Future Capital Basis of Allotment
Thursday, January 31, 2008
The Basis of Allotment of Future Capital Holdings IPO is as below.
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Published by DalalStreet Business @ 1:48 PM IST.
Avoid Subscription to KNR Constructions
Monday, January 28, 2008
KNR Construction (KNR) designs, engineers, constructs and maintains roads. The company diversified into construction of irrigation and urban water supply projects in 2005. The execution of infrastructure projects requires significant amount of technical expertise and skill. Pre-qualification for bidding of such projects is often based on past experience of execution is not a problem though it can't bid for mega construction projects which require minimum net worth criteria.As on November 30, 2007, it had executed projects estimated at Rs 45.34 crore. The balance order book aggregating approximately Rs 145 crore is under execution.Most of its clients are governmental agencies like the NHAI, and state PWDs.
In view of recent fall in the markets, stock prices of infrastructure contracting companies have corrected sharply and are available at attractive P/E multiples between 12x to 15x, based on FY08 estimates. At the price band of Rs 170-180, the company's P/E works out to 17x to 18x which is VERY EXPENSIVE for a SMALL-CAP Construction stock. Avoid subscription to the IPO of KNR Constructions.
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Published by DalalStreet Business @ 10:05 AM IST.
Avoid Investment in Bang Overseas Limited
Bang Overseas Limited (BOL) is engaged in the manufacturing of fashion fabrics and meeting ready to wear requirements of its customers in the apparel, textile, and retail segment. The Company proposes to utilize the issue proceeds to augment its apparel manufacturing capacity and strengthen the distribution network. Post expansion, the manufacturing capacity will increase to 19.8 mn pieces p.a. and the number of retail outlets to 100.
BOL had negative cash flows in the past, owing to a high average debtors cycle and an unreasonable average inventory days.Small size of operations, a relatively new brand "Thomas Scott", and the absence of any competitive leverage do not augur well for the Company. BOL has neither entered into any definitive agreement or tie-ups for its expansion plans nor has made any provisions for increased working capital requirements.
Bang Overseas Limited is valued at a P/E of 17.5x and 18.1x at the lower band of Rs. 200 and the upper band of Rs. 207, respectively. You can look for opportunities in the secondary market as valuations are attractive for front-line stocks. Avoid investments in Bang Overseas Limited Public Issue.
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Published by DalalStreet Business @ 9:30 AM IST.
Private Equity + VCs Activity in 2007
Thursday, January 17, 2008
Our Analyst tracking the IPO market has done an excellent job by maintaining a spreadsheet of all the IPOs which were backed by Private Equity and Venture Capital players.Other than Genpact [Indian company but IPO was in the US] all the following companies were funded by either PE or VC or Both.
Edelweiss Capital:
Edelweiss had raised $50 million via a pre-IPO placement in July from Sequoia Capital India, Lehman Brothers, Galleon Partners and Shuaa Capital. GIC and Galleon Partners have been investing into the company since 2006. Greater Pacific Capital's investment in October 2005 provided exit for a prior investor Connect Capital. Americorp is another early investor in Edelweiss.
FirstSource Solutions:
In 2003, WestBridge Capital (now Sequoia Capital India), which was an investor in FirstRing, made an investment in FirstSource and subsequently increased its ownership stake in 2004 and in 2006, resulting in a 10.94% stake just prior to the IPO. In 2004, Temasek made its initial investment and later increased its stake to 25.80%. In addition, strategic investor Metavante held a 24.07% stake in FirstSource pre-IPO. US-based hedge fund Galleon Group had acquired a 5.84% stake (from FirstSource’s parent, ICICI Bank) just prior to the IPO. The IPO witnessed a sale of shares worth about $14 million by the promoters - ICICI Group.
Jyothy Laboratories:
CDC Group and the CDC-managed South Asia Regional Fund sold their 2.7% stake in the company as part of the IPO. CDC and SARF had purchased Baring Private Equity India’s stake in Jyothy in 2003 and later invested additional capital. (Baring had invested $3.5 million in November 1999.)
Motilal Oswal Securities:
In April 2006, Motilal Oswal had divested a 9.5% stake to New Vernon and Bessemer for $28 million. Post issue shareholding: New Vernon 6.4%, Bessemer 2.03%
MindTree Consulting:
IT Services firm MindTree Consulting raised $53 million via its IPO. Founded in mid-1999 by a group of ex-Wipro executives, MindTree Consulting received about $4 million (Rs. 169 million) from Walden International, Global Technology Ventures (GTV) and members of the founding team. In August 2001, Capital International (CI) led a $12.5 million (Rs. 590 million) second round. It is notable that Mindtree is probably the last significant IT Services company to be seed funded by VC investors. The shareholding of the VC investors just prior to the IPO were Walden 21.23%, CI 13.54% and GTV 8.36%.
Koutons Retail India:
"UTI Ventures invested $6.71 million in Nov '06. Argonaut invested $10 million in Nov '06. Shareholding (post issue)%:
UTI Ventures - 8.37
Argonaut - 5.65
Passport Capital - 3.49"
Redington India:
ChrysCapital invested $15 million for a 11.05% stake in March '06
Zylog Systems:
UTI Ventures invested $6.5 million for a 8.95% stake (pre-issue). Argonaut invested $4.1 mn for a 4.87% stake (Pre-issue).
Vishal Retail:
Gaja Capital invested US$ 20 Million (Rs. 88 million) in March 2006 for a 2.73% stake (average price of Rs. 176). Post issue Gaja has a stake of 2.23%
Global Broadcast News:
IIML, which had invested $8.9 million in January 2006, held a 9.41% stake prior to the IPO, which came down to 7.93% post issue
Everonn Systems India:
"Net Equity invested $ 0.7 million in May 2002. Virmac Investments invested $0.6 million in March 2001.Temasek invested $ 3.2 million in a pre IPO placement in July 2006. Post issue shareholding:
Net Equity Ventures - 14.50
Virmac - 8.90
Temasek - 9.58 "
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Published by DalalStreet Business @ 11:35 AM IST.
Anil Ambani's Dirty Power IPO - Energy Bubble
Indians are blind and mad about the Reliance brand. At a time when the Western world is increasingly protesting against Dirty Coal Plants, Anil Ambani's Reliance Power wants to establish half a dozen such coal plants in India, making our lives a HELL. Google board member, John Doerr is willing to fund any alternative energy that can shut down coal plants. Anil Ambani must sacrifice his greed [to beat Mukesh Ambani's Wealth] which he has carefully put across Indians as Roti, Kapda, Makaan aur Power/Bijli and cheating the Indian investor by raising Rs 11,000 crore.Dirty Promoters Quota Allotment for Dirty Energy Plans:
Reliance Power's Dirty and Unethical Promoters have 45% plus allotment of shares at mere Rs 17 / share when the rest of the Indians are being cheated by being given at Rs 430-450.More facts on How Anil Ambani is Unethical by allotting Reliance Power shares at Rs 17 [PDF]
Read our exclusive coverage demanding an independent probe on Reliance Dirty Power IPO.
Valuations:
It is being offered at 110 P/E for FY2010 earnings. LOL This is how stock market bubbles are formed, if you are new to this market.
Recommendation:
The market momentum coupled with dirty tactics from Ambani is with them. You can apply for listing gians only. But allotment will be in lottery due to the public euphoria. Remember the SMS that was circulated when Reliance Mobile was launched ? Mera Papa Ka Sapna, Sab Ka Maal Apna ;-) However, we are not subscribing to the IPO due the facts justified above.
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Published by DalalStreet Business @ 9:03 AM IST.
Future Capital - 133 times subscribed
Wednesday, January 16, 2008
The IPO of Future Capital Holdings was oversubscribed in a MAD RUSH by FIIs and Retailers by more than 133 times at 21:30 hours on the closing day.
1 Qualified Institutional Buyers (QIBs) 180.7221 Times
2 Non Institutional Investors 84.3815 Times
3 Retail Individual Investors (RIIs) 55.2187 Times
The Retail Portion of Future Capital IPO was subscribed by 55.2 times. The basis of allotment of all retail applicants bidding for 128 shares will be in the ratio of 2:14.
You can check the Status of your application to know about allotment on Jan-31st.
Labels: Future-Capital-IPO-Allotment
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Published by DalalStreet Business @ 9:50 PM IST.
Forthcoming Initial Public Offerings
Saturday, January 12, 2008
Based on our discussions with various companies we have compiled the list of various companies going Public to raise money in the Indian capital markets in Jan-08 and Feb-08. Price Range + Name of the Company + Total Issue Size is as belowIn January,
Rs 700-765 Future Capital Holding Ltd Rs 495Crore
Rs 405-450 Reliance Power 10260cr-11503 cr
J Kumar Infraprojects Ltd. 100 CR
Manjushree Extrusions Ltd 35.7
Gammon Infra Projects 350+CR
Cords Cable Industries Ltd 100CR
KNR Constructions Ltd. 140-150 CR
In Feburary,
Wockhard Hospital 1000CR
Techpro Systems 250 cr approx
GSS America Infotech Ltd. 150 cr approx
EMAAR MGF 5000+cr
IRB Infra Developers Ltd. 1100-1150CR
Globus Spirit Ltd. 68cr
SVEC Constructions Ltd. 40-50CR
Vascon Engineering 400-500 cr
Jhaveri Flexo India Ltd 50CR
Rural Electrification Corporation 957 cr
OIL INDIA 450-500CR
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Published by DalalStreet Business @ 11:43 PM IST.
Future Capital Holdings - Review
Future Capital Holdings Limited (FCH) is the financial services arm of the Future Group. Expansion of investment advisory and retail financial services business are the future revenue drivers for the company.
Future money, the brand name for retail financial services business is expected to benefit from synergies within the business group as in the area of retail financial services, FCHL has the exclusive right to provide financial products and services at present and future malls, stores and retail outlets in India which are owned, controlled or managed by PRIL and its subsidiaries. The funds raised will be used to shore up capital and expand future money business.
FCH acts as an advisor to investment managers of private equity and real estate (including hotels) funds with assets of US$975 million. We expect this segment of the business to benefit from the increasing number of private equity funds investing in the India growth story.
Looking at the Key Financials we feel the stock is highly overpriced. However, we strictly recommend our investors to apply if they are lucky enough to secure allotment in lottery [issue will be heavily oversubscribed] and SELL on listing.
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Published by DalalStreet Business @ 11:13 PM IST.
Performance of New Issues in 2007
Thursday, January 10, 2008
The year 2007 saw Indian IPO Market scaling new records. In 2007, 112 stock got listed on NSE/ BSE 3 out of 10 gave a return of more than 100%, five outperformed BSE - SENSEX and 3 are trading below issue price. IPOs are selling like hot cake in India because of the simple reason that it gives easy money when the investor chooses the IPO on our recommendation. However, the big challenge was Getting allotment in IPO, which is just like lottery and it depends more on luck if the IPO is like that of most sought after companies like – Mindtree, Religare, BGR Energy, Edelweiss, Mundra Port and so on.DLF raised $ 2 billion from the market and it was biggest ever IPO for Indian stock market. Reliance ADAG group's Reliance Power IPO will raise almost $3 Billion in couple of days. Another good issue which is coming at the same time (opening on 11 Jan & closing on 16 Jan) is Future Capital, Kishore Biyani group. Reviews on both of these IPOs will be posted separately.
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Published by DalalStreet Business @ 9:46 AM IST.
Reliance Power - Most Expensive Offering
Wednesday, January 09, 2008
On the first look, the Reliance Power IPO looks like the most expensive IPO. In race to beat his elder brother Mukesh Ambani, Anil is raising money at a premium on ventures still on Paper and Brains :-)
IPO money is being raised to execute about 7,000 MW of capacity expected to go on stream by 2012. If all goes perfectly [Remember, this is Anil Ambani's first Manufacturing Mega Project and he has no experience in executing such projects on his own], Reliance Power will have revenues of Rs 7,600 crore, EPS of roughly Rs 8 and a book value of Rs 70. At the listing price of Rs 850, the stock would be trading at a 2012 price-earning ratio of 105, a price to book value ratio of 13 and a market cap to sales ratio of 26. Kindly remember these are four-year forward ratios.
As I have already said above, Anil has more plans in his brains and will only let them out once the Reliance Power stock is listed [Getting into manufacturing of Power Equipments etc] Its a MAD MAD MARKET for sure :-)
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Published by DalalStreet Business @ 5:58 PM IST.
Reliance Power IPO - Details
Wednesday, January 02, 2008
Details of the Reliance Power IPO as obtained from our sources in BRLM.Issue opens on: January 15, 2008
Issue closes on: January 18, 2008
Price Band: Rs. 405 to Rs. 450 per equity share.
Issue Size: 130 crore equity shares of Rs.10 each, by 100% book built issue. This size is 11.5% of the total equity of 1,130 crore equity shares.
Promoters' Contribution: 16 crore equity shares of Rs.2 each to be subscribed by the Promoters at the same price as being offered to the public. Reliance Energy Ltd. (RIL) and AAA Projects Ventures Pvt. Ltd. (AAA) being the joint promoters would be subscribing 8 crore equity shares of Rs.2, each.
Net Public Issue - 114 crore equity shares of Rs.2 each, shall be offered to the public, by a book-built issue.
Promoters Stake - REL shall be holding 508 crore equity shares of Rs.2 each,being 44.95%, while AAA shall be holding 508 crore equity shares of Rs.2 each, being 44.95%. Remaining 114 crore shares of Rs.2 each being 10.10% shall be held with the public.
Payment Facility - There are two payment method. Method 1 allows 25% on application and remaining 75% on Due Date and available to Retail and Non-Institutional category. Method 2 asks for full payment on application, available to Retail and Non-Institutional. QIB category needs to pay 10% only with application.
Detailed analysis and Recommendation of the Reliance Power IPO will be posted once we get more details and questions answered from the management.
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Published by DalalStreet Business @ 2:52 PM IST.