Sunday, September 19, 2010
Investors could skip the initial public offering of Electrosteel Integrated, which is priced at Rs 10 to Rs 11 per share. Based on the final expected borrowing to become operational, the company's enterprise value per tonne stands at Rs.33,000/tonne with 75 per cent of this accounted for by debt.
Investors with a high risk appetite and a two-to-three year perspective can subscribe to the Initial Public Offer of Ramky Infra, a construction contractor in the infrastructure space. The offer is priced at Rs 405 to Rs 468, resulting in a valuation of 21 times the FY-10 per share earnings and 14 times the estimated FY-11 earnings on post-issue equity. Valuations of nearest comparables, Nagarjuna Constructions, IVRCL and CCCL, are at a par or a slight discount.
Investors with a stomach for risk can consider the initial public offer of Orient Green Power (OGPL), a pure play on the renewable energy segment. The company a leading renewable energy developer, plans to scale up its capacity from 209 MW to 1013 MW by end-FY-2013. Strong revenue growth coupled with tax benefits, preferential tariffs, incentives and carbon credit will aid margin expansion for OGPL. The execution time for renewable energy projects is lower than that for conventional ones.
Investors can consider taking exposure to the initial public offering by Career Point Infosystems, a tutorial services provider, given the encouraging prospects for its business with sustainability and visibility over the long-term.
Investors with a low-to-medium risk appetite can give the initial public offering of Microsec Financial Services a miss. Concentrated regional exposure, high competition in each of its business verticals and risks pertaining to execution of its expansion plans underscore our recommendation.
Investors with a high risk appetite can subscribe to the initial public offering of Eros International Media, a company that sources and distributes Indian films, given the diversified revenue stream from its business and the strong growth trajectory it has managed over the years.
W ith the BSE Sensex breaking past 19000 after a long spell, the market ‘targets' are being busily upgraded to levels of 21000 plus, the previous market high. But did you know that the rally this time round has been underpinned by much lower earnings growth than in 2007-08?