Infibeam Corporation IPO – What are the hidden factors?

Infibeam Incorporation IPO ReviewInfibeam Corporation IPO – What are the hidden factors?


Ahmedabad based, Infibeam Corporation IPO would open for subscription on 21st March, 2016. Infibeam Corporation Ltd is one of India’s leading e-commerce companies focused on developing an integrated and synergistic e-commerce business model. Company posted excellent revenue growth of 52% CAGR in last 5 years. As a standalone numbers, this company has incurred losses, however on a consolidated basis, it has posted profits for 6 months ended Sep-15. What are the positive factors in Infibeam Corporation IPO? What are its hidden factors in Infibeam Corporation IPO? You should read complete review of this IPO before taking any investment decision on this IPO.

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About Infibeam Corporation Limited


Infibeam is one of India’s leading e-commerce companies focused on developing an integrated and synergistic e-commerce business model. They own and operate the Infibeam BuildaBazaar e-commerce marketplace, which provides cloud-based, modular and customizable digital solutions and other value added services to enable merchants to set up online storefronts. As part of its integrated e-commerce ecosystem, they operate Infibeam.com, one of India’s leading multi-category e-retail website. Its integrated business model enables to provide comprehensive, multi-channel and multi-screen value added services to merchants.

Issue details of Infibeam Corporation IPO


  • IPO opens: 21-March-2016
  • IPO closes: 23-March-2016
  • Face Value: Rs 10 per share
  • Issue price band: Rs 360 to Rs 432 per share
  • Minimum subscription: 34 shares
  • Issue size: Rs 450 Crores
  • Lead Managers: SBI Capital markets and Elara Capital Pvt Ltd
  • Listing: BSE and NSE
  • Download Infibeam Corporation IPO Prospectus from SEBI Website at this link

Purpose of the IPO


1. Setting up of cloud data center and purchase of property for shifting and setting up of registered and corporate office

2. Setting up of 75 logistics centres

3. Purchase of software and

4. General corporate purposes.

Company Financials (reinstated-Consolidated)


  • Company generated revenue of Rs 54.45 Crores for the year ended Mar-11 and Rs  295.23 Crores for the year ended Mar-15. For 6 months ended Sep-15, it generated revenue of Rs  174.62 Crores.
  • Company posted a loss of Rs  18.61 Crores for the year ended Mar-11 and loss of Rs 9.78 Crores for the year ended Mar-2015. For 6 months ended Sep-15, it generated a profit of Rs 6.57  Crores.
  • Its restated-consolidated EPS for FY 2015 is negative and last 3 years average EPS  is also negative as it incurred losses. Its diluted EPS for the 6 months ended Sep-15 is Rs 1.51.

Infibeam Incorporation IPO-Financials

Reasons to invest Infibeam Corporation IPO


  • Strong revenue growth in last 5 years. The company grew at 53% CAGR in last 5 years.
  • The company is in the unique business of e-commerce, which would be the first company to get listed on stock exchanges.

Reasons not to invest in a Infibeam Corporation IPO


  • Company has incurred losses in last 5 years. For 6 months ended Sep-15, the company turned to profit making.
  • Certain entities which were acting as Lead Managers have walked away from this issue when compared from Draft Prospectus to Red Hearing Prospectus (ICICI Securities and Kotak Capital Markets)
  • There are outstanding litigations against the Company, its Directors, its Promoters, its Subsidiaries and its Group Companies and any unfavorable decision in connection with such proceedings, individually or in the aggregate, could adversely affect its reputation, business and results of operations
  • The company relies on information technology systems, networks and infrastructure operate its business and any interruption or breakdown in such systems, networks or infrastructure or its technical systems could impair its ability to effectively deliver its products and services. Further, internet penetration in India is limited and may not increase in the future. If the internet infrastructure suffers interruptions, breakdowns or reduced growth, it may adversely affect its business and results of operations.
  • An inability to manage the rapid growth in the scale of its operations or adapt to technological developments or e-commerce trends could affect the performance and features of the services they provide, thereby adversely affecting its business operations.
  • Intellectual property rights are important to its business and operations, and they may be unable to prevent infringement of its intellectual property rights by third parties, including its current or future competitors.
  • They face intense competition and this presents a continuous challenge to its success.
  • Other risk factors (Internal and external) can be viewed in the draft prospectus from Page no. 16 onwards.

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Recommendation / Investment strategy


  • The company has incurred losses in last 5 years, hence it generated negative EPS. Hence we cannot ascertain whether the issue price band of Rs 360 to RS 432 per share is under priced or overpriced.
  • Company has posted strong revenue growth in last 5 years. It posted losses in last 5 years. It turned to a profit making company for 6 months ended Sep-15. One need to wait and see that such profits continue in future. Couple of lead managers of this issue have walked away during the process, which raises doubts about the IPO issue of the company. My advice is to stay away from such IPO’s as of now.

Disclaimer: I do not have an interest in investing in this IPO. The idea of giving positive and negative factors to investors in this article is to create awareness and education about this IPO. One should NOT constitute this as investment advice to buy or not to buy. Please consult your investment advisor before you invest in such high risk investment options.

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Suresh
Infibeam Corporation IPO Review

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