Ace Tours Looks To Raise Funds Via IPO Route
DSIJ Intelligence / 06 Sep 2013
The company is tapping the capital markets via the SME IPO route to raise a sum of Rs 7.57 crore. It intends to use these funds for brand building, as well as to meet its listing, corporate and working capital expenses.
Ace Tours Worldwide (Ace Tours), a tours and travels company based in Surat, is tapping the capital markets via the SME IPO route to raise a sum of Rs 7.57 crore. The issue opens on September 9, 2013 and closes on September 12, 2013. The issue constitutes of 0.5 crore equity shares at a face value of Rs 10 each. 2.8 lakh shares are reserved for the market maker and the remaining is for public issue. The issue price per share is Rs 16.
The company intends to use these funds for brand building (Rs 1.6 crore), its working capital requirements (Rs 6 crore) and to meet the general listing and corporate expenses.
Ace Tours came into existence in 2007 and became a public company in 2011. It offers both domestic and international tour services. It also provides services like school trips, special planned tours, travel booking (air tickets, railway tickets, hotel bookings) etc. The company has its branches in Mumbai, Ahmedabad and Rajkot.
In FY12, the company witnessed a disappointing set of numbers, with the revenues coming in at Rs 19.58 crore, down 12% from that of Rs 22.34 crore in FY11. This fall was mainly due to the decrease in the sale of packaged tours, followed by a fall in air ticket booking. Revenues from packaged tours declined by 11% to Rs 12 crore, while those from air ticket booking revenue came down by 24% to Rs 4.48 crore in the same period. Its EBITDA also declined by 17% to Rs 1.81 crore in FY12 on a yearly basis. Moreover, high finance costs saw the company bleed, as its net profit went down by 75% to Rs 0.13 crore in FY12 against Rs 0.52 crore in FY11.
Ace Tours has a very high PE ratio of 159.5x, while its EPS stands at Rs 0.10. In contrast, its listed peer companies like International Travel House, Trade Wings and Cox & Kings are trading at a trailing 12-month (TTM) PE of 6.03x, 119.5x and 24.29x respectively.
The tours and travel business is highly contingent on seasonal factors like vacations and holidays. Moreover, the shape the economy is in has a direct impact on the business. In view of the current slowdown in the economy, the high PE ratio of this company against its peers and its poor performance in the previous year, investors are advised to stay from this issue.
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