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Reliable Data NSE SME IPO review (Avoid)

Review By Dilip Davda on Sep 25, 2017

Reliable Data Services Ltd. (RDSL) is primarily engaged in providing customized services to various Banks, financial institutions and other manufacturing industries in the field of management services, transaction processing services, human resources services and other allied services. Company has entered into agreement with various leading MNC and Private Sector Banks like Standard Chartered Bank, Deutsche Bank, HSBC, HDFC Bank Ltd, ICICI Bank, Axis Bank, Citibank and Yes Bank for providing various support services. Agreements which RDSL has entered with banks are short term and long term depending upon the type of services and its terms and conditions. Subsequently, few Public Sector Banks were also added to it’s client list such as IDBI, Union Bank and Corporation Bank. The Company is now engaged in collection services with mobile based application developed by banks, image based data processing and other backend processing on behalf of various banks. This opened a new horizon for it and these operations increases the revenue significantly in few years by spreading services to various banks across India.

To part finance its capital expenditure plans, repayment of loans, working capital and general corpus fund needs, RDSL is coming out with a maiden IPO of 2600000 equity share of Rs. 10 each at a fixed price of Rs. 57 per share to mobilize Rs. 14.82 crore. Issue opens for subscription on 27.09.17 and will close on 03.10.17. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue constitutes 30.23% of the post issue paid up capital of the company. Issue is solely lead managed by Swastika Investmart Ltd. and Skyline Financial Services Pvt. Ltd. is the registrar to the issue. It has issued equity shares at par and has also issued bonus shares in the ratio of 8 for 1 in March 2010 and 5 for 1 in July 2017. Post issue, its current paid up equity capital of Rs. 6 crore will stand enhanced to Rs. 8.60 crore. Cost of acquisition of shares by promoters is just Rs. 0.60 per share.

On performance front, RDSL has (on a consolidated basis) posted turnover/net profits of Rs. 20.49 cr. / Rs. 1.48 cr. (Fy14), Rs. 24.72 cr. / Rs. 1.72 cr. (FY15), Rs. 26.40 cr. / Rs. 1.29 cr. (FY16) and Rs. 34.61 cr. / Rs. 1.62 cr. (FY17). Despite growth in top lines for last two fiscals, it has seen pressure on margins. RDSL has reported an average EPS of Rs. 2.55 and average RoNW of 16.30 for last three fiscals on an equity base of Rs. 1.00 crore. Issue is priced at a P/BV of 3.2. If we attribute latest earnings on fully diluted post issue equity then asking price is at a P/E of 30 plus against industry composite of around 18 P/E. Thus issue is highly priced.

On merchant banker’s front, this is the 6th mandate from its stable and last five listings have given between 4 to 25% gains on the day of listing.

Conclusion: Considering high price offer, there is no harm in giving it a miss.


Conclusion / Investment Strategy

Considering high price offer, there is no harm in giving it a miss.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Sep 25, 2017

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

Reliable Data IPO FAQs

  1. 1. Why Reliable Data IPO?

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

  2. 2. How is Reliable Data IPO?

    Read the Reliable Data IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Reliable Data IPO what should investors do?

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

  4. 4. Is Reliable Data IPO good?

    Our recommendation for Reliable Data IPO is to avoid.

  5. 5. Is Reliable Data IPO worth Investing?

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

  6. 6. When will Reliable Data IPO allotment status?

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

  7. 7. When will Reliable Data IPO list?

    The Reliable Data IPO will list on Wednesday, October 11, 2017, at NSE SME.