MT Educare IPO richly priced: SMC

MUMBAI: SMC Investments and Advisors is of the view that initial public offering of MT Educare is suitable for investors with high risk appetite as the issue is richly priced.

“Considering the P/E valuation on the upper end of the price band of Rs 80, the stock is priced at pre issue P/E of 14.74x on its annualised FY11 EPS of Rs 5.43. Post issue, the stock is priced at a P/E of 19.92 on its annualised EPS of Rs 4.02.

On the lower end of the price band of Rs 74 the stock is priced at pre issue P/E of 13.63x on its annualised FY11 EPS of Rs 5.43. Post issue, the stock is priced at a P/E of Rs 18.43 on its EPS of Rs 4.02,” the report said.

Peers like Everonn Education, Educomp Solutions, NIIT and Career Point Infosytems are available at lower P/E as compared to the MT Educare, it adds.

“Education is a recession proof theme and can be expected to perform well in India with the demographic benefits. While MT Educare enjoys good brand strength in the coaching industry, it has to ensure continuous performance to enjoy brand venue. Further the issue is richly priced in comparison to peers and hence is suitable for a investors with high risk appetite,” the note said.

The company has entered the primary market to issue 1.23 crore shares of face value Rs 10 each in the price band of Rs 74-80 per share.

Object of the issue is to part finance cost of construction of a PUC campus in Karnataka, which includes the cost of acquisition of land; establishing new coaching centres at 20 locations and other corporate purposes.

The issue closes Thursday.