Suyog Telematics Ltd IPO Review (Avoid)

Review By Dilip Davda on Dec 30, 2013

While primary market remained near dormant for the year calendar year 2013 except Just Dial main line IPO and PGCIL FPO, it just turned out to be the year of SME IPOs. Suyog Telematics Ltd (STL) is the second and perhaps the last IPO for calendar year 2013 that is opening in the last week of December 2013. Details of the issue are as under:

 

STL is a growing passive telecommunication infrastructure provider in India, engaged primarily in the business of installing and commissioning of Poles, Towers and Optical Fibre Cable (“OFC”) Systems in India. It operates on Build, own and operate basis and covers roof top poles as well as ground level poles. It also offer services to Telecom Operators in installing Telecom Infrastructure on job work basis. The company has provided a number of Poles and Infrastructure on lease over various areas in and around Maharashtra and Uttarakhand and have also installed BTS equipments on poles for most of the leading Mobile Service Providers in India, including, Bharti Airtel Ltd., Vodafone Essar Ltd., Idea Cellular Ltd., and TTML. Having been in the business of civil construction for over 2 decades, the group has completed installation of more than 200 Poles for various TSPs and about 10,000 Roof-Top Towers for BSNL on job work basis. As on September 30, 2013, its fully completed owned portfolio of passive infrastructure consists of 359 Poles in and around Mumbai and 79 towers in and around Maharashtra and Uttarakhand. In addition, it has its own optical fiber cable network of about 150 km in and around Mumbai.

 

Now the company has planned to install additional 10 roof top poles and 100 ground level poles along with up gradation of existing infrastructure at a total cost of Rs. 4.53 crore and to finance this it is issuing  1820000 equity share of Rs. 10 each at a fixed price of Rs. 25 per share. Issue opens on 30.12.13 and will close on 07.01.14. Minimum application is to be made for 6000 shares and in multiples thereof, thereafter. Post allotment, shares will be listed on BSE SME. Issue is lead managed by Aryaman Financial Services Ltd. and Sharepro Services India Pvt. Ltd is the registrar to the issue.

 

On performance front, the company’s revenues have grown from Rs. 1.82 crore in fiscal 2009 to Rs. 8.92 crore in fiscal 2013, representing a CAGR of 37.44 and profit after tax has significantly increased from Rs. 0.14 crore in fiscal 2009 to Rs. 1.00 crore in fiscal 2013, representing a CAGR of 48.46%. The company has posted turnover of Rs. 2.74 crore with a net profit of Rs. 0.31 crore. Face value of its equity share of Rs. 100 each was splited in Rs. 10 in March 2013 and before that it issued few shares at a price of Rs. 300 to Rs. 400 per share.  The company issued bonus shares in the ratio of 15 for 1 in November 2009 and 1 for 1 in August 2013. Its existing equity of Rs. 4.65 crore will rise to Rs. 6.46 crore. If we attribute annualized current earnings based on Q1 numbers, then the asking price is at a P/E of 12.5 which is expensive. On merchant banker’s front, they have poor track record.


Conclusion / Investment Strategy

Avoid this exorbitantly priced IPO which also has entry barrier.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Dec 30, 2013

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

Suyog Telematics IPO FAQs

  1. 1. Why Suyog Telematics IPO?

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

  2. 2. How is Suyog Telematics IPO?

    Read the Suyog Telematics IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Suyog Telematics IPO what should investors do?

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

  4. 4. Is Suyog Telematics IPO good?

    Our recommendation for Suyog Telematics IPO is to avoid.

  5. 5. Is Suyog Telematics IPO worth Investing?

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

  6. 6. When will Suyog Telematics IPO allotment status?

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

  7. 7. When will Suyog Telematics IPO list?

    The Suyog Telematics IPO will list on Wednesday, January 22, 2014, at BSE SME.

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