IPO Coverage is MOVED
Sunday, January 31, 2010
The IPO Coverage from the Best Analysts on the Street is now Moved to the Following Location - IPO India Research and Analysis.
Here is a link to Archives of Past IPO Research.
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Published by DalalStreet Business @ 9:36 AM IST.
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D B Corp Ltd - Subscribe for Medium Term
Friday, December 11, 2009
D B Corp is a leading print media company in India with 7 newspaper, 48 newspaper editions and 128 sub editions in 3 languages (Hindi, Gujarati and English) in 11 sates in India. They have 2 subsidiaries, Synergy Media Entertainment [radio business] under the brand name MY FM and I Media Corp for internet and SMS portals.D B Corp - Dainik Bhaskar and Divya Bhaskar have Strong brand recognition and wide geographical reach in Hindi Heartland - North, Central and Western India.
Print Media in India:
Readership and circulation is directly correlated with literacy levels that have increased from 62.5% in 2002 to over 73% in 2007. Moreover, 69% of India's populations is rural. With faster literacy growth in rural areas, print media circulation is likely to grow faster in regional print. The industry is projected to grow at a CAGR of 9% over the next five years and reach around RS 266 bn in size by 2013.
D B Corp Ltd IPO Details:
Fresh Issue 127.25
Offer for sale 54.50
Fully Diluted Equity Capital after the Issue - 18.15 cr shares of Face Value Rs 10.
Price Band - Rs 185 - 212
Retail Issue Size - Rs 100 cr to Rs 115 cr
Date - Dec-11 to 15th
Financials:
During H1FY10, D B Corp reported an EPS of Rs 5.26 taking into account the expanded equity base. Expect company to report strong performance during H2FY10 owing to better advertising spend due to festive seasons and annualizing the same it will yield an EPS of Rs 10.52
Kindly note that PAT growth is not uniform in the past 4 FYs with the company however, it has managed to remain profitable, unlike your IndiaBulls Powerless and Cash-flow-less company.
Peer Comparison of News Paper Media Companies:
On FY10EPS expectations - Deccan Chronicle is trading at a P/E of 16, Jagran Prakashan is trading at a P/E of 21 and HT Media is trading at a P/E of 28. D B Corp / Dainik Bhaskar is offered at a P/E of 20 at the upper band, thus leaving little scope for immediate appreciation / short term gains.
Review and Recommendation: I Thank You for punishing erring and arrogant promoters like Godrej [Properties] and Jindals [JSW Energy] by not committing your hard earned money. Long / Medium Term Only investors can subscribe to D B Corp Ltd IPO as potential for gains on listing are limited [We do not follow Grey Market nor advise you to].
All Brokerage Reviews of D B Corp IPO will be Posted on the Forum to make you understand how one can be biased in their opinion [including any critic on us]. Worth the read :-)
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Published by DalalStreet Business @ 6:09 PM IST.
Godrej Properties IPO - Richly Priced
Wednesday, December 09, 2009
Godrej Properties (GP) is the real estate arm of Godrej Group that has presence in FMCG, industrial engineering, appliances etc. The group reaches to almost 400 mn Indians every day and enjoys a strong brand recall.Realty Business Model:
It works on an asset-light model by entering into joint development agreements with land owners, sharing its revenues/profits with them in lieu of bringing their land under development. The company has a land bank of 391 acres spread across 10 cities, with more than 50% in Ahmedabad [Previous Mill Land]
Cash Flow Negative: GPL has a negative cash flow from operations on account of its higher working capital requirement towards acquisition of land development rights and expenses for the development of projects.
Current IPO:
Offer size : 94 lakh shares, forming 13.5% of post-issue equity base
Offer Size - Rs 500 cr
Price Band - 490 - 530
Fully Diluted Equity - 6.99 cr shares
FY09 FDEPS - Rs 10.9
On a trailing basis the IPO is priced at ~50 times EPS [FY09] which is expensive in our view.
Taking into account any potential development of land owned by the parent company, successful execution of MoUs (185 acres) which are currently in nascent stages, optimistically in a sunny day scenario the company can be valued at Rs 450 with scope for downside. Gone are the days of SELLING Land Bank story as it didn't really materialize into CASH flow for the company. AVOID Subscribing to Godrej Properties.
We are glad that Retail Investors on our recommendation are staying away from OVERPRICED IPOs and holding on to their CASH [ Capital Preservation, makes lot of sense too] while the FII money gets sucked by these companies, wait for the market correction to BUY other Businesses which will be at compelling valuations.
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Published by DalalStreet Business @ 10:00 AM IST.
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JSW Energy Review - Expensive + Bad Management
Friday, December 04, 2009
The years 2006 and 2007 belonged to the Real Estate companies. 2009 belongs to Power companies, but thankfully, due to powerless listing, Retail Investors have stayed away and let the so called anchor investors / FIIs commit their funds to these projects which are valued as though they are the High Growth Stocks, Electricity and that too in India :-)Promoters Background:They are the same Jindals who have defaulted / were on the verge of bankruptcy in their half hearted badly managed and implemented Jindal Vijayanagr Steel project, where we have already lost ton of in 90s money.
About JSW Energy:JSW Energy is nothing but a power plant that caters to the power requirements of Jindal Vijayanagar Steel plant and you know they can twist and turn the prices manipulate as they want. We give a ZERO Rating to the management and its practices on a scale of 5.
Show me one analyst on the STREET who can support the management for what they have done to Jindal Vjayanagar Shareholders. None. Investment Bankers want business from the company and their analysts will Polish the management and not paint the TRUE STORY :-)
Painting Powerful Dreams the Anil Ambani Way:JSWEL has tied up fuel for 3,380 MW out of the 3,650 MW of operational and under construction projects 1,080 MW will run on domestic lignite, 2,060 MW on imported coal, and 240 MW is hydro capacity. All the purchase contracts for imported coal are linked to the RB Index, exposing the company to fuel price risk as the power tariff may not be aligned to the coal index.
Our only question to you is - Does this issue command such a PREMIUM when ZERO Rating Promoters have subscribed to the issue at less than Rs 10 after adjusting dilution, why should I PAY Rs 100 for the issue ?
JSW Energy IPO - Details:
Pre-issue equity 1372.73 mn shares
Post-issue equity 1618.2 mn shares
Retail Portion of the IPO - 73.6 mn shares
The company unlike Reliance Power is profit making but by virtue of selling power to group company, which is a shady practice in our view. Extremely optimistically, JSW Energy may earn a PAT of Rs 600 cr and on fully diluted equity basis the EPS will be Rs 3.72 thus valuing the company 30 times its FY10 earnings. Expensive!!!
Peer Comparison:
Comparing the Market Cap INR CR / MW in 2012 - JSW Energy's ratio at 5.89 is higher than that of market leader Tata Power which is at 3.75 thus making the issue look VERY VERY expensive. Also, installed power capacity for JSW will be 1/3rd of Tata Power.
Retail investors are cautioned to stay away from the marketing gimmick of Rs 5 discount in JSW Energy IPO. AVOID the Issue.
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Published by DalalStreet Business @ 3:01 PM IST.
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MBL Infrastructures Ltd - AVOID
Friday, November 27, 2009
MBL Infrastructure Ltd (MBL) is engaged primarily in construction and maintenance of roads and highways.
MBL has a strong order book of Rs 815 crore (including order inflow of Rs 203 crore post June), which is at 1.6x FY09 revenues. This provides revenue visibility over the next 1.5-2 years. However, the current order book to FY09 revenues ratio is relatively lower than its peers.
MBL has successfully completed the execution of the BOT project of the 114 km Seoni-Balaghat-Rajegaon state highway under the PPP mode. According to the management, this BOT asset generates monthly toll collections of Rs 70 lakh
Financials:
MBL's revenues grew at a CAGR of 37.7% during FY05-FY09. The revenues from the construction and project related activities grew 38.6% while waste management and trading activities revenues grew 35.7%.
MBL is available at 9.5x the upper band of its FY09 EPS. Considering the lower revenue visibility compared to its peers and MBL valuation, we believe the risk-reward ratio for MBL is unfavourable and hence AVOID the IPO.
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Published by DalalStreet Business @ 11:58 AM IST.
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Allotment of Astec Life Sciences IPO
Thursday, November 19, 2009
The Basis of Allotment of Astec Life sciences IPO is now available here. The IPO was oversubscribed and hence partial allotment has been done to all applicants. You can check the status of your application here.We did not cover the IPO and hence have no recommendation on the same.
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Published by DalalStreet Business @ 2:24 PM IST.
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Cox & Kings - Add Leisure to Portfolio - Subscribe
Saturday, November 14, 2009
Cox & Kings (India) is amongst the oldest travel brands [is also a Global Brand] in the country offering travel (both leisure & business), forex and visa processing services. The company acts as a One Stop Shop for all the travel related needs of Indian and international travelers.In India, tourism as a % of GDP accounted for just 6% in 2008, as compared to about 9% for the world. Thus the domestic and inbound market offers a vast scope for all the operators to expand revenues.
Cox & Kings Current IPO Details:
Face value 10
Price band 316-330
Issue opens November 18, 2009
Issue closes November 20, 2009
Retail Size - 6,403,824 Shares or Rs 211 cr
Fully Diluted Equity after the IPO - 62.92 cr or 6.29 cr equity shares of FV 10
Financial Performance:
C&K reported revenue CAGR of 65.5% over FY06-09 period while OPM was in the 40%-42% range over the same period. PAT witnessed 80% CAGR over FY06-09. Excellent Performance, we should say.
Advantage Cox & Kings:
Apart from India, C&K has a presence in 19 countries through a mixture of
subsidiaries, branch and representative offices.
Higher business volumes would provide the company a better bargaining power to make bulk bookings for air travel, hotel accommodations, car rentals and ground handling
Risks:
Foreign Currency Fluctuations and some competition from other players from the un-organized sector are the key risks.
Cox & Kings Versus Thomas Cook:
Thomas Cook another listed company in the same line of business is directly comparable. Sales of both the companies are almost the same. Thomas Cook is expected to report an EPS of Rs 1.4 to 1.6 for year ending Dec-2009 and is quoting at a P/E of 40.
Cox & Kings, even if it reports a PAT of 63 cr as reported in FY09 [Conservatively], its EPS after full equity dilution will be Rs 10. At a P/E of 33, the management has definitely left something on the table for INVESTORS. However, the company in our view will definitely earn more in FY10.
Since Thomas Cook sales has been growing at a far slower pace than Cox & Kings, its is highly likely that Cox & Kings will enjoy higher discounting 3 to 6 months after the IPO when FIIs would have cornered their chunk of shares :-)
Labels: cox-kings-Vs-Thomas-cook
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Published by DalalStreet Business @ 11:59 AM IST.
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SEBI Must Not amend Rules for Anchor Investors
Wednesday, November 11, 2009
Going by the recent dull listings of IPO on the Street, Anchor Investors [Mostly, FIIs] are back at the doors of SEBI begging to relax rules for Anchor Investors.
Unlike pre-placement which may have lockin period of 12 months, Anchor Investors have just lock-in period of 30 days. They pay 25% upfront and the remaining 75% upon the closure of the IPO. However, they have come in as long term investors and are expected not to SELL the shares on the day of listing or atleast for the first 30 days.
Now why do they want relaxation on 30 days lockin ? It is the abnormal pricing that has led to destruction of Anchor Investors wealth. In any case, as an Anchor Investor why should you be bothered as you are BUYING the Long Term Growth Story of SHELL companies like IndiaBulls Power or Pipavav Shipyard ?
The Goal of these Anchor Investors is very clear - Make Short Term Money. If SEBI is an entity of integrity, then they should increase the lockin period for any kind of pre-placement IPOs to 12 months.
We Strictly Warn the Board of SEBI that any relaxation of rules for Anchor Investors will be challenged and the Finance Minsitsry shall not be spared as well.
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Published by DalalStreet Business @ 1:48 PM IST.
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Blindly Avoid DEN Cable Networks Issue
Thursday, October 29, 2009
Den Networks is a Delhi based company was formed in 2007. The company is a leading cable television company with a pan-India presence. Within a short time span Den has reached out to about a crore households across 77 cities, mainly by buying out small cable TV operators. The company has acquired majority stake in 65 MSO’s (multi system operators) to expand its network across 9 states.
We recommend to BLINDLY AVOID the issue. Without any hesitation, skip this IPO as it is steeply priced.
Den IPO is very aggressively priced. The company is loss making from the last two years. We use the market cap to sales ratio as it is a measure used for start up companies. The market capitalization of DEN at the higher price band works out to Rs. 2700 cr and the company clocked in sales of Rs. 719.35 cr last year taking the ratio to 3.75.
WWIL which is the only listed entity in the comparable line of business has a market capitalization of Rs. 400 cr and sales last year were Rs. 308.26 cr, thus the ratio stands at 1.3.
Punish the SEBI Officials / Lead managers who have cleared this IPO and its pricing.
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Published by DalalStreet Business @ 11:14 AM IST.
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IndiaBulls Power - Basis Allotment + Listing
Tuesday, October 27, 2009
We have been given the Basis of Allotment of the Highly Hyped IndiaBulls Power IPO - Power Hai Tou Zindagi Hey :-)
As the Retail portion of the issue was subscribed by mere 1.09 times with recommendation from us and other leading brokerages to AVOID, as expected all retail Investors have been allotted in FULL.
Here is the CHART Showing the BASIS of ALLOTMENT of India Bulls Power.
Listing is expected
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Published by DalalStreet Business @ 12:06 PM IST.
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