Friday, December 31, 2010
IPO ANALYSIS: MIDVALLEY ENTERTAINMENT LIMITED – NO VALLEY, IT IS DESERT – AVOID.
Mid Valley Entertainment Ltd - the film production, distribution & exhibition firm of South India, is entering the capital market on 10-01-11 with an IPO. The company intends to raise Rs 60cr for its ambitious expansion programme. Aryaman Financial Services Limited are the BRLM.
The company produces, distributes and exhibits movies both in Indian and foreign languages. The company also holds the music, video and television rights of movies, television serials for TV Channels. The company has earlier produced movies like Thambi and Seena Thana, in Tamil. The company presently has screening agreements with 46 theatres across Tamil Nadu (34), Andhra Pradesh (5) and Karnataka (7). The company plans to focus primarily on movie production and exhibition business going forward.
The promoters of the company are -Datuk K. Ketheeswaran, M/s. Unigold Pacifc Limited, M/s. Global Motion Pictures & Ventures Limited and M/s. Kiara Enigma Sdn Bhd.
The objects of the Issue are:
A. Entering into screening agreements with 300 cinema theatres.
B. Renovation and Up-gradation of cinema infrastructure with Digital Equipment and other related assets for a select 100 screens.
C. Acquisition of company, acquisition of screening rights of company having similar line, range and objects of business
D. To meet general corporate expenses
RISK FACTORS:
1. The company operates in highly competitive and uncertain segment.
2. Lack of transparency and hence lack of corporate governance in doing business.
3. The company has not paid Income Tax dues aggregating to Rs. 914.00 Lacs.
4. For acquisition, no specific target has been identified.
5. The company had in the past defaulted and failed to repay the loan taken from City Union Bank Limited.
6. The company had violated certain guidelines under FEMA.
7. There are certain audit qualifications in the auditor’s report,pertaining to previous financial years/periods.
8. IPO grade 1 by BRICK WORKS.
9. Shares will be listed only in BSE.
VIEWS OF RATING AGENCY
The grading factors promoters experience in management of malls and multiplexes. However, the grading is constrained by small size of operations, declining operations in the last 2 years , four prior unsuccessful attempts by the company to raise funds through IPO, promoters lack of experience in entertainment business, litigation with income tax department for non-payment of tax dues, the promoter companies of MVEL and the group companies incurring loss, very preliminary stage of project implementation, no independent appraisal of the project/project cost and project funding fully from IPO proceeds. Promoters are not participating in the means of finance and their post holding equity holding will decline from
current 49.9% to ~34%. The company operates in media and entertainment industry which has high revenue volatility and suffers from video/audio piracy.
VALUATION AND RECOMMENDATIONS
The company will have a post issue capital of around Rs 40cr, servicing this kind of equity will be very difficult, going by company’s past track record. There are issues with respect to corporate governance. Shares of the companies in this segment, are not fancied in the exchanges. Even the much hyped, recently listed EROS Entertainment, shares are quoting below the offer price. AVOID. POOR QUALITY IPO.
FORTHCOMING IPO
NAME OF THE COMPANY | LOKMAT MEDIA LIMITED |
PROMOTERS | VIJAY DARDA AND RAJENDRA DARDA |
ISSUE SIZE | PUBLIC ISSUE OF 13,829,064 EQUITY SHARES OF RS. 10 EACH |
BRLM | KOTAK MAHINDRA CAPITAL COMPANY LIMITED ENAM SECURITIES PRIVATE LIMITED |
REGISTRAR | LINK INTIME INDIA PRIVATE LIMITED |
SEBI NEWS - SBI TO RAISE RS 10,000CR THROUGH RETAIL BONDS
The country's biggest and largest bank is planning to raise Rs 10,000cr through retail bonds. The issue has been cleared by the regulator.
Thursday, December 30, 2010
ICOMM GETS GRADE 3 FROM ICRA
ICOMM - an engineering, procurement and construction company, which is planning an IPO, got grade 3 from ICRA.
The company provides dedicated comprehensive infrastructure solutions, in the telecom, power, defence, solar and it diversified into construction of water pipelines and drainage systems. ICOMM is having facilities for manufacturing Power Transmission products, Telecom & Defense (Wireless & Wireline) products and Solar Modules.
The IPO is expected in the first quarter of FY 11.
Wednesday, December 29, 2010
FORTHCOMING IPOS
| NAME OF THE COMPANY | NetAlter Software Limited |
| PROMOTERS | Rajesh Chunilal Rathod, Yogesh Chunilal Rathod, Vijay Chunilal Rathod, Dhirajlal Lakhamshi Shah, Nitin Harakhchand Gada and Vanita Dhirajlal Shah |
| ISSUE SIZE | PUBLIC ISSUE OF 39,00,000 EQUITY SHARES OF RS.10/- EACH |
| BRLM | ARIHANT CAPITAL MARKETS LIMITED |
| REGISTRAR | Link Intime India Pvt. Ltd. |
| NAME OF THE COMPANY | MODERN TUBE INDUSTRIES LIMITED |
| PROMOTERS | Mahendra Bhansali |
| ISSUE SIZE | RS. 6500 LACS |
| BRLM | Aryaman Financial Services Limited |
| REGISTRAR | Link Intime India Private Limited |
Tuesday, December 28, 2010
Monday, December 27, 2010
FORTHCOMING IPO
| NAME OF THE COMPANY | PTC INDIA FINANCIAL SERVICES LIMITED |
| PROMOTERS | PTC INDIA LIMITED |
| ISSUE SIZE | PUBLIC ISSUE OF 156,700,000 EQUITY SHARES OF FACE VALUE OF RS 10 EACH |
| BRLM | SBI Capital Markets, JM Financial Consultants, ICICI Securities, Almondz Global Securities Avendus Capital, IL&FS Financial Center, |
| REGISTRAR | Karvy Computer share Private Limited |
Saturday, December 25, 2010
IPO ANALYSIS: L&T FINANCE HOLDINGS LIMITED – HIGH PEDIGREE – INVEST.
This company / group needs no introduction. The company is promoted by promoted by Larsen & Toubro Limited (L&T), one of the leading companies in the country, with interests in engineering, construction, electrical and electronics manufacturing and services, information technology and financial services.
L& T Finance Holding company offers a diverse range of financial products and services across the corporate, retail and infrastructure finance sectors, as well as mutual fund products and investment management services, through the direct and indirect wholly-owned subsidiaries. The Company is registered with the RBI as an NBFC-ND -SI.
The company is headquartered in Mumbai, and has a presence in 21 states in India. As at August 31, 2010, we had 715 points-of-presence across India, comprising 103 branch offices, 221 meeting centers.
The network of offices has been established to cater to the growing business needs of the diverse customer base, which includes individual retail customers as well as large companies, banks, multinational companies and small- and medium-enterprises, and to provide them with satisfactory customer service according to their varying requirements.
The operations are arranged into four business groups, being the Infrastructure Finance Group, the Retail Finance Group, the Corporate Finance Group and the Investment Management Group.
The total income of the Infrastructure Finance Group for Fiscal Year 2010 was Rs. 4,504.23 million which accounted for 31.63% of the total income. The total loans and advances outstanding of the Infrastructure Finance Group as at March 31, 2010 were Rs. 42,884.99 million and total disbursements for Fiscal Year 2010 were Rs. 37,955.14 million. The wholly-owned subsidiary, L&T Finance Limited , conducts the retail finance business and the corporate finance business.
ISSUE DETAILS
ISSUE SIZE | RS 1500CR |
PRICE BAND | - |
IPO GRADE | 5 BY ICRA |
BRLMs | JM FINANCIALS, CITI GROUP, HSBC SECURITIES, BARCLAYS SECURITIES, CREDIT SUISSE AND EQUIRUS CAPITAL |
STRENGHTS:
- Diversified and balanced mix of high growth businesses.
- Strong distribution network, with a presence throughout the country.
- Experienced management team and employees with a proven track record of establishing and growing new lines of business.
- High quality loan portfolio comprising the funding of mainly income-generating assets and activities.
- Good financial and capital position, as well as access to multiple sources of capital.
- Strong parentage and brand equity of L&T
IPO ANALYSIS: C. MAHENDRA EXPORTS LIMITED – ROUGH AND UNPOLISHED – AVOID.
Do not invest in a business, one does not understand it - an adage. Diamond business is one such. Unlike gold, the diamond as a commodity is not standardized, in a way, that the man on the streets understands its intrinsic and true value. And most importantly, being a totally family and close circle business, there is complete lack of transparency in the business, with only the promoter manufacturers / traders knowing what is what, and the buyer is more often completely in the dark. Even the bankers who have been financing the trade for decades, concedes, valuation is a matter of concern. It has limited resale value, unlike gold and silver, and is illiquid in comparison. With the exception of some, the companies in this segment lack corporate governance and are subjected to Income Tax and Customs raid periodically. The recently listed Goenka Diamonds and Shree Ganesh Jewellery have given negative returns to the investors. Even the shares of the established players like Classic Diamond, Suraj Diamond and Shrenuj Diamond are not fancied in the exchanges.
Now we have one more IPO from the same segment. C. Mahendra Exports Limited, is entering the capital market on 31-12-10 with issue of 1.50cr equity shares of Rs 10 FV, in the price band of Rs 95-110. The issue closes on 06-01-11.
Mahendra C. Shah, Champak K. Mehta, Pravin C. Shah, Pravin K. Mehta and Sandeep M. Shah are the promoters of the company.
YES Bank Limited and Anand Rathi Advisors Limited are the BRLMs. Anand Rathi is not known for bringing quality issues at attractive valuation. In the recent past, the two IPOs managed by them - Euro Multivision and Pradip Overseas are trading at discount to issue price and retail investors have suffered losses.
C.Mahendra Exports / Group is an integrated diamond and diamond jewelery player, from sourcing of rough diamonds, trading of rough and polished diamonds, processing of diamonds and manufacture of diamond jewelery.
The group has marketing entities in Hong Kong and USA to cater to some of the major markets for cut & polished diamonds and diamond jewelery across the globe. Currently, the Group has around 8 marketing offices spread across Surat, Mumbai, Delhi, Kolkata, Hong Kong, New York, Los Angeles and Antwerp.
At present the Company has two facilities for cutting and polishing of diamonds at Varachha and Udhana, in Surat.
OBJECTS OF THE ISSUE:
The fund requirements of the objects are as follows:
To set up of a diamond processing unit at Gujarat Hira Bourse, SEZ, Ichchhapore, Surat
To set up of a jewelery manufacturing unit at Mumbai.
For financing setting up retail of outlets, branding and for general corporate exps.
MATTERS OF CONCERN:
1. The company faces execution risks in the retail business, where it has no track record.
2. The diamond processing facility is geographically located in one area. Any localized unrest, political disturbances in the area could adversely affect results of operations. Retention of experienced employees is a challenge for this industry. The industry is already facing skilled worker crisis due to non availability.
3. The are issues with respect to the corporate governance. The company is involved in Income Tax litigation, had paid penalty for violation of Customs rules, Auditors qualification on accounts, suspension of sight holders status by DTC etc.,
4. Competitive business- depends on luxury market like USA and HK for business. Any slowdown in that economy will affect the company’s fortune.
5. Clash of interest. Promoter group is involved in similar business.
6. The expansion project is not apprised by any bank /FI and fully equity funded.
FINANCIALS:
TOTAL INCOME - 08-09 RS 1421CR NET PROFIT RS 21CR
09-10 RS 1632CR NET PROFIT RS 23CR
VALUATION AND RECOMMENDATIONS
The company is likely to post an EPS of Rs 5, for FY 11, on the post issue capital of Rs 60cr. At Rs 95-110, the company is demanding a valuation of 22x, which is very expensive.
Other than Rajesh Exports Limited (Leading gold jewellery exporter), the stocks in this sector are not fancied by investors. Goenka Diamonds and Shree Ganesh Jewellery have disappointed the investors.
The diamond industry is very fragmented, with low value addition and is characterized by high competition. Players typically have low margins and the working capital intensity is high arising from the long conversion cycle involved as well as delays in realization of export proceeds, which is more pronounced during demand slowdown in the key export markets. The company’s revenues and margins have shown considerable volatility in the past .The businesses remain highly working capital intensive, which affects the company’s ability to generate free cash flows and has also led to an adverse capital structure. IPO grade 2 by ICRA, indicating below average fundamentals. AVOID SUBSCRIPTION.
Friday, December 24, 2010
Thursday, December 23, 2010
IPO ANALYSIS: SHEKHAWATI POLY-YARN LIMITED – WEAK THREADS - AVOID
Mumbai based polyester yarn manufacturer is entering the capital market with an IPO. The company intends to mobilize Rs 36cr, by issue of 1.20cr shares of Rs10 FV, at a fixed premium of Rs 20 per share. Hem Securities are the lead manager to the issue. The issue opens on 27-12-10 and closes on 29-12-10.
The promoters of the company are Mukesh Ruia and Mr. Ramniranjan Ruia.
BUSINESS:
Shekhawati Poly-Yarn has been in the Polyester Industry for more than a decade and has been engaged exclusively in the manufacture of Polyester Texturised Yarn (PTY). This material is used in the process of weaving of fabric used for suiting, shirting, dress materials, saris, hosiery, knitted fabric, zipper fastener, curtain & industrial cloth as also to manufacture fancy yarn for high value dress materials and upholstery. At present, the company has 20 Texturising Machines with an installed capacity of 13,200 MTPA to produce PTY. The company has also installed 5 Twisting machines to produce Twisted Yarn with installed capacity of 600 MTPA.
OBJECTS OF THE ISSUE
The Company proposes to establish manufacturing facility for Knitted Fabrics.
Particulars | Amount in lacs |
Factory land & building | 700.00 |
Corporate office | 325.00 |
Twisting / Knitting machines | 1725.00 |
Working capital | 550.00 |
Others | 300.00 |
TOTAL | 3600.00 |
FINANCIALS:
RS IN CRORES
09 | 10 | 30-09-10 | |
TOTAL INCOME | 77.51 | 89.51 | 59.96 |
PAT | 1.25 | 2.20 | 1.58 |
MATTERS OF COCENCERN
The company has very poor corporate governance. The company has not followed proper accounting standard with respect to employees’ benefits and has not registered itself with the concerned government’s depts. for professional taxes, ESI etc. The company also does not have a full time company secretary.
The project is fully equity funded without promoters’ contribution.
CARE has awarded IPO grade 2, indicating below average fundamentals.
No firm tie-up for raw materials. The company is yet place order for plant & Machineries.
There is clash of business interest among the promoter group.
The company operates in highly competitive industry, where the prices of products are dictated by big players.
VALUATION AND RECOMMENDATIONS
The company’s expansion project has not been appraised by any Bank or Financial Institution. Small time player in polyester yarn business. The company faces high competition both from domestic as well as international players. The net profit margins are very thin. Shares of companies in this segment are not fancied in the exchanges. Century Enka, one of the oldest players in the industry is available around 5 PE. At Rs 30, the company is demanding a valuation of 20x on its FY 11 earnings, on the post issue capital of Rs 22cr, which is expensive.
Poor quality IPO from Hem Securities (their maiden IPO). Stay away from the issue. The issue is not worth subscribing even at face value. AVOID.
Wednesday, December 22, 2010
IPO NEWS - CRISIL GARDE 4/5 FOR GREATSHIP
The company which is planning an IPO got 4/5 grade from CRISIL.
Greatship (India) Limited, a wholly owned subsidiary of GESCO.
The company is in to providing marine logistics and drilling services for offshore oil and gas explorations activities. Recently, it ventured into offshore construction services. The company owns and operates a fleet of jack-up rigs and offshore support vessels.
The consolidated revenues of the company have grown at a two-year CAGR of 282% to Rs 3,159 mn in FY09 and profits have grown at a two-year CAGR of 377% to Rs 475 mn. The strong growth in revenues is primarily on account of higher operating fleet and a smaller base. Revenues for nine months ending December 2009 were Rs 5,374 mn and profits were Rs 656 mn. The consolidated net worth of the companywas Rs 13,160 mn.
The proceeds of the issue would be utilised to fund acquisition of certain vessels, early redemption of part of preference share issued to promoters, repayment of portion of debt availed by the company and to meet general corporate purposes.
IPO NEWS - STERLITE ENERGY LIMITED GETS 4/5 IPO GRADE FROM CRISIL
Sterlite Energy, a Vedanta Group company and subsidiary of Sterlite Industries Ltd, which is planning to raise Rs 51,000 mn through the IPO, got 4/5 grade from CRISIL.
The company has been formed to leverage on the experience of Sterlite Industries in building and managing captive power plants. The Vedanta Group is one of the largest private sector power plant operators in India based on installed capacity – owning and operating 2,734 MW of captive power plants and 600 MW of commercial
power plants. The group intends to develop all future commercial power generation projects through Sterlite Energy.
Sterlite Energy is currently developing two coal-based power plants – a 2,400 MW plant in Jharsuguda, Orissa and a 1,980 MW in Talwandi Sabo, Punjab (Talwandi Phase-I). The company has recently signed an MOU with the Government of Punjab to set up an additional 660 MW unit at Talwandi Sabo (Talwandi Phase-II). The proceeds of the IPO would be utilized to part finance the construction and development of Jharsuguda and Talwandi Phase-I power projects, and to fund general corporate purposes.
Monday, December 20, 2010
FORTHCOMING IPO
| NAME OF THE C OMPANY | ONELIFE CAPITAL ADVISORS LIMITED |
| PROMOTERS | Thiruvidaimarudur Krishna Prabhakara Naigand Mr. Pandoo Naig |
| ISSUE SIZE | PUBLIC ISSUE OF 3,350,000 EQUITY SHARES OF ` 10/- EACH |
| BRLM | ATHERSTONE CAPITAL MARKETS LIMITED |
| REGISTRAR | SHAREPRO SERVICES (INDIA) PRIVATE LIMITED |
Saturday, December 18, 2010
Thursday, December 16, 2010
FORTHCOMING IPO
NAME OF THE COMPANY | SABARI INN LIMITED |
PROMOTERS | K.R.V. RAMANI, MRS. ARUNA RAMANI AND RAMANI (HUF) |
ISSUE SIZE | RS125.00CR |
BRLM | KEYNOTE CORPORATE SERVICES LTD. |
REGISTRAR | INTEGRATED ENTERPRISES (INDIA) LIMITED |
Recently Listed IPOs' performance
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Wednesday, December 15, 2010
FORTHCOMING IPOS
| NAME OF THE COMPANY | SHREE HANUMAN SUGAR & INDUSTRIES LIMITED |
| PROMOTERS | BIMAL KUMAR NOPANY AND M/S. SHRUTI LIMITED |
| ISSUE SIZE | FURTHER PUBLIC ISSUE OF 1, 87, 50,000 EQUITY SHARES OF Rs. 10/- EACH |
| BRLM | STELLANT CAPITAL ADVISORY SERVICES (P) LIMITED |
| REGISTRAR | MAHESHWARI DATAMATICS PRIVATE LIMITED |
| NAME OF THE COMPANY | VRL LOGISTICS LIMITED |
| PROMOTERS | VIJAY SANKESHWAR AND MR. ANAND SANKESHWAR. |
| ISSUE SIZE | PUBLIC ISSUE OF 23,566,667 EQUITY SHARES OF FACE VALUE OF RS. 10 EACH |
| BRLM | SBI Capital Markets Limited |
| REGISTRAR | Bigshare Services Private Limited |
PUNJAB AND SIND BANK IPO OVER SUBSCRIBED 30 TIMES
The IPO of PSB was over subscribed to the extent of 30 times on the penultimate day. The issue closes tomorrow. It is expected, that the issue, may get another 10 times subscription on the last day.
Tuesday, December 14, 2010
FORTH COMING IPOS - CRISIL IPO GRADE
NAME OF THE COMPANY | GRADE |
STERLITE ENERGY LIMITED | 4/5 |
IOT ENERGY SERVICES LTD | 4/5 |
GREATSHIP (India) LTD | 4/5 |
EMBASSY PROPERTY DEVELOPMENT LTD | 4/5 |
VIRGO ENGINEERS LIMITED | 4/5 |
SHIRDI INDUSTRIES LTD | 2/5 |
FORTHCOMING IPO - REID & TAYLOR
NAME OF THE COMPANY | REID & TAYLOR (INDIA) LIMITED |
PROMOTERS | S. Kumars Nationwide Limited |
ISSUE SIZE | RS 500CR AND OFFER FOR SALE OF 11,964,218 EQUITY SHARES BY S. KUMARS NATIONWIDE, AND 2,991,055 EQUITY SHARES BY INDIVEST PTE LTD. |
BRLM | JM Financials, UBS Securities, J.P. Morgan India, Religare Capital Markets, Antique Capital Markets, Edelweiss Capital, HSBC Securities and IDBI Capital Market Services |
REGISTRAR | Bigshare Services Private Limited |
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