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Rites LTD IPO Best Price to Robust Returns

Rites Limited incorporated in 1974,RITES Ltd is a government of India enterprise, under the aegis of Indian Railways.RITES Ltd an ISO 9001:2008 company, is multi-disciplinary consultancy organization in the fields of transport, infrastructure, and related technologies. It provides a comprehensive array of services under a single roof and belives n transfer of technology to client organizations. In overseas project s, Rites actively pursues and develops cooperative links with local consultants/firms, as means of maximum utilization of local resources and as an effective instrument of sharing its expertise.

Since its inception, the company has evolved from providing transport infrastructure consultancy and quality assurance services and have developed expertise in:

  1. Design, engineering and consultancy services in transport infrastructure sector with focus on railways, urban transport, roads and highways,ports, inland water ways,airports, and rope ways
  2. Leasing exports, maintanance, and rehabilitation of locomotive and rolling stock
  3. Undertaking turnkey projects on engineering, procurement and construction basis for railway lines , track doubling, 3rd line, railway electrification, up gradation works for railway transport systems and workshops, railway stations, and construction of institutional/residential/commercial buildings,both with or without equity participation
  4. Wagon manufacturing, renewable energy generation and power procurement for Indian railways through collaborations by way of joint venture arrangements , subsidiaries or consortium arrangements.

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In India, the clients include various central and state government ministries, departments, instrumentalities as well as local government bodies and public sector undertakings. These include Indian Railways, NTPC, Dedicated Freight Corridor Corporation of India Limited, High Speed Rail Corporation of India Limited, Public Works Department, , Steel Authority of India Limited, Rashtriya Ispat Nigam Limited, Hindustan Petroleum Corporation Limited, Bharat Coking Coal Limited, Metro Link Express for Gandhinagar and Ahmedabad (MEGA) Company Limited, Indian Port Rail Corporation Limited, Airports Authority of India, among others. The company also engages with various large private sector corporations including L&T Metro Rail (Hyderabad) Limited, Kanti Bijlee Utpadan Nigam Limited (KBUNL), Cimmco Limited, Titagrah Wagons Limited, Snowmex Engineers Limited, Unity Infraprojects Limited, Rajdeep Buildcon Private Limited, Mahalsa Constructions Private Limited, Marymatha Constructions Limited, AFCON Infrastructure Limited, INCAP, ARK Services, MNEC Consultants Private Limited, Indian Geotechnical Services Limited, Geokno India Private Limited and NATRIP Implementation Society among others.

Company Promoters:

The Promoter of the company is the President of India acting through the MoR. The Promoter currently holds, directly and indirectly (through his nominees), 100% of the pre-Offer paid-up Equity Share capital of the Company.

Company Financials:

Summary of financial Information (Restated)
Particulars For the year/period ended (in Rs. Millions)
31-Mar-17 31-Mar-16 31-Mar-15 31-Mar-14 31-Mar-13
Total Assets 48,031.69 44,092.06 36,056.30 36,363.82 32,867.96
Total Revenue 15,637.21 12,267.27 11,591.07 12,234.70 10,830.52
Profit After Tax 3,624.16 2,827.31 3,122.88 2,605.36 2,330.57

Objects of the Issue:

The objects of the Offer are:
1. To carry out the disinvestment of 24,000,000 Equity Shares held by the Selling Shareholder in the Company, equivalent to 12% of the issued, subscribed and paid up Equity Share capital of the Company as part of the Net Offer, and such Equity Shares that may be reserved for Employee Reservation Portion, if any, subject to necessary approvals
2. To achieve the benefits of listing the Equity Shares on the Stock Exchanges.

Issue Detail:

  Issue Open: Jun 20, 2018 – Jun 22, 2018
Issue Type: Book Built Issue IPO
Issue Size: 25,200,000 Equity Shares of Rs 10 aggregating up to Rs 466.20 Cr
Face Value: Rs 10 Per Equity Share
Issue Price: Rs 180 – Rs 185 Per Equity Share
Market Lot: 80 Shares
Minimum Order Quantity: 80 Shares
Listing At: BSE, NSE

Company Contact Information

RITES LTD.
RITES BHAWAN, 1, Sector 29, Gurgaon,
Haryana, India-122001
Ph No.   :  91-124-2571666
Fax No.  :  91-124-2571660
Email     : info@rites.com

Bharat Dynamics Ltd IPO

Incorporated in 1970, Bharat Dynamics Ltd is Hyderabad  based wholly-owned GoI Company engaged in the manufacture of surface to Air missiles (SAMs), Anit-Tank Guided Missiles(ATGMs), underwater weapons, launchers, countermeasures and test equipment. Bharath Dynamic have 3 manufacturing facilities located in Hyderabad , Bhanur and Visakhapatnam.

Company is the sole supplier of SAMs and ATGMs. Company is also the sole supplier of SAMs and  ATGMs to the Indian armed forces. Additionally, Company is engaged in business  refurbishment  and life extension of missiles manufactured. Company is intend to offer products such as AKASH SAM light weight torpedoes and counter measure dispensing system to  the international markets in near  future.

Bharat Dynamics have over 3165 full-time employees, which includes 863 engineers.

Competitive Strengths

  1. Modern Facilities and infrastructure to deliver quality products in timely manager.1616803
  2. Increase in indigenisation of our products and implementation of the Make in India policy
  3. Strong order book and established financial track record of delivering growth.

 

Company Promoters:

The promoter  of the company is the  president of India acting through the Ministry of Defence.  Promoter along with its nominees, currently holds 100% of the pre-Offer Equity share capital of the company.

Company Financials:

Particulars For the year/period ended (in Rs. million)
  31-Mar-17 31-Mar-16 31-Mar-15
Total Assets 86,007.92 96,406.32 84,119.70
Total Revenue 51,980.73 46,013.75 32,532.28
Profit After Tax 4,903.19 5,620.69 4,435.48

 

Objects of the Issue:

The objects of the Offer are:

  1. to carry out the disinvestment of [●] Equity Shares by the Selling Shareholder;
    2. to achieve the benefits of listing the Equity Shares on the Stock Exchanges.

 

Issue Detail:

»»  Issue Open: Mar 13, 2018 – Mar 15, 2018
»»  Issue Type: Book Built Issue IPO
»»  Issue Size: 22,451,953 Equity Shares of Rs 10 aggregating up to Rs 960.94 Cr
»»  Face Value: Rs 10 Per Equity Share
»»  Issue Price: Rs 413 – Rs 428 Per Equity Share
»»  Market Lot: 35 Shares
»»  Minimum Order Quantity: 35 Shares
»»  Listing At: BSE, NSE

Retail & Employee Discount

A discount of Rs 10 per equity share on offer price is offered to retail and employees.

Lead Managers : IDBI CAPITAL MARKETS & SECURITIES LIMITED
SBI CAPITAL MARKETS LTD.

IDBI CAPITAL MARKETS & SECURITIES LIMITED
SBI CAPITAL MARKETS LTD.
YES SECURITIES (INDIA) LTD.
YES SECURITIES (INDIA) LTD.

Godrej Agrovet Limited IPO (Godrej Agrovet IPO) Detail

Incorporated in 1991, Godrej Agrovet is India based agri-business Company offering products including Animal Feed, Crop Protection, Oil Palm, Dairy and Poultry and Processed Foods. Godrej Agrovet is leading animal feed company and the largest crude palm oil producer in India.

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Product Portfolio

  1. In animal feed business, the products comprises cattle feed, poultry feed (broiler and layer), aqua feed (fish and shrimp) and specialty feed. The products are produced at 35 facilities and sold through 4000 distributors across India.
  2. In crop protection business, company produces plant growth regulators, organic manures, generic agrochemicals and specialized herbicides. The products are sold in India and 24 countries. Company has over 6000 distributors in this business segment.
  3. In oil palm business, the products include crude palm oil, crude palm kernel oil and palm kernel cake. Company owns five palm oil mills.
  4. The dairy business is operate through a subsidiary Creamline Dairy. Company sell milk and milk based products under the ‘Jersey’ in 5 south India states. Company own nine milk processing units. Company has 2,500 milk product distributors and 50 retail parlors.
  5. Company also produce processed poultry and vegetarian products under the brands ‘Real Good Chicken’ and ‘Yummiez’.

Company Strengths:
1. Pan-India presence with extensive supply and distribution network.
2. Diversified businesses with five business verticals.
3. Emphasis on R&D
4. Part of the Godrej group. Part of strong ‘Godrej’ brand.
5. Leading position in the segments it operate.

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Objects of the Issue:

The Issue comprises a Fresh Issue and an Offer for Sale.

Offer for Sale

Each of the Selling Shareholders will be entitled to the respective portion of the proceeds of the Offer for Sale net of their proportion of Issue related expenses. Our Company will not receive any proceeds from the Offer for Sale.Except for listing fees which shall be solely borne by our Company, all Issue expenses will be shared, upon successful completion of the Issue, between our Company and the Selling Shareholders on a pro-rata basis, in proportion to the Equity Shares issued and allotted by our Company in the Fresh Issue and the Equity Shares sold by the Selling Shareholders in the Offer for Sale.

Fresh Issue

Our Company proposes to utilise the Net Proceeds from the Fresh Issue towards:

(i) repayment or prepayment of working capital facilities availed by our Company;

(ii) repayment of commercial papers issued by our Company; and

(iii) general corporate purposes, subject to the applicable laws.

Issue Size

Issue size is between Rs 1145 to 1157 Cr. The public issue of Godrej Agrovet Limited

The Promoters of the Company are Nadir B Godrej and Adi B Godrej

  1. Nadir B. Godrej, aged 66, is the Chairman and Non-Executive Director of our Company. He holds a bachelor’s degree in science as recommended by the department of chemical engineering from the Massachusetts Institute of Technology, and a master’s degree in business administration from Harvard University. He has been associated with our Company since November 25, 1991. He has experience in leading businesses, and has played an important role in developing the animal feed, agricultural input and chemicals businesses owned by the Godrej group. His active interest in research related to these areas has resulted in several patents in the field of agricultural chemicals and surfactants for our Company. He is the recipient of the CHEMTECH CEW leadership & excellence award 2013 and the ‘Hall of Fame – Chemicals Award’ – CHEMTECH CEW leadership & excellence award 2017. He is also the recipient of various awards from the CHEMTECH Foundation in honour of his contribution to the Indian chemical industry. He is also Member of the CII National Council, was the Chairman of the CII National Committee on Chemicals and the President of Alliance Française de Bombay. For his contribution to Indo-French relations, the French Government has honoured him with the awards of “Chevalier de l’Ordre National du Mérite” and “Chevalier de la Légion d’Honneur”. He was appointed as a Director of our Company with effect from November 25, 1991.
  2. Adi B. Godrej, aged 75, is a Non Executive Director of our Company. He holds a bachelor’s degree in industrial management and a master’s degree in industrial management from the Massachusetts Institute of Technology. He has been associated with our Company since November 25, 1991. He has experience in leading businesses. He is chairman of the board of the Indian School of Business, and past president of the Confederation of Indian Industry. He has previously been a member of the Wharton Asian Executive Board. He is the recipient of several awards and recognitions including the Padma Bhushan, the Rajiv Gandhi Award, The Entrepreneur of the Year for the Asia Pacific Entrepreneurship Awards 2010, AIMA-JRD Tata Corporate Leadership Award 2010, Bombay Management Association-Management Man of the Year Award 2010- 2011, Ernst & Young Entrepreneur of the year 2012, The Asian Awards – Entrepreneur of the Year 2013, the All India Management Association Business Leader of the Year 2014 and the Clinton Global Citizen Award 2016. He was appointed as a Director of our Company with effect from November 25, 1991.                                                                                                                                                                                                                                     Company Contact details

Godrej One, 3rd Floor, Pirojshanagar,                                                                                               Eastern Express Highway, Mumbai,                                                                                                   Maharashtra – 400079
Phone: 25194416 Fax: 25195124.                                                                                                           http://www.godrejagrovet.com

 

 

Cochin Shipyard IPO:Anchor it in your portfolio for six months

Incorporated in 1969, Cochin Shipyard Limited is one of the largest public sector shipyard in India in terms of dock capacity. They operates a shipyard that provides ship building and ships/offshores repair service.

Cochin Shipyard’s shipbuilding activities include the construction of vessels for clients operating in the defense and in the commercial sector shipping industry. In addition to shipbuilding and ship repair, they also offers marine engineering training programs as well as offer additional courses, including 6 months practical training for marine engineering  students from colleges affiliated to universities, fire prevention and fire fighting , and elementary first aid training through its marine engineering  training institute; and chemical, mechanical, and non destructive testing services of metals, welds, and alloys.

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They have and delivered vessels across broad classification including bulk carriers, tankers, platform supply vessels(PSVs) , Anchor handling Tug supply vessels (AHTSs) , barges, bollard pull tugs, passenger vessels and fast patrol vessels(FPVs).They are currently building India’s first Indigenous Aircraft Career(IAC)  for the Indian Navy.

Company Promoters:

The Promoter is the President of India acting through the Ministry of Shipping. the Promoter, along with its nominees, currently holds 100% of the pre-Issue paid-up equity share capital of the Company. After this Issue, the Promoter shall hold 75% of the post Issue paid-up equity share capital of the Company. As the Promoter is the President of India, acting through the Ministry of Shipping, disclosures on the Promoter Group (defined in regulation 2(zb) of the SEBI ICDR Regulations) as specified in Schedule VIII of the SEBI ICDR Regulations have not been provided.

Company Financials:

Summary of financial Information (Consolidated)
Particulars For the year/period ended (in Rs. Million)
31-Mar-17 31-Mar-16 31-Mar-15
Total Assets 33,164.37 33,488.61 28,912.85
Total Revenue 22,085.01 20,968.81 16,604.52
Profit After Tax 3,121.82 2,917.52 692.82

Objects of the Issue:

Company proposes to utilize the Net Proceeds towards funding of the following objects:

  1. Setting up of a new dry dock within the existing premises of the Company (“Dry Dock”);
  2. Setting up of an international ship repair facility at Cochin Port Trust area (“ISRF”); and
  3. General corporate purposes.

Issue Detail:

  • ISSUE OPENS: Aug 1, 2017 – Aug 3, 2017
  • ISSUE TYPE: Book built issue IPO
  • Issue Size:33,984,000 Equity Shares of Rs 10 aggregating up to Rs 1,468.11 Cr
    ›  Fresh Issue of 22,656,000 Equity Shares of Rs 10 aggregating up to Rs [.] Cr                ›  Offer for Sale of 11,328,000 Equity Shares of Rs 10 aggregating up to Rs [.] Cr
  • FACE VALUE: Rs 10 per equity share
  • Issue Price: Rs 424 – Rs 432 Per Equity Share
  • Market Lot: 30 Shares
  • Minimum Order Quantity: 30 Shares
  • Listing At: BSE, NSE

Discount of Rs 21 is offered to RII and Employee. Discounted price band is Rs 403 – Rs 411 for Retail and Employee.

Company Contact details:

Cochin Shipyard Ltd
Administrative Building,
Cochin Shipyard Premises,
Perumanoor, Kochi – 682015
Phone: +91 (484) 2501306
Fax: +91 (484) 2384001
Email: secretary@cochinshipyard.com
Website: http://www.cochinshipyard.com

SIS IPO:Secure your gains on listing

Incorporated in 1985, Security and Intelligence Services (India) Limited provides private security and facility management services in India and Australia. They offers cash logistics; security services, including manned guarding, cash logistics, and electronic security; and facility management services, such as mechanized cleaning, and pest and termite control services.

SiS servers customers that operate in various industries and sectors, which include banking and financial services, IT/ITeS and telecom, automobile, steel and heavy industries, governmental undertakings, hospitality and real estate, utilities, educational institutions, healthcare, consumer goods, engineering, and construction.

SIS Group is present across all the 29 states in India. They have joint ventures with affiliates of Prosegur Compañía de Seguridad, S.A and Terminix International Company, L.P. (“Terminix”), a multi-national provider of termite and pest control services.

Company Promoters:

The promoters of the company are:

  1. Ravindra Kishore Sinha; and
  2. Rituraj Kishore Sinha
  3. Ravindra Kishore Sinha :Ravindra Kishore Sinha, aged 65 years, is the Chairman of the Company. He has been associated with the Company since incorporation. He holds a bachelor’s degree in arts from Magadh University. He has over 30 years of experience in the business of the Company. At present, he is a Member of Parliament (Rajya Sabha) from Bihar.
    He has also served as an advisor to the Ministry of Human Resthece Development, Government of India.

Voter ID Number : RAB0546127

  1. Rituraj Kishore Sinha :Rituraj Kishore Sinha, aged 36 years, is the Managing Director of the Company. He initially joined the Company on July 8, 2002 as the Vice President (International Business Development) and was thereafter designated as the Chief Operating Officer. Subsequently, with effect from April 24, 2017, he was appointed as the Managing Director of the Company. He holds a bachelor’s degree in arts from the University of Leeds. He has over 14 years of
    experience in the Company.
  2. Voter ID Number : RAB0552901
    Driving License Number : 1613003179/1/3/13

 

 

Company Financials:

Summary of financial Information (Consolidated)
Particulars For the year/period ended (in Rs. Million)
31-Mar-16 31-Mar-15 31-Mar-14 31-Mar-13 31-Mar-12
Total Assets 5,173.28 4,393.85 3,629.42 3,038.69 2,370.46
Total Revenue 12,873.22 10,562.87 8,244.94 5,826.73 4,648.84
Profit After Tax 339.08 246.38 332.15 298.93 110.53

 

Objects of the Issue:

The object of the issue are:

  1. Repayment and pre-payment of a portion of certain outstanding indebtedness availed by the Company;
    2. Funding working capital requirements of the Company; and
    3. General corporate purposes.

Issue Profile:

  • Issue Open: Jul 31, 2017 – Aug 2, 2017
  • Issue Type: Book Built Issue IPO
  • Issue Size:9,620,619 Equity Shares of Rs 10 aggregating up to Rs 784.08 Cr
  • Fresh Issue of [.] Equity Shares of Rs 10 aggregating up to Rs 362.25 Cr
  • Offer for Sale of 5,120,619 Equity Shares of Rs 10 aggregating up to Rs [.] Cr
  • Face Value: Rs 10 Per Equity Share
  • Issue Price: Rs 805 – Rs 815 Per Equity Share
  • Market Lot: 18 Shares
  • Minimum Order Quantity: 18 Shares
  • Listing At: BSE, NSE

Company Address

Security and Intelligence Services (India) Ltd
Annapoorna Bhawan,
Telephone Exchange Road,
Kurji, Patna 800 010
Phone: +91 612 226 6666
Fax: +91 612 226 3948
Email: compliance@sisindia.com
Website: http://www.sisindia.com

ULIP Vs. Mutual Funds

Description

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Unit Linked Insurance Plans refer to Unit Linked Insurance Plans offered by insurance companies. These plans allow investors to direct part of their premiums into different types of funds (equity, debt, money market, hybrid etc.). Where as

A mutual fund pools the money from investors and uses it to invest in various securities according to a pre-specified investment objective. Both unit Linked Insurance Plans and Mutual Funds expose investors to market risks.

Objective

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Unit Linked Insurance Plans are long term plans offering you a dual benefit of insurance and investment. Where as Mutual funds are ideal investment tool for the short to medium term.

Regulatory

ULIP is regulated by Insurance Regulatory and Development Authority (IRDA) Where as Mutual funds are regulated by Securities and Exchange Board of India (SEBI).

Tax Benefits

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All Unit Linked Plans offer tax benefits under section 80C. While in Mutual Funds, only investments in tax saving funds are eligible for section 80C benefits.

Switching

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Unit Linked Plans allows you to switch your investment between the funds linked to the plan. This enables you to change the risk return. But in Mutual Funds, no switching option is available. If you are not satisfied with the performance of the fund you can exit completely from the same by paying exit charges, if applicable.

Additional Benefits

Some of the Unit Linked Plans give you an additional benefit or loyalty benefit by issuing extra fund units. But there are no additional benefits issued by mutual funds.

Potentials of returns

Since ULIPs invest in relatively low risk products, the potential of returns is also low. The reason is that they have to promise sum assured irrespective of whether the plan makes money. Mutual funds are of different varieties. Equity oriented mutual funds give higher returns than the hybrid ones. Hybrid mutual funds offer better returns than debt funds.

Liquidity and Lock in

Unit Linked Plans have limited liquidity. One needs to stay invested for a minimum period of time as specified in the policy (lock period minimum 3-5 years) before redeeming the units. Where as you can easily sell mutual fund units (except for Equity Linked Savings Scheme and funds that have a minimum lock-in period).

Money utilization

The premium payments towards ULIP go towards the expenses, insurance Cover and equity mutual funds, where as the premium payments towards mutual funds goes towards the expenses and towards the stocks.

Charges

ULIPs-vs-Mutual-Funds

Charges in a unit linked plan include mortality charges for the life insurance provided. In addition, premium allocation charge, fund management charge and administration charges are applicable. Where as mutual fund charges include an entry load, the annual fund management charge and an exit load, if applicable.

Conclusion

ULIPs and Mutual funds offer a variety of products based on risk profile. Investors should understand their risk profile and investment period and then decide accordingly. If an investor has low risk profile and an investment horizon of 3 years, investing in ULIPs or mutual funds with major portion in equity is not a good idea. Similarly an investor with longer investment horizon and high risk appetite should go for equity oriented mutual fund or ULIPs with bigger exposure to equities.

ULIPs and mutual funds both have their benefits, and comparing them is like comparing apples and oranges. But it is important as an investor to consider that ULIPs are long term plans. As a product, ULIP have evolved with time, they much better than they were in their earlier edition.

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If liquidity is the main concern then it is better to go for mutual funds without lock in period. But ULIPs offer an additional option to switch funds to enhance or protect the fund value. They come with lower costs and lesser risks in the long run.

Contributed By ::

B Sridhara Subudhi

Real Estate Investment Trust, The Future Of Indian Economy

Introduction:

REITs  is a mode of investment in real estate which is modelled after Mutual Funds. It allows both small and large investors to acquire ownership in real estate ventures, in some cases operate commercial properties such as complex, shopping malls, hotels, warehouses etc.

Reit invests in real estate through property or mortgages and is traded on major exchanges like stock.

REITs provide investors with highly liquid stake in real estate. They receive special tax consideration and are offered high dividend yield.

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Types of Reits:

  1. Equity Reits:

It allows investors to own the property and generate revenue by letting out for rent. They are responsible for the equity or value of their real estate assets. Their revenue comes from leasing space to tenants. These rents are distributed to shareholders as dividends. Equity Reits may sell the property holdings, which affects the capital appreciation, reflected in dividends.

2.Mortgage Reits:

It allows investors to earn property mortgages, purchase mortgage properties and loan money. Profits from these Reits are received from the interest earned on the mortgage loan.

  1. Hybrid Reits:

Both equity and mortgage Reits when combined are called hybrid Reits. Hybrid Reits invest both in properties and mortgages.

Other Types: (Popular In US Market)

  • Retail Reit:

These Reits invest in shopping malls and freestanding retail stores. It is considered as the single biggest investment type in America. They make money from the rent they charge from tenants. Preferably, rents from these units should have good profits, low debt, strong balance sheets.

 

  • Residential Reit:

These Reits own and operate multi-family rental apartment building and manufactured housing. They focus on large urban centres.

 

  • HealthCare Reit:

These Reits invest in hospitals, retirement homes and other healthcare centres. They are beneficial as long as the healthcare system is in place and  healthcare funding is strong.

 

  • Office Reit:

These invest in office buildings and receive rental income from tenants. An investor should look into metrics like economy, unemployement, vacancy rates, before investing in office Reits.

 

Legal Regulations:1384328

  • All Reits must have at least 100 shareholders, no 5 of whom can hold more than 50% of shares between them.
  • At least 75% of a Reit’s assets must be invested in real estate, cash, U.S treasury, 75% of gross income must be derived from real estate.
  • Reits must pay out 90% of the profits as dividends to the investors to qualify special IRS tax consideration. This attracts investors of all income levels.
  • Many Reits have Dividend Reinvestment Plans that allows returns to compound over time.
  • Trustees with REIT have defined duties which involve ensuring compliance to all applicable laws that protect the rights of the investors.

 

Process of REIT:

REIT is a process to generate funds from a lot of investors to directly invest in profitable real estate. All trusts with REIT will be listed with the stock exchanges, REIT assets will be held with independent trustees for investors.

Objective:

REIT’S objective is to provide the investors with dividends that are generated from the capital gains accruing from the sale of commercial assets. It is also supposed to provide diversified and safe investment opportunities with reduced risks and ensure maximum return on investments.

Advantage:

  • Income dividends:

90% of distributable cash at least twice in a year

  • Transparency:

REIT will showcase the full valuation on a yearly basis and will also update it on half-yearly basis.

  • Diversification:

According to the guidelines, REIT should invest in a minimum of two projects with 60% asset value in a single project

  • Lower risk:

At least 80% of the assets will have to be invested into revenue generating and completed projects. Remaining 20% can include under construction projects, equity shares of the listed properties, mortgage-based securities.

 

Selecting a REIT:

While assessing a Reit, look for the following things:

  1. High Rate Of Dividends
  2. Long term Capital Appreciation
  3. Funds From Operations
  4. Dividend Per Share/FFO (Higher the better)
  5. Also check out the management and quality of the company.

 

REITs  In  India Till  Date:

The REIT platform has already been approved by the Securities and Exchange Board of India (SEBI).

The real estate sector in India has not been a profitable venture in the past few years. The introduction of REITs will open up a platform that will allow all kinds of investors (large and small) to make safe and rewarding investments into the Indian real estate market.

Investing in REIT can be compared to investing in Gold Bonds. Indians are partial to buying physical Gold rather than in Gold Bonds. It means having one’s own investment in property will always provide Indians greater satisfaction than mere paper investments.

At the end of the day, REITs are investment instruments and not a means to acquire actual properties.

In 2016 Budget, Modi Government removed the major obstacle in the path of the successful listing of Reits, ie Dividend Distribution Tax (DDT). DDT was exempted on Special Purpose Vehicles(SPV’s). Rules for REITS were relaxed. SPVs are now allowed have holdings in other SPV structures and the limit on number of sponsors has also been removed.

Future Scope:

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  • SEBI has also prescribed the guidelines for Public Issue Of Units Of Reits, Continuous Disclosures and Compliances by Reits in December 2016.
  • SEBI has also recognized RICS (Royal Institution of Chartered Surveyors) as valuers for REIT assets.
  • Till date, banks were allowed to invest in equity-linked Mutual Funds and Venture Capital Funds. But RBI has now proposed to allow banks to invest in Reits and InVits (Infrastructure Investment Trust).This may give rise to diversification in banking activities which will further lead to increased growth and profits.
  • India is going to see its first Reits listing in the year 2017. This will increase demand for office space.The commercial real estate would not only grow manifold but also its transactions will be systematized as this sector is unorganized at present.
  • REITs will attract retail investors in India because of their preference for investments in commercial developments , specifically in the highest quality or Grade A properties due to the higher rental yields in this asset class. Also, only 20% of an Indian REIT’s capital can be invested in development, which is the riskiest end of the real estate industry. The remaining 80% of the fund’s assets must be invested in income-producing property.
  • Since REIT projects are often office buildings or shopping malls, they have already been developed and have tenants, so their income stream is relatively easy to predict. As the value of these projects increases, REITs will hold them for a long term and not trade in and out of real estate. The rental yield in commercial asset class across the country is usually in the range of 8-11%.
  • InVits and Reits as investment vehicles can be used to attract private investments while reducing the burden on formal banking institutions.

Conclusion:

Though there is not much buzzing about Reits in India at present, it will soon gain importance in the near future as there are initiatives coming up by concerned regulating authorities.

 

Contribution By:

R. Rupa and V.N.M.Kishore

CDSL IPO: A Solid Issue coming on June 19th: Apply

What is CDSL?

Central Depository Services India Limited (CDSL) is a depository that holds securities in dematerialized form and facilitates trading and settlement of securities to be processed by book entry. It is the second largest central depository of securities in India, based in Mumbai, Maharashtra. The depository began its operations in February 1999. It is promoted by Bombay Stock Exchange in association with prominent banks of the nation, i.e. State Bank of India, Union Bank of India, Bank of Baroda, Bank of India, Standard Chartered Bank, etc…

CDSL also offers facilities to issuers to credit securities to a shareholder’s or applicant’s demat accounts; Know your customer(KYC) services in respect of investors in capital markets to capital market intermediaries; and facilities to allow holding of insurance policies in electronic form to the holders of these insurance policies of various insurance companies. The primary competitor of CDSL is NSDL(National Securities Depository Ltd).

NSDL, the first and largest depository in India, established in August 1996 and promoted by institutions of national stature responsible for economic development of the country has since established a national infrastructure of international standards that handles most of the securities held and settled in dematerialized form in the Indian capital market.

CDSL IS OFFERING IPO:

CDSL-2

CDSL is the first mover for IPO in the depository segment. After the blockbuster debut at premium of 35%, BSE had astonished the markets in early months of 2017. Now, investors are bracing themselves for the much-awaited initial public offering (IPO) of BSE promoted Central Depository Services Limited (CDSL). CDSL would be the first depository in the country to get listed on the Indian bourses.

Market speculates that the CDSL IPO may have price band of Rs 145 to Rs 149 per share to rise around Rs 520 cr. The IPO is expected to open on June 19.

The depository is seeking valuations of around Rs 1,500 crore and BSE’s stake in the company is likely to come down to 24% from current holding of 50%, according to sources quoted by a leading national news agency.

Issue Detail:

  • Issue Open
  • Issue Type: Book Built Issue IPO
  • Issue Size: 35,167,208 Equity Shares of Rs 10 aggregating up to Rs [.] Cr
  • Face Value: Rs 10 Per Equity Share
  • Issue Price: Rs – Rs Per Equity Share
  • Market Lot:
  • Minimum Order Quantity:100
  • Listing At: 30th june ,onNSE

Tentative timetable in respect of the Offer:

  • Bid/Offer Opens On: 19 June 2017
  • Bid/Offer Closes On: 21 June 2017
  • Issue Price: Rs 113 – Rs 115 per Equity Share
  • Offer for Sale of 3,51,67,208 Equity Shares @upper price band = Rs 404.42 Crores
  • Finalization of Basis of Allotment:
  • Initiation of refunds
  • Credit of Equity Shares to demat accounts:
  • Commencement of trading of the Equity Shares on the Stock Exchanges:

The list of shareholders with effect from 14th October, 2016 is as under.

Sr.no. Name of shareholders Value of holding (in Rupees Lacs) % terms to total equity
1 BSE Ltd. 5,229.79 50.05
2 Bank of India 582 5.57
3 Bank of Baroda 530 5.07
4 State Bank of India 1,000.00 9.57
5 HDFC Bank Limited 750 7.18
6 Standard Chartered Bank 750 7.18
7 Canara Bank 674.46 6.45
8 Life Insurance Corporation Of India 433.67 4.15
9 Union Bank of India 200 1.91
10 Bank of Maharashtra 200 1.91
11 The Calcutta Stock Exchange Limited 100 0.96
12 Others 0.08 0
Total 10450 100

As it can be seen BSE is a major promoter of CDSL. So the major proceeds from this issue will go to BSE and not to CDSL since this is a pure Offer for Sale (existing shareholders are exiting via IPO) as it can be seen BSE is a major promoter of CDSL. So the major proceeds from this issue will go to BSE and not to CDSL since this is a pure Offer for Sale (existing shareholders are exiting via IPO) SBI which holds 9.57 per cent now will hold 5 per cent after the IPO, while Bank of Baroda’s stake will come down to 2.99% from 5.07%. The Calcutta Stock Exchange, which holds 0.96%, will cease to be a shareholder after the IPO. The net offer would constitute 32.98%of CDSL’s post offer paid up equity share capital.

CDSL_intro

CDSL FINANCIAL GROWTH:

FY2012 FY2013 FY2014 FY2015 FY2016
Total 120.7 124 122.8 127.2 139.4
Revenue
Total 39.8 57.6 61.2 66.2 63.5
Expenses
Profit after 55.3 49.9 49.3 43.7 74.1
Tax
Net margin 45.8 40.2 40.1 34.4 53.2
(%)

Stock trading in India is still considered niche and risky by a large portion of investing public, including people who end up investing in stock markets indirectly through mutual funds. However, the scenario is changing gradually and this is a big positive for players like CDSL. The company has seen its revenues grow over time and even though the top line growth has not been high, it is steady. A graphical illustration of revenue growth for CDSL.

CDSL’s consolidated financial performance (in INR crore)

Stocks trading were not considered a good thing in the recent past in India, but currently the number of investors investing in stocks has increased gradually through direct means or through indirect means by investing in mutual funds. This is a very positive sign to invest in CDSL.

CDSL has around 42% market share and it is also increasing day by day.

The company has seen its revenues grow at a CAGR of 3.67% over the past four years with the revenue in FY2016 being Rs 139.4 crore.

At Rs. 149 per share, company’s market cap will be Rs. 1,557 crore, with EV of Rs. 1,009 crore. This translates into EV/EBITDA multiple of 8.4x and 7.3x based on FY17 and FY18E earnings, and a PE multiple of 18x and 17x respectively, which is not expensive. Since there are no listed peers, relative valuation comparison cannot be done. However, on 14th Oct 2016, BSE sold 43.37 lakh equity shares representing 4.15% stake in the company to LIC at Rs. 79 per share. Upper end of Rs. 149 is 89% jump in sale price, in barely 8 months, despite the seller being the same, and FY17 profit growing only in double digit (and not doubling) during this period. While current IPO pricing is a steep premium to last transaction price, based on company’s steady growth and strong fundamentals, IPO valuations, nevertheless, appear fair.

CDSL_5

CDSL has paid dividends regularly to its shareholders in the last four years and considering that BSE will continue to remain the biggest shareholder; this policy is unlikely to change anytime soon. Out of the Rs 74.1 crore, it earned last year, CDSL paid a total of Rs 31.4 crore in the form of dividends. CDSL paid a dividend at the rate of 25% (Rs 2.5 per share) and this was up from 22% in FY2015.

So even if the market share is 42%, there are only two entities providing the same service. In the near future, CDSL will definitely try to capture more market share.

  • Conclusion:

It is a known fact that less than 2% invest directly in stock markets through demat accounts. Compare that with double digits in developed economies such as US, UK and China. This poses a great opportunity for this sector since more people will open demat accounts and CDSL/NSDL will get more business. It is safe to say that the party is just getting started for these 2 businesses.

Also since CDSL is the first one to list, it is set to get a first mover advantage as experience by BSE when it listed.

 

Contributed by:

Nagarjuna Konduru

Tejaswini Konda

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