GROSSLY OVER PRICED – AVOID SUBSCRIPTION
Den networks limited is entering the capital market with public issue of 20,000,000 equity shares of Rs10 each in the price band of Rs 195-205. The company intends to raise around Rs 400 crores from the issue. The issue is slated to open on 28-10-09 and closes on 30-10-09. Deutsche Equities India and Antique Capital markets are the BRLMs.
The company is promoted by Sameer Manchanda and Lucid systems pvt. Limited.
The funds raised will be utilized for company’s cable television and infrastructure services, for acquisition of content and broad casting rights and for general purposes including part repayment of existing loans. The project has not been appraised by any bank or financial institution.
The company’s revenue growth heavily dependent on conversion of analog cable subscribers to become digital cable subscribers, in the highly competitive Television distribution industry. Also the company has limited experience in Broad band cable internet services, the other segment which it is interested.
The company has no track record of profitability, dividend payment. It has reported losses for the years 2008 and 2009 and had negative cash flows. The company also is heavily indebted. The average cost of acquisition of shares by promoters - Lucid systms and Sameer Manchanda is Rs 0.40 and Rs 8.80 respectively.
Neither the company’s past track record nor future business prospects justifies the very high premium on shares.
GROSSLY OVER PRICED. AVOID SUBSCRIPTION
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