Category: India IPO Reviews and Updates

ICICI Direct advises you to apply for this IPO. I have personally not looked into it and have no opinion. Here are ICICI Research’s thoughts.

LED display market is around US$3.55 billion and is expected to reach US$3.9 billion by 2007. This market has grown at a CAGR of 15.98% between FY04 to FY07. Also the Live entertainment industry is growing at 18% and needs more LED displays for live events. MIC could be a big beneficiary from the boom in the media space.

MIC is the only player in India to have manufacture to design capabilities for LED video display in India . The company does customised solutions for customers for LED display used in sports and live events, advertising applications, indoor applications such as shopping mall, airports etc and mobile vans. The company also has international presence and offices in many countries.

Financials:
The company posted a top line of Rs 104.4 crore for FY06 compared to Rs 21.19 crore for FY05, while its bottom line jumped to Rs 15.4 crore from Rs 2.14 crore. For the 6 months ending FY07, the company clocked an income of Rs 65.46 crore and posted a profit of Rs 10.89 crore. More than 30% of the income comes from the media business while the rest from telecommunications and info-tech businesses. We expect the company to post a top line of Rs 206 crore in FY07 and Rs 230 crore in FY08 with a bottom line of Rs 32.56 crore and Rs 40.5 crore in FY07 and FY08 respectively. We expect the revenues from the media segment to contribute more than 50% of the top line in FY08, which has EBIDTA margins around 30%.

Valuations of IPO:
The issue is being priced at a price band of Rs 129-150. At the top end of the price band, the stock commands a P/E of 7.44x FY08 EPS of Rs 20.15. Global companies in the media business such as BARCO NV and Daktronics are trading at a P/E multiple of 25 inline with Indian media companies. Based on this MIC Electronics very reasonably priced and one may consider investing in the stock.

Issue closes on May-8th.

Logn Term and investors without an appetite for Risk can blindly avoid the IPO of Fortis Healthcare. Our IPO Analysts had recommended an Avoid on Cairn Energy and had also told to BUY around Rs 100[It made a Low of Rs 110].

Fortis healthcare is a Ranbaxy promoter group company. Ranbaxu is facing one setback after the other and current management is not as strong as it used to be under late Dr. Parvinder Singh. Fortis is a recent entrant and is using acquisition and heavy investment to expand. This is a capital intensive business and hence the promoters decision for an IPO. Their have been some Pre-IPO PE Fund investments but small retail investors don’t have the appetite as PE Funds do 🙂

Fortis has been in Red since its operations. Fortis’ acquisition of Escorts is also in controversy and this is the major revenue contributor to Fortis’ bottomline. Fortis’ healthcares patient occupancy rates are also low [around 75% of capacity]. Overall not a worthy issue at an offer price between Rs 92 to Rs 110. You will get it below offer price after listing.

You can now check the allotment status of ICRA here. The IPO of ICRA was subscribed 75 times. The ratio of allotment for retail 1 Lakh application is 1:2.5. Grey Market Premium is Rs 125 / share and is varying widely depending on the market swing.

Ahluwalia Contracts ( India ) Rs 250 crore

Alliance Nirmaan Rs 200 crore

DLF Universal Rs 12,000 crore

Goel Ganga Group Rs 500 crore

IJM(India) Infrastructure Rs 400 crore

IVRCL Prime Urban Developers Rs 500 core

JMD Promoters Rs 500 crore

KNR Constructions Rs 160 crore

Kumar Builders Rs 500 crore

Mantri Developers Rs 500 crore

Omaxe Rs 1,500 crore

Puravankara Projects Rs 1,300 crore

RMZ Corporation Rs 200 crore

Taneja Developers Rs 300 crore

The IPO of ICRA Ltd which closed today is oversubscribed 75 times.

The retail part of the issue is 54 tiems oversubscribed. That means allotment for Rs 1.0 Lakh application will also be on lottery. The Ratio of allotment will be 1 : 2.7 for the Rs 1.0 lakh application. Come back to see the status of allotment here.

ICRA is India’s number two credit rating agency after CRISIL. Historically, the income of these agencies is directly proportional to the mood on Dalal Street. Moody’s have significant stake in ICRA and will be in full control of the company.

The current IPO, is an offer for sale and none of the proceeds will goto the company where you will be a shareholder. IFCI, SBI and UTI are selling their stake and Moody’s will get control of the company. ICRA still has 399 public issues under its belt and they are actively involved in rating the country’s debt instruments as well. The company will also benefit from Rating outsourcing services, Technical and Analytical Research of parent company’s clients from Wall Street.

On the FLIP side, ICRA has borrowed Rs 50 crore from banks to fund the ESOS Welfare Trust (ESOSWT) for subscription to the preferential allotment made to it under the employee stock option plan (ESOP). The interest costs will take a direct hit on the bottom line of the company.

Financials:
The company doesn’t have any topline growth YoY. Total Income for FY2002 was Rs 31.5 crore and for FY2006 it was 35.1 crore. For the 9 Months ending Dec-2006, the company had a top line of Rs 31.9 crore and a PAT of Rs 11.7 crore. Annualizing the company’s results on fully diluted equity(Rs 10 crore) ICRA will report an EPS of Rs 15.6 for March-2007.

IPO Offer:
Fully Diluted Equity after IPO: Rs 10.00 crore.
Offer Price: Rs 275 to Rs 300
Retail Offer: 903,385 shares. Issue Size of Retail is mere VERY VERY Small – Rs 24.8 crore to Rs 27 crore.

Recommendation:
ICRA has very good promoters and is a very small company with good opportunities for growth. ICRA has been offered at a P/E of 19.2 at higher end. Comparing this to CRISIL which currently trades over a P/E of 40+, one maybe tempted to apply. However, CRISIL’s price at a P/E of 40+ is highly unjustified [You can justify in comment, if you like].

Personally, I like to chase growth stocks [Amtek Auto, Punj Lloyd, Tech Mahindra, etc] and ICRA has to prove that its a growth stock by getting Business and increasing its topline which it hasn’t done in the past 4 years. Also since the issue is very small, I am personally skipping the issue since the allotment will be in lottery.

Tags:IPO India, Moodys, ICRA IPO, Invest India