IPO
July 22, 2013
Two Green IPOs in India – Ind Eco Ventures and Inox Wind The Indian stock market has been languishing in the last couple of years with […]
December 7, 2012
Why the prospects of India's first Nuclear Energy Stock "Nuclear Power Corporation of India" are dim
Nuclear Power Corporation of India India’s cash strapped government has been trying to sell shares of public sector undertakings in 2012 without much success. The general […]
October 8, 2012
Solar Stocks have performed terribly in the past couple of years and have been a very painful experience for long term solar investors. The bad performance […]
February 25, 2012
India's Solar PowerIndustry is starting to see some M&A with both domestic and foreign companies buying smaller firms. While the biggest M&A story is that of Tata Power acquiring the stake in Tata BP Solar, other firms without any grounding in the energy industry are too getting in. Now a Coal Equipment and EPC company Tecpro is getting into the solar energy business by acquiring a small solar lighting and heating company Eversun.Tecpro Systemsis primarily focused on the Power Sector Space.It is a leader in the ash handling and material handling systems and is currently diversifying into becoming a turnkey provider in this segment.Like other infrastructure players it has seen amazing growth in the last 3 years at around 70%+.The growth has been fantastic both on the topline and the bottomline.The 2300 crore Order book provides some comfort over the next year’s revenues or so.The Power Sector in India particularly the Thermal Power Plants are expected to see an explosive growth period.Steel and Cement sectors are also growing strongly.With Tecpro Systems focusing on these 3 segments,it should be able to maintain a good growth trajectory in the future years as well
January 6, 2012
While the larger stock brokers have seen reduced profits,the smaller ones have had to shut down or sell.This trend has been exacerbated last year with the rise of computer controlled algorithmic trading.Most of these small brokers which used arbitraging strategy to generate profits have seen their main business evaporate.Retail investors in India have also avoided the stock market which has become a corruption landmine.With even top institutions like GMO,Goldman becoming victims of frauds,individual investors have no chance.Also market operators have made the Indian stock market a pump and dump heaven even as SEBI takes a long time to crack down on the abuses.
May 28, 2011
SEBI has been strangely and inexplicably absent from its role of supervising the primary market in India despite a stream of pump and dump IPO by small disreputable promoters and investment bankers.Most of these IPOs have no fundamentals to justify lofty valuations and without the role of market operators and investment bankers have no hope in hell of getting subscribed.Its a scary gambling scheme in which retail investors put money only with the hope of getting out on the first day with probably listing gains.There is no way that an investor can make money in these issues in the long term.However the shenanigans of the promoters and bankers have gone unpunished leading to more and more of these junk IPOs getting into the stock market everyday.This only brings a bad name to Indian stock markets where manipulation can happen so brazenly and openly and pushes away genuine investors away from equities.SEBI has been recently been trying to get more retail investors into the stock market however it seems mere words as it does not take action on open corruption.
April 22, 2011
Future Ventures is a VC/Private Equity Company that has invested in a number of small Indian companies and startups mainly focused on the consumption industry in India.With India growing at around 8-9% in the last few years and expectations of strong future growth driven by consumption,Future Ventures seems a good investment considering the portfolio of companies that it owns (analyzed below).Future Ventures is a part of the Future Group run by Kishore Biyani who started India's most famous retail company Pantaloons.The Company has set a price band of 10-11 rupees a share with a target of raising around Rs. 750crore though the IPO.This would represent around 40% of the equity which would give it a post IPO market capitalization of around $375 million.Note the company had tried to come with an IPO 2 years ago but it was deemed to expensive at that time.
March 16, 2011
PTC India Financial Services has substantial advantages of growth,a good business model in India's booming Energy Sector.However the valuation of the company has been kept too high for essentially what is a financial intermediary.The growth of the company has been compensated by the high valuation making it not such a good buy especially in the context of the current stock market and economic conditions.It might be better to look at cheaper alternatives in the Indian Infra Sector.
March 8, 2011
India's GDP has been growing at a rapid clip over the past decade and is set to grow at even a faster pace in the coming decade.Financial services penetration of the Indian economy is quite low compared to even other developing economies.With majority of the Indian population mired in poverty,access to banks and financial companies is quite hard as people lack knowledge and education.India's banks have grown at a rapid pace over the past 2 decades after the financial liberalization.However this growth has still lacked in meeting the massive demand in the need of financial intermediation.This has led to the growth on non-banking financing companies (NBFCs) and microfinance companies.With the opening of the insurance sector,financial companies in India are set to enter a new growth phase.Major banks in India are either state owned or previous government owned institutions which have been fully privatized like ICICI and HDFC Bank.Both the state owned banks and the private banks have managed to grow without throwing the whole system in a crisis like what has happened in the recent past in Europe and USA and in China in the 1990s.Here is a list of the 10 Major Banks in India
February 28, 2011
The Indian Stock Market Regulator SEBI has been seen doing nothing against blatant market manipulation and stock rigging scams.Mid cap and Small Cap Stocks are havens for rigging by promoters and stock brokers as SEBI seemingly does nothing.Even in the primary market,junk IPOs rule the roost with even the recent correction failing to see crap stocks making a debut (Sudar Garmets,Fineotex,Omkar etc.).To anyone with a modicum of common sense it is apparent that such low quality companies could not raise money without manipulating the markets.However SEBI in its infinite wisdom remains blind to this.Stock brokers like Ashika,Dangi continue to operate unimpeded despite being indicted for scamming.Even reputed stock brokers are involved in underhand and shady dealings.However SEBI does nothing indirectly encouraging fleecing of small and retail investors.Not that big investors like Goldman,GMO are immune to fly by night operators as well.
February 18, 2011
Note it would not be surprising if the allegations were true as the Indian stock market is a pump and dump heaven of IPOs with blatant manipulation by market operators.Price Rigging Rings are also present with mid cap and small cap scams happening with an alarming regularity.With Corruption touching a new high,the Supreme Court has taken over the investigation of the Telecom Scam Probe from the Government.This has led the CBI which is mostly a ruling party puppet to question some top billionaires and politicians.However it remains to be seen if some of the top fish are caught or just some small scapegoats are imprisoned.
February 16, 2011
Acropetal Technologies is a bit different from the run of the mill junk IPOs coming out in Feb 2011.After a deluge of crap IPOs in 2010,2011 has not seen many of them as the markets have corrected by around 15%.However a recent rally has bought out the junk companies in association with their associated shady bankers and market operators.Omkar,Sudar,FCL are some of the totally crap IPOs which have happened or in the process of happening.Acropetal Technologies is an IT/ITES company plans to raise Rs 170-crore through its IPO on February 21. The company has fixed the price-band of its IPO at between Rs 88 and Rs 90 per equity share.The company will use Rs 55 crore for acquisitions and Rs 26 crores for a software office.The company seems better quality than the junk and may merit a look from investors though there are much better companies on offer at better prices in the secondary markets.Here are the positives and negatives of the IPO
February 16, 2011
In the season of scams and scandals when the erstwhile high flying mid cap and small cap names are getting battered for management issues,Sudar Garments has surprisingly come out with an IPO despite spotty corporate governance issues.Like so many of the junk IPOs coming out in 2010,this one too should managed to raise money through market operators.The modus operandi of these IPOs is mostly pump and dump where a few unscrupulous and shady brokers are responsible for managing the issue.With the stock market regulator SEBI refusing to crack down on these blatant manipulation,the pipeline of crappy small cap junk IPOs in the Indian stock market keeps growing.Thought that the current market crash would have removed them,but apparently not so as the junk IPO industry keeps growing stronger.This despite the more than 50% crash on issue day of Omkar Chemicals ( a junk IPO).Here are some of the notable negatives of the issue which has been given a 1 out of a 5 rating by rating agency CRISIL (not that the rating help the retail investors).
February 15, 2011
Solyndra is one of the most hyped solar starups which has managed to raise $1 billion in funding and coming out with surprisingly little for the money.Not only did it postpone its IPO but also shut down its first factory as pricess keep diving faster than it can cut costs.Brightsource Energy on the other hand seems to have a brighter future with its unique CSP technology.Also with backers like Alstom and Bechtel,it has the heavy engineering support to construct the massive 392 MW plant.Note other Solar Thermal startups like Ausra and Soliel Systems were bought up by giant engineering conglomerartes Areva and Siemens.Brightsource along with eSolar remain the only pureplay CSP companies still surviving.
February 14, 2011
Fineotex Chemicals (FCL) is a Maharashtra based small chemicals company which is coming out with an IPO for 4.2 million shares at Rs 60-72 to raise Rs 25-30 crores with a total market cap of around Rs 42-50 crores.The company has a 5000 tons plant and is expanding by 13000 tons.The company has little resources by way of cash and it seems strange that a Rs 15 crore company would raise money from the capital markets rather than raising more debt which seems low at around Rs 80 lakhs.Can't find much to say anything positive except that there are no lawsuits pending against the promoters.Here are the negatives.
Omkar Specialty Chemicals was a major disaster for all the investors who decided to gamble on small cap IPO junk.Gambling on FCL in this environment does not make any sense,would make more sense to gamble your money in a casino.In this market you would have a much better chance of returns.
February 10, 2011
In 2010,the Indian Stock Market boomed for junk IPOs with a number of low quality issues raising money.Most of these stocks made no sense from the valuation point of view and were clearly being manipulated by stock market operators in nexus with their promoters.However,it was possible for retail investors to gamble and make money in IPOs by applying and selling on the day the issue listed.If you held on then massive losses were in store as most of the IPOs are trading at less than half of their initial price.Now it seems that even this tactic has gone out of fashion with another low quality IPO Omkar Speciality Chemicals going 50% below its issue price.Note the Indian stock market has falled by more than 15% in the last month or so,with many of the operator driven stocks taking a big hit.This means that these manipulated stocks have little support and would fall to their true value which is a small percentage of their issue price.Hopefully we won't be seeing any more these crappy junk issues for a long time.
December 14, 2010
Note the issue size of the IPO is quite small at around $100 million which means the retail portion is only $30 million.Coal India IPO with a $3 billion issue and $1 billion retail portion got subscribed by almost 2-2.5x.This mean that Punjab and Sind Bank can get subscribed by almost 60x since MOIL IPO got 55-60 times overall subscription with almost 31x retail portion even when the issue size was almost triple that of Punjab and Sind Bank.Note though MOIL IPO in my opinion was more undervalued than PNSB,still I think oversubscription in case of this PSU Bank would be higher than that and could easily cross the 31x retail that MOIL IPO got
December 9, 2010
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
December 8, 2010
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.
December 7, 2010
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.
December 7, 2010
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 […]
December 4, 2010
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
December 3, 2010
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.
December 1, 2010
Manganese Ore India Limited (MOIL),the government owned miner has seen massive oversubscription of its IPO being subscribed 55 times and should easily reach around 60 times.I had written that the MOIL IPO price of Rs 340-375 makes the valuation hugely attractive which would lead to oversubscription.The fundamentals of this stock easily command a much higher price given its low cost leadership position in the fast growing Indian market.The valuation of the company was compelling even at a 25% higher price point as I had written earlier but at around Rs 6300 crore,MOIL had become a no brainer.
While some of the oversubscription could also have been due to people's expectation of oversubscription,I think most of the demand was fundamental in nature.The Indian primary market is showing huge demand for quality stocks.Junk IPOs unless they are not manipulated are showing weak demand .Somewhat doubtful IPO of Claris Lifesciences was forced to decrease its price by 20% as there were not enough takers for the issue.
November 25, 2010
One97 a Private Equity Backed Mobile Value Added Service (VAS) Company is raising Rs 120 crore ( $25 million) from the Stock Market in an IPO.The Company operates in India's Telecom Sector which is the fastest growing in terms of subscribers and represents a good growth opportunity as 3G services starts to roll out.
The Company has not indicated the pricing of shares as of now ,only that it wants to raise Rs 120 crore.Note the VAS Category is seeing increasing competition with a number of new entrants.One97 has diversified into a combined VAS player cum Technology Investor makings its valuation difficult.Note the VAS sector is no longer a unique or fancied one as OnMobile has already listed sometime ago and its valuation has decreased dramatically since then despite improved profits.I would sit out on this one due to the complicated nature of the business,slowing growth and valuation difficulties.A higher risk investor probably might want to buy this one.
November 25, 2010
I have been repeatedly pointing out the dangers of investing in Real Estate Companies as more and more skeletons tumble from the closet.Its an open secret that Real Estate Companies in India fudge their Financial Statements through Creative Accounting and other means such that even Fund Managers don't invest in the Realty Sector.Major Real Estate Companies like IREO and Emaar MGF have played prominent role in some of the major corruption scams rocking the country.Now more big Real Estate Firms have been implicated for their role in other corruption scandals.DB Realty a Mumbai based Realty Company has been found to be a prime suspect in the LIC Housing Finance Scam where the CBI has arrested.Some construction companies like Man Infrastructure,HCC have also become a target of investigation.
November 24, 2010
Note most of these companies fundamentals don''t justify even half of the price at which these stocks were issued at.However these companies keep coming with increasing frequency even as the Regulator SEBI chides investment bankers without doing anything real to prevent the retail investors being defrauded again and again.Note Gravita India is another stock which is undergoing a "pump" currently .I expect it to be dumped shortly as the fundamentals of the company are pretty sorry compared to the valuation it is commanding.The illegal grey market of IPO's , the small market cap of the company and the lax attitude of the Stock Market Regulator has made the Indian Stock Market a heavily biased casino.Here is an interesting article which has analyzed that the only way to beat the shenanigans of the "operators" and the promoters is to sell out on the very day of listing.
November 23, 2010
The main difference between MOIL and Coal India is the number of shares being issued.Note MOIL is going to raise only $300 million compared to the $3.5 billion raised Coal India.CIL had gotten 15 times over subscription which implies that MOIL can 150 times over subscription based on CIL subscription numbers.While the MOIL IPO Price is very attractive,the massive potential over-subscription would hardly lead to much allotment.However the government had done a good job in pricing the PSU share sales at a decently low price leaving something on the table for investors.Coal India IPO was done at a substantial discount to international peers making it a big success.Shipping Corporation of India is also coming out with a FPO where the pricing will be the key.