Pecos Hotels and Pubs Ltd BSE SME IPO review (Avoid)

Review By Dilip Davda on Jul 17, 2015

Pecos Hotels and Pubs Ltd (PHPL) is into the business of running of hotels and pubs in Bangalore, with 4 Pubs providing 70s, 80s and 90s retro rock music since last 10 years. Its focus is to bring alive the greatest of legends in the interiors, the lighting, the paintings, pictures, posters and the sounds. The theme of the pub cater to the 20-35 age group, who are in reasonably well paying jobs, unmarried with a decent disposable income and looking for fellowship in the evening.

To part finance its new Pub development plans, up gradation of existing facilities and raise general corpus fund, the company is coming out with an IPO of 459000 equity share of Rs. 10 each at a fixed price of Rs. 50 per share to mobilize Rs. 2.30 crore. Minimum application is to be made for 3000 shares and in multiples thereon, thereafter. Issue opens for subscription on 23.07.15 and will close on 28.07.15. After issuing incorporation equity at par, it made preferential allotment at a price of Rs. 800 per share in March 2014 and at a price of Rs. 12 per share in January 2015. It has also issued bonus shares in the ratio of 2 for 1 in November 2013 and 20 for 1 in January 2015. Post issue its existing equity capital of Rs. 0.85 crore will stand enhanced to Rs. 1.31 crore. Issue is lead managed by Sarthi Capital Advisors Pvt Ltd and Link Intime India Pvt Ltd is the registrar to the issue. Post allotment, shares will be listed on BSE SME.

On performance front, for the fiscal 2013 and 2014 the company has posted turnover and net profits of Rs. 2.65 crore/0.07 crore and Rs. 2.92 crore/Rs. 0.01 crore respectively. For 10 months ended 31.01.15 it has reported net profit of Rs. 0.10 crore on a turnover of 2.49 crore. If we annualize this earnings and attribute to the asking price then the issue is at a P/E of 54 plus. Thus issue is exorbitantly priced.

As far as lead manager's track record is concerned, this is the 10th IPO from its stable and earlier mandates have mixed trends for rewards post listings.


Conclusion / Investment Strategy

Avoid. With P/E of 54 plus Pecos Hotels is a highly priced IPO. Pecos Hotels is into the business of running of hotels and pubs in Bangalore.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Jul 17, 2015

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the past, SME IPOs drew the attention of investors across the board. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at own risk. The above information is based on information available as on date coupled with market perceptions. The Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com

Pecos Hotels IPO FAQs

  1. 1. Why Pecos Hotels IPO?

    The initial public offer (IPO) of Pecos Hotels and Pubs Ltd offers an early investment opportunity in Pecos Hotels and Pubs Ltd. A stock market investor can buy Pecos Hotels IPO shares by applying in IPO before Pecos Hotels and Pubs Ltd shares get listed at the stock exchanges. An investor could invest in Pecos Hotels IPO for short term listing gain or a long term.

  2. 2. How is Pecos Hotels IPO?

    Read the Pecos Hotels IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Pecos Hotels IPO what should investors do?

    Pecos Hotels IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Pecos Hotels IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is Pecos Hotels IPO good?

    Our recommendation for Pecos Hotels IPO is to avoid.

  5. 5. Is Pecos Hotels IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to avoid the Pecos Hotels IPO.

  6. 6. When will Pecos Hotels IPO allotment status?

    The Pecos Hotels IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Pecos Hotels IPO allotment status to check.

  7. 7. When will Pecos Hotels IPO list?

    The Pecos Hotels IPO will list on Tuesday, August 11, 2015, at BSE SME.








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