Money Tree

The salient features and extracts from the Red Herring Prospectus of the issue are given hereunder:

Issue Opens On : July 23, 2007
Issue Closes On : July 26, 2007
Issue Size : 1,41,50,000 Equity Shares
Face Value : Rs.10/-
Price Range : Rs. 510 to Rs. 600/-
Issue Type : Book Building
Tick Size : Re.1/-
Market Lot : 10
Minimum Order Qty : 10
Listing Stock Exchange : NSE, BSE

Objects Of the Issue :

For development and construction costs for project at Jigani
For development and construction costs for the IT Park and mall to be constructed at Gachibowli
For repayment of loan to the Parent Company
For repayment of the loan taken from Karnataka Bank Limited
For payment of the development right costs to Parent Company
For general corporate purposes.

Basis for Issue Price :

Face Value : Rs.10/-
Issue Price : 51 Times(Lower Price Band) of the Face Value.
Issue Price : 60 Times(Higher Price Band) of the Face Value.
Issue Price : Rs. 510 to Rs. 600
EPS for the last financial year 2006-07 : Rs 4.60
EPS for the last year 2005-2006 : Rs 3.42
EPS for the financial year 2004-05 : Rs. (0.06)
Weighted Average EPS for the years April 2004- March 2007 : Rs 3.69

Industry PE ratio:

Highest : 173
Lowest : 2.4
Industry Composite : 32.4

PE ratio of IVR Prime on the higher side of price band comes out to 130.43 times and on the lower side of the price band comes out to 110.87 times.

PE ratio of the Peer Group

Unitech : 49.2
Sobha Developers : 42.1
Parsvnath Developers : 21.6
D S Kulkarni : 16.5
Ansal Housing : 11.5

Business Overview :

IVR Prime Urban Developers Limited a subsidiary of IVRCL, is a growing real estate development company focusing on integrated townships, residential developments, and
commercial projects, including hotels, retail malls, IT parks and other projects in various parts of India. As on June 21, 2007, the Land Reserves of the company consisted of approximately 2,478.85 acres, representing approximately 75.45 million sq. ft. of Saleable Area (including 0.1 million sq. ft. in relation to unsold villas and flats in Hill Ridge Project), in the cities of Hyderabad, Visakhapatnam, Chennai, Bangalore, Pune and Noida.

History :

The Company was incorporated as IVR Realtors Limited on June 28, 1996 by Mr. E. Sunil Reddy and Mr. E. Sudhir Reddy. The name of the Company was changed from to IVR-Prime Urban Developers Limited and a fresh certificate of incorporation consequent on change of name was granted to our Company on January 16, 2001 by the RoC. The name of the Company was again changed from IVR-Prime Urban Developers Limited to IVR Prime Urban Developers Limited on June 12, 2006. Since its incorporation, the Company has been carrying on the business of real estate development.

Financial Information :

Total income of the Company for the year ended 31st March, 2007 : Rs. 1478.27 millions
Total income of the Company for the year ended 31st March, 2006 : Rs. 1364.25 millions
Total income of the Company for the year ended 31st March, 2005 : Rs. 218.49 millions

Net profit (after tax) for the year ended 31st March, 2007 : Rs. 206.79 millions
Net profit (after Tax) for the year ended 31st March, 2006 : Rs. 117.04 millions
Net profit (after Tax) for the year ended 31st March, 2005 : Rs. 7.08 millions

Comments :

The pricing has been done very aggressively, the shares are being made available at a multiple of more than 100 times of the EPS for the year ended on 31st March 2007. The company has a presence in Chennai, Bangalore, Hyderabad, Vishakhapatnam and Pune and has a huge land bank of 2479 acres or about 75.45 million sq. ft. of Saleable Area. The sector is undoubtedly booming but the pricing, even at the lower band, is quite expensive as compared to its peers. We do not recommend subscription to the issue.

Read ICICI view on IVR Prime IPO
Read R S Iyer (KR Choksey), Manish Bhatt (Prabhudas Lilladher) and S P Tulsian view on Moneycontrol.com