Infibeam Incorporation has listed at Rs 458, a 6% premium compared with its issue price of Rs 432 per

equity share, on the Bombay Stock Exchange (BSE).On the National Stock Exchange (NSE), the stock listed
at Rs 453. It touched high of Rs 467 and low of Rs 440 so far.At 10:08 AM, the stock was trading at Rs 454
on the NSE and BSE. A combined 2.08 million shares changed hands on the counter on both the exchanges
so far.

Infibeam Incorporation, the first e-commerce player in the country, had raised Rs 450 crore through its
initial public offer (IPO).The issue got a lukewarm response from the investor community, particularly
mutual funds which didn’t apply for a single share. The institutional investor segment was subscribed 86%,
the high net worth individual segment 2.23 times and retail portion 1.31 times.

The IPO, which opened from 21-23 March, was subscribed 1.11 times at a price band of Rs 360-432 per
share.

Following are 10 points worth considering in the Infibeam IPO.

1) Infibeam has two main lines of businesses. First is a e-commerce marketplace called BuildaBazaar.com
and second is the e-retailing business under Infibeam.com

2) Under the BuildaBazaar (BaB) marketplace, the company offers customizable online storefront
solutions on a scalable platform, including mobile applications, digital product catalogue, content
management, promotions handling, access to payment gateways as well as fulfilment services.

Cutting through the jargon, the BaB business manages and helps other players set up their e-commerce
venture. It uses data analytics to help merchants target consumers and increase the rate of conversion
from visits to transactions. They also offer merchants training and education to help them improve the
operation of their online storefronts and marketing and sales activities.

3) As of December 31, 2015 the BaB business had 48,724 registered merchants as compared to 350
registered merchants as of March 31, 2012. Among the clients in this part of the business are Unitech
Amusement Parks Limited, Panasonic India Private Limited, Crossword Bookstores Limited, Spice Retail
Limited, Adlabs Entertainment Limited, Gulf Oil Lubricants India Limited, Hidesign India Private Limited,
Eros Electricals LLC, Axiom Telecom LLC and Mumbai International Airport Private Limited.

4) Infibeam.com is like any other e-commerce retailer. This e-retail business of the company had more
than 15 million SKUs of products across 40 product categories including mobile and tablets, computers
and accessories, electronics and cameras, housing and kitchen, books and magazines, fashion and
accessories, baby care and toys, movies and music, beauty and health, auto and auto accessories, travel
and tickets and gifts.

5) Key to an ecommerce website is the logistics network that the company has. Infibeam has 12 logistics
centres across 11 cities in India including in Mumbai, Bengaluru, Delhi, Gurgaon, Kolkata, Hyderabad,
Jaipur, Pune, Lucknow, Ahmedabad and Chennai. It has six warehouses located at Delhi, Gurgaon,
Bengaluru, Ahmedabad, Mumbai and Kolkata.

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6) E-commerce sites are also known by the talent they attract. Infibeam has a total of 900 employees,
including a large number of software engineers and information technology experts. The size however, is
small considering the 45,000 employee strength of Flipkart.

7) The primary purpose of the IPO is for setting up of cloud data centre and purchase of property for
shifting of the registered and corporate offices. The company also intends to set up 75 logistics centres
and purchase software. However, through this issue the company which has been following an asset light
model will be locking in a sizeable amount of money in buying office space. Over a period of three years,
the company is likely to spend Rs 235.2 crore on its office and data centre. The amount is slightly lower
than the Rs 295 crore consolidated turnover of the company in March 2015.

8) Like all other e-commerce companies, Infibeam is also making losses. Though in the first six months of
the current year it has shown a marginal profit. But it is the size of the company which is an issue. At nearly
Rs 300 crore (consolidated basis which includes revenue from BaB), the company is a small player in an
industry (Flipkart had a revenue of Rs 10,390 crore in 2014-15) that believes in ‘shock-and-awe’
pronouncement like a billion day sale.

9) Infibeam is a relatively unknown player with hardly any ad-spend, which to an extent helps its cost
structure. But the industry is all about grabbing market share and awareness which is where Infibeam
fares poorly. Out of the current issue proceeds too no details are given on the amount the company wants
to spend on advertisement and sales promotion.

10) One clear factor that can play against the company is the withdrawal of two important investment
bankers from the issue. Out of the four investment bankers hired as per the DRHP —SBI Capital Markets
Ltd, ICICI Securities Ltd, Kotak Mahindra Capital Co. Ltd and Elara Capital Ltd two have opted out according
to the latest share sale document, as reported by Livemint. Kotak Mahindra Capital and ICICI Securities
have opted out for which Infibeam has not given any reason. Investment Bankers, who normally are
hungry for fees generally, do not walk out of an issue, unless they are not sure of the subscription.

At Rs 2,250 crore IPO market capitalisation, Infibeam is asking for a valuation of nearly 7.6 times its March
2015 revenue revenue, which is roughly the valuation enjoyed by Flipkart post its mark down by Morgan
Stanley. One cannot blame these investment bankers of developing cold feet.

Infibeam lists at premium to issue price .On the BSE, the stock opened at Rs 458, a 6% premium against
its issue price of Rs 432 per share.

1. What do you understand by Initial Public offer?

2. What are the key factors one needs to evaluate the IPO? Here refer to the prospectus.
3. Comment on various types of risks associated with Infibeam.
4. Study the Infibeam IPO as an analyst and track its growth thereafter with the help of P/E ratio.

Refer following websites for the data

NSE

Moneycontrol