Thursday, September 28, 2017

What BJP netas think themselves about economy / Modi policies.


1.Swamy recently told a TV Channel that economy is heading for depression and it may “crash” if steps are not taken soon to revive it. “Today, the economy is in a tailspin. Yes, it can crash. We need to do a lot of good things to revive the economy. Even a tailspin can be made to steady. If nothing is done, we are heading for a major depression. There will be mass scale… banks might collapse, factories might start closing.

2.RSS ideologue and economic commentator, S Gurumurthy also flagged similar concerns on the economy. While speaking on ‘Demonetisation -Its role, Impact and Follow-up’ at an event in Chennai, Gurumurthy said Indian economy is hitting the bottom now. 

3.Sinha, former finance minister attacked current Finance Minister Arun Jaitley, holding him responsible for the mess in Indian economy.

Pointing out that economy is on a downward spiral, Sinha wrote in The Indian Express, “Private investment has shrunk as never before in two decades, industrial production has all but collapsed, agriculture is in distress, construction industry, a big employer of the workforce, is in the doldrums, the rest of the service sector is also in the slow lane, exports have dwindled.”

4. Bharatiya Mazdoor Sangh, India’s largest labour union affiliated with the Rashtriya Swayamsevak Sangh, has sharply criticised the Union government for poor jobs growth and “misguided reforms”, among others.

Wednesday, September 27, 2017

SENSEX @1,00,000 IN 2020. KARVY WRONG AGAIN.


(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 meltdown. A sub prime crisis. Prior to the global meltdown 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 meltdown. 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 A, 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).

Sensex has gained 5200 points in the last 40 months. 
    

ICICI Lombard closes at Rs 680

ICICI Lombard General Ins company made at debut on the exchanges today. As against the IPO price of Rs 661, the stock closed at Rs 680.

FirstChoiceIPO had recommended for subscription to the IPO.

Market Realist : What makes Nvidia the ultimate growth stock


NVIDIA has topped the charts to become the ultimate growth stock, delivering close to 200% in capital returns over the past year. The company is at the center of the fourth technology shift, increasing its presence in almost every major growth trend.
NVIDIA’s GPU appears to be unbeatable in its core market of gaming, and its GPUs are benefiting from the rising demand from cryptocurrency miners. NVDA is also at the start of the AI revolution, with almost all major cloud companies and high-performance computing customers using its GPUs for their AI tasks. The increasing adoption of AI by companies like Wal-Mart Stores is expanding NVIDIA’s data center business.
 Nvidia closed at flat $171 in Tuesday's trading.

IPO ANALYSIS : Shreeji Translogistics Limited - Invest


Issue details:



Issue opens / closes on

29-09 /05-10-2017
Issue Size
9,54,000 equity shares
Face Value
Rs 10
Price Band
Rs 130

BUSINESS
Logistics / supply chain
Promoter
Narendra Shah, Mr. Mahendra Shah, Mr. Bipin Shah, Mr. Rupesh Shah, Mr. Rajnikant Shah & Mr. Mukesh Shah
LISTINGS
Bse, sme
BRLMs
Aryaman Financial Services
REGISTRAR
BigShare



Strengths :
1. Experienced promoters.
2. Pan India presence.
3. Large fleet.
4. Good reputation. 

IPO ANALYSIS : SHREE GANESH REMEDIES LIMITED - INVEST

  
Issue details:


Issue opens / closes on

28-09 /05-10-2017
Issue Size
23,76,000 equity shares
Face Value
Rs 10
Price Band
Rs 36

BUSINESS
Mfrs of pharmaceutical products / fine chemicals
Promoter
CHANDUBHAI KOTHIA, HASMUKH KOTHIA, ASHOKKUMAR KOTHIA, HANSABEN KOTHIA, MANUBHAI KOTHIA, BABUBHAI KOTHIA AND SUBHASH KOTHIA
LISTINGS
Bse, sme
BRLMs
Fedex Securities
REGISTRAR
BigShare



Strengths :

1. Experienced promoters.
2. Zero debt company.
3. IPO reasonably priced.


Tuesday, September 26, 2017

HDFC Bank poised to become 2nd most valued company

HDFC Bank poised to become second most valued company on the Indian bourses after RIL. The second place held by TCS will go to HDFC Bank in the next few trading sessions.

Prataap Snacks IPO subscribed 47 times

Prataap Snacks IPO has been subscribed by 47 times on the last day.

RIL world's 3rd biggest energy company

RIL has jumped five places to rank as the world's third-biggest energy company behind Russian gas firm Gazprom and German utility E.ON, according to Platts Top 250 Global Energy Company Rankings.

State-owned Indian Oil Corp broke into the top 10 club, climbing to 7th position in the 2017 ranking, up from 14th rank in 2016. 

Banks can invest upto 10% in deposit taking NBFC

According to RBI's latest guidelines Banks can no longer hold more than a 10 percent stake in a deposit taking non-banking finance company, with the exception of lenders owning equity in housing finance companies, and also regulated their commodity derivatives play.


Monday, September 25, 2017

IPO ANALYSIS : Godrej Agrovet Limited - Invest


Issue details:




Issue opens / closes on


04-10 / 06-10-2107
Issue Size
Rs 1200 cr
Face Value
Rs 10
Price Band
Rs 450-460


BUSINESS
Animal feeds, dairy, processed foods, Poultry foods, crop protection business.
Promoter
Godrej Industries
LISTINGS
Bse, Nse
BRLMs
Kotak, Credit Suisse and Axis Capital
REGISTRAR
Karvy


Await detailed analysis.

I T Raid Impact : CCD loses 8%

Coffee Day Enterprise stock lost 8% in today's trade. Income Tax raid has taken place on the group companies, including Cafe Coffee Day. The stock closed at Rs 212, down 8%.   

Prataap Snacks IPO fully subscribed

Prataap Snacks IPO has been subscribed t by 2.17 times, on day 2. The IPO closes tomorrow.

ICICI Lombard General Insurance Company to debut tomorrow

ICICI Lombard IPO shares will be listed on the bourses on 27-09-2017.

FirstchoiceIPO on Infibeam

While analysing the IPO last year, this is what we wrote: 

IPO ANALYSIS: INFIBEAM INCORPORATION : 'BEAM NOT STRONG ENOUGH' - AVOID


BUSINESS:

E-commerce Company focused on developing an integrated and synergistic e-commerce business model. Owns / operates Infibeam BuildaBazaar e-commerce marketplace, which provides cloud-based, modular and customizable digital solutions and other value added services to enable merchants to set up online storefronts.

MATTERS OF CONCERN:

1. Loss incurred by Infibeam for the financial year 2013,14 and15 are Rs 24.91cr, Rs 25.94cr and Rs 9.78cr respectively.

2. Outstanding litigations in respect of non-payment of direct taxes, sales tax and VAT.

3. E-commerce industry is intensely competitive and highly technology driven.

4. Not so professionally managed company. There were instance of non-filing of papers with ROC and auditors qualifications on audit reports.

5. Inventory, logistics and warehouse management is complex and challenging.

6. Different states have different regulations for e commerce business; non-compliance will lead to litigations.

7.  Growth and profitability directly depends on the spending habits of regions where the company operates.


For the 6 months ended 30th Sept 2015, the company has reported a revenue of Rs 175 cr and net profit of Rs 6.5 cr.

VALUATION AND RECOMMENDATIONS:

The profit for the first half of this year appears to be manufactured as company had envisaged IPO in this quarter. Two of the BRLMs – ICICI Direct and Kotak Mahindra Capital have quit midway. Family owned and not so professionally managed enterprise. The IPO has been irrationally priced.

Avoid the IPO.

The stock closed at Rs 188 in today's trade, as against the IPO price of Rs 432.

Consortium of Bankers declines Rs 500 cr loan request by Bhushan Steels

Consortium Bankers to Bhushan Steel is reluctant to sanction fresh interim funding of around Rs 500 crore as part of the corporate insolvency process.  

The company already owes banks a whopping Rs 44,500 crore.

Fiis pulls out Rs 29250 cr so far in 2017

For the fiscal year to date, FIIs are net sellers of Indian shares to the tune of Rs 29250 cr. 

India’s benchmark equity Sensex trades at 19 times one-year forward price-to-earnings ratio, higher than its peers in China, Brazil and Russia which trade at 13 times each and 5.66 times, respectively. Sensex trades at a 46 % premium to MSCI index which trades at 16 times one-year forward earnings.

Finance Ministry bats for rate cut

Government scrambles for measures to boost the slowing economy, a top finance ministry officials says and  there is scope for an RBI rate cut at the next policy review as retail inflation continues to be low. The statement comes ahead of the Reserve Bank’s bi- monthly monetary policy decision to be announced on October 4. 

Amazon puts its hands on Shoppers Stop

Shoppers Stop has confirmed that  Amazon.com NV Investment Holdings LLC will invest Rs 179 crore in the company. Shoppers Stop’s board has approved issuance of 43.95 lakh equity shares of Rs 5 each at price of Rs 407.78 per piece to Amazon.com NV Investment Holdings LLC for Rs 179.25 crore on preferential basis.

Govt to pump Rs 25000 cr to PSU Banks

Center may pump in around Rs 25,000 crore into public sector banks to increase their lending power to revive the sagging economy.

Private investment has almost come to a standstill in the absence of lending by banks at lower rates. Without capital from the government, banks cannot lend and the economy cannot be revived without an increase in lending.

Friday, September 22, 2017

Prataap Snacks IPO gets 43% subscription

Prataap Snacks IPO has received 43% subscription on day 1.

Fiis net sell for Rs 1242 cr

Fiis have net sold for Rs 1242 cr in cash market, where as Diis have net bought for Rs 521 cr in the same segment. Benchmark indices posted biggest fall of 2017, Nifty losing over 150 and Sensex 450 points in today's trade.

183 times subscription to construction company IPO defies all logic. Will SEBI conduct a probe?

Capacit'e Infraprojects IPO has been oversubscribed by 183 times. The shares of the company will make their debut on the bourses, next Monday.  Huge response for an loss making enterprise has surprised all. This is not a company  which is driven by technology like Tesla, FB or Google to get such tremendous response. Nor its business model is unique. This is just another construction company, with limited period of history. Then how come the IPO received such a huge subscription. The answer is Grey market.

The grey market is where the unofficial trading of a company's shares, usually before they are issued in an IPO, happens. The distribution channels involved in the grey market are neither legal nor official supported by the original promoters.

Grey market premium  is a premium amount in rupees at which IPO shares are being traded in Grey Market before they get listed in stock exchange. Grey market premium can be in positive or in negative based on demand and supply of the stock. 

Will the market regulator will conduct a probe how a loss making, run of the mill enterprise / ordinary business model company's IPO has received such huge response. 

Capacit'e Infraprojects IPO to list on 25-09-2017

Capacit'e Infraprojects IPO to list on 25-09-2017. The loss making enterprise came out IPO in the price band of Rs 245-250, which has been oversubscribed by 183 times.

FirstChoiceIPO has advised to avoid the IPO.

7 out of 20 IPOs of 2017 trade in red

Seven out of 20 IPOs of 2017 trade in red. They include - C L Educate, S chand & co, Eris life, GTPL Hathway, SIS, BRNL and Matrimony.com.

FirstChoice IPO had advised to stay away from all the above IPOs.

Market bleeds, Sensex, Nifty see biggest fall of the year

Benchmark indices fell over 1%, extending losses for the fourth straight session. Sensex lost 448 points, only Wipro and Coal India closed in green among sensex stocks. All other constituents ended the day in the negative. Amid concerns that the government’s plan for a stimulus to halt an economic slowdown may have a negative impact on the fiscal deficit fuelled the fall. 

Nifty too posted biggest fall of 2017, losing 158 points and closed at 9964. Only 4 stocks closed in the green and the rest in the red.

SBI Life Ins IPO fully subscribed, fails retail , HNI test

SBI Life Ins IPO has been fully subscribed on final day.  The IPO's final tally stands at 3.57 times, thanks to QIB support.

The retail portion of the IPO saw 83 per cent subscription and the HNI investor portion has been subscribed by 70 per cent.

FirstChoice IPO has avoid call on this IPO.

IPO ANALYSIS : RKEC Projects Limited - Invest


Issue details:



Issue opens / closes on

25-09 /28-09-2017
Issue Size
63,78,000 equity shares
Face Value
Rs 10
Price Band
Rs 45

BUSINESS
Construction - marine, aerospace
Promoter
Radhakrishna Garapati
LISTINGS
Nse, emerge
BRLMs
Hem Securities
REGISTRAR
BigShare


IPO ANALYSIS : Beta Drugs Limited




Issue details:


Issue opens / closes on

29-09 /04-10-2019
Issue Size
22,96,000 equity shares
Face Value
Rs 10
Price Band
Rs 85

BUSINESS

Mfts Pharmaceutical products / contract mfrs
Promoter
Vijaya Kumar Batra
LISTINGS
Nse, emerge
BRLMs
Pantomath Capital
REGISTRAR
LInk Intime


IPO ANALYSIS : TIRUPATI FORGE LIMITED


Issue details:



Issue opens / closes on

290-9 /04-10-2019
Issue Size
18,00,000 equity shares
Face Value
Rs 10
Price Band
Rs 29

BUSINESS
Forging, Rolling machine, CNC shop
Promoter
Hitesh Thummar, Ajay Sardhara
LISTINGS
Nse, emerge
BRLMs
Pantomath Capital
REGISTRAR
LInk Intime