Gujarat Pipavav Port Ltd (GPPL) IPO Message Board (Page 71)

125 SHIV KOTA

U CAN APPLY IN THIS IPO BUT DO SELL IN GREY MARKET. IN MY OPINION THIS IS A BAD COMPANY AND WILL DESTROY YOUR CAPITAL. BUT ONE GOOD THING IS THERE, IT WILL BE HIGHLY OVERSUBSCRIBED AND U WILL GET ONLY 8000-10000 RS. ALLOTMENT IN ONE LAC APPLICATION SO RISK WILL BE LESS.

TO GENERATE RETURN PLEASE SELL IN GREY MARKET.

BOLO TARA RA RA

what is grey market of guj pipav in jaipur

129 Bolo Tara .. ..

i am a fan of yours after "EIL" episode. u were the only one to say when exactly delivery of shares will be credited to our accounts. thanks for that news.

now coming to this new ipo , gujrat pipavava, i dont know wthether u are right or wrong but my feelings say i should apply for listing gains only. company is bad, ok, but when all ipos are giving good returns we can take chance,

please dont take my views otherwise.

Dear Milinds....

People on this board are saying half things that promoter are selling stake....and all..read this...second part is two post below...

Mumbai: This is a story of one port, many funds and negative returns after a decade’s wait—a long-term infrastructure story gone wrong.

A private equity (PE) fund managed by AMP Capital Investors of Australia is set to make a substantial loss as it sells a part of its investment in Gujarat Pipavav Port Ltd in the latter’s initial public offering (IPO).

It is not alone. There are quite a few other funds that are not happy with their investment in the port operator.

In a rare loss-making exit through an IPO in the infrastructure sector, the 11-year-old India Infrastructure Fund Llc will see a 27% erosion in the value of its investment if the issue, which opens on Monday, gets priced at the upper end of the Rs42-48 price band.

At this price, India Infrastructure Fund’s loss will be Rs18.45-24.45 per share.

India Infrastructure Fund was launched in 1999 under a joint management agreement between AMP Capital and the erstwhile Unit Trust of India, or UTI. In 2001, the fund bought 5.9 million shares in Gujarat Pipavav Port for Rs47 crore at Rs80 apiece.

In 2007, AMP Capital became the sole manager of the fund with UTI’s exit. Subsequently, a rights issue of 2.3 million shares in September 2007 at Rs50 apiece brought the average cost of acquisition down to Rs66.45 per share.

A second fund—Infrastructure Fund of India Llc—will also offer its shares for sale in the issue. This fund too is managed by AMP Capital.

The second fund had acquired 15.2 million shares at an average cost of Rs42.85. This fund too will make a marginal loss if the issue gets priced at the lower end of the price band.

Together, these two funds will raise between Rs50 crore and Rs56 crore selling their shares, while the company will raise Rs500 crore through a fresh equity issue.

Anoop Seth, managing director, AMP Capital Advisors India Pvt. Ltd, said the fund was exiting at a loss. “The investments were made in 2001. However, since we have a strong belief in the company’s future, we continue to hold 50% of our investment.”

A senior official from UTI Asset Management Co. Ltd said his firm was no longer involved in the affairs of the two funds. UTI Asset Management was created in 2004 after UTI was restructured.

124. JAMES BOND

It is Operators stock. Some people may fight if I express my personal opinion. However, you are absolutely right. Look at PE Funds exiting price after 5 - 10 years of investment. Instead of making 20 - 25% profit after decades of investments, PE Funds are exiting at loss.

As you pointed-out, risk appetite investors can apply, but not for fundamental reasons.

Tapasije Mishra, managing director, IDFC Capital Ltd, the book-running lead manager for the IPO, said the fact that the issue was priced below what the PE investor had paid underlines the attractiveness of the issue.

“Investors are getting it cheap. What is the problem?” he asked.

Another banker handling the deal said: “It was a closed-end fund and it’s being wound down. So, they are booking a loss to meet the redemptions.” He did not want to be named.

A PE firm usually operates a portfolio for three to five years, and then exits for a high return. PE firms prefer exiting portfolios through an IPO. Other exit routes include selling out to other investors or a strategic sale.

With the stock market rising, a number of PE-backed firms have opted for IPOs. So far in 2010, there have been 11 PE-backed IPOs, compared with two for the corresponding period in 2009 and eight in 2008.

In 2009, there were seven such exits and 10 in 2008, according to data by Venture Intelligence, a research service focused on PE and mergers and acquisitions.

According to PE investors, fund exits at a loss for two reasons—first, when a fund’s life is coming to an end; second, when it judges that the market will not support the price of the issue and it’s better to exit.

“Usually PE firms look at a 20-25% IRR (internal rate of return) on their investments. However, that doesn’t happen in each and every investment,” said Hetal Gandhi, managing direcor, Tano India Advisors Pvt. Ltd.

A couple of other funds including the Special Undertaking of Unit Trust of India will get an opportunity -- whether they use it or not -- to exit from their decade-old investments in Gujarat Pipavav Port when the company lists its shares after the public offer.

The Special Undertaking of Unit Trust of India’s investment dates back to August 2000 when the erstwhile UTI had bought shares worth Rs32 crore in the company at Rs80 a piece.

New York Life International India Fund (Mauritius) Llc also invested at a price of Rs80 a share in October 2001. New York Life and special undertaking of Unit Trust of India hold 4.7% and 1.3%, respectively, in the company.

In 2005, an infrastructure fund from IDFC Private Equity Co. Ltd, IL& FS Private Equity and Jacob Ballas Capital India Pvt. Ltd had invested in Gujarat Pipavav at Rs40 per share. Even these entities will not make substantial gains in the IPO.

Luis Miranda, president and chief executive officer of IDFC Private Equity, said: “We don’t have a lock-in. But we don’t intend to exit the investment as we are confident

gujrat pipavav analysis

eps : Negative
book value : less than 10

NOW BOOK VALUE WILL CHANGE IF COMPANY DILUTES ITS 25% EQUITY AT A RATE OF 48. IT WILL BE AROUND 19 AT THAT TIME.

OTHER PEER COMPANIES ARE AT A P/BV OF 8 TIMES.

BUT THIS DONOT JUSTIFY THE ISSUE PRICE. GOING BUY THIS LOGIC IF THIS COMPANY DILUTES 25% @ 100 THAN ITS POST ISSUE BV WILL BE 32.5 AND PUBLIC WILL SAY ITS JUSTIFIED BECAUSE IT IS LESS THAN 8 TIMES.

IF IT SETS IPO PRICE 500, THEN ITS BV WILL BE 132 AND PUBLIC WILL SAY STILLS ITS GOOD.

PRICE TO BOOK VALUE OF MORE THAN 1 CAN ONLY BE JUSTIFIED IF THE COMPANY HAS ABILITY TO GENERATE HIGHER RETURNS IN FUTURE. BUT LOOKING AT THE PAST, IF THIS COMPANY GENERATES EPS OF RS 5 (ON POST ISSUE CAPITAL)AFTER 10 YEARS, STILL IT IS EXTREMELY EXPENSIVE STOCK.

ITS FAIR VALUE IS NOT MORE THAN RS. 20 BUT LOOKING AT THE SENTIMENTS AND RECENT LISTING OF IPOS THE PROMOTERS HAVE SET THIS HIGH PRICE BAND.

AGAIN, THIS IPO MAY (OR MAY NOT) GET LISTED AT PREMIUM BUT THIS WILL BE BECAUSE OF SENTIMENTS, GREY MARKET AND SPECULATION. ONE WHO LOOKS FOR FUNDAMENTALS AND GROWTH STORIES, SHOULD DEFINITELY AVOID THIS IPO.

IF AT ALL ONE WANTS TO TAKE RISK, CAN HUNT FOR SEVERAL GOOD STOCK IN SECONDARY MARKET ALSO.

agar koi kostak rate se application sell karta he to usko apllication ka incentive alag se milta he ?pls give ur sugeestion if u know.

take an example of ARSS Infra's promoters cases,there is lots of cases against company and promoters and directors although it listed wid handsome gain.

Mr harish
wher is the grey market operated in bangalore???

HI,

I THINK SJ ALIAS SREEDHAR ALIAS RAVI BANGLORE ALIAS GEM IPO FINDER OR WHATEVER IS RIGHT IN EVALUATING GPPL BUT HE FORGET TO MENTION ONE THING THAT THIS ISSUE IS FROM GUJRAT AND HEAVY OPERATOR LIKE ACTIVITY WILL BE ON CARDS I PRESUME IT WILL BE ALLOTED EASILY AT 48 AND LISTING PRICE AT RS. 64 TO 68 DEPENDING ON THE MARKET CONDITION 15 DAYS FROM THE CLOSE OF ISSUE, I NOTICED OPERATORS HAVE STARTED BUYING APPLICATIONS IN TONS AT KOSTAK PRICE OF RS. 2100 TO 2150 TILL DATE AND AT A PREMIUM QUOTED 12 TO 14 , AHMEDABAD SURAT AND RAJKOT OPERATORS HAVE STARTED THEIR GAME.

ALL GUJRAT BASED COMPANY ARE GOOD FOR INVESTMENT PURPOSES WHETHER IT IS LISTING GAIN OR LONG TERM.....SO FRIENDS WHETHER U LIKE IT OR NOT COMPANY MAKINJG LOSES OR HAVING TONS OF PENDING CASES AGAINST THEM BUT IT WILL LIST HANDSOMELY.........WATCH IN SEPTEMBER.......WATING FOR YOUR VALUABLE FEEDBACKS.

Bangalore Grey Market preminum is Rs 16 for Pipavav

Demand for Pipapav is picking up
GMP 12-14 now.

Grey Market Rate goes very high on today morning @ 2450/- Per One Lac Application. In Guj.Pipa. Port

Dear SJ,
Thanks for updates on SKS from time to time & also for anlysis on GPPL.
Do you have any idea why promoters of "pipavav shipyard" (Nikhil Gandhi &others)have exited from this co?
I know they are very good businessmen & hence this query ?
As you know Your advice always helps me
THANKS ONCE AGAIN
milinds

CHEMCHO ,
THANKS FOR YOUR VIEWS ABOUT THE MANAGEMENT
AND ALSO YOU HAVE ASKED TO INVEST RS 13000/AS MAXIMUM RISK
AS IT IS QUOTING LISTING GAINS PREMIUM OF RS 5 TO 10
GENERALLY FUNDS DON'T EXIT UNLESS THEY HAVE MADE PROFIT OF 20% IN INVESTMENTS
REALLY THERE SHOULD BE SOME PROBLEM WHEN TWO FUNDS ARE EXITING

hence.....people....who are looking for listing gains......will have to bold enough....to take risk of price fluctuation...coz small issue size....and.....small price.....can lead to huge fluctuation by operators........that may lead....to.....grillling of short term investor.......so short term....traders.....it is risky.....thogh i expect listing gains....but cannot specify quantam...due to rigging possibility........long term investors........apply half.....in application......and buy other half after seeing price movement post listing.........for a week.............if it goes down a bit.....you can average out by investing other half of total funds......by buying open market..................if it lists significantly above say even 30 prcent........u can still buy rest ...............coz............since comany will start generating positive pat and eps... later.....in long term so price will be still cheap at 30 percent plus.....

This is my analysis on this IPO...Gujrat pipavav

1)I dont have to mention that Quality of Promoters APM who hold 54% stake.. APM Terminals, one of the most respected and professionally run container terminal operators in the world, operates Pipavav port. High standards and operational efficiency are the hallmark of the APM Terminals ports worldwide.

2)Look at the Quality of institutional shareholders:

India Development Fund, IDBI, The LIC, New York Life, UTI.

3)WHat is the price at which APM Terminals acquired stake and other shareholders mentioned above .....took at...were alloted shares? .....Dont open your mouth and salivate....if u get suprised....

Rs. 40-50 (Range) What is the issue price ?....not more than 48

4)Its book value post dilution is 12...that is 4 times. Listed peers are 8-9 book.

5)DID SOMEBODY SAY OVERPRICED?

Yes you can say....it is loss making company....that is because it is developing its capacities...and doing high...capex....with high debt currently. SO Judging the company in its inception stage with PE ratio based on PE Ratio is Stupidity....!....BECAUSEEEE....:--

Post IPO, the gearing or Debt/ Equity of the company is expected to significantly reduce from 4.7x in September 2009 to 0.9x in CY12 as a major portion of the IPO proceeds will be used to pay off the loan under the loan
agreement. The reduction in interest costs will help improve the PAT margins significantly.

Its operating margins has significsantly comparing....2008 to sep 2009.....from 7% to 18% because of increase in volumes....

6)Now speaking about sector outloook:

CRISIL Research expects container traffic at non-major ports to grow at a CAGR of 26.4% from 13 mn
tonnes to 43 mn tonnes from 2008-09 to 2013-14. This growth is led by a recovery in the global markets;
subsequent pick-up in imports and exports; increased containerisation of bulk exports; and trade in items like
capital and engineering goods, textiles and food items which are essentially carried in containers. The
container market size of north and north-western India is currently ~ 6 mn TEUs, which is expected to grow
at a CAGR of 11-12% in the next three to four years.

7) Strategic PORT Location:

APM Terminals Pipavav enjoys favourable oceanographic conditions,well-developed infrastructural facilities, and good rail and road connectivity to the hinterland. The grade reflects APM Terminals Pipavav’s strategic location in terms of proximity to the landlocked north and north-western regions, which account for 65% of the container cargo traffic in India. The grading takes into account strong industry prospects. The container cargo market size of north and north-western India is currently ~ 6 mn TEUs (twenty-foot equivalent unit – a 20-foot long container) and is expected to grow at a CAGR of 11-12% over the next three to four years. Given that Jawaharlal Nehru Port Trust (JNPT) is congested and there are no other ports on the western side except Mundra to handle incremental traffic, APM Terminals Pipavav is positioned well to attract this incremental traffic. The port is located at an approximate distance of 150 nautical miles from the ports located in and around Mumbai. Hence,
ships calling to JNPT could sail to APM Terminals Pipavav if JNPT is congested. The bulk handling capacity in Gujarat and Maharashtra is expected to grow at a CAGR of
22% over the next five years from 61 mn tonnes in FY09 to 167 mn tonnes in FY14. Further, the commissioning of new power plants near the port augurs favourably for
the bulk cargo traffic growth at the port.

8)The Quality of Management is extremely high profile...with international experience. So management quality is good.

9) Under the Concession Agreement, GPPL has the right to develop approximately 1,561 acres of land. The
company has developed 485 acres of land and has a balance of 1,076 acres of land which it can utilise for
expanding port operations. Hence, with ample land availability, the company can significantly increase its
capacity through marginal investments in capital equipments. Under the agreement, the company has the
right to sub-lease the land, which provides it an opportunity to earn incremental revenues and subsequently
attract companies using the leased land to use the port services for all their trading activities.

10)Increase in demand for coal will help boost bulk cargo volumes
Total traffic of coal at Indian ports is expected to grow at a CAGR of 7.2% from 91.9 mn tonnes in 2008-09
to 130 mn tonnes by 2013-14. Coal, with a share of 44% of the bulk cargo as of September 2009, is the
major bulk cargo commodity handled at the APM Terminals Pipavav. According to the Government of
Gujarat, six power plants are being commissioned close to APM Terminals Pipavav and 11,164 MW of
power generation capacity will be added in the state by 2012. This will translate into a coal requirement of
around 45 mtpa (million metric tonnes per annum); 4 mtpa for a 1,000 MW power plant. The increase in
demand for coal will help boost the coal traffic at APM Terminals Pipavav.


SO the story has just begun guys,.....investors....with long term can invest.....blindly...........short term investors for listing or I month ....can take risks....coz it can be highly volatile because.....of...low IPO SIze...

Rest is UPTO YOu i have given you ample logic...!!

______________________________________________________

Disclaimer : I Dont Intend to argue....with people......on this post..regarding my view on Gujarat Pipavav...as people argued with me for my SKS Microfinance IPO Advice....and shall not rspond....

The GMP of PIPAVAV IPO is touching 12-13 rs in delhi with very few sellers.

Its creating huge interest amongst anchor investors