IPO ANALYSIS - BIRLA PACIFIC MED SPA LIMITED - ANOTHER JUNK IPO - AVOID

Birla  Pacific  Medspa  is  planning  to  set  up  55  health  care  centers  under  the  brand  name ‘EVOLVE’  across  the  country.  To meet  the  funding  requirements,  Birla  Pacific Medspa  Ltd. plans  to  raise approximately Rs. 65 Crores  by way of  Initial Public Offering of equity shares with Face Value of Rs.10/- at a premium to be decided later.

BACK GROUND

Birla Wellness & Healthcare Pvt Ltd, a Yash Birla Group company has a Joint Venture Agreement with Pacific Healthcare Holdings Ltd, a company incorporated in Singapore and Dr. Abhijit Desai, to form Birla Pacific Medspa with equal shareholding between Yash Birla Group and PHH & its associate Dr. Desai put together.  PHH is one of East Asia’s leading healthcare providers, with healthcare facilities in Singapore, Hong Kong, and China.

The company proposes in India and abroad to do the business of beauty and healthcare treatments, health and fitness resorts, dieticians, yoga ashrams, saloons, hair and Skin treatments, Sanatorium centers, and to manufacture soaps consumables, oils, medicines, body sprays and scents, creams, powders, natural and artificial skin and hair conditioners. However, the company presently does not carry on the business of manufacturing of soaps, consumables. The company presently operates the healthcare centers under the brand name EVOLVE. As on date, the company operates three own EVOLVE centers in Mumbai at Walkeshwar, Bandra & Andheri and 2 centers on franchise basis at Thane and Chennai.

YASH BIRLA GROUP

Yash Birla Group is one of India’s leading industrial groups.

The group has diversified interest in industries like steel pipes, machine tools, cutting tools, tool holders, iron castings, power solution products, multipurpose engines pumps, electrical appliances, textiles, carpets, furnishing, lifestyle, InfoTech, publication, travel, electricity, property development, cotton ginning etc

.

The major companies in the group includes Zenith Birla (India) Ltd, Birla Cotsyn (India) Ltd., Birla Power Solutions Ltd, Dagger Forst Tools Ltd, Birla Precision Technologies Limited (formerly  Birla Kennametal Ltd), Birla Transasia Carpets Ltd,  Birla AccuCast Ltd, Birla Electricals Ltd, Birla Lifestyle Ltd, Birla Concepts (India) Pvt. Ltd, Birla Shloka Edutech Ltd, Melstar Information Technologies Ltd.

  

OBJECTS OF THE ISSUE

 

The funds are intended to meet the capital expenditure towards establishing 55 outlets of Evolve Medspa across various cities and places, meet expenses towards brand promotion and to meet the working capital requirements for running the above centers.

MATTERS OF CONCERNS

• The company has limited operational history and incurred losses in the period.

• The company has taken over Pachealth at Rs 410 lacs, for which there was no independent / out side valuation.

• The business is in preliminary stage of implementation.

• Birla Transasia Carpets is a BIFR Company and  Birla Bombay is in the defaulter list of RBI.

• In the last 2-3 years, the group IPOs has performed dismally in the exchanges. Birla Cotsyn (FV Rs 1) is quoting at Rs 0.65 as against the issue price of Rs 1.20 (after adjusting to split) and Birla Shloka Edutec is quoting at Rs 18 as against the issue price of Rs 50, Birla Ericssion is shifted to trade for trade category.

• The proposed centers are not doctor led but technician led, which will lose acceptability in the long term with increased awareness among consumers.

• IPO grade 2 by Brickworks -the grading  is constrained by delays  in project implementation and poor  financial performance of  the Yash Birla Group of companies  raising IPO funds in the past, Birla Pacific Medspa’s negative cash flows and losses, short history of two years  of  operations,  full  funding  from  IPO  proceeds  and  project  implementation  spread  over three years. The absence of funding or appraisal by a bank or term lending institution.

VALUATION AND RECOMMENDATIONS

The company reported a net loss of Rs 4.57cr for the 14 months period ended 30-09-09. The loss earned for the six  months period ended 31-03-10 is Rs 3.28cr and for the nine months period ended 31-12-10 is Rs 3.68cr. The accumulated loss as at 31-12-10 is Rs 11.53cr. The book value of the share is less than Rs 9/-  It will take couple of years to wipe out loss and come to dividend list. The shares of Yash Birla group are not fancied in the exchanges.   A must avoid IPO.

SKS MICRO AT YEARLY LOW - RS 520

Twenty four out of the TOP twenty five brokerage houses had recommended this IPO at Rs 985/-  Within six months of its listing the shares are quoting at 45% discount to its issue price. First Choice IPO had advised against subscribing to the IPO and had given sell call on listing. The stock is likely to come below Rs 300/- in the near future.

INFOSYS FY 11 RESULTS ON 15-04-11

FORTHCOMING IPOS

CALYX CHEMICALS AND PHARMACEUTICALS LIMITED

PROMOTERS	SMITESH CHANDRAVADAN SHAH, MR. BHARAT SUKHLAL MEHTA AND MR. RAJAT INDULAL DOSHI
ISSUE SIZE	PUBLIC ISSUE OF 68,30,000 EQUITY SHARES
BRLM	PL  CAPITAL  MARKETS  YES BANK LIMITED   PUNJAB NATIONAL BANK
REGISTRAR	LINK  INTIME  INDIA

NAME OF THE COMPANY	PRIME RETAIL INDIA LIMITED
PROMOTERS	Rajiv Chopra and Mrs. Soniya Chopra
ISSUE SIZE	PUBLIC ISSUE OF 75,00,000 EQUITY SHARES
BRLM	HEM SECURITIES LIMITED
REGISTRAR	LINK INTIME INDIA PRIVATE LIMITED

FORTHCOMING IPOS

NAME OF THE COMPANY	FLEXITUFF INTERNATIONAL LIMITED
PROMOTERS	KALANI INDUSTRIES PRIVATE LIMITED, MISCELLANI GLOBAL PRIVATE LIMITED AND SANOVI TRADING PRIVATE LIMITED
ISSUE SIZE	PUBLIC ISSUE OF 6,750,000 EQUITY SHARES
BRLM	COLLINS STEWART INGA PRIVATE LIMITED
REGISTRAR	LINK INTIME INDIA PRIVATE LIMITED

NAME OF THE COMPANY	SHEETAL REFINERIES LIMITED
PROMOTERS	JUGAL KISHORE AGARWAL & MR. JITENDER KUMAR AGARWAL
ISSUE SIZE	RS 60CR
BRLM	Chartered Capital And Investment Limited
REGISTRAR	LINK INTIME INDIA PRIVATE LIMITED

MAHARASRTA GOVERNMENT BANS NEW BOOK ON MAHATMA GANDHI

• International papers buys AP Papers.
• SENSEX above 19000 mark.
• TTSL plans Rs 3000 IPO.
• Recovery in US- TCS sees uptick in pricing.
• Tech sector to grow around 20%.
• FIIs are net buyers on 29-03-11.
• AXIS bank to expand in Gujurat.
• ADAG, ESSAR named in 2G scam.
• India among the top 10 industrial nations.
• SKS completes securitisation of debts around Rs 600cr.
• AXIS, ENAM deal under RBI scanner.
• SRK, Akshay among top 15 taxpayers.
• Rejig at Bombay Dyeing / Wadia empire.

NASDAQ - ADRS - INFY UP 2%, STERLITE UP 3% IN EARLY TRADE.

IPO LISTING NEWS - PTC INDIA FINANCIAL SERVICES TO LIST ON 30-03-11

FORTHCOMING IPOS / FPOS

NAME OF THE COMPANY	POWERICA LIMITED
PROMOTERS	Naresh Chander Oberoi and Kharati Ram Puri
ISSUE SIZE	-
BRLM	JM Financial Consultants,Citigroup Global Markets,IDFC Capital, Kotak Mahindra Capital Company
REGISTRAR	Link Intime India Private Limited

NAME OF THE COMPANY	ORTEL COMMUNICATIONS LIMITED
PROMOTERS	BAIJAYANT PANDA, MS. JAGI MANGAT PANDA, PANDA INVESTMENTS PRIVATE LIMITED AND UTKAL MANUFACTURING & SERVICES LIMITED
ISSUE SIZE	RS 1,000 MILLION
BRLM	IDFC CAPITAL LIMITED  CENTRUM CAPITAL LIMITED
REGISTRAR	KARVY

NAME OF THE COMPANY	POWER FINANCE CORPORATION LIMITED
PROMOTERS	GOVT OF INDIA
ISSUE SIZE	FURTHER PUBLIC ISSUE OF 229,553,340 EQUITY SHARES
BRLM	JM FINANCIAL CONSULTANTS ICICI SECURITIES GOLDMAN SACHS (INDIA) DSP MERRILL LYNCH
REGISTRAR	KARVY

NAME OF THE COMPANY	MUKESH UDYOUG LIMITED
PROMOTERS	Krishan Chand Gupta,  Pardeep Gupta,. Sandeep Gupta and Mukesh Steels Limited, Mukesh Strips Limited, Plezer Investments Private Limited and Mukesh Industrial Finance Limited
ISSUE SIZE	FURTHER PUBLIC ISSUE OF 75,00,000 EQUITY SHARES
BRLM	Corporate Strategic Allianz Limited
REGISTRAR	Skyline Financial Services Private Limited

NAME OF THE COMPANY	INTAS PHARMACEUTICALS LIMITED
PROMOTERS	HASMUKH CHUDGAR, MR. BINISH CHUDGAR, MR. NIMISH CHUDGAR, DR. URMISH CHUDGAR, MS. KUSUM CHUDGAR, MS. BINA CHUDGAR, MS. BINDI CHUDGAR, MS. PARUL CHUDGAR, MR. SHAIL CHUDGAR, INTAS ENTERPRISE PRIVATE LIMITED AND EQUATORIAL PRIVATE LIMITED
ISSUE SIZE	RS 4,250 Million
BRLM	Kotak Mahindra Capital Company Limited  Morgan Stanley India Company Private Limited
REGISTRAR	-

NAME OF THE COMPANY	ARCH PHARMALABS LIMITED
PROMOTERS	Ajit Kamath, Manoj Jain, Rajendra Kaimal, Vidya Kamath, Bindu Jain, Ajit Annu Kamath (HUF), Manoj Jain (HUF), Arch Phytochemicals Private Limited, Avant Capital Services Private Limited, Arch Impex Private Limited, AMR Investments Private Limited and Arch Pharmachem Limited
ISSUE SIZE	RS1,350 MILLION
BRLM	INDIA INFOLINE LIMITED ENAM SECURITIES
REGISTRAR	LINK INTIME INDIA PRIVATE LIMITED

NAME OF THE COMPANY	JAISHREE INDUSTRIES LIMITED
PROMOTERS	SHYAM SUNDER MAHESHWARI AND MRS. ASHA DEVI MAHESHWARI
ISSUE SIZE	RS 5,686 LAKH
BRLM	Ashika Capital Limited
REGISTRAR	KARVY

IPO LISTING NEWS: LOVABLE LINGERIE LIMITED TO LIST ON 24-03-11

• FIIs and DFIs were net buyers on 22-03-11.
• SBBJ rights opens on 28-03-11.
• FII s are bullish on India - BS.
• GM Rao follows Buffett's footsteps, pledges Rs 1500cr for charity.
• BILT to list on LSE.
• Finance Bill passed in LS, service tax on health sector goes.
• Sesa Goa buys Bellary steel in all cash deal.
• DB Realty promoters pledge more shares.
• Sugar stocks up, on export clearance.

• Market may open in the positive.

ADRs UP - STERLITE(2%), INFY(1%), COPPER RAISES ON LME

• Bajaj to produce small car along with Renault.
• Global refining margin to rise, on demand.
• RCom to offer free Web package.
• US, Europe stocks rally.
• TCS, WIPRO, INFY and HCL to raise rates, on improved business environment.
• StanChart to pickup 3% stake in USE.
•  TATA among the top 50 global brands.
• Shilpi cable IPO opens today.

IPO ANALYSIS -SHILPI CABLE TECHNOLOGIES LIMITED – UNCLEAR AND LOW FREQUENCY- AVOID.

The New Delhi based Radio Frequency (RF) cable manufacturer is entering the capital market to raise funds around Rs 56cr, in the price band of Rs 65-69. The company was originally incorporated in 2006, as Rosenberger Shilpi Technologies as a joint venture (50:50) with Rosenberger GmbH of Germany. On account of dispute between them, the 50% share of the Rosenberger was acquired by the Indian promoters in 2008. The company manufactures RF cables, low voltage power cables and cable accessories, cater to the telecom sector.

CARE has assigned grade 1 to the IPO indicating poor fundamentals. The grading is constrained by losses during the past years, liquidity crunch leading to delays in repayment of term loan installments and high working capital utilization and relatively high gearing. The grading is further constrained by very short track record.

                                                                                                                                

FINANCIALS:

                            

RS IN CRORES.

	08	09	10
TOTAL INCOME	11.43	47.33	174.81
PAT	-1.92	-3.98	9.04
RONW	-VE	-VE	24.61
EPS	(0.96)	(1.99)	4.45

VALUATION AND RECOMMENDATIONS:

The company has very limited operating history. The promoters could not get on the joint venture partners. The company had earlier defaulted to IDBI bank and the loans were rescheduled. There are, loss making group companies. For the expansion, no appraisal has been done and the expansion is fully funded by equity. The company operates in rapidly changing, highly competitive telecom sector. Dependence on imported raw materials, without any export potential. The debtors’ levels are high, indicating poor realization and tight liquidity position in the industry. The promoters / group are also into similar business there by causing clash of interest.

At Rs 65-69 the company is demanding a PE multiple of 17, on its FY11 earnings, on the post issue capital of Rs 32cr, which is very expensive. The comparable listed companies in the segment are – Bhagyanagar India, which is trading around Rs 17 (10PE, FV RS 2) and Surana Telecom at Rs 15 (FV RS 5). The issue is irrationally priced.   AVOID SUBSCRIPTION.

                                 

ISSUE DETAILS:

ISSUE OPEN / CLOSES ON	22-03-11 / 25-03-11
ISSUE SIZE  / FV	RS 56CR / RS 10
OBJECTS	Capital expenditure for expansion, 3G enabling tools, working capital requirements.
PRICE BAND	RS 65-69
BRLM	D&A Financial Services
REGISTRAR	BEETAL Financial & Computer Services
IPO GRADING	1 BY CARE

SEBI CLEARS CAIRN - VEDANTA DEAL.

• RIL -KG gas out put may be less than estimated - share tumbles.
• Sibal helping hand for telecom firms- seeks PM help for softer loans to the sector.
• Quake effect - US, European firms look towards India for raw materials in metals, chemicals and textile fibers.
• Hybrid bonds - TATA Steel raises Rs 1500cr @ 11.8% p.a.
• Quake effect minimal - says Infosys.
• HPH Trust- South East Asia's biggest IPO raised $ 5.8 billion.
• Libya declares cease fire after UNSC resolution.
• IDBI eyes 20% growth from SME segment.
• JSW- IT dept unearths inflated expenses during the raid.

RBI RAISES KEY RATES BY 25 BASIS POINTS.

• Bharati Airtel is likely to buy Qualcomm's 4G licenses.
• EPF interest raised to 9.5%.
• HCL Info bags contract of Rs 300cr from IAF.
• Blackstone buys 2% VIP shares.
• PTC INDIA Financial Services IPO closes today.
• Telecom tower business gets infra tag.
• Cash for votes - old news, new leak.
• Karnataka bank's rights issue closes on 22-3-31.
• Banks may set riders for MFI Loan recast.
• Metal stocks soar in LME.
• Market may open in the positive.
• Shilpi cable Technologies IPO to open on 22-03-11. Price band Rs 65-69.

MUKESH AMBANI ON BANK OF AMERICA BOARD.

• Raja's close aide commits suicide.
• Jyothi Labs buys 14.9% stake of A C Muthaih, in Henkel India.
• Hero Honda promoters raise funds by pledging shares to the extent of Rs200cr.
• JSW under IT dept scanner.
• TADADI Port (Karnataka) - GMR, GVK and jsw are in race.
• RBI's policy review meeting today.
• Benchmark AMC being acquired by Goldman Sachs Group for Rs 160cr.
• Rebuilding opportunities in Japan, ferrous and non ferrous metal stocks may rally.
• HDFC - India's only ethical company as per Ethishere Institute (NY).
• INFOSYS-  immense opportunities for Finacle, in rural banking, government thrust on financial inclusion.
• Buy TCS at CMP Rs 1115. Target Rs 1257 by May 2011.

PTC FINANCIAL SERVICES IPO OPENS TODAY, PRICE BAND RS 26-28.

• Corporate advance tax payment up by 30%. RIL pays 37%  higher.
• Cabinet approvs GST Bill. Amendment Bill is likely to be introduced in LS in this session.
• Sistema Shyam TeleServices (MTS) plans IPO, crosses 10m subscribers.
• Rupee weakens - good news for software companies.
• Parsvanath to pay second instalment to Rlys for Delhi land deal.
• PTC Financial services ropes in anchor investors - HSBC Bank Mauriius Ltd and Capital International Emerging markets funds have been allotted 97,95,750 and 54,70,000 shares respectively, at Rs 28.
• CRISIL Report - raising interest cost and delay in execution to affect the performance of construction companies.
• MFIs including SKS may go in for CDR route.
• NIFTY may get support at 5450 level.
• Maruti rolls out 10-Millionth car, a sort of a record for auto maker.
• Crisis may cost Japan $200 billion.
• High inflation, high interest go hand in hand - RBI.

SEBI ISSUES FINAL OBSERVATIONS ON CAIRN-VEDANTA DEAL.

• Nippon buys 26% stake in Reliance Life.
• SEBI seeks clarification on iGate-Patni deal.
• Vishal Retail changes hand. TPG and Shriram buys the firm for Rs 70cr.
• Suzlon promoters sells 2.25% of paid up equity. 
• Lubrizol - $9 billion deal by Warren Buffet.
• Rejig at Mindtree - change in strategy.
• Infy,TCS, Wipro and HP in race for contract with Dept of Post.
• FIIs and DFI s were net buyers on 14-03-11. Market to open in the positive.
• ADRs - Infy and Sterlite (2%) up.
• Rebuilding of Japan - out look good for ferrous and non ferrous metals.
• BOJ injects record amount to the financial system.

RBI MAY RAISE KEY RATES BY 25 BASIS POINTS, IN ITS POLICY REVIEW.

• GMR withdraws, to operate and manage, Ontario International Air Port, California.
• PTC Financial services IPO to open on 16-03-11.
• AV Birla in race  to buy  $3.2 bn Australian mining company - White haven Coal.
• Budget proposal to levy excise duty on branded garments may be put on hold.
• RelInfra expects more revenue from toll collection.
• Bharati Airtel not in race to buy Govt stake in Hexacom.
• Sharp listing gains of IPOs in a weak market raises eyebrows - BS.
• BOJ to pump in 2-3 trillion in funds through its market operations to ease liquidity.
• Reliance may gain from Japan's energy import surge.
• Market may open in the positive.
• ADRs - Infy, Wipro and MTNL gains  in Friday's trading.
• Gold may gain due to global uncertainties.

RIGHTS ISSUE MONITOR

NAME OF THE COMPANY	ISSUE CLOSING DATE	RATIO / PRICE	CMP	RECOMMENDATIONS
EIH	15-03-11	5:11 / RS 66	RS 77	APPLY
KARNATAKA BANK	22-03-11	2:5 / RS 85	RS 108	APPLY
KARUR VYSYA BANK	17-03-11	2:5 / RS 150	RS394	APPLY
CENTRAL BANK OF INDIA		3:5  / RS 103	RS153	APPLY
ARROW TEXTILES		2:5 / RS 11	RS11	DO NOT APPLY

RELIANCE MUTUAL FUND SCHEMES DECLARES DIVIDEND.

• Vision Fund (Retail and Institutional) Rs 4.00 per unit.
• Power Sector Fund Rs 1.50 per unit.

• Canara Bank plans major global growth.
• Gold may scale newer heights on global concerns.
• Bank of Japan pledges support to quake hit economy.
• PSU banks to improve delivery system in rural areas.
• Funds will flow back to emerging markets - Mirae Asset Global Investments.

IPO ANALYSIS: PTC FINANCIAL SERVICES LIMITED - JUST ANOTHER NBFC WITH AVERAGE FUNDAMENTALS – AVOID.

PRICE BAND RS 26-28.

PTC Financial Services (PFS), an NBFC, is promoted by PTC India Ltd (PTC), the leading provider of power trading solutions in India, is a Government of India initiated Public-Private Partnership, whose primary focus is to develop a commercially vibrant power market in the country.

PFS provides financing solutions for, companies with projects across the energy value chain.  It is one of  the  few  financial  institutions  in  the country  that  provides  both  equity  and  debt  financing, including  short-term  and  long-term  debt,  as well  as  structured  debt  financing. With a focus on infrastructure development, the company offers an integrated suite of services including provision financing to, and make investments in, private sector companies in the power sector, including for power generation, equipment supply and fuel source projects. PFS currently focused primarily on power generation projects. PFS also provides fee-based syndication and advisory services as well as carbon credit financing against certified emissions reduction. 

The company currently has equity commitments for ten companies for an aggregate amount of ` 4,838.46 million, with projects aggregating 2,621.45 MW of power generation capacity. Of these equity commitments, as of September 30, 2010, the had entered into definitive agreements for investments in eight companies for an aggregate amount of ` 4,827.67 million, with projects aggregating 2,621.45 MW of power generation capacity. The current portfolio of principal investments are mostly Greenfield projects, which  typically  involve  between  two  and  five  years  of  development  activity  prior  to  commencement  of commercial operations. Three of the company’s principal investment projects, with an aggregate power generation capacity of 175.60 MW, have commenced commercial operation

The company is raising funds, to augment capital for further business expansion.

FINANCIALS: RS IN CRORES

	31-03-09	31-03-10	03-09-10
TOTAL INCOME	11.60	53.49	53.60
PAT	8.53	25.45	25.51
EPS	0.35	0.59	0.60

Average RONW in the last three years is 2.71%.

VALUATION AND RECOMMENDATIONS:

The company’s past financial performance is not encouraging. On a NW of Rs 635cr, the company earned a profit after tax Rs 25cr, for the FY10. Neither the company is in to exciting business. Just another NBFC, with the government backing, with limited expertise and financial products.

The company is significantly dependent on PTC, the Promoter, for the growth. Volatility in interest rates affects the lending and treasury operations, which could cause the net interest income to decline and adversely affect the return on assets.  The debt finance business is concentrated on a few borrowers in the power sector and if any of the loans to these borrowers become non-performing, the quality of the loan portfolio may be adversely affected. Other than the discount offered, there may not be any listing gains.

AVOID SUBSCRIPTION.

ISSUE DETAILS

ISSUE OPEN / CLOSE	16-03-11 / 18-03-11
SIZE / FV	Issue of 156,700,000 equity shares, including offer for sale of 29,200,000  / RS 10
BRLMs	SBI Capital Markets, JM Financial Consultants, ICICI Securities, Almondz Global Securities, Avendus Capital.
REGISTRARS	Karvy Computershare
IPO GRADE	GRADE 3 BY CRISIL.