IPO, FPO http://ak57.in Primary Capital Market & Investor Awareness Mon, 14 Aug 2017 07:55:34 +0000 en-US hourly 1 Cochin Shipyard Limited – Flattish start but sees share close with gains of over 20% http://ak57.in/general/cochin-shipyard-limited-flattish-start-but-sees-share-close-with-gains-of-over-20/8731/ http://ak57.in/general/cochin-shipyard-limited-flattish-start-but-sees-share-close-with-gains-of-over-20/8731/#respond Mon, 14 Aug 2017 07:55:34 +0000 http://ak57.in/?p=8731 Shares of Cochin Shipyard Limited listed on the bourses on Friday and the discovered price was marginally higher than the issue price at Rs 435 on the BSE and Rs 440.15 on the NSE. The company had issued shares at Rs 432 and there was a discount of Rs 21 for employees and retail shareholders. The shares then rose to hit the upper circuit of 20% at Rs 522 and Rs 528.15 respectively at around noon and remained there till the rest of the day. For the records it would be that the shares gained 20.83% and 22.26% respectively.

The share issue of Cochin Shipyard created history of sorts garnering subscription of 1.11 lac crs. The issue was subscribed 75.83 times overall. The QIB portion was subscribed 63.51 times, HNI portion 287.11 times, Retail 8.23 times and Employee 0.52 times. The number of applications received was a new record of 20.75 lac applications bettering the record of HUDCO. On basis of number of applications the retail portion was subscribed 5.36 times. The amount garnered was lower than that of Coal India but one must remember that the size of Coal India was 10 times the size of Cochin Shipyard Limited at 15,500 crs while cochin was a mere 1,468 crs.
Considering the size this issue certainly received larger interest. As in keeping with the current government norms there was no anchor allocation.

The HNI at current prices has not been able to recover his cost of funding the issue and would probably have to wait a little longer before he is able to do so.

Coming to the trading data the total volume on the two exchanges was 308.62 lakh shares which was 91% of the IPO size of 339.84 lakh shares. The delivery volume was 155.12 lakh shares which was 50.26% of the traded volume and 45.65% of the issue size. With there being no anchor portion and even assuming theoretically that all retail subscribers have sold on day one, it is apparent that some HNI’s have booked losses and also sold. Today’s delivery volume would indicate the position further. The weighted average of the day’s trade is Rs 501.26 on the BSE and Rs 508.25 on the NSE indicating that the bulk of the trade happened at the higher prices. It was only the pre-open or the price discovery which saw trade of roughly 25 lakh shares on the two exchanges which were at the low of the day.

Exchange Open High Low Close Net Change % Gain/ Loss Wt.Avg Volume Delivery Del %age
BSE 435.00 522.00 435.00 522.00 90.00 20.83 501.26 3245290 1196387 36.87
NSE 440.15 528.15 435.00 528.15 96.15 22.26 508.25 27617037 14315806 51.84
Total 30862327 15512193 50.26

The listing on the previous day of SIS was completely the opposite where the share opened at the high of the day and slowly slid as the day progressed to close around the low of the day with losses of 7% plus. If one were to compare the two issues listing day performance they were exactly the opposite and it happened on consecutive days.

Retail investors have made decent money even if they have sold at the average price because this would further include the discount of Rs 21 which would amount to another 4%. A good issue with a decent end of day performance but very clearly the opening price was below expectations and the same could be blamed on market conditions. Once again the government has got it right and investors have made money in the IPO of yet another PSU.

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Performance of Newly Listed Shares as on 11th August 2017 http://ak57.in/general/performance-of-newly-listed-shares-as-on-11th-august-2017/8729/ http://ak57.in/general/performance-of-newly-listed-shares-as-on-11th-august-2017/8729/#respond Mon, 14 Aug 2017 07:38:36 +0000 http://ak57.in/?p=8729 Name Date of listing Issue Price closing price closing price % gain loss % change over 04th August 28th July over week lssue price PSP Projects Limited 29th May 210.00 308.50 302.55 2.83 46.90 india Grid 06th June 100.00 95.50 97.03 -1.53 -4.50 Tejas Networks Limited 27th June 257.00 330.00 333.35 -1.30 28.40 Eris Lifesciences Limted 29th June 603.00 525.75 609.45 -13.88 -12.81 CDSL 30th June 149.00 304.55 373.55 -46.31 104.40 GTPL Hathway Limited 4th July 170.00 141.90 156.35 -8.50 -16.53 AU Small Finance Bank Limited 10th July 358.00 541.40 587.85 -12.97 51.23 SIS (India) Limited 10th August 815.00 770.40 NA -5.47 -5.47 Cochin Shipyard Limited 11th August 432.00 522.00 NA 20.83 20.83 ]]> http://ak57.in/general/performance-of-newly-listed-shares-as-on-11th-august-2017/8729/feed/ 0 Markets to be super volatile after decent correction http://ak57.in/general/markets-to-be-super-volatile-after-decent-correction/8727/ http://ak57.in/general/markets-to-be-super-volatile-after-decent-correction/8727/#respond Mon, 14 Aug 2017 07:20:58 +0000 http://ak57.in/?p=8727 The markets went into a correction mode last week and were helped along the way by a SEBI induced circular which banned 332 companies from trading. While by weekend a handful of these were relaxed the larger picture remains. The correction saw markets lose ground on all the five days of trading last week. The BSESENSEX lost 1,111.82 points or 3.445 to close at 31,213.59 points while NIFTY lost 355.60 points or 3.53% to close at 9,710.80 points. There was correction all across and there were hardly any shares that were left unaffected.

The week saw two listings as well in the form of SIS and Cochin Shipyard. While the first opened well and closed with losses of 7% the second opened a little higher than the issue price and then closed at the upper circuit gaining about 21%.

The week ahead has a trading holiday on Tuesday on account of India’s 71st Independence Day. The markets are likely to show some rebound at initial having lost for five consecutive days but it is unlikely to be significantly more than that. The feeling that every dip was an opportunity to buy would no longer be there and people would turn cautious. The geo-political situation at the current moment is not the ideal situation and there could be some pressure points in the coming future.

In such a scenario it makes sense to remain light footed and use sharp dips and rallies to enter and sell the market. Plenty of opportunities would be there and one needs to be patient.

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Security & Intelligent Services (India) Limited – Great debut but poor finish http://ak57.in/general/security-intelligent-services-india-limited-great-debut-but-poor-finish/8708/ http://ak57.in/general/security-intelligent-services-india-limited-great-debut-but-poor-finish/8708/#respond Fri, 11 Aug 2017 08:17:30 +0000 http://ak57.in/?p=8708 Shares of Security & Intelligent Services (India) Limited (SIS) listed on the debut at Rs 875 at the BSE and Rs 879.80 on the NSE against an issue price of Rs 815. Unfortunately the story ended there and it was virtually a one way street thereafter and only downwards. The share touched a low of Rs 749 on the BSE and Rs 748.80 on the NSE before closing at Rs 756.70 on the BSE and Rs 757.05 on the NSE.

The company had tapped the capital markets with its simultaneous offer which consisted of a fresh issue of Rs 362.25 crs and an offer for sale of 51.2 lakh shares in a price band of Rs 805-815. The issue looked expensive and the subscription in the HNI category was poor being subscribed under 2 times.

The company had allotted 43.04 lakh shares to 18 anchor investors comprising of 30 entities. Domestic mutual funds were allotted 20.24 lakh shares which was just under half the total anchor allocation. The issue opened well and had made gains of Rs 60-64 at the discovered price. There was one bulk trade reported in all on the NSE which happened at the discovered price of Rs 879.80 for 5 lac shares. Thereafter the price after holding steady just kept on slipping. The end of the day was panic and though the stock closed around Rs 756-758 the weighted average was significantly higher at Rs 824.69 on the BSE and Rs 833.92 on the NSE.

Exchange Open High Low Close Net Change % Gain/ Loss Wt.Avg Volume Delivery Del %age
BSE 875.00 878.00 749.00 756.70 -58.30 -7.15 824.69 1319728 157330 11.92
NSE 879.80 879.80 758.00 757.05 -57.95 -7.11 833.92 8025978 2006120 25.00
Total 9345706 2163450 23.15

All in all while the listing was good without doubt the finish or the closing was indeed poor. For the records this would go down as one more issue which closed below the issue price on listing day and add to the tally of the merchant bankers on the negative side. If only pricing became more rational. Amen!

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Cochin Shipyard Limited – Subscribed over 76 times http://ak57.in/general/cochin-shipyard-limited-subscribed-over-76-times/8698/ http://ak57.in/general/cochin-shipyard-limited-subscribed-over-76-times/8698/#respond Tue, 08 Aug 2017 08:22:52 +0000 http://ak57.in/?p=8698 The maiden IPO from Cochin Shipyard Limited was a runaway success getting oversubscribed 76.19 times. The IPO size was 1,486 crs and garnered subscription of 1.11 lakh crs. This makes it the second highest subscription amount raised after Coal India Limited. The IPO from Coal India Limited was Rs 15,000 crs and compared to Cochin Shipyard was 1 times in size. Considering the base the subscription for Cochin Shipyard could be considered to be a block buster.

The full details of the subscription are given below.

Cochin Shipyard Subscription

Bucket Size Shares applied for Times oversubscribed
QIB 16580000 1053102210 63.52
HNI 4974000 1436847000 288.87
Retail 11606000 98737050 8.51
Employee 824000 393210 0.48
Total 33984000 2589079470 76.19

The issue received 20.75 lakh applications and created a record in terms of highest number of applications ever received so far. In the process it beat the previous best of HUDCO which had received 20.13 lakh applications. Incidentally Hudco was also a government of India offering. Looking at the participation of retail in the primary market, it’s time for the regulator to look at the bucket sizes and reallocate the same considering the retail interest and the fact that retail is mass participation and consist of just one lot.

All told excellent response for the issue which was very well priced and kudos to the ministry for pricing the share at a valuation which leaves something on the table for all. Wonder when the same wisdom will dawn on the private companies and their promoters.

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Monday Factor in July 2017 gains http://ak57.in/analysis/monday-factor-in-july-2017-gains/8690/ http://ak57.in/analysis/monday-factor-in-july-2017-gains/8690/#respond Mon, 07 Aug 2017 14:09:54 +0000 http://ak57.in/?p=8690 There were five Mondays in the month of July and call it coincidence or purely incidental markets gained on each of the five Mondays. That by itself was not a big achievement but the fact that 85% of the monthly gains on the SENSEX and 65% on the NIFTY came on these five Mondays cumulatively. Looking at it another way on 16 days cumulatively SENSEX gained a mere 15% while on five days it gained 85%. In the case of NIFTY it was 35% on 16 days and 65% on five days.

Not too sure what it is but in any month where there are five days of a particular day of the week and on which the market trades on all five they tend to become crucial and invariably they account for the bulk of the movement irrespective of whether it is a gain or a loss. Couple of year’s back it happened with Tuesdays.

The full table for the SENSEX and NIFTY is given below.

Monday Value Value Prev Friday Change % change
03rd July 31221.62 30921.61 30th June 300.01 0.96
10th July 31715.64 31360.63 07th July 355.01 1.12
17th July 32074.78 32020.75 14th July 54.03 0.17
24th July 32245.87 32028.89 21st July 216.98 0.67
31st July 32514.94 32309.88 28th July 205.06 0.63
1131.09 3.66
Gains in July
31st July 32309.88 30921.61 30th June 1388.27 4.30
Percentage gains on Monday cumulatively 0.85
Monday Value Value Prev Friday Change % change
03rd July 9615 9520.9 30th June 94.10 0.98
10th July 9771.05 9665.8 07th July 105.25 1.08
17th July 9915.95 9886.35 14th July 29.60 0.30
24th July 9966.40 9915.25 21st July 51.15 0.51
31st July 10077.10 10014.5 28th July 62.60 0.62
342.70 3.60
Gains in July
31st July 1077.1 9520.9 30th June 556.2 5.52
Percentage gains on Monday cumulatively 0.65
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Performance of Newly Listed Shares as on 4th August 2017 http://ak57.in/general/performance-of-newly-listed-shares-as-on-4th-august-2017/8688/ http://ak57.in/general/performance-of-newly-listed-shares-as-on-4th-august-2017/8688/#respond Mon, 07 Aug 2017 12:45:32 +0000 http://ak57.in/?p=8688 Name Date of listing Issue Price closing price closing price % gain loss change over 04th August 28th July over week lssue price IRB INVIT 18th May 102.00 97.89 98.04 -0.15 -4.03 HUDCO Limited 19th May 60.00 80.05 83.40 -5.58 33.42 PSP Projects Limited 29th May 210.00 329.60 302.55 12.88 56.95 India Grid 6th June 100.00 97.50 97.03 0.47 -2.50 Tejas Networks Limited 27th June 257.00 349.55 333.35 6.30 36.01 Eris Lifesciences Limted 29th June 603.00 568.40 609.45 -6.81 -5.74 CDSL 30th June 149.00 311.70 373.55 -41.51 109.19 GTPL Hathway Limited 4th July 170.00 142.30 156.35 -8.26 -16.29 AU Small Fianance Bank Limited 10th July 358.00 553.60 587.85 -9.57 54.64 ]]> http://ak57.in/general/performance-of-newly-listed-shares-as-on-4th-august-2017/8688/feed/ 0 Cochin Shipyard records subscription while markets survive rate cut http://ak57.in/general/cochin-shipyard-records-subscription-while-markets-survive-rate-cut/8685/ http://ak57.in/general/cochin-shipyard-records-subscription-while-markets-survive-rate-cut/8685/#respond Mon, 07 Aug 2017 08:32:31 +0000 http://ak57.in/?p=8685 Markets have a mind of their own there is no doubt. After RBI announced a rate cut of 25 basis points on expected lines and with a 5-1 verdict, markets began to correct. The correction lasted a mere couple of days and by weekend on Friday they were back to their winning ways scoring gains all over again. The markets are richly valued no doubt but the excess liquidity ensures that at every correction there are enough buyers.

The IPO from Cochin Shipyard had huge success and received subscription which is very noteworthy. This time of fund mobilisation has happened only after Coal India which was an issue over ten times in size of Cochin Shipyard. While Coal India was to raise Rs 15,500 crs, Cochin Shipyard was for a mere Rs 1,468 crs. The total amount raised was a staggering Rs 1.11 lac crs. The issue saw the QIB portion subscribed 63.52 times, HNI portion subscribed 288.87 times and Retail portion subscribed 8.51 times. The company received a total of 20.75 lac applications which is a new record bettering the previous one also from a PSU company, HUDCO which received 20.13 lakh applications.

Seeing the kind of subscriptions from the retail which is really taking to the markets through primary issues and also mutual funds, it’s time to revisit the various buckets that the IPO has been divided into.

It is now an open secret which even the chaiwala on Dalal Street knows that the HNI applies only through borrowed money. Why should he be allowed to bid for one time the whole issue when oversubscription in his category is not allowed to be shifted to the QIB category? He is only interested in doing this large an application so that unless the issue is subscribed in the HNI category by over 100 times the margin at which money is lent does not reduce. Without that comfort he is not interested in the issue. When one sees the total subscription by HNI’s and the number of people who have applied it invariably is less than the number of times that the issue is subscribed.

Further it is this category of people who play the grey or premium market and are not conducive for a healthy state in the primary market. With the regulator cracking down on the contentious P-Note market, why action is not taken here beats me. By not allowing the HNI to bid for more than the bucket size almost all problems would be solved. The regulator must attempt giving this a try and solve the problems of this hyped demand and rampant price rigging in the primary market which is not justifiable and sustainable.

Markets are looking tired but refuse to correct or consolidate. Who blinks first the markets or the investor only time will tell.

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Early signs of cracks appearing – Book profits http://ak57.in/general/early-signs-of-cracks-appearing-book-profits/8682/ http://ak57.in/general/early-signs-of-cracks-appearing-book-profits/8682/#respond Mon, 31 Jul 2017 08:37:05 +0000 http://ak57.in/?p=8682 The markets continued to make new highs and NIFTY crossed the magical level of 10k.This week the market gave signs that the momentum is stalling and a larger correction is in the offing sooner than later. The BSESENSEX gained 280.99 points or 0.88% to close at 32,309.88 points while NIFTY gained 99.25 points or 1% to close at 10,014.50 points. The broader market too registered gains of between 0.90% and 1.00%.

NIFTY futures for July expired with decent gains of 516.45 points or 5.43%. Bulls were seen struggling on expiry day in the last hour and were unable to press home the advantage. This gave an indication of things to come and markets were slightly weaker on Friday. The midcap and smallcap segments have been seeing profit taking for the last couple of days and it is likely to continue in the coming week as well.

RBI meets for its bi-monthly policy review meet this Tuesday and Wednesday the 1st and 2nd of August where it is widely believed that there would be a rate cut. Inflation has never been so soft and benign and this is the best chance for a rate cut. The optimists are hoping not only for a rate cut but an over optimistic cut of 50 basis points. Whether it would happen or not one is not sure but going forward rate cuts would not be easy with the Fed deciding to shrink its balance sheet and maintain a tight interest rate regime. In such a scenario interest rates may not soften in India going forward post this cut.

There are two IPO’s in the coming week. The first is from Cochin Shipyard which is raising roughly Rs 1,470 crs through a simultaneous offer for sale by the government of India and a fresh issue of 339.84 lakh shares in a price band of Rs 424-432. There is a discount of Rs 21 for retail and employees. The issue is being offered at an attractive multiple of 15-16 times its FY March 2017 earnings. The company is building India’s first indigenous Aircraft carrier. Newspaper reports and the CAG peg the cost of the same at roughly 3 billion dollars. The company has billed so far Rs 7,000 crs for the ship and roughly Rs 12,000-13,000 crs would be billed over the next four or five years. Even though this is majorly to be bought out there is a handling fee which would be earned by the dockyard.

Besides the shipyard, the company is in two more verticals which are ship repair and training and laboratory services. Ship repair is a very high margin business and the company is expanding its activities by adding a new repair facility and also building a new dry dock. The new facility will sufficiently ramp up the capability and capacity of handling substantially larger ships and vessels and make Cochin shipyard a preferred vendor for new ship and repair facility.

Going forward I am sure that the government with its make in India initiative would order further aircraft carriers from Cochin shipyard rather than buying older ones and then refurbishing them. The issue is a must subscribe.

The second issue is from Security and Intelligence Services (India) Limited. The company is tapping the capital markets with its simultaneous offer for sale and fresh issue to raise Rs 775-779 crs in a price band of Rs 805-815. The PE of the issue is a staggering 61.78 times to 62.55 times based on consolidated earnings for the year ended March 2017. The company earns over 86% of its total revenues from security services and is primarily based in India and Australia. Its operation in Australia is bigger than India which 60% of the revenues from security services coming from Australia and 40% coming from India. Its net margin is just under 2%. The valuation at which the shares are being offered leave little or no scope for appreciation for the investor. Further the retail portion is a mere 10% of the issue size and makes allotment that much more difficult.

With both issues back to back, it makes sense to just apply for Cochin Shipyard and ignore the second.

With RBI policy due on Wednesday and markets showing early signs of cracking, keep on the sidelines and book profits.

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Monday magic fails – ITC tanking is talk of the week http://ak57.in/general/monday-magic-fails-itc-tanking-is-talk-of-the-week/8678/ http://ak57.in/general/monday-magic-fails-itc-tanking-is-talk-of-the-week/8678/#respond Mon, 24 Jul 2017 08:44:38 +0000 http://ak57.in/?p=8678 Mondays seem to be a special day in July for the markets. In the first two weeks markets gained a percent each while in the third it was flat and drama happened on Tuesday when ITC was at the hammering end. The stock lost a massive Rs 37.20 intraday and made a low of Rs 276.90 before recovering. It closed the week at Rs 288.50 down Rs 48.70 or 14.40%. What is really surprising and worth taking note of is that over 9 cr shares changed hands physically or were actually delivered on Tuesday. This makes the value of transaction at Rs 2,500 crs and no names appeared on either the buy side or the sell side. It sure is a big number and very clearly there was huge interest in the stock.

The Reliance AGM was held on Friday and in characteristic fashion the company declared a surprise one for one bonus issue to coincide with its 40th anniversary. It also launched its 4G smart phone which would be available against a security deposit for three years and come absolutely free. The company which also declared impressive results for the June quarter saw its share price gain Rs 55 or3.59% and close at Rs 1,586. This incidentally is a nine year high and helped the market gain from the ITC factor.

The numbers from Wipro were better than what the street expected and the buyback at a substantially higher than market price saw the share register double digit gains. With the broader markets looking very expensive, and IT stocks having done nothing in the last couple of quarters there is a sense of security creeping in the IT sector. Investors are taking the view that with markets set to correct, there is a strong possibility that IT stocks may hold themselves, effectively outperforming the broader market.

Expiry of July series happens during the week ahead and the current level of NIFTY futures is higher by 411.15 points or 4.33% compared to the June expiry. The current level of NIFTY is at 9,915.25 points. The current position is in favour of bulls and they need to continue to press home the advantage otherwise they could be under pressure.

The new President of India has been elected and he would be sworn in on Tuesday the 25th of July. Shri Ram Nath Kovind would be the 14th President of India and the first from the NDA. Shri Abdul Kalam was elected during the NDA term but was not a member of the NDA or BJP.

Markets in the coming week would be volatile with expiry to happen. Currently bulls have the upper hand but it doesn’t take too long for things to change. We need big surprises on the positive side from ongoing quarterly results to keep the momentum going. Stay light and use sharp movements to trade the market.

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