Ace Tours Worldwide IPO-Avoid
Gujarat based Ace Tours Worldwide has come up for IPO subscription for 50 Lakh shares of Rs 10 each at a premium of Rs 6 (issue price of Rs 16) totalling to Rs 8 Crores. Though there is nothing much exciting about SME IPO’s, still IPO’s are providing listing gains. In this article, I would elaborate about Ace Tours Worldwide IPO, about the company and whether we can invest in Ace Tours IPO or not?
About Ace Tours Worldwide
ACE Tours Worldwide is primary in the business of providing travel and leisure services to clients. Major competitors are Cox and Kings, International travel house, Trade Wings Ltd etc. Ace Tours IPO would be listed in BSE SME platform.
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Issue details:
- IPO opens: 9-Sep-2013
- IPO closes: 12-Sep-2013
- Face value: Rs 10
- Issue price: Rs 16
- Minimum bid: 8,000 shares and in multiples of 8,000 shares thereon
- Minimum investment: Rs 128,000
- Lead managers: Corporate Strategic Alliance Ltd
- Registrar: Satellite Corporate Services (P) Ltd
- Listing: BSE SME
- Prospectus: http://www.moneycontrol.com/news_html_files/pdffiles/aug2013/Ace_Tours.pdf
Purpose of the IPO: The funds would be used for the following purposes.
- Brand building expenses
- Working capital requirements
- Meeting public issue expenses
Company Financials
Company revenues have grown from Rs 1,840.71 Lakhs for year ended Mar-2008 to Rs 1,624.83 Lakhs for 11 months ended Feb-2013.
Coming to profits, company has posted minus 0.13% margin for year ended Mar-2008 and 1.37% for 11 months ended Feb-2013.
EPS details of Ace Tours Worldwide along with comparision with its competitors
Reasons to invest Ace Tours Worldwide IPO
Nil
Reasons not to invest in Ace Tours Worldwide IPO
- No much revenue growth in last 5 years. In fact, revenues has been decreasing in last couple of years.
- Company runs on thin margins. Such low margins can be wiped out with any small change in business competition.
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Recommendation / Investment strategy: Average EPS for the last 3 years is Rs 0.52. The EPS for 11 months ended Feb-2013 is Rs 0.02. Company runs on thin margins. The minimum investment required is Rs 1.28 lakhs. The SME IPO’s listed are trading with very low volume and the liquidity has been a problem. Considering all these negative points, my suggestion to investors is to stay away from this IPO.
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Suresh
Ace Tours Worldwide IPO
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