IPO NEWS : ONE 97 DEFERS THE ISSUE TO 13-12-10.

The IPO, which should have been  opened on 01-12-10, has been postponed to 13-12-10. The issue will now close on 16-12-10. The price band has not been indicated. First Choice advises the investors to stay away from the issue.

IPO SUBSCRIPTION STATUS -MOIL

The issue got subscription to the extent of 28 times on the penultimate day. The issue closed for QIB bidders today and will close for retail investors tomorrow.

FORTHCOMING IPOS

NAME OF THE COMPANY	BROOKS LABORATORIES LIMITED
PROMOTERS	Atul Ranchal and Rajesh Mahajan
ISSUE SIZE	RS. 6300 LACS
BRLM	D & A FINANCIAL SERVICES PRIVATE LIMITED
REGISTRAR	LINK INTIME INDIA PRIVATE LIMITED

NAME OF THE COMPANY	PLASTENE INDIA LIMITED
PROMOTERS	CHAMPALAL G. PAREKH,  PRAKASH H. PAREKH, MRS. MADHU P. PAREKH AND PRAKASH H. PAREKH (HUF)
ISSUE SIZE	PUBLIC ISSUE OF 1,05,00,000 EQUITY SHARES OF FACE VALUE OF ` 10 EACH
BRLM	Motilal Oswal Investment Advisors Private Limited
REGISTRAR	Karvy Computershare Private Limited

 

NAME OF THE COMPANY	READYMADE STEEL INDIA LIMITED
PROMOTERS	ANIL AGRAWAL
ISSUE SIZE	RS. 4131 LAC
BRLM	Arihant Capital Markets
REGISTRAR	Big Share Services

KNOW YOUR BRLM – KEYNOTE CAPITAL ADVISORS

Keynote has ventured in to manage 6 IPOS, out of which only 3 are trading above the issue price, thus giving a success rate of 50%. Where as the First Choice recommendations were correct in all the cases, giving a success rate of 100%.

NAME OF THE COMPANY	MONTH	ISSUE PRICE	CURRENT PRICE	FIRST CHOICE RECOMMENDATIONS
THANGAMAYIL JEWELLERS	JAN	75	159	APPLY
EMMBI POLY	FEB	45	18	AVOID
FAT PIPE	JUNE	85	ISSUE WITHDRAWN –POOR RESPONSE	AVOID
PRAKSAH STEELAGE	AUG	110	154	INVEST
BEDMUTHA	SEP	102	73#	AVOID
GRAVITA	NOV	125	234**	INVEST FOR LISTING GAINS

# Bedmutha has created history being locked in for 27(down wards) days out of the first 30 days of trading.

** The shares would be available below the offer price within 6 months of listing.

FORTHCOMING IPO

NAME OF THE COMPANY	SEMANTIC SPACE TECHNOLOGIES LIMITED
PROMOTERS	SATYANARAYANA BOLLI,  MS. SRIDEVI BOLLI, MR. RAMA RAO BOLLI AND ICON INVESTMENTS LIMITED
ISSUE SIZE	PUBLIC ISSUE OF 4,500,000 EQUITY SHARES OF RS. 10/- EACH
BRLM	INDIA INFOLINE LIMITED
REGISTRAR	KARVY COMPUTERSHARE PRIVATE LIMITED

IPOs OF SEPT 2010 – PERFORMANCE VS FIRST CHOICE’S RECOMMENDATIONS

Out of the 16 IPOs that  hit the market in Sept 2010, our recommendations were correct in respect of 13 IPOs.

NAME OF THE COMPANY	ISSUE OPEN ED/CLOSED ON	ISSUE PRICE	CMP	FIRST CHOICE RECOMMENDATIONS
INDOSOLAR	13-09/ 15-09	29.00	Below offer price	AVOID
TIRUPATI INKS	14-09/ 17-09	43.00	Do	AVOID
CAREER POINT	16-09/ 21-09	310.00	Above offer price	AVOID
MICROSEC	17-9 / 21-09	118.00	Below offer price	AVOID
EROS INTERNATIONAL	17-09 / 21-09	175.00	Above offer price	INVEST
ELECTRO STEEL	21-09 / 24-09	11.00	Below offer price	AVOID
ORIENT GREEN POWER	21-09 / 24-09	47.00	do	AVOID
RAMKY INFRA	21-09 / 23-09	450.00	do	AVOID
CANTABIL	22-09 / 27-09	135.00	Below offer price	INVEST
GALLANT ISPAT	22-09 / 24-09		Above offer price	AVOID
VA TECH WABAG	22-09 / 27-09		do	INVEST
TECPRO SYSTEMS	23-09 / 28-09		do	INVEST
ASHOKA BUILDCON	24-09 / 28-09		Below offer price	INVEST
SEA TV NET WORKS	27-09 / 29-09		Below offer price	AVOID
BEDMUTHA INDS	28-09 / 01-10		do	AVOID
CEBBCO	30-09 / 05-10		do	AVOID

KNOW YOUR BRLM – ENAM SECURITIES

 

The performance of the issues managed by the leading merchant banker in the country is pathetic. From 1^st Jan 2010 till date, the company has managed 15 issues. Out of the 15 issues only 7 IPOs are quoting above the issue price. The company’s success rate is 47%.  Where as First Choice IPO’s recommendations were correct in 13 out of the 15 IPO managed by Enam, thus giving a success rate of 87%.

IPOs quoting below the offer price

NAME OF THE COMPANY	MONTH	ISSUE PRICE	PRICE AS ON 26-11-10	FIRST CHOICE RECOMMENDATIONS
VASCON	JAN	165	120	AVOID
D B REALTY	JAN	468	210	AVOID
JAYPEE INFRA	APRIL	102	69	AVOID
INDOSOLAR	SEPT	29	24	AVOID
RAMKY INFRA	SEPT	450	340	AVOID
ELECTRO STEEL	SEPT	11	10	AVOID
ASHOKA BUILDCON	SEPT	324	295	INVEST
PRESTIGE ESTATES	OCT	183		AVOID

IPOs QUOTING ABOVE THE ISSUE PRICE.

NAME OF THE COMPANY	MONTH	ISSUE PRICE	PRICE AS ON 26-11-10	FIRST CHOICE RECOMMENDATIONS
UBI	FEB	66	121	INVEST
ILFS TRANSPORT	MARCH	258	282	AVOID
PERSISTANT SYSTEM	MARCH	310	376	INVEST
EROS	SEPT	175	175	INVEST
OBEROI REALTY	OCT	260	268	INVEST
COAL INDIA	OCT	245	313	INVEST
VATECH	SEPT	1310	1649	INVEST

IPO ANALYSIS: ONE 97 COMMUNICATIONS LIMITED – WEAK SIGNAL: AVOID

The company is entering the capital markets at the wrong time. One do not know where the 2G scam findings will lead to and what will be the repercussions of the likely  hardening of the guidelines by the government. Almost all companies, in the segment, either directly or indirectly, are involved in some controversy or the other. The one time darlings of the investors / traders – Bharati Airtel and Reliance Communications are trading at all time low in the exchanges.  The sector has strong growth potential in the long term. However, in the near term, because of the problems in spectrum allocation, the sentiment is negative. The segment is highly competitive.

One 97 Communications are one of the leading provider of telecommunications value added services. The company offer products and services to meet the needs of telecom service providers, consumers (mobile phone users) and to the enterprises. One 97 develops and also purchase content and applications, provide the relevant platform for delivery of the products and services and integrate these products and services with the core network elements of telecom service providers.

The applications can be deployed on any telecom network and accessed from most mobile handsets. One 97 utilizes interactive voice response (IVR) system or voice, Short Message Services (SMS), Unstructured Supplementary Services Data (USSD) and Wireless Application Protocol (WAP) technology to deliver the products and services. 

Network Services

The focus of the network services is to assist telecom service providers in enhancing network efficiency and improving their revenues and profitability by delivering innovative solutions that enhance their subscribers’ expectations.

The company also provides customer life cycle management services that are aimed at increasing average revenue per user, including self-care portals, service provisioning portals, loyalty programs and customer churn

management services. The services such as toll-free info lines, customer communication tools through outbound dialers, tagged-SMS, missed-call back services and USSD inserts, further enable the telecom service provider

customers to enhance their subscribers’ experiences while using their respective networks. 

Services for mobile phone users

One 97 offers a broad range of mobile content, applications and commerce services to consumers, for which the company earns revenue through revenue sharing arrangements with telecom service providers. The content and applications include, music browsing, ring-tone downloads among others.

OBJECTS OF THE ISSUE:

 The company intends to utilize the funds for:

(i)  Procuring telecom equipment and software for installation. 

(ii)  Procurement of Other Fixed Assets.

(iii) General corporate purposes.

FINANCIALS:

Rs in crores

	09	10	30-06-10
TOTAL INCOME	81.39	119.05	36.12
PAT	2.13	16.17	6.47
EPS	0.89	6.33	9.80#
RONW	1.76%	11.95%	-

# on post issue share capital, annualized.

MATTERS OF CONCERNS:

1. The rating agency CRISIL has awarded grade 3 to the IPO indicating, average fundamentals.

2. The company has derived and will continue to derive a significant portion of the income from a few major customers. For the three month period ended June 30, 2010 and fiscals 2010, 2009 and 2008, the five largest customers accounted for approximately 80.67%, 78.26%, 91.38% and 89.79% of our total revenue, respectively.

3. One of the independent directors, P N Vijay was earlier charged, for alleged violation of insider trading by SEBI.

4. The company was served with notice by RBI for FEMA violations.

5. The company is subject to risks associated with the challenges faced by the mobile communications value added services industry in which the company operates. The markets in which it operates are highly competitive and some of the competitors have greater resources than one 97. The telecom service provider customers are subject to extensive government regulation. The licenses and the regulatory environment in which the company operates are subject to change.

6. The debtors’ realization is in excess of 100 days.

OUTLOOK FOR TELECOM SECTOR:

According to CRISIL Research, the industry will grow at a CAGR of 21% from Rs 40.8 bn in FY09 to Rs 135.3 bn in FY15. The growth will be driven by telecom service providers’ efforts to increase the usage of VAS to enhance their average revenue per user, increasing availability of VAS-compatible affordable handsets, growing popularity of content on mobile and launch of 3G services. The report also says that the implementation of mobile number portability and consolidation amongst TSPs will benefit established VAS providers.

STRENGTHS:

The long-standing relationships with telecom service providers, which creates technological and time-to-market barriers to entry for new entrants.

The diversified income base, which reduces the reliance on any single market, telecom service provider, product or service.

VALUATION AND RECOMMENDATIONS:

The company’s RONW is below average.  For FY 09, the PAT percentage was just 2.2%. However, for FY 10 the percentage has gone to 16%, which is to be taken with a pinch of salt. The shares of established service providers in the segment are languishing in the exchanges. The company’s fundamentals are not so strong. Although the company’s pre issue share capital is Rs 22.84cr, the company has a preference capital of another Rs 48cr. For this kind of capital, the revenues and earnings recorded by the company are not inspiring. There are industry specific risks, incident risks. Investors are advised to stay away from the issue.

Note: The Company had earlier received funding from Intel Capital, Softbank Asia Infrastructure Fund Partners and Silicon Valley Bank. Even the SKS Micro had the funding by the greats of the financial and corporate sector like Sequoia capital, Soros and N R Narayana Murhty. The IPO came at Rs 985 and within three months, the shares are trading at almost 30% discount to the issue price. Do not get misled by the big names associated with the company. The issue opens on 1-12-10 and closes on 6-12-10. IDFC Capital and Avendus Capital are the BRLMs.