IPO Update:ERA Constructions

ERA Constructions : Excuse me please !
Era construction is offering 68 lac shares through a public issue at an offer price of Rs. 72 (fixed price) per share with a face value of Rs. 10.
Issue Opens : June 24,2005
Issue closes : June 29, 2005

Let’s Dig into the Company:
1. The company quotes that the issue proceeds will be used to acquire plant and machinery and augment the long-term working capital.

2. The shares of the company are already listed on BSE and is currently quoting at Rs.85 (lowest Rs. 66 during May2005)

3. Assuming a weighted average price of Rs. 80 till the allotment of shares is done, the issue gives a 10% return on the shares alloted.

4. The company earned an EPS of Rs. 8 per share (3 years weighted average EPS of Rs.6.5). This translates into a P/E of 10. However the P/E after the issue of shares will be 20, which looks expensive.

5. The company is a profit making company since its inception.

6. The company is dependant on few large orders rather than a large customer base.

7. Company has sizeable debtors as compared to its sales. It needs an agrresive strategy to improve its debtor’s turnover.

Though Investment Guru has a positive opinion on the construction sector, the valuations of ERA constructions look stretched.
Investment Guru recommends investors to stay away from this public offer. The stock is already listed and hence the valuations on listing of new shares will not be at par with the other IPO’s.

There are host of other IPO’s coming in the month of July and it is recommended to keep your money parked for those issues which will provide much better returns.
Stay tuned for an update on the forthcoming issues!
Happy Investing!

28 comments:

Anonymous said...

Hi Rajesh,
Thanks for the update. I was already doubtful to apply in this IPO. Now I have decided not to go for it.
Whar are your views on Yash paper ?

M Srinivasa

cvrk said...

I concur with the Guru.

Yogi said...
This comment has been removed by a blog administrator.
Yogi said...

Rajesh,

thanks for the update

hits7 said...

Hello
Rajesh
Can u throwsum light as to wat to do on jindal polyfilms allotment i have applied for 180 shares they r bound 2 b alloted and the crip is running down like anything?

Rajesh Soni said...

Regarding Hits7,
Unfortunately, this scrip is not traded in futures, otherwise I would have advised you to sell futures and then set off it with you position in cash markets.
Only way is to sell it out on the day you get allotment in case you want to come out of it.

kamlesh said...

Dear Rajesh Ji,
Thanx for replying. I m eagerly waiting for your mail. Also I will call you.
Urs
KAM

Anonymous said...

Can u comment on Yash Papers

Amit said...

Rajesh, glad to see my opinion validated by you, that too from a different point of view. Your reasoning on the financials seems to be quite sound.

I've mentioned in my blog the the issue is not worth it primarily because of the amount of litigation (with associated penalties and claims) the company seems to be under. It's too high a risk.

Strangely, several analysts seem to be recommending the issue as a Buy!

Anonymous said...

Hi Amit,

Many so called investment pundits are misleading retail investors!I don't know on what basis these people are making predictions! The lured investors into JindalPoly and now doing the same with ERA. They stopped investors from applying for SAKSOFT,Cyber MEDIA, Nandan, Ganesh etc..One thing they lack is common sense!
Regards,
Hitesh

hit said...

Hi Amit,
Many so called investment pundits are misleading retail investors!I don't know on what basis these people are making predictions! The lured investors into JindalPoly and now doing the same with ERA. They stopped investors from applying for SAKSOFT,Cyber MEDIA, Nandan, Ganesh etc..One thing they lack is common sense!
Regards,
Hitesh

hit said...

Hi Amit,
Many so called investment pundits are misleading retail investors!I don't know on what basis these people are making predictions! The lured investors into JindalPoly and now doing the same with ERA. They stopped investors from applying for SAKSOFT,Cyber MEDIA, Nandan, Ganesh etc..One thing they lack is common sense!
Regards,
Hitesh

hits7 said...

Hi\
Have been allotted 78 shares of JPFL.It seems like now I have to wait long 2 get even my cut off pric eback.Is there any procedure by which we can complain about such FPOs?which dont even get listedat the cut off price.

moneymasala said...

I have burnt my fingers on all FPOs that have appeared in recent times, incl premium ones like PNB, Dena and Allahabad Banks. I think one should lay off FPOs for the time being and concentrate only on quality IPOs.

Any comments (from the Guru and others) on SPL?

Regards,
MoneyMasala.

Rajalingam said...

Hi Rajesh,

Thanks for your update, I wanted to know about Yash Papers Limited IPO. Can pls updated reg this IPO.

Rahul Munjal said...

Any Comments on Yash Papers and SPL Industries limited in respect to Short Term or Listing gains ??

Regards,
Rahul

IPO Guru said...

Hello All,

For your information, Yash Paer is already listed in BSE and trading around 20. I feel we should be carefull to avoid a JPFl kind of situation. Similarly SPL Industries Ltd also is listed company.

Regards,
Hithesh

Rahul Munjal said...

Thanks Hithesh. I wont apply for any of them then... :)

Anonymous said...

Dear Sir,

Pls. advise on forthcoming IPOs
SPL Industries,Yash Paper etc.

Arvind

Anonymous said...

Dear Sir,

Pls. advise on forthcoming IPOs
SPL Industries,Yash Paper etc.

Arvind

Anonymous said...

Dear Sir,

Pls. advise on forthcoming IPOs
SPL Industries,Yash Paper etc.

Arvind

Anonymous said...

Hi Rajesh,
I have adoubt about SPL Industries Limited..whether this company is already listed one or not..According to your suggestion I will think to apply..Because I do not want to apply for FPO...waiting for reply..
Regards
munna

Anonymous said...

i have 100 shares of jk cements at 160 the cmp is 150 what would you suggest me to do

nitin said...

ALL,I think one should be very careful before appling for cos.that are already listed because they delibrately jakup their prices before opening of the issue ,only to bring them down at time of listing.This game that operators play has become old,and it's high time invesrors recognise it!!

Rahul Munjal said...

what about beeyu allotment. I heard that its out. Where can i check the status?

IPO Guru said...

Please check

http://www.mdpl-online.com/

Regatrds,
Hithesh

Anonymous said...

Rajesh,
any thoughts on the "IL&FS Investsmart" IPO?
thanks
Vinod

Anonymous said...

Dear rajesh ,

How to choose the beat shares for day trading

--sangeetha