Click her to Check Allotment Status of Jyothi laboratories IPO
The stock was offered to investors @ Rs. 690 and the grey market is putting a premium of Rs 200 on the offer price.
Meanwhile Both BGR Energy (100 x)and Transformers and Rectifiers (82 x) IPO have been hugely oversubscribed on the closing day. Read More!
Brigade enterpise limited has entered the capital markets with an offer of 166.24 lac shares of Rs. 10 each at a price band of Rs. 351-390 per share. Investment Guru is of the view that realty and infrastructure sector would continue to be in limelight as it makes deeper inroads in the world of stock markets. Brigade enterprise’s business model comprises of a mix of residential, commercial and hospitality properties. The company’s operation and land bank are focused in and around Bangalore. Exposure of the company to a limited geographical area and a lean land reserve of just 44.16 million square feet might put a dent on the margins in future.
However, the bright side of the picture is that the company has sizeable ongoing projects which would keep the scorecard ticking in the medium term. On valuations parameters the stock looks aggresively priced leaving little scope of appreciation for Investors. The issue also has a green-shoe clause which would be used to provide stability to the price of the stock for one month if the market price falls below the issue price. Investors should consider subscribing to the issue purely from listing gains perspective. For long term perspective, there are better players available in the secondary markets with sizeable land bank and better geographical spread.
- BEL is a real estate development company based in Bangalore, primarily focused on the development of residential, commercial and hospitality properties in South India. Company’s residential properties include
integrated lifestyle enclaves and apartment buildings targeted towards middle income and high income customers.
- The company has completed a total of 67 properties, comprising of 41 residential properties, 21 commercial properties and five hospitality properties, aggregating to approximately 5.67 million sq. ft. of Saleable Area and approximately 6.74 million sq. ft. of Developable Area.
- The company is currently developing 16 properties, including Brigade Gateway and Brigade Metropolis, which are integrated lifestyle enclaves and that comprise of a combined Saleable Area of approximately 10.83 million sq. ft. and a combined Developable Area of approximately 11.89 million sq. ft.
- Consolidated total income was Rs. 4,170.20 million for the fiscal year 2007 as compared to Rs.2,032.32 million for the fiscal year 2006 and Rs. 1,605.03 million for the fiscal year 2005, representing year over year increases of 105.19%, 26.62% and 109.38%, respectively.
- The consolidated profit after tax was Rs. 714.98 million for the fiscal year 2007 as compared to Rs. 423.06 million for the fiscal year 2006 and Rs. 198.77 million for the fiscal year 2005, representing year over year increases of 69.00%, 112.84% and 85.06%, respectively.
- Return on Net worth is 47%. Net Asset value is 26.52 per share.
Issue Opens : December10, 2007
Issue Closes: December13, 2007
Registrar : Karvy Computershare
Click Here to check IPO Allotment Status of Brigade Enterprise Ltd.Read More!
TRIL has entered the capital markets with a public issue of 29.95 Lac shares of Rs. 10 each at a price band of Rs. 425-465 per share through book building process. Investment Guru is of the view that Power transmission and distribution is an integral part of the power sector’s growth story and Transformers play a pivotal role in this process. TRIL is one of the major players in this segment.
However, in this case too the promoters have not left much on the table for the investors as similar companies are available at same valuations in the secondary markets. One can apply for the issue with a view of moderate listing gains on listing. However, from a medium term perspective investment in peers such as Indo-tech transformers is also advisable as the company is operating on better margins.
Let’s take a look at the company
- TRIL is one of the major players in the Indian markets manufacturing a wide range of transformers ranging from power generation, transmission and distribution transformers, industrial transformers and a wide range of speciality transformers.
- TRIL manufacture transformers upto 220 kV Class, having an installed capacity of 7,200 MVA transformers per annum.
- The company currently operate through two manufacturing units, located at Changodar, near Ahmedabad and Odhav, in Ahmedabad, both in Gujarat
- Key customers include utilities and power transmission companies. The company has also exported transformers to countries such as the England, Canada, United Arab Emirates, South Africa, Saudi Arabia and Indonesia.
- Company’s business strategy is to focus on manufacturing of high capacity transformers at the proposed manufacturing facility at Moraiya since high capacity transformers command better margins.
- The company intends to leverage its relationships with the power transmission companies to take up turnkey projects for setting up sub stations.
- TRIL has a healthy order book position of Rs.319 crore as on September 1, 2007 with most of the contracts having an embedded price variation clause, shielding the company from adverse movement in prices of key raw materials like copper and steel. TRIL has strong in- house design capabilities which is a key success factor for this industry as transformers are custom built as per the requirements of the customer.
- CARE has assigned a 'CARE IPO Grade 4' to the IPO which indicates above average fundamentals.
- Power transformers constituted 77% of total sales of the company in FY07 followed by furnace transformers (13%) and others (10%). Sales to State electricity utilities constituted 51% of total sales of TRIL for FY07 with the remaining to industrial and other sectors.
- During FY07, TRIL's total income grew by 69% over FY06 on account of increase in sales volume as well as per mva realisations. The company was able to sell higher mva (80 and above) transformers in FY07 as compared to FY06, where margins are better.
- TRIL's PAT margin also improved to 7.99% in FY07 as compared to 5.8% in FY06. ROCE and RONW were high at 62% and 54% in YQ7 as compared to 42% and 43% in FY06 respectively.
- EPS for the six months ended September,2007 (annualized) is Rs. 20.4 (post issue equity) which translates into a PE multiple of 23.
- Return on Net Worth is 41.36 % for FY07.
Issue Opens : December 7, 2007
Issue closes: December 12, 2007
Registrar: Intime Spectrum
Click here to check IPO Allotment Status of TRILRead More!
BGR Energy systems has entered the capital markets with a public issue of 91.36 Lac shares at a price band of Rs. 425-480. Investment Guru is of the view that the company is into the powerful business of Power equipments and hence has potential to deliver excellent performance given its unique business proposition, government’s thrust on this sector and the demand supply mismatch.
However, the promoters have been greedy in pricing the issue and the issue at the higher band is asking for a valuation in line with those of Blue-chips like BHEL and L&T. ICRA has assigned Grade 3 to the issue indicating Average fundamentals. I would prefer to stay away from the issue (though it is commanding a premium in grey market even at this aggresive pricing) since the current fundamentals do not justify such a high valuation and I would not like to pay a price today for the three year forward earnings of the company given the risk factors (see below). I would suggest that investors with long term view or high risk takers should only invest in the issue.
What’s Good about BGR Energy ?
- The company is well placed in its business of power projects which provides turnkey Engineering, procurement and construction (EPC) and Balance of plant (BOP) services given the limited players in the space and huge business opportunities due to focus on power sector.
- BGR plans to open a marketing office in Dubai to ensure proximity to clients and to open a manufacturing facility in China to expand manufacturing capabilities.
- Company boasts of a strong order book of Rs. 33212 million which brings visibility to its earnings.
- The company has in house designing and engineering capabilities which provide significant cost advantage.
- BGR has a proven track record of executing 130 contracts in 42 countries in Asia, Middle east, Africa and Eurpoe.
- The company has come along way from a subcontractor to securing direct orders from power generation companies.
- The company has posted a strong growth in both top line and bottom line over past two years. For the Quarter ended 30th June the company posted a top line of Rs.239 crore and Net Profit of 17 crores.
- The company has carried out Pre IPO placement of its shares to CVC (20.88 Lac shares) and Reliance Capital (14.4 lac shares) at a price of Rs.450.
- The issue proceeds would be utilized in augmenting the working capital and establishing manufacturing and assembling facilities.
- The company generates a Return on Net worth of 39% which is higher than that of L&T and BHEL.
What’s not good about BGR Energy ?
- The company is dependant on few customers for a major chunk of its revenue. The Top three clients contributed 48% of the topline.
- Major chunk of the revenue (73%) comes from its business with government entities and hence the business is prone to delays in execution of the projects based on political developments and changes in budgetary allocations.
- The company has a very high account receivable collection cycle (as high as 180 days). This puts a burden on the working capital position of the company and could be a limiting factor in optimizing the operational and financial efficiencies.
- Pricing Risks – Most of the projects executed by the company are on a fixed price basis. For 18 months ending 31st March 2007, 90% of the total income was derived from fixed price contracts. Though the company enters into back to back contracts from suppliers, pressure on margins due to rise in input costs cannot be ruled out and would adversely impact the company’s performance.
- The annualized EPS on the results posted for Quarter ending 30th June,2007 stood at 9.7 which translates into a PE multiple of 50. This makes the issue priced in line with valuation of much stronger, capable and dependable companies like L&T and BHEL.
- The Net asset value per share comes to 12.8 which shows that the IPO price is 37.5 times its Net asset value. This makes issue quite expensive.
Issue Opens : December 5, 2007
Issue Closes : December 12, 2007
Registrar : Intime Spectrum
As per NSE circular, Equity Shares of Edelweiss Capital Limited would be listed on the stock exchange on Wednesday, 12 th december,2007. The Stock is currrently commanding a huge premium of Rs. 700 on the offer price of Rs. 825 per share in the Grey market.
Kaushalya Infrastructure IPO Allotment Status
The IPO Allotment status for Kaushalya Infrastructure Development Corporation limited is out on its Regisrar's website Intime Spectrum.
Click Here to Check Allotment Status
The company had offered shares @ Rs. 60 per share. the issue was subscribed by around 7 times. The grey marlet is putting a premium of Rs. 10-12 on the stock. Read More!
The isuue was subscribed whopping 46 times with retail portion oversubscribed by more than 16 times. The stock was offered at Rs. 145 is commanding a premiuim of Rs. 70-80 in the grey market.
Click here to Check Allotment Status of Kolte Patil IPO
Renaissance Jewellery IPO allotment Status
The company had offered shares @ Rs. 150. The issue was subscribed 24 times with retail portion oversubscribed by more than 10 times. The stock is commanding a premium of Rs. 30-35 in the grey market.
Click here to Check Allotment Status of Renaissance Jewellery IPO Read More!
We saw a lot of IPO's listing this week and few more are coming to rock the markets. Before that let me give you an update that the Intime spectrum site is working and you can check allotment status for Mundra Port IPO. As far as IPO refund for Mundra port is concerned, you can expect them in your bank accounts by 27th November as per information posted by the Registrar. Mundra is listing on the bourses on 27th November and is expected to have a grand listing in the coming week. The stock may list around Rs. 1,000 levels on Tuesday.
The most rewarding IPO was the least talked about. Allied computers which listed on BSE rewarded investors with a return of 217 %. This was followed by religare which rewarded investors with 182 % return. Out of the 5 IPO's that listed this week, only one Rathi Bars disappointed the investors and generated a negative return of 9%. And all this when Sensex posted a fall of 840 odd points !
One thing is clear, the IPO euphoria is here to stay and is going to reward the investors well. Reason ? Liquidity and the ongoing feel good factor ! Investors across the spectrum have shown interest in investing through the IPO route and most of issues are getting hugely oversubscribed. This results in poor allotments and then the rush to acquire the stocks on the listing day. However, there has been a slight deviation from earlier listings. The stocks are able to maintain and in some cases even further strengthen their upmove post listing though amidst lot of volatility.
As far as valuations is concerned, there is no doubt that these stock do not deserve these valuation based on their fundamentals and the investors would do well to book profits at regular intervals in such stocks. An entry can be made at lower levels depending on the performance of the company.
Empee Distillers to list on Monday, 26th November
The IPO party is bound to continue in the coming week. Empee Distillers is listing on Monday. The issue was subbscribed nearly 7 times. The company has offered shares @ 400 per shares. At the offer price the issue was valued at a PE of 25 which is in line with valuation of its peers. The Grey market is puting a premium of Rs. 50 on the stock valuing it at Rs. 450 per share. Investors can expect the stock to listing in the range of 450-475. A price above 500 would be good fit for profit booking.
IPO's Open now
Jyothi Laboratories: Issue closes on 27th November
Burnpur Cement : Issue Closes on 3rd DecemberRead More!
Mundra Port IPO Allotment Status is out . You can check the allotment status from link below
Click here for Mundra Port IPO Allotment Status
The website of Intime Spectrum, the Registrar to the issue is currently not accesible due to heavy traffic of investors, so it is advisable to check status late in the night or you can call the intime spectrum office.
The stock was oversubscribed a whooping 116 times with Retail portion oversubscribed 16 times. An extremely strong listing is expected for the stock given the apetite for the IPO. The Grey market is putting a price tag of Rs. 900-1000 for the listing of Mundra Port.
Barak valley Cements listing tomorrow
Barak Valley Cement is listing on 23rd November,2007. The IPO was subscribed 27 times. Against the offer price of Rs. 42, the stock is commanding a premium of Rs. 28 in grey market which translates into a listing price of Rs. 80 Investors are advised to book profits on a price above Rs. 80
Rathi Bars to list tomorrow
Another Stock making a debut tomorrow, but a low profile one. This was a Fixed price IPO where the shares were offered at Rs. 35 The oversubscription numbers are not available. The Gery market is putting a modest premium of Rs. 3 on the offer price. However, given the current volatilty, the stock may spring some surprises on the listing date. Investors can consider profit booking at levels above Rs. 50. Read More!
Following are some of the companies where the P Note exposure is considered to be relatively higher and investor should keep above in mind while dealing in these shares. These stocks can witness bouts of unwinding (though not necessary at same time) and hence investors should be careful while taking a decision to invest or otherwise.
India Bulls Financial Services
(Please note, this is not an exhaustive list) Read More!
In my previous post I was talking about what could make sensex fall from these levels and what I could find was that something related to FII's could be the possible driver...gosh....and what I feared came true....SEBI's draft circular on PN's came to a big jolt to the market sentiments as the markets feared that it would lead to withdrawal of money by these investors from the markets.
We saw a drastic opening which led the markets to shut down for 1 hour. Leading stocks were seen down ranging 20% to 15% at a wafer thin volumes. Yes, it took just few seconds for the markets to reach the level which lead to a shut down for 1 hour...nobody got a chance to react... Our finance minister had to come out for a statement, but came from it was that he backed the SEBI's move and according to him the move is beneficial for the markets as well as the participants.
Everybody as waiting for correction
yes, the recent rally had really stunned the investors as it didn't allow most of them to participate in it in a big way. Investors were in a confused state as at every high level , they knew correction might come, but didn't knew when it will come and the sensex kept them waiting an when it came ....it came like a storm ....so what's new....nothing has changed for small investors state of mind...as for sure this sharp jerk would now make them think if this is the right time to buy.....
Understanding the PN story
Most of the investors have heard that the fall is due to some sebi circular on PN which is related to FII's mode of investing. Let me give you some clarity on it in simple words. There are 34 FII's and their sub accounts which are registered with SEBI and which can issue Participatory notes to the investors abroad. Sebi is worried about the source of these funds entering the markets as it does not have visibility into who is investing. Also these investors have been using the leveraging available through the derivatives segment and hence SEBi was of view that the recent market upsurge is due to the hectic trading that was been done by these participants using the derivative leverage.
If we see the data , the investment through PN's have increased from 10 folds in last three years and lot of hedge funds are using this mode of investment in the Indian equity markets.
Now SEBI wants to control the inflow of money through this channel and proposes to put a cap of 5% of the asset under custody of the FII's as eligible for issue of PN's. Sebi also wants the FII's should wind up their current positions within 18 months.
Now this may lead to redemption of funds by these investors and the markets are reacting to this possibility.
We will discuss this more in the upcoming posts.
Where is the market headed now ?
Today's correction can be termed as blessing in disguise for investors as they were looking for opportunity to invest. However, the jerk was strong enough to shake investor's confidence on how much it will fall before going up again. Well, the real implication of the PN story will unfold in few days and I believe it will have more impact on stock where the PN investors had large exposure. Stocks where the FII' holding through PN was not significant should not be affected and hence any correction is such stocks could well be an opportunity to invest at lower levels.
The FII investment may see a brake and this could bring in more rationality in the markets going forward. I personally welcome the move of SEBI as it is very important that we do not become puppets in hands of FII and have sufficient checks in place to monitor the investments coming through FII's. Read More!
Law of gravity says that everything which goes up, comes down. Looks like this doesn't applies for the Sensex !! What a day it was ! With sensex finally climbing 19000, it made sure that the cheers comes from across the board rather than only Reliance pack holders . Today was the day for metal stocks to shine brighter and make their presence feel in the march of sensex to glorifying heights !
The beauty of today's rise was that it was secular in nature (did I say secular , sorry Tech is out flavour still, can't help it). The rally spread across the large , Mid and small cap stocks.
Let's discuss some of the stocks that I have discussed earlier on the blog and see how they are doing. One of My favourites in metal pack "JSW Steel", rose around 13% to cross the 1000 mark. The stock had a spectacular run in the last one year. Sail also rose 16% to close at new high of Rs. 260. Skumars continued its run ahead of the demerger and closed at Rs. 125. Gitanjali gems continued its glitter to close at 368. I believe that the stock still has steam left given its focus on inorganic growth. Reliance Industries continue to rule strong. Investors are advised to maintain a hold on this stock.
CCCL had a sparkling listing today. Against the offer price of 510 , the stock closed at 800 a gain of 57 % !! Recently listed IPO have been quite rewarding given the huge demand and CCCL was no exception. Short term Investors can consider booking profits at a price above Rs. 860. Long term investors can continue to hold the stock.
So are you guys all set to see the 20000 mark ???? Wondering what to do ? Yes, one question that is hounding retail investors is that whether it makes sense to buy at current levels ?
There are no signs of a pull down, the only factor of political instability has also lost its power since congress seems to have dragged its feet back on the nuclear agreement issue. It's hard to give up the throne! Q3 results so far have not thrown any major negative surprise except that the rupee appreciation has been able to dent the growth rate of IT companies. But that has already been factored ! So the only reasons for markets to fall from here can be profit booking by the FII's and that can come anytime!
The advice here would be that conservative investors would be better avoiding buying into stocks at current levels. If you are already invested and see super profits on your investments, you would be better off booking profits on every rise. After all, its equally important to bring the profits in your home rather than being happy seeing your notional profits!
Parting thoughts that may give you some insights ....power grid is still languishing at 115 levels after a powerful debut. Will nagarjuna fertilizers become part of Reliance pack ...? Will Gitanjali's recent acquisition help it cross 400 levels ? Can Bharti's tower biz help it to attain all time high !
All the best! Enjoy the current bull ride , but safeguard yourself from the jerks that this bull can give. Invest in fundamentally good stocks. As always, do write to me if you have any queries! Read More!
Investors who have applied for the IPO can check the allotment status here >>>
Check Allotment Status
The issue was oversubscribed a whooping 65 times creating a history in the IPO market. QIB section got oversubscribed by 115 times. Retail portion got oversubscribed by 7 times.
As per unconfirmed sources, the IPO grey market is putting a premium of Rs. 25 on the offer price of Rs. 52. We will discuss the listing strategy in detail once the listing date is finalised. Read More!
Supreme Infrastructure has entered the capital markets with an offer of 34.75 Lac shares at a price band of Rs. 95-Rs. 108. Investment Guru is of the view that the company's business model of integrated construction setup has worked well and has enabled it to garner higher margins in an otherwise low margin business. There are few factors such as over-dependence on government projects and inexperience in the construction of office spaces which are relatively dark areas. However, the company has priced its IPO very modestly and investors in the IPO can expect good listing gains. Given its entry in the construction of IT parks and related areas, the stock would be worth watching from a medium term perspective.
About the Company
- Supreme Infrastructure is a medium sized Company in the infrastructure sector and is engaged in construction of Roads, Highways and widening of Highways.
- The company owns and operates a Ready Mix Concrete (RMC) Plant (powai) for captive consumption and also for sale to other parties.
- It also owns and operates Asphalt Plants (Bhiwandi and Powai) for captive consumption and also for sale to other parties and Wet Mix Plant for captive consumption
- The company operates crushing Plant (near Thane) for crushing the stones / boulders into aggregates to be used in the building and road construction.
- Supreme Infrastructure has completed 56 projects valued at Rs. 198.77 Crores till July 31, 2007.
- The IPO proceeds would be used for purchase / upgradation of Plant and Machinery and Long term working capital requirements.
- A profit making company for last 10 years.
- The Company is well equipped to handle large orders and is registered as a Class “I” by PWD and as “A” Class contractor by Bombay Municipal Corporation and Public Works Department as Class “I” Contractor and entitled to bid for and accept Works and Orders as per its bidding capacity.
The New Venture
- The company plans to foray into the real estate business by undertaking the construction contracting activity. The promoters of the company have incorporated a separate company by the name of Supreme Housing for real estate development business.
- Supreme Housing and Hospitality Private Limited proposes to develop an Information Technology Park followed by residential complex in Powai area. The area to be developed as information Technology Park would be approximately 4,90,000 square feet and the area to be developed as residential complex would be approximately 5,71,000 square feet. The residential complex will be developed under the Slum rehabilitation scheme . The work for development of information Technology Park is expected to commence by March 2007.
Financials and Valuations
- Company Top line grew from mere 8 crores in FY03 to 96 crore in FY07. Net profit grew from 12 Lacs in FY03 to 12.75 Crore in FY07.
- EPS for Year ended FY07 stood at 12.66. Post Issue EPS works out to be Rs. 9.2. The offers comes at a P/E of 11.7 on the upper price band.
- Return on Networth stood at 32% for FY07.
- Net Asset Value as of 30th June stood at Rs. 43.64 (Pre-issue).
- Competitors like MSK Projects and Tantia Constructions are quoting at a P/E of 14.
Issue Opens : 21-Sep-2007
Issue Closes : 26-Sep-2007
Registrar : Bigshare Services
For Allotment status of Supreme Infrastructure IPO, Click Here
Forthcoming IPO's : Saamya Biotech, Maytas Infra, Circuit Systems.Read More!
Looks like India is going through a very good phase. On one hand our cricketers are showering fours and sixes and delivering amazing performance at the world cup, on the other hand the stock markets are flaring up with sensex hitting all time high of 16616 with superstars like Reliance hitting every ball for a six !!! whatever, the game has taken an intresting turn, be it cricket or the sensex. So what's next ? Will our cricketers win over the australians ? will sensex post a new high on monday ?
We should all thank Mr. bernanke , the US Fed chief for a 50 basis point rate cut which brought cheers to markets across the globe. Markets are now expecting RBI to announce a rate cut ! Fed's decision is being seen as a helping hand to the ongoing subprime crisis. On the Indian markets, this would ensure flow of funds to indian markets and hence liquidity would continue to be a driving factor for the markets.
Reliance stocks in the thick of action
The person who been benefitted most from the upturn in the stock market is undoubtedly the Ambani brothers and of course the Reliance Shareholders. Share of all reliance group companies posted impressive gains.
I remember giving the Investment idea on Reliance Industry @978 in May last year (See the post Here) with a One year target of 1800 and since then the stock has lived up to the expectation of the investors. I would recommend invetsors to keep a hold on the stock as it unfolds it journey to new horizons. Reliance has recently announced its foray in highly lucrative shipbuilding and dredging sector.The company has anoounced oil finds in D4 block in Krishna Godavari basin. Company Infrastructure arm Reliance Industrial Infrastructure has been in the limelight for last few session and has moved to 1043 backed by continous buying support.
Reliance group stocks were in continous demand in the market. Reliance Natural Resources surged 35% to end at Rs. 76. It has applied for a license to undertake city gas distribution business in Delhi, Mumbai, Gurgaon and Noida. Reliance petroleum was up 11 % on huge demand. Punters are putting a target of Rs. 200 on the stock within 6 Months.
Kuotons and CCCL gets huge subscription
Both the IPO's were considered to be aggressively priced and see the subcription numbers ! Kuotons was subscribed 45 times while CCCL was subscribed whooping 81 times. This shows the craze to earn listing gains among the investors and why not , if a stock like Magnum Ventures can give 85% return on lsiting day, Kuotons and CCCL will follow suit and going by the trails they may also have a blasting debut on the bourses. As per unconfirmed sources, Kuotons is commanding a premium of Rs. 100 in the Grey market and CCCL is commanding a premium of Rs. 250 The figures may go further up after the news of oversubscription. Another IPO on the block is Supreme Infrastructure. An update on this IPO will be posted shortly on the blog. Read More!
Company : Consolidated Construction Consortium Ltd. (CCCL)
Sector : Construction / Engineering
Shares Offered : 37 Lac
Price Band : Rs. 460 – 510
CCCL is a good mix of play on construction and engineering space. Investment Guru is of the view that the company has good growth potential given the visibility into its earnings based on 2000 crore order book, good management pool and its move towards high margin businesses. However, the IPO has been priced quite aggressively and the quantum of listing gains depends on the state of markets at the time of listing. Investment Guru expects moderate listing gains on listing.
- Ability to provide integrated turn-key construction services to clients operating in diversified sectors
- Scheme of concentric integration: CCCL has the key competencies and in-house resource to deliver a project from its conceptualization to completion. The company believes that this has been one of the important contributing factors to successful completion of a number of projects in a timely manner, without compromising on quality.
- Ability to execute innovative and complex structures
- Qualified experienced and proven management team
- The company’s operations are concentrated in Southern part of India. 92.50% of the Order Book as of July 31, 2007 and 92.2% of revenues for Fiscal 2007 are from projects located in the south of India. Further to this even in South they are concentrated in the states of Tamil Nadu and Karnataka. Hence the company lacks geographical diversification.
- The company does not owns the CCCL brand, it has licensed by one of the promoter’s group company. The company pays 4% of profit to this company (maximum Rs. 2 Crore) for using the logo.
- The company has generated negative cash flows from operating activities for last three years.
Company’s Topline has zoomed from 126 crore in year 2003 to 868 Crores in year 2007. Bottom line has also soared from 3 crore in FY03 to 47 crore in FY07. In last 4 years, the company’s sales have grown at a CAGR of 76% while the profits has grown at a CAGR of 126 %.
For FY07, the EPS post the bonus issue stood at 14.88. Return on Networth is 23.27%.The Net asset vale per share comes to Rs. 55.84. At the higher price band the issue comes at a PE of 34. Peer B.L. Kashyap is quoting at a PE of 24.
This Issue being has been graded by ICRA Limited as IPO Grade 3 indicating average fundamentals.
Issue Opens : 18-Sep-2007
Issue Closes : 21-Sep-2007
Registrar : Karvy
To check IPO Allotment status of CCCL click Here
Koutons Retail has entered the capital markets with an offer of 35.24 lac equity shares at a price band of Rs. 370 -415. Investment guru is of the view that the company has taken advantage of the retail growth story of India and has been able to deliver excellent growth with a viable business model. The future holds good for the company and the IPO proceeds would be used for expansion plans to fuel company growth engine. At the same time the company has priced the issue quite aggressively. However, given the growth rate in Topline and bottomline, and future expansion plans , and due to low float available to public, the stock would be bound to offer smart listing gains to the investors.
The Organized Retail story
The Indian retail sector is at an inflexion point with economy growing at 7-8%, favourable demographics, rising consumer incomes, real estate developments like emergence of new shopping malls and changing lifestyles that bring the Indian consumer closer to the consumers in more developed markets. All these changes are driving growth of organized retailing.
India is the second fastest growing economy in the world, where currently the retail market is valued at USD 270 billion. Food and grocery is the dominant sector followed by clothing, textiles and fashion accessories. Organised retail has been growing at a CAGR of 30%. Apparel and accessories retailing is the largest segment of organized retailing in India, constituting 39.0% of total organized retailing business, which is valued at approximately Rs. 550.0 billion (USD 12.4 billion). The rise of Mall culture in urban India has been a boon for the apparel sector and has the trend is fast catching up in smaller cities. The potential is huge.
About Koutons India
An integrated apparel manufacturing and retail company in India. The company is in the business of designing,manufacturing and retailing apparel under the “Koutons” and “Charlie Outlaw” brands through a network of 999 exclusive brand outlets (as of August 20, 2007) across India.
The company has 18 in-house manufacturing/finishing units and 14 warehouses which are spread across various locations in and around Gurgaon. The company has increased annual manufacturing capacity from 6 Lac pieces of apparel in 2005 to 1.24 Crore as of March 31, 2007
The “Koutons” brand has been core to the success of the company. Sales from brand “Koutons” has increased from Rs. 516 million for 2005 to Rs.3,727 million for 2007 and has contributed 99.11% and 92.34% of total income in fiscal 2006 and 2007, respectively.
Koutons brands caters to middle and high fashion segment and offers a complete range of men’s wardrobe. The company has also relaunched its old brand “Charlie Outlaw” targeting the youngsters.
The company adopts three tier retail model to market its products. It has Company owned and company operated stores, Company owned and Franchisee operated stores and Franchisee owned and Franchisee operated stores. At present the majority (858) outlets are franchisee owned and operated. 124 outlets are company owned and franchisee operated while only 17 outlets are under company owned and operated model. The focus is on increasing in company owned and operated stores.
Koutons is an intergrated player as its operations cover manufacturing to retailing processes. The scale of operations helps the company to enjoy higher operating margins.
Company enjoys high brand visibility and this helps it to maintain the growth rate.
The company is bringing diversification in its retail model from franchisee based to Company owned and operated stores. This will improve profitability in long term.
The company is also moving from men’s range to complete family range of apparels. This would provide drivers for future growth.
Aggressive growth of the company has led to higher inventory levels which in turn increases the working capital requirements.
The company is dependant on brand “Koutons” for its sales. Inability of company to maintain the brand image could lead to slower growth in sales and profitability
The franchisee model has its own pitfalls and company’s overdependence on this model may be a risk factor. Also the entire inventory risk in the franchisee model is borne by the company.
Object of the Issue
The issue proceeds would be utilized in setting up exclusive brand outlets and new manufacturing facilities
Financials and Valuation
Income has grown from Rs. 581.46 million in fiscal 2005 to Rs. 4,036.17 million in fiscal 2007, at a CAGR of 163.5% and our profit after tax has increased from Rs. 19.29 million in fiscal 2005 to Rs. 344.87 million in fiscal 2007, at a CAGR of 322.8%.
For the year ending 31st March,2007, the EPS stood at 14.22. The average return on networth is 21.2%. Net asset value per share is Rs. 59.49.
On post issue equity, the EPS works out to be 11.3. At the offer price of Rs. 415 the issue comes at a PE of 36.8 which makes it a aggressively priced issue. Peers like Kewal Kiran and zodiac are quoted at a PE multiple of 16 and 19 respectively.
Issue Opens: 18-Sep-2007
Issue Closes: 21-Sep-2007
Check IPO Allotment Status of Koutons Here Read More!
Powergrid Corporation has entered the capital markets with a public offer of 57.39 Crore equity shares at a price band of Rs. 44-52. The company intends to raise about Rs. 3000 crore at the higher band. Investment Guru is of the view that the company has good growth potential given the thrust on power sector reforms and its importance in the growth of the economy. The issue is priced reasonably and offers scope for listing gains.
Hightlights of the IPO :
- Power Grid is into the business of Power transmission. (In Year 2007, it transmitted approximately 298 billion units of electricity, representing nearly 45% of all the power generated in India)
- The company has completed 101 transmission projects and schemes valued at Rs. 251.81 billion. As at June 30, 2007, it had 45 transmission projects in various stages of implementation.
- The Company plan to spend Rs. 550 billion towards investment in transmission projects during the GoI’s Eleventh Five Year Plan
- The company also provides transmission related consultancy services.
- The company has also diversified into Telecom Business by creating a telecommunications network principally using its overhead transmission infrastructure.
- It own and operate a fibre-optic cable network over 19,000 kilometres long and connected over 60 Indian cities, including all major metropolitan areas. The company has been leasing bandwidth on this network to more than 60 customers, including major telecom operators such as BSNL,VSNL, TTSL RCOM and Bharti.
- The net proceeds of the Fresh Issue shall be utilized for 15 identified transmission projects of the Company
- The company's Topline has grown at a CAGR of 13% over the last 5 years. For FY07, PGCIL clocked a Topline of Rs. 40.8 Billion and PAT of 10.8 billion. For the Q1 ended June,30 the Topline was Rs. 10.5 Billion and a PAT of Rs. 4.5 Billion backed by savings in Interest and Finance Charges.
- Weighted average EPS for the last three years stood at Rs.2.85. The annualised EPS based on first quarter's EPS comes to Rs. 4.76
- The retrun on Networth comes to 10.16 %
- Net Asset value of company's share comes to Rs. 29.18 per share.
- There are no listed peers per the prospectus.
- Major part of the Revenues is derived from the transmission of power to the State Power Utilities and many of these entities have had weak credit histories in the past. This may impact performance of PGCIL.
Issue Opens : September 10th, 2007
Issue Closes : September 13th, 2007
Registrar : Karvy Computer Share
Company Website : Click Here
Check Allotment Status of Power grid IPO Here
Wow! It's a great feeling to be back on the blog after a gap of more than one month. First of all thanks to all the readers of the blog who have showed tremendous faith in the blog and have been kind enought to wait patiently for updates on the blog. I am penning this post from myhometown Jaipur. I arrived here on Saturday afternoon and the city welcomed me with a scanty shower that changed the mood of the climate. Today also we witnessed a short span of showers and cool breeze was blowing. Jaipur , as always, has been close to my heart and every time I come here I make plans of settling here, sooner or later. I am sure I am going to write a great chapter in my career soon and when I do that most probably I would be based at Jaipur. I am not going to open the cards further and frankly these are just some thoughts that come to my mind . I need some hard core planning to convert this into action. Well, lets leave this apart for now and turn to our all time favourite .....yeah...of course...the Great Indian Stock Markets......As I am writing this post , there are few questions in my mind which I am and probably all the readers are trying to find answers to.
- Where is the sensex headed ?
- Will global factors continue to impact our matkets ?
- What about impact of recent political developments?
- How is the Indian economy placed and its impact on markets ?
- Markets have recovered recently from lower levels ? have I missed the rally...should I buy now or wait for a fall ?
- Should I put my money in bluechips or Midcap stocks ?
- Which sectors are expected to perform better in coming quarters ?
- Will markets go up till diwali and then fall ?
- What is the FII mood on Indian stocks ?
- How will the IPO's do in the coming months?
- Can sensex touch all time high this year again ?
The list is not ending ....so let's put a brake and try to explore what the markets hold for the future.
The Bounce Back
Investors were trying to forget the jerks of March 2007 as the markets pulled back smartly from there to create a life time high, however the month of July brought another shocks in form of Sub prime crisis and clouds of uncertainty over domestic political uncertainty. Indian markets got glued to the global markets and to add to the woes came the political drama over the Nuclear treaty with US. It looked as if the things have come to an halt and the bull run is over. However, the markets again took an U-turn and recovered to a greta extent backed by buying at lower levels and assurance from US govt that sub prime lenders would get relief.
Global Markets would continue to Impact
The sub prime fear is far from over and looks like it will continue to haunt the US as well as asian markets for time to come. For those readers who are not aware of what sub prime crisis, I would put it simply as defaults by borrowers of loans with changes in interest regime. The US housing markets had witnessed tremendous growth in numbers of defaulters on home loan borrowings especially to the segment where the quality of borrowers was not good and hence the chances of default are more. You can read more on Subprime Crisis on Wikiepedia.
Can Sub prime crisis happen in India ?
Given the sharp surge in real estate prices and hardening of Interest rates and given the way the property market is growing on the financing options available, we can say Indian is not immune to sub prome crisis. Howevever, we are in the eraly stages of the cycle and the real impact would be known in the coming 3-4 years.
Political Concerns - Roadblock to reforms
The question is not limited to whether left will pull out the support to the UPA government or whether the Indo-US Nuclear deal will go through or not . A bigger concern is that will the government be able to take the reforms path forward without any roadblocks ? geberal perception is that, even though the government may eventually save its seat, it will have to put the reforms on back burner while doing so. Political concerns or in other words the overruling of politics over economics will prove to be a dampner on the moods of the market.
FII's ...will they buy or sell ?
Well they are in the business of earning money through stock markets and they do indulge in profit taking at times. However, I do not think that FII's would leave the immense opportunity that India as a growing economy offers to the Investors. If we see the investment pattern of the FII's in the last 6 months, we would find that FII's have been net buyers in 5 out of the 6 months. So who say's they are running out. I believe that FII's would continue to pour money in India and keep booking profits too as and when they find an opportunity. Overall, FII interest in India would continue.
Indian Economy - On the growth Track ?
Indian economy grew at the rate of 9.3% for the quarter ending June ,2007. As per the Central Statistical Organisation manufacturing sector grew at 11.9 per cent, ‘electricity, gas & water supply’ at 8.3 per cent, ‘construction’ at 10.7 percent, ‘trade, hotels, transport and communication’ at 12.0 per cent, ‘financing, insurance, real estate and business services’ at 11.0 per cent, and ‘community, social and personal services’ at 7.6 per cent. The growth rates in ‘agriculture, forestry & fishing’ and ‘mining & quarrying’ are estimated at 3.8 per cent, and 3.2 per cent, respectively during this period.
This shows that we are moving steadily towards the target of 10% growth, but again one has to watch the political development which may result in slowdown in the growth.
Also we need to fast takeover our neighbour China, whose economy is growing at a scorching pace of 11.3%.
Blue Chips Vs. Midcaps
Well that's a tough question and one needs to take a call based on individual investing pattern and risk apetite. Blue chips on one hand provide steady growth with more stability during the downturns, Midcap stocks offers skyrocketting returns which can turn into earth shaking tremors as well in times of downtrend. I would advice a mix of both. An average investor should have 60% blue chip exposure and 30-40 % midcap exposure to get a balance in the portfolio, but again it depends on individual investment needs and objectives.
The Outperforming Sectors
Capital goods, Private sector Banks, Cement, Financial Services and chemical and fertliser space looks good from sector perspective. IT would continue to be underperformer for some more time until investors get a clear picture on how these companies tackle the stromg rupee and manage to grow at higher pace.
IPO's continue to delight
The performance of recently listed IPO's gives us a feeling that good IPO's would continue to shower money on the investors and bad IPO's would be punished irrespective of the sensex levels. Hence, Investors would do well to invest money only in good IPO's.To summarise, the outlook on the Indian Stock market is cautiously optimistic. One should understand that there are factors that can pull the markets down. However, as I always say, long term investors would always be winner. Short term investor will need to keep themselves abreast of global as well as domestic developments. Stock specific stories would continue to rule the markets. Read More!
Everonn - Technifying India's future, Apply for listing gains
Everonn Systems has entered the capital markets with a public offer of Rs. 50 crore worth of shares at a price band of Rs.125 -140. Investment Guru is of the view that Indian IT Training business segment has huge potential given the young demography advantage of India and hence company's imparting IT training have good potential. Everonn Systems is a play on both the IT training as well as the niche segment of "Vitels" which is a virtual and Technology enabled learning solutions. However, company is heavily dependant on government initiatives and has high debt outstandings which can impact future cash flows given company's huge capex oriented plans. However, since the issue is compared to peers like Educomp and NIIT which are quoting at fancy premiums, it may generate listing gains for Investors.
Let's look at some of the highlights of the issue
About Everonn Systems
- India is currently one of the largest markets for School Education in the World. India currently has over 1 million schools providing education to over 200 million students. There are over 5 million teachers across ndia who needs support in training in IT and delivery of Education.
- The Government of India has spent over Rs. 10,000 crores on Elementary Education in the country during 2005-06 through its various schemes. Besides this the Government has an outlay of Rs 2563 crores on Higher/Secondary Education during 2005-06. Education in the country is funded through a 2% Education Cess and other Budgetary Allocations.
- Everonn system a fully integrated Knowledge Management, Education and Training Company offering a range of services that include Creating Educational and Training Content, Designing and executing large learning initiatives and Setting up the needed infrastructure for learning and training.
- It is a leading players in setting up Virtual and Interactive Learning classroom networks across India to deliver quality and affordable education. It is developing and integrating content for Indian and global audience in schools, colleges, corporates and retail space.
- The company has presence in eight states, over 1,300 computer labs and 1,900 schools, and trained 1.2 million students.
- The issue proceeds would be used to fund setting up of institutional education and infrastructure services, Vitel Solutions, Brand Building and forM&A's.
- The company currently caters to over 1900 schools. It plan to add almost 1000 schools every year.
- The company has been selected by the School Education Department, Government of West Bengal to impart computer education to students of Government schools.
- It has also received the contract for providing certain equipments and services such as Computer hardware, software and connected accessories as per the Karnataka Govt's tender and providing computer education services and Annual Maintenance in 216 Government High Schools under the ICT Project.
- Everonn is one of the pioneers in this space with a successful and impressive track record. ESIL’s Education Centric technology, content and support infrastructure provision to the last mile (schools) has enabled it to successfully create a niche in this sunrise segment.
- The company has very high level of Sundry Debtors of 7.8 months as on March 31, 2007. This pose risk to cash flow of the company and may impact working capital requirements.
- The company works on BOOT model which involves huge capex outlays at initial stages.
- The company's business is seasonal in nature.
- Company's Topline has grown from 16.2 crores in FY04 to 43 Crores in FY07 generating a CAGR of around 35.5 % . Profits also grew from 60 lacs in Fy04 to 4.86 Crores in FY07.
- For the year ended 31st March,2007 company EPS stood at Rs. 5.63 which gives a P/E of 24.87 at the higher end of the price band.
- Industry composite PE is 55
- Weighted Average Return on Networth is 17.79%
- Net Asset value is Rs. 62.52
- Peer Group company Educomp Solutions which has a compartively large scale is quoting at PE multiples of 127 while NIIT is qouting at PE multiple of 67
Issue Opens :05-07-2007
Registrar :Cameo Corporate Services
Company Website :Everonn Systems
For IPO Allotment Status Click HereRead More!
Suryachakra Power corporation limited has eneterd the capital markets with an offer of 3.4 crore shares at a price band of Rs. 17-20 per share. Investment Guru is of the view that Suryachakra is a small player in its segment and hence doesn't command economies of scale which is an differentiating factor in the power industry. The IPO has also been priced very aggresively compared to company fundamentals. The outlook for power sector has been optimistic given the governments focus on infrastructural growth of India, however, it has to be seen if small plyaers like Suryachakra can really take advantage of this. The foray into power trading and Bio-diesel sector are a positive but the company's ability to succeed in these ventures is yet to be tested and proved. The IPO is rated as average.
About the Company
- SPCL is part of the Suryachakra Group and is headed by Sh. P.V Rao
- The company's vision is to be a frontrunner in power trading by developing a vibrant power market and striving to correct market distortions and to improve the commercial viability and supply power at competitive rates.
- The company is actively engaged in the generation of power. The company had set up 20 MW power plant in remote area near Port Blair, in Andaman Islands at a cost of Rs.850 millions and dedicated to the Nation. The plant is in operation for the past couple of years. It has already notched up an annual turnover of RS.800 millions.
- The Company focusing on entry into Urban infrastructure development activities and
also had signed MOU with Zecon Engineering Berhad, Malaysia.
- The Company has been granted Power Trading license by Central Electricity Regulatory
Authority for carrying out inter state sale (trade) of power.
- The company’s group companies viz. Cocanada Fisheries Ltd. and Kalyan Marine and Agro Products Ltd were delisted due to non-compliance with Listing Agreement.
- The Company relies on a single customer for all of its income. Under the PPA, the Company is required to sell the entire power available for sale generated by the power plant to Electricity Department of A & N Administration
- Crisil has assigned a CRISIL IPO grade “2/5” (pronounced “two on five”) to the proposed initial public offer of Suryachakra Power Corporation Ltd (SPCL). This grade indicates that the fundamentals of the issue are below average relative to other listed equity securities in India.
To invest in Equity of MSM Energy Limited a wholly owned subsidiary, for setting up of two
10MW bio-mass based power plants in Parbhani and Amravati districts of Maharashtra.
- For the Year ended March'07, total Income stood at 95 Crores while net profit stood at 1.72 Crores. Topline grew by 9.4 % while profits grew by 56%.
- The Consolidated average EPS works out to be 0.34. At the higher band of the offer price , the issue comes at a P/E of 58.82 Average industry P/E is 18.2 !!
- Return on Networth is 2.34 %
- Competitors like Neyveli Lignite is qouting at PE of 23 and has RONW of 7.7 %
Issue Opens : 25-06-2007
Issue Closes : 29-06-2007
Registrar : Karvy
IPO Allotment Status of Suryachakra
Company Website Read More!
The listing of Nelcast was diappointing for those who got the allotments. The stock which listed at Rs. 230 in the opening trades soon started tumbling down. Though the stock did touch 274 levels on NSE, I believe not many trades would have happened at those levels. After staying near the IPO offer price for some time the stock went into discount zone and couldn't recover from the jerk's. The IPO was reasonably priced and the markets didn't thought it fit for further premium. The stock is currently qouting at Rs. 206 down nearly 6% from the IPO price.
Nelcast Ltd. is listing tomorrow on both BSE and NSE. The company has alloted shares @ Rs. 219 per share. The issue saw a good response and was oversubscribed by 7.36 times. the retail portion was subscribed around 4.6 times while the Institutional Investors portion got oversubscribed by 11 times.
At the offer price the stock comes at a P/E of around 20 which can be considered to be reasonable given the current valuation of auto ancilliary sector. The stock is expected to list between Rs. 260-285 given the current IPO listing trends. A listing above this level can be considered as a good opportunity to book listing gains. Read More!
Check Allotment Status of Vishal retail
We will discuss the expected listing price (one thing is sure that listing is going to be a explosive one) and how to play the stock on the listing day once the listing date is available.
See Investment Guru's IPO update on Vishal retail Read More!