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NMDC FPO – IPO Analysis, Updates, should you subscribe?

free stock tips — Wed, 10 Mar 2010 13:29:00 +0000

The 332,243,200 equity shares follow-on public offer of NMDC, a navratna public sector undertaking, opened for subscriptions today. The price band for the issue, which will close on March 12, 2010, has been fixed at Rs 300-350 per share.

The government has offered a discount of 5% to the offer price to retail individual bidders and eligible employees.

Experts’ opinions were mixed on the issue but they have reached a consensus on the pricing—that it should have been at or below Rs 300 instead of this price band of Rs 300-350. Investment Advisor, SP Tulsian adviced retail investors to apply at Rs 300 per share. R Venkat Subramanian, CIO of Infina Finance Pvt Ltd says, at around Rs 300 maybe it is worth giving a shot. However, Paresh Jain of Angel Broking advised an avoid on the issue.

SP Tulsian said, “We feel that post this issue, share price will correct to its realistic levels, due to increase in float to over 11%, which in our view would be around Rs. 300 per share. So, it is advised to apply in the issue at the lower band of Rs 300 per share and advice is to refrain from applying at the cut off. In all probability, book is likely to get discovered at Rs 300 per share. Hence, it would have been prudent on part of the Govt. to announce the band with narrow range of Rs 25. This wide range of Rs. 50 in price band, indicates lack of confidence, even on part of the Govt. Even QIB category is likely to see offer coming in at around Rs 300 per share. If price gets discovered at Rs 300 per share, net cost of acquisition to them will be Rs 285 per share, which will leave some profit on the table for the prospective retail investors. If by chance, price gets discovered at Rs 350, due to good response of QIB, it may not sustain on listing of new shares due to increase in float.”

Manish Bhatt of Prabhudas Lilladher says, one should subscribe to the issue at cut-off price with one-year horizon. He expects the pricing may be around Rs 300 per share, so that investors will get shares at Rs 285.

R Venkat Subramanian said, “NMDC price is still a bit of a tough range. I think Rs 250-275 range would have made it very attractive and at Rs 300 it is sort of neither here nor there. So I think at Rs 300 or above Rs 300, the investment bankers would have tough job on their hands. Otherwise the environment is extremely favourable for NMDC, the headlines for iron ore and any kind of resource is so strong that generally there should be investor appetite, there maybe a little bit of churning from even some of the global mining companies that investors are holding into something like NMDC. So it is okay but not great kind of pricing.” “I would think that something like a SAIL is cheaper than NMDC but around Rs 300 maybe it is worth giving a shot,” he has said.

Krishna Kumar Karwa, MD of Emkay Global Financial Services said, “From an investor perspective looking for listing gains probably this is not the issue to subscribe for but from a long-term perspective this is a good investment opportunity. So we are expecting institutional support for the issue and the retail investors’ response maybe slightly lukewarm.

Sandeep Madan, High Networth Individual says, “It is a skip for now, not because of NMDC itself, but because of the way the government has been pricing its issues, FPOs in the recent past. Rs 300 too in my mind is a price which is on the higher side based on all the parameters that one has there to analyse.

Paresh Jain of Angel Broking advised a avoid on the issue.

Amit Dalal, Executive Director of Tata Investment Corporation says, the discount to market price is something that could attract investors and perhaps hopefully there will be larger list of FIIs who will participate in this issue than what we saw in NTPC. “The whole space has become quite expensively priced though iron ore prospects are very good next year, prices of the iron ore have been revised upwards. So they do have an earnings growth potential next year which is perhaps even as good as what we saw last year but issue expensively valued undoubtedly,” he has said.

Source : Money Control

NMDC FPO – IPO Analysis, Updates, should you subscribe? is a post from: Indian Stock Market Tips

Won’t subscribe to National Mineral Development Corporation (NMDC) FPO: Sandeep Madan

free stock tips — Wed, 10 Mar 2010 11:24:35 +0000

The follow-on public offer of NMDC opened for subscriptions today. The offer comprises a net offer to the public of 330,500,000 equity shares of face value Re 1 each and a reservation of 1,743,200 equity shares for purchase by eligible employees. The offer will close on March 12, 2010. The price band for the issue is fixed at Rs 300-350 per share.

In an exclusive interview with CNBC-TV18, Sandeep Madan, High Networth Individual, speaks about the issue and gives his outlook going forward.

Here is a verbatim transcript of the exclusive interview with Sandeep Madan on CNBC-TV18. Also watch the accompanying video.

Q: Is National Mineral Development Corporation (NMDC) a subscribe or a skip?

A: Basically, it is a skip for now, not because of NMDC itself, but because of the way the government has been pricing its issues, FPOs in the recent past. When promoters do this kind of stuff and have a high pricing on their side, it is understandable, these are group of individuals who want to get the best out of what they have created over a period of time. But government doing that, very clear examples for that is National Thermal Power Corporation, Rural Electrification Corporation (REC) trying to get the last dollar or last penny on the table for that matter, that is a bit surprising. In this case too my concern is the same that the pricing on this has been on the higher side, especially if it gets subscribed at the upper end to the band.

Q: Do you think there is any percentage in looking at it at Rs 300, the lower end of the band? Do you think that may work out for HNIs or you are not convinced even with Rs 300?

A: Rs 300 too in my mind is a price which is on the higher side based on all the parameters that one has there to analyse. But the fact of the matter remains that there has been no clear price determination on this stock for all this while because of the low liquidity with which it has been floating. So today the price that we are talking is the price that has been announced is times higher than the international peers and what one needs to see is that it is an international global market now. So if for any reason iron ore can be brought in from anywhere in the world at a cheaper price, I don’t understand why is something that is mined in India has to get a certain price for the valuation to justify itself.

The argument of growth being in this country is a very fair one. We see that this country is going to grow on a very different scale vis-à-vis the rest of the world. So in that given situation Japan, China, India, the growth story remains. The commodities would be required in plenty, steel would be required based on steel requirements iron ore prices should strengthen. If they do obviously the price going forward should improve from what it is today. Also the stock prices will benefit from that, but then saying that each international company would have the same advantage because now with the global world, this being a global place where trading can be done seamlessly, I don’t understand why something being produced in India, except for the freight part, would make any difference other than that.

Q: So let us talk about a couple of IPOs then, what about something like a DQ Entertainment, is that more interesting or lucrative for an HNI to invest in?

A: Basically the story with the IPOs as of the recent past, except for a couple of exceptions like Cox & King and a couple others, the complete story on IPOs and FPOs has been a disappointment for investors. Most of it, I would attribute to the merchant bankers, lead managers, the way they try to get the best without leaving anything for the investor on the table. Based on that without getting into the specifics or naming any of these particular ones, we have a stream of IPOs that are to come, a few of them open right now and a few of them opening in very near future, my basic concern on these has been the pricing. Everything is good for a price and the same thing could be bad for a higher price. So most of it has to do with the pricing except for a certain company could be bad fundamentals itself, but then those are very few and far. The major issue is the pricing.

Source : Money Control

Won’t subscribe to National Mineral Development Corporation (NMDC) FPO: Sandeep Madan is a post from: Indian Stock Market Tips

NMDC FPO –Avoid- Angel Securities

free stock tips — Wed, 10 Mar 2010 06:19:28 +0000

NMDC Follow on Public offer (FPO) opens on 10 March and closes on 12 March, 2010.

The FPO entails issue of 33.2 crore equity shares priced in the band of Rs300-350. The company will raise between Rs9,900-11,600 crore depending on the cut-off price.

The issue of 33 crore equity share by Government of India (GoI) represents 8.38% of the total outstanding share capital of the company. Retail Investors are entitled for a 5% discount of the issue price. Post the issue the government holding will be around 90% of the total share capital.

The company will not receive the offer proceeds as it is a part of Government divestment plan.

NMDC, India’s leading iron ore producer benefits from huge iron ore reserves, better quality ore and low cost advantage. At the lower price band, NMDC is trading at 12.6x and 9.6x FY2011E and FY2012E EV/EBITDA while at the upper band it is trading at 15.1x and 11.5x its FY2011E and FY2012E EV/EBITDA. In comparison to Sesa Goa (only listed domestic iron ore company), which is trading at 7.8x and 6.4x FY2011E and FY2012E EV/EBITDA, we feel that the FPO pricing is overpriced. We recommend an AVOID on the FPO.

NMDC FPO –Avoid- Angel Securities is a post from: Indian Stock Market Tips

NMDC FPO price band at Rs 300-350 per share

free stock tips — Mon, 08 Mar 2010 21:29:45 +0000

The government has fixed the price band for the NMDC follow-on public offer at Rs 300-350 per share, at a discount of 12.9-25.3% to the current market price, reports CNBC-TV18′s Sajeet Manghat. Retail investors will get a further 5% discount in the issue.

The government is understood to have fixed a price band of Rs 300-350 for the follow-on public offer of state-owned mining giant NMDC. It is priced at a discount of 14.8-25.3%.

The Empowered Group of Ministers met today fixed the price for the state-owned company. At this price range, the company is likely to mop up about Rs 11,700 crore, steel ministry sources said.

From a valuation point of view, the IPO would be fairly priced compared to its global peers though it would be at a premium to many of them. NMDC is one of the largest iron ore producers in India. The fact that it has the lowest cost of production for iron ore would mean that it would get a premium to some of its domestic peers as well as some international peers.

Valuation is close to around 22-25 times assuming the FY11 EPS to be around Rs 14 per share. NMDC is expected to come out with new price norms by the next fiscal which is expected to increase iron ore prices by nearly 50%. If that happens, the EPS would be much higher and that would mean that we are looking at a PE multiple of 17-22 times for FY11, which is a pretty fair valuation for NMDC going forward.

On an EV To EBITDA basis, it is quite comparable to many other peers though it is at a slight premium to many of them. Analysts however say that since NMDC is one of the largest players in the iron ore segment it will command that premium. This is good news for all retail investors as retail is going to get a 5% discount to the price which would be determined by the price band of Rs 300 -350 per share.

The government has taken the sensitivities of institutional investors into consideration. Institutional investors were talking about the current market price of NMDC being very high. Hence the government has priced it at a point which will give them something to go for or some pop on the listing would be there for retail investors as well if they go ahead and invest in the FPO.

The NMDC issue will open on March 10 and close on March 12. The country’s largest iron ore producer is coming out with its public issue of over 33 crore shares of face value of Re 1 each. The government is slated to divest 8.38% stake in the public sector undertaking.

NMDC share closed at Rs 400.6, down 3.35% from Friday’s closing, on Bombay Stock Exchange (BSE).

NMDC FPO price band at Rs 300-350 per share is a post from: Indian Stock Market Tips

NMDC FPO price-band to be fixed on 8 March; issue opens 10 March

free stock tips — Fri, 05 Mar 2010 14:51:07 +0000

The FPO comprises a net offer to the public of 330,500,000 equity shares of face value of Re1 each

Navratna public sector unit NMDC Ltd plans to tap the capital market with its FPO, offering for sale of shares for cash at a price to be determined by the book-building process.

The issue is slated to hit the market on 10 March and close on 12 March. The price-band will be fixed on 8 March. The FPO comprises a net offer to the public of 330,500,000 equity shares of face value of Re1 each. It shall constitute up to 8.38% of the post-offer paid-up equity share capital of the mining company.

“The company has decided to offer a discount of 5% to the offer price for retail individual bidders and eligible employees,” NMDC chairman and managing director Rana Som told reporters here on Thursday.

The proceeds of the issue will be used to fund the mining giant’s capex programme.

“The company has taken up a capex of Rs26,500 crore over the next five years. The company plans to expand and establish its presence as an integrated producer of iron and steel through selective value-addition projects,” Som said.

NMDC has signed an MoU with the Chhattisgarh government to develop a steel plant with a capacity of 3 million tonnes per annum at Jagdalpur with an investment of Rs15,500 crore.

“We also have plans to develop a steel plant in Karnataka,“ Som said.

The company expects to complete its acquisition of Sponge Iron India Ltd soon, he said.

NMDC also plans to develop two pellet plants at a cost Rs1,500 crore in Karnataka and Chhattisgarh.

“These projects will be financed through internal accruals as the company will have a cash balance of Rs13,000 crore as on 1 April, he said.

The price-band and minimum bid lots will be decided by the selling shareholders in consultation with the book-running lead managers (BRLMs), Som said.

The BRLMs to the issue are UBS Securities, Citigroup Global Markets, Edelweiss Capital, Kotak Mahindra Capital, Morgan Stanley India Co and RBS Equities India.

NMDC FPO price-band to be fixed on 8 March; issue opens 10 March is a post from: Indian Stock Market Tips