Bharat Road Network Limited IPO Message Board (Page 11)

How will you justify Objects of the Issue? P/BV for this is more than listed IRB which has positive incomes , then why should I buy BRNL?

Agreed, I expected the issue price to be anywhere around 210 to make P/BV in range of 2.1-2.8. After all it''s asset is the only silver lining here, but the Object of issue as rightly pointed out by you is not convincing enough to invest in this company.
I will avoid this Issue and may go for Dixon

Teza ne apne patte bicha diye hain.. Yakinan mark idhar hi hai..:P

#AndaazApnaApna

1) The Price Band is Rs 195 to Rs 205 -

Promoters have also invested money @ 205, refer page 80 of the RHP

2) The company is consistently making Losses(The diluted EPS for FY2017 is Rs -48.51)

- The business model of BOT Road sector is such that in the first few years of tolling the projects are PAT negative due to (a) peak debt post project completion and initial years of tolling, (b) high cost of debt due to project interest rates reset done post completion only and construction risk is over which take further 1-2 years for rate reduction post completion (c) Toll rates are at rock bottom level as concession allows rate increase every year post project completion @ wpi (d) depreciation charged over the tolling/operational period of the project is actually apportionment of the project cost incurred during construction and is a charge on profit without any asset replacement requirement since the asset is not required to be replaced and shall be transferred to authority after the concession period of 25/30 yrs gets over
3) The P/e ratio of the Industry is around 11.60 and this company being loss making with an with negative EPS is offering shares at Rs 205.-

Pe ratio have no relevance in this industry, it''s a cash flow/yeild business and DCF model and sum of parts value is considered
4) The NAV per share is Rs 78.64 which makes Price/Book ratio as 2.61 times which is also higher as the same ratio for much better peer like IRB Infra is around 1.42 times
- need to look at the post issue nav, for that one should further add the ipo fund raised I.e 6000 mio approx divided by 839,500,000 shares (post issue shares) which comes to rs 71.47 and post issue nav would be rs 150+ so Price to book would be 1.36.

5) Since the company is loss making the return on networth is also negative.
Company''s projects are in it''s Initial year of operation so Pat is negative ( refer point 2)

6) Even the Objects of the issue is not useful to the prospective investor. The company will be advancing the issue proceeds for advancing as subordinate debt which is unsecured & Interest Free and acquisition of subordinate debt from SREI (Promoter of the company). This is not at all useful for the Shareholders of this company.

Rs 372 crs are used to buy subdebt which are not at all interest free and would yeild 12% minimum yeild asper the terms of the respective instrument, refer page 92-95 of RHP.
Rs 51 crs out of the Issue proceed will be used to advance interest free loan to STPL project since it''s a part of equity commitment and Under the STPL Loan Facility the required contribution by the STPL sponsors towards the STPL Committed Capital can be contributed inter alia in the form of equity share capital and/or subordinated debt (which shall be non-interest bearing during the construction period only.) Refer pg 91 of RHP. Stpl and it''s sponsors hv opted for subordinate debt in place of equity to have flexibility in the capital structure.

Looks like some one from the lead managers or their PR team is lurking on this site, trying to salvage the upcoming disaster.

@rkpatel: Its not going to work.

1.So you want the public to make a bad investment because the promoters did so?
2.The company has not earned a single paisa of profit and do you seriously expect us to believe they will do so with your 4 point presentation? I can pick a ton of holes in your logic especially on your claims about depreciation charging.
3. I do partly agree with this but how do you expect a normal investor to make an investment decision without any data?
4. You didn''t take into consideration the losses that are yet to come.
5. Dude it''s an infrastructure company incorporated in 2006, we''re in 2017. They''re not amazon.