Wednesday, August 3, 2011

IPO ANALYSIS: SRS LIMITED.

SURE TO RUIN YOUR SAVINGS – AVOID.

IPO FROM AN ONCE SEBI DEBARRED GROUP COMPANY.

PRICE BAND RS 58- 65

The BRLMs to the IPO are Karvy Investor Services, IDBI Capital Markets and SPA Merchant bankers.

Details IPO managed by these managers in the last twenty months, what are the returns earned by investors will be discussed first.

SPA has managed two issues – Infinite Computers and Cantabill, both are trading much below heir offer price.

IDBI Capital has managed one issue – ARSS Infra - as against the IPO price of Rs 450, shares are trading at Rs 370. Karvy has not managed any issue during the period.

SRS is a diversified Company with business interests in Cinema Exhibition, Food / Beverages, Retail / Manufacturing & Retail Jewellery.

FIANCIALS:

RS IN CRORES.


31-03-10

31-03-11

SALES

1329

2077

PAT

26

37

EPS (Rs)

2.55

3.60

MATTERS OF CONCERN:

1. One of the Promoter Group Companies, namely SRS Real Infrastructure (earlier known as Manu Finlease Limited) came with an IPO in the year 1995. After the public issue, Securities and Exchange Board of India (SEBI), on the grounds of alleged malpractices in the public issue ordered

Investigations to be conducted to ascertain the truth of allegations.

The Chairman of SEBI passed an order dated November 29, 2002, whereby M/s. Manu Finlease Limited, Anil Kumar Jindal, J.K. Garg, P.K. Kapoor and Mrs. Ritu Garg were debarred from accessing and being associated with the capital market for a period of 5 years.

2.SEBI had withdrawn the acknowledgment card issued to one of the group company’s IPO in 1996, for non disclosing the irregularities in the IPO of Manu Finelease, a group company.

3. Lacks corporate governance.

4. Almost 90% of IPO proceeds are proposed to be utilized in three businesses, Cinemas, F&B and retail, which accounted for around ~20% of the company’s OPBDITA in FY 10 and 11, according to ICRA.

5. Low RNOW.

6. Negative cash flow in the last three years.

7. Almost a dozen PSU banks are banker to the company including SBI.

However, none of them are BRLMs.

VALUATION AND RECOMMENDATIONS:

For the year 31-03-11, the total revenue is Rs 2077cr. More than 50% of this has come from traded items. This appears to be manufactured. The negative cash flow in the last 3 years from a company which is in to predominately cash sales business, justifies the suspicion.

The company will have a post issue capital of Rs 139.29cr, even to earn an EPS of Rs 1, the company earn a PAT of Rs 14cr, which is unlikely in the near future. These kind stocks are not worth at face value.

The group companies were earlier subjected various strictures, including debarring from accessing capital markets. That has not prevented from them approaching the market in new avatar.

Public memory is short and it is shortest in Capital Markets. Even the disgraced Ramaliga Raju and his associates floats an IPO now, it will be heavily subscribed. And if the investors lose the money in that exercise, they can always blame the regulators.

Surprisingly the IPO carries a grade of 3 from ICRA and there is no mention of the SEBI indictment in the report.

AVOID THE IPO.

ISSUE DETAILS:

Issue opens / closes on – 23/8, 26/8

IPO grade 3 by ICRA.

Promoters:

Dr. Anil Jindal, Sunil Jindal, Bishan Bansal. Raju Bansal, BTL Industries and BTL Portfolio Limited

Issue size – 3.50,00,000 equity shares of Rs 10 FV.

Monday, August 1, 2011

FORTHCOMING IPO - IFCI FACTORS

IFCI Factors has filed DRHP with SEBI for public issue of 39.08 Mn shares.

The company intends to use the funds to augment its capital base and to meet future capital requirements.

Enam Securities is the book running lead manager to the issue.

HOW CAN WE SAVE MFI INDUSTRY- BY NOT BEING GREEDY.

Before going in to the possible solution to the problem faced by our MFIs, one should examine what led to the present situation. Greed, greed and greed. MFIs are aware that they are dealing with the oppressed, downtrodden, poorest of the poor and vulnerable sections of the society.


The ultimate goal of micro finance is to enable the poor to build assets, increase incomes, reduce vulnerability to shocks and economic stress and improve quality of life by enabling better access to education and healthcare. The micro finance industry has grown at a rapid pace across the world and has created a positive impact in the lives of millions of poor people.

Instead of doing this MFIs started to create value for their share holders, PE investors. You can not create value for share holders at the cost of the poorest of the poor. Helping poor and value creation for share holders are two boats which are moving in OPPOSITE directions. Either you can be here or there, but not in both the boats, at the same time.

The Micro Finance Institutions, instead of providing credit at affordable interest rate, exploiting the situation and looking for a return on investments in excess of 30% p.a. The borrowers pay exorbitant rate of interest. Most of their income goes for servicing the debt with no savings. This kind of situation is no better than the one the poor borrowers had experienced with the traditional moneylenders. They also defeat the very purpose of establishing the Micro Finance Institutions.

There were reports that MFIs were charging as high as 60% p.a. They were into forcible recovery, distributing unsolicited financial products on the clients, multiple lending, strong arm tactics and other unwarranted things. Andhra government did the right thing in bringing the regulation. There was nothing wrong in it.

BFSL collapse is its own making. Being head of the MFI body, Mr Mahajan did nothing to ensure discipline among members, particularly in the area of interest rate.


Micro finance should not be viewed as a business venture where one can expect very high return on investments.


IIFCL TO RAISE RS 3500CR TAX FREE INFRA BONDS IN FY12

L&T FINANCE HOLDINGS IPO PRICED AT RS 52 PER SHARE, TO LIST ON AUG 10.

US DEBT CRISIS RESOLVED, NIFTY MAY OPEN WITH 50 POINT GAP

Republicans and Democrats have reached an understanding on the vexed debt ceiling issue.

Sunday, July 31, 2011

SPEAK ASIA –ATTEMPT FOR ANOTHER FRAUD


Already 5 officials of Speak Asia are cooling their heels in Mumbai police stations. Today TOI carry’s a half page advertisement on one of their product YUG LCD TV.

It says “contrary to the market offers we offer the unbelievable -an LCD 22”TV @RS9998.” This is another fraud on the gullible consumers. First, they do not have any show room or service centers. The brand and the manufacturer are unknown. Apply commonsense. Speak Asia is not into charity. Only a manufacturer or established wholesale trader can sell at a very competitive price. Neither Speak Asia is the manufacturer or the wholesaler and definitely not into charity. This is another attempt to divert the attention of public and law enforcing agencies who are probing the fraud committed by the company. Public are here by warned not to fall into the trap. The established brands too are available in the same price range. Buy from a trusted dealer.

Comparative prices.

BRAND

PRICE

PANASONIC VIERA

RS 10479

VIDEOCON VLL

RS 11600

LG19LH20R

RS 11500

SANSUI S2230YV

RS 9990

SPEAK ASIAYUG##

RS 9998

## UN KNOWN BRAND

Friday, July 29, 2011

IPO SUBSCRIPTION :L&T FINANCE HOLDINGS FINAL TALLY 5.19 TIMES

FORTHCOMING IPOS

NAME OF THE COMPANY

Auto Mark Industries (India) Limited

PROMOTERS

Arun D Khara and associates

ISSUE SIZE

1,25,00,000 equity shares

BRLM

Comfort Services

REGISTRAR

Sharepro Services


NAME OF THE COMPANY

Abhijeet Power Limited

PROMOTERS

Manoj Jayaswal and associates

ISSUE SIZE

Rs 1375cr

BRLM

DSP Merrill, Enam, Axis Bank, IDFC Capital SBI Caps and UBS Securities

REGISTRAR

-


NAME OF THE COMPANY

Tejora Technologies Limited

PROMOTERS

-

ISSUE SIZE

40,00,000 equity shares

BRLM

Unicon Capital Services

REGISTRAR

Big share

NAME OF THE COMPANY

Ind Ecoventures Limited

PROMOTERS

-

ISSUE SIZE

Rs 105cr

BRLM

Saffron Capital

REGISTRAR

Big share


NAME OF THE COMPANY

PME Power Solutions India Limited

PROMOTERS

-

ISSUE SIZE

1,14, 23, 226 equity shares

BRLM

Edelweiss, Imperial Corporate Finance

REGISTRAR

Link Intime.

SPEAK ASIA'S COO TARAK BAJPAI DETAINED BY MUMBAI POLICE

Mumbai police have arrested the COO of Speak Asia, the on line MLM company, for alleged fraud.

Thursday, July 28, 2011

IPO LISTING NEWS- BGIM LISTS AT 65% DISCOUNT

The IPO which was made at Rs 82, closed at Rs 28, on the first day. We had indicated that this company is another SRG Infotec in the making. Our analysis and recommendations have come true.

L & T FINANCE HOLDINGS IPO FULLY SUBSCRIBED.

In spite of Sensex being down by more than 300 points since the IPO opened for public, the issue fully subscribed today, the penalimate day.

Wednesday, July 27, 2011

L & T FINANCE HOLDINGS IPO GETS GOOD RESPONSE ON DAY ONE

The IPO received subscription to the extent of 46% on the first day.

L&T FINANCE HOLDINGS ROPES IN ANCHOR INVESTORS @RS 56 A SHARE.

L&T Finance Holdings has raised Rs 153cr by placing shares with anchor investors, @Rs 56 a share. The anchor investors include Tioman Investments, DSP Black rock and Capital International.

The IPO which opens for subscription today has a price band of R 51-59.

FIRSTCHOICEIPO recommends subscription to the issue.

Tuesday, July 26, 2011

SKS MICRO Q1 RESULTS, REPORTS HUGE LOSS

The Company posted a loss of Rs 219cr for the quarter ended June 30, 2011 as compared to profit after tax of Rs 67cr for the quarter ended June 30, 2010. Total Income has decreased from Rs 313cr for the quarter ended June 30, 2010 to Rs 177cr for the quarter ended June 30, 2011.

IPO LISTING NEWS: BHARATIYA GLOBAL INFO MEDIA TO LIST ON 28-07-11

Monday, July 25, 2011

FIIs NET BUY RS 316 CR.

FIIs, on 22-07-11, had net purchases to the extent of Rs 445cr and today they increased their purchases by another Rs 316cr. The figures for DIIs is Rs 243cr and Rs 224cr respectively. The Sensex reacted positively, up by 149 points, today.

RIL Q1 NET PROFIT UP BY 16.7%, EPS @RS 17.30

The country's biggest corporate entity, RIL, has posted a rise of nearly 17% in net profit in its first quarter of FY12. During the period, the company's PAT jumped to Rs 5,661 crore against Rs 4,851 crore in the previous fiscal.

Net sales of the company shot up more than 39% to Rs 81,018 crore from Rs 58,228 crore, Year-on-Year.

The company shares closed at Rs 882, up 1%, in the exchanges.

Tuesday, July 19, 2011

FIIs NET BUY RS 293CR IN CASH MARKET.

Foreign money continue to flow into Indian equities. FIIs today are net buyers to the extent of Rs 293cr. Heavy delivery based transaction has taken place in RIL, Hindalco, Infosys and TCS, among others. Expect these counters to move up substantially before the July contract expiry.

FRANKLIN TEMPLETON AND LIC UP THEIR STAKE IN RELIANCE INDUSTRIES.



The country's biggest insurer and Franklin mutual fund have purchased shares worth Rs 200cr between April-June period. LIC holding now increased to 7.16% and Franklin holding to 1.05%. Currently, promoters holding stood at 44.72 %, where as FII holding at 17.37%.

INFOSYS PLANS IT CENTER IN GUJARAT, SIMILAR TO MYSORE FACILITY.

Monday, July 18, 2011

IPO ANALYSIS: L&T FINANCE HOLDINGS LIMITED – HIGH PEDIGREE – INVEST.


ISSUE OPENS ON 26-07-11, CLOSES ON 29-07-11.
PRICE BAND RS 51-59.
ISSUE SIZE RS 1275CR.
IPO GRADE 5 BY CRISIL, CARE, ICRA


This company / group needs no introduction. The company is promoted by Larsen & Toubro Limited (L&T), one of the leading industrial group in the country, with interests in engineering, construction, electrical and electronics manufacturing and services, information technology and financial services.

The company has recently raised Rs 330cr, at Rs 55 per share, by making placement to US private-equity fund Capital International.

L& T Finance Holding company offers a diverse range of financial products and services across the corporate, retail and infrastructure finance sectors, as well as mutual fund products and investment management services, through the direct and indirect wholly-owned subsidiaries. The Company is registered with the RBI as an NBFC-ND -SI.

The company is headquartered in Mumbai, and has a presence in 21 states in India. As at August 31, 2010, we had 715 points-of-presence across India, comprising 103 branch offices, 221 meeting centers.

The network of offices has been established to cater to the growing business needs of the diverse customer base, which includes individual retail customers as well as large companies, banks, multinational companies and small- and medium-enterprises, and to provide them with satisfactory customer service according to their varying requirements.

The operations are arranged into four business groups, being the Infrastructure Finance Group, the Retail Finance Group, the Corporate Finance Group and the Investment Management Group.

The total income of the Infrastructure Finance Group for Fiscal Year 2010 was Rs. 4,504.23 million which accounted for 31.63% of the total income. The total loans and advances outstanding of the Infrastructure Finance Group as at March 31, 2010 were Rs. 42,884.99 million and total disbursements for Fiscal Year 2010 were Rs. 37,955.14 million. The wholly-owned subsidiary, L&T Finance Limited , conducts the retail finance business and the corporate finance business.


STRENGTHS:

  • Diversified and balanced mix of high growth businesses.
  • Strong distribution network, with a presence throughout the country.
  • Experienced management team and employees with a proven track record of establishing and growing new lines of business.
  • High quality loan portfolio comprising the funding of mainly income-generating assets and activities.
  • Good financial and capital position, as well as access to multiple sources of capital.
  • Strong parentage and brand equity of L&T.

The company earned a PAT of Rs 392 crore in FY11, up from 262 crore,compared to the previous year.


VALUATION AND RECOMMENDATIONS:

At Rs 51-59 price band, the issue priced around 20 times its FY11 earnings, on post issue capital. The price to book value (P/BV) works out to 2.3 times. The higher valuation is justified considering its pedigree, management and business model. The company is likely to get a banking license too.

Investment in IPO is recommended both for listing gains and long term appreciation.


The issue is lead managed by JM Financial, Citigroup Global Markets, HSBC Securities, Barclays Securities, Credit Suisse Securities and Equirus Capital.



Sunday, July 17, 2011

21 RIL blocks may get nod for stake sale

BP has agreed to buy stake in 23 oil and gas blocks of  RIL for USD 7.2 billion, the government may next week give unconditional approval for stake sale in only 21 blocks.

HINDALCO'S SAMBALPUR PROJECT GETS ENVIRONMENT MINISTRY'S APPROVAL.

The environment ministry panel has recommended clearance to Aditya Birla group flagship Hindalco Industries' coal mine project in Sambalpur, Orissa for doubling its capacity to three MTPA.

RIL TO ANNOUNCE Q1 RESULTS ON 25-07-11.

Friday, July 15, 2011

EXPECT THE SENSEX TO MOVE UP BY 500 POINTS, NEXT WEEK.



In the last three trading sessions both the FIIs and DIIs are net buyers to the extent of Rs 600cr and Rs 110cr respectively, in cash market. Big ticket delivery based transaction seen RIL, Infy, TCS, Hindalco and SBI. Barring unforeseen negative macro economic news, the Sensex is likely to gain 500 points next week. The Euro zone shadow and probable down grading of US debt is unlikely to affect our markets. The Nifty faces stiff resistance at 5775 level. After consolidating at this level, the Nifty may cross 6000 level. Stay invested in index stocks and indices.

Thursday, July 14, 2011

IPO ANALYSIS : INVENTURE GROWTH AND SECURITIES - INTOLERABLE PRICE BAND - AVOID.

Incorporated in 1995, Inventure Growth and Securities Ltd (IGSL) offers trading services in equity, debt market, commodities and currency futures segment to financing activity, wealth management, and distributions of financial products.

The IPO opens on 20th July 2011. The company is issuing 70 lakh equity shares of Rs.10 each, in the price band of Rs. 100 to Rs. 117 per share, to raise funds around Rs.80 crore. The issue, comprising a dilution of 33.33%, closes on 22nd July.


Inventure Growth has operations mainly in the western region. The timing of the IPO is not appropriate, in the present market conditions, since most brokerages are down-sizing operations and barely managing to stay afloat due to intense competition and meagre income.


IGSL has Growth tepid growth for FY11. In fact in the last 3 years the CAGR of the company is only 4%. The company does not have any investment banking or corporate advisory division, which can support it with high fee income, in these thin retail volume days.

For FY11, company reported an EPS around Rs. 4, on equity of Rs. 14 crore. At upper end of 117, share is being issued at a PE multiple of 26 times, which is highly intolerable given that brokerages of much better scale and size, are ruling at much lower PE.

In 2010, Microsec Financial Services, a Kolkata based brokerage firm had gone public. As against the issue price of Rs 118, the shares are trading around Rs 38. Even the larger brokerages such as Edelweiss Capital, MotilalOswal and Emkay Global and others have disappointed the investors.

ICRA has awarded grade 2 to the IPO indicating below average fundamentals.  The BRLM – Intensive Fiscal Services is unknown. One more poor quality IPO, which has been priced at its FY 2015 earnings.

Avoid subscription.

Wednesday, July 13, 2011

IPO SUBSCRIPTION STATUS : BHARATIYA GLOBAL INFO MEDIA

The IPO received subscription to the extent of 47% on the third day. The issue closes tomorow.

Avoid subscription, it will go Readymade Steel way.

DSQ SAGA IN SKS MICRO

On July 6th, the Finance Ministry released a draft regulation bill on MFIs. By coincidence or otherwise, on the same day,  the circuit filter for the scrip raised from 5% t 20 % for the reasons best known to the Exchanges. The stock was up by 70% in 5 trading sessions starting from July 6th. The volume was very low initially and picked up on the 5th day, which was to the extent of 74 lacs shares in NSE. However the delivery percentage was very low at 9%.   Today, the scrip was down 10%, with thin volume. There is a report on this subject in today's Business Standard. Hence the circular trading and un warranted bulk deals has not taken place fearing regulators wrath. During 80s few counters like DSQ Software, Pentafour and others were manipulated, through circular trading, before it was busted by Sucheta Dalal. Similar trend is seen here too.

Investors are advised to trade cautiously in this kind of stocks.
.

RIL LEADS THE PULL BACK RALLY, SENSEX UP BY 184 POINTS.

Today's rally was lead by Reliance Industries which closed at Rs 868, up by Rs 20. The other prominent gainers are Dr. Reddy's, DLF, Bharati Airtel, Reliance Cap and Sesa Goa.

The newly listed IPO - Readymade Steel, was closed in the negative, down 36% to its issue price.

Friday, July 8, 2011

FIIs NET BUY RS 517(CM) AND DIIs NET SELL RS 390CR ON 08-07-11

MINING BILL, OIL PRICES DRAG SENSEX

The Sensex was down by 220 points due to heavy selling in Metal counters, coupled with overall negative sentiment due to sharp movement of oil prices in international markets.

STOCK WATCH – SKS MICRO FINANCE– SELL. THE NEW BILL WILL NOT MAKE ANY DIFFERENCE TO THE BOTTOM LINE.


The finance ministry is proposing to introduce a new bill, in the coming winter session of parliament on how to regulate the Microfinance Institutions. Among others the bill proposes to make the RBI as the sole regulator of the segment. As RBI has accepted the recommendations of the Malegam committee, the bill would include all the findings of the committee. The main aim of the bill is affordability for the borrowers and sustainability for the providers. There is no place for exploitation, arm-twisting and profiteering. There would be cap on rate of interest, margins and loan amount. At the best scenario, the net interest margin for these MFI will be around 2% and not more than that.  MFIs have to follow stringent RBI norms on provisioning, capital adequacy.  There will be a committee, consisting of members from the State / Central government /MFIs association to oversee the functioning of the MFIs.  The new bill is good for orderly growth for MFIs. There is no scope for super profits.

Sell SKS Micro and switch to strong and well managed NBFCs like M&M Finance, Bajaj Auto Finance and Shriram Finance, if the investors wish to stay in the NBFC segment.

BRENT MOVES BEYOYND $ 116 A BARREL, STOCKS RALLY MAY NOT SUSTAIN.


One of the fundamental reasons that stocks started moving northwards was easing of oil prices in the international markets due to the initiatives taken by IEA. It was expected that the excess stock released by the IEA would cool down the oil prices substantially, on sustainable basis. Prior to IEA’s action the Nifty was hovering around 5200 level and most experts were predicting that Nifty would test 4800 level. Suddenly the views on emerging economies changed, that the cooling of oil prices would largely benefit these economies and the growth would be robust.   The FIIs who were skeptics on India’s growth prospects till then saw a different picture and started investing heavily and has pumped in more than Rs 10,000cr in the last two weeks. The Brent did react on IEA action. However, within two weeks of IEA action the Brent has not only regained its pre IEA action level, it has moved beyond that level and now it s trading around $ 116 a barrel. It was up almost 3% in yesterday’s trade.

According to Goldman Sachs, oil supplies will become "critically tight" in 2012, largely because production leader Saudi Arabia won't be able to pump as much extra oil as many people believe. Robust global economic growth will continue to drive oil demand that outstrips supply; it is only a matter of time before inventories and OPEC spare capacity become effectively exhausted, requiring higher oil prices to restrain demand.

Now we are back to square one. The ‘reason’ on which the stock rallied is no more there.  The high oil prices will have telling effect on our economy. The euphoria created by aggressive FII buying may not lost long. 

Investors are advised to trade cautiously

Thursday, July 7, 2011

MANIPULATION RAMPANT IN NEWLY LISTED IPOS

Birla Pacific Medspa which got just one time subscription got listed at 150% premium to its issue price is surprising. The fundamentals of the company are weak and the business is yet to evolve. There were no takers at Rs10 and it is puzzling that the stock find buyers even at Rs 30, the days high. Will SEBI look into the first day/week price rigging of  newly listed companies. Similar the case with Rushil Decor.

These shares would be available at discount to its issue price in the next few trading sessions, as we have seen in the case of Timbor, Sanghvi Forging and Sevalakshmi Papers.

FIIs NET BUY RS 869CR ON 07-07-11

Wednesday, July 6, 2011

IPO LISTING NEWS - BIRLA PACIFIC MEDSPA TO LIST ON 07-07-11.

We expect the shares to list at 15-20% discount to its issue price of Rs10.