Showing posts with label care grading. Show all posts
Showing posts with label care grading. Show all posts

Thursday, September 9, 2010

IPO ANALYSIS: EROS INTERNATIONAL MEDIA LIMITED – WILL HIT THE BOX-OFFICE, IN STOCK MARKET TOO. INVEST.







Established and reputed name in the Indian film industry, Eros International Media is entering the capital market on 17-09-10. The company intends to mobilize Rs 350cr through the initial public offer. Enam Securities, Kotak Mahindra Capital, RBS Equities and Morgan Stanley are the BRLMs. The issue closes on 21-09-10. Eros International Media (EIML) is promoted by Eros International plc and Eros Worldwide. 

BACKGROUND AND BUSINESS:
                                                                                                                                                     Eros Group, is a global player within the Indian media and entertainment sector that
has  been  in  the  business  close  to  three  decades. The Eros Group has an extensive film library and is in the business of sourcing Indian and other film content and exploiting it worldwide through its offices in India, UK, USA, UAE, Singapore, Australia, the Isle of Man and Fiji across formats such as theaters, home entertainment, television and digital new media.  Eros  plc,  the  holding  company  of  the  Eros  Group,  is listed on the Alternative Investment Market of the London Stock Exchange. 

EIML exclusively source all Indian film content for the Eros Group and exploit such content across formats within India, Nepal and Bhutan.


The company  has  various  rights  to  over  1,000  films which  include Hindi, Tamil  and  other regional  language  films,  including  films  such as Mughal-e-Azam, Om Shanti Om, Lage Raho Munnabhai and   
Love Aaj Kal, which the company considers a key competitive advantage and an integral part of the business model. EIML also  own  rights  to  certain English  language  films  for  home  entertainment  distribution within  India. The Hindi, Tamil, other regional and English language films together form the Eros India Library.


EMIL  exploit  and  distribute  end-to-end  Indian  film  content  within  India,  Nepal  and  Bhutan  through  multiple formats  such  as  theaters,  home  entertainment,  principally  in  the  form  of DVDs, VCDs  and  audio CDs,  and television  syndication, which primarily  involves  licensing  the broadcasting  rights to major  satellite  television broadcasting channels, cable television channels and terrestrial television channels.  The company also distributes content via digital new media such as mobile ring tones, wallpapers and downloads, IPTV, DTH and other internet channels.

OBJECTS OF THE ISSUE:

Acquiring and co-producing Indian films, including primarily Hindi language films as well as certain Tamil and other regional language films and for general corporate purposes.



FINANCIALS:

RS IN CRORES     (CONSOLIDATED)

08
09
10
TOTAL INCOME
490.18
627.78
640.88
NET PROFIT
  41.12
  73.30
  83.18
EPS (Rs)
  80.64
143.73
  11.45
 
NOTE: The Company issued bonus shares in Dec 2009, in 13: 1 ratio. Prior to issue of bonus the shares, the capital of the company stood at Rs 5.10cr.

The average RONW during the last three years is in excess of 40%.


RISKS:
  • Changing  consumer  tastes  may  compromise  the  ability  to  predict  which  films  will  be  popular  with audiences in India and internationally. 

  • The company is dependent on the Indian box office success of the films produced/distributed.

  • EILM derives revenues from theatrical exhibition of   films by collecting a specified percentage of gross box office receipts from multiplex and single screen theater operators and, as there is no independent monitoring of such data in India, the company relies on theater operators and the sub-distributors to report relevant information to be accurate and in timely.  While some single-screen operators have moved to a digital distribution model that provides  greater  clarity  on  the  number  of  screenings  given  to films, multiplex  operators  and many  other single-screen  operators  retain  the  traditional  print  model. There is a risk that gross box office receipts and sub-distribution revenues being inadvertently or purposefully under reported, misreported. 


  • The average cost of acquisition of or subscription to Equity Shares by the Promoters is at Rs 0.07. 



PLUS POINTS:

Valuable and well-developed content distribution network.
Portfolio approach to films and a strong regional presence.
Strong long-standing relationships with talent within the industry.
Experienced management team.
Brand Value of the - Eros name. 


VALUATION AND RECOMMENDATIONS:

Well known brand in the film industry. In an uncertain industry, the company has performed consistently.  At Rs 158 -175 the issue is attractively priced.  Even at the upper band, the company demands a PE multiple around 16 of its FY 10 earnings, which is justified, considering  the business potential and brand equity.  CARE has awarded grade 4/5 for the IPO, indicating above average fundamentals. INVEST.

Monday, March 15, 2010

SHREE GANESH JEWELLERY PLANS IPO

The Kolkata based jewelery house, plans to enter the capital markets shortly. The rating agency CARE has awarded grade -3 for the IPO.

AWAIT FOR DETAILED ANALYSIS.

Saturday, February 6, 2010

TEXMO PIPES AND PRODUCTS LIMITED: UNIMPRESSIVE TRACK RECORD – AVOI D

ISSUE DETAILS:

Public issue of 50,00,000 equity shares of Rs 10 face value in the price band of Rs 85 -90. The issue opens on 16-02-10 and closes 0n 19-02-10.The Company intends to raise around Rs 45cr from the IPO. Almondz Global Securities Limited are the Book Running Lead Manager.

PROMOTERS: Sanjay Agarwal, Rashmi Agarwal and associates are the promoters of the Company.

BUSINESS HISTORY:

The Company was started as a partnership firm under the name Shree Mohit Industries in 1999. It was converted into a Public Limited Company under the present name in 2008. Shree Mohit Industries started its operations in the financial year 1999-2000 with manufacturing of PVC, HDPE pipes. During 2000-01, the installed capacity was increased from 2928 MTPA to 4392 MTPA. The firm also introduced new products - plumbing pipe, conduit Pipe and PLB HDPE cable duct. Subsequently in the year 2003, the erstwhile firm started manufacturing suction & delivery hosepipe, elasto-meric sealing ring fit PVC Pipe (Gasket Pipe), SWR Pipe, column pipe, HDPE plain pipe, sprinkler pipe and drip irrigation system. The installed capacity was further increased to 6797.20 MTPA for PVC and to 7217 MTPA for HDPE pipes in subsequent years. The company to consolidate the operations, signed Business Transfer Agreement in 2008 for purchase of specified assets and liabilities of the three promoter group entities - Shree Balaji Industries, Shree Venkatesh Industries and Shree Padmavati Irrigation Private Limited.
Idea cellular, Tata communications and Aditya Birla telecom limited are among the top clients of the company.

OBJECTS OF THE ISSUE:

The company intends to utilize the proceeds of the issue to increase the product range (Rs 11.33cr), for setting up manufacturing facilities for injection mouldings/ fittings and
Woven sacks (Rs 22.06cr) and for meeting long-term working capital requirements (Rs 10.00cr), among others. However, the fund requirements and the funding plans are as per the management’s estimates, and have not been appraised by any Bank / Financial institution.


FINANCIALS: 07 08 * 09* (Rs in crores)

Total Income 20.48 59.08 47.03

Net Profit 0.41 4.26 4.33

*Figures include revenues of partnership firms prior to conversion.

EPS (Rs) 0.68 7.11 7.68

MATTERS OF CONCERN:


1. While converting the partnership firm viz. ‘Shree Mohit Industries’ it into a public limited company, independent valuation was not done. The same was done as per the estimates of the management.

2. During 2007, the company was debarred by BSNL for award of any further work / contract for a period of one year. Reliance Communication Infrastructure Limited invoked the performance guarantees twice in 2007, once by BSNL in 2008.

3. The company is yet to place orders for 100% of the plant & machinery, equipment, etc. for the proposed project.

4. The average cost of acquisition of Equity shares by the Promoters is Rs 10.20.

5. Texmo faces competition from both organaised and un organaised sector.The major competitors are Jain Irrigation India Limited, Kriti Industries India Limited, Kisan Mouldings, Manjushree Extrusions, Precision Pipes, and Nagarjuna Pipes. Further, there are no entry barriers in this industry and any expansion in capacity by existing manufacturers would further intensify competition.

6. The Company has no history of dividend payment.


DEMAND OUT LOOK AND OPPORTUNITIES:

Increase in real estate construction due to urbanization and demand for homes and government impetus on increasing the use of irrigational facilities in the farming sector will drive growth in PVC pipes. The Eleventh five-year plan aims at adding 11 mn hectares of irrigational facilities, thus requiring huge investments in the sector. it is estimated that steel pipes will witness robust demand of 22% - 25% in next 3-5 years. SAW pipes and exports will lead the growth in demand. However, exports could be plagued to a certain extent by slowdown in US economy. Cement and PVC pipes are expected to sustain growth momentum of 16% - 18%.

• Low pipeline penetration in India compared to developed nations.
• GoI’s thrust on infrastructure development & water supply.
• City gas pipe projects.
• Higher export market due to proximity to Middle East, which accounts for 14% of the global planned projects.

VALUATION AND RECOMMENDATIONS:

At the higher end of the price band (Rs 90/-) the company demands P/E of 12 on FY 09 earnings. For a mid-tier and family owned, controlled company the valuation is very much stressed. Precision Pipes and Profiles company Limited, another player in the segment, whose book value is around Rs 100/- is presently quoting at Rs 76/- (around 7 P/E). The rating agency CARE has awarded grade 2 for the IPO indicating below average fundamentals. Investors are advised to stay away from the issue.