Here are the Research Recommendations of the MT Educare IPO
Way2WEalth Securities has the following Views
At the offer price band of Rs 74 – 80, the issue is available at FY12E P/E of 21.1-22.8x. Career Point Infosystems Ltd, a listed entity with similar business, is valued at a historical P-E multiple of 12.7x. Though the brand name is well recognized, it is hard to quantify returns with certainty. The business model is unsustainable in the longer term with the industry bound to be regulated by the government. Also, at a price band of Rs 74 – 80, the valuation is stressed. Considering its constraint in scalability, investors can Avoid this issue.
Keynote Capital's Views are as follows,
At the offer price band of Rs74-80 per share, the issue is available at the PE multiple of 14.41x of H1FY12 annualised earnings. The company has EBIDTA margins of 20% and PAT margins of 7.7%. However, the business model is unsustainable in the long term with the industry bound to be regulated by government. Looking at the forward earning and growth aspect along with reasonable ROE seems to be little expensive at the IPO price. Therefore, we advise the investor to ‘avoid’ the issue
Nirmal Bang Analysts Kavita Vempalli and Amrita Burde recommend the following,
At the given price band of Rs.74-Rs. 80, on a post equity basis the issue is 16.7x & 18.1x respectively for FY12E EPS of Rs 4.42. We have factored in lower numbers for Q4FY12 for MT Educare which is seasonal for the company. On P/E basis valuations looks expensive as compared to Career Point which on an annualized FY12E earnings is trading at 12x. This is mainly on account of higher other income Career Point earns.
However on EV/EBIDTA, EV/Sales and Fixed Asset Turnover Ratio basis, MT Educare’s pricing seems reasonable. We recommend Subscribing
the issue with a long term view, though it may not have listing gains
HSBC Analyst Hitesh Punjabi said,
MT Educare has descent financial performance and good industry prospects. MT Educare is valued at a P/E of 13.8x-14.9x on its annualised FY12 EPS (on post-equity) of Rs 5.4 on a price band of Rs 74-Rs 80, respectively. On comon with the Career Point which trades at a P/E of 13.3X its FY12 earnings, MT Educare has a diversified portfolio as compared to Career Point. We recommend the high risk investors to Subscribe to the issue for listing gains.
PUG Sec Analyst Viral Shah has the following View,
At upper end of price band (INR80), the issue is valued at 16x FY12E EPS (annualized), which is higher than its listed peers (7-13x). Zero debt, strong FCF and cash & cash equivalents would enable it to fund future growth plans. However, compared to its peers the valuation looks expensive and hence recommend avoid.
