Dhanus Technologies

Dhanus Technologies

Gemini Communications, Dhanus Technologies, Take Solutions

Gemini Communications, Dhanus Technologies, Take Solutions

Dhanus Technologies Listing

Dhanus Technologies will list on Oct 17 2007

Reliance Power, Mudra Port Sez, Rathi Bar - more grey market premiums

Reliance Power 48 to 50 ( keeps on increasing)

Mudra Port & Sez - 240 to 250 (price not issued)

Dhanus Tech 295 90 to 95

Supreme Infra 108 80 to 85

Saamya Biotech 10 11 to 12

MAYTAS Infra 370 150 to 160

Circuit Systems 35 7 to 8

Rathi Bars 35 3 to 4

Dhanus Technologies Allotment Status

Dhanus Technologies IPO Allotment

Dhanus Technologies fixes IPO price

At Rs 295 a share

Telecom services provider Dhanus Technologies has fixed the issue price of its IPO at Rs 295 a share, the top end of the Rs 280-Rs 295 price band.

At the IPO price of Rs 295, the PE multiple works out to 23.9, based on FY 2007 consolidated EPS of Rs 12.40.

The company had entered the capital market on 10 September 2007 with a public issue of 38.35 lakh equity shares of Rs 10 each. The issue was subscribed 28.47 times when it closed on 12 September 2007.

The qualified institutional buyers category was subscribed 36.17 times. The non institutional investors category was subscribed 26.73 times. The retail investors category was subscribed 18.6 times.

The company proposes to utilise the proceeds to expand its infrastructural facilities and equipment base, construct a new corporate office and network operating centre.

Chennai-based Dhanus Technologies offers telecommunication and unified messaging and enhanced logistics services. The company's BPO unit has clients from the US, UK and Australia.

On a consolidated basis, Dhanus Technologies reported a net profit of Rs 22.17 crore on revenue of Rs 92.13 crore in the year ended 30 June 2007.

Dhanus Subscription Details - Update

QIB - 13.96 times

NII - 24.06 times

Retail - 14.77

Subscription figures after withdrawal option

Grey Market - Reliance Power, Consolidated Construction, Kouton, Supreme Infra

Reliance Power 60 to 80 34 to 35

Dhanush Tech. 295 90 to 95 (Good comeback, IPO is now about 18 times oversubscribed, Can't guarantee the listing price though)

Koutons Retail 415 75 to 80

Consolidated Construction 510 200 to 205

Supreme Infra 108 55 to 58

Saamya Biotech 10 5 to 6

MAYTAS Infra 320 to 370 135 to 140

Circuit Systems (India) Ltd 35 5 to 6

Dhanus Technologies Update

The initial public offer (IPO) of Dhanus Technologies has taken a knock following reports of CBI raids on the company. At the time of going to press, more than half of the qualified institutional buyers (QIBs) had withdrawn their money from the issue. They had over-subscribed the issue by 36.1730 times initially. The issue now stands oversubscribed by 16 times overall. Initially, the company’s IPO was oversubscribed 28.7 times.

“On the retail investors’ side, there has been a withdrawal by 2.43 times at last count. In terms of HNIs, there was a withdrawal of 1.85 times,” said Ashok Parekh, head of capital markets, SREI, a book running lead manager to the issue. Dhanus Technologies’ allotment for the retail investors category of the IPO was subscribed by 18.66 times.

S Muthukrishnan, director (marketing), Dhanus Technologies, however, said they were quite confident that the investors would stay invested.

The Chennai-based company was to raise Rs 110 crore from the market by offering 42 lakh equity shares of Rs 10 each at a price band of Rs 280 to Rs 295. The issue closed on September 12 and was fairly well subscribed.

Prithvi Haldea of Prime Database said the incident was not new. There have been cases in the past when companies, before the listing of the stock on the bourses, have given option to investors to withdraw. “However allegations such as this can lead to retail investors backing out. Now it is up to the investors to take a call if they have enough confidence in the issue,” he said.

Grey Market - Reliance Power IPO, Saamya, Kouton, Consolidated Constructions

Reliance Power GREY MARKET PREMIUM OF 32 to 34

Dhanus Tech. 280 to 295 60 to 70

Koutons Retail 370 to 415 75 to 80

Consolidated Construction 510 170 to 180

Supreme Infra 95 to 108 55 to 58

Saamya Biotech 10 5 to 6

MAYTAS Infra 320 to 370 130 to 135

Circuit Systems (India) Ltd. 35 5 to 6

Dhanus Technologies Allotment Status

This is to inform you that an article was published in a local Tamil magazine - "Junior Vikatan" in its edition dated 29.08.2007 in which it has raised certain allegations against the Company / its promoters and its employees. In this regard, the Company is publishing a public notice in the prominent newspapers on 27.09.2007, giving details of the allegations & the Company's clarifications on the same. The Company is also giving an option to the applicants to withdraw their applications, if they wish to do so, within a period of 10 days from the date of publication of the public notice, viz., 06.10.2007. A separate letter to all the applicants/investors has also been sent in this regard. The further course of action regarding basis of allotment / despatch of refund orders etc., will be organised subsequently.

Download Public Notice here

Letter to Investors

Dhanus Technologies IPO Allotment

There will be delay in allotment of Dhanus Technologies

Due to some problems with the SEBI regarding

Non Disclosures in Red Herring Prospectus

Allotment may be delayed to Oct 8 2007

Grey Market - Maytas, Kouton, Consolidated

Power Grid Corporation 44 to 52 22 to 23

Dhanus Tech. 280 to 295 70 to 75

Koutons Retail 370 to 415 75 to 80

Consolidated Construction 460 to 510 180 to 185

Supreme Infra 95 to 108 65 to 70

Saamya Biotech 10 6 to 7

MAYTAS Infra 320 to 370 150 to 155

Circuit Systems (India) Ltd. 35 3 to 4

Kaveri Seeds 150 to 170 12 to 14

Grey Market - Saamya, Consolidated, Koutons

Power Grid Corporation 44 to 52 21.50 to 22

Dhanus Tech 280 to 295 95 to 98

Koutons Retail 370 to 415 75 to 80

Consolidated Construction 460 to 510 205 to 208

Supreme Infrastructure 95 to 108 65 to 67

Saamya Biotech 10 3.50 to 4

Circuit Systems 35 3.5 to 4

Kaveri Seeds 150 to 170 15 to 17

Grey Market - Kouton, Consolidated, Circuit, Supreme

Power Grid Corporation 44 to 52 20 to 21

Dhanus Tech 280 to 295 95 to 100

Koutons Retail 370 to 415 70 to 75

Consolidated Construction 460 to 510 205 to 210

Supreme Infra 95 to 108 60 to 65

Saamya Biotech 10 3 to 4

Circuit Systems (India) Ltd. 35 3.5 to 4

Kaveri Seeds 150 to 170 5 to 7

Grey Market - Kouton, Consolidated, Circuit Systems

Power Grid Corporation 44 to 52 18 to 19

Dhanus Technologies 280 to 295 90 to 100

Koutons Retail 370 to 415 60 to 65

Circuit Systems (India) Ltd. 35 4 to 4.5

Consolidated Construction 460 to 510 100 to 110

Magnum Venture 30 2.5 to 3

Kaveri Seeds 150 to 170 6 to 8

Allied Computer 12 0

Grey Market - Power Grid, Consolidated, Dhanus, Kouton

Power Grid Corporation 44 to 52 18.5 to 19

Dhanus Tech 280 to 295 95 to 100

Koutons Retail 370 to 415 70 to 75

Consolidated Construction 460 to 510 120 to 125

Circuit Systems (India) Ltd. 35 4 to 5

Magnum Venture 30 2 to 3

Kaveri Seeds 150 to 170 8 to 10

Dhanus Technologies IPO Subscription

Qualified Institutional Buyers (QIBs) - 36.1730 times

Non Institutional Investors - 26.7306 times

Retail Individual Investors (RIIs) - 18.6680 times

Employee Reservation - 1.0314 times

OVERALL - 28.47 times

Dhanus Technologies

Dhanus Technologies

Dhanus Technologies (IPO): Avoid

Investors can stay away from the Initial public offer of Dhanus Technologies (Dhanus), given the high competition in its business segments and relatively high execution risks.

At the upper end of the price band (Rs 295), the offer values the company at about 17 times its trailing 12 month earnings, without factoring in the equity dilution due to the offer.

This appears stiff in comparison to stocks of smaller telecom and software services as well as large hardware companies.

At the higher end of the price band, the company will raise Rs 113 crore from the offer to finance fresh equipment for its fleet tracking business and augment infrastructure facilities in its IT and BPO divisions.

Business outlook

Calling cards division: The key revenue driver (55 per cent of revenues), this business involves reselling talk-time of international telecom operators under the company’s own brand name to Indians residing or travelling abroad. Internationally, the MVNO (mobile virtual network operator) business is dominated by companies that enjoy strong brand equity in another line of business. which they leverage in this business (egs: Virgin Mobile and Disney Mobile). Dhanus does not have comparable brand value that could be successfully leveraged.

The competition in this space is already stiff, with Bharti Airtel, Reliance Communications and VSNL aggressively promoting their international calling cards overseas, imposing margin pressures that the company may not be able to withstand in the long run.

Moreover, Dhanus’ service cannot be used with mobile telephones, giving it little uniqueness or competitive advantage. The major players in this business, which have substantial network management experience and tie-ups with international telecom operators, may be much better placed to tap this market.

There could also be legal hurdles for this leg of Dhanus’ business, as the offer document mentions that it does not possess a ‘no objection certificate’ (NOC) from the Department of Telecommunications for selling international cards in India.

Fleet Tracking: A substantial portion of the issue proceeds has been earmarked for expanding the company’s products which help track vehicle (fleet) movements. A report published last year by Frost and Sullivan has estimated the market size for fleet tracking to be $75 million by 2011; it was only $6.5 million as of 2005. This indicates that the market in India is small compared to the US where vehicle tracking is widely adopted by companies.

In the Indian context, the government is emerging as a key user of such services and is touting GPS systems for trains, local buses and even post-office vans. Players such as CMC, which have an existing relationship with government clientele, or HCL Infosystems, appear well-placed to cater to this market. Ramping up this service would involve tie-ups with VSAT (very small aperture terminal) players for provision of satellite bandwidth. The bandwidth is stiffly priced and given the expenditure it would entail, Dhanus may be forced to work with thin margins.

BPO and IT services: The company provides BPO services such as telemarketing and customer services to overseas clients. It also provides software services in the telecom segment.

Given the company’s limited experience in running a telecom network and providing software services, this division’s prospects are uncertain. Scaling up of the business may not happen at the requisite pace. Exposure to the North American market would expose the company to rupee appreciation risks. Other factors such as attrition and wage inflation also pose key execution risks.

Considering the above factors, it appears that the execution and competitive risks associated with the business are relatively high; risk-averse investors can avoid the offer.

Offer details: The offer is open from September 10-12.