IS Quick Heal IPO worthy for investors to invest?

Quick Heal Technologies Ltd (QHT) is one of the leading providers of security software products and solutions in India with a market share of over 30%.

Company's proprietary antivirus technology works to detect security threats including virus and malware attacks in real time to protect users IT assets across platforms, including Windows, Mac, Android, iOS and Linux, and across devices, including desktops, laptops, mobile/ smartphones and tablets.

Since its incorporation, more than 24.5 million licenses of the products have been installed and as of June 30, 2015, company has over 6.9 million active licenses spread across more than 80 countries.

Sequoia Capital had invested Rs 60 crore in the company way back in 2010 and currently holds about 10% of the company’s shares.They are planning to offload 5.4 % stake.

Strengths or good points about the company are mentioned below:

• Good brand name and strong distribution channel.
• Zero debt company with free cash flow.
• Strong management team and also a venture capitalist team of Sequoia Capital.

Currently, the company has 33 branch offices in India and consists of 1,200 people in its team and a network of 15,000 channel partners in hundred countries.

One of the Nice article  i found in the Forbes site on Quick heal dates back to November 8, 2012 tells the below thing about quick heal.

Q

uick Heal is a completely homegrown anti-virus software company that’s not only beaten big, multi-billion dollar competitors like McAfee and Symantec, but is also taking back the fight to their turfs in other countries around the world. 

 “They’re growing like a weed while throwing out amazing cash flows. What a great business!” says Sumir Chadha, co-founder and managing director of Westbridge Capital, who is on the board of Quick Heal representing Sequoia Capital.

The company, which started as a calculator repair firm before creating the brand Quick Heal in 1995, has seen revenues grow 15 per cent in FY15 to ₹292.2 crore. However, profits have consistently declined over the last three years. In FY13, net profits stood at ₹77.5 crore, which dropped to ₹61.5 crore in FY14, and further to ₹56.2 crore in FY15. Kailash Katkar said the decline was due to the company’s increased R&D spend in the last three years.

“In the last three years, we’ve launched many new products with the help of our R&D efforts. While this has led to increase in revenue, we’ve maintained lower margins to ensure we are investing for the future,” Kailash Katkar said. The company said it will use the proceeds of the sale to invest in advertising, R&D and for buying new offices in Kolkata, Pune and New Delhi. The minimum bid lot will be of 45 shares and in multiples of 45 equity shares thereafter and will be listed on both the BSE and the NSE. The offer will be open from February 8-10.

The main worry for the company is regarding the declining profits.

Closing comments and Conclusion:

It is a  worthy of investment as there is no peer to compare the PE or anything in Indian markets and it is a cash generating machine.It is just having less exposure globally once it gets firm grip globally it might generate more cash.

Better to invest in a zero debt company with potential to grow than in a company with a lot of debt and which is trying to survive or in public sector banks( you dont know which one will last this tide :) ).

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