With all the excitement about the Talwalkars IPO – I completely overlooked the fact that there was a second IPO at about the same time – Nitesh Estates Limited.
The Nitesh Estates IPO closes on the 27th April, so just a couple more days left, is priced between between Rs. 54 – Rs. 56, and is graded 2 on 5 by CRISIL.
Nitesh Estates is in the real estate business, and was incorporated in 2004. It has since then developed three premium residential projects in Bangalore. It is primarily engaged in real estate development in Bangalore, although it does have projects in Kochi, and is expanding to Chennai, Goa and Hyderabad. These three completed projects totaled 0.55 mm square feet of saleable area, whereas in the next five years it plans to develop 11.74 mm sq ft of residential projects (Nitesh will have a 62% stake in this), and 3.1 mn sq ft of commercial projects (Nitesh will have a 65% stake in that). So, in that sense you can see that the company plans to expand aggressively, and is a relatively new in this market as well.
Since the company got just 2 on 5, which indicates a below average fundamentals relative to other, I took a shortcut to go straight to the financials to see if the promoters were offering the issue cheaply to investors.
The prospectus states that the EPS for the last three years has been Rs. 0.42, Rs. 0.15, and Rs.0.59, and at Rs. o.42 for 2009 – the P/E comes out at about 128 at the lower band.
Given that the company is relatively new in its segment, and is entering a tough market – you would have expected it to offer a discount to IPO investors; not charge a premium.
I am sure a lot of people will find a lot of reasons to enter this IPO and try their luck, but for me – there is no compelling reasonÂ to do so. If you do invest then all the best to you!