Multibaggers for future

Three cheers to Bombay Stock Exchange (BSE) which is planning to come up with an IPO next year. The exchange has selected 14 banks including Bank of America Merrill Lynch, JPMorgan, Barclays Capital, and UBS for its IPO planned during the first-half of 2013. This is certainly not the first bourse to get listed but it is also not commonplace to find exchanges seeking public money. To be fair, public money comes with a lot of strings attached including increased public scrutiny and higher pressure to maintain corporate governance. Now this is arguably a difficult task in this line of business, it is therefore intriguing what prompted BSE to get a public listing. The exchange is not short of cash for sure. Multi Commodity Exchange (MCX) is already listed and has a market capitalization of nearly INR78.81 billion (USD1.44 billion). Incidentally, BSE is also seeking a valuation in excess of USD1 billion, according to chief executive Ashishkumar Chauhan. Arms of Indian banks Kotak Mahi...

Rural Electrification Corporation (REC) listed today at a premium amidst good market sentiments. The stock listed at Rs 126 versus an issue price of Rs 105 . The company has made an External Commercial Borrowing (ECB) application with RBI. It earlier said it plans to raise Rs 4,040 crore from ECB route. The company expects to see continued growth of 25-30% and plans to do business of Rs 1.35 lakh crore over the next 5 years.

Gammon Infrastructure Projects Ltd (GIPL) may join the list of withdrawn IPOs due to lack of subscription. GIPL is offering 11.45% of its post-issue paid up capital for a price of Rs 167 to Rs 200 per share. This translates into a range of Rs 276.385 crore to Rs 331 crore. Accordingly the company is valued in the range of Rs 2413.8 crore to Rs 2890.8 crore. These valuations are difficult to justify by any standards particularly when the stock markets are bleeding. The fact that the company is asking for a Price Earnings (PE) ratio of over 100 based on Estimated FY08 earnings is simply ridiculous. At this time, Infrastructure companies with sound financials like IVRCL Infra are available at a Trailing Twelve Month (TTM) PE ratio of 27 . It was only last month when investors saw Infra IPOs like KNR and IRB trading below their issue price. While the chips are down after the Budget and retail investors shying away from share markets, subscription of the retail portion (30%) looks a dis...

Gammon Infrastructure Projects Ltd (GIPL) is entering the capital market with its initial public offering of 16.55 crore equity shares of Rs 10 each in price band of Rs 167 to Rs 200 per share . The issue will constitute 11.45% of the post-issue paid up capital. The issue will open on 10 March 2008 and close on 13 March 2008. The issue has been graded by Credit Analysis & Research as CARE IPO Grade 4 , indicating above average fundamentals. GIPL is offering part payment facility to retail and non-institutional investors. The amount payable on submission of the bid cum application form is Rs 50 per equity share , with the balance to be paid by the due date. The company undertakes and develops projects such as roads, bridges, ports, hydroelectric power and biomass power projects on a Public Private Partnership (PPP) basis. GIPL plans to use the proceeds for investments in its various projects being developed by its subsidiaries in Uttar Pradesh, Maharashtra and Sikkim.