Do Not Compare Yourself with Other Investors While Making Investment

There is very fine line said by Dan Jensen that, ‘The only goal is to be better than myself, my biggest competition is with no one but myself only.’ that simply means that one should not compare himself with others in any aspect of life but try improving his own work and skills and same applies while making an investment and expecting positive results from it.

In other words, comparing yourself with others can be a very futile and caustic act as we all have our own different goals and skills and we all are not in the same race, our ways to make investments are dissimilar.

Have you ever seen Warren Buffett making any investment with Carl Ichan strategies or Peter Lynch making any investment in David Tepper’s style? The answer is a clear No because they all have their own rules and strategies to make investments and create positive results out of it. Some ways of investing are for long-term, some are short-term, some are for value, some are for growth, some bet on the change and some bet on the things that won’t. It’s even more captivating to hear the different opinions from the two value investors looking at the same company. So, the key point is not making a comparison with others instead compared you with yourself one or two years ago.

compare

Also, one must keep in mind that to be a good investor he must follow more discipline and try to make less investment decision as possible. That simply means you have to believe in your investment decisions that will do good without your involvement. Not comparing yourself to other investors and their performance is not enough for you; you must not worry about other’s opinion also. If you are a contrarian investor, you should not even listen to and worry about people’s opinion about yourself. If you listen to their opinion, it is because you are having more confidence in them than you have in yourself.

Download our first e-book on Higher education costing in foreign countries.

Here are three key points that can help you in making beneficial results from the investments-

Believe in yourself

If you see yourself as a successful investor in future, you must believe in the rules made by you for you. You must have proper planning and strategies for different investments, and you have to believe in that philosophy and the strategies even during tough times. The thing is if you are not willing to take risks and you do not have courage and patience then you can never be an investor.

Do not make unnecessary investments

It is mandatory to know that every investment is not going to give you positive results, so you do not have to invest in all kinds of opportunities or environment. For example, in 1999 the technology is in boom period but Warren Buffett did not make any investment in it, and people said, ‘that’s it for Buffett, he’s too old now.’ And at that time Warren said that ‘I don’t do tech because I don’t understand it and I think it is not for me. I am going to sit it out.

Have the guts to face the failure

The more you get experience in making investments you will come to know that discipline is a must in investing. Sometimes you have to sit out and watch other investors making money in the exact investments that you have already passed on. It is not necessary to follow the trend and invest in everything; you only have to make investments in the things you really know about and then stick to your process with confidence.

Download our first e-book on Higher education costing in foreign countries.

Access to higher education is easier now, with good colleges in India and foreign universities wooing students. But, parents must plan and start saving early to build a corpus for their children’s higher studies. And, while it is an important financial goal, such saving should not be prioritised over other goals like saving for retirement.

There has to be a balance between funding short-term and long-term goals. When we speak of long-term goals, families should put retirement as the first priority and then children’s education. For, if children’s education is partly unfunded, there are several options like scholarships or educational loans. But, if your retirement is unfunded, no institution will come forward to fund it. So, parents should not put the child’s education at the mercy of their own retirement planning.

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

“Some parents also invest in land or property, hoping to sell this when a need arises. However, immovable assets might be illiquid. At the time of need, these might not fetch the amount of money one hopes for. It is risky to depend solely on these.”

“The most important factors to consider are safety of the corpus and the rate of return on your investment. The returns should outperform the rate of increase in the cost of education,”

higher study

“Given that education inflation is much higher than consumer inflation, we assume an inflation of 12 per cent for children’s education. This means there has to be some allocation to a high risk/return asset class like equity, as per the family’s comfort level and risk appetite.”

 

Download our first e-book on Higher education costing in foreign countries.

Download (PDF, 2.74MB)

 

 

India Real Estate Sentiment Index

The quarterly report by Knight Frank India, Federation of Indian Chambers of Commerce & Industry (FICCI) and National Real Estate Development Council (NARDECO) captures the perceptions and expectations of industry leaders in order to judge the sentiment of the real estate market.

kf

Knight Frank FICCI NAREDCO – Q3 (July – September 2017)

Download the report

Download (PDF, 550KB)

 

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.

Download (PDF, 583KB)

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.

 

Reliance Nippon Life Asset Management ( First MF ) IPO Review

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

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

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

ipo

IPO Dates & Price Band:  

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

IPO Market Lot:

Shares: Apply for 59 Shares (Minimum Lot Size)

Amount: Rs. 14,868

IPO Allotment & Listing:

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

Company Promoters:

  • RELIANCE CAPITAL LIMITED
  • NIPPON LIFE INSURANCE COMPANY

Lead Managers:

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

IPO Registrar:

Karvy Computershare Private Limited

Anchor investors

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

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

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

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

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

financial data1

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

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

2. Upgrading the IT system;

3. Advertising, marketing and brand building activities;

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

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

6. Funding inorganic growth and other strategic initiatives.

7. Meeting expenses towards general corporate purposes.

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

Strengths

Leading Asset Management Company with Strong Credentials to Drive Growth.

Multi-Channel Distribution Network.

Comprehensive Suite of Products with Distinguished Investment Track Record.

Strong Focus on Processes.

Focus on Customer Centricity and Innovation.

Experienced Management Team.

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

Strategies

Expand its Investor Base and Focus on Retail Customers.

Focus on Developing its AIF Business.

Inorganic Growth through Strategic Acquisitions.

Leveraging Technology to Improve Investor Experience.

Expand its Overseas Operations.

Continue to Focus on Robust Investment Process and Product Innovation.

Negative

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

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

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

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

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

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

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

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

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

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

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

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

Valuation

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

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

valuationGrey market premium

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

Conclusion

Investors may consider for short to medium term.

DISCLAIMER

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