IPO proceeds to meet capex, acquisitions needs: Nu Tek

Nu Tek India, a telecom infrastructure service provider, plans to tap the capital market with an initial public offering, or IPO, of 45,00,000 equity shares of Rs 10 each.  This 100% book built issue has a price band between Rs 170 and Rs 192 per share. The issue, which has been assigned an IPO grade of three out of five by rating agency, Crisil, opens for subscription on July 29 and closes on August 1.  

Inder Sharma, Chairman and Managing Director, Nu Tek India, said the company is planning to raise Rs 67 crore from the IPO. “The objective is to raise working capital, to fund capex programme, and the remainder will go towards overseas acquisitions.”

Excerpts from CNBC-TV18’s exclusive interview with Inder Sharma:

Q: What is the reason for this IPO and how much money are you planning to raise?

A: We are raising Rs 67 crore. The objective is to raise working capital, to fund capex programme, and the remainder will go towards overseas acquisitions.

Q: What is the company’s current capacity and how are you looking to ramp it up?

A: We are building about 1,000 cell sites a year. The Indian telecom space offers unlimited opportunities. Telecom infrastructure is set to double in the next two years. We are looking to ramp it up by 100%.

Q: Close to around 70% of your revenue comes from the northern part of India. You are venturing into areas like Turkey and the Gulf. Are you already seeing some kind of traction in these areas? If so, what percentage of revenue will come in from these regions?

A: We are exploring markets outside India on the back of our customers, which are telecom equipment providers, like Motorola, Nokia, and Siemens etc. They have requested us to help them out in these geographies because they are the next emerging markets.

Our site building activities are mostly concentrated in northern India. Our other pan-India offerings are active equipment services which is spread across 23 circles right now.

Q: Are you looking at achieving an EPS of about Rs 11.5. Was that your fully-diluted EPS for FY08, which on your current upper end price band of Rs 190 per share gives a price to earnings multiple of about 15-16 times. What is the cost of growth that you see for your company going forward from these levels in terms of earnings?

A: We have been consistently growing at over 50% CAGR. With new capital infusions and forays overseas we plan to maintain that or better it.

Q: What is the timeline for the capex that you will do with the IPO money? If that is not happening on time, with the current capacity, would you still maintain 50% growth that you pointed out for FY09?

A: We are comfortable with 50% growth. With other acquisitions and capex revenues kicking in, we hope to better it.

Q: With capex coming on stream, would FY10 show a better picture in terms of growth, than what FY09 might show?

A: We are in a business which is growing. We want to keep growing capacities, which are being made available to us right now.