IPO Update: Eros International media limited

Full Entertainment for Investors too !

Eros International IPO is offering shares @ 158-175 to raise up to Rs. 350 crore. A quick look at the positives and concerns.

 

 

Positives

1. Eros has a content library of over 1000 films and the company is yet to milk these effectively.

2. Diversity and segmentation of revenue- Eros derives revenue from Theatre release of new movies, sale to channels and music rights. Further a large portion of revenue is generated from overseas releases which ensures good geographical segmentation.

 

Concerns

1. Failure to provide super hit movies in future may turn the tide.

2. Not competent to make its own movies. The only production “Aa dekhen Zara” was a big flop.

On valuations the issue is priced at a PE of 21 on the higher end which is in line with valuation enjoyed by peers such as UTV software. With good going of “Dabang” and few good movies lined up for release the stock is all set to provide full entertainment to investors on the stock markets too . I am applying with a view to book listing gains.

Current Grey Market Premium :  Rs. 35

Registrar : Link Intime

Issue Closes : 21-Sep-2010

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IPO Update : Career Point Infosystems

This IPO may not be comparable to the likes of Everonn Edu which has given 400% return since its listing and it may not repeat the euphoria created by Educomp solution since its listing, but Career Point info systems definitely offer a opportunity to participate in a public offering of a new class of business – Education –Tutorials.

At the same time it also presents a potential risk as we do not have a comparable listed entity. The company needs no introduction as neither Kota as a hub for engineering tutorials. It provides tutorial services to high school and post high school students for various competitive entrance examinations including AIEEE,IIT-JEE, PMT and PDT through its 17 company operated and 16 Franchisee centres.

 

Positives

1. Being first issue of its kind of a education tutorial company, the IPO will set precedent for the other companies in this sector who aspire to get listed.

2. The education tutorial has been a highly un-organized industry and the listing of career point will enable people to have shareholding in such companies as education is considered to be a highly lucrative and promising industry.

3. Career point has earned a good brand name in its field. In education sector, reputation matters a lot and the company is poised to reap benefit of the same.

4. Presence across 13 states provides Career point an edge to target the wide consumer base of students preparing for the engineering exams.

5. The company plans to foray aggressively into ECAMS (Education consultancy and management services) and is exploring to extend it to private-public schools as well as government school.

6. The company also runs Global public school and Career point University.

 

Concerns

1. Education industry witness rapid changes and with ever increasing competition it would a challenge for the company to maintain its competitive edge.

2. The company has a history of negative Cash flows from Operating and Investing activities on account of its rapid expansion plans.

3. A search and seizure operation was carried at company premises and premises of the promoters last year by income tax department. One of the promoter had accepted unaccounted income of the company, promoters and relatives of INR 60 Million. There were series of notices served on the company by other departments based on above . The management needs to show more honesty and transparency and better standards of corporate governance as they serve the industry which runs on credibility.

4. The training center at Kota contributes more than 58% of  revenue and hence any disruption of any sort at Kota may lead to significant loss of revenue for the company.

 

Financials & Valuations

Career point reported a Top-line of Rs. 65.8 crore for year ending 31-Mar-2010, up 37% against last year. Net profit stood at 17.8 Crores, up 18.7% against last year. As per a recent interview, the management has shown confidence of a growth rate of 25% .

The EPS for year ending Mar-10 stood at 14.71 and the Return of net worth stood at 14.6%. At the upper price band of 310, the PE works out to be 28 which is aggressive considering Everonn trading at current PE of around 21 and Educomp at a PE of 25. The stock is quoting at a premium of Rs . 90 in Grey market .

I am considering applying for the IPO and if the stocks lists at a good premium, I plan to book listing gains.

Issue Opens : September 16,2010

Issue Closes: September 21,2010

Registrar : Link Intime

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Happy New year 2010

Dear Friends,

I wish all of you a very Happy and Prosperous New year. The last year has been a mixed year in terms of stock market movement. It started with a doom of recession but recovered as the fear of recession receded and economies across the globe started showing signs of recovery. Year 2010 should prove to be a period of consolidation in the markets. The extreme volatility of 2009 would be missing this year and the markets will bank on Inflationary trends, Decisions on Stimulus exit and Earnings season for direction. Liquidity would continue to drive the Asian markets stronger.

With 2009 providing a big jump to the valuation across companies, searching for value picks would be more difficult in the new year. Investor would flock to Mid caps and Small caps stocks that have not recovered fully from the beatings of 2008 and where the fundamentals do warrant a correction in valuations.

I have been absconding from the blog for last few months and I do not see any improvement in frequency of updates on the blog in the new year.  You may not see many updates on the blog as my job wants more of my time, but I promise you at least few powerful posts that would make you feel good about spending time on this blog.

Once again, all the best for the new year and Happy Investing !!

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HUDA Scheme: Residential Plots in Faridabad

Haryana Urban Development Authority has launched a scheme to allot freehold residential plots in Faridabad and other areas like Sonipat, Rohtak, Bahadurgarh, Ambala, Jind, Hisar and Palwal.

Though the scheme is launched for various urban areas, the center of attraction is the allotment of 1,969 plots of various sizes in Faridabad.

Salient Features of the Scheme

• Faridabad is an integral part of the NCR region and has good connectivity and proximity to Delhi. Though the region has been sluggish as compared to other NCR regions like Gurgaon is terms of appreciation in real estate prices, it does offer ample scope as there are talks of modernization of Mathura Road and work on Badarpur flyover as well as access to Metro in near future will provide facelift to the area.
• Crime Rate in Faridabad is far less as compared to other popular regions in terms of real estate development like Noida and Ghaziabad.
• The Rates offered in HUDA Scheme are quite competitive and offer even a good long term investment opportunity for those who want to invest in real estate to create wealth.
• HUDA Scheme offers facility of payment in Installments. 10% Payable at application, 15% within one month of allotment and balance in Six equal Annual Installments.
• Interest @5.5% per annum on the amount of earnest money for period beyond six months of closing date of scheme if the draw is not held and earnest money not refunded within this period.
• Allotment will be made through draw of lots.
• Any Individual can apply under the scheme provided he has not been allotted a plot of land directly by HUDA in the concerned Area. If you want to apply under reserved category, you must be a domicile of Haryana.

Concerns on the Scheme

• You earnest money could be stuck with HUDA for as long as Six months without interest and thereafter @ 5.5% p.a. interest.
• Development on Delhi-Mathura Highway and completion of Badarpur Flyover/ Access to metro is the key to next phase of price appreciation in the region and any delay on this front can take the sheen away for the investors.
• Faridabad is grappling with pollution like other NCR regions. All the areas of the Faridabad including residential areas, industrial areas and silence zone are in the grip of air pollution. A part of it can be blamed to its initial planning as an Industrial township. Even the quality of water is a area of concern as a recent study has found water levels to be highly polluted and unfit for drinking.

Conversion of Marla in Sq. Mtr., Sq. Yard and Sq. feet

Since the HUDA brochure talks in terms of Marla , you can refer the table below to see the equivalent size of plot in various dimensions

Download HUDA Application Form (remember to include additional Rs.100 while preparing the earnest money draft if you are using the downloaded version of application form)

Download HUDA Scheme Brochure

Last date of Application : 05-01-2010

Update : 04-01-2010

The Last date of Application has been extended to 06-01-2010

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IPO Update: Indiabulls Power Ltd.

In Quest for Power “full” India

Indiabuls Power Ltd. has entered the capital markets with an issue of 33.98 Crore shares of Rs. 10 each at a price band of Rs. 40-45 per share. Investment Guru is of the view that India Bulls is just another player trying to leverage the India Power Story like Adani, Reliance and Tatas. The company is currently in the process of setting up its power plants will take 3-4 years to start commercial operations. It’s a story similar to Adani power and hence it’s more of a long term play.

• The Company is a subsidiary of IBREL, a part of the Indiabulls Group.
• IBPL is currently executing five power projects: 1,320 MW Amravati Power Project – Phase I, 1,335 MW Nashik Power Project, 1,320 MW Bhaiyathan Power Project, 1320 MW Amravati Power Project – Phase II and 1320 MW Chhattisgarh Power Project.
• The company expects to sell 75 per cent of the power generation via a long-term power purchase agreement (PPA) and balance through trading of power.
• Since the company has not yet commenced the operations, there is no financial performance to compare with other players.
• The projects are expected to be funded through a D/E ratio of 75:25.
• It is also developing four medium size Hydro Power Projects in Arunachal Pradesh aggregating to 167 MW. Indiabulls has also entered into MoUs with the Govt. of Madhya Pradesh and Jharkhand for setting up of 2640 MW & 1320 MW Thermal Power Projects in each of these States respectively.

Investment Guru is of the view that we have already seen what happened to the Adani and NHPC issues and there is no reason why Indiabulls should get different treatment. The stock is currently commanding a premium of Rs. 4-5 in grey markets but for that matter even Adani commanded a premium in grey matter. This is a pure long term play and the stock will become dull after listing sensations until news of developments on the operational front starts coming in. For those who are looking for listing gains, if the promoters decide to price at a lower band , you can look for a 10% gain otherwise you would have to pray for your luck .

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Reliance declares 1:1 Bonus and Rs.13 Dividend

For those who thought that days are gone for this once evergreen stock , it’s time to be taken aback. Reliance Industries has added to the diwali celebrations of its shareholders by announcing a combo of a liberal 1:1 Bonus issue (after a gap of 12 years) and Rs. 13 per share dividend.

 

What does this Bonus means for Reliance Shareholders ?

• The Bonus issue is an attempt by Reliance Industries to instill confidence in the shareholders towards the tradition of this company to bestow Investor friendly measures.
• Bonus Issues doesn’t change anything in terms of Financial performance & fundamentals of the company and hence is EPS neutral. However, it does have an indirect impact in terms of improving the sentiments for the stock and brings in more liquidity. Historically , we have seen run up in the stocks after Bonus announcements and stocks have given better returns post Bonus adjusted prices. So, essentially, it is a sentiment booster measure.
• The timing cannot be more right for the company to announce a bonus as the stock price of reliance Industries has been a laggard as compared to sensex performance due to the ongoing tussle between Mukesh Ambani and his younger brother Anil Ambani over the Gas supply pact. The Bonus issue will provide some impetus to the investor sentiments which was clouded by the ongoing dispute.
• The Bonus issue has been on account of two major milestones achieved by the company i.e., successful commencement of Gas production from its KG6 Basin and building of new refinery at reliance Petroleum.
• The Bonus issue is also applicable to shareholders of Reliance Petroleum shares pursuant to recent amalgamation of the company with RIL. The company has fixed Record date of 29th September for reckoning the members entitled to receive 1 Share of Reliance Industries for every 16 Shares held in Reliance Petroleum.
• The Record date for Bonus has not been announced yet.

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