Wednesday, May 15, 2013
A strong US dollar index takes away the shine Bullion metal prices ended lower on Tuesday, 14 May 2013. Comex gold prices ended the U.S. day session moderately lower Tuesday, on bearish outside market forces, a stronger U.S. dollar index and weaker crude oil prices. Gold for June delivery ended lower by $9.8 (0.7%) at $1,424.5 an ounce on the Comex division of the New York Mercantile Exchange on Tuesday. July silver ended lower by $0.32 cents (1.3%) at $23.38 an ounce on Tuesday. The rallying U.S. and world stock markets continue to be a major bearish underlying factor for safe-haven gold, as well as other investment asset classes. As the U.S. and Japanese stock markets hit record or multi-year highs, they and other world stock markets continue to pull away investor monies from the other asset classes. The major central banks of the world continue to flaunt their easy-money policies, which have driven interest rates to extremely low levels for an extended period of time. It was an uneventful overnight trade in Asia and Europe Tuesday. Fresh economic data from Europe was mixed Tuesday. The German ZEW index for May came in at 36.4 versus 36.3 in April, but below expectations of 39.5. However, European Union industrial production rose 1.0% in March, the largest monthly increase in 1.5 years. Australia's government budget was released on Tuesday and it hinted further easing of that country's monetary policy is very possible. That news dropped the Aussie dollar to an 11-month low versus the greenback. Investors considered the possible curtailing of monetary-policy stimulus by the Fed. The central bank's easy monetary policy tends to raise the risk of inflation, as well as put pressure on the dollar. Gold is seen as a hedge against inflation and as a dollar-denominated commodity, can benefit from a weaker dollar. In the currency market, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, rose by 0.3% on Tuesday. Among economic data expected at Wall Street on Tuesday, it was limited to export and import prices. Export prices, excluding agriculture, decreased by 0.5% in April after they had decreased 0.2% during the prior month. Excluding oil, import prices declined 0.2%, which follows last month's decline of 0.2%. At the MCX, gold prices for June delivery closed lower by Rs 147 (0.54%) at Rs 26,707 per ten grams. Prices rose to a high of Rs 26,918 per 10 grams and fell to a low of Rs 26,652 per 10 grams during the day's trading. At the MCX, silver prices for July delivery closed lower by Rs 602 (1.33%) at Rs 44,516/Kg. Prices opened at Rs 45,054/kg and fell to a low of Rs 44,152/Kg during the day's trading.
IPO Opens on 20th & Closes on 22nd May 2013 Price band Rs. 470 to 543 per shares Retail investors are offers Safety Net and also 10% upfront discount. Just dial maiden offer: apply at lower price band The long waited IPO of Just Dial Ltd (JDL) is finally seeing the day of the light as it has now planned maiden public offer that opens for subscription on 20.05.13 and will close on 22.05.13. JDL is one of the leading local search engine portals and provides its users Just Dial search service with information and user reviews from its database of local businesses, products and services across India. The company search service is available to users through multiple platforms: Internet, mobile Internet, telephone (voice) and text (SMS). In fiscal 2012, it addressed over 254.3 million search requests across our platforms. As of December 31, 2012, it is conducting approximately 195,100 campaigns for our paid advertisers. As one of the first companies to offer local search services in India, it believes that it has a first mover advantage among consumers seeking information on local businesses. It aims to provide fast, free, reliable and comprehensive information to its users, which it believe will create a network effect to attract more search queries. JDL also believe that it has established Just Dial as a well known Indian brand on the Internet. In addition, through its easy to remember phone numbers and user friendly mobile phone interface, it has been able to attain significant mind-share with users for their local search needs. Reports of JDL IPO evinced great interest in primary market community as it is likely to change the parameters for primary market as well as grey market, opine seasoned observers. Just Dials database lists 9.0 mn businesses as of February 2013 (4.5 mn as of end-FY10), mostly MSMEs. New data is added and updated regularly by 314 employees. To expand its network in existing and new cities, it has appointed resellers to collect data from their respective territories. More than just the scale of its database, Just Dials ability to consistently keep it updated has been the reason for strong growth in usage of its search services. The company that postponed its IPO plans as it could garner the then needed funds from private equity partners and is now providing exit route to some of them and also to others via offer for sale of 17,497,458 Equity Shares of Rs. 10 each by the Selling Shareholders. The listing of the Equity Shares will enhance its brand name and provide liquidity to the existing shareholders. Listing will also provide a public market for the Equity Shares in India. The Company will not receive any proceeds from the Offer. In April 2010 the company has issued bonus shares in the ratio of 55 shares for every 1 share held and thereafter has done ESOP/placement at a price ranging between Rs. 10 and Rs. 4595 with a major chunk at a price of Rs. 488.66. Now the company is coming out with an offer for sale from existing shareholders for 17497458 equity share of Rs. 10 each with a price band of Rs. 470-543 to mobilize Rs. 822-950 crore based on lower and upper price band. Minimum application is to be made for 25 shares and in multiples thereof thereafter. Retail investors are offers Safety Net and also 10% upfront discount. Out of 17497458 shares on offer the company has reserved only 1749745 shares (i.e. just 10%) is kept for retail shareholders, 2624618 (15%) shares for HNIs and rest (75%) for QIBs . This is perhaps due to the mandatory safety net clause imposed by SEBI the company wants to reduce the Safety Net burden. Issue is rated as IPO 5 by CRISIL indicating strong fundamentals. While grading, CRISIL has put disclaimer that it does not mirror the issue pricing and the issue size was considered for 9,554,307 shares. The grade is not a recommendation to buy, sell or hold the graded instrument, its future market price or suitability for a particular investor. Citigroup Global Markets India Private Limited and Morgan Stanley India Company Private Limited are the joint BRLMs and Karvy Computershare Pvt Ltd is the registrar to the issue. Shares will be listed on BSE and NSE. It appears that as promoters have to honor the Safety Net they too have opted for some dilution of stake to keep some buffer with them so that in the event of Safety Net clause application, it can pay from the buffer created and hence the issue size has more than doubles of its original plans and even higher than the CRISIL consideration. On the performance front, the company has posted an average EPS of Rs. 6.05 (on consolidated and fully diluted basis-with a CAGR of 40.2% in top and 135.1% in bottom-line respectively) and its NAV as on 31.12.2012 is Rs. 57.51. For the first 9 months of the fiscal 2012-13 it has clocked turnover of Rs. 271.61 crore with a net profit of Rs. 47.08 crore and as the equity capital post IPO remains the same due to offer for sale, this translates into an annualized EPS of Rs. 8.99 and thus the asking price is at a P/E of 52 to 60 and at a P/BV of 8.2 to 9.4 based on lower and upper price band. Thus issue is aggressively priced. The company has no listed peer for comparison. The company is now facing competition from Askme, Asklaila, Getit, Sulekha etc and hence the first mover gains made in the past may see diminishing pattern going forward. On BRLMs front, Citi Group and Morgan Stanley had mandate for 17 and 11 IPOs and out of them 4 IPOs failed to give listing gains to investors from both of them. Remark: Apply at the lower price band at Rs. 423 per share (with upfront 10% discount to retail investors) for a lot as applicable under safety net.
The Indian stock markets are expected to open on a positive note as the global cues look supportive. SGX Nifty is trading 24.00 points higher. Events for the day: Results: Century Textiles, Bajaj Finance, Karnataka Bank, J&K Bank, United Spirits, Adani Ports, Bajaj Finserv and IRB Infra will announce their quarterly results today. Headlines for the day: RBI sends showcause notices to ICICI, HDFC and Axis banks Bond yields decline; fuel hopes of further monetary easing Tata Steel's $1.6 bn write-off not to impact rating: Moody's SBI chairman flags NPA as area of concern Hero launches brand in Latin America Indian Indices: The Indian equities are likely to start the trading session in the green zone as the global cues look supportive. Volatility may remain high post key economic event like Inflation numbers for the month of April which was announced yesterday during market hours. Investors will remain cautious as the Q4 earnings season is now at its peak has mixed kitty of earnings. SGX Nifty is trading 24.00 points higher. On Tuesday (May 14, 2013), the S&P BSE Sensex wrapped trade at 19722.29, up by 31.00 points while the NSE Nifty rose 15 points to settle at 5995.40. Global Indices: Asian shares were steady on Wednesday, with Tokyo stocks surging to a fresh 5-1/2 year high as Japanese exporters rallied on the yen's sharp slide. European shares stretched to a new five-year closing high on Tuesday, helped by a batch of forecast-beating company results and renewed signs of appetite for stocks from cash-rich investors. US stocks rallied to fresh highs on Tuesday as investors picked up large-cap companies' shares on the expectation that central bank stimulus will help propel the rally further.
The market may edge higher in early trade on firm Asian stocks. Trading of CNX Nifty futures on the Singapore stock exchange indicates that the Nifty could gain 27 points at the opening bell. Jet Airways (India) said after market hours on Tuesday, 14 May 2013, that Securities and Exchange Board of India has permitted the company and relaxed the requirement of 12 week cool off period after the proposed inter se transfer of shares to enable the company to undertake the Offer for Sale through Stock Exchange Mechanism (OFS) for the purpose of achieving the minimum level of public shareholding as required under the Securities Contracts Regulations, 1957. Realty major DLF has received strong investor response for its institutional placement programme. Investors bid for a total quantity of 14.81 crore shares under the institutional placement programme through the stock exchanges mechanism held during a single day on Tuesday, 14 May 2013. The company will issue up to 8.1 crore shares to eligible qualified institutional buyers. The floor price for the qualified institutional placement was set at Rs 222 per equity share, with price band of Rs 222 to Rs 233 per share. United Spirits after trading hours on Tuesday, 14 May 2013, said that the Directorate General of Central Excise Intelligence (DGCEI), Mumbai has issued a show cause notice for service tax demand of Rs 69.30 crore on the company. The company said that DGCEI, Mumbai examined soft copy of the company's ledger extract of Advertisement & Sales Promotion expenses for the period 2007-08 to 2011-12. The DGCEI without verifying the nature of the expenses accounted for in the ledger extract has considered the entire amount as 'sponsorship services' and served a show cause notice on the company for service tax demand of Rs 69.30 crore, United Spirits said. The company said it is process of replying to the show cause notice by highlighting the error. The company said it has been paying service tax on applicable services regularly ever since such taxes were introduced by statute, United Spirits said. PSU OMCs will be in focus after the Reserve Bank of India Deputy Governor H.R. Khan on Tuesday said that that the central bank has allowed oil marketing companies to raise a part of their short-term capital requirements through overseas borrowings. Shares of realty firms will be in focus after Khan on Tuesday also said that the RBI has allowed companies building low-cost housing projects to raise overseas loans. Shares of aviation firms will be in focus after Khan on Tuesday also said that the RBI has extended the time by a few more months for civil aviation firms to make foreign borrowings. In early 2012, the government permitted companies in the aviation sector to raise a total of $1 billion to help tide over their capital shortages. These borrowings were to be made in the last year ended 31 March 2013. Key benchmark indices closed marginally higher on Tuesday, 14 May 2013, with the market recovering after over 2% slide on Monday, as the latest data showing sharp fall in wholesale price inflation in April 2013 raised hopes that the RBI may further cut policy rates to perk up economic growth. The S&P BSE Sensex advanced 30.62 points or 0.16% to settle at 19,722.29 on that day, its highest closing level since 11 May 2013. Foreign institutional investors (FIIs) bought shares worth a net Rs 420.99 crore on Tuesday, 14 May 2013, as per provisional data from the stock exchanges. The focus of the market is on Q4 results. Bajaj Auto announces Q4 results tomorrow, 16 May 2013. ITC unveils Q4 results on Friday, 17 May 2013. Coal India unveils standalone FY 2013 results on 20 May 2013. L&T unveils Q4 results on 22 May 2013. Tata Steel, State Bank of India and Bharat Heavy Electricals (Bhel) unveil Q4 results on 23 May 2013. Coal India unveils consolidated FY 2013 results on 27 May 2013. Sun Pharma, GAIL (India) and Hindalco Industries unveil Q4 results on 28 May 2013. ONGC, NMDC and BPCL unveil Q4 results on 29 May 2013. M&M and Tata Power unveil Q4 results on 30 May 2013. Asian shares rose on Wednesday, with Japan's Nikkei Average surging to a fresh 5-1/2 year high as Japanese exporters rallied on the yen's sharp slide. Key benchmark indices in Indonesia, Japan, Hong Kong, Taiwan, and Singapore rose by 0.1% to 2.26%. Key benchmark indices in China and South Korea fell by 0.02% to 0.13%. US stocks rallied to record highs on Tuesday, continuing an ascent driven by the Federal Reserve's easy monetary policy, though investors' focus has turned to when the Fed may start to rein in its bond-purchase programme.