The company spends nearly 45-50 million Rupees per annum on finance costs.IPO funds are stated to be used for prepaying debt among other things and should boost the margins. The company has also entered in MOU for sale of capital intensive and low margin business of Indus schools for a consideration of Rs. 83 crores. Company will have liquid funds for acquisitions in to related high margin businesses as well as expanding the business of other existing verticals. Taking this in to account Company should be able serve the enlarged capital. As said earlier it is in to a business where exciting things are happening in a country dominated by a young population and education is big business. They have established brand names in their kitty. Unfortunately fact remains that historical financial performence just does not support the IPO pricing. IMO may be a good post issue buy at opportune time.
Insider Message (Not sure on authenticity part) Sharing it to larger group in case some one knows if this claims are false or not.
"This is what my class mate from Indus World School of Business ( B School closed by CL) has said Varun Shukla: The IPO proceedings and paper-work was ensured on gun-point (metaphorically of course) by the two initial investors (Gaja Capital & HDFC Bank) who had lent CL generous amounts of equity and investment – primarily in the form of loans – in the hope of a profitable RoI. The deadline of that RoI kept moving continuously into the future. Then there were loans taken to pay off previous loans! The situation continued to be grim for quite some time after which Gaja put their foot down and asked for an exit; IPO was the only way. The first attempt at IPO filing was made in the year 2011. All attempts in subsequent years were rejected because CL balance sheets were too messed up (read ‘fudged’). It took them 5 years to streamline the balance sheets. Varun Shukla: Proceeds of the issue will be used for: • acquisitions and other strategic initiatives (3%) • repayment of loans (80%) • to fund working capital requirements (10%) • for other general corporate purposes (7%) Varun Shukla: First hand insider information, buddy boy. I used to report to Satya; I have _seen_ the balance sheets that I’m talking about. Varun Shukla: In some cases, I even know _how_ the fudging was done."
They have rejections for IPO application from past more than one time and bigger investors are looking to exit from this.This IPO is fresh plus OFS. Be cautious as numbers are vauge and investors are off loading
> Why anchor investors are coming in? any thought or any idea? I think this is the real question which some one should try to answer. If you see, allmost all the anchor investors are quite big and good names and i don''t think they would put money just like that if they don''t expect any returns. Just a thought.
Mayb even anchor investors r bought I feel....In this world anything can happen.....What do u feel septaji, will d market correct? Valuations look really stretched. No improvement in results.