Nitesh Estates is entering the capital market on
The company seems to be facing a lot of liquidity pressure despite being a small and regional player, having presence in Bengaluru. The company, as on
Apart form this, the company has no financial performance to speak about; infact it has no significant revenue from its core business of property development. In FY09, of its total income of Rs.88 crores, Rs.55 crores came from contracting work, while Rs.27 crores came from sale of development rights. And though the topline is in double digit, despite being a realty company, its PAT was paltry at just Rs.2.77 crores. Even during 9 months ending Dec.09, total income was just at Rs.67 crores, with net loss of Rs.1.33 crores.
Inspite of such a pathetic financial performance, the company has courage to issue bonus shares in the ratio of 9 shares for every 1 share held, due to which, paid up equity capital of the company, increased to Rs.69.78 crores. Strangely, this has placed net worth below its paid up equity at Rs.69.41 crores as at
The company claims to have 3.64 million sq.ft., of which, 1 million sq.ft. is out of Bengaluru. As stated earlier, even of this 2.65 million sq.ft. in Bengaluru, the clear title of the company is linked to so many obligations and performances.
Post IPO, paid up equity of the company will rise to Rs.145 crores. Even now, the company needs about Rs.725 crores, but has restricted its requirement to Rs.361 crores only, leaving uncovered liabilities of Rs.342 crores, in respect to Ritz Carlton Project. These factors may have forced the promoters of the company, even to agree for about 52% dilution to mobilise Rs.405 crores.
So by no way can the present saleable area can be valued out at about Rs.3,850 per sq.feet, which is being asked by the company, on its estimated EV of about Rs.1,400 crores. Infact, there is no track record of performance and even completion of all these projects may take over 5 years.
Much better plays are available in mid and large cap segment in reality sector, with strong presence in cities like Mumbai,
Hence, a clear advice is to avoid it.