Mahindra Logistics IPO Review and current GMP

Mahindra Logistics Limited (Incorporated in 2008 ) is end-to-end logistics solution and service provider. Mahindra Logistics is part of Mahindra Group (M&M), one of India’s leading groups with business spanning across several industries and countries. Before 2008, the logistics activities of M&M was operated as a division of M&M.

The logistics business of the company includes transportation and distribution, warehousing, in-factory logistics and value-added services to M&M and other more than 120 clients which provides for domestic and multinational companies operating in the IT, ITeS, business process outsourcing, financial services, consulting and manufacturing industries in 12 cities.

Its subsidiary, 2X2 Logistics, provides logistics and transportation services to OEMs to carry finished automobiles from the manufacturing locations to stockyards or directly to the distributors through specially designed vehicles.Other subsidiaries, Lords, provides international freight forwarding services for exports and imports, customs brokerage operations.

List of Anchor Investors

Mahindra Logistics has allotted 57.62 lakh equity shares at Rs 429 per share to 15 anchor investors, aggregating to Rs 247.2 crore, ahead of its initial public offering ( IPO ). Six mutual funds have applied for the issue through a total of 10 schemes.

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The promoters :

Mahindra & Mahindra Limited.

The main object of the issue is:

To achieve the benefits of listing the Equity Shares on the Stock Exchanges.

Lead Managers:

Axis Bank Limited
Kotak Mahindra Capital Company Limited

Registrar to the IPO:

Link Intime India Private Ltd,
Phone of the Registrar:+91-22-25963838

Registered Office of the Company :

Mahindra Logistics Limited

 IPO Dates & Price Band:

  • IPO Open: 31-October-2017
  • IPO Close: 02-November-2017
  • IPO Size: Approx Rs. 701 Crore (Approx)
  • Face Value: Rs. 10 Per Equity Share
  • Price Band: Rs. 425 to 429 Per Share
  • Listing on: BSE & NSE
  • Retail Portion: 35%
  • Equity: 1,93,32,346 Shares

Market Lot:

  • Shares: Apply for 34 Shares (Minimum Lot Size)
  • Amount: Rs. 14,586

Allotment & Listing:

  • Basis of Allotment: 8-November
  • Refunds: 9-November
  • Credit to demat accounts: 9-November
  • Listing: 10-November

Mahindra Logistics

BUSINESS STRATEGY

Continue to grow share of its business from non-Mahindra Group clients.

Focus on large revenue clients by providing integrated, end-to-end solutions and continue to provide additional services to existing clients.

Continue to diversify its revenues from industry verticals such as consumer goods, pharmaceuticals, e-commerce, and bulk.

Continue to focus on enhancements in technology.

Leveraging on the changing logistics industry dynamics, particularly with the implementation of the GST regime.

Continue to establish new multi-user warehouses.

Continue to explore new business opportunities in new industry verticals and business segments.

Qualitative factors

Some of the qualitative factors which form the basis for computing the Offer Price are:

  1. An“asset-light” business model which allows flexibility and scalability in operations and high capital efficiency;
  2. Customized, technology-driven logistics solutions;
  3. Integrated, end-to-end logistics services and solutions;
  4. The Mahindra brand and support from the Mahindra Group;
  5. Presence across diverse industry verticals with long-standing client relationships; and
  6. Experienced management team with strong domain expertise.
Below is a graphical representation of its SCM services as well as its integrated, end-to-end solutions.
INTEGRTED LOGISTIC SOLUTION

Salient trends in the Indian logistics industry

Indian logistics industry to grow at a CAGR of approximately 13.0% to ₹ 9.2 trillion in Fiscal 2020.

The Indian Government’s increased focus on infrastructure.

Integrated network development will promote use of multi-modal transportation.

A simplified tax regime to lower costs and provide an opportunity for outsourcing.

GST implementation to provide an opportunity for organized service providers.

3PL service providers: One stop shop for logistics end-users.

The future trend in the 3PL industry is an asset-light model.

A 3PL market in India to grow at a CAGR of 19-21% by Fiscal 2020.

PTS industry to reach a market size of ₹ 85 – 95 billion in Fiscal 2020.

Freight forwarding market to increase at a CAGR of 8-9%.

Road freight to continue to occupy a significant share.

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Key drivers for growth of 3PL service providers in India

GST implementation to drive 3PL growth.

Focus on core business results in increased outsourcing trend.

Increased flexibility and scalability.

Offer value added services.

Increasing global presence in India to further 3PL growth.

Large, organized 3PL service providers to enjoy a distinctive edge over smaller, unorganized service providers.

Negative

Mahindra Logistics depend significantly on clients in the automotive industry and are highly dependent on the performance of the automotive industry.

A loss of, or a significant decrease in business from clients in the automotive industry could adversely affect its business and profitability.

Mahindra Logistics depend on a limited number of clients, which exposes us to a high risk of client concentration. Fluctuations in the performance of the industries in which its clients operate may result in a loss of clients, a decrease in the volume of work we undertake or the price at which we offer its services.

Mahindra Logistics business and operations depend significantly on its parent and Promoter, Mahindra & Mahindra Limited and the other Mahindra Group entities.

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Mahindra Logistics operate in a highly fragmented and competitive industry and increased competition may lead to a reduction in its revenues, reduced profit margins or a loss of market share.

Mahindra Logistics may not be able to manage the growth of its business effectively or continue to grow its business at a rate similar to what we have experienced in the past.

Mahindra Logistics business is highly dependent on technology and any disruption or failure of its technology systems may affect its operations.

Difficulties and uncertainties surrounding the implementation of a GST regime in India may adversely affect its business strategy.

Mahindra Logistics are susceptible to risks relating to compliance with labor laws.

Mahindra Logistics, its Directors, its Promoter and its Group Companies are involved in certain legal proceedings, which if determined unfavorably, may adversely affect its reputation, business, financial condition and results of operations.

Mahindra Logistics may face claims relating to loss or damage to cargo, personal injury claims or other operating risks that are not adequately insured.

Mahindra Logistics experienced negative cash flows from its operating activities, investment activities as well as financing activities.

Mahindra Logistics, its Subsidiaries, its Promoter and some of its Group Companies have availed of debt facilities that can be recalled by lenders at any time.

Loss making Group Companies

LOSS

Financial

  • Mahindra Logistics net worth stood at Rs 363 crore for the quarter ended June, translating into a book value of Rs 51/- share.
  • Revenue clocked a compounded annual growth rate of 15 percent, and net profit rose to 17 percent in five years to March.
  • Revenue and net profit for the quarter ended June stood at Rs 852 crore and Rs 15 crore, respectively.
  • Earnings before interest and tax margin have been close to 2 percent as it follows an asset-light business model.
  • The company has not declared any dividend in the last five financial years.

Valuations

At the upper end of the price band, earnings per share for the year to March stood at Rs 6.4 and the price-earnings ( P/ E ) ratio at 67 times.

 Grey market premium
 Grey market premium is  38/- to 39/-, Kostak is Rs.350/-
Conclusion

Investors may consider for medium to long term.

DISCLAIMER

No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here.

 

Reliance Nippon Life Asset Management ( First MF ) IPO Review

Reliance Nippon Life Asset Management (RNAM) is one of the largest asset management companies in India, managing total AUM of INR 3,62,550 Lakh crore as of June 30, 2017. The company is involved in managing (i) mutual funds (including ETFs); (ii) managed accounts, including portfolio management services, alternative investment funds (AIFs) and pension funds; and (iii) offshore funds and advisory mandates. It is ranked the third largest asset management company, in terms of mutual fund quarterly average AUM (QAAUM) with a market share of 11.4%, as of June 30, 2017, according to ICRA. For the financial year 2016, it was ranked the second most profitable asset management company in India, according to ICRA.systematic investment plan (SIP) accounts that generate inflows of close to Rs. 510 crore per month or Rs 6,120 crore annually. SIPs account for 10 percent of the company’s equity AUM.

The company started its mutual fund operations in 1995 as the asset manager for Reliance Mutual Fund and manages 55 open-ended mutual fund schemes including 16 ETFs and 174 closed-ended schemes for Reliance Mutual Fund as of June 30, 2017. It has a network of 171 branches and approximately 58,000 distributors including banks, financial institutions, national distributors and independent financial advisors (IFAs), as of June 30, 2017. Reliance Nippon Life Asset Management manages offshore funds through its subsidiaries in Singapore and Mauritius and has a representative office in Dubai.

As part of its managed accounts business, the company provides portfolio management services to high net worth individuals and institutional investors including the Employees’ Provident Fund Organisation (EPFO) and Coal Mines Provident Fund Organisation (CMPFO). Its Subsidiary, Reliance AIF Management Company Limited manages two alternative investment funds, which are privately pooled investment vehicles registered with SEBI. Further, it received a certificate of commencement of business as a pension fund manager from the Pension Fund Regulatory and Development Authority (PFRDA) in 2009 and manages pension assets under the National Pension System (NPS). As of June 30, 2017, it managed total AUM of INR 1,503.93 billion as part of its managed accounts business.

ipo

IPO Dates & Price Band:  

  • IPO Open: 25-October-2017
  • IPO Close: 27-October-2017
  • IPO Size: Approx Rs. 1542 Crore (Approx)
  • Face Value: Rs. 10 Per Equity Share
  • Price Band: Rs. 247 to 252 Per Share
  • Listing on: BSE & NSE
  • Retail Portion: 35%
  • Equity: 6,12,00,000 Shares

IPO Market Lot:

Shares: Apply for 59 Shares (Minimum Lot Size)

Amount: Rs. 14,868

IPO Allotment & Listing:

  • Basis of Allotment: 1-November
  • Refunds: 3-November
  • Credit to demat accounts: 3-November
  • Listing: 6-November

Company Promoters:

  • RELIANCE CAPITAL LIMITED
  • NIPPON LIFE INSURANCE COMPANY

Lead Managers:

JM Financial Institutional Securities Limited
CLSA India Private Limited
Nomura  Financial  Advisory  and  Securities  (India) Private Limited\
Axis Capital Limited
Edelweiss Financial Services Limited
IIFL Holdings Limited
SBI Capital Markets Limited
YES Securities (India) Limited

IPO Registrar:

Karvy Computershare Private Limited

Anchor investors

Reliance Nippon Life Asset Management IPO raises Rs 462.67 Cr from Anchor Investors (subscribed 30+ times)

This is one of the largest anchor responses any company has received for its IPO in the recent past. Rs.15,000+ Cr received from over 50 investors against anchor book size of Rs 462.67 Cr – allocation made to 24 investors.

  • Large Sovereign Wealth Fund – Abu Dhabi Investment Authority, Kuwait Investment Authority.
  • Foreign institutional investors – Fidelity International, Morgan Stanley, Eastspring Investments, Columbia Threadneedle Investments, Pictet, DE SHAW and Neuberger Berman.
  • Top mutual fund houses – HDFC MF, Birla MF, SBI MF, UTI MF, DSP Blackrock MF, IDFC MF
  • Large private insurance companies – ICICI Prudential Life,Bajaj Allian

Rs. 4 Lakh In Reliance Banking Fund Turns Over Rs. 1 Crore In Less Than 15 Years

The following chart sets forth a summary of the evolution of the Indian Mutual Fund Industry:

financial data1

The objects for which its Company intends to use the Net Proceeds are as follows:

1. Setting up new branches and relocating certain existing branches;

2. Upgrading the IT system;

3. Advertising, marketing and brand building activities;

4. Lending to its Subsidiary (Reliance AIF) for investment as continuing interest in the new AIF schemes managed by Reliance AIF;

5. Investing towards its continuing interest in new mutual fund schemes managed by us;

6. Funding inorganic growth and other strategic initiatives.

7. Meeting expenses towards general corporate purposes.

The following table sets forth the trend in the net financial savings of India.
fin data

Strengths

Leading Asset Management Company with Strong Credentials to Drive Growth.

Multi-Channel Distribution Network.

Comprehensive Suite of Products with Distinguished Investment Track Record.

Strong Focus on Processes.

Focus on Customer Centricity and Innovation.

Experienced Management Team.

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Strategies

Expand its Investor Base and Focus on Retail Customers.

Focus on Developing its AIF Business.

Inorganic Growth through Strategic Acquisitions.

Leveraging Technology to Improve Investor Experience.

Expand its Overseas Operations.

Continue to Focus on Robust Investment Process and Product Innovation.

Negative

There are outstanding proceedings against its Company, and certain of its  Subsidiaries, Promoters, Directors and Group Companies and any adverse  outcome in any of these proceedings may adversely affect its profitability and  reputation and may have an adverse effect on its business, results of operations and financial condition.

RNAM’s future revenue and profit are largely dependent on the growth, value and composition of AUM of the schemes managed by us, which may decline.

Underperformance of investment products in respect of which we provide asset management services could lead to a loss of investors and reduction in AUM and adversely affect its revenue and reputation.

RNAM’s business has grown consistently in the recent past and such growth might not continue or might reverse.

The regulations that apply to the industry in which RNAM operate may change.

Non-compliance with SEBI’s observations made during its periodic inspections could expose us to penalties and restrictions.

RNAM depend on third-party distribution channels and other intermediaries, and problems with these distribution channels and intermediaries could adversely affect its business and financial performance.

RNAM may not be able to attract and retain senior investment professionals and other personnel.

RNAM may be required to merge, wind up or change the fundamental attributes of some of the mutual fund schemes managed by us, to comply with the recent SEBI circular dated October 6, 2017.

RNAM are dependent on the Reliance Group and Nippon Life for certain aspects of its business and operations.

RNAM require a number of approvals, licenses, registrations, and permits for its business.

Employee misconduct or failure of its internal processes or procedures could harm us by impairing its ability to attract and retain clients and subject us to significant legal liability and reputational harm.

Valuation

At the upper end of the price band (Rs 252 per share), the issue is valued at 5.7 times price to FY18 projected book value. Though Reliance Nippon has no listed peers, given its growth trajectory and consistent return ratios, the valuation looks reasonable. To put things in perspective, over the last four years, the company’s top-line and bottom-line registered an impressive CAGR of 21 percent and 15 percent, respectively.

More importantly, the company sold a small portion of its stake at a relatively higher valuation in the past. In July 2017, a group of US and Singapore funds picked up a 4.43 stake in the company for Rs 675 crore, valuing it at around Rs 15,000 crore or 8 times its FY17 book value.

valuationGrey market premium

Grey market premium is Rs. 64 to 68 and Kostak is Rs. 725

Conclusion

Investors may consider for short to medium term.

DISCLAIMER

No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here.

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If you had invested Rs. 1 lakh in gold in 1979 then today its worth is Rs. 30.26 lakh…. while on the other hand, if you would have invested the same amount Of Rs.1 Lakh in equity then today its worth of Rs. 3.1 cr…..

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DISCLAIMER

No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here.

General Insurance Corporation of India ( GIC ) Review

General Insurance Corporation of India Ltd. (GIC) is the largest reinsurance company in India in terms of gross premiums accepted in Fiscal 2017, and is accounted for approximately 60% of the premiums ceded by Indian insurers to reinsurers during Fiscal 2017, according to CRISIL Research. GIC is also an international reinsurer that underwrote business from 161 countries as at June 30, 2017. According to CRISIL Research. Corporation ranked as the 12th largest global reinsurer in 2016 and the 3rd largest Asian reinsurer in 2015, in terms of gross premiums accepted. It provides reinsurance across many key business lines including fire (property), marine, motor, engineering, agriculture, aviation/space, health, liability, credit and financial and life insurance. Through more than 44 years of experience in, and commitment to, providing reinsurance products and services, GIC believe that it has become a trusted brand to its insurance and reinsurance customers in India and overseas.

IPO Dates & Price Band:

IPO Open: 11-October-2017
IPO Close: 13-October-2017
IPO Size: Approx Rs. 11500 Crore (Approx)
Face Value: Rs. 5 Per Equity Share
Price Band: Rs. 855 to 912 Per Share
Listing on: BSE & NSE
Retail Portion: 35%
Equity: 12,47,00,000 Shares

Market Lot:

Shares: Apply for 16 Shares (Minimum Lot Size)
Amount: Rs.14592

IPO Allotment & Listing:

Basis of Allotment: 18-October
Refunds: 23-October
Credit to demat accounts: 24-October
Listing: 25-October

Registrar:

Karvy Computershare Private Limited

Lead Managers:

Axis Capital Limited
Citigroup Global Markets India Private Limited
Deutsche Equities India Private Limited
HSBC Securities & Capital Markets Pvt Ltd
Kotak Mahindra Capital Company Limited

GICOffer for Sale:

GIC will not receive any proceeds from the Offer for Sale.

Fresh Issue

GIC proposes to utilize the Net Proceeds from the Fresh Issue towards:

(i) Augmenting the capital base of its Corporation to support the growth of its business and to maintain current solvency levels; and

(ii) General corporate purposes, subject to applicable law.

List of shareholder

PROMOTOR1Competitive Strengths:

Leader in Indian reinsurance industry with a trusted brand and 44 years of experience.

Significant global player with growing international presence.

Diversified product portfolio and revenue streams.

Robust and comprehensive risk management framework.

Diversified investment portfolio generating strong growth and attractive yields.

Strong financial track record and a strong balance sheet.

Experienced management team.

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Strategy:

Expand and leverage its leadership position in the domestic reinsurance industry and continue its strong business growth.

Expand its presence internationally and grow its overseas business.

Focus on improving profitability through a reduction in combined ratio.

Grow its life reinsurance and other business lines in India and overseas markets.

The following charts show the penetration for life and non – life insurance business in 2016 in Brazil, Russia, India, China, South Africa, South Korea, Taiwan, Japan, Hong Kong, Singapore, the United States, the United Kingdom and worldwide.

PENETRATION11Source: Swiss Re World insurance reports Sigma No 3/2017 as extracted from the CRISIL Report

Brazil – The proportion of primary life and non – life insurance premium is well balanced for  Brazil, with the life segment contributing a slightly higher proportion of 54%. (Source: CRISIL Report)

Russia – Russia is completely different compared with other BRICS countries, as the proportion of non -life insurance is far higher at 87%.  (Source: CRISIL Report)  However, the life segment’s share has been increasing over the past five years, as it has grown at a very high pace, while non – life premiums have been growing at a subdued pace. (Source: CRISIL Report)

India India is the second largest market among the BRICS nations, behind only China. India has a far higher domination of life insurance, which contributes to about 79% of the total premium collected. (Source: CRISIL Report)   However, over the past five years ended 2015, India has grown at a subdued pace compared to the rate of growth in non -life insurance premiums.Penetration levels (defined as premiums as a percentage of GDP), were at 0.8% in 2016, which is the lowest amongst BRICS and other Asian economies, reflecting the significant growth potential of the Indian non -life insurance market.

China – The Chinese market is similar to the Brazilian market, with the contribution of life insurance at 56% in 2016. (Source: CRISIL Report)  However, the share of non – life has been increasing, as it has grown at a much faster pace than life insurance premium over the past five years. (Source: CRISIL Report)

Top 20 Global Reinsurance group

TOP20Negative:

Its success depends upon its ability to accurately assess the risks associated with the businesses that GIC reinsure, and if actual losses exceed its estimated loss reserves, its net income and capital position will be reduced.

The catastrophe business that they reinsure may result in volatility of its earnings.

The usefulness of analytic models as a tool to evaluate risk is subject to a high degree of uncertainty that could result in actual losses that are materially different from its estimates, including probable maximum losses, and its financial results may be adversely impacted, perhaps significantly.

GIC are exposed to credit risk relating to its reinsurance brokers and cedants.

GIC may decide not to purchase or be unable to purchase retrocessional coverage for the liabilities they reinsure, and if GIC successfully purchase such retrocessional coverage, they may be unable to collect from its retrocession partners, which could have a material adverse effect on its business, financial condition and results of operations.

GIC operate in a highly regulated industry and any changes in the regulations or enforcement thereof may adversely affect the manner in which business is carried on and the price of the Equity Shares.

There are outstanding litigations against our Corporation, its Directors and its Group Companies and any adverse outcome in any of these litigations may have an adverse impact on its business, results of operations and financial condition.

Regulatory and statutory actions against us could cause reputational harm and could materially adversely affect its business, financial condition, results of operations and prospects.

If GIC are significantly downgraded by rating agencies, its standing with brokers and customers could be negatively impacted and may adversely impact its results of operations.

A substantial increase in its agriculture reinsurance business in recent years exposes us to risks, losses, uncertainties, and challenges which could have a material adverse effect on its business, financial condition and results of operations.

The exposure of its investments to interest rate, credit, and equity risk may adversely affect its net income and the adequacy of its capital.

Its investment portfolio is subject to liquidity risk which could decrease its value.

Political, regulatory, governmental and industry initiatives in and outside India could adversely affect its business.

Since GIC rely on a few reinsurance brokers for a significant part of its international reinsurance business, loss of business provided by these brokers or breaches by these brokers of their contractual or regulatory obligations could reduce its premium volume and net income and have an adverse effect on its business, financial condition and results of operations.

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Financials

Its gross premiums on a restated consolidated basis from its international business in Fiscal 2017, Fiscal 2016 and Fiscal 2015 were ₹103,004.52 million,₹ 83,396.92 million and ₹ 66,094.53 million, respectively, and its gross premiums have grown at a CAGR of 24.84% from Fiscal 2015 to Fiscal 2017. In Fiscal 2017, Fiscal 2016 and Fiscal 2015, its gross premiums for risks outside of India were 30.53%, 45.00% and 43.28%, respectively, of its total gross premiums. GIC develop its overseas business through its home office in Mumbai, branch offices in London, Dubai and Kuala Lumpur, a representative office in Moscow, a subsidiary in the United Kingdom that is a member of Lloyd’s of London and a subsidiary in South Africa.

Its gross premiums on a restated consolidated basis in Fiscal 2017, Fiscal 2016 and Fiscal 2015 were ₹337,407.91 million,₹ 185,342.45 million and ₹152,701.56 million, respectively, and have grown at a CAGR of 48.65% from Fiscal 2015 to Fiscal 2017. In the same fiscal years, its profit after tax on a restated Consolidated basis was ₹31,406.23 million, ₹28,234.15 million and ₹28,909.75 million, respectively, and has grown at a CAGR of 4.23% from Fiscal 2015 to 2017. Its productivity, as measured by profit after tax per employee on a restated consolidated basis, improved to ₹ 55.78 million per employee in Fiscal 2017 from ₹55.07 million in Fiscal 2015.

Further, as at March 31, 2017, 2016 and 2015, they had a restated consolidated net worth (including fair value change account) of ₹ 495,508.46 million, ₹ 408,702.58 million and ₹ 433,842.92 million, respectively. GIC’s total assets on a restated consolidated basis as at March 31, 2017, 2016 and 2015 amounted to ₹ 970,794.39 million, ₹ 761,027.46 million and ₹ 749,164.34 million, respectively. We had a solvency ratio of 2.41%, 3.80% and 3.32%, calculated on a restated standalone basis as at March 31, 2017, 2016 and 2015, respectively, against the minimum statutory requirement of 1.50%. GIC has been rated “A – ” (Excellent) with a stable outlook by AM Best for 10 consecutive years. In addition, GIC has paid successive annual dividends in the past five fiscal years (including a proposed dividend in Fiscal 2017) to the Government of India as its shareholder, and its dividends during last five fiscal years were an aggregate of ₹ 33,200.50 million.

Valuations

GIC has posted an average EPS of Rs. 34.81 and average RoNW of 16.61% for last three fiscals. The issue is priced at a P/BV of 3.89 and a P/E of around 31.19. If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is around P/E of 32. Thus issue appears fully priced. It has no listed peer to compare with.

Grey market premium:

Currently there is no trade in Grey market.

DISCLAIMER

No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here.

MAS Financial Services IPO Review and GMP

Ahmedabad based MAS Financial Services is a  Non-Banking Financial Company. MAS Financial offer product and services under 5 categories:

1. Micro-enterprise loans 2. SME loans 3. Two-wheeler loans 4. Commercial Vehicle loans 5. Housing loans. As of September 30, 2016 Company had more than 530,000 active loan accounts and 3,200 Customers.

The Company operated across six States and in Delhi through 119 branches. It also has commission-based direct sales agents (DSA) and has revenue sharing arrangements with some of the dealers and distributors where part of loan default is guaranteed by such sourcing dealers.

The company has been in this business over 2 decades. It has a track record of consistent growth with quality loan portfolio.The company has developed an extensive operational network in Gujarat and Maharashtra. Another important aspect of this company is  Robust credit assessment and risk management framework.

AUM in micro enterprise, two wheeler, Commercial Vehicle and housing loan segments increased at a CAGR of 39.78%, 10.61%, 22.24%, and 56.00% from March 31, 2012 to March 31, 2016, respectively, and AUM in SME loan segment increased at a CAGR of 161.64% from March 31, 2013 to March 31, 2016. As of March 31, 2016 and September 30, 2016, its total outstanding debt including security deposits received from customers (excluding assignment’s) was 16,015.31 million and 16,874.25 million, respectively, and its finance cost was 1,423.01 million and 831.24 million, respectively.

mas

IPO Dates & Price Band:

  • IPO Open: 06-October-2017
  • IPO Close: 10-October-2017
  • IPO Size: Approx Rs. 550 Crore (Approx)
  • Face Value: Rs. 10 Per Equity Share
  • Price Band: Rs. 456 to 459 Per Share
  • Listing on: BSE & NSE
  • Retail Portion: 35%

Market Lot:

  • Shares: Apply for 32 Shares (Minimum Lot Size)
  • Amount: Rs.14688

IPO Allotment & Listing:

  • Basis of Allotment: 13-October
  • Refunds: 16-October
  • Credit to demat accounts: 17-October
  • Listing: 18-October

Lead Managers:

  • Motilal Oswal Investments Advisors Pvt Ltd

Registrar to the IPO:

Link Intime India Private Ltd

The promoters :

1. Kamlesh Chimanlal Gandhi
2. Mukesh Chimanlal Gandhi
3. Shweta Kamlesh Gandhi and
4. Prarthna Marketing Private Limited

Objects of the Issue

  1. Fresh Issue
  2. Offer for Sale

Competitive Strengths

Track record of consistent growth with quality loan portfolio.

Diversified product offerings presenting significant growth opportunities.

Access to diversified sources of capital and cost effective funding.

Deep market knowledge through extensive sourcing channels.

Robust credit assessment and risk management framework.

Experienced management team with reputed investors.

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Business Strategies

Strengthen marketing and sourcing channels while maintaining stable growth and quality of portfolio.

Expand its product offerings.

Leverage its existing network and customer base to develop its housing finance business.

Leverage technology to foster growth.

Positive

MAS Financial Services has been growing its loan book and it clearly reflects in its revenues which have not dipped in any of the last four years. Growing at an average rate of 26.3%, revenues jumped from Rs. 43.1 crore in FY2013 to Rs. 364.7 crore in FY2017. Profits have also maintained almost the same rate in recent years and as a result, earnings in FY2017 stood at INR68.6 crore. Margins have consistently remained in the healthy range of 16.7% to 19.1% in these years.

The company is on track to excel further as the performance in the first quarter indicates. Profitability in the latest quarter actually shot up to 22.4%, although it is always a good practice to discount the sudden jump in earnings or margins.

It has a wide spectrum of products and this is kind of diversification is positive. Although the company has a high exposure to micro-enterprise loans (accounting for 59.5% of the loan book), this risk is mitigated by low gross NPAs of 1.06%. Net NPAs are even lower at 0.92%.

Another positive development is that loan disbursement in SME and housing loan categories have outpaced the micro-enterprise category, resulting in increasing average loan size.

As of 30 June 2017, MAS Financial Services cost of borrowing stood at 9.05%, as a result of its excessive reliance on short term bank loans. However, this is likely to come down following the IPO as the company will use proceeds to augment its capital base.

Negative

The Company, Promoters, Directors, and its Subsidiary are involved in certain legal proceedings, any adverse developments related to which could materially and adversely affect its business, reputation and cash flows.

MAS Financial Services business operations involve transactions with relatively high risk borrowers. Any default from its customers could adversely affect its business, results of operations and financial condition.

MAS Financial Services extend loans to other financial institutions such as MFIs, NBFCs and HFCs. If there is a default by these financial institutions or if the company are unable to maintain its relationships with these institutions, its business, financial condition and results of operations may be adversely affected.

MAS Financial Services inability to maintain relationships with its sourcing intermediaries could have an adverse effect on its business, prospects, results of operations and financial condition.

The quality of its portfolio may be impacted due to higher levels of NPAs and its business may be adversely affected if MAS Financial Services is unable to provide for such higher levels of NPAs.

Matrimony.com Limited IPO Review

MAS Financial Services business requires substantial funds, and any disruption in funding sources would have a material adverse effect on its liquidity and financial condition.

MAS Financial Services inability to compete effectively in an increasingly competitive industry may adversely affect its net interest margins, income and market share.

As part of its business strategy, MAS Financial Services have assigned or securitized a significant portion of the receivables from its loan portfolio to banks and other financial institutions. Any deterioration in the performance of any portfolio of receivables assigned to banks and other institutions may affect its ability to conduct further assignment and securitization and thus adversely impacting its business prospects, financial condition and results of operations.

MAS Financial Services financial performance is subject to interest rate risk, and an inability to manage its interest rate risk may have a material adverse effect on its interest income from financing activities, thereby adversely affecting its business prospects and financial performance.

The recent currency demonetisation measures imposed by the Government of India adversely affected the Indian economy and similar unanticipated measures may adversely affect its business its business operations, financial condition, results of operations and financial condition.

MAS Financial Services business is highly regulated and it may be adversely affected by future regulatory changes.

MAS Financial Services is subject to regulations in relation to minimum capital adequacy requirements and a decline in its CRAR will require us to raise fresh capital which may not be available on favourable terms, or at all. This, in turn, may affect its business, prospects, results of operations and financial condition.

An inability to effectively manage and sustain our rate of growth, or maintain operational efficiencies, may adversely affect its business and it may not be able to increase its revenues or maintain its profitability.

Some of its loans are unsecured and are susceptible to certain operational and credit risks which may result in increased levels of NPAs which may adversely affect its business, prospects, results of operations and financial condition.

MAS Financial Services may not be able to recover its secured loans on a timely basis, or at all, the full value of collateral or amounts which are sufficient to cover the outstanding amounts due under such defaulted loans, its inability to recover outstanding amounts under loans may adversely affect its business.

Valuations

PE RATIO

The price band of  Rs.456 – 459 per share and Earnings Per Share (EPS) of 15.33 mean the company is asking for a Price/Earnings (P/E) ratio of 29.94 at the upper end. This is in line with the competition, although some NBFCs are still available at a lower valuation, Shriram City Union Finance Limited – trading at a P/E ratio of 23.75 – being one of them. Nevertheless, valuations of almost financial plays have jumped in recent months and most of its competitors including Capital First Limited, Mahindra & Mahindra Financial Services Limited and Bajaj Finance Limited are quoting at high multiples. This valuation stands to come down if first quarter earnings are taken into consideration but we don’t see merit in doing that.

MAS Financial Services’ Return on Net Worth (RONW) of 20.65% is on the higher side among its peers and is even better than Bajaj Finance. While this is helpful and may give an impression that pricing is on the lower side, the company is seeking a high valuation on Price/Book Value (P/B) front. On this parameter, the company’s valuation is at 6.92 which is higher than Shriram City Union Finance, Capital First, Mahindra & Mahindra Financial Services.

Grey market Premium

Grey market premium is Rs.190/- and Kostak is Rs.400/-

Conclusion

Investment may be considered for short term to medium term.

DISCLAIMER

No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here.

Godrej Agrovet IPO Review and Grey market premium

Godrej Agrovet , Incorporated in 1991, is a leading company having diverse product-portfolio of Animal Feed, Crop Protection, Oil Palm, Dairy and Poultry and Processed Foods. Godrej Agrovet is the largest crude palm oil producer in India.

Animal feed business: Cattle feed, poultry feed (broiler and layer), aqua feed (fish and shrimp) and specialty feed. These products are produced at 35 locations and sold through about  4000 distributors across India.Godrej Agrovet is the leading compound animal feed company in India, on the basis of installed capacity for the financial year 2016, according to the CRISIL Animal Feed report from 2016 Crop protection

Crop protection business: Plant growth regulators, Organic manures,  Agrochemicals and specialized herbicides. These products are sold in India and 24 other countries.The Company has more than 6000 distributors in this business line.

Oil palm business: Crude palm oil, Crude palm kernel oil and palm kernel cake. The company owns five palm oil mills where these products are manufactured

The dairy business is operated through its subsidiary: Creamline Dairy.  The company own nine milk processing units.It  has 2,500 milk-product distributors and 50 retail parlors.During FY2015-16, the company also acquired Creamline Dairy, a south India-focused milk and milk products firm along with Astec Lifesciences Ltd, an agri-chemical and pharma intermediates firm, further strengthening the company’s presence across the agri and food business value chain Company also produce processed poultry and vegetarian products under Company also produce processed poultry and vegetarian products under the its popular brands ‘Real Good Chicken’ and ‘Yummiez’.

GODREJ IPO

Godrej Industries is the largest shareholder in the company with a 63.7% stake.Godrej group enteres Capital market after  nearly a decade; the last being Godrej Properties (which went public in 2010).The calibre of promoters like the Godrej family only makes the issue more attractive to potential investors.

Godrej Agrovet today said it has raised a little over Rs 341 crore from anchor investors ahead of its initial public offer.

Institutional investors that participated in the anchor book allocation include the Reliance Capital Trustee Company, SBI Life Insurance Company, Nomura, Government of Singapore, First State Indian Subcontinent Fund, The India Fund Inc-Aberdeen, Russel Investment Co., Goldman Sachs India and Birla Sunlife Trustee Company.

Prataap Snacks Ltd. IPO Review and GMP

IPO Dates & Price Band:

  • IPO Open: 04-October-2017
  • IPO Close: 06-October-2017
  • IPO Size: Approx Rs. 1157 Crore (Approx)
  • Face Value: Rs. 10 Per Equity Share
  • Price Band: Rs. 450 to 460 Per Share
  • Listing on: BSE & NSE
  • Retail Portion: 35%
  • Equity Shares: 300 Crore + 12,300,000 Shares

Market Lot:

  • Shares: Apply for 32 Shares (Minimum Lot Size)
  • Amount: Rs. 14720

IPO Allotment & Listing:

  • Basis of Allotment: 11-October
  • Refunds: 12-October
  • Credit to demat accounts: 13-October
  • Listing: 16-October
  • The promoters :
  • Mr Nadir B. Godrej and Mr Adi B. Godrej
  • Objects of the issue are
  • The Company proposes to utilise the proceeds from the Fresh Issue towards:
  • repayment or prepayment of working capital facilities availed;
    b. repayment of commercial papers issued by the Company;

Lead Managers:

1. Axis Capital Ltd,
2. Credit Suisse Securities (India) Private Limited
3. Kotak Mahindra Capital Company Limited

Registrar to the IPO:

Karvy Computershare Private Limited

Competitive Strengths

Pan India Presence with Extensive Supply and Distribution Network.

Diversified Businesses with Synergies in Operations.

Strong R&D Capabilities.

Strong Parentage and Established Brands.

Experienced Promoters and Management Team.

Strategies

The primary elements of its business strategy are to continue to grow its existing businesses, leverage synergies between its businesses and opportunistically evaluate inorganic opportunities.

Continue to Grow its Overall Market Share by Leveraging our Presence in Existing Business Verticals.

Inorganically Grow its Business Offerings.

Consolidate its market position in existing business verticals; achieve operating leverage in key markets by unlocking potential efficiency and synergy benefits;

Strengthen and expand its product portfolio;

Enhance its depth of experience, knowledge base and know how; and increase its sales and distribution network.

Positive

Well diversified company, which has enabled them to grow their business double digit in last five years.

In last five years i.e. FY13-FY17, company’s revenue & profitability has grown at a CAGR of 15.6% and 29.8% respectively. With established Godrej brand coupled with Pan India presence, superior return ratios, and positive long-term outlook for each business verticals.

Margin are between 4.4% to 5.8% in the last 4 out 5 years.

SBI Life insurance IPO and Current GMP

Negative

Unfavourable local and global weather patterns may have an adverse effect on its business, results of operations and financial condition.

The comapny operate in five business verticals and its inability to manage its diversified operations may have anadverse effect on its business, results of operations and financial condition.

The comapny derive a significant portion of its revenue from its animal feed business and any reduction in demand or in the production of such products could have an adverse effect on its business, results of operations and financial condition.

The comapny do not have long term agreements with suppliers for its raw materials and an increase in the cost of, or a shortfall in the availability of such raw materials could have an adverse effect on its business and results of operations.

The improper handling, processing or storage of raw materials or products, or spoilage of and damage to such raw materials and products, or any real or perceived contamination in its products, could subject us to regulatory and legal action, damage its reputation and have an adverse effect on its business, results of operations and financial condition.

The company, its Directors, our Subsidiaries, Promoters and certain of its Group Companies are involved in certain legal proceedings. Any adverse decision in such proceedings may render us/them liable to liabilities/penalties and may adversely affect its business and results of operations.

The comapny utilize the services of certain third parties for its operations and any deficiency or interruption in their services could adversely affect its business and results of operations.

Certain of its businesses are subject to seasonal variations that could result in fluctuations in its results of operations.

If the comapny are unable to introduce new products and respond to changing consumer preferences in a timely and effective manner, the demand for its products may decline, which may have an adverse effect on its business, results of operations and financial condition.

Outbreaks of livestock diseases in general, and poultry and shrimp disease in particular, can significantly restrict its ability to conduct its operations.

The comapny inability to expand or effectively manage its distribution network may have an adverse effect on its business, results of operations and financial condition.

Certain of its operations are concentrated in the state of Andhra Pradesh and any adverse developments affecting this state could have an adverse effect on its business, results of operations, financial condition and cash flows.

A slowdown or shutdown in its manufacturing operations or under utilization of its manufacturing facilities could have an adverse effect on its business, results of operations and financial condition.

The company inability to effectively manage its growth could have an adverse effect on its business,results of operations and financial condition.

The comapny do not own the “Godrej” trademark and logo.

Financials:

Godrej Agrovet is well diversified company, which has enabled them to grow their business double digit in last five years. In last five years i.e. FY13-FY17, company’s revenue & profitability has grown at a CAGR of 15.6% and 29.8% respectively. With established Godrej brand coupled with Pan India presence, superior return ratios, and positive long-term outlook for each business verticals, we believe the company will maintain profitable growth in coming years. At Upper Price Band of IPO Price of Rs 460/-, company trades at 42x its FY17 EPS of Rs 10.95/-, which is fairly priced. Hence, we recommend to SUBSCRIBE to the issue on long-term basis.

Grey market premium

Grey market premium as on today at Rs.100-110 with Kostak at Rs.400-450

DISCLAIMER

No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here.

Are We Headed for Another Dot-Com Disaster?

With a current market cap of over $143 billion, cryptocurrencies are changing the way we understand finance and economics. For perspective, Facebook has a value of $496.0 billion, or 3.46 times the entire market capitalization of all cryptocurrencies worldwide. 2017 saw the price of one Bitcoin exceed the value of one ounce of gold, and new blockchain currencies have followed suit.

Bitcoin — $69.5 Billion

Ethereum — $27.7 Billion

Ripple — $7.4 Billion

Bitcoin Cash — $7.3 Billion

Litecoin — $2.8 Billion

Since its founding in 2009, Bitcoin has grown to be the largest cryptocurrency — with over 16.5 million bitcoins on public ledgers and a market capitalization comparable to Paypal‘s. Bitcoin’s acceptance and popularity paved the way for future cryptocurrencies, and can now be used to purchase everything from food to vehicles to vacation packages and real estate!

Hackers Have Stolen Millions Of Dollars In Bitcoin — Using Only Phone Numbers

bubbleSource : Howmuch

Ethereum — $27.7 Billion

As the second largest cryptocurrency by market capitalization, Ethereum has developed a unique story since its inception in 2015. Ethereum’s hack — a loss of around $30 million — led to a split, and cryptocurrency news outlets are predicting another before the end of 2017. While Ethereum may not be as widely accepted by merchants as its older brother, Bitcoin, rapid growth has catapulted Ethereum’s market cap above Expedia’s ($21.7 billion).

China ICO Ban: World’s Oldest Bitcoin Exchange Shuts Its Doors

Ripple — $7.4 Billion

With roots tracing back to as early as 2004, it’s quite possible that the innovation behind Ripple was one of the earliest predecessors to blockchain currencies. While Bitcoins are mined, Ripple has a predetermined set of coins, a centralized transaction ledger, and a different protocol for verifying purchases that make it faster than Bitcoin. With a value of over $7.4 billion, Ripple has a market capitalization greater than the successful online real estate platform Zillow.

Be alert Bitcoins are not approved by RBI

Bitcoin Cash — $7.3 Billion

As Bitcoin outgrew its infrastructure, developers searched for a way to decrease the wait time for bitcoin transactions without opening the currency to the type of spam that had inspired the original limits. Enter: Bitcoin Cash. With a blocksize of 8MB instead of 1MB, Bitcoin Cash was designed to be the faster, more secure, decentralized peer-to-peer cryptocurrency of the future. While relatively young, Bitcoin Cash has a market cap of $7.3 billion, larger than value of Brighthouse Financial ($7.2 billion).

South Korea Follows China By Banning ICOs

Litecoin — $2.8 Billion

As one of the early adopters of cryptocurrency technology, former Google engineer Charles Lee created Litecoin in 2011 to improve speed and security for transaction confirmations within a blockchain. While the smallest on the list, Litecoin has an active community of users and developers with a market capitalization of $2.8 billion — equal to the local discount promotion company Groupon.

Russian Hackers Used 9000 computers to Mine Monero, Zcash, Other Cryptocurrencies

With surging popularity and growing market capitalization, cryptocurrencies are here to stay. The future of information security, financial legislation, and economic growth will factor into widescale utilization and development of this new asset class, but year-over-year growth and technological innovation illustrate a promising start for cryptocurrencies around the world.

Source: Nasqaq.com,coindesk.com etc..