Nu Tek India has entered the capital markets with an offer of 44 Lac shares at a price band of Rs. 179-192. Investment Guru is of the view that Investors should avoid the IPO on account of following reasons:
- Nu tek is operating in a very competitive segment and has limitation of scale of operations.
- In view of above, it would not be possible for the company to sustain its growth rate of over 47%. The growing trend of Infrastructure sharing by telecom companies would also act as a restraint.
- The issue is priced at a PE of 15.6 which looks aggressive considering the current market scenario. Since the issue is small it may sail through, but it may not provide listing gains to the investors unless there is change of sentiment at the time of listing. The listing trend of recent IPO’s is sufficient to deter investors from applying blindly to the IPO’s. See my post on Initial profit-less option
- The business model is skewed towards limited customers.
- Large players have significant advantage in securing large scale orders and hence Nu tek faces serious challenge with regards to competitors like GTL who enjoy better presence and have better financial and technical competencies.
Issue opens : 29-Jul-2008
Issue Closes : 01-Aug-2008
Registrar : Aarthi consultants
Related Information
About the company
Company Fact Sheet
Company's Strength
Check IPO Allotment Status of NuTek
1 comments:
Their rare exceptions but most new issues make terrible investments. Do not fall for the hype behind these stocks.
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