Bajaj Corp Limited IPO Message Board (Page 22)

ICICI contradiction in Bajaj Corp:

On the one side ICICI direct comes out with the "AVOID" rating on the issue and on the other side ICICI Prudential subscribe largest chunk of shares i.e. 31.90% in the issue as a Anchor Investor:

Details:
Applicant / No. of Equity Shares Allocated / % of Anchor Investor Portion

ICICI Prudential Emerging Star (Stock Targeted at Returns) Fund / 153847 / 19%
ICICI Prudential Life Insurance Co Ltd / 104615 / 12.90%

If ICICI Prudential i.e. family member of the ICICI group does'nt cares for the ICICI Direct report, How can be believe in the same?

Guys

Bajaj has no negatives
Saharanpuri/Gem IPO finder/Sreedhar/Ravi are best analysts on this site
All have recommended to apply in full load
Also in Ahemdabad some operators are active in this script as this is a small script.
Zero debt company and small issue
It's very very good company to apply

I am applying 12 full applications
enjoy !!

Should one apply for Bajaj Corp IPO as ICICI direct has suggested a clear AVOID....

All board members, Thanks all for your quality comments & healthy orguments. Fellow boarders & retail investors will benifit..
Once again appreciate your contribution
-Ravi, Pune

SJ

Apart from what saharanpuri ji said, let me tell you Bcorp produce 3rd largest hair oil and it is going to expend 3 times with IPO amount. It is further going to acquire some companies and also it's 3rd party production is going to increase 8 times after Panota Sahib production unit is reformed and finally new prodcut range will increase sales too. At 27 PE it's price come out to be 800-850. And increase in sales, FMGC moving in rural India to tap 70% untouched market only makes this IPO lucrative.

SJ,
Its obvious that you have not used almond drop hair oil.Please speak to somebody who has used the same & get his reaction specially on HAIR LOSS.

BAJAJ ALMOND DROP BIGGEST STRENGTH IS THAT IT ARRESTS HAIR LOSS.It has got 300% more Vitamin E in its formula developed over 20 years which helps in re growth of hair follicle.

Users are addicted to it & keep on buyin irrespective of price increases .Please speak to alcal kirana or supermarket owner n get the first hand feed back.THEREFORE IT HAS GOT PRICE INELASTICITY AS ITS BIGGEST STRENGTH.

everybody loses hair n is afraid of losing hair including todays youth.India has age old tradition of using hair oils which will not disappear overnight & the Hair oil sector has a huge CAGR growth over last several years.

Increasing penetration in rural sector & conversion of coconut oil users which is sticky & seasonal ensures THAT GROWTH POTENTIAL REMAINS HUGE IN INDIA. INDIA HAS GOT THE LARGEST NO OF MUNDIES IN WHOLE WORLD.

ANCHOR INVESTORS LIKE GOLDMAN SACHS, FRANKLIN TEMPLETON , RELIANCE ,ICICI,AXIS ,BIRLA SUNLIFE N LARGE NO OF FIIS ARE NOT IDIOTS & HERE FOR 10 % POPUP LISTING GAINS.THEY HAVE ENTERED FOR LONG TERM.

@ Saharanpuri

What is the huge potential in hair oil....? can you explain....u mean to say in the last 5 years there were less bald people..who needed to apply hair oil and no of bald people will increase by 100%....YOY......lol...I dont remember the last time i applied hair oil..everyday....except after a gap of 15 days..

if u tell me set wet gel is coming with IPO i will buy coz 60% of india is youth and they apply gel on their hairs...!!
....dont get offended..but just that word "huge potential" for hair oil" amuses me...!!...no offence...!!

Well may be hair oil demand in rural areas...is more.....but reaching to rurqal masses....needs huge capex in distribution networks...and forward integration...!!

And just one product in portfolio aquiring market share of 90%....and 50% market leadership...dont u think biggger FMCG will be eyeing the space...!!.....

IT HUL....have massive brand portfolio...even then their price is languishing on stock markets.....

Yes because cheap valuations...can give listing gains....not a long term story...exciting enough to invest.....what is so unique about hair oil..?...Is it as exciting as say " the next Jubiliant story "

One should definitely go for listing gains....but i personally dont invest in such companies...coz they might as well return to their issue price or below it after listing gains.....

Having said tht i is trading at 20-25%....to its peers like ITC etc...when comparison will happen it will adjust to that valuations....but that doesnt means it is ITC...

MARY, RAVI BANGALORE K.K.NATARAGAN,GEM IPO EXPERT ,MILLINDS,ARE SAME PERSONS
YOUR ANALISIS AT NSE INDEX 5300- AND ABOVE DOES NOT WORK AND ALSO SAME WAY IN DOWN WARD TREND AT 3750 TO 4300 NIFTY ,PROFIT ,PE RATIO EPS DOES NOT WORK IN STOCK MARKET
HENCE DONOT TRY TO BE MORE WISE
IT IS ONLY BROKERS MARKET AND THE INVESTMENT OF OTHER INSTITUTION IN BULK
HENCE ANY STOCK WILL GIVE RETURNS BUT IF THE RETAIL INVESTMENT IS MORE THAN 10 TIMES THEN PROFIT IS LESS BECAUSE MONEY IS WASTED IN INTEREST AND SO IS THE ALLOTMENT IN SHARES
SO GUYS TEACH SOME THINK WHICH IS ADVISABLE

QIB got subscribed 17.59 times and not 20 times.

Will some one show the full Prospectus as an attached document to one of these comments.Thanks.

The price of Rs660 may appreciate to around Rs.850 in about a year's time based on fundamentals.

If the issue is going to be oversubscribed by around 14 times and only 10 shares are alloted for full app. then return on listing is only about Rs.1000.

APPLY FOR BAJAJ.ONLY NEGATIVE WILL BE LESS ALLOTTMENT .IF YOU GET IT ,YOU GET GOOD LISTING GAIN ALSO

SJ & all other boarders please ponder over following point & lets have a healthy discussion on Bajaj Corp IPO closing tomorrow.

With regards to Bajaj Corp here are a few salient features
- Zero debt Co
- Very little depreciation
- Factories situated in HP,UKhand enabling tax free status for next 10 yrs.
- Negative working capital
- Tremendous distribution reach built over 20 years.
- Huge potential in light hair sector itself
- Only non cyclical company in Kushagra bajaj stable who is an aggressive promoter with 84 % stake
- Hair oil has real beneficial benefits arresting hair loss resulting in addicted users something akin to ITC cigarattes
- No wonder highest EBIDTA margins in FMCG sector next only to ITC.
- Tremendous QIB response already resulting in 20 times oversubscription
and anchor investors like GS,FT,Birla,Reliance,Axis,ICICI MF
- Price inelasticity of its main product

As such you need to give 25-30 PE in consonance with PE PE of FMCG sector.This years EPS on post issue capital is 28 .With doubling of capacity thanks to new Himachal factory , huge demand of product,10 % price in may,increased EPS can comfortably touch 35-40 in march 11 & 12 .

This implies a price of 875- 1000 rs on a conservative PE of 25.

Bajaj have left a lot on table for Indian public with 85 % promoter stake

how is the issue ? apply or not?

Latest GMP in jaipur

EIL 12.50 buyer-13.50 seller

SKS 38 buyer- 40 seller

Bajaj 80 buyer-84 seller

Bajaj is very very good issue
Apply in full quantity
It is FMCG company so chances of loss are very very low

@ Milinds....I had seen that you requested my analysis on Bajaj Corp in SKS blog....Here is my take on...Bajaj Corp

1)High Dependance on Single Brand:

The company’s sales are largely driven by almond oils, which contributed around 90% to sales for the company as on 31st December, 2009. Therefore, an impact on the sales of this product could adversely affect the market share, business and financial performance of the company.

2.Raw material Prices Highly Volatile:

Light liquid paraffin (LLP) a derivative of crude oil which is one of the key inputs for the company’s products is highly dependant on international crude prices and any significant rise in the same could increase the production cost and impact profitability.

3) High Valuations:

With the company’s considerable revenue share being contributed from Almond Oil sales only and emergence of intensive competition in the segment the stock’s valuation appears a bit unjustified. The company’s turnover and profits for FY10 (annualised) stand at Rs. 311.3 crore and Rs.75.3 crore respectively and hence the EPS pre-issue is Rs.30.1. However, post-issue the EPS would be Rs.25.5 and at an issue price of Rs.630-660 per share the stock would be ranging at a P/E of 24.7-25.8x its FY10 EPS; which seems to be quite expensive looking at the company’s concentrated presence in the industry. Hence comapring it with other peers valuation like ITC and Godrej Consumer is unjustified...coz...they have vast product portfolio

4) Stiff competition from Rivals going forward:

Sustaining both the growth rates and margins over the medium term, however presents a challenge. For one, with Bajaj Corp already occupying a near 50 per cent share of the light oils market, further market share gains are not likely to be easy. Competitors such as Marico, Cavinkare, Dabur and Emami too are looking to this segment, with a slew of new launches to drive growth.

5) High Inflation to lower margins considerably:

with high food inflation prompting consumers to down-trade in some categories, players in categories such as hair oil are beginning to take price cuts to drive volumes. This, combined with higher advertising outlays, may compress margins in this segment from exceptionally high levels.

6)The new product launches effect:

The new product launches it is planning will be coming out only within next 3 years....that combined with high advertisment expenses for those brands additionally will mean..that results from those launches will only improve profits 3-5 years down the line..!!

7) FMCG itself is a low margin high expenditure sector....

Just see the fate of ITC and HUL ...their price is still where it was...and hasnt moved much in 5 years....while other large cap stocks have quadrupled in some period.

8) Better Options Available to catch India's Consumtion story:

If u want to catch consumtion story invest in Consumer Durables...like Panasonic and Hitachi or Home...Titan...VIP...TTK Prestige....or Jubiliant Foodworks....why do you want to invest...in FMCG sector..!..that too with a single brand FMCG company...

So bottomline is invest for 10% returns on listing from IPO APPLICATION and not by buying from grey market.....and exit....otherwise if looking for long term then...there are better options in consumer space..!!

at this site allotment status shown two weeks,
this is a old one, I request that now correct this
massage as per new rules

116.
ravi bangalore,

you analysed extremely well.
logical, scientific & to the point.
i m impressed.
shud i apply for i full lot?
plz.
thx
mary.

Members highlighted at Remarks 109 and 111 about QIB portion of Suscriptions. The information helps the Followers of Chittorgarh.com to take a clear view about applying for the IPO.

For the benefit of one and all, please enlighten us the source of information to know CATEGORY wise break up DURING day-time.

I am able to view only total subscription during the day. Category wise break is made available only at the END of day but not DURING the day in both bse and nse web sites.

97. Milinds

The company has posted strong growth in its financial in last couple of years riding on the success wave of ‘Almond oil’.

The proceeds from the issue will be used for promoting its new products and for acquisition and other strategic initiative. If the company's products are not accepted by the market, all the money will be wasted. Marketing and advertising create an intangible asset - a brand. They don't create a tangible asset.

Bajaj Almond Drops sells a lot, but then Bajaj Brahmi Alma and Bajaj Amla Shikakai have a much smaller market. Some products sell in large numbers and some are ignored by the market. That's why HUL experiments so much with new products. HUL lowers its risk by offering a large variety of products.

It is not possible to say whether its new product launches will click or fail at this stage. Companies can do well with a narrow product range too- Jyothy Laboratories has been doing well with just two or three main products.

Bajaj Corp has a limited history and is relatively a new company.

The book value per share, as on 31st March 2010, was Rs. 10.24. The low book value was due to the 110% interim dividend pay-out in FY10, mainly to benefit the promoters, before the company went public. The networth of the company has decreased from Rs 51.58 crore in FY09 to Rs 25.6 crore in FY10 as the company paid a huge dividend to its shareholders to satisfy SEBI criteria for listing.

The IPO is priced cheaply as compared to its peers, discounting the concerns.

On a relative basis, the valuation seems to be cheap. Owing to concerns like dependent on one product, limited operating history etc., the stock should trade at a discount of ~20% to its peers. At Rs.660, the stock is available at a 25% discount to its peer's (estimated around Rs.879). At a 20% discount to its peers, the fair value comes to ~Rs 703 per share., there may be around 5% listing gains. Its size is small, the FMCG space is a favourite hunting ground for investors.

Investing in IPOs to make listing gains may not always work and is fraught with risk. But, it is a strategy to make a quick buck if you are willing to brave uncertainties of broad market.

Based on QIB demand, you can take your own decision. The oversubscription level from QIBs is usually a good indicator for retail investors to gauge the success of an IPO. SEBI's decision to allow extra day for retailers is paying-off- case in point is retail response for SKS IPO & EIL FPO.

An IPO's listing has nothing to do with whether the issue was oversubscribed or undersubscribed. In the past, several IPOs, which were heavily oversubscribed by QIB & HNI bidders have fallen below their issue price soon after listing- Jaypee Infra, Satluj Jal Vidyut, Nitesh Estate, Indiabulls Power, Pipavav Shipyard, Adani Power etc.

The subscription levels drive a lot of investor to IPOs as there is lot of liquidity in the market that chase these listing gains.

It has a rating of 4. A good rating of an IPO help investors to reap benefits in the long-term. A good rating ensures that companies entering the market do not vanish over time. However, ratings are not meant for listing gains since fundamental value of a scrip come into play only in the long-run.