Saturday, March 6, 2010

DQ Entertainment (International) Limited.........IPO...

I have mentioned about DQ Entertainment (International) Limited in my past posting that if the IPO comes one need to go for it after looking at what price it is coming....One of my friend wrote me that they are coming out with IPO and that is happening very fast.
I just talked about it couple of months back and the wish is coming true.....The promoters are selling their stake of some 20% for 1.60 cr shares which are 10paidup , which to my mind is excellent in the sense that it is 10paidup and u all know I have a liking for stocks which comes with 10 FV.
Though valuation looks expensive on paper but looking at the future growth prospect I think it is a good IPO to go for.

DQ Entertainment (International) Limited, a Hyderabad based animation firm would be coming out with IPO on March 8, 2010. DQ Entertainment said on Thursday that it is planning to raise Rs. 1.28 Billion through an Initial Public Offering (IPO) of 16,048,011 equity shares of Rs. 10 each.

DQ Entertainment Limited IPO is set at a price band of Rs 75-80 per share which would comprise 20% of the post issue capital. The promoters holding would be reduced to 75 percent from the current 94.03 percent after the issue. The company plans to close Initial Public Offering by 10-Mar-2010.
It really needs to be seen how DQ entertainment is able to make profits in-spite of rampant piracy market.
It is a fully integrated broad based entertainment group and is a global leader in the creation, production, distribution, licensing and marketing of all forms of entertainment.

* With a workforce of around 3500 (including permanent and freelancers) and production sales and distribution centers at Hyderabad, Chennai, Mumbai, Kolkata, Manila, Ireland, Paris, Los Angeles and Japan DQ Entertainment is all set to expand further.

* The company generates more than 70% of its revenues from Europe and the remaining 30% from US.

* DQ Entertainment currently has an order book of 95 million USD.

* The previous financial year March 2009 saw a profit of Rs 161 Million from DQ entertainment from the revenue of 1.5 billion Rs.

* DQ Entertainment is currently involved with brands like Iron Man which is the first 3D animated TV series, third season of Mickey Mouse Clubhouse and is producing properties like Little Prince and Little Nicolas.

Future Plans of DQ Entertainment:

* The red herring prospects lists a Nasscom-Ernst & Young report which indicates that the current animation industry of around 68 Billion USD is all set to grow with a compounded annual growth of 10% for the next three years atleast. Going by this report the company’s prospects are looking good.

* DQ Entertainment intends to use the revenue generated from IPO in the following way: (Rs in Millions)

- Rs 549.58 Cr for IP content creation

- Rs 392.31 Cr for Development of Infrastructure and Addition facilities at SEZ Unit in Andhra Pradesh.

- Rs 129.22 Cr for investment in subsidiary DQ Entertainment (Ireland) Ltd.


  1. Posted by : prjayachandran
    From MMB
    The FPO of NMDC is the third by Government of India, after NTPC and REC.

    NTPC`s FPO was fixed at a discount of 4.8% to the closing price of NTPC at Rs211.25 on 1 February, when the issue floor price was announced. The issue received a lukewarm response from both institutional and retail investors.

    Perhaps taking a cue from the poor response to the issue, REC`s FPO price when decided at Rs.203 was at a discount of nearly 8% to its last closing price.

    Unlike these NTPC and REC that had 10.5% and 18.18% public free float respectively, NMDC has a measely float of just 1.63%. Even of this, 1.38% of the total equity is held by Institutions like insurance companies, banks and mutual funds which do not trade frequently in the markets and hold stocks for the longer term.

    I feel that theshare price has remained artificially much higher than intrinsic price all these days as the institutions that held the 1.38% stake did not trade much in them.

    The share is presently quoting at 47.9 times TTM EPS of Rs.8.64 and Price to Book Value ratio is 14.17. A good benchmark for comparison would be a premium Indian mining company like Sesa Goa which quotes at realistic PE of 18 and (slightly expensive) P/BV of 8.11.

    Even world class, extremely competitive mining companies like BHP Billiton (world`s largest mining company based in Australia) and Rio Tinto (world`s third largest mining company) are trading at PE ratio of 20 or less.

    If I were to be calculate a realistic price for NMDC, it may fall between Rs.175 to Rs.240 at acceptable and fair valuation ratios based on the present performance of the company.

    Although the market capitalisation of NMDC was about Rs. 1,64,337 crores due to the low 1.63% floating stock, free float market cap was only Rs.2679 crores which is lower than all the stocks included in the Sensex and Nifty. The low floating free stock has kept the stock out of being a component of Sensex and Nifty and also from futures/options.

    However, post FPO the increase in floating stock to 10.01% would see the free float market cap rise to about Rs.16,433 crores. I am sure that after that, India`s largest mining company can no more be kept out of Nifty and Sensex and from futures/options.

    I feel this can have some serious repurcussions on the market price of NMDC. This because the greater availability of stock will bring it out of the high protected price it enjoyed for all these years, expose it to market forces, fair pricing and get it down to realistic valuations. Larger trading volumes in the stock should slowly make the stock price dift down to lower levels over the years (unless performance improves dramatically from the present).

    If I were the Government of India, I would thank my stars that I am getting such a high prices for the FPO. For, the next FPO (if any) would be at even steeper discount at the present FPO.

    If I were an existing investor in the stock, I would sell ALL my stocks without batting an eyelid.

    I may be speaking against acceptable public perception, but I do not mind speaking my mind.

    I think even an FPO price of Rs.300 is a GREAT BARGAIN for the Government of India for NMDC.

    You may subscribe to NMDC FPO if it at a steep discount to present price of Rs.415. But remember to sell it on first day (I jokingly call it First Day,First Show)....

  2. Dear Mr Rajeev

    patel airtemp at Rs 87.90 down from
    the january 22 peak 132, ther is lot of incosistency in this stock eventhough fundamentally good company can i enter now or avoid

    Thanks in advance

  3. nirash,
    According to me there is nothing wrogn in Patel Airtemp....

  4. @nirash,

    Every Stock Has 80% Trader+Speculators+Punters, only 20% contains value+growth ppl who dont have control on dragging and pushing the price, but they gain huge by watching the price dance in the long term :)

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