THE ECONOMIC REV OLUTION THE ECONOMIC REV OLUTION FINANCIAL WEEKL Y Supplementary Supplementary Dt.27.09.20 SMALL PACKET BIG BANG OIL & GAS PIPELINE INFRASTRUCTURE SERVICE PROVIDER FOCUSED ON LAYING PIPELINE NETWORKS ALONGWITH CONSTRUCTION OF ASSOCIATED FACILITIES; AND PROVIDING OPERATIONS & MAINTENANCE SERVICES TO THE LEADING CITY GAS DISTRIBUTION (“CGD”) COMPANIES IN INDIA COMING WITH IPO WILL BE LISTED IN “T” GROUP WITH 5% CIRCUIT LIMIT, SPECULATIVE MOVEMENT WILL GET RESTRICTED MARKET EXPERTS BELIEVE, IT WILL BE LISTED BY PREMIU M DUE TO RESEANOSABLE PRISE, COMPANY LEAVE SOME THING ON TABLE FOR INVESTORS SMALL WONDER FOR LONG TERM INVESTMENT WITH LUCRATIVE RATE LIKHITHA INFRASTRUCTURE IPO SMALL PACKET BIG BANG IPO DETAILS Fresh Issue 51,00,000 Shares Issue Size in Amount (Cr.) 61.20 Face Value Rs.10 Price Band Rs.117- 120 Pre Issue No of Shares 1,46,25,000 Shares Post Issue No of Shares 1,97,25,000 Shares Pre Issue Paid up Capital Rs.14,62,50,000 Post Issue Paid up Capital Rs.19,72,50,000 Pre Issue Market Cap (Cr.) Rs.175.50 Post Issue Market Cap (Cr.) Rs.236.70 ISSUE OPENS September 29, 2020 ISSUE CLOSES October 01, 2020 LISTING ON Main Board of BSE & NSE LEAD MANAGER TO THE ISSUE UNISTONE CAPITAL PRIVATE LIMITED REGISTRAR TO THE ISSUE BIGSHARE SERVICES PRIVATE LIMITED Pillai Sivasankara Parameshwara Kurup Chairman, Non- executive Independent Director He has been appointed to the Board of the Company since March 28, 2019. He has done AMIE Mech from Human Resource Development Institute (HRDI) in the year 1972 and has a professional qualification in American Society for Non- destructive Testing (ASNT) Level 3 (Re-validation Pending). He had also served as a Vice-President with Chemie-Tech Private Ltd. from 2003 to 2006 and had handled all activities of design & construction of Fuel Oil Refinery Plant at Baharin. Since 2006, he is working as a Freelancer in construction of pipeline systems and related field. Contd page 2
Transcript
THE ECONOMIC REVOLUTIONTHE ECONOMIC REVOLUTION 1
FINANCIAL WEEKLY
SupplementarySupplementary
Dt.27.09.20
SMALL PACKET BIG BANG
OIL & GAS PIPELINE INFRASTRUCTURE SERVICE PROVIDER FOCUSEDON LAYING PIPELINE NETWORKS ALONGWITH CONSTRUCTION OFASSOCIATED FACILITIES; AND PROVIDING OPERATIONS &MAINTENANCE SERVICES TO THE LEADING CITY GAS DISTRIBUTION(“CGD”) COMPANIES IN INDIA COMING WITH IPO WILL BE LISTED IN“T” GROUP WITH 5% CIRCUIT LIMIT, SPECULATIVE MOVEMENTWILL GET RESTRICTED MARKET EXPERTS BELIEVE, IT WILL BELISTED BY PREMIU M DUE TO RESEANOSABLE PRISE, COMPANYLEAVE SOME THING ON TABLE FOR INVESTORS
SMALL WONDER FOR LONG TERM INVESTMENT WITH LUCRATIVE RATE
LIKHITHA INFRASTRUCTURE IPO
SMALL PACKET BIG BANG
IPO DETAILSFresh Issue 51,00,000 SharesIssue Size in Amount (Cr.) 61.20Face Value Rs.10Price Band Rs.117- 120Pre Issue No of Shares 1,46,25,000 SharesPost Issue No of Shares 1,97,25,000 SharesPre Issue Paid up Capital Rs.14,62,50,000Post Issue Paid up Capital Rs.19,72,50,000Pre Issue Market Cap (Cr.) Rs.175.50Post Issue Market Cap (Cr.) Rs.236.70ISSUE OPENS September 29, 2020ISSUE CLOSES October 01, 2020LISTING ON Main Board of BSE & NSELEAD MANAGER TO THE ISSUEUNISTONE CAPITAL PRIVATE LIMITEDREGISTRAR TO THE ISSUEBIGSHARE SERVICES PRIVATE LIMITED
Independent DirectorHe has been appointed to the Board of the Company since March 28, 2019. Hehas done AMIE Mech from Human Resource Development Institute (HRDI) inthe year 1972 and has a professional qualification in American Society for Non-destructive Testing (ASNT) Level 3 (Re-validation Pending). He had also servedas a Vice-President with Chemie-Tech Private Ltd. from 2003 to 2006 and hadhandled all activities of design & construction of Fuel Oil Refinery Plant atBaharin. Since 2006, he is working as a Freelancer in construction of pipelinesystems and related field. Contd page 2
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Srinivasa Rao GaddipatiManaging Director
Being the Promoter, he has shaped the company since inception to what it is today.He is a technocrat having vast technical experience of over three decades in the field of
laying of cross-country pipeline of hydro-carbons and city gas distribution projects. Withhis sound knowledge, vision and leadership skills, he has changed and taken the Companyto new heights.
He established M/s Srinivasa Constructions in the year 1995 and over the years startedgetting projects from reputed clients, following which he founded our Company in theyear 1998, to facilitate growth and presence in the pipeline infrastructure sector.
He is the mind behind the execution of numerous cross-country pipeline & city gasdistribution projects across India for our
STRONG PRESENCE IN INDIA :Likhitha Infrastructure is one of the well-established oil & gas pipeline layingcompanies in India with diversified operations spread across variousGeographical regions such as Karnataka, Delhi-NCR, West Bengal, Gujarat, Goa,Andhra Pradesh, Kerala, Tamil Nadu, Telangana, Madhya Pradesh, Jharkhand,Bihar, Chandigarh, Haryana, and Uttar Pradesh. The experience and operationsin these strategically important regions enable the Company to establish contactswith local clients and suppliers.SCALABILITY OF OPERATIONS: The recent Government initiatives have providedlucrative opportunities for work execution Company such as ours, who is alreadyhaving a good presence in City Gas Distribution Projects along with constructionof CNG Stations. India’s pipeline network is expected to expand to around 35,000kms in the next 5-6 years, based on which the Company is also planning toexpand its pipeline laying execution capacity to a range of 250-300 kms peryear.EXPERIENCED AND DEDICATED MANAGEMENT TEAM :The Company is managed by a team of professionals led by dedicated andhardworking management team and believes that the leadership and vision ofthe Company Promoter, Srinivasa Rao Gaddipati, has been instrumental in drivingthe growth and implementing the business strategies of the Company. The teamcomprises of personnel having technical, operational and business developmentexperience.LONG TERM RELATIONSHIP WITH THE CLIENTS:Company’s clients include major Oil & Gas distribution companies spread acrossthe country and have been associated with some of them on long term basis.The Company believes to address the client’s requirements on a continuousbasis which help them to maintain a long-term working relationship with theirclients and improve their retention strategy.STRONG PROJECT EXECUTION CAPABILITIES :Having a large equipment base, technically qualified and experienced employeepool, comparatively lower cost center of operations and strong project
INVESTMENT RATIONALE - KEY ADVANTANGES
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management systems and capabilities enable the Company to execute large aswell as complex projects. As of July 31, 2020, Likhitha Infrastructure has beenengaged on more than 31 on-going projects across India. Strong project executioncapabilities have enabled them to complete various large and complex projectswithin the stipulated delivery timelines.CONTINUE TO EXPAND OPERATIONS OF THE COMPANY:We intend to strengthen our presence all over the country and play a biggerrole in CGD system as the Government is focusing to substantially increase theCGD network and also to become a prominent player in O&M operations ofCGD network. The Company has entered into a Joint Venture Agreement withM/s. PT Citra Panji Manunggal, a Company incorporated under the laws ofIndonesia, for a pipeline project.RETAINING SKILLED MANPOWER:The Company have assembled an experienced management team with expertisein areas that are important to Company’s business. The Company believes thatthe successful implementation of Company’s business and growth strategiesdepends on the ability of the Company to hire and cultivate experienced,motivated and well trained members of the management and employee teams.FURTHER GROWTH IN O&M SERVICES OFFERINGS:The significant increase in pipeline projects in India and the aging of existingpipeline projects should result in a significant increase in demand for O&MServices. Business. These offer relatively better margins as compared to pipelineinfrastructure projects and taking into consideration the present phase of CGDbusiness, the business of O&M Services is expected to further increase. Further,the level of competition for O&M contracts is relatively lower than that in caseof Pipeline Infrastructure Projects due to technical requirements.CONTINUE TO DEVELOP CUSTOMER RELATIONSHIP AND EXPAND CUSTOMERBASE: Company aims to grow the business primarily by increasing the numberof clients and retaining the existing client base, and believes that a long- termcustomer relationship with large clients fetches better dividends. The Companyaims for continuous meeting with the requirements of the customers andbuilding long term customer relationship.CONTINUE TO FOCUS ON SAFETY AND ENVIRONMENT STANDARDS: Since theseelements of performance measurement have become important competitiondifferentiators and key criteria for prequalification of contractors by potentialclients. The objective of the Company is to adhere complete safety standardsand specifications in the pipeline infrastructure industry with a positive attitudeand approach by adopting environmental friendly and latest technologies andto protect the health and safety of personnel involved in the Company whileminimizing damage caused to environment by controlling the hazards andimpacts associated with the operations. The Company aims at protection of theenvironment and believes in sustainable development.
Muthoot Fincorp Sep 2020NCD issue review (Sub-scribe for Long Term)
•This is the 7th debt offer from this com-pany since July 2014.
•Issue is rated as CRISIL/A Stable•Coupon rates are attractive consideringfalling interest rate regime.
•Moderate investment may be consid-ered for long term.
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ABOUT COMPANY:Muthoot Fincorp Ltd. (MFL) is a non-deposit taking, systemically impor-
tant NBFC registered with the RBI under Section 45 IA of the RBI Act. TheCompany is one of the largest Indian NBFCs engaged primarily in the busi-ness of providing personal and business loans secured by gold jewellery andornaments (“Gold loans”). Its Gold loan products include Muthoot Blue GuideGold loan, Muthoot Blue Bright Gold loan, Muthoot Blue Power Gold loan,Muthoot Blue Bigg Gold loan, Muthoot Blue Smart Gold loan and 24×7Express Gold loan.
MFL’s Gold loan products are structured to serve the business and per-sonal purposes of individuals who do not have ready or timely access to
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formal credit or to whom credit may not be available at all, to meet unanticipatedor other short-term liquidity requirements. The Gold loan portfolio of our Com-pany as of March 31, 2020 comprised approximately 30.07 lakhs loan accounts.As of June 30, 3030, the company serviced through 3541branches located across20 states, union territory of Andaman and Nicobar Islands and the national capi-tal territory of Delhi and employed 16,025 employees including 255 contractedexperts in its operations.
In addition to the Gold loan business, the Company provides foreign exchangeconversion and money transfer services as sub-agents of various registered moneytransfer agencies. It is also engaged in wind energy as well as real estate busi-ness through joint ventures. For Real estate business, it is exploring its own landbank.
OFFER DETAILS:MFL is coming out with its Secured Redeemable Non-Convertible debentures
of Rs. 1000 each for a base amount of Rs. 200 cr. It has green shoe option toretain oversubscription of Rs. 200 cr. thus making the overall size of the offerRs. 400 cr. Issue opens for subscription on September 28, 2020 and will close onor before October 23, 2020. Minimum application is to be made for 10 NCDs(Rs. 10000) and in multiple of 1 NCD (Rs. 1000) thereon, thereafter. Post allot-ment NCDs will be listed on BSE. Application to be made only by ASBA modeand allotment will be in demat mode only. MFL will spend Rs. 5.12 cr. for theproceeds of the entire amount of Rs. 400 cr. Out of the available net proceeds75% will be used for working capital, repayment of interest and principal ofexisting loans and the balance for general corporate purpose.
This is the 7th debt offer from the company since July 2014. Last offer was inJanuary 2020.
This offer has tenures of 27 months, 38 months and 60 months. It offers cou-pon rates ranging from 8.85% to 9.60% depending on the options applied for.Interest payment will be either Monthly, Yearly or Cumulative as per the choiceof investors.
Issue is solely lead managed by SMC Capitals Ltd. while Integrated RegistryManagement Services Pvt. Ltd. is the registrar to the issue and SBI Cap TrusteeCo. Ltd. is the Debenture Trustee.
ISSUE RATINGS:This offer is rated as “CRISIL/A” Stable by CRISIL. This rating indicates that
instruments with this rating are considered to have adequate degree of safetyregarding timely servicing of financial obligations and carry lowest credit risk.
FINANCIAL PERFORMANCE:On financial performance front, MFL has (on a consolidated basis) posted
total revenue/net profits of Rs. 3353.76 cr. / Rs. 372.61 cr. (FY19) and Rs. 3758.68cr. / Rs. 257.93 Cr. (FY20). The company has posted setback in its bottom linefor the concluded fiscal. Promoters are holding 78.75% stake as on June 30,2020.
As of June 30, 2020, the total secured borrowings utilized by the Companyaggregated to Rs. 10,95,152.00 lakhs and unsecured borrowings utilized by ourCompany aggregated to Rs. 2,47,562.00 lakhs and we will continue to incur
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additional indebtedness in the future. As on March 31, 2020 it’s paid up equitycapital of Rs. 193.71 cr. is supported by free reserves of Rs. 2092.93 cr. Postissue its current debt equity ratio of 4.57 will stand enhanced to 4.70.
CONCLUSION / INVESTMENT STRATEGYCoupon rates are attractive with A+ (Stable) rating amidst falling interest rate
scenario. It has posted setback in bottom line for FY20 that raises concern. How-ever, cash surplus investors looking for steady regular returns may consider mod-erate investment for long term. (Subscribe for long term).
ABOUT COMPANY:
EIH Ltd. (EIH) {Erstwhile known as East India Hotels Ltd.) is a flagship company of Oberoigroup which has received some stake from Reliance group as well. Its primary business is the owner-ship and management of hotels, and therefore is subject to the general risks encountered in the hoteland travel industry.
Currently, the company is engaged in the business of ownership and management of hotels, withinand outside India. It also provides airline and airport services, car rentals and charter flights services.
As of June 30, 2020, the Company has 10 Subsidiaries, three Associates and two Joint Ventures. Itdoes not have a holding company.
The ongoing COVID-19 pandemic has had an adverse impact on company’s business, cash flows,results of operations and financial condition and the extent to which it may continue to do so in thefuture, is uncertain and cannot be predicted.
ISSUE DETAILS:
EIH is issuing 53794768 equity shares of Rs. 2 each at a fixed price of Rs. 65 per share by way ofa rights issue to mobilize Rs. 349.67 cr. The company is issuing 8 shares for every 85 shares held ason September 23, 2020. Full money is to be paid on application.
EIH will utilize the net proceeds of rights issue for repayment/prepayment of full or in part bor-rowings by the company (Rs. 280.00 cr.), and general corpus fund (Rs. 65.98 cr.). The company willbe spending Rs. 3.68 cr. for the entire rights issue process.
The issue opens for subscription on September 29, 2020, and will close on October 13, 2020. Postallotment, shares will be listed on BSE and NSE. The issue is solely lead managed by Ambit CapitalPvt. Ltd. and KFin Technologies Pvt. Ltd. is the registrar to the issue.
Company’s current paid-up equity capital of Rs. 114.31 cr. will stand enhanced to Rs. 125.07 cr.post this issue. EIH is looking for a market cap of Rs.4064.87 cr. on the basis of post rights issuepaid-up equity capital.
FINANCIAL PERFORMANCE:
For the last two fiscals, on a consolidated basis, EIH has posted turnover/net profits of Rs.1879.61 cr. / Rs. 148.96 cr. (FY19) and Rs. 1674.69 cr. / Rs. 165.14 cr. (FY20).
EIH Ltd rights issue review (Others)• EIH is primarily engaged in the hotel and travel industry.• Ongoing pandemic has adversely affected the company’s
business.• EIH has suffered a severe setback for Q1 of FY21.• This is the second rights issue from the company after 2011.• Issue is priced at a minus P/E based on negative earnings for
the first quarter.
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For Q1 of FY21, it has marked a loss of Rs. -152.06 cr. on revenue of Rs. 44.62 cr. Thus the issueis priced at a negative P/E based on loss for the first quarter of FY21. As of June 30, 2020, it’s paid-upequity capital of Rs. 114.31 cr. was supported by free reserves of Rs. 2870 cr.
Its equity capital of post rights of Rs. 125.07 cr. will be supported by free reserves of Rs. 3361 cr.As on June 30, 2020 promoters were holding 35.25% equity shares of the company.
SCRIP PRICE MOVEMENTS:The scrip quoted at Rs. 83.7 on cum-right (on September 21, 2020) and opened at Rs. 82.10 and
closed at Rs. 78.35 ex-right (on September 22, 2020). On Friday, September 25, 2020, it closed at Rs.78.05 indicating market cap of Rs. 4880.97 cr. Last 52 week, scrip has marked a high/low of Rs.184.43/53.66.
CONCLUSION / INVESTMENT STRATEGYEIH is one of the well-known hotel chains. It has come to market with second rights issue after
2011. However, considering its negative performance for Q1 of FY21 and prevalent uncertaintyfollowing pandemic, cash surplus risk savvy investors may consider investment for long term at theirown risk.
Atal Realtech NSE SME IPO review(Others)
• ARL is engaged in construction and engineering services seg-ments
• The company also does trading in segment related materials.• It has shown inconsistency in bottom lines for the last three
fiscals.• Based on P/E, P/BV parameters, the issue appears fully
priced.• This sector is witnessing downturn with subdued demand due
to pandemic.
ABOUT COMPANY:
Atal Realtech Ltd. (ARL) is a construction company providing inte-grated civil works contracting and engineering services for structural con-struction and infrastructure sector projects and is a registered contractorwith the Government of Maharashtra Public Works Department in Class I-A. It engages in contracting and sub-contracting for various governmentand private projects which includes the construction of commercial struc-tures and industrial structures.
The company is situated at Nashik and many of its project sites are lo-cated in the State of Maharashtra, though it has undertaken projects inother parts of India. Majority of the construction activity being undertakenincludes civil & structural construction and infrastructure contracts undersubcontracting by main contractors, who have been allotted the project bya principal employer. Further, ARL has undertaken a few projects directlyas a Contractor for certain private construction companies and real estate
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developers.Company’s revenue model also includes trading of certain construction ma-
terials. Besides undertaking contracted and / or sub-contracted projects, it isalso engaged in trading activities, wherein the company is supplying construc-tion materials to various clients as per their specific requirements.
ISSUE DETAILS/CAPITAL HISTORY:
To meet its plans for working capital (Rs. 1.55 cr.) and general corpus fund(Rs. 0.47 cr.), ARL is coming out with a maiden IPO of 1504000 equity sharesof Rs.10 each at a fixed price of Rs. 72 per share to mobilize Rs. 10.83 cr. Theissue consists of a fresh issue of 304000 equity shares (Rs. 2.19 cr.) and anoffer for sale of 1200000 equity shares (Rs. 8.64 cr.). The issue opens for sub-scription on September 30, 2020, and will close on October 07, 2020. Mini-mum application is to be made for 1600 shares and in multiples thereon, there-after. Post allotment, shares will be listed on NSE SME Emerge platform.
Issue constitutes 30.48% of the post issue paid-up capital of the company.The company will be spending Rs. 0.52 cr. for this IPO process.
The issue is jointly lead managed by Aryaman Financial Services Ltd. andGalactico Corporate Services Ltd. while Bigshare Services Pvt. Ltd. is theregistrar to the issue. Aryaman Capital Markets Ltd. is acting as a MarketMaker for this company. Having issued initial equity at par, the companyraised/converted further equity in the price range of Rs. 100 – Rs. 118 betweenAugust 2018 and February 2019.
The average cost of acquisition of shares by the promoters is Rs. 4.15 pershare. Post issue, ARL’s current paid-up equity capital of Rs. 4.63 cr. will standenhanced to Rs. 4.93 cr. With this IPO, the company is looking for a marketcap of Rs. 18.50 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, on a standalonebasis, ARL has posted turnover/net profits of Rs. 51.57 cr. / Rs. 2.32 cr.(FY18), Rs. 58.26 cr. / Rs. 2.12 cr. (FY19) and Rs. 58.69 cr. / Rs. 2.62 cr.(FY20). It has posted static average top line with inconsistency in bottom lines.
For the last three fiscals, on a standalone basis, ARL has posted an averageEPS of Rs. 5.45 and an average RoNW of 11.72%. The issue is priced at a P/BV of 1.22 on the basis of its NAV of Rs. 59.07 as on March 31, 2020, and at aP/BV of 1.20 on the basis of post-issue NAV of Rs. 59.87.
If we attribute FY20 earnings (on a consolidated basis) on fully diluted postissue equity, then asking price is at a P/E of around 13.56 against an industry
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average of 18.3, making it fully priced offer.
COMPARISION WITH LISTED PEERS:
As per offer documents, ARL has shown Dilip Buildcon, JMC Projects andPrestige Estate as its listed peers. They are currently trading at a P/Es ofaround 14.21, 39.53 and 42.85 (as on September 25, 2020). However, theyare not strictly comparable on an apple to apple basis.
MERCHANT BANKER’S TRACK RECORDS:
On merchant banker’s performance front, this is the 23rd mandate fromAryaman Financial in the last three fiscals. Out of last 10 listings, 2 opened ata discount and the rest at premiums ranging from 0.02% to 2.16% on the dayof listing. While this is the first mandate from Galactico Corporate and hasno track records.
CONCLUSION / INVESTMENT STRATEGY
ARL has posted inconsistent top and bottom lines for the last three fiscals.On the basis of P/E and P/BV parameters, the issue appears fully priced. Fol-lowing COVID-19 pandemic scare, this sector is currently witnessing down-turn with subdued demand. Cash surplus, risk savvy investors may consideran investment at their own risk in this IPO.
VEER GLOBAL BSE SMEIPO REVIEW (AVOID)
• VGIL is a local real estate developer for affordable residentialprojects.
• Company’s top line shows inconsistency.• This segment is witnessing subdued demand and slowdown due
to pandemic.• Based on P/E parameter, the issue is exorbitantly priced.
ABOUT COMPANY:
Veer Global Infraconstruction Ltd. (VGIL) is a real estate developer, prima-rily focusing on the development of residential projects in Vasai – Virar andPalghar district. It has over 9 years of experience in, developing residentialprojects in the low-income affordable housing segment. Company is primarily
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catering for affordable housing where it tries to bring reality to the dreams ofpeople for owning their own place to live. VGIL achieves this by creative pricingand flexible payment terms ranges within the low-income affordable housingmarket segment. As on the date of filing of Prospectus, it has completed 5 projects.
It focuses on residential projects, which include residential building in town-ships, redevelopments, etc. mainly in affordable segments. Currently, VGIL hasseven ongoing projects.
ISSUE DETAILS/CAPITAL HISTORY:
To meet its plans for working capital (Rs. 4.00 cr.) and general corpus fund(Rs. 0.66 cr.) needs, VGIL is coming out with a maiden IPO of 1756000 equityshares of Rs.10 each at a fixed price of Rs. 28 per share to mobilize Rs. 4.92 cr.The issue opens for subscription on September 30, 2020, and will close on Octo-ber 09, 2020. The market is surprised for such a long duration for the IPO sub-scription period. Minimum application is to be made for 4000 shares and in mul-tiples thereon, thereafter. Post allotment, shares will be listed on BSE SME plat-form.
Issue constitutes 27.02% of the post issue paid-up capital of the company. Thecompany will be spending Rs. 0.26 cr. for this IPO process.
The issue is solely lead managed by Capitalsquare Advisors Pvt. Ltd. and PurvaSharegistry India Pvt. Ltd. is the registrar to the issue. Nikunj Stock Brokers Ltd.is acting as a Market Maker for this company. Having raised initial equity at par,the company raised further equity at a fixed price of Rs. 21 per share betweenMarch 2016 and January 2020.
The average cost of acquisition of shares by the promoters is Rs. 20.48, Rs.20.70 and Rs. 21.00 per share. Post issue, VGIL’s current paid up equity capitalof Rs. 4.74 cr. will stand enhanced to Rs. 6.50 cr. With this IPO, the company islooking for a market cap of Rs. 18.19 cr.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, on a consolidatedbasis, VGIL has posted turnover/net profits of Rs. 2.33 cr. / Rs. 0.04 cr. (FY18),Rs. 10.08 cr. / Rs. 0.12 cr. (FY19) and Rs. 8.63 cr. / Rs. 0.16 cr. (FY20). It hasshown inconsistency in the top line.
For the last three fiscals, on a consolidated basis, VGIL has posted an averageEPS of Rs. 0.52 and an average RoNW of 1.62%.
The issue is priced at a P/BV of 1.28 on the basis of its NAV of Rs. 21.89 as onMarch 31, 2020, and at a P/BV of 1.22 on the basis of post-issue NAV of Rs.23.00.
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If we attribute FY20 earnings (on a consolidated basis) on fully diluted postissue equity, then asking price is at a P/E of around 112 making it exorbitantlypriced offer.
COMPARISION WITH LISTED PEERS:
As per offer documents, VGIL has shown Suratwwala Business and KoltePatil as its listed peers. They are currently trading at a P/Es of around 32 and 00(as on September 25, 2020). However, they are not strictly comparable on anapple to apple basis.
MERCHANT BANKER’S TRACK RECORDS:On merchant banker’s performance front, this is the 3rd mandate from its
stable in the last two fiscals (including the ongoing one). Out of last 2 listings,1 opened at a discount and the rest at a premium of 0.04% on the day of listing.
CONCLUSION / INVESTMENT STRATEGY
VGIL has posted average performance with the inconsistent top line. Basedon P/E parameters, the issue is exorbitantly priced. This segment is currentlywitnessing subdued demand and slowdown due to COVID-19 pandemic. Thereis no harm in giving this IPO a “MISS”.
SIGMA SOLVE NSE SME IPOREVIEW (OTHERS)
• SSL engaged in IT and IT-enabled services for global cli-ents.
• SSI is a subsidiary of the company where SSL is going tohave a 60% stake post issue.
• The issue expenses indicates the fully structured format ofthe IPO.
• Cash surplus, risk savvy investors may invest at their ownrisk.
ABOUT COMPANY:
Sigma Solve Ltd. (SSL) (erstwhile known as Presha Software Pvt. Ltd.) isengaged in providing the IT and IT-enabled services and to accelerate thebusiness opportunities of Sigma Solve Inc. (SSI), a Florida (USA) based ITCompany which is a subsidiary.
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At present, the company is having 51.04% stake in the subsidiary companyi.e. Sigma Solve Inc. By additional investment of Rs. 0.70 cr., its stake will beapproximately 60.00% of the total capital of the subsidiary company; as a resultprofit/loss earned by the subsidiary company will be forming part of SSL on aconsolidated basis.
“Sigma” and “Sigma Solve Inc.”(Erstwhile group concern and now subsid-iary company w.e.f. October 23, 2019) having their offices at Florida (USA),Atlanta (Home Office), and Australia (Home Office) jointly make efforts fornew business acquisitions. Company’s 100% of the revenue is from the exportof services, and in order to provide hassle-free payment facilities to clients, SSLchannelizes payment through “Sigma Solve Inc., having their presence in Florida(USA), Atlanta (Home Office) and Australia (Home Office). SSL does not haveany identified customers being almost 100% of sales is booked by Sigma SolveInc., and subsequently, “Sigma” is charging on monthly basis to Sigma SolveInc. for providing the execution facilities on per man-hour basis in conjunctionwith efficiency level achieved on monthly basis. Moreover, “Sigma” also occa-sionally serves directly to clients.
ISSUE DETAILS/CAPITAL HISTORY:
To meet its plans for acquisitions and other strategic initiatives (Rs . 2.30 cr.),investment in a subsidiary (Rs. 0.70 cr.) and general corpus find (Rs. 1.20 cr.)needs, SSL is coming out with a maiden IPO of 1101000 equity shares of Rs.10each at a fixed price of Rs. 45 per share to mobilize Rs. 4.95 cr. The issue opensfor subscription on September 29, 2020, and will close on October 09, 2020.The market is surprised for such a long duration for the IPO subscription period.Minimum application is to be made for 3000 shares and in multiples thereon,thereafter. Post allotment, shares will be listed on NSE SME Emerge platform.
Issue constitutes 26.78% of the post issue paid-up capital of the company.The company will be spending Rs. 0.75 cr. for this IPO process. This indicatesthat the issue is pre-structured and will get through with arranged funds.
The issue is solely lead managed by Beeline Broking Ltd. and Link IntimeIndia Pvt. Ltd. is the registrar to the issue. Nikunj Stock Brokers Ltd. is acting asa Market Maker for this company. So far the company has raised entire equity atpar and has issued bonus shares in the ratio of 100 shares for 1 share held in May2019.
The average cost of acquisition of shares by the promoters is Rs. 4.15 pershare. Post issue, SSL’s current paid-up equity capital of Rs. 3.01 cr. will standenhanced to Rs. 4.11 cr. With this IPO, the company is looking for a market capof Rs. 18.50 cr.
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FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, on a standalonebasis, SSL has posted turnover/net profits of Rs. 2.57 cr. / Rs. 0.23 cr. (FY18),Rs. 3.49 cr. / Rs. 0.35 cr. (FY19) and Rs. 5.69 cr. / Rs. 0.65 cr. (FY20). As thecompany has invested in its own subsidiary in October 2019, on the basis ofconsolidated performance, for fiscal 2019-20, it has posted a turnover of Rs.10.97 cr. with a net profit of Rs. 1.94 cr.
For the last three fiscals, on a standalone basis, SSL has posted an averageEPS of Rs. 2.76 and an average RoNW of 29.69%. On a consolidated basis, thisfigure stands at Rs.5.73 and 28.23% respectively.
The issue is priced at a P/BV of 2.53 on the basis of its NAV of Rs. 17.78 ason March 31, 2020, and at a P/BV of 1.94 on the basis of post-issue NAV of Rs.23.23. (On a consolidated basis).
If we attribute FY20 earnings (on a consolidated basis) on fully diluted postissue equity, then asking price is at a P/E of around 9.53 against peers groupaverage of 11.75, making it fully priced offer.
COMPARISION WITH LISTED PEERS:
As per offer documents, SSL has shown Dev Information, InfoBeans Technoand Innovana Thinklabs as its listed peers. They are currently trading at a P/Esof around 31.91, 12.95 and 8.33 (as on September 25, 2020). However, they arenot strictly comparable on an apple to apple basis.
MERCHANT BANKER’S TRACK RECORDS:
On merchant banker’s performance front, this is the 6th mandate from itsstable in the last four fiscals (including the ongoing one). Out of last 5 listings,1 at par and the rest at premiums ranging from 1.37% to 10% on the day oflisting.
CONCLUSION / INVESTMENT STRATEGY
SSL has posted growth in top and bottom lines for the last three fiscals. How-ever, on the basis of P/E and P/BV parameters, the issue is fully priced. Theissue expenses indicate the structured format of the IPO. Cash surplus, risk savvyinvestors may consider investment at their own risk.
Review By Dilip Davda on Sep 26, 2020
Contd page 18
THE ECONOMIC REVOLUTIONTHE ECONOMIC REVOLUTION 18
e mail:[email protected] DailyProfit web -www.enjoydailyprofits.blogspot.com
Lalit dhingra M). 0993500650709889997271
LIVE PROOFS OF 100% ACCU-RATE NIFTY PREDICTIONS
THIS IS THE MAGIC OF OUR WEL LEARNED AND EXPERT WRITER, WHOCAN JUDGE THE WIND OF STOCK MARKET VERY WELL
FOLLOWING CONCLUSIVE LINE WAS TOLD IN PREVIOUS WEEKLY OUT-LOOK IN THE TOPIC OF"CORRECTION CONTINUATION WHICH MAY BE
DEEPER ALSO":-CORRECTION CONTINUATION IS EXPECTED IN THE COMING WEEK/
WEEKS WHICH MAY BE DEEPER ALSO.AS WAS TOLD 100% SAME HAPPENED AND NIFTY CRASHED 715
POINTS IN PREVIOUS WEEK AS WELL AS NIFTY CORRECTED MORE THAN
1000 POINTS FROM HIGHER LEVELS.
Firstly up moves towardsnext resistances but finally
correction continuationtowards next supports
Technical Analysis,Research & Weekly Outlook(Sep 28 to Oct 01,2020)
Nifty-EOD Chart Analysis(Wave B structure,Averages & Stochastic)
Nifty-EOD Chart (25-Sep-2020):-
Contd page 19
THE ECONOMIC REVOLUTIONTHE ECONOMIC REVOLUTION 19
Technical Patterns and Formationsin EOD charts
1- Corrective Wave-A completion at 7511.10 on24-03-2020 and Wave-B beginning2- Wave-B completion indications with recenttop formation at 11794.3 on 31-08-2020 andcorrection beginning3- Wave-B correction continuation with recentbottom formation at 10790.2 on 24-09-2020.4- Intermediate Term Trend decider 55-Day SMAis today at 112475- Long Term Trend decider 200-Day SMA istoday at 107576- Stochastic-%K(5) is at 18.64 & %D(3) is at14.43
Conclusions from EOD chart analysis(Wave B structure,Averages & Stochastic)
Corrective Wave-A completed at 7511.10 on 24-03-2020 and Wave-B started but strong signalsof its completion at 11794.3 on 31-08-2020after 406 points fall from higher levels andclosing 260 points down on that day.
Although after that Nifty remained 15 Sessionssideways between 11186-11585 but this rangewas broken down on 22-09-2020 and 31-08-2020started correction remained continued withrecent bottom formation at 10790.2 on 24-09-2020.
As Nifty has not moved below 200-Day SMA(todayat 10757) in on going correction thereforeLong Term Trend is still up but strongindications of Intermediate Term Trend turningdown after last 4 sessions closing below itsdecider 55-Day SMA(today at 11247)
Contd page 20
THE ECONOMIC REVOLUTIONTHE ECONOMIC REVOLUTION 20
Short term indicator Stochastic has moved intoOversold zone and %K(5) at 18.64 has intersectedupward %D(3) at 14.43 therefore signals of Shortterm up moves which will be seen in next week.
1- Corrective Wave-A completion at 7511.10 on24-03-2020 and Wave-B beginning.2- Wave-B completion indications with recenttop formation at 11794.3 on 31-08-2020 andcorrection beginning.3- Fibonacci retracement levels of correction:-
Conclusions from EOD chart analysis(Fibonacci retracement levels)
Wave-B completion continuation which will beaccording to above mentioned Fibonacciretracement levels and that should be watchedfor supports getting and next moves in comingweeks/months/years.
Nifty-Intra Day Chart Analysis(25-Sep-2020)
Nifty-Intra Day Chart (25-Sep-2020):-
Technical Patterns formation in todayintraday charts
1- Consolidation between 10855-109212- Up moves3- Consolidation between 10966-110104- Up moves5- Sideways trading between 11027-110726- Whole day actual trading between 10855-11072
Conclusions from intra day chart analysis
As whole day good consolidation withcontinuous up moves after strong opening and
Contd page 22
THE ECONOMIC REVOLUTIONTHE ECONOMIC REVOLUTION 22
selling patterns were not seen therefore lastFriday started up moves will be seen in thebeginning of next week.
Conclusions(After Putting All Studies Together)
1- Long term trend is up.2- Intermediate term trend is down.3- Short term trend is down.
Strongest indications of Wave-B completion andWave-C beginning emerged on 31st Aug 2020 sincethen Nifty has slipped more than 1000 pointsfrom higher levels.
Nifty remained 15 Sessions sideways between11186-11585 after 31st Aug 2020 sharp fall andthis 15 Sessions range has also been brokendown in last week which is a strong indicationof more down down moves below the lowest of ongoing correction(10790.2).
As Short term indicator Stochastic has movedinto Oversold zone and good consolidation wasseen last Friday also therefore previoussession started up moves which will be seen inthe beginning of next week towards followingnext resistances;-
As strong signals of Wave-C beginning for downmoves towards and below 7511.10 thereforefinally following next supports should bewatched in the coming weeks/months;-
Contd page 23
THE ECONOMIC REVOLUTIONTHE ECONOMIC REVOLUTION 23
Although firstly up moves areexpected in next week but willfuse near about above mentionedresistances in the coming 2/3weeks and finally on goingcorrection will remain continuedtowards above mentioned supports.1- 10855-109212- 10966-110103- 10627-106864- 10503-105455- 10224-10348(Strong)
REALITY FINALLY CAUGHT-UP WITH MARKETS. The worseningmacros started casting shadows over the galloping markets.
US indices lost nearly 8-10 % as most FANGS lost nearly doubleof that.
The dollar index ( DXY ) started moving up and it is currently at94.57 from the low of 91.99 hit on 31st august. This index is likelyto move up to 96 in the coming week. THIS COULD PUT PRESSUREON EMERGING MARKETS INCLUDING INDIA AND PRECIOUSMETALS LIKE GOLD AND SILVER.
Our markets could correct up to 3 % + and silver can go belowcrucial support of 22 dollars. Gold also can go down to 1820 and1780 dollar levels.
American presidential elections are just 40 days away anddemocrats have an edge. Democrat victory is perceived to beagainst the raging bull market in American equities andcorrespondingly can be bad for Indian markets as well.
NIFTY 50 WMA is placed at 10932 and if that support is brokenwe may have 10720 / 10525 on cards.
I am giving below my weekly indices levels which u can use totake weekly positions in options and specific stocks looking atsector index.
SHORT COVERING WILL GIVE SOLID RISE…BUT, BE CAUTIOUS ON RISE…. TAKE PROFITS
ON RISE.
# Hot Weekly Stock Futures:1) Sun Pharma (491.70): Rs. 485 stoploss… It may touch 504 to
513…2) Dabur (495.05): Rs. 487 stoploss.. It may touch 504 to 513…3) Tata Steel (353.30): Rs. 344 stoploss.. It may touch 369 to 387…4) Axis Bank (415.70): Rs. 401 stoploss.. It may touch 432 to 450…5) ONGC (69.25): Rs. 66 stoploss… It may touch 72 to 81…6) Bharti Airtel (440.95): Rs. 421 stoploss… It may touch 459 to
477…7) Reliance (2211.20): Rs. 2175 stoploss.. It may touch 2241 to
2295…8) Tata Motors (127.60): Rs. 122 stoploss.. It may touch 135 to
144…9) SBI (182.65): Rs. 176 stoploss… It may touch 189 to 198…10)IDFC First (29.25): Rs. 27 stoploss… It may touch 32 to 36…11)PFC (85.55): Rs. 83 stoploss… It may touch 90 to 99…
# Hot Delivery based Short term Stocks :1) MOIL (139.20): SL 136… With solid upmove it may touch 153 to
189…2) IRB (108.45): SL 101… With solid upmove it may touch 117 to
126…3) BHEL (30.15): SL 28… Near term it may touch 36 to 45 with
upmove..4) SAIL (34.35): SL 32… Near term it may touch 40 to 45…5) IDFC (31.40): SL 29… Near term it may tocuh 36 to 40…6) Hind Copper (33.85): SL 32… Near term it may tocuh 40 to 45...7) KTK Bank (40.65): SL 39… Near term it may touch to 45 to 54…8) Delta Corp (104.15): SL 100… Near term it may touch 117 to
135…9) Walchand (46.25): SL 43…. Moving towards 54 to 63 in near
term…
THE ECONOMIC REVOLUTIONTHE ECONOMIC REVOLUTION 32
BSE Sensex (37388.66) andNifty (11050.25) closedrespectively last week.
COFORGE and APOLLOHOSP added Interest in OCTOBER series.Huge positionwas build up at COFORGE call Option Strike Price 2400.00.Good build up was alsoseen at IBULHSGFIN call Option Strike Price 120.00
