Next IPO

TAKE Solutions Limited

TAKE Solutions (TSL) the Chennai-based company came out with an initial public offer (IPO) to mop-up upto Rs 1,533 million to fund the company`s expansion plans. TSL planned to float 2.1 million shares at a price band in the range of Rs 675- 730. The issue is open for subscription till August 7.

The issue will constitute 17.50% of the fully diluted post issue paid up equity capital of the company. The book running lead manager to the issue is Edelweiss Capital.
Shares of the company will list on both BSE and NSE.

Company Profile

Incorporated in 2000, TAKE Solutions is an international business technology company with domain expertise to provide supply chain management and life science solutions. TSL product portfolio includes 16 active products in the supply chain management and 6 products in the life science. TSL has completed more than 2,500 software installations for over 250 customers ranging in size from multinational enterprises to medium- and smaller-sized companies. TSL operates its global operations with help of 8 subsidiaries around the world.

Objective of the Issue

TSL plans to utilise the issue proceeds for acquisition of companies engaged in same business in India and/or abroad to enhance the geographic reach. In addition, TSL will invest funds into product development & expansion of domestic infrastructure facilities, refund debt facilities utilized for acquisitions of US based ClearOrbit and prepayment of term loan.

Financials

TSL presented outstanding financial performance during fiscal 2007. TSL on consolidated basis, registered a robust earnings growth of 3.28 times in fiscal 2007 to Rs 316.37 million over fiscal 2006, supported by strong revenue growth. During the fiscal 2007, TSL reported a revenue growth of 3.79 times to Rs 1,828.29 million over fiscal 2006. On the contrary, the operating margin of TSL slipped to 25.26% in fiscal 2007, a decline of 737 basis points over fiscal 2006.

Valuation

TSL offered the shares at P/E multiple of 19.26x to 20.84x at floor and cap price respectively, as against its peers Sasken Communication Technologies and Subex Azure, which are trading at P/E multiple of about 39x and 101.7x respectively. On the other hand, shares of TSL are available in the range of 7.63 to 8.25 times of net asset value at floor and cap price respectively. Among the other factors, TSL`s niche position in supply chain management and life sciences segment combined with large product bank with low ownership costs are expected to strengthen the position of TSL in future.
Considering the above factors, the issue of TSL seems to be underpriced with a potential to provide short term gains, subject to favourable market conditions.

My Expectation

In usual scenario this IPO must be hitting 1000 on the listing day. And it may go upto 1150 in a month.

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