Chittorgarh.com Logo
Loading...

Transpact Enterprises BSE SME Startup IPO review (Avoid)

Review By Dilip Davda on Aug 22, 2019


•    The company outsources its therapeutic device from the third party.
•    TEL hs posted negative earnings for the last three fiscals.
•    The company is spending Rs. 0.30cr. to raise Rs. 1.35 cr.
•    The issue is priced exorbitantly despite negative earnings.

ABOUT COMPANY:
Transpact Enterprises Ltd. (TEL) is a design, development and distribution company for a therapeutic device - 'Vestibulator' which is a unique and innovative therapeutic design in medical device segment. Vestibular has been incubated at SINE (Society for Innovation and Entrepreneurship), IIT Bombay. Further, a licence agreement had been executed between IIT Bombay and the company to carry out all commercialization activities.

TEL along with IIT Bombay has filed a joint patent for the technology of Vestibulator with Controller General of Patents, Designs and Trademarks, Department of Industrial Policy and Promotion, Ministry of Commerce and Industry. Vestibulator is a compact, mechanized, innovative therapeutic device which is ergonomically designed to provide stimulations for vestibular, neurodevelopmental and sensory integration therapy.
The device is being outsourced by the company. It provides design details for manufacturing to the third party.

Group company Octaware Technologies is already listed on BSE SME since 2017. Shares issued at Rs. 90 are currently quoting at Rs. 98.50 with 52 weeks high/low of Rs. 110/Rs. 91.

ISSUE DETAILS/CAPITAL HISTORY:
To part finance its plans of redemption of preference shares (Rs. 0.29 cr.), acquisition of R&D facility and Registered Office (Rs. 0.75 cr.) and general corpus fund (Rs. 0.02 cr.) needs, TEL is coming out with a maiden IPO of 104000 equity shares of Rs. 10 each at a fixed price of Rs. 130 per share to mobilize Rs. 1.35 cr. The issue opens for subscription on 26.08.19 and will close on 28.08.19. Minimum application is to be made for 1000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME Startup. TEL is spending Rs. 0.30 cr. for this IPO process.

Issue constitutes 26.89% of the post issue paid-up capital of the company. The issue is solely lead managed by Aryaman Financial Services Ltd. while Bigshare Services Pvt. Ltd. is the registrar to the issue. Aryaman Capital Markets Ltd. is the market maker for this IPO.

Having issued initial equity at par, it raised further equity at a price ranging from Rs. 50 to Rs. 750 per share between November 2015 and April 2016 and has also issued bonus shares in the ratio of 6 for 1 in April 2019.

The average cost of acquisition of shares by the promoters is Rs. 1.43 per share.  Post issue TEL's current paid-up equity capital of Rs. 0.28 cr. will stand enhanced to Rs. 0.39 cr. Its preference equity of Rs. 0.25 cr. gets redeemed through this IPO process.

FINANCIAL PERFORMANCE:
For the last three fiscals, TEL has posted turnover/net profits of Rs. 0.00 cr. / Rs. -(0.05)  cr.  (FY17), Rs. 0.00 cr. / Rs. -(0.09) cr.. (FY18) and Rs. 0.13 cr. / Rs. -(0.07)cr.. (FY19). Thus it has posted negative earnings for all these years.

For the last three fiscals, it has posted an average EPS of Rs. - (2.60) and an average RoNW of -(28.17%).  The issue is priced at a P/BV of 325 on the basis of its NAV of Rs. 0.40 as on 31.03.19 and at a P/BV of 3.72 on the basis of post-issue NAV of Rs. 35.00. As the company has negative earnings for the last three fiscals, its offered at negative P/E. Based on financial data, the issue is exorbitantly priced.

COMPARE WITH LISTED PEERS:
As per offer documents, it has no listed peers to compare with.


MERCHANT BANKER'S TRACK RECORDS:
On merchant banker's front, this is the 33rd mandate from its stable in last three fiscals (including the ongoing fiscal). Out of last 10 listings, 2 opened at a discount and the rest with premiums ranging from 0.02% to 1.25%. Thus it has poor track records.


Conclusion / Investment Strategy

Since TEL is spending Rs. 0.30 cr. (22%) for raising Rs. 1.35 cr. the issue is fully structured one. Investors may give a miss to this exorbitantly priced issue with negative earnings so far.

Reviewer recommends Avoid to the issue.

Review By Dilip Davda on Aug 22, 2019

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

Transpact IPO FAQs

  1. 1. Why Transpact IPO?

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

  2. 2. How is Transpact IPO?

    Read the Transpact IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Transpact IPO what should investors do?

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

  4. 4. Is Transpact IPO good?

    Our recommendation for Transpact IPO is to avoid.

  5. 5. Is Transpact IPO worth Investing?

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

  6. 6. When will Transpact IPO allotment status?

    The Transpact IPO allotment status will be available on or around Sep 3, 2019. The allotted shares will be credited in demat account by Sep 5, 2019. Visit Transpact IPO allotment status to check.

  7. 7. When will Transpact IPO list?

    The Transpact IPO will list on Thursday, September 5, 2019, at BSE SME.