Powergrid - Follow-on-public offer
Tuesday, June 23, 2009
Power Grid Corporation of India is considering floating a follow-on-public offer (FPO) by the end of this financial year or in the start of next year to mop-up Rs 3,000 crore.
The state-run entity looks to infuse 15% fresh equity through the issue, as added by the company's CMD S K Chaturevedi.
The company has reported decent numbers for fiscal 2008-09, its net profit surged 16.72% during the fiscal to Rs 1,690.61 crore while the total income rose 38.32% to Rs 7,028.54 crore.
Recently, it bagged an order worth Rs 1,033 crore from Punjab State Electricity Board for turnkey execution of transmission lines and substations.
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Published by DalalStreet Business @ 11:50 AM IST.
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Mahindra Holidays Resorts - Review
Mahindra Holidays and Resorts Ltd is India's largest holiday timeshare company enjoying a market share of over 70% in the industry. The company currently has 27 resorts, with 1261 apartments / cottages and over 96,000 members. MRHL, with a highly respected promoter group, excellent execution of projects and a track record of delivering an apparently good holiday experience to members,is the strongest player in the timeshare industry in India.
Business Performance:
Membership enrollments have grown at a CAGR of 32% over the last three years. Its revenues and net profits have grown faster at a CAGR of 41.3% and 58.6%, respectively over this period. Timeshare is a very high entry barrier business model that requires relatively low equity capital and generates predictable annuity revenues.
The following table shows the Profit and Loss Account of the company over the past 4 years.
Current IPO Details:Fresh issue of shares : 5,896,084
Offer for sale of shares : 3,369,191
Retail portion: 2,779,583 shares
Price Band - Rs 275 to Rs 325
Some Concerns:
The company recognizes the non-refundable portion of the membership fees (about 60% of total) in the year of booking. The remaining (about 40%) is recognized evenly over 25 years (the membership period). Revenue recognition policy somewhat aggressive since it is unlikely that 60% of the costs of servicing a member are incurred in the first year. The number is more likely to be closer to 30%.
Recommendation:
At the lower and upper band of the issue price the stock would discount its FY2010E earnings by 23.9x and 28x respectively and its FY2011E earnings by 19.5x and 23x respectively. The issue is very aggressively priced leaving very little room for upside on the basis of fundamentals.
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Published by DalalStreet Business @ 10:31 AM IST.
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Mahindra Holidays Price Band Rs 275-325/sh
Friday, June 19, 2009
We have just received confirmation that Mahindra Holidays has fixed IPO price band for its forthcoming IPO at Rs 275-325 / share. The size of the issue will be Rs 301 crore at the upper end of the price band and Rs 255 crore at the lower end of the band.The IPO will open for subscription on June-23rd and will close on June-26th.
Mahindra Holidays & Resorts, the 25 year old entity started with an investment of Rs 20 crore, is growing at whopping 43% consolidated annual growth rate (CAGR) from the last four years and enjoys about 75% of the total pie of the domestic resorts market.
The company reported FY09 sales of Rs 400 crore and a Net Profit of Rs 80 crore. Fitch has assigned a rating of 4 on a scale of 5. Stay tuned for complete analysis of the same.
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Published by DalalStreet Business @ 11:18 AM IST.
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Coal India on disinvestment radar of the govt
Wednesday, June 17, 2009
Riding on its ambitious plan of disvestment of PSUs, the coal ministry is toying with a proposal to disinvest 5-10% stake in navratna PSU Coal India in order to pave the way for listing of the coal giant on the bourses. The coal ministry has informed the finance minister about the development. CIL shares would be allotted to people whose land is acquired for mining purposes and also to the employees of the company.
For the purpose of divestment, the coal ministry is required to introduce a bill to amend the Coal Mines Nationalisation Act in order to facilitate divesting of government's equity in the company for listing of the entity.
CIL was accorded navratna status in October 2008, as per which its has to be listed within the timeframe of three years elapsing in October 2011. The coal ministry has also demanded for a reduction in customs duty on heavy machines used for mining purposes. Coal India has ambitious plans of acquiring sophisticated mining equipment to improve output.
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Published by DalalStreet Business @ 12:17 PM IST.
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Full money upfront mandatory for QIPs in IPOs - SEBI
Monday, June 15, 2009
In a bid to make a level playing field in favour of retail investors, the Securities and Exchange Board of India (SEBI) has finally geared to make full payments upfront mandatory for qualified institutional investors (QIPs) when they apply for shares in initial public offers (IPOs). On the other hand, retail investors are required to pay the full amount with their applications. As of now, QIPs are required to pay only 10% of the amount required for the shares for which they apply upfront.
SEBI has focused on a better price discovery since retail investors are inclined to be influenced by QIP participation. The proposal was on the back seat for a year due to the crunch in the IPO market. As the markets have started recovering, SEBI has now decided to implement it.
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Published by DalalStreet Business @ 12:51 PM IST.
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