Infibeam IPO Subscribed Only 21% On Day 1

The much talked about Infibeam’s IPO has started on a slow run rate. Day 1 witnessed only 21% subscription for the IPO.

Out of 1,25,00,000 shares, Infibeam issue received bids for 26,44,792 shares. The portion set aside for qualified institutional buyers (QIBs) was subscribed 22 per cent and non-institutional investors received 21 per cent subscription. Retail investors category was subscribed 17 % (via).

Started in 2007 by former Amazon executive Vishal Mehta, the company runs several e-commerce services like, BuildaBazaar, Incept and Picsquare. The firm turned profitable with a net profit of Rs.6.6 crore in the first six months of 2015-16, however, it reported a net loss of Rs.9.8 crore for the year ended 31 March 2015.

Avoid Infibeam IPO ?

HEM securities and several other analysts have suggested retail investors to avoid the Infieam IPO, owing to the high valuation that the company is demanding.

The company is bringing the issue at price band of Rs 360-432 per share which will turn up into p/e multiple of 145-174 on post issue H1FY16 annualized eps of Rs 2.48/ share. Though company has integrated e-commerce business model with a large merchant and customer base & has association with established brands but financial performance of company is not able to instil confidence of investing at present level. Also looking after the valuations of company,issue looks expensive at current level. Hence we recommend investors to “Avoid” the issue. [source]

Last week, Kotak Mahindra Capital and ICICI Securities withdrew as bankers from the public issue. The company did not disclose the reason for the exit, however, industry insiders viewed the development as a ‘call of concern.’ In fact, the whole IPO decision of the company is seen as a risky bet, as not just Infibeam but the whole e-commerce space in India has a poor track record of profits.

It plans to utilize the IPO proceeds towards setting up of cloud data centre and shifting, setting up of 75 logistics centres, purchase of software and setting up of registered and the corporate office of the company.

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