Month: December 2006

Read our earlier review about background of Cairn Energy and Cairn India.

Current IPO proceeds will goto parent company and very little to Indian subsidiary where we will be a shareholder. Cairn has carefully avoided an offer for sale and will suck the money out of company after the IPO. [Refer to page 12 of the Application form, the amount they will withdraw from the company is expected to be between $1.33 to $1.63 billion]
After IPO parent company will still hold 69.5% in Cairn India. So why do the listing drama ?

Cairn as on the date of IPO has huge oil reserves and very little operations. The risk factors also mentions that it may not be easy to extract oil from the Rajasthan[Largest reserve] and many incur additional expenses.

Looking at the financials and other peer group comparisons as stated in various research reports [CLSA, ShareKhan, JM Morgan Stanley], the offer price is expensive. Cairn India IPO is priced at double the valuations of state owned ONGC. [Don’t argue Petronas has bought 10% stake at Rs175, Cairn and Petronas are global oil companies and you never know where Cairn may have bought stake in Petronas at abnormal valuations]

Check out ShareKhan report on Cairn India Ltd IPO.[PDF]

Recommendation: Retail individual investors can avoid investing in Cairn India Ltd IPO. However, if you are a long term investor[3+ years, investment horizon] then you can apply and get allotment for some small quantity[0.094% subscription till Wednesday Midnight, VERY POOR Response] and I am sure just like Reliance Petroleum, you will get Cairn India sometime within the next 12 months below the issue price.

Tags:IPO India, Energy Stocks, Oil Stocks , Cairn India IPO

Bangalore / Bengalooru based Real Estate firm Sobha Developers Ltd which recently concluded its IPO has announced the allotment of shares details and are made available here.

The issue was heavily oversubscribed and even in the Retail category of Maximum shares allotment was on lottery in the ratio of 32:43. This category also saw 70% of the total shares applied.

The grey market premium for Sobha Developers is Rs450. [At this price it is expensive, well Indian stocks are all expensive :-)]

Tags:Realty IPO, IPO India , Real Estate India, Land Bank India

Background: Cairn India Limited is a wholly owned subsidiary of Cairn Energy PLC of UK. Cairn has been operational in India since several years with various Indian partners. Cairn India’s share in each and every major oil / gas field [DOC]. The Rajasthan oil field, Mangala, is the biggest asset of the company with oil reserves of 839 Million barrels.

Restructuring of Cairn India: Cairn Energy PLC held 100% of Cairn India Ltd. Cairn Energy PLC transferred all the Indian assets and operations to Cairn India Limited and Cairn Energy PLC held 100% stake in the company. It then planned to sell 30% stake in this company by means of an IPO.

Cairn India Ltd Pre-Placement: Cairn Energy PLC went for a pre-placement before the IPO. It sold approximately 10% of Cairn India Ltd to Malaysian Oil Giant, Petronas at Rs 176.48 per share. Videocon and other financial institutions also participated in the private placement and bought 1.8% of Cairn India. This gives the Cairn India a valuation of $6.5 Billion [Rs 30,000 crores]

Cairn India Financials: Total Income for FY2005 was Rs 223.02 crores and PAT of 102.4 crores. For the first of FY2006, their Total income stood at Rs 190 crores and PAT of 83.6 crores. Check out this document for financials of Cairn India.

Cairn India general IPO:
Issue opens on Dec-11-2006 and closes on Dec-15-2006
Issue Size: 328,799,675 equity shares of Rs 10 each at a price between Rs160 and Rs190 through Book Building issue.
Retail Individual Investors Issue Size: 30% approximately 100 Million shares. Issue size for retail investors will be between Rs 1,600 crores and Rs 1,900 crores.

Valuations of Cairn India Ltd: I am not sure how oil analysts and oil lobbies discount stocks like Cairn Energy, based on oil assets or cash flow ? I am hunting for various research reports and I will keep you folks posted on whether to apply for the issue or not.

Tags:IPO India, Cairn Energy PLC IPO, Energy Stocks, Oil Lobby

I have had many investors complain about non-receiving of shares allotted during IPO and refund of balance amount.

Parsvnath Developers Ltd IPO had many complaints of non-refund of money and shares not being credited into demat account. Also some complained about Lanco and DCB IPOs as well. In most cases Intime Spectrum is the registrar and is a worse registrar so far in India. [Intime doesn’t reply to e-mails, phones are always busy or they don’t respond] If you are a CEO of a company in India and planning for an IPO, then please don’t choose Intime Spectrum as the registrar for IPO.

So what should you do as an Investor to get your refund ? Wait for 21 Business days, and then start using the following methods to get your complaint resolved.

In most cases I have observed, their are errors regarding demat or client details. Intime needs DEMAT Account Client Master[this is different from your DEMAT Account Statement]. Send your client master + Application Details[Name, Number, etc] to the registrar by E-mail or Postal Mail. Wait for a week and if you still don’t have shares or refund, then try contacting by phone and later file a complaint with SEBI.

How to file complaint with SEBI – India ?

• Fill this online form made available on SEBI website. You will get a tracking number.
• If the online form doesn’t work, then download this form [PDF], Print it, Fill it and Post it to SEBI
• If you are sending it by postal mail, then send a CC of the form to BSE and NSE at following addresses

Bombay Stock Exchange Ltd
[Farzana Mehta or Rajesh Ghadi]
PHIROZE JEEJEEBHOY TOWERS,
DALAL STREET , MUMBAI- 400001
TEL : 91-22-22721233/4 FAX : 91-22-22721919

National Stock Exchange of India Ltd.
Investor Grievance Cell / Arbitration
Exchange Plaza,
Plot no. C/1, G Block,
Bandra-Kurla Complex
Bandra (E)
Mumbai – 400 051.

Hopefully, SEBI and the concerned companies wake up to investor woes before its too late.

Tags:IPO India, India Stock Market, Finance India, Invest India