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Friday, March 6, 2015

Adlabs Entertainment Ltd. IPO Review

Update: The closure date has been extended to March 17, 2015 and the price-band has been revised to  Rs. 180-215

Issue Highlights

Issue Period
10/3/15-12/3/15
Price Band
Rs. 221-230
Issue Type
100 % book building
Issue Size
Rs. 449.2-467.5 crore  (2,03,26,227 equity shares)
Maximum Retail Subscription
Rs. 1,98,380 (14 lots)
Face Value
Rs. 10
Minimum Bid Lot
65 equity shares
Industry
Amusment/Aqua Parks (Entertainment)
Listing
BSE,NSE
Registrar
Link Intime India Pvt. Ltd.
Retail Discount
Rs. 12


Issue details


Fresh Issue: 1,83,26,227 equity shares
Offer for Sale:  20,00,000 equity shares

Company profile

Adlabs Entertainment Ltd. owns and operates Imagica theme park and Aquamagica Water Park at Adlabs Mumbai. The company offers a ‘one stop’ entertainment destination with a diverse array of rides, international-level attractions, food and beverage outlets and merchandise shops at Adlabs Mumbai on Mumbai-Pune expressway. Adlabs is soon going to be launched a 287 key hotel.

Objects of the Issue

(1)   Partial repayment of consortium loan: Rs. 330 crore
(2)   General corporate purpose : NA

Financial Profile

P/E #
-17.2
P/B #
7.1
Total Debt/Equity
5.1
Interest Cover
.1
ROCE %
.3
EV/Sales
18.6
EV/EBITDA
299.4

# Values derived using Post issue Shares

Inference

High debts and difficulties in interest payments are the sole reasons for floating this issue but this issue is steeply priced despite company has not even break-evened. The only comparable peer to the company is Wonderla Holidays and despite being profitable during the time of its IPO, the same was offered below 6-times its book value.
Running amusement parks is a capital intensive business and the same requires regular and periodic investments to sustain growing visitors.
Having a glance its financials, valuation of this issue appears stretched and not at all justified for a company in its initial stage of operations.
To cut a long story short, Adlabs shall take at least a few years to turn profitably (provided everything sails well) and instead of investing in a company and keeping-on expecting it to perform well, it is always better to wait and watch and entry to be made when this company starts performing well (even at higher levels).So, presently I shall skip this issue.

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