National Highway Authorities of India Tax Free Bond and Stock Market Investment

Introduction

National Highways Authority of India (NHAI), has go into the debt capital market on 15.01.2014, with an topic of Tax Free Bonds of face worth of Rs. 1,000 apiece, in the nature of Secured Redeemable Non Convertible Debentures.

Issue Details

Concluding on 05.02.2014, issue has a size of Rs. 1,000 crore, with an alternative in companies hand to retain an over-subscription up to Rs. 2,698 crore, taking total fund-raising to Rs. 3,698 crore. Minimum application amount is Rs. 5,000, and in multiples of Rs, 1,000 thereafter. Allocation will be on first come first serve basis.

Rating

AAA by CRISIL, CARE and BRICKWORK, indicating uppermost degree of safety regarding appropriate servicing of financial compulsion

Issue Listing

National Stock Exchange and Bombay Stock Exchange, Bonds are to be concern mutually in physical and dematerialized form, therefore a demat account is not essential to purchase these bonds. Trading in the bonds will unavoidably be in the demat form.

Proffer of the Issue

The current bonds are being offered fewer than two series with features as under:

Particulars

Series I

Series II

Tenor

10 Years

15 Years

Frequency of Interest Payment

Annual

Annual

Coupon Rate (%) Per Ann-um

# For Retail Investors *

8.52% P.A

8.75% P.A

# Other Than Retail Investors

8.27% P.A

8.50% P.A

Put/Call Option

Null

Null

*Retail investor defined as resident individual, HUF and NRIs upto limit of Rs. 10 lakh

Allocation ratio: 40 percent for retail investors, 20 percent for High Net worth Individuals, 30 percent for corporate, 10 percent for Qualified Institutional Buyer

Rate of Return

National Highway Authorities of India’s 15 year (Series 2) bonds carrying 8.75 percent per annum coupon for retail investors, are comparable to 12.66 percent pre-tax return earned on other fixed income instrument, presumptuous the highest tax bracket of 30.9 percent for retail individuals. These rates are 10 basis points (0.10%) higher than Indian Railway Finance Corporations issue currently open for subscription carrying same AAA credit rating.

Seeing as tax free bonds score over company Non Convertible Debentures due to longer duration and higher tax-efficient returns, no point comparing this issue with Non Convertible Debentures of ECL Finance, Manappuram, Muthoot and SREI Infra for investors in the highest tax chunk of 30.90 percent. Those in the lower tax bracket of (0%, 10% or 20%) can consider the Non Convertible Debentures only if they have a lower time horizon for three or five years.

Recommendation

National Highway Authorities of India bond issue is not the best-looking, due to comparatively lower tenure of fifteen years. Although coupon rate is higher than IRFCL, inform to wait for other tax free bond issues with 20 year bonds, which are likely to open for subscription over the next duo of months.

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Shriram Transport Finance – NCD Issue

Introduction

Shriram Transport Finance, India’s largest commercial vehicle financing company, is incoming to the debt capital market with a public issue of secured Non-Convertible debentures (NCD) of face value Rs. 1,000 each, on October 07th 2013, to increase of Rs. 250 crore, with an opportunity to keep another Rs. 250 crore, captivating the entire fund raised to Rs. 500 crore.

Issue Allocation

  • 50% reserved for retail investors,
  • 30% for HNIs
  • 10% each for institutions and non-institutions

Issue Details

21st October 2013 (with option to close / extend the issue)

Details

National Stock Exchange and Bombay Stock Exchange, one Non Convertible Debentures comprising one trading lot.

Application Amount

Lowest Rs.  10,000/- and in multiples of Rs. 1,000/- afterward

Rating

‘AA/Stable’ by CRISIL, ‘AA+’ by CARE, signifying high degree of security for timely interest and principal payment.

Company Background

Shriram Transport Finance, a deposit taking, Non Banking Financial Company with Assets Under Management of Rs. 52,717 crore as of March 31, 2013, is the only organized player in the used Curriculum Vita financing market, joined with a healthy balance sheet with capital adequacy ratio (CAR) of 20.58 percent as of March 31st 2013, against RBI’s requirement of 15 percent. Company’s total income for FY13 was Rs. 7,014 crore (up 13% YoY), with net profit of Rs. 1,463 crore (up 12% YoY). Its net Non Performing Assets are just 0.8% of net loan assets in FY13, on net worth of Rs. 7,338 crore. The funds raised via the Non Convertible Debentures issue will be used for financing behavior, repaying accessible loans, business operations and working capital condition. Therefore, the company is fundamentally hummed with a strong balance sheet.

Proffer of the issue

Three different tenures are being offers Three years, Five years and Seven years:

 

Particulars

Series I

Series II

Series III

Series IV

Series V

Series VI

Term

3 Years

5 Years

7 Years

3 Years

5 Years

7 Years

Interest Payment

Annual

Annual

Annual

NA

NA

NA

Coupon Rate {% P.A}

# Individual Investor

11.25%

11.50%

11.75%

NA

NA

NA

# Non-Individual Investor

10.75%

10.75%

10.75%

NA

NA

NA

Effective Yield{% P.A}

# Individual Investor

11.25%

11.50%

11.75%

11.25%

11.50%

11.75%

# Non-Individual Investor

10.75%

10.75%

10.75%

10.75%

10.75%

10.75%

Put Call Option

None

None

None

None

None

None

Redemption Amount {As Per NCD}

# Individual Investor

Face Value

+Accrued Interest

Face Value

+Accrued Interest

Face Value

+Accrued Interest

Rs. 1,377.30

Rs. 1,723.87

Rs. 2,177.70

# Non-Individual Investor

Rs. 1,358.79

Rs. 1,666.63

Rs. 2,044.79

Rate of Return

The highest rate of interest / effective yield is being offered to individual investors under Series III and Series VI option for 7 years i.e.11.75% per annum.

Non Convertible Debentures offer dual advantage of higher coupon rates and liquidity (individual listed), making it a good-looking investment option for retail investors, vis-à-vis bank Fixed Deposit. On a post-tax basis, Series III and VI’s 11.75% yield offers net return of 8.12% pa to those falling in the highest tax group. Lying on the other hand, IIFCL tax free bonds (currently open for subscription) are offering 8.75 percent tax free return for twenty years, which score over the Non Convertible Debentures hands-down due to higher coupon and longer term.

Recommendation

Present Non Convertible Debentures issue from the Shriram group is an attractive fixed income gadget for each, but in comparison with tax free bonds, one must choose the last.

For Information on NCD Issues and NFO Updates visit www.profitkrishna.com

IIFCL TAX FREE BONDS

Introduction

India Infrastructure Finance Company Limited is a festive New Delhi head-quartered, providing long term financial assistance to infra projects and wholly owned by the Government of India has entered the debt capital market first time in this financial year  on October 2013 with a public issue of secured redeemable Non-Convertible Debentures (NCD) of face price Rs. 1,000 each.

Issue Details

India Infrastructure Finance Company Limited issue opened on 03 October 2013 and will close on 31st October’2013, and issue size were Rs. 5,000 Crores with an option in company’s hand to retain an over subscription up to Rs.2,500 crore. Least application is Rs. 5,000 and in multiples of Rs. 1,000 subsequent to that, while allotment will be done on first arrive first serve up basis. Being tax-free, the interest does not attract tax deductions nor do the bonds attract wealth tax. In addition, the bonds do not have any confine period.

Rating

IIFCL Bonds, rated AAA via CARE, ICRA and BWR, specify highest degree of safety regarding timely servicing of financial obligations.

Listing

To be listed on Bombay Stock Exchange, are to be subject both in physical and dematerialized form, therefore a demat account is not necessary to purchase these bonds. Trading lot is one bond and must be essentially in done demat form only.

Proffer of the Issue:

The NCD issue has three investment options as proffer below:

 

Facts

Series I

Series II

Series III

Tenure

10 Years

20 Years

15 Years

Interest Payment

Annual

Annual

Annual

Coupon Rate (%) P.A

# For Retail Investors

8.26%

8.63%

8.75%

Rest Of Investors

8.01%

8.38%

8.50%

Tax-Effective Yield (%) P.A (Assuming 30.90% Tax Free)

# For Retail Investors

11.95%

12.49%

12.66%

Rest of Investors

11.59%

12.13%

12.30%

 # Retail investors defined as application up to Rs. 10 lakhs from resident individuals, Hindu Undivided Family, A Non Resident Indians and Qualified Foreign Investors being individual. 40% of the issue is reserved for retail investors.

Rate of Return

This is the 3rd tax-free bond issue this financial year after

  1. REC closed on 16th September
  2. HUDCO being to close on 14th October
  3.  IIFCL is offering 8.75 percent coupon for 20 year period, which is comparable with HUDCO’s 8.74 percent. IIFCL’s 15 year coupon of 8.63 percent is much lower than HUDCO’s 8.76 percent. On the other hand, its credit rating of AAA is a notch better than HUDCO’s AA+. But that should not be matter, the subject being made by a public sector undertaking with a track record of successful bond issues.

 The Twenty year (Series III) bonds, carrying the highest coupon rate, are similar to a 12.66 percent pre-tax return earned on other fixed income gadget, assuming the highest tax category of 30.9 percent for retail individuals. This is very good-looking rate as currently no bank is offering double digit interest rates on long term deposits.

Beforehand issued (in 2012 and 2013) twenty year HUDCO bonds (maturing in 2033) are trading on Bombay Stock Exchange with yields of 7.80 percent-8.09percent. Therefore, current rates are significantly higher.

Recommendation

The present Non-Convertible Debentures issue carries attractive returns transversely maturities, with yields of 11.50% to 11.75% for five years being the highest for individuals. Alternatively, the SREI Infrastructure Finance is not the best placed in the sector witnessing tremendous stress and uncertainty. Comparison with SREI Infrastructure Finance preceding issue made earlier this year cannot be made as the liquidity is incredibly meager on BSE, with scarcely a duo of trades taking place in a calendar day and yields nearing 17% for the five year instrument.

Conclusion

Bearing in mind the tax free income to be earned from the bonds, AAA rating, twenty years tenor with attractive coupon rate, coupled with likely falling interest regime situation ahead, Individuals looking for fixed asset allocation can subscribe to the series III bonds with tenure of twenty years

For More Detail on Tax Free Bonds Visit www.profitkrishna.com

Housing and Urban Development Corporation

HUDCo Tax Free BondsIntroduction

Housing and Urban Development Corporation (HUDCO) is a government-owned corporation in India, founded in 1970 with head quarters in New Delhi, is incoming to the debt capital market from 17 September’2013, through an issue of Tax Free Bonds of face value of Rs.1,000 each, in the temperament of Secured Redeemable Non Convertible Debentures.

Issue Details

Issue, closes on 14 October’2013, has a size of Rs.750 crore, with a choice in HUDCO’s hand to retain an oversubscription up to the projection limit of Rs. 4,809.20 crore. Minimum appliance is Rs. 5,000 and in multiples of Rs. 1,000 after that, at the same time allotment will be done on first come first dole out origin. Life form tax-free, the interest does not draw Tax Deduction at Source {TDS} nor do the bonds attract wealth tax. In addition, the bonds do not have any lock-in period.

Rating

Hudco Bonds were rated AA+ by CARE and India Ratings, signifying high degree of safety regarding timely servicing of financial obligations, are proposed to be listed on Bombay Stock Exchange.

Listing

Hudco Bonds were proposed to be listed on Bombay Stock Exchange, are to be subject both in physical and dematerialized form, therefore a demat account is not necessary to buy these bonds. Trading lot is one bond and must be essentially in done demat form only.

Proffer of the Issue

Bonds have3 different series under which they are being offered:

Particulars

Series I

Series II

Series III

Tenure

10 Years

15 Years

20 Years

Interest Payment

Annual

Annual

Annual

Coupon Rate (%) P.A

For Retail Investors #

8.39%

8.76%

8.74%

Other than Retail Investors

8.14%

8.51%

8.49%

Tax-Effective Yield (%) P.A (Assuming 30.90% Tax Free)

For Retail Investors #

12.14%

12.68%

12.65%

Other than Retail Investors

11.78%

12.32%

12.29%

# Retail investors defined as application up to Rs. 10 lakh from resident individuals, Hindu Undivided Family, Non Resident Indians and Qualified Foreign Investors being individual. 40 percent of the issue is reserved for retail investors, 30% for High Net worth Individuals, 20% for corporate and balance 10% for QIB.

Company Background

A mini-ratna, HUDCO is lends to housing and urban infrastructure projects across the country. In FY13, it posted top line of Rs. 2,900 crore and PAT of Rs. 700 crore, on net-worth of Rs. 6,500 crore. With low net Non Performing Assets of 0.83% as of 31 March’2013, it has a contented capital adequacy ratio of 23.24 percent. Hudco had sanctioned project worth Rs. 23,000 crore and pay out Rs. 6,000 crore in FY13 and targets to pay out Rs. 7,000 crore for the duration of FY14. For Q1FY14, it reported revenue of Rs. 617 crore plus PAT of Rs. 102 crore.

Rate of Return

This is the second tax-free bond issue this fiscal after REC (which closes on 16 September’2013), HUDCO is offering slightly higher coupon vis-a-vis REC. However, its credit rating of AA+ is a nick lower than REC’s AAA. On the other hand, that should not be prevention, the issue being a public sector undertaking with a track record of victorious bond issues.

The Fifteen year (Series II) bonds, carrying the highest coupon rate, are comparable to a 12.68 percent pre-tax return earned on other fixed income instruments, presumptuous the highest tax bracket of 30.9 percent for retail individuals. This is awfully good-looking rate as currently no bank is offering double digit interest rates on long term deposits. In reality, the 20 year Series III issue also carries a very attractive coupon of 8.74 percent which render to12.65 percent tax effective yield.

Before issued (in early 2013) Fifteen year HUDCO bonds are trading on Bombay Stock Exchange with yields of 7.61%-8.05%. Consequently, current rates are significantly higher.

The present issue is likely to witness overpowering response, comparable to REC which closes early on 16 September’2013, a week prior to its scheduled closure of 23 September’2013.

Recommendation

Present HUDCO bonds are very attractive and warrant subscription for debt investors. Both Series II and Series III are suggested, with prejudice towards the latter owing to its longer tenure.

Because this is the first public issue of tax-free bonds by the company this fiscal (having hoist about Rs. 2,400 crore during FY13), it hopes to exercise the green-shoe option and exhaust the entire shelf limit, given the very good-looking ticket rates. Issue mortal on first-cum-first-serve origin, retail investors must grab that application form at the initial.

Rural Electrification Corporation

Introduction

 Rural Electrification Corporation has entered the debt capital market, with an issue of Tax Free Bonds of face value of Rs. 1,000 each, in the nature of Secured usable Non Convertible Debentures {NCD’s}.

Issue Details

Issue Opens from 30th August 2013 and Issue, closing on 23rd September, has a size of Rs.1, 000 crore, with an option to retain an over subscription of Rs.2,500 crore, aggregating the issue size to Rs. 3,500. Minimum application is Rs. 5,000 and in multiples of Rs. 1,000 thereafter, while Allotment will be done on first come first serve basis. Interest rates on these bonds are fully exempt from Income Tax and TDS is not applicable. Wealth Tax is not levied on investment in bonds.

Rating

AAA/ Stable by CRISIL / IND AAA by IRRPL and AAA by CARE and ICRA.

Listing

Bonds, planned to be listed on Bombay Stock Exchange, are to be issued both in physical and dematerialized form, hence a demat account is not necessary to buy these bonds. Also, the bonds do not have any lock-in period.

Proffer of the Issue

Bonds have three different series under which they are being offered

Particulars Series 1 Series 2 Series 3
Face Value per Bond Rs 1,000
Tenor – Years 10 15 20
Minimum Application Rs 5,000 (in multiples of Rs 1,000 thereafter)
Coupon Rate % pa (Cat I, II and III) 8.01 8.46 8.37
Additional Coupon Rate % pa (Cat IV) 0.25 0.25 0.25
Total Coupon Rate % pa (Cat IV) 8.26 8.71 8.62
Effective yield % pa (Cat I, II and III) 8.01 8.46 8.37
Effective yield % pa (Cat IV) 8.26 8.71 8.62
Frequency of Interest payment Annual
Issuance and Trading Physical and Demat mode (trading in demat mode only)
Interest on application % pa As per coupon rate applicable to investor category
Interest on refund % pa 5.00
Redemption After 10 years from Allotment After 15 years from Allotment After 20 years from Allotment
Redemption Amount Repayment of the face value with interest

Issue Structure:

Investor Category I – Institutions II – Corparates III – HNI (more than 10 lacs) IV – Retail (upto and including 10 lacs)
Issue allocation 20% 20% 20% 40%
*Basis of allotment: on first come first serve basis

Retail investors defined as application upto Rs. 10 lakh from resident individuals, HUF, NRIs and QFIs being individual. 40% of the issue is reserved for retail category with balance split equally among the other three categories of institutions, corporates and HNIs (over Rs. 10 lakh) respectively.

Company Background

A Navratna central PSU, REC provides interest bearing loans to state electricity boards (SEBs), power utilities and private sector for all segments of power infrastructure. In FY13, it posted topline of Rs. 13,526 crore and PAT of Rs. 3,833 crore, on networth of Rs. 17,529 crore. Earning NIMs of 4.70% in FY13, its loan book totaled Rs. 1.27 lakh crore, up 26% YoY. In Q1FY14, the company continued with its robust financial performance with revenue of Rs. 3,982 crore and PAT of Rs. 1,154 crore. Its current market cap stands at over Rs. 16,600 crore. Thus, the company is financially sound and secure.

Advice

The 15 year (Series 2) bonds, carrying the highest coupon rate, are analogous to a 12.60 percent pre-tax return is paid on additional fixed income gadgets, presumptuous the peak tax bracket of 31% for retail individuals. This is very attractive rate as currently no bank is offering double digit interest rates on long term deposits.

Earlier fifteen year bond issues made by Rural Electrification Corporation Limited in the last 12 months are currently trading with yields of 6-7.5% on NSE, albeit with extremely thin volumes, which make it incomparable with the current offering. We find the 8.71 percent rate very attractive which definitely deserves a look and an application form.

Kushal Tradelink Limited


Kushal Tradelink was Ahmedabad based company integrated in 2000; The Company claims to encompass a client base of over six hundred customers, making it a major player within the Paper and Paper Products market within Gujarat. Kushal Tradelink reportedly maneuver as an intermediary in the paper product supply chain whereby it purchases materials such as kraft paper, duplex board, etc. commencing individual paper mills and supplies the same to customers in the packaging section. According to the present document, KTL has 3 godowns located in different regions of Ahmedabad, Gujrat.

In addition stocking facilities, these godowns allegedly have certain processing facilities such as sheet-cutting, rewinding, bailing, reel to sheet making etc. Kushal Tradelink is now intends to increase its grip in Gujarat besides entering into other states. It put forward to set up a new office facility at Ambawadi in Gujarat as a part of its development plans. The Kushal Tradelink Limited group consists of Kushal Infrastructure and Ashapura Paper Mills.

The Promoters of Kushal Tradelink are Mr. Sandeep Agarwal and Mr. Mahendra Agarwal.

Objects of the Issue:

  • Purchase and set up Corporate House at a cost of Rs 10.01 cr which includes land cost Rs 6.03 cr.
  • Long-term working capital requirement of Rs. 15.75 Cr
  • General corporate purposes of Rs. 1.09 Cr
  • To Meet the Issue Expenses

ISSUE DEAILS:

  • Issue Open: 14 August 2013 – 21 August 2013
  • Issue Type: Fixed Price Issue IPO
  • Issue Size: 7,928,000 Equity Shares of Rs. 10
  • Issue Size: Rs. 27.75 Crore
  • Face Value: Rs. 10 Per Equity Share
  • Issue Price: Rs. 35 Per Equity Share
  • Market Lot: 4000 Shares
  • Market Quantity: 4000 Shares
  • Listing At: SME platform of BSE
  • Lead Managers: Aryaman Financial
  • Market Maker: Aryaman Broking
  • Registrar: Bigshare Services

COMPANY FINACIALS:

Kushal Tradelink Limited posted average Earnings per Share of Rs. 1.77 for last 3 fiscals. For the year 2012-13 Kushal Tradelink ltd. earned net profit of Rs. 4.09 crore on a turnover of Rs. 246.10 crore and if we trait this earnings on expanded equity of Rs. 23.73 crore post this issue it amounts to an Earnings Per Share of Rs. 1.72 and on this basis the asking price is at a P/E of 20+ and on the Net Asset Value of Rs. 13.23 as on 31.3.13, it is at a P/BV of 2.65 and thus is an classy offer. Its trading business has thin fringe which may lessen going forward as the direct supply from paper manufacturing will give strong competition. In April 2009 it issued bonus shares in the ratio of 11 for 1 and in August 2011 in the ratio of 8 for 10 and thus its equity rose to Rs. 15.80 crore before IPO. This will further rise to Rs. 23.73 post issue. Visit Profit Krishna.

CONCLUSION:

The fundamentals of Kushal Tradelinks are certainly doing not exude optimism. Despite the fact that the main object of the IPO is to situate up a corporate office, they have not hitherto identified the exact property or land proposed to be acquired from the Issue proceed. Planned things of the issue for which funds are being raised have not been assessing via any bank or financial institution. There could be conflicts of interest as closely held group entities too have similar line of business and merchant banker’s front; it has poor track record and credibility in the market. Since 2010-11, it has brought seven IPOs which have poor performance track record and these reasons investors should AVOID this issue.

VKJ Infra Developers Limited IPO

Vkj Infra Developers Ltd was New Delhi based company integrated in 2012; The Company currently affianced engage in the business of Land Development, Civil Construction & trading in construction materials, primarily soils & sands.

Vkj Infra Developers Limited mainly affords civil construction, land & site development services and trading of construction materials. By the side of present they are looking for some land for future projects in Delhi, Noida, and NCR region. They are also conferring with other Construction Companies/ Developers to finalize joint venture projects with them. In addition they are doing land leveling works from the past years with ISP Construction Private Limited.

Vkj Infra Developers Individual Promoters are Mr. Manoj Kumar, Mr. Arun Kumar Chalukya and Mr. Rajesh Kumar Chauhan and the corporate promoters was M/s SSD Real Estate Developers Pvt. Ltd.

Objects of the Issue:

  • To meet the fund requirements for execution of Ongoing and Forthcoming Projects and other working capital requirements
  • To meet the funds required for general corporate purposes
  • To Meet the Issue Expenses

ISSUE DEAILS:

  • Issue Open: 12 August 2013 – 16 August 2013
  • Issue Type: Fixed Price Issue IPO
  • Issue Size: 5,100,000 Equity Shares of Rs. 10
  • Issue Size: Rs. 12.75 Crore
  • Face Value: Rs. 10 Per Equity Share
  • Issue Price: Rs. 25 Per Equity Share
  • Listing At: BSE, SME
  • Lead Managers: Inventure Merchant Banker
  • Market Maker: Anuriti Multi Broking
  • Registrar: Sharepro Services

COMPANY FINACIALS:

Vkj Infra Developers Limited Company’s performance, for last 3 fiscals it has posted an average Earnings per Share of Rs. 4.36. For the fiscal 2011-12 it has posted and Earnings per Share of Rs. 4.40 and for the eleven months period ended on 28.02.13 the company has posted Earnings per Share of Rs. 0.07 (not annualized). Vkj Infra Developers issued its equity at a fancy price on 31.3.2011 105700 shares at Rs. 100 per share, on 30.03.12 85455 shares at Rs. 500 per share and then on 16.1012 issued tolerant bonus in the ratio of 25 shares for every 1 share detained. Over and above these, it again issued 20000 equity shares at Rs. 25 per share on 18.06.13 and 7500000 shares at par on 26.06.13. At the present it wants premium from the public for the IPO procedure. Its equity that was just Rs. 0.20 crore on 31.3.2012 rose to Rs. 5.23 crore on 28.02.13 and as on 30.06.13 it stood at Rs. 12.75 crore. It will further raise to Rs. 17.85 crore posts this issue.  For eleven months ended on 28.02.13 its turnover was Rs. 2.60 crore with a net profit of Rs. 0.04 crore translating the offer price at a P/E of 1000+. Read more in detail for VKJ Infra Developers Limited IPO.

CONCLUSION:

Vkj Infra Developers Limited has already shown its true colors by diverting considerable amount to investment activities. Hence, price manipulation cannot be ruled out.

Seeing that noteworthy portion of the public category is held at par, they may mar the scrip once the lock-in is relaxed after a year.

Promoters’ credentials are far from convincing and their post-issue stake is as low as 26% in 2 years the company has had 3 auditors as the timid auditors expressed their inability to continue.

Seeing that the merchant banker’s performance, this is the fourth SME issue from their stable and considering their market game in its own parent company and the other mandates listing, one may get some rewards. But current status is not having encouraging trends and hence investors should AVOID this issue.

Silverpoint Infratech Limited Ipo

Silverpoint Infratech Ltd was west Bengal based company integrated in 1997; The Company currently affianced in the providing land development, construction services and other related services for civil & structural construction and infrastructure sector projects. The Individual promoters were Mr. Sanjay Kumar Drolia, Mr. Mohan Lal Surekha and company corporate promoters were M/s saffron Vinimay Private Limited and M/s Shivamangal Commercial Private Limited.

Silverpoint Infratech Ltd were clients includes Binani Cement Ltd, PACL India Limited, Jain Infra projects Limited, Prakash Constrowell Limited, NKC Projects Pvt. Ltd VKS Projects Ltd, Shri Mahavir Ferro Alloys Pvt. Ltd and Kivar Infra Pvt. Ltd along with others.

Objects of the Issue:

  • The objects of the Offer are to attain the benefits of listing the Equity Shares on the Stock Exchanges
  • Carry out the vending of 80, 00,000 Equity Shares by the Selling Shareholders.

ISSUE DEAILS:

  • Issue Open: 12 August 2013 – 14 August 2013
  • Issue Type: Fixed Price Issue IPO
  • Issue Size: 8,000,000 Equity Shares of Rs. 10
  • Issue Size: Rs. 12.00 Crore
  • Face Value: Rs. 10 Per Equity Share
  • Issue Price: Rs. 15 Per Equity Share
  • Listing At: BSE, SME
  • Lead Managers: Inventure Merchant Banker

COMPANY FINACIALS:

Silverpoint Infratech Limited has posted average earnings per share of Rs. 0.17 for last 3 fiscals. For the eleven months ended on 28.02.13, it has earned net profit of Rs. 0.49 crore on a turnover of Rs. 230.75 crore translating in to an Earnings per Share of Rs. 0.27. Consequently the asking price at Rs. 15 is at 55+ P/E. Between March 2005-March 2009 Silverpoint Infratech Ltd. issued 1968913 equity shares at a price of Rs. 200 on preferential basis and in July 2012 issues bonus in the ratio of 9 shares for every 1 share held. Listed fancy peers like Era Infra, Jaypee Infra etc are trading at a sprawling twelve months P/E of around 7 to 16. Click here to know more about Silverpoint Infratech Limited Ipo.

CONCLUSION:

Seeing that the merchant banker’s performance, this is the fourth Small/Medium Enterprises {SME} issue from their stable and considering their market game in its own parent company and the other mandates listing, one may get some rewards. But current status is not having hopeful trends and for this reason, investors should AVOID this offer.

Shriram Transport Finance Company NCD

About Company:

Incorporated in 1979, Shriram Transport Finance Company Limited {STFC} is engaged in the business of commercial vehicle finance, Consumer finance , Life and General Insurance, Stock Broking, chit funds and distribution of financial products like life & general insurance harvest and element of mutual funds. Shriram Transport having 528 branches and service centers throughout India. The Company providing asset financing NBFCs with Reserve Bank of India under section 45IA of the Reserve Bank of India Act ,1934.

Objects of the Issue:

  • Various financing activities including lending and investments,
  • To repay existing loans and for business operations including capital expenditure and working capital requirements.

Issue Details:

  • Issue Open: 16 July’2013 – 29 July’2013 {with option to close/extend the issue}
  • Issue Type: Fixed Price Issue NCD
  • Issue Allocation: 50 Percent reserved for Retail Investors, 30 percent for HNI and 10 percent Each for Institutions and Non-Institutions
  • Issue Size: Rs. 750.00 Crore
  • Application Amount: Minimum 10,000 and in multiples of 1,000 thereafter
  • Listing At: BSE, NSE NCD comprising one trading lot

The NCDs proposed to be issued have been rated ‘CRISIL AA/Stable’ by CRISIL and ‘CARE AA+’ by CARE, indicating high degree of safety for timely interest and principal payment.

Options:

Particulars Series I Series II Series III Series IV Series V
Interest Pay Out Annual Annual Monthly On Redemption On Redemption
Tenure 3 Years 5 Years {4+1} 5 Years 3 Years 5 Years {4+1}
Coupon Rate {% P.A}
Individual Investors 10.90% 11.15% 10.63% N.A N.A
Non-Individual Investors 9.65% 9.80% 9.40% N.A N.A
Effective Yield {% P.A}}
Individual Investor 10.90% 11.15% 10.63% 10.90% 11.15%
Non-Individual Investor 9.65% 9.80% 9.40% 9.65% 9.80%
Put/Call Option Non None None None None
Redemption Amount {Per NCD}
Individual Investor

Face Value + Accrued Interest

50% face value after 4 years, 50% face value after 5 years with accrued interest

Face Value + Accrued Interest

Rs. 1,364.33

Rs. 763.37 after 4 years, Rs. 848.48 after 5 Years

Non-Individual Investor

Rs. 1,318.67

Rs. 726.93 after 4 years, Rs. 798.17 after 5 years

The highest rate of interest is being offered to individual investors under the 4+1 year’s tenure {i.e.} Series II and Series V, at 11.15 percent per annum effective yield. Series III with 5 year tenure is offering the lowest yield of 10.63 percent.

Shriram Transport Finance, a deposit-taking NBFC with assets under management (AUM) of Rs. 52,717 crore as of March 31, 2013, is the only organized player in the pre-owned CV financing market, coupled with a healthy balance sheet with capital adequacy ratio (CAR) of 20.58 percent as of 31st March 2013, against RBI’s requirement of 15 percent. Shriram Transport Finance total income for FY13 was Rs. 7,014 crore (up 13% YoY), with net profit of Rs. 1,463 crore (up 12% YoY). Shriram Transport Finance net NPAs are just 0.8% of net loan assets in FY13, on networth of Rs. 7,338 crore. The funds raised via the NCD issue will be used for financing activities, repaying existing loans, business operations and working capital requirement. Consequently, Shriram Transport Finance is fundamentally sound with a strong balance sheet.

NCDs offer dual advantage of higher coupon rates and liquidity, as they are listed on the stock exchanges, making it an attractive investment option for retail investors, vis-à-vis other fixed income products, such as bank Fixed Deposit or debt schemes of mutual funds. Also, 11.15 percent interest rate is attractive in the current macro environment. Even on a post-tax basis, Series II and V offer net return of 7.70 percent per annum to those falling in the highest tax bracket.

Even though listed, NCDs being very thinly traded on the stock exchange, a comparison of yields with peers or previous issues would be inappropriate. Take for example, the NCDs issued in July 2012 at coupon of 10.25 percent and 10.50 percent are trading at yields of 9.40-9.50 percent. Furthermore, there are few company deposits offering yields of 15.07% for 3 years (e.g. IVRCL). Yet, risk-reward pay-off is not favorable.

Present NCD issue from the Shriram group is very attractive for retail investors as it offers high ‘fixed returns’ for a long-term duration of 5 years. The group is perceived to be very investor friendly and has a history of successful NCD issues in the past. Those looking for diversified investment options can apply in the issue (Series II or Series V), which scores over other ‘fixed income’ investment options. Click here to know more about Shriram Transport Finance Company NCD.

Shriram Transport NCD Lead Manager(s):

  • JM Financial Institutional Securities Private Ltd.
  • AK Capital Services Limited
  • HDFC Bank Limited
  • ICICI Securities Limited

Shriram Transport NCD Co-Lead Manager(s):

  • Karvy Investor Services Limited,
  • RR Investors Capital Services Private Ltd.

Shriram Transport NCD Trustee(s):

  • SMC Capitals Ltd and Trust Investment Advisors Private Limited
  • IDBI Trusteeship Services Ltd.

Shriram Transport NCD Registrar:

  • Integrated Enterprises (India) Ltd.

JUST DIAL IPO

JUST DIAL IPO:

Just Dial is an India’s No.1 Local Search Engine. It was integrated on the year 1996, as Just dial Limited. Mr.  V.S.S Mani, Managing Director and Chief Executive Officer of the Company.

Just Dial’s search services are available to users through Internet, mobile Internet, telephone and text {Short Message Service}. Just dial is a Twenty Four/Seven Free Search service on a single national number 08888888888 that receives over 130 Million Calls every year. It presents reliable information about local businesses, products and services to the users in over 2000 cities in India. They encompass more than 300 million customers using Just Dial Services.

Just dial gets its revenues chiefly from selling advertisement and through qualified leads. The company having more than 145,000 paid advertisers. They are placing advertising in 4 ways available to promote brand or advertise on Just Dial including Listing on Web, Listing on Phone Search, Listing on Mobile Search and Placing Video Ads.

Objects of the Issue:

  • Attain the benefits of listing the Equity Shares on the Stock Exchanges and
  • Bring out the sale of 17,497,458 Equity Shares by the Selling Shareholders.

ISSUE DEAILS:

  • Issue Open: May 20, 2013 – May 22, 2013
  • Issue Type: 100% Book Built Issue IPO
  • Issue Size: 17,497,458 Equity Shares of Rs. 10
  • Issue Size: Rs. 822.38 – 950.11 Crore
  • Face Value: Rs. 10 Per Equity Share
  • Issue Price: Rs. 470 – Rs. 543 Per Equity Share
  • Market Lot: 25 Shares
  • Minimum Order Quantity: 25 Shares
  • Listing At: BSE, NSE, MCX-SX
  • Grade: CRISIL is given 5/5 which Indicates Strong fundamental   compared to to other listed equity securities in India.

COMPANY FINACIALS:

Just Dial has posted 28%-47% annualized growth in terms of revenue in the last Five years. The revenues have increased from Rs. 71.6 Crores (FY2008) to Rs. 275.6 Crores (FY2012). For the Nine months ending Dec’2012, company has posted Rs. 271.6 Crores.

Company has been operating around 15% to 18% margins in the last Three years.

FINANCIALS

2008-03

2009-03

2010-03

2011-03

2012-03

9 Months Ending Dec’12

Revenues {Rs. In Millions}

716.03

918.14

1,347.63

1,876.60

2,752.15

2,716.10

Profits {Rs. In Millions} after Tax

20.89

75.41

193.25

288.25

505.81

470.80

Profit %

2.92%

8.21%

14.34%

15.36%

18.38%

17.33%

Revenue Growth % {YoY}

28%

47%

39%

47%

32%

ADVANTAGES OF IPO:

  • Crisil rated Five/Five which indicates strong fundamentals.
  • It offers 10% discount on the floor price to the retail investors. This offers safety net to the retail investors.
  • Company is debt free with negative working capital cycle.
  • Strong growth in future

DISADVANTAGES OF IPO:

  • Just Dial IPO  NAV   is only Rs. Fifty Seven (as on 31-Dec-12) whereas the issue price band is Rs. 470 to Rs. 543 (pre-discount)
  • From side to side this issue Just dial is selling the existing shareholders capital and company is not raising any capital for its own.
  • Retail subscription is only for 10% of the issue price. Due to small retail subscription, promoters can manage the safety net option.
  • Present there are several IPO’s which were graded by Crisil as Five/Five like Care, L&T Finance which are now available at discount after pos- listing.
  • There are other competitors like Google India, Ask me, Asklaila, Sulekha etc. which may provide firm rivalry in future.

CONCLUSION:

The Company Just dial has time after time innovated and stayed ahead of competition. Any hostile moves from big competitors like Google India (This is a High Competitor Power Search Engine World Wide) need to be carefully monitored. Company is growing in terms of revenues and margins. Considering the earnings per share of Rs. 8.99, the P/E ratio would work out to be 52-60. The price to book value (P/BV) comes to 8.2 to 9.4. There are no listed peer companies to compare the issue price. Somewhat, we feel that this issue is aggressively priced. Leaving the aggressive pricing, if an investor subscribes at Rs. 423 (Lower price band of Rs. 470 minus 10% discount for retail investors) for a maximum of 100 lot / < Rs. 50,000, even in case of discount after listing, there would be less risk of loss. If the price goes down beyond 20% of the issue price, Safety net any how is there to safeguard the investors. Investors should subscribe this IPO considering these points. At last we need to watch one more point On BRLM’s front, Citi Group and Morgan Stanley had mandate for SEVENTEEN and ELEVEN IPOs and out of them FOUR IPOs failed to give listing gains to investors from both of them.