IPO Analysis - Tree House Education and Accessories

Tree House Education and Accessories is coming with an Initial Public Offer (IPO). Let's see if you should buy IPO of this company.

Issue Open: August 10, 2011
Issue close: August 12, 2011
Price Band: Rs. 135 - Rs. 153 Per Equity Share
Minimum Bid: 40 Equity Shares
Face Value: Rs. 10 Per Equity Share
Issue Type: 100% Book Building
Maximum Subscription Amount for Retail Investor: Rs. 200000

Incorporated in 2006, Tree House Education is one of the leading educational services providers in India. As per CRISIL report, they operate the largest number of self-operated pre-schools in India. They have 177 pre-schools under the brand name of "Tree House" across 23 cities in India.

Tree House provide a wide variety of educational services to K-12 schools which includes designing curriculum and providing teaching aids, supplying methods for imparting education, organizing extra-curricular activities for students and teacher training.

The pre-school market is just at beginning stage in India. This company can take advantage as an established player of huge market in India which is highly unorganized.

At the offer price bands, the issue is available at P/E of 38.6x- 43.7x its FY12E EPS of Rs 3.5 on post diluted equity. It is much higher than average.

IPO Grading / Rating:
CRISIL has assigned an IPO Grade 3 to Tree House Education IPO. This means as per CRISIL, company has 'Average Fundamentals'.

It is not an comfortable offer for IPO investors and company is not leaving anything on table for investors. In current market turmoil, it could be risky to buy any such expensive IPO.

But it is an IPO in education space which is highly favorable by investors and may attract retail investors. I would never invest my money in such expensive IPO. If you want to take a chance,do it at lower band of IPO price.