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Day: May 15, 2013

My First Take on Just Dial IPO ~ WTF ! JUST DONT DIAL !

12 Comments / Controversies, Corporate Governance, Financial Services ~Credit Rating Agencies, Financing, Foreign Institutional Investors, Information Technology, Insider Trading, Interesting News Sightings, INVESTOR MISTAKES, IPOs, Media, Reflections, Sectors, STOCKS, VALUATION, When the Heart Explodes through the helpless Mind / By

WTF ! JUST DON’T DIAL ! 

That’s My First Take on the ‘Just Dial’ IPO ! 

How can SEBI,Exchanges,MOF,Company Law Board even allow this IPO of just under Rs 1000 crs ! ~ there are no  real Objects to the Issue as  it is fully an Offer For Sale by Existing and Part Exiting Promoters and PE  Shareholders and the Company does not get any IPO Money

If you do subscribe in the IPO you’ll make these Existing and Part Exiting Promoters & Other PE Shareholders more very very very filthy rich in no time and making  yourself poor in time to come ! 

The Just Dial IPO opens on May 20,2013 in the book building band of Rs 470 to Rs 543 for a FV Rs 10 share ~ Shares on Offer for Sale by 9 Shareholders  total 17497458 with 75% amounting to 13123095 shares reserved for QIB Portion (normally it is 50%) ~ At top band Price of Rs 543 the Issue Size is Rs 950 crs with all the Monies going to the selling shareholders that include three Promoters,V S S Mani,Ramani Iyer and V Krishnan and 6 Funds that include Sequoia III,SAIF,Tiger Global Four JD Holdings,Tiger Global Five Indian Holdings ,EGCS and SAPV ~ All are Part Exits except for EGCS who exits in full

Plan to write a  detailed note on this Obscene IPO but be forewarned now with these few details and perspectives

Am stunned simply at the gaul and audacity of the Company guided by it’s Lead Issue Managers Citigroup Global & Morgan Stanley  to come out with such an overvalued IPO that is totally an Offer for Sale providing part Exit to Promoters and some PE Players !

SEQUOIA’s Role Play as an Illustration 

SEQUOIA III (Yes,it also holds shares as Sequoia I and II) ,for example at the top band price of Rs 543,will make an obscene 836% Return inside four years on it’s initial Investment in July 2009 at an average Price of Rs 58 a share after  adjusting for a  crazy 55: 1 Bonus in 2010 ! ~ even this Initial Investment of  Rs 38.35 Crs was a Transfer of 118014 Shares on July 21,2009 from another Shareholder Clearmist Ltd at Rs 3250/share  The Liberal Bonus 55:1 on April 24,2010 took the holding to 6608784 shares ~ Of this they are offering 3207934 shares in this IPO and would stand to get Rs 174 crs at Rs 543 and yet be left with 3400850 shares  !

I mean they came in at Rs 50+ and want us to come in at Rs 500+ through their shares ! Whoa ! ~ all for a Company that they just pumped in Rs 250 crs again in  

Promoters exiting make even more ! as their holding cost is between Nil to just 64 paise per share ! read more

Shree Rama Multi-tech at Rs 8+~ Do not get too excited because Nirma lost in the Supreme Court and will have to honour an Open Offer at Rs 18.60

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Nearly Five Years ago on July 21,2008 I had covered Nirma refusing to honour their committment of an Open Offer to Shree Rama Multi-tech Shareholders and that the matter was before the Supreme Court

Nirma disallowed to withdraw offer for Shree Rama Multi-tech

Monday, July 21st, 2008

I have posted this Update on the above blog post but for easier access and viewing have repeated it as a new blogpost now

Latest Update Sunday,May 12,2013 

After years  finally Supreme Court upheld SAT and Nirma will have to make the Open Offer to Shree Rama Multi-tech Shareholders to pick up 20% Equity at Rs 18.60

http://www.business-standard.com/article/companies/sc-dismisses-nirma-plea-in-shree-rama-open-offer-113050900201_1.html

Shree Rama consequently hit 20% upper circuit at Rs 5.74 on Thursday,May 9,2013 and another 10% on Friday,May 10,2013 at Rs 7.56 to give a market cap of Rs 44 crs

Nirma of course has delisted at Rs 260 in March 2012

However Dont get too excited and expect Shree Ram Multi-Tech to rise to Rs 18+ as only 20% of the Equity of Rs 31.76 crs (FV Rs 5) is the Offer Burden and so all shares will not be accepted  and post offer scenario the Share Price may drop below par of Rs 5 again

Shree Rama Multi-tech boasts of top Clientele but continues to make Operating Losses though in FY 13 it has recorded a Profit of over Rs 8 crs for the 9mFY 13  because of  Exceptional Item that relates to a settlement with a lender of less than 1/3 the amount (see below)

The accumulated Loss remains huge and Networth remains negative at @ Rs 90 crs with Long term Borrowings yet above Rs 200 crs

The company has filed fresh scheme of compromise and arrangement u/s 391 of The Companies Act, 1956 vide petition no.401 of 2008 in Gujarat High Court and the same is pending before the Hon’ble High Court

During the first quarter ended June 30,2012 in FY 13 the company has entered into settlement with one of the lenders and principle amount of Loans and Borrowing of Rs 72.63 crs was settled for Rs 22.57 crs. The resultant gains were credited to the P & L A/c by Rs 24.39 crores and to Capital Reserves by Rs 25.66 crs as per the end use of the Loans

Will be interesting to see if Shree Rama Multi-tech can be reborn again after  Scheme of Compromise and Arrangement is passed by the Court and further settlements take place with lenders to bring down Debt significantly ~ After all the Company  did notch Sales of Rs 72 crs in FY 12 and Rs 64 crs for the 9m FY 13

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