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eClerx is another company coming up with its Initial Public Offering(IPO).It is basically a data analytics and customized process solution provider to the global enterprises.The portfolio of its business range from data analytics, operations management, data audits, metrics management and reporting services.It serves manufacturing,retail and financial service sector.
So it is hitting the capital markets with a IPO of equity shares of Rs10 each at a price to be decided through 100% book building process.The issue has started on Dec 4th and will end on Dec 7th.The price band will be in between Rs 270 – 315.The basic objective of the issue include funding acquisitions,infrastructure investment and setting up of additional facilities.
The company’s revenue grew from Rs 47.75 crore in FY 06 to Rs 86.23 crores.But on paper the P/E valuation of this company look a bit stretched.The company generates 85% of its revenues from its top 5 clients.The company also suffers from unpredicted profitability,and it has reported erratic fluctuations in its margins.Its operating margin fluctuated widely in between 19% to 53%.
The small size of the company may also become a bottle neck in managing hedging activities to protect its business from current fluctuations due to rupee appreciation.The issues looks rather risky at current valuations.We feel the investors could make some listing gains from this script.It has also got a below average rating.This issue is only for those players who are ready to take certain risk to make money from it.
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