Markets
BSE See NSE See 39,168.55
-283.52 (-0.72%)
collapse Related Readings collapse

Value In Service - One97 Communications

| 12/6/2010 2:51 PM Monday

With the broader market coming off 7 per cent of its Diwali peak and the volatility making life further difficult, it’s not only the secondary market but also the primary market that is feeling the shivers. A prime example of the same is the IPO of One97 Communications, a telecom value added services provider. The company’s issue was slated to open on December 1, 2010 but it has now been postponed by 12 days and will now open on December 13 and close on December 16, 2010. The firm, that expects to garner around Rs 120 crore from the market, was yet to finalise on the price band at the time of going to press. Out of the Rs 120 crore, Rs 83.49 crore would be towards procuring telecom equipments and software while Rs 10.54 crore would be towards procuring fixed assets. The balance funds would be towards general corporate purposes.

One97 Communications (One97) is a provider of value added services (VAS) in the telecom space to telecom service providers, mobile users and enterprises. As regards telecom service providers, One97 aims at increasing their average revenue per user by enhancing subscriber experiences by delivering services such as toll free infolines, missed call back services, obtaining information such as sports, results, stock quotes, prepaid balance inquiry and call management systems, etc. For mobile phone users, One97’s services include a range of mobile content, applications and commerce services that include music browsing, ring tone downloads, caller ring back tone downloads, content alerts, contests, chat, messaging applications, etc. It uses the telecom network as media and assists enterprises for customer communication, enterprise messaging, brand communication and advertising.

All these applications and services can be deployed on any telecom network and accessed from most mobile handsets using services such as SMS, WAP, etc. Though this would be the second such business to be listed on the bourses, one should know that VAS is a very fragmented space with the presence of many small, unorganised players trying to grab a share of the market pie. Thus with the presence of unorganised players, pricing of the content will always be an issue. Since telecom companies have no exclusive contracts with VAS players, price wars are imminent. Secondly, we also believe that entry barriers in this business are very low as the technology and the business models are easily replicable or can be acquired with ease. That apart, handset makers such as Apple and Nokia are already providing various applications through their stores while others such as Samsung, LG and Sony Ericsson intend to commence such offerings soon. Even enterprises can launch their own messaging and application solutions. This puts companies such as One97 at disadvantage. 

On the valuation front, considering the similar but bigger peer On Mobile Global’s valuations (market cap of Rs 1655 crore and FY10 sales of Rs 454 crore), One97 (FY10 sales at Rs 119 crore) should command a market capitalisation of at least Rs 435-450 crore. At these estimates, One97 could end up issuing approximately 98 lakh shares while the price band could be around Rs 110-122 at which the scrip is available at PE of 24-27x. The company is yet to come out with the price band and hence we would be revisiting our analysis, give our take on the valuations and update the same on our website at www.dsij.in.

 

Find More Articles on: DSIJ Magazine, New Issue Analysis, IPO, IPO Analysis, Product, Large Cap

news letter

More for the early bird.

Get the post-market reports and breakfast news right in your inbox. See latest »

DSIJ Mindshare

Index trend and stocks in action June 17, 2019

Karan DSIJ / Article rating: 5.0

In case Nifty falls below the level of 11,770, it may test the 11,600 mark in the near term. To move upside, the bulls need to move above the 20-DMA once again and sustain for at least two to three days. Only then, the bulls will gain confidence. Stocks in news: BHEL, Elecon Engineering Company, PG Electroplast, FDC, Divi’s Laboratories, Symphony, Coromandel International, Voltas.

12345678910Last

Tiger Logistics topline to grow by 10%--buoyant over infra sector status to logistics sector

Tiger Logistics topline to grow by 10%--buoyant over infra sector status to logistics sector

Logistics sector will play a vital role in making the concept of ‘Make in India’ a success. This will be further aided by some of the recent steps taken by Government of India such as granting of infra sector status to logistics sector.

Best and worst Performing Sector Funds of Year 2017

Best and worst Performing Sector Funds of Year 2017

As the year-end has approached most of you are eager to know the mutual fund movers and shakers of the year 2017. Read on to find the performance of various sector dedicated funds.

Markets may start positive, but volatility likely due to F&O expiry

Markets may start positive, but volatility likely due to F&O expiry

The start of the F&O expiry day is likely to be in the green, but volatility may creep in with the progress of the session. The SGX Nifty suggests that the Nifty could open at 10,525 with gains of 32 points at the opening bell. 

Pidilite announces buyback of Rs 500 crore

Pidilite announces buyback of Rs 500 crore

The buyback offer comprises purchase of up to 50,00,000 equity shares. The buyback offer size comprises 0.975 per cent of the total paid-up equity capital of the company.

Bank Nifty drags markets to close in the red

Bank Nifty drags markets to close in the red

The late session fall in Bank Nifty changed the direction of the market, leading to a marginal fall in the benchmark indices. Bank Nifty yet again resisted at its multiple point downward sloping trendline level at 25733.

Six major underperforming MF schemes having higher expense ratios

Six major underperforming MF schemes having higher expense ratios

Mutual funds with a large size of assets under management (AUMs) are supposed to have lower expense ratios. However, there are schemes with large AUMs but having higher expense ratios and generating lower returns. 

Nifty Pharma supports market; Sun Pharma at bullish reversal

Nifty Pharma supports market; Sun Pharma at bullish reversal

Nifty Pharma index has come in as the healer in an otherwise sluggish market. Index has given a consolidation breakout at the 9420 level today and if the it sustains 9420, followed by 9628 on the upside, it has a long way to go.

Ten stocks close to their 52-week low

Ten stocks close to their 52-week low

Following stocks are close to their 52-week low as at 12.35 p.m. on December 27.

Ten stocks close to their 52-week high

Ten stocks close to their 52-week high

The markets on December 27 opened gap down. BSE Sensex is trading at 34,068.15, up by 57.54 points and the Nifty is trading at 10,539.45, up by 7.95 points.

Five stocks with selling interest

Five stocks with selling interest

Overall volumes in futures & options currently stand at 62.75 lakh contracts with a turnover of Rs. 5,19,204.72 crore.