IL&FS Transportation Networks : In reverse gear.

IL&FS Transportation Networks was lead managed by biggies of investment banking.

Enam Securities Private Limited, Nomura Financial Advisory And Securities (India) Private Limited And JM Financial Consultants Private Limited.

The IPO of IL&FS was made in early 2010 at a price of Rs 258.

It carried IPO grade of 4 awarded by CARE and Fitch.

The stock, even after 6 years of revenues, trading at Rs 102, down Rs 156.

Our recommendations on the IPO was :

- Promoters - IL&FS, has been involved in SEBI proceedings in the past and has been subjected to certain penalties by SEBI.

- IL&FS’s business is significantly dependent on policies of the Government of India.

- Funds are raised, mainly for prepayment/repayment of loans (Rs 500cr).

- The growth of the business mainly depends on winning new contracts.

- Company operates in an industry that is capital intensive in nature, which requires capital infusion periodically to sustain growth.

- Operates in a regulated environment, the toll road operations are regulated by the NHAI.


The issue,in the price band of Rs 242-258, is very aggressively priced. Refrain from subscription.

Where have the listed diamond companies gone?

 The following diamond / jewellery companies had hit the primary market in the last 8-10 years. All of them have taken the investors for a ride. 

a. Mini Diamond.
b. Suraj diamond.
c. Classic Diamond.
d. Shrenuj Diamond.
e. Shree Ganesh Jewellery and Diamond.
f. Parekh Platinum.
g. C.Mahendra Exports
h. Tara Jewellers
i. Goenka diamond and Jewels

The following are still traded on BSE.

1. Gitanjali Gems
2. Lypsa Gems
3. Alankit
4. Renaissance Jewellery

While analysing an diamond company's IPO, we had shared our views with investors. 

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. 

BS Limited - J M financials worst IPO.

BS Limited(formerly known as BS TransComm Ltd) is a player in Power Transmission & Distribution and Telecom Managed Services. The company came IPO in 2010 at Rs 248 (Rs 10FV). The IPO was solely managed by J M Financials. While analysing the IPO among others, we wrote the following.

MATTERS OF CONCERN:

IPO grading 2/5 by ICRA.

The company has limited track record  in its core activities (including tower manufacturing, turnkey solutions and O&M services).

High market risk associated with expansion plans, particularly given the high competitive intensity of the business.   Industry dominated by large established players. The company’s capability to sustain current level of growth and return on investments remains to be seen. 

Profitability could be vulnerable to steel price fluctuation risk.

The company witnessed stretched liquidity position, as indicated by instances of LC devolvement and delays in debt servicing in the recent past.  High working capital intensive business. 

In the last 6 years this is one of worst performing stock. Currently the Rs 1 FV, stock is trading around Rs 2.65. 

This is one of the worst IPO lead managed by J M Financials.

Apple to set up manufacturing hub in Bangalore

Apple, the world's most valued company, pride of America, is setting up a assembly plant in Bangalore. 

Apple plans to make iPhones for the Indian market in, Peenya industrial hub, Bengaluru. Wistron, a Taiwanese OEM maker for Apple, is setting up a facility in Peenya, the city's industrial hub, to manufacture the iPhones. The facility will start production from next April.

Apple though market leader worldwide for smart phones, has market share of 2% in India. Apple smart phones are the costlier than other phones, for various reasons. Manufacturing in India is expected to bring down the prices by 20%, as there will be big savings on customs duty. 

Apple has also sought incentives which is under considerations by Central government.

IPO ANALYSIS: Maheshwari Logistic Limited - Avoid

ISSUE DETAILS:

ISSUE OPENS / CLOSES ON	30-12-2016 / 06-01-2017
Promoters	Vinay Maheshwari / others
Business	Truck services- own / third party
ISSUE SIZE	39,96,000 equity shares
FACE VALUE	Rs 10
PRICE BAND	Rs 68
LISTINGS	NSE - Emerge
BRLMs	Pantomath Capital
REGISTRAR	BigShare

AVOID THE IPO.

Reasons :

1. Unprofessionally managed enterprise.

    

2. Diversifying into unrelated business - craft paper.

        

3. Disputes with IT authorities, declared income under VDS.

FORTHCOMING IPO : PSP PROJECTS LIMITED

ISSUE OPENS / CLOSE ON	--
FACE VALUE	Rs 10
ISSUE SIZE	1,00,80,000 equity shares
BUSINESS	Construction / Infra development
PROMOTERS	PRAHALADBHAI SHIV RAMBHAI PATEL AND SHILPABEN PATEL
LISTINGS
BRLMs	KARVY
REGISTRAR	KARVY
IPO GRADE	NA

Orient Green Power : Red rays in exchanges

Orient Green Power hit the primary market in 2009 at a price of Rs 47. 

The stock, is now trading in single digit.

The IPO was lead managed by JM Financial Consultants Private Limited,Goldman Sachs (India) Securities Private Limited,UBS Securities India Private Limited,Axis Bank Limited. 

The IPO carried grade 4 awarded by CRISIL.

FirstChoiceIPO had advised stay away from the IPO.

Adani Power : where biggies can be terribly wrong.

Adani Power came IPO in Aug 2009 at a price of Rs 100 a piece.

 The IPO was managed by who is who of the investment banking. 

Names like DSP Merrill Lynch Ltd, Enam Securities Private Limited, IDFC - SSKI Limited, JM Financial Consultants Private Limited, Kotak Mahindra Capital Company Limited, Morgan Stanley India Company Private Limited, ICICI Securities Limited and SBI Capital Markets Limited, were associated with the IPO.

The stock is now trading around Rs 29, down 71%. The benchmark indices - Sensex,  during the same has gone up  by almost 10,000 points. 

FirstChoiceIPO had advised the investors to stay away from the IPO. 

Coming soon : NSE IPO

NSE has filed papers with SEBI for an IPO. The issue could be around Rs 10,000 cr, bigger than ICICI prudential Life Insurance offer. Among others, Goldman Sachs and Temasek Holdings of Singapore will be getting an opportunity to trim / off load their stake.

Know your RBI's new deputy governor

Viral V. Acharya of New York University Stern School of Business has been appointed as new deputy governor of Reserve of Bank of India. Prior to joining NYU Stern, Professor Acharya was a Professor of Finance and Academic Director of the Private Equity Institute at the London Business School, a Research Affiliate of the Center for Economic Policy Research and an Academic Advisor to the Bank of England. He was appointed Senior Houblon-Normal Research Fellow at the Bank of England to conduct research on efficiency of the inter-bank lending markets for the summer of 2008.

Professor Acharya's research interests are in the regulation of banks and financial institutions, corporate finance, credit risk and valuation of corporate debt, and asset pricing with a focus on the effects of liquidity risk. He has published articles in the Journal of Finance, Journal of Financial Economics, Review of Financial Studies, Journal of Business, Rand Journal of Economics, Journal of Financial Intermediation, Journal of Money, Credit and Banking, and Financial Analysts Journal.

Professor Acharya has received numerous awards and recognition for his research. He received the Best Paper Award in Corporate Finance from the Journal of Financial Economics in 2000, Best Paper Award in Equity Trading at the Western Finance Association Meetings in 2003, Outstanding Referee Award for the Review of Financial Studies in 2003, the inaugural Lawrence G. Goldberg Prize for the Best Ph.D. in Financial Intermediation, Best Paper Award in Asset Pricing from the Journal of Financial Economics in 2005, and an inaugural Rising Star in Finance Award in 2008.

Professor Acharya earned a Bachelor of Technology in Computer Science and Engineering from the Indian Institute of Technology, Mumbai, and a Ph.D. in Finance from New York University Stern School of Business.

Tree house education : Tree has fallen completely.

From an IPO price of Rs 153 in 2011, the stock is now trading at Rs 16. And there are no takers at that price too. 

While analysing the IPO in 2011, we concluded by saying the following:

At Rs 135-153, the stock is offered around 30 PE, on its estimated FY12 earnings, which is expensive.The company is into new kind of business which may evoke good response to the IPO. There are many grey areas particularly with regard to corporate governance. The company will have a post issue capital of Rs 34.85cr. Even to show an EPS of Rs 5 the company has to earn a PAT of Rs 17.50cr, in FY 12, which is a tall order. Like micro finance, education too politically sensitive segment. Any wrong doing will attract harsh measures from the government. 

The performance of any company on the eve of an IPO is to be taken with a pinch of salt. Since this is a concept stock there could be listing gains. 

The track records of the BRLMs are pathetic.

Global cues, short covering to keep the indices in green

Stock market are expected to open in a  firm note following global cues. DJIA, FTSE and Nasdaq closed in the green in yesterday's trading. After demonetization FIIs started selling in the cash market which resulted in indices losing over 5% in 2 weeks. On ther hand DIIs have aggressively buying in the same segment. In yesterday's trading although FIIs have net sold in cash market, however FIIs have net bought in index options ( Rs 1460 cr). DIIs have net bought for more than Rs 1500 cr in cash market.

There are lot of short positions in index stocks which are to covered before the expiry, that is tomorrow. Expect indices to close with a decent gains. 

Forthcoming IPO - Uber

Most awaited tech IPO may happen in 2017. Uber. The next Google. 

 About Uber :

Uber is a taxi service. Basically, it connects riders with independent car drivers. After you book a car using Uber’s mobile app, a driver rushes to your location. The app even shows you, in real-time, when your driver will arrive. And when you make it to your destination, there’s no need to pull out your wallet: your fare is automatically charged to your preferred payment method. 

Its quarterly net revenue grew from $8 million in Q4 2012, to what’s expected to be $1.5 billion in Q4 of 2016.

SEBI ISSUES PUBLIC INTEREST DISCLOSURE MESSAGE TO INVESTORS

It has been observed that SEBI, Bengaluru Local Office is regularly receiving complaints against activities carried on by QNET/ Vihaan Direct Selling India Pvt. Ltd. (VDSIL). 

In this regard, SEBI has noted that activities of QNET/VDSIL against which complaints are being received are akin to Multi Level Marketing (MLM) activities and therefore the same are being forwarded to State Government/ EOW, Karnataka having jurisdiction to implement provisions of Prize Chits and Money Circulation Schemes (Banning) Act, 1978 governing MLM activities in the nature of Money Circulation Schemes, for further actions as they deem fit. 

The general public are hereby informed that the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 and Rules made there under empower respective State Governments/ local police authorities to take action against MLM activities in the nature of Money Circulation Schemes carried out in their territorial jurisdiction. 

The victims/investors of QNET/VDSIL and also investors aggrieved by the MLM activities in the nature of money circulation schemes carried on by other entities are advised to file their complaints with respective state governments/ local police authorities having territorial jurisdiction for addressing their complaints. The message is issued in the interest of investing public.

Nvidia over takes Apple

Nvidia has overtaken Apple in terms of share price . Nvidia, in today's trade closed at $ 117.32 as against Apple's $ 117.26. However market cap Apple stands at $ 626.50B, while Nvidia's is at $ 64.33B. After market hours Nvidia has gone beyond $118. 

IPO ANALYSIS: PROLIFE INDUSTRIES LIMITED -AVOID

ISSUE DETAILS:

ISSUE OPENS / CLOSES ON	27-12 /30-12-2016
Promoters	MANINDER SINGH JOLLY, Mrs. ANUREET KAUR JOLLY
Business	Manufacturers of special and exclusive range of intermediates for dyes, pigments, pharmaceuticals, agrochemicals.
ISSUE SIZE	PUBLIC ISSUE OF 11,10,000 EQUITY SHARES
FACE VALUE	Rs 10
PRICE BAND	RS 38
LISTINGS	BSE SME
BRLMs	SWASTIKA INVESTSMART
REGISTRAR	Link Intime

AVOID THE IPO.

The following two risk factors are enough  to stay away from the IPO.

1. SEBI has filed prosecution against Tripex Overseas Limited & Others – Mr. Maninder Singh Jolly, promoter-Director of our Company. SEBI has filed prosecution against Tripex Overseas Limited & Others – Mr. Maninder Singh Jolly, promoter Director of our Company. Mr. Maninder Singh Jolly for violating regulation 3(d), 4(2) (f) and 4 (2) (r) of SEBI (PFUTP) Act in the securities of Tripex Overseas Limited under section 24(1) of SEBI Act in the court 9th Additional Chief Metropolitan Magistrate Bandra Mumbai on 22nd February, 2013. The said offence is punishable u/s. 24(1) read with section 27 of SEBI Act with imprisonment which may extend to 10 years or with fine which may extend to 25 crores or with both.

2. The Company has not made provision for Gratuity Payment as required under The Payment of Gratuity Act 1972. The company has not complied with AS-15- Employee Benefits as issued by ICAI.

Speciality restaurant : nothing special left.

Speciality Restaurant, the grade 4 IPO came public in May 2012 at Rs 150. It was lead managed by Kotak Mahindra Capital. In the last 4 and half a years the stock is depreciated by more than 50%, whereas bench mark indices have risen by 30 percent.

While analysing the IPO we had recommended to stay away, based on its fundamentals and business model.

IPO grade vs stock market performance - Just Dial

The company came IPO in 2013 with much funfair and promise.  The IPO was awarded grade 5 by CRISIL. (Maximum permissible). It was lead managed by Citigroup Global Markets and Morgan Stanley India.  

Among others FirstChoiceIPO had written the following in May 2013:

JUST DIAL IPO : QUESTIONABLE GRADE BY CRISIL

Just Dial IPO has been awarded grade 5 by CRISIL. Normally this grade is awarded to companies which are professionally managed, have impeccable track record and who have high business integrity & ethics.  However a closer scrutiny of the RHP of Just Dial tells a different story.   Among others, we found the following deficiencies / un-professionalism in conduct of the business:

               1. Improper keeping of records.                   

2. There were delay in a few cases in the deposit of undisputed statutory dues; and no payments were made to the Employees’ State Insurance Corporation, for which the company had been served show cause notice by ESIC.

3. The company had received FEMA violation notices.

4. There are outstanding criminal proceedings against the Company,  Managing Director and certain Directors and employees.

5.  Promoters have interests in entities which are in the same line of business as that of the Company.

 
One does not understand how CRISIL has awarded grade 5 for the IPO in spite of the above deficiencies / unprofessional conduct of the business.

The stock is trading around Rs 370 against the IPO price of Rs 530.

Narendra Modi's statement spooks stock market.

PM made a statement on Saturday that those who make money from securities market should contribute more to the exchequer. Due to demonetization the market had lost more than 5 percent in the last few weeks. The Saturday's statement further derailed the Sensex which lost 234 points in today's trading. This is despite Arun Jaitley clarifying that there are no proposal increase long term capital gain tax on stocks.

IPO stock review : H P L electric & Power has given shock

The company came public in the last week of Sept 2016 at Rs 202.

Sure to get electric shock if you invest in the IPO, this is what we wrote.

The company, post IPO will have equity of Rs 48.20 cr. For FY 17 the likely EPS is around Rs 8 on the expanded capital. The offer is made at 26 PE which is very expensive. More importantly, the money raised from the IPO will go towards reduction of debt / working capital requirements. There won’t be any capacity addition.

AVOID INVESTMENT IN THE IPO.

The stock is now trading at Rs 96.

Varun beverages : stock review post listings

Varun Beverages hit the primary market in Oct 2016. The IPO was priced in the range of Rs 440-445.

Within 2 months of listings the stock is trading around Rs 358, down by Rs 87.

This is what we wrote while analysing the IPO:

Bottles are empty - avoid the IPO.

The company is likely to report an EPS around Rs 9 for CY 16. The offer at the upper end made at 50 plus PE, which is expensive. The company has limited history of profitability.  Funds from the fresh issue of equity will be utilized towards repayment of debt / general corporate exps.

The company, virtually is offering empty bottles to the investors.

Other than high percentage of promoters holdings (70 plus percentage), there are are no positive factors in the offer.

A MUST AVOID IPO.

IPO ANALYSIS: LIBAS DESIGN LIMITED - AVOID

ISSUE DETAILS:

ISSUE OPENS / CLOSES ON	27-12 /30-12-2016
Promoters	Mrs. Reshma Riyaz Ganji, Mr. Riyaz Eqbal Ganji and Mr. Nishant Mitrasen Mahimtura
Business	Making of Customised clothes
ISSUE SIZE	20,00,000 equity shares / Rs 11.86 cr
FACE VALUE	Rs 10
PRICE BAND	Rs 58
LISTINGS	Nse- Emerge
BRLMs	Sarathi Capital
REGISTRAR	Bigshare

Note ban has adversely affected the corporate India.

Corporate India faces another challenge: the repayment of external commercial borrowings (ECBs). According to data from the finance ministry, $29 billion worth of ECBs are due for repayment during the current financial year. Besides, another $19.6 billion worth of ECBs are due for repayment in FY18. In all, $207 billion worth of foreign debt were up for repayment at the end of March 2016. Post note rupee has weakened and is likely to weaken further in 2017.

Nvidia surges further

Nvidia stock gained another $ 2.67 and closed at $109.78 in today's trading. Its market cap stands at $ 59.44B. If listed on the Indian bourses the company would be the second most valued after TCS. 

The biggest tragedy of demonetization

 Credibility of RBI is at the lowest level since independence.

IPO ANALYSIS: VEERAM ORNAMENTS LIMITED -AVOID

ISSUE DETAILS:

ISSUE OPENS / CLOSES ON	23-12 /28-12-2016
Promoters	Rakshit Mahendra Shah and Mrs. Pinal Rakshit Shah
Business	Trader & Retailer of branded Jewellery & Ornaments.
ISSUE SIZE	PUBLIC ISSUE OF UPTO 11,37,000 EQUITY SHARES
FACE VALUE	RS 10
PRICE BAND	RS 45
LISTINGS	BSE SME
BRLMs	GRETEX CORPORATE
REGISTRAR	KARVY