Reblog: Aster DM Healthcare IPO Review

Aster DM Healthcare Ltd. (Aster) is one of the largest private healthcare service providers which operate in multiple GCC states based on the number of hospitals and clinics and an emerging healthcare player in India. GCC states that comprise the United Arab Emirates, Oman, Saudi Arabia, Qatar, Kuwait and Bahrain. It also operates in Jordan and Philippines. Aster is having operations in different verticals and geographies. It has already started work for 10 new hospitals, 5 in GCC states and 5 in India. Although it has a larger portion of revenues coming from GCC states, due to India based company, it has registered office in the southern region and is mulling listing in India. Asters hospitals in India are located in Kochi, Kolhapur, Kottakkal, Bengaluru, Vijaywada, Guntur, Wayanad and Hyderabad. These are operated under “Aster”, “MIMS”, “Ramesh” or “Prime”, “Aster Aaadhar” and “Aster CMI” brands. Its clinics are located at Kozhikode, Eluru and Bengaluru. As of 30.09.17 the company had 17408 employees including 1417 full-time doctors, 5797 nurses, 1752 paramedics and 8442 other employees. In addition, it had 891 “fee for service” doctors.  Aster has a diversified portfolio of healthcare facilities, consisting of 9 hospitals, 90 clinics and 206 retail pharmacies in the GCC states, 10 multi-specialty hospitals and 7 clinics in India, and 1 clinic in the Philippines as of September 30, 2017. Overall currently it has total 323 operating facilities.

Majority of Aster hospitals and clinics provide secondary and tertiary healthcare services to patients. In addition to providing core medical, surgical and emergency services, some of its hospitals provide complex and advanced quaternary healthcare in various specialties, including cardiology, oncology, radiology, ophthalmology, neurosciences, pediatrics, gastroenterology, orthopedics and critical care services. Aster had plans on the table for more large hospitals in metros of India before the budget, but now it mulls affordable hospitals in tier –II and tier- III cities and in rural areas. No plans have been firmed up so far in this regard.

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Reblog: Galaxy Surfactants IPO review

Galaxy Surfactants Ltd. (GSL) is India’s one of the leading manufacturer of surfactants and other specialty ingredients for the personal care and home care industries. Its products find applications in a host of consumer-centric personal care and home care products including skin care, oral care, hair care, cosmetics, toiletries and detergent products. Over the years, GSL has significantly expanded and diversified its product profiles, client base and geographical footprints. Currently, its product portfolio comprises over 200 grades which are marketed to more than 1700 customers in over 70 countries. GSL is supplying its products to FMCG companies in India such as Cavinkare Pvt. Ltd., Colgate Palmolive, Dabur India, Henkel, Himalaya, L’OREAL, Procter & Gamble, Reckitt Benckiser, Ayur Herbals, Jyothy Lab and so on. It is exporting its products to Africa Middle East Turkey, Asia Pacific, Americas and Europe FMCG giants. To meet global demands, GSL has established step-down subsidiaries and manufacturing facilities is Egypt and USA. GSL has at present strategically located 7 manufacturing facilities out of which 5 are in India and 2 located overseas. It has registered 47 patents since 2002 and 38 patent applications pending. GSL’s products find applications across “mass”, “mass-tige” and “prestige” range of products and is the most preferred supplier to leading brands.

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Reblog: Amber Enterprises India Limited IPO Review

Amber Enterprises India Ltd. (AEIL) is a niche player in functional component manufacturing segment that is used widely by Room Air Conditioner (RAC) manufacturers. The company enjoys preference of eight out of 10 mega players in the field and is getting more new customers that are entering in this field as under While Goods penetration among users has vide difference as far as ACs are concerned. While TV, Fridge and Washing Machines enjoys penetration of over 10% to 60% in India, AC penetration is as low as around 4% and thus this segment has vide scope of advancement going forward.RAC penetration in neighboring countries ranges from 30 to 100%. Its customer includes Panasonic, LG, Daikin, Hitachi, Whirlpool, Voltas, Blue Star and Godrej. The company is a market leader in Indian RAC, OEM/ODM segments and has comprehensive product portfolio to suit the requirements of its customers. AEIL has 11 manufacturing facilities at 7 strategic locations and thus enjoys proximity of its prime customers. To stay tuned with the futuristic requirements, it keeps spending on R&D and backward integration. In last five years, it made two acquisitions i.e. PICL in 2012 and IL Jin in 2017 and is now able to offer maximum solutions under one roof. It enjoys “Make in India” status and helps India in reducing imports from China and other countries. While increasing temperature will bring more demand, adequacy of power supply help for the faster advancement of RAC markets domestically. As per Frost and Sullivan report, RAC and OEM/ODM markets are set to post CAGR of 12.4% and 25.1% respectively by 2022. AEIL enjoys a market share of 19.1% in RAC and 55.4% in OEM/ODM segments respectively. AEIL’s customers command around 75% of the Indian RAC market share.

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Reblog: Astron Paper IPO review

Astron Paper and Board Mills Ltd. (APBM) is engaged in manufacturing of kraft paper and catering to the packaging industry. It has a current capacity of 96000 mt p. a. Post proposed expansion plans, its total installed capacity will stand increased to 129000 mt p. a. Its manufacturing and dispatch process has been assessed and certified ISO 9001:2015 and ISO 14001: 2015 by SGS United Kingdom Ltd. It is using waste paper as its main raw material and thus saving the usage of wood, thus following green initiative. APBM’s kraft paper is used by packaging industry in manufacturing corrugated boxes, liners, sacks and composite containers.

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Reblog: Future Supply Chain IPO review

Future Supply Chain Solutions Ltd. (FSC) is one of India’s largest organized third-party logistics service operators. It offers automated and IT-enabled warehousing, distribution and other logistics solutions to a wide range of customers. Company’s service offerings, warehousing infrastructure, pan-India distribution network, “hub-and-spoke” transportation model and automated technology systems support its competitive market position. FSC’s customers operate in various sectors across India, including retail, fashion and apparel, automotive and engineering, food and beverage, fast moving consumer goods (“FMCG”), e-commerce, healthcare, electronics and technology, home and furniture and ATMs. According to management, its business model enables it to act as a service provider that can comprehensively cover customers’ supply chain needs. It currently operates with 14 hubs, 106 branches and dedicated containerized fleet of 526 vehicles. Its Mihan-Nagpur distribution center is the most modern and highly automated one.

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Reblog: Shalby Ltd IPO review

Shalby Ltd. (Shalby) is one of the leading multi-specialty chains of hospitals in India. Its hospitals are tertiary care hospitals, few of which also offer quaternary healthcare services to patients in various areas of specialization such as orthopedics, complex joint replacements, cardiology, neurology, oncology, and renal transplantations. As on the date of RHP, Shalby provided inpatient and outpatient healthcare services through 11 operational hospitals with an aggregate bed capacity of 2,012 beds. As on June 30, 2017, it had nine operational hospitals with an aggregate operational bed count of 841 beds. Shalby that has earned name and fame for joint replacement had a 15% market share of all joint replacement surgeries conducted by private corporate hospitals in India in 2016. As on the same date, it also provided outpatient services through 47 Outpatient Clinics and has ten shared surgery centres within third party hospitals, which are called “Shalby Arthroplasty Centre of Excellence” (“SACE”), where Shalby offers orthopedic healthcare services including surgeries. Since March 2007, it has conducted an aggregate of 92100 surgeries, and provided healthcare services to an aggregate of 1025533 patients, consisting 133652 inpatients and 891881 outpatients. Indian healthcare industry that was around Rs. 9.2 trillion in 2016 is expected to grow at a CAGR of around 15-16% to reach Rs.17.2 trillion by 2020.

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Reblog: Mahindra Logistics IPO review

Mahindra Logistics Ltd. (MLL) – a Mahindra group company is one of India’s largest 3PL solutions providers in the Indian logistics industry which was estimated at Rs. 6.40 trillion in fiscal 2017 according to CRISIL report. MLL’s competitive advantage is its “asset-light” business model pursuant to which assets necessary for operations such as vehicles and warehouses are owned or provided by a large network of business partners. Technology enabled, “asset-light” business model allows for scalability of services as well as the flexibility to develop and offer customized logistics solutions across a diverse set of industries. The company operates in two distinct business segments, supply chain management (“SCM”) and corporate people transport solutions (“PTS”).

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Reblog: Reliance Nippon Life IPO review

Reliance Nippon Life Asset Management Ltd. (RNL) (erstwhile known as Reliance Capital Asset Management Ltd.) is one of the largest asset management companies in India, managing total AUM of Rs. 3,625.50 billion as of June 30, 2017. RNL 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. RNL started mutual fund operations in 1995 as the asset manager for Reliance Mutual Fund, managed QAAUM of Rs. 2,229.64 billion and 7.01 million investor folios, as of June 30, 2017. It managed 55 open-ended mutual fund schemes including 16 ETFs and 174 closed-ended schemes for Reliance Mutual Fund as of June 30, 2017. RNL has a pan-India 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.

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Reblog: GIC IPO review

General Insurance Corporation of India Ltd. (GIC) is the largest reinsurance company in India in terms of gross premiums accepted in Fiscal 2017, and is accounted for approximately 60% of the premiums ceded by Indian insurers to reinsurers during Fiscal 2017, according to CRISIL Research. GIC is also an international reinsurer that underwrote business from 161 countries as at June 30, 2017. According to CRISIL Research. Corporation ranked as the 12th largest global reinsurer in 2016 and the 3rd largest Asian reinsurer in 2015, in terms of gross premiums accepted. It provides reinsurance across many key business lines including fire (property), marine, motor, engineering, agriculture, aviation/space, health, liability, credit and financial and life insurance. Through more than 44 years of experience in, and commitment to, providing reinsurance products and services, GIC believe that it has become a trusted brand to its insurance and reinsurance customers in India and overseas.

GIC has diversified its business geographically to grow underwriting business and profitability as well as to maintain a balanced portfolio of risks. Its gross premiums on a restated consolidated basis from international business in Fiscal 2017, Fiscal 2016 and Fiscal 2015 were Rs.10300.45 cr. Rs. 8339.69 cr. and Rs. 6609.45 cr. respectively, and gross premiums have grown at a CAGR of 24.84% from Fiscal 2015 to Fiscal 2017. In Fiscal 2017, Fiscal 2016 and Fiscal 2015, its gross premiums for risks outside of India were 30.53%, 45.00% and 43.28%, respectively, of its total gross premiums. GIC’s gross premiums on a consolidated restated basis from international business for the three months ended June 30, 2017 were Rs. 3004.97 cr. and its gross premiums for risks outside of India were 17.34% of total gross premiums. It has developed its overseas business through home office in Mumbai, branch offices in London, Dubai and Kuala Lumpur, a representative office in Moscow, a subsidiary in the United Kingdom that is a member of Lloyd’s of London and a subsidiary in South Africa.

In Fiscal 2017, GIC led 74.79% of the reinsurance treaties in which it participates in the Indian non-life market. It also administers three domestic reinsurance pools and one African-Asian reinsurance pool that allow it to manage reinsurance economics and strengthen relationships with customers. GIC maintains a diversified investment portfolio to generate investment returns to support liabilities for the reinsurance it underwrites and to create shareholder value. GIC has an Indian investment portfolio, which includes fixed income debt securities including Government securities, equity securities including exchange traded funds, and other investments, but does not include fixed term deposits for its business written outside of India at its branches. As at June 30, 2017 and March 31, 2017, GIC’s Indian investment assets on a standalone restated basis had a carrying value of Rs. 41929.85 cr. and Rs. 39126.27 cr. respectively, and a fair value of Rs. 73902.56 cr. and Rs. 69162.58 cr. respectively. Corporation’s investment income from its Indian investment assets on a restated standalone basis in Fiscal 2017, Fiscal 2016 and Fiscal 2015 was Rs. 4515.61 cr. , Rs. 4174.99 cr. and Rs. 4176.06 cr. respectively, and has grown at a CAGR of 3.99% from Fiscal 2015 to Fiscal 2017. Our yields (without unrealized gains) from Indian investment assets on a standalone restated basis in Fiscal 2017, Fiscal 2016 and Fiscal 2015 were 12.35%, 12.91% and 14.08%, respectively. In the three months ended June 30, 2017, its investment income and yields (without unrealized gains) from Indian investment assets on a restated standalone basis was Rs. 1046.79 cr. and 10.33%, respectively. In addition to its Indian investment assets, GIC holds fixed term deposits at banks outside of India for its overseas business (written outside of India at its branches) from which it earned Rs. 99.76 cr. in interest income in Fiscal 2017. GIC follows robust and comprehensive risk management framework.

Further, as at June 30, 2017 and March 31, 2017, 2016 and 2015, it had a restated consolidated net worth (including fair value change account) of Rs. 52116.00 cr. Rs. 49550.85 cr. Rs. 40870.26 cr. and Rs. 43384.29 cr. respectively. GIC’s total assets on a restated consolidated basis as at June 30, 2017 and March 31, 2017, 2016 and 2015 amounted to Rs. 108320.69 cr. Rs. 97079.44 cr. Rs. 76102.75 cr. and Rs. 74916.43 cr. respectively.

It had a solvency ratio of 1.83, 2.41, 3.80 and 3.32, calculated on a restated standalone basis as at June 30, 2017 and as at March 31, 2017, 2016 and 2015, respectively, against the minimum statutory requirement of 1.50. GIC has paid successive annual dividends in the past five fiscal years (including a proposed dividend in Fiscal 2017) to the Government of India as it’s shareholder, and corporation’s dividends during last five fiscal years were an aggregate of Rs. 3320.05 crore. Reinsurance premiums in India are projected by CRISIL Research to increase at a CAGR of 11-14% over the next five years to reach Rs. 70000 crore by Fiscal 2022. As a trusted brand in the Indian market with 44 years of experience, GIC believes that it is well placed to take advantage of this industry growth.

To meet its capital augmentation plan, working capital and listing purpose, GIC is coming out with a maiden IPO of 124700000 equity share of Rs. 5 each via book-building route with a price band of Rs. 855 – Rs. 912 per share to mobilize Rs. 10661.90 crore to Rs. 11372.60 crore (based on lower and upper price bands). Minimum application is to be made for 16 shares and in multiples thereon, thereafter. GIC is offering Rs. 45 per share cash discount to retail and eligible employees. The issue opens for subscription on 11.10.17 and will close on 13.10.17. The issue consists of fresh equity issue of 17200000 equity shares and an offer for sale of 107500000 equity shares of Rs. 5 each. The Offer includes an Employee Reservation Portion for Eligible Employees aggregating up to Rs. 116,800,000. Post allotment; shares will be listed on BSE and NSE. BRLMs to this issue are Citigroup Global Markets India Pvt. Ltd., Axis Capital Ltd., Deutsche Equities India Pvt. Ltd. HSBC Securities & Capital Markets (India) Pvt. Ltd., Kotak Mahindra Capital Co. Ltd. Karvy Computershare Pvt. Ltd. is the registrar to the issue.

Despite the mega issue, it is not going to have anchor bidding. Issue constitutes 14.22% of fully diluted post issue paid up capital of the corporation. Corporation has raised equity at par from 1972 to 1975 and has also issued bonus shares in the ratio of 1 for 1 in December 1982, 1 for 2 in January 1986, 2 for 3 in July 1990, 1 for 1 in February 1994 and 1 for 1 in June 2005. Post Issue Corporation’s current paid up equity capital of Rs. 430 crore will stand enhanced to Rs. 438.60 crore.

On consolidated basis, GIC has posted an average EPS of Rs. 34.81 and average RoNW of 16.61% for last three fiscals. The issue is priced at a P/BV of 3.89 and at a P/E of around 31.19. If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is around P/E of 32. Thus the issue appears fully priced. It has no listed peer to compare with.

On BRLM’s front, 5 merchant bankers associated with the offer have handled 45 public offers in the past three years, out of which 12 offers closed below the offer price on listing date.

Conclusion: GIC IPO is the first mover in Re-insurance segment, hence going forward, it will create fancy, but considering the fate of recent insurance sector IPO’s performance post listing and the mega size of this fully priced offer with wider chances of allotment, immediate rewards are unlikely. Hence cash surplus investors may consider a moderate investment for long term.

The original review appears on and is penned by Dilip Davda. It is available here.

Reblog: IPO Review – Indian Energy Exchange Ltd.

Indian Energy Exchange Ltd. (IEX) is the largest exchange for the trading of a range of electricity products in India, in terms of traded contract volumes in the financial year 2017 according to the Central Electricity Regulatory Commission (the “CERC”). Electricity products traded over its electronic trading platform comprise (i) electricity contracts in blocks of 15 minutes in the day-ahead-market (the “DAM”), (ii) electricity contracts for fixed terms in the future, such as intra-day contracts, day ahead contingency contracts and contracts up to 11 days ahead, known as the term-ahead-market (the “TAM”) and (iii) renewable energy certificates (“RECs”). IEX has commenced the trading of energy saving certificates (“ESCerts”) on Exchange on September 26, 2017. It is one of two exchanges in India that offer an electronic platform for the trading of electricity products and have a substantial majority market share among the power exchanges in India. The DAM constitutes the substantial majority of the energy contracts that are traded on IEX. In the financial years 2016 and 2017, it commanded a 99.6% and 99.4% market share, respectively, of electricity contracts in the DAM, in terms of volume, according to the CERC. According to the CERC, in the financial years 2016 and 2017, 93.7% and 94.8% of the traded contract volumes of electricity contracts in the DAM, TAM and RECs combined, were conducted over it.

The Indian power market, in terms of electricity generated, consisted of 89.7% of long-term and medium terms electricity contracts (contracts for periods of one year or over) and 10.3% of short-term electricity market (contracts for periods of under one year) for the financial year 2017, according to the CERC. The short-term electricity market includes contracts through licensed traders, direct bilateral contracts, deviation settlement mechanism (“DSM”) and contracts traded over power exchanges. The share of electricity contracts traded over power exchanges has grown from 23.8% to 34.5% of the short-term market between the financial year 2013 and the financial year 2017, according to the CERC. Further, according to CRIS, the short-term electricity market in India is expected to grow to 21.1% of electricity generated in India by the financial year 2022, of which 43.0% is expected to be traded over power exchanges.

Trading in the DAM and TAM product categories through IEX provides participants with a means to meet their power requirements and manage, among other things, availability and price of electricity. It primarily brings together sellers of power, such as independent power producers, captive power plants, distribution companies and Government owned power generation companies, and buyers of power, such as distribution companies and industrial, commercial and institutional power consumers, and provides them with a transparent, neutral and automated platform for trading of electricity. Trading on IEX is done by its members on their own behalf and on behalf of their clients, who are together known as participants on Exchange. Trades with respect to electricity contracts traded in the DAM and TAM are physically settled, meaning that settlement is made through the physical delivery of electricity itself. IEX does not own or trade electricity products for on its own account.

As of August 31, 2017, IEX had over 5,900 participants registered on its Exchange of which over 3,200 participants were active. Over 4,300 registered participants were eligible to trade electricity contracts and over 4,000 registered participants were eligible to trade RECs, as of August 31, 2017. Its participants registered to trade electricity contracts are located across 29 states and five union territories in India and include 50 distribution companies, over 400 electricity generators, and over 3,900 open access consumers. As on the same date, IEX included over 1,000 renewable energy generators and over 2,900 industry and corporate customers. In the financial year 2017, participants traded and cleared 4.62 million RECs on Exchange. Only 3.6% of power generation capacity is traded on this exchange against 30 to 70% trades on global power exchanges.

For providing exit route and listing gains, IEX is coming out with a maiden IPO by way of offer for sale of 6065009 equity shares of Rs. 10 each via book building route with a price band of Rs. 1645-1650 to mobilize Rs. 997.69 to Rs. 1000.73 crore (based on lower and upper price bands). The issue opens for subscription on 09.10.17 and will close on 11.10.17.Minimum application is to be made for 9 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. BRLMs to this offer are Axis Capital Ltd., Kotak Mahindra Capital Co. Ltd., and IIFL Holdings Ltd. Karvy Computershare Pvt. Ltd. is the registrar to the issue. Issue constitutes 20% of the post issue paid-up capital of the company. This being a secondary offer, the company’s paid-up capital remains same at Rs. 30.33 crore post IPO. Its entire equity is issued at par so far. The average cost of selling shareholders ranges from Rs. 10 to Rs. 709.23.

On the performance front, IEX has posted total revenue/net profits of Rs. 173.99 cr. / Rs. 91.95 cr. (FY14), Rs. 176.38 cr. / Rs. 90.02 cr. (FY15), Rs. 200.14 cr. / Rs. 100.34 cr. (FY16) and Rs. 237.42 cr. / Rs. 113.57 cr. (FY17). For Q1 of the current fiscal, it has reported a net profit of Rs. 30.63 cr. on total revenue of Rs. 61.66 cr. It has posted an average EPS of Rs.34.84 and average RoNW of 39.25 for last three fiscals. The issue is priced at a P/BV of 16 plus. If we annualize latest earnings and attribute it on post issue equity then asking price is at a P/E of 40 plus. It has no listed peers to compare with. Though pricing of the IPO raises concern, its track record and bright prospects leave some room for new investors. IEX’s revenue posted CAGR of 14.5% for last five fiscals. It’s PAT margins are near 49% for all these years.

On BRLM’s front, three merchant bankers associated with the offer have handled 44 public issues in the past three years out of which 12 issues closed below the issue price as on listing date.

Conclusion: Higher spending for power infra augurs well for this company. IEX will enjoy the first mover advantage and generate more fancy post listings. Investors may consider an investment for short to long term. (Subscribe).

The original review appeared on and is penned by Dilip Davda. It is available here.