DSIJ Mindshare

Trine Entertainment’s IPO To Hit Markets Soon

A Mumbai-based company Trine Entertainment (TEL) is set to tap the primary market with its IPO. The company has plans to raise an amount of Rs 5.75 crore through an issue of 38.32 lakh equity shares, for its software development plans. It will be a fixed price issue at Rs 15 per share, which is at a premium of Rs 5 of its face value. A total of 2 lakh equity shares will be reserved for market makers, while the net issue to public will be 36.32 lakh equity shares. The lead manager for the said offer is Aryaman Financial Services. The company currently has 1.28 crore equity shares.

TEL, founded in the year 2006, is involved in the operations of developing video games. Its major focus area is console based platforms. The company is a registered developer and publisher for Sony Playstation 2, Playstation portable, Playstation 3, Nintendo Wii, Nintendo DS and iPhone. It also develops games on contract basis. In the process of business expansion, the company is developing online games to be run on smart phones, PCs and tablets.

On the financial front, TEL has posted revenues of Rs 4.18 crore in FY12, which is 24% below its income in FY11. The 9MFY13 revenue stood at Rs 3.32 crore. The company has reduced its operating expenses in this period by 32% to Rs 2.33 crore. This is mainly due to the decline in other expenses. The material purchase expenses and cost of employees has also showed a reduction of 58% and 24% respectively.

However, in spite of a decline in the operating expenses, the EBITDA in this period declined by 8.5% to Rs 1.85 crore. The net profit grew to Rs 26 lakh in FY12 from Rs 16 lakh in FY11, with a decline in depreciation cost and finance expenses in FY12.

The company intends to invest the net proceeds in financing the expenditure of mobile social game and acquiring new hardware and software. The total expense for the production of mobile social game is Rs 1.5 crore, which will most likely be published with its own brand. For acquiring new hardware and software and to establish a new office, an investment of Rs 50 lakh is intended by the company.

However, as there is no listed player in this space, we cannot compare it on the valuation front. The company has quoted Rs 15 per share for this issue. At the offered price, it is likely to trade at a PE of 21x of its FY12 EPS of Rs 0.71. JDL has not yet disclosed the opening date of the issue, but we will keep you updated as and when the company releases further details regarding the issue.

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