DQ Entertainment IPO will get subscribed: Udayan

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The initial public offering of DQ Entertainment, the animation, gaming and live action entertainment production and distribution company, has opened for subscription today. The 1,60,48,011 equity shares IPO is being done through 100% book building process and will close on March 10, 2010. The price band for the issue is fixed at Rs 75 - Rs 80 per equity share of Rs 10 each.

Udayan Mukherjee, Managing Editor, CNBC-TV18, says the issue will do well. "Given the business and how it is shaping up, and given its order book, I do not think on next year's earnings or next year's revenues it's that expensive a stock."

He further says, the company will do well over Rs 200 crore revenues next year and well over Rs 35 crore in terms of profits. "I think it will be subscribed quite easily and you might see some listing gains too."

Here is a verbatim transcript of Udayan Mukherjee's comments on CNBC-TV18. Also watch the accompanying video.

I think it will do well because I know people will complain about valuations on current year earnings etc, seemingly slightly expensive in the near-term. But given the business and how it is shaping up, and given its order book, I do not think on next year's earnings or next year's revenues it's that expensive a stock.

It's a nice niche animation, gaming play, very good clients overseas and it derives most of its income from overseas as well. It's actually assured of the next couple of years of revenues because of its order book of more than Rs 450 crore, so it's in a unique situation what come what may it will deliver and clock those Rs 200 crore plus kind of revenues annually. It's asking for Rs 600 crore marketcap, which I think given that it will do well over Rs 200 crore revenues next year and well over Rs 35 crore in terms of profits, I do not think its terrible expensive.

It's probably coming on FY11 numbers at just over three times revenues and probably between 15-17 times in terms of PE multiples. So if the growth can be believed and it's a good business with 35% EBITDA margin profile, I think it will be subscribed quite easily and you might see some listing gains too.