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Two NCD and two SME IPOs for the week

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Dewan Housing Finance Corp. Ltd. (DHFCL) that entered with its maiden debt offer of Rs. 4000 crore on 3rd August 2016 and garnered above Rs. 19K crore has mulled hitting the iron when it is hot. Encouraged by the overwhelming support for earlier debt offer, the company is now coming out with even bigger pie of Rs. 10000 crore debt offer on aggregate basis.  The base size of the offer is Rs. 2000 crore with a permission to retain oversubscription to the tune of Rs. 10000 crore. Issue opens for subscription on 29.08.16 and will close on or before 12.09.16. Allotment will be done on “First Come-First Served basis”.

The company is offering Secured Non Convertible Debentures of Rs. 1000 each. Minimum application is to be made for 10 NCDs (i.e. Rs. 10000) and in multiple of 1 NCD thereon, thereafter. The issue is rated as AAA by CARE and BWR indicating that instruments with this rating are considered to have the highest degree of safety regarding timely servicing of financial obligations. Such instruments carry the lowest credit risk. Post this issue its debt equity ratio will rise to 13.35. This time the offer has little lower coupon rates and varied tenures as detailed hereunder:

Two NCD offer details


In Series I, the tenor is 3 years and the frequency of coupon payment is annual; the coupon rate for NCD Holders in Category I & Category II is 9.05%; the coupon rate for NCD Holders in Category III & Category IV investors is 9.10%; effective yield per annum for NCD Holders in Category I & Category II investors is 9.05%; effective yield per annum for NCD Holders in Category III & Category IV investors is 9.10%.

In Series II, the tenor is 5 years and the frequency of coupon payment is annual; the coupon rate for NCD Holders in Category I & Category II is 9.05%; the coupon rate for NCD Holders in Category III & Category IV investors is 9.15%; effective yield per annum for NCD Holders in Category I & Category II investors is 9.05%; effective yield per annum for NCD Holders in Category III & Category IV investors is 9.15%. In Series III, the tenor is 7 years and the frequency of coupon payment is annual; the coupon rate for NCD Holders in Category I & Category II is 9.05%; the coupon rate for NCD Holders in Category III & Category IV investors is 9.25%; effective yield per annum for NCD Holders in Category I & Category II investors is 9.05%; effective yield per annum for NCD Holders in Category III & Category IV investors is 9.25%. [Category IV Investors (Retail Individual Investors) are defined as Resident Indian individuals and HUFs through the Karta applying for an amount aggregating for an amount up to and including Rs. 10 lakh, across all Series of NCDs.  The NCDs will be listed on BSE and NSE. The Lead Managers to the Issue are YES Securities (India) Limited , Edelweiss Financial Services Limited, Axis Bank Limited, A. K. Capital Services Limited, ICICI Bank Limited, IndusInd Bank Limited, ect.

Conclusion: Offers with “AAA” rating is most preferred by investors in debt market. Hence this offer is worth considering for investment for steady interest income.

Kosamattam Finance Ltd (KFL) is once again coming out with its NCD offer to mobilise Rs. 100 crore with a green shoe option to retain oversubscription to the extent of Rs. 100 crore, making the aggregate size of the offer of Rs. 200 crore. Kosamattam Finance that is primarily engaged in Gold Loan business is now doing business in areas such as money transfer services, foreign currency exchange and air ticketing services.

The company is offering Secured redeemable non-convertible debentures of Rs. 1000 each. It opens for subscription on 29.08.16 and will close on or before 27.09.16. Minimum application is to be made for 10 NCDs and in multiple of 1 NCD thereon, thereafter. The offer has tenure of 400 days, 18 months, 36 months, 48 months and 78 months and interest payment modes cumulative and monthly as per the choice of investors. Coupon rates vary from 9.25% to 11%. Although coupon rates are lucrative, its poor grading makes is a bit risky. Post issue its debt equity ratio will stand enhanced from 8.83 to 9.94.

Issue is solely managed by Vivro Financial Services Pvt Ltd and IL & FS Trustee Company Ltd is the Debenture Trustee. Karvy Computershare Pvt Ltd is the registrar to the issue. Post allotment, NCDs will be listed on BSE.

Conclusion:    Considering poor rating, Risk savvy investors may consider investment for medium term.

SME IPO Details:

Madhya Bharat Agro Products Ltd (MBAPL) is manufacturing Beneficiated Rock Phosphate (BRP), Single Super Phosphate (SSP) and Sulphuric Acid which is used in large quantities for replenishing “P” (Phosphorus) in the soil and act as a fertilizer for the crop. Our Company has entered into the backward integration by manufacturing of Beneficiated Rock Phosphate (BRP) and Sulphuric Acid which is used as a raw material for manufacturing of SSP. The company is also engaged in business of Purchase and Sale of (Trading) of Textiles and agricultural commodity.

For listing gains, the company is coming out with a maiden offer for sale of 5790000 equity share of Rs. 10 each at a fixed price of Rs. 24 per share to mobilize Rs. 13.90 crore. Issue opens for subscription on 29.08.16 and will close on 02.09.16. Minimum application is to be made for 6000 shares and in multiples thereon, thereafter.  Post allotment, shares will be listed on NSE SME –Emerge platform. Issue is lead managed by Hem Securities Ltd and Bigshare Services Pvt Ltd is the registrar to the issue.  Its paid up capital will remain at Rs.21.91 crore post issue.  From incorporation till Sept 2000 it issued equity at par and then at a price of Rs. 73.70 per share in 2007. Again it issued equity at par during 2009-2010 and then further equity in a price range of Rs. 24 to Rs. 100 per share. It has also issued bonus in the ratio of 2 for 1 in August 2009.  On merchant banker’s front, this is the 19th mandate from its stable and earlier 18 issues have shown mixed trends.

Conclusion: Investors may consider investment for medium to long term as this year normal monsoon is predicted.

Spicy Entertainment & Media Ltd (SEML) is a media and entertainment company with specific focus on event management. It is also engaged in the business of distribution of films and provides event management services to leading Indian insurance companies for their customer awareness programs, brand promotional activities, sign board management, marketing campaigns amongst others.

The company offers fully customised solutions that give shape to its clients’ special preferences, their needs and vision for the program. It offers the most comprehensive range of solutions for corporate as well as private event management and media production needs. SEML plan and stage events to suit the specific needs of clients and has thus emerged as a one-stopshop for all event management and media production requirements. To part finance its plans for setting up of a recording studio, produce regional feature film, raising general corpus funds, the company is coming out with a maiden IPO of 4820000 equity share of Rs. 10 each at par to mobilize Rs. 4.82 crore. Issue opens for subscription on 01.09.16 and will close on 07.09.16. Minimum application is to be made for 10000 shares and in multiples thereon, thereafter.  SEML has issued all equity at par so far. Its current equity capital of Rs. 11.69 crore will stand enhanced to Rs. 16.51 crore post this issue.  Issue is solely managed by First Overseas Capital Ltd and Maheshwari Datamatics Pvt Ltd is the registrar to the issue. Post allotment, shares will be listed on BSE SME.

Conclusion: Risk savvy cash surplus investors may consider investment for long term in this at par issue.

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. As SME issues have entry barriers and low preference from broking community, any reader taking decisions based on any information published here does so entirely at own risk. Above information is based on information available as on date coupled with market perceptions. Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).

(Email: dilip_davda@rediffmail.com)