Category: Economy, Markets and Macro Views

The week that went by was a fantastic week with BSE Sensex closing at an all time high of 13,282 and record money flowing into the Indian IPOs by Retail Individual Investors.

Retail Indian Investors poured in Rs 3,300 crores cash into Parsvnath Developers Ltd IPO. This is after they had already put some Rs 300 crores in Info Edge India Ltd IPO. Retail Indian Investor also invested Rs 600 crores into the Lanco Infratech Limited IPO.

I’ll keep you informed when the allotment details will be made available online. Happy Investing until then.

Tags: Invest India, Dalal Street, IPO India, Money India

Parsvnath Developers Ltd issue which has already been subscribed 6 times overall and 0.6 times in retail category is a invest for short and long term Indian investor. Studying the Investment Pattern of Retail Indian Investors and the grey market premium in Jaipur at Rs4,500 per application of Rs96,000 tells that the issue is likely to perform good.

R S Iyer , S P Tulsian and Manish Bhatt have all asked to apply. If it lists at say Rs 400 then its P/E will be at 50 for FY 07 earnings, do we really care about P/E in a Bull Market ?

Tags: Invest India, Dalal Street, IPO India

DalalStreet.Biz analysts have spoken to some industry folks and we recommend a Subscribe to Parsvnath Developers IPO. Complete Analysis of Parsvnath Developers IPO is available here.

Also our most favorite analyst has told to invest for long term in Lanco InfraTech IPO as most of it will be subscribed by institutional investors and it maybe the next GMR Infra Ltd.

Tags: Invest India, Dalal Street, IPO, IPO India

A fortnight ago, we first broke the news of Reliance Capital Ltd entering brokerage services through their arm Reliance Money and not RTrade or Reliance Trade as reported by section of the press.

Reliance Capital Limited promoted Reliance Money’s brokerage structures are available with us. Reliance Money is offering a brokerage charge of 7.4 paise on every Rs 100 worth of delivery based trades, and 2 paise on non-delivery trades (a.k.a Intra Day) which rival brokers admit is the lowest in the industry so far.

Reliance Money will offer a common platform for investors to invest in all equity products, commodities, forex, IPOs, insurance and other financial products.

Retail brokerage houses fear that Reliance Money may rewrite the rules of the broking business, distorting business dynamics in the short term. This move will have a direct impact on the bottomline of speculative company like Indiabulls Financial Services Limited and India Infoline Limited.

Reliance Money is offering prepaid cards of value Rs 500, Rs 1,350 and Rs 2,500. An insider has tipped that a Kolkatta based brokerage house is coming with flat fee unlimited trades package. I will get you the details soon. Reliance has also launched a Credit Card in association with CitiBank.

For Details Contact: Jaya @ 98675- 70030. Tell her you were referred by DalalStreet.Biz WEBSITE to get an attractive offer.

Tags: Dalal Street, Invest India, IPO India, Reliance Capital

As promised, I looked into the finer details of draft RHP of Info Edge India Limited. I feel it’s very risky to apply and hence recommending all small investors to avoid. You can read the details about this in our IPO section.

Tech Mahindra Limited is promoted by the Keshub and Anand Mahindra Group. Their IPO was reasonably priced and was heavily oversubscribed.

I have been optimistic about the prospects of this company mainly because of the promoters background on Dalal Street and ethical business practices. (Anand Mahindra refused to make any forward looking statements for the company after announcing the Q2-07 results).

Here is a brief research and analysis of their performance.

Tech Mahindra’s QoQ growth in Income and PAT(in Rs crores) since Q2-2006 are as follows.
Q2-2006. Income 257.64 (+4.89%) and PAT 37.4(+10.9%)
Q3-2006. Income 340 (+32.2%) and PAT 75 (+100%)
Q4-2006. Income 421.2 (+23.8%) and PAT 89 (+18.7%)
Q1-2007. Income 587 (+39.5%) and PAT 106 (+19%) 100 ? Not Sure.
Q2-2007. Income 647 (+10%) and PAT 141 (+33%)

Their has been a phenomenal growth in terms of Income and PAT for the past 6 quarters. Why is this necessary ? Read my Satyam Computers Case Study. Fund Managers like to chase stocks which report consistent growth in PAT. Tech Mahindra gets A+ for all other parameters except its Income concentration from British Telecom, another promoter. This issue is also mitigated since their is no slowdown expected in the European Telecom Market.

Earnings Front:
Now lets have a look at Tech Mahindra’s YoY growth in Income and PAT

FY2005 Income 954.19 (+24%) and PAT 102 (+51.3% )
FY2006 Income 1276.6(+33%) and PAT 235 (+129%)
For the Half year ending, sept-30-2006, it’s income was 1204.4 and PAT of 241.4.

DalalStreet.Biz to mitigate risks models on 3 fronts, Conservative, Moderate and Optimistic for short term predictions (6 Months to 12 Months).

Conservative Estimates:
Half Yearly Income and earnings 1204.4 and 241.4. Assume it grows at 10% QoQ for the next 2 quarters which will bring it’s PAT for the whole Year to 241 + 155 + 170 = 566 crores.
FY2007 EPS Estimated = 48.83 after dilution say Rs45. Discounting its FY07 earnings @ 20 times, Price Target for the stock will be Rs900.

Moderate Estimates:
Half Yearly Income and earnings 1204.4 and 241.4. Assume it grows at 15% QoQ for the next 2 quarters which will bring it’s PAT for the whole Year to 241 + 162 + 186 = 589 crores
FY2007 EPS Estimated = 50.81 after dilution say Rs48. Discounting its FY07 earnings @ 22.5 times, Price Target for the stock will be Rs1080

Optimistic Estimates:
Half Yearly Income and earnings 1204.4 and 241.4. Assume it grows at 15% QoQ for the next 2 quarters which will bring it’s PAT for the whole Year to 241 + 169 + 203 = 613 crores
FY2007 EPS Estimated = 52.89 after dilution say Rs50. Discounting its FY07 earnings @ 25 times, Price Target for the stock will be Rs1250.

Take either of the estimation model and you will see its PAT grow 100% YoY. Fund Managers would also like to know the revenue mix of different verticals and different geographies before they initiate a coverage. In any case we are upbeat on Tech Mahindra and we also believe it will be a $1 Billion company by FY2009 and not a year later FY2010 as projected by its management during IPO.

Update: Many on the MoneyControl board think I have been very conservative in my expectations of the stock price. Maybe, I will always be so and anything over it is a bonus 😉