Infibeam's IPO Is Expensive; Avoid Investing

Business

oi-Sunil

By Sunil Fernandes

Published: Monday, March 21, 2016, 8:59 [IST]

Infibeam Incorporation will hit the capital markets today to mop-up Rs 450 crore through an initial share plan, becoming the first e-commerce firm to tap the initial public offer (IPO) route, said the media report.

The company has fixed the price band at Rs 360-432 per equity share for the IPO. The initial share-sale programme will conclude on March 23.

According to the Draft Red Herring Prospectus, Gujarat-based Infibeam plans to come out with public issue of equity shares worth up to Rs 450 crore.

The issue is being managed by SBI Capital Markets and Elara Capital India. Most analysts believe the shares are horribly expensive. The face value of the share is Rs 10 and is priced 36 times its face value on the lower side and 43.20 times on the higher side. Even stocks like HUL do not command such high price to earnings multiple.

The company has made losses in 2014. Recently, there were reports that two investment bankers have walked out of the issue.

The shares will be listed on BSE as well as NSE. It's best that individuals avoid investing at such a high price and wait for the listing. It is extremely doubtful that you would get good gains on listing.

Most of the e-commerce companies are making losses and are surviving on continuous funding. One is not sure, if they will turn profitable anytime soon.

With inputs from Dion Global