Career point is a good issue, for a change I agree to Mr Tulsian on this, It's a small issue, hence allotment would be tough, considering the interest it is generating in the IPO market, there is heavy activity in the grey market, with GMP currently hovering around Rs. 125/-
Among the issues recently announced Career Point seems to be the best, VA Tech Wabag has still not announced its dates, hence the rush would be towards this one. One would be lucky if he/she gets some allotment.
Me too surprised to see such a high grey market premium. As marketmover pointed out such a small issue would we get any allotment? Looks like sure shot listing gain candidate.
@ San Yad,
Tulsian is not wrong always. I have made some money from Globus spirits IPO and that time he was also positive about that. Initially it went down but later it rewarded.
1. The income tax part is obviously true as it is stated in the RHP.
Many people avoid taxes and so I am not surprised by it.
2. The regulatory risk does exist. As far as I know, "giving higher weightage to school results" is just a proposal and has not been implemented yet.
The company is diversifying and its new initiatives like ECAMS (Education Consultancy and Management Services) and TechEdge Class should reduce regulatory risks.
3. The company's growth rate in the past has been good.
However, the market looks into the future.
Considering the potential of the education sector and the company, there should good demand for the stock.
FY 2010 eps was around Rs 10 and FY 2011 eps may be around 11-12.
Both these figures include dilution effect of the IPO.
After the IPO, the company will have more than Rs 90 per share of cash. Considering that, the IPO price of Rs 310 looks expensive, but not outrageous.
If one looks at market value, Educomp is the biggest company in the education sector followed by Core Projects.
In my opinion, none of the companies in the education sector can be compared to Career Point.
Career Point is into tutoring services and none of the listed education companies can be considered its peer/competitor.
I have done engineering and I know on what funda their classes work.
They make tons of money you really can't think in medical and engineering field with crash courses of single day 9-12 hours (just a day before exam) charging 3-3.5k per student with a class having 200 people in 100 seating capacity. Even after paying 2k per hour to prof. you people decide how much money is made.
You can really bet on this sector.
As mentioned Career Point is bit different in its working lot professional but the minting business is same.
How serious are these concerns ? I am really puzzled now.
Prudent if you feel you would make listing gains and have applied on listing take out your positions on listing.
If not than even I am not sure whether i'll apply because if i do I won't go for Eros which looks a better company so still confused. Will see QIB response before deciding.These company IPO are all short time bet you can't keep it long like Reliance, L&T, HDFC etc.
And all stuff mentioned is true and fundamentally will affect its working but I don't feel its worth taking the risk for long term at most 2 years bet and also hope it do well till than.
So far QIP response is 0.9 times and overall around 0.5 times.
These company IPO are all short time bet you can't keep it long like Reliance, L&T, HDFC etc.
And all stuff mentioned is true and fundamentally will affect its working but I don't feel its worth taking the risk for long term at most 2 years bet and also hope it do well till than.
So far QIP response is 0.9 times and overall around 0.5 times.
Precisely my point, I feel this is fine for listing gains but not fit for long term. Only Coal India is what I will freely hold for 5+ years.
More negatives :- ( Only for long term point of view)
Quote:
Weaknesses
* Operates in highly fragmented and competitive market.
* The business is seasonal as most of the enrollments happens in the first and second quarters of any financial year.
* Operating profit margin has continuously slided in the last four years, from 59.7% in FY 2007 to 38.6% in FY 2010.
* One of the group companies and entities, Wellwin Technosoft Pvt. Ltd, has similar business activities and there could be a conflict of interest.
* There are 74 legal and other proceedings pending against the company and 22 legal and other proceedings involving promoters for claims, to the extent quantifiable, amounting to Rs 4.03 crore and Rs 0.7 crore, respectively, If decided against the company or promoters, these could have an adverse effect on reputation, business prospects and results of operations.
* Undisclosed income of about Rs 6 crore has been detected by the income tax department during search and seizure of office premises as well as residence of directors and their relatives in December 2009. It is not clear how much of this belongs to individuals and how much to the company.
* The recent removal of Kota from the list of IIT-JEE exam centers may have a negative impact on the inflow of students from outside Kota for preparation of IIT-JEE.
Valuation
At the lower price band of Rs 295 per equity share of Rs 10 face value, the P/E works out to 30.4 times the EPS of Rs 9.7 for FY 2010. At the upper band of Rs 310, P/E works out to 31.6 times the EPS of Rs 9.8 for FY 2010. Listed companies in the education sector, Everonn Education, Educomp Solution and NIIT, have PE of 21.1, 19 and 16 times EPS of FY 2010. However, Career Point Infosystems is the first company from the tutorial education field, tapping the capital market.
Last edited by Prudent_Investor : 18th September 2010 at 11:20 PM.
At the lower price band of Rs 295 per equity share of Rs 10 face value, the P/E works out to 30.4 times the EPS of Rs 9.7 for FY 2010. At the upper band of Rs 310, P/E works out to 31.6 times the EPS of Rs 9.8 for FY 2010. Listed companies in the education sector, Everonn Education, Educomp Solution and NIIT, have PE of 21.1, 19 and 16 times EPS of FY 2010. However, Career Point Infosystems is the first company from the tutorial education field, tapping the capital market.
EPS for 2010 is 14.71 check RHP
The valuation of 310 is done with a expectation that net profit/earnings margin will be 35% for next 10 years for this company.
Thus if you invest the same amount per share at GOI coupon rate of 8% for 10 years you will achieve similar returns.
I will go for listing gains only.
Last edited by man4urheart : 19th September 2010 at 02:04 AM.
Already it is oversubscribed by 25.5times. Still one more day for retail investors. Will the allotment be on lottery basis even for full application?
Today's figures are more to do with QIBs, as today is the last day for them to apply, unlike EROS and Microsec, which have their QIB and Retail closing on the same day. You will see the same frenzy in them also tomorrow, Career point should subscribe more than 20 to 25 times in retail, it will definitely be a lottery for full application, I am expecting the same for EROS, maybe not to that extent.
To explain, if you apply for the full retail quota of 1 Lac and then sell your application to the grey market irrespective of allocation, the rate you get is the Kostak rate. A good IPO commands 2000+ rates, that's a guaranteed 2%. Since the chances of allotment are getting lower so the Kostak rates are going down too. Currently at 1700 for this one. Eros is at 2000, Va Tech Wabag at 2100.
The grey market premiums (this is for the lucky ones who will get some allotment).
Career Point >>134-136
Micro Sec >> 25-26
Eros >> 39-40
Career Point Infosystems IPO
Looks like sure shot listing gain candidate. 
).
Linear Mode
