Sunday, October 30, 2016

Mr TRUMP, IT IS RIDICULOUS

In an recent election campaign speech, Mr Trump, the republican presidential candidate praised India's GDP growth and promised the Americans that he will take US GDP to the level of India, if voted to power. It appears that Mr.Trump does not understand world economy. He is comparing India's growth to US and he thinks USA can grow at 6% and above. To grow at that rate a country needs to have a very large poor population. Most of them should live in abject poverty. The gap between haves and haves not should be wide. The desire to improve ones living standard and better life offers huge growth opportunity for developing countries like India. The labour costs are here cheap, compared to developed countries. Hence, most of the world's top companies would like to invest in India to take cost / growing market advantage. This has cascading effect on the economy, including employment generation. USA does not have such population. The country is very well developed. Labour cost is abnormal. USA imports almost every thing from China, because of forbidding local wage structure. Mr. Trump, first, should ponder over why US is so much dependent on China for its daily needs. ( Total net imports by America from China this year till Aug is at 2,25,000 million USD.)

To grow even at 4%, US should stop importing from China and manufacture locally. That is next to impossible and cost prohibitive. Hence comparing GDPs of India and China with US and aspiring to emulate that is ridiculous. US can not achieve that kind of GDP in the foreseeable future. 

Saturday, October 29, 2016

BSE REVISES CIRCUIT FILTER FOR 15 STOCKS

BSE has revised circuit filter for the following  15 stocks with effect from October 30, 2016.

Sr. No.
Scrip Code
Scrip Name
Circuit Filter % Revised to
1
500151
Golden Tobacco Ltd
10
2
500412
Thirumalai Chemicals Ltd
10
3
508664
Best Eastern Hotels Ltd
10
4
524576
Vivid Global Industries Ltd
10
5
532271
Cybermate Infotek Ltd
10
6
532481
Noida Toll Bridge Company Ltd
10
7
532876
Everonn Education Ltd
10
8
540143
Sagarsoft (India) Limited
10
9
540150
Mewar Hi-Tech Engineering Limi
10
10
590057
Green Fire Agri Commodities Ltd
10
11
532916
Barak Valley Cements Ltd
5
12
533015
Nu Tek India Ltd
5
13
517230
PAE Ltd
5
14
537838
Mahadushi International Trade Ltd
5
15
521030
Nakoda Ltd
5

IPO ANALYSIS: GREEN SIGNAL BIO PHARMA : MORE RED SIGNALS - AVOID



ISSUE DETAILS:



ISSUE OPENS / CLOSES ON
09 -11 / 11-11-2016

ISSUE SIZE
PUBLIC OFFER OF 1,45,79,560 EQUITY SHARES
FACE VALUE
RS 10
PRICE BAND
RS 76-80
PROMOTERS
SUNDARA PARIPOORANAN AND DR. P. MURALI  
BRLM / REGISTRAR
INDIAN OVERSEAS BANK / BIG SHARE
BUSINESS
Manufacturers and exporters of vaccines






BUSINESS:

The company is in to vaccine manufacturing. As on date they have two products: 1. BCG Vaccine - for immunization against Tuberculosis 2. BCG-ONCO - for Immunotherapy for the treatment of Urinary Bladder Carcinoma. As both vaccines produced by the company are generic drugs and they do not require any patents for the same.

OBJECTS OF THE ISSUE:

       Objects of the Offer are to achieve the benefits of listing the Equity Shares on the on the exchanges and to carry out the sale of up to 14,579,560 Equity Shares by the Selling Shareholders.

RISKS

1. Two products company. BCG Vaccine and BCG ONCO contribute more than 72% to the total revenue of the company.

2. Operates in highly price regulated markets in India.

3. Single manufacturing facility.

4. Company has made a Net loss for the preceding four out of five financial years.

5.  Very high debtor and inventory level.



VALUATION AND RECOMMENDATIONS:

The company has limited history of profitability. Debtors and inventory levels are high, indicating that products are not fast moving and the company has been  extending abnormal credit period for the buyers.

At Rs 76-80, the offer is made at 20 plus PE on FY 16 earnings which is expensive. After the IPO / OFS, the promoters’ holdings will come down by 38%.



INVESTORS CAN SKIP THIS IPO.



IPO LISTING NEWS : ZTO DEBUTS AT DISCOUNT

Chinese package delivery enterprise ZTO Express debuted the stock market at a discount. The stock opened at $18.40 a share before falling more than 15 percent. The stock ended the day at $16.57. The company had priced its IPO shares at $ 19.50.

APPLE WATCH NIKE+ PRICED AT RS 27000.

Apple has released the newest update to its watch, the Apple Watch Nike+. The new timepiece which is 42mm-wide has been priced at Rs 27,000. It is the latest innovation in the long line of running-related apparatus that Nike started producing in 2006.

Friday, October 28, 2016

VARUN BEVERAGES IPO FAILS RETAIL TEST, EMPLOYEES HAVE NO CONFIDENCE

Varun beverages IPO which closed for subscription today, manages to get one time. 

However, the IPO has failed the retail test. The retail portion has been subscribed only to the extent of 82% of the shares allotted. Employees portion has been subscribed only 5%. 

TODAY'S QUOTE

A person of character lives by set, certain and immovable standards. -- Nicholas Von Hoffman

Wednesday, October 26, 2016

CANARA BANK'S NET IMPROVES IN Q2

Canara bank posted a net profit of Rs. 357 Cr for the quarter ended September 30, 2016 as compared to Rs. 529 Cr for the quarter ended September 30, 2015. In the first quarter of FY 17, the bank has posted a net profit of Rs 229 Cr.

Total Income has decreased from Rs. 12477 Cr for the quarter ended September 30, 2015 to Rs. 12187 Cr for the quarter ended September 30, 2016.

FY 17 Q2 RESULTS : HERO MOTORS IN TOP GEAR

Hero Motor Corp has posted a net profit of Rs. 1004 Cr for the quarter ended September 30, 2016 as compared to Rs. 786 Cr for the quarter ended September 30, 2015. 

The total income has increased from Rs. 7458 Cr for the quarter ended September 30, 2015 to Rs. 8601 Cr for the quarter ended September 30, 2016.

The stock closed at Rs 3422 in today's trading. The results were announced after the market hours. The stock is will gain substantially in tomorrow's trading.

Tuesday, October 25, 2016

AXIS BANK DELIVERS BAD NUMBERS IN Q 2

Axis Bank has posted a net profit of Rs. 3190.80 million for the quarter ended September 30, 2016 as compared to Rs. 19156.40 million for the quarter ended September 30, 2015. 

The total income has increased from Rs. 120010.10 million for the quarter ended September 30, 2015 to Rs. 136987.70 million for the quarter ended September 30, 2016.

Saturday, October 22, 2016

BIOCON BEATS ESTIMATES, STOCK TOUCHES 1K MARK

Biocon has posted a net profit of Rs. 147 Cr for the quarter ended September 30, 2016 as compared to Net Loss Rs. (11 Cr) for the quarter ended September 30, 2015. 

The total income has increased from Rs. 819 Cr for the quarter ended September 30, 2015 to Rs. 992 Cr for the quarter ended September 30, 2016.

The stock reacted positively on last Friday and closed above Rs 1000 mark for the first time in the history of Biocon. 

Thursday, October 20, 2016

IPO ANALYSIS : VARUN BEVERAGES - ' BOTTLES ARE EMPTY' - AVOID





ISSUE OPENS / CLOSE ON

26-10 / 28-10-2016
PRICE BAND / FACE VALUE
RS 440-445 / RS 10
ISSUE SIZE
RS 1110 CR

BUSINESS
FRANCHISEE OF PEPSICO
PROMOTERS
RJ CORP LIMITED, RAVI KANT JAIPURIA, VARUN   JAIPURIA AND RAVI KANT JAIPURIA & SONS (HUF)
LISTINGS
BSE, NSE
BRLMs
CLSA, YES SECURITIES, KOTAK AND AXIS CAPITAL
REGISTRAR
KARVY
IPO GRADE
NA


BUSINESS


Varun Beverages are one of the largest franchisee in the world (outside USA) of carbonated soft drinks (CSD) and non-carbonated beverages  sold under trademarks owned by PepsiCo. Pepsico produces and distributes a wide range of CSDs, as well as a large selection of NCBs, including packaged drinking water. PepsiCo CSD brands produced and sold by us include Pepsi, Diet Pepsi, Seven-Up, Mirinda Orange, Mirinda Lemon, Mountain Dew, Mountain Dew Game Fuel, Seven-Up Nimbooz Masala Soda, Seven-Up Revive and Evervess. PepsiCo NCB brands produced and sold includes Tropicana Slice, Tropicana Frutz (Lychee, Apple and Mango), Nimbooz as well as packaged drinking water under the brand Aquafina.


THE OFFER


Fresh Issue of Equity  - 1.50 Cr shares, OFS  - 1.00  Cr shares,TOTAL   2.50  Cr shares


OBJECTS OF THE OFFER


Prepayment or scheduled repayment of a portion of the loan and  for General corporate purposes.


RISKS


1.Termination or non renewal of the PepsiCo India Agreements or the PepsiCo International Agreements by PepsiCo India / PepsiCo Inc. or PepsiCo International Entities will impact business.


2.The company incurred losses of ₹ 395.30 million and ₹ 201.56 million in Fiscal 2013 and Fiscal 2014,  respectively. .


3.Obesity or nutritional concerns will reduce demand for some of the products.


4. GST on  carbonated sweetened beverages will increase from 18% to 21%. This will impact profitability of the company.


5.Changes in currency exchange rate influence the results of operations. Some of the expenses, particularly operating expenses in connection with the operations outside India, are denominated in currencies other than Indian Rupees.


FINANCIALS
(RUPEES IN CRORES)



30-06-2016
31-12-2015
31-12-2014




TOTAL REVENUE
2539
3408
2517
NET PROFIT
210
87
(20)
EPS
12.61
5.27
(1.30)


VALUATION AND RECOMMENDATIONS:


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 perecentage), there are are no positive factors in the offer.


A MUST AVOID IPO.


Tuesday, October 18, 2016

IPO ANALYSIS: PNB HOUSING FINANCE LIMITED : EXPENSIVE - AVOID

ISSUE DETAILS:


ISSUE OPENS / CLOSES ON
25-10 /27-10-2016
ISSUE SIZE
RS 3000 CR
FACE VALUE
RS 10
PRICE BAND
RS 750-775
LISTINGS
BSE, NSE
BRLMs
KOTAK, DSP MERRILL LYNCH, JM FINANCIAL,JP MORGAN AND MORGAN STANLEY
REGISTRAR
LINK INTIME



BUSINESS


Promoted by Punjab National Bank, PNB Housing Finance is the fifth largest HFC in India by loan portfolio as of September 30, 2015 with the second largest amount of public deposits in an HFC in India as of March 31, 2015.  PNB offers housing loans for the purchase, construction, extension or improvement of residential properties or for the purchase of residential plots, and “non-housing loans” in the form of loans against property  to property-owning customers through mortgages over their existing property.


The non-residential premises loans  for the purchase or construction of non-residential premises; lease rental discounting  loans offered against rental receipts derived from lease contracts with commercial tenants; and corporate term loans.


The target customers for our housing loans are salaried customers, whose main source of income is salary  and self-employed customers, whose main source of income is their profession or their business. PNB also offer housing loans in the form of construction finance loans to real estate developers of residential housing. As of March 31, 2016, the housing loans constituted 70.34% of our total loan portfolio and the retail housing loans constituted 87.10% of the total housing loan portfolio. The average loan size is around Rs 56 lacs.

VALUATION AND RECOMMENDATIONS

The company reported an average EPS of Rs 26 in the last 3 years. Assuming PNB Housing will report an EPS of Rs 27/28 for FY 17, the offer is made around 28 PE, which is expensive.

The IPO is very aggressively priced. The IPO should not have been priced beyond Rs 500.

AVOID THE IPO.