Sunday, December 13, 2009
SUFFICIENTLY INTELLIGENT AND COMPETENT
Anil Dharker views that our intelligence agencies are inefficient and unprofessional and comparing them to the agencies in UK and US is unfair. (DNA 23-11-09 - How intelligent our sleuths are) They must be having sufficient information about Vilas Pandurang Warak and Rahul Mahesh Bhatt. That need not be made public, since investigation is still in progress. The law is same for every one and the National Investing Agency (NIA) is following the established procedure in questioning them. Just because they are from film land, rules need not be deviated. It is the media that is harassing them with un wanted publicity. The investigating agencies are just doing their job. We all know how FBI officials treated our Sharukh Khan in August this year, at New York airport. If the US intelligent agencies are so efficient why they had know clue about the 9/11 attack, which killed thousands of people. Why they are not able to catch the most dreaded terrorist Osama Bin Laden, in spite of Pakistan government giving them free hand to use their territory for that purpose? By appearance most Indians, Bangladeshis and Pakistanis (the epicenter of international terrorism) look alike which is a major hindrance in surveillance and information gathering, unlike in the West, where they can easily identify an Asian by look. This is the advantage the Western intelligent agencies have over our agencies. Otherwise, our intelligent agencies are also sufficiently intelligent and competent.
BURY THE REPORT, BUILD PLACE OF WORSHIP FOR ALL RELIGION
A lot of debate, discussions, views and counter views have been on the air since the Liberhan report was leaked/placed in Lok Sabha. Justice Liberhan has taken seventeen years to tell what the country already knew. The delay is an indication of how successive governments at the Center were serious about the reports, its findings and taking action against the culprits. The report is a stillborn child, which will be quietly buried. The present government at the center has neither the numbers nor political will to take strong action against those who were responsible for the demolition. The political parties are in no mood to find a lasting, permanent solution to the problem. The debate, discussions should focus on this, instead of looking into the omissions and drawbacks of the commission. The purpose of all religion is to know and love God and to show ethical and proper directions to life and living. The preaching in all religion does not differ in any way and all teach love as against hatredness. India being a country, which harbors a multitude of religious belief, the feeling of solidarity in diversity can be best showcased by building a centre of worship for all religions.This would no doubt become a memorable monument for the whole world to appreciate and emulate. Its time the political differences are buried and India demonstrates to the world that we are a truly a secular nation in letter and spirit. The government should initiate talks in this regard involving all political parties.
ANDHRA SPLIT: HIDDEN AGENDA
PUBLISHED IN HT ON 15-12-09 UNDER THE CAPTION - TELANGANA DECISION HASTY.
The haste decision of UPA -2 government to initiate the process of splitting the Andhra, has put the otherwise strong Congress government in the state in a spot. The Telangana movement is not an overnight creation. The demand was there for the past forty years. KCR who was part of NDA government in 1999 did nothing for creation of separate state. TDP(KCR was in TDP at that time) had more numbers in LS at that time and Chandra babu Naidu was the chief minister of Andhra. He could have got the Telangana state without any problems, normally associated when smaller states are carved out of bigger state. In 2009 assembly as well as in the LS election TRS lost very badly. Under YSR, Congress rode back to power. There was no agitation when YSR was at the helm of affairs. The bickering and weak leadership in state Congress gave him the much needed plat form to re-launch his sagging political career. It is a myth that the smaller the state, the better the administration and the development. It is not about the size or numbers when it comes better governance and performance. The quality of political leadership, commitment, political will and genuine concern for the development of the state and welfare of the people that matters. Does KCR have the magic wand to solve all the problems faced by the Telangana region? Why he did not go on fast unto death, for the same cause, when he was part of NDA?
The majority of MLAs and MPs of Congress, TDP and Praja rajyam parties are against the split. Unless a favorable resolution is passed in assembly, the Center will not be able to proceed further. And we will be back to square one.
The haste decision of UPA -2 government to initiate the process of splitting the Andhra, has put the otherwise strong Congress government in the state in a spot. The Telangana movement is not an overnight creation. The demand was there for the past forty years. KCR who was part of NDA government in 1999 did nothing for creation of separate state. TDP(KCR was in TDP at that time) had more numbers in LS at that time and Chandra babu Naidu was the chief minister of Andhra. He could have got the Telangana state without any problems, normally associated when smaller states are carved out of bigger state. In 2009 assembly as well as in the LS election TRS lost very badly. Under YSR, Congress rode back to power. There was no agitation when YSR was at the helm of affairs. The bickering and weak leadership in state Congress gave him the much needed plat form to re-launch his sagging political career. It is a myth that the smaller the state, the better the administration and the development. It is not about the size or numbers when it comes better governance and performance. The quality of political leadership, commitment, political will and genuine concern for the development of the state and welfare of the people that matters. Does KCR have the magic wand to solve all the problems faced by the Telangana region? Why he did not go on fast unto death, for the same cause, when he was part of NDA?
The majority of MLAs and MPs of Congress, TDP and Praja rajyam parties are against the split. Unless a favorable resolution is passed in assembly, the Center will not be able to proceed further. And we will be back to square one.
VIR SANGHVI IS RIGHT – PAK IS CUNNING
Thought provoking and excellent article by Vir Sanghvi – There is a method to their madness (Reflections HT- 13-12-09). For the reasons best known to their leaders (MAD), the PAK neither is interested in having peaceful relationship with India nor is their successive leaders are making any sincerer efforts in finding a lasting solution to the vexed problems. The government of India had provided more than required proof against the perpetrators of Mumbai attack. Shah Mehmood Quershi, PAK external affairs minister had the audacity to say that the proof provided is half- baked, recently in New York. PAK is simply not interested in taking action against the offenders. On one pretext or the other, the PAK is delaying taking actions on the terrorists who attacked Mumbai.
Any right thinking and responsive government would have taken action barely on the request made without going into the details of so-called proof. However, our good neighbor does not do that. This gives reasons suspect whether such heinous acts were carried out with the tacit understanding and the support of the establishment there. Only time will reveal the ‘true’ intentions of PAK in its role in curbing the terrorists activities on its soil or otherwise.
Earlier, the former Pakistan president Pervez Mushraff has admitted that the aids provided by the United States to Pakistan for the fight against terrorism during his tenure was misused to strengthen the defenses against India. Mr.Zardari, the present PM, has accepted the fact that the terrorists in their land are created, nurtured and supported by the Establishment. Terrorists, by tacit understanding and the support of PAK military and ISI carried out the 26/11 attack on Mumbai. The government of India has provided enough proof, that the attack was carried out by out-fits, that are sheltered and protected by the Government of PAK. The PAK government is not serious in this matter. The dreaded international gangsters, drug peddlers and terrorists are living like Moghul emperors of yester years with active support of the government. India has given a list of most wanted international criminals who are sheltered in PAK. However, no response from them. What kind of a peace deal, one can have, with leaders of that kind of mindset. It is high time that we stop acting like statesmen, show our strength, and put the peace talk in the back burner.
For IPO analysis from the same blogger log on to firstchoiceipoanalysis.blogspot.com
Any right thinking and responsive government would have taken action barely on the request made without going into the details of so-called proof. However, our good neighbor does not do that. This gives reasons suspect whether such heinous acts were carried out with the tacit understanding and the support of the establishment there. Only time will reveal the ‘true’ intentions of PAK in its role in curbing the terrorists activities on its soil or otherwise.
Earlier, the former Pakistan president Pervez Mushraff has admitted that the aids provided by the United States to Pakistan for the fight against terrorism during his tenure was misused to strengthen the defenses against India. Mr.Zardari, the present PM, has accepted the fact that the terrorists in their land are created, nurtured and supported by the Establishment. Terrorists, by tacit understanding and the support of PAK military and ISI carried out the 26/11 attack on Mumbai. The government of India has provided enough proof, that the attack was carried out by out-fits, that are sheltered and protected by the Government of PAK. The PAK government is not serious in this matter. The dreaded international gangsters, drug peddlers and terrorists are living like Moghul emperors of yester years with active support of the government. India has given a list of most wanted international criminals who are sheltered in PAK. However, no response from them. What kind of a peace deal, one can have, with leaders of that kind of mindset. It is high time that we stop acting like statesmen, show our strength, and put the peace talk in the back burner.
For IPO analysis from the same blogger log on to firstchoiceipoanalysis.blogspot.com
Wednesday, December 9, 2009
IPO ANALYSIS – DB CORP LIMITED - SKIP, JUMP AND PASS OVER
D B Corp, one of the leading print media house in the country, publishing 48 newspaper editions, in three languages, in eleven states and which also operates 17 FM radio stations, is entering the capital markets. The public issue consist of 1, 81, 75,000 shares of Rs 10/ each, including the offer for sale of 1, 27, 25000 shares in the price band of Rs 185 -212.
The issue will open on 11-12-09 and closes on 15-12-09. Enam Securities private limited, Citi Corp Markets India private limited and Kotak Mahindra Capital Company limited are the Book Running Lead Managers.
The flagship newspapers of DB Corp are, Dainik Bhaskar, Divya Bhaskar and Saurashtra Samachar, have a combined average daily readership of 15.5 million readers, making them one of the most widely read newspaper groups in the country. The other newspapers are Business Bhaskar, DB Gold and DB Star and, on a franchisee basis, DNA (in Gujarat and Rajasthan). In addition to newspapers, they also publish 5 periodicals, namely, Aha Zindagi, a monthly magazine published in Hindi and Gujarati, Bal Bhaskar, a Hindi magazine for children, Young Bhaskar, a children’s magazine in English and Lakshya, a career magazine in Hindi.
OBJECTS OF THE ISSUE
The objects of this Issue are to raise funds for - setting up new publishing units, upgrading existing plant and machinery, enhancing brand image through sales and marketing, reducing existing working capital loans and for prepaying existing term loans.
However, the projects for which the Net Proceeds are intended to be utilized have not been appraised by any bank or financial institution and the costs of the projects are based on the internal estimates of the Company.
FINANCIALS
07 08 09 (Rs in crores)
Total Income 674.37 862.69 960.98
Net Profit 35.90 69.77 54.81
EPS (In rupees) 3.06 6.01 4.06
The weighted average RoNW was in excess of 30% for the last three years.
VALUATION AND MATTERS OF CONCERN
Established brands in Indian print media with wide geographical reach. Average fundamentals. Based on FY 2009 EPS, in the price band of Rs 185 -212 the stock is valued around 50 times its earnings, as against the industry average of 28 times. The valuation is very much stretched. The company has no definitive business plans. The promoter group companies have history of de-listing from the Stock Exchanges. Some of the trademarks, logos and copyrights are not registered. The company is unable to disclose information in relation to certain promoter group companies. Promoters and promoter group have equity interests or investments in other entities that offer services that are related to the business of DB Corp.
BUSINESS CHALLENGES
D B Corp business is dependent on advertising revenue and a reduction in advertising expenditure,loss of advertising customers or inability to attract new customers could have a material adverse affect on the business. The company relies substantially on advertisements revenue. During the financial year ended March 31, 2009, the company derived 75.50% of consolidated income from advertisement income.
According to PWC report, the media growth rate to increase in 2010 to 10.4%, from of about 9% now, as economic conditions are expected to gradually improve. The industry will continue to grow at increasing rate and there will be an overall compounded annual growth rate for the period 2009-13 of 10.5 percent. The report also predicts a healthy growth in all eight segments of entertainment and media industry in next four years (2010 to 2013). These are television, filmed entertainment, print media comprising newspaper and magazine publishing, radio, emerging segments like music, animation, gaming, internet advertising.
The Indian newspaper industry is intensely competitive. In each of the markets, DB Corp faces competition from other newspapers for circulation, readership and advertising. In addition, they may face competition from other forms of media including, television broadcasters, magazines, radio broadcasters and websites. These other forms of media compete with newspapers for advertisement and for the time and attention of readers. The group may also face competition from international media companies as the Government of India has recently liberalized its foreign investment regulations and restrictions applicable to the media sector. Competition for circulation and readership has often resulted in competitors reducing the cover-prices of their newspapers. Furthermore, competition for advertising from newspapers has often resulted in competitors reducing advertising rates or offering price incentives to advertising customers. Such reduction in prices or rates or the introduction of new price incentives could have a material adverse effect on financials.
Circulation and readership of newspapers among readers is an important source of revenue as they significantly influence ad-spend by advertisers and advertising rates. Circulation and readership are dependent on, among other factors, the quality of editorial content and the preferences of readers, the reach of newspapers, and the loyalty of readers to newspapers and ability to successfully establish new locally focused newspapers in new regions. Any failure to meet readers’ preferences, quality content may affect circulation and in turn revenues.
The issue is very unattractively priced. There is nothing left for investors. AVOID SUBSCRIPTION.
The issue will open on 11-12-09 and closes on 15-12-09. Enam Securities private limited, Citi Corp Markets India private limited and Kotak Mahindra Capital Company limited are the Book Running Lead Managers.
The flagship newspapers of DB Corp are, Dainik Bhaskar, Divya Bhaskar and Saurashtra Samachar, have a combined average daily readership of 15.5 million readers, making them one of the most widely read newspaper groups in the country. The other newspapers are Business Bhaskar, DB Gold and DB Star and, on a franchisee basis, DNA (in Gujarat and Rajasthan). In addition to newspapers, they also publish 5 periodicals, namely, Aha Zindagi, a monthly magazine published in Hindi and Gujarati, Bal Bhaskar, a Hindi magazine for children, Young Bhaskar, a children’s magazine in English and Lakshya, a career magazine in Hindi.
OBJECTS OF THE ISSUE
The objects of this Issue are to raise funds for - setting up new publishing units, upgrading existing plant and machinery, enhancing brand image through sales and marketing, reducing existing working capital loans and for prepaying existing term loans.
However, the projects for which the Net Proceeds are intended to be utilized have not been appraised by any bank or financial institution and the costs of the projects are based on the internal estimates of the Company.
FINANCIALS
07 08 09 (Rs in crores)
Total Income 674.37 862.69 960.98
Net Profit 35.90 69.77 54.81
EPS (In rupees) 3.06 6.01 4.06
The weighted average RoNW was in excess of 30% for the last three years.
VALUATION AND MATTERS OF CONCERN
Established brands in Indian print media with wide geographical reach. Average fundamentals. Based on FY 2009 EPS, in the price band of Rs 185 -212 the stock is valued around 50 times its earnings, as against the industry average of 28 times. The valuation is very much stretched. The company has no definitive business plans. The promoter group companies have history of de-listing from the Stock Exchanges. Some of the trademarks, logos and copyrights are not registered. The company is unable to disclose information in relation to certain promoter group companies. Promoters and promoter group have equity interests or investments in other entities that offer services that are related to the business of DB Corp.
BUSINESS CHALLENGES
D B Corp business is dependent on advertising revenue and a reduction in advertising expenditure,loss of advertising customers or inability to attract new customers could have a material adverse affect on the business. The company relies substantially on advertisements revenue. During the financial year ended March 31, 2009, the company derived 75.50% of consolidated income from advertisement income.
According to PWC report, the media growth rate to increase in 2010 to 10.4%, from of about 9% now, as economic conditions are expected to gradually improve. The industry will continue to grow at increasing rate and there will be an overall compounded annual growth rate for the period 2009-13 of 10.5 percent. The report also predicts a healthy growth in all eight segments of entertainment and media industry in next four years (2010 to 2013). These are television, filmed entertainment, print media comprising newspaper and magazine publishing, radio, emerging segments like music, animation, gaming, internet advertising.
The Indian newspaper industry is intensely competitive. In each of the markets, DB Corp faces competition from other newspapers for circulation, readership and advertising. In addition, they may face competition from other forms of media including, television broadcasters, magazines, radio broadcasters and websites. These other forms of media compete with newspapers for advertisement and for the time and attention of readers. The group may also face competition from international media companies as the Government of India has recently liberalized its foreign investment regulations and restrictions applicable to the media sector. Competition for circulation and readership has often resulted in competitors reducing the cover-prices of their newspapers. Furthermore, competition for advertising from newspapers has often resulted in competitors reducing advertising rates or offering price incentives to advertising customers. Such reduction in prices or rates or the introduction of new price incentives could have a material adverse effect on financials.
Circulation and readership of newspapers among readers is an important source of revenue as they significantly influence ad-spend by advertisers and advertising rates. Circulation and readership are dependent on, among other factors, the quality of editorial content and the preferences of readers, the reach of newspapers, and the loyalty of readers to newspapers and ability to successfully establish new locally focused newspapers in new regions. Any failure to meet readers’ preferences, quality content may affect circulation and in turn revenues.
The issue is very unattractively priced. There is nothing left for investors. AVOID SUBSCRIPTION.
Monday, December 7, 2009
ANALYSIS OF FORTH COMING IPOS
Await for analysis of ;
a. DB corp
b. Vasocn engg
c. Hathway cables
d. Kumar urban developers
e. Nitesh estates
f. Lodha developers
a. DB corp
b. Vasocn engg
c. Hathway cables
d. Kumar urban developers
e. Nitesh estates
f. Lodha developers
IPO ANALYSIS: GODREJ PROPERTIES LIMITED – SURE WINNER - APPLY
Mumbai based, leading real estate development company, who are one of the top ten builders in the country, is entering the capital markets, to raise around Rs 500 crore, with public issue of 94,29,750 equity shares of Rs 10/- each in the price band of Rs 490 -530. The issue will open on 09-12-09 and close on 12-12-09. ICICI Securities limited, Kotak Mahindra Capital Company. IDFC- SSKI LIMITED and Nomura Financial Advisory Securities Pvt limited are the Book Running Lead Managers to the issue.
The company is promoted by Godrej Industries Limited, which holds around 80% of equity share capital. Godrej Industries Limited is the listed flagship company of the Godrej group of companies, which is one of the leading business conglomerates in the country.
Godrej Group is engaged in diverse business segments, spanning Home appliances, FMCG, Consumer products, Industrial products , Oleo chemicals, Animal feed, Real estate development and Oil palm plantations.
Godrej properties limited (GPL) has real estate development projects in 10 cities in India, which are at various stages of development. Currently, the business focus is on residential, commercial and township developments. GPL is a fully integrated real estate development company involved in all activities associated with the development of residential and commercial real estate.
GPL, as of October 15, 2009, has Land Reserves of 391.04 acres aggregating approximately 82.74 million sq. ft. of Developable Area and 50.21 million sq. ft. of Saleable Area, located in or around prominent and growing cities across India, such as Mumbai, Pune, Bengaluru and Ahmedabad. As on the same date the company has completed a total of 23 projects comprising 16 residential and 7 commercial projects, aggregating approximately 5.13 million sq. ft. of area for development.
OBJECT OF THE ISSUE
The company plans to raise around Rs 500 cr, intends to use Rs 203 cr for acquisition of land development rights for forthcoming projects, Rs 75 cr for construction purposes, Rs 172 cr repayment of loans and the rest for general corporate purposes.
FINANCIALS
(Rs in crores)
09 08 07
Operating income 247.38 227.50 137.26
Profit after tax 76.62 74.85 28.72
RoNW 25% 41% 48%
EPS (In rupees) 12.53 12.78 4.97
VALUATION
GPL is promoted by reputed Godrej group, which has very strong brand equity. Excellent financial track record. Leaders in corporate governance. In the price band of Rs 490-530 the stock is valued at about 40 times of its earning for FY-09. ICRA has awarded grade 4 for the IPO indicating above average fundamentals. The high valuation is justified considering the strong financials, brand equity and future business prospects.
CHALLENGES AND STRATEGIES
The company’s ability to successfully compete in new segments across different geographies is yet to be demonstrated. Due to general recession, proportion of un-booked space in the on-going commercial projects exposes it to market risks. Further slowdown in real estate segment may affect the demand and resultant decline in property prices. This coupled with oversupply situation in many pockets can affect the prices further, which will have cascading impact on financials.
As per CRISIL estimate, the annual additions in units are expected to grow from 70 million units in 2008 to reach 81 million units in 2014. Estimated annual additions in units in rural areas are to grow from 174 million units in 2008 from 198 million units in 2014. GPL with selective acquisition of land parcels in strategic locations, also enter into development agreements with land owners to acquire development rights to their land in exchange for a pre-determined portion of revenues, profits or developable area generated from the projects. The Godrej brand name and the reputation associated with it contribute in attracting potential joint development partners . This business model enables undertaking more projects without having to invest large amounts of money towards purchasing land. Hence, GPL is able to limit risk through project diversification while maintaining significant management control over our projects. A SURE WINNER FROM THE GODREJ STABLE. APPLY.
The company is promoted by Godrej Industries Limited, which holds around 80% of equity share capital. Godrej Industries Limited is the listed flagship company of the Godrej group of companies, which is one of the leading business conglomerates in the country.
Godrej Group is engaged in diverse business segments, spanning Home appliances, FMCG, Consumer products, Industrial products , Oleo chemicals, Animal feed, Real estate development and Oil palm plantations.
Godrej properties limited (GPL) has real estate development projects in 10 cities in India, which are at various stages of development. Currently, the business focus is on residential, commercial and township developments. GPL is a fully integrated real estate development company involved in all activities associated with the development of residential and commercial real estate.
GPL, as of October 15, 2009, has Land Reserves of 391.04 acres aggregating approximately 82.74 million sq. ft. of Developable Area and 50.21 million sq. ft. of Saleable Area, located in or around prominent and growing cities across India, such as Mumbai, Pune, Bengaluru and Ahmedabad. As on the same date the company has completed a total of 23 projects comprising 16 residential and 7 commercial projects, aggregating approximately 5.13 million sq. ft. of area for development.
OBJECT OF THE ISSUE
The company plans to raise around Rs 500 cr, intends to use Rs 203 cr for acquisition of land development rights for forthcoming projects, Rs 75 cr for construction purposes, Rs 172 cr repayment of loans and the rest for general corporate purposes.
FINANCIALS
(Rs in crores)
09 08 07
Operating income 247.38 227.50 137.26
Profit after tax 76.62 74.85 28.72
RoNW 25% 41% 48%
EPS (In rupees) 12.53 12.78 4.97
VALUATION
GPL is promoted by reputed Godrej group, which has very strong brand equity. Excellent financial track record. Leaders in corporate governance. In the price band of Rs 490-530 the stock is valued at about 40 times of its earning for FY-09. ICRA has awarded grade 4 for the IPO indicating above average fundamentals. The high valuation is justified considering the strong financials, brand equity and future business prospects.
CHALLENGES AND STRATEGIES
The company’s ability to successfully compete in new segments across different geographies is yet to be demonstrated. Due to general recession, proportion of un-booked space in the on-going commercial projects exposes it to market risks. Further slowdown in real estate segment may affect the demand and resultant decline in property prices. This coupled with oversupply situation in many pockets can affect the prices further, which will have cascading impact on financials.
As per CRISIL estimate, the annual additions in units are expected to grow from 70 million units in 2008 to reach 81 million units in 2014. Estimated annual additions in units in rural areas are to grow from 174 million units in 2008 from 198 million units in 2014. GPL with selective acquisition of land parcels in strategic locations, also enter into development agreements with land owners to acquire development rights to their land in exchange for a pre-determined portion of revenues, profits or developable area generated from the projects. The Godrej brand name and the reputation associated with it contribute in attracting potential joint development partners . This business model enables undertaking more projects without having to invest large amounts of money towards purchasing land. Hence, GPL is able to limit risk through project diversification while maintaining significant management control over our projects. A SURE WINNER FROM THE GODREJ STABLE. APPLY.
Wednesday, December 2, 2009
IPO ANALYSIS: JSW ENERGY LIMITED – POWER PACKED - APPLY
Jindal group needs no introduction in capital markets. The group has business interest in the steel, power, cement, aluminum, software, power trading and infrastructure sectors.
The power company from the JSW group is planning to raise Rs 2700 cr through IPO,in the price band of Rs100-115 per share, having face value of Rs.10 per share. The issue will open on 07-12-09 and closes on 09-12-09.
JM Financial Consultants Pvt Ltd, Kotak Mahindra Capital Ltd., ICICI Securities Ltd., IDFC-SSKI Ltd., JP Morgan India Ltd., SBI Capital Markets Ltd., Morgan Stanley India Ltd. and IDBI Capital market Services ltd are the book running lead managers to the issue.
JSW Energy limited, is a part of the JSW Group, headed by Mr. Sajjan Jindal.The company currently owns and operates thermal power plants in Karnataka with an aggregate capacity of 995 MW. It also provides operation & maintenance services for power plants of group companies and project management services for the power plants being set up by the group. JSWEL is currently in the process of enhancing its power generation capacity by 2,790 MW. It is also setting up a transmission line network and developing lignite mines through joint ventures.
OBJECTS OF THE ISSUE
The funds raised are intended to be used for setting up power plants. Repayment of high cost corporate debts and for general corporate purposes.
The cost of the projects is estimated at Rs.14,048 crore and is being funded in a debt to equity ratio of 2.45:1 i.e. long-term debt of Rs.9,979.50 crore and equity of Rs.4,068.50 crore. The company has already tied up the total debt component while, funds aggregating Rs.5, 982 crore were deployed in the various projects as on June 30, 2009. State Bank of India and ICICI Banks have appraised and funded the projects.
VALUATION
The company had a CAGR in excess of 30%, in revenue generation, in the last three years. Consistently profit making company. Professional and experienced management. Known for good corporate governance. Strong financials. Power plant are located at diverge geographical locations. The issue has been graded by rating agency CARE as Grade 4, indicating above-average fundamentals. The company’s RoNW is at 18% as on 31-03-09. At Rs 100 -115, the issue is very attractively priced considering its pedigree. Retail investors are offered a discount of Rs 5/- per share.
OPPORTUNITIES
On the successful commissioning of the projects, JSWEL would have benefit of the prevailing high merchant tariff for short term. Given the significant power supply deficit in the country and government recognizing the power sector as a key infrastructure sector to be developed to sustain Indian economic growth, prospects for
growth is favorable for companies in the power sector.
One of the established energy company. One of the early entrants in the power trading business. Currently most of the revenue is derived from power generation. The company has the potential to become an integrated power company in the Indian power sector with presence across the value chain.
The low per capita consumption of electric power in India compared to the world average presents a significant potential for sustainable growth in the demand for electric power in India. There is a very big gap between demand and supply, demand being higher. The company is in the right business at the right time. Investors are advised to apply for the issue for both short term and long term appreciation.
ATTRACTIVELY PRICED. APPLY.
The power company from the JSW group is planning to raise Rs 2700 cr through IPO,in the price band of Rs100-115 per share, having face value of Rs.10 per share. The issue will open on 07-12-09 and closes on 09-12-09.
JM Financial Consultants Pvt Ltd, Kotak Mahindra Capital Ltd., ICICI Securities Ltd., IDFC-SSKI Ltd., JP Morgan India Ltd., SBI Capital Markets Ltd., Morgan Stanley India Ltd. and IDBI Capital market Services ltd are the book running lead managers to the issue.
JSW Energy limited, is a part of the JSW Group, headed by Mr. Sajjan Jindal.The company currently owns and operates thermal power plants in Karnataka with an aggregate capacity of 995 MW. It also provides operation & maintenance services for power plants of group companies and project management services for the power plants being set up by the group. JSWEL is currently in the process of enhancing its power generation capacity by 2,790 MW. It is also setting up a transmission line network and developing lignite mines through joint ventures.
OBJECTS OF THE ISSUE
The funds raised are intended to be used for setting up power plants. Repayment of high cost corporate debts and for general corporate purposes.
The cost of the projects is estimated at Rs.14,048 crore and is being funded in a debt to equity ratio of 2.45:1 i.e. long-term debt of Rs.9,979.50 crore and equity of Rs.4,068.50 crore. The company has already tied up the total debt component while, funds aggregating Rs.5, 982 crore were deployed in the various projects as on June 30, 2009. State Bank of India and ICICI Banks have appraised and funded the projects.
VALUATION
The company had a CAGR in excess of 30%, in revenue generation, in the last three years. Consistently profit making company. Professional and experienced management. Known for good corporate governance. Strong financials. Power plant are located at diverge geographical locations. The issue has been graded by rating agency CARE as Grade 4, indicating above-average fundamentals. The company’s RoNW is at 18% as on 31-03-09. At Rs 100 -115, the issue is very attractively priced considering its pedigree. Retail investors are offered a discount of Rs 5/- per share.
OPPORTUNITIES
On the successful commissioning of the projects, JSWEL would have benefit of the prevailing high merchant tariff for short term. Given the significant power supply deficit in the country and government recognizing the power sector as a key infrastructure sector to be developed to sustain Indian economic growth, prospects for
growth is favorable for companies in the power sector.
One of the established energy company. One of the early entrants in the power trading business. Currently most of the revenue is derived from power generation. The company has the potential to become an integrated power company in the Indian power sector with presence across the value chain.
The low per capita consumption of electric power in India compared to the world average presents a significant potential for sustainable growth in the demand for electric power in India. There is a very big gap between demand and supply, demand being higher. The company is in the right business at the right time. Investors are advised to apply for the issue for both short term and long term appreciation.
ATTRACTIVELY PRICED. APPLY.
Tuesday, November 24, 2009
IPO ANALYSIS: MBL INFRASTRUCTURE LIMITED – BETTER AVOID
The Kolkatta based infrastructure development company is planning to raise around Rs 100 cr through IPO, which is slated to open on 27-11-09 and closes on 01-12-09. The company proposes to issue 57, 00,000 of equity shares of Rs 10/each in the price band of Rs 165-180. Motilal Oswal Investment advisors are the Book Running Lead Manager.
The company is promoted by R G Maheshwari and associates, was originally incorporated as Maheshwari Brothers Limited and subsequently its name.
The company is engaged in the construction and maintenance of roads and highways, industrial infrastructure projects, other civil engineering projects for various government bodies and other clients.
The company has a pan India presence and has executed or in the process of execution a number of projects in states of West Bengal, Madhya Pradesh, Maharashtra, Rajasthan, Assam, Uttar Pradesh, Bihar, Delhi Andhra Pradesh, Haryana and Karnataka.
The company has also interest in steel trading and waste management and ready mix concrete business.
OBJECTS OF THE ISSUE
The funds are intended to be used for procurement of capital equipments, investments in joint ventures, for BOT projects, for working capital requirements and for meeting general corporate purposes. However, the project has not been appraised by any Bank or Financial Institution.
VALUATION
The company has recorded robust revenue and profitability in the last three years and has track record of dividend payment. At Rs 165 (lower end), the price earning ratio of 17 is very much on the higher side, compared to the peers of the sector which are available around 12/13 P/E. Certain criminal cases are pending against the company/ its subsidiaries/group companies and income tax (disappropriate income) appeal. Company is heavily dependent on government/government funded projects. The rating agency ICRA has awarded grade 2 indicating below average fundamentals. The premium sought is very much is on the high side, considering the above factors.
CHALLENGES AND RISKS
Demand for our infrastructure services depends mainly on general developmental activities in the country and expenditure levels in the building and infrastructure sectors. The infrastructure services are principally dependent on sustained economic development in the regions in which the company operates. In addition, demand for infrastructure services is largely dependent on government policies relating to infrastructure development and budgetary allocations made by governments for such development, as well as funding provided by international and multilateral development financial institutions for infrastructure projects. Investment by the private sector in infrastructure projects is dependent on the potential returns from such projects, is therefore linked to government policies relating to private sector participation and the sharing of risks, and returns from such projects. A reduction of capital investment in the building or infrastructure sectors for any reason could have a material adverse effect on business, results of operations and financial condition. Instability of economic policies and the political situation in India could adversely affect the fortunes of the Industry. Investors are advised to stay away from the issue.
The company is promoted by R G Maheshwari and associates, was originally incorporated as Maheshwari Brothers Limited and subsequently its name.
The company is engaged in the construction and maintenance of roads and highways, industrial infrastructure projects, other civil engineering projects for various government bodies and other clients.
The company has a pan India presence and has executed or in the process of execution a number of projects in states of West Bengal, Madhya Pradesh, Maharashtra, Rajasthan, Assam, Uttar Pradesh, Bihar, Delhi Andhra Pradesh, Haryana and Karnataka.
The company has also interest in steel trading and waste management and ready mix concrete business.
OBJECTS OF THE ISSUE
The funds are intended to be used for procurement of capital equipments, investments in joint ventures, for BOT projects, for working capital requirements and for meeting general corporate purposes. However, the project has not been appraised by any Bank or Financial Institution.
VALUATION
The company has recorded robust revenue and profitability in the last three years and has track record of dividend payment. At Rs 165 (lower end), the price earning ratio of 17 is very much on the higher side, compared to the peers of the sector which are available around 12/13 P/E. Certain criminal cases are pending against the company/ its subsidiaries/group companies and income tax (disappropriate income) appeal. Company is heavily dependent on government/government funded projects. The rating agency ICRA has awarded grade 2 indicating below average fundamentals. The premium sought is very much is on the high side, considering the above factors.
CHALLENGES AND RISKS
Demand for our infrastructure services depends mainly on general developmental activities in the country and expenditure levels in the building and infrastructure sectors. The infrastructure services are principally dependent on sustained economic development in the regions in which the company operates. In addition, demand for infrastructure services is largely dependent on government policies relating to infrastructure development and budgetary allocations made by governments for such development, as well as funding provided by international and multilateral development financial institutions for infrastructure projects. Investment by the private sector in infrastructure projects is dependent on the potential returns from such projects, is therefore linked to government policies relating to private sector participation and the sharing of risks, and returns from such projects. A reduction of capital investment in the building or infrastructure sectors for any reason could have a material adverse effect on business, results of operations and financial condition. Instability of economic policies and the political situation in India could adversely affect the fortunes of the Industry. Investors are advised to stay away from the issue.
Sunday, November 15, 2009
IPO ANALYSIS : COX & KINGS: ATTRACTIVELY PRICED – APPLY ...
One of the leading and oldest recognised service provider in the travel and tourism industry with pan India and global presence in 18 countries is planning to raise around Rs 600 crore through IPO. The company proposes to issue 1,84, 96,640-equity shares of Rs 10/ each, including offer for sale of 30, 46,640 shares in the price band of Rs 316 -330/ share. The issue is slated to open on 18-11-09 and closes on 20-11-09. India Info line limited are the Book Running Lead Manager.
The company caters to the overall travel needs of an Indian and International traveller and it is one of the India ’s largest tour and travel operator, which serve as a ‘One Stop Shop’ for all travel and travel related products.
Cox & Kings business are broadly categorised as Leisure Travel, Corporate Travel, Forex and Visa Processing. They also design travel packages for both individuals and groups for their domestic and international leisure travel, as travel arrangements for corporate clients to cater to their business meetings, conferences and events. They also provide end-to-end travel solutions including land, air and cruise bookings, hotel bookings, in-transit arrangements, local sightseeing, visa, passport and medical insurance assistance. The company continuously innovates product offerings with the flexibility to meet the changing needs of the customers and to address their needs better.
OBJECTS OF THE ISSUE
The proceeds of the IPO are intended to be deployed for acquisitions, investments in overseas subsidiaries, repayment of loans and for general corporate purposes.
THE PRICING
Taking into consideration the company’s strong brand equity, efficient management, wide range of products, geographical reach, investment in technology and financial performances, the issue can be considered very attractively priced. The rating agency CARE has assigned Grade 4, indicating above average fundamentals. At Rs 316-330, the price-to-earning ratio is around 16 multiple based on the average weighted EPS of Rs 22.00 for the last three years, as against the average industry PE multiple of 36. There is enough scope for further appreciation.
CHALLENGES
The company operates in a highly competitive market and hence faces stiff competition from other players operating in this sector as also from the un-organized sectors. Many Indian and foreign players have entered the market both in the online and offline space. Pricing is one of the key factors that play an important role in customers’ selection of products. There are several strategies adopted by competitors to increase their market share through advertising, pricing, service, new product innovations and distribution reach amongst others. This increased competition by both traditional and new players is likely to affect margins. However, this could stand mitigated by the the brand equity and the trust it has earned over the years. The company appears well poised to face the challenges and emerge a winner. This is one of the public issues that the investors can apply and look for positive returns.
The company caters to the overall travel needs of an Indian and International traveller and it is one of the India ’s largest tour and travel operator, which serve as a ‘One Stop Shop’ for all travel and travel related products.
Cox & Kings business are broadly categorised as Leisure Travel, Corporate Travel, Forex and Visa Processing. They also design travel packages for both individuals and groups for their domestic and international leisure travel, as travel arrangements for corporate clients to cater to their business meetings, conferences and events. They also provide end-to-end travel solutions including land, air and cruise bookings, hotel bookings, in-transit arrangements, local sightseeing, visa, passport and medical insurance assistance. The company continuously innovates product offerings with the flexibility to meet the changing needs of the customers and to address their needs better.
OBJECTS OF THE ISSUE
The proceeds of the IPO are intended to be deployed for acquisitions, investments in overseas subsidiaries, repayment of loans and for general corporate purposes.
THE PRICING
Taking into consideration the company’s strong brand equity, efficient management, wide range of products, geographical reach, investment in technology and financial performances, the issue can be considered very attractively priced. The rating agency CARE has assigned Grade 4, indicating above average fundamentals. At Rs 316-330, the price-to-earning ratio is around 16 multiple based on the average weighted EPS of Rs 22.00 for the last three years, as against the average industry PE multiple of 36. There is enough scope for further appreciation.
CHALLENGES
The company operates in a highly competitive market and hence faces stiff competition from other players operating in this sector as also from the un-organized sectors. Many Indian and foreign players have entered the market both in the online and offline space. Pricing is one of the key factors that play an important role in customers’ selection of products. There are several strategies adopted by competitors to increase their market share through advertising, pricing, service, new product innovations and distribution reach amongst others. This increased competition by both traditional and new players is likely to affect margins. However, this could stand mitigated by the the brand equity and the trust it has earned over the years. The company appears well poised to face the challenges and emerge a winner. This is one of the public issues that the investors can apply and look for positive returns.
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