Category: IPO/NFO

Euro Multivision IPO

Open and Close Date of Euro Multivision IPO

The Euro Multivision IPO opens on 22nd September and closes on 24th September 2009.

Euro IPO: Price Range

The price range of Euro Multivision is between Rs. 70 and 75.

IPO Grading by CARE: Euro Multivision

CARE has graded the IPO 3 out of 5 which means average fundamentals. The positives in the grading are the favorable dynamics in the new business, and the availability of SEZ status.

The negatives are delay in the implementation schedule of the Photo Voltaic (PV) project, high debt – equity ratio, small scale of existing operations, reducing margins in existing business and uncertain export market among others.

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Quick notes on ETFs, Mutual Funds and IPOs

I see questions around a few things in comments and emails regularly, and thought I’d write a quick post addressing some of the simpler ones (who likes complicated stuff anyway).

Mutual Fund and ETF Expenses: All ETFs and mutual funds incur expenses, which are usually expressed as a percentage of their assets. The higher the expense ratio, the more expensive the fund is. So, you should compare expense ratios and go for one that has a lower ratio (other things being equal).

Underlying assets: It is not necessary that all Gold ETFs have gold as their underlying asset also. Some funds may have stocks of gold mining companies, others may just hold future contracts that track a gold index, and some others may own physical gold. You need to find out what is the underlying asset of a particular fund, so that you know it matches what you had in mind. Here is a post I wrote some time ago about different type of commodity funds.

Fund of funds may charge double fees: Fund of funds own other mutual funds. If a fund of funds charges you fees, then that means you end up paying double fees. Once for the fund of funds, and then for the mutual funds that such a fund owns.

No notification on allotment of IPOs: This one is specific to Indian IPOs and causes a lot of grief to investors. You don’t get emails or any other notifications when an IPO allotment is done. You need to keep a tab on the allotment and listing dates yourself. A good way to do this is by setting Google alerts.

These were a few things that I have recently seen, and if you can think of anything else, let’s hear them, and try and find an explanation to them.

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Pipavav Shipyard IPO

Pipavav IPO: Open and Close Dates

Pipavav IPO opens on 16th September 2009 and closes on 18th September 2009.

Pipavav IPO: Price Band

The price band of Pipavav IPO has been fixed between Rs. 55 and Rs.60

IPO Grading: Pipavav Shipyard

The IPO has been graded 3 out of 5 by CARE. This denotes average fundamentals. I was interested to see how CARE graded this IPO as one with average fundamentals because they don’t have any operating history at all.

CARE gives the following reasons which are in favor of Pipavav:

1. Strong Order book position

2. SEZ approval to the subsidiary of Pipavav.

3. Professionally qualified and experienced management.

4. Strategic tie up with Punj Lloyd Ltd.

The factors weighing negatively for the grading are:

1. Absence of track record in shipbuilding.

2. Project risk associated with new projects.

3. The company has a history of corporate debt restructuring because some of its earlier plans had gone awry.

4. Concentration of order book to the main line shipping sector.

Business of Pipavav Shipyard Limited

Pipavav Shipyard currently has not commenced commercial operations and is engaged in building the Pipavav Shipyard located on the west coast of India adjacent to major sea lanes between between the Persian Gulf and Asia.

After the construction of the shipyard is complete Pipavav would be able to construct and repair ships and vessels of various sizes and construction of products like offshore rigs, jackets and vessels for oil and gas companies. Pipavav right now has agreements in place for the construction of 26 Panamax bulk carriers with the capacity of 74,500 DWT each for delivery from 2009 to 2012. The construction of the shipyard itself is expected to complete by October 2008.

Key Risks

Pipavav has no operating history and it becomes hard therefore to judge how well it would do in the future.

Pipavav has no prior experience in ship building or repair or offshore activities.

There is a large dependence on the proceeds of this IPO itself to mobilize funds and proceed with the construction of the Pipavav Shipyard therefore the general stock market conditions etc. influence the initial success of the company.

Objects of the Issue

The primary purpose of the IPO is to mobilize funds for construction of the shipyard and a sum of Rs.4,550 million has been earmarked for the same. Another important objective of the IPO funds are to generate margin for working capital and a sum of Rs. 2450 million has been earmarked for the same.

Financials of Pipavav Shipyard

Since Pipavav has not commenced operations yet there are no details available for its revenues, profits or cash flow generation.

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Oil India IPO

Oil India IPO: Open and Close Date

The IPO opens on September 7th and closes on September 11th.

Price band of the IPO

The price band of Oil India has been fixed between Rs. 950 and Rs. 1,050.

IPO Grade

CRISIL has graded Oil India 4 out 5, which indicates above average fundamentals.

Business of Oil India

Oil India is the country’s second largest state run explorer and produces 3.5 million tons oil annually. It is engaged in exploration, development, production and transportation of crude oil and natural gas onshore in India. Oil India has also been accorded the status of Mini Ratna by the Government of India. Just to keep things in perspective though, ONGC, which is also controlled by the government is ten times the size of Oil India.

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Globus Spirits IPO

IPO Open and Close Date

Globus Spirits IPO opens on the August 31st 2009, and will remain open till September 2nd.

IPO Grading

This IPO has been graded 3 out of 5 by CARE, which denotes average fundamentals.

Price Band: Globus Spirits

The issue is priced between Rs. 90 and Rs.100, and the face value of a share is Rs.10.

Business of Globus Spirits

Globus Spirits manufactures, markets and sells country liquor, Indian Made Foreign Liquor, and Industrial alcohol comprising of rectified spirit and extra – neutral alcohol. It was incorporated in 1993, and its registered office is in New Delhi.

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NHPC IPO allotment details are out

NHPC IPO allotment details are out, and can be found on Karvy’s website.

Business Line has good data on the application to allotment ratio. This story has a table that shows you how many shares were allotted to you given your application. But, the table in the story is just indicative, and you should check your allotment against your own application number.

NHPC IPO’s listing is expected in the first week of September. It will be listed on 1st September.

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Jindal Cotex IPO

Issue Date of Jindal Cotex IPO

The offer is open between August 27th and September 1, 2009.

Price Band of the IPO

The price band of Jindal Cotex has been fixed between Rs. 70 and Rs.77.

IPO Grading

Brickwork Ratings India Private Limited has rated the IPO – 3 out of 5, which indicates average fundamentals.

Business of Jindal Cotex

Jindal Cotex manufactures Acrylic, Polyester, Polyester – Viscose, Polyester Cotton, combed and carded yarn, which are used to manufacture suitings and fabrics. They have an installed capacity of 23,472 spindles of acrylic, cotton blended and polyester yarns.

In addition to the existing business, the IPO is meant to raise money for expansion and entry into new lines of business. These new lines of businesses are medical and specialty textiles, and will be carried out through fully owned subsidiaries.

Jindal Cotex has also installed a 1250 KW Suzlon Wind Mill, and plans to sell all the power generated from this wind mill to Ajmer Vidyut Vitran Nigam (AVVN). AVVN is a power distributor that supplies power to 11 districts in Rajasthan. So, Jindal Cotex seems to be testing waters in the power generation business as well.

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Fun IPO Calculator

Here is something I was toying with for a couple of weeks now. It is a calculator that tells you how much money you will make in listing gains of an IPO, if you key in the amount you are willing to invest, what you expect to be allotted to you, price per share, and what you expect the stock to list at.

There is no way for you to tell how much you will be allotted, or what the stock will list at, therefore, this calculator is just for fun, and should not be taken seriously at all.

I am calling it Beta because I already have several improvements in mind. If you want to see any features added in, let me know, and I’ll add them, if I can.

Here is how it works:

In the “Investment Amount” field, enter the amount that you will be investing in the IPO.

In the “Allotment Amount” field, enter the amount that you expect will be allotted to you.

In the “IPO Price” field, enter the price at which the IPO is being offered.

In the “Listing Price”, enter the price at which you expect the stock to list.

Hit “Submit” and see the fun.

IPO Calculator




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NHPC IPO Oversubcription Details

NHPC IPO has been open just one day, and it’s already been oversubscribed three times. But, this headline figure of 3 is a little misguiding, as far as retail investors are concerned.

When a company declares its IPO, it has to declare the number of shares it will issue. Along with this; it also needs to declare the number of shares it will issue within each category of investors.

These are the main categories:

  1. Qualified Institutional Buyers
  2. Non Institutional Investors
  3. Retail Investors
  4. Employees

People who invest less than 1 lakh (100,000) in an IPO fall under the Retail Investor category, and subscription numbers in this category is the only thing that matters to them.

But, when an over-subscription number is reported, it is normally the sum total of all categories, and is generally misleading.

To understand this, take a look at the over-subscription numbers broken down by the different categories for the NHPC IPO.

Category Oversubscription
Qualified Institutional Buyers 6.0057
Non Institutional Investors 0.0062
Retail Individual Investors 0.0952
Employee Reservation 0.0002

Numbers as at 7th August 2009 from NSE’s Website

If I am going to bid under the retail segment, then I am only concerned with the “Retail Individual Investor” category in this table. That is just at 0.09 times. So, it hasn’t even been subscribed once, let alone thrice! The over-subscription has been driven by the QIBs, but that doesn’t impact my allotment as a retail investor.

But hearing the “three times oversubscribed number”, without telling me what the retail portion is; influences me wrongly in two ways:

  1. It makes me think that I need to apply for much more than I really want, because the issue has been so much oversubscribed. I think that I will only get pittance, if I don’t apply for a large number of shares.
  2. If I was going to apply for a small lot, it makes me think that there is no point in applying at all, because my small application won’t get any shares at all.

So, you need to ignore all headline over-subscription numbers, and specifically look for your category to make sense out of this number.

Here is how to do that.

  1. Go to NSE India’s website.
  2. In the middle of the page, you will see IPO: NHPC. Click on “NHPC”

13. Scroll down the page that opens and you will see a table with the title – “NHPC LIMITED – Bid Details”.  In this table – “3 Retail Individual Investors (RII) is what you are interested in.

2

You can check this site, and see what the latest numbers are. This is the source of the data, and will help you cut through the noise in the news, and get to the real number you are interested in.

This site has regular features about IPOs, FDs and other investment ideas, if you would like to get that content by email, please click here.

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