Power Grid Corporation, a PSU power distribution company, is coming out with an IPO through the Book Building process. The Power Grid Corporation IPO will open for subscription on Monday, September 10th 2007 and will close for subscription on Thursday, September 13th 2007. The price band for the Power Grid Corporation IPO is between Rs. 44 to Rs. 52 per share. The funds raised from the Power Grid Corp IPO will go to the National Investment Fund (NIF). The lead managers for the Power Grid Corporation IPO are Citigroup, Kotak and Enam. The registrar for the Power Grid Corporation IPO is Karvy Computershare private limited.
Debutante HDIL tops volume on BSE & Suryachakra Power Corporation, IFCI, Spice Communications and Reliance Natural Resources follow. 1.56 crore shares were traded in Housing Development and Infrastructure counter on BSE today. The scrip topped volumes on BSE. Real-state developer Housing Development and Infrastructure (HDIL) scrip ended at Rs 558.60 on BSE, a premium of 11.72% over the IPO price of Rs 500. The company had fixed the IPO price at Rs 500, the upper end of the Rs 430 - Rs 500 price band. The stock will also be part of NSE's F&O with a lot size of 400. The IPO of HDIL received a good investor response. The IPO was subscribed 6.6 times. The issue closed on 3 July 2007. HDIL focuses on real estate development, which includes residential, commercial, retail projects and slum rehabilitation and development. On consolidated basis, HDIL reported a net profit of Rs 548 crore on sales of Rs 1204.19 crore in the year ended March 2007.
Vishal Retail attracts 178.5% premium on debut. Settles at Rs 752.20 on BSE compared to IPO price of Rs 270. Vishal Retail ended at Rs 752.20 on BSE, at a huge premium of 178.59% over the IPO price of Rs 270. The scrip debuted at Rs 472.50, thereafter it touched a high of Rs 809and a low of Rs 423.25. On BSE, 1.14 crore shares were traded in thescrip. At the current price of Rs 752.20, the scrip trades at a PE multiple of67.16, based on its year ended March 2007 (FY 2007) EPS of Rs 11.20. The company had priced its IPO at the top end of the Rs 230 to Rs 270price band, following strong response to the issue. The IPO wassubscribed a massive 69 times. Vishal Retail operated 50 stores including two franchisee stores endApril 2007. These 50 stores are spread over about 12,82,000 square feetand are located in 39 cities across 18 states in India. To strengthenits supply chain, the company has set up seven regional distributioncenters and an apparel manufacturing plant. Following the concept of value retail in India, Vishal Retail sellsquality goods at reasonable prices by either manufacturing themselvesor procuring them from manufacturers (primarily from small- andmedium-size vendors and manufacturers). The company targets middle andlower-middle income groups, which constitute a majority of thepopulation in India. It sells ready-made apparels (including its own brands) and a widerange of household merchandise and other consumer goods such asfootwear, toys, watches, toiletries, grocery items, sports items,crockery, gift and novelties. Apparel contributed 63% of its totalsales in the year ending March 2007, followed by non-apparel (22%) andFMCG products (15%). In FY 2007, Vishal Retail increased its number of stores from 26 to 49.In FY 2008, it plans to open 22 more stores, taking the total to 72stores, from the current 50 stores. The total estimated cost for these22 stores is Rs 105.25 crore. Most of the 22 stores will be located inTier III cities (18 stores) followed by Tier I cities (three stores)and Tier II cities (one store). Vishal Retail reported net profit of Rs 24.98 crore on revenue of Rs 602.65 crore in FY 2007.
Valuation Pre-issue, ICICI Bank's FY 2007 EPS and Book Value (BV) stand at Rs 34.6 and Rs 270.35, respectively. At the current price of Rs 917.85 (on 18 June 2007, the pre-IPO opening date), P/E and P/BV stand at 26.5 and 3.4, respectively. HDFC Bank's and UTI Bank's P/E and P/BV stand at 30.5, 5.4 and 26, 5.1, respectively. The last three-month high/low and the average share price of works out to Rs 994.3, Rs 791.15 and Rs 890.14, respectively. The offer price band is Rs 885 to Rs 950. Naturally, without the Rs 50 discount, retail response would have been very poor. The ADR price of ICICI Bank closed at US$ 47.39 per ADR (representing two underlying shares) on NYSE, which is equivalent to Rs 970.78 per share at an exchange rate of one US$=Rs 40.97. The ADR issue price is likely to be at a premium to the domestic issue price. At the upper and lower end of the price band of Rs 885 and Rs 950, ICICI Bank's FY 2007 EPS on post-issue equity works out to 27.6 and 28. Post-issue BV stands at 394 and 400. Given the tremendous growth potential in the Indian financial markets and its capacity to capitalise on it, ICICI Bank will remain one of the most fancied stocks of FIIs (current foreign holding is 71.57%). As long as global liquidity conditions remain favourable, there will be no dearth of FII buyers. How else can you explain the ICICI Bank scrip shooting up 74% since its last FPO in December 2005 compared with a 60% gain in the BSE 30-share Sensex, when the bank has managed only a 22% growth in net profit (compared with the Sensex companies' aggregate growth of 31%) on 22% dilution of equity since its last FPO, effectively showing almost a flat growth in EPS. Well if you should require any quantitative justification, there are two. BV jumped due to the premium collected in the last FPO. The bank issued shares at Rs 525 per share (at Rs 498.75 for retail investors) when the pre-issue book value was just Rs 185.41. Second is the recent unlocking of value of its insurance and asset management subsidiaries (their value works out to Rs 495.92 per pre-issue share). After the present FPO too, BV will jump 46%-48% due to the huge premium. Besides boosting BV, the FPO funds will bolster the net interest margin (NIM) also as they will not carry any cost in the profit-and-loss (P&L) account and, possibly, the growth in net profit in FY 2008 could outstrip equity dilution of 24%-25%. For FIIs, post-issue P/BV of only 2.2- 2.4 would remain an attractive carrot.
One should book profit in Glory Polyfilms on every rise. This is a time to take gains, Glory Polyfilms is asmall company. The packaging sector largely caters to the FMCG and suchbig names, so super profits is something you don't make very easily inthe packaging market and even better names have not really been able toreport any kind of super profits except for what used to be laminatedtubes packaging earlier and at that time you just had one supply thatwas reason you were able to report super profits out there. Mysuggestion to investor is to take your gains on the pop.
One should book profit in Glory Polyfilms on every rise. This is a time to take gains, Glory Polyfilms is asmall company. The packaging sector largely caters to the FMCG and suchbig names, so super profits is something you don't make very easily inthe packaging market and even better names have not really been able toreport any kind of super profits except for what used to be laminatedtubes packaging earlier and at that time you just had one supply thatwas reason you were able to report super profits out there. Mysuggestion to investor is to take your gains on the pop.
Roman Tarmat, a medium sized Mumbai-based infrastructure company, is open for subscription with an initial public offer, IPO of 2,900,000 equity shares of Rs 10 each for cash at a price to be decided through the book building process. The price band for the issue is between Rs 150 and Rs 175 per equity share.
We believe that the IPO has been quite expensively priced for the following reasons: The company has been taking the benefit of Section 80IA for the past two years. The effective tax rate for FY06 is 5.4% and that for 9m FY07 is 3.5%. With the benefit been taken away from the contractor companies like Roman Tarmat, the company's profitability will be adversely affected. Over 62% of the company's order book is constituted by two major orders. Thus, the visibility of revenue flows is limited going forward. Till date, the company has not bagged any orders from NHAI. The company mostly has small size orders (orders below Rs 1 billion) in its books. Thus, scalability of company's business remains a concern. A large proportion of company's revenue and order book is derived from low margins roads and highway segment.
Valuation: At the upper level of the price band of Rs 150-175, the stock is priced at 17x FY07 annualized EPS of Rs10 (before eliminating the benefit of Sec. 80 IA). Even at an optimistic estimate for FY08, the stock is priced at a P/E of 15.2-17.7. We believe, that for a low margin road contracting business, such a P/E is quite unjustified. We thus recommend 'Do not subscribe'.
Roman Tarmat, a medium sized Mumbai-based infrastructure company, is open for subscription with an initial public offer, IPO of 2,900,000 equity shares of Rs 10 each for cash at a price to be decided through the book building process. The price band for the issue is between Rs 150 and Rs 175 per equity share.
We believe that the IPO has been quite expensively priced for the following reasons: The company has been taking the benefit of Section 80IA for the past two years. The effective tax rate for FY06 is 5.4% and that for 9m FY07 is 3.5%. With the benefit been taken away from the contractor companies like Roman Tarmat, the company's profitability will be adversely affected. Over 62% of the company's order book is constituted by two major orders. Thus, the visibility of revenue flows is limited going forward. Till date, the company has not bagged any orders from NHAI. The company mostly has small size orders (orders below Rs 1 billion) in its books. Thus, scalability of company's business remains a concern. A large proportion of company's revenue and order book is derived from low margins roads and highway segment.
Valuation: At the upper level of the price band of Rs 150-175, the stock is priced at 17x FY07 annualized EPS of Rs10 (before eliminating the benefit of Sec. 80 IA). Even at an optimistic estimate for FY08, the stock is priced at a P/E of 15.2-17.7. We believe, that for a low margin road contracting business, such a P/E is quite unjustified. We thus recommend 'Do not subscribe'.
DLF Gets total bids for 34.33 crore shares (17:00 IST). On third day of DLF IPO, the issue was 1.96 times subscribed. The IPOreceievd total bids for 34.33 crore shares from total issue size of17.50 crore shares. (17:00 IST) The total bids in the Qualified Institutional Buyers (QIBs)category were 33.15 crore shares. Within this category, the ForeignInstitutional Investors bid for 30.20 crore shares, the DomesticFinancial Institutions bid for 2.43 crore shares and the Mutual Fundsbid 51.15 lakh shares. The Non Institutional Investors bid for 8.53 lakh shares, out of 1.74 crore shares allotted for this category. The retail individual investors bid for 1.05 crore shares. Fromthis, 94.88 lakh shares were bid at cut off price and 10.14 lakh shareswere price bids. The employees bid for 5.04 lakh shares from total 10 lakh shares allotted for this category. The IPO has a price band of Rs. 500 - 550 and will close on 14 June 2007. The fresh issue of 17.5 crore equity shares is aimed at raising Rs 8750crore to Rs 9625 crore depending on the price band of Rs 500-550 pershare, to fund acquisition of land reserves, and development andconstruction of various real estate projects. Part of the proceedswould be utilised for repayment of the debt on its books. The Gurgaon-based DLF group is one of the leading real estatedevelopers in India. It has been focused on the National Capital Region(NCR; i.e. Delhi and adjacent areas like Gurgaon). The group hasdeveloped over 220 million square feet (msf) of saleable area acrosssegments like residential (apartments, row houses and plots),commercial building and retail properties. It is one of the first developers to anticipate the need for townshipson the outskirts of the fast growing cities and is generally creditedwith the growth of Gurgaon through the development of an integratedtownship spread over 3,000 acres. The company has signed a memorandum of understanding with Nakheel LLC,UAE to jointly develop two townships in India, each spread over 20,000acre. Apart from this, the company has already obtained the approval forseveral special economic zone (SEZ) projects (including thegovernment's approval for two information technology-specific SEZs inGurgaon, and one SEZ each in Hyderabad, Pune and Chennai). It is alsoin the process of finalising approvals for several other SEZs, whichwould cover an aggregate area of 26,100 acre, including a 20,000-acremulti-product SEZ in Gurgaon, a 2,500-acre SEZ in Ludhiana, a1,100-acre SEZ in Amritsar and a 3,000-acre SEZ in Ambala. The DLF group has made significant progress in pursuing new businessopportunities in terms of multiplex cinemas (through its subsidiary DTCinemas), development of a chain of luxury and business hotels(thorough a joint venture formed with the Hilton group), foray intoinfrastructure projects like roads, bridges and airports (through jointventure with Laing O'Rourke), insurance (a joint venture withPrudential, US for life insurance), and engineering and design services(a joint venture with WSP). DLF's consolidated net profit before extra-ordinary items and tax stoodat Rs 732.40 crore in the year ended 31 March 2007 (FY 2007), onrevenue of Rs 1734.70 crore. FY 2007 EPS is Rs 3.30.
