The latest news about Quick heal IPO and recommendations
One of the most renowned software providers in the world, Quick Heal is presently set to fix the price band at the rate of Rs 311 to Rs 321 for the 450 crore Initial Public Offer. This is going to hit the market on next Monday. The Quick Heal technologies are best known for their antivirus software programs and this is the first company to be listed within the Bourses. The overall revenue growth for the company has been more than 22% in the last 5 years and it can be said undoubtedly that there are no listed peers that has been able to make it as uniquely as Quick Heal within the IPO segment. In this article we are going to weave through the positive and negative factors and determine whether it is worth the investment or not. But before we directly delve deep into the “turn on” and “turn off” factors of this latest fixed price, let us have a quick glance about the company Quick Heal technologies.
A quick glance at business scenario of Quick heal technologies
Quick heal is the leading provider of security software and solutions within India and its end customers include small offices, home users, SMB’s, enterprises, governmental agencies and educational organizations. The proprietary antivirus program has been based on threat detection system and innovative behavior. It works on detecting security threats that include malware and virus attacks, enhancing the protection of IT assets through certain platforms including Mac, Windows, iOS, Android and Linux. It has been creating antivirus software from the year 1995 for Computers, tablets and mobiles.
Overview of Antivirus industry in India
Considering the industry of Indian Antivirus, it must be mentioned that, the overall market of Indian Antivirus is Rs 5000 crore and it has been estimated to grow at CAGR of 12% by the year 2017. At this rate, the amount of antivirus market shall reach up to Rs 6600 crore. It cannot be denied that there has been extreme increment in the usage of internet and with this increment; the attacks of Trojan, malware and virus have also increased to a great extent. Thus, there has been a huge demand in IT security. Observing the reports of Zinnov Industry, Quick Heal comprises of a market share of 30% and it is growing continuously. Presently, more than 20% of India population are using internet and this has opened a great passage for the development of Antivirus market in India.
The features of Quick Heal IPO
The opening date of this issue is on Monday 8th February 2016 and closing date is 10th February 2016. If you are planning to opt for this scheme, then it is essential to take up this scheme before the 10th of February.
The type of issue is 100% book binding and the face value per share has been considered as Rs 10.
The minimum bid lot is 15 equity shares within multiples of 15 equity shares and the minimum order value is Rs 13995 to Rs 14445.
The total issue size is Rs 445-460 crore and the proposed listing has been done within National Stock Exchange and Bombay Stock Exchange.
The purposes of IPO
There are 4 major purpose of this IPO that is being conducted by Quick Heal. They are as follows:
Sales and Advertising promotion
Generating the capital expenditure for development and research
Formatting development, renovation and purchase for the office premises within Pune, Kolkata, Chennai and New Delhi.
General corporate purposes
The basic objectives of Quick Heal IPO
Quick Heal technologies are planning to generate Rs 250 crore through issuing 80 Lakh equity shares within the IPO and also the remaining 63 Lakh shares that are worth Rs 200 crore, shall be offloaded with a cap price of Rs 321 by the promoters. But within the total amount of net proceed, which is Rs 450 crore, an amount of Rs 200 crore shall be allotted directly for the promoters who are offloading the shares and the rest amount shall be utilized in the above mentioned way according to the necessity of advertisements, sales, promotion and many other purposes.
The report for financial performance of Quick Heal Technologies
According to the reports, Quick Heal has generated the revenue from the sales figure of Rs 286 crore for the year 2015. And from the last 5 years, according to the estimation of CAGR, the company has attained a growth of 12.43%.
The margin for EBIDTA for Quick Heal has been exceptionally high. Considering the last year’s percentage of EBIDTA, it was around 31.82%. This is however half of the earlier years but it cannot be denied that this is a pretty handsome margin.
On the other hand the PAT for sales margin has been on the declining trend and it reached from 38% on the year 2011 to 19% in 2015. It is a fact that 19% is also a good percentage for a company but if the company desires to sustain in the market for a long period of time then it is essential to maintain a double PAT than this percentage.
The RoNW is also on the decrement rate starting from 27% within the year 2012 to 16.37% in 2015. But at the same time an overall 15% RoNW is also considered as good.
At last year, EPS of the company was around Rs 8.81 per share, while in the earlier years, it was a little high. The amount was Rs 9.56 for 2014 to Rs 12.59 for 2013.
Why it is a good idea to invest on Quick Heal IPO
There are certain factors which shows positive effects if the investment of Quick Heal IPO is made. They are as follows:
The company has been showing good signs of profits and the sales figure has been increasing. But at the same time, it is essential to note that the RoNW and the other profit figures are in a decreasing trend. Though there may not be any immediate impact considering the figures, but to sustain in the long run, the company definitely needs to worry about this.
With the investment in Quick Heal IPO, the digital India initiative, started by the government shall be boosted to a great extent. At the same time, the brand recognition of the company shall be highest within the peer groups and other companies in Antivirus sector. There are immense chances of becoming a major beneficiary for Digital India along with a beneficiary for 100 smart city plan campaign started by Indian government.
Within June 30 of last year, the company attained more than 15000 retail partners, 279 governmental partners, 577 mobile channel partners and also 230 enterprise level partners.
The company of Quick Heal Technologies was awarded with “Make in India Excellence 2015” for the contribution made towards economic growth within the country. And also the solutions prepared by the company have also been certified by AV-Test and the AV-comparatives.
The reasons why you should not invest in Quick Heal IPO
Apart from having the healthy CAGR of 12.43%, the EPS and RoNW has been falling within the last 4 years. The PAT and EBIDTA margin has also decreased in the last 4 years.
The second factor is this company might hold 30% market share within this antivirus industry, but that percentage is really minimal in the global market. The other competitors like Microsoft, AVG, Avast and McAfee are major players for global market. These companies shall offer immense competition since they are also opting to gain a hold in Indian market. Thus, in the future years, Quick Heal is going to face intense competition from these players.
The company has been attaining certain tax benefits on the manufacture of DVD’s and CD’s and any loss for these benefits shall have adverse impact on the financial performance of the company. Also, the company has been making heavy investments on brand promotion and advertising.
If the company is able to cope with the present scenario, since the market is more inclined towards the usage of smart phones and tablets, then there are chances that Quick Heal IPO investment shall be a success. Also, considering the IT penetration and internet usage within the coming years, it will be a good option to subscribe for “Quick Heal IPO for the medium and long term”, since the company is going to gain the benefits of first listed companies within Antivirus sector.
A comparative study
|SL NO||Why it will be good to invest in Quick Heal IPO||Why is it not good to invest in Quick Heal IPO|
|1.||The sales figures are good. Irrespective of RoNW and EPS decrement, there is not going to be any immediate effect on the company.||In the long run it might face difficulties if the RoNW and EPS decrement rates are not considered.|
|2.||This investment shall support the Digital India Initiative. Highest brand recognition and there are also chances of becoming a beneficiary for the initiative of 100 smart cities.||The PAT and EBIDT margins have been decreasing within the last 4 years.|
|3.||The company incorporates 15000 retail partners, 577 mobile channel partners, 230 enterprise partners and 279 governmental partners.||30% market share in the Indian Antivirus market, but that is not good enough in the global market. Thus, it shall be difficult to outrun the global competitors like Avast, AVG, McAfee and Microsoft.|
|4.||The company was awarded with “Make in India Excellence 2015” and it is also certified by AV-Test and AV-Comparatives.||Any loss from the tax benefits attained from manufacturing CD’s and DVD’s shall have immense adverse impact on the financial performance of the company.|