REC IPO Subscribed 27.91 times
Friday, February 22, 2008
The IPO of Rural Electrification Corporation was subscribed 27.91 times at 11:00 PM on the final closing day. The retail portion was subscribed 7.67 times.
All retail applications bidding for 480 and above will get atleast 60 shares as firm allotment.All the retail applications for 900 shares [Rs 1 Lakh application] will get firm allotment of 120 shares.
We have a SUBSCRIBE recommendation for the REC IPO.
Labels: REC-IPO-Allotment
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Published by DalalStreet Business @ 11:22 AM IST.
Rural Electrification Corporation - REC - Subscribe
Tuesday, February 19, 2008
Rural Electrification Corporation - REC is a public sector financial institution and a non-banking financial company (NBFC) providing fund and non-fund based services to clients engaged in various aspects of generation, transmission & distribution and related activities in power sector in India.The company was founded with the sole objective of extending finance to and promoting power projects and related activities in India. The company occupies a key position in the government's plans for the growth and development of the Indian power sector, especially in rural areas. It has played and will continue to play a key role in the implementation of government policies and programmes.
The state or centre owned enterprises dominate the power generation, distribution % transmission arena, India is witnessing increased participation by private players. REC employs a pro-active approach in its client relationships. For instance, REC helps its clients prepare a detailed five year plan addressing their anticipated financing needs. Gross NPAs and net NPAs of REC stood at 0.23% and 0.16% as on September 2006 respectively.
The cost of funds stood at 6.55% in the six month period ended September 30, 2007. Moreover, being an NBFC and a public sector undertaking, REC is exempt from the provisions of the Reserve Bank of India (RBI) Act relating to the maintenance of liquid assets and creation of reserve funds.
Financials: REC is a profit making company unlike Reliance Power which is a SHELL company with no CASH PROFITS insight. REC reported a PAT of Rs 522.9 crore for the first half of CFY2008. REC is expected to report an EPS or Rs 12.2 on fully diluted equity by annualizing the results of first half.
REC IPO Details:
Retail portion : Upto 45,665,100 shares
Price Band: Rs90 - Rs105
Fully Diluted Equity: Rs 858.66 crore
Investors can SUBSCRIBE to REC Public Issue at CUT-OFF. Please don't apply on borrowed money because of the volatile markets. We also recommend IPO investors of PFC - Power Finance Corporation to Book Some profits and divert the money into REC.
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Published by DalalStreet Business @ 12:04 PM IST.
Tina Ambani Birthday - Box office Flop for Reliance Power Investors
Monday, February 11, 2008
Feb-11th is the day when the first lady of ADAG group, Tina Munim Ambani celebrates her Birthday. Unfortunately, the day turned out to be a Valentine Mismatch for the ADAG group chairman Anil Ambani. His Dirty Energy IPO closed at Rs 373 a massive 17% discount to issue price after trading below Rs 445 for most of the day.All the Anil Ambani group companies were hammered mercilessly adding to the blood bath on the street.
Reliance Energy Down 18.72%.
Reliance Communications Down 9%
Reliance Capital Down 11%
RNRL Down 17%
AdLab Films Down 16%
One thing is for sure, Anil Ambani has a steep hill to climb and prove that he can execute mega projects in record time and only then the thumbs down given to his group companies will be reversed.
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Published by DalalStreet Business @ 3:55 PM IST.
Emaar MGF Withdraws IPO
Friday, February 08, 2008
Our analyst in Mumbai is informing that the Greedy management of EMAAR MGF Real Estate has withdrawn the IPO.We were the only one to BOLDLY put an AVOID rating on the IPO. However, things changed this late afternoon as QIBs and FIIs withdrew their bids and the subscription fell from 0.83% to just 0.43%.
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Published by DalalStreet Business @ 3:27 PM IST.
IRB Infrastructure Developers - Review
Sunday, February 03, 2008
IRB is an infrastructure development and construction company in India with extensive experience in the roads and highways sector. The Company has established business in the roads sector and has a large portfolio of completed and operational BOT projects in road infrastructure sector.IRB also has an advantage of support of experienced promoters and skilled engineering staff. It has recently diversified into the real estate development sector in order to complement its infrastructure development business. Due to its early entrance in the BOT toll road business, IRB operates a number of BOT projects which contributes to robust cash flow and a healthy bottom-line.
Valuation and Recommendation:
As of August 31, 2007, IRB had a total debt of Rs. 27 bn including fully convertible debentures of Rs. 2.6 bn. IRB is planning to use around 65% of the proceeds toward repayment of loans, even after considering the repayment, the debt-equity ratio remains high at 4.2:1. The company has an order book of Rs 2400 crore.
IRB, at the upper and lower price band, is valued at a forward FY08 P/E of 65.3x and 55x, respectively, which is at a substantial premium when compared with the peer group average of 15-20x. The issue price between Rs 185 - Rs 220 appears expensive compared to peers quoting between 20-25x with larger order books.
Only investors with High Risk appetite may consider investing in the IPO as we have seen downgrades in Infrastructure sector especially on GMR from HSBC and Merill Lynch.
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Published by DalalStreet Business @ 11:25 PM IST.
Wockhardt Hospitals - Sick Management
Wockhardt Hospitals Limited is one of the largest private healthcare companies in India. It has a network of 10 super speciality hospitals and 5 regional speciality intensive care units (ICU) along with 10 pharmacies. However, only 3 of these hospitals contribute to more than 70% of the revenue of the entire company. The Company is planning to add 16 hospitals within a span of two years and is raising capital to fund these expansion plans and repay its loans.Wockhardt's total debt to equity ratio stood at 5.2x, as of December 31, 2007, which is extremely high. Though the management plans to utilize part of the proceeds to re-pay its short term debt, but, given its aggressive expansion plans, the Company might have to incur additional debt in the future.
Valuation and Recommendation:
For the 9 months ended FY08, the company reported revenues of Rs 260 crore and a net profit of Rs 7.3 crore.
Fully Diluted Equity Post-IPO: 10.4 crore shares of Rs 10 each = Rs 104 crore
Annualizing Net Profits - Rs 10 crore.
EPS for FY08 = ~ Rs 1.0
Thus the issue is priced between a P/E multiple of 280 and 310 on FY08 earnings.
Do I have to say whether one should apply or not when you have the facts in front of you ? At a time when Bluechips are unloaded without a second thought in secondary market, the management of Wockhardt Hospitals appears to be sick for abnormally pricing the IPO.
Additionally, we recommend value investors not to go by the private placement eye wash unethical managements undertake to fool the retail investors.
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Published by DalalStreet Business @ 8:16 PM IST.
Emaar MGF - Misleading Landbank Valuations
Emaar MGF Ltd [EML] is a JV between Dubai based Emaar Properties and MGF Realty Developers from Delhi. The JV commenced its operations in India in February 2005. Its primary business is the development of properties in the residential, commercial, retail and hospitality sectors. In addition, it has also identified health care, education and infrastructure as business lines for future growth.In residential space (318.8 msf of residential & 136.5 msf of plots) its main focus is on developing & selling integrated master planned communities in mid to luxury segment. In commercial space (88.9 msf), it is focused on developing, selling and leasing office and SEZ properties. In retail space (18 msf), it is focused on developing sale or lease shopping centres within its integrated master planned communities & on a stand-alone basis, large regional destination malls and luxury retail space at its luxury hotel developments.
Details of the Issue:
No of shares offerd to retailers 3,07,71,187
Price band: Rs 540 to Rs 630
Retail Issue Size: Rs 1,657 crore to Rs 1,934 crore
Valuations and Recommendation:
The company had reported sales of Rs 472 crore and a net profit of Rs 128 crore for first half of FY08. Annualizing the results fully diluted EPS is expected to be Rs 2.7.
CAUTION: Unlike DLF-UNITECH most of Emaar MGF's Landbank needs cash for part payment towards acquisition, Development and conversion after which it will be ready for construction. There is also not much of visibility about the launches of the complete land reserves. Almost Rs 4,000 crore is still required for the same and hence we term the Landbank Valuation claims of all brokerage houses as Misleading. [Emaar MGF Landbank should be pro-ratedly valued by the amount which it has paid, not on the post-IPO leveraged money which it will use to pay off and get titles cleared on the land]. The woes don't end here, nearly ~80% comprises agricultural land for which the company has not yet obtained a certificate of change of land use.
Emaar MGF cash register will take atleast a year to start ringing in. Realty stocks can never be valued only on the basis of their Landbank which is so misleading.
Value based investors can skip the issue and look at other companies available at attractive prices in the secondary market.
Labels: Avoid-Emaar-MGF
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Published by DalalStreet Business @ 1:13 PM IST.
Reliance Power - Basis of Allotment
Friday, February 01, 2008
Just a while ago allotment for Retail Section of Investors in the Reliance Power Ltd IPO was completed. We have obtained the basis of allotment of Rel Power for your reference.All applications for more than 195 shares have got firm allotment of 15 shares. Here is the complete breakdown of allotment No of shares applied and the ratio of allotment.
15 shares applied - 2:27 [Two applicants of 27 were chosen and allotted 15 shares]
30 shares applied - 4:27
45 shares applied - 2:9
60 shares applied - 8:27
75 shares applied - 10:27
90 shares applied - 4:9
105 shares applied - 14:27
120 shares applied - 16:27
135 shares applied - 2:3
150 shares applied - 20:27
165 shares applied - 5:6
180 shares applied - 8:9
195 shares applied - 1:1 [Means 15 shares allotted Firm]
210 shares applied - 1:1
225 shares applied - 1:1 [16 shares Firm OR 17 shares in the ratio of 1:10]
You can check the status of your application here from Feb-2. Reliance Power now has 41 Lakh Retail Shareholders. You can also download the entire spreadsheet of Reliance Power IPO Basis of Allotment here.
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Published by DalalStreet Business @ 11:48 AM IST.