Birla Shloka Edutech

Birla Shloka Edutech has entered the capital market on 11^th January 10, with a issue size of Rs.34.78 crores, of which, promoters would be contributing Rs. 5 crores while Rs. 29.78 crores would be mopped up from the public. The price band of the issue is at Rs. 45 to Rs. 50 per share.

The present financial performance of the company is pathetic to say least. With 52 week high/low of share price of Rs. 90 and Rs.19 and share now ruling at Rs. 55, why anyone will think of going for this issue? Even financial performance has been horrible, with topline of Rs. 104 crores with PAT at Rs. 40 lakhs for FY 09 resulting in an EPS of 60 paise. This is mainly from trading in computer and hardware. Maybe,the company is trying to put some hopes by posting somewhat better results for 6 months ending 30-9-09, which may not really help. During these 6 months, topline is at Rs. 65 crores, with PAT at Rs. 75 lakhs, with book value of  close to Rs. 11 as on date.

The present market capitalization of the company is at Rs. 32 crores and almost an equivalent sum is being raised. This would bring down the promoters stake to 34% from present 57%.

The company is planning to foray into computer education, which is just a promise to attract the prospective investors. But this strategy is unlikely to work.

 A clear cut advise to remain away from the issue.