Reblog: IPO Review – Aavas Financiers Ltd.


Aavas Financiers is entering the primary market on Tuesday 25th September 2018, to raise up to Rs. 400 crore via fresh issue of equity shares of Rs. 10 each and an offer for sale (OFS) of upto 1.62 crore equity shares by 4 promoter group entities and 2 top management personnel, both in the price band of Rs. 818 to Rs. 821 per share. Representing 27.93% of the post issue paid-up share capital, total issue size is Rs.  1,734 crore at the upper end of the price band, of which, OFS accounts for 77%. Issue closes on Thursday 27th September and listing is likely on 8th October.

Company Overview:

Aavas Financiers, established by listed NBFC AU Small Finance Bank (formerly AU Financiers) in March 2012, as AU Housing Finance, is a Jaipur, Rajasthan head-quartered affordable housing finance company, providing home loans of Rs. 8 lakh average ticket size to 60,000 customers, through its 166 branches in tier 2 to tier 6 towns across 8 Indian states, with gross loan book of Rs. 4,356 crore (30-6-18).

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Reblog: IPO Review – Garden Reach Shipbuilders and Engineers


Garden Reach Shipbuilders and Engineers is entering the primary market on Monday 24th September 2018, with an offer for sale (OFS) of up to 2.92 crore equity shares of Rs.10 each by the Government of India (GoI), in the price band of Rs. 115 to Rs. 118 per share, with a discount of Rs. 5 per share for retail category. Representing 25.50% of the post issue paid-up share capital, total issue size is Rs. 340 crore at the upper end of the price band. Issue closes on Wednesday 26thSeptember and listing is likely on 5th October.

Company Overview:

Garden Reach Shipbuilders and Engineers is a Mini-Ratna Category 1 company under the Ministry of Defence, manufacturing warships for Indian Navy and Indian Cost Guard (90%+ revenue derived from them) under its ship building division. It also has an engineering division, accounting for less than 10% of revenues, manufacturing deck machinery for ships, pre-fabricated steel bridges and marine pumps. With 3 manufacturing facilities in Kolkata, company’s order book position (31-7-18) of Rs. 20,314 crore is very healthy, as it includes order for 3 ships for the Indian Navy, aggregating Rs. 19,300 crore, to be delivered from FY24 onwards. This will contribute to revenues meaningfully from FY21 onwards, as company is yet to commence work on these orders. Till then financial performance may be subdued as revenue peaks in the middle of the typical contract duration of 5-6 years.

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Reblog: IRCON International IPO review


•    IRCON is under Railway Ministry.
•    It enjoys MINI RATNA status.
•    It has planned relisting after a gap of 7 years.
•    Issue is attractively priced with a discount of Rs. 10 per share for Retail investors.
•    It has order on hand worth Rs. 22406 crore.

ABOUT COMPANY:

IRCON International Ltd. (IRCON) is an integrated Indian engineering and construction company, specialising in major infrastructure projects, including, railways, highways, bridges, flyovers, tunnels, aircraft maintenance hangars, runways, EHV sub-stations, electrical and mechanical works, commercial and residential properties, development of industrial areas, and other infrastructure activities. We provide EPC services on a fixed-sum turnkey basis as well as on an item-rate basis for various infrastructure projects. IRCON also executes on build, operate and transfer mode in various projects in order to meet the requirements of its bids. In 2016, the company ranked number 248 in the list of the top 250 international contractors by Engineering News Record (ENR) of the United States. IRCON is headquartered in Saket, New Delhi and has an overseas office in Malaysia. Additionally, have 26 project offices in India and abroad (including in Sri Lanka, Bangladesh, South Africa and Algeria) and five regional offices to support and manage business operations. IRCON enjoys “Mini Ratna” status.

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Reblog: IPO Review – CreditAccess Grameen


IPO Snapshot:

CreditAccess Grameen Limited is entering the primary market on Wednesday, August 8, 2018, to raise upto Rs. 630 crore via fresh issue of equity shares of Rs. 10 each and an offer for sale (OFS) of upto 1.19 crore equity shares by promoter, both in the price band of Rs. 418 to Rs. 422 per share. Representing 18.70% of the post issue paid-up share capital, total issue size is Rs. 1,131 crore at the upper end of the price band, of which 44% is the OFS portion. The issue closes on Friday, August 10, 2018 and listing is likely on 23rd August.

Company Overview:

CreditAccess Grameen is India’s 3rd largest micro finance institution (MFI) providing unsecured loans to women with annual household income upto Rs.1.6 lakh (urban area) and Rs. 1 lakh (rural area), of average ticket size of Rs. 20,000. With asset under management (AUM) of Rs. 4,975 crore (31-3-18) and a deep rural focus (81% customers in rural), 86% of loans provided is for income generating activities, 10% for home improvement and balance for emergency and family welfare. Despite widespread network of 516 branches across 132 districts in 9 Indian States and Union territory, company’s AUM is concentrated in Karnataka (58% of total) and Maharashtra (27%). While other MFIs have converted to banks (Bandhan, Equitas, Ujjivan, Bharat Financial on the verge of merger with Indusind), CreditAccess does not plan to tap the banking route and is comfortable being a standalone MFI.

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Reblog: IPO Analysis: HDFC Asset Management Company (AMC) Limited


Verdict: A ‘no-brainer’ Buy

IPO Snapshot:

HDFC Asset Management Company (AMC) Limited is entering the primary market on Wednesday 25th July 2018, with an offer for sale (OFS) of up to 2.55 crore equity shares of Rs.5 each, by both the promoters, HDFC (34% of OFS) and UK’s Standard Life (66% of OFS), in the price band of Rs. 1,095 to Rs. 1,100 per share. Representing 12.01% of the post issue paid-up share capital, total issue size is Rs. 2,800 crore at the upper end of the price band. The issue closes on Friday 27th July and listing is likely on 6th August, which will be the 5th listing from HDFC stable.

Company Overview:

HDFC AMC, 56.97% subsidiary of HDFC Ltd, with foreign JV partner UK’s Standard Life owning 37.98% stake, is India’s second largest AMC (behind ICICI Prudential) with asset under management (AUMs) of Rs.2.91 lakh crore (31-3-18) and 13.7% market share. Company is the largest AMC with equity oriented funds (at 51.3% of AUM vis-à-vis industry average of 43.2%), which also helps it become the most profitable AMC in India, having earned net profit of Rs. 722 crore in FY18 or 18.1% market share of the industry PAT, due to higher fees earned in equity as against debt product. Thus, with only 13.7% market share in total AUM, 16.8% market share in actively managed equity-oriented AUM help the company garner 18.1% market share in net profits of the industry, comprising of 42 players. Besides high profitability, company also enjoys benefit of retailisation of portfolio, with 62% AUM coming from retail investors, unlike industry average of ~50%, again highest market share in retail AUM of 15.7%. Systematic investment plan (SIP) products, with average ticket size of Rs. 3,800, also provide high revenue visibility, as 77% of company’s SIPs are signed up for 5 years.

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Reblog: IPO Review – TCNS Clothing


Verdict: The Cool and Nice Stock

IPO Snapshot:

TCNS Clothing Co. Limited is entering the primary market on Wednesday 18th July 2018, with an offer for sale (OFS) of up to 1.57 crore equity shares of Rs.2 each by PE investor, promoters, current MD and former employees, all in the price band of Rs. 714 to Rs. 716 per share. Representing 25.63% of the post issue paid-up share capital, total issue size is Rs. 1,125 crore at the upper end of the price band. Issue closes on Friday 20th July and listing is likely on 30th July.

Company Overview:

TCNS Clothing Co. is a New Delhi head quartered branded apparel maker for ethnic women wear, operating 3 brands – W, Aurelia and Wishful, with sales mix of 57:33:8. Its 465 exclusive branded outlets (281 for W, 183 for Aurelia, 1 for Wishful) accounted for approximately 50% of FY18 topline of Rs. 838 crore. Further, products are sold through 1,469 large format stores, 1,522 multi-brand outlets and online/ e-commerce websites, which account for 28%, 11% and 10% of the topline respectively. While design operations are in-house, manufacturing is completely outsourced. The brand outlets, all on long term leases, are either company operated or franchised out. Company plans to open 75-80 new stores each year, to strengthen its brands.

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Reblog: Varroc Engineering IPO Review: Endurance Encore?


Aurangabad-based Varroc Engineering plans to launch its IPO next week and has priced the offer in the range of INR965 – 967 per share. The IPO will involve sale of 20,221,730 shares through an Offer For Sale (OFS), amounting to INR1,955.4 crore at the upper end of the price end. Investors can place orders for minimum 15 shares and in multiples thereafter. All these shares of the auto component manufacturer will be sold by existing shareholders. While the positive response to recent IPOs of RITES Limited and Fine Organic Industries indicates the positive sentiment, it is better to check the fundamentals before committing your money and Varroc Engineering IPO review is a step in this direction.

All OFS

As mentioned above, all the shares sold in the IPO will be offered by existing shareholders and thus, the company will not get anything from IPO proceeds. Among the selling shareholders are Omega TC Holdings Pte Ltd, Tata Capital Financial Services Limited and promoter Tarang Jain.

Omega TC Holdings made an investment in the company in March 2014 which has resulted in its stake going up to 12.55%.  The Singapore-based private equity firm plans to sell its entire shareholding of 16,917,130 shares. Similarly, Tata Capital Financial Services plans to sell its 1.15% equity stake or 1,552,040 shares. Tarang Jain, who currently owns 46.35% equity stake in the company, plans to offload 1,752,560 shares which will lead to his stake dropping to just above 45%.

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Reblog: Rites Ltd IPO review


Rites Limited (Rites) (erstwhile known as Rail India Technical & Economic Services Ltd.) is a wholly owned Government Company, a Miniratna (Category – I) Schedule ‘A’ Public Sector Enterprise and a leading player in the transport consultancy and engineering sector in India and the only company having diversified services and geographical reach in this field under one roof. It has an experience spanning 43 years and undertaken projects in over 55 countries including Asia, Africa, Latin America, South America and Middle East regions. Rites is the only export arm of Indian Railways for providing rolling stock overseas (other than Thailand, Malaysia and Indonesia). The company is a multidisciplinary engineering and consultancy organization providing a diversified and comprehensive array of services from concept to commissioning in all facets of transport infrastructure and related technologies.

Rites was incorporated by the Ministry of Railways, Government of India (“MoR”) and have the benefit of being associated with the Indian Railways, which is the fourth longest rail network in the world. It has developed expertise in (1) Design, engineering and consultancy services in transport infrastructure sector with focus on railways, urban transport, roads and highways, ports, inland waterways, airports and ropeways; (2) Leasing, export, maintenance and rehabilitation of locomotives and rolling stock, (3) Undertaking turnkey projects on engineering, procurement and construction basis for railway line, track doubling, 3rd line, railway electrification, up gradation works for railway transport systems and workshops, railway stations, and construction of institutional/ residential/ commercial buildings, both with or without equity participation; and (4) Wagon manufacturing, renewable energy generation and power procurement for Indian Railways through our collaborations by way of joint venture arrangements, subsidiaries or consortium arrangements.

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Reblog: Fine Organic IPO review


Fine Organic Industries Ltd. (FOIL) is the largest manufacturer of oleochemical-based additives in India and a strong player globally in this industry. It produces a wide range of specialty plant derived oleochemical-based additives used in food, plastic, cosmetics, paint, ink, coatings and other specialty application in various industries. As at March 31, 2018, FIL had a range of 387 different products sold under the ‘Fine Organics’ brand. It is the first company to introduce slip additives in India and is the largest producer of slip additives in the world. As on 31.03.18 it has 631 direct customers (i.e., end-users of products) and 127 distributors from 69 countries. Its customer list comprises of multinational, regional and local players manufacturing consumer products and petrochemical companies and polymer producers globally. FOIL’s plastics additives and specialty additives are also used in the packaging of foods and other fast moving consumer goods.

The company manufactures additives from base oleochemicals is a highly specialised and fully atomized process. Hence, many of these additives are specialty products, and this industry enjoys premium margins with only a few players dominating the industry globally. The company has three production facilities in Maharashtra -one in Ambernath, one in Badlapur and one in Dombivli.  As at March 31, 2017, these three facilities have a combined installed capacity of approximately 64,300 tonnes per annum.  FOIL is in the process of setting up an additional production facility in Ambernath with a planned installed capacity of 32,000 tonnes per annum and expects it to commence operations in the fourth quarter of Fiscal 2019. In addition, it is planning to set up a new production facility in Leipzig, Germany with a planned initial installed capacity of 10,000 tonnes per annum and expects to commence operations in the third quarter of Fiscal 2020. This facility will be owned and operated by a joint venture company with 50% equity interest by FOIL.

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Reblog: Lemon Tree Hotels Ltd. IPO Review


Lemon Tree Hotels Ltd. (LTHL) is India’s largest hotel chain in the mid-priced hotel sector, and the third largest overall, on the basis of controlling interest in owned and leased rooms, as of June 30, 2017, according to the Horwath Report. It is the ninth largest hotel chain in India in terms of owned, leased and managed rooms, as of June 30, 2017, according to the Horwath Report. LTHL operates in the mid-priced hotel sector, consisting of the upper-midscale, midscale and economy hotel segments. Company seeks to cater to Indian middle class guests and deliver differentiated yet superior service offerings, with a value-for-money proposition. The company opened our first hotel with 49 rooms in May 2004 and as on 31.01.2018 it had 4,697 rooms in 45 hotels (including managed hotels) across 28 cities in India. On the said date it has 662992 members in loyalty programme as “Lemon Tree Smiles” and the number is continuously rising.

LTHL aims to be India’s largest and most preferred chain of hotels and resorts in each of the upper-midscale, midscale and economy hotel segments. Due to the dynamic and evolving nature of Indian guests’ expectations and based on its market research, company has created three brands in order to address these three hotel segments: (1) ‘‘Lemon Tree Premier’ which is targeted primarily at the upper-midscale hotel segment catering to business and leisure guests who seek to use hotels at strategic locations and are willing to pay for premium service and hotel properties; (2) “Lemon Tree Hotels” which is targeted primarily at the midscale hotel segment catering to business and leisure guests and offers a comfortable, cost-effective and convenient experience; and (3) “Red Fox by Lemon Tree Hotels” which is targeted primarily at the economy hotel segment.

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