ADAG STOCKS PLUMMETS.

CBI statements on Anil Ambani had telling effects on the ADAG stocks today. The stocks were down from 3% to 12%. The market cap of the group has come down to as low as Rs 54000Cr level.

NAME OF THE COMPANY	PRICE AS ON 30-09-11 (RS)	MARKET CAP RS IN CRORES
RELIANCE INFRA	374	9891
RELIANCE CAPITAL	315	7742
RELIANCE POWER	77	21543
RCOM	72	14809
RELIANCE MEDIA	91	419
TOTAL	-	54404

The total market capitalization of the group stood at Rs 69,966.73 crore in July in 2006 and in July 2010 the market capitalization was at Rs 1, 42,380 crore.

The group had the highest market cap on 08-02-2008 at Rs 350550Cr.

Rel COM		133356
Rel Capital		44803
Rel Energy		46431
RNRL		24260
Rel Power		101700
TOTAL		350550

SAMAVARDHANA MOTHERSON MULLS RS 1750CR IPO.

Samavardhana Motherson Finance Limited (SMFL), an integrated design and manufacturing company in the automotive industry plans to raise Rs 1750Cr through an IPO. The company holds 36% stake in auto components maker Motherson Sumi Systems. Standard Chartered Securities and J P Morgan are the BRLMs. SMFL has manufacturing facilities in 23 countries.

P G ELECTROPLAST FACES SEBI PROBE

According reports, SEBI has initiated a probe against the rigging of share prices. The IPO received luke warm response, getting subscription only to the extent of 1.34 times. No bank, Insurance Company, Mutual Fund and other Financial Institutions subscribed to the IPO, because of its poor quality and irrational pricing. However the IPO got listed with almost 100% premium to its issue price on 26-09-11 and went up further on next day and down 20% yesterday.

Even after 20% fall yesterday the shares are trading around 40PE, on its FY 11 earnings, on the post issue capital of Rs 16.41cr. The shares of well established companies in the segment, with strong brand equity, like Videocon ( 8 PE) and Mirc Electronics (10 PE) are available at much cheaper valuation. Its fair value is Rs 50.

SWAJAS AIR CHARTERS IPO - CUTS PRICE BAND AND EXTENDS CLOSING DATE.

The Book Running Lead Manager to the issue has informed the Exchanges that the SWAJAS AIR CHARTERS LIMITED issue will close on Oct 5th, 2011 instead of the earlier closing day on Sep 28th 2011.

Further, the price band has revised from 90/- to Rs100/- to Rs. 84/- to Rs. 90/- per share. Post issue modification date has been revised to 7th Oct, 2011.

The revision in price band makes no difference, stay away from the IPO.

IPO ANALYSIS : INDO THAI SECURITIES - STAY AWAY WITH CONFIDENCE.

ITSL is in to equity broking and is a member of NSE, BSE, MCX-SX and USE. The Indore head quartered company has 14 branches, out of which 12 in Madhya Pradesh and 2 in Maharastra. ITSL has also 60 business associates mainly concentrated in the state of M. P.

The company is planning to mobilize around Rs 32Cr, by issuing 40, 00,000 equity shares, in the price band of Rs 70-84.The IPO opens on 30-09-11 and closes on 05-10-11. Corporate strategic Alliance are the BRLM.

The primary object of IPO is for working capital requirement, set up of regional and corporate office premises, expansion of branches and for brand building and advertisement.

Financial Performance:

In 9MFY11, ITSL has achieved total income Rs.4.27 crore and PAT of Rs.1.15 crore. PAT margin declined to around 27% compared to previous year on account of absence of income from long-term capital gain. The EPS has declined to Rs 2.56 mainly due to increase in equity base on back of capitalization of reserves by issuing bonus shares in ratio of 2:1 in July’2010.

MATTERS OF CONCERN:

IPO grade 2 by CARE. CARE says, the grading of ITSL is constrained due to small scale of operations in highly competitive broking industry marked by low market share and limited revenue diversification. The geographical concentration with limited branch network and high dependency on capital markets which are inherently volatile leading to uncertainties in ITSL’s earning profile, further constrains the grading.

According to the NSE Fact Book, top 25 brokers account for only 44% of the total volume. National brokers like Kotak Securities, Religare Securities and IIFL rank among the top brokers in the country with a nationwide presence.

The company’s expansion plan faces challenges. The company has set an ambitious target to roll out branches aggressively over the next two-three years to grow its broking business, for which IPO money is being raised. However, the company will face challenges due to strong competition from national brokers with a pan-India presence. Moreover, the company is relatively unknown outside the M P and may find it difficult to penetrate the other markets.

Even the larger brokerages such as Edelweiss Capital, MotilalOswal and Emkay Global and others have disappointed the investors.

VALUATION AND RECOMMENDATIONS:

At Rs 70-84, the offer is being around 25 PE on its FY 11 earnings, on the post issue capital. Small time regional player in the highly competitive broking segment. The IPO is irrationally priced.

STAY AWAY FROM THE IPO. FAIR VALUE RS 20.

NIFTY TO OPEN IN GREEN

The Sensex yesterday was up by almost 500 points, mainly due to short covering. The net buying by FIIs, yesterday, was negligible. Favorable global cues and further squaring off the short positions may push the NIFTY beyond 5050 level. The up trend may continue till the expiry of future and options, tomorrow.

IPO ANALYSIS :ONELIFE CAPITAL ADVISORS: 'NO LIFE CAPITAL' - AVOID. ONE MORE FROM LOOT MAAR CATEGORY.

PRICE BAND RS 100 -110.

IPO GRADE 1 BY CARE, POOR FUNDAMENTALS.

ISSUE OPENS / CLOSES 28-09, 04-10.

BRLM – ARTHERSTONE CAPITAL MARKETS

ISSUE SIZE – 33, 50,000 EQUITY SHARES, FV RS10.

Onelife Capital Advisors Limited (OCAL) is a SEBI registered Category I, Merchant Banker and is in the process of securing license to do business in Equity Broking (BSE) and Portfolio Management Services (PMS) by SEBI.

The company has a corporate office in Mumbai and the current employee strength is eleven. It has no branches as on date.

OCAL started its operations in FY2010, Income from operations consists principally of income from investment banking and related services, which includes fee-based income from merchant banking, corporate advisory (including research services), debt syndication services and professional fees. In FY10, the company earned a total income of Rs.61.7 lakh comprising professional fees and consultancy charges.

OCAL had provided advisory services to a company in FY10 and is yet to receive payment for these services. Out of the total debtors of Rs.56.7 lakh, 80% are outstanding for more than six months.

CARE views on Industry Outlook:

A transparent, efficient and well developed stock market facilitates investment and economic growth and is an important factor in development of financial markets like India. India’s stock market has evolved over the years and has seen structural reforms in system as well as regulation and supervision in recent times, particularly after the establishment of Securities Exchange Board of India (SEBI) as the market regulator. Stringent regulations put forth by SEBI periodically and improving technology led to well regulated highly systems enabled capital market in India. System based trading and settlement has helped market-determined prices and allocation of resources, screen-based nation-wide trading. Presently, there are 22 recognized stock exchanges in India and the stock markets now have various players including mutual funds, FIIs, hedge funds, corporate and other institutions and retail public. OCAL’s performance is dependent on performance of the domestic and global financial markets.

MATTERS OF GRAVE CONCERN:

1. One of the promoter group entities ‘Sai Broking’ has been issued two show cause notices by SEBI for violation of provisions and for unfair trade practices.

2. The company is loss making and has negative cash flow from the operations.

3. Limited track record, moderate management profile, lack of diversified revenue streams, lack of branch network, highly competitive merchant banking business, high dependence on capital markets which exposes OCAL’s business to volatility in stock market which may impact its revenues and profitability.

VALUATION AND RECOMMENDATIONS:

The company reported losses for FY11. The profit reported in FY10 is not be taken at face value since the debtors are yet to be realized. One of the poorest quality IPO to hit the market in FY 11.

Onelife has managed one IPO this year – Paramount Print Packaging. As against the IPO price of Rs 35, the shares trading at Rs 21.

The BRLM to the issue, Artherstone had earlier managed the IPO of Midfield Ind. The shares are now trading at Rs 40, as against the issue price of Rs 133.

A MUST AVOID IPO. FAIR VALUE Rs 5.

RDB IPO GETS POOR RESPONSE

The IPO which closes tomorrow has received subscription to the extent of just 8%.

POOR QUALITY IPO, STAY AWAY.

IPO LISTING NEWS - P G ELECTROPLAST TO LIST ON 26-09-11.

IPO ANALYSIS: SWAJAS AIR CHARTERS : TURBULENT TIMES,SKY HIGH PREMIUM - AVOID

An IPO at 25 PE multiples from a small player in the Aviation sector, which is going through weather, puzzles the inventors. The company has very limited operational history, demands a premium of Rs 80 / 90, where as the shares of well established, bigger players of the sector are languishing in Rs 20-30 range. The IPO carries grade 2 by ICRA, indicating below average fundamentals.

Investors advised to note that out of the total 30 IPOs that are listed in 2011, 18 IPOs are trading below the offer price. This is one such poor quality issue.

The IPO has a price band Of Rs 90-100, opens on 26-09 and closes 0n 28-11. Aryaman Financial Services are the BRLM. The company plans to raise Rs 37.50Cr.

BUSINESS:

Swajas is a Non-Scheduled Airline Operator, which has 3 helicopters and one Air craft, taken on dry lease. The company services are mainly concentrated in southern India.

The company offers services under the following segments:

1. General Air-Charter Services

2. Off-Shore Transportation & Logistics

3. Charter Tourism

4. Medical Evacuation Services

FINANCIALS:

The company reported a total income of Rs 29.15 Cr, PAT of Rs 0.78Cr and EPS of Rs 4.60 for the year 2010. The EPS for the FY 11 is Rs 3.88. The company will have post issue capital of Rs 15Cr.

ANALYSIS, VALUATION AND RECOMMENDATIONS:

The company boasts of profitability for the years 2009, 2010 and 2011. However the company is yet to remit TDS of Rs 80 lacs, deducted in 2010, which should have been deposited with the appropriate authorities within 7 days. Although it is in operation for 3 years, the company is yet to obtain ESI registration.

The company operates in highly competitive, regulated sector. Proper infrastructure development is essential for growth of this segment. Because of policy paralysis nothing is moving at the highest level.

Depends on very few customers for business. Top 10 customers’ accounts for 80% of the revenue in FY 2011.

Swajas had negative cash flow in the past.

The company pays lease rents in dollar terms. Dollar appreciation against rupee will dent the company’s profitability. The volatile price movement of ATF prices adds more discomfiture to the business. Most importantly the IPO is irrationally priced.

AVOID. (Fair value around Rs 20.)

IPO ANALYSIS : M AND B SWITCH GEARS - SOLAR VENTURE MAY PUT THE COMPANY IN REVERSE GEAR : AVOID.

MSBL is in to the business of manufacturing of transformers since the last 30 years and primarily caters to the requirements of state electricity boards and government controlled utilities. MBSL has increased its presence in high KVA transformers segment and specialized transformers has improved its competitive position in the industry. The company is promoted by S S Mundra and associates.

The company which started with a capacity to manufacture 550 transformers p.a. has grown gradually to a capacity to manufacture 5,100 transformers p.a.

OBJECTS OF THE IPO

The company intends to utilize the funds raised to set up a solar photovoltaic plant in M.P.

MBSL will be implementing the project using the Crystalline Silicon PV technology for the entire 6 MW of solar power project.

ABOUT SOLAR PROJECTS

Commercial solar cells, most often made from silicon, typically convert sunlight into electricity with an efficiency of only 10 – 20%, although some test cells do a little better. Given their manufacturing costs, modules of today’s cells incorporated in the power grid would produce electricity at a cost roughly 3 - 4 times higher than current prices. Break through in technology is required, to produce electricity at rates comparable to conventional methods.

The technology for manufacturing solar photovoltaic cells is still evolving and therefore carries the risk of obsolescence. The company also has no prior experience in the Solar PV cells business and is expected to face competition from large and established players.

Concerns as per ICRA who have assigned grade 2 to the IPO:

1. Small scale of operations of the company in the transformer business resulting in lower bargaining power vis a vis larger customers and moderate economies of scale.

2. Highly competitive and fragmented nature of the transformer industry with significant competition from small and medium sized players.

3. High working capital intensity of operations arising out of high debtor days resulting in negative fund flow from operations over the last two years.

4. Early stage of implementation for solar power project resulting in higher execution risks.

5. High cost of power generation make solar power projects highly unviable in the absence of subsidized feed in tariffs or other financial incentives like revenues through sale of Renewable Energy Certificates.

6. High off-take risks, as MBSL yet to tie up for sale of power with customers.

7. High funding risks as financial closure for Phase I is yet to be achieved.

8. Large quantum of equity funding for the solar project resulting in expectations of modest equity returns from the project.

VALUATION AND RECOMMENDATIONS

The company intends to mobilize Rs 90Cr, by issue of 50, 00,000 equity shares in the price band of Rs 180-186.

The total PAT earned by the company in the last 4 years is around Rs 2.50Cr. The company will have a post issue capital of Rs 20Cr. The company to shown an EPS of Rs 5 has to earn PAT of Rs 10Cr, which is very unlikely in the near future. The company is venturing into untested and uncertain business segment. The company has corporate governance issues. It had negative cash flow till 2010.

The debtors’ level in the FY 11 has gone up to 65% of sales indicating stretched cash flow.

The average cost of acquisition of shares by the promoters is less than Rs 8.

The IPO is managed by D & A Financial Services, who had earlier managed the Shilpi Cable issue. As against the IPO price of Rs 69, the shares are trading at Rs 14. Another aggressively priced IPO.

The new venture will put the company in reverse gear.

Avoid the IPO.

IPO ANALYSIS : FLEXITUFF INTERNATIONAL LIMITED: NOT STRONG ENOUGH - AVOID.

PRICE BAND RS 145 -155.

FIL is engaged into the manufacturing of FIBC (Jumbo bags), geo-textile fabric and ground cover fabric, Biaxially Oriented Polypropylene (BOPP) woven bags and leno bags (small packaging bags). FIL’s main product is FIBC bags (65% of revenue) which are used in bulk packaging and transporting requirements of a host of industries.

The company’s manufacturing facilities are located in Kashipur (Uttarakhand) 16,000 mtpa and Pithampur (MP) 23,000 mtpa.

IPO Details

FIL is proposing to make an IPO of 67, 50,000 equity shares of face value of Rs.10 each. Out of the total equity shares, 45, 00,000 equity shares would comprise of fresh issue. The balance 22, 50,000 equity shares, is offer for sale, by Clear Water Capital partners. The IPO open will open 29-09-11 and closes on 05-10-11. Collins Stewart Ingra is the BRLM. In the year 2010, Collins managed two IPOs – Technofab Engineering and Intrasoft. Currently these IPOs are trading much below their offer price. This IPO carries grade 3 awarded by CARE.

FIL intends to utilize the proceeds to fund expansion and set up Dripper Project, among others.

INDUSTRY

FIBC manufacturing is a labour and power-intensive process. Low labour costs, ease in the procurement of the polymers and proximity to end markets give India a competitive edge over other countries. FIBCs are being increasingly used in the industries those require economical and reliable packaging at reduced logistical costs and are preferred to smaller packages.

FINANCIALS:

FIL achieved a consolidated turnover of Rs 578Cr and Rs 321Cr for the years 2011 and 2010. The net profit earned is Rs 3.09Cr and Rs 0.46Cr, respectively. The company has share capital of Rs 17.21 Cr as on 31-03-11.

VALUATION AND RECOMMENDATIONS:

We witness rush of IPOs in the month of Sept. This is to beat the dead line. Otherwise the companies have to seek fresh clearance from SEBI if they miss the dead line. So have 6 six IPOs lined up before 30-09-11.

FIL although has recorded impressive growth in the past, the company has negative cash flow in the last 5 years. There are corporate governance issues like Income Tax notices, related party transactions, criminal litigation etc., Right now the company’s one unit is in SEZ, which entitles the company for some concessions and tax benefits. From FY12, the company has to pay MAT, which drastically reduces the PAT margins. The company will have equity of Rs 21.71Cr, post IPO. The company will find it difficult to service this equity, given the thin margins and the competitive environment it operates.

One third of the IPO amount goes to the share holders offloading their stake. The company is entering into new and untested segment. The expansion cum diversification will take time to give results.

Investors are advised to stay away from the IPO.

Emmbi Polyarns and Jumbo Bags are the comparable listed entities.

FORTH COMING IPOS

NAME OF THE COMPANY	Birla Research and Lifesciences Limited
PROMOTERS	Yashovardhan Birla, Birla Wellness & Healthcare Private Limited, Nirved Traders Private Limited, Shearson Investment & Trading Company Private Limited and Godavari Corporation Private Limited
ISSUE SIZE	RS 75.00 CR
BRLM	ARIHANT capital markets ltd.
REGISTRAR	Link Intime India

NAME OF THE COMPANY	JIJI INDUSTRIES LIMITED
PROMOTERS	GAURAV MUNGAD, VAIBHAV MUNGAD, OMPRAKASH MAHESHWARI AND MUNGAD STRIPS ANDALLOYS PRIVATE LIMITED
ISSUE SIZE	PUBLIC ISSUE OF 90,00,000 EQUITY SHARES
BRLM	Hem Securities Limited
REGISTRAR	BIGSHARE SERVICES PRIVATE LIMITED

NAME OF THE COMPANY	JUST DIAL LIMITED
PROMOTERS	V.S.S. Mani, Anita Mani, Ramani Iyer and V. Krishnan
ISSUE SIZE	RS 360 CR
BRLM	Citigroup Global Markets, Morgan Stanley India
REGISTRAR	KARVY

BHEL FIXES RECORD DATE FOR SPLIT.

BHEL has informed BSE, it has fixed October 04, 2011 as the Record date for the purpose of Sub-division of existing equity shares of face value of Rs. 10/- each into 5 equity shares of face value of Rs. 2/- each.

MATCHING BUYING AND SELLING BY FIIs & DIIs.

The NIFTY today is up by more than 100 points, helped by global cues and some short covering. That is no strange, it has moved up by more than 150 points in the past. What is interesting is the net buying and net selling by FIIs and DIIs are matching. The figure is Rs 318Cr.

IPO LISTING NEWS - VASWANI IND TO LIST IN THE FIRST WEEK OF OCTOBER

The controversial IPO will list in the first week of October. Earlier, the listing matter was referred to Securities Appellate Tribunal, for alleged manipulation of IPO subscription.

SBI’S PAT MAY SURPASS RS 10,000CR MARK THIS FISCAL.

Country's largest lender - State Bank of India profit in the current fiscal is likely to exceed Rs 10,000 crore on the back of increased business and sustained effort to contain bad assets.


State Bank of India (SBI) had posted a net profit of Rs 8,265 crore in 2010-11, 9.84 per cent lower than that in 2009-10, mainly due to higher pension, gratuity, loan loss provisions, higher investment and standard assets provision on special home loan scheme.

However, SBI hopes to clock a net profit in excess of Rs 4,200 crore for the half-year ending 30-09-11.

NEWS FROM VC CIRCLE - CATAMARAN MAY EXIT SKS MICRO

Catamaran, a venture capital fund floated by Infosys founder NR Narayana Murthy, may soon exit SKS Microfinance with a final decision on the matter is likely to be taken shortly. Catamaran had invested Rs 28.1 crore in SKS Microfinance on January 16, 2010, for 937,770 shares. Contractually, Catamaran shares in SKS Microfinance have a lock-in for a period of 24 months from the date of investment but it lapsed when the weekly average closing price of SKS shares fell below Rs 400.

IPO ANALYSIS : TIJARIA POLYPIPES LIMITED: IRRATIONALLY PRICED - AVOID

Tijaria Polypipes Limited (TPL) is engaged in the manufacturing of pre-lubricated HDPE pipes (PLB HDPE), PVC & SWR pipes, sprinkler pipes and systems, flat tubes, fittings and PET straps, with a total production capacity of 25163 million tonnes per annum (MTPA). The company markets most of its products under the brand names Vikas and Tijaria.

The company is planning to raise Rs 60Cr to fund its expansion cum diversification project, by issuing 1, 00, 00,000 equity shares of Rs 10 FV at fixed price of Rs 60.

The total cost of the project is Rs 108.52Cr. The balance is funded by Bank finance Rs 40Cr and Promoter equity Rs 8.52Cr.

Under diversification TPL plans to venture into manufacturing of Partially Oriented Yarn (Popularly known as POY), Draw Texurised Yarn (DTY) Monofilament Yarn, Polyester Zippers Chains, Mink Blankets and PET Sheets.

The IPO is being managed by Hem Securities who had earlier managed Shekawati Poly-yarn Limited recently. The stock is quoting at Rs 23.40, as against the IPO price of Rs 30, (down 22%).

FINANCIALS:

In FY 2010-11, TPL reported a profit after tax of Rs 6.90 crore on an operating income of Rs 112.29 crore while in FY 2009-10, it reported a PAT of Rs 6.74 crore on an operating income of Rs 107.46 crore. The EPS for the period were Rs 5.46 and Rs 5.26 respectively.

RISK FACTORS:

1. Intense competition, fragmented nature of the industry and vulnerability of profitability to fluctuations in raw material prices.

2. The company is executing an expansion cum diversification project that is very large in relation to its current size and would be associated with various execution level risks, it being a new area of business.

3. Small player in the plastic pipes business.

4. Stressed cash flows due to high business growth and large working capitalrequirements may impact the margins.

5. There are some corporate governance issues like following proper accounting standards. The company is yet to register its branches out side Rajasthan under Shops and Establishment Act.

6. The company had negative cash flow in the year’s 2008 and2009.

VALUATION AND RECOMMENDATIONS:

At the offer price of Rs 60, the shares are offered around 20 PE, on the FY 11 earnings, on its post issue capital of Rs 23.62Cr. It carries IPO grade 2 assigned by ICRA. The company’s expansion cum diversification plan is still at preliminary stage. It will take another 12-18 months to go on stream. There is high execution risks associated with the new project. Post issue promoter group holding will come down below 60%. Considering the above and the industry in which it operates, the IPO has been irrationally priced.

AVOID SUBSCRIPTION. (Fair value Rs 30.)

The IPO opens on 27-09 and closes on 29-09.