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Prabhat Telecoms (India) BSE SME IPO review (Avoid)

Review By Dilip Davda on Jul 20, 2016

Prabhat Telecoms (India) Ltd (PTL) is engaged into design, assemble, and customize import and distribution of mobile handsets, wireless dongles / data-cards, data products and mobile / telecom accessories. The company sells feature mobile handsets under brand name “V3” Mobiles and internet data cards & smart phones / tablets, fixed wireless terminal and high end telecom devices under brand name “Xccess”. PTL also sell accessories like screen guard, Memory card etc under the brand name “Platinum”.  The company is also a distributor of CDMA handsets for TTML for Mumbai Circle. It sells CDMA product to chain of distributors PAN India through TTML/TTSL corporate tie-ups and also sells product through organized retail chain like The Mobile Store, Mobile plus etc and through more than 15 online portals.

For listing requirements of the company, it is coming out with a maiden SME IPO of 2200000 equity share of Rs. 10 each through offer for sale at a fixed price of Rs. 51 per share to mobilize Rs. 11.22 crore. Issue opens for subscription on 22.07.16 and will close on 26.07.16. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely managed by Navigant Corporate Advisors Ltd. and Cameo Corporate Services Ltd is the registrar to the issue. Having issued shares at par between 2007 and 2009 it issued shares in a price range of Rs. 20 to Rs. 200 per share during 2010 to 2013 and also issued bonus in the ratio of 7 for 10 in March 2013. Being offer for sale, its current paid up equity post IPO remains same at Rs. 8.32 crore.

On performance front, the company has posted turnover and net profit of Rs. 215.42 cr. / Rs. 3.53 cr. (FY13),  Rs. 298.15 cr. / Rs. 3.11 cr. (FY14) and  Rs. 304.23 cr. / Rs. 1.13 cr. (FY15). For 10 months ended on 31.03.16 it has clocked in turnover of Rs. 258.44 crore with a net profit of Rs. 0.75 cr. Thus while its top line has been improving, its bottom line has shown declining trends. Fall in profit is attributed to higher provisions for depreciation and interest. If we annualize the latest earnings and attribute it to the paid up equity then the asking price is at a PE of around 47 plus which makes it a pricy issue. The company has no listed peers to compare with.

On merchant banker’s front, this is the first IPO from its stable and has no track record.

Conclusion:  Past four years working is not supporting the asking price which is at a higher PE. Only risk avers investors with surplus funds may consider long term investment. Other can ignore this IPO.


Conclusion / Investment Strategy

Conclusion:  Past four years working is not supporting the asking price which is at a higher PE. Only risk avers investors with surplus funds may consider long term investment. Other can ignore this IPO.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Jul 20, 2016

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

Prabhat Telecoms IPO FAQs

  1. 1. Why Prabhat Telecoms IPO?

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

  2. 2. How is Prabhat Telecoms IPO?

    Read the Prabhat Telecoms IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Prabhat Telecoms IPO what should investors do?

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

  4. 4. Is Prabhat Telecoms IPO good?

    Our recommendation for Prabhat Telecoms IPO is to avoid.

  5. 5. Is Prabhat Telecoms IPO worth Investing?

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

  6. 6. When will Prabhat Telecoms IPO allotment status?

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

  7. 7. When will Prabhat Telecoms IPO list?

    The Prabhat Telecoms IPO will list on Wednesday, August 3, 2016, at BSE SME.