Naysaa Securities SME IPO-Should you invest?
Naysaa Securities Limited is coming up with a public issue IPO of 10 L Shares and raising Rs 1.5 Crores. Naysaa Securities IPO is priced at Rs 15 per share. There are several negative points about this SME IPO. What should be your call on this Naysaa Securities IPO? Should you invest in Naysaa Securities SME IPO? What are the risk involved in this SME IPO?
About Naysaa Securities Limited
Naysaa Securities Limited is headquartered in Mumbai and operate through registered office. They are a diversified financial services company in India offering products & services covering equity broking and equity derivatives to all kinds of investors, namely, retail, high net worth individuals and Corporates.
Issue details of Naysaa Securities IPO
- IPO opens: 5-Sep-2014
- IPO closes: 12-Sep-2014
- Face value: Rs 10 per share
- Issue price: Rs 15 per share (Including Rs 5 premium)
- Minimum investment: Rs 120,000
- Minimum shares to be invested: 8,000 and multiples of 8,000 each
- No of shares: 10 Lakh shares
- Issue size: Rs 1.5 Crores
- Lead Managers: Guiness Corporate Advisors Limited
- Listing: BSE SME platform
- Download Naysaa Securities IPO Prospectus from SEBI website here
Purpose of the IPO
The funds would be used for the following purposes.
- Expand domestic operations and network of branches
- Enhancement of margin money maintained with the exchanges
- General corporate purposes
- Public Issue expenses.
- Company generated revenue of Rs 7,212.5 Lakhs for the year ended Mar-10 and Rs 708.27 Lakhs for the year ended Mar-14. Means, its revenues have declined by 90% in the last 5 years.
- Company posted a profit of Rs Rs 1,000 for the year ended Mar-10 and a profit of Rs 1.03 Lakhs for the year ended Mar-2014.
Reasons to invest Naysaa Securities IPO
Reasons not to invest in an Naysaa Securities IPO
- Company revenues are inconsistent. Its revenues declined by 90% in last 5 years. Even FY 2013 revenues were Rs 2,677 Lakhs, however FY 2014 revenues are Rs 708 Lakhs only. With such inconsistencies, we cannot predict how the company would perform in the future.
- It earned a profit of just Rs 1,000, 5 years back and Rs 1 Lakh now in FY2014. With such thin margins, shareholders are not going to enjoy any profits.
- Business restricted to Mumbai Suburb only.
- It incurred Rs 0.17 Lakhs loss in FY 2011-12.
- Promoter group company has incurred losses in the last few years ((Vikram Shares and stock broking)
- It has negative cash flows in 4 out of last 5 years. This indicates that it need to borrow loans for high rate of interest and has difficulty in managing working capital requirements. This would affect the profits of the company.
- SME IPO’s are trading on low volume. Liquidity of such shares could be an issue. Stock brokers can easily manipulate the price of the stock.
Also Read: Ways to get maximum interest from PPF
Recommendation / Investment strategy:
- On an issue price of Rs 15, based on FY 2014 EPS of Rs 0.14, P/E Ratio works out to be 107 times. Based on last 3 years Avg EPS of Rs 0.09, P/E ratio works out to be 167 times. Its competitors P/E Ratio is 583 (Highest) and 5.3 (Lowest) and average at the industry level is 18. Considering 105 / 167 P/E ratio of Naysaa Securities IPO, it shows the issue price is very very high.
- Naysaa Securities IPO has several negative factors. Revenues are inconsistent, profits are pathetic and almost zero and promoter group performance is not good. I am surprised how such companies being allowed by Indian regulator to raise money from the public. I would advise investors to stay away from such IPO’s and they should be very, very cautious before thinking of investing in such companies.
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Naysaa Securities SME IPO
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