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Grey Market Premium Dt. 2-11-2008

Grey Market Premium Dt. 2-11-2008

Company Name	Offer Price (Rs.)	Premium (Rs.)
Alkalie Metals Ltd.	90 to 95	-14 to -16 Discount
Note: Dont subscribe for issue by just seeing premium Price as it may change anytime before listing. Subscribe only considering Fundamental of the companies

Grey Market Premium Dt. 18-10-2008

Grey Market Premium Dt. 18-10-2008

Company Name	Offer Price (Rs.)	Premium (Rs.)
Alkalie Metals Ltd.	90 to 95	-20 to -25 Discount
Note: Dont subscribe for issue by just seeing premium Price as it may change anytime before listing. Subscribe only considering Fundamental of the companies

Grey Market Premium Dt. 12-10-2008

Grey Market Premium Dt. 12-10-2008

Company Name	Offer Price (Rs.)	Premium (Rs.)
Chemcel Biotech Ltd.	16	3 to 5
Alkalie Metals Ltd.	86 to 103	-15 to -20 (Discount)
Note: Dont subscribe for issue by just seeing premium Price as it may change anytime before listing. Subscribe only considering Fundamental of the companies

Alkali Metals: Aaj nahi Kal

Alkali Metals is entering the capital market from 7th October 08 to 15th October 08, with a public issue of 25.50 lakh equity shares of Rs.10 each, in the band of Rs.90 to Rs.105 per share.

The company is not a metal company making iron and steel, but is into manufacturing of sodium derivates, pyridine derivates and fine chemicals. Sodium Metal used in fast breeder nuclear reactor for power generation was company’s first product.

The company has been in its commercial existence for over 35 years and despite, its size has been very small. For FY 08, the total income of the company was at Rs.65 crores with profit after tax of Rs.7.93 crores resulting in an EPS of Rs.11.45. Book value per share of the company as at 31-07-08 was at Rs.49.25 with net worth of just Rs.36.50 crores. This is inspite of the fact that bottomline of the company in the last 5 years was at Rs.43 crores while cash profit was at Rs.51 crores.

The company is now setting up an Active Pharmaceutical Ingellents (API) plant at Vishakhapatnam with an installed capacity of 672 TPA with total outlay of Rs.38.75 crores, excluding public issue expenses. This project is being financed by proposed issue and internal accruals, and both these sources are quite risky and unreliable.

At the lower end of Rs.90, the company would be able to mobilize Rs.23 crores while at the upper end, it would be Rs.26.80 crores. If we take total project cost at Rs.41 crores, the company would be requiring to source Rs.15 crores from internal accruals.

As at 31-07-08, the company had a total debt of Rs.29.20 crores, of which Rs.15.60 crores are of short-term nature due within one year. This translates into a debt equity ratio of 0.80 : 1. Since the annual cash accruals of the company is close to Rs.7 crores (net off dividend) it would be requiring two years working to mobilize this fund. This means, target production date of April 09 is not likely.

For FY 09, the company is likely to have a bottomline of less than Rs.10 crores, which would translate into an EPS of less than Rs.10 on expanded equity base of Rs.10.18 crores. Considering this, even at the lower band of Rs.90, the share is being issued at a PE multiple of 9 times against many stocks available at a PE of 5 – 6 times. Indoco Remedies expected to have an EPS of Rs.45 for FY 09 is ruling at Rs.215, which implies a PE of less than 5. J B Chemicals ruling at a PE of 4, Natco Pharma at a PE of 5, Surya Pharma at a PE of 3 and Nectar Life at a PE of less than 5.

If this is the state of the existing established players in the secondary market, what is the point in considering this issue, which is virtually issued at a PE of almost double digit. Except for some momentum and high promoters stake of 75% post issue, nothing attractive in the issue even at the lower band of Rs.90.

Grey Market Premium Dt. 4-10-2008

Grey Market Premium Dt. 4-10-2008

Company Name	Offer Price (Rs.)	Premium (Rs.)
20 MICRONS Ltd.	55	5 to 6
Chemcel Biotech Ltd.	16	3 to 4
Alkalie Metals Ltd.	90 to 95	--
Note: Dont subscribe for issue by just seeing premium Price as it may change anytime before listing. Subscribe only considering Fundamental of the companies

Grey Market Premium Dt. 20-9-2008

Grey Market Premium Dt. 20-9-2008

Company Name	Offer Price (Rs.)	Premium (Rs.)
20 MICRONS Ltd.	50 to 55	6 to 8
Chemcel Biotech Ltd.	16	4 to 5
Note: Dont subscribe for issue by just seeing premium Price as it may change anytime before listing. Subscribe only considering Fundamental of the companies

Grey Market Premium Dt. 13-9-2008

Grey Market Premium Dt. 13-9-2008

Company Name	Offer Price (Rs.)	Premium (Rs.)
20 MICRONS Ltd.	50 to 55	8 to 10
Chemcel Biotech Ltd.	16	4 to 5
Note: Dont subscribe for issue by just seeing premium Price as it may change anytime before listing. Subscribe only considering Fundamental of the companies.

Chemcel Biotech: Unhealthy Issue

Chemcel Biotech is entering the capital market on 9th September 08 to 12th September 08, with a public issue of 1.54 crore equity shares of Rs.10 each at a premium of Rs.6 per share, with total issue price of Rs.16 per share, aggregating Rs.24.64 crores.

The company is a pesticide formulator manufacturing pesticides for crops like paddy, cotton and sugarcane and had a total income of Rs.25 crores for FY 08 with PAT of Rs.1.20 crores, resulting in an EPS of less than 50 paise.

It is learnt that the company has managed to get its IPO subscribed from closed sources and the said source or operator is from a nearby hill station of Mumbai. The stock is likely to witness huge momentum post listing, and it will help the said operator to jack up the price of the stock after listing, if it does not receive any public response. So, interested to have negative analysis and rating on the stock.

Rightly so, the stock has no fundamentals at all. The company is entering into bio-diesel field but nothing seems to be attractive. The huge equity base of Rs.26 crores would be a big dampner. But who cares for all these, if you have some different motive!

Nothing attractive in the stock while having necessary momentum and speculative ingredients in it. Those who have inclination to ride the momentum may get attracted towards the issue.

A very risky proposition and hazardous to the health of primary market.

Grey Market Premium Dt. 6-9-2008

Grey Market Premium Dt. 6-9-2008

Company Name	Offer Price (Rs.)	Premium (Rs.)
20 MICRONS Ltd.	50 to 55	7 to 9
Chemcel Biotech Ltd.	16	4 to 5
Note: Dont subscribe for issue by just seeing premium Price as it may change anytime before listing. Subscribe only considering Fundamental of the companies

20 MICRONS: Micro returns

20 Microns is entering the capital market from 8th September 08 to 11th September 08, with a public issue of 43.51 lakh equity shares of Rs.10 each, in the band of Rs.50 to 55 per share. Of this, fresh issue is of 16.75 lakh shares, while offer for sale is of 26.76 lakh shares.

The company is into mining and mineral business with its plants located at five places in Gujarat, Rajasthan and Tamil Nadu. FY 08 topline of the company was at Rs.108 crores, which includes trading turnover of Rs.38 crores. Net profit for the year was at Rs.4.59 crores, which has resulted into an EPS of Rs.3.69.

Since the fresh issue is of 16.75 lakh shares only, even at the upper band of R.55, it would be able to mobilize Rs.9.20 crores only. This would be used to finance the ongoing expansion at five places, estimated to have an outlay of Rs.19.20 crores, including issue expenses and general corporate purposes. Rs.10 crores is being mobilized as a term loan from IDBI.

Financial health of the company as at 31.03-08 has not been very healthy. Inspite of gross block of Rs.76 crores as at 31-03-08, the turnover of the company for FY 08 was just Rs.69 crores. Debt of the company was at Rs.46.51 crores on a net worth of Rs.28.20 crores, resulting in a Debt equity ratio of 1.65 to 1. Even expansion is being carried out on an estimated debt equity of over 1:1. Post issue, equity of the company, will rise to Rs.14.12 crores with promoters stake of 43% only.

Ashapura Minechem, a Rs.1,500 crore company with tiny equity base of Rs.16 crores is ruling at a PE of close to 7. There are many such mining companies ruling at a PE multiple of 5 to 8 times, though they may not be strictly comparable, product-wise with the company.

Present issue, even if considered at the lower band of Rs.50, is being made at a PE ratio in double digit, which is definitely very high. The company would largely be falling in small cap category, for which perception is very low.

In view of this, investment is not advised in the issue at any levels.

Grey Market Premium Dt. 23-8-2008

Grey Market Premium Dt. 23-8-2008

Company Name	Offer Price (Rs.)	Premium (Rs.)
NU TEK India Ltd.	192	6 to 7
Austral Coke & Projects	196	13 to 15
Resurgere Mines & Minerals	263 to 272	6 to 8
Note: Dont subscribe for issue by just seeing premium Price as it may change anytime before listing. Subscribe only considering Fundamental of the companies

Grey Market Premium Dt. 17-8-2008

Grey Market Premium Dt. 17-8-2008

Company Name	Offer Price (Rs.)	Premium (Rs.)
NU TEK India Ltd.	192	3 to 5
Austral Coke & Projects	196	11 to 13
Resurgere Mines & Minerals	263 to 272	8 to 10
Note: Dont subscribe for issue by just seeing premium Price as it may change anytime before listing. Subscribe only considering Fundamental of the companies

Resurgere Mines & Minerals: Neither mine nor your

Resurgere Mines & Minerals is entering the capital market from 11th August 08 to 13th August 08 with a public issue of 44.50 lakh equity shares of Rs.10 each, in the band of Rs.263 to Rs.272 per share.

The company is into extraction processing and sale of iron-ore and bauxite and has been in the business for the last three years. Till FY 05, the company was carrying out trading activities only and inspite of a turnover of Rs.75 crores, annually, never had a bottomline in excess of Rs.40 lakhs.

The company has taken three iron-ore mines on arrangement to raise iron-ore and subsequently purchase it. These mines are in Orissa and Jharkhand and lease period of two original holders were expired in 1989 and 1999. Even lease of third mine is expiring on 15-04-2009, though renewal applications for all three mines were made by the original lease holders in time, to the government.

Strangely, terms of the agreement of the company with the mine-lease holders have not been spelt-out or given. The company is now acquiring an iron-ore mines, in Sindhudurg, Maharashtra, for which application is under process at the Collector level.

Strangely, the proposed IPO is not to finance the acquisition or development of mines but to acquire processing plant and logistics for its existing activity. Rs.129 crores is earmarked for acquiring Drilling Machines, Pay-loaders, Crushers, for its 4 sites, while Rs.116 crores has been earmarked for purchase of 6 Railway racks.

The company intends to purchase 6 rakes of 61 wagons each, of which, orders for 3 rakes have been placed with Texmaco Ltd., for which, an advance of Rs.15 crore has been made. Under the scheme, on handing over purchased rakes, to the railways, the company would be provided with the assured supply of 4 rakes per month, against each rake and shall be given a freight rebate of 10%. The company shall also be entitled to get additional 2 rakes per month, against each rake, without freight rebate. However, the ownership of these rakes shall remain with the company for a period of 10 years and after that, the same shall be transferred in favour of Indian Railways.

Similarly, under its present contract of extraction and processing, the services of machineries, labour and material resources are outsourced which the company now intends to employ its own equipments.

So the present business model of the company is purely contractual in respect to raw-material mining and processing and dispatch, without having any ownership of fixed assets,. Due to this, the fixed assets of the company as at 31-03-08 are at Rs.2.11 crores on an annual turnover of Rs.425 crores. Total current assets of the company, as at 31-03-08, are at Rs.267 crores, which are largely financed by the networth of Rs.225 crores.

For FY 08, on total income of Rs.425 crores, PAT of the company was at Rs.66.56 crores which has resulted in an EPS of Rs.27.60. Present equity of the company would rise from Rs.24.09 crores to Rs.28.54 crores. This results, in a PE multiple of about 10 times, based on historic earning, and considering issue price at the upper band.

We need to compare the company with Sesa Goa which have its own iron-ore and coal mines and had a turnover of Rs.3,672 crores for FY 08, with PAT of Rs.1,492 crores, resulting in an EPS of Rs.379 on tiny equity base of Rs.39.36 crores. However, June 08 quarter of Sesa Goa has been much better, which had a topline of Rs.1,342 crores and PAT of Rs.633 crores, giving an EPS of Rs.160. This should result in an EPS of over Rs.500 for FY 09. Share price of this company is ruling at Rs.3,300 which implies in a PE multiple of 6.60 times., This is inspite of the fact that the company has proposed bonus issue in the ratio of 1 : 1 as also have gone for stock split from Rs.10 to Re.1, which are perceived as positive moves by the market.

Even otherwise, all other mining stocks are ruling at a PE multiple of less than 10. Prominent amongst them are Ashapura Minechem ruling at Rs.128, having an expected EPS of Rs.15 for FY 09, which results in a PE multiple of 8, GMDC ruling at Rs.256 is expected to have an EPS of Rs.20 for FY 09, which results in a PE of less than 13. Even various ferro alloys manufacturers like Navbharat Ventures, Facor Alloys, Ferro Alloys are ruling at a PE multiple of 5 – 8 times.

In this background, the issue of the company at a PE multiple of 10 is definitely expensive. However, if this is calculated on average earning of last three years, this multiple is at 18 times. Also, difference of atleast 20% between primary and secondary market pricing is always expected.

Also, the business model of the company does not have sound footing, as it is more of trading nature. Post mines acquisition, the things may improve, which will happen on a very low scale. Hence, the earning multiple of over 6 times, on historic earnings looks appropriate. Even track record of the promoters are not assuring at all.

All these warrant a cautious view on the issue, which is definitely expensive and hence advised to avoid.

Austral Coke & Projects: Dont burn your hands here

Austral Coke & Projects is entering the capital market from 7th August, 2008 to 13th August, 2008 with a public issue of 72.60 lakh equity shares of Rs.10 each, in the price band of Rs.164 to Rs.196 per share. There is a green shoe option of upto 10.89 lakh equity shares.

The company is promoted by father – son duo who are also the promoters of Gremach Infrastructure Equipments & Projects Ltd., which went public on 8th March 07, and made an IPO of Rs.59 crores, by issuing shares of Rs.10 at Rs.86 per share. This company has shown speculative activity on the bourses with share price having touched a high of Rs.500 in the first week of January 08 and now languishing at Rs.90 with low of Rs.80 made in mid July 08. This is inspite of the fact that the company posted an EPS of Rs.24.50 for FY 08. This translates into a PE multiple of less than 4 and inspite of the fact that the company is into infrastructure equipment hiring business which has good discounting and huge growth potential. But due to concern on the promoter’s track record and issues of corporate governance, the share is rightly languishing at this level.

Mr. Ratanlal Tamakhuwala was one of the promoter of Gujarat NRE Coke, but due to family dispute, has disassociated himself in 1997, from the company.

The company is presently into manufacture of LAM Coke and refractory, trading of textile and providing rental of construction/earthmoving machineries. Though the company has its existing coke manufacturing plant in Kutch but nowhere in RHP, the company has bothered to state the installed capacity and its utilization. Even the financial performance for 11 months ending 28-02-08 are not very revealing as revenue break-up of Rs.226 crores into LAM Coke of Rs.124 crores, Textiles Rs.42 crores and Equipments of Rs.60 crores has not defined traded and manufactured. During this period, the company had traded turnover of Rs.102 crores. If we presume textile turnover of Rs.42 crores as traded one, its EBIT was just Rs.17 lakhs. Similarly, Equipment Division had turnover of Rs.60 crores, which also seems to be of trading had an EBIT of Rs.9.45 crores. So, increase in Gross Block during FY 08, of Rs.178 crores, represents increase in Coke unit capacity from 1,25,000 TPA to what level? During FY 06, the company increased its coke capacity form 50,000 TPA to 1,25,000 TPA as also created new unit of Refractory at an outlay of Rs.54 crore. So, why this additional spend of Rs.178 crores in FY 08?

The company has agreement with group companies for similar business of equipment hiring and purchase & sale of coke for management fee, which clearly conflicts with the interests of the company. So what is the necessity to have a separate company for both these business in this company?

The whole structuring of the company’s business has been made to enable the company to come out with an IPO. The bottomline of the company was at Rs.9.15 crores for FY 07 which rose to Rs.35.18 crores for 11 months ending 28-02-08. On present equity base of Rs.21.77 crores, even if we assume an EPS of Rs.19 for FY 08, share at the lower band of Rs.164 is issued at a PE multiple of over 9 times. Gujarat NRE Coke, an established player with presence in overseas market is ruling at a PE of close to 9 times, based on its FY 09 earnings. So, in this scenario, when the coke prices are softening having corrected from $ 200 per MT to $ 160 per MT in last one month, what is the rationale of this valuation, that too at the lower band. At the upper band of Rs.196, there are no justification or rationale at all.

The promoters have tasted the public money and by launching this IPO are planning to mobilize about Rs.150 crores, including green shoe option. Considering the track record of the promoters and of the company’s performance, it can only be presumed as a speculative issue solely for the benefits of the promoters.

A clear advice is to remain away, if you have fundamental view.

Grey Market Premium Dt. 3-8-2008

Grey Market Premium Dt. 3-8-2008

Company Name	Offer Price (Rs.)	Premium (Rs.)
Vishal Information Technologies	140 to 150	3 to 5
NU TEK India Ltd.	170 to 192	6 to 8
Austral Coke & Projects	164 to 196	20 to 22
Note: Dont subscribe for issue by just seeing premium Price as it may change anytime before listing. Subscribe only considering Fundamental of the companies

Nu Tek India: 'New' Issue, Great 'Take'

Nu Tek India is entering the capital market from 29th July 2008 to 1st Aug 2008 with a public issue of 45 lakh equity shares of Rs.10 each in the band of Rs.170 to Rs.192. Of this, fresh issue is of 35 lakh shares while offer for sale is of 10 lakh shares.

The company is a Telecom infrastructure service provider offering infrastructure rollout solutions for both mobile and fixed telecommunications networks by offering services to Telecommunication Equipment Manufacturers, Telecom Operators and third party infrastructure leasing companies.

Among Telecom Equipment Manufacturers, the company clients are Nokia, Ericsson, Motorola and Nortel while amongst Telecom Operators are Tata Tele, R-Com, Bharati, Idea, Vodafone and Tata Communications. Presently, the company is executing works of Rs.137 crores for its various clients.

For FY 08 the total income of the company was at Rs.97 crores with EBITDA of Rs.32 crores, giving a margin of 33.66%. PBT was placed at Rs.30.29 crores while PAT was at Rs.21.27 crores, resulting in an EPS of Rs.15.50 on present equity base of Rs.13.76 crores. FY 08 the company has posted a growth of 50% in topline while 100% in bottomlines.

Due to rapid increase in telecom subscribers which are now at 308 million of which 269 million are wireless subscribers, service providers and equipment makers need to focus on network quality as a competitive necessity. As the company is an end to end solution provider with track record of over 12 years of project management for all type of customers with 1,083 permanent employees, enjoys a strong position in the domestic market. The company now has estimated a capex of Rs.89 crores, of which, Rs.21 crores is for overseas acquisitions to enable the company to have overseas foothold. Also, Rs.44 crores is for capital expenditure. Though presently, the company is debt free but has Rs.50 crores, projects for Customers Under Progress and Rs.47 crores as Sundry Debtors. These are partly financed by current liabilities of Rs.34 crores, which if curtailed, could improve the operating margins of the company, by procuring the materials at the competitive rates.

Fresh infusion of the funds would only supplement the present operations which would improve its growth. Even equity dilution, considering offer for sale is 25.50% only, with post-issue equity at Rs.17.26 crore. Due to huge growth potential of the telecom sector, the company should be able to have a CAGR of 40% in topline and bottomline for the next three years.

Share at lower band of Rs.170 is definitely attractive. However, even at the upper band of Rs.192, based on historic earnings, it is issued at a PE multiple of about 12 times, while at about 10 times, based on FY 09 earnings. Even this is considered quite good, and price is likely to get discovered at the upper band of Rs.192 and even at that level it can prove to be a rewarding investment.

Grey Market Premium Dt. 27-7-2008

Grey Market Premium Dt. 27-7-2008

Company Name	Offer Price (Rs.)	Premium (Rs.)
Birla Cotsyn (India)	12 to 14	Discount
Vishal Information Technologies	140 to 150	7 to 9
NU TEK India Ltd.	170 to 192	12 to 15
Note: Dont subscribe for issue by just seeing premium Price as it may change anytime before listing. Subscribe only considering Fundamental of the companies

Vishal Information Technologies: V Shall not

Vishal Information Technologies is entering the capital market from 21st July 08 to 24th July 08 with a public issue of 27.90 lakh equity shares of Rs.10 each, in the price band of Rs.140 to Rs.150 per share. Of this, fresh issue is of 17.90 lakh shares while offer for sale is of 10 lakh shares.

The company is a very tiny player in the field of data digitalization, E-Publishing, digital library, E-Accounting and Fund Accounting, which covers all the range in IT enabled services other than voice call centre. However, the scale of operations of the company is quite small with topline at Rs.41 crores for FY 08 with a PAT of Rs.12.36 crores, resulting in an EPS of Rs.13.90.

Share now being offered in the band of Rs.140 to Rs.150, is resulting in a PE multiple of 10 to 11 times, based on historic earnings. Present valuations of such companies in the secondary market are quite low at a PE multiple of 4 to 5 times, which has much larger scale and better profitability.

The company is now expanding its seat capacity from 250 to 450 for Data digitalization , of E-Publishing from 150 to 250 while of Digital Library from 75 to 100 seats. All this is estimated to cost Rs.30 crores including issue expenses. This is being met by preferential allotment of 3.10 lakh shares made to IDBI in March 08 at Rs.120 per share for Rs.3.72 crores while about Rs.25 crores would come from the proposed issue.

As discussed earlier, the valuations are definitely stiff and are for a very small amount for which primary market is not helping the companies to mobilize such an amount unless and until it is done with hand in gloves with the operators. The net worth of the company at Rs.55 crores is largely blocked in sundry debtors of Rs.30 crores, (a cycle of about 9 months) and loans & advances of Rs.6.50 crores. Such a long debtor cycle is always risky for any business. Also, presently the company has no borrowings and hence it would have been prudent for the company to go for borrowings which would have been a cheaper route and even debt equity ratio would have remained at a very low level of 0.5 : 1.

The recent experience of such small IPOs have shown that no response has been received from the public and such IPOs were managed by the operators in collusion with the promoters of the company, ultimately causing huge loss to the investors and traders.

A clear advice is to remain away from the issue as much better stocks are available in the secondary market.

Grey Market Premium Dt. 20-7-2008

Grey Market Premium Dt. 20-7-2008

Company Name	Offer Price (Rs.)	Premium (Rs.)
Somi Conveyor Belting	35	3 to 5
Birla Cotsyn (India)	12 to 14	Discount
Vishal Information Technologies	140 to 150	7 to 10
Note: Dont subscribe for issue by just seeing premium Price as it may change anytime before listing. Subscribe only considering Fundamental of the companies.

Grey Market Premium Dt. 13-7-2008

Grey Market Premium Dt. 13-7-2008

Company Name	Offer Price (Rs.)	Premium (Rs.)
KSK Energy Venture	240	Discount
Somi Conveyor Belting	35	3 to 5
Birla Cotsyn (India)	12 to 14	Discount
Note: Dont subscribe for issue by just seeing premium Price as it may change anytime before listing. Subscribe only considering Fundamental of the companies