Showing posts with label crisil. Show all posts
Showing posts with label crisil. Show all posts

Thursday, August 19, 2010

IPO ANALYSIS : GUJARAT PIPAVAV PORT LIMITED - SAFE PASSAGE ENSURED. INVEST.








India‘s first private sector port is entering the capital market. APM Terminals, one of the world’s leading terminal and port operators, are the promoters of Gujarat Pipavav Port Limited (GPPL). GPPL is principally engaged in providing port handling and marine services for container cargo, bulk cargo and LPG cargo.


ISSUE DETAILS



Issue Period

23-O8-10 TO 26-08-10

Issue Size / FV
Public issue Rs 500cr.
Offer for sale - 1,17,07,369 shares. FV Rs 10/-

Price band

Rs 42-48.

Issue Type

100% Book Building

Objects
Prepayment of loan (Rs300cr), investment in capital expenditure & equipments (Rs88cr) and general corporate purposes (Rs31cr).

IPO Grading/Agency


CRISIL - GRADE 4

Book Running Lead Manager/s
IDFC-SSKI, KOTAK MAHINDRA CAPITAL,IDBI CAPITAL

Name of the registrar


KARVY COMPUTERSHARE
PRIVATE LIMITED.




























A strong promoter group - APM Terminals, which brings to the company technological expertise, best practices in port operations, and a strong and experienced management, backs GPPL. APM Terminals Pipavav enjoys favourable oceanographic conditions, well-developed infrastructural facilities, good rail, and road connectivity to the hinterland. GPPL is strategically located in terms of proximity to the landlocked north and northwestern regions, which account for 65%of the container cargo traffic in India.  The container cargo market size of north and northwestern India is expected to grow at a CAGR of 11-12% over the next three to four years. Expect Mundra port, there are no other ports on the western side to handle incremental traffic.
 
APM Terminals Pipavav is positioned well to attract this incremental traffic. The port is located at an approximate distance of 150 nautical miles from the ports located in and around Mumbai. Hence, ships calling to Mumbai could sail to APM Terminals Pipavav if Mumbai port is congested.

APM  Terminals  Pipavav  is  strategically  located  near  the  entrance  of  the  Gulf  of  Khambhat ,on the main maritime trade routes, which helps us to serve imports from and exports  to  the Middle East, Asia, Africa,  the United States, Europe and other  international destinations.

FINANCIALS: 

The Company has not earned profit since its inception in 1992. For the year ended Dec- 09, the total revenue earned was Rs 224.49cr and net loss of Rs 117.57cr. In the first quarter of current year (as on 31-03-10), the figures were Rs 56.77cr and Rs (-) 27.76cr respectively. The  accumulated loss is around Rs 807.89cr. However, the net worth of the company is still in positive with Rs 280.10cr.

STRENGTHS:

  • The port is strategically located.
  • Benefit from the relationship with the promoter, leading port operator in the world.
  • Well-developed port infrastructure.
  • Experienced management team.
  • Ability to handle diverse cargo portfolio.


RISKS:

GPPL was unable to meet the Minimum Guaranteed Quantity and was subjected to non-fulfillment liability. 

The company faces risks relating to reliance on concessions and licenses from government and quasi-governmental organisations.  GPPL may be adversely affected by increases and/or changes in royalties and fees payable.


DEMAND OUT LOOK

As per CRISIL, the total traffic of coal at Indian ports is expected to grow at a CAGR of 7.2% from 91.9 mn tonnes in 2008-09 to 130 mn tonnes by 2013-14. Coal, with a share of 44% of the bulk cargo as of September 2009, is the major bulk cargo commodity handled at the APM Terminals Pipavav. Six power plants are being commissioned close to APM Terminals Pipavav and 11,164 MW of power generation capacity will be added in the state by 2012. This will translate into a coal requirement of around 45 mtpa. The increase in demand for coal will help boost the coal traffic at APM Terminals Pipavav.


RECOMMENDATIONS:



APM Terminals, one of the most respected and professionally run container terminal operators in the world, operates Pipavav port. High standards and operational efficiency are the hallmark of the APM Terminals ports worldwide.

Gujarat Pipavav has excellent cargo handling facility, critical connectivity, strategically located.

Mr. Prakash Tulsiani, who has held several management positions in the A.P. Moller - Maersk Group, prior to joining the company, heads GPPL’s management. 

The company has invested over Rs 2,000 cr for the development of port in the past. It has a right to develop 1,561-acres of land at the port, of which around 485-acres has been developed.
The growth story has just begun.  The issue is attractively priced at Rs 42-48.  APPLY, for both short term and long term gains.


Saturday, May 29, 2010

IPO ANALYSIS: GUJARAT STATE PETROLEUM CORPORATION LIMITED (GSPC) – ENERGY FOR GROWTH - INVEST




GSPC - one of the leading oil and gas exploration and the largest gas trading company in the country, is entering the capital markets with an IPO. The company proposes to issue 4, 48,000,000 equity shares of Rs 1 FV in the likely price band of Rs 80-90/- The company intends to raise around Rs 3000cr from the market.

JM Financial Consultants, Enam Securities, ICICI Securities, Kotak Mahindra Capital Company and SBI Capital Markets Limited are the BRLMs.

BUSINESS

GSPC, an undertaking of the Government of Gujarat, is an integrated energy company – comprising exploration and production, Gas transmission, Distribution and Power generation with presence across the entire natural gas value chain. 

GSPC is a mid-sized oil and gas exploration and production (E&P) company.   The company holds a large portfolio of E&P assets, which are in various stages of exploration, development and production.  GPSC has 60 onshore and offshore oil and gas blocks.  GSPC has 28 oil & gas discoveries in the Cambay & K G basins as on 31-12-09.

GSPC’s primary asset is the Deen Dayal field in the Krishna-Godavari basin (the KG basin) located off the east coast of the State of Andhra Pradesh, which has significant gas reserves.

 
  • Ranked third in India as an operator for number of discoveries.
  • Owns and operates the largest gas transmission network in Gujarat.
  • Developing gas based power plants in Gujarat with an expected aggregate generation capacity of 1209MW ( 156MW is already operational)
  • Developing 5 MMTPA LNG Terminal at Mundra in Gujarat.
  • One of the largest gas trading companies in the country.


OBJECTS:

1.  To part finance the Deen Dayal West field in the KG basin.
2.  Pre-pay rupee loan facility.
3.  To fund exploration and development costs for Fiscal 2011 in certain blocks. 


FINANCIALS:

The company’s total revenues stood at Rs 26.4 bn for the six months ended September 2009 as against Rs 62.0 bn in FY09 and Rs 46.3 bn in FY08.  For the six months ended September 2009, the company’s operating margins were higher at 29.5 per cent as compared to 21.5 per cent in FY09. The improvement in operating margins was because of increase in contribution to GSPC’s top-line from transmission and CGD (city gas distribution) businesses, which are high margin businesses.


Domestic Supply and Demand

Domestic consumption of oil has grown at CAGR of 6.8% since the financial year 2003.  The  domestic  production  of  oil  remained  stagnant,  higher  refining  capacity additions saw crude  out put  increase at a CAGR of 9.1% from  the  financial year 1998  to 2009. This  increased India‘s dependence on  imports  from 48.0% of  its  total oil  requirement  in  the  financial year 1998  to around 80%  in  the financial year 2009. Domestic production is, however, expected to increase in the short term as production from the Mangala basin, which commenced production in August 2009, ramps up to expected peak production of 8.8 MMT annually in 2011 according to CRISIL report. 

On the supply front, GSPC has tied up with GAIL (India) Ltd, Indian Oil Corporation Ltd and Bharat Petroleum, Corporation Ltd for supply of Liquefied Natural Gas (LNG) on long-term contract basis and with Hazira LNG Pvt. Ltd. for the supply of spot-LNG.

GSPC is present in the gas transmission business through its subsidiary Gujarat State Petronet Limited (GSPL). Gujarat has a strong industrial base and a widespread gas transmission network. This has resulted in Gujarat to emerge as the highest gas consuming state in India. This uniquely places GSPL to attract a large portion of the incremental supply of gas in the medium term. Bearing testimony to this, nearly 30-35 percent of the 60-mmscmd of RIL’s current KG basin gas production is being supplied to Gujarat


RISKS


The  start  of  production  from  the Deen Dayal West  field  in  the KG  basin,  off  the  east  coast  of  India, entails various risks, and the occurrence of any such risk may result in significant cost overruns or delay the  commencement  of  commercial  production,  which  may  have  an  adverse  effect  the  business.


VALUATION:

·         Excellent business prospects from exploration and production.
·         Gas trading to contribute volumes.
·         CGD to contribute towards better margin.
·          Presence in one of the fastest growing industrial state in the country.
·         Scope for further margin improvement.


RECOMMENDATIONS:

CRISIL has awarded grade - 4 for the IPO indicating above average fundamentals.
Energy filled issue. Subscribe at the lower price band.

Saturday, March 20, 2010

IPO NEWS - PERSISTENT SUBSCRIBED BY OVER 90 TIMES

The IPO of  Persistent Systems Limited, for which CRISIL  has awarded grade -4,  has been  subscribed by 93 times, as per NSE website.

FIRST CHOICE HAD STRONGLY RECOMMENDED FOR SUBSCRIPTION TO THE ISSUE.

Saturday, February 6, 2010

RURAL ELECTRIFICATION CORPORATION LIMITED (REC) - NAVRATNA - CONSISTENT PERFORMER – INVEST.

ISSUE DETAILS:

Public issue 17,17,32,000 equity shares of Rs 10/- each, including fresh issue of 12,87,99,000 equity shares and offer for sale of (by GOI) 4,29,33,000 equity shares in the price band to be determined through competitive bidding process. The issue opens on 18-02-10 and closes on 23 -02 10. Kotak Mahindra Capital Company Limited, DSP Merrill Lynch Limited, ICICI Securities Limited, JM Financial Consultants Private Limited and RBS Equities (India) Limited are the BRLMs.


BUSINESS:


REC is a public financial institution in the power infrastructure sector. The Corporation is engaged in the financing and promotion of transmission, distribution and generation projects throughout India. REC occupies a key position in the GOI's plans for the growth of the power sector.

REC assists clients in formulating and implementing a broad array of power projects and finances those projects. Clients primarily include public sector power utilities at the central and state levels and private sector power utilities. The area of activities include, an integral role in the development of relationships with clients, the operation and promotion of business, loan appraisal, loan sanction and post-sanction monitoring processes. REC’s primary financial product is project-based long-term loans. The corporation funds business with market borrowings of various maturities, including bonds and term loans. The sound financial position enable the Corporation to raise funds at competitive costs and there fore able to price financial products competitively. REC commenced our operations in 1969 for developing the power infrastructure in rural areas. REC has contributed significantly to the development of rural India and India's agriculture through funding of transmission and distribution projects in rural areas.



As of September 30, 2009, REC is one of the 18 Indian public sector undertakings to be granted 'NAVRATNA' status by the Department of Public Enterprise by virtue of operational efficiency and financial strength. The GoI has rated REC’s performance as “Excellent” continuously since 1994. The corporation has been ranked among the top ten public sector undertakings in India by the Ministry of Heavy Industries and Public Enterprises for the years from 2000 -2005, except in 2003.


OBJECTS OF THE ISSUE:

The object of the Offer for Sale is to carry out disinvestment of 4, 29, 33,000 Equity Shares by the GOI. REC will not receive any proceeds from the Offer for Sale. Object of the Fresh Issue: The Corporation intends to utilise the funds being raised to augment capital base to meet our future capital requirements arising out of growth in business.


FINANCIALS:

The total income recorded for the year 07-08 and 08-09 is Rs 3541.80cr and Rs 4923.30cr. The net profit earned for the same period was Rs 958.68 and Rs 1386.46cr.

Earning Per Share - (in Rs) RONW (%)

March 31, 2007 - 10.23 17.36
March 31, 2008 - 12.28 16.10
March 31, 2009 - 16.03 20.09
Weighted Average 13.81 Weighted Average 18.31


Net Asset Value per Equity Share as on September 30, 2009: Rs. 90.00.


Domestically, REC holds the highest long-term borrowing domestic credit rating from each of CRISIL , ICRA , Fitch and CARE Limited. Globally, REC holds long-term borrowing ratings from Fitch and Moody's that are on par with sovereign ratings for India.



MATTERS OF CONCERN:

• The business and industry are dependent on the policies and support of the Government of India, which makes REC susceptible to changes to such policies, and the level of support it receives.

• The Corporation has significant concentration of outstanding loans to certain borrowers and if the loans to these borrowers become non-performing, the quality of the asset portfolio may be adversely affected.

• REC is power sector-specific public financial institution. This sector has a limited number of borrowers. In addition, many of these borrowers are public sector utilities that are loss making and therefore may not have liquidity to repay their borrowings.

• As on September 30, 2009, ten borrower groups to which REC had the highest amount of outstanding loans in the aggregate accounted for 77.89% of total outstanding.

• REC’s ability to compete effectively is dependent on the ability to maintain a low effective cost of funds. Historically, REC had access to funds -equity financing and loans received directly from GOI, as well as tax concessions with respect to, and guarantees of, certain types of bonds and borrowings that enabled REC to price such borrowings at a lower rate of interest.


• Currently, REC funds its business significantly through borrowings that have shorter maturities than the maturities of new loan assets. Funds mis - match and volatility in interest rates may adversely affect the financials.


• REC has granted loans to the private sector on a non-recourse or limited recourse basis, which increases the risk of non-recovery and could expose REC ability to borrow from various banks. RBI imposing restrictions on banks in relation to their exposure on NBFCs (including REC), may adversely affect growth and margins.


• Corporation had continuous negative cash flow in the past.


• REC is registered as a NBFC with the RBI. Currently, REC is a ‘non-deposit accepting NBFC and yet to obtain specific approval from the RBI for accepting public deposits.


• The cost of funding and the pricing of loan products are determined by a number of factors, many of which are beyond REC’s control.


• The power sector financing industry is becoming increasingly competitive and REC’s profitability and growth will depend on the ability to compete effectively and maintain a low effective cost of funds.


• The funding requirements of the Company and the deployment of a portion of the Net Proceeds are based on management estimates and have not been independently appraised by any bank or financial institution.


• Shortages in the supply of crude oil, natural gas or coal could adversely affect the Indian economy and the power sector projects to which the company has exposure, which could have a material adverse effect on the business, financial condition and results of operations.


OPPORTUNITIES:


India is among the fastest growing economies globally and has grown at an average rate of 8.2% perannum during the last five years. The per capita energy consumption in India is relatively low in comparison to most other parts of the world, including other developing nations. According to data from Key World Energy Statistics (2009),
India's per capita electricity consumption was 543 units per year, as compared to a world average of 2,752 units per year and yearly per capita consumption of 3,252 units in Middle Eastern countries, 1,838 units in Latin America countries, 2,346 units in China, 705 units in Asian countries and 578 units in African countries.
The power industry in India has historically been characterized by energy shortages, provides opportunities for funding mega power projects, where in, REC is a leader and has the requisite expertise.


RECOMMENDATIONS:

The share, currently is quoting around Rs 235/- in exchanges (52 week - high/low of Rs 275/75) Investment in the company may be considered depending upon the prevailing market price during the issue period. The price should be, at least, Rs 15 -17 less than the market price.