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Quick Heal Technologies IPO Review (Apply)

Review By Dilip Davda on Feb 2, 2016

Quick Heal Technologies Ltd (QHT) is one of the leading providers of security software products and solutions in India with a market share of over 30% in the retail segment according to the Zinnov Industry Report. Its customers include home users, small offices and home offices (SOHO), SMBs, enterprises, educational institutions, as well as government agencies and departments. QHT's proprietary antivirus technology, which is based on an innovative behavior and threat detection system, works to detect security threats including virus and malware attacks in real time to protect users' IT assets across platforms, including Windows, Mac, Android, iOS and Linux, and across devices, including desktops, laptops, mobile/ smart phones and tablets, while aiming to ensure resource availability, business continuity and an uninterrupted digital experience. Company's product portfolio includes solutions under the widely recognized brand names “Quick Heal” and “Seqrite” for desktop and laptop security, mobile / smartphone security, endpoint security, gateway security, network security, cloud-based mobile device management (MDM) systems, data loss prevention (DLP) systems and family safety software. Since incorporation of QHT, more than 24.5 million licenses of its products have been installed and as of December 31, 2015, it had over 7.13 million active licenses spread across more than 80 countries. The company also invests in advertising and sales promotion activities across various media channels that further increase our brand recognition among existing and potential users. First generation promoters have done remarkable job in this field.

As of December 31, 2015, QHT's conduct its sales and marketing activities out of 64 offices and warehouses across 36 cities in India and, through   Subsidiaries, that are present in Japan, Dubai, the United States and Kenya.

To part finance its advertising and sales promotion, capex for R&D, purchase, develop and renovate proposed offices at Kolkata, Pune and New Delhi along with general corpus funds, the company is coming out with a book building process IPO consisting of fresh equity issue worth Rs. 250 cr. and offer for sale of 6269558 equity shares of Rs. 10 each from existing stakeholders. Price band for this IPO is Rs. 311-321. Thus the company plans to raise between Rs. 444.98 cr to Rs. 451.25 cr. based on the lower and upper price bands. It opens for subscription on 08.02.16 and will close on 10.02.16. Minimum application is to be made for 45 shares and in multiples thereon, thereafter. BRLMs to this issue are ICICI Securities Ltd, Jefferies India Pvt Ltd and JP Morgan India Pvt Ltd. Registrar to the issue is Link Intime India Pvt. Ltd.

On performance front, the company has posted an average EPs of Rs. 9.60 (on consolidated basis) for last three fiscals with declining trends in bottom line. During 2010-11 it issued preferential equity at Rs. 768.67 per share. In December 2015 it issued equity shares in the price range of Rs. 37.50 to Rs. 110.. So far it made five bonus issues 2 for 1 (March 2005), 3 for 1 (March 2006), 3 for 1 (March 2007), 3 for 4 (March 2008) and 7 for 1 (February 2014). Its current equity capital of Rs.62.24 cr. will stand enhanced approx. to Rs. 70 cr.  post IPO. . For first half ended 30.09.15 it has clocked in net profit of Rs. 24.22 on a turnover of RS. 152.27. If we attribute these earnings on annualized basis, then asking price is at a P/E of 45 plus and at a P/BV of 5 plus based on its consolidated NAV of Rs. 58 on the said date. Its RoNW has shown declining trends for last four fiscals. For this management clarified that in last three years, it has spent more on new products for enterprise module and mobile securities which has been charged to P & L. Rewards on these will be generated in coming years. Its revenue consists of 87% retail market and rest from other segments. 97% of its revenue is from domestic market and the rest from exports. It hopes to increase it substantially as its products have been receiving approval from world renowned agencies. Company enjoys preferred anti-virus solution provider company status with a market share of 30% in the domestic market.

Here again like recent few issues, there are no listed peers to compare with and thus this issue is also from the first mover of the segment and may create fancy. However, pricing of the issue appears to be on the higher side. On merchant banker's front, their past mandates have shown mixed trends post listing. Average cost of acquisition of the Equity Shares for Promoters who are also Selling Shareholders in IPO is Rs. 0.03144, average cost of acquisition of equity shares for other Selling Shareholders is Rs. 96.08 and the Public Offer at the upper end of the Price Band is as high as Rs. 321.


Conclusion / Investment Strategy

Although issue appears priced on the higher side, investment for medium to long term may be considered as this issue is from the first mover in the segment.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Feb 2, 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. Any reader taking decisions based on any information published here does so entirely at its own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda, a freelance journalist

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

Quick Heal IPO FAQs

  1. 1. Why Quick Heal IPO?

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

  2. 2. How is Quick Heal IPO?

    Read the Quick Heal IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Quick Heal IPO what should investors do?

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

  4. 4. Is Quick Heal IPO good?

    Our recommendation for Quick Heal IPO is to subscribe.

  5. 5. Is Quick Heal IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Quick Heal IPO.

  6. 6. When will Quick Heal IPO allotment status?

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

  7. 7. When will Quick Heal IPO list?

    The Quick Heal IPO will list on Thursday, February 18, 2016, at BSE, NSE.