Muses of Murari

It looks like IPO craze is back, but this time, the pattern suggests that more informed people are jumping into it, coupled with smartly set IPO price bands.

Recent IPOs – JSW Energy and DB Corp – are interesting case studies. When I read JSW IPO analysis report, I was somewhat impressed given that clear roadmap towards various projects and the details of them for next 5 years or so. According to the report, there’s some risk involved in executing projects and long waiting periods before the promised revenues kicks-in. Healthy net margins and India power shortage story should have spiced up the IPO subscription rates. But it got poor response. For a long term investment, JSW is a good bet in my opinion.

Fast forward few days. I read DB Corp IPO analysis online. DB Corp is in newspaper business, mainly non-english print circulation in heartlands and has good advertising revenue model. When I heard newspaper IPO, I’d my doubts whether newspaper business could be a great bet in the future, given that increasingly more number of people, especially younger people, access news online. Next moment, it hit me that we are talking about India and it shall take ages before the internet shift actually happens here.

DB Corp IPO is smartly priced. Good advertising model (in my opinion not a long term growth story), bigger rural audience, cheaper than other existing newspaper scrips and circulations in regional languages. This did the trick – over-subscription of whopping 39.5%!! This is the highest rate of subscription since the infamous Reliance Power IPO. Now, the experts are sharing whys and hows of successful IPO story. As usual, only after the gamble pays off, strategies let out to the people.

I am no expert in business analysis, but as a learner I can sense that there is no great future for newspaper business in the current form, though you may have odd opportunities like DB Corp – many regional languages, lack of serious internet penetration, still a generation left who has die-hard habits of reading news offline! Who cares if the business is viable or not in long term? Who cares to wait till that long period? For majority of us, the stock price does not represent a particular business but a fluctuating meter available to make quick bucks.

Related posts:

• Embrace or extinguish
• DC’s cheap ads
• My short take on Media Industry
• Google PowerMeter, Mythology and more links
• Social, media, communication & more links