CARE IPO Details

Credit Analysis And Research Ltd   
BRLM:                                                     Kotak Securitie, ICICI Securities Ltd, DSP Merrillynch, Edelweiss Financial Services, 
                                               IDBI Capital Markets and SBI Capital Markets Ltd 

Syndicate Member:                            Kotak Securities Limited, Edelweiss Securities Limited and SBICAP Securities Limited 
  
Issue Period:                                        Friday, December 07 – Tuesday, December 11 , 2012 
  
Price Band  :                                      Rs.700/- - Rs.750/- 

Bid Lot :                                       20 Equity Shares into multiples of 20 Equity Shares. 

Registrar:                                               Karvy Computershare Private Limited 
  
Issue Size:                                              71,99,700 Equity Shares (Rs.504 Crs - Rs.540 Crs) 
                                                                  
QIB:                                               35,99,850 Equity Shares (50% of the Net Issue Size) 

HNI:                                              10,79,955 Equity Shares (15% of the Net Issue Size) 

Retail:                                              25,19,895 Equity Shares (35% of the Net Issue Size) 
        
Listing:                                                    BSE & NSE 
  
IPO Grading:                                          CARE has been exempted by the Securities and Exchange Board of India           
                                              (“SEBI”) (pursuant to Regulation 109(b) of the SEBI Regulations) from obtaining IPO                                                      grading for the Offer. 

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LKP BYTES : Dharani Sugars & Chemicals (Buy@Rs.41, Target Rs.120)

The story so far ………..

Dharani Sugars & Chemicals – DSC belonging to the Chennai based PGP Group of companies is a fully integrated sugar producer and is a Rs6bn company with a sugar capacity of 10,000TCD, Distillery capacity of 160klpd and a 37mw co-generation power plant spread across its 3 units in Dharani Nagar, Polur & Villupuram all in Tamil Nadu. DSC derives 80% of its revenues from sugar and 20% from distillery and co-generation.

DSC undertook a massive capacity expansion in all its 3 business verticals last fiscal and this was funded entirely by debt as a result of which every penny earned last fiscal was eaten up by the interest cost and its long-term debt equity ballooned to 2.7x while its total debt equity rose to 4x and at 1x EV to sales the market capitalization now stands at just Rs1.2bn. 

The story ahead ………..

We expect DSC to post a 230% rise in net profits this fiscal to Rs330mn driven primarily by the sugar business as we expect the average realization to be Rs32 per kg as against Rs28 per kg in the last two years. DSC pays a substantially lower price for the cane as compared to its peers in the western and northern parts of India. During H1 this fiscal the gross margins from the sugar business improved 4 times as compared to the same period last fiscal. Higher than average crushing days in line with mills based in southern India along with a recovery of more than 9% would in our view ensure that the sugar division performs to its potential this fiscal.

With the 100klpd distillery going on stream in October 2012 we believe that the 5% mandatory ethanol blending program augurs well for DSC next fiscal and this segment along with co-generation would contribute well for the first time next fiscal. The 22mw co-generation at its new unit fetched a realization of Rs4.4 per unit which is higher than the rate at its old unit and we expect DSC to post a net profit of Rs500mn next fiscal as the integrated sugar model plays out well in FY’13-14.

DSC trading at 2.5xFY13-14E earnings of Rs17 is in our view the best available small cap integrated sugar play and we recommend a BUY with a one-year price target of Rs120.

Thanks and Regards

LKP Advisory

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Technical Report

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Market Outlook

New Issue - Net 7.88% Tax-Free Interest from AAA rated Govt Bonds from REC

Dear Investor,

We are pleased to present you the details of Tax-Free Bonds issued by Rural Electrification Corporation (REC).The interest earned on these bonds is fully exempt from tax and there will be no deduction of tax at source from the interest, irrespective of the amount or the investors’ status. The bonds have been rated “AAA” by CRISIL, CARE & ICRA and carry an attractive tax-free coupon ranging between 7.72-7.88% (Tax Free). The pre-tax yield works out to around 11.17-11.40% (for Retail investors in the highest tax bracket).

Bond Details:

Particulars	Details
Bond Structure	Tax Free, Secured, Redeemable, Non Convertible Bond
Tax Free Coupon	7.72% (10 Yr) & 7.88% (15 Yr)
Rating	“AAA” by CRISIL, CARE & ICRA
Face Value (per bond)	Rs.1000
Minimum Application	Rs.5,000
Issuance	In Physical & Demat mode
Listing	Proposed to be listed on NSE & BSE
Issue Opens On	Dec 03, 2012
Issue Closes On	Dec 10, 2012 (First Come First Serve)

Illustration of Pre-Tax Yield:

Retail Applicants	10 Years	15 Years
Tax Free Returns (%)	7.72	7.88
Pre-Tax Yield (%)	11.17	11.40

Assuming 30.9% tax bracket

Company Profile:

Rural Electrification Corporation Limited (REC), a Navratna Central Public Sector Enterprise under Ministry of Power, was incorporated on July 25, 1969 under the Companies Act 1956. REC a listed Public Sector Enterprise of Government  of India had a net worth of Rs. 12,789 Crore as on 31.03.11.  Its main objective is to finance and promote rural electrification projects all over the country.  It provides financial assistance to State Electricity Boards, State Government Departments and Rural Electric Cooperatives for rural electrification projects as are sponsored by them

Financial Highlights:

                                                                               (Rs. Cr)

FY Ending	2008-09	2009-10	2010-11
Total Income	4,931.28	6,707.60	8,495.26
Net Profit	1,272.08	2,001.42	2,569.92
Reserves	5,331.42	10,092.88	11,801.16

Kindly revert for any further clarification on the bonds.

Axis Midcap - Good show since launch: HOLD :: Business Line

SGX NIFTY 5,903.00 +26.50 ; Markets continue to move UP..

SGX NIFTY 5,903.00 +26.50 ;
Singapore exhcnage
8:45 AM India time
30 Nov 2012
Markets continue to move UP..

Fund Talk - Track your fund's performance regularly :: Business Line

Allocate sufficient amounts to other asset classes such as debt, gold and real-estate. While judging a fund’s returns, consider its benchmark’s performance as well as that of peers.

I have been investing Rs 10,000 every month in Sundaram Capex Opportunties fund for the last 54 months and Rs 20,000 in Birla Sun Life Midcap for the past 26 months. While the former has given negative returns, the latter has generated slightly positive returns.

What do I do with these funds?

P.N.Dalmia