Dalal Street

We have carefully analyzed the Public Issue offering of IVR Prime Urban Developers and recommend value investors to AVOID the issue.

IVR has just completed one Residential project in Hyderabad. Cushman & Wakefield had valued projects using net present value of the projects in the range of Rs 4998.4 crore and Rs 5524.6 crore after deducting the developers margin, the net present value of the land reserves was between Rs 2889.8 crore and Rs 3194 crore. The per share value after deducting the developers margin works out to Rs 450-Rs 498 per share.

Consolidated FY 2007 EPS on post-issue equity works out to Rs 3.3. At the offer price band of Rs 510 – 600, the P/E range is 155-182.4, respectively. Comparable listed player according to size Ansal Properties and Infra is currently trading at 24.7 times its consolidated recurring FY 2007 earning. Nearest location-wise comparable company Sobha Developers is trading at 41.6 times its FY 2007 earning.

We recommend VALUE Investors to BLINDLY AVOID the IPO of IVR Prime. Fundamentals of the market will return and this Bull Market and Party won’t last forever. Don’t commit your hard earned money to worthless promoters and fly by night operators. Please don’t be tempted by Listing Gains or whatever stories your broker tells you. Stick to Fundamentals and Stick to Diversified Folio. You will make lot of money in the long run.

Zylog Systems is promoted by first generation entrepreneurs Sudarshan Venkatraman and Ramanujam Sesharathnam. It is a global services provider with major focus on application development and integration including web application, web services, application integration, business Intelligence, data warehousing and mobile and wireless applications; enterprise infrastructure management and quality assurance & testing.

Zylog is a very small company 1/15th the size of Infosys. The company has business concentrations in the same verticals as Infosys does.

Current Offer:
36,00,000 Equity shares within the price band of Rs 330 to Rs 350 aggregating mere Rs 126 crore.
Fully Diluted Equity Post IPO = 1.65 Crore Equity Shares of Rs 10 each.

Valuations:
At the price band of Rs 330 – Rs 350, FY 2007 EPS (on post-issue equity) of Rs 33.2 is discounted 9.9-10.5 times.

The stock looks reasonably valued and leaves good scope for appreciation. Since the issue is very small, Investors who are lucky and have chances of allotment can blindly subscribe to the IPO. Even the fate of Rs 100,000 application will be decided by lottery. The stock will be easily listed upwards of Rs 525 as the Grey Market Premium is upwards of Rs 150.
Good Luck!!!