Dalal Street

I decided to explore the investment pattern of Retail Indian Investors in various IPOs in 2006. Based on this pattern, and various other factors, you can predict how retail investors are likely to invest in an IPO.

Below you will find, Name of Company, Retail Investors collection in the IPO, Issue Price / Current Market Price.

Reliance Petroleum Ltd – Rs12,100 crores , Rs 60 / Rs65
Sun TV Ltd – Rs 540 crores, Rs 875 / Rs1270
Tech Mahindra – Rs 1120 crores, Rs 365 / Rs995
Voltamp Transformers Ltd – Rs 327 crores, Rs 345 / Rs 511
Action Construction Equipment – Rs 578 crores, Rs 135 / Rs 251
GVK Ltd – Rs1048 crores, Rs 310 / Rs 248
Unity Infrastructure – Rs 140 crores, Rs 675 / Rs 555
GMR Infrastructure – Rs 144 crores, Rs 210 , Rs351

You can see that Reliance is still the most sought after company and everybody from Grandfathers to kids must have applied in that IPO. SunTV and Tech Mahindra equally good brand names also saw terrific subscription and demand.

Retail investor who has burnt his fingers in GVK and Unity infrastructure issue is unlikely to subscribe in Lanco Infra and may subscribe in Parsvnath.

Info Edge India has sucked Rs360 crores from retail investors already. Based on various other factors I expect the Parsvnath Developers Ltd issue to subscribe 3 times (collection of Rs 1,000 crores) in the Retail category. And in the best case it may subscribe over 5 times (collection of Rs 1,500 crores) in the retail category.

Tags:IPO India , Parsvnath , Invest India , Retail Indian Investor

Bengalooru based Sobha Developers Ltd is planning for an IPO which is likely to be in the range of Rs500 to Rs550 crores.

Sobha Developers IPO Proposal:
Fresh issue of 88.9 lakh equity shares of Rs 10 each at a price band of Rs 550-640 per share through the 100% book-building process, which will comprise 12.2% of the company’s fully diluted equity base.

Expected Date of Sobha developers IPO: November 23 and 29, 2006. So by this time you will have got your Parsvnath Developers Ltd and Lanco Infratech Ltd IPO money refunded.

The IPO proceeds will be used to finance land acquisitions, construction and development of existing and proposed residential projects and for retiring certain loans.

Sobha has land bank of about 2,747 acres in Bangalore / Bengalooru, Mysore / Mysooru, Pune, Chennai, Cochin, Thrissur and Coimbatore. Its core competency is in IT and is most preffered construction company by Infosys Technologies Ltd.

Last month, Sobha completed a pre-IPO placement of 4.8 lakh shares with Kotak Mahindra Private Equity Trustee and 97,245 shares with Bennett, Coleman & Company Ltd @ ??? I’ll tell you as soon as I get this info.

Tags:IPO India , India Real Estate, Sobha, Dalal Street

Company: Parsvnath Developers Limited (PDL)
IPO Dates: Nov-06-2006 t oNov-10-2006.
Issue Price: 100% Book Building. Range Rs250 to Rs300.
Issue Size : 33,238,000 Shares Plus Green Shoe Option of 3,087,800 shares.
Total Issue Size= 36,325,800 shares * Rs250 = Rs908 crores
Or 36,325,800 shares * Rs300 = Rs1089.7 crores
Retail Investors have 30% reservation.

Company Background: The company is currently engaged in a variety of projects, 20 integrated townships, 25 residential projects, 27 commercial complexes, including shopping malls, multiplexes, office space and a complete metro station. Further, the company has obtained in-principle government approvals for the development of nine SEZ projects. It is the first company to receive a rating of DR 2-ICRA-NAREDCO from ICRA, which is given for a “strong project development capacity”. It has also receives ISO 9001:2000, ISO 14001:2004, and OHSAS 18001:19999 certifications from RINA. It has diversified business model spanning 14 states and 41 cities. Parsavanath has reputed client list of Biz Bazaar, Raymonds, Spencers, Pizza Hut, McDonalds etc.

It may face risks like any other real estate stock in India due to the overhetaing. No I don’t think commodity prices like Iron and Cement will affect its bottomline as commodities have turned bearish now. (Courtesy: Shankar Sharma and Mark Mobius)

Parsvnath SEZ Plans: Parsvnath is developing 1,500 Hectares together in 9 SEZs.

Parsvnath Company Financials: YoY Growth in Income and PAT is as follows. Figures in crores.
FY2002. Income=27.295 PAT=3.29
FY2003. Income=69.38 (+154%) PAT=11.46 (+248%)
FY2004. Income=112.945 (+62.8%) PAT=18.4 (+60%)
FY2005. Income=306.846 (+171%) PAT=65.6 (+256%)
FY2006. Income=653.67 (+130%) PAT=106.9 (+63%)

Q1FY2007. Income=249 and PAT=36.5. Lets be conservative and annualise the same earnings, we get PAT for FY2007 at 146.

Parsvnath Post-Equity: Post Equity considering the Green shoe option is exercised, 184.696
Expected EPS = Rs7.90

At the issue price of Rs250 or Rs300, the forward PE Multiple on EPS of Rs7.9 is 31.6 or 37.97.

DalalStreet.Biz expects that investors will have some gains on listing. By Tuesday, after talking to our sources in Mumbai, we will come with a clear recommendation.

Tags:IPO India , Parsvnath Developers , India Real Estate, Real Estate Stocks