Initial Public Offerings in 2010 is going to reach almost $300 billion globally which is a record exceeding the last biggest IPO Funding Year in 2007.The drivers of the huge growth in IPOs in 2010 are a combination of factors which have come together.Going into 2011,the picture may not be as good as interest rates increase in Europe and other emerging markets.The main drivers of Capital Raising for IPOs has been

Punjab and Sind Bank is a National PSU (Public Sector Undertaking) which is coming with a Rs 480 crore IPO by selling 4 crore shares at around Rs 113-120.The Company is offering 18% of its equity in the offering which would give it a market capitalization of roughly Rs 2500 crore ($550 million) at the upper end of the price band.Note there are a large number of mid cap and large cap PSU banks listed on the Indian markets.Note most of the PSU banks have seen a very good bull run in the last year and a half significantly outperforming the rest of the market.However the last 3-4 months have been tough with a LIC Housing Finance Scandal implicating top PSU Bank Officials for taking Bribes for Loans.The rise in deposit rates and tight liquidity has also hurt the sentiment for PSU Bank stocks.However,Banking remains one of the best ways to play the Indian growth story as financial inclusion remains very low.PSU Banks in general trade at low valuations compared to the private bank peers and mid cap PSU banks at lower multiples than larger ones like SBI,Bank of Baroda and PNB.
Summary

Punjab and Sind Bank seems a no brainer due to its significant discount on its fair valuation.At 5x P/E and around 1.2x P/B ,Punjab and Sind Bank is being sold at a substantial discount to the rest of PSU banks which are lower quality in terms of growth and margins.There are some mitigating factors like the low NIM ratio however the valuation more than covers for that up.The only problem in case of the Punjab and Sind Bank IPO is going to be oversubscription.Like MOIL IPO which saw 55-60 times oversubscription,same thing could happen here also.

A2Z Maintenance and Engineering Services is a Private Equity Promoted Facilities Management,Waste Management and EPC Company which is getting into the business of biomass energy.Company has fixed a price band at Rs 400-410 comprising of fresh issue of Rs 675 crore (~$150million) by the company and an offer for sale of upto 4.5 million shares by the selling shareholders.Note Renewable Energy in India has a bright future with around 5 GW of Renewable Energy Capacity to be installed per year over the next decade.However Biomass Energy may not be the best area considering the considerable expense and uncertainty in acquisition of feedstock.The Company already operates in 3 distinct sectors namely

Summary

A2Z is very similar in nature and valuation to VA Tech Wabag which did a successful IPO recently.The margin profile,growth and management is very similar.As such A2Z is a decent company however its not a compelling buy given the valuation.Note Biomass Energy is a tough sector to operate in and Orient Green Power has done badly since its IPO without having done anything badly as such.A2Z given the overall qualitative and quantitative factors seems a good stock at fair valuation.This makes the company a decent one to buy.

Midfield Industries which is a small low quality company did an IPO around 3 months ago at a very expensive price that did not justify the fundamentals.However the stock after issue kept going up defying the laws of gravity.Not a surprise here as the Indian stock market is an IPO pump and dump heaven for […]

Ravi Kumar Distilleries (RKDL) is another low quality company coming out with an IPO to take advantage of the current bullish conditions of the Indian Stock Market.It is not the first junk IPO nor is going to be the last ,it is an addition to the list of low quality companies which have given huge losses to investor unfortunate enough to subscrible.Note more than 50% of the companies coming out with an IPO over the last year are trading well below issue price.Recent Stock Market Scandals show the complicity of market operators,shady promoters and compromised financial institutions.Note the other recent IPOs by the investment banker for RKDL IPO have resulted in massive losses for investors.It would take a miracle for this one to prove a success.Ravi Kumar Distilleries (RKDL), plans to raise Rs 74 crore through its Initial Public Offer (IPO) and has fixed the price-band at between Rs 56-64 per share for the issue.Here are some of the main features of the IPO

India’s Stock Market Regulator has been hardly proactive in cracking down on stock market manipulation except for some inefficient scolding.It has banned some companies and a stock market operator for artificially rigging up stock prices through a nefarious scheme so that the stock could placed through QIBs at higher prices.Recently GMO,Goldman,Morgan and Fidilety got conned by a fly by night Indian financier who managed to place $100 million of his company’s shares a hugely inflated price.A cursory due diligence by these high flying financial institutions would have shown his business model to a sham.Realty Investing in India is always a dangerous game with real estate firms involved in all sorts of corruption scandals.Akruti City whose shares had seen a massive rise some months ago has been implicated by SEBI for rigging up its share price with the help of a “stock market operator” Dangi.Some other firms like Murli Industries,Welspun Corp have been found to be part of this corruption game as well.Broking Firms like Ashika and Anand Rathi were broking for the Operator.Note SEBI has not done much except banning these firms.I would have though that these white collar crimes should be punished more stringently.Banning some entities without any jail time will lead to more and more of these stock rigging in the future.