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Tuesday, October 19, 2010

COAL INDIA : SUBSCRIBE FOR LISTING GAINS.

Price Band - Rs.225-245, Face Value- Rs.10 , 5 % Discount to Retailers.
Issue opens on - 18th October 2010, Monday
Issue closes on - 21st October 2010, Thursday
Listing on – 4th November 2010, Thursday
QIB Book - 315818220 shares.
Retail Book - 568472796 shares.
Employee Reservation - 63163644 shares
Total No. of Shares offered - 631636440 shares or 10 %
Equity Shares outstanding after the Issue - 6316364400 Sh
Equity Shares outstanding prior Issue -6316364400 Sh
Total Size of the Issue - Rs. 14211.81 Cr's. - Rs. 15475.09 Cr's.
IPO GRADING – 5/5 by CRISIL , 5/5 by ICRA.
FAIR VALUE - Rs.265- Rs. 315

CONSOLIDATED RESULTS AS ON – 31st March 2010
TOTAL INCOME - Rs. 52592.292 cr
NET PROFIT – Rs. 9833.699 cr
Share Capital – Rs. 6316.364 cr
Reserves & Surplus – Rs. 19533.022 cr
Dividend – 35 % or Rs. 3.50 per share.
Earning Per Share – Rs. 15.57/sh.
Book Value – Rs. 40.92/sh.

COAL INDIA – India’s largest coal producing company. In FY 09 it contributed 81.9% of total India’s coal production. Largest producer of coal based on raw coal production in the world. Coal Reserve as on 1st April 2010 – 6421.8 cr. It operates 471 mines across 8 states in India. Also exploring opportunities in Australia, Indonesia, South Africa & USA.Raw coal prices lower than landed cost of imported coal in India. Coal India will help GOVT to raise 37.8 % of its disinvestment target.
According to the red herring prospectus of the company, on a consolidated basis, it had registered the three months profit ended June 30 2010, Coal India's total income was about Rs 13,110 crore, while net profit for the period stood at Rs 2,521.78 crore, Coal India had a cash and bank balance of Rs 38,046.34 crore and debt of Rs 1,779.45 crore. Coal India has set aside $1.2 billion (Rs 5,300 crore) in this financial year for foreign acquisitions,
CIL is 40% cheaper than it peers on EV/EBITDA, only 18% of its coal is of top quality. On a price to earnings basis, it certainly does not look overpriced. It is in line at 15 times with what a Peabody Energy or Bhumi Resources is trading at. If you were to look at it from an EV/EBITDA prospective, then it is certainly more than 30% or 40% cheaper vis-à-vis some of its global peers trading at about 6 to 6.5 times whereas the global average to EV/EBITDA basis stands at a 12-13 times. So clearly valuations seem to be on its side. According to me the fair value of CIL comes to Rs. 1,67,383.65 cr - Rs. 1,98,965.47 cr or Rs. 265 - Rs.315

SUBSCRIBE FOR LONG TERM & IF FOR TRADING PROSPECTIVE GO FOR IT ON LISTING GAINS......

Wednesday, October 6, 2010

SESAGOA : BUY ON EVERY DECLINES

Scrip Code : 500295 /SESAGOA
CMP : Rs. 367.10 ;Buy at current levels & in every dip.
Traget : Rs. 380 - Short term ; Long term - Rs. 480.
Market Cap : Rs. 31,559.68 cr.
52 Week High - Low : Rs. 274.7/Rs. 490.8.
Book Value : Rs. 86.75 ; Face Value : Rs. 1.00 ; EPS : Rs. 31.83 ; Divd : 325.00 % ; Total Debt : Rs. 1992.80 cr ; Enterprise Value : Rs.397.59 per share ;
Total Shares : 859702559 shares; Promoters - 479113619 shares - 55.73% ;Total Public holding – 99510958 shares – 11.58%

SESA GOA is a best bet in medium to long term at current price as company is rapidly churning free cash flows on the very fluctuating iron ore prices. There’s an estimate of 3.4 cr tonnes of iron ore mining in FY12, which is much lower estimate then management’s guidance of 5 cr tonnes which implies a volume of 31% CAGR in FY10-12. This volume upside would make cash flow rising despite of falling commodity prices.
On the basis of Discounted Cash Flow analysis Sesa Goa current valuation in an long term iron ore realization comes at $47/tonne.
Now, on CAIRN VEDANTA DEAL, This acquisition will cost over US $ 9 Billion of which Sesa Goa will invest from its cash resources US $ 3 Billion for a 20% stake…. This will be shown as an Investment in the Books of Sesa Goa. (20% of cairn comes to 37.95 cr shares at Rs.355/sh i.e. Rs.13471 cr).
Now, on 31st March 2010
Networth of Sesa Goa was Rs.7209 cr. (Eq Rs.83 cr + Reserves Rs.7126 cr).
Fixed Asset Rs. 580 cr
+ Investments Rs. 5479 cr
+ Net Current Asset Rs. 3076 cr
– Loans Rs. 1926 cr
TOTALS – Rs.7209 cr.

The Deal is expected to be done by early Fy 2011
So after the deal on March 31, 2011 , Sesa Goa’s Networth has to climb from Rs 7209 crs to atleast Rs 15000 cr. The Assets Side would reflect Fixed Assets of Rs 600 crs + Investments of Rs 13500 crs atleast + Net Current Assets of Rs 1000 crs .Sesa Goa will hold 37.95 crs shares being 20% of Cairns India’s Equity…. thus will receive Rs 190 crs as Dividend assuming Rs 5/share Dividend by Cairns…. It has Invested atleast @ Rs 13500 cr, so the return on Investment is a 1.40% being the Dividend Yeild!….
The book value of Sesa Goa will be around Rs.174.50. EPS- Rs. 88-90. EV/EBITDA - 11.35 v/s 26.40 of industry

Saturday, October 2, 2010

MICRO-MAX MOBILE: PLANS IPO !!!

MicroMax Informatics Ltd - India's one of the leading mobile handset maker is planning for an IPO. Company intends to sale 2,15,46,118 shares through IPO. The price could be around Rs. 210 per share, an total of Rs. 452 cr to be raised by diluting 10.03 % of post issue. This values the company around Rs. 4500 cr. Equity Prior Issue - 19,32,70,610 shares ; Post Issue - 21,48,16,728 shares.

3 PE investors have already bought a 5.75 % stake in pre ipo for Rs. 210 cr from 4 promoters this Sept 2010. Sequia Capital has - 2.68 %; Sandstone Capital - 2.68 %; Madison India Capital - 0.39 % bought from Rajesh Agarwal, Rahul Sharma, Sumeet Kumar & Vikas Jain for an estimate price of Rs. 181 cr.(After accounting for Bonus shares) rest unknown. TA Associates a major PE investor has 15 % stake bought in DEC 09 at around Rs. 100 cr. Total PE investment in company is around Rs. 410 cr, whereas the promoters actual contribution is Rs. 6 lakh per head. Indian handset makers market share went up to 17.5 % from merly 0.9 % last year. MicroMax enjoys 4.1 % of market share followed by Spice - 3.9 %, Karbonn mobiles - 3 %, Nokia - 54.1 %, Samsung -9.7 %. MicroMax mobiles sold 70.5 lakh handset by March 2010, it also sells mobile data cards.

Financial Details -

Net Worth as on 31 March 2010 - Rs. 208.624 cr ;
Net Asset Value - Rs. 11.75/sh.
Total Income - Rs. 1601 cr ; Net Profit - Rs. 200 cr (March 2010).
Revenue have jumped 4.5 x against last year & net profit grew to 5.7 x from last year. The reason of high margins in bussiness is due to wafer thin overhead with cost of product sold comprising 2/3rd of total sales.
Company's Employee cost is around Rs. 7 cr. Selling & distributing Expenses Rs. 75 cr. On the basis of last fiscal profit on a post issue- EPS- Rs. 9.3 ; P/E - 22.5 .

FUTURE PLANS -

Company is looking at valuation of 13.3x its previous years EBITDA. Company wants to use half of the proceeds amounting to Rs. 226 cr in setting up new handset manufacturing plant near TamilNadu. The rest of the amount Rs. 125 cr in BRAND buliding for next 2 years (April'11 - March'13). Investment in acquisition Rs.75 cr by March'11. Rest Rs. 26 cr in strategic initiatives to be used by current year March'11.

Company had expanded bussiness in international market, It intends to expand in Nepal by January, SriLanka by June, Bangladesh by July. Also it intends to expand its wings to Nigeria, Ghana & UAE.
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