Know Your IPO: VCU Data Management

Maharashtra-based VCU Data Management (VCUDM) is all set to enter the capital markets through the Small and Medium Enterprise (SME) platform. The company has filed a DRHP and has proposed to offer 75 lakh equity shares of face value of Rs 10 each. The fixed issue price is Rs 25 per share, which is at a premium of Rs 15 of the face value.

Through this offering, an amount of Rs 18.75 crore is sought to be raised. The fresh issue comprises a reservation of 31.5 lakh equity shares for promoters and 3.78 lakh equity shares for market makers. The Lead Manager for the said issue is Networth Stock Broking.

The company has been incorporated as recently as March 13, 2013. It is engaged in the business of manufacturing surveillance and news gathering devices and provides various related solutions. It also provides unique video encoder, decoder, media server and 2G/3G/4G WiFi technology.

VCUDM proposes to employ an amount of Rs 25.71 lakh for its working capital requirement, which will be met through the issue proceeds and internal accruals. In addition, Rs 28.2 lakh will be used to purchase fixed assets.

On financial front, as on May 2013, the company has posted a topline of Rs 12.46 lakh and reported a loss of Rs 21.17 lakh in the two-month period of its business.

There is no listed entity in this space so far. As this is the first year of the company’s business, and it has no brand recognition, investors should not bet on the offered issue price. We advise staying away from the offer at this point.