Saturday, September 10, 2016

IPO ANALYSIS: G N A AXLES LIMITED – INVEST FOR LISTING GAINS



                                                 ISSUE DETAILS


ISSUE OPENS / CLOSES ON
14-09 / 16-09-2016
ISSUE SIZE
63,00,000 EQUITY SHARES
FACE VALUE
RS 10
PRICE BAND
RS 205-207

BUSINESS
Mfrs of  rear axle shafts, other shafts and spindles for LCV /HCV/MCV segment
PROMOTERS

 JASVINDER SINGH SEEHRA, RANBIR SINGH AND GURDEEP SINGH
LISTINGS
BSE, NSE
BRLMs
PNB INVESTMENTS, AMBIT PVT LTD

REGISTRAR
LINK INTIME
IPO GRADE
NA

BUSINESS:


The company manufactures and supply a diverse range of rear axle shafts, other shafts and spindles for the on-highway segment - LCVs / MCVs / HCVs and other transport vehicles such as buses. GNA also manufactures and supply a diverse range of rear axle shafts and other shafts for the off-highway segment - for agricultural tractors and machinery, forestry and construction equipment, electric carts and other specialty vehicles used in mining and defence sectors. Solid and hollow spindles used in the axle assembly for vehicles.

OBJECTS OF THE OFFER:


The Net Proceeds from the Issue will be utilised towards the following objects:

1. Purchase of plant and machinery Rs 80 cr
2. To meet working capital requirements Rs 35 cr
3. General corporate purposes.


 RISKS:


1. Project not appraised & fund utilisation is at the sole discretion of the management.

2. Petition against the company for winding up for non-payment of dues to RMG Alloys Limited.

3. Search and seizer by IT authorities in the past.

4. Top five customers, which include Meritor HVS AB, Dana Limited, Mahindra & Mahindra Limited and John Deere, contributed 57% of  the revenue from operations and sales to our top 10 customers contributed 74% of  the for FY 16.

5. Debtors realisation cycle is very high.

6. The trademark appearing on the cover page RHP is not owned by the company.

7. Conflicts of interest - Promoters have interests in other companies that are doing the same business.

8. Average cost of acquisition of shares by promoters is just 0.50 paise per share.

STRENGTHS:

1. Leading Manufacturers of Axle Shafts in India (SOURCE – CRISIL)

2. Manufacturing Facilities with Large Capacity and Modern Machinery.

3. Low debt.


  FINANCIALS:  (RS IN CRORES)


31-03-2014
31-03-2015
31-03-2016
CAPITAL
15.16
15.16
15.16
REVENUES / TOTAL INCOME

404.24

430.64

508.94
NET PROFIT
13.26
21.59
25.95
EPS
8.75
14.24
17.12
RONW (%)
14.49
19.17
18.77



VALUATION AND RECOMMENDATIONS:

The Company is likely to report an EPS of around Rs 16 for FY, on the expanded equity of Rs 21.46 cr. The offer is made at 13 PE, which is attractive.

However there are risks associated with the company like winding up petition, tax disputes. If these goes against the company, the stock will take a severe beating.

INVEST FOR LISTING GAINS ONLY.

L&T Technology Services ropes in anchor investors

L&T Technology Services has allotted  around 3 million shares at Rs 850 apiece to 13 anchor investors  and raised  Rs 268 crore. 

The anchor investors include ICICI Pru Life Insurance, HDFC Trustee, BlackRock India Equities (Mauritius), JP Morgan Funds, and Sundaram Mutual Funds. L&T Tech's IPO will  open on 12-09-2016.

JAYAPRAKASH ASSOCIATES REPORTS HUGE LOSS

Jaiprakash Associates ( part of  Ultratech Cement) has  reported standalone net loss to Rs 603 crore for the quarter ending June 2016.

The company had posted a net loss of Rs 482 crore in the corresponding period of the previous fiscal.

The total income of the company on standalone basis declined 27 per cent to Rs 1,735 crore in the quarter under review from Rs 2,381 cr, a year ago.

Friday, September 9, 2016

IPO NEWS : ICICI PRUDENTIAL LIFE FIXES PRICE BAND

ICICI Prudential Life Insurance IPO will open on 19-09-2016. The company has fixed the IPO price in the band of Rs 300-334.

IPO ANALYSIS: CROWN LIFTERS LIMITED - AVOID


                                                 ISSUE DETAILS


ISSUE OPENS / CLOSES ON
09-09 / 19-09-2016
ISSUE SIZE
5,52,000 EQUITY SHARES
PRICE BAND
RS 10
FACE VALUE
RS 121

BUSINESS
Service provider for construction equipment hire industry/material handling industry.
PROMOTERS
R. Karim Kamruddin Jaria
LISTINGS
NSE EMERGE
BRLMs
SARATHI CAPITAL

REGISTRAR
BIG SHARE
IPO GRADE
NA

IPO ANALYSIS: HUSYS CONSULTING LIMITED - AVOID


                                                 ISSUE DETAILS

ISSUE OPENS / CLOSES ON
09-09 / 19-09-2016
ISSUE SIZE
6,08,000 equity shares
PRICE BAND
RS 69
FACE VALUE
RS 10

BUSINESS

 IT - H R FUNCTIOM MANAGEMENT
PROMOTERS
 Gundlapally Ramalinga Reddy and Mrs. Gundlapally Praveena
LISTINGS
NSE EMERGE
BRLMs
SARATHI CAPITAL

REGISTRAR
KARVY
IPO GRADE
NA


(UN PROFESSIONALLY MANAGED)


SEBI SHOULD PROBE YES BANK'S QIP FIASCO

Yes Bank has deferred its plans to raise USD 1 billion through QIP.  This reason -extreme volatility during  yesterday's trading day because of misinterpretation of new QIP guidelines, Yes Bank has been advised by its appointed merchant bankers to defer its proposed QIP.

Stock movement is a function of the market and management should not monitor stock movement on daily basis.

SEBI should probe the Yes Bank's QIP announcement and withdrawal of the same within 24 hours.  Whether the decision of launching QIP and U turn by promoters has helped any group of investors / brokers who made a killing yesterday's trading by short selling.

The stock has fallen 5 percent in yesterday's trading. 

Thursday, September 8, 2016

TCS WARNS OF REVENUE GROWTH, DECLINE IN PROFIT

TCS says that IT sector as whole will underperform in FY 17 as compared to the previous year.

Tech stocks are likely to come under pressure in today's trading.

BHEL POSTS 78 CR NET IN FIRST QUARTER

BHEL has posted a net profit of Rs. 78 cr for the quarter ended June 30, 2016 as compared to Rs. 50 cr for the quarter ended June 30, 2015. Total Income has increased from Rs. 4859 cr for the quarter ended June 30, 2015 to Rs. 5872 cr for the quarter ended June 30, 2016.

The stock gained 16 percent and closed at Rs 160 in yesterday's trading.

TODAY'S QUOTE

There is only one God, for all religion.  If this is not true, then there is no God. FirstChoiceIPO.


IPO NEWS : BSE TO SEEK SEBI NOD FOR LAUNCHING IPO

BSE, Asia's oldest stock exchange will be filing papers with SEBI for its IPO. The exchange is likely to get Rs 1000 cr from the IPO (OFS). BSE has reported a net profit  of Rs 53 cr for the first quarter of FY17.  BSE has  about 9300 members including institutions. Edelweiss is being appointed as lead BRLM for the IPO.

Wednesday, September 7, 2016

MARUTI SUZUKI SUPPLIERS FACTORY GUTTED

A fire broke out at the factory of India Japan Lighting, in Bawal, Haryana, last night, leading to an immediate shutdown of the plant.

The company is a key supplier of head lamps and tail lamps to Maruti Suzuki India Ltd, India’s largest car maker.

TATA MOTORS GET RS 900 CR ORDER

Tata Motors has bagged orders of over 5,000 buses worth of about Rs 900 crore from 25 state/city transport undertakings across the country. The orders are to be executed in 2016-17.

Tuesday, September 6, 2016

INOX WIND: WHAT NOMURA SAW TODAY, WAS SEEN BY FIRSTCHOICEIPO AT THE LAUNCH OF IPO

This is what we wrote on the IPO in March 2015.

IPO ANALYSIS: INOX WIND LTD – LOOT MAAR OFFER – AVOID.

ISSUE DETAILS:


ISSUE OPENS  / CLOSES ON

18-03 /  20-03-2015
ISSUE SIZE
RS 700 CR
PRICE BAND
RS 315 - 325
FACE VALUE
RS 10
PROMOTERS
GUJARAT FLUOROCHEMICALS LIMITED

BUSINESS

WIND POWER SOLUTION PROVIDERS
LISTING
BSE AND NSE
BRLM
AXIS CAPITAL, DSP MERRILL LYNCH,  EDEL WEISS AND YES BANK

REGISTRAR

LINK INTIME


                            
                     BUSINESS:

Inox is in to manufacture of wind turbine generators, or WTGs, and provides turnkey solutions by supplying WTGs and offering services including wind resource assessment, site acquisition, infrastructure development, erection and commissioning, and also long term operations and maintenance of wind power projects.

THE OFFER:

Fresh issue of equity shares amounting to Rs 700 crores (including premium) and OFS by GFCL – 1, 00, 00,000 equity shares.

OBJECTS OF THE ISSUE:

1. Expansion and upgradation of existing manufacturing facilities.
2. Long term working capital requirements.
3. Investment in the Subsidiary.
4. General Corporate Purposes.


RISK FACTORS:

                a. The company experienced negative cash flows in the immediate past.

b. Inox has limited operating history, which makes it difficult to evaluate the past performance and prospects.

c.  Operates in a very competitive industry.

d.  Top five customers contributed over 85% of the total income for the nine months ended December 31, 2014.

e.  If wind patterns at sites that we have previously identified as suitable for wind farm projects change, the business, financial condition / operations of the company could be adversely affected.

f.  Most of the company’s experience implementing projects is derived from projects which have implemented in the states of Rajasthan, Maharashtra and Gujarat.

g.  The company has high working capital requirements.

h. Debtors outstanding as of December 31, 2014, are at Rs 755 crores, which accounts for 42% of revenue for the same period.

i. Clash of interest - Promoter and the affiliates have certain interests that are similar to the company’s business.

j. The company is yet to place orders for majority of the items that they intend to purchase using the Net Proceeds of the Issue and the actual cost of such items may exceed the estimates.

l.  The Net Asset Value per Equity Share was Rs 20.99 and Rs 29.88.

 m. The cost of acquisition per Equity Share by our Promoter is just Rs 2.


 n. On June 12, 2013, the short-term rating for the banking facilities and commercial paper was downgraded by CRISIL Ratings from “CRISIL A1” to “CRISIL A2+”. In the “Rating Rationale” with respect to the downgrade, CRISIL cited deterioration in the liquidity over the past year because of an increase in the working capital requirements resulting from a large inflow of orders and CRISIL noted that our debtor days increased to 172 days as of March 31, 2013 from 43 days as of March 31, 2012. 


CHALLENGES FOR WIND TURBINE MANUFACTURERS:

Grid connectivity is a big bottleneck. About ten years back, the wind energy industry was focusing towards technology, up gradation to high capacity, etc. At that point of time, both Wind Turbine Manufacturers and Wind Farm Developers never thought that land availability and the grid connectivity are going to become such a serious issue. Today, the problem has become a magnificent issue and that needs to be addressed.

The availability of land is becoming a major threat since potential wind sites had all been exhausted and the remaining available sites are generally low and medium windy ones. 

FINANCIALS:
                              (RUPEES IN CRORES)

DEC
31 2014
DEC 2013
MAR 2014
REVENUES
1795
853
1576
PAT
 179
 85
 131
EQUITY
200
200
200
  

EPS
Year
Basic EPS  


March 31,2014
7.21


March 31,2013
9.73


March 31,2012
6.66


Weighted Average
7.96


Nine month period ended December 31, 2014.
9.88


VALUATION AND RECOMMENDATIONS

The offer is made around 30 PE, based on the latest EPS, which is exorbitant for a company which has very limited operational history and operates in an uncertain business segment.  The company will have Rs 200 crore plus equity, post IPO, the serving of such huge equity is next to impossible.

The average cost of acquisition of shares by promoters is just Rs 2, whereas the public offer is made at Rs 315-325, which reminds us the loot-maar IPOs of 2011. 

Within six months of listings, the IPO could trade around Rs 60-70 range.

AVOID THE IPO.

SERVICES PMI AT NEW HIGH


Services PMI rose to 54.7 points in August, up from 51.9 in July, a new high in the last 3 years. A reading above 50 points shows expansion, while a reading below that mark means contraction. The services index has now signalled expansion in each of the past 14 months.

Sunday, September 4, 2016

RAJAN URGES OF INDEPENDENCE OF RBI

RBI Governor argues for Independent Central Bank for Macroeconomic Stability of the Country.

In his last public speech as the RBI Governor at St. Stephens College, New Delhi on September 3, 2016, Dr. Raghuram G. Rajan explained why central banking was not as easy as it appeared - just raising or cutting interest rates - and why it needed decisions, sometimes unpopular or hard-to-explain ones, to be made under conditions of extreme uncertainty and argued in favour of having an independent central bank and the role and responsibilities of the central bank governor.

The central bank governor has to make difficult policy choices often in the face of uncertainties after weighing the alternatives as best as one can. He cited the example of 2013, when due to weak macro fundamentals the rupee tumbled and it was necessary to get back the confidence of international investors and how he, who had just taken over as the Governor of the Reserve Bank, had to decide on introducing the FCNR(B) scheme in the midst of uncertainties. That the decision proved to be beneficial for the country, the Reserve Bank and the banks, taught him that "Policy making invariably involves taking measured risks in the face of uncertainty." He then made out a case for India to have a strong and independent central bank so that it could ensure macroeconomic stability.

It is for taking complex decisions - often difficult for the common citizens to understand - that the central banks should be independent and should be able to say 'no' to seemingly attractive proposals, he argued but added that at the same time, it also cannot become free of all constraints. "It has to work under a framework set by the Government," he said. In his view, "Frameworks reduce the space for differences" and it was important that the constitutional authorities clearly outlined the central bank's responsibilities.

He gave two examples - a framework for inflation objective and a risk management framework for RBI that indicated the level of equity the RBI needed, given the risks it faced, to be adopted by the RBI Board. "The RBI did not have the luxury of economic inconsistency," he said, be it interest rates, exchange rate, pushing banks to clean up or paying dividend to the government. In a poor country like India where so many people lived at the margin, the role of the central bank was to ensure that growth did not exceed the country's potential, adopting prudential policies that reduce the risk, and building sufficient buffers that the country was protected against shocks. The Governor also explained the economic rationale of why the RBI cannot pay special dividend to the government - in addition to the entire surplus being paid out for the last three years.

He explained that paying a special dividend over and above the surplus RBI generated, as had been suggested, was legally not possible. And even if it were legally possible, and even if the Board were convinced a higher dividend would not compromise the creditworthiness of the RBI, this not reduce overall market borrowing by the government, defeating the very purpose of special dividend! He instead made out a case for transferring to the government the entire surplus of the RBI, retaining just enough buffers that were consistent with good central bank risk management practice. "Separately, the government could infuse capital into the banks. The two decisions need not be linked," he pointed out and further suggested that the Government should acknowledge its substantial equity position in the RBI and subtract it from its outstanding debt when it announces its net debt position. That would satisfy all concerned without monetary damage.

The Governor also argued for operational freedom of the central bank, "albeit invariably in consultation with the Finance Ministry" in matters relating to macroeconomic stability. "Multiple layers of scrutiny, especially by entities that do not have the technical understanding, will only hamper decision making," he said and suggested that instead, the government-appointed RBI Board, which included ex-officio government officials as well as government appointees, should continue to play its key oversight role. He pointed out in this context that at present all important RBI decisions including budgets, licenses, regulation, and supervision are either approved by the Board or one of its sub-committees and it was, therefore, important to quickly fill the vacancies in the RBI Board so that the full expertise and oversight of the Board could be utilised.

In the interests of macroeconomic stability again, he argued that the Governor’s rank should be commensurate with her position as the most important technocrat in charge of economic policy in the country. On communication, Governor said that in a developing democracy such as India, the RBI Governor also has to continuously make the case for the actions the central bank is taking, including the many structural reforms that were underway. Communication was as much about educating as it was about informing - be it with entrepreneurs and retail borrowers or pensioners or Parliamentarians, he said and added that public understanding could help ease the way for reforms, as well as increase support for policies. "The RBI Governor therefore has to explain again and again...and occasionally also warn about the dangers of certain courses of action or certain tendencies in the economy for growth and macroeconomic stability."

Friday, September 2, 2016

IPO ANALYSIS: L&T Technology Services Limited - INVEST


ISSUE DETAILS


ISSUE OPENS / CLOSES ON

12-09/15-09-2016
ISSUE SIZE / OFS

RS 900CR
FACE VALUE
RS 2
PRICE BAND
RS 850 -860

BUSINESS
 PROVIDOR OF PURE ER&D SERVICES TO       MFG, TECHNOLOGY AND PROCESS ENGG.

PROMOTERS

LARSEN& TOUBRO
LISTINGS
BSE NSE

BRLMs
KOTAK MAHINDRA, DSP MERRIL LYNCH, JM FINANCIALS AND SBI CAPS
REGISTRAR
KARVY
IPO GRADE
NA

AWAIT DETAILED ANALYSIS

Thursday, September 1, 2016

HERO MOTOCORP's SALES UP 28% IN AUG 2016

Hero MotoCorp today reported a 28 per cent increase in sales at 6,16,424 units in August.
The company had sold 4,80,537 units in August 2015.