Nitesh Estates Limited IPO

by Manshu on April 25, 2010

in IPO/NFO

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 reason  to do so. If you do invest then all the best to you!

{ 6 comments… read them below or add one }

Tax Lawyer April 25, 2010 at 7:58 pm

It’s actually good to see IPO deals getting done. In this weak economy we’ll take all we can get. We’ll just have to see how good the pricing on this deal is.

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maria April 27, 2010 at 11:11 pm

these kinds of articles are really knowledgable and helpful to students doing their projects or take finance as their specialization. Nitesh estate created so much hype about tis IPO, tis can be one of the reasons for they been carried away and not paying more attention to wer improvement was needed. but its sucess depends on the investors who like to take risks or can we end up saying human behavior is unpredictable.

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Accounting Leads May 23, 2010 at 6:41 pm

Seems like the economy is starting to turn around and hopefully we will see more deals like this. I guess maybe I am being optimistic, but I hope that we see more deals. Time will tell…

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Real Estate Bird Dog June 27, 2010 at 8:19 am

Yes I think things are starting to improve on the deal front. It may take awhile for the real estate market, but the stock market and IPOs usually start to turn around before the economy does.

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Debt Cancellation July 24, 2010 at 1:56 pm

This market is definetely in better shape these days. Not sure though if we are completely out of the woods. Just make sure that you diversify.

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Dallas TX CPA November 14, 2010 at 10:27 am

Great to see the IPO market getting jumpstarted.

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