VCU Data Management – IPO – Can we subscribe?

VCU Data Management IPO-Can we subscribeVCU Data Management – IPO – Can we subscribe?

Maharashtra based VCU Data Management Ltd is coming out of public issue for 75 Lakh shares of face value of Rs 10.00 and issue price of Rs 25 per share (Premium of Rs 15 per share) each aggregating to Rs 18.75 Crores. VCU Data Management IPO would hit the market on 4-Oct-13. While this company has started just 6 months back, it offers products in the wireless video communication space which is unique business model. Company indicates that there are no competitors. There are several hidden factors where one should be considered before investing in VCU Data Management IPO. Should you subscribe to VCU Data Management IPO?

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About VCU Data Management Limited

The company has been incorporated recently as on March 13, 2013. It is engaged in the business of manufacturing surveillance and news gathering devices and provides various related solutions. It also provides unique video encoder, decoder, media server and 2G/3G/4G WiFi technology. The business is currently within the 1 year start up phase of operations and serves a targeted population that consists of media houses, businesses, government bodies, law enforcement agencies & retail individuals. The company identifies with international players like TVU Networks, LiveU, Gearhouse Broadcast and Live Function in the technology, telecommunication & surveillance industry.

VCU Data Management IPO would be listed in BSE SME platform.

Issue details of VCU Data Management IPO

  • IPO opens: 4-Oct-2013
  • IPO closes: 8-Oct-2013
  • Face value: Rs 10
  • Issue price: Rs 25
  • Minimum and maximum bid: 6,000 shares for retail investor
  • Minimum and maximum investment: Rs 150,000
  • Lead managers: Networth Stock Broking Ltd
  • Listing: BSE SME
  • Download Prospectus of VCU Data Management IPO

Purpose of the IPO: The funds would be used for the following purposes.

  • Towards Augmenting Working Capital Gap
  • Towards purchase of Fixed Assets
  • Issue Related Expenses

Company financials

  • Since company has been started recently, 2 months performance ended May-2013 is only available.
  • Company has posted revenue of Rs 12.46 Lakhs and a LOSS of Rs 21.17 Lakhs.

Reasons to invest VCU Data Management IPO

  • This company has unique business model. If business model is successful, the revenues are expected to grow at a faster pace.

Reasons not to invest in VCU Data Management IPO

  • Since company has incorporated 6 months back the financials are available only for 2 months. We are yet to see the full-fledged operations of the company to assess the performance.
  • This company has a unique business model and success ratio is yet to be ascertained. Since there are no peers for comparison we are not sure whether it would be successful or failure or whether it would take several years to grow.
  • The SME IPO’s listed are trading with very low volume and the liquidity has been a problem.
  • The investment required is Rs 1.50 lakhs.

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Recommendation / Investment strategy:

  • Company has unique business model.
  • NAV of this company as on 31-May-2013 is Rs 9.73. Post this issue, the NAV would be Rs 17.12.
  • There is no EPS and P/E ratio comparison as company has just been incorporated. Also there are no listed competitors to compare with this company.
  • There is no brand recognition in the market. We cannot say whether business would be successful or not. We do not know whether the issue price is high or low. Under these circumstances, investor should wait and watch the performance for couple of years before investing in such IPO’s.

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VCU Data Management IPO

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