Recommendations Nitesh Estates

[komal]

SMC has just a 2 star rating with EXPENSIVE Valuation for the IPO of Nitesh Estates,

A significant amount of funding and execution risk is involved in the real estate business. The company has limited track record in the highly competitive mid-income housing segment and enjoys low-margin. The percentage of equity dilution is fairly on higher side because of issuance of 7.23 crore new share on the base of 7.08 crore of existing Shares which is leading to significant downward impact on Price to book value from 4.70x to 1.64x. Therefore the valuation looks expensive if we compare the price to book ratio with the listed peers in the same domain that are placed in a better position.

[sunil]

Sharekhan's Views on Nitesh Estate Public Offering - Expensive

The stock trades at a price/book value (P/BV) of 1.7x postissue. It has a limited track record and is heavily dependent upon few key managerial. Its venturing into new geographies  and new segments pose a significant execution risk. Further, the percentage of equity dilution is fairly on a higher side, as the company is issuing 7.23-7.5 crore new equity shares against its base of 7.08 crore existing shares, which will lead to the promoters’ stake dilution to around 41% from 84%. Besides, our net asset value (NAV) works out to Rs50 per share, which is at discount to its price band. Therefore, the valuation looks expensive even if we compare its P/BV ratio with the listed peers in the same domain that are placed in a better position.

[sunil]

HSBC has asked Investors to AVOID IPO of Nitesh Estates,

The company’s ongoing and forthcoming projects are into new segment which are highly competitive and in new geographical areas where the company has little or no experience. The success of this will depend on consumer acceptability and the then market conditions. Given the volatility in the earnings for NEL, lower return ratios and relatively better players available in the segment, we feel that the IPO price is steep and believe that investors would get an opportunity post listing. We, therefore, recommend an Avoid on the issue.

[chetan]

Dalal and Brocha has asked investors to AVOID the IPO of Nitesh Estates,

The company has experienced negative cash flows during the past 3 financial years as well as the 9 month period ended December 2009. Also for the 9 month ended December 2009 the company had negative operating margins. The company did not make any income from property development during the 9 month period ended December 09 as well as the financial year ended March 09 and 08. The income during this period is the income from contractual activity from Nitesh Garden Enclave Project.

We recommend our investors to AVOID the issue.