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“In India, companies may fall sick, but promoters rarely do!”

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Yo! L & T Finance Holdings zooms 12.7 % to close at Rs 72.40 today ~ It holds 4.68% of City Union Bank (CUB) which is cum rights Rs 59.75

Yo! L & T Finance Holdings zooms 12.7 % to close at Rs 72.40 today ~ It holds 4.68% of City Union Bank (CUB) which is cum rights Rs 59.75

The market air swirling around to justify this surge is that very soon L & T Finance will get the RBI and government go ahead to increase it’s stake in CUB ~ It holds 19195012 shares or 4.68% of the FV Rs 1 Equity Capital of Rs 40.99 crs as on September 30,2012~CUB has over 80000 shareholders

Interestingly 49 FIIs held 21.86% of the CUB Equity on September 30,2012

CUB is coming out with a rights and employee issue not exceeding Rs 400 crs with record date set at November 23,2012~ The Rights Terms are 1:4 at Rs 20 with 102487972 shares reserved for shareholders with no renunciation right but they could apply for more.The Employee Issue is for a whopping 26500000 shares.The Fresh Issue size is Rs 258 crs

As on 31st March, 2012, CUB had 3347 employees comprising of 47 executives, 1006 officers, 1906 clerks and 388 sub-ordinate staff.

Assuming 3500 employees now,it would mean an average of fresh 7500 shares each in the new issue at Rs 20=> this computes to a gain of @ Rs 32 on the ex rights price of  @ Rs 52 => that’s a cool average gains of Rs 2.40 lakhs per employee

Have a Look at CUB’s Financials ~ it shows a limited downside ~ in fact the 52 week High/Low has been quite robust at Rs 61/39 on BSE

Rs Crs unless otherwise stated

Half Year September 30,2012

Adjusted for November/December 2012  Rights & Employee Issue

Full Year March 31,2012

Equity (FV Rs1)

41

41+10.25 +2.65=53.9

40.82

Reserves

1358

1358+245.1=1603.1

1202

Networth

1399

1657

1242.82

Book Value in Rs

34

30.74

30.4

Net Profit

136

136

280

EPS in Rs

3.3

2.5

6.86

Deposits

17689

16341

Advances

13330

12137

Gross NPA %

1.24

1.01

Net NPA %

0.6

0.44

Cum Rights Share Price in Rs

59.75

51.8 ex Rights

P/E

9.05

10.36

P/BV

1.76

1.69

So if L & T Finance is allowed to increase it’s stake in CUB beyond the current ceiling of 5% with an ultimate objective of taking over the Bank,when the RBI Regulation Act is amended and the fresh banking guidelines allows such a takeover,what do you think will be the share price of CUB ex rights !

Interestingly a Broker has downgraded CUB to a Sell from a Buy in it’s November 5,2012 Report ~ Really ! ~ I may just connect with their Director of Research to request them to relook,review and rethink this call ~ they make it at Rs 59 with a target price of Rs 58! 🙄

 

IPO Failure : Samvardhana Motherson Finance Ltd issue closed today with just a shade over 23% subscription…BRLMs Standard Chartered Securities and J P Morgan India and Selling Shareholders decide not to proceed with the Issue

The Idea of this Blogpost is not to rub salt on the wounds but to again expose the twins Greed and Fear that characterize our markets …either the two BRLMs grossly overestimated their own ability or they grossly underestimated the intelligence of Investors or both !

IPO of Samvardhana Motherson Finance Issue closed today grossly undersubscribed...The Two Book Running Lead Managers Standard Chartered Securities (I) Ltd and J P Morgan India Pvt Ltd and the Selling Shareholders seeing this situation have decided this evening not to proceed with this Issueas if they had any choice in this matter,as even date extension would have not helped the issue succeed !

http://www.bseindia.com/xml-data/corpfiling/AttachHis/Samvardhana_Motherson_Finance_Ltd_040512.pdf

Of 127696518 Equity Shares available for subscription in the book building range of Rs 113 to Rs 118,only 29586650 shares were bid for as below….that’s just a shade over 23% subscription

Bid and Quantity for Samvardhana Motherson Finance Ltd

Cumulative (BSE+NSE)

Last updated on
Friday, May 04, 2012  5:15:00 PM
Price(Rs.) Cumulative Quantity
113.00     29586650    
114.00     27811400    
115.00     27810850    
116.00     15817050    
117.00     15816200    
118.00     15816100    
Cut-off     587250    

I’m assuming it was the BRLMs that guided the Company in the IPO Pricing Band of Rs 113 to Rs 118…..if so,they need to be pulled up by the Company for having mislead them for such a high Pricing Band,given the Market Sentiment prevailing ….Such Pricing left nothing on the table for Investors and was largely instrumental in the IPO not succeeding

A Good and Costly Lesson Learnt of the Consequences of  Mispricing IPOs in a Challenging Environment….Samvardhana Motherson Finance should have priced the IPO much lower  in the Rs 75 to Rs 80 band or else awaited better times if they were keen to launch the IPO at higher Pricing like they just unsuccessfully did

When reviewing this Issue and the Prospectus I had found the Pricing high and was skeptical of the IPO sailing through,more so as it was a fairly big issue of over Rs 1500 crs …seems I was right….expect BRLMs to blame Sentiment and not the IPO Pricing for this Failure !

As for the Macro Picture,all those who have been in touch with me or following my blog in the recent past will have sensed why I was not excited and  why I thought 17000 Sensex will break on the downside like it did scaringly today…1.87% and 320 points down to 16831…The Month of May looks ominous for the Markets…so sell and go away in May as they say…take a vacation…if you can afford it though !

Anil Ambani tries to lift Shareholder Spirits…and maybe Share Price too ?! at the Reliance Cap AGM Today

Anil Ambani tries to lift Shareholder Spirits…and maybe Share Price too ?!  at the Reliance Cap AGM Today

Bonus and Banking & Insurance Business Stake Sale…that’s what Anil Ambani stated today at the AGM to enthuse all who yet beleive he can surge back to Glory

He’s not really treading any new Path here….Two years ago he said more or less the same at the AGM

A subdued looking Anil Ambani addresses ‘Share Owners’ at the Reliance Capital AGM this morning

Tuesday, July 21st, 2009 

Bonus ?…What diff will this make ?…Equity is Rs 246 crs..Reserves a shade under Rs 8000 crs…Debt is just over Rs 20000 crs….Earnings have been declining…Share Price is under 1.5 Book

In 2009 the Market Cap was more than double of the Rs 10000 crs it is now with Reliance Cap at Rs 900 levels from the current Rs 400

Methinks like methought in 2009 that Anil Ambani can greatly redeem himself by coming out with a Reliance Insurance IPO at Par Rs 10

Cheers !

Your Equity Approach & Strategy will or should depend on whether you want to make money or don’t want to lose any !…NHPC or NTPC ?…or Delta?….New Listing L & T Finance is a safe bet for both objectives

Your Equity Approach & Strategy will or should depend on whether you want to make money or don’t want to lose any !

So if you are a guy who sweats at falls you ought to be taking less risk and looking at the ‘N’o or Low risk ‘N’s…NHPC @ Rs 25 and NTPC @ Rs 175 

But if you enjoy or indulge in Equities hoping for the windfalls,then perhaps you should chase Delta @ Rs 98…Rakesh Jhunjhunwala increased his stake today in this Jaidev Mody company

However what may interest both set of Investors..those not willing to risk capital or those willing to aggressively risk it…. is L & T Finance Holdings that listed today……Issued at Rs 52,it listed around this price,went up marginally and then slacked to below Rs 50…bounced back up to Rs 51 and then again dropped to close below Rs 50

This is Larsen Groups first Public Offer in nearly 25 years and that too a share with FV of Rs 10 offered at Rs 52 and available below Rs 50 on first day of listing !…..It’s and operation of scale and spreads…. and L & T Finance comes out a winner in both…my valuations for it are strong over One to Three Years….It must be in any and every Investment Portfolio    

Cheers !

Biyani’s Future Ventures IPO…First you seduce at an obscene premium…and then now you seduce at Par !

Recent Past Pedigree Problem

So does FUTURE VENTURES really have a PROMISING FUTURE or is it just FUTURE PROMISES ?

Biyani’s ‘Future Ventures’…First you seduce Investors with a Future Capital Holdings IPO at an obscene premium…and now you seduce them at the other extreme with the Future Ventures IPO at near Par !

 In January 2008,just before Reliance Power seduced Investors at an obscene premium,Biyani’s Future Capital Holdings (FCH) seduced Investors with an IPO at Rs 765 !…just over three years down the line it has collapsed 80% to Rs 160 thereabouts…legal…yet criminal ! 

 Investors saved from FV IPO at a heavy Premium in 2008

And if Biyani had had his way he would have launched the IPO of even Future Ventures (FV) in  2008 in an attempt to gather Rs 2000 crs in it !…Rs 1500 crs would have been brought in by Promoters….probably monies from other Future Group Companies and in all probability from the IPO proceeds of FCH !……surely even the FV IPO  would have been at an obscene premium too….after FCH IPO, an EGM was called in early March 2008 to raise the Authorised Capital of Futures Ventures to Rs 5000 crs ! to pave the way for the IPO 

FV IPO Size now is for Rs 750 to Rs 825 crs in a bookbuilding range of Rs 10 to Rs 11…methinks this range is rather silly and senseless and it should have been a Fixed Price IPO

What will FV do ?

Biyani is resting on way past laurels with Pantaloon and Big Baazar

His own businesses are simply tight on cash and margins and lack of any fresh sustainable thrust in revenues and profits…SACH !….Oh ! that’s also the new brand of Products launched in 2008 in a venture with Sachin Tendulkar ! 

So now Biyani wants public monies in FV to invest in other businesses !…”trust my business and investment acumen” he seems to say…..however his own partner,with who he parted ways,Sameer Sain,ex Goldman Sachs raised questions on this….they both did not see eye to eye with each other on the business model to take the Future group forward

So should we trust Biyani and his FV ? 

FV is a book building Issue of 75 crore shares of Face Value Rs 10 at par of Rs 10 to Rs 11…it has opened today…however there are no Anchor Investors….unlike last weeks full subscription in the Anchor Investor quota of 30% of the 50% QIB Portion of the heavily oversubscribed IPO of the other Systematically Important Non Deposit taking NBFC,Muthoot Finance Ltd read more

Emami Infrastructure Ltd at Rs 91…..Listed on July 28,2010 with suspicious and crazy gyrations of near Rs 600 on the upside and below Rs 90 on the downside…What’s the Story!?

I’ve been asked to Value newly listed Emami Infrastructure Ltd (EIL) after it’s Price Acrobatics displayed on the first day of Listing,on Wednesday last week!  

I needed a ‘Saridon’ at the end of the Interesting and quite revealing Valuation exercise !…there should be a law against the number of companies that a Real Estate Player opens in the Group !…you will understand once you go through this blog

Emami Infrastructure Ltd listed on Wednesday,July 28,2010 and Price swings were crazy…opening at Rs 250 on NSE and then touching  heights of Rs 598.80 and lows of Rs 86 and closing at Rs 104.8…closed lower at Rs 101 on BSE…and today it’s Rs 91

On the first day of Listing,there are no Circuit Breakers…so price mischief through volatile swings is easily facilitated…seems Emami Infrastructure too is a prey to this Game…SEBI is planning to investigate Listing Day swings…also have a look at the Bulk deals on that day on BSE (source bse website)

BULK DEALS ON BSE ON THE FIRST DAY OF LISTING OF EMAMI INFRASTRUCTURE LTD

Scrip Code:533218   Date : Wednesday ,July 28,2010

Deal Date

Scrip Code

Scrip Name

Client Name

Deal Type *

Quantity

Price

28/7/2010

533218

EMAMI INFRA ALIVE CONSULTANTS

B

182804

113.64

28/7/2010

533218

EMAMI INFRA GENUINE STOCK BROKERS PVT. LTD.

B

512612

112.68

28/7/2010

533218

EMAMI INFRA SMART EQUITY BROKERS PRIVATE LIMITED

B

389393

118.08

28/7/2010

533218

EMAMI INFRA CROSSEAS CAPITAL SERVICES PRIVATE LIMITED

B

295142

111.01

28/7/2010

533218

EMAMI INFRA AKSHI FINANCE PRIVATE LIMITED

B

338590

108.89

28/7/2010

533218

EMAMI INFRA HOTEL LIBRARY CLUB P LTD

B

128475

122.38

28/7/2010

533218

EMAMI INFRA MARWADI SHARES AND FINANCE LIMITED

B

205207

117.78

28/7/2010

533218

EMAMI INFRA OPG SECURITIES P LTD

B

840352

115.37

28/7/2010

533218

EMAMI INFRA ALIVE CONSULTANTS

S

182804

114.33

28/7/2010

533218

EMAMI INFRA GENUINE STOCK BROKERS PVT. LTD.

S

512612

112.90

28/7/2010

533218

EMAMI INFRA SMART EQUITY BROKERS PRIVATE LIMITED

S

389393

118.50

28/7/2010

533218

EMAMI INFRA CROSSEAS CAPITAL SERVICES PRIVATE LIMITED

S

281888

112.00

28/7/2010

533218

EMAMI INFRA AKSHI FINANCE PRIVATE LIMITED

S

338590

108.89

28/7/2010

533218

EMAMI INFRA HOTEL LIBRARY CLUB P LTD

S

128475

119.61

28/7/2010

533218

EMAMI INFRA MARWADI SHARES AND FINANCE LIMITED

S

205207

117.87

28/7/2010

533218

EMAMI INFRA OPG SECURITIES P LTD

S

840352

115.69

28/7/2010

533218

EMAMI INFRA T.ROWE PRICE INTERNATIONAL A/C NEW ASIA FUND

S

300120

97.76

* B – Buy, S – Sell

Except for one,all have squared off at marginal profits…the only genuine sale is by an FII, T Rowe…they were in the Top Ten Shareholders list at the time of the Scheme of Arrangement…..clearly these are synchronised bulk trades to create volumes on the bourse…they do not serve the purpose of efficient price discovery,or genuine,credible and authentic trading……it’s a rampant misuse of the Bulk Trade Window….but why does this misuse continue !?……no prizes for guessing !….a lot of people,part of a nexus, should be brought to book for destroying the sanctity of our markets

Let’s turn to the Valuation of Emami Infrastructure Ltd….but before I do that,let’s revist how Emami took over Zandu in 2008  

An Ambitious Emami Group wins a Hostile Bid for Zandu

Remember how in 2008 for Rs 700 crs the Agarwals of Emami Group took over Zandu Pharmaceuticals from the Parikhs (no relations of mine!) in a hostile takeover battle…with more than a little help from the Anand Rathi Group…a lot of Coincidences here that surround the Birla Group….Emami Promoters are ex Birla Group Managers from the 1970s…Anand Rathi too headed the Finance Function in a leading Birla Company….Birla Financial Companies were aggressively buying Zandu in 2007/8 before the takeover bid….A Zandu share of FV Rs 100  was available below Rs 1000….the hostile takeover took it to Rs 20000 !…Friday,Zandu share was quoted at Rs 3100…..but effectively yet near Rs 16000 as a Zandu Shareholder was given 14 free shares of flagship, Emami Ltd of FV Rs 2 for every one share of FV Rs 100 held in Zandu under the Scheme of Arrangement of 2009..last week Emami split the FV from Rs 2 to Rs 1 and is quoted now at Rs 457 for a FV Rs 1 Share  read more

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