Sep 5, 2000|
Hughes Tele: The valuation game
Hughes Tele.com IPO is on the road. In fact, today is the last day for submission of bids for the book build portion. The floor price for the share is Rs 12 indicating that the company believes it shares to be valued for at least the above price.
At what price the market values the share will be known after the close of the book build portion when the company announces the issue price for the fixed price portion. But the question remains at what price will the market value the shares?
Rough estimates on valuation based on market comparables (comparative valuation) reveals the following numbers.
|| Hughes Tele.com
Recently, Singapore Telecom acquired an aggregate stake of 20% in Bharti Telecom and Bharti Televentures. It purchased the stake for $400 m or Rs 18.4 bn. This gives the Bharti combine a market value of Rs 92 bn.
|| Bharti *
|| Hughes Tele
| Mkt Value/Sub (Rs)
| No. of Subs
| Market Value
| No. of shares
| Mkt Value/Share (Rs)
* includes Bharti Telecom and Bhari Televentures |
** based on comparable valuations
*** post IPO
The exercise gives Hughes Tele.com a market value of Rs 4,442 m. The company post IPO will have an equity capital of Rs 15.53 bn with 1,553 m shares. This results in a market price of Rs 3 per share.
This is a comparative exercise and may not reflect all the variables for determining the correct value of the Hughes Tele.com IPO.
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