Spice Communications tops volume
Date: 19.07.2007 Debutante Spice Communications tops volume on BSE 11.71 crore shares were traded in the Spice Communications counteron BSE today. Spice Communications debuted on BSE today. The scripended at Rs 60.65, a premium of 31.84% over the IPO price of Rs 46.The company had raised Rs 528 crore in an initial public offering (IPO),which closed on 27 June 2007. The IPO was oversubscribed more than 37 times.The IPO was priced at the top end of the Rs 41-Rs 46 price band.Spice Communications will use around 50% of the total proceeds to retirepart of its Rs 1,000-crore debt, while the remaining would be used forexpansion plans.Spice Communications reported net loss of Rs 41.80 crore on revenues of Rs385.11 crore in the six months ended December 2006.
Omaxe IPO - Invest at cut-off
Dated: 19.07.2007 Omaxe (OL) is a real-estate development and construction company promoted and founded by Rohtas Goel. Commencing operation as a construction and contracting company, it has completed 120 construction projects. Now, its focus is fully on development of residential and commercial real-estate projects ranging from integrated townships, group housing and retail and other commercial properties, hotels, information technology and bio-tech parks to special economic zones.
After entering the real-estate business in 2001, OL has completed eight residential projects consisting of seven group-housing and one integrated township projects, and two commercial projects including retail and office space, covering an aggregate built-up/ developed area of approximately 5.13 million sq. ft.
End March 2007, OL had 52 residential and commercial projects, consisting of 21 group-housing projects, 16 integrated townships, 14 shopping malls and commercial complexes and one hotel, either under development or under various stages of approvals for development. Of these 52 projects, 38 are under development and 14 in various stages of approvals for development. The company expects to commence development of these 14 projects in the current year ending March 2008 (FY 2008). The 16 integrated townships are essentially ‘mixed-use’ areas consisting of residential and commercial projects and are expected to include 10 group-housing projects, 16 commercial developments, one biotech park and one information technology park. It is also developing projects in the hospitality sector. Its hotels at Amritsar, Greater Noida and Patiala are part of commercial malls under construction. OL has applied for change of land use for its hotel project in Faridabad.Most of OL’s residential developable space is in non-NCR locations of northern India. Just 19% of the space from the current group-housing projects that can be developed is either under development or in various stages of approval in the national capital region (NCR). All the township projects are in Tier II and III cities/ towns in north India. However, the share of NCR region in the total commercial space that can be developed is 49%. On November 21, 2006, OL entered into a joint venture with Azorim International Holdings, a part of a leading Israeli real-estate development group. The joint venture is for the construction and development of Omaxe Forest, an ultra-luxury group-housing development in Faridabad. Under the terms of the agreement, of the total area of approximately 36.22 acres, the company will transfer approximately 20.58 acres representing approximately 1.8 million sq. ft. of saleable area to the joint venture entity in which Omaxe and Azorim International will hold an equal stake of 50%. End July 2007, OL expects an outstanding of Rs 88.97 crore against land purchased. Part of the proceeds will be used for payment of that outstanding along with funding of about Rs 236.03 crore for future land acquisitions. Apart from land acquisition and project development cost, the company is also expected to retire in FY 2008 Rs 200-crore high-cost debts raised from financial institutions.
Strengths:
1) Access to land reserve of approximately 3,255 acres end March 2007. Total land reserve includes about 571 acres belonging to joint ventures and collaborations in which OL has an economic interest of approximately 74% calculated on a weighted average basis. It owns 31% of the land reserve directly or through its subsidiaries and has sole development rights on 46% of the land bank. About 6% of the land has been allotted by the government and its agencies on a long-term lease of about 90/99 years. 2) Of the total land reserves, around 3096 acres (including approximately 451 acres belonging to joint ventures and collaborations) relate to projects that are currently under development or in various stages of approval for development, representing approximately 150 million sq. ft. of saleable area. Of the 150-million sq ft saleable area, about 66.6 million sq ft will be for group housing and 77.3 million sq ft developed into township and 4.89 million sq ft reserved for commercial purpose. 3) One of the first developers to conceptualise and develop theme malls in north India. OL conceptualised wedding mall: the one-stop shop for wedding arrangements. Given the strong supply glut in the retail space in the NCR region, this ability to differentiate its property will hold good in attracting tenants and retaining them. 4*)Adoption of percentage completion method means revenue recognition starts only if the actual cost already incurred on the date of financial statement is at least 30% of the total project cost as estimated by the management. In FY 2008, OL is likely to recognise revenue for more projects out of the current 38 projects as against 23 projects in the previous year.
Weaknesses :
1) Ventured into realty business only in 2001 and has completed just eight projects since then. Was only a construction contractor since 1989. Despite longer track record as a construction contractor, OL decided not to take up any more construction contracts since March 2006 as the margin in the realty business is higher. As a company with limited track record in this business, it is more prone to cyclical ups and downs of the business. 2) The strong rise in real-estate prices and rising interest rates are likely to impact the affordability of housing. Real-estate prices are already showing signs of softening in certain locations. 3) Effective tax rate stood at 20.18% in FY 2007 largely on account of benefits availed under Section 80-IB of the Income-Tax Act, 1961. For projects approved on or before March 2007 and completed within four years, OL is eligible for this benefit, subject to conditions. New projects approved after this date will not be eligible for this benefit. Hence, the company’s tax incidence is set to increase. 4) Operating cash flows in recent fiscals are negative. Operating cash flow for FY 2007 is negative Rs 713.13 crore. The comparative figure is Rs 131.06 crore in FY 2006. Strong negative operating cash flow is primarily on account of a sharp rise in projects in progress. This was Rs 839.75 crore end March 2007 compared with Rs 544.30 crore end March 2006. The inventory, too, has increased to Rs 192.08 crore end March 2007, from Rs 111.52 crore end March 2006. 5) Ol does not own the ‘Omaxe’ brand. It is owned by its Chairman and Managing Director. Rohtas Goel. Under a license agreement dated October 1, 2005, the company had to pay a lumpsum amount of Rs 1.2 crore and a royalty fee at the rate of 2% of its annual real-estate turnover. Accordingly it paid Rs 13.2 crore on this account in FY 2006. But from FY 2007, Goel has exercising his rights of renunciation, and has agreed to receive fixed payment of Rs 10 lakh per annum as royalty. Further, the license agreement expires end March 2008.
Valuation :
Total income posted a CAGR of 77.34% to Rs 1439.67 crore in FY 2007 to Rs 145.56 crore in FY 2003. CAGR in profit after tax and minority interest was 171.04% to Rs 257.26 crore in FY 2007, from Rs 4.77 crore in FY 2003. At the offer price band of Rs 265-310, Omaxe’s PE works out to 17.8 – 20.8 x FY2007 EPS of Rs 14.9 (consolidated) on post issue equity of Rs 1727.5 million. On a relative comparison, Omaxe trades at a lower PE & M.Cap/Sales basis.Using NAV method, we arrive at a Net Asset Value of Rs 487 per share which is 57% above the upper band of the price range of Rs 265- Rs 310.We feel, company’s strong brand image, focus on Tier2 & Tier 3 cities and lower valuations compared to peers to be major positives. We recommend a subscribe to the issue.
ISSUE CLOSES TOMORROW
Latest IPO's Updates
Celestial Labs:
Equity shares Ltd will get listed at NSE and BSE on 17th July, 2007.
The issue price of the same is Rs.60/-
The issue price of the same is Rs.60/-
IVR Prime Urban Developers Limited:
Issue opens on: July 23, 2007
Issue closes on: July 26, 2007
Price band: Rs.510-600 per share
Central Bank of India :
Issue opens on: July 24, 2007 Issue closes on: July 27, 2007
Price Band: Rs.85-102
Bid lot: 60 shares
Allied Digital Services IPO
Dated: 02 July, 2007
Allied Digital Services IPO - Invest at cut-off Founded in 1995 by Amit Shah, a first-generation entrepreneur with 30 years experience in the Indian IT industry, Allied Digital Services (ADS) is a provider of IT infrastructure management and technical support services. Operating across a network of 92 locations in 25 states with a team of around 1250 employees countrywide, the company follows a direct approach. ADS operates through six strategic business units (SBUs) spread across the services and solutions space. The solutions segment includes information technologies solutions (SBU-1) including IT infrastructure, storage solutions, information security and data security solutions, enterprise management solutions and telecom solutions. The second SBU comprises networking/communic ation Solutions. The third SBU provides integrated solutions to set up security & safety devices, asset tracking devices, intelligent building management system and energy management solutions. The fourth SBU’s services cover software solutions in the enterprise management system (EMS) and enterprise resource planning (ERP) for manufacturing; retail; banking, financial services and insurance (BFSI); and telecom.In the services segment the fourth SBU provides information technology services including test and repair/service centre, technical BPO, incident-based support, annual maintenance contract (AMC), facilities management services, enterprise management services and infrastructure/ professional services. SBU-6’s services include remote management services (RMS) including network operation centre (NOC) offering enterprise IT helpdesk, remote desktop management, and server and network management. The security operation centre (SOC) offers 24x7 information security surveillance services. Solutions contributed 79% of the revenue and services 20% in the year ending March 2007 (FY 2007), Services contributed about 50% of the earning before interest, tax, depreciation and amortisation (EBITDA). The top client contributed 12%, top 5 clients 34% and top 10 clients 47% of the revenue. International business accounted for only 6% of the operating revenue.The net proceeds of the present issue would be utilised for setting up a global service delivery centre comprising a 250-seater technical BPO, IT service delivery centre, remote management service centre, software solution unit, data centre and centre of excellence. Other uses of the funds would be for upgradation and expansion of existing infrastructure such as increasing the warehouse space, expanding geographically, and setting up the NOC/SOC business facility. ADS would also go for strategic acquisition. It has identified three companies: one an Oracle services provider in India addressing India, the US and the Middle East; a security services provider in India addressing India and the Middle East; and a technical BPO services provider in Canada addressing US and Canada. Strengths ADS is collaborating with e-Cop to enter remote management services through the NOC/SOC initiative. This is still not a competitive segment as it is in the nascent stage. Its partnership with e-Cop, the leader in SOC with more than 90% market share in the Far East market, will be a big positive. The SOC facility would be operational by July 2007. There is possibility of transfer of work from e-Cop to the partnership due to competitiveness of Indian operations. Due to its direct-customer and neutral-vendor approach and national presence across 92 locations and 25 states, ADS enjoys a strategic advantage to capture the fast growing market opportunity. Through its acquisitions, ADS will expand clients and geographically, enabling it to cross-sell services and solutions. Currently, ADS has an order book of Rs 107.81 crore. Of this, Rs 54.70 crore is annuity revenue arising from services contracts and Rs 53.11 crore from the solutions business. These would be executed within 8-10 months.Weaknesses ADS is operating in a highly competitive market. This could affect its cost advantages, and reduce its share of business from clients. Growth is dependent on manpower. The industry suffers from high attrition rate.ValuationFrom FY 2004-FY 2007, the operating income of ADS recorded a CAGR of 58.5% and net profit zoomed from Rs 32 lakh to Rs 22.93 crore due to focus on infrastructure management services, storage and security services. At a price band of Rs 170-Rs190, FY 2007 EPS on post-issue equity works out Rs 13.3, and P/E 12.8-14.3. Its closest peer, Tata Elxsi, is trading at a trailing 12-month P/E of 20. Considering its thrust on new business initiatives, Allied is expected to post a robust growth in FY08. This will make its current valuations even cheaper. Investors with a medium-to-long term horizon can consider investing in the stock. It will also reward handsome listing gains.
Allied Digital Services IPO - Invest at cut-off Founded in 1995 by Amit Shah, a first-generation entrepreneur with 30 years experience in the Indian IT industry, Allied Digital Services (ADS) is a provider of IT infrastructure management and technical support services. Operating across a network of 92 locations in 25 states with a team of around 1250 employees countrywide, the company follows a direct approach. ADS operates through six strategic business units (SBUs) spread across the services and solutions space. The solutions segment includes information technologies solutions (SBU-1) including IT infrastructure, storage solutions, information security and data security solutions, enterprise management solutions and telecom solutions. The second SBU comprises networking/communic ation Solutions. The third SBU provides integrated solutions to set up security & safety devices, asset tracking devices, intelligent building management system and energy management solutions. The fourth SBU’s services cover software solutions in the enterprise management system (EMS) and enterprise resource planning (ERP) for manufacturing; retail; banking, financial services and insurance (BFSI); and telecom.In the services segment the fourth SBU provides information technology services including test and repair/service centre, technical BPO, incident-based support, annual maintenance contract (AMC), facilities management services, enterprise management services and infrastructure/ professional services. SBU-6’s services include remote management services (RMS) including network operation centre (NOC) offering enterprise IT helpdesk, remote desktop management, and server and network management. The security operation centre (SOC) offers 24x7 information security surveillance services. Solutions contributed 79% of the revenue and services 20% in the year ending March 2007 (FY 2007), Services contributed about 50% of the earning before interest, tax, depreciation and amortisation (EBITDA). The top client contributed 12%, top 5 clients 34% and top 10 clients 47% of the revenue. International business accounted for only 6% of the operating revenue.The net proceeds of the present issue would be utilised for setting up a global service delivery centre comprising a 250-seater technical BPO, IT service delivery centre, remote management service centre, software solution unit, data centre and centre of excellence. Other uses of the funds would be for upgradation and expansion of existing infrastructure such as increasing the warehouse space, expanding geographically, and setting up the NOC/SOC business facility. ADS would also go for strategic acquisition. It has identified three companies: one an Oracle services provider in India addressing India, the US and the Middle East; a security services provider in India addressing India and the Middle East; and a technical BPO services provider in Canada addressing US and Canada. Strengths ADS is collaborating with e-Cop to enter remote management services through the NOC/SOC initiative. This is still not a competitive segment as it is in the nascent stage. Its partnership with e-Cop, the leader in SOC with more than 90% market share in the Far East market, will be a big positive. The SOC facility would be operational by July 2007. There is possibility of transfer of work from e-Cop to the partnership due to competitiveness of Indian operations. Due to its direct-customer and neutral-vendor approach and national presence across 92 locations and 25 states, ADS enjoys a strategic advantage to capture the fast growing market opportunity. Through its acquisitions, ADS will expand clients and geographically, enabling it to cross-sell services and solutions. Currently, ADS has an order book of Rs 107.81 crore. Of this, Rs 54.70 crore is annuity revenue arising from services contracts and Rs 53.11 crore from the solutions business. These would be executed within 8-10 months.Weaknesses ADS is operating in a highly competitive market. This could affect its cost advantages, and reduce its share of business from clients. Growth is dependent on manpower. The industry suffers from high attrition rate.ValuationFrom FY 2004-FY 2007, the operating income of ADS recorded a CAGR of 58.5% and net profit zoomed from Rs 32 lakh to Rs 22.93 crore due to focus on infrastructure management services, storage and security services. At a price band of Rs 170-Rs190, FY 2007 EPS on post-issue equity works out Rs 13.3, and P/E 12.8-14.3. Its closest peer, Tata Elxsi, is trading at a trailing 12-month P/E of 20. Considering its thrust on new business initiatives, Allied is expected to post a robust growth in FY08. This will make its current valuations even cheaper. Investors with a medium-to-long term horizon can consider investing in the stock. It will also reward handsome listing gains.
HDIL IPO - Invest at cut-off
Dated: 01 July 2007
Housing Development and Infrastructure (HDIL), part of the Wadhwan group (formally known as the Dheeraj group), develops real estate mainly in the Mumbai Metropolitan Region. Since its incorporation in 1996, the company has developed 23 projects covering approximately 11 million square feet of saleable area, including about 5.7 million square feet of land sold to other builders after the development. It also have constructed an additional two million square feet of rehabilitation housing area under the slum rehabilitation schemes. Dewan Housing Finance Corporation, a listed company is part of the promoter group. To fund acquisition of land or land development rights for its ongoing and planned projects and construction of its ongoing and planned projects, and to meet general corporate purposes, HDIL is coming out with an IPO.The price band is Rs 430- Rs 500 The issue opens on 28 June and closes on 3 July 2007. Strengths HDIL has land reserves of approximately 112.1 million square feet of saleable area to be developed through 32 ongoing or planned projects. The company has 21 ongoing projects under construction and development, aggregating to approximately 45.5 million square feet of saleable area, and has 11 planned projects aggregating approximately 66.6 million square feet of saleable area. Of the land reserves, about 73.4% is actually owned by the company; and 15.7% of it is to be acquired under memoranda of understanding (MoU) and agreements. But these MoUs do not have any revocation clauses. Another 10.9% of the land reserve is under joint venture with partners. The execution, however, rests with HDIL. Has received in-principle approval from the Ministry of Commerce and Industry to develop, operate and maintain multi-services special economic zones (SEZs) in its name. However, given the uncertainty in SEZ regulations, HDIL has still not decided whether it would develop them on its own or in collaboration with others.
Housing Development and Infrastructure (HDIL), part of the Wadhwan group (formally known as the Dheeraj group), develops real estate mainly in the Mumbai Metropolitan Region. Since its incorporation in 1996, the company has developed 23 projects covering approximately 11 million square feet of saleable area, including about 5.7 million square feet of land sold to other builders after the development. It also have constructed an additional two million square feet of rehabilitation housing area under the slum rehabilitation schemes. Dewan Housing Finance Corporation, a listed company is part of the promoter group. To fund acquisition of land or land development rights for its ongoing and planned projects and construction of its ongoing and planned projects, and to meet general corporate purposes, HDIL is coming out with an IPO.The price band is Rs 430- Rs 500 The issue opens on 28 June and closes on 3 July 2007. Strengths HDIL has land reserves of approximately 112.1 million square feet of saleable area to be developed through 32 ongoing or planned projects. The company has 21 ongoing projects under construction and development, aggregating to approximately 45.5 million square feet of saleable area, and has 11 planned projects aggregating approximately 66.6 million square feet of saleable area. Of the land reserves, about 73.4% is actually owned by the company; and 15.7% of it is to be acquired under memoranda of understanding (MoU) and agreements. But these MoUs do not have any revocation clauses. Another 10.9% of the land reserve is under joint venture with partners. The execution, however, rests with HDIL. Has received in-principle approval from the Ministry of Commerce and Industry to develop, operate and maintain multi-services special economic zones (SEZs) in its name. However, given the uncertainty in SEZ regulations, HDIL has still not decided whether it would develop them on its own or in collaboration with others.
Everonn Systems IPO
Dated: 10.07.2007
Incorporated in 2000, Everonn Systems India is promoted by P Kishore, who was closely involved in implementing computer literacy projects in the Nilgiri district of Tamil Nadu since 1987. The company won its first contract for computer education in 332 schools in Tamil Nadu in 2000. Everonn is now a fully integrated knowledge management, education and training company offering a range of services including creating knowledge resources, designing and delivering learning and training programs and setting up infrastructure and delivery platform. One of the two strategic business units (SBUs) of Everonn is institutional education. The SBU sets up IT education infrastructure in institutions (schools and colleges), delivers IT education under the build-own-operate- and-transfer (BOOT) model and offers turnkey education and software solutions. Currently, the company has a presence in eight states, over 1,300 computer labs and 1,900 schools, and trained 1.2 million students. The SBU contributed 68% of the revenue in the year ending March 2007 (FY 2007) with earning before interest, tax, depreciation and amortisation (EBITDA) margin of 42.8%.The second SBU is a virtual-and- technology- enabled learning solution (Vitels) SBU. It provides specialised content through an interactive remote delivery mechanism to institutions, specially colleges and schools and working professionals. The company has built its virtual learning brand, Zebra Cross, V-Schools, V-Colleges and V-Placement, and operates through 197 delivery centers covering 101 colleges, 83 schools, three retail and 10 Hughes Net (Direcway) centres. The SBU contributed 32% of the revenue in FY 2007, with EBITDA margin of 37.1%.The proceeds of the present issue along with the funds raised through preferential allotment to India China Pre-IPO Equity (Mauritius) are to be utilised to support the two SBUs’ working capital requirement, mergers & acquisitions, investment in subsidiary set up to retail educational aids, tools and other products, and brand buildingStrengths Of the 1,900 schools under operation in the institutional education and Infrastructure services SBU, the contract for 183 schools is set to expire in FY 2008. The balance contracts are to go through FY 2010. Everonn has plans to add at least 1,000 schools in a year by using the IPO proceeds. Recently, it won a Rs 30-crore contract for 1,256 schools in Gujarat. As per the management, the order book of Rs 110 crore is to be executed over three-3.5 years. The Vitels SBU has the first mover advantage and has plans to add another 250 virtual classrooms in FY2008. It has also tied up with PMC School of Logistics, Singapore, to tap the South-East Asian market. The revenue from the Singapore tie-up would start only in FY 2009. Weaknesses The BOOT model involves heavy upfront investment to build school projects. This can put pressure on profit in the initial periods and the working capital requirement would also be high.The business is seasonal in nature and the maximum revenue and profit are usually registered in the second and fourth quarters of the financial year.The operating profit margin has fallen by 550bps to 41% in FY 2007 over FY 2006 (compared with FY 2005, OPM is down almost 1,000 points). The main reasons for the fall in FY 2007 were the infrastructure- deployment expenses at the 216 schools under the Karnataka government contract, which started only in February 2007 with no addition to revenue. Also, expenses on new initiatives taken by the Vitels division impacted margin. Though the revenue grew 39% to Rs 43.04 crore, net profit fell 1% to Rs 4.86 crore in FY 2007.Everonn had entered into an agreement with Hughes Escorts Communication (HECL), now Hughes Communication India, on 20 March 2002 for five years as a lead partner to help HECL in developing remote education and training through satellite broadband technologies. The contract has expired and HECL is yet to renew it. Failure to renew the contract could have a negative impact on Everonn’s revenue and profit.Valuation and recommendationAt the price band of Rs 125-140, FY 2007 EPS on post-issue equity works out to Rs 3.4 – Rs 3.5 and P/E 36.8 – 39.9. The sector is currently enjoying very high market fancy due to expectation of high growth rates. Educomp Solutions is trading at P/E of 129 times and NIIT at 37 times.Everonn’s reasonable growth trajectory in the past and the huge untapped market in the IT/ IT-aided education segment and increased government thrust on education through budgetary allocations make the stock an attractive investment opportunity.The Qualified Institutional Buyers (QIBs) is already oversubscribed 10.7291 times, Non Institutional Investors 1.2607 times and Retail Individual Investors (RIIs) 11.4694 times as per nse website.
ISSUE CLOSES TOMORROW
Incorporated in 2000, Everonn Systems India is promoted by P Kishore, who was closely involved in implementing computer literacy projects in the Nilgiri district of Tamil Nadu since 1987. The company won its first contract for computer education in 332 schools in Tamil Nadu in 2000. Everonn is now a fully integrated knowledge management, education and training company offering a range of services including creating knowledge resources, designing and delivering learning and training programs and setting up infrastructure and delivery platform. One of the two strategic business units (SBUs) of Everonn is institutional education. The SBU sets up IT education infrastructure in institutions (schools and colleges), delivers IT education under the build-own-operate- and-transfer (BOOT) model and offers turnkey education and software solutions. Currently, the company has a presence in eight states, over 1,300 computer labs and 1,900 schools, and trained 1.2 million students. The SBU contributed 68% of the revenue in the year ending March 2007 (FY 2007) with earning before interest, tax, depreciation and amortisation (EBITDA) margin of 42.8%.The second SBU is a virtual-and- technology- enabled learning solution (Vitels) SBU. It provides specialised content through an interactive remote delivery mechanism to institutions, specially colleges and schools and working professionals. The company has built its virtual learning brand, Zebra Cross, V-Schools, V-Colleges and V-Placement, and operates through 197 delivery centers covering 101 colleges, 83 schools, three retail and 10 Hughes Net (Direcway) centres. The SBU contributed 32% of the revenue in FY 2007, with EBITDA margin of 37.1%.The proceeds of the present issue along with the funds raised through preferential allotment to India China Pre-IPO Equity (Mauritius) are to be utilised to support the two SBUs’ working capital requirement, mergers & acquisitions, investment in subsidiary set up to retail educational aids, tools and other products, and brand buildingStrengths Of the 1,900 schools under operation in the institutional education and Infrastructure services SBU, the contract for 183 schools is set to expire in FY 2008. The balance contracts are to go through FY 2010. Everonn has plans to add at least 1,000 schools in a year by using the IPO proceeds. Recently, it won a Rs 30-crore contract for 1,256 schools in Gujarat. As per the management, the order book of Rs 110 crore is to be executed over three-3.5 years. The Vitels SBU has the first mover advantage and has plans to add another 250 virtual classrooms in FY2008. It has also tied up with PMC School of Logistics, Singapore, to tap the South-East Asian market. The revenue from the Singapore tie-up would start only in FY 2009. Weaknesses The BOOT model involves heavy upfront investment to build school projects. This can put pressure on profit in the initial periods and the working capital requirement would also be high.The business is seasonal in nature and the maximum revenue and profit are usually registered in the second and fourth quarters of the financial year.The operating profit margin has fallen by 550bps to 41% in FY 2007 over FY 2006 (compared with FY 2005, OPM is down almost 1,000 points). The main reasons for the fall in FY 2007 were the infrastructure- deployment expenses at the 216 schools under the Karnataka government contract, which started only in February 2007 with no addition to revenue. Also, expenses on new initiatives taken by the Vitels division impacted margin. Though the revenue grew 39% to Rs 43.04 crore, net profit fell 1% to Rs 4.86 crore in FY 2007.Everonn had entered into an agreement with Hughes Escorts Communication (HECL), now Hughes Communication India, on 20 March 2002 for five years as a lead partner to help HECL in developing remote education and training through satellite broadband technologies. The contract has expired and HECL is yet to renew it. Failure to renew the contract could have a negative impact on Everonn’s revenue and profit.Valuation and recommendationAt the price band of Rs 125-140, FY 2007 EPS on post-issue equity works out to Rs 3.4 – Rs 3.5 and P/E 36.8 – 39.9. The sector is currently enjoying very high market fancy due to expectation of high growth rates. Educomp Solutions is trading at P/E of 129 times and NIIT at 37 times.Everonn’s reasonable growth trajectory in the past and the huge untapped market in the IT/ IT-aided education segment and increased government thrust on education through budgetary allocations make the stock an attractive investment opportunity.The Qualified Institutional Buyers (QIBs) is already oversubscribed 10.7291 times, Non Institutional Investors 1.2607 times and Retail Individual Investors (RIIs) 11.4694 times as per nse website.
ISSUE CLOSES TOMORROW
FINAL SUBSCRIPTION FIGURES OF EVERONN SYSTEMS LIMITED
· QIB: 104.1 times
· HNI: 311.15 times
· Retail: 138.66 times
· Overall: 147 times
· No of applns: 480000
Spice Comm plans Rs 520 crore IPO
Spice Communications, a company that offers GSM services in Punjab and Karnataka through its Spice Telecom brand, intends to raise Rs 520 crore through its initial public offering (IPO). The price band for the issue, which opens on June 25 and closes on June 27, has been fixed between Rs 42 and Rs 46 a share. Malaysia's incumbent service provider Telekom Malaysia (TM) holds 49 per cent, while industrialist and Modi group Chairman B K Modi owns the remaining 51 per cent stake in Spice Communications."We will raise a total of Rs 632 crore, which includes the Rs 112 crore raised through pre-IPO placement, from the capital markets. We will use the proceeds of the IPO to repay debt and for general corporate purposes," Spice Telecom Chairman and Managing Director Dilip Modi told reporters here today. The company had earlier raised Rs 112 crore through a pre-IPO placement of 2.48 crore shares at Rs 45 each.The GSM operator will issue 11.31 crore equity shares of Rs 10 each and the issue will comprise 16.39 per cent Spice Communications' fully diluted post-issue share capital. The company is taking a 100 per cent book-building route for the IPO. Enam Financial Consultants and UBS Securities India are book-running lead managers, while Karvy Computershare is the registrar to the issue. Spice Communications will use around 50 per cent of the total proceeds to retire part of its Rs 1,000 crore debt, while the remaining would be used for expansion plans. The company's expansion plans included foraying into national long distance (NLD) and international long distance (ILD) services in the country, Modi said. After the IPO, TM's stake in the company will fall to 39 per cent and the promoter's holding to 41 per cent, while retail public holding will increase to around 20 per cent. The company's shares would be listed on the BSE. Spice Communications could not list its shares on the NSE due to regulatory concerns, Modi said. Since June 2002, the company has been operating with a negative networth. At the end of 2006, it had an accumulated loss of Rs 684.35 crore with a negative networth of Rs 160.52 crore. As a result, it will not be able to list on the National Stock Exchange (NSE), where listing of companies with negative networth is not permitted. Bankers to the issue said Spice Telecom could look at listing on the NSE after the IPO, as it expects to recover from its ailing position. At present, Spice Communications is the eighth largest GSM operator in the country, with 3 million subscribers and a 2.30 per cent market share.
Spice Communications IPO
Spice Communications IPO opens on 25 June 2007. Price band Rs 41 - 46 per share. Spice Communications intends to garner around Rs 520 crore through its initial public offering, which opens on 25 June 2007. The issue, having a price band between Rs 41 - 46 a share,will close on 27 June 2007. The company is taking a 100% book-building routefor the IPO.
The company will issue 11.31 crore equity shares of Rs 10 each and the issuewill comprise 16.39% Spice Communications' fully diluted post-issue sharecapital. The company had earlier raised Rs 112 crore through a pre-IPOplacement of 2.48 crore shares at Rs 45 each.
Malaysia's official service provider Telekom Malaysia (TM) holds 49%, whileindustrialist and Modi group Chairman B K Modi owns the remaining 51% stakein Spice Communications. Spice Communications will use around 50% of thetotal proceeds to retire part of its Rs 1,000 crore debt, while theremaining would be used for expansion plans.
The company's expansion plans included foraying into national long distance(NLD) and international long distance (ILD) services in the country. PostIPO, TM's stake in the company will fall to 39% and the promoter's holdingto 41%, while retail public holding will increase to around 20%. SpiceCommunications' net loss of Rs 68.58 crore in the full year ended June 2006from Rs 6.97 crore in FY 2005. Sales advanced 9.1% to Rs 661.49 crore in FY2006 (Rs 606.57 crore).
The company's shares would be listed on the BSE. Spice Communications couldnot list its shares on the National Stock Exchange (NSE), where listing ofcompanies with negative networth is not permitted.
DLF IPO Update
DLF Gets total bids for 34.33 crore shares (17:00 IST). On third day of DLFIPO, the issue was 1.96 times subscribed. The IPO receievd total bids for34.33 crore shares from total issue size of 17.50 crore shares. (17:00 IST)The total bids in the Qualified Institutional Buyers (QIBs) category were33.15 crore shares. Within this category, the Foreign InstitutionalInvestors bid for 30.20 crore shares, the Domestic Financial Institutionsbid for 2.43 crore shares and the Mutual Funds bid 51.15 lakh shares.The Non Institutional Investors bid for 8.53 lakh shares, out of 1.74 croreshares allotted for this category.The retail individual investors bid for 1.05 crore shares. From this,94.88lakh shares were bid at cut off price and10.14 lakh shares were price bids.The employees bid for 5.04 lakh shares from total 10 lakh shares allottedfor this category.The IPO has a price band of Rs. 500 - 550 and will close on 14 June 2007.The fresh issue of 17.5 crore equity shares is aimed at raising Rs 8750crore to Rs 9625 crore depending on the price band of Rs 500-550 per share,to fund acquisition of land reserves, and development and construction ofvarious real estate projects. Part of the proceeds would be utilised forrepayment of the debt on its books.The Gurgaon-based DLF group is one of the leading real estate developers inIndia. It has been focused on the National Capital Region (NCR; i.e. Delhiand adjacent areas like Gurgaon). The group has developed over 220 millionsquare feet (msf) of saleable area across segments like residential(apartments, row houses and plots), commercial building and retailproperties.It is one of the first developers to anticipate the need for townships onthe outskirts of the fast growing cities and is generally credited with thegrowth of Gurgaon through the development of an integrated township spreadover 3,000 acres.The company has signed a memorandum of understanding with Nakheel LLC, UAEto jointly develop two townships in India, each spread over 20,000 acre.Apart from this, the company has already obtained the approval for severalspecial economic zone (SEZ) projects (including the government's approvalfor two information technology-specific SEZs in Gurgaon, and one SEZ each inHyderabad, Pune and Chennai). It is also in the process of finalisingapprovals for several other SEZs, which would cover an aggregate area of26,100 acre, including a 20,000-acre multi-product SEZ in Gurgaon, a2,500-acre SEZ in Ludhiana, a 1,100-acre SEZ in Amritsar and a 3,000-acreSEZ in Ambala.The DLF group has made significant progress in pursuing new businessopportunities in terms of multiplex cinemas (through its subsidiary DTCinemas), development of a chain of luxury and business hotels (thorough ajoint venture formed with the Hilton group), foray into infrastructureprojects like roads, bridges and airports (through joint venture with LaingO'Rourke), insurance (a joint venture with Prudential, US for lifeinsurance), and engineering and design services (a joint venture with WSP).
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