Lotus Eye Care fair value at Rs 24-25

CNBC-TV18's Managing Editor, Udayan Mukherjee - Lotus Eye Care had mysteriously subscribed 1.2-times. It belongs to that clutch of IPOs, which get bailed out mysteriously and see a little bit of a pop up on day-one. Today the opening should not be too bad so I don’t know whether it sees a little bit of a bump up in the near-term. But you have to be clear about what the view is on some of these IPOs.

At issue price of Rs 38, where the issue finally got done, I don’t think Lotus Eye Care is firstly such a good compelling business, secondly its quite a bad valuation. Because even at that price being generous with the kind of expectations on EPS I think it’s trading at about 25-26 times FY09 expected earnings and 15-16 times FY10 earnings. That’s very expensive; you can buy Infosys rather than this.

So the fair value of this stock is closer to that Rs 24-25 and there is no reason to bark up that space at all trading. Of course I am sure, operators will log on to this one as well as they have with some of the more recent IPOs but from a fundamental and from a valuation perspective this is not where you want to be at all.