UFO Videoz IPO – Should you invest in this IPO?

UFO Movies IPO - Should you investUFO Videoz IPO – Should you invest in this IPO?


Another interesting investment option, UFO Videoz IPO would hit the market on 28th April, 2015. UFO Moviez India is India's largest digital cinema distribution network and in-cinema advertising platform in terms of number of screens. Should you invest in UFO Videoz India Limited Initial Public Offering? What are the risk factors to be considered before you invest in such UFO Videoz IPO?

About UFO Videoz India Limited


UFO Moviez India is India's largest digital cinema distribution network and in-cinema advertising platform in terms of number of screens. UFO operates India’s largest satellite-based, digital cinema distribution network using its UFO-M4 platform, as well as India’s largest D-Cinema network. 3i Research Mauritius Limited and P5 Asia Holding Investments (Mauritius) Limited have made investments in UFO.

Also Read: Where does Rakesh Jhunjunwala investing in Indian Markets and what is his stock portfolio?

Issue details of UFO Videoz India IPO


  • IPO opens: 28-April-2015
  • IPO closes: 30-April-2015
  • Face Value: Rs 10 per share
  • Issue price band: Rs 615-625 per share.
  • Minimum Shares to apply: 24 shares and in multiples of 24 shares thereon.
  • Minimum Investment : Rs 14,760
  • Issue size: Rs 600 Crores
  • Lead Managers: Axis Capital Limited and Citigroup Global Markets India Private Limited
  • Listing: BSE / NSE
  • Download UFO Videoz India Limited IPO Prospectus from Moneycontrol.com website here

Purpose of the IPO


The objects of the Offer are to achieve the benefits of listing the Equity Shares on the Stock Exchanges and for the sale of Equity Shares by the Selling Shareholders. Further, this Company expects that listing of the Equity Shares will enhance its visibility and brand image and provide liquidity to its existing shareholders. Company will not receive any proceeds of the Offer and all the proceeds of the Offer will go to the Selling Shareholders.

Company Financials (Consolidated Restated)


  • Company generated revenue of Rs 73.5 Crores for the year ended Mar-10 and Rs 421.09 Crores for the year ended Mar-14.  It earned revenue of Rs  357.23 Crores for 9 months ended Dec-14.
  • Company posted a LOSS of Rs 23.77 Crores for the year ended Mar-10 and a Profit of Rs 50.1 Crores for the year ended Mar-2014. Its profit is Rs  40.62 Crores for 9 months ended Dec-2014.
  • Its EPS for FY 2013-14 is 16.6 and last 3 years Avg is Rs 12.39.

UFO Moviez India IPO - Financials

Reasons to invest UFO Videoz India Limited IPO


  • Good revenue growth story in last 5 years. It multiplied its revenue by 5.7 times in last 5 years.
  • Good and consistent profits of 11% in last 2 years 9 months.
  • Unique business model where enormous growth expected.

Reasons not to invest in UFO Videoz India Limited IPO


  • It has incurred losses for 2 years (FY 2009-10 and FY 2010-11) in the last 5 Years and 9 months financial performance. Consistent performance of profits in the last 5 years would be better to assess company long standing performance.
  • Company is presently involved in certain disputes with Real Image Media Technologies Private Limited, competitor, with respect to certain patents held by Real Image. If such disputes are decided against this company or are not settled on terms favorable to this company, or at all, it would have a material adverse effect on this company, financial condition, results of operations, prospects and reputation and may also have a material adverse effect on stock price.
  • Any downturn in the Indian or international cinema could materially adversely affect its, financial condition, results of operations and prospects.
  • Company and some of its Promoters, Directors and Group Entities are involved in certain legal proceedings which may be determined against this company.
  • Certain qualifications have been noted in Auditor’s audit reports and this  may be adversely affected if company do not adequately address such qualifications or if other qualifications are noted or identified.
  • The income tax authorities had carried out search and seizure operations at the premises of certain of Promoters, including Promoter Director, members of Promoter Group as well as Group Entities. Any adverse determination by the tax authorities in this matter could increase their tax liability and / or subject them to monetary penalties.
  • Certain of existing shareholders together may be able to exert substantial voting control over this company after the Offer, which may limit the ability to influence corporate matters and may this company to take actions that are not in best interest.
  • Other risk factors (Internal and external) can be viewed at prospectus Page no. 24 onwards.

You may also like: 5 Things to remember before investing in Penny Stocks

(my recent article on Moneycontrol.com)

Recommendation / Investment strategy:


  • At a higher price band Rs 625 and consolidated basic EPS for FY 2013-14 of Rs 16.6, P/E Ratio works out to be 37.65. At a higher price band of Rs 625 and consolidated basic EPS of last 3 years average of Rs 12.39, P/E Ratio works out to be 50.44. At a higher price band of Rs 625 and consolidated basic EPS of 9 months ended Dec-2014 of Rs 13.04, P/E Ratio works out to be 47.93.
  • Means, company is asking an issue price of P/E ratio in between 37 to 50. Comparing to its peers, highest P/E Ratio is 270 and lowest is 3.3 and industry average is 27.5. Hence the issue price is on little higher side.
  • UFO Videoz IPO has several positive factors. Good reveue growth story in last 5 years, consistent profit performance in the last 2 years, 9 months, unique business model are some of the positive factors. It has incurred losses for 2 financial years in last 5.75 years, legal proceedings against company/promoters and several other risk factors indicated above are some of the negative factors.
  • I am positive about UFO Videoz India Limited IPO. One should invest in such IPO’s for listing gains as well as for the long term considering positive factors of this IPO. Investors can subscribe at higher price band. 

Disclaimer: I am planning to invest 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. Please consult your financial advisor / investment advisor before you invest in such high risk investment options.

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Suresh
UFO Videoz IPO – Should you invest in this IPO

17 comments

  • Ganesh

    Hi SUresh,

    I’ve noticed the Risk identifications in the MFs (High/Medium/Low). Do we have similar identifications for the stocks, especially for the IPOs. If so, what is the Risk color for this IPO?

  • Saurabh Joshi

    Hi Suresh,
    This time I was unlucky…as got No Allotments in the VRL logistic…surely it will give good Listing Gains as per market Studied.
    Do you think that UFO will be another Monte Carlo type share…As I had Asked you that time also whether Monte is over priced…?
    Same query This Time..As already I am holding Monte with Net 100 Re loss.
    Still as UFO has not good Price in Grey market.So Asking For this UFO on safer side..

    • Saurabh, Difficult to compare with any other IPO. Like I indicated earlier, if we are getting good listing gains, we can exit. Otherwise, we can hold such scrips for 2-3 years to get good returns. 

  • DM

    What like your view on how it would compare to PVR at this price.

    • Hi DM, If you look at Prospectus, Page no. 142, it indicates comparison with other peers including PVR. PVR P/E Ratio (share price Vs its EPS) shows 34. UFO Videoz on other hand is asking for P/E ratio between 30 to 50 based on EPS of FY 2013-14, Last 3 years avg EPS and also for 9 months ended Dec-14. If we take 9 months ended Dec-14 EPS, P/E ratio is 47. Means comparing to PVR, this scrip UFO Videoz is priced on higher side. 

  • Akshay

    Hi Suresh,

    Thanks for another wonderful review. I had 1 query though. Does “listing gain” mean selling the shares on the day the stock is listed on exchange?

  • blognishant

    if its a high valuation, why are you keen on investing?

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