Grey Market Premium Dt. 30-12-2009

IPOs Listing Expected

D. B. Corp.	6/7 January 2010
JSW Energy Ltd.	4th January 2010
Godrej Properties	4/5 January 2010
MBL Infra	5th January 2010

Latest Grey Market Premium Dt. 30-12-2009

Company Name	Offer Price (Rs.)	Premium (Rs.)	Kostak (Rs. 1 Lac Application)
D.B. Corp.	212 (For Retail Investor Rs. 210)	26 to 28	--
JSW Energy Ltd.	100 (For Retail Investor Rs. 95)	4 to 5.50	--
Godrej Properties	490	23 to 25	--
MBL Infra	165 to 180	9 to 11	--

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. 23-12-2009

Grey Market Premium Dt. 23-12-2009

Company Name	Offer Price (Rs.)	Premium (Rs.)	Kostak (Rs. 1 Lac Application)
D.B. Corp.	212 (For Retail Investor Rs. 210)	20 to 21 (High Rs. 28)	--
JSW Energy Ltd.	100 (For Retail Investor Rs. 95)	2.50 to 3 (Low Rs. -6/7)	--
Godrej Properties	490	28 to 29	--
MBL Infra	165 to 180	5.5 to 6.5	--

Note: Dont subscribe for issue by just seeing premium Price as it may change anytime before listing. Subscribe only considering Fundamental of the companies

DB Corp: Costly News

D B Corp is entering the capital market on 11th December 09 to 15th December 09, with a public issue of 181.75 lakh equity shares of Rs.10 each, in the price band of Rs. 185 to Rs. 212 per share. Of this, fresh issue is of 127.25 lakh shares, while offer for sale, is of 54.50 lakh shares. The proposed IPO will result in 10% equity dilution, with promoters’ stake to be placed at 86.34%, of post issue equity, of Rs. 181.52 crores.

The company is offering a discount of Rs 2 to retail investors, on the discovered price, which seems like peanuts, more of an insult to retail category. It would have been better, if the company had not have given this discount.

The company needs to be compared with the listed peers, with similar size and reach, and on these parameters, HT Media and Deccan chronicle are the fit peers to compare. The company is bit weak on financials when compared with its peers but has certain advantages over those two, in respect to face value of share at Rs.10 of the company as against Rs.2 of those two and second being high promoters’ stake at 86% against 64% of Deccan and 69% of HT Media.

Now, coming on financial performance, this company is on a weak footing as evident from the financial performance of other two listed peers. D B Corp for FY 09, had total income of Rs. 961 crores with PAT at Rs.35.90 crores, resulting in an EPS of Rs. 2.12. Deccan, for FY 09, had total income of Rs. 858 crores with PAT at Rs. 140 crores, on an equity base of Rs. 49 crores, resulting in an EPS of Rs. 5.72 while HT Media had a total income of Rs.1,360 crores with PAT at Rs. 85 crores, on equity of Rs.47 crores, resulting in an EPS of Rs. 3.64.

For 6 months ending 30-9-09, D B Corp had a total income of Rs. 524 crores with PAT at Rs.91 crores, resulting in an EPS of Rs. 5.40 for the period. H T Media had total income of Rs.690 crores with PAT at Rs. 64 crores, translating into an EPS of Rs. 2.75, while Deccan had total income of Rs.482 crores with PAT at Rs. 177 crores, resulting in an EPS of Rs. 7.25.

The market capitalization of D B Corp, at the upper band would be close to Rs. 3,850 crores, while that of H T Media is at Rs. 3,400 crores and Deccan at Rs. 3,800 crores. Deccan is presently ruling at PE of 10 times, based on expected EPS of Rs. 15.40 for FY 10 while H T Media is ruling at PE of 24 times. As against this, D B Corp, at the upper band is seeing shares, issued at a PE of about 19 times. Also, vernacular print media rules at lower valuations on bourses as compared to English language.

Considering the presence of the company with 7 newspapers, 48 newspaper editions, 128 sub- editions, as also, 31 facilities spread across 31 cities, with combined average daily readership of 1.55 crore readers, the company would get placed in the upper league of print media with other listed peers. Even the debt burden of the company is comparable with other two listed peers.

Keeping all these facts in mind, issue at Rs. 185, being its lower band, looks attractive while at Rs.212, being its upper band, does not leave anything on the table for the prospective investors, as better alternatives are available in the secondary market.

Godrej Properties Godsave Investors

Godrej Properties is entering the capital market from 9th December 2009 to 11th December 2009 with a public issue of 94.30 lakh equity shares of Rs. 10 each, in the band of Rs. 490 to Rs. 530 per share. This will result in 13.50% equity dilution, with market capitalization expected to be at Rs. 3,700 crores, at upper price band of Rs. 530 per share.

The basic model of the company is to develop the properties in joint development with the land owners, with over 75 per cent of the saleable area under this model. Hence, this result’s in lower land bank, less amount getting blocked in land purchase and focussing entirely on development of the land. For development of the land, builders and developers, generally raise construction finance or working capital requirements by selling part of the property under development. So, under the given circumstances, there is very low requirement of funds for the company and hence, such a stiff market capitalisation of the company is not justified at all.

Upto 31-10-09, the company had completed just 23 projects, with total area of 5.13 million sq. feet, of which, 16 were residential and 7 were commercial projects. It is strange to see project size of 10,000 sq. feet to 40,000 sq. feet, having developed by the company. Due to this, the financial performance of the company has been on a very small scale as they were unimpressive as well. For FY09, on consolidated basis, the total income of the company was at Rs. 250 crores, with PAT at Rs. 75.63 crores. This PAT has been achieved to the extent of Rs. 41.99 crores, being profit on sale of long term investments. Even for 6 months ended 30-09-09, the total income of the company was at Rs. 115 crores with PAT at Rs. 47.74 crores. Can you believe that profit on sale of long term investment for 6 months ended 30th Sept 2009 was at Rs. 58.38 crores? So, where is the earning from the core business of the company? Also, this kind of profit was never earned in the earlier years. Even a group like Godrej has to resort to these measures to show respectable financials of the company!

Now coming on the total saleable area, it has 50.21 million sq. feet, of which 27.38 million sq. ft., being 54% is in Ahmedabad, with just 2.26 million sq. ft. in Mumbai. Not very significant completion of the projects is likely over next 2 years, which may keep the financials of the company, depressed and low. The company has recently entered (on 08-10-09) into a MoU with group company, Godrej & Boyce Mfg. Co. Ltd., for acquiring lease of 99 years, for 36.50 acres of land. This project may not take off for next two years and is in the eastern suburb of Mumbai, where realizations and margins are low. Also, this is seen as a measure to show a boost in saleable area, which may not really impress the prospective investors and justify the stiff offer price.

As stated earlier, against the expected market capitalization of the company at Rs.3,700 crores, there are many comparable peers available at a much cheaper valuations, with good presence in Mumbai, Pune, Banglore and NCR region. For example Parsvanath Developers has a market cap of Rs. 2,050 crores, Mahindra Life at Rs.1,400 crores, Peninsula Land at Rs. 2,250 crores, Ansal Properties at Rs. 750 crores, Marathon at Rs. 450 crores, Ajmera Realty at Rs.850 crores and Brigade Enterprise at Rs.1,600 crores. Now, all the developers have elevated their quality of projects and Brigade in Banglore and Marathon and Peninsula in Mumbai are few to name in this category. Even the financial performance of all these companies is quite respectable with very low equity base. Ajmera has an equity base of Rs. 35.50 crores, Ansal properties at Rs. 57 crores, Marathon at Rs. 12.65 crores, Mahindra Life at Rs.41 crores and Peninsula at Rs. 56 crores. Peninsula had an income of Rs. 169 crores with PAT at Rs. 83 crores, for quarter ending Sept. 09, while Marathon had net income of Rs. 40 crores, with PAT at Rs. 29.23 crores.

Even the culture and quality of the company is same and comparable with other developers, in respect to loading over built up area, floor rise etc. So where is any extra feature, which needs to get valued higher or deserves disproportionate valuation or premium tag?

Issue is steeply priced and much better plays are available in the secondary market and our advice is to give a skip to the issue.

Grey Market Premium Dt. 4-12-2009

Latest Grey Market Premium Dt. 4-12-2009

Company Name	Offer Price (Rs.)	Premium (Rs.)	Kostak (Rs. 1 Lac Application)	Subject to Sauda
Cox & Kings India	330	4 to 5	--	--
MBL Infra	165 to 180	2 to 3	--	--
JSW Energy Ltd.	100 to 115	8 to 9	1650 to 1700
Godrej Properties		5 to 7	--

Note: Dont subscribe for issue by just seeing premium Price as it may change anytime before listing. Subscribe only considering Fundamental of the companies

JSW Energy: Energy to Last Long

JSW Energy is entering the capital market on 7th December,2009 to 9th December,2009 with a public issue of Rs. 2,700 crores, price band for which has been fixed at Rs. 100 to Rs. 115 per share. As a gesture, for the retail shareholders, a discount of Rs. 5 shall be offered on the price discovered.

The company is a part of JSW Group headed by Sajjan Jindal, which is in turn a part of the O.P. Jindal Group. The company hopes to emerge as an integrated player in energy sector with presence in power trading, power generation, transmission project, mining operations as also manufacturing of capital equipments like Steam Turbines, Generators in JV with Toshiba of Japan.

The company has 3,650 MW of power generation projects under implementation, mainly at Ratnagiri and Barmer, of which, 995 MW are already operational, while 2,145 MW will be operational by October 2010, in phases, at an interval of every 2 ½ months. The company also has 7,740 MW of power generation projects under development, for which, preliminary work of land purchase, statutory clearances, feedstock back up, are all being tied up. The total cost of project for 3,650 MW, with transmission and mining projects, are estimated to cost Rs. 17,015 crores, of which ,Rs. 12,210 crores will come from debt and Rs. 4,805 crores from equity contribution.

The interesting part of the company is that, it is already a profit making with sizeable presence in the sector. For 6 months ending September 09, the total income of the company was at Rs. 875 crores with PAT of Rs. 267 crores. Net worth of the company, as at 30-09-09 was at Rs. 1,747 crores, which has been largely used to create the existing capacity of 995 MW. The company has been having investments in 70 lakh shares of JSW Steel, market price of which is over Rs. 700 crores, with its book value at Rs. 200 crores, as at 30-09-09. Also, the profits of the company in H2 of FY10 will be much higher and better, as 730 MW of capacity has become operational between July to September 09. Also, due to likely completion of 2,145 MW by October 10, which is most likely, considering the present status of the projects and execution capability of the promoters, the company hopes to mobilize good part of equity component of 7,740 MW from internal accruals. This gets reinforced as the company had earned a PAT of Rs. 1,577 crores in the last 4 ½ years, mainly from power trading and tiny power generating capacity of 260 MW.

Looking to the aggression and execution capability, which has been exhibited by the group in JSW Steel, as also, the present progress of the power projects of the company, it has good prospects of growing faster than its peers in the energy sector, as an integrated player. Also, even if the company is able to just add 3,650 MW further capacity, without any equity dilution over next 5 years, which is most likely to happen, will make the financials of the company even more strong and its balance sheet quite healthy.

Even now, the financials of the company are better placed with its peers. Adani Power, presently has an EV of Rs. 7.20 crores/MW with total capacity to become operational by March 12. However, the company has an EV of close to Rs. 7.20 crores/MW by netting off investments and other related power business, as also considering cash flow from early commencement of 2,145 MW by October,10.

Considering all these, issue looks good even at the upper band of Rs. 115 per share. It is likely that this issue will not disappoint, as happened with earlier 3 energy IPOs, of Adani Power, NHPC and Indiabulls Power. As such O.P. Jindal Group has remained investors friendly and have rewarded the investors well, over last 25 years.

One can apply in the issue even at the upper band of Rs. 115 for listing as well as investment gains.