Infibeam IPO gets thumbs down from analysts


Ahmedabad-based e-commerce player Infibeam’s INR450 crore IPO has received negative reviews and recommendations from analysts. Infibeam analyst recommendations are mostly on the grounds of excessive valuations, recent exit of two lead bankers, and apprehensions about the absence of external investments, even though Infibeam operates in an industry which is flush with venture capital and private equity funds. This corresponds with weak activity in the grey market in Infibeam IPO.

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India Infoline has recommended investors to Avoid the IPO stating expensive valuations. “At the upper band of issue, the stock is priced at 6.5x (annualized) H1 FY16 EV/sales. ROE and ROCE is at 3% and 10%, respectively, as of H1 FY16. We envisage better profitability on the back of the upcoming cloud data centre and improvement in technology infrastructure and overseas growth. However, Infibeam issue seems highly expensive at current valuations. Investors should give the IPO a miss,” said the brokerage house’s research team in a note while noting that Infibeam has not compromised on its valuations even though valuations of e-commerce companies were either marked down in the unlisted space or have corrected in the global listed space.

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Similarly, Hem Securities has advised inventors to stay away from the IPO. “Though company has integrated e-commerce business model with a large merchant and customer base & has association with established brands but financial performance of company is not able to instill confidence of investing at present level. Also looking after the valuations of company, issue looks expensive at current level. Hence we recommend investors to Avoid the issue,” noted analysts at Hem Securities.

Mumbai-based Choice Broking also has put an Avoid rating on Infibeam IPO as its valuations are expensive.  “After annualizing, sales from operating stands at around Rs,3,492.6 mn for FY16. At the lower price band of Rs360 per share, the company’s share is available at a P/S(x) of 5.6, while at higher price band of Rs432, it is available at P/S(x) of 6.7 of its FY16E, which is 39% premium to its global peers such as, eBay Inc and shopify Inc,” said the brokerage house in its report.

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