Category: India IPO Reviews and Updates

Global Broadcast News Allotment Status is avaliable here. Basis of allotment has been lottery in all the categories of retail. The number of shares alloted in all the category of retail is 25 depending on the ratio. For instance 37 applicants of 102 have been alloted 25 shares in the 400 shares category.

Firstsource formerly ICICI Onesource is India’s leading pure-play BPO. The BPO industry in India is expected to grow at a rate of 37% till 2010. Globally Indian companies dominate the space with a healthy 46% market share.

Firstsource currently has 10,000 employees across 20 centers. Being the market leader it has several advantages to bag large outsourcing deals. The company has consistently acquired BPO companies to establish presence in various verticals. Clientele is split between the US and Europe in equal proportions. The proceeds of the IPO will be used for expansion and debt repayment.

Firstsource IPO Details:
69.3 Million shares of which 9.3 million are offer for sale.
Price Band : Rs 54 to Rs 64
Issue Size: Rs 443 crore.
Fully diluted Equity post IPO – 41.62 crore equity shares of Rs 10 each

Financial and Valuations:
The Draft Red Herring Prospectus reports that the company had an income of Rs 549.9 crore for FY2006 and a PAT of Rs 24.7 crore. Income and profits for the first 9 months of FY 2007 are Rs 549 crore and Rs 62.3 crore. Annualising the first 9 months figures, Firsource will conservatively report a PAT of Rs 83 crore. EPS on fully diluted equity will be Rs 2.0.

At the upper band of the IPO, it quotes at a P/E multiple of 32 for FY2007E . Companies operating in the same space listed in New York are traded at a P/E multiple of 40. With Firstsource being the market leader we expect some listing gains though the stock is a good long term bet.

Retail Subscription:
Retailers have roughly around Rs 140 crore reserved. One has to apply in multiples of 100 shares. Thus a retailer can apply for a maximum of 1,500 shares @ Rs 64 each = Rs 96,000. If the retail portion of the issue is oversubscribed by more than 15 times, then the fate of investor applying for 1,500 shares will also be decided by lottery. [It will also depend on how many times the category @ Maximum is oversubscribed] Happy Investing!!!

I had a closer look at Cinemax IPO just last night and I am personally not subscribing to the issue though investors with the ability to take some risk can apply and SELL on allotment.

Background & Business: Lifestyle and Leisure space is changing rapidly in India. Multiplex entertainment is seeing wider acceptance among large cities. Cinemax is a leader in the western markets and has an ambitious plan to quadraple its seats from 9,000 to 36,000 by 2009.
Mumbai accounts for 15% of all box office collections and Cinemax being a leader in this market, it helps them. Some analysts wrote about the promoters family being into Real Estate which will also help [Yes everybody wanst to be a Realty king now, just like IT in 1999-2000]

Post IPO Equity – Rs 28 crore or 2.8 crore equity shares of Rs 10 each [None of the folks mention this. This is very important as all your future EPS figures are based on fully diluted equity]

Financials:
Cinemax had a Total Income of 15.4 [2005] 43.8 [2006] and 34.7 [First Half 2007]
Cinemax had a PAT of 4.698 [2005], 12.1 [2006] and 3.1 [First Half 2007]
-All figures in Rs crore

It is hard to understand how Cinemax will outperform in another 3 months [Read Income from Screening 60% and F&B 30% in RHP], anyway, even on an optimistic basis if its profits stand at Rs 12.1 crore, then one can expect an EPS of mere Rs 4.3 for FY2007.

At IPO price band of Rs 135 – Rs 155, it translates into P/E of 31.3 to 36.3. This implies it is fully priced. [Broker manipulation is a separate story] However, the growth of Multiplex entertainment is pegged at mere 14% for the next 4 years and valuations look stretched. Cinemax also trails behind PVR, Adlabs, and Inox in the total number of screens and seats.

Always remember, stick to the market leader in any particular growth segment and you will make money. When I can get Adlabs at similar valuations, would rather BUY it than Cinemax.

Tags:IPO India, India Mall , India Entertainment, Emerging Market

House of Pearl Fashion is operating in three business streams: manufacturing, marketing and distribution, and sourcing of garments. They currently operate ten modern ready-to-wear apparel manufacturing facilities, of which six are located in North India, One in South India, two in Bangladesh and one in Indonesia.

IPO Details:
Issue Size Rs 314 – Rs 359 crores
No of shares offered – 5.9 Million shares
Price Range for Book Building – Rs 525 -to Rs 600
Fully Diluted Equity after the Issue – Rs 19.68 crore or 1.96 crore equity shares of FV Rs 10.

The company is raising capital to double its current manufacturing capacity. The company manufactures only 25% of the net sales it does and the rest being sourced from different manufacturers. It mainly markets in the UK – 50% and the rest in other European countries and the US.

The company had a sales of RS 448 crores and a PAT of Rs 25.8 crores for Half year ending 2006. The company’s OPM and Net Margins are at 8% and 5.2% which are far lower than that of Gokaldas Exports which has 11% OMP and 7.5% Net Margin.

The IPO is priced in the range of 23-26 times its FY2007 earnings while industry leader Gokaldas Exports is available at 14.3 times its Fy2007 earnings. The valuations look very expensive and their will be no listing gains. Long Term Investors can also avoid the issue.

Tags:Invest India, IPO India , Textikle Stocks, House of Pearl Fashion

Global Broadcast News Limited is an English News channel promoted by the promoters of TV-18 and is backed by CNN. The company plans to raise Rs105 crores.

IPO Details:
Offer Price: Rs 230 to Rs 250 / share each of face value Rs 10
Post IPO Equity : Rs 27.1 crores or Rs 26.7 crores
Number of Shares offered: 45,65,217 or 42,00,000 depending on the pricing. This is the first such issue where amount to be raised is fixed. Greedy Promoters ?

Background of Global Broadcast News – GBN:
GBN started operations in June-2005. It has an average marketshare of 30% in the English News channel segment trailing NDTV which controls 36% of the market. GBN is banking on the growth in advertisement of news channels where English news channel is the fastest growing segment with 30% YoY growth. GBN is also banking on the implementation of CAS regime. GBN’s CNN-IBN is now a pay channel with a fees of Rs 5 / subscriber / month.

GBN = CNN IBN + 49% of IBN 7 a.k.a Channel 7 (Hindi News Channel) + 15% in Web 18. I really don’t understand the need to float a separate company, just for these two channels when TV-18, which is in the business of content generation could have done it under the listed entity.

Financials of GBN India:
For the 10 Months FY ended 2006, GBN reported revenues of Rs 6.53 crores and a net loss of Rs 46.53 crores. For Half year ended Sept-30-2006, Revenues were 25.90 crores and a net los of Rs 25.80 crores.

Revenue and Profit Estimations for FY 2007.
Revenues – Rs 70 crores
Net Loss – Rs 33 crores

Revenue and profit Estimates for FY-2008.
Reveneus – Rs 105 crores [50% growth YoY]
PAT – Rs 22 crores
Expected EPS – Rs 8.1 or Rs 8.23. The shares are being offered at a forward P/E of 29 and 30.

GBN Recommendation for IPO Investors:
The issues is very aggressively priced and takes into account the rosy picture of growth in Indian English News Channel. At issue price of Rs 250, GBN will have a market cap of Rs 675 crores which is very high. Investors with high risk appetite who are willing to hold for long term are advised to apply. As a Small investor I will skip the issue as it is too small and allotment will be by lottery. Instead hold your money for PSU IPOs which will have some appreciation on table for investors. Also India’s worst registrar, Intime is managing the issue so allotment and refund is a big problem 🙂

Tags:IPO India, CNN India, Emerging Market, Money India

The ir-rationaly priced Cairn India scrip got listed on BSE and NSE today. It listed at a discount of 20% to offer price and the scrip is currently trading at Rs 130.

DalalStreet.Biz had put an avoid recommendation on Cairn energy IPO. Don’t be in a hurry to BUY Cairn as you should get the stock around Rs 100.

In another development DLF developers have filed a draft prospectus with SEBI for mega IPO.

Tags: Cairn, Energy Stocks, DLF IPO , IPO India