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Blindly Avoid DEN Cable Networks Issue

October 29, 2009

Den Networks is a Delhi based company was formed in 2007. The company is a leading cable television company with a pan-India presence. Within a short time span Den has reached out to about a crore households across 77 cities, mainly by buying out small cable TV operators. The company has acquired majority stake in 65 MSO’s (multi system operators) to expand its network across 9 states.

We recommend to BLINDLY AVOID the issue. Without any hesitation, skip this IPO as it is steeply priced.

Den IPO is very aggressively priced. The company is loss making from the last two years. We use the market cap to sales ratio as it is a measure used for start up companies. The market capitalization of DEN at the higher price band works out to Rs. 2700 cr and the company clocked in sales of Rs. 719.35 cr last year taking the ratio to 3.75.

WWIL which is the only listed entity in the comparable line of business has a market capitalization of Rs. 400 cr and sales last year were Rs. 308.26 cr, thus the ratio stands at 1.3.

Punish the SEBI Officials / Lead managers who have cleared this IPO and its pricing.

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