FLY INDIGO !~Lists high at Rs 850+~Why!?~Read My October 2015 IPO Note

IndiGo has had a brilliant listing this morning at 10 am opening at Rs 856 on BSE and racing to a high of Rs 898 and  now is at Rs 860 levels at 10.20 am.The IPO Price was Rs 765

Why this Premium on Listing !?

Go through my  IPO Note below to get some sense and wonder why Retail Investors missed out and why many  ridiculed the Pricing and the over liberal Dividends

October 29,2015

SCRIP SCAN

FLY INDIGO !

IPO of InterGlobe Aviation Ltd (IndiGo)

Book Building Price Band : Rs 700 to Rs 765

IPO refuelling the IndiGo Fleet for Operations & Expansion

IPO refuelling the IndiGo Fleet for Operations & Expansion

Profitable Operations in 7 of 9 Operating Years as a Low Cost Carrier & Bumper Profits on significantly lower Aviation Turbine Fuel Prices in ongoing FY 16 indicate an Earnings Multiple of  just 11 on IPO Top Range Pricing of Rs 765

+

Scale Potential being tapped with Huge Expansion with current 97 Airbus Fleet to be expanded to over 527 (Orders placed) over the next decade

 

Major Risk

 Listing Gains may not be available as :

Indigo drained of all Networth by Dividends to show a negative Networth on June 30,2015 ! +  Offer for Sale Component is huge at @ Rs 1750 crs (nearly 60% of Issue Size) and nearly all shareholders are offloading part of holding

Thus Promoter Mindset perceived to be Greedy by Retail  Investors who tend to invest more on emotion & sentiment than on pure reason and thus response has been tepid from them

“Why should we pay a high IPO Pricing of Rs 765 just for Potential & Promoter Pocket. Moreover Bumper Profits & Over the Top Liberal Dividend Distribution Practice & Policy may not sustain into the Future!”

IPO Opened on

Tuesday, Oct 27, 2015

IPO Closes Today

Thursday, Oct 29, 2015

IPO Type

100% Book Building

Equity Shares  Offered

Fresh shares ~ 16.6-18.2 Million shares (worth Rs 1272 Crs) Offer For Sale (OFS) ~  22.8 Million shares being part of holdings from nearly all existing shareholders

Face Value of Shares

Rs 10

Price Band

Rs 700 – Rs 765 Per Equity Share

Issue Size

Rs 3018 Crs @ Rs 765 per share

Listing on

BSE, NSE

Bid Lot

15 Equity shares and multiple of 15 Equity Shares

Global Book Running Lead Manager

Citigroup Global Markets India Private Limited,  J.P. Morgan India Private Limited,  Morgan Stanley India Company Private Limited

Book Running Lead Managers

Kotak Mahindra Capital Company Limited

Object of the issue

1. Rs 1165 Crs towards retirement of certain outstanding lease liabilities and consequent acquisition of aircraft
2.Rs 33 Crs for purchase of ground support equipment for airline operations; and
3. General corporate purposes
4. To receive the benefits of listing of the Equity Shares on the Stock Exchange

QIB’s

50% of Net Issue Rs 1512 Crs (including Anchor) at upper band

NIB’s

15% of Net Issue Rs 454 Crs at upper band

Retail (upto Rs 200000)

35% of Net Issue Rs 1059 Crs at upper band

  

OVERVIEW

InterGlobe Aviation is the company  that owns & operates the Low Cost Carrier IndiGo Airlines. The airlines commenced operations in August 2006 and is now one of the largest players in the domestic airline space with the largest market share that’s fast closing in on 40%. It ranked seventh in terms of largest low-cost carrier globally in seat capacity in 2014, according to CAPA Centre for Aviation . At the end of August 2015, the airline had a fleet of 97 aircraft.

It has an order book of 180 A320 neo (new engine option) aircraft and expects to take delivery of 15 additional aircraft, including nine A320 neos by March 31, 2016. According to Airbus, A320 neo aircraft are expected to consume up to 15% less fuel than current generation A320 aircraft without shark-lets, which will further reduce fuel consumption per flight.

Indigo has also recently placed an order for 250 new Airbus aircrafts in 2015 which  are scheduled for delivery between 2018 to 2026. read more