IPO ANALYSIS : COCHIN SHIPYARD - INVEST

Issue details:

Issue opens / closes on	01-08 / 03-08-2017
Issue Size	Public issue of 3,39,84000 equity shares including OFS 2.26 cr equity shares
Face Value	Rs 10
Price band	Rs 424 -432
BUSINESS	Shipbuilding / offshore construction
Promoter	Govt of India
LISTINGS	Bse, Nse
BRLMs	Sbi Capital markets, Edelweiss Financial services, J M Financial Institutional Securities
REGISTRAR	Link Intime

Risk factors :

1. Business cyclical in nature, depends on global economy.
2. Entire business operations are based out of a single shipyard at Kochi.
3. The firm's businesses are dependent on the information technology infrastructure and for this they rely on third-party licences for the business.
4. Subject to extensive government regulation.
5. Risks involved in setting up of Dry Dock / International shipbuilding facility and operationalizing it.

Strengths:

One of India’s leading public-sector shipyards catering to both commercial clients as well as clients engaged in the defence sector with a multitude of offerings for a broad range of vessels across life cycles.  

Modern facilities and infrastructure and integrated capabilities to deliver quality products and services.  

Order book with a strong customer base of reputable ship owners and marquee clients.

Valuation and recommendations.

CSY is likely to report an EPS of Rs 30 in FY 18. The offer is made around 15 PE on its FY 18 earnings.The NAV as on last fiscal stands at Rs 179. The IPO is reasonably priced. Invest.

IPO ANALYSIS : SECURITY AND INTELLIGENCE SERVICES - Expensive Avoid

Issue details:

Issue opens / closes on	31-07 / 02-08-2017
Issue Size	Rs 363 cr + OFS of 51 lac shares
Face Value	Rs 10
Price band	Rs 805-815
BUSINESS	Security service providers
Promoter	Ravindra KIshore Sinha, Raj Kishore Sinha
LISTINGS	BSE, NSE
BRLMs	Axis Capital, IIFL Holdings, ICICI Securities,Kotak Mahindra Capital,Yes Securities, SBI Caps, IDBI Capital markets
REGISTRAR	Link Intime

Risk factors :

1. Violation of contract labour laws in the past.
2. Large work force - as on 31-03-2017, the company has 1,54,400 employees on its roll.
3. The firm is  subject to several labour legislations and regulations governing welfare, benefits and training of the employees and  are also a party to several litigations initiated by former or current employees.
4. There have been certain instances of discrepancies in relation to certain statutory filings made or required to be filed by the Company with the RoC under applicable law and certain other non-compliances under Indian company law, including FEMA violation.
5. High level debt - Rs 917 cr, as on last fiscal.
6. Out of the proceeds of the IPO  (Rs 362 cr), Rs 200 cr will go for retirement of debt.
7. Average EPS in the last 3 years is less than Rs 12.
8. More than 87% of the revenue comes from security services business.

Valuation and recommendations.

The company is likely to report an EPS of Rs 15, in FY 18, on the expanded capital. At Rs 815, the offer is made at 50 plus PE, which is expensive.

The business is not  an  ‘out of the box business idea’ to demand such steep valuation. The enterprise is not so professionally managed.

Avoid the IPO.

L&T's profit surge

Infra major L&T's profit during the June quarter grew by 46 percent to Rs 892 crore. 

Revenue rose almost by 10 percent to Rs 23,990 crore year-on-year, driven by infrastructure business that contributed 44 percent to total revenue.

CAG raps PS Banks

CAG has found gaping holes in the recapitalisation of public sector banks, stating that the recovery rate of non-performing loans was in general lower than the write-off rate between 2010-11 and 2014-15.


NPAs not recognised.

CAG also found instances of lower recognition of NPAs and, over-stating of net profits in 12 PSBs, where there was a material difference between NPAs recognised by banks and those ascertained by the RBI.

Gross NPAs of PSBs have surged from ₹2.27 lakh crore as of March 31, 2014, to ₹6.83 lakh crore as of end-March 2017.

Credit Suisse downgrades ITC

Credit Suisse has downgraded cigarette cum FMCG major ITC to neutral. ITC closed at Rs 292 in yesterday's trading, down Rs 2. The stock will come under pressure in today's trading in view of downgrading of the stock by Credit Suisse.

IPO ANALYSIS : SECURITY AND INTELLIGENCE SERVICES : EXPENSIVE - AVOID

Issue details:

Issue opens / closes on	31-07 / 02-08-2017
Issue Size	Rs 363 cr + OFS of 51 lac shares
Face Value	Rs 10
Price band	Rs 805 - 815
BUSINESS	Security service providers
Promoter	Ravindra KIshore Sinha, Raj Kishore Sinha
LISTINGS	BSE, NSE
BRLMs	Axis Capital, IIFL Holdings, ICICI Securities,Kotak Mahindra Capital,Yes Securities, SBI Caps, IDBI Capital markets
REGISTRAR	Link Intime

Risk factors :

1. Violation of contract labour laws in the past.
2. Large work force - as on 31-03-2017, the company has 1,54,400 employees on its roll.
3. The firm is  subject to several labour legislations and regulations governing welfare, benefits and training of our employees and  are also a party to several litigations initiated by former or current employees.
4. There have been certain instances of discrepancies in relation to certain statutory filings made or required to be filed by the Company with the RoC under applicable law and certain other non-compliances under Indian company law, including FEMA violation.
5. High level debt - Rs 917 cr, as on last fiscal.
6. Out of the proceeds of the IPO  (Rs 362 cr), Rs 200 cr will go for retirement of debt.
7. Average EPS in the last 3 years is less than Rs 12.
8. More than 87% of the revenue comes from security services business.

Valuation and recommendations.

The company is likely to report an EPS of Rs 15, in FY 18, on the expanded capital. At Rs 815, the offer is made at 50 plus PE, which is expensive.

The business is not  an  ‘out of the box business idea’ to demand such steep valuation. The enterprise is not so professionally managed.

Avoid the IPO.

Jio bleeds Idea

Idea Cellular missed estimates in the fiscal first quarter while posting its third net loss in succession. The company faced pricing power due entry of Reliance Jio.

For the quarter ended June 30, Idea posted a consolidated net loss of Rs 815 crore compared with a net profit of Rs 220 crore a year ago, and a loss of Rs 328 crore in the previous three-month period.

GST Impact : CV sales down

GST has caused a slowdown in demand for commercial vehicles as transporters grapple with a fall in haulage rates. Medium and heavy commercial vehicles have been the worst performing segment of the automobile industry in the April-June quarter, with a 32 per cent contraction in sales to dealers.  The two top players, Tata Motors and Ashok Leyland, reported double-digit decline in sales. 

Biocon's revenue, net dip

Biocon's first quarter profits dropped 51 per cent to Rs 81 crore on account of lower sales of small molecules and branded formulations.

Revenue dropped 4 per cent to Rs 988 crore in the quarter ended June.

The company had reported profits of Rs 167 crore on revenue of Rs 1,033 crore in the same period last year.

The stock closed at Rs 399, down Rs 4 in yesterday's trading.

The stock is likely to react negatively in today's trading in view poor shown in June quarter.

Amazon's revenue up, net down in June quarter, stock down

Amazon sales rose in the second quarter at $33.9bn, rising 17% overseas and 27% in North America.

 Profits plunged, as the e-commerce giant spent heavily in a bid to become the go-to shop globally for everything from food to television.

Amazon earned $197m  in profit in the three months to the end of June, down 77%.

The stock closed at $ 1046, down $ 6. In the after hour trade the stock is down 3 odd percent.

ICICI Bank's net down in q1

 ICICI Bank reported a year-on-year drop in profit for the quarter ending June 2017 with increased net interest income.

Standalone net profit of Rs 2,049 crore for the June quarter marked a drop of 8 per cent over Rs 2,232 crore in the year-ago period.

NII rose by 8 per cent to Rs 5,590 crore in the April–June quarter, as compared to Rs 5,159 crore in the same quarter in the previous financial year. 

Results were announced after market hours. The stock is likely to react negatively in tomorrow's trading. The stock closed at Rs 309, down Rs 2.

Maruti disappoints street

 Maruti Suzuki has reported a flat profit growth of 4.4 per cent to Rs 1,556  crore for June quarter, hurt by higher deferred tax provisions. The result has  disappointed the street.

 The number came below Rs 1,684 crore profit estimated by analysts in an ET  Now poll. Net sales for the quarter rose 16 per cent to Rs 17,132 crore.

 The stock closed flat at Rs 7570, in today's trading.

ITC"s net raises marginally

ITC has reported 7.4% increase in net profit at Rs 2,560 crore in April-June 2017 quarter as against Rs 2,385 crore in year-ago period.

Revenue from operations rose about 4% to Rs 13,800 crore, while revenue from its cigarettes segment grew 6.6%.

ITC's net sales during the period under review was up 4.29 per cent to Rs 13,722 crore, as against Rs 13,157 crore in the corresponding quarter last fiscal.

Yes Bank 's net at Rs 966 Cr, stock up 6 percent

Yes Bank has reported 32% increase in net profit for the quarter ended June 30, 2017 at Rs 966 crore compared with Rs 732 cr in the same quarter previous fiscal.

Net interest income for the bank during the quarter grew 44% to Rs 1,809 crore as against Rs 1,256 crore in the comparable quarter last fiscal. 

The bank’s board also approved a stock split in the ratio of 5 for 1.

The stock gained Rs 104 and closed at Rs 1722 in yesterday's trading.

Facebook net jumps by 71%

 Facebook revenues hit $9.3bn  over the April to June period, jumping 45%  year-  on-year. Profits climbed 71% to $3.9bn.

 Facebook stock was up 3.6% in after-hours trade.

 The company says mobile ads represented 87% of its advertising  revenue of  $9.16bn, up from 84% a year ago.

 Facebook now employs more than 20,600 people, up 43% year-on-year.

HDFC reports unimpressive numbers

HDFC has reported 17% per cent drop in standalone net profit at Rs 1,556 crore for the quarter ended June 30, 2017.

The company had reported a net profit of Rs 1,871 crore in the year-ago quarter.

The board of the company approved a proposal to issue up to Rs 35,000 crore secured redeemable NCDs on a private placement basis.

Nifty closes above 10,000 mark for the first time

Nifty for the first time has closed above 10,000 mark in today's trading. Nifty gained 36 points and closed at 10020.

Elon Musk jibes at Zuckerberg

Elon Musk and Mark Zuckerberg, among the world’s most recognisable billionaires, are locked in a fight over artificial intelligence. “I’ve talked to Mark about this. His understanding of the subject is limited,” the Tesla founder tweeted on Tuesday in response to the Silicon Valley Business Journal which reported Zuckerberg had said the doomsday scenario put forward by Musk was “irresponsible”.

Caution : Indices driven by liquidity, not valuations

The mood is quite good with the Nifty touching 10,000.  The market per se in terms of valuation levels is probably now closer to the heydays of late 2007 and early 2008. Market now is in a bubble kind of zone in terms of valuation. Book profits in certain overvalued stocks / sectors. Trim positions. Bull market corrections will be very sharp and deep.

Stay in cash mode for sometime.

ICRA : There are concerns for success of Jio

Rating agency ICRA has  flagged a slew of concerns for the success of Jio offerings, including it being a bundled phone which has not succeeded in the domestic market so far many times, the “tricky issue” of bundling of apps and creating a ‘walled garden’, and if it can let a customer use other apps. 

Marketability and acceptability of Jio Phone would hinge on the kind of data experience it offers to the users without the port to connect to the TV, which comes at a higher monthly charge, it said, adding the effectively free phone can also increase funding requirements for the company.  Another agency Crisil said it expects data usage growth to slow down to four times in the next five fiscal years, as against the 24 times in the previous five.

Sebi initiatives may help banks

Securities and Exchange Board of India is planning to make it mandatory for listed companies to inform stock exchanges if they fail to make interest and loan installment payments on time in order to ensure greater fiscal discipline and keep shareholders better informed.

The regulator is considering the timeframe within which the information has to be declared to the stock exchanges. 

To avoid negative impact on the shares, listed companies are more likely to keep their records clean, as far as payment of interest and repayment of loans are concerned.

Maharashtra Govt : RIL defaulted on payment of fine,surcharge

Maharashtra government says that Mukesh Ambani led Reliance Industries has defaulted on payment of fine and additional surcharge of Rs 1,370 crore over the delay in construction of a convention-cum- exhibition centre in BKC, in Mumbai. 

The government gave this information in the state legislative assembly in a written reply to the question asked by Leader of Opposition Radhakrishna Vikhe Patil and some other MLAs.

RBI : Bad loan provisioning to go up

RBI will soon direct lenders to set aside 50% of bad debt as soon as a referral happens, and 100% if the tribunal orders liquidation, taking a heavy toll on finances already marred by provisioning requirements on non-performing assets. 

According to RBI provisioning requirement would be uniform for all cases going to NCLT  because the principle is the same.

Bank Nifty will come under pressure in today's trading in view of the above dicta from RBI.

Jio Impact : Bharti Airtel's net nose dives

Jio Impact : Bharti Airtel’s net profit for Q1 slumped 75% with a net profit of Rs 367 crore for the three months ended June. Net profit in the January-March quarter was nearly Rs 373 crore.

Revenue fell 14% to Rs 21,958 crore from a year earlier. 

The stock closed at Rs 427 in today's trading, up Rs 7.

Results were announced after market hours. The stock will react negatively in tomorrow's trading consequence to its  dismal performance in June quarter. 

IPO ANALYSIS : GLOBALSPACE TECHNOLOGIES LIMITED - AVOID

Issue details:

Issue opens / closes on	26-07 / 28-07-2017
Issue Size	30,34,000 equity shares
Face Value	Rs 10
Price band	Rs 66
BUSINESS	Software development / enterprise mobility solutions
Promoter	Krishna Murari Singh
LISTINGS	Bse sme
BRLMs	Choice Capital Advisors
REGISTRAR	Link Intime

Risk factors :

1. Revenue for FY 17, Rs 17.28 cr, debtors outstanding as on 31-03-2017 is Rs 12.33 cr.

2. Top 10 customers contribute more than 92% to the total revenue.

Hero MotoCorp posts Rs 914 cr net in q1

Hero MotoCorp has reported marginal increase in the June quarter net profit at Rs 914 crore against Rs 883 crore posted during the same period last year. 

The company’s revenues grew around 7.5 percent at Rs 8,744.6 crore against Rs 8,131 crore year on year.

Company reported a EBITDA of Rs 1,428 crore, an increase of around 6 percent against Rs 1,350 crore in the June quarter of 2016.  There is slight decline  in the operating margin, which came in at 17.6 percent against 17.9 percent year on year.

Alibaba ties up with Paytm

Alibaba Group has announced its first formal joint venture with mobile wallet company Paytm, to set up an online gaming company.

The latter would hold 55 per cent stake. The rest would be Alibaba’s Hong Kong-based private company, AGTech Media. 

Axis Bank's q1 FY 18 numbers disappoints, EPS, return on assets down

 Axis Bank's Profit for q1 of FY18 fell 16 percent year-on-year to Rs 1,306 crore. The bank had reported a net profit of Rs 1556 cr in q1 of FY17.

Total Income stood at Rs 14052 cr as against Rs 13,852 cr in June quarter last fiscal.

Asset quality was stable during the quarter as gross NPA declined to 5.03 percent from 5.04 percent. Net NPA increased to 2.3 percent from 2.11 percent.

Latest EPs comes to Rs 5.43 and it was Rs 6.49 in previous year.

The stock closed at Rs 547, up Rs 12, in today's trading.

Results were announced after market hours. The stock will react to the numbers tomorrow.