nitesh-ipo desert at ion project
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[ FOR THE PARTIAL FULFILLMENT OF Post graduation Diploma inmanagement DEGREE]
Dissertation final project“A feasibility study on the basis of IPO Pricing as an Investment
indicator”
UNDER THE FACULTY OF FINANCE DEPARTMENT
RESEARCH GUIDEProf. Dr Amarjeet Singh Khalsa
SUBMITTED BY- Nitesh Bhawsar
ACKNOWLEDGEMENT
At the very outset I would like to thanks prof. Amarjeet Khalsa for the time andeffort he devoted in explaining me the project and for providing me theopportunity to do this research project report.I would also like to thanks to my parents, friends and all those who have beenassociated with my project directly and indirectly.
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NITESH BHAWSAR IPER PGDM
CONTENTS1. Conceptual overview………………………………………5
1.1 Introduction of IPO………………………………………………………… 61.2 Advantages and disadvantage of IPO……………………………………… 71.3 Types of issues……………………………………………………………… 8
2. Research methodology…………………………………….112.1 Objective of my research……………………………………………………. 122.2 Collection of data……………………………………………………………. 122.3 Significance…………………………………………………………………. 132.4 Limitations…………………………………………………………………....13
3. Theoretical Background…………………………………...143.1 Classification of issues………………………………………………………153.2 Types of Offer Documents (ODs)…………………………………………...16
3.3 Guide to understand an Offer Document……………………………………173.4 Pricing of an Issue…………………………………………………………...194.5 Parameters to judge an IPO………………………………………………….20
3.6 IPO scam……………………………………………………………………..21
3.7 Intermediaries involved in the Issue Process ……………………..................28
3.8 IPO Grading………………………………………………………………….28
3.9 Sebi Norms…………………………………………………………………...31
3.10 Marketing of IPO…………………………………………………………...32
3.11 Largest IPO in India and world……………………………………………..34
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3.12 Top and worst IPO performers ( 21 June 2010)…………………………….40
4. Data Analysis……………………………………………….44
5. Findings and Conclusions………………………………….129
Bibliography………………………………………………..133
DECLARATION
I Nitesh Bhawsar student of Post Graduate Diploma in Management (PGDM), Institute of
Professional Education & Research, and Bhopal hereby declare that I have completed this
Dissertation on A study on the basis of IPO Pricing feasibility as an Investment indicator in
the academic year June 2011.
The Information submitted is true and original to the best of my knowledge.
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the steps taken by the companies before going for any IPO and also the role of (SEBI) Securitiesand Exchange Board of India the BSE and NSE , what are primary and secondary markets andalso the important terms related to IPO. It gives us idea of how IPO is driven in the market andwhat are various factors taken into consideration before going for an IPO. And it also tells ushow we can more or less judge a good IPO. Then we all know that scams have always been a
part of any sector you go in for which are covered in it and also few recommendations are givenfor the same. It also gives us some idea about what are the expenses that a company undertakesduring an IPO. IPO has been one of the most important generators of funds for the smallcompanies making them big and given a new vision in past and it is still continuing its work andalso for many coming years.
Initial public offer (IPO): When an unlisted company makes either a fresh issue of securities or offers its existing securities for sale or both for the first time to the public, it is called an IPO. This paves way for listing and trading of the issuer’ssecurities in the Stock Exchanges.An initial public offering, or IPO, is the first sale of stock by a company to the public. Acompany can raise money by issuing either debt or equity. If the company has never issuedequity to the public, it's known as an IPO.An IPO is the first sale of stock by a company to the public. A company can raise money byissuing either debt or equity. If the company has never issued equity to the public, it's known asan IPO. Companies fall into two broad categories: private and public.A privately held company has fewer shareholders and its owners don't have to disclose muchinformation about the company. Anybody can go out and incorporate a company: just put insome money, file the right legal documents and follow the reporting rules of your jurisdiction. Most small businesses are privately held. But large companies can be private too.Did you know that IKEA, Domino's Pizza and Hallmark Cards are all privately held? It usuallyisn't possible to buy shares in a private company. You can approach the owners about investing,
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but they're not obligated to sell you anything. Public companies, on the other hand, have sold atleast a portion of themselves to the public and trade on a stock exchange. This is why doing anIPO is also referred to as "going public."Public companies have thousands of shareholders and are subject to strict rules and regulations.They must have a board of directors and they must report financial information every quarter. In
the United States, public companies report to the Securities and Exchange Commission (SEC).In other countries, public companies are overseen by governing bodies similar to the SEC. Froman investor's standpoint, the most exciting thing about a public company is that the stock istraded in the open market, like any other commodity. If you have the cash, you can invest.
The CEO could hate your guts, but there's nothing he or she could do to stop you from buyingstock. The first sale of stock by a private company to the public, IPO’s are often issued bysmaller, younger companies seeking capital to expand, but can also be done by large privately-owned companies looking to become publicly traded. In an IPO, the issuer obtains the assistanceof an underwriting firm, which helps it determine what type of security to issue (common or preferred), best offering price and time to bring it to market. IPO’s can be a risky investment. For
the individual investor, it is tough to predict what the stock will do on its initial day of tradingand in the near future since there is often little historical data with which to analyze thecompany. Also, most IPO’s are of companies going through a transitory growth period, and theyare therefore subject to additional uncertainty regarding their future value.Primary and Secondary markets In the primary market securities are issued to the public and the proceeds go to the issuing company. Secondary market is term used for stock exchanges, wherestocks are bought and sold after they are issued to the public.
PRIMARY MARKETThe first time that a company’s shares are issued to the public, it is by a process called the initial public offering (IPO). In an IPO the company offloads a certain percentage of its total shares to
the public at a certain price.Most IPO’S these days do not have a fixed offer price. Instead they follow a method calledBOOK BUILDIN PROCESS, where the offer price is placed in a band or a range with thehighest and the lowest value (refer to the newspaper clipping on the page). The public can bid for the shares at any price in the band specified. Once the bids come in, the company evaluates allthe bids and decides on an offer price in that range. After the offer price is fixed, the companyallots its shares to the people who had applied for its shares or returns themtheir money.
SECONDRY MARKET
Once the offer price is fixed and the shares are issued to the people, stock exchanges facilitate
the trading of shares for the general public. Once a stock is listed on an exchange, people canstart trading in its shares. In a stock exchange the existing shareholders sell their shares toanyone who is willing to buy them at a price agreeable to both parties. Individuals cannot buy or sell shares in a stock exchange directly; they have to execute their transaction through authorizedmembers of the stock exchange who are also called STOCK BROKERS.
IPO – ADVANTAGES AND DISADVANTAGES
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The decision to take a company public in the form of an initial public offering (IPO) should not be considered lightly. There are several advantages and disadvantages to being a publiccompany, which should thoroughly be considered. This memorandum will discuss theadvantages and disadvantages of conducting an IPO and will briefly discuss the steps to be takento register an offering for sale to the public. The purpose of this memorandum is to provide a
thumbnail sketch of the process. The reader should understand that the processis very time consuming and complicated and companies should undertake this process only after serious consideration of the advantages and disadvantages and discussions with qualifiedadvisors. Advantages of going public
Increased Capital
A public offering will allow a company to raise capital to use for various corporate purposessuch as working capital, acquisitions, research and development, marketing, and expanding plantand equipment.
Liquidity
Once shares of a company are traded on a public exchange, those shares have a market value andcan be resold. This allows a company to attract and retain employees by offering stock incentive packages to those employees. Moreover, it also provides investors in the company theoption to trade their shares thus enhancing investor confidence.
Increased Prestige
Public companies often are better known and more visible than private companies, this enablesthem to obtain a larger market for their goods or services. Public companies are able to haveaccess to larger pools of capital as well as different types of capital.
Valuation
Public trading of a company's shares sets a value for the company that is set by the public marketand not through more subjective standards set by a private valuator. This is helpful for a company that is looking for a merger or acquisition. It also allows the shareholders to know thevalue of the shares.
Increased wealth
The founders of the company often have the sense of increased wealth as a result of the IPO.Prior to the IPO these shares were illiquid and had a more subjective price. These shares nowhave an ascertainable price and after any lockup period these shares may be sold to the public,subject to limitations of federal and state securities laws.
Disadvantages of going Public
Time and Expense
Conducting an IPO is time consuming and expensive. A successful IPO can take up to a year or more to complete and a company can expect to spend several hundreds of thousands of dollars on attorneys, accountants, and printers. In addition, the underwriter's fees can range from3% to 10% of the value of the offering. Due to the time and expense of preparation of the IPO,many companies simply cannot afford the time or spare the expense of preparing the IPO.
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Disclosure
The SEBI disclosure rules are very extensive. Once a company is a reporting company it must provide information regarding compensation of senior management, transactions with partiesrelated to the company, conflicts of interest, competitive positions, how the company intends to
develop future products, material contracts, and lawsuitsAct requires public companies to file quarterly statements containing unaudited financialstatements and audited financial statements annually. These statements must also containupdated information regarding nonfinancial matters similar to information provided in the initialregistration statement. This usually entails retaining lawyers and auditors to prepare thesequarterly and annual statements. In addition, a company must report certain material events asthey arise. This information is available to investors, employees, and competitors.
Decisions based upon Stock Price
Management's decisions may be effected by the market price of the shares and the feeling thatthey must get market recognition for the company's stock.
Regulatory Review
The Company will be open to review by the SEBI to ensure that the company is making theappropriate filings with all relevant disclosures.
Falling Stock Price
If the shares of the company's stock fall, the company may lose market confidence, decreasedvaluation of the company may effect lines of credits, secondary offering pricing, the company'sability to maintain employees, and the personal wealth of insiders and investors.
VulnerabilityIf a large portion of the company's shares are sold to the public the company may become atarget for a takeover, causing insiders to lose control. A takeover bid may be the result of shareholders being upset with management or corporate raiders looking for an opportunity.Defending a hostile bid can be both expensive and time consuming. Once a company hasweighed the advantages and disadvantages of being a public company, if it decides that it wouldlike to conduct an IPO it will have to retain a lead
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Chapter -2Research Methodology
OBJECTIVE OF MY RESEARCHTo analyze ipo’s of last five years and try to analyze its performanceTo analyze on the basis of p/e ratio and compare p/e to industry p/eTo analyze EPS, RONW, NAV AND BOOK VALUE to the industry peers and then check howthese indicators impact on stock priceTo find financial and non financial indicators that can be used to decide about investing in IPO,s by retails investorsTo using all the financial and non financial parameter which give us investment decision in ipo
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Through this research we will come to know that financial and non financial indicators works or not in investment decision.
COLLECTION OF DATA
Primary data
primary data collection methods involve individuals collecting data for themselves using meanssuch as interviews as well as questionnaires. The main feature of primary data collection is thatthe information that is collected is unique to the individual and his or her research, and is notseen by anyone else until after it has been published. A number of different methods of collecting primary data are used including questionnaires, interviews, focus group interviews, observations,case-studies, diaries, critical incidents as well as portfolios.Secondary data
Secondary data is the data that have been already collected by and readily available from other sources. Such data are cheaper and more quickly obtainable than the primary data and also may be available when primary data can not be obtained at all.
Advantages of Secondary data
1. It is economical. It saves efforts and expenses.
2. It is time saving.
3. It helps to make primary data collection more specific since with the help of secondarydata, we are able to make out what are the gaps and deficiencies and what additionalinformation needs to be collected.
4. It helps to improve the understanding of the problem.
5. It provides a basis for comparison for the data that is collected by the researcher.
Disadvantages of Secondary Data
1. Secondary data is something that seldom fits in the framework of the marketing research
factors. Reasons for its non-fitting are:-A) Unit of secondary data collection-Suppose you want information on disposable income, butthe data is available on gross income. The information may not be same as we require.
B) Class Boundaries may be different when units are same.
I using the secondary data of last 5 years of IPO came from Jan 2006 to April 2011
Using various financial tools ratios , subscription pattern and recommendation of
brokerage house
For the research I take 30 companies in these I take a only above 800 cr size of IPO
Use credit rating of ICRA, CARE, CRISIL to analyze IPO,s
SIGNIFICANCE
• It will help in investment decision for retail investors• Financial indicators will help for retail investors for analysis of IPO
LIMITATIONS
• Time constant
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• The trend of last five year IPO may or may not reflect the performance due to volatility
of market
• Small sample of IPO
• take a those IPO which have issue size is more then 800 Crore, so its also reduces the
numbers of IPO’s
• Take only IPO of price band not a fixed price of price band.• Credit rating is available for those IPO,s which are came after 2008
Chapter-3Theoretical background
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CLASSIFICATION OF ISSUES
Initial public offer (IPO): When an unlisted company makes either a fresh issue of securities or offers its existing securities for sale or both for the first time to the public, it is called an IPO. This paves way for listing and trading of the issuer’s
securities in the Stock Exchanges.
(A) Further public offer (FPO) or Follow on offer: When an already listed companymakes either a fresh issue of securities to the public or an offer for sale to the public,it is called a FPO.
(b) Rights issue (RI): When an issue of securities is made by an issuer to its shareholdersexisting as on a particular date fixed by the issuer (i.e. record date), it is called an rightsissue. The rights are offered in a particular ratio to the number of securities held as on therecord date.(c) Bonus issue: When an issuer makes an issue of securities to its existing shareholders as on
a record date, without any consideration from them, it is called a bonus issue. The sharesare issued out of the Company’s free reserve or share premium account in a particular ratio to the number of securities held on a record date.
(d) Private placement: When an issuer makes an issue of securities to a select group of persons not exceeding 49, and which is neither a rights issue nor a public issue, it is calleda private placement. Private placement of shares or convertible securities by listed issuer can be of two types:
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(i) Preferential allotment: When a listed issuer issues shares or convertible securities, toa select group of persons in terms of provisions of Chapter XIII of SEBI (DIP)guidelines, it is called a preferential allotment. The issuer is required to comply withvarious provisions which inter ‐alia include pricing, disclosures in the notice, lock ‐in
etc, in addition to the requirements specified in the Companies Act.
(ii) Qualified institutions placement (QIP): When a listed issuer issues equity shares or securities convertible in to equity shares to Qualified Institutions Buyers only in termsof provisions of Chapter XIIIA of SEBI (DIP) guidelines, it is called a QIP.
Types of Offer Documents (ODs)
‘Offer document’ is a document which contains all the relevant information about the company, promoters, projects, financial details, objects of raising the money, terms of the issue etc and isused for inviting subscription to the issue being made by the issuer. ‘Offer Document’ is called
“Prospectus” in case of a public issue or offer for sale and “Letter of Offer” in case of a rightsissue.(i) Draft offer document: is an offer document filed with SEBI for specifying changes, if any,in it, before it is filed with the Registrar of companies (ROCs). Draft offer document is madeavailable in public domain including SEBI website, for enabling public to give comments, if any,on the draft offer document.
(ii) Red herring prospectus is an offer document used in case of a book built public issue. Itcontains all the relevant details except that of price or number of shares being offered. It is filedwith RoC before the issue opens.
(iii) Prospectus is an offer document in case of a public issue, which has all relevant detailsincluding price and number of shares being offered. This document is registered with RoC before the issue opens in case of a fixed price issue and after the closure of the issue in case of a book built issue.
(iv) Letter of offer is an offer document in case of a Rights issue and is filed with Stock exchanges before the issue opens.
(v) Abridged prospectus is an abridged version of offer document in public issue and is issuedalong with the application form of a public issue. It contains all the salient features of a prospectus.
(vi) Abridged letter of offer is an abridged version of the letter of offer. It is sent to all theshareholders along with the application form.
(vii) Shelf prospectus is a prospectus which enables an issuer to make a series of issues within a period of 1 year without the need of filing a fresh prospectus every time. This facility is availableto public sector banks /Public Financial Institutions.
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(viii) Placement document is an offer document for the purpose of Qualified InstitutionalPlacement and contains all the relevant and material disclosures.Guide to understand an Offer Document
This sub‐section attempts to inform the structure of presentation of the content in an offer
document. The basic objective is to help the reader to navigate through the content of anoffer document.
(a) Cover Page
Under this head full contact details of the Issuer Company, lead managers and registrars,the nature, number, price and amount of instruments offered and issue size, and the particulars regarding listing. Other details such as Credit Rating, IPO Grading, risks inrelation to the first issue, etc are also disclosed if applicable.
(b) Risk Factors
Under this head the management of the issuer company gives its view on the Internal
and external risks envisaged by the company and the proposals, if any, to address suchrisks. The company also makes a note on the forward looking statements. Thisinformation is disclosed in the initial pages of the document and also in the abridged prospectus. It is generally advised that the investors should go through all the risk factorsof the company before making an investment decision.
(c) Introduction
Under this head a summary of the industry in which the issuer company operates, the business of the Issuer Company, offering details in brief, summary of consolidatedfinancial statements and other data relating to general information about the company,the merchant bankers and their responsibilities, the details of brokers/syndicate
members to the Issue, credit rating (in case of debt issue), debenture trustees (in case of debt issue), monitoring agency, book building process in brief, IPO Grading in case of FirstIssue of Equity capital and details of underwriting Agreements are given. Importantdetails of capital structure, objects of the offering, funds requirement, funding plan,schedule of implementation, funds deployed, sources of financing of funds alreadydeployed, sources of financing for the balance fund requirement, interim use of funds, basic terms of issue, basis for issue price, tax benefits are also covered.
(d) About us
Under this head a review of the details of business of the company, business strategy,competitive strengths, insurance, industry‐regulation (if applicable), history andcorporate structure, main objects, subsidiary details, management and board of directors, compensation, corporate governance, related party transactions, exchangerates, currency of presentation and dividend policy are given.
(e) Financial Statements
Under this head financial statement and restatement as per the requirement of theGuidelines and differences between any other accounting policies and the Indian17Accounting Policies (if the Company has presented its Financial Statements also as per
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either US GAAP/IFRS) are presented.
(f) Legal and other information
Under this head outstanding litigations and material developments, litigations involving
the company, the promoters of the company, its subsidiaries, and group companies aredisclosed. Also material developments since the last balance sheet date, governmentapprovals/licensing arrangements, investment approvals (FIPB/RBI etc.), technicalapprovals, and indebtedness, etc. are disclosed.
(g) Other regulatory and statutory disclosures
Under this head, authority for the Issue, prohibition by SEBI, eligibility of the company toenter the capital market, disclaimer statement by the issuer and the lead manager,disclaimer in respect of jurisdiction, distribution of information to investors, disclaimer clause of the stock exchanges, listing, impersonation, minimum subscription, letters of allotment or refund orders, consents, expert opinion, changes in the auditors in the last 3
years, expenses of the issue, fees payable to the intermediaries involved in the issue process, details of all the previous issues, all outstanding instruments, commission and brokerage on, previous issues, capitalization of reserves or profits, option to subscribe inthe issue, purchase of property, revaluation of assets, classes of shares, stock marketdata for equity shares of the company, promise vis‐à‐vis performance in the past issuesand mechanism for redressal of investor grievances is disclosed.
(h) Offering information
Under this head Terms of the Issue, ranking of equity shares, mode of payment of dividend, face value and issue price, rights of the equity shareholder, market lot,nomination facility to investor, issue procedure, book building procedure in details along
with the process of making an application, signing of underwriting agreement and filingof prospectus with SEBI/ROC, announcement of statutory advertisement, issuance of confirmation of allocation note("can") and allotment in the issue, designated date,general instructions, instructions for completing the bid form, payment instructions,submission of bid form, other instructions, disposal of application and applicationmoneys, , interest on refund of excess bid amount, basis of allotment or allocation,method of proportionate allotment, dispatch of refund orders, communications,undertaking by the company, utilization of issue proceeds, restrictions on foreignownership of Indian securities, are disclosed.
(i) Other Information
This covers description of equity shares and terms of the Articles of Association, materialcontracts and documents for inspection, declaration, definitions and abbreviations, etc.
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Pricing of an Issue
(a) Who fixes the price of securities in an issue?
Indian primary market ushered in an era of free pricing in 1992. SEBI does not play any role
in price fixation. The issuer in consultation with the merchant banker on the basis of market demand decides the price. The offer document contains full disclosures of the parameters which are taken in to account by merchant Banker and the issuer for decidingthe price. The Parameters include EPS, PE multiple, return on net worth and comparison of these parameters with peer group companies.
(b) What is the difference between “Fixed price issue” and “Book Built issue”?
On the basis of Pricing, an issue can be further classified into Fixed Price issue or Book Builtissue.Fixed Price Issue: When the issuer at the outset decides the issue price and mentions it inthe Offer Document, it is commonly known as “Fixed price issue”.
Book built Issue: When the price of an issue is discovered on the basis of demand receivedfrom the prospective investors at various price levels, it is called “Book Built issue”. For more explanation on Book Built Issues please refer to the section titled “Understanding
Book Building”
5. Understanding Book Building:
(a) What is book Building?
Book building is a process of price discovery. The issuer discloses a price band or floor price before opening of the issue of the securities offered. On the basis of the demandsreceived at various price levels within the price band specified by the issuer, Book RunningLead Manager (BRLM) in close consultation with the issuer arrives at a price at which the
security offered by the issuer, can be issued.
(b) What is a price band?
The price band is a band of price within which investors can bid. The spread between thefloor and the cap of the price band shall not be more than 20%. The price band can berevised. If revised, the bidding period shall be extended for a further period of three days,subject to the total bidding period not exceeding thirteen days.
(c) How does Book Building work
Book building is a process of price discovery. A floor price or price band within which the bids can move is disclosed at least two working days before opening of the issue in case of
an IPO and atleast one day before opening of the issue in case of an FPO. The applicants bid for the shares quoting the price and the quantity that they would like to bid at.After the bidding process is complete, the ‘cut‐off’ price is arrived at based on thedemand of securities. The basis of Allotment is then finalized and allotment/refund isundertaken. The final prospectus with all the details including the final issue price and theissue size is filed with ROC, thus completing the issue process. Only the retail investorshave the option of bidding at ‘cut‐off’.
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Parameters to judge an IPOGood investing principles demand that you study the minutes of details prior to investing in anIPO. Here are some parameters you should evaluate:-Promoters
Is the company a family run business or is it professionally owned? Even with a family run business what are the credibility and professional qualifications of those managing the company?Do the top level managers have enough experience (of at least 5 years) in the specific type of business?Industry Outlook The products or services of the company should have a good demand and scope for profit.Business PlansCheck the progress made in terms of land acquisition, clearances from various departments,
purchase of machinery, letter of credits etc. A higher initial investment from the promoters willlead to a higher faith in the organization.Financials
Why does the company require the money? Is the company floating more equity than required?What is the debt component? Keep a track on the profits, growth and margins of the previousyears. A steady growth rate is the quality of a fundamentally sound company. Check theassumptions the promoters are making and whether these assumptions or expectations soundfeasible.Risk FactorsThe offer documents will list our specific risk factors such as the company’s liabilities, court
cases or other litigations. Examine how these factors will affect the operations of the company.Key NamesEvery IPO will have lead managers and merchant bankers. You can figure out the track record
of the merchant banker through the SEBI website.
PricingCompare the company’s PER with that of similar companies. With this you can find out the P/E
Growth ratio and examine whether its earning projections seem viable.
IPO SCAMS
YES BANK Ltd. CASE
The modus operandi adopted in manipulating the YES Bank Ltd (YBL)'s initial public offering(IPO) allotment involved opening of over 7,500 benami dematerialised accounts.
These accounts were with the National Securities Depository Ltd (NSDL) through KarvyStockbroking Ltd (Karvy-DP). Of the 13 erring entities, the chief culprits identified by SEBIwere Ms Roopalben Panchal and Sugandh Estates and Investments Pvt Ltd.
While Ms Panchal opened 6,315 benami DP accounts, another entity Sugandh opened 1,315 benami accounts. Each of these accounts applications were made for 1,050 shares, payingapplication money of Rs 47,250 each. By applying for small lots (1,050 shares through eachaccounts), they misused the retail allotment quota stipulated for IPOs. The shares allotted in IPOto the benamis of Ms Panchal and Sugandh would have otherwise gone to genuine retailapplicants.
The IPO of YBL opened on June 15, 2005 and its shares were listed on the BSE and the NSE onJuly 12, 2005.
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It was observed that Ms Panchal had transferred 9,31,600 shares to various entities in seven off-market transactions on July 11 - a day prior to the listing and commencement of trading on thestock exchanges. In order to get an allotment of 9,31,600 shares, Ms Panchal would have had toapply for crores of shares involving many crores of rupees in application money.
However, Ms Panchal's name did not appear in the list of top 100 public issue allottees. Thus, it
was suspected that Ms Panchal must have made multiple applications or that other applicantswere acting as a front for her.
Ms Panchal had applied for only 1,050 shares in the YES Bank IPO, paying the applicationmoney of Rs 47,250. And she did not receive any allotment in the IPO. On July 6, Ms Panchalreceived 150 shares each from 6,315 allottees through off-market transactions aggregating9,47,250 YBL shares.
Curiously, as per the dematerialised account data furnished by NSDL, of the above 6,315entities as many as 6,221 entities have a same address in Ahmedabad. There are three moreaddresses of locations in Ahmedabad, which have been linked to Ms Panchal. All the 6,315entities have their bank accounts with Bharat Overseas Bank and demat accounts with Karvy-DP.
By applying for the maximum possible number of shares per applicant while being categorisedas retail applicant and by putting in large number of applications in the lot of 1,050 shares, MsPanchal and her associates (real or fictitious) have attempted to corner the maximum possiblenumber of shares in the IPO allotment.
This tantamounts to an abuse of IPO allotment process, the SEBI order said.
A similar modus operandi was adopted by Sugandh, which received 150 shares each from 1,315dematerialised accounts aggregating 1,97,250 shares in off market transactions.
According to SEBI findings, Ms Panchal and others booked profits to the tune of about Rs 1.70crore on the day of the listing of YES Bank shares.
SEBI unearths another IPO scam in IDFC
SEBI on Thursday 12th Jan 06 unearthed yet another abuse of IPO norms in the IDFC's initial public offering (IPO) where a few investors opened over 14,000 dematerialised accounts tocorner large number of shares of the company. This is the second such incident, after a similar such violations were detected in the YES Bank's IPO.
SEBI said in IDFC's IPO too four investors opened as many as 14,807 dematerialized accountswith Karvy-DP and "strangely", all these account holders have their bank accounts with Bharat
Overseas Bank Ltd, Ahmedabad. SEBI order said: "further probe is required for examining thesystemic fault, if any, of the registrar Karvy-RTI i.e. Karvy Computer Shares P Ltd, and the leadmanagers Kotak Mahindra Capital Company Ltd, DSP Merrill Lynch Ltd and SBI CapitalMarkets Ltd in identifying and weeding out the benami applications."
Reference is being made to the RBI to examine the role of BhOB, HDFC Bank, Indian OverseasBank, ING Vysya Bank and Vijaya Bank in opening the bank accounts of these benami entitiesand apparently funding them.
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According to SEBI, Karvy-DP, which was also named in the YES Bank IPO case, has notadhered to `Know-your-Client' norms, as per the reports of inspection submitted by NSDL andCDSL on the DP. Also, some of the documents collected by CDSL during the course of inspection show that Karvy-DP has obtained letters purportedly issued by the banks' concernedsuch as BhOB as proof of identity and proof of address of the person for the purpose of opening
dematerialised accounts."It is seen that one branch manager has on the same date signed as authorized signatory of
different branches of the bank. This raises a doubt as to the authenticity of the bank documentsobtained by Karvy-DP for opening dematerialised accounts," the SEBI order by its Whole-timeDirector Mr G. Anantharaman said. SEBI also banned four investors (in whose names themultiple accounts were opened) viz., Ms Roopalben Nareshbhai Panchal (who was also namedin the YES Bank IPO scam), Sugandh Estates & Investments P Ltd, Mr Purshottam GhanshyamBudhwani and Mr Manojdev Seksaria from doing any kind of transactions in the securitiesmarket, till further directions.
Another 35 firms were also barred from participating in the IPOs in the future, till further orders,the SEBI order said.
SEBI bars Karvy, 23 other entitiesAlleged involvement in IPO allotment scam
In the dock
Ban on several entities including HDFC Bank, IDBI Bank, ING Vysya Bank and Motilal OswalSecurities from opening fresh demat accounts.The regulator also pulled up NSDL and CDSL for `grave management lapses'.
Description
SEBI on Thursday 27th April 2006 came down heavily on stock market intermediaries by banning several entities including Karvy group of companies, Pratik DP and Indiabulls
Securities, for their alleged involvement in the IPO allotment scam. SEBI has also barred severalentities including HDFC Bank, IDBI Bank, ING Vysya Bank and Motilal Oswal Securities fromopening fresh demat accounts.
In an interim order issued today after the second round of investigations, the capital marketregulator has banned 24 entities from buying and selling securities till further orders.
Common address
SEBI also said 15 Depository Participants at National Securities Depository Ltd (NSDL)including Kotak Securities, Citibank, ICICI Bank, Bank Paribas and IndusInd Bank had morethan 500 demat account holders sharing the common address.
It asked NSDL to conduct inspection on whether all the demat account holders are genuine. NSDL has also been asked to check whether the Know Your Customer norms of SEBI have been
duly complied with and take action against suspect accounts on verification.
Analysts felt the SEBI order was akin to capital punishment for the entities involved in thesecurities market scam.
"In view of the detailed findings, Karvy DP and Pratik DP prima facie do not appear to be fit todeal in securities market as SEBI-registered intermediaries. Appropriate quasi-judicial proceedings are being initiated against the two DPs," the 252-page order issued late in theevening said.
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SEBI said the other business groups of Karvy appear to have acted in concert in the gamut of IPO manipulations. "I further direct Karvy Stock Broking Ld, Karvy Computer Share PVT Ltd,Karvy Investor Services and Karvy Consultants not to undertake fresh business as registrar to theissue and share transfer agent," Mr G Anantharaman, Whole-Time Member, SEBI, said.
NSDL, CDSL pulled up
The regulator also pulled up NSDL and CDSL for `grave management lapses'. The findingsrevealed "contributory negligence" on the part of the depositories and their managements.
"The promoters of NSDL and CDSL are directed to take all appropriate actions includingrevamping of management which clearly has allowed matters to come to such a sorry pass," theorder said.
The order, to be treated as a `show-cause notice', has given 15 days time to the parties named for filing objections.
IPO scam: HDFC Bank, 2 others fined
The Reserve Bank of India on Monday 27 th Feb 2006 fined HDFC Bank, IDBI and ING VysyaBank for violation of Know Your Customer norms and other irregularities in relation to the
recent IPO scam.HDFC Bank has been slapped with the highest penalty of Rs 25 lakh; ING Vysya Bank - Rs 10
lakh and IDBI Ltd Rs 5 lakh.
This is the second time HDFC Bank has been fined for violation of KYC norms. In January, the bank was imposed a penalty of Rs 5 lakh.
According to an RBI release, these banks have been fined, "for violation of regulations on KYCnorms, for breach of prudent banking practices and for not adhering to its directives/guidelinesrelating to loans against shares/ IPO."
Salient Features of IPO scam
Modus operandi Current account opened in the name of multiple companies on the same date in the same
branch of a bank
Sole person authorized to operate all these accounts who was also a Director in all thecompanies
Identity disguised by using different spelling for the same name in different companies
Multiple accounts opened in different banks by the same group of joint account holders
Huge funds transferred from companies accounts to the individual’s account which wasinvested in IPO’s
Loans/ overdrafts got sanctioned in multiple names to bypass limit imposed by RBI
Loans sanctioned to brokers violating guidelines
Multiple DP accounts opened to facilitate investment in IPO Large number of cheques for the same value issued from a single account on the same
day
Multiple large value credits received by way of transfer from other banks
Several accounts opened for funding the IPO on the request of brokers, some were infictitious names
Refunds received got credited in brokers a/cs
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Margin money provided by brokers through single cheque
Nexus between merchant banker, brokers and banks suspected
Operational deficiencies
Factors that facilitated the scam Photographs not obtained
Proper introductions not obtained
Signatures not taken in the presence of bank official
Failure to independently verify the identity and address of all joint account holders
Directors identity/ address not verified
Customer Due Diligence done by a subsidiary
Objective of large number of jt. account holders opening account not ascertained
Purpose of relationship not clearly established
Customer profiling based on risk classification not done
Poor monitoring and reporting system due to inadequate appreciation of ML issues
Absence of investigation about use and sources of funds
Unsatisfactory training of personnel
No system of fixing accountability of bank officials responsible for opening of accounts
and complying with KYC procedures
Ineffective monitoring and control
Measures to prevent scams
An analysis of IPO scam clearly brings out the laxity on the part of banks to scrupulouslyimplement the KYC/AML guidelines issued from time to time. It also raises seriousconcerns about the integrity of the systems & systemic risks.
While scams may still happen despite best of preventive measures, it should notundermine the efforts being made to insulate the financial sector from money laundering.It is going to be a long fight with constant need to improve and innovate new strategies.
It is important to understand that the risks banks run as a result of non-compliance withregulatory and statutory guidelines can cause severe reputational and financial damage toindividual banks and the Indian banking system as a whole
Need for comprehensive operational framework implementing important aspects of KYCinstructions e.g.
Documentation procedure for opening of all types of customer accounts;
Clarity in understanding of risk classification of accounts and proper customer profiling
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Ongoing monitoring of medium and high risk accounts
Enhanced due diligence in respect of accounts with beneficial ownership, non-face toface transactions, group companies, high risk businesses and wire transfers etc.
Prompt reporting of cash and suspicious transactions to Principal Officer by branches
An effective audit machinery
Good understanding of regulatory and statutory prescriptions in letter and spirit Clear demarcation of duties and responsibilities
Violations to be dealt with sternly
Intermediaries involved in the Issue Process
(a) Which are the intermediaries involved in an issue?
Intermediaries which are registered with SEBI are Merchant Bankers to the issue (knownas Book Running Lead Managers (BRLM) in case of book built public issues), Registrars tothe issue, Bankers to the issue & Underwriters to the issue who are associated with theissue for different activities. Their addresses, telephone/fax numbers, registration number,
and contact person and email addresses are disclosed in the offer documents.
(i) Merchant Banker: Merchant banker does the due diligence to prepare the offer document which contains all the details about the company. They are alsoresponsible for ensuring compliance with the legal formalities in the entire issue process and for marketing of the issue.
(ii) Registrars to the Issue: They are involved in finalizing the basis of allotment in anissue and for sending refunds, allotment etc.
(iii) Bankers to the Issue: The Bankers to the Issue enable the movement of funds in the
issue process and therefore enable the registrars to finalize the basis of allotment by making clear funds status available to the Registrars.
(iv) Underwriters: Underwriters are intermediaries who undertake to subscribe to thesecurities offered by the company in case these are not fully subscribed by the public, in case of an underwritten issue.
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IPO GRADING
1. What is ‘IPO Grading’?
IPO grading is the grade assigned by a Credit Rating Agency (CRAs) registered with SEBI, tothe initial public offering (IPO) of equity shares or any other security which may be converted
into or exchanged with equity shares at a later date. The grade represents a relative assessment of the fundamentals of that issue in relation to the other listed equity securities in India. Suchgrading is generally assigned on a five‐ point point scale with a higher score indicating stronger fundamentals and vice versa as below.IPO grade 1 ‐ Poor fundamentalsIPO grade 2 ‐ Below‐Average fundamentalsIPO grade 3 ‐ Average fundamentalsIPO grade 4 ‐ Above‐average fundamentalsIPO grade 5 ‐ Strong fundamentalsIPO grading has been introduced as an endeavor to make additional information available for theinvestors in order to facilitate their assessment of equity issues offered through an IPO.
2. I am an issuer. By when am I required to obtain the grade for the IPO?
IPO grading can be done either before filing the draft offer documents with SEBI or thereafter.However, the Prospectus/Red Herring Prospectus, as the case may be, must contain the grade/sgiven to the IPO by all CRAs approached by the company for grading such IPO.
3. Who bears the cost of the IPO grading process?
The company desirous of making the IPO is required to bear the expenses incurred for gradingan IPO.
4. Is grading optional?
No, IPO grading is not optional. It is mandatory. Any issuer who decides to offer shares throughan IPO, is required to obtain a grade for the IPO from at least one Credit Rating Agency.
5. Can the issuer reject an IPO grade?
IPO grade/s cannot be rejected. Irrespective of whether the issuer finds the grade given by therating agency acceptable or not, the grade has to be disclosed as required under the DIPGuidelines. However the issuer has the option of opting for another grading by a differentagency. In such an event all grades obtained for the IPO will have to be disclosed in the offer documents, advertisements etc.
6. Will IPO grading delay the process of issue?
IPO grading is intended to run parallel to the filing of offer document with SEBI and theconsequent issuance of observations. Since issuance of observation by SEBI and the grading process, function independently, IPO grading is not expected to delay the issue process.
7. What are the factors that are evaluated to assess the fundamentals of the
issue while arriving at the IPO grade?
The IPO grading process is expected to take into account the prospects of the industry in whichthe company operates, the competitive strengths of the company that would allow it to address
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the risks inherent in the business and capitalize on the opportunities available, as well as thecompany’s financial position.While the actual factors considered for grading may not be identical or limited to the following,the areas listed below are generally looked into by the rating agencies, while arriving at an IPOgrade
a. Business Prospects and Competitive Positioni. Industry Prospectsii. Company Prospectsb. Financial Positionc. Management Qualityd. Corporate Governance Practicese. Compliance and Litigation Historyf. New Projects—Risks and ProspectsIt may be noted that the above is only indicative of some of the factors considered in the IPOgrading process and may vary on a case to case basis.
8. Does IPO grading consider the price at which the shares are offered in the
issue?
No. IPO grading is done without taking into account the price at which the security is offered inthe IPO. Since IPO grading does not consider the issue price, the investor needs to make anindependent judgment regarding the price at which to bid for/subscribe to the shares offeredthrough the IPO.
9. Where can I find the grades obtained for the IPO and details of the grading
process?
All grades obtained for the IPO along with a description of the grades can be found in the
Prospectus. Abridged Prospectus, issue advertisement or any other place where the issuer company is making advertisement for its issue. Further the Grading letter of the Credit RatingAgency which contains the detailed rationale for assigning the particular grade will be includedamong the Material Documents available for Inspection at the Registered office of the Company.
10. Does an IPO grade, which indicates ‘above average or strong fundamentals’
mean I could subscribe safely to the issue?
An IPO grade is NOT a suggestion or recommendation as to whether one should subscribe to theIPO or not. IPO grade needs to be read together with the disclosures made in the prospectusincluding the risk factors as well as the price at which the shares are offered in the issue.
11. How do I interpret the IPO Grades?
The grades are allocated on a 5‐ point scale, the lowest being Grade 1 and highest Grade 5.
12. How does IPO Grading help in deciding about investing in an IPO?
IPO Grading is intended to provide the investor with an informed and objective opinionexpressed by a professional rating agency after analyzing factors like business and financial prospects, management quality and corporate governance practices etc.However, irrespective of the grade obtained by the issuer, the investor needs to make his/her own
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independent decision regarding investing in any issue after studying the contents of the prospectus including risk factors carefully.
13. What is the role of SEBI in IPO grading exercise?
SEBI does not play any role in the assessment made by the grading agency. The grading is
intended to be an independent and unbiased opinion of that agency.
14. Will IPO Grading given by CRAs be a parameter for SEBI to issue its
observations?
The grading is intended to be an independent and unbiased opinion of a rating agency. SEBIdoes not pass any judgment on the quality of the issuer company. SEBI’s observations on theIPO document are entirely independent of the IPO grading process or the grades received by thecompany.
15. Which credit rating agencies are registered with SEBI?
As on date, the following five credit rating agencies are registered with SEBI. The same can beaccessed at http://www.sebi.gov.in/investor/addcra.htmlSEBI NORMS
SEBI has come up with Investor Protection and Disclosure Norms for raising funds throughIPO. These rules are amended from time to time to meet the requirement of changing marketconditions.Disclosure Norms :
Risk factor – The company / merchant banker must specify the major risk factor in thefront page of the document
Issuers Responsibility – It is the absolute responsibility of the issuer company about thetrue and correct information in the prospectus. Merchant banker is also responsible for giving true and correct information regarding all the documents such as materialcontracts, capital structure , appointment of intermediaries and other matters.
Listing Arrangement – It must clearly state that once the issue is subscribed where the
shares will be listed for trading. Disclosure Clause – It is compulsory to mention this clause to distinctly inform the
investors that tough the prospectus is submitted and approved by SEBI it is notresponsible for the financial soundness of the IPO.
Merchant Bankers Responsibility – Disclosure Clause the Lead Manager has to certifythat disclosures made in the prospectus are generally adequate and are in conformity withthe SEBI guidelines.
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Capital Structure – The company must give complete information about the Authorisedcapital , Subscribed Capital with top ten shareholders holding pattern, Promoters interestand their subscription pattern etc. Also about the reservation in the present issue for promoters, FII’s, Collaborators, NRI’s etc. Then the net public offer must be stated veryclearly.
24 Auditors Report – The Auditors have to clearly mention about the past performances,
cost of project, means of finance, receipt of funds and its usage prior to the IPO. Auditor must also give the tax-benefit note for the company and investors.
Investor Protection Norms
Pricing of Issue – The pricing of all the allocations for the present issue must follow the bid system. The reservation must be disclosed for different categories of investors and
their pricing must be specifies clearly. Minimum Subscription – If the company does not receive minimum subscription of
90% of subscription in each category of offer and if the issue is not underwritten on theunderwriters are unable to meet their obligation, then fund so collected must be refunded back to all applicants.
Basis of Allotment – In case of full subscription of the issue, the allotment must be madewith the full consultation of the concerned stock exchange and the company must beimpartial in allotting the shares.
Allotment/Refund – Once the allotment is finalized, the refund of the excess moneymust be made within the specifies time limits otherwise the company must pay intereston delayed refund orders.
Dematerialisation of Shares – As per the provisions of the Depositories Act, 1996, andSEBI Rules, now all IPO will be in Demat form only.
Listing of Shares – It is mandatory on the part of the promoters that once the IPO is fullysubscribed, and then the underlying shares must be listed on the stock exchange. This provides market and exit routes to the investors.
MARKETING OF IPO
The role of marketing, and particularly promotion, in the pricing and trading of securities is
fairly limited.PRELIMINARY REQUIREMENTS
The company has to complete all legal requirements , appoint all intermediaries and once theyget SEBI card (approval) . the process of marketing of IPO can commence.TIMING OF IPO
This is most important factor for the success of IPO. If , secondary market is depressed, if thereis political unrest, if serious international problems are prevailing then it is considered to benegative factors for timing of IPO’s. If these factors are favorable then the Company must find
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out about the timing of other prestigious IPO’s. Normally in good times many companies arecrowding at the same time.A question of TimingTiming the issue is crucial as it determines the success or failure of an issue to a great extent.During 1995-96, primary market boom, there was a period during which there were two to three
issues in a day. This is a dangerous situation.The ideal time for marketing an issue is a boom in the secondary market, peaceful socio- political-economic environment and at least two days gap between two issues.
GENERAL PROCEDURE FOR MARKETING OF IPO
PRESS CONFERENCE
Promoters and Lead Managers call for press conference in each major investment center.Reporters are briefed about the issue . They carry it as news-item in their papers.INVESTORS CONFERENCE
The prospective investors are called by invitation. The promoters and lead managers give presentations. They reply to the questions of the investors to boost their confidence.
ROAD-SHOWThis is like the investors conference but normally is done abroad for marketing ADR/GDR Issues. It is an expensive process and requires a lot of legal compliances. The company has toobserve the rules of the concerned country. However, road shows are becoming more and more popular in India.NEWSPAPER ADVERTISEMENT
The company releases statutory advertisements in leading newspapers. The company has to publish abridges prospectus in leading newspapers. It is the responsibility of the promoters toensure that the issuing company and their group companies should not release any commercialadvertisement, which may influence the investor’s decision for investment.
LARGEST IPO IN INDIA AND WORLD
India's initial public offer (IPO) market has emerged as the eighth largest in the world. The year 2007 saw 105 public offerings raising Rs 39,387.72 crore (Rs 393.877 billion). Accodring tosome estimates, the total value of public issues in 2008 could be as high as Rs 75,000 crore (Rs750 billion).Top ten IPO’s in India -
1) Coal India ltd.
IPO SIZE – 15000 Crore
Year of issue - 2010
The Government has announced that it will be fixing the price of Coal India Ltd’s (CIL) initial
public offering (IPO) at the upper end of the price band at Rs. 245 per share.This decision was
taken yesterday in view of the high demand the IPO witnessed.The IPO of Coal India was
oversubscribed by more than 15.28 times. The Coal India. IPO issue recieved bids for almost
US$ 53 billion worth of equity shares as against issue size of US$ 3.5 billion.This is one of the
biggest IPO’s to ever hit the Indian Capital Markets . The portion for Qualified institutional
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buyers (QIBs) for whom there was a reservation of 50 per cent of the shares has been
oversubscribed by as much as 24.7 times.The retail segment saw more than 16.45 lakh
applications received, which is a new record and the highest that any PSU’s IPO has so far
attracted.The government has has stated that the amount of Rs. 15,200 crore that it will mop
from this disinvestment will be utilised for infrastructure and development programmes in therural areas of India.
Coal India Limited is the holder of the world’s largest coal reserves and also the largest
producer.It is ranked as one of the lowest cost coal mining firms in the world. The issue price of
Coal India is far lower than what it’s global peers are valued at and this has prompted the huge
retail and FII interest in the company. Experts and analysts expect Coal India to list above Rs
300 on it’s day of listing. In the grey market the shares are already trading and deals are being
made at a premium of Rs 30 – Rs 40 per share.
Some experts believe Coal India’s fair value is at least Rs 316 per share as coal prices areunlikely to come down in India.This assessment of fair value of Rs 316 is based on the
Discounted Cash Flow valuation. At an issue price of Rs 245 per share , Coal India will enjoy a
valuation of more than US$ 35 billion, which will make it the seventh highest among India’s
listed firms.
2) Relaince Power ltd.
IPO size: Rs 11,700 crore Year of issue: 2008
Anil Dhirubhai Ambani Group-promoted Reliance Power Ltd's Rs 11,700 crore (Rs 117 billion)initial public offering has set many a record: it started off with a bang on January 15 with the
share sale -- India's biggest-ever -- getting fully subscribed within a minute of opening.The Reliance Power IPO of 26 crore (260 million) equity shares is worth $3 billion. Most of the bids came at Rs 450, the upper end of the price band, making it the country's largest IPO withestimated proceeds of Rs 11,700 crore.The Qualified Institutional Bidder (QIB) portion was subscribed 17.5 times and high net worthinvestor (HNIs) segment was subscribed 6.7 times.The company was offering the equity shares at a price band of Rs 405-450 per share. The bidding for allotment of shares in the IPO was to close on January 18.3) Oil and natural gas Corporation (ONGC)
IPO size: Rs 9,500 crore Year of issue: 2004
ONGC's public offering opened on March 5, 2004.The IPO was oversubscribed within half an hour of its opening, with estimated proceeds of Rs9,500 crore (Rs 95 billion).Till the Reliance Power IPO was launched, the ONGC offering was the largest IPO by anycompany ever in the Indian capital markets with 142.59 million shares being sold through the book-building route in a price band of Rs 680-750. 4) DLF LTD.
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IPO size: Rs 9,188 crore Year of issue: 2007
DLF Universal's IPO hit the markets on June 11, 2007 and closed on June 14. Althoughscheduled for June 2006, the IPO ran into rough weather with minority investors create a furorewith 'chating' allegations against the company.
DLF managed to settle this issue and filed a new prospectus with the Securities and ExchangeBoard of India. The Sebi approval for the same was received soon after.DLF Universal priced its IPO between Rs 500 and Rs 550. It was earlier expected to price theissue around Rs 600. The issue raised about Rs 9,188 crore (Rs 91.88 billion). The IPO wasoversubscribed a modest 3.45 times.
5) Cairn India Ltd.
IPO size: Rs 5,788 crore Year of issue: 2006
Cairn, the oil and gas exploration company, entered the Indian capital market with a public issueof 328,799,675 equity shares of Rs 10 each at a premium decided through a 100 per cent book-
building process.The share was issued in a price band of Rs 160-Rs 190.The construction and development work for the oil major's Rajasthan oil field was partly funded by the IPO.The company raised about Rs 5,788 crore (57.88 billion) through the IPO.6) Tata Consultancy Services ltd. (TCS)
IPO size: Rs 5,420 crore Year of issue: 2004
India's largest IT comapny, Tata Consultancy Services Ltd, offered 5.54 crore (55.4 million)equity shares of Re 1 each, including a fresh issue of 2.27 crore (22.7 million) shares, in itsinitial public offering through a book-building route.
The Rs 5,000-crore (Rs 50 billion) IPO opening coincided with the birth centenary of JRD Tata,who was at the helm of the Tata group for over four decades before Ratan Tata took charge.The issue also comprised an offer for sale of 3.26 crore (32.6 million) shares by Tata Sons Ltdand certain other shareholders of TCS, and a further greenshoe option by Tata Sons for 831,000shares each.The company raised about Rs 5,420 crore (Rs 54.20 billion) through the IPO.
7) NTPC Ltd.
IPO size: Rs 5,368 crore Year of issue: 2004
The National Thermal Power Corporation offered a public issue of equity shares of Rs 10 each by offering 865,830,000 equity shares in a price band of Rs 52 to Rs 62.The issue was made through 100 per cent book building process. The offer was made for 10.5 per cent of NTPC's enlarged capital. The issue raised about Rs 5,368 crore (Rs 53.68 billion) atthe top end of the price band. Post offer, the government's stake in NTPC reduced to 89.5 per cent.The issue opened on October 7, 2004 and closed on October 14.
8) Reliance Petroleum ltd.
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IPO size: Rs 2,700 crore Year of issue: 2006
Reliance Petroleum opened for bidding on April 13, 2006. The price band was fixed at Rs 57 toRs 62 and the bidding closed on April 20, 2006. This was the second time in the market for the petrochem major, after 1993 when it first came out with an IPO.
The company offered 45 crore (450 million) equity shares for subscription.Retail investors could bid for up to 1,600 shares at the upper end of the price band and theyneeded to pay only Rs 16 per share at the time of bidding. The balance amount was to be payableon allotment.The company raised Rs 2,700 crore (Rs 27 billion) through the IPO.
9) Idea Cellular ltd.
IPO size: Rs 2,443 crore Year of issue: 2007
The company fixed the price band between Rs 65 and Rs 75 per Rs 10-share. The premium wasdecided through a 100 per cent book-building process.
The issue opened for subscription on February 12, 2007 and closed on February 15, 2007.The company raised Rs 2,443 crore (Rs 24.43 billion) through the IPO.10) Jet Airways ltd.
IPO size: Rs 1,899 crore Year of issue: 2005
The initial public offer by Jet Airways met with overwhelming response on the very first day --February 18, 2005.The issue was fully subscribed within five minutes of opening and was oversubscribed 4.4 times.The issue received a total 7.5 crore (75 million) bids for the 1.72 crore (17.2 milllion) shares onoffer at a price band of Rs 950-1,125.The The Qualified Institutional Bidder (QIB) category was oversubscribed almost eight times.
Of the total shares, 60 per cent had been reserved for this category of buyers, while 90 per centof the bids came in at Rs 1,125 per share, the top end of the price band.The company raised Rs 1,899 crore (Rs 18.99 billion) through the IPO.
WORLD’S LARGEST IPO,s –
1) Agricultural bank of China ltd.
IPO size - $22.1 billion
Year of issue – 2010
ABC was the last of the "big four" banks in China to go public. In 2010, A shares and Hshares of Agricultural Bank of China were listed on the Shanghai Stock Exchange and the HongKong Stock Exchange respectively. Each share was set to cost between 2.7RMB and 3.3RMB per share. H shares were set to cost between HK$2.88 and HK$3.48 per share.The final share price for the IPO launch was issued on July 7, 2010. On completion in August 2010 it becamethe world's biggest initial public offering (IPO) surpassing the one set by Industrial andCommercial Bank of China in 2006 of US$21.9 billion.
2) Industrial and commercial bank of China
IPO Size – $21.9 billion
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Year of issue – 2006
ICBC was simultaneously listed on both the Hong Kong Stock Exchange and Shanghai Stock Exchange on 27 October 2006. It was the world's largest IPO at that time valued at US$21.9 billion, surpassing the previous record US$18.4 billion IPO by Japan's NTT DoCoMo in1998. In 2010, AgBank broke ICBC's IPO record when it raised $22.1 billion. China's largest
commercial bank was also the first company to debut simultaneously on both the Hong Kongand Shanghai stock exchanges.
3) American International Assurance
IPO Size – $ 20.5 billion
Year of Issue- 2010
It is an insurance company based in Hong Kong. It has offices in Asia-Pacific region includingAustralia, China , India, Macau , Vietnam, Malaysia, South Korea , Singapore.AIA was planned to be listed in Hong Kong Stock Exchange in April 2010. However, in March2010, Prudential plc, a United Kingdom-based financial services company, announced that it will buy AIA for $35.5 billion. The purchased later fell through, and AIA held an IPO later in
October 2010 raising $20.51 billion, the third largest ever IPO.4) NTT DoCoMo
IPO Size- $18.4 billion
Year of issue- 1998
It is predominant mobile phone operator in Japan . The issue was oversubscribed by 3 times. Itis largest IPO ever in Japan. It is alo listed at LSE , NYSE, Stock Exchanges. They are havingemployees more than 21500 in year 2005. Total assets is more than $ 65 billion as of year 2009 .
Top ipo performers ( 21 june 2010)
Company CMPIssuePrice List Price List Date Chg (%)
Fineotex Chem 256.7 70 80 11-Mar-11 220.9
C Mahendra Exp 243.1 110 111 20-Jan-11 119
Gallantt Ispat 87.9 50 48.9 11-Oct-10 79.8
Aanjaneya Life. 377 234 229.45 27-May-11 64.3
Midvalley Enter 118.8 70 73 27-Jan-11 62.7
Gravita India 346.6 125 218.75 16-Nov-10 58.4
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Lovable Lingerie 393.55 205 261.5 24-Mar-11 50.5
Sudar Garments 105.55 77 74 11-Mar-11 42.6
Coal India 390.25 245 287.75 4-Nov-10 35.6
Prakash Steelage 145.2 110 118.55 25-Aug-10 22.5
Guj Pipavav Port 63.8 46 56.25 9-Sep-10 13.4
Power Grid Corpn 101.15 90 95 25-Nov-10 6.5
Power Fin.Corpn. 171 203 0 27-May-11 0
Top bottom ipo performer (21june 2011)
Company CMPIssuePrice List Price List Date Chg (%)
AcroPetal Tech. 18.3 130 130 10-Mar-11 [85.9]
Sea TV Network 17.7 100 120 14-Oct-10 [85.3]
Tirupati Inks 8.1 43 53.95 1-Oct-10 [85.0]
Bajaj Corp 113.65 660 730 18-Aug-10 [84.4]
Gyscoal Alloys 12.56 71 76.6 27-Oct-10 [83.6]
Aster Silicates 22.9 118 127.7 28-Jul-10 [82.1]
Shilpi Cable 15.3 69 78.35 8-Apr-11 [80.5]
Midfield Indus. 36.7 133 159.4 4-Aug-10 [77.0]
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Cantabil Retail 32.15 135 133.8 12-Oct-10 [76.0]
Servalaksh.Paper 8.24 29 30 12-May-11 [72.5]
Microsec Fin 38.4 118 135.1 5-Oct-10 [71.6]
Commercial Eng. 36 127 122.8 18-Oct-10 [70.7]
VMS Indus. 15.05 40 43.95 14-Jun-11 [65.8]
SKS Microfinance 378.65 985 1,036.00 16-Aug-10 [63.5]
Ravikumar Distll 24.35 64 64 27-Dec-10 [62.0]
Orient Green 17.95 47 45.7 8-Oct-10 [60.7]
Indosolar 14.55 29 29.75 29-Sep-10 [51.1]
Prestige Estates 123.15 183 251 27-Oct-10 [50.9]
Parabolic Drugs 38.65 75 76 1-Jul-10 [49.1]
Technofab Engg. 142.8 240 265 16-Jul-10 [46.1]
Omkar Spl.Chem. 54.5 98 95 10-Feb-11 [42.6]
Ramky Infra 262.35 450 450 8-Oct-10 [41.7]
PTC India Fin 16.65 28 28 30-Mar-11 [40.5]
MOIL 330.85 375 551 15-Dec-10 [40.0]
Tecpro Systems 242.2 355 399.4 12-Oct-10 [39.4]
Sanghvi Forg. 52.2 85 85 23-May-11 [38.6]
A2Z Maintenance 243.95 400 390 23-Dec-10 [37.4]
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BS Transcomm 118.85 248 190 27-Oct-10 [37.4]
Para. Print. 22.25 35 35 9-May-11 [36.4]
Electrosteel St. 8.37 11 12.35 8-Oct-10 [32.2]
Pun. & Sind Bank 100.95 120 146.1 30-Dec-10 [30.9]
Claris Lifescien 158.95 228 224.4 20-Dec-10 [29.2]
Career Point 329.05 310 461 6-Oct-10 [28.6]
S C I 99.45 140 136.9 15-Dec-10 [27.4]
Ashoka Buildcon 250 324 333.55 14-Oct-10 [25.0]
Eros Intl.Media 161.85 175 213.35 6-Oct-10 [24.1]
Va Tech Wabag 1,268.10 1,310.00 1,655.00 13-Oct-10 [23.4]
Hindustan Media 133.5 166 170 21-Jul-10 [21.5]
Innoventive Ind. 88.15 117 110 13-May-11 [19.9]
Oberoi Realty 230.9 260 280 20-Oct-10 [17.5]
Muthoot Finance 153.65 160 180 6-May-11 [14.6]
Engineers India 272.1 290 315 12-Aug-10 [13.6]
Tata Steel 559.15 610 630.15 2-Feb-11 [11.3]
Future Ventures 8.64 10 9.5 10-May-11 [9.1]
Shekhawati Poly. 30.3 30 32.5 12-Jan-11 [6.8]
Bedmutha Indus. 111.5 102 114.4 14-Oct-10 [2.5]
RPP Infra Proj. 73.1 75 75 6-Dec-10 [2.5]
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Chapter – 4Data analysis
These are the list of some slected ipo on which we doing a research these all company selectedon raised amount of ipo issue. These all company issue size is more then 800 crore rs.
Isuuer company
1 MOIL Limited IPO
2 Coal India Limited IPO
3 Prestige Estates Projects Ltd IPO
4 Oberoi Realty Limited IPO
5 SKS Microfinance Ltd IPO
6 SJVN Ltd (Satluj Jal Vidyut Nigam Ltd) IPO7 Jaypee Infratech Limited (JIL) IPO8 D B Realty Limited IPO
9 JSW Energy Limited IPO
10
Indiabulls Power Limited IPO
11 Oil India Limited IPO
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12
NHPC Limited IPO
13
Rural Electrification Corporation Limited (REC) IPO
14 IRB Infrastructure Developers Limited IPO
15
Reliance Power Limited (REPL) IPO
16
Mundra Port and Special Economic Zone Ltd IPO
17
Power Grid Corporation of India Limited IPO
18
Puravankara Projects Limited IPO
19
Central Bank of India IPO
20
Omaxe Limited IPO
21
Housing Development and Infrastructure Ltd IPO
22
Spice Communications Limited IPO
2
3
DLF Limited IPO
24
Idea Cellular Limited IPO
25
Power Finance Corporation Limited (PFC) IPO
26
Cairn India Ltd IPO
27
Parsvnath Developers Limited IPO
PARSVNATH DEVELOPERS LIMITED
Parsvanath Developers
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Parsvanath Developers Limited (Parsvnath) is a real estate development company. The Companyhas operations in 30 cities and nine states in India. Parsvnath has a diversified portfolio of realestate development projects. As of March 16, 2006, the Company was engaged in thedevelopment of 12 integrated townships, 19 residential projects, 20 commercial complexes,including shopping malls and multiplexes, and a hotel. In addition, it has completed 14 projects,
including six housing projects and eight commercial complexes. As of March 1, 2006, theCompany directly owned or held development rights for 63.84 million square feet of saleablearea. As of March 16, 2006, one of Parsvnath's important projects was Parsvnath Exotica atGurgaon, Haryana. It is a residential complex, which has a total saleable area of approximately2,178,530 square feet.Parsvnath have successfully raised the standards for the industry as is evident from their pioneering achievement of being the first Real Estate Company to have been awarded with NAREDCO - ICRA DR 2 - Rating, ISO 9001, 14001 & OHSAS 18001 Certification.
QUALITIATIVE FACTORS
Ability to identify emerging markets and assess the potential of a location
One of the key factors in real estate development sector is the ability to assess the potential of alocation after evaluation of its demographic trends. Our ability to evaluate such trends hasenabled us to identify locations which are relatively untapped and gain the first mover advantagein such locations. Our experience in the real estate sector enables us to develop a vision whichdrives our acquisition strategy.
Marketing network
Our marketing is structured in consideration of the nature of the project and the customer base atwhich the project is targeted. Our sustained and structured marketing over the cycle of the project results in wide exposure of our products to the target audience. Brands such as BigBazaar and Spencers have outlets in shopping malls developed by us. We believe that the
presence of such well known brands large retail outlets ensures confidence among potentialcustomers.
Diversified business model
We have a number of diverse projects in 37 cities and 13 states of India and are not restricted toany one segment or geographical region of the market. Our commercial buildings, malls andmultiplexes are customized to cater to the demographics of the specific locality. Further, our residential complexes are directed at both the high income and the economy segment.
Timely and cost efficient completion of projects
We have evolved a project monitoring system which is leveraged by us to ensure disciplinedcompletion of our projects. Our track record for timely completion has given us confidencewhich is reflected in our agreements with our customers which includes a clause stating that wewill deliver possession to them at the stipulated time or else pay a penalty linked to the period of the delay based on the committed period of completion.
Transparent and efficient system of procuring materials
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We have established a transparent and efficient system for procuring best quality of materials atreasonable prices. We maintain a "just-in-time" inventory to reduce storage costs and therebyensure the flexibility to take advantage of changes in market conditions for materials required byus.
Our financial position.We believe our financial position will enable us to finance our plans. As of March 31, 2006, wehad a debt to equity ratio of 1.17. Our ability to give timely delivery of projects to our customersalso translates into timely receipts of receivables by us reducing our dependence on externalsources for funding of our projects.
Organized and professionally managed company.
We are a professionally managed company with qualified and experienced professionals in thesenior management. In order to expedite the decision making process and to facilitate speedyimplementation of the real estate projects, we have adopted a model in which critical functionslike project conceptualization, planning, procurement and project monitoring are managed from
our corporate office and key support functions such as obtaining regulatory approvals, pre-marketing and marketing are the responsibility of our representatives at the local level. Thismodel enables us to maintain a balance between the customization of our projects to cater to thedemographics of a location while maintaining our standards of quality and efficiency.
QUALITATIVE FACTORS
CALCULATE P/E OF PARSVNATH DEVELOPERS
Eps= 7.21Share price= 300P/e = 41.60
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Peer group P/E(i) Highest 133.4(ii) Lowest 2.7(iii) Peer group Average 22.4
If above graph the p/e of parsvnath is more then industry p/e and other two company but lessthen mahindhra, so the stock is expensive in comparision of majority stocks
The eps of parsvnath is more then any company it indicate the company earn more then anycompany through shares
The book value of parsvnath is less in comparision of industry peers, and its share price is 310that means the share is overvalued
If we talking about the ronw of parsvnath Return on net worth is more in comparison of industry peersThe rating of parsvnath is above average which is given by the credit agencies. So it’s a goodstock for investment
Listing day results
listing 300
Open 270
Close 263Gain/lose (12.3) %
INTERPRETATION- Parsvnath have a strong fundamentals and good financial track track and p/e ,eps, book value all are good and indicates that investors should invest in this project but atthe day of listing the not gave good returns. Parsvnath listed at 300 but open at 270 and close at263.
CAIRN INDIA LLIMITED
CAIRN INDIA LIMITED
Cairn Energy PLC is public oil and gas exploration and Production Company based inEdinburgh, Scotland.
Cairn India Limited is a newly incorporated Indian company and has been promoted by CairnEnergy PLC, a crude oil and natural gas exploration and production company trading on themain market of the London Stock Exchange. At the completion of the Reorganisation, theCompany will acquire the Subsidiaries which hold all of the ownership and operated interests in
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Cairn Energy PLC’s Indian crude oil and natural gas development and production assets and themajority of its Indian crude oil and natural gas exploration assets. Upon the Company’sacquisition of the Subsidiaries, Cairn aim to be a leading participant in the Indian crude oil andnatural gas industry. We estimate the total gross proved plus probable (2P) reserves attributableto the fields in production or under development in which Cairn India has interests to be 754
mmboe and its net working interest in these 2P reserves to be 472 mmboe. Most of the 2Preserves are estimated to be contained in the Rajasthan Block which is currently subject tosignificant appraisal and development activity. In addition to proved plus probable reserves,Cairn estimate the gross contingent resources attributable to these fields to be 414 mmboe.Outside of the Rajasthan Block Cairn estimate the total gross 2P reserves attributable to thefields in production or under development in which Cairn India has interests to be 122 mmboeand on a net working interest basis Cairn estimate these same reserves to be 30 mmboe. Inaddition, a further 157 mmboe of gross contingent resource has been identified in fields outsideof Rajasthan, with most of this gross contingent resource (143 mmboe) estimated to be containedin the deep water Block KG-DWN-98/2.
Qualitative Factors
Internal Factors
• At the completion of the Reorganisation, the Company will acquire the Subsidiaries which holdall of the ownership and operated interests in Cairn Energy PLC’s Indian crude oil and naturalgas development and production assets and the majority of its Indian crude oil and natural gasexploration assets. On the Company’s acquisition of the Subsidiaries, we aim to be a leading participant in the Indian crude oil and natural gas industry.
• We estimate the total gross 2P reserves attributable to the fields in production or under development in which Cairn India has interests to be 754 mmboe and its net working interest in
these 2P reserves to be 472 mmboe.• We have interests ranging from 40% in the Lakshmi and Gauri oil and gas fields to 22.5% inthe Raava oil and gas field. We have a 70% interest in the development area in the RajasthanBlock. As at 30 June, 2006 we estimated our net working interest, proved and probable reserves,to be 472 mmboe.
• We have a seven year tax holiday from corporate tax in respect of each eligible unit in theRajasthan Block, commencing from 1 April in the tax year during which commercial productionfrom that unit begins.• We have a significant portfolio of exploration and appraisal acreage in eastern, western andnorthern India. We were awarded five new exploration blocks in India as part of NELP V in
2005. We are also actively participating in NELP VI.
• We have a long and proven exploration expertise in India, having made 29 hydrocarbondiscoveries since 1994. In 2004, Cairn India made the largest onshore crude oil discovery inIndia since 1985 when it discovered the Mangala field in Rajasthan. Since then, Cairn India hasmade 17 additional discoveries in the Rajasthan Block and continues to undertake explorationwork which may lead to future discoveries.
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External Factors
• India is the second most populous country in the world with a population of approximately billion. Rapid economic growth in India has led to a significant increase in demand for crude oiland natural gas.
• We are likely to benefit from the high demand for oil in India because this demand cannot bemet by current domestic production capacities as India fulfils only 20% of its oil and natural gasrequirements from oil and natural gas production within India. We expect a gross plateau production rate from the Rajasthan Block of approximately 150,000 bopd.
• India is a net importer of crude oil and natural gas. In 2005, India consumed 115.7 milliontonnes of crude oil, yet it produced only 36.2 million tonnes. Similarly, in 2005, India consumed36.6 billion cubic metres of natural gas but produced only 30.4 billion cubic metres (Source: BPStatistical Review of World Energy, June 2006).
Adjusted Earnings per Share
The Company was incorporated on 21 August, 2006 and does not have a financial track recordwhich reflects the operations of Cairn India.The following table lays down a pro forma computation of earnings per share for the Company based on the earnings of the three material subsidiaries of Cairn India Holdings Limited whichare CEA, CEHL, CEIH and the post-Issue equity share capital (number of shares) of theCompany.
Industry P/E*
a) Highest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.1 b) Lowest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4c) Industry Average . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.14
Listing day
Listing 190
Open 140
close 137.5
gain/loss (27.3)%
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POWER FINANCE CORPORATION LIMITED
Power Finance Corporation Limited (PFC) a leading power sector public financial institutionand a non banking financial company providing fund and non-fund based support for the
development of the Indian power sector. They perform a major role in channelising investmentinto the power sector and function as a vehicle to develop power sector in India.
PFC clients include state power utilities, central power sector utilities, power departments, private power sector utilities (including independent power producers), joint sector power utilities, power equipment manufacturers and power utilities run by local municipalities. Theseclients are involved in all aspects of the generation, transmission and distribution and relatedactivities in the power sector in India.
Few financial facts:
1. As of March 31, 2006, PFC have made cumulative sanctions of Rs. 940,520.90 million andcumulative disbursements of Rs. 617,990.10 million to power sector projects.In fiscal 2005.
2. PFC made a profit after tax of Rs. 9,705.31 million and in fiscal 2006, their net profit was Rs.
9,754.33 million.3. In fiscal 2005, PFC had total assets of Rs. 311,455.45 million and net worth of Rs. 59,974.96million. In fiscal 2006, we had total assets of Rs. 374,896.05 million and our net worth wasRs.65,055.45 million.
QUALITATIVE FACTORS
Factors external to us
• Huge requirement of funds for investment in Power Sector: Historically, the power industryin India has been characterized by energy shortages. The GoI’s mission of “Power for all by2012”, estimated that India’s installed generation capacity should be 200,000 MW by the end of its Eleventh Five Year Plan in 2012 compared to 124,287 MW as on March 31, 2006. This will
require huge requirement of funds for investment in Power Sector.
Factors internal to us
• Leading provider of power finance in the country: We are a leading power sector publicfinancial institution and a non banking financial company providing fund and non-fund basedsupport for the development of the Indian power sector. In the government's ninth plan period(fiscal 1998 to fiscal 2002), our disbursements, excluding short term loans, were Rs. 135,844.51million against a total expenditure in the power sector of Rs. 1,195,760.00 millionresulting in a share of 11.36% for this period. In the government's tenth plan period (fiscal 2003to fiscal 2007) our disbursements, excluding short term loans, for the first four year period wereRs. 281,649.45 million against estimated expenditure of Rs. 1,228,390.00 million in the power
sector (as per Planning Commission’s tenth plan mid-term appraisal) for the same periodresulting in a share of 22.93% for this period. As of March 31, 2006, we have made cumulativesanctions of Rs. 940,520.90 million and cumulative disbursements of Rs. 617,990.10 millionto power sector projects.
• Exclusive focus on financing the power sector: We were founded with the sole objective of,and our focus continues to be on, extending finance to and promoting Indian power projects andrelated activities. We have developed extensive power sector knowledge and have the capacity to
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appraise and extend financial assistance for a wide variety of projects. We also have the skillsand the expertise to provide solutions to various problems faced by power sector utilities and provide assistance to our clients in their reform and restructuring programs.
• Established relationship with the Government: We play a pivotal role in the GOI’s plans for
the growth and development of the Indian power sector and implementation of its policies and programs including the implementation of the Electricity Act.
• Well developed client base: We have a well developed client base which includes state power utilities, central power sector utilities, power departments, private power sector utilities(including independent power producers), joint sector power utilities, power equipmentmanufacturers and municipal run power utilities. These clients are involved in all aspects of thegeneration, transmission and distribution and related activities in the power sector inIndia.
• Healthy asset quality: Despite significant exposure to State Power Utilities (which have been
making cash losses) our asset quality has remained healthy over a long period of time primarilyon account of our recovery mechanism which in addition to primary security like charge onassets and irrevocable state government guarantees and payment of obligations through defaultescrow accounts.
• Competitive Cost of Funds: Given our relationship with the GoI we have been able to sourceforeign currency loans from agencies such as the World Bank, ADB and KfW (“Kreditanstaltfuer Wiederaufbau”). These sources enable us to raise long term funds at competitive costs,which supplement the funds available from commercial sources and broaden the maturity profileof our debt.
• Nodal agency for development of UMPPs: We have been designated as the nodal agency bythe GoI for the development of five UMPPs, each with a capacity of 4,000 MW and above.
• Competent and committed workforce: We have a highly competent and committed work force. The members of our management team and professional staff have a variety of professional qualifications and come from a diverse set of backgrounds including power generating companies, engineering companies, leading commercial banks and lendinginstitutions, finance companies and regulatory bodies. Our managers and professional staff havedomestic and international expertise and domain knowledge in areas such as project finance,corporate lending, structured finance and law.
• Recognition / Awards conferred: Within 10 years of commencement of operations in 1988,we have been conferred “Mini Ratna” status by the GoI India in 1998-99 which provides usconsiderable operational freedom and autonomy in decision making. Further, in recognition of our performance and our consistent achievement of targets negotiated under the Memorandum of Understanding we enter into with the Government on an annual basis, the Government has ratedour performance as “Excellent”, continuously from fiscal 1994 to fiscal 2004. For fiscal 2005,we had “Very Good” rating.
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Price/Earning (P/E) ratio in relation to issue Price of Rs [●]a. For the year ended March 31, 2006 EPS is Rs 8.25. b. P/E based on year ended March 31, 2006 is [●]c. Industry P/E -There are no listed companies of comparable size in the Indian power
finance sector. Hence, there is no industry P/E.
Comparison with Industry Peers:There are no listed companies of comparable size in the Indian power finance sector. Hence, thiscomparison is not possible
EPS RETURN ON
NETWORTH%
Power finance
corporation
8.25 13.06
Parameters INDUSTRY
BENCHMARKS
P/E No industry for
comparision, therefore no
industry p/e
10.30
RONW 13.06
EPS 8.25
P/E RATIO
Share price=85
Eps=8.25
p/e=10.30
Credit rating
agency rating
Crisil, care, icra,fitch etc
Listing day
Listing 85
Open 104
close 111.55
Gain/loss 31.2%
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IDEA CELLULAR LIMITED
IDEA CELLULAR
Idea Cellular Limited, an Aditya Birla Group company is a leading mobile operator in India andcurrently operates in 11 Circles. Following the growth opportunities in the Indian
telecommunications market, Idea Cellular is among fastest growing mobile operator.Idea Cellular provide mobile services in 11 Circles in India, namely the metropolitan Circle of Delhi, the category A Circles of Andhra Pradesh, Gujarat and Maharashtra, the category BCircles of Haryana, Kerala, Madhya Pradesh, Rajasthan, Uttar Pradesh (East) and Uttar Pradesh(West) and the category C Circle of Himachal Pradesh.
More facts:
1. For the financial years 2005 and 2006, Idea's gross revenues were approximately Rs. 22.68 billion and Rs. 29.73 billion, respectively.2. Idea Recently got license for the Mumbai and Bihar Circles.
Quantitative factors
Some of our key competitive strengths:• Attractive existing footprint;• Operations in 11 Circles in India;• Original licensee in seven of the Established Circles, providing incumbency advantages;• Market leader in two of, and established positions in the remainder of, the Established Circles;• Critical mass of 10.36 million subscribers as at September 30, 2006;• Strong distribution channels;• High quality network structure;• A national brand;• Part of the Aditya Birla Group.
Quantitative factors
FY 2006 eps nav p/e RONW
Idea cellular 0.35 3.03 214 10.14
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Peer Group P/EIndustry P/E Telecommunications
a) Highest 43.6 b) Lowest c) Industry Average 37.6idea cellular p/ e calculation
eps= 0.35share price= 75 p/e = 214Financial parameters analysis
The p/e of idea cellular in comparision of industry p/e is much high and also high in comparision
of other companies like mtnl, reliance, vsnl etc . it shows the stock of idea is expensive incomparision of other stocks
The eps of idea cellular is 0.35 which is too less is comparision of industry peers it means theearning of per share is too less of idea cellular
The return on netwoth of idea is more in comparision of mtnl, reliance, vsnl but less then the bharti airtel so it is average in performance of eps
The NAV of idea cellular is less in comparision of all industry peers its shows the size of the
assest of the company is small in campare to other peers
Listing day
Listing 75
Open 92.4
close 85.55
Gain/lose 14 %
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DLF LIMITED
DLF LIMITED
Incorporated in 1946, DLF Limited is a real estate development company based in India. DLF is
the largest Indian company in terms of the area of completed residential and commercialdevelopments. DLF’s main area of operation is Delhi and surrounding areas.
DLF is in almost each and every area of real estate development including identification andacquisition of land, planning, execution, marketing and maintenance of the projects.
DLF's major line of business includes:
Residential business - DLF builds and sells a wide range of properties including houses,duplexes and apartments of varying sizes, with a focus on the higher end of the market.Commercial business - DLF builds and sells or lease commercial office space, with a focus on properties attractive to large multinational tenants.Retail business - DLF develop and manages leases based shopping malls, which in many casesinclude multiplex cinemas.
DLF is now focusing on more infrastructure, SEZs(special economic zones) and hotel projects.Few more facts:Developed approximately 220 million square feet, including approximately 195 million squarefeet of plots, 17 million square feet of residential properties, 6 million square feet of commercial properties and 2 million square feet of retail properties.Land Reserves of approximately 10,255 acres.for the three years ended March 31, 2006, 2005 and 2004, DLF's consolidated total income wasRs. 12,420 million, Rs. 6,260 million and Rs. 5,266 million, respectively, and consolidated net profit was Rs. 1,917 million, Rs. 865 million and Rs. 538 million, respectively
Peer group P/E*(i) Highest 365.8
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(ii) Lowest 9.6(iii) Peer group Average 49.9
Dlf p/e calculationEps= 12.84
Share price= 550 p/e= 42.83
EPS RONW BOOK VALUE
DLF LIMITED 12.84 17.52
Financial parameters analysis
The p/e of dlf is near to industry p/e that shows the company stock is not too expensive or cheapand the highest p/e is 253 of mahindhra gesco
The eps of dlf here is 12.84 and it is mid between others peers , somit is average stock for theinvestment purpose
The returns is 17.52 that is good in comparision of other company , there is other two company
which have more then dlf rest of have a less then dlf so its also a good indication for investment
The nav of of dlf is more then approx all company . company have large assest size in compareof other company
Credit rating
agency rating
Crisil, care, icra,fitch etc
Listing dayListing 550
Open 582
close 570.05
Gain /lose 3.6%
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SPICE COMMUNICATION
Incorporated in 1997, Spice Communications Limited (or Spice Telecom) is a cellular services provider in the states of Punjab and Karnataka in India. Spice Telecom has around 14.26%market share in these states.
Spice total billable subscribers as on December 31, 2006 were 1.86 million comprisingapproximately 1.41 million pre-paid subscribers and approximately 0.45 million post-paidsubscribers. In three years ended June 30, 2004, 2005 and 2006, Spice telecom's total incomewas Rs. 5,544 million, Rs. 6,430.59 million and Rs. 6,804.53 million, respectively.
Malaysia’s incumbent service provider Telekom Malaysia (TM) holds a 49%, while industrialistand Modi group chairman B K Modi owns the remaining 51% stake in Spice Communications.
QUALITATIVE FACTORS
• Strong Player in our circle of operation. As of December 31, 2006, we were the secondlargest operator in Punjab, with approximately 1.75 million subscribers and the sixth largest
operator in Karnataka, with approximately 0.70 million subscribers. For the two circlescombined we were the fourth largest operator in December 2006 based on subscribers with amarket share of 14.26%.
• Strong Strategic Investor in TM. TM’s investment in our Company in March 2006 provided uswith anopportunity to leverage the operational and strategic expertise of a major regionaltelecommunications player. TM is a leading telecommunications company based in Malaysia, with a strong presencein theAsia-Pacific region, including investments in Sri Lanka, Bangladesh, Indonesia, Cambodia,
Singapore and Pakistan.
• Vibrant and well-recognised brand name. The “Spice” brand is well-recognised in our targetmarkets. We position our brand as innovative, youthful and high-performing to appeal to thesavvy and technologically advanced youth in these affluent states.
• Experienced Management Team. Our management team includes senior executives who haveexperience working in the Indian wireless communications market since the commercialisationof wireless services in 1995. As a result, our management has extensive experience with planning and implementing strategies in the fast-changing Indian cellular market. We believe our management strength will be crucial in the implementation of our future growth plans.
QUANTITATIVE FACTORS
EPS RONW PE BOOK VALUE
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SPICECOMMUNICATION
(0.87) 52.87 17.85
Industry P/E Telecommunications
a Highest 47.2 b Lowest 21.3c Industry Average 41.0
spice p/ e calculationeps =-0.87share price= 46 p/e 52.87
PEERS COMPARISION
The p/e of spice communication is 52.8 which is more then industry p/e and and other players itsshows the the stock is expensive in comparision of industry peers
The eps of spice communication is very less is comparision of peers group it shows the earningon per share is very much less on per share
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The NAV of spice comm. is -2.1 that shows there is no value of assest and company have a tomuch I debt so it’s a bad indicators as a invest purposeCredit rating
agency rating
Crisil, care, icra,
fitch etc
Listing day
Listing 46
Open 55.75
close 60.65
Gain/lose 31.84%
HOUSING DEVELOPMENT INFRASTURURE LIMITED
Incorporated in 1996, Housing Development and Infrastructure Ltd (HDIL) is a a real estatedevelopment company based in Mumbai. HDIL is part of the Wadhawan Group (formerly knownas the Dheeraj Group) and operates in Mumbai Metropolitan Region.
HDIL Real Estate Development business includes construction and development of residential projects, commercial and retail projects, Slum Rehabilitation and Development.
HDIL has Large Land Reserves in the Mumbai Metropolitan Region. As of December 31, 2006,they had approximately 112.4 million square feet of Land Reserves.
To expend its business by location HDIL is looking for projects in other locations, includingKochi and Hyderabad. HDIL is planning to enter into hotel projects, special economic zone
developments and “mega-structure” complexes, which are large-scale mixed-use retail,commercial and residential developments.
Qualitative Factors
We believe the following business strengths allow us to successfully compete in the real estatesector:• Large Land Reserves in the Mumbai Metropolitan Region;• Strong in-house development capabilities and project execution skills;• Experienced and established participant in Slum Rehabilitation Schemes;• Established reputation for quality projects and construction; and• Experienced management and employees
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Industry P/E*i. Highest : 249.1ii. Lowest : 3.3iii. Industry Composite : 50.4calculation of p/eeps 30.45share price = 500 p/e = 16.42Financial parameters analysis
The p/e of hdil is 16.42 and industry average is 50.4 that shows the share of hdil is very chep andand hdil is the only company have a least p/e.
The eps of hdil is at the top in comparision of other peers group where as the p/e of thatcompany is so less means the stock is so cheap and here the the eps is at good high that showsthe company have agood earning and good stock for the investment purpose.
The return on netwoth is also more then the other two peers and less then two peers that means itgive a avergage retun on euity to their shareholders
Here NAV is her very less in comaparision of all peers company, above all eps, ronw, p/e is good but here nav is too less. It shows the company have more liability or may be company have toomuch expenditure or company have very less assestsCredit rating
agency rating
Crisil, care, icra,
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fitch etc
Listing day
Listing 500
Open 441.39close 434.47
Gain/lose (13.1) %
At the time of listing company shares close at 434. That means at that particular day companynot give a good returns and its eps, ronw, and p/e says it’s a good investment only nav is veryless.
OMAXE LIMITED
Incorporated in 1989, Omaxe Limited is a real estate development and construction companywith operations in 30 cities and 9 States in India. Omaxe Limited is involve in residential andcommercial real estate development projects ranging from integrated townships, group housingand retail and other commercial properties, hotels, information technology and bio-tech parks tospecial economic zones. Omaxe's operations span across all aspects of real estate development,from the identification and acquisition of land, to the planning, execution and marketing of projects.
As of September 30, 2006 Omaxe had completed more than 120 construction projects and hadaccess to land reserves of approximately 3,052 acres. As of September 30, 2006, Omaxe had 46current residential and commercial projects consisting of 19 group housing projects, 13integrated townships, 13 shopping malls and commercial complexes and 1 hotel.
On November 21, 2006, Omaxe entered into a joint venture with Azorim International Holdings
Limited, which is part of a leading Israeli real estate development group. The joint venture is for the construction and development of project ‘Omaxe Forest’, an ultra-luxury group housingdevelopment in Faridabad.
Omaxe's revenues have grown from Rs. 1,455.56 million in Fiscal 2003 to Rs. 8,193.18 millionin Fiscal 2006, at a CAGR of 77.89% and profit after tax and minority interest increased fromRs. 49.72 million in Fiscal 2003 to Rs. 1,207.31 million in Fiscal 2006, at a CAGR of 189.58%.
QUALITIATIVE FACTORS
Ability to identify, acquire and consolidate land
One of our key strengths is our ability to identify suitable tracts of land for our developments andto acquire and consolidate land. We have an in-house project research team consisting of 23
employees who are involved in gathering relevant market data, assessing the potential of alocation after evaluating its demographic trends and in identifying relevant government schemesand incentives.
Extensive land reserves
As of September 30, 2006, we had access to land reserves of approximately 3,052 acres(including approximately 540 acres of land belonging to joint ventures and collaborations in
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respect of which our economic interest is approximately 74% calculated on a weighted average basis in relation to such land).
Experience in the construction industry with a track record for quality of construction and for
timely delivery of projects
We have been in the construction and contracting business for 17 years and have a high level of technical expertise in executing our projects. As of September 30, 2006 we had completed morethan 120 construction projects in such capacity. We understand the intricacies of project planningand dealing with execution related issues like raw material procurement, labour, suppliers andother third parties
Ability to identify emerging trends in customer requirements and strong marketing network.
We have a strong marketing network of more than 800 business associates. Our marketing isstructured in consideration of the nature of the project and the customer base at which the projectis targeted. Our sustained and structured marketing over the cycle of the project results in wideexposure of our products to the target audience.
We have a diversified business within the real estate sector.
Our real estate business has diversified across geographical locations and in different real estate projects that we are involved in. We have projects and land reserves in 30 cities and 9 states of India. As of September 30, 2006, we had 46 current residential and commercial projectsconsisting of 19 group housing projects, 13 integrated townships, 13 shopping malls andcommercial complexes and 1 hotel.
Emphasis on innovation
We were one of the first developers to conceptualize and develop theme malls in northern India.Our theme based projects include:
• Wedding Malls: Wedding malls are intended to be ‘one-stop shops’ for all wedding relatedarrangements and will include shops and outlets selling wedding wear, jewellery, floraldecorations and other wedding related accessories. 51
• ‘House 2 Home’ will include shops selling interior design-ware, furniture and other residential accessories to set-up and furnish a home. We are currently developing a ‘House 2Home’ mall at Gurgaon.
• ‘NRI City’ that we are developing in Greater Noida is a mini-township in close proximity tothe NCR and provides a choice of residential housing from apartments to individual plotswith world-class amenities.
• ‘Nile at Gurgaon’ is a residential project incorporating Egyptian style architecture but withmodern amenities and conveniences.
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Peer group P/E(i) Highest 305.60(ii) Lowest 5.20(iii) Peer group Average 51.40Omaxe p/e calculationEps= 8.04Share price= 310 p/e= 38.55
The p/e of omaxe is 38 and industry average is 51 that is less there others two peers have veryhigh p/e and rest of others near average that means it’s a average price of stock not expensiveand not too cheap
The eps of omaxe limited is average not too high and too less in comparision of others peers , socompany have a average earning in comparison of others peers.
The return on netwoth is high in comparision all peers expect kulkarni . so here shareholders getsa good return on equity .
The book value of omaxe share is very less in comparision of others peers company comparingtoo market value that is 300 it shows the share is too much overvalued.Credit rating
agency rating
Crisil, care, icra,fitch etc
Listing day
Listing 310
Open 400
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close 349.95
Gain/lose 12.88
There is great performance see at a first date 12% returs at the time of closing the share was
overvalued to see its overvalued nobody will invest in that copany but when we see its others parameters then investors come to know why the comy is good its netwoth is very high good epsgood p/e. so its very important to analyse all the parameters
INTERPRETATION-
CENTRAL BANK OF INDIA
Incorporated in 1911, Central Bank of India is the first Indian commercial bank which waswholly owned and managed by Indians. Central Bank of India branches are spread in 27 out of 28 States as also in 4 out of 7 Union Territories in India. Central Bank of India holds a very prominent place among the Public Sector Banks on account of its network of 3194 branches and
267 extension counters at various centers throughout the length and breadth of the country.Central Bank of India has over 25 million account holders.
CBI plans to expand significantly the number of branches to 1,000 under central bankingsolution(CBS) so as to cover approximately 80% of the business by the close of financial year ending March 2008 (FY 2008). Also, the bank has set a target to increase its ATMs to 500 from261 (end March 2007) by end of this fiscal.
Qualitative Factors
1. We are a public sector banking institution in India and service over 25 millioncustomers across India.
2. As at March 31, 2007, we had 3,194 branches in India spread over 27 states andthree union territories. 3. Our advances increased by 38.18% to Rs. 517,954.67 million as at March 31,
2007 from Rs. 374,834.81 million as at March 31, 2006. As at March 31, 2007, housingand retail loans constituted 10.68% of our total outstanding credit.
4. Our total deposits increased by 24.51% from Rs. 664,826.48 million as of March31, 2006, to Rs. 827,762.77 million as of March 31, 2007.
5. Our net NPAs to net advances ratio declined from 2.59% as of March 31, 2006 to
Rs. 1.70% as of March 31, 2007.
EPS (Rs.) P/E Return On
Average Net
Worth (%)
Book Value Per
Share (Rs.)
Central Bank 13.11 [•] 15.07 77.25
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EPS (Rs.) P/E Return On
Average Net
Worth (%)
Book Value Per
Share (Rs.)
Peer Group
Bank of Baroda26.8 10.1 12.5 235.7
Bank of India22.3 9.9 21.3 117.9
Canara Bank 33.5 7.9 18.8 197.8
Union Bank of India16.2 8.2 19.2 93.7
Peer Group (Simple)
Average
24.7 9.03 17.95 161.275
Industry P/E
Highest: 17.7Lowest: 4.9Average: 10.4
Calculation of p/eEps= 13.11Share price = 102
p/e= 7.7
Financial parameters analysis
The p/e of central bank is very less in comaprision of all others peers group that shows thecompany have a cheap stock but only p/e cannot says how the comp will perform in future.
Here eps of central bank is less to all others peers bank.
Credit rating
agency rating
Crisil, care, icra,fitch etc
Listing day
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Listing 102
Open 110.68
close 98.17
Gain/lose 3.75
Overall its was a good investment too see all its financial parametes very less p/e that means thestock is so much expensive good book value, and good returns on shareAt the day of listing also stock gave a 3.75% returns
PURVANKARA PROJECT LIMITED
Incorporated in 1986, Puravankara Projects Limited is one of the leading real estate developmentcompanies in India. Puravankara operations span all aspects of real estate development, from theidentification and acquisition of land, to the planning and execution and marketing of the projects.
The residential properties that Puravankara develop consist of apartment complexes, villas and
townhouses. Puravankara's commercial projects include retail and office premises.Puravankara's projects are spread over Bangalore, Kochi, Chennai, Coimbatore, Hyderabad,Mysore, Colombo and the United Arab Emirates ("U.A.E"). Puravankara have completed 12residential projects and one commercial project covering approximately 3.18 million sq.ft of Saleable Area. Puravankara currently have 12 residential projects and one commercial projectunder construction covering approximately 10.45 million sq ft. of Developable Area or 10.02million sq ft. of saleable Area. As of December 15, 2006, Puravankara's Land Assets aggregateapproximately 31.07 million sq. ft.
Qualitative Factors
● We believe that we have an established brand name in the Indian real estate market owing toour commitment to quality and timely delivery of our projects.
● We have a strong and experienced management team, led by our Promoter.
● We also have access to an extensive land bank aggregating approximately 33.48 million squarefeet of land situated in various locations, including Bangalore, Chennai, Kochi and Coimbatore.
● Our partnership with Keppel Investment Mauritius Private Limited, a subsidiary of theSingapore based Keppel Land Limited (which is a subsidiary of Keppel Corporation Limited, acompany that is majority owned by Temasek Holdings, the investment arm of the Singapore
Government) is also another factor affecting the demand for our Equity Shares.
Industry P/E*i. Highest : 156.5ii. Lowest : 2.0iii. Industry Average : 26.84
p/e calculation
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eps= 6.8share price = 450 p/e= 66.17
calculate P/e , at the time of listing
Financial parameters analysis
Financial parameters analysis
Credit rating
agency rating
Crisil, care, icra,fitch etc
NIL
Listing day
Listing 450
Open 399
close 361.75
Gain/lose (19.6)%
If we talk about the purvankara limited its p/e was average that means the stock is not tooexpensive or cheap but the eps was very shows there is very less earning on share, ahead it thereturn on networth was good and book value was very less that tell the share was overvaluedBut finally at the day of listing the the compay gave 19% return on share.
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POWER GRID CORPORATION
Incorporated in 1989, Power Grid Corporation of India Limited (PGCIL) is Indian governmentowned, public sector enterprise. PGCIL is in the business of transmission of electric power inIndia. It owns and operates a large network of transmission lines and infrastructure thatconstitutes most of India’s interstate and inter-regional electric power transmission system and
carries electric power across India.As of March 31, 2007 PGCIL owned and operated 59,461 circuit kilometers of electricaltransmission lines and 104 electrical substations. In Fiscal 2006, PGCIL transmittedapproximately 279 billion units of electricity, representing approximately 45% of all the power generated in India.
PGCIL is also into the consultancy business and has provided transmission-related consultancyservices to more than 90 clients in over 200 domestic and international projects.
PGCIL is also into the telecommunications business and own and operate a fiber-optic cablenetwork for telecom business in India. As on March 31, 2007 PGCIL has over 19,000 kilometerslong fiber-optic cable network connecting over 60 Indian cities, including all major metropolitanareas.
PGCIL have been designated a Mini-Ratna Category-I public sector undertaking and in fiscal2006, generated a total income of Rs. 35,543.14 million with profit after tax of Rs 9204.19million. Transmission and transmission-related activities constituted 93.88% of total income,with the balance came from consulting and telecommunication businesses.
Peers comparision
We believe none of the listed companies in India are in the business of power transmission.Hence,comparative data for the peer group/industry is not available.The issue price of Rs. [●] per Equity Share has been determined by us in consultation with theBRLMs, on the basis of the demand from investors for the Equity Shares through the Book building
process and is justified based on the above accounting ratios. For further details see “Risk Factors” on page x and the financials of the Company including profitability and return ratios, as set out inthe“Auditors’ Report” on page 138 for a more informed view.
eps ronw NAV
Power grid 2.76 9.41 28.31
p/e calculationeps= 2.76share price= 52 p/e= 18.8Financial parameters analysis
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PARAMETERS Industry benchmark Company
P/E No comp for comparision 18.8
EPS 2.76
RONW 9.41
Listing 52
Open 85
close 100.65
Gain/lose 93.5%
There is no peers comparision because it is a huge company and nobody other company cancompete with power gried well the eps, ronw, nav were ok,At the day of listing the company gave 93% returns.
MUNDRA PORT AND SPECIAL ECONOMIC ZONE LIMITED
Mundra Port and Special Economic Zone Limited is developer and operator of the Mundra Port,a leading sea port located in Kutch Gujrat. Mundra Port is Adani Group promoted company andhas exclusive right to develop and operate Mundra Port and related facilities for 30 years startingfrom February 17, 2001. Mundra Port provides port services for bulk cargo, container cargo,crude oil cargo and value-added port services, including railway services.
Promoter of Mundra Port, Adani Group is a diversified group with around Rs 16,000 croreturnover. Incorporated in 1988, Adani Group is involve in businesses like commodities trading,coal mining, power trading, power generation, real estate development, agro processing and
logistics, shipping and port operations.In April 12, 2006 Mundra Port received approval as a developer of a multi-product SEZ atMundra and the surrounding areas, which will be the first port based multi product SEZs inIndia. Mundra SEZ will provide integrated infrastructure including world-class Industrial,Business, and Social infrastructure like development of Industrial plots, Commercial andResidential buildings, Schools, Colleges, Hospital, Entertainment, Sports and Recreationfacilities.
Mundra Port's income has grown at a compound annual growth rate of 51.2% from Rs. 1,676.7million in fiscal 2004 to Rs. 5,797.4 million in fiscal 2007. Company’s net profit in fiscal 2006was Rs. 737.5 million and in fiscal 2007 was Rs. 1,931.2 million.
Qualitative FactorsWe believe the following business strengths allow us to compete successfully in the portindustry:• Our natural and location advantages, including a deep water draft that enables us toaccommodate larger vessels that require a deep water berth, and protection from severe weather that enables us to handle cargo throughout the year
• Proximity to the northern interior of India and major maritime trade routes which provides us a
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strategic position to service the significant population of the landlocked north and northwestregions of India which generates significant port traffic
• Land with port back-up area and infrastructure which provides us sufficient resources for futureexpansion, and SEZ advantages
• Access to rail, road and pipeline network that provides us with a competitive advantage over competing ports in attracting larger volumes of cargo
• Strategic arrangements and established customer relationships with certain companies• Experienced management team that has demonstrated the ability to manage significantexpansion plans and capital expenditures while maintaining our recent income and profit growth
p/e calculationseps= 5.36share price = 440
p/e = 82Financial parameters analysis
PARAMETERS Industry benchmark
Company
P/E 82
EPS 5.36
RONW 26.08
Comparison with Industry Peers
There are no listed comparables in the Indian port and SEZ industry.Credit rating
agency Rating
Crisil, care, icra,fitch etc
NIL
Listing day
Listing 440
Open 154
close 192.34
Gain/lose (56.28)%
Mundra port p/e says that the stock is expensive but without peers we cannot says anything thathow much it is expensive , its eps is less and gave a good returns finally at the listing daycompany gave huge loss to their investors the stock close more then below 50%
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RELIANCE POWER
Reliance Power Limited (REPL), a Reliance Anil Dhirubhai Ambani (ADA) Group company isin the business of developing, constructing and operating power projects. The Reliance ADAgroup is one of the biggest business group in India involve in business like telecommunications(Reliance Communications), financial services (Reliance Capital), media and entertainment(Adlabs Films), infrastructure, energy (Reliance Energy REL, Reliance natural resources RNRL,Reliance Energy Transmission and Reliance Energy Trading) and other sectors.
Reliance Power Limited is currently developing 13 medium and large sized power projects with
a combined planned installed capacity of 28,200 MW across various geographic locations inIndia. First project of Reliance Power is expected to go onstream in 2009. Company intend tosell the power generated by these projects under a combination of long-term and short-termPPAs to state-owned and private distribution companies and industrial consumers.
Financial parameters analysis
Credit rating
agency rating
Crisil, care, icra,fitch etc
4
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Listing day
Listing 450
Open 516.53
close 351.23
Gain/lose (21.94)%
The public issue size of reliance power is 10000 crore which is largest upto 2009. Company hada good netwoth ok eps and less nav company came with huge issue size because their objectivewas to provide power in india at large quantity their fundamental are also very to see thatinvestor invest money in that stock but after all at the day of listing company close at below20%, at the time of listing it reaches at 516 but its not justified for the returns
IRB INFRASTRUTURE
Incorporated in 1998, IRB Infrastructure Developers Limited is in infrastructure development
business which involves construction, development and operation of infrastructure development projects.
IRB Infrastructure Developer is an established infrastructure company in the roads sector inIndia and have a large portfolio of completed and operational BOT projects in the Indian roadinfrastructure sector. IRB's construction business complements infrastructure development business and involves engineering, procurement and construction work for construction projectson a contractual basis, including in the roads sector.
IRB is one of the leading Private Developers in the Western India & having large number of operating toll road projects. IRB has executed Road Construction works on BOT and funded basis for the Clients like MORST&H, NHAI, MSRDC, PWD, World Bank, Asian DevelopmentBank, of around 1200 kms length, so far. IRB executed one of the early BOT Project viz. 'Thane
Bhiwandi By-Pass Road' & the prestigious 'Mumbai - Pune Expressway & NH 4 BOT Project'.
Qualitative factors
The information presented in this section for the years ended March 31, 2005, 2006 and 2007 isderived from our unconsolidated audited restated financial statements and consolidated auditedrestated financial statements for March 31, 2007. Investors should evaluate the Company takinginto consideration its earnings and based on its consolidated growth strategy. Some of thequalitative factors which may form the basis for computing the Issue Price are as follows:
• Diversified portfolio across road infrastructure sector at various geographic locations.
• Ability to meet pre-qualification credentials.• Extensive experience and strong track record.• Professionally managed company.• Experienced management and a qualified employee base.• Integrated execution capabilities with in-house construction and management capabilities
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Industry P/E
a) Highest 131.9 times b) Lowest 2.9 timesc) Industry Average 32.0 times
P/e calculationEps= 3.5
Share price= 220P/e= 62.8
Financial parameters analysis
Credit rating
agency ratingCrisil, care, icra,fitch etc
4
Listing day
Listing 220
Open 170.05
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close 189.05
Gain /lose (13.63)
To see the fundamental and credit rating investor should invest in this stock every thing is
positive in financials like its book value not overvalued and not undervalued its p/e is very near to industry p/e, yes eps is less in comparision of peers and return on netwoth is also average.At the day of listing stock not gave good returns and its shares close below 13%.
RURAL ELECTRIFICATION CORPORATION LIMITED
Incorporated in 1969, Rural Electrification Corporation Limited (REC) is one of the leading
public financial institutions in Indian power infrastructure. They are engaged in the financingand promotion of transmission, distribution and generation projects throughout India.
REC provides funding to their clients and assist them in formulating and implementing varioustypes of power project-related schemes. Clients include public sector power utilities at thecentral and state levels and private sector power utilities. Additionally, they fund power projectsfor their joint sector clients. Their financial products primarily include long-term loans, short-term loans, bridge loans and debt refinancing.
REC currently administer grants and provide loans as the nodal agency for the RGGVY, which is primarily aimed at the electrification of all villages in India. REC provides loan assistance toSEBs/State Power Utilities for investments in rural electrification schemes through its CorporateOffice located at New Delhi and 17 field units (Project Offices), which are located in most of the
States.The GoI has rated their performance as “Excellent” continuously from Fiscal 1994 throughFiscal 2006. They have also been ranked among the top ten public sector undertakings in India by the Ministry of Heavy Industries and Public Enterprises for Fiscal 2000, Fiscal 2002 andFiscal 2005.
QUALITATIVE FACTORS
• Our business is profitable and our financial position strong;• Our overall cost of funds is competitive;• We have extensive experience and knowledge in Indian power sector finance, particularly
in the area of transmission and distribution;
• We employ a pro-active approach to client relationships; and• We occupy a key strategic position in the GoI’s plans for inclusive growth
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INDUSTRY P/EThere is only one company for the comparision for rural electrification is power financecorporation so take its p/e as a industry benchmark
The P/E ratio of PFC is 16.9.
p/ e calculationeps= 8.77share price= 105 p/e= 11.9Financial parameters analysis
Credit rating
agency ratingCrisil, care, icra,fitch etc
3
Listing day
Listing 105Open 125
close 121.2
Gain/lose 15.41%
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Rural electrification is one of the of best stocks in india at the time of listing also its gave a positive returns of 15.41%. one of the reason of positive returns is this is the govt undertakingcompany and its fiancials and fundamentals are also very strong.
NHPC LIMITED
Incorporated in 1975, NHPC Limited (Formerly known as National Hydroelectric Power Corporation Ltd.) is a Govt. of India's Enterprise. NHPC is a hydroelectric power generatingcompany dedicated to the planning, development and implementation of an integrated andefficient network of hydroelectric projects in India. They execute all aspects of the developmentof hydroelectric projects, from concept to commissioning.
NHPC have developed and constructed 13 hydroelectric power stations and their total installedcapacity is currently 5,175 MW. This includes two power stations with a combined capacity of 1,520 MW, constructed and operated through our Subsidiary, NHDC. Company's power stationsand hydroelectric projects are located in the North and North East of India, in the states of Jammu & Kashmir, Himachal Pradesh, Uttarakhand, Arunachal Pradesh, Assam, Manipur,Sikkim and West Bengal. Company generated 14,813.16 MUs of electricity in Fiscal 2008.
Presently, They are engaged in the construction of 11 additional hydroelectric projects, which areexpected to increase total installed capacity by 4,622 MW. Further eight projects, including one joint venture project, with an anticipated capacity of 5,751 MW, are currently awaiting sanctionfrom the CCEA. NHPC have obtained ISO 18001:2000, ISO 9001:2000 and ISO 14001:2004certifications from the Bureau of Indian Standards
We believe the following business strengths allow us to successfully compete in the power generation and supply sector: Established track record in implementing hydroelectric projects; Long term power purchase agreements with our customers; Strong operating performance;
Competent and committed workforce; and Strong in-house design and engineering team
EPS BOOK
VALUE
RONW% P/E
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NHPC LIMITED 0.97 6.30 37.11
Industry P/E(i) Highest: 1,496.5(ii) Lowest: 10.7(iii) Peer Group Average: 21.2
p/ e calculationeps= 0.97share price= 36
p/e= 37.11
Financial parameters analysis
Credit rating
agency rating
Crisil, care, icra,fitch etc
3
Listing day
Listing 36
Open 39
close 36.7
GAIN/LOSS 0.20%
Nhpc is also a govt undertaking company at the day of listing company not impress to their investor one one reason may be the financial of the company is not good just to except p/e ratio.Well afterall all company not close at negative that goofd thing for investors.
OIL INDIA LIMITED
Incorporated in 1959, Oil India Ltd is a premier Indian National Oil Company, engaged in the
business of exploration, development and production of crude oil and natural gas, transportationof crude oil and production of LPG. Oil india also provides various E&P related services andholds 26% equity in Numaligarh Refinery Limited. Oil India Limited is second largest oil andgas company in India as measured by total proved plus probable oil and natural gas reserves and production.
OIL has over 1 lakh sq km of PEL/ML areas for its exploration and production activities, most of it in the Indian North East, which accounts for its entire crude oil production and majority of gas
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production. Rajasthan is the other producing area of OIL, contributing 10 per cent of its total gas production.
Presently, OIL’s exploration activities are spread over onshore areas of Ganga Valley andMahanadi. OIL also has participating interest in NELP exploration blocks in Mahanadi Offshore,Mumbai Deepwater, Krishna Godavari Deepwater, etc. as well as various overseas projects in
Libya, Gabon, Iran, Nigeria and Sudan.
Qualitative Factors
Factors Internal to the Company
_ We are the second largest national oil and gas company in India as measured by total proved plus probable oil and natural gas reserves and production (Source: DGH). As of March 31, 2009,our unaudited estimated independent proved plus probable crude oil reserves wereapproximately 575.40 million barrels (which include certain reserves attributable to condensatefrom non-associated gas reservoirs) and our independent proved plus probable natural gasreserves were approximately 63.41 billion cubic meters (which include certain reservesattributable to fuel gas consumption).
_ All of our estimated independent proved plus probable oil reserves, as well as 93.66% of our estimated independent natural gas reserves, are located onshore in the Upper Assam basin in thestates of Assam and Arunachal Pradesh. Additionally, we have independent natural gas reservesin the Jaisalmer basin in the state of Rajasthan. _ We have been present in the India oil and gas exploration and production industry for over fivedecades and count among our achievements the creation of a fully automated crude oil pipeline.
Factors External to the Company
_ The significant growth of India's economy over the past decade has led to increases indomestic energy consumption. During the five year period ended March 31, 2009, the CAGR of consumption of petroleum products was has grown significantly from 107,751 thousand metric
tons for fiscal 2004 to 133,400 thousand metric tons (provisional figure) for fiscal 2009.(Source: PPAC, June 2009)
_ Crude oil demand is projected to increase to about 1,393 million barrels per year by 2012. Gasdemand is expected to reach 330 million standard cubic meters per day by 2012, whichrepresents a CAGR of 10% for the period between 2005 and 2012. Increased use of gas for power generation, petrochemicals, fertilizers and city gas distribution are expected to drivedemand growth in the country (Source: Investment Commission of India). _ India is a net importer of crude oil and natural gas. There is currently a mismatch between thedemand and supply for both natural gas and crude oil in India, with the demand for both sourcesof energy outweighing the domestic production. In 2008, India daily consumed 1051.90 million barrels of crude oil but produced only 279.40 million barrels. Similarly, India consumed 41.40
billion cubic meters of natural gas but produced only 30.60 billion cubic meters (Source: BP Statistical Review of World Energy, 2009).
INDUSTRY PEERS COMPARISION
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Industry p/e
Highest 37.3Lowest 7.3
Industry Composite* 17.7
p/e calculationeps= 104.24share price= 1050 p/e= 10.07Financial parameters analysis
Credit rating
agency rating
Crisil, care, icra,fitch etc
4
Listing day
Listing 1050
Open 1019
close 1140
Gain/lose 8.57%
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Oil india limited is one of the largest oil producers in india when I see its financial then nowheeeits peers group in comparision. To see its strong fundamentals every one invest in this companyits returns on netwoth is much high to its peers eps is also high, crdit rating is 4.
At the day of listing company gave 8.57 % returns and I thing its good returns at the first day day
and those who are invest in that company he was haapy to invest in these stock.
INDIA BULLS POWER LIMITED
Incorporated in 2007, Indiabulls Power Limited is a power project development company.Company develops and intends to operate and maintain power projects in India. The Company isa subsidiary of IBREL (Indiabulls Real Estate), a part of the Indiabulls Group and listed on theBSE and the NSE. IBREL is one of the largest real estate development companies in India. Itfocuses on construction and development of properties, project management, investmentadvisory and construction services.
Indiabulls Power Ltd has five thermal power projects under development, which will have acombined installed capacity of 6,615 MW. These projects include:
1. Amravati Phase-I (1320 MW)2. Amravati Phase-II (1320 MW)3. Nasik (1335 MW) in Maharashtra4. Bhaiyathan Thermal Power Project (1320 MW) &5. Chhattisgarh Power Project (1320 MW) in the State of Chhattisgarh.
Indiabulls is also developing four medium size Hydro Power Projects in Arunachal Pradeshaggregating to 167 MW. Indiabulls has also entered into MoUs with the Govt. of MadhyaPradesh and Jharkhand for setting up of 2640 MW & 1320 MW Thermal Power Projects.
QUALITATIVE FACTORS1. We are managed by a team of professionally qualified people. All the three promoters areengineers from the Indian Institute of Technology, New Delhi.
2. Consolidated Net worth of our Company, as of March 31, 2004 was Rs. 1023.19 million.
3. Consistent growth in net profits at a CAGR of 118.31% for the last 2 years. Operating profitsgrew at a CAGR of 166.39% and revenues grew at CAGR of 132.97% over the last 2 years.
4. We grew from 1 location and 310 clients in the year 2000 to 70 offices, 55 cities, 606employees and 32,359 retail clients spread across the country.
5. Diversified product offering: equity, debt & derivatives brokerage, mutual funds,commodities, IPO distribution, insurance products and research services.
6. We have Rs. 1760 million of sanctioned credit facilities from 9 leading banks and financialinstitutions
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7. Indiabulls Securities Limited has ‘PR1+’ rating for unsecured short term borrowing program,which was increased from Rs. 200 million to Rs. 320 million on May 5, 2004, and ‘A+’ ratingfor medium to long term unsecured borrowing program of Rs. 200 million. The Rating to theCompany has been assigned by Credit Analysis Research Limited.8. For Financial Year 2003-04 EBITDA was Rs. 365.39 million and Profit Before Tax was Rs.
308.97 million
9. Our distinct set of competitive advantages which are as follows: _ Diverse Branch Network of 70 branches in 55 cities. _ Bouquet of financial products and services _ Advanced technology team of 27 people comprising of several engineers that delivers marketleading product innovation _ Strong sales and marketing teams of 476 Relationship Managers with continuous reinvestmentand training _ Strong cross selling opportunities amongst 32,359 clients as on April 30, 2004 _ Strong and experienced promoters
_ Leading product innovation and marketing strategies _ Well capitalised player, with strong banking relationships and credit ratings _ Ability to combine people and technology in unique ways _ Strong market presence and increased market share leads to a virtuous cycle of growth and profitability _ One of the leading players with professional and entrepreneurial management in the retailfinancial market.
Calculation of p/ earningEps= 0.05Share price= 45 p/e= 900
Financial parameters analysis
agency ratingCrisil, care, icra,fitch etc
3
Listing day
Listing 45
Open 44.95
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close 39.25
Gain/lose (12.7)%
To see the stock financial I am saying its not good financial because its share are
overvalued there is no eps no RONW so how the copany can give good returns and it washappen at the first day compny stock close at 12% below the share price.
JSW ENERGY LIMITED
Incorporated in 1994, JSW Energy Limited (JSWEL) is a group company of Jindal South West(JSW) group headed by Mr.Sajjan Jindal. The JSW Group has a presence in the steel, power,cement, software, and infrastructure sectors. Other companies in JSW are JSW Steel Ltd, JindalSouth West Mining Ltd, JSW Port, Jindal Praxair Oxygen Company Limited (JPOCL) andinvestment companies. JSWEL is the first Independent Power Producer (IPP) to be set up in thestate of Karnataka. The company has set up 2 units of 130 MW each and both units are
generating power using Corex gas and coal.JSW Energy Ltd is an established energy company with 560 megawatts of operational generatingcapacity and 3,090 MW of generating capacity in the construction or implementation phase.JSW Energy plans to foray in all areas of power Generation, Transmission, Distribution andTrading. Currently company is working on power solutions in the States of Karanataka,Maharashtra, Rajasthan and Himachal Pradesh.
JSW is expanding their generation capacity by an additional 2,385 MW through construction andimplementation of four new power plants in Maharashtra, Rajasthan and Himachal Pradesh.Each project is planned to be strategically located either near an available fuel source, loadcentre or infrastructure facilities. Raj WestPower Limited (RWPL), promoted by JSW Energy isa Rs.5000 crore project at Bhadresh, District Barmer. The project plans to generate 1080 MW (8
x 135MW) of power which will be supplied to the distribution companies (Discoms) inRajasthan. In Maharashtra under implementation is a 1200 MW (4 x 300 MW) Power Projectlocated at Jaigarh, District Ratnagiri, Maharashtra. JSW Energy has also marked its entry intoHimachal Pradesh. JSW Energy’s is setting up Hydro Power Project at Kutehar, River Chamba.,which will generate 260 MW Power valued at Rs.1700 crore.
JSW has been engaged in power trading activities since June 2006. The Central ElectricityRegulatory Commission, or “CERC”, has granted us a “F” category license which is the highestlicense category available to trade power in India.
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Industry P/Ea. Highest : 95.60 b. Lowest : 9.10c. Industry Composite : 22.20 calculation of p/eeps= 5.04share price= 115 p/e= 22.8
Financial parameters analysis
Credit rating
agency rating
Crisil, care, icra,fitch etc
4
Listing dayListing 115
Open 102
close 100.75
Gain/lose (12.39)
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At the day of listing share close at 12% below the share price there is reason behind it itsfinancial are not good the share are overvalued , there is very less earning on per share price,returns on equity is also so less in all this conditions its very difficult to gave the positive returnsof the company.
DB REALITY LIMITED
DB Realty Limited (DBRL) is a real estate development company focusing on residential,commercial, retail and other projects, such as mass housing and cluster redevelopment in andaround Mumbai. Today, the Group is one of India's top Real Estate developers, with presence inCommercial, Residential, Hospitality, Retail, IT Parks and Gated communities. Its existing product portfolio ranges from upscale buildings, lavish villas and some of the most elite malls inthe country.
As of August 31, 2009, DB Realty have ten Ongoing Projects, aggregating approximately 18.61million square feet of Saleable Area, nine Forthcoming Projects, aggregating approximately20.17 million square feet of Saleable Area and six Upcoming Projects, aggregating
approximately 22.11 million square feet of Saleable Area.They are jointly promoted by Mr. Vinod K. Goenka and Mr. Shahid U. Balwa, whose familieshave been in the real estate and allied businesses for more than 25 years and 95 years,respectively. DB's significant shareholders also include IL&FS Trust Company Limited, IIRFHoldings VI Limited, Trinity Capital (Eleven) Limited, Bollywood Mauritius Holdings andWalkinson Investments Limited
Qualitative Factors
We believe the following business strengths allow us to successfully compete in the real estatesector:1) Strong Presence in Mumbai
2) Land Identification at Attractive Pricing and Strategic Locations3) Strong Parentage Proving Access to Experience and Capabilities4) Development Capabilities and Project Execution Skills5) Good Relationships with Investors, Leading Banks and Financial Institutions, Contractors andArchitects6) Development of Projects through the Joint-Venture Model7) Experienced and Professional Management
DB REALITY 266.95 28.49 1094.39
Industry P/E*
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Highest 112.90Lowest NilIndustry Composite 32.10
Calculation of p/e
Eps= 266.95Share price= 486 p/e=1.8
Financial parameters analysis
Credit rating
agency rating
Crisil, care, icra,fitch etc 2
Listing day
Listing 486
Open 430
close 455.4
Gain/lose (6.29)
The financial are very good after all the credit rating give 2 rating means poor fundamental. If
we leave the credit rating every one will say that the company have good financial and strongcompetetiors of dlf, ackruti and unitech . the company is emerging very fast and its project isspread in overall mumbaiAt the day of listing company not give a good return and disappoint to its investors and its share price close at below 6.29%
JAYPEE INFRATECH LIMITED
Qualitative Factors
Some of the qualitative factors which form the basis for computing the price are:
Ability to leverage the Jaypee Group’s technical capabilities, project management expertiseand execution skills;Strength of the ‘Jaypee Greens’ brand;Integrated development with real estate projects being developed alongside an expressway;Strong regional growth prospects;Large and mostly contiguous land reserves among three parcels in the NCR acquired at theYEA’s acquisition cost and with significant land use flexibility;Single state location of the entire Yamuna Expressway; and
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Strong and experienced management team, well-trained workforce and streamlined operating processes.
Comparison with other listed companies
There is no listed comparable infrastructure company with large real estate exposure as theCompany
EPS RONW BOOK VALUE
P/E
JAYPEE INFRATECH 2.8 21.42 43.41 41.7
p/e calculationeps= 2.8share price= 117 p/e= 41.7
Financial parameters analysisCredit rating
agency Rating
Crisil, care, icra,fitch etc
3
Listing day
Listing 117
Open 93
close 91.3
Gain/lose (21.9)
At the day of listing investors not happy with the stock because its close below 21% of its share price. Its financial are good we cant compare its financial because there is no peers of that kingof huge size ..
SJVN LIMITED
Incorporated in 1988, Satluj Jal Vidyut Nigam Ltd (formerly Nathpa Jhakri Power CorporationLimited - NJPC) is a hydroelectric power generation company, originally established as a jointventure of the Government of India ( GOI ) and the Government of Himachal Pradesh (GOHP)to plan, investigate, organize, execute, operate and maintain Hydro-electric power projects. The present authorized share capital of SJVN is Rs 7000 crores.
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The Nathpa Jhakri Hydro – Electric Power Station– NJHPS ( 1500 MW ) was the first projectundertaken by SJVN for execution. The 1500 MW NJHEP has been designed to generate 6612MU of electrical energy in a 90% dependable year with 95 % machine availability. It is also providing 1500 MW of valuable peaking power to the Northern Grid. Out of the total energygenerated at the bus bar, 12 percent is supplied free of cost to the home state i.e. Himachal
Pradesh. From the remaining 88% energy generation, 25% is supplied to HP at bus bar rates.Balance power has been allocated to the beneficiary states / UTs of Northern Region by Ministryof Power, Government of India.
SJVN is currently constructing the 412 MW Rampur Hydro Electric Project in the state of Himachal Pradesh. SJVN is also implementing three hydro projects (252 MW Devsari, 60 MW Naitwar Mori and 51 MW Jakhol Sankri) in the state of Uttarakhand. Further, SJVN has also been allocated Luhri Hydro Electric Project (775 MW) and Dhaulasidh HEP (66 MW) in thestate of Himachal Pradesh for preparation of Detailed Project Report and subsequent execution.Further, SJVN is entering into a Joint Venture for the implementation of 1500 MW TipaimukhHE Project in Manipur with an equity participation to the extent of 26%.
Qualitative FactorsWe believe the following strengths will allow us to successfully compete in the power sector:• Experience in hydroelectric power project development• Established track record of operational excellence• Stable revenue stream through long-term power purchase agreements with state electricity boards• Ability to capitalize on performance-based incentives under the current tariff regime• Established reputation for good corporate governance and environmental and socialresponsibility• Existing committed work force• Strong cash position to support project development and operations
Power Generation Industry P/E
Highest : 317.3Lowest : 11.2
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Industry Composite : 21.2
Calculation of p/eEps= 1.85Share price= 26
p/e= 14
Financial parameters analysis
The p/e of sjvn is less then industry average and less then others peers
Credit rating
agency rating
Crisil, care, icra,fitch etc
4
Listing day
Listing 26
Open 28
close 25.05
Gain/lose (3.6)%
It is government undertaking company and has a tied up with himachal Pradesh govt. itsfinancial are excellent credit rating are also good in its peers group company have a bestfinancial after all at the day of listing its below 3.6%
SKS MICROFINANCE
Qualitative Factors
We believe the following business strengths allow us to successfully compete in themicrofinance sector:
• Market Leadership• Superior asset quality• Expertise in microfinance• Diversified Sources of Revenue• Pan-India rural distribution network • Scalable operating model• Access to multiple sources of capital and emphasis on asset and liability management• Experienced management team and board of directors
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Comparison with other listed companies
We believe that none of the listed companies in India are engaged exclusively in the
business of microfinance.
EPS RONW BOOK VALUE
P/E
SKS MICROFINANCE 8.94 12.04
p/e calculationeps= 8.94share price= 985 p/e = 110Financial parameters analysis
Credit ratingAgency rating
Crisil, care, icra,fitch etc
4
Listing day
Listing 985
Open 1036
Close 1088
Gain/lose 10.4%
This is the first microfiance company which come with their ipo and its share price is also somuch expensive sks is the largest micro finance company and has a huge network in over theindia that;s why agency give a 4 creditrating to the ipo. Well at the day of listing company gave10% gains to their investors
OBEROI REALITY LIMITED
Oberoi Constructions is a real estate developer focused on premium developments in Mumbai.Group have completed 32 projects covering approximately 4.979 million square feet of saleable
area spread across the city of Mumbai. The Oberoi Realty group currently manages a portfoliospanning across Residential, Office Space, Retail, Hospitality and Social Infrastructure properties in Mumbai.
Oberoi develop residential, office space, retail, hospitality and social infrastructure projects inmixed-use and single-segment developments. currently they have eight Ongoing and 19 Planned projects, which we expect to provide a total Saleable Area of approximately 21,316,528 squarefeet.
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Qualitative Factors
Competitive strengths1. Strong presence in Mumbai;2. Established brand and reputation;3. Strong project pipeline providing near term cash flow visibility;
4. Cash flow stability from our rental properties;5. Strong and stable management team with proven ability;6. Financial strength;7. Our proven execution capabilities; and8. Scalability due to outsourcing model.
Industry P/E*Highest 391.20Lowest 2.80
Industry Composite 38.50
p/e calculation
eps= 8.49
share price= 260
p/e=30.62
Financial parameters analysis
Credit rating
agency rating
Crisil, care, icra,fitch etc
4
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Listing day
Listing 260
Open 280
close 282.2
Gain/lose 7.6%
The company have a excellent financials and good credit rating and at the day of listingcompany shares close at 7.6 % that shows the company have have strong fundamentals.
PRESTIGE ESTATE LIMITED
Incorporated in 1986, Prestige Estates Projects Ltd is a Bangalore based company involve in realestate development. Prestige Estates is south India’s largest real estate development company.
Company has completed 142 real estate projects of approximately 27.09 million sq. ft. Company
has a diversified portfolio of real estate development projects including residential (includingapartments, villas, plotted developments and integrated townships), commercial (includingcorporate office blocks, built-to-suit facilities, technology parks and campuses and SEZs),hospitality (including hotels, resorts and serviced accommodation) and retail (including shoppingmalls) segments of the real estate industry.
Company has established a strong brand image, have a successful track record of execution anda diversified portfolio of real estate projects
Qualitative Factors Some of the qualitative factors which form the basis for computing the prices are: Strong execution track record and capability
Diversified portfolio of real estate projects Strong brand name
Experienced management team
Partnership with CRIDF
Strong client base
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Peer Group P/E:
a. Highest: 32.9
b. Lowest: 27
c. Peer Group Average: 29.95
p/e calculationeps= 2.95share price= 183 p/e= 62
Financial parameters analysis
Credit rating
agency rating
Crisil, care, icra,fitch etc
3
Listing day
Listing 183Open 190
close 192.55
Gain/lose 5.2 %
At the day of listing its shares close at above 5.2% to analyse company financial its goodsomewhere I foundin some thing I found some deficiency but its overall good stock and shouldinvest inCOAL INDIA LIMITED
Coal India Limited is the largest coal producing company in the world, based on raw coal
production of 431.26 million tons in fiscal 2010. Coal India produce non-coking coal and cokingcoal of various grades for diverse applications.
As of March 31, 2010, Coal India operated 471 mines in 21 major coalfields across eight statesin India, including 163 open cast mines, 273 underground mines and 35 mixed mines (includes both open cast and underground mines). They also operated 17 coal beneficiation facilities withan aggregate designed feedstock capacity of 39.40 million tons per annum. Company intend todevelop an additional 20 coal beneficiation facilities with an aggregate additional proposed
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feedstock capacity of 111.10 million tons per annum. Besides this, They provided 85 hospitalsand 424 dispensaries.
The Indian Institute of Coal Management (IICM) operates under CIL and imparts multidisciplinary management development programs executives.
Coal India's major consumers are the power and steel sectors. Others include cement, fertiliser,
brick kilns etc.
QUALITATIVE FACTORS
• The largest coal producer and one of the largest reserve holders in the world• Well positioned to capitalize on the high demand for coal in India• Track record of increasing productivity and cost efficient operations• Robust financial position with a strong track record of financial performance• Strong capabilities for exploration, mine planning, research and development• Experienced senior management team and large pool of technically skilled employees
EPS RONW BOOK VALUE
P/E
COAL INDIA 15.56 23.60 24.67
p/e calculationeps= 15.56share price= 245 p/e= 15.74
Financial parameters analysisCredit rating
agency Rating
Crisil, care, icra,fitch etc
5
Listing day
Listing 245
Open 287.75
close 342.35
Gain/lose 39.5%
This is company where every investor can invest the money with close eyes because this kind of opportunity is come very less in the year this is the one of the favorate ipo of every one . coalindia is come with 15000 crore of ipo that is largest till date more then excellent fundamentalsand superb fianancils. Every thing is ok in this company very good price band for investors
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And finally investor make money at the first day stocks close with 40% in first day.
PARAMETERS Industry benchmark
Company
P/E No industry in
comparision
15.74
EPS 15.56
RONW 23.60
COMPARISON WITH INDUSTRY PEERS:
We are a coal mining company and there is no other listed peer in India with which we can becompared with
MOIL LIMITEDIncorporate in 1896, MOIL Limited (Manganese Ore India Limited) is India based producer of manganese ore, primarily used to make ferro-alloys for steel production. MOIL is a 'Mini Ratna'PSU, owned by Government of India and under the administrative control of the Ministry of Steel.
MOIL Limited is the largest producer of manganese ore by volume in India. MOIL operate sevenunderground mines (Kandri, Munsar, Beldongri, Gumgaon, Chikla, Balaghat and Ukwa mines)and three opencast mines (Dongri Buzurg, Sitapatore/Sukli, and Tirodi) to produce more then1,093,363 tonnes of manganese ore.
In addition to high, medium and low grade manganese ore, company produces manganesedioxide and chemical grade manganese ore. The major competitive strengths of the company are:
1. Largest producer of manganese ore in India with access to significant reserves;2. Well positioned to capture the growth potential of the Indian steel industry;3. Track record of growth and efficient operations;4. Strategic location of the mines and5. Strong capabilities for exploration, mine planning and research development.
Qualitative Factors
1. Largest producer of manganese ore in India with access to significant reserves2. Well positioned to capture the growth potential of the Indian Steel Industry3. Track record of growth and efficient operations4. Strategic location of our mines provides us with competitive advantages
5. Strong track record of financial performance6. Strong capabilities for exploration, mine planning and research development7. Experienced senior management and large pools of skilled manpower
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Mining Industry P/Ei) Highest: 225.0ii) Lowest: 4.3
iii) Industry Composite: 22.5
p/e calculation
eps= 27.72
share price= 375
p/e= 13.52
The p/e of moil india is less in comparision of industry peers and industry average
The eps of moil India is more then industry peers its give a indication that whether the share isexpensive but it gives a earning on share.
Credit rating
agency rating
Crisil, care, icra,fitch etc
5
Listing dayListing 375
Open 551
close 466.5
Gain/loss 24.4 %
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In year 2010 is the good year for investor who invest money in ipo , numbers of good ipo’scame and gave a good returnsLike that moil India is also gave 25% returns at the first day. Credit rating was 5 and financial parameters are also excellent .
The following are the list of companies and detail of their p/e is above and belowthe industry average
s.no
Companies
p/e below or aboveindustry p/e
results( in profitor loss) %
1 MOIL Limited IPO below industry p/e- profit 24%
2 Coal India Limited IPO no industry peers 39.50%
3 Prestige Estates Projects Ltd IPO above industry pp/e 5.20%
4 Oberoi Realty Limited IPO below industry p/e- profit 7.60%5 SKS Microfinance Ltd IPO no industry peers 10.40%
6 SJVN Ltd (Satluj Jal Vidyut Nigam Ltd) IPO below industry p/e- loss -3.6
7 Jaypee Infratech Limited (JIL) IPO no industry peers -21.9
8 D B Realty Limited IPO below industry p/e -loss -6.29
9 JSW Energy Limited IPO above industry p/e -loss -12.39
10 Indiabulls Power Limited IPO no industry peers -12.7
11 Oil India Limited IPO below Industry p/e -profit 8.57%
12 NHPC Limited IPO above industry 0.2
13 Rural Electrification Corporation Limited(REC) IPO below industry p/e- profit 15.41
14 IRB Infrastructure Developers Limited IPO above industry p/e -13.63
15 Reliance Power Limited (REPL) IPO no industry peers -21.94
16 Mundra Port and Special Economic Zone LtdIPO no industry peers -56.28
17 Power Grid Corporation of India Limited IPO above industry p/e- 93.50%
18 Puravankara Projects Limited IPO above industry p/e- loss -19.6
19 Central Bank of India IPO below industry p/e- profit 3.75
20 Omaxe Limited IPO below.profit 12.88
21 Housing Development and Infrastructure LtdIPO below. Loss -13.1
22 Spice Communications Limited IPO above.profit 31.8423 DLF Limited IPO below. Profit 3.6
24 Idea Cellular Limited IPO above.profit 14
25 Power Finance Corporation Limited (PFC)IPO no industry peers 31.2
26 Cairn India Ltd IPO no industry peers -27.3
27 Parsvnath Developers Limited IPO above.industry peers- loss -12.3
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List of the IPO’s with their credit rating given by different agency and their results
s.no
Companies
credit rating by
care, icra, crisil
results ( in
profit or loss1 MOIL Limited IPO 5 24%
2 Coal India Limited IPO 5 39.50%
3 Prestige Estates Projects Ltd IPO 3 5.20%
4 Oberoi Realty Limited IPO 4 7.60%
5 SKS Microfinance Ltd IPO 4 10.40%
6 SJVN Ltd (Satluj Jal Vidyut Nigam Ltd)IPO 4 -3.6
7 Jaypee Infratech Limited (JIL) IPO 3 -21.9
8 D B Realty Limited IPO 2 -6.29
9 JSW Energy Limited IPO 4 -12.3910 Indiabulls Power Limited IPO 3 -12.7
11 Oil India Limited IPO 4 8.57%
12 NHPC Limited IPO 3 0.2
13 Rural Electrification Corporation LimitedIPO 3 15.41
14 IRB Infrastructure Developers Limited IPO 4 -13.63
15 Reliance Power Limited IPO 4 -21.94
16 Mundra Port and Special Economic ZoneLtd IPO Not available -56.28
17 Power Grid Corporation of India Limited
IPO Not available 93.50%18 Puravankara Projects Limited IPO Not available -19.6
19 Central Bank of India IPO Not available 3.75
20 Omaxe Limited IPO Not available 12.88
21 Housing Development and InfrastructureLtd IPO Not available -13.1
22 Spice Communications Limited IPO Not available 31.84
23 DLF Limited IPO Not available 3.6
24 Idea Cellular Limited IPO Not available 14
25 Power Finance Corporation Limited (PFC)
IPO Not available 31.226 Cairn India Ltd IPO Not available -27.3
27 Parsvnath Developers Limited IPO Not available -12.3
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Chapter -5
Finding & conclusion
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In above data analysis i made a chart of all companies and their p/e of above and
below industry average and what happen in the day of listingI found those companies have p/e below industry average they give a gains at theday of listing and those have a p/e above industry average they majority of themgot loss.
below p/e above p/e
industry p/e 10 9
profit 8 5
loss 2 4
Here the analyses of ipo which got a credit rating from 1 to 5 in this analysisfound that most of ipo who got a 3 credit rating they are most successful below 1got majority of loss above 4 rating got 55 % success and 45% loss. Overall thecredit rating agency majority of the decision and their rating are rights andinvestors can do believe on that rating this ratings are feasible.
credit
rating profit loss
total
ipo1 to 2 1 1
3 3 2 5
4-to 5 5 4 9
grand total 15
My objective is to make this project was to analyze the financial indicators awhich is give in the section of IPO prospectus of “on the basis of pricing” in that
section there are given EPS, RONW, P/E ratio, BOOK VALUE and NAV Ianalyze near about 30 IPO’s in that IPO I analyze these financial parameters withtheir industry peers company. After analyze these parameters I also check the daywhen stock was listing and it gave profit or loss..
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In every company I found different results like in one company the p/e was goodEPS was good, but the RONW was bad and at the day of listing the company gaveloss, vis a vis profit also.
In many company I found some parameters are good and excellent and others areok but at the day of listing company not gains and investor suffered loss.
In the case of power grid there is no peers but the company was huge and govtundertaking and at the day of listing it gave 90% return. So its very difficult to sayabout these kind of company which is new in sectors and which have other company in comparison will give us a good returns or not..
Yes we can say the company will give us 100% positive returns how much don’tknow but it will give us a positive returns at the first day. These kinds of company
have a too much strong fundaments and strong financial excellent credit rating.These kind of company like coal India, MOIL history says these company gavealways positive returns because every investor want to purchase these kind of stock which have good fundamental and these fundamental increase the demand of share when demand was high these stock perform well and gave good return andthen very less people sell these shares it and prices continue goes up.
Well in my research project I saw 50% company gave positive results and 50%gave negative results its all depend on company and its fundamental. Investors
have a perception that in Govt Company is a safe place for investing that why theyincrease its demand in market. But these is not a true many good private sector company also gave a fantastic returns.
Credit rating is also now a good parameters to see about the investment decision,some credit agency like care, crisil , icra gave their own rating on the ipo after analyzing the financial parameters. Most of the time their forecasting is right.
These are list of all those companies on which I anlyse the basis of issue pricingand price performance and find which companies gave how much return on thefirst at the closing of NSE. I analyse all the parameters of these companies likeP/E,EPS, RONW,BOOK VALUE, NAV, AND CREDIT RATING..
Companiesgain/loss%
MOIL Limited IPO 24%
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Coal India Limited IPO 39.50%
Prestige Estates Projects Ltd IPO 5.20%
Oberoi Realty Limited IPO 7.60%
SKS Microfinance Ltd IPO 10.40%
SJVN Ltd (Satluj Jal Vidyut Nigam Ltd) IPO -3.6
Jaypee Infratech Limited (JIL) IPO -21.9
D B Realty Limited IPO -6.29
JSW Energy Limited IPO -12.39
Indiabulls Power Limited IPO -12.7
Oil India Limited IPO 8.57%
NHPC Limited IPO 0.2
Rural Electrification Corporation Limited (REC)
IPO 15.41IRB Infrastructure Developers Limited IPO -13.63
Reliance Power Limited (REPL) IPO -21.94
Mundra Port and Special Economic Zone Ltd IPO -56.28
Power Grid Corporation of India Limited IPO 93.50%
Puravankara Projects Limited IPO -19.6
Central Bank of India IPO 3.75
Omaxe Limited IPO 12.88
Housing Development and Infrastructure Ltd IPO -13.1Spice Communications Limited IPO 31.84
DLF Limited IPO 3.6
Idea Cellular Limited IPO 14
Power Finance Corporation Limited (PFC) IPO 31.2
Cairn India Ltd IPO -27.3
Parsvnath Developers Limited IPO -12.3
In my research I found very different results and this is very important as anvestors point of view, those ipo comes of govt undertaking companies they are 95%success i.e at the day of listing close at above the share price like power grid gave92 % in first day, coal india 40% moil 24%. Their financial are good I not deniedfor that but in private companies those finnacila are good from all side after allthey not succeed this are happen in 30% companies.
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Bibliography -
Books-
Pandey I.M- “financial management”, vikas publication house, 12
th
print, 9
TH
edition
Websites-
www.Chittorgarh.com www.Moneycontrol.com www.sebi.in
www.Yahoofinance www.Bseindia.com www.Nseindia.com