Read
Listen
Watch
Play
Find
Mail

  • Quotes

  • NAVs

  • News

  • Messages

  • Opinions

  • Notices

  • Videos
  Post a Message | Explore Forums  |  Browse Stock Messages  |  Hot Discussions  | Top rated Messages  | Top Boarders
Search: Messages    Stock    Boarder
 
Ads by Google
Moneycontrol.com >> Message Board >> View Messages >> IPO, New Issues
   You are here :     Moneycontrol     MMB    Market View      IPO, New Issues                         Most active discussions of 2006 , 2007 & 2008
SPA Sec neutral on Birla Cotsyn - Feedbac (2)   02-Jul-08 11:02Tracked by (0)  
Posted by:   ABHISHEKKOTHARI on ( 02-Jul-08 11:02 )
SPA Securities has come out with a research report on Birla Cotsyn (India) IPO. It has recommended a neutral rating on the issue.

Birla Cotsyn (India) has opened for subscription with its initial public offering (IPO) of Rs 1441.8 million. The issue will close on July 4, 2008. The price band is between Rs 15 to Rs 18 per equity share.

SPA's report on Birla Cotsyn (India) IPO:

Investment Positives:

The expansion project has been awarded the “Mega Project” status by Maharashtra government which will result in tax benefits, electricity duty exemption, Industrial promotion subsidy equivalent to 100% of the eligible investments made etc. The company is planning to be a fully integrated textile company with its scope of operations ranging from ginning, to spinning to fabrics, readymade garments and further owning its own retail shops.

Investment Concerns:

Birla Cotsyn is looking at aggressive expansion plan and is aiming at becoming integrated textile company. Textile sector is currently out of favor due to unfavorable business conditions such as rising cotton prices, yarn realizations under pressure due to tough competition, huge competition from china and other exporters in export market coupled with risk of forex fluctuations. As the company is funding its plans through this IPO, it will put a lot of strain on its balance sheet as the post issue equity base is going to 7x of pre-issue.

Valuation:

The stock is available at a P/E of 50x on its upper band of Rs 18, which is the highest in the peer group. The margins recorded by BCL at EBITDA and PAT level are also on the lower side when compared with its peers. The risk of executing such large projects is high. The rise in cotton prices might impact the margins of the company. Since BCL intends to export 50% of their production (currently it exports ~25%) it will be exposed to forex fluctuations. Promoter & PAC stake post dilution will be below 30%. BCL intends to market its products to the premium and middle segment of the consumers. The promoters have extensive experience in this industry. We expect that BCL‟s retail operations will help in improving the margins. Investors with long term prospective can invest in this issue. Hence, we recommend "Neutral" to the issue.

Members are requested to present their view on this IPO.
Track Post |  Reply to this post | Track Boarder | Click if Offensive | Rate message

Feedback

CNBC TV18 CNN IBN CNBC Awaaz IBN 7 IBN LOKMAT

Poll 

Do you believe that the Indian banking system is healthy?

Yes No
 
View Result  View all comments
To SMS your queries to us Type YS < Your query > SMS to 52622
Stocks to be discussed next:
  Suzlon  |   RIL  |  Tata Steel  |   Tata Mot  |   ICICI Bk  | Balrampur Chini  
 view all queries »
Boarder Circle
Platinum
Gold
Silver
Newbie
Popular Boarders 7days
DUstocks
269
radhika_nandlal
182
vkk43
139
marketman
125
KotakInvestment
115
All Time
more
Top Tracked 7days
marketman
709
KFactor
695
flashstock05
571
DUstocks
469
radhika_nandlal
437
All Time
more
Prolific Boarders 7days
sambala
396
vkk43
395
radhika_nandlal
333
zoombusiness
327
All Time
more