Now HDFC MF FMP Extends Maturity By 380 Days

Rs. 339-crore HDFC Fixed Maturity Plan – 1168 Days – February 2016 (1) was launched on Feb. 3, 2016. It has generated 9.5% CAGR since launch. Subsequent to the latest announcement of the rollover, the scheme shall mature on April 29, 2020. The existing maturity date of the scheme was April 15, 2019.

The reason for roll-over is not stated, but a close study of HDFC Fixed Maturity Plan – 1168 Days – February 2016 (1)’s portfolio shows that it has close to combined 20% exposure in two Essel Group firms.

HDFC MF

Holding of HDFC Fixed Maturity Plan – 1168 Days 

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Almost 10% of HDFC Fixed Maturity Plan – 1168 Days – February 2016 (1)’s money is in debentures of Edisons Infrapower and Multiventures. Another 10% is in debentures of Sprit Infrapower and Multiventures. This means as much as 20% of the Rs 339 crore of FMP money is in these two Essel Group firms.

Essel Group hopes to sell a stake in Zee Entertainment. If the stake sale happens and money comes to Essel, everybody including lenders, goes back home happy with their promised amount. If the stake sale does not fructify by that deadline, lenders and Essel group promoters may have to arrive at a new deadline.

Choice for investors

Rollover will be done by written consent of investors till 5.30pm on April 12. Redeeming investors will be given full principal + interest ex of Zee exposure

 

Essel and zee group exposure: Investors in some FMPs of Kotak Mutual Fund that mature between April 8 and May end, will not get their full redemption amount back on maturity.

Kotak FMP Series 127 and 183 that matured on April 8 and April 10 had an exposure of nearly 18 percent and 19 percent, respectively, to the Essel Group.

The scheme said it may face a delay in recovering its money that it had invested in the non-convertible debentures (NCD) of two of Essel group companies, namely Edisons Utility Works Pvt Ltd and Konti Infrapower & Multiventures Pvt Ltd.

As a result, investors may get their part redemption proceeds upon the scheme’s maturity and the rest will come to them as and when the fund house recovers the money from the companies.

Investors may get part redemption, rest when fund house recovers money scheme facing delay in recovering money from NCDs of two Essel group company. The FMP was launched around November 2015.

risk

Although the NCDs are backed by equity shares of Zee Entertainment Enterprises Limited (Zee), most of the lenders and mutual funds who had lent money (in other words, bought the debt securities) to the Essel group had chosen to not sell the shares to recover the money if there is any default.

Check the factsheet regularly if you are invested in debt and balance funds

Lenders have granted this moratorium till around September 2019 by which time they, including Kotak AMC, expect the group to repay all its dues.

The 3- year FMP scheme, which matures in April-May 2019, has invested in debt securities, money market instruments and government securities. Amongst other investments, the scheme also invested in Non-Convertible Debentures (NCDs) issued by Edisons Utility Works Pvt Ltd and Konti Infrapower & Multiventures Pvt Ltd (both are Essel Group companies – secured by equity shares of Zee Entertainment Enterprises Limited) and IL&FS Transportation Networks Limited (Credit Enhancement by Parent Support Agreement of IL&FS). The three firms are facing headwinds due to company and sectoral-specific issues. For IL&FS Transportation Networks, Kotak Mutual Fund has made a 100% provision for this investment as the company has been classified in the Red category where recovery is uncertain and will be dependent on the resolution plan achieved by the new board/NCLT.”

Kotak FMP due for maturitykotak

NCDs or debt securities that are backed by the group companies equity shares come with a cover that is agreed upon at the time of the agreement.

Total of 10 fund houses namely ICICI, HDFC, KOTAK, FRANKLIN, UTI, L&T, RELIANCE,SBI etc..had lent to 16 companies belonging to Essel Group. Some of this money lent was backed by shares of the above companies that were pledged.

Overall the mutual fund industry has an exposure of around Rs.8000 crs to Zee/Essel Group in deb across mutual funds and schemes. Of this around 1700 cr is in FMPs and the rest in open-ended debt funds.

Detail portfolio of Kotak FMP S127 

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Detail portfolio of Kotak Fixed Maturity Plan S183

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Totally around 55 FMPs have exposure to Zee/Group Debt. The maturities have just started. In the next 2-3 months, almost 30-40 of these FMPs will mature. So all the investors in such FMPs may be impacted

“This has resulted in a breach of top-up covenants…there were a lot of deliberations with the promoters of the Essel Group along with other lenders (Mutual Funds, NBFCs etc). A supermajority of lenders have decided not to declare an event of default as it may result in steep fall in price given panic selling in the Zee thereby eroding collateral value and resulting in sub-optimal recovery,” said the note by Kotak AMC to its investors.

Do your mutual funds have exposure to Essel Group?

The fund house added that “Essel promoters are working for the resolution of above through a strategic sale of Zee in a time-bound manner. The above resolution is likely to be achieved by September 30, 2019 as per communication from Essel promoters.”

Meanwhile, the FMP is due for maturity. How it pays back to the investors remains to be seen, as the fund house has not done side-pocketing yet for this particular scheme. Side pocketing is a practice whereby the bad asset- the debt security that defaulted- in a scheme is segregated from the rest of the scheme. Once segregated, a set of units will contain investments made in the troubled paper, while the other set of units will contain all other investments and cash holdings. The good part of the scheme is open for sales and repurchase, but the bad portion is frozen. If and when the fund house recovers the money from the bad assets, it pays off the money to unit holders whose investments were stuck in the fund before the default.

Conclusion: You have to wait and hope the problem resolves. The probability of the problem resolving is high and you may get your total money back. And also interest for this period.

Polycab India Ltd IPO Review and list of anchor investors

Polycab India Ltd is a manufacturer and seller of wires, cables and fast moving electrical goods. Its a popular brand for wires in India. They sell their products under brand name “POLYCAB”. They are one of the largest manufacturers of wires in the industry. The product range includes power cables, control cables, solar cables, building wires and more. The other products includes welding cables, round cables, railway signaling cables, speciality cables and green wires. The other business includes electric fans, LED lighting and luminaires, switches and switchgears, solar products and conduits and accessories.

For Fiscal 2018, they have a market share of approximately 18% of the organized wires and cable industry and approximately 12% of the total wires and cables industry in India, estimated at ₹ 525 billion based on manufacturers realization. Apart from wires and cables, they manufacture and sell FMEG such as electric fans, LED lighting and luminaires, switches and switchgears, solar products and conduits and accessories.

polycab

Polycab India raises Rs 401 cr from anchor investors and the List of anchor investors

IPO Dates & Price Band:

  • IPO Open: 05-April-2019
  • IPO Close: 09-April-2019
  • IPO Size: Approx ₹1346 Crore
  • Face Value: ₹10 Per Equity Share
  • Price Band: ₹533 to ₹538 Per Share
  • Listing on: BSE & NSE
  • Retail Portion: 35%
  • Equity: 17,582,000 Shares

Market Lot:

  • Shares: Apply for 27 Shares (Minimum Lot Size)
  • Amount: ₹14,526

Allotment & Listing:

  • Basis of Allotment: 12-April-2019
  • Refunds: 15-April-2019
  • Credit to demat accounts: 16-April-2019
  • Listing: 18-April-2019

Company Promoters:

  • Inder T Jaisinghani
  • Ajay Jaisinghani
  • Ramesh T Jaisinghani

Polycab IPO Lead Managers:

  • Axis Capital Ltd
  • Citigroup Global Markets India Pvt Ltd
  • Edelweiss Financial Services Ltd
  • IIFL Holdings Ltd
  • Kotak Mahindra Capital Company Ltd
  • Yes Securities (India) Ltd

Polycab IPO Registrar:

Karvy Computershare Private Limited

Object of the issue:

The Company shall not receive any proceeds from the Offer for Sale
The Net Proceeds from the Fresh Issue are proposed to be utilised towards the following objects:
1. Scheduled repayment of all or a portion of certain borrowings availed by the Company;
2. To fund incremental working capital requirements of the Company; and
3. General corporate purposes

Qualitative Factors:

Market leader in wires and cables in India
Diverse suite of electrical products with varied applications across a diverse customer base
Strong distribution network
Manufacturing facilities with high degree of backward integration
Strong brand in the electrical industry
Experienced and committed management team

 key

Key Business Strategies:

Enhance and strengthen our leadership position in wires and cables

Continue to expand the FMEG business

Expand distribution reach

Continue to invest in technology to improve operational efficiencies, customer satisfaction and sales

Strengthen brand recognition

Basic Financial Details:

financial

Financials( Consolidated) of Polycab India Ltd:

Earnings per Share (EPS)2017-18 Rs 26.23
Earnings per Share (9 M)2018-18 Rs 25.31
Book value as on 31.12.2018 Rs. 192.64
RoNW  for 2017-18 : 15.78%
Upper Price Band/last EPS: 20.49
Upper offer price/Book Value Ratio: 2.79

If we annualize consolidated EPS of Rs 25.31 for 9 months ended Dec-18 and a higher price band of Rs 538, the P/E works out to 16x. Similarly, if we take consolidated EPS of 3 years average of Rs 20.79, P/E works out to be 26x. Means company is asking highest price band of Rs 538 in the P/E of 16x to 26x. Its competitors like Havell India is trading at P/E of 72.5x (Highest), Bajaj electricals are trading at 61.42x and KEI Industries at P/E of 23x (Lowest) and the industry average is at 54x,hence the highest Polycab IPO Price of Rs 538 per share is reasonably priced.

peers

Risk:

Its Company, Subsidiaries, Joint Ventures, Directors and Promoters are involved in certain criminal and civil legal proceedings. Any adverse decision in such proceedings may render us/them liable to liabilities/penalties and may adversely affect our business, financial condition, results of operations and cash flows.

Significant increases or fluctuations in prices of, or shortages of, or delay or disruption in the supply of primary raw materials could affect its estimated costs, expenditures and timelines which may have a material adverse effect on its business, financial condition, results of operations and cash flows.

Polycab continued operations at its manufacturing facilities are critical to it’s business and any disruption, breakdownor shutdown of its manufacturing facilities may have a material adverse effect on its business, financial condition, results of operations and cash flows.

Polycab is heavily dependent on the performance of the wires and cables market. Any adverse changes in the conditions affecting the wires and cables market can adversely impact its business, financial condition, results of operation s,cash flows and prospects.

Polycab inability to maintain the stability of its distribution network and attract additional distributors and dealers may have a material adverse effect on its results of operations and financial condition.

If polycab are unable to maintain and enhance its brand, the sales of its products will suffer, which would have a material adverse effect on its results of operations.

Polycab is highly dependent on its key management team as well as its mid-to-senior personnel and its success depends in large part upon its Promoters. The loss of or its inability to attract or retain such persons could materially adversely affect its business performance.

Polycab has substantial capital expenditure and working capital requirements and may require additional financing to meet those requirements, which could have a material adverse effect on its results of operations and financial condition.

Polycab faces significant competitive pressures in its business. Its inability to compete effectively would be detrimental to its business and prospects for future growth.

Polycab operates in a labor-intensive industry and is subject to stringent labor laws and any strike, work stoppage or increased wage demand by its employees or any other kind of disputes with its employees could adversely affect its business, financial condition, results of operations and cash flows.

Polycab depend on a limited number of third parties for the supply of its primary raw materials and delivery of products and such third parties could fail to meet their obligations, which may have a material adverse effect on its business,results of operations, financial condition and cash flows.

Grey market premium

Current GMP is Rs.75/- to 80/-  and Kostak is Rs. 700/-

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.

Metropolis Healthcare IPO Review and List of anchor investors

Metropolis Healthcare, a diagnostics company, has a presence across 19 states, with operational network spread across 197 cities in India. The company offers a range of clinical laboratory tests and profiles used for prediction, early detection, diagnostic screening and confirmation and/or monitoring of the disease.

During the nine months period ending December 31, 2018, company conducted approximately 12.3 million tests from approximately 6.6 million patient visits as compared to approximately 16 million tests from approximately 7.7 million patient visits during the financial year 2018.

Moreover, the company has shown good revenue growth in the last 5 years. It is a debt free company.

The company offered a broad range of approximately 3,487 clinical laboratory tests and 530 profiles, as of December 2018.

metropolis

Metropolis Healthcare on Tuesday raised ₹530 crore by selling shares to anchor investors ahead of its initial share-sale. The company allotted 60,23,293 equity shares to 26 anchor investors at ₹880 per unit. Among the anchor investors are Small Cap World Fund, Fundsmith Emerging Equities Trust, Sundaram Mutual Fund, UTI Equity Fund, Edelweiss Crossover Opportunities Fund.

List of anchor investors :

Download (PDF, 1.02MB)

 IPO Dates & Price Band:

  • IPO Open: 03-April-2019
  • IPO Close: 05-April-2019
  • IPO Size: Approx ₹1204 Crore
  • Face Value: ₹2 Per Equity Share
  • Price Band: ₹877 to ₹880 Per Share
  • Listing on: BSE & NSE
  • Retail Portion: 10%
  • QIB Portion: 75%
  • HNI Portion: 15%
  • Equity: 15,269,684 Shares

Market Lot:

  • Shares: Apply for 17 Shares (Minimum Lot Size)
  • Amount: ₹14,960

IPO Allotment & Listing:

  • Basis of Allotment: 10-April-2019
  • Refunds: 11-April-2019
  • Credit to demat accounts: 12-April-2019
  • Listing: 15-April-2019

Lead managers:

JM Financial, Credit Suisse, Goldman Sachs, HDFC Bank and Kotak Mahindra Capital are the lead managers to the offer.

Shareholder of the company:

shareholders

3 lakh shares are reserved for employees. One of the promoters, Sushil Kanubhai Shah, will offload 63 lakh shares, while investor CA Lotus Investments, part of Carlyle Group, will sell 74 lakh shares through the IPO.

Object of the Issue:

1) to achieve the benefits of listing the Equity Shares on the Stock Exchanges and

2) for the Offer for Sale.

Overview of Indian Healthcare Market:

The size of the Indian healthcare industry, in revenue terms, was USD 125 billion in the financial year 2015,which is estimated to have increased to USD 171 million by the financial year 2017. The healthcare industry is expected to grow at a CAGR of 16.9% from USD 125 billion in the financial year 2015 to USD 273 billion in the financial year 2020. India’s healthcare market is expected to be among the top three healthcare markets globally, in terms of incremental growth, by the financial year 2020.

Our Competitive Strengths

One of the leading diagnostics companies in India which is well positioned to leverage the expected growth in the Indian diagnostics industry.

Widespread operational network, young patient touch point network and asset light growth of service network

Comprehensive test menu with wide range of clinical laboratory tests and profiles

Strong and established brand with a focus on quality and customer service

Robust Information Technology Infrastructure with Focus on Improving Efficiency

Established track record of successful acquisition and integration in India and overseas

Experienced Senior Management Team and Qualified Operational Personnel

Our Strategy

Continue to Focus on Organic Growth Initiatives to Expand Our Reach

Continue Our Focus on Providing Quality Tests and Services

Focus on the Expansion of Our Service Network

Focus on Increasing our Business from Individual Patients

Pursue New Avenues of Growth

Focus on Consolidation Opportunities in a Largely Unorganized Diagnostic Sector

Financial:

From financial year 2016 to financial year 2018, revenue from operations grew from Rs 475.47 crore to Rs 643.57 crore, representing a CAGR of 16.3 percent and profit for the year grew from Rs 81.95 crore to Rs 109.75 crore, representing a CAGR of 15.7 percent.

financial details

3 lakh shares are reserved for employees. One of the promoters, Sushil Kanubhai Shah, will offload 63 lakh shares, while investor CA Lotus Investments, part of Carlyle Group, will sell 74 lakh shares through the IPO.

Object of the Issue:

1) to achieve the benefits of listing the Equity Shares on the Stock Exchanges and

2) for the Offer for Sale.

Overview of Indian Healthcare Market:

The size of the Indian healthcare industry, in revenue terms, was USD 125 billion in the financial year 2015,which is estimated to have increased to USD 171 million by the financial year 2017. The healthcare industry is expected to grow at a CAGR of 16.9% from USD 125 billion in the financial year 2015 to USD 273 billion in the financial year 2020. India’s healthcare market is expected to be among the top three healthcare markets globally, in terms of incremental growth, by the financial year 2020.

Our Competitive Strengths

One of the leading diagnostics companies in India which is well positioned to leverage the expected growth in the Indian diagnostics industry.

Widespread operational network, young patient touch point network and asset light growth of service network

Comprehensive test menu with wide range of clinical laboratory tests and profiles

Strong and established brand with a focus on quality and customer service

Robust Information Technology Infrastructure with Focus on Improving Efficiency

Established track record of successful acquisition and integration in India and overseas

Experienced Senior Management Team and Qualified Operational Personnel

Our Strategy

Continue to Focus on Organic Growth Initiatives to Expand Our Reach

Continue Our Focus on Providing Quality Tests and Services

Focus on the Expansion of Our Service Network

Focus on Increasing our Business from Individual Patients

Pursue New Avenues of Growth

Focus on Consolidation Opportunities in a Largely Unorganized Diagnostic Sector

Financial:

From financial year 2016 to financial year 2018, revenue from operations grew from Rs 475.47 crore to Rs 643.57 crore, representing a CAGR of 16.3 percent and profit for the year grew from Rs 81.95 crore to Rs 109.75 crore, representing a CAGR of 15.7 percent.

Peers:

Peers

Grey market premium:

Currently, Grey market premium is Rs. 60/- to 65/- and Kostak is Rs. 200/- to 250/-

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.

 

Jana Small Finance Bank Offers Upto 9.6% Interest rate : Review and MF holding

Jana Small Finance Bank (erstwhile Janalakshmi Financial Services Limited) commenced operations as a non-banking finance company (NBFC) on March 4, 2008, and was later classified as a non-banking finance company-microfinance institution (NBFC-MFI). The bank received a licence to set up a small finance bank on April 28, 2017 and commenced banking operations on March 28, 2018. Jana Holdings Limited (JHL), a non-banking finance company-non-operative financial holding company (NBFC-NOFHC), holds a 45.37% stake in JSFB as on February 28, 2019.

fixedeposits

JSFB has a diversified presence across 18 states and 2 union territories in India, with a portfolio of Rs.7,164 crore as on November 30, 2018. The share of the top 3 states of Tamil Nadu, Karnataka and Maharashtra was about 51% as on November 30, 2018. The bank raised Rs. 1,636 crore equity during FY2018 and Rs.601 crore during 11M FY2019 from existing and new investors.

For H1 FY2019, the bank has reported a net loss of Rs.1,291.8 crore on a managed portfolio of Rs.6,941 crore as on September 30, 2018. In FY2018, JSFB reported a net loss of Rs. 2,503.8 crore on a total managed asset base of Rs. 10,022.4 crore compared to a net profit of Rs. 170.1 crore on a total managed assets base of Rs. 15,730 crore during FY2017.

FD RATES

Credit challenges

Weak recoveries from harder overdue buckets continue to weigh down on asset quality – JSFB’s asset quality has remained weak with 90+ dpd3 at 31.7% (Rs.2,336.4 crore excluding write-off and Rs.3,264.4 crore including write-off) as on December 31, 2018 compared to Rs. 3,270.6 crore4 in March 2018 (Rs. 1,990 crores in March 2017) because of modest collections from the overdue buckets and limited impact of the various recovery programmes.

key financial

Outlook: Negative

The Negative outlook factors in the expected weakness in JSFB’ earnings and capital profile going forward. The ratings would be downgraded further if the bank’s recoveries and disbursements remain subdued thereby prolonging any meaningful improvement in its earnings and capitalisation, or if its liquidity profile deteriorates because of the bank’s inability to mobilise adequate external funding or deposits. The outlook would be revised to stable in case of a steady revival in its profitability indicators and improvement in its capital structure.

rating history

ratingMutual fund Holding of JSFB :

  1. DSP Credit risk Fund 08/07/2019
  2. UTI Unit link Insurance plan  26/04/2019
  3. Kotak Credit Risk  08/04/2019
  4. Kotak Medium Term   08/04/2019

Should you invest?

Like any other commercial bank, deposit of up to ₹ 1 lakh is insured by the Deposit Insurance and Credit Guarantee Corp. (DICGC), a subsidiary of RBI. DICGC has a list of insured banks on its website, and as of know, seven of the 10 small finance banks are listed on its website.

“The credit rating practices and mechanism of small finance banks might not be at the same level as that of an older public or private sector bank. So, I would be circumspect about these new age small banks as compared to the older banks, and hence would classify them as somewhat risky.