Powerhouse Fitness and Realty Ltd IPO Review (Avoid)

Review By Dilip Davda on Sep 23, 2014

Powerhouse Fitness and Realty Ltd (PFRL) is a fitness chain operating in Mumbai and also have the presence in Surat and Jaipur through franchise. PFRL operates Gyms under the brand “Powerhouse Gyms” which is owned by Powerhouse Gyms International headquartered in Detroit, USA.

Its Gyms are state of the art facilities with services including gyms, steam, aerobics and diet counseling amongst others. The first gym was established in May 1999, as “Q’s Fitness Studio” a proprietary firm as its sole proprietor at Santacruz West, Mumbai. After the success of the Santacruz centre another centre was set up at Vile Parle, Mumbai in October 2004. “Q’s Fitness Studio” has signed a Master Licensing Agreement dated March 21, 2005 with Powerhouse Licensing LLC, which provides PFRL with the exclusive right to set up and operate Powerhouse Gyms and to use and license of the Powerhouse Gyms and the associated trademarks in the gyms in India, Nepal, Bangladesh and Sri Lanka set up and run Powerhouse gyms in India, Sri Lanka, Nepal, Bangladesh and Maldives. The first Powerhouse fitness centre in India was set up in November 2005 at at Juhu (Mumbai). The centres at Santacruz and Vile Parle were converted to Powerhouse.

Currently, PFRL  12 Powerhouse Gyms in Mumbai located at Juhu, Vile Parle, Chembur, Ghatkopar, Mulund(W), Chowpatty, Prabhadevi, Andheri(E), 4 Bunglows, Malad (W), Mumbai Central and Colaba. It also operates 13 fitness centres in Mumbai and three franchisees in Santacruz (Mumbai), Surat and Jaipur. The company has also entered into a leave and license agreement for the opening of Gym in Thakur Complex, Kandivali (East) and interior work has commenced. As on date PFRL has approximately 9000 members in all our gyms including our franchisees.

Now to part finance its expansion plans of setting up six new gyms in western and eastern suburbs of Mumbai and to meet corpus fund, the company is coming out with an IPO of 2400000 equity share of Rs. 10 each at a fixed price of Rs. 30 per share for listing on BSE SME. The issue opens for subscription on 29.09.14 and will close on 09.10.14. Minimum application is to be made for 4000 shares and in multiples thereof, thereafter. Issue is lead managed by First Overseas Capital Ltd and Bigshare Services Pvt Ltd is the registrar to the issue. Its present paid up equity capital of Rs. 4.50 crore will rise to Rs. 6.90 crore post issues.

On performance front, the company has earned net profit of Rs. 0.08 crore on a total turnover of Rs. 3.89 crore for the fiscal 2013-14 translating in and EPS of Rs. 0.47 on a paid up capital of Rs. 4.04 crore. If we attribute this earning on enhanced equity post IPO then EPS stands at Rs. 0.11 resulting in asking price at a P/E of 270 plus against Talwarkar’s P/E of around 17.

On merchant banker’s front, this is the first mandate and has no past track record.


Conclusion / Investment Strategy

Avoid this exhorbitantly priced SME offer that has entry and trading barriers of minimum investment.

(Disclaimer: Author has no plans to invest in this IPO)

 

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Sep 23, 2014

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

Powerhouse Fitness IPO FAQs

  1. 1. Why Powerhouse Fitness IPO?

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

  2. 2. How is Powerhouse Fitness IPO?

    Read the Powerhouse Fitness IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Powerhouse Fitness IPO what should investors do?

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

  4. 4. Is Powerhouse Fitness IPO good?

    Our recommendation for Powerhouse Fitness IPO is to avoid.

  5. 5. Is Powerhouse Fitness IPO worth Investing?

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

  6. 6. When will Powerhouse Fitness IPO allotment status?

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

  7. 7. When will Powerhouse Fitness IPO list?

    The Powerhouse Fitness IPO will list on Tuesday, October 21, 2014, at BSE SME.

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