Master And Student - All About Stock Markets

Pipavav Shipyard is coming out with an IPO of 86,850,000 Equity Shares of Rs 10 each at a price band of Rs.55-Rs.60 for construction of facilities for Shipbuilding, Offshore Business and for general corporate purposes.

It is currently constructing the shipyard,on the Indian west coast near Persian Gulf. Once completed the shipyard will be available for ship construction and repairs for a range of vessels as well as the construction of products like offshore platforms, rigs, jackets and vessels for oil and gas companies.

Details of the Issue:

Size of the Issue : 86,850,000 Equity Shares of Rs 10.
Face Value of Rs 10 Per Equity Share.
Price band : Rs.55 - Rs.60 Per Equity Share.
Listing At: BSE, NSE.

The only advantage would be the tax-free status of its SEZ status and lower taxes for the shipyard, being an export-oriented undertaking. It is to be noted that the company has not started commercial production yet, so revenues are not yet generated. Also, the sector is under stress as a result of the global downturn, with no clear signs of revival. It is not going to be a smooth sailing and hence investors can look for better opportunities.

If you enjoyed this article, please consider sharing it!

India's largest Mutual Fund, Reliance Mutual Fund is launching Morgan Stanley Capital India (MSCI) index ETF, following the launch of Hang Sang ETF by benchmark couple of weeks before. Reliance MSCI India ETF will be the first of its breed to track the performance of the MSCI India index. Interestingly MSCI India has outperformed Nifty since March lows,the MSCI India index has given returns of 95% while Nifty has gone up only 79% over the same period.

The MSCI India Index consists of 60 Indian companies, 10 more than the Nifty with Reliance Industries having the largest weightage of 13% followed by Infosys with a weightage of over 10%. The MSCI India Index has stocks other than Nifty which include AV Birla Nuvo, Glenmark Pharma, United Phos, United spirits.This is yet another interesting product , which would attract investors looking for Diversified Equity Fund.

If you enjoyed this article, please consider sharing it!

BPCL,HPCL and IOCL are going to be the big beneficiaries of the government’s decision to (1) bear the entire subsidy burden on cooking fuels (LPG and kerosene) and (2) bear subsidy on auto fuels along with the upstream oil companies. The petroleum secretary has guided to an overall subsidy burden of Rs300 bn on cooking fuels for FY2010E and has stated that the government will bear this entire burden through issue of oil bonds to the downstream companies.

The downstream companies are expected to report strong earnings in FY2010E and beyond in light of the above mentioned development. The stocks have been historically cheap on P/B and replacement cost. But there were concerns about lack of a transparent pricing system and stable subsidy-sharing mechanism and inability to forecast earnings confidently. However, the government’s decision to bear the entire subsidy on cooking fuels and some portion of subsidy on auto fuels addresses the street’s previous concerns.

The FY2010E, FY2011E and FY2012E EPS estimates for BPCL work out to Rs80(+109%), Rs65(+56%) and Rs74(+29%) and for HPCL Rs73(+77%), Rs58(+52%) and Rs70(+8%). The large upward revision over the current year estimates reflects (1) the new subsidy-sharing mechanism and (2) information contained in FY2009 annual report. Key downside risks to earnings and fair valuations stem from (1) unfavorable changes to subsidy-sharing system and (2) lower-than-expected refining margins.

Going by these estimates the fair value of BPCL and HPCL works out to Rs675 and Rs525, respectively. Long term investors can watch out these stocks on declines.

If you enjoyed this article, please consider sharing it!