Sunday, June 6, 2010
http://www.buzzingstocktips.com/2010...ipo-avoid.html

Issue Price: 82 - 85 Rs Per Equity Share
Fatpipe Networks India Limited incorporated in Dec 2002, owned by DR. RAGULA BHASKAR, is the inventor and multiple patents holder of technology that provides the highest levels of WAN optimization, reliability, security, and bandwidth management. For 9 months ended 31st December 2009, it earned revenue of Rs 45.9 crores and net profit of Rs 5.2 crores. Post-issue market cap is Rs 155 crores.
Positives:
Dr. Ragula Bhaskar, managing director and chief promoter is the inventor of router-clustering technology.
The company’s clientele comprises of law firms, luxury hotels, several Fortune 1000 companies, banks, educational institutions and government entities.
Fatpipe has over 1400 customers across five continents including AT&T.
Company holds 7 patents on a technology called "Router-Clustering".
FatPipe sells its products worldwide through a network of 2 authorized distributors and over 500 resellers.
FatPipe is proposing to expand its operations to China, Singapore, South Africa, Kenya, Nigeria, Argentina, Belgium, Germany, France, Eastern Europe and Australia.
The book value per Equity Share as on 31st December, 2009 was Rs 28.82.
The company has cash and bank balance of Rs 5 Cr.
Negatives:
The working capital requirements are based on the internal estimation of the management estimates and are not certified by the auditors.
The Company has not paid dividend in the past.
The existing tax benefits will be withdrawn by Indian Income Tax Act, 1956 by March 31, 2010.
The company has debt of 0.88 Cr Rs.
P/E of 22 under current market conditions looks overpriced.
Conclusion:
Networking sector is a promising sector. The company has all the positive signs to grow big. But, the company is a small cap and is in its early stages. Current market conditions are not conducive for IPO's. It is best to AVOID this IPO, let it trade in secondary market for a while and decide to buy or stay away after a while.