In 2012, S Chand had raised Rs. 200 crore from Everstone Capital in lieu 35 per cent stake in publishing house S. Chand & Company Private Ltd for Rs 200 crore or $38 million. The deal would value the New Delhi-based firm, founded in 1939, at over Rs 570 crore. S Chand & Co had profit after tax (PAT) of Rs 7.75 crore on the total income of Rs 144.64 crore in FY11. According to Care Rating, S Chand reported PAT of Rs 4.81 crore on total sales of Rs 90.93 crore for first nine months in FY12.
profit after tax and before minority interest grew at a CAGR of 33.48% over the past five Fiscal years from Rs 14.7 Cr million in Fiscal 2012 to Rs 46.42million in Fiscal 2016 ( reference page 139)
If all things equal 46.42/14.7 x 570 = Approx 1800 Crs with 3,46,95,242 Equity Shares outstanding after IPO Gives me fair value price around Rs520 max however this financial year the company has reported big loss no idea of such huge loss when the company before on quarterly and 9 months base was always in black so this big inorganic growth is effect the bottomline
220.1. Nidhike| Link| Bookmark|
April 19, 2017 10:13:49 PM
Top Contributor (300+ Posts, 500+ Likes)
U taking post IPO equity but not taking post IPO numbers. Result of chhaya publication is still not consolidated which is 30 cr last year. Equity is higher to 3.45 cr from 3 cr just to actually fund this acquisition. So as ur calculation 46+30/14.7×570=3000cr which comes to 850 fair value One thing one has to remember that valuation of when 14 cr profit making company n 76 cr profit making comany can''t be same . It will certainly command higher valuation than it commanded 5 years back. Hence my 4 digit tgt :)
You correct with 30 cr on page 415 RHP however this 30 cr inorganic net profit growth has leveraged it balance sheet so it not as simple as you put.... however it looks better then i thought will redo the numbers
since it only 75% so it is not 30 Crs it 22.5 Cr also how much will this cost is also question mark so to be on safer side IMO total profit would be around 60 to 65 Crores
WILL GET EV OF 2250 CR TO 2500 CRS GIVING A IR VAULE OF 720 WITH MIS OF 25% I STILL GET A FAIR PRICE BELOW IPO PRICE SO i will still avoid
220.4. Nidhike| Link| Bookmark|
April 19, 2017 10:51:04 PM
Top Contributor (300+ Posts, 500+ Likes)
Taken loan of 150 cr to fund 76% Raising 325 cr so actually leveraging going down considerably after IPO
Plz redo u missed some imp point n let me know if I need correction
220.5. Nidhike| Link| Bookmark|
April 19, 2017 10:55:28 PM
Top Contributor (300+ Posts, 500+ Likes)
Costing of rest 24% is absolutely clear in RHP 220cr for 100% subject to certain ebidta performance. So max 55 cr for 24%. Profit will be 100% consolidated and 55 crore will be shown in liability side for payment as per RHP so no question of 22.5 cr ....deal is certainty of 100% for 220 cr
Even if i take 76 Crs as u have mention do not take minority interest will they have buy also consider nil debt i get EPS of 22 giving a PE of 30 when naveent is available at 24 PE i still find it expensive AVOID
220.7. Nidhike| Link| Bookmark|
April 19, 2017 10:59:01 PM
Top Contributor (300+ Posts, 500+ Likes)
MKT will value it on Fy18 number at least n u valuing on fy16 no. Of 76 cr
Even if reports 90 cr profit it will still be expensive then NAVEENT education still it PE will be approx 25.34 more then NAVEENT which has better business mix and also as a IPO investor I need to make profit and get some return
IMO it is a expensive IPO and greed management not left anything like L&T and Varun good companies but not good IPO investment
220.9. Nidhike| Link| Bookmark|
April 19, 2017 11:13:15 PM
Top Contributor (300+ Posts, 500+ Likes)
Publishing business alws command better valuation than commoditised business of Navneet like stationary etc. In my view mgt has left 20-25% for IPO investors which is commendable in this boom time. A clear buy n hold for long term.
I think it is other way round stationary business get better PE multiple then PUblication based on listed players
220.12. Nidhike| Link| Bookmark|
April 19, 2017 11:25:21 PM
Top Contributor (300+ Posts, 500+ Likes)
Digital is the way forward but without content there is no digital or physical. I rest my case now
Valuation is subjective n I think s chand PE should be higher n u think otherwise. Only time will tell who is right.
I just tried to put some fact n figures ppl might have missed from Rhp. Hope some of those will make ppl take more informed decision.
220.13. Nidhike| Link| Bookmark|
April 19, 2017 11:37:16 PM
Top Contributor (300+ Posts, 500+ Likes)
Few more facts: Growth: Navneet profit increased from 80 cr to 125 cr standalone (103 cr consolidated)from FY12 to 16. S Chand increased from 14 cr to 46 cr standalone n (76 cr consolidated) from 12 to 16
MKT loves growth
Valuation of publishing / stationary etc. Navneet ebitda of publishing 175 cr on sales of 515 cr sales and stationary ebidta of 36 cr on 416 cr of sales. How can MKT gives valuation to stationary business more than publishing business??? Plz enlighten
220.14. Septa| Link| Bookmark|
April 20, 2017 12:30:47 AM
(4000+ Posts, 4600+ Likes)
BTW Naveent also brought something big this financial year Encyclopaedia Britannica India for all cash. Even if you give low valuation for stationary still 125 Crs vs 76 Crs so ur argument that stationary business is inferior PE multiply. So whatever Naveent is doing it generating more profit from publication business then S chand . if you look just publication topline they r almost same approx 600 crs
so 75/125x 3850 = 2310 Crs divided by 3,46,95,242 Equity Shares equates to only Rs 665 per share less then the IPO price
If your argument is S Chand topline and bottom line improve same the case of Naveent so peers compare S chand should have at least come with 570 then it would have a great issue in this bull run.
At 670 they have full priced any upside will be operator driven not fundamental.
I rest my case happy investing i based my argument based on best case still the fair rise is below IPO price
Greed Management high risk IPO
220.15. Nidhike| Link| Bookmark|
April 20, 2017 12:47:48 AM
Top Contributor (300+ Posts, 500+ Likes)
Missing point in ur above analysis is difference in growth rate of s chand vs Navneet . S chand profit growth thrice the rate of Navneet so can''t give same multiple as.....MKt Loves Growth!!!!!
I appreciate your analysis and it is commendable....
But there are many if and buts....
Like you I too think that S Chand IPO will surprise everyone on listing...And this I have said multiple times on this forum.
But somehow when it comes to valuation, I differ on this....The growth from 2012 to 16 cannot be categories into high growth..it is less than moderate.....Hence assigning 30x is not appropriate to this stock...
Also if you look at TTM performance then no where valuation seems reasonable. Infact average eps for last 3 years is only around 15...
Whatever your calculations are is based on future assumption i.e. FY 18 which to me is hypothetical due to companies bad performance in this fiscal....
If market strongly believes in the growth strategy of this company and trust it''s management, then it can give some premium to it.....
But it''s performance is a dampener this year hence very difficult to judge it''s performance for FY18...
MARKET IS MARKET LET IT DECIDE THE PRICE...I will decide to apply or not on last day of the issue purely as a trader.....
220.17. Nidhike| Link| Bookmark|
April 20, 2017 12:59:48 AM
Top Contributor (300+ Posts, 500+ Likes)
"But somehow when it comes to valuation, I differ on this....The growth from 2012 to 16 cannot be categories into high growth..it is less than moderate.....Hence assigning 30x is not appropriate to this stock..."
Now look at hard fact n figures:
consolidated restated revenues grew at a CAGR of 32.64% over the past five Fiscal years from Rs 1,746.44 million in Fiscal 2012 to Rs 5,406.27 million in Fiscal 2016;
Consolidated restated EBITDA grew at a CAGR of 47.47% over the past five Fiscal years from Rs 271.07 million in Fiscal 2012 to Rs 1,282.16 million in Fiscal 2016;
Consolidated restated profit after tax and before minority interest grew at a CAGR of 33.48% over the past five Fiscal years from Rs 146.91 million in Fiscal 2012 to Rs 466.42 million in Fiscal 2016;
Chhaya‘s consolidated revenues was Rs 1,286.23 million and Rs 705.74 million and consolidated profit after tax was Rs 302.35 million and Rs 115.31 million, in each of Fiscal 2016 and Fiscal 2015, respectively.
Sales CAGR of 36% n EBiDTA CAGR of 47% innlast 5 years is less than moderate?????
220.18. Septa| Link| Bookmark|
April 20, 2017 1:21:31 AM
(4000+ Posts, 4600+ Likes)
Nidhike great growth rate both topline and bottom line but the issue is equity has also diluted in that period. So all that growth also meant more shareholders. SO your RONW has stayed same even with such ferocity in growth profit and revenues.
At least in case of NAVEENT RONW has improved over time
Should I subscribe for listing gains sir and is.there any informative group for ipo for mobile?
216. SkDash| Link| Bookmark|
April 22, 2017 12:51:01 PM
Top Contributor (1000+ Posts, 200+ Likes)
Free 403 Cr money to S Chand and Co to repay their debt. Equity Shareholders are became donor now (with no dividend expectation and also no obligation by Regulator). Everybody is interested in short term money and capital gain,, who ill bear the loss? Money market became Monkey Market now. Bring Monkey, I will pay you rupees.
The problem with this forum is that only 2 or 3 people like Eagle Eye, Septa or Anandk contribute seriously and highly valuable...
Rest all like to pinpoint and have fun . Then wait for allotment lottery and if they get allotment, chest thumping starts...Grow up guys...Abuse me if u like but this is the truth.....
@Roz Mary marlo ðŸ˜....i was just asking to learn and that too for the thing which I didn''t understood to Eagleye...i hope it was not sarcastic to me!...and I do respect and believe in Eagleye truely.
Wow! All this while I was thinking it may go the CL Educate way.... Last when I read about this company, it said it made a loss of around 90 crs for Q1, Q2 and Q3 of FY17.
An interesting extract from Dilip Davda''s review -
"According to the management, the company has history of posting losses for first three quarters and generates almost 75 per cent of total revenue and commensurate profits in the final quarter of every year and hence the first nine months figures cannot be compared due to seasonality of the company''s business"
There is nothing interesting in dilip davda review... Anybody reading this forum already know about this...
I thought you will be quoting Warren buffet, Jesse Livermore, Carl Icahn, Peter lynch or Rakesh Jhunjhunwala...But ended up quoting dilip dawda of this site...
By the way I read your V guard story....It was interesting... .I hope you get more multibaggers....Do share ur new ideas on forum...
Yesh Yesh!! " Intangible assets" and "Certain Charm" of intangible nature must help promoters with their "tangible" amortization effort. Only an elite class of investors with their "intangible Intelligence" and dough can make such amazing discoveries / observations happen. Had the the likes of Einstein or Newton been around ...this must have made them feel so (intellectually) inferior ....No?
206.2. ShareView| Link| Bookmark|
April 21, 2017 11:05:28 AM
IPO Guru (2600+ Posts, 3700+ Likes)
Hi Maniac ,
Posting after a long time . Welcome back . Last message I remember was surge in traders of '' Lemon - Chilli '' w.r.t auto rally . Am I right ? Keep posting
@ 201.2. ShareView Apr 21, 2017 10:05:28 AM IST I Like It. 2 | Report Abuse IPO Mentor IPO Mentor (500+ Posts, 900+ Likes)
Oh! Haha ...Yes ....Lemons and Chilies and what not....Weren''t those the days with myriad of such skits?...All made possible by both "the great minds (as in us) that thought alike" and of course the usual antagonists who opposed every bit of our comments, for the heck of it. Thanks mate! thanks for welcoming :)
Roz Mary Marlo (Apr 21, 2017 9:53:56 AM IST) For: S Chand and Company Ltd
God bless you...Rest market will teach you
^^^. Now that must go down as one great historic statement ever made on this forum.....Made me reminiscent of Jesus''s famous "Father (as in the God) forgive ''em all...for they don''t know what they are doing" ...RIGHT BEFORE BEING CRUCIFIED ... Hey! buddy.. How have you been? .. :)
Today''s article in Economics times "S. Chand IPO: 5 things you need to know before taking a call on it" looks promising. Stock is a sure shot buy for me
Hi, i am trying to ask this question desperately but didnt get ans from anyone, Plz help me on the applying strategy considering over-subscription of all categories- i have 3 different DEMATs with full family and capacity to apply for 4 lots of SME IPOs. What should be a good strategy -(1) to apply for 3 different application of 1 lot each in RII or (2) to apply for 2 different application of 2 lot each in NII?? Is the allotment criteria same for both the category e.g one lot to each applicant through lottery in case of over subscription?