TPL Trakker IPO: Sweet in bitter times

Though the IPO is neither a puffed up one nor too exciting, market majority seems to agree on oversubscription for TPL Trakker, a satellite vehicle tracking company offering fleet management services and vehicle security in Pakistan. The initial public offering intends to raise Rs300 million with share price or Rs10 per share, two thirds of which has been successfully garnered through book building while the remaining Rs100 million is hope to be raised today. For those who know little about TPL Trakker, the company started as a joint venture with DigiCore Holdings Ltd. - a South African company with 30 percent stake in the company while the remaining 70 percent is held by TPL Holdings (Pvt) Ltd. Pioneering in vehicle tracking in Pakistan, celebrating the status of the largest tracking and fleet management company in the region with150k units installed, the company offers GPS, GSM and Satellite Mobile Asset Tracking besides offering services for monitoring power generators, containers and providing location and navigation solutions. The offer of 30 million shares at a price of Rs10 per share is likely to bring in new growth plans to TPL Trakker. The main rationale behind the issue is claimed to be working capital financing as well as off-loading of its short term obligations. At the same time, the issue is going to provide the potential investors with a chance to diversify their portfolio ranging from TPLs core business activity of technology to attractive real estate and insurance business. Its first movers advantage and the niche in tracking technology coupled with a steady rise in car sales locally, makes the scrip attractive enough to draw higher subscription. Moreover, the IPO at Rs10 per share is slightly under valued compared to the book value per share of Rs11.06 for FY11, increasing the chance of over subscription all the more. Furthermore, the overwhelming response at book building process with over subscription of 1.31 times blows hope in tomorrows event. With satisfactory financial performance over the years, the management is also hopeful about the growth in revenues for FY13 to the tune of 119 percent as soon as cash starts dribbling in from the Afghan-Pak Transit Agreement project. Besides the omni-present interest rate risk and the perils of new and big players emerging with better prices to offer, generally small players exist in the industry. However, it is important that investors think beyond the "one in a life time opportunity" to make sound investment decision. A factor that could mend or break the sanguine hopes is attached to Nato supply routes, which would bode well for the company if they reopen and not very positive in case of prolonged closure. Since the company is not very popular with the general public it believed that the dividend policy is likely to play a significant role in investors interest.