Category: Economy, Markets and Macro Views

Naukri.Com holding and promoter company Info Edge India Limited’s IPO will open for subscription on Oct-30th and closes on Nov-2nd. Here is an analysis of the same. First, I am very disappointed by the way the company management has arranged the financial figures of EPS, RONW, etc without tabulating on page 10 of the application form.

IPO of 5,323,851 equity shares of Rs10 each through 100% book building process. The price band has been fixed at Rs290 to Rs320 per equity share. This translates the issue size to be in the range of Rs154.39 crores and Rs170.36 crores.

Retail Investors have 30% of the issue reserved for them. Non-Institutional investors have 10% of the issue reserved for them.

Background on Info Edge India Limited:
The company derives major part of its revenues from recruitment classifieds and related services. 92.73% for the past year. rest of the revenue is contributed by Jeevansathi (Matrimonial Site) and 99Acres (Real Estate Site). Naukri.Com is the leader in online recruitment in India. Jeevansathi made it to the top-3 in online matrimony in India. 99Acres is relatively young trying to establish itself.

Brief Financials about Info Edge India Limited:
Income in crores.
FY2004 – Income=9.076 EPS=1.12
FY2005 – Income=19.472 EPS=0.15
FY2006 – Income=84.057 ESP=6.08

Post-Issue Share Holding and Financials:
Number of Eq. Shares = 2,72,95,256 of Rs10 each
If Promoters don’t sell their shares upon listing then, they will hold 54.6%

The company reported a net profit of Rs5.219 crores for Q1-2006. If the figures are annualised, then the company is expected to report a Net Profit of Rs20.87 crores and an EPS of Rs7.64.
At EPS of 7.64, the issue price of Rs290 or Rs320 translates into a forward P/E Multiple of 37.95 or 41.88.

I have requested for some more details from the company and will write my recommendation whether to APPLY or AVOID the issue after I receive a reply from the company.

Tags: India IPO, Naukri, Dalal Street , India Invest

UBS has initiated coverage on Unitech Limited with a BUY2 rating. UBS analysts are little bit over-optimistic about the land bank saga without realizing the shady deals of the operators in Unitech counter.

UBS report is expecting income of Rs 2,703, Rs 6,382 and Rs 11,309(in crores) and EPS of Rs8.43, Rs 22.95 and Rs43.00 for the financial years 2007, 2008 and 2009. 100% YoY growth for the next 2 years. Sounds bit over optimistic projections.

UBS has set a price target of Rs444 with a Buy 2 rating. You can read the report and make your investment decision[PDF] yourself.

Mumbai’s leading Broking firm, Prabhudas Lilladhar has put a BUY recommendation on the company’s stock at Rs194.

Their team met ITC company officials before writing the research report. Key highlights of the report are as follows. Increase in tobacco prices not a key concern for ITC. In non-cigarette’s FMCG, Foods, LifeStyle Retailing and Stationery to be key growth drivers. Agri trading business is expected to show a robust performance. Capacity additions in Paperboard.

ITC is expected to report an EPS of Rs7.1 and Rs8.3 for FY2007 and FY2008. Prabhudas research says @ Rs194 it is quoting at 26.2X FY07Eand 22.4X FY08E which is wrong. However, if you calculate on the expected EPS, it is actually quoting at 27.32XFY07 and 23.37XFY07. The entire report on ITC can be accessed here. [PDF]

DalalStreet.Biz Recommendation: I maybe wrong but for me the stock looks expensive at Rs194 levels and wouldn’t buy at this level.

The management of HCL Technologies Limited is positive on the prospects of their company. You might have observed, HCL Tech lagged behind its peers in earnings during 2003 through 2005, mainly because of the vertical nice they were into. In the past 2 years they have expanded into every possible domain from Application Development to IT Infrastructure Management(Another big outsourcing opportunity, where HCL Tech is the leader).

HCL Technologies enjoyed poor PE discounting because of the fact their quarterly earnings were not consistent. The restructuring in the past two years has streamlined their earnings and you can expect HCL Tech to report QoQ growth rates just like Infosys or TCS. The stock is likely to be re-rated if it consistently grows over 8-10% QoQ and I expect an EPS of Rs33 for the FY ending June 2007. At current discounting of 20X, the one year price target is Rs660 for the stock. However, on re-rating, I would expect the stock to quote around Rs750, 25% upside from current levels.

Disclosure: I hold HCL Tech in my folio.

I hope the weekend was nice with Diwali Shopping. Here is the technical analysis for Monday’s trading and ET’s stock recommendations in the Investor Guide.

Stop Losses are a Must. Happy Trading.

The benchmark of Indian Stock Market, 30 Shares BSE Sensitive Index closed at 12,736.42 a record high in the Indian history.

Just 5 months ago when the markets had crashed, many people said that India was headed towards a bear market and only, DalalStreet.Biz ruled out and we started BUYING at those attractive levels. Keep invested. You will see many more record levels. Valuations do justify earnings in most stocks(not all) and India is the last big emerging market the world will see. FIIs have pumped in $3 Billion since the June crash. One FII will sell while other will BUY, and according to me their will be more buyers than sellers and hence India may look overvalued at certain time, but stay invested.

Small investors, kindly take the Mutual Fund and SIP route to make money as it is currently tax free. Have a great weekend!