Showing posts with label MarketBuzz. Show all posts
L&T Infotech IPO review
L&T Infotech has come out with Initial Public Offering (IPO) of 17,500,000 Equity Shares of Rs 1 aggregating up to Rs 1,400.00 Cr. Incorporated in 1996, Larsen & Toubro Infotech, a subsidiary of Larsen & Toubro Ltd., a Mumbai based IT Solutions & Services Company. The company is ranked 6th largest IT company in India in terms of export revenues and among top 20 IT service provider in the world.
Competitive strengths of the company are as following:
1. Strong domain focus enabling Business-to-IT Connect
2. Strong parentage and brand equity of our Promoter
3. Established long-term relationships with our clients
4. Extensive portfolio of IT services and solutions
5. Track record of established processes and executing large, end-to-end, mission critical projects
6. Strong management culture
7. Conducive work environment to attract and retain talent.
The price band for the issue is fixed at Rs 705-710 and the offer comes at a price equity of 13.0x-13.1x trailing (FY16) earning per share (EPS), which is at 25-30 percent discount to peers like Mindtree & Hexaware. L&T Infotech is 24 percent and 83 percent larger than Mindtree & Hexaware, respectively in terms of revenue, and earns substantially higher returns on equity (RoE).
The issue is open from July 11 - July 13.
So, should you subscribe?
The offer price looks attractive, given its strong parentage, healthy return ratios and high dividend payout. The promoters have left something on the table for the investors in terms of valuations.
Competitive strengths of the company are as following:
1. Strong domain focus enabling Business-to-IT Connect
2. Strong parentage and brand equity of our Promoter
3. Established long-term relationships with our clients
4. Extensive portfolio of IT services and solutions
5. Track record of established processes and executing large, end-to-end, mission critical projects
6. Strong management culture
7. Conducive work environment to attract and retain talent.
The price band for the issue is fixed at Rs 705-710 and the offer comes at a price equity of 13.0x-13.1x trailing (FY16) earning per share (EPS), which is at 25-30 percent discount to peers like Mindtree & Hexaware. L&T Infotech is 24 percent and 83 percent larger than Mindtree & Hexaware, respectively in terms of revenue, and earns substantially higher returns on equity (RoE).
The issue is open from July 11 - July 13.
So, should you subscribe?
The offer price looks attractive, given its strong parentage, healthy return ratios and high dividend payout. The promoters have left something on the table for the investors in terms of valuations.
Weekend Roundup
Weekend Roundup
Some stuff worth reading this weekend:
Pound heads for biggest fall on record (Bloomberg)
Mahanagar Gas IPO oversubscribed 64 times (Money Control)
5 word financial advice for new graduates (TRB)
Is gold a store of value or investment? (Barry)
Appetite for hotel stocks improves (Mint)
Some stuff worth reading this weekend:
Pound heads for biggest fall on record (Bloomberg)
Mahanagar Gas IPO oversubscribed 64 times (Money Control)
5 word financial advice for new graduates (TRB)
Is gold a store of value or investment? (Barry)
Appetite for hotel stocks improves (Mint)
NSE Trading hours may be extended upto 5 pm
Trading hours on stock exchanges, both NSE and BSE, may stretch upto to 5 pm if SEBI accepts proposal of MSEI.
MSEI,erstwhile MCX Stock Exchange, has a proposal to seeking permission to extend timings for its equity platform. In 2009, the SEBI had allowed NSE and BSE to extend trading hours till 5:00 PM, but the exchanges refrained from implementing it due to opposition from the brokers. If MSEI decides to give investors more time to trade, NSE and BSE will be forced to follow suit.
Big brokers are unlikely to oppose the plan to extend the trading hours this time. Most of the large brokers are now already a part of currency derivatives segment which operates till 5 pm or are associates of commodity market which operates till 11.30 pm. Therefore, extending trading time for the equity and derivative segment won't be that of a problem this time.
Global exchanges also have different trading hours. Foreign exchanges like Euronext, Deutsche Borse, Six Swiss and BME Spanish offer extended trading hours till 5 pm or 5.30 pm.
The move to extend trading hours will facilitate members to reach out to investors in semi-urban and rural areas, enhance liquidity and broaden the shareholder base,
What do you think about extended trading hours, if that ever happens? Post your views and comments.
MSEI,erstwhile MCX Stock Exchange, has a proposal to seeking permission to extend timings for its equity platform. In 2009, the SEBI had allowed NSE and BSE to extend trading hours till 5:00 PM, but the exchanges refrained from implementing it due to opposition from the brokers. If MSEI decides to give investors more time to trade, NSE and BSE will be forced to follow suit.
Big brokers are unlikely to oppose the plan to extend the trading hours this time. Most of the large brokers are now already a part of currency derivatives segment which operates till 5 pm or are associates of commodity market which operates till 11.30 pm. Therefore, extending trading time for the equity and derivative segment won't be that of a problem this time.
Global exchanges also have different trading hours. Foreign exchanges like Euronext, Deutsche Borse, Six Swiss and BME Spanish offer extended trading hours till 5 pm or 5.30 pm.
The move to extend trading hours will facilitate members to reach out to investors in semi-urban and rural areas, enhance liquidity and broaden the shareholder base,
What do you think about extended trading hours, if that ever happens? Post your views and comments.
Brexit and Markets
Brexit is the buzz word now. So what is is all about?
What does Brexit mean?
It is a word that has become used as a shorthand way of saying the UK leaving the EU - merging the words Britain and exit to get Brexit, in a same way as a Greek exit from the EU was dubbed Grexit in the past. A referendum is being held on Thursday, 23 June to decide whether Britain should leave or remain in the European Union.
What does Brexit mean?
It is a word that has become used as a shorthand way of saying the UK leaving the EU - merging the words Britain and exit to get Brexit, in a same way as a Greek exit from the EU was dubbed Grexit in the past. A referendum is being held on Thursday, 23 June to decide whether Britain should leave or remain in the European Union.
Who wants the UK to leave the EU?
The British public are fairly evenly split, according to the latest opinion polls. The UK Independence Party, which won the last European elections, and received nearly four million votes - 13% of those cast - in May's general election, campaigns for Britain's exit from the EU. About half of Conservative MPs, including five cabinet ministers, several Labour MPs and the DUP are also in favour of leaving.
What about businesses?
Big business - with a few exceptions - tends to be in favour of Britain staying in the EU because it makes it easier for them to move money, people and products around the world.
How will the Markets react?
Many traders and market observers see Brexit as a negative, prompting the reaction in markets. A new poll showing a majority of British people in favor of leaving the European Union hit foreign exchange and stock markets on Friday. The data in London newspaper The Independent showed that 55 percent believe Britain should leave the EU, versus 45 percent who favored staying. The publication said it marked the largest portion of respondents who favored exiting since research firm ORB began polling the issue for it last year.
SEBI increases lot sizes to Rs. 5 lakhs
In a major move that could change the game in derivatives market, the Securities and Exchange Board of India (SEBI) has increased the minimum contract size in equity derivatives segment from Rs. 2 lakhs to Rs. 5 lakhs.
Accordingly, the framework for determination of lot size for derivatives contracts is modified as under:
The aforesaid provisions shall be made effective from the next trading day after expiry of October 2015 contracts. The stock exchanges shall review the lot size once in every 6 months based on the average of the closing price of the underlying for last one month,
This move will impact derivatives volumes in the short-run, since retail participation will be reduced substantially.
Accordingly, the framework for determination of lot size for derivatives contracts is modified as under:
- The lot size for derivatives contracts in equity derivatives segment shall be fixed in such a manner that the contract value of the derivative on the day of review is within Rs. 5 lakhs and Rs. 10 lakhs.
- For stock derivatives, the lot size (in units of underlying) shall be fixed as a multiple of 25, provided the lot size is not less than 50. However, if the contract value of the stock derivatives at the minimum lot size of 50 is greater than Rs. 10 lakhs, then lot size shall be fixed as a multiple of 5, provided the lot size is not less than 10.
- For index derivatives, the lot size (in units of underlying) shall be fixed as a multiple of 5, provided the lot size is not less than 10.
The aforesaid provisions shall be made effective from the next trading day after expiry of October 2015 contracts. The stock exchanges shall review the lot size once in every 6 months based on the average of the closing price of the underlying for last one month,
This move will impact derivatives volumes in the short-run, since retail participation will be reduced substantially.
Sensex in 2025 - RIL, ONGC, SBI, BHEL, L&T could exit?
Index heavyweights stocks like Reliance Industries (RIL), ONGC, Larsen & Toubro (L&T), State Bank of India (SBI) and BHEL are among 15 stocks that could see an exit from S&P BSE Sensex over the next decade - That's what seems to be the case according a research by Ambit Capital.
The report predicts the pace of churn in the 30-share index's constituents to gather momentum. According to Ambit's analysis, Sensex's churns over a 10-year window from 1986 to date shows that the churn ratio of the Sensex tends to rise when the economy is undergoing irreversible structural changes.
Over the next decade, the report predicts the pace of churn in the 30-share index's constituents to gather momentum. The current economic-political environment, Ambit says, will usher in an era of change which will drive Sensex churn higher driven by Prime Minister Narendra Modi's resets to the Indian economy.
Then what could be the stocks replacing them? - The new entrants could include Flipkart, Paytm, Cafe Coffee Day and ICICI Prudential Life Insurance. Well, it seems an interesting analysis. Such changes in indices re-emphasize on investing in Index Funds or Index ETFs like Nifty Bees.
Be a wise investor !
The report predicts the pace of churn in the 30-share index's constituents to gather momentum. According to Ambit's analysis, Sensex's churns over a 10-year window from 1986 to date shows that the churn ratio of the Sensex tends to rise when the economy is undergoing irreversible structural changes.
Over the next decade, the report predicts the pace of churn in the 30-share index's constituents to gather momentum. The current economic-political environment, Ambit says, will usher in an era of change which will drive Sensex churn higher driven by Prime Minister Narendra Modi's resets to the Indian economy.
Then what could be the stocks replacing them? - The new entrants could include Flipkart, Paytm, Cafe Coffee Day and ICICI Prudential Life Insurance. Well, it seems an interesting analysis. Such changes in indices re-emphasize on investing in Index Funds or Index ETFs like Nifty Bees.
Be a wise investor !
Sensex Target 54,000 - BoA Merrill Lynch
Sensex target 54,000!
Brokerage house Bank of America Merrill Lynch is bullish on India with an index target of 54,000 by end-2018 and believe that Investors must await dip in the market. It feels India is vulnerable to a near term global correction as too many global fund managers own shares in this market. “One of our near term concerns has been that investors are very overweight India; this makes India vulnerable to any near term global correction,” says the Merrill Lynch note, adding that a macro recovery appears to be some way off. “While we are structural bulls on India with an index target of 54,000 by end-2018, we have been highlighting that we see the market being range-bound to negative over next few months,” the note further says.
Global Emerging Markets (GEM) funds are nearly 420 bps overweight India BoFA’s view is that this makes India vulnerable to any near term global correction. India remains the most owned market in GEM by a wide margin.
“Investors, post their company meetings, seem to agree with our view that valuations were probably pricing in too much of good news. While we think the market will remain expensive through the year, we think it will consolidate for the next 3-6 months,” the note says. Merrill Lynch is bullish on auto, banks, cement and oil. It expects pharma shares to do well near term as the market consolidates.
There always risk associated with investing directly in stock markets and there are many ways to participate in this bull run. And one such way is investing through mutual funds, whether it is lumpsum amount during heavy corrections or SIP. We have already seen in this post that the best way to invest in the markets is through Systematic Investment Plan , without worrying too much about where the markets go in short-term.
Be a wise investor!
Brokerage house Bank of America Merrill Lynch is bullish on India with an index target of 54,000 by end-2018 and believe that Investors must await dip in the market. It feels India is vulnerable to a near term global correction as too many global fund managers own shares in this market. “One of our near term concerns has been that investors are very overweight India; this makes India vulnerable to any near term global correction,” says the Merrill Lynch note, adding that a macro recovery appears to be some way off. “While we are structural bulls on India with an index target of 54,000 by end-2018, we have been highlighting that we see the market being range-bound to negative over next few months,” the note further says.
Global Emerging Markets (GEM) funds are nearly 420 bps overweight India BoFA’s view is that this makes India vulnerable to any near term global correction. India remains the most owned market in GEM by a wide margin.
“Investors, post their company meetings, seem to agree with our view that valuations were probably pricing in too much of good news. While we think the market will remain expensive through the year, we think it will consolidate for the next 3-6 months,” the note says. Merrill Lynch is bullish on auto, banks, cement and oil. It expects pharma shares to do well near term as the market consolidates.
There always risk associated with investing directly in stock markets and there are many ways to participate in this bull run. And one such way is investing through mutual funds, whether it is lumpsum amount during heavy corrections or SIP. We have already seen in this post that the best way to invest in the markets is through Systematic Investment Plan , without worrying too much about where the markets go in short-term.
Be a wise investor!
CARE IPO Review
Credit Analysis and Research (CARE) is entering the capital market on 7^th December 2012 through an offer for sale of 71.99 lakh equity shares of Rs.10 each in the price band of Rs. 700 - Rs. 750 Per Equity Share.
Issue Details:
- Issue Open: Dec 07, 2012 - Dec 11, 2012.
- Issue Size: 7,199,700 Equity Shares of Rs. 10.
- Face Value: Rs. 10 Per Equity Share.
- Issue Price: Rs. 700 - Rs. 750 Per Equity Share.
- Market Lot: 20 Shares.
- Minimum Order Quantity: 20 Shares.
- Listing at BSE and NSE.
India’s largest credit rating agency and S&P’s 53% subsidiary CRISIL at current price of Rs. 1024, quotes at a PE multiple of 34 times and ICRA, in which Moody’s holds 28.5% equity stake, trades at 32 times. Whereas CARE, at the current IPO price is offered at lower P/E multiple of 20 times at the estimated EPS Rs. 35, which is attractive at current market conditions.
Hence, considering the valuations, investors can invest with a long term view and current market conditions favor those who invest for listing gains too.
NSE New Indices - Alpha, High Beta, Low Volatility
These are strategic indices, which are designed on the basis of quantitative models / investment strategies to provide a single value for the aggregate performance of a number of companies. The companies must rank within the top 300 companies by average free-float market capitalization and aggregate turnover for the last six months.
CNX Alpha Index:
CNX Alpha index aims to measure the performance of securities listed on NSE with high Alphas, which are measured on the basis of their risk-adjusted value. Weights of securities in the index are assigned based on the alpha values. Security with highest alpha in the index gets highest weight.
CNX High Beta Index:
CNX High Beta Index aims to measure the performance of the stocks listed on NSE that h ave High Beta. Beta can be referred to as a measure of the sensitivity of stock returns to market returns. This index can be used by those who are looking for high-risk-high-return category of stocks.
CNX Low Volatility Index:
CNX Low Volatility Index aims to measure the performance of the least volatile securities listed on NSE. This index can be used to create a portfolio of least-volatile securities which shall curb the downside during the bear phases.
All the above indices have 50 stocks each in their respective index and they will be calculated on an end-of-day basis and their closing value would be available the NSE.The EOD Data and stocks comprising of these indices are available in NSE .
Nifty Crash 2012
The country's leading stock exchange NSE was halted for a few minutes due to a crash of 1000 points in the S&P CNX Nifty, hitting a low of 4888 intra-day. Many of the Nifty stocks were down anywhere between 15-20%. As per NSE India website the circuit breaker rules (upper circuit and lower circuit) are as follows:
From the following table you can check out the lows of index and other nifty stocks below: There were many stocks in the nifty down as much as 15-20% , all were actual trades done during normal market hours and no freak trades which would happen in small-cap or penny stocks.
Such a crash had happened in nifty futures a few months ago, for which the reason attributed was algo trading, but this one was a manual execution of orders. Considering market at these higher levels, big selling could be anticipated, if not such a big one. Traders should be aware of such events and get themselves protected using proper risk management systems. Had the markets been frozen, it would have been a black swan event and if you wonder what's this black swan is all about, you can read about it here at Black Swan Theory.
Index-based Market-wide Circuit Breakers:Since the index showed a downward movement of about 20%, the nse was closed and rightly so. But surprisingly, the exchange was re-opened in few minutes, citing reasons of erroneous trades by one of the broker for about 650cr.
The index-based market-wide circuit breaker system applies at 3 stages of the index movement, either way viz. at 10%, 15% and 20%.In case of a 20% movement of the index, trading shall be halted for the remainder of the day.
From the following table you can check out the lows of index and other nifty stocks below: There were many stocks in the nifty down as much as 15-20% , all were actual trades done during normal market hours and no freak trades which would happen in small-cap or penny stocks.
Such a crash had happened in nifty futures a few months ago, for which the reason attributed was algo trading, but this one was a manual execution of orders. Considering market at these higher levels, big selling could be anticipated, if not such a big one. Traders should be aware of such events and get themselves protected using proper risk management systems. Had the markets been frozen, it would have been a black swan event and if you wonder what's this black swan is all about, you can read about it here at Black Swan Theory.
MCX-SX Index SX-40
Not only the exchange, MCX-SX is all set to take on the country's two most popularly traded equity indices, the Sensex-30 and the Nifty-50, with its own benchmark index SX-40. It will select top stocks from the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) to create the SX-40. The new index, SX-40 is expected to consisting of BSE-30 stocks and the rest 10 would be of picked from stocks reflecting the growth story of India.
Currently, the Sensex and Nifty are recognised globally, of which NSE comprising of exchange-traded funds (ETFs), exchange-traded futures and options and other index funds, generates a little over half of the trading volumes in India's equity derivative market. The new exchange MCX-SX and the new index SX-40 is definitely bound to catch everyone's attention globally as well as locally.
MCX Stock Exchange - MCX-SX
The currency derivatives segment at MCX-SX is supported by a strong membership base and witnesses a nation-wide participation. At the end of July 2012, MCX-SX had 751 members and saw participation from 714 towns and cities across India. MCX-SX has received permissions to deal in Interest Rate Derivatives, Equity, Futures & Options on Equity and Wholesale Debt Segment.
Following its success in Currency futures, MCX is all set to launch its equity operations from Diwali. What does this mean for an investor and trader?
MCX-SX is planning to offer competitive membership fees, which could trigger a price war causing the BSE and the NSE to revise their membership fee structure. This would help in reduced transaction charges for the investor and trader. Just like Bombay Stock Exchange BSE and National Stock Exchange NSE, investors and trader could buy and sell stocks, futures and options in MCX-SX. It's just that your broker has to be a member of MCX-SX and surely, leading brokers would provide trading facilities of MCX-SX, since the costs involved are going to be lesser than now.
Investor and traders, over the past 15 years are very much connected with BSE and NSE, but they are in for a change and it would be a new beginning for them.
Change is here, be part of it !
Just visit the new exchange here at MCX-SX.
Nifty Futures Flash Crash
To start with, there could be many possibilities which could have caused this crash.The error could be due to wrong punch or entry of a sell order with a wrong quantity or price. Another possibility is that it may be due to algorithmic trading or prominently known as Algo trading, which is so programmed, that in case there is a fall below a particular price level, the algo will initiate a sell order no matter what the price is. There was also a similar flash crash in US markets in 2010, when Dowjones crashed about 1000 points in a matter of few seconds.
What does this all mean for a trader? As a trader, if you are long or short, you have to hedge your positions to minimize your risks in trading. One has to be prepared for such kind of flash crashes or up-freeze market, when markets went up 20% in 2009 post-election results.Any retail trader trading nifty futures or other similar derivative products, must hedge his positions buying puts or selling higher strike price calls. Say, one is long in nifty futures at 5300, it is better to sell 5400 strike calls or buy 5200 puts. There are many more such strategies which could be used depending upon individual trading positions.
As an investor, such wild swings give you big opportunities. Such crashes provide you an opportunity to buy good stocks for long-term, if they come down 15-20% , for no fundamental reason. As always, if wealth creation over the long term is really your objective, it is better for retail investors to invest in mutual funds and leave the rest to the market.
Buzzing Stocks MMTC and PSU Stocks
So, what's the buzz? The government has been thinking of raising funds through the buyback route and under the buyback mode, the government can raise money by selling its equity in the company. After the government's due approval, institutions, banks and companies interested in buying government stake in PSUs will be able to send their proposals and buy these shares.
Recently, SEBI has allowed promoters to offload their stakes through auctions and this move will facilitate the government's efforts to sell these stocks at better prices. With the new window, the government will be in a position to negotiate better prices for the stake sale and hence the huge spurt in stock prices of these companies.
Does buyback move warrant such huge jump in these stocks? No, since most of the companies on the fundamental part do not justify such high price - for e.g., MMTC is just a trading company and its current EPS stands at Rs.2 and at the current price of Rs.900 the P/E ratio works out to 450, which is abnormal. And similar is the case with other mines and mineral stocks.
This huge rise is entirely driven by the buy-back news and also due to low liquidity of the floating stock (since Government of India holds about 90% each in all of the stocks mentioned above). We have seen many such hi-fliers before and know what happened to them later. Hence, investors are better off, if they would stay away from such stocks, even if they fall 30-40% from current prices.
Buyer beware !
NSE Dow Jones futures and S&P 500 futures
S&P 500 is a free-float capitalization-weighted index 500 leading companies of the us economy and widely regarded as the best single gauge of the us equities market. Dow Jones Industrial Average (DJIA) is a price weighted index having 30 large and liquid blue chip stocks traded on U.S. exchanges.
Contract Details:
The contract size for the S&P 500 is 250 units and DJIA is 25 units, which approximately works out to 2.5 lakhs per contract. There are four quarterly expiry contracts in the mar-jun-sep-dec cycle and will be traded during Indian market time.
For whom?
Indian investors are currently permitted to invest in foreign assets subject to the limits stipulated by the Reserve Bank of India. Futures on S&P 500 and DJIA, currently being introduced by NSE shall enable traders desirous of taking exposures to us market to do so, without taking any foreign currency risk as they are rupee denominated contracts.
These contracts enable those invested in the us markets to hedge their equity exposure. Also, they can also be used as hedging tool by investors having a high exposure to stocks in sectors whose financial performance depends significantly on the prospect of the U.S. economy.
Other than the above mentioned investors/traders, market participants who can understand the dynamics of the U.S. markets can have directional views on the movement of the indices. As far as small investors are concerned, this would be a avoid in the better interest of them.
Buzzing Stock - Jubilant Foodworks
The company, known for its popular brand Dominos Pizza, has more than 50% single store cities. In 4QFY11 it entered new cities such as Patna, Bhubaneswar etc. These regions present huge opportunity for penetration-led growth, success of the product in these cities would be a key factor to watch out for in FY2012E. Currently 65% of sales are contributed by top seven cities and 50% of stores are located in Maharashtra, New Delhi and Karnataka.
The company currently trades at more than 50 x 2012E Eps of Rs.15 , which is on the higher side.The company's business model is good and there is huge growth opportunities for the company driven by changing demographic and socio-economic factors. Despite the strong near-term earnings forecast and favorable view, the current valuation of the company (PE of 50X FY2012E), the stock is expensive and one could book profits at current levels. Though, the momentum could take it higher, it would not be in the taste of retail investors to buy at these prices.
Punjab and Sind Bank IPO Review
The bank has over 100 years of banking experience and established relationships with customers, including the Central and State Governments and public sector enterprises and their presence is predominantly in Punjab and other north Indian states.
The revenues for FY10 stand at Rs.4326cr and PAT at 506cr , resulting in an EPs of Rs.27. The book value of the bank is at Rs.105, while the most of the mid-cap PSU banks are quoting between 1-1.5 times book value, the pricing of the issue seems okay. Medium to Long term investors can go for this issue.
Details of the issue:
Issue Open: Dec 13, 2010 - Dec 16, 2010.
Face Value: Rs. 10 Per Equity Share.
Issue Price: Rs. 113 - Rs. 120 Per Equity Share.(5 % discount offered to retail investors)
Market Lot: 50 Shares.
Listing at BSE and NSE.
Indian Markets - Buy or Sell ?
Before we come to any conclusions, let us check out some of recent happenings in and around us. Recently markets have been hit with many scams, some of them directly impacting the markets, like the housing loans and Global events like European crisis, Korean shoot outs and other similar events. These events are causing substantial swings in the markets and the much talked about US Fed’s QE2 program is not having much impact, either.
Currently Sensex at 20k, trading at 17.1 x FY11E EPS and 14.6X FY12E EPS, which is at fair valuations. The strong FII inflows and strong earnings growth are providing support to the Indian markets' valuations at 15-18 x FY12E EPS, above its 12-15x historical range, which would mean the Sensex in the range of 15-16k.The P/E expansion in multiples could be led by (1) continued strong FII inflows, (2) positive macro-economic outlook and (3) strong earnings growth, which could lead the markets higher.
To sum up, there is no doubt that the markets are at fair valuations, but the factors mentioned above could take the markets further up. Hence, existing investors could hold and ride the wave and anyone who wants to enter now, can participate in the current rally by taking the SIP method of investing in mutual funds.New investments and big ticket investments could be made only when sensex is available around historical range mentioned above.
After all investing is not that easy, isn't it?
Manganese Ore India - MOIL IPO Review
MOIL operates seven underground mines and three opencast mines to produce more then 1m tonnes of manganese ore. The company is well positioned to capture the growth potential of the Indian steel industry, due to its track record and strategic location of the mines. The key risk is that the Manganese ore and alloy industry has historically derived demand from the steel industry and hence is directly exposed to the volatility and the cyclicality of the global steel industry.
Details of the issue:
Issue Open: Nov 26, 2010 - Dec 01, 2010.
Issue Size: 33,600,000 Equity Shares of Rs. 10.
Face Value: Rs. 10 Per Equity Share.
Issue Price: Rs.340-375 Per Equity Share.
Listing at BSE and NSE.
The EPS for the year FY10 stands at Rs.28 and at the higher band of Rs.375 the company would be trading at 14 P/E, which is well priced. There is no direct comparable listed peer with which the stock can be compared with other than NMDC which trades at at 25 P/E.
With the expectations of robust growth in the domestic steel production, demand for manganese ore is likely to increase during the next few years. The domestic manganese ore demand to grow at a CAGR of about 9% during the next 2-3 years.
After the stupendous success of Coal India IPO, the MOIL IPO too, will evoke good response from institutional and retail investors. Hence, long term investors can apply for this issue and not for listing gains alone.
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