Oyeeee Media IPO – Should you invest?

Oyeeee Media IPO – Should you invest?

Mumbai based, Oyeeee Media IPO will open for subscription on 13th August, 2015. Oyeeee Media currently engaged in the business of media and entertainment operations. Its revenues grown by 260 times in last 5 years. It earned over 27% profits in FY2014-15. Every thing looks good right. Please go through the complete review to change your view. What are hidden factors of Oyeeee Media Ltd IPO? Should you invest in this Oyeeee Media IPO or not?

About Oyeeee Media Limited

Oyeeee Media currently engaged in the business of media and entertainment operations. The company offers the most comprehensive range of solutions for the corporate as well as private event management and media production needs. Company plans and stage events at national and international levels to suit specific needs. Oyeeee Media is a one-stop-shop for all event management and media production requirements.

Issue details of Oyeeee Media IPO

  • IPO opens: 13-August-2015
  • IPO closes: 19-August-2015
  • Face Value: Rs 10 per share
  • Issue price: Rs 40 per share
  • Minimum Shares: 3000 shares and in multiples of 3000 shares there-off
  • Minimum amount: Rs 120,000
  • Issue size: Rs 15.90 Crores
  • Lead Managers: First Overseas Capital Ltd
  • Listing: BSE SME
  • Download Oyeeee Media Limited IPO Prospectus from SEBI Website at this link

Purpose of the IPO

  • To finance the production of television serials
  • To finance the estimated expenditure of production of film
  • Development & Acquisition of contents
  • Brand Building
  • General corporate purposes

Company Financials

  • Company generated revenue of Rs 39,000 for the year ended Mar-11 and Rs 101.4 Lakhs for the year ended Mar-15.  
  • Company posted a Profit of Rs 8,000 for the year ended Mar-11 and a Profit of Rs 27.72 Lakhs for the year ended Mar-2015.
  • Its EPS for FY 2015 is Rs 0.57 and last 3 years average EPS of Rs 0.31

Reasons to invest Oyeeee Media IPO

  • Nil

Reasons not to invest in an Oyeeee Media IPO

  • It incurred losses in 2 financial years out of last 5 financial years. 
  • Company is dependent on management team for success whose loss could seriously impair the ability to continue to manage and expand business efficiently.
  • They have reported negative cash flows.
  • If company is unable to effectively implement its business and growth strategies, its results of operations may be adversely affected. Company success will depend, in large part, on its ability to effectively implement its business and growth strategies.
  • The valuations of companies in the media/entertainment industry are perceived to be high, which may not be sustained in the future and may also not be reflective of future valuations in the industry and there is no standard valuation methodology.
  • The entertainment industry is subject to shifts in tastes and preferences of audiences.
  • Company does not have any long term supply contracts with its customers, which may adversely affect our results of operations.
  • They are dependent on third-party media houses and production houses to source the contents, which we trade and distribute. Denial of supply of contents to company at acceptable terms will adversely affect its activities and subsequently its reputation and results of operations
  • Piracy may adversely impact its revenues and business.
  • Minimum investment of Rs 120,000 is high for small investor.
  • Other risk factors (Internal and external) can be viewed in prospectus Page no. 9 onwards.

Recommendation / Investment strategy

  • At an issue price of Rs 40 and EPS for FY 2014-15 of Rs 0.57, P/E Ratio works out to be 70. At an issue price of Rs 40 and last 3 years EPS of Rs 0.31, P/E Ratio works out to be 129. Means, the company is asking issue price where P/E ratio is between 70 and 129.
  • There is no listed company in similar business, hence we cannot say whether issue price is overpriced or underpriced.
  • Oyeeee Media Limited revenues have been thin till FY2014.  In last financial year of FY2015, it earned revenue of over Rs 1 Crore. It has been earning small profits in last few years and even it incurred losses in FY2012 and FY2013. Though its profits are 27% in FY2015, such margins need to sustain for couple of more years. On top of it, it is asking issue price of Rs 40 per share which is very high. Investors should be little cautious and 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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Oyeeee Media IPO – Should you invest

Suresh KP

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