Suyog Telematics IPO – Should you subscribe?

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Suyog Telematics IPO, SME IPO, Initial Public OfferingsSuyog Telematics IPO – Should you subscribe?

Suyog Telematics IPO would hit the market on 30th December, 2013. This IPO would get listed on the BSE SME Platform. This issue consists of 18.12 Lakhs shares for ₹ 4.53 Crores. In this article, I would provide analysis about Suyog Telematics IPO and whether it is good for investment or not.

About Suyog Telematics

Suyog Telematics' business is to build, own and operate telecommunication poles, towers (particularly roof-top towers), OFC systems and related assets and to provide these passive infrastructure assets on a shared basis to wireless and other communications service providers.

Issue details of Suyog Telematics IPO

  • IPO opens: 30-December-2013
  • IPO closes: 7-Jan-2014
  • Face value: ₹ 10
  • Issue price: ₹ 25
  • Minimum bid: 6,000 shares for retail investors and in multiples of 6,000 shares thereof
  • Minimum investment: ₹ 150,000
  • Lead managers: Aryaman Financial Services
  • Listing: BSE SME
  • Download Suyog Telematics Prospectus of IPO 

The purpose of the IPO: The funds would be used for the following purposes.

  • Installation of 10 new roof top poles
  • Installation of 100 new ground based poles
  • Upgradation & replacement of existing tower & poles

Company Financials

  • The company has posted revenue of ₹ 182 Lakhs for the year ended Mar-2009 and ₹ 892.23 Lakhs for the year ended Mar-2013.
  • The company has posted a profit of ₹ 13 Lakhs for the year ended Mar-2009 and ₹ 100 Lakhs for the year ended Mar-2013.

Reasons to invest in Suyog Telematics Ltd IPO

  • Good growth in the revenues in the last 5 years.
  • Good profit growth in last 5 years

Reasons not to invest in Suyog Telematics Ltd IPO

  • The IPO’s listed on the BSE SME platform are trading on low volume and  liquidity is an issue.
  • Minimum investment required is ₹ 1.50 lakhs.

Recommendation / Investment strategy:

Average EPS for the last 3 years is ₹ 1.90. At issue price of ₹ 25, this translates to a P/E ratio of 13x. There is no peer to compare with similar business and size.

Though the profits look good in last financial year, we should wait for consistent profit margins for atleast 1-2 years.

I am neutral on this Suyog Telematics IPO as of now.  

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Suresh
Suyog Telematics IPO

Suresh KP
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