L & T Technology Services Ltd, (LTTS), is a leading global pure-play ER&D services company. It provides ER&D services, which is defined as the set of services provided to manufacturing, technology and process engineering companies, to help them develop and build products, processes and infrastructure required to deliver products and services to their end customers.
LTTS operates in a large and growing global market derived from a global corporate ER&D spend of $1,007 billion in 2015, of which the ER&D spend of the top 500 global ER&D spending companies was $614 billion in 2015. The estimated addressable ER&D outsourcing opportunity for ER&D service providers was $365 billion of the G500 ER&D spend in 2015. $67 billion of the corporate ER&D spend of $1,007 billion is currently addressed, which represents a penetration of 6.7% and offers potential growth opportunities.
The company is coming out with a maiden IPO in the form of Offer for Sale of its 10.2% of post issue capital. The company is issuing 10400000 equity share of Rs. 2 each in a price band of Rs. 850-860 to mobilize Rs. 884.00 cr. – Rs. 894.40 cr. based on lower and upper price band. Issue opens for subscription on 12.09.16 and will close on 15.09.16. Minimum application is to be made for 16 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. BRLMs to the offer are Kotak Mahindra Capital Co. Ltd., DSP Merrill Lynch Ltd., JM Financial Institutional Securities Ltd and SBI Capital Markets Ltd. Karvy Computershare Pvt Ltd is the registrar to the issue. Being offer for sale, its post issue equity remains same at Rs. 20.34 cr. It issues equity at par in 2012-2014 and then it hiked the face up value of its equity in January 2016 and then reduced it in April 2016 with transfer of residual portion to reserves. In June 2016 it issues rights shares at a price of Rs. 281 per share. Average cost of acquisition of equity shares for the promoter is Rs. 103.25 per share. On merchant bankers’ front, the four BRLM’s associated with the offer have handled 22 public issues in the past three years out of which seven issues closed below the issue price on the listing day.
Conclusion: The issue is from the Group reckoned for its market friendly gestures. This is the second IPO from the group in this year. However, last IPO from the group failed to live up to confidence post listing. Long term investors may consider investment in this issue as the company is one among the few in the world providing technology solutions.
GNA Axles Ltd (GNA) is today among the leading manufacturers of rear axle shafts used in on-highway and off-highway vehicular segments in. Since its first supplies in 1995 and first exports in 2002-2003, GNA has grown to production levels of more than 2.26 million components in Fiscal 2016. The company manufactures and supplies a diverse range of rear axle shafts, other shafts and spindles for the on-highway segment, i.e. for light commercial vehicles (“LCVs”), medium commercial vehicles (“MCVs”) and heavy commercial vehicles (“HCVs) and other transport vehicles such as buses. It also manufactures and supplies a diverse range of rear axle shafts and other shafts for the off-highway segment, i.e. for agricultural tractors and machinery, forestry and construction equipments, electric carts and other specialty vehicles used in mining and defense sectors.
To part finance purchase of plant and machinery as well as raise working capital and general corpus fund, the company is coming out with a maiden IPO of 6300000 equity shares of Rs. 10 each via book building route in a price band of Rs. 205-207 to mobilize Rs. 130.41 crore (bases on upper price band). From the issue, it has reserved 200000 equity shares for its employees. Issue opens for subscription on 14.09.16 and will close on 16.09.16. Minimum application is to be made for 70 shares and in multiples thereon, thereafter. The company has issued all equity shares at par since inception till March 1997 and two bonus issues in the ratio of 1 for 1 in March 2006 and 9 for 1 in Marcy 2007. Post IPO its current paid up equity capital of Rs. 15.17 cr. to Rs. 21.47 cr. BRLMs to the issue are PNB Investment Services Ltd and Ambit Pvt Ltd. Link Intime India Pvt Ltd is the registrar to the issue. Post allotments, shares will be listed on BSE and NSE.On merchant banker’s front, Ambit Finance has not handled any issue in last three years.
PNB has just one IPO of Dilip Buildcon in the recent past that gave returns on listing day.
Conclusion: Listing of the company will be in T group and hence speculative movement is ruled out. However, considering its niche play with rising top and bottom line and major thrust on exports, long term investors may consider investment in this 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. Any reader taking decisions based on any information published here does so entirely at own risk. Above information is based on RHP and other documents available as of date coupled with market perception. Author has no plans to invest in this offer.
(SEBI registered Research Analyst-Mumbai).