Coming soon : Rs 200 currency notes

Reserve Bank of India has decided to print Rs 200 notes. According to reports, citing people familiar with the development,  the process of printing the Rs 200 notes has started.

A U Small Finance Bank IPO fully subscribed on day 2

A U Small Finance Bank IPO has been fully subscribed on day 2. The IPo closes tomorrow. Normally retail investors put their applications on last day, taking into account the subscription figures for the first two days.  Hence the IPO is likely to get good response on last day and subscription  is likely to cross 10 times the offer, on final day.

FirstChoiceIPO has recommended subscription to the IPO.

Eris Lifesciences makes subdued debut

Eris Lifesciences shares were closed at Rs 601.50, as against the IPO price of Rd 603.   The stock touched low of Rs 593 and high of Rs 628, intraday.

Stake sale by Canara Bank - CARE up 13%

CARE Ratings shares rallied more than 13 percent, after its rival picked up stake in the company through block deals. CRISIL shares gained one odd percent and Canara Bank rose 2 percent in today's  trade.

Rating agency CRISIL has purchased 26,22,430 equity shares of CARE Ratings, representing 8.9 percent of its equity share capital.

CARE closed at Rs 1608, Canara Bank at Rs 332 and Crisil at Rs 1950.

SENSEX @ 1,00,000 - WHAT KARVY HAS NOT FACTORED IN

(This article was first published on 05-06-2014)

KARVY Stock Brokings which has been recently barred by market regulator SEBI, from taking up new assignment or launching new schemes for six months in respect of its role as a stockbroker, has come out with a research report wherein it says that Sensex will touch 1,00,000 mark by 2020. 

KARVY has 5 reasons why Sensex will touch that magic figure.

First: Macro-economic revival in India will open opportunities to make strong returns in the next few years. 

Second:  A real GDP growth of 6% along with Inflation of around 7% should lead to a nominal GDP growth of 13%.

Third: KARVY believes that earnings growth for new five to six year business cycle should be at least 20% considering the economy will revive from a very low base.

Fourth: If the infrastructure cycle revives quickly, the earnings growth revival will be faster with even 25% CAGR looking possible. 

Fifth: An earnings growth between 20-25% and multiple re rating from 15x to 16-17x in the next few years can lead to a 25% compounding of Sensex returns, which will take it to 100,000 levels by calendar year (CY) 2020.

What KARVY has not factored in are:

1. Happening of a 'Black Swan' event - like the one occurred in 2008 which led to global melt down. A sub prime crisis. Prior to the global melt down in 2008, Sensex was hovering around 22,000 and experts like KARVY then predicted that Sensex will touch 50,000 mark by 2014. Believing this theory millions of investors jumped in to the market. Then came the melt down. Equity markets across the world plummeted. Within few months Sensex came down to 8000 levels. Most investors lost money, some went bankrupt, few committed suicide. Brokerage houses down sized their operations.  It took nearly 6 years for Sensex to come to the level of 2008. Between June 2008 and June 2014, in full 6 years, the Sensex has moved by just by 3000 points.

2. Monsoon failure - This will apart from deterrent to GDP will be a drag on some segments like FMCG, auto and banks.

3. Fluctuations in currencies of major economies which will hinder our import / export.

4. Regime change / change in the economic policies in countries where in India is a major trading partner. 2016 is a big year for world economy. U S will elect its new president. The incumbent may be not as friendly as the current one. 

5. Slow down in world's major economies like  U S, China and Japan will have an impact on  India's growth story.

6. Terror strike similar to 29/11 which will make the  world economy crawl.

7. Spurt in oil prices internationally, reasons other than production and supply. We import 80% of oil requirements. If oil prices in international markets raises unreasonably as it happened in 2008-09, where in one barrel had touched $ 150, our economy will go for a tailspin.

8. Nature's fury - floods, earth quake and tsunamis. Capital earmarked for development will be diverted towards rehabilitation, will impact growth.

9. Scams, fraud in stock market - similar to one committed by Harshad Mehta and Ketan Parekh. Investors will lose faith in the system, market. We shall be back to square one.

10. Failure of a big bank / financial institution, globally. Money will flow away from equity markets to commodity / other segments.

( KARVY made the above prediction in first week of June, 2014. The Sensex was hovering around 25,500 at that time).

Forthcoming IPO : Godrej Agrovet

Godrej Agrovet is planning an initial public offerings to raise around Rs 400 crore.

Godrej Agrovet is a diversified, research & development-backed agri-business company that caters to animal feed, oil palm plantations, crop protection, hybrid seeds, dairy and processed poultry.

Godrej Industries currently holds 60.8 per cent stake in Godrej Agrovet.

Susquehanna Financials bullish on Nvidia

Susquehanna Financial says Nvidia  will release two new cryptocurrency-specific graphics processing units (GPUs) during the third quarter. 

 Nvidia’s stock surged 3.5% in today's trading and closed at $ 151.75.

Rights Issue Monitor : Zenotech Laboratories Limited - Avoid

  

Issue details:

Issue period	30-6 / 14-07-2017
Issue price	Rs 45
FACE VALUE	Rs 10
ISSUE SIZE	2.66 cr equity shares
BUSINESS	Pharmaceutical products
Ratio	17 : 1
LISTINGS	Bse
BRLMs	Vivro Financial Services
REGISTRAR	Karvy

U S markets : S&P 500 posts biggest rally

The Dow Jones Industrial Average gained 143.95 points to 21,454.61, with shares of Caterpillar Inc. CAT, +2.42% and JPMorgan Chase & Co. JPM, +2.01%  leading the charge.

The Nasdaq Composite Index COMP- S&P 500  rose by 88 points to 6,234, recording its biggest one-day gain since Nov. 7.

A U Small Finance Bank gets 18% subscrition

A U Small Finance Bank has received 18% subscription on day 1. Highest number of bids has come from retail segment.

QUOTE OF THE DAY

We must take risks today to learn lessons for tomorrow. 

Mark Zuckerberg, 

CEO of Facebook

Cadila Healthcare to raise funds

Cadila Healthcare's board has approved in-principle to raise funds by issue of equity shares/ convertible bonds/debentures through QIP /GDR)/ADR, for an aggregate amount up to Rs 10000 crore.

IPO ANALYSIS : Shrenik LImited - Avoid

Issue opens / closes on	06-07 / 10-07-2017
Issue size	54,00,000 equity shares
Face Value	Rs 10
Price band	Rs 40
Promoters	Shrenikbhai Vimawala
Business	Trading - Paper products
Registrar	Link Intime
Listings	Nse, Sme
BRLM	Pantomath Capital Advisors

IMF cuts US growth

IMF has cuts its growth forecast for U S economy to 2.1 percent. It says that Trump administration is unlikely to achieve its goal of annual GDP growth over 3 percent.

SBI : NPA Insolvency, may not dent bottom line too much

State Bank of India has ruled out the additional provisioning towards the 12 largest NPA accounts which have been referred to insolvency proceedings denting the bottom lines very hard as most of the provisioning has already been done. 

The increased provisioning requirements, more or less, in all of these accounts we have pretty large provisions. But yes, we have to make a little more but it should not very badly impact our earnings going forward, chairman Arundhati Bhattacharya. 

Marc Faber : Doom days ahead for stock markets

Renowned investor Marc Faber has made another dire prediction for the stock market: It may fall by as much as 40% or even more. “Dr Doom” Marc Faber, the author of “Gloom, Boom & Doom Report” said in an interview to a leading business news channel. The stock market could see another ‘lurch’ higher, but then the investors may want to cash out and run for cover.

We have had more than eight years of a bull market, Marc Faber, the bearish investor, said. “The Nasdaq is being driven by very few stocks,” he said, adding that it “usually is not a particularly healthy sign from a technical point of view.” 

Further, March Faber said that the valuations are very high and there is a lot of volatility. “We have a lot of volatility, and when things start to go down they will go down a lot,” he predicts.

FaceBook achieves another mile stone

 Thirteen years after launching and less than five years after hitting 1 billion, Facebook now has 2 billion monthly active users.

Facebook wants people to celebrate with a personalized “Good Adds Up” video they can make and share here. Meanwhile, Mark Zuckerberg played it cool with this brief announcement message.

IPO ANALYSIS : Ace Integrated Solutions Limited - Avoid

Issue opens / closes on	29-06 / 05-07-2017
Issue size	18,00,000 equity shares
Face Value	Rs 10
Price band	Rs 40
Promoters	Chandra Shekar Vema
Business	Recruitment and examination services.
Registrar	BigShare
Listings	Nse, Sme
BRLM	D&A Financial Services

Forthcoming IPO : Prataap Snacks LImited

Issue details:

PROMOTERS	Arvind Mehta, Apoorva Kumat
FACE VALUE	Rs 5
ISSUE SIZE	Rs 250 cr plus OFS
BUSINESS	Snack Food Business
LISTINGS	Bse, Nse
BRLMs	JM Financials. Edelweiss, Spark Capital Advisors
REGISTRAR	Karvy

IPO ANALYSIS: AU Small Finance Bank - Small bank, Big dreams - Invest.

Issue opens / closes on	28-06 /30-06/2017
Issue size	5.34 cr equity shares
Face Value	Rs 10
Price band	Rs 355-358
Promoters	Sanjay Agarwal,Jyoti Agarwal / others
Business	NBFC / Small Finance Bank
Registrar	Link Intime
Listings	NSE, BSE
BRLM	ICICI Sec, Motilal, Citigroup,HDFC Bank

                   BUSINESS:

The enterprise is an small finance bank that has recently transitioned from a retail focused non-banking finance company, which primarily served low and middle-income individuals and businesses that have limited or no access to formal banking and finance channels.

As of March 31, 2017,  the operations are conducted through 301 NBFC branches spread across 10 states and one union territory,  with significant presence in the states of Rajasthan, Gujarat, Maharashtra and Madhya Pradesh and has employed 8,515 personnel, serving 2,80,349 active loan accounts.

Total Gross AUM for the last 3 years are -  10,733 cr in 2017, 8221 cr in 2016 and Rs 5567 cr in 2015.

      

OBJECTS OF THE ISSUE:

              The objects of the Offer are to achieve the benefits of listing the Equity Shares on the Stock Exchanges.

Details of the Offer:

1. OFS - 5.34 cr equity shares.

AU promoter Sanjay Agarwal and private equity investors Warburg Pincus, World Bank arm International Finance Corp., ChrysCapital and Kedaara Capital will sell part of their stakes in the IPO.

                         FINANCIALS:

                                     (RS IN CRORES)  

		31-03-2017	31-03-2016	31-03-2015
TOTAL REVENUE		1430	1052	689
NET PROFIT		842	247	139
CAPITAL		284	44	44
EPS (Rs)		11.96	9.34	5.31
RONW (%)		42	24	18
NAV		70.34	-	-

               

                               

MATTERS OF CONCERN:

1. Inability to successfully transition from an NBFC to an SFB may have an  adverse effect on the business.
2. Operations are concentrated in western India.
3. Inability to manage interest rate risk may adversely affect the business.
4. Significantly depend on the vehicle finance business - 50% of total exposure.

      STRENGTHS:

1. Significant Presence in Rural and Semi-Urban Markets with Focus on Low and Middle Income Customers.
2. Diversified Product Portfolio and Revenue Streams.
3. Robust and Comprehensive Credit Assessment and Risk Management Framework.

  VALUATION AND RECOMMENDATIONS

The offer is made at 21 PE, based on fy18 earnings and on the expanded capital. The bank has shown consistent growth, profitability in the last 3-4 years. The bank has significant presence  in the most vibrant states - Gujarat and Maharashtra which should work to its advantage. Professionally managed.  The IPO is attractively priced.

 INVEST.