Jaypee Infratech Limited listed its shares on the BSE and NSE yesterday and was under pressure right from the start of trading. It did not see a single trade in positive territory and the highs were Rs 98.50 and Rs 98.80 on the BSE and NSE respectively. The poor performance is attributed to the fall in the markets over the last few weeks. 

The company had tapped the capital markets with a simultaneous issue of fresh equity worth Rs 1650 crs and an offer for sale of 6 cr shares. The price band was Rs 102-117 and the issue carried a discount of 5% for retail investors. The issue was open for subscription between the 29th of April and the 4th of May 2010. The issue received adequate response and was subscribed just about 1.24 times. The issue was priced at Rs 102 and the company allotted a total of 17.39 cr shares as fresh issue and 6 crs shares as offer for sale making a total of 23.39 cr shares.

The share listed at Rs 93 on the BSE and Rs 98 on the NSE respectively. The highs were Rs 98.50 and Rs 98.80 respectively. The lows were at Rs 90 on both the exchanges. The traded volumes were significantly lower than normal at 5.23 cr shares. It may be mentioned that the first one hour of trade had seen volumes of 2.94 cr shares. This effectively means that the volume in 5.and a half hours was a mere 2.29 cr shares significantly lower than the first hour of trade itself. The share closed at Rs 91.30 down 10.7% on the BSE and Rs 91.45 down 10.55% on the NSE.

The low volumes indicate that people were simply not interested in selling at 10% below the IPO price or retail investors selling 5% below their discounted price. They preferred to hold on and would wait for better opportunities.  Traders felt that the stock price had already reached low levels and shorting at these levels would be dangerous and not profitable to initiate trades. The weighted average was Rs 93.60 on the BSE and Rs 94.02 on the NSE.

At the end of the day the total traded volume was 5.23 cr shares or a mere 22.4% of the IPO size of 23.39 cr shares. The delivery volume was 1.79 cr shares or 34.26% of the traded volume. The delivery as a percentage of IPO size was 7.66%. The low volumes indicate that there would be a selling pressure at higher levels if the share moves closer to the discounted issue price of retail investors. Trading volumes are likely to pick up if the share price improves. At current levels there would be little interest.

In summary, a completely disappointing start to the trading of yet another IPO.

Jaypee Infratech Limited listed today at a listing ceremony on the NSE. The share is traded on the BSE and NSE. The company had tapped the capital markets with a simultaneous issue of fresh equity worth Rs 1650 crs and an offer for sale of 6 cr shares. The price band was Rs 102-117 and the issue carried a discount of 5% for retail investors. The issue was open for subscription between the 29th of April and the 4th of May 2010. The issue received adequate response and was subscribed just about 1.24 times.

The issue was priced at Rs 102 and the company allotted a total of 17.39 cr shares as fresh issue and 6 crs shares as offer for sale making a total of 23.39 cr shares.

The share listed on the NSE at Rs 98 on the NSE and Rs 93 on the BSE respectively. The highs on the two exchanges were Rs 98.80 and Rs 98.50 respectively. World markets and overseas cues are bad and the Indian markets are no exception. The lows made on both the exchanges are an identical Rs 90. The markets have recovered from their lows and are now trading substantially higher than their lows.

The company, Jaypee Infratech Limited is an attractive proposition around Rs 87-90 and would offer short term appreciation if the share does touch these levels. I am an investor in the company from the IPO and my cost in the retail category is Rs 96.90. The current market price of around Rs 93.50 means a loss in absolute terms of about Rs 3.50 per share or roughly 3.6%. Considering the current concerns in the stock market globally, I would not be a worried man at this time on Jaypee Infratech Limited.

The share has in the first hour of trading seen a volume of 2.94 cr shares which is roughly 12.57% of the IPO size of 23.29 crs. It shows that this huge volume is reflective of panic in the share post listing. The weighted average is around Rs 95.30 while the share is trading at around Rs 93 indicating weakness. The remaining part of the day and global markets will determine where this share closes at the end of the day.

Jaypee Infratech is to list on Friday the 21st of May at a listing ceremony on the NSE. The company had launched its offer for sale and fresh offer between the 29th of April and the 4th of May in a price band of Rs 102-117. The issue was subscribed 1.24 times.

The issue was priced at Rs 102 and there was a 5% discount to retail investors. The issue had raised Rs 2262 crs at the issue price.

Jaypee Infratech Limited which had launched its IPO and offer for sale between the 29th of April and the 4th of May has priced its IPO at Rs 102. The issue carries a discount of 5% for retail investors. The issue was subscribed 1.24 times.

Jaypee Infratech Limited which had tapped the capital markets with a fresh issue and an offer for sale was subscribed. The issue had opened on Thursday the29th of April and closed on Tuesday the 4th of May. The price band was Rs 102-117 and a discount of 5% was offered to retail investors.

Looking at the way the book has been built it is a certainty that the discovered price will be either Rs 102 or Rs 103.

Details of the subscription are as follows: -

The IPO of Jaypee Infratech Limited which opened for subscription on Thursday the 29th of April and closes on Tuesday the 4th of May was subscribed to the extent of 0.87 times the issue size at the end of day 2. The price band is between Rs 102-117 and the book is being built around the lower end of the price band around Rs 102-103.

Retail investors would do well to apply at a specific price instead of applying at cut off. If one were to apply at cut off the maximum application for retail investor would be 850 shares at an investment of Rs 99450. If however he put in a specific bid at say Rs 105 he would be able to apply for 950 shares with an investment of Rs 99750. There could be an argument that with the book being built at Rs 102-103 why bid at Rs 105? The argument is perfectly valid but the fact is that even at Rs 104, Rs 103 or Rs 102 the quantity of shares bid would not change and it would remain at 950 shares but the amount paid would change marginally.

The price bid at Rs 105 by retail investors ensures maximum utilisation of the 1 lac limit and also ensures that the price bid is effectively bidding at cut off. The current book has 85% of the bids at Rs 103-102 and it appears the book would more or less come at this price.

In conclusion retail investors should bid at Rs 105 instead of cut off price.     

Subscribe for decent gains in the medium term

Jaypee Infratech Limited is tapping the capital markets with an issue which includes a fresh issue and an offer for sale. The issue opens on Thursday the 29th of April and closes on Tuesday the 4th of May. The issue would raise between Rs 2262 crs and Rs 2352 crs in a price band of Rs 102-117 with a 5% discount to retail investors post allotment.

Business
Jaypee Infratech Limited is an Indian infrastructure development company engaged in the development of the Yamuna expressway and related real estate projects. The company holds the concession for developing, operating and maintaining the Yamuna Expressway from Noida to Agra for a period of 36 years. The expressway is 165 kms and is being constructed as a six lane concrete highway which is access controlled. The company has a right to develop five parcels of land each of 1235 acres, totalling 6175 acres. The total area which could be developed is roughly 520 million square feet. Assuming a construction cost of Rs 1500 and a selling price of Rs 3000 per square foot, there is a gross realisation of Rs 1500 per square foot or Rs 78,000 crs.

The company is eligible for income tax benefits under section 80 I (A) and the same is available for a continuous period of 10 consecutive years in a block of 15 years. The company has decided to claim this benefit beginning with Assessment year 2009-2010 (Financial year 2008-2009). This means that to claim full benefit from tax purposes it would be in the interest to complete the sale of the developable area in the next nine years. A key factor to note in this project is that the entire expressway of 165 kms travels through a single state Uttar Pradesh.

The current toll on this land is expected to be Rs 250 per car.

Objects of the issue

The company is raising a gross amount of Rs 1650 crs through the fresh issue of shares.

The Yamuna Expressway is being built at a total cost of Rs 9739.29 crs of which a sum of Rs 6250.09 crs has been deployed/spent upto 28th February 2010. The broad expenses include the following: -

Financials
Jaypee Infratech Limited has reported total revenue of Rs 556.26 crs for the year ended March 2009 and Rs 533.02 crs for the nine months ended December 2009. The net profit for the respective periods is Rs 266.73 crs and Rs 398.85 crs. The profit in terms of EPS based on current numbers is absolutely insignificant and needs to be ignored if one is looking at the opportunity that this project will throw up.

Comparison
There are quite a few infrastructure players in the country such as GMR Infrastructure, GVK Power, IRB Infrastructure, IL&FS Transportation Networks Limited. Each of these has been executing large road projects but the Noida-Agra project is the first of its kind where there is such a large real estate development included in the same. The company would effectively be creating five new townships on this road which would bring their own prosperity. The travel time on this access controlled expressway is likely to take roughly 120-130 minutes for 165 kms of distance.

Key challenges
The key challenge is to sell the huge land bank that the company possesses. Selling 520 million square feet is going to be a challenge, but with the Eastern peripheral road planned and another international airport also on this road will make for huge traffic as we go forward. The Jaiprakash group has delivered challenging projects and this is one of them.

Conclusion

Jaypee Infratech is an interesting opportunity for investors to share in India’s development and infrastructure growth. Invest for medium term gains.

Jaypee Infratech Limited which is tapping the capital markets with a public issue which opens on Thursday the 29th of April and closes on Tuesday the 4th of May has announced a price band of Rs 102-117. The issue comprises of a fresh offer of Rs 1650 crs and an offer for sale by M/s Jaypee Associates, the promoter of the company of 6 cr shares. The offer for sale would realise Rs 612 crs at the lower band and Rs 702 crs at the top end of the price band.

The total issue size would therefore be between Rs 2262 crs to Rs 2352 crs.