No Paris Hilton - but we track it!

18-SEP-2007,INDOWIND,Indowind Energy Limited,AMBIT SECURITIES BROKING PVT. LTD.,BUY,245828,135.60,-
18-SEP-2007,INDOWIND,Indowind Energy Limited,ASIT C MEHTA INVESTMENT INTERRMEDIATES LTD,BUY,403690,134.75,-
18-SEP-2007,INDOWIND,Indowind Energy Limited,GANSHYAMBHAI SANALAL SHAH,BUY,242963,132.42,-
18-SEP-2007,INDOWIND,Indowind Energy Limited,P R B SECURITIES PRIVATE LTD,BUY,377941,135.59,-
18-SEP-2007,INDOWIND,Indowind Energy Limited,PRASHANT JAYANTILAL PATEL,BUY,240643,136.17,

18-SEP-2007,INDOWIND,Indowind Energy Limited,AMBIT SECURITIES BROKING PVT. LTD.,SELL,245828,135.92,-
18-SEP-2007,INDOWIND,Indowind Energy Limited,ASIT C MEHTA INVESTMENT INTERRMEDIATES LTD,SELL,403690,134.79,-
18-SEP-2007,INDOWIND,Indowind Energy Limited,GANSHYAMBHAI SANALAL SHAH,SELL,256007,134.72,-
18-SEP-2007,INDOWIND,Indowind Energy Limited,P R B SECURITIES PRIVATE LTD,SELL,377941,135.60,-
18-SEP-2007,INDOWIND,Indowind Energy Limited,PRASHANT JAYANTILAL PATEL,SELL,240643,136.27,-

Madness Continues .. Indowind

17-SEP-2007,INDOWIND,Indowind Energy Limited,AMBIT SECURITIES BROKING PVT. LTD.,BUY,478935,128.69,-
17-SEP-2007,INDOWIND,Indowind Energy Limited,ASIT C MEHTA INVESTMENT INTERRMEDIATES LTD,BUY,429780,129.47,-
17-SEP-2007,INDOWIND,Indowind Energy Limited,KAUSHIK SHAH SHARES & SECURITIES PVT LTD,BUY,333122,130.12,-
17-SEP-2007,INDOWIND,Indowind Energy Limited,P R B SECURITIES PRIVATE LTD,BUY,250962,128.47,-
17-SEP-2007,INDOWIND,Indowind Energy Limited,PRASHANT JAYANTILAL PATEL,BUY,322682,130.02,-

17/9/2007 532894 IWIND ENERGY MATRIX EQUITRADE PVT LTD B 403005 129.24
17/9/2007 532894 IWIND ENERGY MATRIX EQUITRADE PVT LTD S 403005 129.66

17-SEP-2007,INDOWIND,Indowind Energy Limited,AMBIT SECURITIES BROKING PVT. LTD.,SELL,478935,129.04,-
17-SEP-2007,INDOWIND,Indowind Energy Limited,ASIT C MEHTA INVESTMENT INTERRMEDIATES LTD,SELL,429780,129.87,-
17-SEP-2007,INDOWIND,Indowind Energy Limited,KAUSHIK SHAH SHARES & SECURITIES PVT LTD,SELL,334132,129.94,-
17-SEP-2007,INDOWIND,Indowind Energy Limited,P R B SECURITIES PRIVATE LTD,SELL,250962,129.55,-
17-SEP-2007,INDOWIND,Indowind Energy Limited,PRASHANT JAYANTILAL PATEL,SELL,322682,130.79,-

Be Careful if you have a position, exit at the first sign of weakness

Indowind Energy - Crazy Trades

14-SEP-2007,INDOWIND,Indowind Energy Limited,AMBIT SECURITIES BROKING PVT. LTD.,BUY,687648,92.86,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,ASHOK DEORAH,BUY,375105,92.92,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,ASHWIN STOCK & INVST.P.LTD.,BUY,456210,87.01,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,ASIT C MEHTA INVESTMENT INTERRMEDIATES LTD,BUY,927661,87.83,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,ASSET ALLIANCE SECURITIES PVT. LTD.,BUY,772337,78.11,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,AUM SECURITIES PRIVATE LTD,BUY,574638,90.27,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,B K SHAH AND CO,BUY,286865,90.59,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,CITIGROUP GLOBAL MARKETS MAURITIUS PRIVATE LIMITED.,BUY,500000,90.00,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,DINDAYAL BIYANI STOCK BROKERS LTD.,BUY,681000,91.24,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,GHALLA BHANSALI STOCK BROKERS PVT. LTD.,BUY,811918,100.16,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,HARBUX SINGH SIDHU,BUY,716890,90.92,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,JIGNESH TALAKSHI GALA (HUF),BUY,472495,103.06,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,KAUSHIK SHAH SHARES & SECURITIES PVT LTD,BUY,747731,101.32,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,KHANDWALA INTEGRATED FINANCIAL SERVICES P LTD,BUY,506963,83.07,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,M/S JIYA INVESTMENTS,BUY,278868,106.24,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,MAHENDRA P RATHOD,BUY,373316,67.51,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,MANIPUT INVESTMENTS PVT LTD,BUY,316690,97.49,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,NAMAN SECURITIES & FINANCE PVT LTD,BUY,249608,100.06,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,P R B SECURITIES PRIVATE LTD,BUY,943516,87.50,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,PRASHANT JAYANTILAL PATEL,BUY,1661803,97.04,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,RAMAKANT R CHOKHANI,BUY,449912,81.30,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,SANDEEP SATISHKUMAR SABOO,BUY,1178856,73.93,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,TEJPAL S SHAH,BUY,434957,89.32,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,TRANSGLOBAL SECURITIES LTD.,BUY,704776,98.41,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,VAIBHAV DOSHI,BUY,372862,85.37,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,VIJAY Y NANVARE,BUY,487909,82.57,-

14-SEP-2007,INDOWIND,Indowind Energy Limited,AMBIT SECURITIES BROKING PVT. LTD.,SELL,687648,93.04,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,ASHOK DEORAH,SELL,375105,93.98,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,ASHWIN STOCK & INVST.P.LTD.,SELL,456210,89.22,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,ASIT C MEHTA INVESTMENT INTERRMEDIATES LTD,SELL,927661,88.16,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,ASSET ALLIANCE SECURITIES PVT. LTD.,SELL,772337,78.57,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,AUM SECURITIES PRIVATE LTD,SELL,574638,92.58,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,B K SHAH AND CO,SELL,286865,91.96,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,DINDAYAL BIYANI STOCK BROKERS LTD.,SELL,680990,91.86,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,GHALLA BHANSALI STOCK BROKERS PVT. LTD.,SELL,811917,100.63,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,HARBUX SINGH SIDHU,SELL,716890,91.35,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,JIGNESH TALAKSHI GALA (HUF),SELL,472495,103.30,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,KAUSHIK SHAH SHARES & SECURITIES PVT LTD,SELL,746731,101.64,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,KHANDWALA INTEGRATED FINANCIAL SERVICES P LTD,SELL,480713,81.82,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,M/S JIYA INVESTMENTS,SELL,278868,106.45,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,MAHENDRA P RATHOD,SELL,373316,73.56,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,MANIPUT INVESTMENTS PVT LTD,SELL,316690,97.55,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,NAMAN SECURITIES & FINANCE PVT LTD,SELL,238606,100.97,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,P R B SECURITIES PRIVATE LTD,SELL,943516,88.78,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,PRASHANT JAYANTILAL PATEL,SELL,1661803,97.90,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,RAMAKANT R CHOKHANI,SELL,449912,81.65,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,SANDEEP SATISHKUMAR SABOO,SELL,1159351,81.75,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,TEJPAL S SHAH,SELL,434957,90.26,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,TRANSGLOBAL SECURITIES LTD.,SELL,699776,99.02,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,VAIBHAV DOSHI,SELL,372862,85.25,-
14-SEP-2007,INDOWIND,Indowind Energy Limited,VIJAY Y NANVARE,SELL,469385,89.05,-

Indowind IPO hit by QIB exodus

Another small-sized initial public offering (IPO) has fallen prey to uncertain market conditions and overpricing. Indowind Energy is the latest victim of last minute withdrawal of large-sized bids by qualified institutional bidders (QIBs).

The IPO had attracted a bidding of about 1.3 times just before the offer closed on August 24. But, a sudden bout of withdrawals resulted in a fall in subscription to below 90% as the bidding was coming to a close, which raised concerns, particularly among retail investors.

Merchant bankers believe small investors are being misled by the initial ‘positive’ response from QIBs, who can spoil the equation if they opt to withdraw.

Sources said on the very first day around 63 lakh shares of Indowind were bid on behalf of 2-3 FIIs, leading to a 100% subscription of the QIB portion. Another lot of 49 lakh shares was bid by a few other institutional investors on the same day.

However, the application for the 63 lakh shares was withdrawn just before the closing of the issue, resulting in a fall in the QIB subscription. This prompted retail investors to also withdraw their applications before the allotment was finalised.

On the poor response to the IPO, a merchant banker told ET, the pricing of Indowind was slightly aggressive and the market conditions were also uncertain at the time of the issue. Despite a firm Sensex during the bidding period, investors remained unconvinced about the recovery and remained cautious, he said.

Indowind offered a total of 1.25 crore shares of Rs 10 in the price band of Rs 55-65 per share. UTI Securities was the book-running lead manager for the issue, while Canara Bank was the co-book running lead manager

Indowind Energy : Avoid

Investors can avoid the initial public offer of Indowind Energy, which generates wind power and develops, operates and maintains windmill projects for others. A stiff valuation, absence of a focussed business strategy and governance issues, negate the bright prospects that the wind power business otherwise holds.

At the offer price of Rs 55-65, the price-earnings multiple is at 30-36 times the company’s earnings for the year ended June 2007. Even after considering the company’s 9 MW expansion plan, the valuation is at about 35-40 times on the post-offer equity base. The asking price appears ambitious when compared to the valuations of power generation companies.

The premium enjoyed by Suzlon Energy arises out of its size, more integrated business (manufacturing equipment and developing wind farms) and global presence. We believe that Indowind Energy, with a relatively small turnover (of Rs 24 crore may be unable to deliver earnings commensurate with the valuation it is asking for.
Business and objects of issue

Indowind Wind Energy company has 16.8 MW of installed capacity, the power generated from which is sold to the Tamil Nadu Electricity Board and to some corporates in Karnataka.

The company has also developed 17.9 MW of wind farms for others which it also operates and maintains. Indowind Energy now plans to raise Rs 70-80 crore through this IPO. The proceeds are to be used primarily to set up a 9 MW wind plant in Karnataka, acquire second-hand wind energy generators (WEGs) and foreclose windmill operating leases with Axis Bank and ICICI Bank.
Lacking focus

Indowind Energy appears to lack a focussed business strategy. In the power generation business, it has not had a profitable deal either with the TNEB or with third-parties. While the sale rate with TNEB is lower than that offered by a few other State governments, the sale to corporate clients in Karnataka also appears to be less attractive as the wheeling charges for sale to third parties is higher in the State. Hence, the returns from the power generation segment appear lack-lustre compared to the projects segment.

Despite this experience, the company had again initially planned to set up the new 9 MW plant in Tamil Nadu but later decided to shift the same to Karnataka and sell power to the Bangalore Electricity Supply Company (BESCOM)

This not only resulted in delaying the project but also in the company withdrawing its public offer document on an earlier occasion. That the company is yet to enter into a power purchase agreement with BESCOM (as stated in the offer document) further suggests lack of a planned business approach.

The company has earmarked close to Rs 40 crore for acquiring second-hand WEGs that banks recover from defaulting clients. Windmills, in general, are subject to higher repairs and breakdown. The efficiency of the mills, especially the second-hand ones, remains doubtful, given that they would not have been used after the banks recovered them. This may result in reducing the plant load factor for the company, now at about 23 per cent.

As for foreclosing the operating leases with a couple of banks — neither the company nor the banks have initiated steps for such foreclosure. In this initial stage, it is unclear whether it would be a profitable proposition. The company’s projects division (developing and running wind farms), however, appears to have returned well. If the company is able to focus on this segment, earnings visibility may be higher. However, it may require more skilled manpower than the present 95 (of which 64 are contract labourers).

The company’s corporate promoter, Subuthi Finance (listed in the stock market), has a track record of non-compliance with certain listing requirements. It has also received notices from the RBI for certain irregularities.

Indowind itself has in the past derived a chunk of income from ‘other sources’. While this has gradually declined, the company has stated that it deploys surplus funds for providing loans and earns interest income. This as a poor and risky business practice. The above governance issues do not inspire confidence.

Offer details: The IPO is open from August 21-24. UTI Securities is the book running lead manager. The market capitalisation (on the price band) post listing would be Rs 270-320 crore.

Indowind Energy IPO

Promoted by K.V.Bala and Subuthi Finance, Indowind Energy generates wind power, undertakes turnkey operations for windmill projects and operates and maintains (O&M) wind electric generators (WEGs). The company currently owns 16.825-MW windmill capacities in Karnataka and Tamil Nadu, and operates and maintains 17.915-MW capacity. It currently supplies power to a state utility and a few companies in Karnataka. Tamil Nadu Electricity Board (TNEB) is its major client.

Currently, Indowind Energy sells power to TNEB at Rs 2.70 per unit. It sells power to corporate clients in Karnataka at Rs. 4.05 per unit (however, the company has to pay wheeling charges at 10%).

Strengths

• Is setting up a wind farm of 9-MW capacity in Karnataka at an investment of Rs 49.5 crore. Intends to sell this project for an appropriate price. The project division’s profit before tax (PBT) margin was 23.5% in the year ended March 2007 (FY 2007).

• As per the National Tariff Policy, state commissions have to fix a minimum percentage of energy from non-conventional sources. The Union government has also introduced a package of incentives, some of which include tax concessions such as 80% accelerated depreciation and tax holidays for power income under Section 80IA. Also, the gestation period for the wind power project is just six-nine months as compared with thermal power project’s 36 months. It has low variable cost, too. Thus, in near future, there is likely to be significant capacity additions. The wind power potential, based on data collected from 10 states and only 1% of land availability, has been estimated at around 45,195 MW. Thus, the overall scenario for companies with presence in wind power generation, project and O&M segments are favorable. Indowind Energy normally gets 10-15% of power generated from its O&M projects.

• From the issue proceeds, Rs 18.26 crore will be used for foreclosure of lease with ICICI Bank and Axis Bank. The company had entered into an operating lease with Axis Bank and ICICI Bank for windmills. The banks own the windmills and these have been given on operating lease to Indowind Energy. The company operates 10.75-MW capacity windmills under O&M contract for these two banks. The lease period is ending in 2012 and 2014, respectively, for the two banks. By foreclosing the lease transaction, Indowind Energy will be saving lease payments to these banks (saving of around Rs 4 crore). The impact of the power generated will be reflected in income generated from power.

• Rs 20 crore from the issue proceeds will be used to take over second-hand wind-energy-related assets of defaulting companies put up for sale by banks. This way, Indowind Energy plans to expand its capacity at a cheaper rate using its expertise in this field

• Claims to be the first company in India in the wind energy sector to get carbon credit certification from the United Nations Framework Convention for Climatic Change for its 12.3-MW projects. Indowind Energy expects income from carbon credit of Rs 0.7-0.75 crore from its balance capacity.

Weaknesses

• Wind-power generation is seasonal in nature. Thus, there is likely to significantly variation in income from power generation, quarter on quarter. Year on year, the variation will depend on the quantum of wind received by the company’s wind farm.

• Group company Subuthi Finance has received a notice from the Reserve Bank of India (RBI) for irregularities/ violations of certain provisions of the RBI Act. It also had failed to meet certain listing requirement.

• Given a bank guarantee of Rs 5.3 crore to its group company Indonet Global. Other group company SGM Windfarms is in the same business.

Valuation

Between FY 2003-FY 2007, revenue shot up from Rs 5.68 crore to Rs 24.12 crore. However, during the same period, operating profit margin (OPM) declined from 69.7% to 32.9%. This is likely to have happened on account of the fact that the share of the revenue from wind-power generation has declined from 100% to 32%. Wind-power generation has a low operating variable cost and a high fixed cost (depreciation /interest). Thus, net profit during the period has grown at almost half the pace as compared to revenue: from Rs 2.4 crore to Rs 6.58 crore.

FY 2007 EPS on post-issue equity works out to Rs 1.3. At the offer price band of Rs 55-Rs 65, the P/E range is 40.9-48.4, respectively. TTM P/E of Power Generation and General Electric Equipment Medium / Small is 13.6,14.5, respectively. There is no comparable listed entity. Suzlon Energy, one of the global leaders and the most integrated player in this filed, is trading at 43.9 times its consolidated TTM earning.