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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