ICICI Sec. IPO Review and the list of anchor investors

ICICI Sec. is a leading technology-based securities firm in India that offers a wide range of financial services including brokerage, financial product distribution and investment banking and focuses on both retail and institutional clients. It has been the largest equity broker in India since fiscal 2014 by brokerage revenue and active customers in equities on the National Stock Exchange, powered by its significant retail brokerage business, which accounted for 90.5% of the revenue from its brokerage business (excluding income earned on our funds used in the brokerage business) in fiscal 2017.

ICICI Securities Raises Rs 1,718 Crore From Anchor Investors.

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ICICI-Securities-IPO

Its retail brokerage and distribution businesses are supported by its nationwide network, consisting of over 200 of its own branches, over 2,600 branches of ICICI Bank through which its electronic brokerage platform is marketed and over 4,600 sub-brokers, authorized persons, independent financial associates and independent associates as at September 30, 2017.

ICICI Sec. is empanelled with a large cross-section of institutional clients.

IPO Dates & Price Band:

  • IPO Open: 22-March-2018
  • IPO Close: 26-March-2018
  • IPO Size: Approx Rs.4017 Crore (Approx)
  • Face Value: Rs.5 Per Equity Share
  • Price Band: Rs.519 to 520 Per Share
  • Listing on: BSE & NSE
  • Retail Portion: 10%
  • Equity: 77,249,508 Shares

Market Lot:

  • Shares: Apply for 28 Shares (Minimum Lot Size)
  • Amount: Rs.14,560

Allotment & Listing:

  • Basis of Allotment: 2-April-2018
  • Refunds: 3-April-2018
  • Credit to demat accounts: 4-April-2018
  • Listing: 5-April-2018

The promoters:

ICICI Bank Ltd.

Lead Managers:

DSP Merrill Lynch Limited

Citigroup Global Markets India Private Limited

CLSA India Private Limited

Edelweiss Financial Services Limited

IIFL Holdings Limited

SBI Capital Markets Limited

Object of the issue:

The objects of the Offer for the Company are to achieve the benefit of listing the Equity Shares on the Stock Exchanges and for the sale of Equity Shares by the Promoter Selling Shareholder. Further, the Company expects that the listing of Equity Shares will enhance its visibility and brand image and provide liquidity to its existing shareholders.

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Our Strengths

Largest Equity Broker in India Powered by Our Proprietary Technology Platform.

Natural Beneficiary of Fundamental Transformation in the Indian Savings Environment.

Strong and Growing Distribution Business with an “OpenSource” Distribution Model.

Superior Customer Experience through Product and Technology Innovation.

Strategic Component of the ICICI Ecosystem.

Strong Financial Performance with Significant Operating Efficiency.

Experienced Senior Management Team.

i8Our Strategies

Strengthen its Leadership Position in the Brokerage Business.

Continue Investing in Technology and Innovation.

Strategically Expand its Financial Product Distribution Business Through Cross-Selling.

Leverage its Leadership in Equity Capital Markets to Strengthen its Financial Advisory Businesses.

Diversify its Revenue Streams and Continue Reducing Revenue Volatility.

Future Supply Chain Solutions Ltd IPO Review

Negative

Some of its Directors, its Promoter and certain Group Companies are involved in certain legal and other proceedings.

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General economic and market conditions in India and globally could have a material adverse effect on its business, financial condition, cash flows, results of operations and prospects.

ICICI Sec. rely heavily on its relationship with ICICI Bank for many aspects of its business, and its dependence on ICICI Bank leaves us vulnerable to changes in its relationship.

The operation of its businesses is highly dependent on information technology, and ICICI Sec. are subject to risks arising from any failure of, or inadequacies in, its IT systems.

ICICI Sec. rely on its brokerage business for a substantial share of its revenue and profitability. Any reduction in its brokerage fees could have a material adverse effect on its business, financial condition, cash flows, results of operations and prospects.

ICICI Sec. is subject to extensive statutory and regulatory requirements and supervision, which have a material influence on, and consequences for, its business operations.

ICICI Sec. may fail to detect money laundering and other illegal or improper activities in its business operations on a timely basis.

There are operational risks associated with the financial services industry which, if realised, may have a material adverse effect on its business, financial condition, cash flows, results of operations and prospects.

ICICI Sec. faces intense competition in its businesses, which may limit its growth and prospects.

ICICI Sec. may not be able to sustain its growth or expand its customer base.

ICICI Sec. faces certain other risks related to its distribution business, which accounts for a significant portion of its revenue and profitability.

ICICI Sec. face various risks due to its reliance on third-party intermediaries, contractors and service providers.

ICICI Sec. face various risks in relation to its investment banking business.

ICICI Sec. may incur losses on its treasury and trading business from market volatility or its investment strategies.

Its Promoter, ICICI Bank, and some of its Directors and related entities may be subject to conflicts of interest because they compete against us and have interests in companies which are in the same line of business as us.

Credit risks in our day-to-day operations, including in its investment portfolio, may expose us to significant losses.

ICICI Sec. have experienced negative cash flows in the prior years.

Cash Flow

i2Financial

Its profit after tax was INR 717.5 million, INR 891.9 million, INR 2,938.7 million, INR 2,387.2 million, INR 3,385.9 million and INR 2,460.5 million in fiscals 2013, 2014, 2015, 2016 and 2017 and the six months ended September 30, 2017, respectively, and its return on equity has exceeded 30.0% for each measured period since fiscal 2013. For fiscal 2017, our return on equity was 69.2%.

Comparison of Listed Peers

i4Valuations

Annualised EPS works out to Rs 10.48 for the year ended March 2017. At the upper end of the price band, shares will trade at 49.6 times its earnings.

High valuations despite less capital intensive business.

Grey market premium

Current GMP is Rs.6/-, and  Kostak is Rs.300/- (sellers)

 

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

Hindustan Aeronautics Limited IPO Review and Current GMP

Hindustan Aeronautic is engaged in manufacturing, development, design, repair and servicing of products like helicopters, aero-engines, aero space structures, aircraft and many more. Hindustan Aeronautic India has the unique products portfolio and the operations have names like Bangalore Complex, MiG Complex, Helicopter Complex, Accessories Complex, and Design Complex and they have over 11 production division with 11 R&D centers in India.

Their major domestic customers are Indian Air Force, Indian Army, Indian Navy, Indian Coast Guard, Indian Space Research Organisation, Defence Research & Development Organisation, Ordnance Factory Board, ,Border Security Force, Oil & Natural Gas Cooperation of India, Govt. of Karnataka, Govt. of Jharkhand, Govt. of Maharashtra, Geological Survey of India, Bharat Heavy Electricals Ltd. They export their products in France, USA, Mauritius, Israel, Ecuador, Namibia, Nepal, Russia, UK, Oman, Malaysia, Thailand, Germany and Vietnam. The company received “Excellent” rating from Government of India from 2002 to 2016.

Hindustan Aeronautics is ‘Navratna’ company since June 2007 and the largest DPSU in India. It is the 39th largest aerospace company in the world in terms of revenue. The company was also awarded Raksha Mantri’s Award for excellence in performance under institutional category in FY 2008, FY 2010, FY 2011, FY 2013 and FY 2016.

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IPO Dates & Price Band:

  • IPO Open: 16-March-2018
  • IPO Close: 20-March-2018
  • IPO Size: Approx Rs. 4482 Crore (Approx)
  • Face Value: Rs.10 Per Equity Share
  • Price Band: Rs.1214 to 1240 Per Share
  • Listing on: BSE & NSE
  • Retail Portion: 35%
  • Equity: 34,107,525 Shares
  • Discount:  Rs.25 for Retail & Employee

Market Lot:

  • Shares: Apply for 12 Shares (Minimum Lot Size)
  • Amount: Rs.14,580 (For Retail & Employee)
  • Amount: Rs.14,880 (For QIB & HNI)

IPO Allotment & Listing:

  • Basis of Allotment: 26-March-2018
  • Refunds: 27-March-2018
  • Credit to demat accounts: 27-March-2018
  • Listing: 28-March-2018

The promoters:

The President of India

Acting through the Department of Defence Production Ministry of Defence.

 Lead Managers:

SBI Capital Markets Ltd
Axis Capital Ltd

Registrar to the IPO:

Karvy Computershare Pvt Ltd.

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Outlook of the Indian Aerospace and Defence Sector

India has the third largest military in the world and is the sixth largest spender in Defence. India is also one of the largest importers of conventional defence equipment and spends approximately 30% of its total defence budget on capital acquisitions. 60% of Indian’s defence – related requirements are currently met through imports.

In addition, the ‘ Make in India ’initiative by the Government is focusing its efforts on increasing indigenous defence manufacturing with the aim of becoming self – reliant.

The opening up of the defence sector for private sector participation is helping foreign OEMs to enter into strategic partnerships with Indian companies and leverage opportunities in the domestic market as well as global markets.

India’s focus on indigenous manufacturing in the defence sector has yielded certain benefits as the MoD over the last two years unveiled several products manufactured in India including the LCA Tejas, the composites sonar dome, a portable elemedicine system for the armed forces, penetration – cum – blast and thermobaric ammunition specifically designed for the Arjun tanks, the Varunastra heavyweight torpedo manufactured with 95% locally sourced parts and medium-range surface-to-air missiles. The Defence Acquisition Council under the MoD cleared defence sector transactions with a value of more than 820 billion under the buy and Make (Indian) and Buy Indian categories. These transactions include the procurement of Light Combat Aircraft, T-90 tanks, mini UAVs and light combat helicopters.

121Our Strengths

India has the third largest military in the world and is the 6th largest spender in the defence sector.

60% of total defence requirements of India as on today is met from imports. Hindustan Aeronautics is poised to gain under the ‘Buy and Make (Indian)’ procurement category. The company has all the necessary capabilities and technology (including licensed technology) to capture maximum relevant defence budget spend going ahead.

Long credible history of research, design and development, manufacturing and maintenance, repair and overhaul (“MRO”) services.

Setting up a goal: First step to Financial Planning ( Video )

Established track record in offering product lifecycle support extending to periods beyond four decades.

Indian armed forces plan to procure more than 1000 rotary wing aircrafts and will revamp their fleet in next 10-20 years.

Strong design and development capabilities.

Leadership position in the Indian aeronautical industry and strong GoI support.

Diversified product portfolio.

Strong financial track record.

Experienced management team and operating team.

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Our Strategies

Expand its operations through partnerships or collaboration.

Diversify through expansion in new growth areas.

Diversify further into the civil aircraft segment for both manufacturing and servicing opportunities.

Develop in-house capabilities to design and develop specialized products including aero – engines.

Leverage Existing Cost Advantage.

Developing Human Capital.

Enhancing customer satisfaction.

Optimising operations towards becoming a lead integrator of aircraft platforms.

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Negative

There are outstanding legal and tax proceedings involving its Company. Any adverse decision in such proceedings may expose us to liabilities or penalties and may adversely affect its business, financial condition, results of operations and cash flows.

Hindustan Aeronautics depend heavily on MoD contracts. A decline or reprioritisation of funding in the Indian defence budget, that of customers including the Indian Army, Indian Air Force and Indian Navy (the “Indian Defence Services”), Indian Coast Guard, Border Security Force, Central Reserve Police Force and Paramilitary forces or delays in the budget process could adversely affect its ability to grow or maintain its sales, earnings, and cash flow.

As a result of national securities concerns,certain information in relation to its business and operations is classified as ‘secret and confidential’ pursuant to which we have not disclosed such information in this RHP nor provided such information to the BRLMs and other intermediaries and advisors involved in the Offer.

The MoD contracts are not always fully funded at inception and are subject to termination. Its inability to fund such contracts at the time of inception or any termination could have a material adverse effect on its financial condition and results of operations.

Its Company is not in compliance with certain provisions of the Companies Act and/or SEBI Listing Regulations in relation to terms of reference of the Audit Committee and the Nomination and Remuneration Committee.

Ongoing disclosure of information in relation to its Company after the listing of the Equity Shares on the Stock Exchanges may be limited and may not be in compliance with the SEBI Listing Regulations and other applicable laws.

The GoI has significant influence over its actions which may restrict its ability to manage its business. Any change in GoI policy could have a material adverse effect on its financial condition and results of operations.

EMI VS SIP ( Be controlled or take control )

Its current order book may not necessarily translate into future income in its entirety. Some of its current orders or requests for a proposal which we have received may be modified, cancelled, delayed, put on hold or not fully paid for by its customers, which could adversely affect its results of operations.

Hindustan Aeronautics is involved in a dispute with the Ministry of Defence of Ecuador relating to their termination of an agreement with us relating to the supply of helicopters to the Ecuadorean Air Force. Its revenue and exports may be adversely affected as a result.

Hindustan Aeronautics also operate in evolving markets, which makes it difficult to evaluate its business and future prospects.

Its earnings and margins may vary based on the mix of its contracts and programs, its performance, and its ability to control costs.

Its business could be materially adversely affected if any default of its causes an aircraft or helicopter accident.

ALH Dhruv Helicopters supplied to the Ecuadorean Air Force were involved in accidents, and The Ecuadorean Ministry of Defence has designated the company as a defaulting contractor and has barred it from bidding for future contracts. This can affect the future exports and company’s ability to bid outside India.

The aircraft such as MiG-21 variants, MiG-27 and the Su-30 MKI, as well as engines and other accessories, and repair and overhaul services for these aircraft that are manufactured in India are done through transfer of technology from Russian OEMs as well as pursuant to inter-governmental agreements with Russia. The United States, the United Nations Security Council and other jurisdictions and organizations have implemented comprehensive economic sanctions targeting Russia in recent years. This can have an adverse impact relating to the supply and support from Russian OEMs for the aircraft that Hindustan Aeronautic manufacture under transfer of technology with such OEMs.

Valuation

On the performance front, Hindustan Aeronautic has (on a consolidated basis) posted turnover/net profits of Rs. 17362.00 cr. / Rs. 994.10 cr. (FY15), Rs. 18754.80 cr. / Rs. 2004.30 cr. (FY16) and Rs. 19596.90 cr. / RS. 2624.70 cr. (FY17). For the first half of the current fiscal, it has earned a net profit of Rs. 391 cr. on a turnover of Rs. 5665.90 cr.

For last three fiscals, it has posted an average EPS of Rs. 54 and an average RoNW of 17.67%. Hindustan Aeronautic’s last three fiscal’s EPS stands at Rs. 73 (FY17), Rs. 42 (FY16) and Rs. 21 (FY15). PAT margins for these fiscals were 14%, 12%, and 6% respectively. It has posted CAGR of 9% for revenues, 62% CAGR in PAT for last three fiscals. The issue is priced at a P/BV of 3.46 on the basis of its NAV of Rs. 358 as on 30.09.17.

It has no listed peers to compare with. Hindustan Aeronautic’s sale to Indian Defense Services accounts for nearly 92% (on an average) of its revenues. According to management, first-half results cannot be annualized to compare as it always does better in the second half due to billings only on delivery of products. However, if we annualize latest earnings and attribute it on its paid-up equity then asking price is at a P/E of 53, but if we consider FY 17earnings, then P/E comes to 17.

Grey Market premium

Current GMP is Rs. 4/- and Kostak is Rs. NIL

 

Only LIC policyholders money can save this IPO.

 

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

 

Bandhan Bank IPO Review and the list of anchor investors

Bandhan Bank (BB) is a commercial bank focused on serving underbanked and underpenetrated markets in India. It has a banking license that permits it to provide banking services pan-India across customer segments. BB currently offers a variety of asset and liability products and services designed for micro banking and general banking, as well as other banking products and services to generate non-interest income.

Its strength lies in microfinance, including a network of 2,022 doorstep service centers (“DSCs”) and 6.77 million micro loan customers that BFSL transferred to it, which it has grown to 2,546 DSCs and over 9.47 million microloan customers as of September 30, 2017.With the network of 2,546 doorstep service centers (DSCs) and 9.47 million microloan customers, the bank has strong very hold in microfinance. Bandhan bank has 864 bank branches and 386 ATMs serving over 1.87 million general banking customers. Banks distribution network is strong in East and Northeast India, with West Bengal, Assam and Bihar.

Bandhan Bank Raises Rs 1,342 Crore From Anchor Investors.

List of Anchor Investors

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IPO Dates & Price Band:

  • IPO Open: 15-March-2018
  • IPO Close: 19-March-2018
  • IPO Size: Approx Rs. 4470 Crore (Approx)
  • Face Value: Rs. 10 Per Equity Share
  • Price Band: Rs.370 to 375 Per Share
  • Listing on: BSE & NSE
  • Retail Portion: 35%
  • Equity: 119,280,494 Shares

Market Lot:

  • Shares: Apply for 40 Shares (Minimum Lot Size)
  • Amount: Rs.15,000

Allotment & Listing:

  • Basis of Allotment: 22-March-2018
  • Refunds: 23-March-2018
  • Credit to demat accounts: 26-March-2018
  • Listing: 27-March-2018

The promoters:

Bandhan Financial Holdings Limited,
Bandhan Financial Services Limited,
Financial Inclusion Trust And North east Financial Inclusion Trust.

Lead Managers:

Kotak Mahindra Capital
Company Limited
Axis Capital Limited
Goldman Sachs (India)
Securities Private Limited
JM Financial Institutional Securities Limited
P. Morgan India Private Limited

Registrar:

Karvy Computershare Private Limited

bandhanbank

Main objects of the issue are:

In terms of the RBI New Bank Licensing Guidelines, the Equity Shares of Bank are required to get listed on the stock exchanges within three years from the date of commencement of business of its Bank, i.e., on or before August 22, 2018. In light of the above, since the Bank is required to get listed on the stock exchanges on or before August 22, 2018, the Bank is undertaking this Issue.  The objects of the Fresh Issue are to augment the Bank’s Tier-I capital base to meet the Bank’s future capital requirements.

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2Strategy

Maintain focus on micro lending while expanding further into other retail and SME lending.

Continue to strengthen its liability franchise.

Boost share of non-interest income.

Enhance its digital platform to improve customer acquisition and retention and reduce costs.

Enhance retail banking systems and procedures to improve efficiency.

Strengths

Operating Model Focused on Serving Underbanked and Underpenetrated Markets.

Consistent Track Record of Growing a Quality Asset and Liability Franchise.

Extensive, Low-Cost Distribution Network.

Customer-Centric Approach.

Consistent Financial Performance and Robust Capital Base.

An experienced and professional team, backed by strong independent board.

2Positive

Focus on the underpenetrated region and new products to ensure loan book growth of more than 23 percent over FY18-20.

The net interest margins (NIMs) of the bank was strong at 9.86%, return on equity (RoE) of 25.55% and return on assets (ROA) of 4.07% (each on an annualized basis) in the nine months ended December 2017 compared with 10.34%, 27.88% and 4.39% in the nine months ended December 2016. The bank has maintained good asset quality amidst challenging macro environment. The gross NPAs stood at 1.67% and the net NPA at 0.80% at end December 2017.

The bank has grown quality asset base over the various phase of development. Its gross loan book has grown from and Rs 7768.79 crore as on 23 August 2015 to Rs 15578.44 crore end March 2016 to Rs 24364.39 crore end December 2017, while customers have increased from 6.77 million to 11.99 million. Deposits base have jumped to Rs 25293.96 crore with CASA ratio of 33.2% and retail deposits ratio of 85.1% end December 2017. The growth in low-cost liability business has led to a reduction in the cost of funding, allowing the bank to lower the lending interest rates while maintaining profitable spreads and further grow the portfolio and capture market share.

The bank’s distribution network is relatively low cost, which in particular is a result of “hub and spoke” model of using DSCs and associated bank branches, as well as focus on tech initiatives. This low-cost model is demonstrated by operating cost-to-income ratio was 35.38% for the nine months ended December 2017 and 36.31% for FY2017.

Overall earnings profile looks comfortable, with premium valuations expected to remain.

The issue seems richly priced, but the bank has a unique business model.

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Negative

Limited operating history and its fast-growing and rapidly evolving business make it difficult to evaluate its business and future operating results on the basis of its past performance, and its future results may not meet or exceed its past performance.

BB cannot effectively compare its financial statements for Fiscal Years 2015, 2016 and 2017 due to irregular terms of duration.

If BB is unable to manage the growth associated with the expansion of its branches, ATMs, and DSCs effectively, its financial, accounting, administrative and technology infrastructure, as well as its business and reputation could be adversely affected.

A substantial portion of its operations is located in East and Northeast India, making us vulnerable to risks associated with having geographically concentrated operations.

Business comprises both traditional general banking activities and modern micro banking activities that expose its business overall to the risks faced by each sector, which may negatively impact its performance.

BB derive a substantial portion of its interest income from advances that are due within one year, and a significant reduction in these short-term advances may result in a corresponding decrease in its interest income.

New India Assurance IPO Review and Current GMP

Microcredit lending has its own unique risks and, as a result, BB may experience increased levels of non-performing loans and related provisions and write-offs that negatively impact its results of operations.

BB rely primarily on deposits as a low-cost means of funding its loan portfolio and there is no guarantee that we will be able to source sufficient deposits or alternative funding to support its business.

An increase in its portfolio of non-performing assets may materially and adversely affect its business and results of operations.

BB may face risks associated with its large number of branches and widespread network of operations which may adversely affect its business, financial condition and results of operations.

Its business and financial results could be impacted materially by adverse results of legal proceedings.

BB does not own the premises at which its Registered and Corporate Office, branches, ATMs, DSCs and other office premises are located.

Comparison with PEERS

6813Valuation

Bandhan Bank’s EPS for 9M of FY2018 on post-issue equity works out to Rs 10.7. At the price band of Rs 370 to Rs 375, P/E works out to 34.6 to 35.0 times.

Post-issue book value of Bandhan Bank works out to Rs 75.6 at the issue price of 370 and Rs 76.0 at the issue price of Rs 375. P/BV works out to 4.9X and P/Adj BV is at 5.0X at the upper price band.

Among the comparable banks, RBL Bank is trading at P/BV (on 9M FY2018 BV) of 3.0X, AU Small Finance Bank is trading at P/BV of 8.4X, Yes Bank is trading at P/BV of 2.8X, IndusInd Bank is trading at P/BV of 4.4X.

Among the comparable NBFCs and leading microfinance lenders, Equitas Holding is trading at P/BV of 2.8X, Ujjivan Financial Services is trading at P/BV of 2.4X and Bharat Financial Inclusion is trading at P/BV of 5.6X.

Grey Market premium

Current GMP is Rs. 26 /- and Kostak is Rs. 800/-

 

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.

Bharat Dynamics IPO Review

Bharat Dynamics is one of the leading defense PSUs in India engaged in the manufacture of Surface to Air missiles (SAMs), Anti-Tank Guided Missiles (ATGMs), underwater weapons, launchers, countermeasures and test equipment. It is the sole manufacturer in India for SAMs, torpedoes, ATGMs (Source: F&S Report). It is also the sole supplier of SAMs and ATGMs to the Indian armed forces (Source: F&S Report).

Additionally, it is also engaged in the business of refurbishment and life extension of missiles manufactured. It is also the codevelopment partner with the DRDO for the next generation of ATGMs and SAMs. It is a wholly-owned GoI company headquartered in Hyderabad and under the administrative control of the MoD, GoI and were conferred the ‘Mini-ratna (Category -1)’ status by the Department of Public Enterprises, GoI. Founded in 1970, it has over four decades of experience in manufacturing missiles and countermeasures and its allied equipment.

BDL

IPO Dates & Price Band:

  • IPO Open: 13-March-2018
  • IPO Close: 15-March-2018
  • IPO Size: Approx Rs.960 Crore (Approx)
  • Face Value: Rs.10 Per Equity Share
  • Price Band: Rs.413 to 428 Per Share
  • Listing on: BSE & NSE
  • Retail Portion: 35%
  • Equity: 22,451,953 Shares 
  • Retail & Employee Discount: Rs.10

IPO Market Lot:

  • Shares: Apply for 35 Shares (Minimum Lot Size)
  • Amount: Rs.14,630 (For Retail & Employee)
  • Amount: Rs.14,980 (For QIB & HNI)

IPO Allotment & Listing:

  • Basis of Allotment: 20-March-2018
  • Refunds: 21-March-2018
  • Credit to demat accounts: 22-March-2018
  • Listing: 23-March-2018

Company Promoters:

President of India

Government of India

IPO Registrar:

Alankit Assignments Ltd

IPO Lead Managers:

  • IDBI Capital Markets & Securities Ltd
  • SBI Capital Markets Ltd
  • Yes Securities (India) Ltd

Economic Trends & Growth Outlook

The Central Statistics Organization and the Indian Monetary Fund forecasts India to be one of the fastest growing economy for the 2017-18 fiscal period. The Government of India forecasts the economy to grow at 7.1% during the same year. The growth is among the strongest of the G-20 nations.

Foreign Development Investment (FDI) rates have increased in sectors like defense, insurance, and other sectors. As a result FDI has jumped from $ 36 Billion in 2013-14 to $ 60 Billion in 2016-17. Under the ambit of the ‘Make in India’ initiative, investment procedure, license applications, declarations and other processes has been streamlined to boost investor confidence. Applications for permits have been digitized, and a new uniform tax regime (Goods & Services Tax) has been implemented to reduce complexity in taxation.

The Indian Defence Market – Macro Outlook

The Indian defense market is in a state of transition, as a result of new policies promulgated by the government. The Indian Armed Forces have not been able to spend the entire defense budget allocated, owing to straitjacketed procurement procedures and inherent delays; and the gap between allocated and actual defense spending has been increasing over the years. Frost & Sullivan expects the underspend in defense to decrease during the forecast period, as the government modifies policies to simplify procurement. Reduced underspending will drive defense budgets and the market will expand to $68.7 billion, recording a compound annual growth rate (CAGR) of 6.52 %, or $79.17 billion at a CAGR of 8.04 % depending on the government’s ability to simplify procurement through policy initiatives.

Defense Industry Drivers

Drivers

Terrorism, Borders, and Internal Security Problems

problems

New FDI Policies and DPP 2016

keyDefense Procurement Planning in India

defenceImage Source: Frost & Sullivan

New Policy Developments and Implications

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Indian Defence Exports are on the rise

exportsIndian Defence Budget Forecast 2017-26

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Guided Missile & Torpedo Market Landscape

world

Reliance Nippon Life Asset Management ( First MF ) IPO Review

Competitive Strengths

Modern facilities and infrastructure to deliver quality products in a timely manner.

Increase in indigenization of our products and implementation of the “Make in India” policy.

Quality control of our products.

Strong order book and established financial track record of delivering growth.

Experienced board and senior management team.

Our Strategies

Continue to invest in infrastructure.

Focus on R&D.

Developing new products.

Provide its product offerings to the international market.

Positive

Valuations are lower compared to peers like Bharat Electronics and Apollo Micro System.

Bharat Dynamics has a strong order book and revenue outlook, coupled with superior return ratios compared to peers.

The company has a dominant position as a government-owned defense enterprise.

Strong return ratios, negative working capital management, strong growth track and superior balance sheet (debt-free) are positive.

Negative

BDL is primarily dependent on a single customer, the Indian armed forces through the Ministry of Defence, Government of India (“MoD”). A decline or reprioritization of the Indian defence budget,the reduction in their orders, termination of contracts or failure to succeed in tendering projects and deviations in the short term and long term policies of the MoD or the Indian armed forces in the future will have a material adverse impact on its business, financial condition, and results of operations, growth prospects and cash flows.

As a result of national security concerns, certain information in relation to its business and operations is classified as ‘secret and confidential’ pursuant to which BDL have not disclosed such information in this DRHP nor provided such information to the BRLMs and other intermediaries and advisors involved in this Offer.

Its business operation is based out of three units in Telangana and Andhra Pradesh. The loss of, or shutdown of, its operations at any of its units in Telangana and Andhra Pradesh will have a material adverse effect on its business, financial condition and results of operations.

BDL’s future growth and expansion are limited by its production capacities, the requirements of the MoD and the locations at which we operate.

Do Not Compare Yourself with Other Investors While Making Investment

BDL’s agreements, memorandums of understanding and non-disclosure agreements with various business partners may not yield the benefits we expect.

BDL derive its revenues from the MoD contracts on the achievement of certain milestones. Its contracts with the MoD are subject to termination.

Imposition of liquidated damages and invocation of performance bank guarantees / indemnity bonds by its customers could impact its results of operations and BDL may face potential liabilities from lawsuits and claims by customers in the future.

BDL is subject to a number of procurement rules and regulations of the MoD, Government regulations and other rules and regulations. Its business and its reputation could be adversely affected if BDL fail to comply with applicable rules.

Its business could be adversely affected by an adverse outcome of an audit by the Comptroller Auditor General of India (“CAG”).

The CAG and its current and past statutory auditors have qualified and made certain observations in their audit report on its financial statements in recent financial years.

There are outstanding legal and tax proceedings involving the Company. Any adverse decision in such proceedings may expose us to liabilities or penalties and may adversely affect its business,financial condition, results of operations and cash flows.

BDL has had a negative net cash flows in the past and may continue to have negative cash flows in the future.

Financials:

Total Income of 2016-17 INR 51,980.7 Millions
Total Income of  6M 2017-18 INR 21,902.51 Millions
Earnings per Share (EPS) INR.21.57**
Earnings per Share (EPS) 6M INR.7.21**
Equity Capital as on 30.9.2017 INR 916.41 Million
Equity Capital after the IPO: INR.
Upper Price Band/last EPS: 19.84**
Book Value of the Share As on September 30, 2017  INR 88.96**
**NAV adjusted for bonus shares  in the ratio of 1:1
Upper offer price/Book Value Ratio: 4.81

It has no direct listed peers to compare with in India. In India BEL, Cochin Shipyard, L&T, M&M, Tata Power, Reliance Defense etc. are working on defense projects but their main revenue comes from another sector.

If we compare BDL to some exact peers in the United States – Lockheed Martin P/E 25, Rockwell Collins P/E 27, Northrop Grumman P/E 26, Raytheon P/E 28. BDL is asking same as international peers. Looks like it is fully priced.

Grey Market premium

Current GMP is Rs.4/- and Kostak is Rs.250/-

Conclusion:

BDL share is offered to retail investors at Rs. 418 ( net of retail discount) PE of 18.43 on Estimated EPS for the current year. So the IPO is very very reasonably priced. Yet due to varied factors Grey market lacks any fancy for this IPO and at the time of listing, Wishes of Grey market prevails.

So Listing Gains may not be significant. yet one should APPLY this IPO for solid Medium to long Term Gains.

 

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.

 

Amber Enterprises India Limited IPO Review and GMP

Punjab based Amber Enterprises India Limited (Incorporated in 1990) is manufacturer of air conditioners and its component in India. With the market share of 55.4%, Amber is the market leader in the Room Air Conditioner . The company manufactures RAC’s for 8 out of the 10 top RAC brands in India including Daikin, Hitachi, LG, Panasonic, Voltas and Whirlpool. These 8 brands have over 75% of market share in India.The Company has 10 manufacturing facilities across seven locations in India.

Super anchor book! Sold 20.8 lakh equity shares to 15 anchor investors for Rs. 178.71 crore

Abu Dhabi Investment Authority
Blackrock India Equities Mauritius Limited
Goldman Sachs India Limited
Kuwait Investment Authority Fund
ICICI Prudential Business Cycle Fund Series 2
ICICI Prudential Value Fund – Series 10
HDFC Small Cap Fund
SBI Magnum Multicap Fund
Reliance Small Cap Fund
Aditya Birla Sun Life

List of Anchor Investors :

Download (PDF, 283KB)

 

amber11111

The Product portfolio includes :

1. Room Air Conditioners : This includes window air conditioners and indoor units and outdoor units of split air conditioners.

2. RAC Components : Critical components such as heat exchangers, motors and multi-flow condensers.

3. Other Components : Other related components including case liners for refrigerator, plastic extrusion sheets for consumer durables and automobile industry, sheet metal components for microwave, washing machine tub assemblies and for automobiles and metal ceiling industries.

The Company has a dedicated R&D centre at its Rajpura facility which is equipped and is accredited by National Accreditation Board for Testing and Calibration Laboratories (NABL) with ISO/IEC 17025:2005 certification and facilities for 3D modelling, quality and product testing.

IPO Particulars:

IPO Opens on : 17th Janaury 2018
IPO Closes on : 19th January 2018
Issue Type: Book Built Issue IPO
Issue Size:[.] Equity Shares of Rs 10 aggregating up to INR 600.00 Cr
#Fresh Issue of [.] Equity Shares of Rs 10 aggregating up to INR475.00 Cr
#Offer for Sale of [.] Equity Shares of Rs 10 aggregating up to INR 125.00 Cr
Face Value: INR 10 per Share
Price Band: INR 855-859 Per Equity Share
Minimum Order Quantity:17 Shares
Listing will at: NSE,BSE

Tentative Timetable:

Finalisation of Allotment : 24 January 2018
Refund : 25 January 2018
Transfer of Shares to Demat A/c:29 January 2018
Listing Expected on 30 January 2018

Objects Of The Issue:-

  • Prepayment or repayment of all or a portion of certain borrowings – INR400 crore
  • General Corporate purposes – remaining amount

Lead Managers:

Edelweiss Financial Services Limited
IDFC Bank Limited
SBI Capital Markets Limited
BNP Paribas

Registrar to the IPO:

Karvy ComputerShare Private Ltd

Promoters Of the Company:-

  1. Jasbir Singh
  2. Daljit Singh

Global Air Conditioner Market Split by Segments

amber 2

Global RAC Volume Market Size and Forecast (Million Units)

amber3

RAC Market Penetration – Select Asian Countries and Global

amber4

Competitive Strengths

1. Market leadership in the RAC OEM/ODM industry in India.

2. One stop solutions provider for the RAC industry with high degree of backward integration.

3. Strong customer relationships with the majority of leading RAC brands in India.

4. R&D and product design capabilities leading to high proportion of ODM business.

5. Track record of financial performance.

6. Economies of Scale.

7. Culture of innovation and highly experienced management.

Market Penetration of Consumer Durables, India vs. Global (%), Fiscal 2015

amber5

Evolution of Room Air Conditioners in India

amber6

Financial Highlights

  • Amber Enterprises net worth, as of Sept. 30, was close to Rs 363 crore, translating into book value of Rs 115 a share after fresh issuance.
  • Its revenue has been growing at an annualised rate of 17 percent, while net profit rose at 9 percent in five years to March 2017.
  • For the first half ended September, revenue and net profit stood at Rs 938 crore and Rs 27 crore, respectively.
  • Earnings before interest, tax and depreciation and amortisation grew at a CAGR of 23.5 percent, while Ebitda margins expanded 150 basis points in the last five years to 7.8 percent.
  • For the first half ended September, Ebitda and margins stood at Rs 84 crore and 9 percent, respectively.
  • The company has a total debt of close to Rs 554 crore, which would fall it looks to use Rs 400 crore from the IPO proceeds to pare debt.

Market Structure RAC

amber7

Market Share Analysis RAC

amber 8

Key Strategies

Expansion of existing product portfolio with a focus on ODM.

Expand domestic customer base and grow export sales.

Continuing innovation and strengthening the R&D capacity.

Pursue selective acquisitions, partnership opportunities and inorganic growth.

Continue to focus on increasing efficiency and profitability.

Reliance Nippon Life Asset Management ( First MF ) IPO Review

Negative

Amber’s business is dependent on certain principal customers and the loss of, or a significant reduction in purchases by, such customers could adversely affect its business, financial condition, results of operations and future prospects.

If its customers do not continue to outsource manufacturing, or if there is a downward trend in OEM/ODM business, its sales could be adversely affected.

Any slowdown in the RAC industry may adversely impact its business, results of operations, financial condition and cash flows.

Amber’s inability to identify and understand evolving industry trends, technological advancements, customer preferences and develop new products to meet its customers’ demands may adversely affect its business.

Amber do not have firm commitment agreements with its customers. If its customers choose not to source their requirements from us, its business and results of operations may be adversely affected.

Amber have experienced growth in the past few years and if company are unable to sustain or manage its growth, its business and results of operations may be adversely affected.

Amber failure to compete effectively in the highly competitive RAC and equipment manufacturing industry could result in the loss of customers, which could have an adverse effect on its business, results of operations, financial condition and future prospects.

Pricing pressure from customers may adversely affect its gross margin, profitability and ability to increase our prices.

Amber manufacturing capacity may not correspond precisely to customers’ demands which may affect its results of operations.

Amber Enterprises and its Subsidiaries are involved in certain legal proceedings, which, if determined against us could have a material adverse effect on its financial condition, results of operations and its reputation.

Amber have undertaken and may continue to undertake strategic investments and alliances, acquisitions and mergers in the future, which may be difficult to integrate and manage. These may expose us to uncertainties and risks, any of which could adversely affect its business, financial condition and result of operations.

Dixon Technologies IPO – Review

Peer Comparison

Amber Enterprises has no listed competitors. Dixon Technologies Ltd. has a similar business model but caters to a different market—an equipment vendor for makers of washing machines, LED televisions, lighting products and mobile phones.

Valuations

“At the higher end of the price band of Rs 859, the issue is valued at 96.8 times price to earnings (PE) on FY17 basis (post dilution) and 49.4 times on first half of FY18 (annualized) basis. While the company holds leadership position , it is difficult to justify its valuation due to lack of clarity of the growth trend in the financial performance.

“Single digit earnings before interest, taxes, depreciation, and amortization (EBITDA) margin, average of 8% for last 5 years and return on equity is 10%.

Grey market premium

GMP is 575, Kostak is 550, Subject to Rs. 6000/-

Conclusion

Investors may consider for short to medium term gain.

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.

 

Future Supply Chain Solutions Ltd IPO Review

Future Supply Chain Solutions Ltd. (FSC) is a supply chain and logistics company. Future Supply Chain Solutions is part of Kishore Biyani’s Future Enterprise Ltd. The company was incorporated in 2006. The company offers automated and IT-enabled warehousing, distribution and other logistics solutions. It has customers in various sectors all across India, including ATMs, automotive and engineering, retail, fashion & apparel, food – beverage, FMCG, e-commerce, health-care, electronics and technology, home and furniture.

It has 42 distribution centers across India, which covers approximately 3,500,000 square feet of warehouse space.

List of anchor investors

Download (PDF, 601KB)

The company offers customers services in three key areas:

  1. Contract Logistics
  2. Express Logistics
  3. Temperature-Controlled Logistics

The promoters :

Future Enterprises Limited ( Kishore Biyani Group company)

Main objects of the issue are:

1. Avail the benefit of listing of the Equity Shares on the Stock Exchanges;
2.To Enhance stability and brand image and
3.To provide liquidity to its existing shareholders.

FUTURE

IPO Dates & Price Band:

  • IPO Open: 06-December-2017
  • IPO Close: 08-December-2017
  • IPO Size: Approx Rs. 650 Crore (Approx)
  • Face Value: Rs. 10 Per Equity Share
  • Price Band: Rs. 660 to 664 Per Share
  • Listing on: BSE & NSE
  • Retail Portion: 35%
  • Equity: 9,784,570 Shares

Market Lot:

  • Shares: Apply for 22 Shares (Minimum Lot Size)
  • Amount: Rs.14,608

Allotment & Listing:

  • Basis of Allotment: 12-December-2017
  • Refunds: 14-December-2017
  • Credit to demat accounts: 14-December-2017
  • Listing: 18-December-2017

IPO Registrar:

Link Intime India Private Ltd

Lead Managers:

  • IDFC Bank Limited
  • IIFL Holdings Limited
  • Yes Securities (India) Limited

Do Not Compare Yourself with Other Investors While Making Investment

Risks and Upsides

Logistics service providers face the following general challenges in the market:

Foreign direct investment activity is uncertain and is dependent on global policies and market volatility.

A slowdown in the user industry could affect the volumes handled by logistics service providers.

Quality and availability of infrastructure could impact performance.

Intense competition and low barriers to entry in certain segments could affect logistics service providers.

Increasing scale could be challenging.

The express logistics industry is sensitive to high operating costs; and

There is a need to continuously invest in and evolve technology.

Strengths

One of the largest service providers with an extensive network of facilities in a fast-growing third-party logistics market.

Comprehensive solution for supply chain requirements.

Diverse customer base across many sectors.divrsificationAt the forefront in introducing new standards of technology and automation in the logistics industry in India.

Longstanding relationship with Future Entities.

Experienced management team with logistics and retail sector-specific knowledge.

Khadim India Limited IPO Review

Strategies

Capitalise on the growth of the third-party logistics industry in India.

Target growth by identifying new customers, increasing its share of existing customers’ third-party logistics spending and leveraging existing relationships.

Expand addressable market through customized and new service offerings.

Invest further in infrastructure and expand its network.

Explore inorganic growth opportunities.

Continue to improve operating efficiencies and implement technological and process enhancements.

indian log mktNegative

The Future Entities are its key customers and its Promoter and certain of its Group Companies account for a significant portion of its revenue. Any failure to maintain its relationship with these customers will have a material adverse effect on its financial performance and results of operations.

FSC’s business is affected by prevailing economic conditions in India and indirectly affected by changes in consumer spending capacity in the sectors we serve within India.

FSC may face competition from a number of international and domestic third-party logistics companies, which may adversely affect its market position and business.

Delays or defaults in payment by its customers could affect its cash flows and may adversely affect its financial condition and operations.

An inability to pass on any increase in operating expenses to its customers may adversely affect its business and results of operations.

FSC are heavily dependent on machinery and equipment for its operations. Any breakdown of its machinery or equipment will have a significant adverse effect on its business, reputation, financial results and growth prospects.

FSC business is highly dependent on technology and automation and any disruptions of or failure to update such technology or automation could have an adverse effect on its results and operations.

Changing regulations in India could lead to new compliance requirements that are uncertain.

The trend toward outsourcing of supply chain management activities, throughout India or within specific sectors, may change, thereby reducing demand for its services.

Conditions and restrictions imposed on FSC by the agreements entered into with some of its customers could adversely affect its business and results of operations.

The performance of its express logistics and temperature-controlled businesses may continue to decline.

Dependence on third-party vendors could have an adverse effect on its business financial condition and results of operations.

Some of its lease agreements may have certain irregularities.

FSC’s Promoter, Group Companies, and Directors are involved in certain legal proceedings and potential litigation.Any adverse decision in such proceedings may render us/them liable to liabilities/penalties and may adversely affect its business and results of operations.

Compititive positioning of Logistics service providers 

KEYFinancials

For FY 2017, 2016 and 2015, the revenue from operations was Rs. 5,611.83 crores, Rs. 5,198.70 crores, and Rs. 4,079.63 crores, respectively. (A CAGR of 17.3%.)

For FY 2017, 2016 and 2015, the net profit was Rs. 457.54 crores, Rs. 294.27 crores, and Rs. 246.57 crores, respectively, (A CAGR of 36.2%.)

For FY 2017, 2016 and 2015, the EBITDA was Rs. 742.82 crores, Rs. 699.40 crores, and Rs. 639.40 crores, respectively, (A CAGR of 7.8% during the last three Fiscals.)

Financial snapshot of Key companies.

financial snapshotValuations

On the upper price band of Rs.664/- and Restated FY17 EPS of Rs.11.69, P/E ratio works out to be 56x. Even based on last three years restated EPS of Rs. 9.41, P/E ratio works out to be 70x. Means, companies are asking higher price band of Rs.664/- in the P/E ratio of 56x to 70x. Its only listed peers Mahindra Logistics Ltd. is trading at P/E ratio of 68x. Hence we compare this way; Future supply chain is overpriced.  

Grey market premium

Currently, Grey market premium is Rs. 20/- ( Seller )

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.

 

HDFC Life IPO Review and Current GMP

HDFC Standard Life Insurance Company Ltd ( HDFC Life ) (Incorporated in 2000) is life insurance provider in India. HDFC Life offers a wide range of individual and group insurance solutions.

The Company is a joint venture between HDFC and Standard Life Aberdeen plc. Standard Life is an Edinburgh based investment company offering a wide range of financial services across the world. Standard Life is a public company established in 1825.

The Company sells Insurance policies through a multi-channel network, which includes direct sales through own branches, Insurance agents, Partner Banks and through other financial institutions. The company has more than 414 branches and 15,406 full-time employees located across India. It has more than 58,147 individual agents.

HDFC Standard Life Insurance raises Rs 2,322 crore from anchor investors.

List of anchor investors.

Download (PDF, 2.03MB)

IPO Dates & Price Band:

  • IPO Open: 07-November-2017
  • IPO Close: 09-November-2017
  • IPO Size: Approx Rs. 7500 Crore (Approx)
  • Face Value: Rs. 10 Per Equity Share
  • Price Band: Rs. 275 to 290 Per Share
  • Listing on: BSE & NSE
  • Retail Portion: 35%
  • Equity: 29,98,27,818 Shares

Market Lot:

  • Shares: Apply for 50 Shares (Minimum Lot Size)
  • Amount: Rs. 14500

IPO Allotment & Listing:

  • Basis of Allotment: 14-November-2017
  • Refunds: 15-November-2017
  • Credit to demat accounts: 16-November-2017
  • Listing: 17-November-2017

hdfc lifePromoters:

1.Housing Development Finance Corporation Limited (“HDFC”);

2. Standard Life (Mauritius Holdings) 2006 Limited (“Standard Life Mauritius”); and

3. Standard Life Aberdeen plc (“Standard Life Aberdeen”).

The objects of the issue are:

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

2. To carry out the sale of Offered Shares by the Selling Shareholders.

Top 10 Shareholder

SHARE

Lead Managers:

1.CLSA India Private Limited
2. Credit Suisse Securities (India) Private Limited
3. Edelweiss Capital Limited
4. Haitong Securities India Private Limited
5. HDFC Bank Limited
6. IDFC Bank Limited
7. IIFL Holdings Limited
8. Morgan Stanley India Company Pvt Ltd
9. Nomura Financial Advisory And Securities (India) Pvt Ltd
10. UBS Securities India Private Limited

Registrar to the IPO:

Karvy Computershare Private Limited

Life insurance penetration  ( 2016 )

life insurance penetration 2016Competitive Strengths

Strong parentage and a trusted brand that enhances our appeal to consumers

Strong financial performance defined by consistent and profitable growth.

Growing and profitable multi-channel distribution footprint that provides market access across various consumer segments in India.

HOW CAN YOU SETTLE YOUR INSURANCE CLAIM IF REJECTED?

Focus on customer centricity enabling growth across business cycles.

Leading digital platform that provides a superior experience for customers and distributors.

Independent and experienced leadership team.

mshare

market shareStrategies

Reinforce it’s agile,multi-channel distribution platform to fortify and diversify its revenue mix across business cycles.

Drive innovation in product sales to enhance customer value proposition and to capture niche segments.

Invest in digital platforms to establish leadership in the growing digital space.

Continue to build economies of scale to ensure profitability and cost leadership.

asiaNegative

HDFC Life may be unable to implement its growth strategies and develop and distribute an appropriate product mix for specific customer segments through its multiple distribution channels.

Any termination of, or any adverse change to, its relationships with or performance of its bancassurance partners, including HDFC Bank, could have a material adverse impact on its business, profitability, results of operations and financial condition.

Changes in regulation and compliance requirements could have a material adverse effect on its business, financial condition, results of operations and prospects.

Misconduct by its agents, employees, distribution partners or other third parties is difficult to detect and deter and could harm our brand and its reputation, or lead to regulatory sanctions or litigation against us.

Its Company and certain of its Subsidiaries, Directors, Promoters and Group Companies are involved in certain legal proceedings which, if determined against us, may adversely affect its business and financial condition.

HDFC Life’s results are dependent on the strength of its brand and reputation, as well as the brand and reputation of other HDFC group entities.

Variation in its persistency experience from its estimates, as well as concentrated surrenders, may materially and adversely affect its cash flows, results of operations and financial condition.

If actual claims experience and other parameters are different from the assumptions used in pricing its products and setting reserves for its products, could have a material adverse effect on its business, results of operations and financial condition.

HDFC Life depends on its leadership and key management and its actuarial, information technology, investment management, finance, frontline sales staff, underwriting and other personnel, and its business would suffer if we lose their services and are unable to adequately replace them.

SBI Life insurance IPO and Current GMP

Adverse market fluctuations and economic conditions would have a material adverse effect on its business, financial condition, results of operations and prospects.

Failure to secure new distribution relationships, as well as any termination or disruption of its existing distribution relationships, may have a material adverse effect on its competitiveness and result in a material impact on its financial condition and results of operations.

Higher expenses than expected could have a material adverse effect on its business, financial position and results of operations.

There is a risk that customer data could be lost or misused.

In the event that HDFC and/or Standard Life Mauritius reduce the percentage of their respective shareholding in its Company, or the Name Usage Agreement or the Trademark Agreement is terminated, we may not be permitted to use the “HDFC” and/or “Standard Life” trademarks as part of our brand and name for our business.

Catastrophic events, such as natural disasters, which are often unpredictable, may materially and adversely affect its claims experience, investment portfolio, financial condition and results of operations.

total

Valuation

HDFC Standard Life Insurance Company is among the top three life insurers in India by terms of market share in new business premium one of the most profitable life insurers based on the VNB margins, and among the top five private life insurers in India. The overall total premium recorded a CAGR of 14.5% to Rs.19445 crore between FY2015 and FY2017. The VNB margins improved from 18.5% in FY2015 to 22.0% in FY2017 by improvement in cost-efficiencies, increasing persistency ratios and selling a balanced product mix. Profit after tax registered a CAGR of 6.3% to Rs 886.92 crore in FY2017 from FY2015.

The company is valued at Rs 58260 crore at the upper price band of Rs 290 per share. With embedded value (EV) at Rs 14010 crore end September 2017, the scrip is offered at 4.2 times the EV.

Comparison with Peers:

ICICI Pru. Life: PE 33.40, RoNW : 28.70%

SBI Life PE 69.40,RoNW : 18.60%

HDFC Std.Life: PE:65.91 ,RoNW:25.70%

Grey market premium

Current Grey market premium is Rs.11/-

Conclusion

Strnogly avoid.

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.

 

Khadim India Limited IPO Review

The  Company is one of the leading footwear brands in India, with a two-pronged focus on retail and distribution of footwear. It is the second largest footwear retailer in India in terms of number of exclusive retail stores operating under the ‘Khadim’s’ brand, with the largest presence in East India and one of the top three players in South India, in fiscal 2016. It also had the largest footwear retail franchisee network in India in fiscal 2016. Its core business objective is ‘Fashion for Everyone,’ and it believes that the Company has established an identity as an ‘affordable fashion’ brand, catering to the entire family for all occasions. As at March 31, 2017, it operated 829 ‘Khadim’s’ branded exclusive retail stores across 23 states and one union territory in India, through its retail business vertical. Further, it had a network of 357 distributors in fiscal 2017, in its distribution business vertical.

Khadim India has allocated shares worth Rs 157.5 crore to 13 anchor investors at the upper end of the Rs 745 – 750 price band set for the IPO.

List of Anchor investor

Download (PDF, 655KB)

 

IPO Dates & Price Band:

  • IPO Open: 2-November-2017
  • IPO Close: 6-November-2017
  • IPO Size: Approx Rs. 545 Crore (Approx)
  • Face Value: Rs. 10 Per Equity Share
  • Price Band: Rs. 745 to 750 Per Share
  • Listing on: BSE & NSE
  • Retail Portion: 35%
  • Equity: 65,74,093 Shares

Market Lot:

  • Shares: Apply for 20 Shares (Minimum Lot Size)
  • Amount: Rs.15000

Allotment & Listing:

  • Basis of Allotment: 10-November-2017
  • Refunds: 13-November-2017
  • Credit to demat accounts: 13-November-2017
  • Listing: 14-November-2017

Company Promoters:

  • Siddhartha Roy Burman
  • Knightsville Private Limited

Khadim India IPO Registrar:

Link Intime India Private Ltd

 Lead Managers:

  • Axis Bank Limited
  • IDFC Bank Limited

Objects of the Issue:

The Offer comprises a Fresh Issue by the Company and an Offer for Sale by the Selling Shareholders.

The Offer for Sale

The Selling Shareholders will receive the proceeds of the Offer for Sale. The company will not receive any proceeds from this.

The Fresh Issue

The Net Proceeds from the Fresh Issue are proposed to be utilized towards the following objects:

1. Prepayment or scheduled repayment of all or a portion of term loans and working capital facilities availed by the Company; and
2. General corporate purposes.

khadimsindia

Key Strengths

A leading footwear brand, offering affordable fashion across various price segments.

Strong design capabilities to maintain seasonal trends and leading premiumisation through sub-brands.

A two-pronged market strategy that straddles efficiently across retail and distribution models.

Extensive geographical reach and penetration across East and South India.

Asset light model is leading to higher operating leverage.

Experienced Promoters supported by a professionally qualified, experienced and entrepreneurial management team.

KHADDIM2Strategies

Expand its geographical footprint in western India and certain markets in northern India and further penetrate markets in south India

Continue to focus on an asset-light model led growth

Premiumise product offering to increase average selling price and gross margins

Details of Utilisation of Net Proceeds

Pre-payment or scheduled repayment of all or a portion of term loans and working capital facilities availed by its Company.

bankNegative

Khadim is subject to risks associated with expansion into new geographic markets. Any inability to expand into new geographic markets or penetrate existing markets may adversely affect its growth and future prospects.

Any delay or default in payment from its franchisee-operated stores or distributors could adversely impact its profits and affect its cash flows.

Khadim may not be able to obtain sufficient quantities or desired quality of finished products from outsourced vendors in a timely manner or at acceptable prices, which could adversely affect its retail business, financial condition and results of operation.

Khadim rely on its franchisees with respect to its retail business and on its distributors with respect to its distribution business. Any failure to maintain relationships with such third parties could adversely affect its business, results of operations and financial condition.

Khadim’s Directors and Promoters are involved in certain legal proceedings, which, if determined against us could have a material adverse effect on its financial condition, results of operations and its reputation.

Khadim cost of procurement of products from outsourced vendors or cost of manufacture of products using contract manufacturers may increase in the future. Any inability to pass on costs to consumers and distributors, may result in a reduction in its margins.

Khadim’s inability to maintain an optimal level of inventory in its stores may impact its operations adversely.

Failure to successfully procure raw materials or to identify new raw material suppliers could adversely affect us.

If Khadim is unable to maintain and enhance the ‘Khadim’s’ brand, the sales of its products may suffer which would have a material adverse effect on its financial condition and results of operations.

Any inability to increase its market share in premium products may have an adverse effect on its business, financial condition, results of operations and prospects.

Khadim results of operations may be materially adversely affected by its failure to anticipate and respond to changes in fashion trends and consumer preferences in a timely manner.

Khadim depends on third parties for a major portion of its transportation needs. Any disruptions may adversely affect its operations, profitability, reputation and market position.

Khadim’s Promoters will retain a majority shareholding in its Company following the Offer, which will allow them to exercise significant influence over us and may cause us to take actions that are not in the best interest of its other shareholders.

KHADDIM3Valuation 

Net sales increased 16% to Rs 621.25 crore and the operating profit margins were up 80 basis points to 10.6% in FY 2017. Net profit jumped 22% to Rs 30.75 crore. .Net sales (net of discount and taxes) of the retail business rose 14% to Rs 456.49 crore and those of the distribution business by 36% to Rs 134.7 crore.

Net sales stood at Rs 178.43 crore and the OPM at 9.3% in the June 2017 quarter. Net profit stood at Rs 7.10 crore. Net sales (net of discount and taxes) of the retail business stood at Rs 124.9 crore, in line with the growth of existing stores and revenue contributions from 28 new stores and of the distribution business was Rs 48.38 crore, primarily from growth in the distribution base.

At the upper band of Rs 750, P/E works out to 43.8 times EPS of Rs 17.1 (on post-IPO equity) for FY 2017. On a comparable basis, Bata India is trading at a P/E of 57.5 times FY 2017 EPS of Rs 13.5, Liberty Shoes at a P/E of 63.6 times FY 2017 EPS of Rs 3.88 and Relaxo Footwear at a P/E of 51.7 times FY 2017 EPS of Rs 10.24.

PEEEEEEEEEEE

Grey market premium

Currently Grey market premium is Rs.19/-

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.

New India Assurance IPO Review and Current GMP

The New India Assurance Co. Ltd  ( NIA )  is in operation for almost a century (Incorporated on July 23, 1919 ) and largest general insurance company in India. The company was nationalized by the GoI on January 1, 1974. The Government of India holds 100% of the pre-Offer paid-up Equity Share capital of the company.

NIA offers insurance in categories including fire insurance; marine insurance, motor insurance, crop insurance, health insurance and other insurance products.

NIA is the market leader in the general insurance industry in India across the segments except for crop insurance.The Company’s distribution network includes 68,389 individual agents and 16 corporate agents, 25 banks, and a large number of OEM and automotive dealer.New India Assurance is rated A-(Excellent) by AM Best Company since 2007 and have been rated AAA/Stable by CRISIL since 2014.

After flop show of GIC, Once again LIC is bid for the NIA’s IPO 

LIC through multiple brokers has placed large bids. The total application size of LIC could be anywhere between Rs 8,500 crore and Rs 9,500 crore.

IPO Dates & Price Band:

  • IPO Open: 1-November-2017
  • IPO Close: 3-November-2017
  • IPO Size: Approx Rs. 10500 Crore (Approx)
  • Face Value: Rs. 5 Per Equity Share
  • Price Band: Rs. 770 to 800 Per Share
  • Listing on: BSE & NSE
  • Retail Portion: 35%
  • Equity: 12,00,00,000 Shares 
  • Discount: Rs. 30 for Retailers & Employees

IPO Market Lot:

  • Shares: Apply for 18 Shares (Minimum Lot Size)
  • Amount: Rs.14400 (For QIB & HNI)
  • Amount: Rs.13860 (For Retailers & Employees)

IPO Allotment & Listing:

  • Basis of Allotment: 08-November-2017
  • Refunds: 09-November-2017
  • Credit to demat accounts: 10-November-2017
  • Listing: 13-November-2017

IPO Registrar:

Link Intime India Private Ltd

Lead Managers:

  • Axis Bank Limited
  • IDFC Bank Limited
  • Kotak Mahindra Capital Company Limited
  • Nomura Financial Advisory And Securities (India) Pvt Ltd
  • YES Bank LimitedNIA FINALThe promoters :

President of India, acting through the MoF

Main  object of the issue is:

Offer for Sale The Company will not receive any proceeds from the Offer for Sale.

Fresh Issue

The Company proposes to utilize the Net Proceeds towards meeting its future capital requirements  & improving its solvency margin and consequently the solvency ratio.

Historical Evolution of General Insurance in India

NIA

Competitive Strengths

Market leadership and established brand

Longstanding global footprint and successful international operations

Customer satisfaction drives sustainable business model

Diversified product offering and product innovation capability

Multi-channel distribution network

Robust financial position

Robust IT infrastructure

Experienced senior management team

Growth drivers for select segments of non – life insurance

NIA 1Low Penetration

Rise in new vehicle sales

Demand for crop insurance

Increasing cost of healthcare

Increasing coverage of insurance in India

NIA 2Supportive regulations

Increase in online retail sales

General Insurance Corporation of India ( GIC ) Review

Business Strategies

Capitalise on significant market potential and increase our market share

Improve underwriting profitability

Leverage technology to drive growth, profitability and customer satisfaction

Continue to focus on product innovation

Expand its international operations

Negative

Any significant variation between actual claim payments from the assumptions and estimates used in the pricing of, and setting reserves for, its various insurance products, may have a material adverse effect on its business, financial condition and results of operations.

Any termination or adverse change in its relationship or arrangements with its agents, brokers, bancassurance partners or other distribution intermediaries, or a decline in their productivity, may have a material adverse effect on its business, financial condition, and results of operations.

NIA may not be able to sustain our historical growth rates or successfully implement its business strategies.

NIA Company, Directors, Subsidiaries and Group Companies are involved in certain legal and other proceedings.

NIA is subject to a comprehensive and evolving regulatory framework in a regulated industry that affects the flexibility of its operations and increases compliance costs.

ICICI Lombard IPO Review and Current Grey market premium

NIA investment portfolio is subject to the volatility in the market value of financial instruments and liquidity risk, which could decrease its value and have a material and adverse effect on its business, prospects, financial condition and results of operations.

Catastrophic events, including natural disasters, may result in significant liabilities for claims by policyholders which could have a material adverse effect on its business, prospects, financial condition and results of operations.

Any actual or alleged misconduct or fraudulent activity or non – compliance with applicable laws by its employees, agents and other distribution intermediaries may lead to customer claims as well as regulatory action against us, which could adversely affect its business, prospects, financial condition and results of operations.

Any actual or alleged misconduct or fraudulent activity or non – compliance with applicable laws by its employees, agents and other distribution intermediaries may lead to customer claims as well as regulatory action against us, which could adversely affect its business, prospects, financial condition and results of operations.

NIA had a deficit in its miscellaneous segment revenue account and negative net cash flows in the past and may continue to have a deficit in its revenue account and negative cash flows in the future.

There are certain risks related to its crop/weather insurance offering that could have a material adverse effect on its business, financial condition, results of operations and prospects.

A significant portion of its business comes from working with the government which subjects us to risks which could result in litigation, penalties, and sanctions including early termination, suspension and removal from the approved panel of insurers.

Retirement Fund : What is a Systematic Withdrawal Plan ( VIDEO )

Valuation

NIA is the largest general insurance company in India, with 15% market share of the domestic gross direct premium. The company is a market leader in all segments except crop insurance for last five straight years. The gross written premium of the company has increased at a CAGR of 15% from Rs 13200 crore in FY2013 to Rs 23230 crore in FY2017. The company has been funding its operations for more than 40 years without any external capital infusion. The company commands a healthy financial position, with a solvency ratio 2.27x end June 2017, compared to the IRDAI prescribed control level requirement of 1.50x. The operating expense ratio of the company was 20.40% in FY2017, the lowest among the top 10 multi-product insurers in India.

NIA’s EPS for FY2017 works out to Rs 10.52. The IPO is offered at P/E multiple 73.2 times FY2017 EPS at the lower price band and 76.1 times FY2017 EPS at the higher price band.

The post issue book value (BV) of NIA is Rs 184.5 end June 2017. P/BV works out to 4.3 times at the upper price band of Rs 800 per share.

The company is the second general insurance company to list on the exchanges, after ICICI Lombard General Insurance Company listed in September 2017. ICICI Lombard General Insurance Company is currently trading at 7.9 times its book value and is available at PE multiple of 36.1 times. The incurred claim ratio of ICICI Lombard General Insurance at 80.64% and the combined ratio at 104.1% for FY2017 is better than New India assurance incurred claim ratio at 92.2% and the combined ratio at 119.7%.

Grey market premium

Currently there is no trade Grey market.

Conclusion

Strongly avoid as like a GIC.

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.

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.

Dixon Technologies IPO – Review

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.

MAS Financial Services IPO Review and GMP

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.