Wednesday, December 28, 2016

Tree house education : Tree has fallen completely.

From an IPO price of Rs 153 in 2011, the stock is now trading at Rs 16. And there are no takers at that price too. 

While analysing the IPO in 2011, we concluded by saying the following:

At Rs 135-153, the stock is offered around 30 PE, on its estimated FY12 earnings, which is expensive.The company is into new kind of business which may evoke good response to the IPO. There are many grey areas particularly with regard to corporate governance. The company will have a post issue capital of Rs 34.85cr. Even to show an EPS of Rs 5 the company has to earn a PAT of Rs 17.50cr, in FY 12, which is a tall order. Like micro finance, education too politically sensitive segment. Any wrong doing will attract harsh measures from the government. 

The performance of any company on the eve of an IPO is to be taken with a pinch of salt. Since this is a concept stock there could be listing gains. 

The track records of the BRLMs are pathetic.

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