CarTrade Tech entered the market with its IPO in August at Rs 1618 subscribed 20 times. It was Offer For Sale so all the money went to the Investor’s pocket who were smart enough to gauge the market mood leaving the company high and dry. So now 100 per cent stocks are with public. On August 16, listing day it opened at Rs 1600, made a high of rs 1618 and on January 28th the stock closed at Rs 653. After its listing the company declared two quarterly results – September quarter it had clocked sales of Rs78 crore, operating loss Rs 33 crore and net loss of Rs 38 crore; in December quarter it had clocked sales of Rs 89 crore, operating loss Rs 28 crore and net loss of Rs 23 crore. The question is at such performance why markets should give even this valuation. The sector has growth but coupled with huge competition. The IPO was recommended ‘APPLY’ by ALL the broking firms and analysts.
Happiest Minds Technologies’ IPO came at Rs 166, was listed on 17th September 2020 at Rs 350, and made a high of Rs 1580 on July 16, 2021. It’s a good company with credible management but all the revenue comes from digital business. Now look at its performance – Its profit in June 2020, Sep’ 20, Dec’ 20, March 2021, June 21, Sep’ 21 and Dec’ 21 was Rs 50 cr, 34 cr, 42 cr, 36 cr, 36 cr, 44 cr, and 49 cr respectively. During these 7 quarters sales increased but profit remained in Rs 50 crore ranges. Yet the stock is trading at Rs 1140, more than 10 times IPO price, at 102PE with Book Value of Rs 40; also once traded at 140PE when it made a high of Rs 1580. Even the best of IT stocks like Infosys is trading at 32-35PE, Wipro & Tech Mahindra at 25PE. But here where is no growth the stock is trading at such high PE. How long this high PE would be sustainable?
IndiaMART InterMESH’s IPO came at Rs 973 in June 2019 and company raised Rs 476 crore. In July the stock was trading at Rs 2020 and after 7 months in February 2021 it was trading at Rs 9950 almost tribled. It was right time when in February itself the company issued QIP at Rs 8615 raising Rs 1100 crore. A year after its high and the QIP now the stock is trading at Rs 4800. Now look at its performance – Its profit in June 2020, Sep’ 20, Dec’ 20, March 2021, June 21, Sep’ 21 and Dec’ 21 was Rs 74 cr, 70 cr, 80 cr, 56 cr, 88 cr, 82 cr, and 70 cr respectively. Can anyone identify growth? Still the stock was trading at 102PE when it was at its peak and even now trading at 50PE. Why even 50PE when there is no bottom line growth after two years?