IPO Note: Infibeam Incorporation Limited - Avoid - IndiaInfoline

Issue Opens: 21-Mar-16, Issue Closes: 23-Mar-16, Price Band: Rs360-432

Infibeam is promoted by Mr. Ajit Mehta, Mr. Vishal Mehta, and Mr. Malav Mehta. The company provides domestic e-commerce products and solutions in India. Unlike other e-commerce startups, Infibeam has opted to raise Rs.450cr directly from the primary market. Notably, there were some instances in recent times, wherein valuations of e-commerce companies were either marked down in the unlisted space or have corrected in the global listed space. However, Infibeam has not compromised on its valuations. Furthermore, the exit of two investment bankers just before RHP calls for concerns.

It will be a challenge for Infibeam to compete with the existing e-commerce giants. Furthermore, to raise additional funds in the future, the company may go in for equity dilution or increase its debt. This can be a cause of concern for investors. In addition, future cash flow generated from the high-margin service business could be utilized by the e-commerce business.

Post listing Market Cap of ~Rs.2300cr appears expensive based on annualized FY16 sales of ~Rs.350cr, PAT of ~Rs.13cr.

Source : Equity Bulls

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