IPO, FPO » Globus Spirits

Weekly Performance of Newly Listed Shares week ended 25th Sept

Arun Kejriwal — Sat, 26 Sep 2009 04:57:19 +0000

Name	Date of listing	Issue Price	closing price	closing price	gain loss	change over
			25th Sept	18th Sept	over week	Issue price
NHPC	1st September	36	34.70	35.70	-2.80	-3.61
Jindal Cotex	22nd September	75	82.35		9.80	9.80
Globus Spirits	23rd September	100	91.05		-8.95	-8.95

Globus Spirits Listing Day One: Good start but very poor finish

Arun Kejriwal — Thu, 24 Sep 2009 03:13:23 +0000

Globus Spirits Limited was listed on the BSE and NSE today. The company had a listing ceremony on the BSE. The company had issued 75 lac shares in the price band of Rs 90 to 100. The issue was open during the period 31st of August and 2nd of September 2009. The issue was priced at Rs 100. The stock which listed well moved up to a high of Rs 111.30 and 111.70 on the BSE and NSE respectively. The stock was in positive territory but kept on slipping and half way through the day’s trading had not only given up the day’s gains but began trading in the negative.

Information from the exchanges shows that while atleast two institutional investors sold on day one, one investor has bought as well. The volume on the BSE and the NSE was 104 lacs and 131 lacs respectively. The combined volume of 235 lacs in the day’s trade was poor. The delivery percentage was 16.86 % and almost 40 lac shares were sold for delivery on day one. This delivery is 52.92 % of the shares offered in the IPO.

In a television interview after the listing the Managing Director of the company Mr Ajay Swarup has indicated that the company is likely to earn an EPS of Rs 12-13 for the FY 09-10 based on the fully diluted equity. The company has also signed an agreement for bottling of Jagatjit’s products. The prospects of decent earnings did not help the company survive the onslaught and the share tumbled to close at Rs 90.75 on the BSE and Rs 90 on the NSE respectively. The share lost close to 10% at close and was marginally higher than the low of the day.

In conclusion, though the share had given listing gains in the early part of the day, clearly the same were unsustainable and the share cracked under pressure. History books will record the event as one more IPO which cracked on listing day and closed well below issue price.

Exchange	Open	High	Low	Close	Net Change	Volume	Delivery	Del % age	Wt Avg
BSE	110.00	111.30	89.30	90.75	-9.25	10395529	1545407	14.87	100.06
NSE	101.00	111.70	89.50	90.00	-10.00	13142820	2424299	18.45	100.32
Total						23538349	3969706	16.86

Globus Spirits: Listing price

Arun Kejriwal — Wed, 23 Sep 2009 08:43:29 +0000

Globus Spirits Limited was listed on the BSE and NSE today. The company had a listing ceremony on the BSE. The company had issued 75 lac shares in the price band of Rs 90 to 100. The issue was open during the period 31st of August and 2nd of September 2009. The issue was priced at Rs 100. The stock listed at Rs 110 on both the exchanges and has been under some pressure thereafter. The stock after showing initial strength has given up a large part of its gain but is still trading in positive territory and as of 11.45 am the stock was up about 2% on both the exchanges. The volume on the BSE and the NSE was 45 lacs and 60 lacs respectively. The combined volume of almost 106 lacs in the first 110 minutes of trade is average. It would be interesting to see where the stock closes at the end of the day.

Exchange	Open	High	Low	Close	Net Change	Volume	% gain	Wt Avg
BSE	110.00	111.30	100.65	102.00	2.00	4533818	2.00	106.10
NSE	101.00	111.70	100.70	101.85	1.85	6051325	1.85	106.13
Total						10585143

Globus Spirits Ltd.

Arun Kejriwal — Sun, 20 Sep 2009 05:35:00 +0000

The shares of Globus Spirits Limited will be listed on the BSE and the NSE on Wednesday the 23rd of September 2009. The company had issued shares in a price band of Rs 90-100, between the 31st of August and 2nd of September 2009. The price for the issue was fixed at the upper price band of Rs 100.

GLOBUS SPIRITS : attractively priced issue for the medium term

Arun Kejriwal — Tue, 01 Sep 2009 07:35:07 +0000

Globus Spirits ltd was incorporated in the year 1993. The company is in the business of manufacturing and marketing IMFL (Indian made foreign liquor), industrial alcohol and country liquor. The company has two manufacturing and bottling plants at Behror and Samalkha with a licensed and installed capacity of 1,44,00,000 bulk litres per annum at each plant. The company has a capability to make alcohol from grain and also molasses. It supplies rectified spirit or ENA (extra neutral alcohol to almost all the leading liquor manufacturers in the country. The company has a decent presence and market share in Haryana, Delhi and Rajasthan in the country liquor segment and has launched its IMFL brands additionally in Uttar Pradesh and the four Southern states of Karnataka, Kerala, Tamil Nadu and Andhra Pradesh.

Market and earnings

The company is promoted by Mr Ajay Swarup, an IIM graduate from Kolkatta and his investment company Chand Bagh Investments Ltd. The demand for liquor or the growth in the sector is a fact of life with factors such as rising population, the wider acceptance of liquor being a part of life and no longer a social taboo and of course the average age of people being initiated into drinking coming down. At the same time it may also be relevant to know that the per capita consumption in India is 2 litres against 3.5 lts in Thailand, 5 lts in USA and 9 lts in Russia. The company had gross sales of Rs 235.26 crs in 07-08 and Rs 281.40 crs in 08-09. They have shown a further growth in the first quarter of the current year with sales rising to Rs 92.35 crs. The profit after tax has been Rs 12.64 crs and Rs 12.93 crs showing that margins have been under pressure. The margins were under pressure and the same have been reflected in numbers primarily on account of rising costs. In the current quarter Globus Spirits did get a price increase and the same resulted in a jump in net profits to Rs 6.77 crs for the first quarter. The EPS for 07-08 is Rs 10.58 and for 08-09 Rs 10.55. The annualised EPS for 09-10 is Rs 22.12 and actual for the quarter Rs 5.53

The profits look sustainable simply for the reason that traditionally the first half sales in the liquor industry account for 40% while the second half accounts for 60%.

Issue Details
Issue Size	75,00,000 equity shares of the face value of Rs. 10 each
Employee Reservation	Up to 50,000 equity shares
QIBs Portion	Up to 37,25,000 equity shares
NIBs Portion	Not less than 11,17,500 equity shares
Retail Portion	Not less than 26,07,500 equity shares
Price Band	Rs. 90.00 – Rs. 100.00 per equity share
Paid up capital	Pre-Issue – Rs.12.26 crs.	Post-Issue – Rs. 19.76 crs.
Market Capitalization	At lower band – Rs. 177.84 Crore	At upper band – Rs. 197.60 Crore
Promoter holding	Pre-Issue- 96.41%	Post-Issue – 59.81%
Grading	“CARE IPO Grade 3” from CARE
Issue Program	Issue Opens on – 31st Aug 2009	Issue Closes on – 2nd Sept 2009
Listing	BSE & NSE
BRLM	Srei Capital Markets Limited & Keynote Corporate Services Limited

The objects of the issue are as follows:-

Multi-Pressure Distillation Plant to produce 35,000 litres/day of ENA at Behror Unit.
Multi-Pressure Distillation Plant, including Slurry mixing and Liquefaction,
Saccharification cum-Fermentation along with auxiliaries etc. to produce 35,000 Litres/day of ENA, at Samalkha Unit.
Brand Development for Marketing of IMFL Brands
Acquisition of Canteen Stores Department registered IMFL Brands
IMFL Bottling Section at Samalkha Unit
IMFL Bottling Section at Behror Unit.

The total cost of all the above and other aspects of the project are estimated to cost Rs 89.3 crs.

Growth and Valuations

The main drivers going forward would be to increase the company’s presence in the IMFL segment and with a brand acquisition of a Canteen Stores Department (CSD) approved/registered brand increase sales in the premium segment.

The share is attractively priced at 4.07 times and 4.52 times at the lower and upper price band respectively of its first quarter EPS on an annualised basis. As mentioned earlier the EPS for the quarter was Rs 5.53 and on an annualised basis the same was Rs 22.12

I recommend investors to subscribe to the issue for medium term gains.

SEBI Disclaimer:- I intend to subscribe to the issue