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

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

Facebook a good buy at US $ 22 ? ~ Consider these Short Term Risks

Facebook a good buy at US $ 22 ? High/ Low in the three months  since IPO earlier this year is US $ 45 (Listing Day,May 18,2012) and US $19.82

The Consensus is Bullish going Forward a Year with target price to recover to IPO Pricing Levels of US $ 38

However Consider these Short Term Risks (source : business insider)

 

  • Significant Increase in Floating Stock in the next few months

Currently 420 million shares @ 15% of the Equity are issued in the IPO are floating ~ Ken Sena of Evercore works out that in the next few months this floating stock will move up significantly as below and while at this low Price Shareholders may not wish to sell,there will be selling pressure at significant rises

August 15, 2012: 268 million shares, 10% of shares outstanding
October 14,2012: 249 million shares, 9% of shares outstanding
November 13,2012: 1.332 billion shares, 49% of shares outstanding
December 13,2012: 124 million shares, 5% of shares outstanding
May 17, 2013: 47 million shares, 2% of shares outstanding

  • Facebook facing huge Cash Outflow of @ US $ 3 Billion towards Tax Charge for vesting of Restricted Stock Units (RSUs) to Employees in the next few months

The Value at which this RSU is vested is taken as compensation to employees and Facebook will have to pay withholding tax ~ @ 400 million RSUs have been granted of which 273 million come up for vesting in October and November this year ~ Facebook has Cash of over US  $10 billion  so it won’t have to face any crunch on this .However such an outflow will cause Facebook to rethink buy backs and other application of funds that they be planning ~RSUs actually create some value for Employees depending on market price ~ it is preferred over stock options that may lapse if not exercised because they are cost more than the market price

  • Valuations yet high ~ @ 35 times FY 13 Earnings against just 12 and 13 times for Apple and Google

Facebook attracted unprecedented Demand for Shares in the IPO Process ~ Top Management decided to raise the quantity on offer and also the IPO Price to US $ 38 ~ the Premium was unprecedented too ~ as the potential of significant Non Linear Earnings Growth over the coming years was hyped up considerably ~ Irrational Exuberance on hindsight ~ Rationality and Sanity followed almost immediately and Share Price has been declining,with a few bounce banks, ever since IPO

So if Facebook has to dive to Apple Valuations,the Share Price has to dive by half  to @ US $ 10 ! ~ It’s already halved from IPO Levels of @ US $ 40 ! ~ So unless Facebook is able to amply demonstrate in advance and in the next few quarters that it will  deliver on non linear growth in earnings in the coming years,expect the Share Price of Facebook to stay range bound at current price levels in the near future

However having warned this,the Faith in Facebook remains quite intact ! ~ one cannot overnight create a social network of 900 + Million members ~ and if mobile advertising takes off big time, such a membership database will attract advertisers by the drove  as they will get more bang for their buck ~ some corporations  have dropped or reduced facebook advertising  as they currently don’t see value as there is a perceptible drop in members accessing facebook to play games online ~ most prefer twiddling with apps and games on mobiles now ~ facebook realises this and is adapting ~ It can learn from the rapid decline in the share price of  Zygna,the creator of games online but which don’t have a mobile app and platform read more

Facebook IPO Price Fixed at US $ 38…Historic and Much Awaited Nasdaq Listing sees Record Volumes but Underwriting support to not let Price drop below US $38…Zuckerberg how about an Indian listing !?

On the Face of it Never Judge the Book by It’s Face !….that’s the lesson learnt from Facebook’s lack lustre Listing yesterday 

Facebook IPO Price Fixed at US $ 38…Historic Nasdaq Listing sees Record Volumes and Underwriting support to not let Price drop below US $38…Quotes were expected to cross US $ 50…Never happened….Instead FB struggled right through the day 

http://www.nasdaq.com/symbol/fb

A record over 580 Million Shares were traded on the first day of Listing with the official Opening at US $ 42 and Official Closing at US $ 38.37….High & Low recorded was US $ 45 and US $ 38

Clearly the underwriters Morgan Stanley and all were supporting the Share at US $ 38 not allowing it to fall below the IPO Price

On hindsight,it would have been better to have kept the original price band of US $ 28 to US $ 35…then this Listing would have been deemed successful…..Price was raised just three days ago on record  demand….Within 20 minutes of Trading the Price dropped below US $ 40 and began quoting at IPO Price Level of S $ 38 and had to be supported the full day by the Underwriters

The Market Cap yet is a strong @ US $ 105 Billion

It was never a Valuation Listing….but a Momentum and Sentiment Lusting (Yes,deliberately spelled Lusting!)  ! 

For Day Traders,who were expecting it to be a Magical Listing Day Opportunity,it turned out to be a Nightmare !

Pitched at over 100 times Earnings and 25 + times Sales,Facebook clearly was being offered at a Huge Premium….Imagine the surprise,and even consternation of those who were  allotted all that they had applied for !…they had applied for more shares than they really could afford or wanted,as they expected only a partial allotment…..in three and five months the lock in would also be out and the floating stock would increase substantially

So going Forward,what is FB’s Revenue Model ?….it has to be Targeted Increased rate Advertising….It has 900 Million members…there are @ 7 Billion People on this Planet…so it’s going to be like a Telecom ARPU story….Average Revenue Per Unit….It surely has its work cut out…Now the 29th Richest man on this Planet at US $ 19 + Billion worth,Founder Mark Zuckerberg reasserted FB’s objective when he rang the Bell by Remote from the FB HQ at Menlo Park,CA …” It’s not about the Money….We want to make the World a More Open and Connected Place”….the message may just wear off shareholders if Price drops below IPO Levels next week  read more

I’m inclined to side with Shah Rukh Khan …v/s MCA which has proposed a 5 year ban on him to enter Wankhede Stadium…and why IPL Chairman Rajiv Shukla may too just side with him !

I’m inclined to side with Shah Rukh Khan …v/s MCA…I blogged on this in detail yesterday…and why IPL Chairman and Minister of Parliamentary Affairs,Congressman and ex Journalist and TV Anchor Rajiv Shukla may too just side with him !

The Issue is already Political….Laloo Prasad and Kirti Azad side SRK…even  Mamata Banerjee,the CM of West Bengal has requested that MCA reverse the proposed 5 year Ban on SRK to enter Wankhede Stadium in Mumbai…BCCI is to make the final decision,as Rajiv Shukla asserts

There’s a strong business link between SRK and Rajiv Shukla’s listed Company BAG Films…and also a stink of Insider Trading in it a few years ago

Check out my blogs on this in 2010,2009 and 2008 as below

 

IPL Cricket Stink…providing a link to some bluntness

Wednesday, April 28th, 2010

B.A.G. Films and Media Ltd back to under Rs 13 from just under Rs 105…It had never deserved to shoot up like this!

Monday, February 2nd, 2009

SRK in the BAG !..but BAG not in the BAG!

Monday, July 14th, 2008 Cheers !

It’s Facebook Time on Nasdaq soon !…Quick Trading Opportunity beckons….US $ 11.8 billion IPO closing today two days before schedule…US $ 35 Offer at Top end gives a US $ 96 Billion Valuation !

Hey ! We Facebook guys have made 28 year old Facebook Founder Mark Zuckerberg Really Rich…Facebook closes it’s US $ 11.8 Billion IPO today…two days before actual closing… invited offers for 337.4 million shares between US $ 28 to US $35 to give a US $ 96 Billion valuation at top end…lists under FB on Nasdaq on May 18…Apple Co-founder Steve Woznaik ready to buy at any price !…however,a Bloomberg poll showed that 79% think it is overvalued !…methinks it’s going to open strong on listing

Fast Action coming up soon in Facebook on Nasdaq….Indian Residents can easily invest overseas now…So open your overseas brokerage accounts asap…either directly or through a few Indian Brokerages that are offering to do so and  manage these accounts for you….Quick Trading Opportunity in FB beckons strongly

Cheers !

Performance of the BSE Sector Indices in 2011/12 and to date is quite Interesting

Performance of the BSE Sector Indices in 2011/12  and to date is quite Interesting ….What provoked this post is Sameer’s counter argument in my earlier post…he is bullish in the short term,citing the favourable upmoves in the Pharma,Cement and Auto Sectors…I’m looking at the Bigger Picture and I’m not so excited really as Macros are clearly playing up and this Government is unlikely to push big ticket reforms…we need to await 2014 General Elections,which I fear may yet again through up a fractured verdict…but I hope with a more reform friendly and decisive coalition !

Have a Look at the Performance of the BSE Sector Indices in 2011/12 and to date…Quite Interesting…The Reds & Greens signal fall or rise/holding up from over a year ago  

The Alltime High & Low Columns are quite revealing

  • FMCG,Healthcare and Auto Indices  have registered All time Highs this Month…with consistent Wealth Creation in the 21st century in FMCG and Healthcare while a huge surge in the last four years in the Auto Sector
  • Quick and huge  wealth destruction in the IT sector in 2000/2001,the Metals and Power Sector inside Ten months in 2008 between January and October and in the Realty Sector between Jan 2008 and March 2009  

PERFORMANCE OF BSE SECTOR INDICES AS ON APRIL 26,2012

Sector

Valuation

Current Close

April 26,2012

A Month Ago

A Year Ago

52 Week

All Time

%

Mkt Cap

PE

PBV

Index

%

Index

%

High

Low

High

Low

IT

9

19.4

6

5509

6011

(8.4)

6244

(11.8)

6361

4639

8678

Feb 2000

835

Sept 2001

Teck

12.6

23.4

3.5

3239

3516

(7.9)

3764

(13.9)

3799

2982

4188

Oct 2007

547

Sept 2001

FMCG

7

35

14

4806

4386

9.6

3739

28.5

4834

3562

4834

April 2012

706

April 2003

Consumer Durables

0.7

20

2.7

6509

6377

2.1

6491

7097

5063

7370

Nov 2010

414

Sept 2001

Metals

9.4

14

2.4

10981

10978

16723

(34.3)

16723

9191

20495

Jan 2008

3807

Oct 2008

Oil & Gas

11.7

16.9

1.8

7896

7910

10093

(21.8)

10102

7495

14269

Jan 2008

2529

Aug 2004

Capital Goods

3.8

15.9

3.1

9424

9933

(5.1)

13710

(31.3)

14108

7807

21021

Nov 2007

481

Sept 2001

HealthCare

4.4

57

4.4

6747

6391

5.6

6191

9

6879

5757

6879

April 2012

985

April 2001

Bankex

9.8

13.3

2.1

11666

11571

13520

(13.7)

13501

8947

15108

Nov 2010

1614

June 2003

PSU

25.7

13.8

2

7160

7235

9169

(21.9)

9254

6204

11205

Jan 2008

734

Sept 2001

Auto

4.9

22

4.8

10745

9861

0.1

9678

11

10829

7814

10829

April 2012

2128

Dec 2008

Realty

1.2

20.9

1.4

1677

1726

(2.8)

2346

(28.5)

2311

1348

13848

Jan 2008

1298

March 2009

Power

7.2

15.3

2

1991

2082

(4.4)

2724

(26.9)

2714

1725

4929

Jan 2008

1275

Oct 2008

  • IT  shows a Drop,but TCS has outperformed Infosys ,which has slumped and the latter holds 48% weightage in the Index ! against just 29% by TCS !…this needs to be rectified by BSE rightaway…more so as the Market Cap of TCS is Rs 233301 crs against just Rs 135415 crs of Infosys !….The Index tracks the share price of  10 Companies with 88% weightage of just three …Infosys,TCS and Wipro …Other interesting constituents are Oracle Finance and Financial Technologies 
  •   Techk comprises of 30 IT,Telecom,Media and Communication Companies and has mirrored IT fall
  • FMCG has been the years Darling with ITC (55% weightage) and HUL (18% weightage) outperforming to allow the Index to hit Alltime Highs…11 Companies constitute this Index…Interesting ones are the two Kingfisher Group Companies,United Spirits and United Breweries…. and Tata Global (spotted this at Rs 80 late in 2011) and the huge 2010/2011 winner Jubilant Foods (Dominoes Pizza)
  •  Consumer Durables has heavyweight Titan with 51% weightage in the Index…It’s been a flat year
  • Metals has seen a bad year…In fact this Index has slumped the highest @ 35% over last year…75% Index weightage is in Five scrips led by Tata Steel with 22% followed by Coal India,Jindal Steel,Sterlite and Hindalco
  • Oil & Gas too has seen a bad year…Reliance with a 54% weightage and ONGC with a 22% weightage aggregate a skewed weightage of 76% in the Index
  • Capital Good Giants,India Proxy Larsen and Toubro and BHEL have a weightage of  54% and 16% respectively in the Index that monitors the share price of  17 companies,that also include Siemens,Suzlon,Havells,Thermax,ABB and Punj Lloyd…it’s been a shocking year for both,Larsen and BHEL on the bourses and the steep fall has unnerved even the aggressive Investors
  • Healthcare has held up well in 2011/12…19 Healthcare and Pharma Companies comprise the Index with Sun Pharma (18%),Dr Reddys (17%) and Cipla (12%) leading the weightages
  • 14 Banks comprise the Bankex with the top three weightages given to HDFC Bank (26%),ICICI Bank (25%) and State Bank of India (16%)…it’s been a very challenging year for the Banks given the slowdown in the Economy and high interest rates affecting credit offtake…the rising level of NPAs remains a threat
  •  PSU ~ The Index has 60 PSU Companies in it ! with Coal India and ONGC leading at 14% each in weightages followed by State Bank of India with 9% and NTPC with 8%…Interestingly these 60 Comnpanies have an aggregate  Market Cap of Rs 1561821 crs currently….and this smartly and significantly  constitute nearly 26%,that’s over one fourth of the Total Current Market Cap of BSE of Rs 6108734 crs 
  • The Auto Index covers 10 Companies across the sector spectrum of leading four HMV and LMV wheelers & Two Wheelers,Battery (Exide) & Engine (Cummins) Manufacturers and Tyres (Apollo)…Aggregate 86% weightage is given to top Five Vehicle Players led by Tata Motors with a 31% weightage .Interestingly and encouragingly too,this Index has held up well,largely due to outperformance by Tata Motors…However Index aggregate Market Cap is below 5% of total market cap 
  • Realty Index tracks the share price of 12 realty companies…DLF lead weightages with 33% followed by Unitech (17%),Oberoi (10%) and HDIL (10%)…Shobha,Godrej Properties,Phoenix,D B Realty are some others in this Index…it’s continued to be a sliding year for this sector that’s been saddled with huge crippling debt,huge inventories and delayed projects….but how much more lower can it go !…search for contrarion winners in this sector over the long term…had spotted Orbit at Rs 20 + late last year and early this year…Price has doubled to @ Rs 48 currently…and even Indiabulls Real Estate at Rs 45 + levels after demerger of Indiabulls Power….it surged to Rs 80 levels before reacting now to Rs 62 …But Both do not form part of this Index 
  • Power Sector is battling  Source Feed Supplies of Coal and Gas that’s crippling Operations and resulting in lower output and capacity underutilisation….Implementation of both,Public and Private Mega Projects too has been delayed for a host of reasons …This Index tracks 19 companies in the Sector that cover Generators,Transmitters and Distributors as also others that supply Equipment like BHEL which has the second largest weightage of 15% …NTPC with a 20%  leads the weightages….Incidentally Private Power Players like Reliance Power  and Adani Power have a weightage of 4% and 3%  respectively….Given the Challenges faced,the Year has been quite unkind to this Sector…the Index has slumped @ 27% in the past year…anyone for a Contrarion Bull Play here !? 
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