IPO: PTC INDIA Financial Services

PTC India Financial Services is entering the primary market on 16th March 2011 with a fresh issue of 12.75 crore equity shares and an offer for sale of 2.92 crore equity shares of Rs. 10 each, both, in the price band of Rs. 26 to Rs. 28 per share, with retail investors getting a Re. 1 discount to the issue price. The company will raise Rs. 327-353 crore in fresh issue, while the offer for sale will range between Rs. 75-81 crore, depending on the price discovered. The issue, comprising 27.9% of the company’s post issue paid-up capital, closes on 18th March 2011.

77.60% subsidiary of PTC India with balance 22.40% held equally between Goldman Sachs and Macquarie Group, PTC India Financial Services provides project financing (both debt and equity) to the entire energy value chain (including power generation, transmission and distribution assets, gas pipelines, fuel linked ports, electricity equipment) in India. Presently focussed more on power generation projects, this non-deposit taking NBFC and Infrastructure Finance Company (as stipulated by RBI), also undertakes carbon credit financing against certified emissions reduction (CER), mainly for small Indian private power producers.

As of 31-12-10, company’s equity investments aggregated to Rs. 419 crore comprising 8 companies, including minority stake in India’s first power exchange, Indian Energy Exchange, while its debt investments stood at Rs. 595 crore (of which, 59% long-term debt) in 13 companies, representing projects with 6,794 MW of aggregate power generation capacity. Besides this, it owns 6MW wind farms in Karnataka which have recently got operational in the last 12 months.

The company has strong fundamentals as indicated by a CRAR of 60.57% against requirement of 15% and nil NPAs, as of 31-12-10. For FY10, it clocked total income of Rs. 53 crore and earned PAT of Rs. 25.5 crore, resulting in EPS of Rs. 0.59 on equity of Rs. 435 crore. For 9mFY11, total income rose to Rs. 83 crore (including Rs. 3.5 crore from sale of wind power) with PAT surging to Rs. 31 crore, translating into an EPS of Rs. 0.72.

The company’s networth, as of 31-12-10, stood at Rs. 664 crore, while it had secured loans worth Rs. 477 crore outstanding, with total assets of Rs. 1,168 crore. Its return-on-assets (RoA) has also been improving from 3.2% in FY10 to 3.9% (annualised) for FY11.

PTC India Financial has an understanding with PTC Ashmore Fund to refer all Indian energy sector equity financing over Rs. 100 crore to the Fund, and in-turn will get reference for under-Rs. 100 crore equity financing opportunities as well as all debt and convertible debt financing opportunities from the Fund.

Company is undertaking the IPO to augment its capital base, which will help meet future capital requirements for growth. Also, its Rs. 100 crore retail infra bond issue is underway, which will boost further lending, besides significantly reducing cost of funds, which have, nevertheless been gradually decreasing from 11.86% in FY09 to 10.17% in 9mFY11, but still fares unfavourably vis-à-vis larger peers PFC and REC, which raise funds at average rate of 7-8%. Going forward, company’s Infrastructure Finance Company status will also enable it to higher lending exposure to a single borrower group, quicker access to additional ECBs as well as easier bank financing.

PTC’s holding in the company will drop to 60% post-IPO, while Macquarie Group, which will make a 20.5% CAGR in 3 years from selling part (60%) of its holding, will own 3.46% stake in the company, post-issue.

On a BVPS of Rs. 15.29, as of 31-12-10, company is offering shares in the IPO at PBV of 1.83x at the upper band of Rs. 28 and effective PBV of 1.77x for retail investors, on a pre-money basis. A broad comparison may be drawn with other power sector financiers:

Although PFC, REC and IDFC are much larger as against PTC India Financial, the latter has been showing handsome growth both in terms of fund deployment and on other financial parameters. PBV of the issue is very attractive vis-à-vis peers (excluding PFC which is lying low due to expected FPO) making a post-listing market cap of Rs.1,574 crore seems very fair, given the good fundamentals, experienced management team and healthy upside potential in India’s power sector.

We recommend the issue and investors are advised to apply at the upper end of the price band.

Source: internet (By S P Tulsian)

NHPC Listing

BY S. P. Tulsian
NHPC Ltd. stock will be listing tomorrow and looking to the grey market premium of Rs. 5.50 to Rs. 6 and issue having made at Rs. 36 per share, it is likely to list, at around Rs. 42 per share. This listing will definitely be a disappointment for the NHPC allottees and for the primary market.
NHPC went public on 7th August 2009 with an issue of 164 crore equity shares of Rs. 10 each, of which, fresh issue was 112 crore shares, while, offer for sale was of 52 crore shares. The allotment has been made by the company in record 14 days.
QIB category subscribed by 29.11 times, HNI category subscribed 55.93 times while Retail category subscribed 3.79 times and Employees category subscribed by about 0.66 times. Retail category has 13.35 lakh allottees while HNI category had just 6,033 shareholders with 381 allottees in QIB category and 5,530 members in employees category. The total shareholders came to the company’s fold, post IPO, is 13.47 lakh.
Most of HNI applicants have applied in the issue, after availing 95% finance, at an average interest rate of 11.50% to 12.50%. If we calculate interest at 11.50% on 95% amount having availed, for 14 days, the interest cost per share comes to Rs. 8.25 per share. This results in a total cost per share to an HNI investor at Rs. 44.25 per share.
In Retail category, minimum of 175 shares and maximum of 2625 shares were allowed and firm allotment has been given to those who have applied for 700 shares and above. In this category, no applicant avails finance, hence interest cost, on notional basis to them, at 12% per annum, work out to 63 paise, per share of the share allotted. In QIB category, it is not material, as 10% of the money is only paid by these allottees. In such a case, interest cost to them is about 48 paise per share.
So HNI, will be at a great disadvantage and likely to see loss on listing day, if share lists below Rs. 44.25 per share, or rules below this level, throughout the day. Generally, such allottees are not in a mood to hold the position, as they mostly go for listing gain. Inspite of the share now remaining with them, without any debt burden or pledge, still higher cost keeps bothering them at all the time.
In such a scenario, it is likely to see selling pressure coming in from HNI and Retail category investors, for first 2 - 3 days, which will keep pressure on the stock price and may not allow it to move past Rs. 42. Also, poor listing of Adani Power, has disappointed this class of investors, as share is still languishing at Rs. 104. In case of NHPC, even in grey market, trades have taken place at a premium of Rs. 9 to Rs. 12 which will also pose a problem in its settlement, as it is causing loss to those who have gone long in this stock.
On fundamental basis, stock has long term prospect to give a steady and annualized return of about 15% to 18% from a level of Rs. 42. However, don’t expect fireworks in the stock in the near term as stock is likely to move gradually on the lines of NTPC and Powergrid, other 2 PSU utility companies.

Source: www.premiuminvestments.in (By S P Tulsian)

IPO Talk: Rural Electrification Corporation

Rural Electrification Corporation is entering the capital market on 19th February 08, with a public issue of 15.61 crore equity shares of Rs.10 each, in the band of Rs.90 to Rs.105 per share. 50% of this issue is by way of fresh issue while 50% is by way of offer for sale.
After the recent debacle of many IPOs, this is one of the mega issues, which intends to mobilize Rs.1,640 crores. It has been seen that PSU IPOs have been reasonably valued. This maybe due to the conservative approach of issuer’s officials, as also, no personal interest is involved, as sailing through the issue is more important than the valuation. This issue falls in this category.
The company is a public financial institution, engaged in the financing and promotion of transmission, distribution and generation projects throughout India. The company, all along has been financing public sector projects, but has been shifting to joint sector and private sector, in view of mega power projects, now being set up by the private sector. As at 30-09-07, total of Rs.35,050 crores has been financed by the company, of which 96.33% has been to the public sector.
For FY 07, the total income of the company was at Rs.2,933 crores with PAT of Rs.776 crores, giving an EPS of Rs.9.95 on equity of Rs.780.60 crores. First six months of FY 08 seems to be quite good with topline at Rs.1,792 crores and PAT of Rs.523 crores, which results in an annualized EPS of Rs.13.40. Even on fully diluted equity of Rs.858.66 crores, this would be close to Rs.12.20. The present book value, as at 30-09-07, is at Rs.54, which would rise to Rs.63 to Rs.64, depending on the price discovery, post IPO.
Fresh infusion of Rs.700 crores to Rs.800 crores, into the company would be EPS accretive and 82% government stake, post issue, is also an assuring feature. The funds are mobilized mainly to augment capital base to meet future capital requirement of improved business and to list the shares.
We feel that in this turmoil, when primary market is not at all comforting with any good IPO, this is a better issue, where investors can safely apply for reasonable gains.

Source:sptulsian.com

Latest Gray Market Premium: Rs. 25-28/-.

IPO Talk: Manaksia Ltd.

Manaksia Ltd. is entering the capital market on 17th December 07, with a public issue of 1.55 crore equity shares of Rs.2 each in the band of Rs.140 to Rs.160 per share. The shares of the company are presently listed on Kolkata exchange but not traded as the company has just 143 shareholders as on date.

The company is a multi-product multi-divisional company with 15 manufacturing units in India and 3 abroad with 2 in Nigeria and one in Ghana. The company is into metal products, packaging products, mosquito coils and engineering and other goods. The financial performance of the company has been robust and consistent for the last over five years with good growth having posted by the company, over the years. For FY 07 the total income of the company was at Rs.835 crores with EBITDA of Rs.178 crores (21.32%). PBT of Rs.101 crores and PAT of Rs.92 crores, on consolidated basis, on tiny equity of Rs.10.80 crores. This translated into an EPS of Rs.17 for FY 07.

For five months ending 31st August 07, topline was at Rs.454 crores with EBITDA of Rs.89 croes (19.60%) PBT of Rs.54 crores and PAT of Rs.51 crores. Though, EBITDA fell by about 1.72%, PAT shown an increase of 16 bps. The company should be able to post an EPS in excess of Rs.20 for FY 08, considering the present trend of working.

Post issue, paid-up equity of the company would rise from Rs.10.80 crores to Rs.13.90 crores, which is definitely low, compared to the volume and profitability of the company, which is likely to be Rs.1,000 crore and Rs.100 crore plus, respectively. Promoters would be holding about 58% of the expanded equity while public float would be about 42%. As stated earlier, of this, 25% is held by about 125 shareholders who seems to be more group associates or loyal shareholders. This results into an effective float of about 17%.

The company now proposes to expand its metal business with an outlay of Rs.116 crores for debottlenecking of Aluminium Rolling Mill, certain equipment for speciality Alloy Plant and additional machinery for Steel Cold Rolling Plant at Haldia. Rs.60 crore has been earmarked for repayment of debt, which is now placed at about Rs.285 crores, used largely to finance net current assets of close to Rs.200 crore.

The present product mix of the company is about 72% in Metals of which 25% is for Ferrous and 47% for non-Ferrous, especially Aluminium. Packaging contributes about 14% while 9% is from Mosquito Coil. In its Aluminium Alloy business, the company has 60% raw material input as scrap while 40% as primary metal which give better conversion margin to the company. Due to this, raw material constitutes about 53% of manufactured product sales, which is considered quite low by any standards, thus giving good profit margins to the company.

The company with its metal management skills is able to manufacture advanced metal packaging products like ROPP Caps, Crowns, Metal Containers, Mosquite Coil stands and are supplying to companies like Coke, Reckitt Benckiser, Shiva Distilleries etc. Due to huge demand of the existing clients and better margins, the focus of the company has been in this segment.

Considering the expected profitability of Rs.20 EPS for FY 08, share is being issued at a PE of about 8 times. Future expansion in the capacity of the company would improve the profitability. Consistent growth in the financial performance of the company, for the last five years, as also low equity base of Rs.13.90 crores are positive features of the issue.

Investment is advised in the issue, which would be profitable in the short and medium term.

Source:sptulsian.com

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IPO Talk: Jyothy Laboratories

Jyothy Laboratories is entering the capital market on 22nd November 07 with an Offer for Sale of 44.30 lakh equity shares, of Rs.5 each, in the band of Rs.620 to Rs.690 per share. Five, venture capitalists and PE investors, having acquired the shares of the company between 2000 and 2006, are now offloading their stake and completely exiting from the company. The cost of acquisition per share to these investors was at Rs.143 in 2000 and at Rs.291 in the year 2003.

The company has been struggling till FY 04, when it had stagnant topline and negative bottomline. In FY 05, though topline fell to Rs.271 crores from Rs.300 crores, PAT rose to Rs.33.27 crores, against net loss of Rs.23.08 crores, in FY 04.

The Offer for Sale is being made by five shareholders, of which ICICI Bank Canada and ICICI Bank UK, PLC is holding maximum number of shares, of about 28.66 lakh shares. These shares were acquired by them in the year 2006, from original allottees like Canzone Ltd., South Asia Regional Fund and CDC Investment Holdings.

The company is an FMCG player in fabric care, household insecticide, surface cleaning, personal care and air care segment with brands such as Ujala, Maxo, Exo, Jeeva and Maya.

Ujala Fabric Whitener, flagship brand of the company, has 57.5% market share (by volume) and 72.2% share (by value) as at 31st July 07. Maxo Coils has market share of 20.8% as on that date. Rest of the brands are either region based or have yet to catch on.

Since the proposed issue is Offer for Sale, no capacity increase is taking place or no new fund is coming to the company, hence only the normal growth would get achieved by the company. Though topline of the company rose by 19.25% from Rs.314.05 crores in FY 06 to Rs.374.52 crores in FY 07, PAT rose only by 3.33% from Rs.46.59 crores in FY 06 to Rs.48.14 crores in FY 07. This is due to fall in the EBITDA margin in FY 07 to 18.12% from 19.34% in FY 06. Due to huge cash surplus of about Rs.77 crores with the company, other income is quite high at Rs.12.63 crores for FY 07. EPS was at Rs.33.20 for FY 07.

FMCG sector presently is not a fancied sector and is likely to remain so for the next couple of years. Return on net worth of the company is also quite low at 16.51% when compared to its peers like Emami, which is at 40.5% and Marico at 49.7%. The share is being offered at a PE multiple of close to 21, at the upper band, of Rs.690 per share, thus leaving very low scope for appreciation in the medium to long term. The issue may give listing gains but looking at the pressure on margins of the company, the share may not be able to give decent returns in the long run.

Source:sptulsian.com

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IPO Talk: Kolte Patil Developers

Kolte Patil Developers is entering the capital market on 19th November, 2007 with a public issue of 1.90 crore equity shares of Rs.10 each in the band of Rs.125 to Rs.145 per share. The issue size at the upper band is Rs.275 crores with 25% dilution of expanded equity base of Rs.75.25 crores.

The company is a leading realty player in Pune market and out of total saleable area of 39.78 million sq. ft., 92% is located in Pune while 8% is in Bangalore. Both are hot and rising market for realty where saleability of the property is fast with good demand from middle and upper class of users.

28 projects with saleable area of 17.80 million sq. ft., of which 24 are in Pune and 4 are in Bangalore, are under development, which includes 5 IT Parks, 11 commercial complexes, 10 residential complexes, 1 service apartment and 1 integrated township. Balance area of 21.58 million sq. ft. is held for development.

The company has joint venture agreement with ICICI Venture Fund Management for three of its projects with equity and equity linked financing for the projects. This shows that the project and the company has been duly checked and verified which instill confidence.

The company has agreed to acquire 24 million sq. ft. of land in Pune where the cost of acquisition ranges from Rs.750 per sq. ft. to Rs.7 per sq. ft. The total cost for these lands are Rs.287 crores, of which, Rs.110 crores has already been paid, while remaining Rs.176 crores is mobilized via this issue. Bavdhan 3, a residential project has saleable area of 9.75 lakh sq. ft., which is in the vicinity of Bavdhan 1 and 2, where the company is developing an IT Park, of about 4 lakh sq. ft. Due to this project, residential project would have good demand, from ownership and rental.

For FY 07, the company achieved a total income of Rs.252 crores and PAT of Rs.83.56 crores, resulting into an EPS of Rs.14.85. The debt of Rs.150 crores is also not very high, considering its land bank.

The expanded equity of Rs.75.25 crores translates into a valuation of Rs.1,100 crores at the upper band. Saleable area of 39 million sq. ft. translates into weighted average value per sq. ft. of Rs.282. The same looks quite reasonable and good profits can be made by the company after development. Even, amount to be mobilized, from the issue would get partly used for development and construction of Rs.149 crores and balance Rs.176 crores shall be usd for making payment, for acquiring development rights.

Considering all these, issue looks reasonably priced, even at the upper band and hence investment is recommended.

Source:sptulsian.com

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IPO Talk: Edelweiss Capital

Edelweiss Capital is entering the capital market on 15th November 07, with a public issue of 83.86 lakh equity shares of Rs.5 each in the band of Rs.725 to Rs.825 per share.

Edelweiss is a known name in the financial market and the company with its nine wholly owned subsidiaries and two subsidiaries, is offering integrated financial services and products, including, investment banking, institutional equities, private client brokerage, wealth management, asset management and investment advisory services, insurance brokerage and wholesale financing.

For FY 07 the total income, on consolidated basis, was at Rs.371.25 crores with PBT of Rs.173.77 crores and PAT of Rs.109.00 crores. Of this, trading and arbitrage income was at Rs.114.22 crores. For five months ending 31st August, 07, the total income of the company was at Rs.284.86 crores, of which trading and arbitrage income was at Rs.103.46 crores. This has resulted in PBT of Rs.127.89 crores and PAT of Rs.80.93 crores.

If we analyse results of FY 07, and results of five months ending August 07, employee costs have increased by about 100%, on an annualized basis, while finance cost increased by about 350%, on annualized basis. As against this, core income of the company, being fee brokerage and commission income improved by just 50%, on an annualized basis.

For any financial services company, especially for an investment and broking and wealth management company, the core business revenue is from fee, brokerage and commission income and not the trading and arbitrage income. However, in case of this company, the bottomline over the years viz. FY 04 to FY 08 (part) has largely come from trading and arbitrage income. Hence the question arises - how far would it be acceptable to capitalize such income component, while valuing the company?

Even the debt component of the company rose sharply from Rs.386 crores as at 31st March 07 to Rs.976 crores as at 31st August 07. On gross basis, it has resulted in a yield of 13% for five months or about 2.5% per month. This kind of yield is given by arbitrage plays, even on a fund size of Rs.1,000 crores. So, the business model of the company is relying more on trading and arbitrage income which may not be perceived to be very healthy, on a sustainable basis, while valuing a company.

On an annualised basis, for FY 08, the company may have a bottomline of Rs.250 crores, which may result in an EPS of about Rs.33, translating into a PE multiple of about 25 times, at the upper band of Rs.825 per share. The market capitalization of the company, post issue, at the upper band of Rs.825 per share, works out at Rs.6,200 crores.

If we consider grey market premium of Rs.500 per share, market cap on listing would be about Rs.10,000 crores, which makes the issue definitely expensive when compared to its peer like Indiabulls Securities, India Infoline and Motilal Oswal.

The revenue model of the company does not give absolute comfort and looking at the grey market activity and quote, the subscription levels would be very high, resulting in poor allotment ratio. Still if somebody wishes to ride the momentum, one can go for it.

Source:sptulsian.com

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Mundra Port IPO Flash

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IPO Talk: Empee Distilleries

Empee Distilleries is entering the capital market on 1st November, 2007 with a public issue of 48 lakh equity shares of Rs.10 each, in the band of Rs.350 to Rs.400 per share.

The company is presently engaged into manufacturing of various IMFL products with its distillery located at Kanchipuram, Tamil Nadu with an installed capacity of 30.24 lakh cases per annum and another distillery at Kerala with an installed capacity of 30 lakh cases per annum.

For 9 months ending 30-06-07, the total income of the company was at Rs.546 crores with EBITDA of Rs.32.73 crores, PBT of Rs.21.78 crores and PAT of Rs.16.42 crores, on equity of Rs.14.20 crores, which results in an annualized EPS of Rs.15.40. Presently, purchase and marketing of IMFL in the state of Tamil Nadu and Kerala are with the state government and hence no distilleries operating in those states can sell its products to any other buyers, except the state governments and also can’t produce beyond its rated capacity, which is based on monthly rated capacity. If any distillery reaches its levels, say on 25th of any month, it can’t operate for remaining 5 days of the month. Hence, capacity utilization is already capped and only improvement in the working can be made by change in product mix. Since, marketing is state subject, even distilleries can’t advertise and to push its brands of IMFL, they need to motivate to state distribution shops by offering them incentives in other forms, to enable them to push the company products, by which higher allocation of better brand is received by the distilleries, for better margin.

Realising this, company is expanding its Tamil Nadu distillery capacity as also setting up grain based distillery in Andhra Pradesh and relocating a distillery in Karnataka. Due to surplus land, held by the company, the same is also developed by the company at Shriperumber an I.T. hub, of about 2 lakh sq. ft. The total fund requirement is estimated at Rs.182 crores, which is financed by term loan of Rs.22 crores, internal accruals of Rs.9.50 crores and proposed IPO of Rs.192 crores, considering at the upper band of Rs.400 per share.

Considering an estimated EPS of Rs.16, for FY 07 and considering upper band of Rs.400, the share is being issued at a PE multiple of 25, which is in line with the valuation of existing IMFL manufacturers like Radico Khaitan, Jagatjit Industries etc. United Spirits and United Breweries are discounted dearly due to leadership and national presence.

Hence, considering present level of activity, share may seem fully priced at Rs.400 per share. However, capacity expansion in Tamil Nadu would add quickly to the financials while Andhra Pradesh and Karnataka would add to the financials from next year. The realty stock would also add good cash flow, in the next three years, to the financials. All this leaves scope for further appreciation in the share price. Due to 25% dilution to the public, low floating stock would also keep share price at respectable levels.

If you have no reservations for a wine stock, this could definitely give you decent returns, even if subscribed at the upper band of Rs.400.

Source:sptulsian.com

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IPO Talk: Religare Enterprises

Religare Enterprises is entering the capital market on 29th October 07 with a public issue of 75.76 lakh equity shares of Rs.10 each, in the band of Rs.160 to Rs.185 per share. The proposed issue is 10% of the expanded equity of Rs.75.76 crores.

The company is 100% holding company for various subsidiaries engaged in stock broking, personal finance, commodities broking, insurance broking, wealth management services, venture capital, investment banking and art initiatives. Reliance Insurance Holding Co. Ltd., an insurance holding company, is 75% subsidiary of the company. The companies are all in place with strong organization network and capable to achieve scalability, over a period of time. Senior level executives and personnel have been recruited by various subsidiaries and business of all these subsidiaries would witness a sharp increase in time to come.

For FY07, on consolidated basis, total income of the company was placed at Rs.320.12 crores with PBT of Rs.47.60 crores and PAT of Rs.25.02 crores resulting in an EPS of Rs.3.67, on pre-issue equity of Rs.68.19 crroes. For 6 months ending 30-09-07, the total income was placed at Rs.307.96 crores with PBT of Rs.57.64 crores and PAT of Rs.36.73 crores, resulting in an annualized EPS of Rs.10.80. This means, present issue is being made at a PE multiple of 17, based on FY 08 earnings, and at the upper band of Rs.185 per share.

Presently, the company with its subsidiaries have 1,217 business locations managed by the company and its subsidiaries as also Business Associates in 392 cities and towns in India. The company proposes to establish 100 more branches for which Rs.26.50 crores has been allocated. Rs.50 crores has been allocated for funding retail finance business. Rs.60.60 crores has been earmarked for lending business and this amount has been sourced from pre-IPO placement, having made at Rs.160 per share.

The post issue equity of the company will be at Rs.75.76 crores and at Rs.185 per share, it has a market capitalization of close to Rs.1,400 crores which is very low, thus having huge scope of expansion. Also, in view of low-base and recent creation of organization for various subsidiaries, CAGR of atleast 40% for the next three years in bottomline is visible. This kind of performance would be well received by the market, post listing.

The issue is very attractively priced and investment is advised at the upper band of Rs.185 per share. This is probably the most economical broking stock which can give handsome returns to the short term and medium term investors as also good listing gains.

Source:sptulsian.com

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IPO Talk: Mundra Port & SEZ

Mundra Port and Special Economic Zone is entering the capital market on 1st November, 07 with a public issue of 402.50 lakh equity shares of Rs.10 each, in the band of Rs.400 to Rs.440 per share.

The company is the developer and operator of Mundra Port, which has a deep water draft ranging from approx. 15 meters to 32 meters in depth, at a distance of about 15 km. from shore, where it is used to unload crude, a big business potential. The port is principally engaged in providing port services for bulk cargo, container cargo, crude oil cargo, and value added port services including railway services. The commercial operations of the port has commenced from October 2001. Total cargo volume at Mundra Port increased from 11.7 million MT in FY 06 to 19.8 million MT in FY 07.

The concession agreement for the port is 30 years, which would expire on 17-02-2031, and 3,404 acres of land has been permitted to get used for the port alongwith a right to use the foreshore land and waterfront, and on 17-02-2031 the port shall be transferred to Gujarat Maritime Board.

The company presently has 15,665 acres of land available and 16,688 acres of additional land are at various stage of being transferred to the company, thus aggregating 32,353 acres for Port and SEZ.

The present equity of the company is Rs.360.04 crores which will increase to Rs.400.68 crores post IPO, of which, promoters stake would be 81.30% while 10% is being issued to the public, while about 8.7% is held by private equity investors like ICICI Bank, IDFC, Govt. of Singapore, Indivest PTE and 3i Venicle (Mauritius) Ltd.

For FY 07, the income of the company was placed at Rs.596 crores with PBT of Rs.175 crores and PAT of Rs.187 crores, due to deferred tax credit of Rs.13.32 crores. The total debt of the company as at Rs.30-06-07 was at Rs.1,399 crores while net worth was at Rs.764 crores.

If we calculate the enterprise value, post IPO, at the upper band of Rs.440 per share, the same works out at Rs.17,600 crores and adding debt of Rs.1,400 crores it works out to Rs.19,000 crores, which is very low compared to the size and operations of the Port and SEZ.

The company now has estimated a requirement of Rs.3,160 crores, which is mainly being Rs.700 crores for SEZ, Rs.2,000 crores for coal terminal project, Rs.255 crores in Adani Petronet (Dahej) Port, Rs.49 crores for Adani Logistic and Rs.156 crores for Inland Conware P. Ltd. This is being financed by debt of Rs.1,200 crores, internal accruals of Rs.525 crores and Rs.1,435 crores from proposed IPO. At the upper band, issue would mobilize Rs.1,770 crores which would take care of this requirement.

The noteworthy feature of the project is that such a big port is already operational, with virtually, entire land for port and SEZ having acquired. The potential of revenue generation is huge in view of all weather nature as also huge cargo inflow of coal mainly for Tata Power (4,000 MW) Ultra Mega Power Project and Adani Power, 2,640 MW, project. The crude cargo would also give huge revenue to the port. SEZ income would be added to the revenue and profitability of the company, in the coming years. However, concession period of 30 years, expiring in 2031 is considered to be of shorter duration.

As the infrastructure projects have huge potential and this being an operational Port, it represents an excellent investment bet and is recommended for investment even at the upper band of Rs.440 per share.

Source:sptulsian.com

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