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Sunday, March 1, 2015

Ortel Communications IPO Review


Issue Highlights

Issue Period
3/3/15-5/3/15
Price Band
Rs. 181-200
Issue Type
100% Book Building
Issue Size
1,41,82,598 shares
Face Value
Rs. 10
Minimum Bid Lot
75 Shares
Maximum retail Subscription
Rs. 1,95,000 (13 lots)
Listing
BSE,NSE
Industry
Cable & Broadband Service
Registrar
Karvy Computershare

Issue Details


(1)   Fresh Issue:60,00,000 equity shares
(2)   Offer for Sale by NSR-PE Mauritius LLC: 81,82,598 equity shares

Company Profile:

Ortel Communication is a regional cable television and high speed broadband provider predominantly in Odisha (constituting 89 % of its customer base) and a few other states like Chhattisgarh, Andhra Pradesh and West Bengal.

Financial Profile:

Parameter
Value
P/E
-48.6
P/B
17.6
NPM %
-9.5
ROCE %
-6
ROE %
-36.2
Current Ratio
.4
Z- Score
.62

Inference: The fundamentals of the company are miserable and the company is clearly a value destroyer. The Z-score of .62 indicates the high probability of its bankruptcy.
Total debt is almost 6.5 times Ortel’s networth and rising interest costs are detrimental to Ortel’s strive towards profitability. Besides, Ortel predominantly operates in Orissa only (and a few more states in lower capacities) and its business is quite vulnerable to rising completion and changing technologies.
There was no need to delve deeper into future prospects and financials of this company and this issue is a clear avoid for me.

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