Thursday, May 10, 2012

IPO ANALYSIS : SPECIALITY RESTAURATNTS - EXPENSIVE RESTAURANT - AVOID




ISSUE OPEN / CLOSES ON

16-05-12 / 18-05-12

ISSUE SIZE

1,17,39,415 SHARES OF RS 10 FV

PRICE BAND

RS 146-155

IPO GRADE

4 BY CRISIL

PROMOTERS

ANJAN CHATTERJEE AND SUCHHANDA CHATTERJJE

BRLM

KOTAK MAHINDRA CAPITAL COMPANY

REGISTRAR

LINK INTIME

This is the first IPO for Kotak Mahindra in 2012  and second in the last 12 months after Future Ventures IPO in May 2011.  The performance of the IPOs manged by Kotak Mahindra Capital in the last 2 years is furnished below. Out of the 21 IPOs managed by Kotak Mahindra only 3 are trading above the IPO price.



NAME OF THE COMPANY

MONTH

ISSUE PRICE

CMP


VASCON
2010
JAN

165

40

DB REALTY

JAN

468

71

JUBILANT FOOD

JAN

145

1078

NTPC

FEB

201

152

HATHWAY

FEB

240

164

REC-FPO


FEB

193

185

NMDC-FPO

MAR

300

165

NITESH ESTATES

APR

54

14

JAYPEE INFRA

MAY

102

43
STD. CHRTD. BK
IDR

MAY

104

91

SKS MICRO

JUL

985

89

HM MEDIA VENTURE


JUL



166



142

BAJAJ CORP

AUG

660

590


GPPL


AUG


46


55
TECPRO
SEP
355
177
EROS
SEP
175
180
OBEROI REALTY
OCT
260
245
COAL INDIA
OCT
245
326

PRESTIGE ESTATES

OCT
2010

183

109

TATA STEEL FPO

JAN 2011

610

454

MUTHOOT FINANCE

APR
2011

175

119

FUTURE VENTURES

APR
2011

10

  8


.

OBJECTS OF THE IPO:

The funds are intended to be utilized for establishments of new corporate hospitals (Rs 145cr), developments of food plazas (Rs15cr), Repayment of term loan (Rs10cr) and the rest is for general corporate purposes.

FINANCIALS :( RS IN CRORES)



31-03-10

31-03-11

31-12-11
TOTAL INCOME
 129.75
175.06
152.11
PAT
     9.65
  16.02
  15.01
EPS
     3.18
    4.44
    6.00#
SHARE CAPITAL
     1.70
   34.93
   35.21
NET WORTH
   70.67
   97.29
  112.64
# ANNULISED.

NAV AS ON 31-12-11 IS RS 38.14.

MATTERS OF CONCERNS

  1. The business is labour-intensive. The company depends on dedicated and capable employees.


      2. The costs of compliance with health, safety and environmental laws are significant, and the failure to comply with existing and new health, safety and environmental laws could adversely affect the fortunes of the company.

3. The average cost of acquisition of Equity Shares by its Promoters is just 18 per Equity Share. 


      4. The premises for all of the restaurants and confectioneries are taken on lease and inability to continue the lease rights and keep up with increasing lease rentals in certain key locations.

      5. Food-borne illnesses and resulting negative guest perceptions could adversely affect the business.

      6. Strong competition in the business. The fine dining sector of the restaurant industry in India is subject to competition in respect of price, service, location and food quality.

     7. The Indian food services industry has a history of being fragmented and unorganized and dominated by local players.





Business Strategy

The company intends to leverage on the flagship Mainland China brand while selectively expanding into existing and new markets using the brand equity.
 

VALUATION AND RECOMMENDATIONS

At Rs 146-154, the company is demanding a PE multiple of 20 on its expected earnings for FY13, on its post issue capital of Rs 46.95cr.

The BRLM is one of the worst performing lead managers in the country. Out of the 21 IPOs managed by Kotak, only 3 are trading above the IPO price. Even an ‘at par’ issue managed is quoting below its issue price. This IPO too has been irrationally priced. It is ridiculous for promoters to ask the IPO investors to subscribe at Rs 146-154, when their cost of acquisition is just 18 paise and the company is not century old. The company was incorporated in 1999.

Wednesday, May 9, 2012

IPO SUBSCRIPTION STATUS : PLASTENE INDIA

The IPO received less than 2% subscription on the opening day. The issue closes on 15-05-12.

TBZ TANKS 7% ON DEBUT.

The IPO which was recommended by HSBC and Credit Suisse lost 7.5% on the listing day.  The IPO shares were allotted at Rs 120 (lower price band), closed at Rs 111.00 on NSE. Around 24 lacs shares were traded on BSE and NSE.

HSBC and Credit Suisse had subscribed at Rs 120 a share  before the IPO as anchor investors.

IDFC Capital and Avendus Capital were the BRLMs to the issue.

The IPO carried grade 3 awarded by CRISIL.

FirstchoiceIPO had advised the investors to stay away from the issue.

STOCK WATCH: HINDALCO - BUY




CMP / FV
RS 119 / RS 1
EQUITY
RS 191CR
PE
10
52 WEEK HIGH / LOW
RS 111 / 207
MARKET CAP
RS 23000CR
PROMOTERS HOLDING
AROUND 37%

INDUSTRY

METALS / ALUMINUM

TBZ LISTS AT DISCOUNT

TBZ IPO shares were listed in the exchanges today. As against the issue price of Rs 120, the shares are trading around Rs 112. (at 10.15 a.m.)

First Choice IPO had advised the investors to stay away from the issue.

PLASTENE INDIA IPO OPENS TODAY



Plastene India's Rs 77cr IPO opens today. The company is into manufacturing of flexible intermediate bulk containers (FIBC), flexible packaging, BoPP laminated woven sacks, master-batches and multifilament yarns.
Plastene intends to expand manufacturing facilities of jumbo bags and BoPP woven sacks at its existing units. The company also intends to venture into manufacturing of new product called as ‘block bottom valve bags’ used for packaging of cement, pharma and food grains.

The company’s PAT percentage has been steadily decreasing in the last 3 years. ROCE and RONW are too declined from 30 plus percentage to around 15 percentages in the same period. The existing capacities are not fully utilized. The industrial segment the company operates is not an not exiting one.  Post IPO, promoter and promoter group will hold around 74% of the equity. At Rs 81- 84, the valuation is stretched. However, there could be listing gains because of the high percentage promoters holding and BRLM involved.

INVEST ONLY FOR LISTING GAINS.

Tuesday, May 8, 2012

LISTING NEWS : TBZ IPO TO LIST ON 09-05-12.

TBZ IPO will list on, May 09, 2012 and will be traded under T group. The scrip will be in Trade-for-Trade segment till May 22, 2012.

SME IPO: MONARCH HEALTH SERVICES LIMITED




ISSUE OPEN /CLOSES ON

12-05-12 / 16-05-12

ISSUE PRICE

RS 40

ISSUE SIZE

30, 00, 000 EQUITY SHARES (RS 12CR) FV RS 10

BRLM

NETWORTH STOCK BROKING

PROMOTERS

DR NITISH SHETH, DR. PRASHANT VIKRAM, DR AJIT KADAM and MAXGAINZ FINSERVE

REGISTRAR

SHAREPRO SERVICES

IPO GRADE

NA

LISTING

BSE – SME PLATFORM

GOOGLE – ORACLE COPY RIGHT CASE: SPLIT VERDICT.





The Federal District Court jury in San Francisco ruled that Google infringed on the overall structure of software copyrights held by Oracle, but also said that Google had not violated other important parts of Oracle’s software known as Java.

The limited decision means Google will not have to redesign its Android operating system.  Oracle had sued Google claiming Google violated its copyrights to Java when it built the Android operating system. With 300 million Android smartphones, Android is now the world’s dominant mobile software system.

Oracle, which is likely to receive only modest damages for the copyright violation, will seek to have Google obtain a license to use Java, something Google does not want to do because it could make Oracle influential in future versions of Android.

Monday, May 7, 2012

ALL EYES ON PRANABDA

The GAAR controversy and confusion has pulled down NIFTY by more than 400 points in the last couple of weeks. This issue will come for discussion in parliament today. FM is likely to clarify the stand of the government. Market grapevine is that Parnabda is likely to follow the middle path, which may boost the sentiments of the markets.

Sunday, May 6, 2012

TOP 10 BEST LEADERSHIP COMPANIES ARE BASED IN AMERICA.

According to Hay Group, the top 10 best leadership companies in the world are all based in America.

The list include GE, P&G, IBM, MICROSOFT, COCA-COLA, MCDONALD'S, ACCENTURE, WAL-MART, JOHNSON&JOHNSON and UNILEVER.

Tatas are among the top 5 leadership companies in Asia.

Saturday, May 5, 2012

IPO ANALYSIS – PLASTENE INDIA - INVEST FOR LISTING GAINS





ISSUE OPENS / CLOSES ON – 09-05 / 15-05
PRICE BAND RS 81-84
ISSUE SIZE RS 77CR
IPO GRADE 3 BY ICRA
BRLM – MOTILAL OSWAL
PROMOTERS : CHAMPALAL G. PAREKH, PRAKASH H. PAREKH, MRS. MADHU P. PAREKH AND PRAKASH H. PAREKH (HUF).

Plastene India which is in to manufacturing of flexible intermediate bulk containers (FIBC), flexible packaging, BoPP laminated woven sacks, master-batches and multifilament yarns, is entering the capital market. 

The company has manufacturing facilities at Kutch and Mehsana district in Gujarat, with a total installed capacity of 56,200 MTPA as on March 31, 2012.

 
OBJECTS OF THE ISSUE:

Plastene intends to expand manufacturing facilities of jumbo bags and BoPP woven sacks at its existing units. The company also intends to venture into manufacturing of new product called as ‘block bottom valve bags’ used for packaging of cement, pharma and food grains.

FINANCIALS:  RS IN CRORES

31-3-10 31-3-11 31-01-12*

TOTAL INCOME

285

390

301

PAT

8.12

 12.54

5.69

EPS

3.21

 5.20

3.00

EQUITY

23.15

25.25

25.25
POST ISSUE EQUITY RS 35.75CR
NAV AS ON 31- 01-12 RS 34.

STRENGTHS:
Higher degree of diversification across packaging products relative to peers.
Steady demand outlook for domestic poly-woven sacks industry from fertilizer and cement sectors; and  export  market  for  FIBCs  due  to  shifting  of  sourcing  to  India.
Location advantage due to proximity to ports and raw material source leads to lower inward and outward freight in comparison to peers. 

RISKS:  
Highly competitive and fragmented nature of poly woven sacks industry due to low entry barriers.
Vulnerability of FIBC export demand to global slowdown.
Weak  bargaining  power  with  customers  could  exert  pressure  on  margins  in  the  domestic poly-woven sack business, particularly for fertilizer bags.
Under utilization of expanded capacities in the recent past.
Oswal Extrusion – a group company is a top customer (21% of net sales).
Independent director was once a defaulter, as per CIBIL.
Trail production of the expansion will commence in 2013 and revenue accretion will happen only in FY14.


TRACK RECORD OF BRLM


IPO PRICE

CMP
ASHOKA BUILDCON 324 196
TREE HOUSE 135 207
MBLINFRA 180 177

VALUATION AND RECOMMENDATIONS:

The company’s PAT percentage has been steadily decreasing in the last 3 years. ROCE and RONW are too declined from 30 plus percentage to around 15 percentages in the same period. The existing capacities are not fully utilized. The industrial segment the company operates is not an not exiting one.  Post IPO, promoter and promoter group will hold around 74% of the equity. At Rs 81- 84, the valuation is stretched. However, there could be listing gains because of the high percentage promoters holding and BRLM involved.

INVEST ONLY FOR LISTING GAINS.

MIDAS TOUCH DEAL MAKERS INCLUDE 9 INDIAN AMERICANS





The venture capitalists who made investments in start-up companies and then sold off their stakes with handsome gains include 9 Indian Americans, according to Forbes Magazine. 

The “Midas Touch” top 100 includes Aneel Bhusri the co-CEO of Workday - a cloud-based financial and human resources software company was ranked 25th in the list.

The others in the list are Rob Chandra (28th) Sameer Gandhi (33rd), Vinod Khosla (34th) Neeraj Agarwal (36th) Navin Chaddha (46th), Ajay Agarwal (95th), Asheem Chandna (96th) and Subrata Mitra (99th).

SKS MICRO : IPO MONEY GONE WITH THE WIND

In Aug 2010 with much hype and promise of next Infosys / TCS, SKS Micro raised Rs 1654cr from the primary market. After that, only for one quarter - Dec 2010, the company reported net profits. And in the subsequent 4 quarters the company has been reporting losses, the highest being Rs 428cr in the third quarter of FY12. The company so far has reported losses in excess of Rs1100cr. The company is also likely to report losses around Rs 400cr, for the 4th quarter of FY12. With that, the entire IPO money will disappear from the books.

The company allotted shares in the IPO at Rs 985, are now trading around Rs 100.

NSE NEWS : Corporates with highest number of complaints pending.



Given below are names of Corporates, whose securities are suspended / withdrawn from trading on NSE, with highest number of complaints pending against them for a period of more than 2 months as on April 30, 2012.

Sr. No.
Name of the Corporate
Number of complaints pending
1
Vatsa Corporations Ltd
76
2
Soundcraft Industries Ltd.
27
3
Pal Peugeot Ltd
11
4
Enkay Texofood Industries Ltd
6
5
Arihant Industries Ltd.
5
6
Patheja Forgings & Auto Parts Manufacturers Ltd
4
7
Eider Infotech Limited
3
8
Cauvery Software Engineering Systems Ltd
2
9
Lan Eseda Industries Ltd
2
10
Scintilla Software Technology Ltd
2

Friday, May 4, 2012

SAMSUNG LAUNCHES GALAXY S III

The world’s largest phone maker- Samsung  launched its new smartphone, the Galaxy S III. It’s the third version of the manufacturer’s most successful smartphone.

The phone has a 4.8-inch screen — bigger than the iPhone’s 3.5-inch display, but smaller than the one on the largest Android phone, the Samsung Galaxy Note. It has an eight-megapixel camera and a front-facing camera for video conferencing. It includes the latest Android software system, called Ice Cream Sandwich.

SAMVARDHANA IPO BOMBS

Samvardhana Motherson IPO has received 23% subscription during the issue period. The irrationally priced IPO has bombed. There was no indication of extension of time  and reduction in price band by the BRLM.

The  BRLM have decided to not to proceed with the issue. Refunds follows for those who had applied.

Thursday, May 3, 2012

CARLYLE GROUP FIXES IPO AT $22

The Carlyle Group has priced its initial public offering at $22 per stock unit.

The price was down from a range of $23 to $25 that Carlyle had previously disclosed, indicating some potential weakness in investor appetite. But the company received overwhelming response to the IPO, which was closed on 02-05-12.

Wednesday, May 2, 2012

TCS IS NUMBER 1 MARKET CAP

Today, Tata Consultancy Services (TCS) became number 1 company in terms of market cap, overtaking RIL. TCS's market cap at Rs 2,48,116 crore  compared to RIL's Rs 2,43,413 crore. TCS closed at Rs 1268  and RIL at Rs 743 in BSE. 

SKS MICRO RESULTS ON 07-05-12.


SMFL IPO FAILS TO WOO INVESORS ON DAY ONE.

The IPO received 3% subscription on day one. Considering the size of the issue, the subscription received is very poor. As against 4.89Cr shares reserved for retail category, the IPO received bid for just 45300 shares. The IPO closes on 04-05-12.

FACEBOOK IPO ROAD SHOW NEXT WEEK

Facebook is  finalizing its plans for roadshow as soon as early next week, according to sources. The presentation to investors — which should span New York, Boston, San Francisco, Chicago, Baltimore and  Los Angeles — is expected to last eight to nine days. Based on that time frame, Facebook, the world’s largest social network, would be ready to go public near mid-May.

SAMVARDHANA MOTHERSON IPO OPENS TODAY

Samvardhana Motherson intends to raise Rs 1665cr, which includes fresh issue of shares amounting to Rs 1344cr and Offer For Sale amounting to Rs 321cr, opens for subscription today, in the price band of Rs 113-118.  The company recently allotted 1.93cr shares to the anchor investors at a price of Rs 115.The IPO carries grade 4. Standard Chartered and JP Morgan are the BRLMs. LinkIntime are the registrar to the IPO.

The company reported dismal numbers for the 9 months ended 31-12-11.

The IPO is expensive. AVOID SUBSCRIPTION.

Tuesday, May 1, 2012

LISTING NEWS :TBZ IPO

TBZ IPO which received luke warm response may fix the IPO price at the lower end of the band @ Rs 120. All retail investors will get firm allotment. The IPO is likely to be listed early next week.

SAMVARDHANA IPO - ANCHOR ALLOTMENT AT RS 115.

Samvardhana Motherson has allotted 1.93Cr shares at Rs 115 a share, including Rs 105 as premium, to anchor investors. The anchor investors include Royal Bank of Scotland, First State Investments (HK),IVY Pacific fund, Birla Sun life, Monetary authority of Singapore and Government of Singapore.