Tuesday 11 September 2007

DHANUS TECHNOLOGIES - IPO Analysis

MAX. ISSUE SIZE (Rs) : 113 crores
PRICE BAND (Rs) : 280 - 295
ISSUE OPENS/CLOSES : 10th to 12th September, 2007
LISTING : BSE, NSE


Dhanus Technologies is a Chennai based company engaged in providing telecommunication services besides unified messaging and enhanced logistics services. It also undertakes outsourcing contracts for telemarketing services from the US, UK and Australia.

Its primary operations are focused across the Telecards, Teleservices, ITES/BPO services and Telematics segments. The IPO proceeds have been earmarked for acquiring and setting up a corporate office, network operating centre and infrastructure for the BPO and Telematic services.

It must be noted at the outset itself that the track record of this company’s management does not inspire confidence with a spate of pending cases including criminal charges.Hitherto, the company has not received a NOC from the Department of Telecommunications for selling international calling cards in India.

Besides, in the absence of its own telecom infrastructure in countries where its global calling cards are operational, the company is entirely reliant on the infrastructure of the telecom operators in those countries.

The USP of this company is its FleeTrac service which though a potent business, is still nascent in India. It must also be noted here that the technology used for FleeTrac service is universally available and thus it will not be long before new players flood the markets alongside this company.

With the qualitatives failing to cheer, one shifts focus to the quantitatives. Here too, the picture is far from inspiring with dipping margins being the order of the day across most of the company’s business segments.

Given this none too impressive backdrop and the mere implied promise of a better tomorrow, chances are, discerning investors will not buy into this IPO with an immodest P/E demand of 24.

WRONG NUMBER