SULA Vineyard - OFS

A Vibrant primary market is crucial for a growing secondary market. It primarily helps in few ways:

1. When new companies get listed, the choice for investors keeps growing.
2. When investors chase few listed stocks (due to lack of choice), their valuations keeps going up. With new companies getting added to the list, the probability of investments getting distributed is quiet high. Thus it helps markets maintain at reasonable valuation.

In primary market, 

1. When a company issues NEW shares for first time to public - it is called Initial Public offer (IPO). Here the money raised in IPO goes to the company for what ever purpose described in the prospectus.
2. If an already listed company issues NEW shares to public - it is called Further Public Offer (FPO). Here again the money raised in FPO goes to the company.
3. If an unlisted company's promoters / existing share holders - sell their shares and dilute their stake - it is called Offer for Sale (OFS). Here the entire OFS sale proceeds goes to the sellers and the company receives nothing.

So whenever a primary issue comes up, we need to check if it is an IPO or FPO or OFS. The first two - that too for business development of the company are the best bet. 

Sula Vineyard - India's largest wine maker - has come up with OFS. One of it's biggest investor - Verlinvest with 47% stake (picked up in 2010) is selling 22% stake. Apart from Verlinvest its Founder and CEO Rajeev Samant, Cofintra, Haystack Investments, Saama Capital etc are selling some portion of their share holdings - taking the total offer to 31.95% of total equity. Post IPO promoters and promoter group will be holding 27.3% stake. This is the risk of a OFS. It leaves little skin in the game.

The Rs.2 face value share is priced at Rs.340 to Rs.357 per share. 

Of India's US$ 33 billion alcoholic market, wine accounts for just 1% which is equal to per capital consumption of 40ml per year. While the world average is 13.50% or 5.45 ltr / annum it is 30% in Europe. Even the chinese consume 1.56 ltr / annum. With per capita income going up, it is obvious that the wine consuming population in India is bound to rise.

Back in 2000's when wine was 100% imported, Sula was and early entrant and got incorporated in 2003. And today they command more than 50% market share in Wine. The company produces 56 different labels of wine at 4 owned and 2 leased production facilities in Maharastra and karnataka.

Sula also has a strong direct to consumer (D2C) selling channel primarily through its Wine Tourism Business facilities in Nashik and Bengaluru, with the highest number of D2C sales in the Indian wine industry in FY21. Its products are available over various ecommerce platforms, which is helping the company further increase its D2C footprint. Sula is the pioneers of wine tourism in India with many firsts to their credit, such as the first wine tasting room in India, the first vineyard resort, the first wine music festival and the first winery tours at its facility in Nashik. As part of its Wine Tourism Business, Sula owns and operate 2 vineyard resorts located at and adjacent to its winery in  Nashik, Maharashtra, under “The Source at Sula” and “Beyond by Sula” brand names, having room capacities of 57 and 10 rooms as of date.

The key concerns / risks of the SULA OFS are:

1. Post OFS - low promoter holdings
2. High dividend pre OFS - scraps off all reserves of the company
3. Erratic climatic conditions can affect wine grape production
4. Changing consumer preferences
5. Changing state regulations
6. Changing legal / regulatory / policy environment.

Analysts view is that the issue is FULLY PRICED. There is no money in the table. There may be listing gains since Sula vineyard is the first wine company to be listed in the market. With recent bad taste set by earlier IPO's like Nykaa, Pay TM etc, retail investors need to be careful here. 

  

L&T Finance Allotment Price & Details

L&T Finance holdings which was open for subscription in price band of Rs.51 to Rs.59 has announced Rs.52 as its allotment (cut-off) price . Investors who applied at cut-off price would get the balance refunded by the registrar one day prior to listing of the shares.

Subscription details to the issue is given below:


To check if your application in L&T Finance Holdings got alloted, CLICK HERE.

The shareholders and employees quota put together has been at five times. If this allotment is on clubbed basis, then one fifth of applied shares may be alloted or one in five application may be alloted.

The Public quota has oversubscribed by 9%. Hence the chance of allotment are relatively bleek in this category. For someone to get allotment in this category, they need to be lucky.

And the participation by FII and Mutual funds is quiet weak ( at 1.93 times).

Hence the stock price may not runup on listing. May be a marginal appreciation of 5% to 10% on listing is possible. Investors who didnot get allotment in the IPO or didnot apply for the IPO may consider adding L&T Finance on listing. With a three to five years outlook, this company may deliver good returns with further unfolding of its foray into direct banking business.

L&T Finance Holdings Ltd IPO Details :

This is the first listing in L&T family after L&T’s listing in 1950.

Rating Agency CARE has assigned an IPO Grade 5. This means as per CARE, company has 'Strong Fundamentals'.

The company has already raised Rs 330 crore through a pre-IPO placement to Capital International which has picked up a four percent stake in the company at Rs 55 per share.

The total issue size is of Rs 1,275 crore or 17% stake in the company.

Apart from that about Rs.170 Crores is reserved for preferential allotment to L&T Employees and Shareholders, who will be entitled to a discount of Rs.2 per share on allotment price.

That leaves a net issue of Rs 1075 crore available for general public.

About the Company:

L&T Finance Holdings is a fully-owned subsidiary of engineering major L&T having five subsidiaries namely L&T Infrastructure Company, L&T Finance, India Infrastructure Developers, L&T Investment Management and L&T Mutual Fund Trustees.

The combined asset base of these group companies as of FY11 stood at Rs 18,800 crore, up from Rs 12,000 crore in FY'10. The company posted a PAT of Rs 392 crore last fiscal, up from 262 crore in the previous fiscal.

L&T Infrastructure Finance is a diversified company, financing power, roads, telecom, oil and gas, ports and urban infrastructure. This is a relatively new player, incorporated in 2007. Yet, it has scaled its portfolio to Rs 7,186 crore, as of March 2011. The exposure is also pretty much diversified with power, roads and telecom accounting for 29 per cent, 17 per cent and 14 per cent of the total exposure.

The size of the loan book under L&T Finance, as of March 2011, was Rs 10,156 crore. This includes exposure of Rs 460 crore to the micro finance sector. L&T Finance's loan book is riskier than the infrastructure financing business as it involves lending to smaller and mid-sized businesses. However, the company only lends for income generating activities, thus mitigating the risk to some extent.

Issue Detail:
»» Issue Open: Jul 27, 2011 - Jul 29, 2011
»» Issue Type: 100% Book Built Issue IPO
»» Issue Size: Equity Shares of Rs. 10
»» Issue Size: Rs. 1,245.00 Crore
»» Face Value: Rs. 10 Per Equity Share
»» Issue Price: Rs. 51 - Rs. 59 Per Equity Share
»» Market Lot: (to be announced)
»» Minimum Order Quantity: (to be announced)
»» Listing At: BSE, NSE

MOIL IPO - Allotment Ratio

Manganese ore India Ltd created history by having enormous oversubscription. The HNI category (with investment of more than 2 lakhs per application), got oversubscribed by 140.92 times, where as the retail category got oversusbscribed by 31.59 times.

Today the shares allotment got over and the shares would be credited to your demat account by now. Due to heavy oversubscription, there was an allotment of 17 shares in for 'luckey' investors. Balance money would get refunded in two days time. For all other investors, the entire fund would be refunded.

For instance, in the table below, those investors who applied for only one lot (17 shares), one in 31 applications got an allotment of 17 shares. Similarly, for someone who applied for 102 shares (6 lots) six out of 31 applications got an allotment of 17 shares. And for the maximum number of shares @ 527 shares (31 lots), 49 out of 50 applications got an allotment of 17 shares. That is it.

In such a huge oversubscription, the chance of getting an allotment is very very meager. And the allotment rational is the decision of lead managers to the issue. Hence donot feel upset. Better luck next time.

Manganese Ore India Ltd : MOIL IPO Allotment

Public awareness on the benefits of investing in Initial Public Offer is on the rise. Unlike the earlier IPO boom in 1991, now investors are very choosy and are investing in good quality IPO's only. And many of them prefer Government owned companies like Coal india, Manganese Ore India Ltd etc.

In the previous IPO : Coal India, a Govt of India enterprise, the total oversubscription was 20 times the issue size. And the retail portion was oversubscribed by 2.31 times. That itself was hailed as a very big achievement.
(Click here to see the IPO oversubscription status of Coal India Ltd : http://easyinv.blogspot.com.....coal-india)

But the current IPO status of MOIL is mind boggling. The issue got oversubscribed by 56.43 times. Among them Institutional investors oversubscribed by 49 times and High value investors segment got oversubscribed by 143 times. The retail subscription limit which got hiked to 2 lakhs per individual, got oversubscribed by 32.86 times.

Technically in the retail side, one out of 32 applications should get allotment or an investor would get partial allotment like 1/32 of his susbcribed shares.

Usually such heavy oversubscription would end up with lots of non-allotment or very low allotment. Investors need not lose heart. It is their participation that makes an issue succesful. And a healthy primary market is a sign of healthy secondary market. Keep investing in good companies which are debt-free for better future.

Hat's off to such a numbers in IPO front.

Coal India - IPO Status

A few months ago, Brazillian company Petrobas raised US$ 70 Billion in an IPO and the stock got listed in Sau Paulo and not in New York or London as it used to be.

Now Coal India which wanted to raise some $ 3 billion has got subscription of $ 54 Billion which is truly phenomenal. With the pre-IPO expectation of three to four times oversubscription, markets were thrilled to see the tremendous response. Thanks to the 'Govt Campaign' and all the feel good factor in the IPO run up. For an issue of such big size (15000 crores), to get over susbcribed by 20 times (3,00,000 Crores) is indeed a great achievement.

SKS Micro's IPO lands in controversy

31 Jul 2010, 0440 hrs IST,NYT News Service

SKS IPO Conterversy..................................................

An Indian company with rich American backers is about to raise up to $350 million in a stock offering closely watched by philanthropists around the world, showing that big profits can be made from small helping-hand loans to poor cowherds and basket weavers.

The company, SKS Microfinance, is one of the biggest players in the field known as microfinance, which involves loans, often as small as $20, that banks might consider too tiny and risky to bother with.

SKS was set up as what philanthropists call a “social enterprise” — a business based on the concept of doing well by doing good. And there is no question that the company’s 41-year-old Indian-American founder, Vikram Akula, and investors who include prominent Silicon Valley venture capitalists will do very well indeed from the IPO. Mr Akula has already privately sold shares worth almost $13 million, and he still holds stock options potentially worth $55 million.

The question is whether the social good will be as amply rewarded.

SKS Microfinance is not the first microlender to go public, and there has long been debate over whether social enterprises should be turned into giant commercial operations. Proponents of commercial microfinancing say the money raised can provide even more loans to the needy than relying only on charitable donations.

But the IPO for SKS, one of the field’s biggest stock offerings yet, has caused its own type of controversy. The disputes involve two charitable microfinance organisations that helped Mr Akula put SKS on its feet and financed it through its early days. It is not clear what will happen with the money those groups will make from the IPO.

At one of those groups — five Indian trusts that now hold the assets of Mr Akula’s original nonprofit version of SKS — two board members resigned in March over his plan to steer funds toward his original nonprofit group rather than granting them to many charitable entities.

The other nonprofit ensnared in controversy is a Seattle-based group called Unitus, which holds a stake in SKS that will be worth millions after the IPO. The group’s board shocked the nonprofit community this month by saying that all of the organisation’s 40-person staff would be laid off and that Unitus would no longer be involved in microfinance activities.

That stunned donors of Unitus, which was set up a decade ago specifically to support microfinance. As recently as June, a newly hired chief executive at the group had been discussing ambitious new projects with potential supporters, including the Bill and Melinda Gates Foundation.In charity circles, people wondered about the motives of the Unitus board members, at least four of whom had invested in SKS Microfinance themselves and thus would reap profits from the IPO.

“If Unitus is closing down, that shows what is the real result of this IPO,” said Muhammad Yunus, an economics professor who is considered the father of microfinance and has been critical of the SKS stock offering. “You are now encouraging the profit-maximising part, and the nonprofits are closing down.”

Joseph Grenny, the chairman of Unitus’ board and an SKS investor, declined to say what would happen to Unitus’ proceeds from the offering. Because Unitus is listed as a “promoter” of the stock offering, he said he could not comment without violating Indian law. “That’s all speculative at this point, anyway,” he said in a telephone interview.

......

In India, there are also questions about how nonprofit assets will be handled after the SKS IPO. SKS’ roots lie in a nonprofit microfinance organisation, known as SKS Society, that Mr Akula set up in 1997. To help it grow faster, in 2005 Mr Akula set up a profit-making offshoot, SKS Microfinance, to attract commercial financing.

No one doubts that the money SKS Microfinance raises in the offering will enable it to make even more loans to needy applicants. As of March it had about 6.8 million borrowers, holding $624 million worth of microloans, making SKS among the biggest of the world’s 1,800 or so microfinance organisations. The controversy lies in the five trusts that served as the bridge between the original nonprofit SKS Society and SKS Microfinance.

When Mr Akula started the profit-making SKS Microfinance, virtually all of the company was owned by the trusts. Over time, as other investors came in — including the American firm Sequoia Capital and the Silicon Valley venture capitalist Vinod Khosla — the trusts’ stake was diluted to 15%

But the trusts still stand to benefit in a big way from the public offering. They are selling shares worth up to $42 million and will continue to own a stake worth as much as $175 million — collectively making them one of the biggest endowments in India.

A new, supposedly independent board was created last fall to oversee the trusts and the new wealth they will have. But that structure quickly fell apart.

After the board’s first meeting in March, two of the handful of directors resigned: Narayan Ramachandran, who previously headed the Indian operations of the investment bank Morgan Stanley, and Anu Aga, a prominent philanthropist and former chairwoman of Thermax.

Mr Ramachandran and Ms Aga referred requests for comment to the company. But several people close to the situation said the two had left over differences with Mr Akula — who at the time was not a member of the trust board — about how to spend money from the offering.

Mr Akula declined to discuss the trusts or other specifics relating to the IPO, citing Indian and American securities rules. Mr Akula has become something of a celebrity in India, and some people who know him — including his ex-wife, Malini Byanna — said he wanted to continue controlling the trusts and SKS Society because he has political ambitions in India.

SKS Microfinance : Debate

Succesful listing of SKS microfinance would be a good case study for the future on the scope of Private Equity Investments in India. In general a Private Equity brings in huge funds to a company for its operations, on the condition that it will get a profitable exit within stipulated time. Just as in the case of SKS, the first private equity investment happened in 2006. And in 2010, its investors are getting bountiful exit.

And the beauty is, SKS started off as an NGO. With the 'permission' of RBI it gets itself converted into a pucca Non Banking Finance company with a profit motto. No doubt, the 'money minded' investors would meet their goals - make bumper profit. For instance, one of the prime promotor Sequoia, which holds 21% stake @ Rs.49.77 per share is planning to sell one third of its holdings. That means @ the lower price band of Rs.850, it would make 17 times its money - that too in hardly 3 years plus.

This hot subject of an NGO doing business for profit motto has sparked a wide spread debate for quiet some time. One such article is furnished herewith for your kind information. We believe, it would be an interesting piece of reading.

.........Experts from Business Standard............................................
An initial public offer by SKS Microfinance is likely to set the stage for more such offers in the world's largest microlending market, but it has also sparked a debate on the ethics of profiting from the poor.

The IPO, a first in India and one of only a handful by microfinance institutions (MFIs) around the world, is expected to raise about $250-$350 million for SKS and its private equity investors.

It has drawn keen interest from countries with major microfinance industries such as Bangladesh, Mexico and South America, as well as the private equity firms who have recently piled into the sector.

But it has also drawn sharp criticism from some MFIs and non-government organisations who do not favour going to capital markets or the strong flows of private equity that have pushed up valuations.

"The job of microfinance is to alleviate poverty, so the question to ask is: who's going to benefit from the IPO?" said Olivia Donnelly, executive director of UK-based Shivia Microfinance, a non-profit firm that focuses on India and Nepal.

"It's OK to do an IPO because you need to scale up, or upgrade your IT systems, but is it correct to make millionaires out of shareholders when your borrowers are so poor?"

Microfinance has been around since the 1970s, but jumped into the spotlight in 2006 when the Nobel Peace Prize went to Bangladesh's Muhammad Yunus and his Grameen Bank, which pioneered giving tiny unsecured loans to the poor to buy cows or sewing machines.

Some Indian MFIs including SKS have switched to a for-profit model and registered as non-banking financial corporations.

MFIs' expanding client base and near-zero defaults have drawn investors ranging from Singapore's Temasek, CLSA Capital and International Financial Corp to private equity firms Sandstone Capital, Unitus and Matrix, which have put money in SKS, Share Microfin, Spandana, Ujjivan and other MFIs.

HIGH VALUATIONS
Advocates say rapid growth and the drying up of traditional sources of capital have driven MFIs to consider other options.

"When we are growing 75 percent year-on-year, the sort of equity we need to maintain 15 percent capital adequacy ratio cannot come from old-fashioned sources such as philanthropists or banks," said Vijay Mahajan, president of lobby group MFI Network.

"So we've had to move to new sources like PE, the capital market and debt instruments. This is something to be celebrated."

Sumir Chadha, managing director of private equity firm Sequoia Capital India, which holds more than a fifth of SKS, said the IPO would improve the reputation of microfinance lenders.

"MFIs tend to be regarded badly. It is very frustrating. This IPO will dramatically increase visibility and bring in greater trust for the entire MFI eco-system," Chadha said.

Earlier this year, India's finance minister said non-banking financial corporations (NBFCs), including some like SKS, can be granted banking licences, signalling a greater role for MFIs.

But India's central bank has pulled up MFIs for their high interest rates -- about 25-27 percent. That is about double the rate at which they borrow from banks, but still lower than moneylenders.

There is also criticism of high valuations, which private equity has helped push to about 5.9 times book value, or nearly three times the global average, JPMorgan and the World Bank's Consultative Group to Assist the Poor (CGAP) said in a report.

Listed MFIs, including Mexico's Compartamos, have outperformed mainstream banks, but valuations of Indian MFIs are "unsustainably high" and not justified by their recent growth or current and future earnings expectations, it said.

Delinquency levels, kept low because borrowers must repay funds before getting access to more funds, may not be sustainable. Overheating was already evident in some southern Indian states, the report said, and profitability will also decline as operating costs rise as MFIs expand outside the southern states.

Private equity's role in MFIs has also been criticised.

"PEs can bring greater efficiency, development plans and good management, but they can also create tension because investors tend to want to exit in three to five years," Xavier Reille, a co-author of the report, told Reuters from Washington.

"There may be potential rifts because with such high valuations, you obviously want to sell even higher. And the high multiples may discourage fresh capital from coming in," he said.

SOCIAL MISSION
SKS has drawn investors including Sequoia, Kismet Capital, Unitus, venture capitalist Vinod Khosla and Infosys Technologies founder N.R. Narayana Murthy.

Vikram Akula, a former McKinsey consultant, has been named one of the most influential people by Time magazine, and SKS, which he first founded in 1997 as a non-profit, is today India's largest MFI with about 5.5 million clients.

But activists and NGOs see no reason for cheer.

"MFIs are ignoring their social mission. They have a duty to educate their clients and not lend money for buying a TV or pay dowry just to add to their loan books," said Shivia's Donnelly.

"It's the wrong path to take. It's sub-prime all over again."

There are few regulations and no accountability, they say.

"MFIs talk about their valuations, but no one talks about social performance: are we really lifting people out of poverty?" said Royston Braganza, chief executive of Grameen Capital India.

With about half a dozen big Indian MFIs contemplating IPOs, SKS' offering will be a milestone, the JPMorgan/CGAP report said, and could help advance a stalled microfinance bill in India.

"Depending on the outcome, it is quite probable that the spotlight on Indian microcredit will intensify, while triggering renewed discussion around MFIs' profitability and social impact."

Original article: http://www.business-standard.com/india/news/sks-microfinance-ipo-sparks-debate/90764/on

SKS Microfinance - IPO Note

SKS Microfinance is India’s largest and the world’s fastest- growing microfinance organization with 1626 branches. It aims to empower the poor by providing them collateral-free loans for income-generation. SKS extends these loans to women who use it to scale up their enterprises and get themselves and their families out of poverty. Started in 1998 as an NGO, SKS transformed into an NBFC in 2005 and is regulated by the RBI.
Since transformation, SKS has been successful in creating a for-profit model of microfinance using commercial funds that is scalable. Delivering services at the doorsteps of its members and following clear-cut processes, SKS has been able to ensure a repayment rate of over 99 % on its loans.

Borrowers take loans for a range of income-generating activities, including livestock, agriculture, trade
(such as vegetable vending), production (from basket weaving to pottery) and new age business (photography to beauty parlours). SKS also provides members with interest-free loans for emergencies as well as life insurance and loan cover insurance to borrowers. It has a customer base of around 53 lakh people.

About the Founder:
SKS Microfinance was founded by former McKinsey consultant Dr.Vikram Akula, an NRI, in 1998. It is head quartered in Hyderabad. Dr.Vikram Akula holds a B.A. from Tufts, an M.A. from Yale, and has a Ph.D. from the University of Chicago. His Ph.D. dissertation focused on the impact of microfinance. He has received several awards for his work with SKS, including the Echoing Green Public Service Entrepreneur Fellowship.

Dr.Akula, who grew up in Schenectady, upstate New York (where father A.V. Krishna is a surgeon), encountered poverty first hand earlier while visiting relatives in Medhak. "It's a tragedy that we NRIs who can do a lot, are not doing enough. We have the skills to solve the problems,"

In the hinterland, where there are few landlines, let alone ATMs, the founder of SKS Microfinance is starting to dispense loans, typically $116, on smart cards, which its loan officers had been using to record repayments electronically.

High Profile Investors of SKS:
(1) In March 2006, SKS closed its first round of equity investment; the largest microfinance investment in India to date - $ 3.2 million from some of the world’s leading microfinance investors
(2) Second round equity investment of $11.5 million in March 2007.
(3) The third round of equity worth Rs 147 crore was raised in January 2008.
(4) In November 2008 SKS raised equity worth $ 75 million(Rs 366 crore), the largest equity raised by an MFI in the world.
(5) In July 2009, Bajaj Allianz made a strategic investment of $ 10 million(INR 50 crore) in SKS Microfinance which was the first-ever investment by an insurance company in an Indian microfinance institution.
(6) U.S. venture capital firm Sequoia, one of Google Inc. and Yahoo! Inc.’s early investors, plans to sell about a third of the SKS holding it has accumulated since March 2007 in the IPO. It began buying stake in SKS in March 2007 for Rs 49.77 per share. It now plans to sell about 40 lakh shares or less than a third of its stake
(7) George Soros’s Quantum (M) Ltd. hedge fund, which bought 300,000 shares for 636 rupees each as late as 23rd July 2010. He will hold a 0.4 percent stake after the sale, according to the prospectus.
(8) Infosys Narayana Murthy’s Catamaran Management Services Pvt. will own 1.3 percent for Rs.300 a share.
(9) Sequoia Capital India (21.8%), Sandstone (12.9%), Kismet Capital (5.7%), Tejas Ventures (2.7%), Bajaj Allianz (2.6%), SIDBI (2.8%), Narayana Murthy’s Catamaran Fund (1.6%) and Unitus (5.7%)
(10)Chairman Dr.Vikram Akula himself holds only 13% of SKS equity


Why so much craze for Micro finance:

There is an expectation that credit to the nation’s poorest may surge by more than 40 percent in a market where about 120 million households don’t have access to banking and financial services.

SKS provides loans from $22 to $260 each for women raising cows or opening a village tea stall in a nation where 828 million people live on less than $2 a day. India has an untapped credit demand of 1.2 trillion rupees, according to Crisil Ratings, the Indian unit of Standard & Poor’s.

Now What is on offer in the IPO :
(1) Price band for the issue is fixed at 850-985 rupees/share of face value of Rs.10
(2) Retail investors to get 50 rupees discount on final price
(3) The Issue will constitute 21.6% of the fully diluted post issue paid-up capital of the company
(4) At the end of the issue, this IPO would have raised as much as 16.3 billion rupees ($347 million) or Rs.1561 Crores.
(5) A 21.6 percent stake in SKS will be offered to investors, with 7.45 million new shares to be sold by the company and 9.35 million shares by existing investors.

Ofcourse there has been a critic article on SKS. We will post it later.

Engineers India - Follow on Public Issue

Engineers India (EIL) the PSU Engineering Project Consultancy & Turnkey company in which the Government of India holds 90.4%. In line with recent regulation which states that atleast 25% of any company's share should be with public, EIL has come out with a Follow on Public Issue for 10% of its holdings. After this issue the government stake in the company will fall to 80.4%.

As on June 2010, the company has a revenue growth of 55% at Rs 606.04 crore. However with operating margin eroding by 180 basis points, the growth at profit were limited and it eventually closed with a net profit of Rs 114.56 crore, a rise of 22%.

EIL has rewarded its share holders quiet healthy in the past. List of its dividends and its bonus issues are given below:

JSW Energy - Share IPO - Details

Kindly click the Picture to enlarge.

L & T Debenture

L & T Finance opens Non Convertible Debenture for subscription. The issue is opening on the 18th of August and closing on the 4th of September. It is a good issue. Investors looking for capital-safe investments can consider investing in this issue. The interest rate varies from 9.51% to 10.24% under various options. To invest in this debenture, do stay in touch with our office at ph: 9366696000, 9366629000 or 9944193339.

More details available at : www.easymadurai.com/publication/LT.pdf

NHPC - 23 times over subscribed

National Hydro Power Corpration : Share Initial public offer seems to be a grand success. Retail investors could expect 25% of the allotment. But Non Institutional Investors (HNI's investing more than 1 Lakh) have feeble chance of allotment. Anyway, NHPC's success would pave wave for many more share IPO's in the future.

Qualified Institutional Buyers (QIBs) 29.1608

Non Institutional Investors - 56.7074

Retail Individual Investors (RIIs) 3.8730

Employee Reservation 0.5697

NHPC - review in Business Standard

The strong project pipeline provides confidence and should result in healthy growth for NHPC over the coming years

Long-term growth opportunities along with a consistent cash flow and healthy return on investment have attracted investors to the power sector. NHPC, the country’s largest player in the hydro power generation space, is one such contender which has come out with an IPO. While the company has several inherent advantages and opportunities to grow in the long run, analysts believe that investment in the IPO may not yield significant gains in the near term due to the overhang of lower return on equity (RoE) and inherent risks of the business.
Stable foundationNHPC currently owns and operates a total capacity of 5,175 mw consisting of 13 hydro based power projects in different states in the country. Most of these projects are backed by the long term power purchase agreement with the respective state utilities and earned an average price of Rs 2.03 per kwh for electricity supplied during 2008-09, which is considered good in a competitive tariff environment. On the operating parameters as well, NHPC demonstrated capacity utilisation in the range of 94 per cent in 2009, which is higher than the cumulative capacity index levels required under CERC regulations. This is also a reason that according to the tariff policy, the company enjoyed certain incentives. Although the company supply about 85 per cent of its power to state electricity boards (SEBs), the good part is that despite poor financial health of the SEBs NHPC has been able to recover 100 per cent of its dues as these payments are secured by the state and central governments.

Powering Ahead
To further leverage its capabilities and strengths, the company has drawn up aggressive plans to almost double its capacities to 9,467 mw by March 2013, for which, 11 hydro based power plants of 4,622 mw are already under construction. Additionally, the company has projects of 14,000 mw in the pipeline awaiting different clearances, and are likely to go on stream after 2013. While these are huge plans and may result in a substantial increase in NHPC’s revenue and profits, the expansion plans have taken toll on the company’s RoE which has stayed low at about 6 per cent. “NHPC’s RoE is low as compared to 14 per cent enjoyed by NTPC. However, it is due to the long gestation nature of hydro power projects as compared to the thermal power projects,” says Rabindra Nath Nayak, analyst, Systematix Shares.
For FY 2009 the company reported consolidated net worth of Rs 18,392.5 crore, out of which Rs 9,331 crore was deployed as capital work-in-progress or into projects which are yet to be commissioned, thus deflating the overall RoE. Adjusted for this and the cash balances of Rs 2,600 crore as on March 2009, the RoE from core operations is estimated at around 15 per cent which is in line with industry trends.
Room for improvement
Analysts however, believe that there is room for the RoE to improve further and thus, profits of the company. Under the new CERC tariff policy 2009, the RoE has been increased from 14 per cent to 15 with another 50 basis points as incentive for projects that are implemented on schedule. Additionally, “going forward, with the faster commissioning of ongoing projects, the company may improve the total RoE, as the percentage of regulated equity to total net worth improves further,” says Nayak.

The process however, will be gradual and spread over a few years. “Today, the ratios are not favourable due to substantial investment in the working capital. I do not expect the RoE to improve drastically, but one can expect the RoE to improve to about 9-9.5 per cent by 2013 as the projects go on stream,” says Girish Solanki, analyst, Angel Broking.
Inherent risks
It generally takes 5-7 years to commission a hydro power plant. Additionally, if there is any delays (which are common in the case of hydro power projects), expect the financials of the company to bear some of the brunt. In the case of NHPC as well, there have been delays and the company has revised the commissioning dates for a few of its ongoing projects. There are several reasons for the delay. For instance, Lachen hydroelectric project (210 mw) being set up at Sikkim is currently facing opposition from local communities, which has resulted in a delay in the survey and investigation works. Similarly, its largest project of 2,000 mw Subansiri in Arunachal Pradesh is delayed and is expected to go on stream by 2012. Other projects such as Parbati II (800 mw) and Teesta Low Dam (160 mw), too, face delays. These not only lead to loss of potential revenue, but also result in lower RoE for the company.
Conclusion
At the price band of Rs 30-36 per share, the issue is priced at a price-to-book value of 1.7-2 times on the post-IPO capital, which is relatively lower compared to its listed peers (see table How they compare). The lower valuations reflect the concerns pertaining to low returns (currently), project execution risks and long gestation period of its projects. On the bright side, the project pipeline is large and should ensure healthy growth going ahead. Investors can invest with a long-term perspective as the gains from ongoing projects and thus, higher returns will flow in the ensuing years.
Link: http://www.business-standard.com/india/news/nhpc-hothydro/366406/

Adani Power - IPO - Big Success

Revival of Primary Market ( New issue of share ) indicates the recovery of investment sentiments. Hence the recent success of Adani Power further strengthens the view that Markets could very well be on the path of recovery. The worst situations : tight money, low liquidity, high interest cost etc is definitely over.

Attached is the IPO subscription details of Adani Power. The issue has been heavily subscribed on the institutional side ( 39 times ). On the retail side it has been suscribed by nearly 3 times. Hence there is higher chance of atleast a partial allotment on the retails segment. Higher subscription figure in the HNI segment and Instritutional side indicates decent listing premium ( around 50%) on day one! Let us wait and see.

NHPC - IPO

National Hydro Electric Power Corp (NHPC) is the first Government company to go public under the new government. The success of NHPC would fuel the scope of further disinvestment from other government entities. Just like NTPC which came public in 2004 at Rs.62 and currently trades at Rs.200+, NHPC also has the great potential to be a multibagger.

Our recommendation:
Disinvestment leads to efficient price discovery.
Each and Every investor needs to apply for NHPC IPO.
Multiple applications with same demat number will be rejected.
Price range is Rs.30 to Rs.36.
Minimum lot size is Rs.175.
IPO forms can be bid officially at EASY Investment office itself.
In summary : Don't Miss this issue.
Do call us over phone ( 9366629000 ) for more information.