Olympic Cards IPO Subscribed 0.99x

Olympic Cards (OCL), a Chennai-based wedding card manufacturer which had approached the BSE with an IPO to garner Rs 25 crore, has received a subscription of 0.99x. The main objectives of the IPO are to set up an additional manufacturing capacity and to open four new retail outlets in Chennai. We had asked our readers to avoid this IPO in the latest issue of our magazine. 

Even though the updated subscription numbers are not available, by Monday the QIB had not participated in the subscription while the retail portion was subscribed 0.46 times and the non-institutional portion was subscribed by 1.46 times. We believe that today QIB have subscribed their entire portion. 

We had clearly said that the business looks good on an individual level but the scalability of the same seems questionable. We had also said that the company operates in a market where products can be easily duplicated and there is no competitive advantage in this fragmented business. The company also does not own its current logo and the same has been shared with one of the relative’s entity which operates in the same business. 

OCL’s major business is located in the Tamil Nadu region and hence the nature of the business will remain local. We believe that its expansion plans in other states will be met with high competition, thus impacting the margins. Its business module is largely based on lavish marriage expenses, which remain restricted to the high income group in society. Also, the opportunities in this industry largely remain localised and customers remain loyal to the card manufacturers. 

On the valuation front the price band looks quite expensive. Our advice to those investors who have subscribed to the issue is to exit the counter on the listing day. We believe that the company cannot command a premium as the nature of its business remains fragmented and competition will remain high.