The case of Creative Eye, in all likelyhood, should not be different as the company is offering equity shares at a price-earning multiple of as high as 59.21 (based on floor price Rs 225). Investors may not miss the bus even if they shun this issue as a number of media companies are expected to come out with IPOs. Nevertheless, one should not ignore so many investment opportunities in the secondary market when well-established media companies are trading at a tempting PE multiple.

For instance, Sri Adhikari Brothers, which is currently expanding its horizons from TV software production, is trading at a price-earning multiple of only 25.6 against Creative Eye's offer PE of 59. Sri Adhikari Brothers is currently hovering around Rs 585 on the bourses. Interestingly, the media giant and market favourite, Zee Telefilms, is trading at a compelling PE of 70.6 against Creative's 59.21. Zee Telefilms is currently hovering around Rs 461. While Creative Eye is expecting a minimum price of Rs 225 for its share, Cinevista Communication is currently quoting at around Rs 233.

Investors are likely to get yet another opportunity in Padmalaya Telefilms on its listing on the bourses. Padmalaya, a much bigger company in size and operation compared to Creative Eye, had offered shares at an attractive PE of 15.55.

As the offer price of Padmalaya was Rs 100, investors can enter at every correction after its listing. Therefore, it makes sense to wait for Creative Eye's listing on the bourses.

Creative Eye is offering 18.75 lakh equity shares through the bookbuilding route at a floor price of Rs 225. The price-earning multiple of 59.21 is based on EPS of Rs 3.8 for fiscal 2000. The floor price of Rs 225 discounts the projected earnings (on diluted equity) for fiscal 2001 by a multiple of almost 29.

While the company is targetting a minimum price of Rs 225, one of the key promoter, Zuby Kochhar, had been allotted 7.39 lakh shares (7.39 per cent of the post-issue) at a price of Rs 115 on February 29, 2000. Ahead of the IPO, promoters and other shareholders have issued 41.7 lakh bonus shares.

Moreover, Zuby Kochhar had sold one lakh equity shares to ICICI Venture Funds Management Company at a price of Rs 55 in May, 2000. Om Namah Shivay-fame Creative Eye has now chalked out a a Rs 75.54-crore project. As the company proposes to fund the entire project cost through the current issue, it should get at least a price of Rs 300 for its offer of 25.02 lakh shares. Therefore, the company may face a shortfall in resource mobilisation through this equity offer.

The Rs 75-crore project has not been apprised by any financial institution or bank. Of the total project cost, a sizeable portion of Rs 27.79 crore is earmarked for working capital requirements. However, the working capital requirements are company's own estimates.

The company is deploying Rs 2 crore in development of portals (promoters have no exposure to portal development), Rs 8.93 crore in procurement of film rights, Rs 1.2 crore in advertising division, Rs 8.62 crore in tele shopping network and e-commerce activities linked to the tele shopping network, Rs 5 crore in expansion of the marketing network, Rs 10 crore in acquisition of rights/commercial time on TV channel, Rs 3 crore in expansion of post-production studio and Rs 3 crore in acquisition of TV software including Hindi film songs. Of the issue proceeds, around Rs 6 crore is going towards issue expenses.

Incorporated in 1986, Creative Eye has been promoted by Dheeraj Kumar Kochhar and Zuby Kochhar. The former will hold 18.67 per cent and the later will hold 35.79 per cent of the post-issue paid up capital.

The company is mainly depending on Doordarshan for its business. Creative Eye's first serial aired on Doordarshan was Kahan Gaye Woh Log. This was followed by a 19-episode detective serial Adalat and 113 episode serial, Sansar. However, these serials did not get the prime-time slot. However, Om Namah Shivay has proved to be a major hit. At present, the company is critically depending on this serial for 65 per cent of its revenue, which will be reduced to 30 per cent, according to the company. The company also proposes to expand its activities to satellite channels. Creative Eye is currently discussing with Star TV for four serials and six additional proposals with DD. For fiscal 2001, the company is projecting a sharp jump in net profit to Rs 7.76 crore and total income to Rs 93.35 crore.