AGB Shipyard : Will history repeat itself ?

Good IPO, but getting Allotment wouldn't be easy !
ABG Shipyard has eneterd the capital markets with an offer of 85 Lac shares at a price band of Rs. 155-185. This IPO reminds of the Bharti shipyard IPO which was offered at Rs. 66 and is currently trading at Rs. 338. SO the question arises , Will the History repeat itslef ? Can ABG repeat the Bharati story ?

Investment Guru analyse the IPO and answers the above question too.


What makes this IPO attractive ?
1. The shipyard industry is in limelight and has attracted investor attention. ABG will not be an exception to this.

2. The company is the largest private sector shipyard in India. It builds marine ships, including bulk carriers, deck barges, interceptor boats, anchor handling supply ships, driving support ships, tugs and offshore vessels.

3. It has built over 88 ships since its inception in 1990, and currently has an order book position for 27 ships under construction. The comapny's order book is worth Rs.1300 crores and 50% of this is from exports.

4. The Issue price at upper band of Rs.185 comes at a PE multiple of around 14 (considering annualised EPS of Rs. 13). However at wieghted average EPS of last three years, the issue comes at a PE of 17. The Bharati shipyard stock is currently trading at a PE of 25.

5. The company expeansion plans to set up a new shipyard at Dahej will start bringing fruits in another 3-4 years and hence the stocks looks good even from long term perspective.

6. The weighted average return on networth is to the tune of 33.8%

Concerns :
The company is running at 100% utilisation of its facilities. The time lag between the usage of the new facilities may show up on the returns of the company.
Since the company has a good share of export earning, competition from other countries like china may have impact on future earnings.

Investment Guru's Outlook on the IPO

Investment Guru recommends investors to apply for the IPO. The IPO will certainly not repeat the history of Bharati Shipyard. The reason behind this is that the Bharati IPO was priced quite conservatively and hence provided spectacular gains to Investors. This is not the case for ABG shipyard. The company has certainly left something for Investor but it is not copmarable to Bharati IPO. Given the small size of the IPO, one need to have lot of luck on his side to get allotment. The small size but huge apetite scenario will also lead to smart listing of the stock.
The IPO can also be used as a entry for long term investment in the stock. The shipyard sector is at the upward trend of its cycle and there are no near term concerns of its moving to downtrend.

Issue Opens: 18-Nov-2005
Issue Closes : 24-Nov-2005
Registrar :Intime Spectrum
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PBA Infrastructure: Allotment Status

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Investment Guru's Trading Blog

Dear Visitors,
Investment Guru presents you a blog which focusses on stocks with Trading perspective.
This blog will carry trading recommendation on regular basis and follow-up on them.
The blog also covers stocks which may see action during the day, however these will not carry any target price.

As all of us know that Indian stock markets do have lot of opportunities for traders and this Blog will help traders to cpaitalise on such ooportunities. As always please use your discretion in using the trading opportunities discussed.

The idea behind creating a new blog was to differentiate trading with Investing and avoid confusion among visitors. Investment Guru Blog continues to provide you Investing Opportunities while the Trading Insight Blog provides you insight to the Trading opportunities.

The advice to visitors o the new blog would be to first keep a watch on the blog and see how the trading ideas and other info on the blog performs and once you generate a confidence and align yourself to the communication on the blog, you may decide to follow it.

Wish you happy Trading !

Go to Trader Insight Blog
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IPO Update : Bombay Rayon Fashions

Apply for Listing Gains

Bombay Rayon is entering the capital markets with a issue of 134.75 Lac shares to be issued at a price band of Rs.60-70.

Investment Guru recommends investors to apply for the issue with an objective to encash LISTING GAINS. Though the issue looks priced a bit aggresively , it is in line with other IPO's and one expect a listing gain in the range of 15-20% (subject to market conditions on listing) on the issue price.

Company Highlights :

The company is engaged in export of fashion fabrics and garments

The proceeds of the issue will be used for the expansion of capacity and working capital.

The book value as on June 30, 2005 is Rs. 15.43 per Equity Share.

The company clocked a net profit of Rs. 7 crore for FY05 on sales of Rs. 127 Crore.

EPS for FY05 stood at Rs.7.57 which converts into a P/E multiple of 9

The Return on networth for FY05 stood at 16%

Exim Bank holds a 5% (pre IPO) stake in the comapny, bought at a premium of Rs. 40 Per share.

Registrar : Intime Spectrum
Issue Opens : 11-Nov-05
Issue Closes: 17-Nov-05
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Reliance Industries : Built to succeed

Demerger to Unlock value for Investors

The Reliance Industries stock has been in the limelight for past few weeks.
The shareholders and creditors of Reliance have recently okayed the demerger scheme with overwhelming response.
Under the scheme of arrangement, finalised in broad detail in June this year, Reliance will transfer its holdings in Reliance Capital, Reliance Energy, Reliance Infocomm and Reliance Communications to four new entities promoted and controlled by Anil Ambani. RIL shareholders will get shares in the four entities.

SHAREHOLDING IN DEMERGED ENTITIES
All shareholders of RIL, except the Specified Shareholders', would be issued shares of de-merged undertakings in 1:1 ratio i.e. for each share held in RIL, shareholders would get:
1. One share of Reliance Communications Ventures Ltd. of face value Rs. 5 each fully paid-up
2. One share of Reliance Energy Ventures Limited of face value Rs. 10 each fully paid-up
3. One share of Reliance Capital Ventures Limited of face value Rs. 10 each fully paid-up
4. One share of Global Fuel Management Services Limited of face value Rs. 5 each fully paid-up

The Specified Shareholders i.e. Trustees of Petroleum Trust (holding 7.5% of RIL) and four companies - Reliance Aromatics and Petrochemicals Pvt. Ltd., Reliance Energy and Project Development Pvt. Ltd., Reliance Chemicals Pvt. Ltd. and Reliance Polyolefins Pvt Ltd (collectively holding 4.7% of RIL) hold RIL shares for the economic benefit of RIL shareholders. The Specified Shareholders will not take shares of the resulting companies. The RIL shareholders will get proportionate benefit of this also. As a result thereof, the total number of shares to be issued by each of the resulting companies would be 122 crore as against 139 crore equity shares of RIL.

BENEFITS TO SHAREHOLDERS
The shareholders of RIL would continue to participate in the growth and progress of RIL, which is a global oil, gas, refining and petrochemicals company. They would continue to hold the same number of shares as they currently hold in RIL. In addition to that, they would receive separate shares in the four demerged entities, which will allow them to participate individually as well as collectively in the growth areas of telecom, financial services and coal and gas based energy businesses. The shares of the resulting companies will be listed on the Stock Exchanges in India, where RIL shares are currently listed, thus providing liquidity to all shareholders. This will unlock value for all shareholders as they can participate directly in all the businesses that RIL has nurtured and brought to stature.

Outlook on Reliance
Investment Guru believes that the demerger should unlock the value for the Reliance Industries Sharholders and the total value of their holdings in the demerged entities should be quite higher than the current market price of the Stock. The street is buzzed with expectations that the premium will be in the range of Rs. 200-300 on the stock post demerger.

Next on Investment Guru:
IPO Update on Bombay Rayon Fashions

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Back to the Blog...

Dear Friends,
You must be wondering where I was for last three weeks , with no updates on the blog. I would say it was a mix of a pesonal and official work pressures which kept me away from the Blog. The blogger in me was quite eager to go back to the dashbopard and start writing , but circumstances prevailed.
However, when you see my post , you can make out that I am out of the woods now and ready to blog again with same spirits!
I thank all the visitors for their patience to see the blog not updated every time they looged on to it for last three weeks and still maintaining their faith in this journey of successful investing !

So let's take about investments and here follows my next post...

Happy Investing !! Read More!