FIRST CHOICE IPO ANALYSIS

BRENT CRUDE BREACHES $121 / BARREL

2012-02-20T13:00:00.003+05:30

Fearing supply cut from Iran Brent crude rallied past $120 mark per barrel in the international market. The surge in oil prices will adversely affect the emerging economies like India. Stock market reaction will be known tomorrow since the markets in India are closed today.

NIFTY MAY CORRECT ANOTHER 100 POINTS BEFORE THE EXPIRY

2012-02-16T18:40:00.003+05:30

The net buying by FIIs, today, has come down drastically compared to earlier trading days. The rally in the Indian stock market since Jan 2012 is fueled by global liquidity and dollar inflows. In just 45 days Sensex and NIFTY has moved by more than 15 %, than what it was as on 31-12-11. Fundamentally nothing has changed much.Winding up of long positions may start from tomorrow.

IPO ANALYSIS: OLYMPIC CARDS – DO NOT TOUCH THE CARD

2012-02-16T09:26:00.002+05:30

Chennai based Olympic Cards is planning to raise Rs 27cr through IPO to fund its expansion programme. Ashika Capital is the sole book-running lead manager for the issue. In the past Ashika has managed Vaswani, Sudar Garments and VMS Industries. Ashika is notorious for introducing poor quality IPOs.

Olympic Cards is in to manufacturing and trading of wedding and greeting cards, business cards, envelopes, letterheads, calendars, notebooks and account books. It also trades in printing inks. Its manufacturing facility is located in Chennai with an installed capacity of 145 mn pieces. Manufacturing sales contribute 82% to 86% to total revenues; trading sales make up the rest.

The IPO carries grade 1, awarded by CRISIL. The grade assigned to Olympic Cards reflects its presence in an industry which is highly fragmented, with low entry barriers. This weakens the bargaining power of players. Even though Olympic Cards is a leading player in South India, low product differentiation does not really give any player an edge.

The current concentration will adversely affect the company’s long-term prospects. The grade factors in the company’s exposure to the risk of brand dilution. It shares the ‘Olympic’ brand with the promoter’s relatives who have a similar business.

Centralized management, and relatively weak internal processes and management information systems have also influenced the grade. Further, the independent directors’ have limited role in the management.

IPO ANALYSIS: MULTI COMMODITY EXCHANGE OF INDIA (MCX): BRIGHT PROSPECTS - INVEST

2012-02-15T09:44:00.011+05:30

PRICE BAND Rs 860 to Rs 1,032.

ISSUE DETAILS:

ISSUE SIZE / FV

64,27,378 SHARES / RS10

IPO OPEN / CLOSE

22-02-12 /24-02-12

BRLMS

EDELWEISS, MORGAN STANLEY AND CITI CORP

REGISTRARS

KARVY

IPO GRADE

5 / 5 BY CRISIL

IPO - OFFER FOR SALE - DETAILS OF OFFERORS

(NO OF SHARES)

FTIL	26,43,916
SBI	21,12,025
GLG	7,81,508
ALEXNADERIA	3,90,754
CORP BANK	2,46,175
ICICI LOMBARD	1,48,000
BOB	1,05,000
TOTAL	64,27,378 SHARES

OBJECTS OF THE OFFER

The objects of the Offer are to achieve the benefits of listing on the exchanges and to carry out the sale.

The listing of the Equity Shares will enhance the brand name and provide liquidity to the existing shareholders.

The Company will not receive any proceeds from the Offer.

ABOUT MCX

It is promoted by FTIL with a pre-IPO stake of 31.18%. FTIL is a Software developer and a technical service provider of automated electronic solutions for foreign exchange, commodities and equities.

MCX’s leadership position in the Indian commodity futures market over the past four years, with over 80% share of the overall traded turnover in FY11. It is a leader in the trading of bullion, crude oil, copper and natural gas.

The total value of commodity futures contracts traded on the Exchange in the nine months ended December 31, 2011 and the fiscals 2011, 2010 and 2009 was Rs 119,806.89 billion, Rs 98,415.03 billion, Rs 63,933.03 billion and Rs 45,880.95 billion, respectively. According to data maintained by the FMC, these amounts represented 87.3%, 82.4%, 82.3% and 87.4% of the Indian commodity futures industry in terms of the value of commodity futures contracts traded during the same periods.

As of December 31, 2011, MCX, offered trading in 49 commodity futures based on contract specifications, from a diverse range of classes including bullion, ferrous and non-ferrous metals, energy and agriculture. The same underlying physical asset traded under different contract specifications is regarded as a separate commodity future.

MCX as has around 2,200 members on the Exchange‘s platform, with over 296,000 terminals.

MCX is the largest silver exchange, the second largest gold, copper and natural gas exchange and the third largest crude oil exchange, in terms of the number of commodity futures contracts traded for each of these commodities.

FINANCIALS (RS IN MILLIONS)

YEAR

31-03-09

31-03-10

31-03-11

31-12-11

(9 MONTHS)

INCOME

2,124.48

2,873.82

3,688.92

4,023.33

NET PROFIT AFTER TAX

1,574.19

2,207.26

1,730.97

2,205.34

CAPITAL

407.96

407.99

509.99

EPS

31.60

43.30

34.56

58.00#

NET WORTH

4,936.50

6,968.12

8,488.49

10,739.25

# Annualized.

VALUATION AND RECOMMENDATIONS:

The offer for sale of 64.27 lac shares of Rs 10 each constitutes 12.6% of the paid up capital of Rs 50.99 CR. MCX, in the price band of Rs 860- 1032 is valued around 17 times its FY12 earnings and 5 times its NAV. This compares well with its counterparts, the US based CME and ICE. Shares are being listed only on BSE is a negative factor. The company has had negative cash flow in the previous years.

Considering small size of the offer, there will be listing gains. INVEST.

CONTRARY OPINION : SENSEX TO GROW IN EXCESS OF 20% IN 2012.

2012-02-06T10:19:00.002+05:30

We here by republish an article on Sensex movement originally published on Tuesday, December 6, 2011.

Leading FIIs including Citi, BofA-Merill Lynch, UBS Securities, Macuarie and Nomura predicts a gloomy picture for Sensex and NIFTY and they expect the bench mark index to fall another 20% from the current level. First Choice IPO differs with their prediction and expects the indices to to grow in excess of 20% in 2012. Global crisis is just a 'blip' says Prof Levitt, the author of the best selling book Freakonomics. And that is not without reason. Economies around the world have grown so much since World War II, unless there is something horrific on the horizon, which he does not see, people will look back these days as nothing more than a 'blip'. There is no doomsday looming on the horizon. It is only the extreme reaction to the markets by the so called biggies, that makes the problem look bigger than it actually is. And if one analyses the earlier prediction made by these FIIs, one can safely conclude that the market is headed in the opposite direction than what these experts think. There could be some slow down in parts of the world, but the India growth story remains in tact. Stay invested in top indices stocks.

The prediction has almost come true in just 45 days.

NIFTY MAY GAIN 100 POINTS TOMORROW

2012-02-02T18:16:00.001+05:30

FORTHCOMING IPOS

2012-02-02T18:11:00.000+05:30

NAME OF THE COMPANY

DATE OF FILING OF DRHP WITH SEBI

Maiam Global Foods

21-12-11

Bluplast Industries

21-12-11

Preludesys India

28-12-11

Vishwanath Sugar and Steel Industries

03-1-12

Tara Jewels

04-01-12

Hindusthaan Eco Ventures

19-01-12

IPO ANALYSIS: FACEBOOK INC - STEEP VALUATION, IS IT WORTH INVESTING?

2012-02-01T14:15:00.006+05:30

The most anticipated tech IPO since Google went public in August 2004, Facebook, the world’s largest social-networking service, is likely to file papers with SEC for its initial public offering (IPO) this week.

The expected market valuation of the company is around $100 billion.

Facebook is founded by Mark Zuckerberg with his college roommates - Eduardo Saverin, Dustin Moskovitz and Chris Hughes. The Web site's membership was initially limited to Harvard students, but was expanded to other colleges in the Boston area, the Ivy League, and Stanford University. It gradually added support for students at various other universities before opening to high school students, and eventually to anyone aged 13 and over.

Revenue

Most of Facebook's revenue comes from advertising. Microsoft is Facebook's exclusive partner for serving banner advertising, and therefore Facebook serves only advertisements that exist in Microsoft's advertisement inventory.

Revenues ( in millions US$)
Year	Revenue	Growth
2006	$52	—
2007	$150	188%
2008	$280	87%
2009	$775	177%
2010	$2,000	158%
2011	$4,270	114%

Facebook generally has a lower click through rate (CTR) for advertisements than most major Web sites. According to Business Week.com, banner advertisements on Facebook have generally received one-fifth the number of clicks compared to those on the Web as a whole, although specific comparisons can reveal a much larger disparity.

For 2012, Facebook is expected to post $5.78 billion in ad revenue globally.

Facebook's reported valuation of $US75 billion to $US100 billion compares with about $US100 billion for McDonald's Corp, $90 billion for Citigroup Inc and Amazon.com Inc and $US75 billion for Bank of America Corp. It would exceed the market cap of $US55 billion for Hewlett-Packard Co, one of the world's largest technology companies by revenue.

Both Facebook and Google earn most of their money from advertising and are now competing to gain as much information as possible about their users to help advertisers target niche audiences.

Even with Facebook's heady growth rate, Google had ad revenue last year of more than five times what Facebook is expected to get in 2013. Yet it is Google that is mimicking Facebook in building a rival social network called Plus.

OBJECTS OF THE IPO

The IPO funds are intended to be used for its expansion and fend off competition from rivals such as Google and Twitter.

LEAD ARRANGERS / MANAGERS

Morgan Stanley and Goldman Sachs Group are the lead managers.

The targeted amount would slot it among the world's 15 largest IPOs.

At the reported price, Facebook's IPO would be the biggest for a US Internet company - topping the debut of one of its main rivals, Google Inc.

VALUATION:

FB is grossly over-valued. On a price/sales basis, Facebook would trade at 19.7 — that’s 497 percent higher than Apple at 3.3 and 294 percent above Google’s P/S of 5. Facebook’s P/E of 80 is far higher than Google’s 19 or Apple’s 12.7. This means that Facebook’s stock might not hold up after the first-day IPO pop.

FB’s revenues represent a mere 1 percent of the world’s $507 billion in total ad spending and its IPO would not lead to a major change in the trajectory of corporate spend.

NIFTY MAY TOUCH 5500 LEVEL BEFORE BUDGET

2012-01-27T18:01:00.003+05:30

We had on 20-01-12 analyzed and predicted that NIFTY would touch 5200 level by 27-01-12. NIFTY did surpass that level today. FIIs are continuously buying and today's net buying in cash market is in excess of Rs 1000CR. This, coupled with usual euphoria before the budget may take NIFTY to 5500 level in coming weeks.

NIFTY TO TOUCH 5200 LEVEL NEXT WEEK

2012-01-20T18:39:00.002+05:30

FIIs so far, in 2012, have increased their exposure by almost $ 1 billion and are net buyers on daily basis through out the month. The expiry on 25th is likely to witness hectic activity and short covering which may take the NIFTY beyond 5200 level. Short positions still exists in Banks, Metals, IT and Oil and Gas segment.

FII BUYING AND GLOBAL CUES WILL PUSH THE INDEX FURTHER UP.

2012-01-18T08:36:00.002+05:30

FIIs have bought in excess of Rs 1000 CR yesterday. This, coupled with positive global cues will help the index to move further.

GOOD WILL HOSPITAL IPO BOMBS

2012-01-09T19:06:00.003+05:30

Book Running Lead Manager - SPA Merchant bankers, has informed the Exchanges that the Book Building issue of Goodwill Hospital and Research Centre Limited has been withdrawn, due to very poor response.

We had advised the investors to stay away from the IPO, because of irrational pricing, unprofessional promoters and limited operating history, among others.

L&T, MARUTI RESULTS ON 23-01-12.

2012-01-09T15:26:00.002+05:30

Larsen & Toubro and Maruti have informed the exchanges that a Meeting of the Board of Directors of their respective Companies will be held on January 23, 2012, inter alia, to consider and take on record the unaudited financial results of the Company for the quarter ended December 31, 2011 .

TCS RESULTS ON 17-01-12

2012-01-06T17:25:00.001+05:30

Tata Consultancy Services Ltd has informed the exchanges that a meeting of the Board of Directors of the Company will be held on January 17, 2012, to take on record the audited financial results of the Company for the quarter and nine months ended December 31, 2011 (Q3) and to consider declaration of a Third Interim Dividend to the equity shareholders.

INSTITUTIONS BUYING PUSHES SENSEX

2012-01-04T06:05:00.003+05:30

Positive global sentiments, clue from the RBI that rate reversal is possible in next couple of weeks made the Institutions - both FIIs and DIIs to mop up rate sensitive and realty sector stocks which helped Sensex to move up by 400 plus points. The rally is expected to continue for few more days, unless there is unexpected global negative news.

WORST PERFORMING IPOS OF 2011

2012-01-03T07:39:00.003+05:30

NAME OF THE COMPANY	ISSUE PRICE RS	CMP RS	% CHG	BRLM	FIRST CHOICE RECOMMENDATIONS
TAKSHEEL	150	13	-91	PNB INVESTMENTS	AVOID
BHARATIYA	82	8	-90	ALMONDZ	AVOID
RDB RASAYANS	90	11	-89	CHARTERED	AVOID
ACROPETAL	90	11	-88	SAFFRON	APPLY#
BROOKS	100	13	-87	D AND A	AVOID
SHILPI	69	10	-86	D AND A	AVOID
INDO THAI	74	10	-86	CORP STRATEGY	AVOID
SERVALAXMI	29	5	-84	KEYNOTE	AVOID
PARAMOUNT	35	5	-84	ONE LIFE	AVOID
TIJARIA	60	9	-84	HEM SECURITIES	AVOID
VASWANI	49	10	-80	ASHIKA	AVOID
SANHVI FORGING	85	23	-74	ARIHANT CAPITAL	AVOID
M AND B	186	61	-67	D AND A	AVOID
PTC FIN	28	10	-64	SBI CAPS, ICICI, ALOMNDZ, JM	AVOID
TIMBOR HOME	63	25	-61	CORP STRATEGY	AVOID

# Expect in case of Acropetal, First Choice recommendations were correct in all other IPOs.

SEBI BARS 3 MERCHANT BANKERS AND 7 COMPANIES FOR IPO VIOLATIONS.

2011-12-29T08:10:00.003+05:30

At last the watch dog has taken some action. First Choice IPO has been warning the investors about the nexus of Issuers and Merchant Bankers for the last 3 years. We have been repeatedly advising to stay away from such IPOs. Price rigging on listing day and dumping of the shares subsequent days was regular pattern adopted by these fraudulent promoters and merchant bankers. The seven companies that have been banned are:

Name of the company

Issue price

CMP

First Choice IPO recommendations

Reasons for our recommendations

Bharatiya global

AVOID

Tainted promoters

Tijaria Polypipes

AVOID

Irrationally pricing

Taksheel

150

AVOID

Fraud IPO

RDB Rasayans

AVOID

Irrational pricing

One Life Capital

110

243

AVOID

Irrational pricing

Brooks lab

100

AVOID

Irrational pricing

PG Electroplast

210

183

AVOID

Irrational pricing

The merchant banker who have banned are PNB Investment Services, Almondz Global and Artherstone Capital.

IPO ANALYSIS: GOODWILL HOSPITAL AND RESEARCH CENTER LIMITED : INFLATED MARGINS,QUESTIONABLE INTEGRITY, HOPELESS MERCHANT BANKER - AVOID.

2011-12-23T08:05:00.013+05:30

ISSUE OPENS / CLOSES ON 30-12-11 / 09-01-12

IPO GRADE : GRADE 3 BY CARE.

PRICE BAND RS 165-175

Goodwill Hospital, which runs a multi specialty hospital of 220 beds in Noida under the brand Ojjus Medicare, is planning an IPO to mobilize Rs 62Cr for expansion. Each equity share carries one detachable warrant.

SPA Merchant Bankers Limited are the book running lead managers to the issue.

Goodwill Hospital focuses on core areas such as neurology and neuro surgery, cardiology and cardiac surgery with emphasis on joint replacements and sports injuries. It also provides other services like pediatrics’, diagnostic, critical care medicine, oncology and dermatology.

Goodwill Hospital was established in 2000. In Dec 2007, Ojjus Medicare Pvt Ltd took over the management and it was reorganized as a multi specialty hospital. Currently, Ojjus holds entire 100% stake in the company.

As of November 2011, the hospital has a team of 40 full time doctors, 94 nurses and 47 other medical personnel.

The hospital has installed ‘Perfexion’ – Gamma knife machine - for non invasive treatment. Goodwill is one of the few centers in South and South East Asia to install Gamma Knife machine also called fifth generation machine, which uses robotic technology to deliver precise radiation for treatment.

The Company intends to use issue proceeds for setting up of diagnostic center at Faridabad (Rs 16.22 crore), establishment of six polyclinics (Rs 33.97 crore) and repayment of loans (of Rs 10 crore).

Goodwill Hospital reported a net profit of Rs 4.33 crore on total income of Rs 16.08 crore in the quarter ended June 30, 2011. For the financial year ended on March 31, 2011 - company posted a net profit of Rs 15.72 crore and total income of Rs 53.58 crore, an increase of 471.6% and 134% over previous year, respectively.

RISK FACTORS:

1. Hopeless merchant banker. In the last 2 years, SPA has managed 4 IPOs and the current statuses are as follows:

NAME OF THE COMPANY	ISSUE PRICE	CURRENT PRICE
INFINITE COMPUTERS	165	61
PARABOLIC DRUGS	75	31
CANTABIL	135	15
SRS LIMITED	58	35

2. Funds requirements have not been apprised by any bank / FI, there are no definite plans as the company is yet to receive many approvals. Properties where they are planning polyclinics are not yet identified.

3. The project has already been delayed.

4. Very high debt equity at 3:1.

5. The company had earlier defaulted in payment of lease rental to a group company and there are corporate governance issues.

6. The promoters are non doctors and inexperienced.

VALUATION AND RECOMMENDATIONS:

As IPO was envisaged, the company in the last 3-4 quarters has reported robust numbers. However payment to suppliers and consultant doctors has been delayed which raises doubt on the revenue numbers and margins reported. An expert in the health industry opines, margins reported by the company are not sustainable.

More over the IPO is only to mobilize funds with no definitive plans.

IPOs from health care segment have not rewarded the investors in the past. Some companies like Noida Medicare and Malar hospitals have gone into oblivion. Fortis Health, Indraprastha and Birla pacific Medspa all have disappointed the investors.

INVESTORS CAN GIVE A MISS TO THE IPO.

SHORT COVERING PUSHES SENSEX BY 500 POINTS

2011-12-21T18:08:00.003+05:30

Strange but true. Both the FIIs and DIIs are net sellers in cash market today. In spite of this Sensex was up by more than 500 points, largely due to short covering of positions by operators.

Moody's up graded the India's sovereign debt to stable. First up grade in the last 7 years. This news came after the closure of the markets. Expect some big ticket buying by FIIs in the coming days in the back drop of debt up gradation and softening of dollars.

EXPECT 100 POINTS GAP UP OPENING IN NIFTY

2011-12-21T07:58:00.003+05:30

Sentiment across the globe has changed for better. Stocks in U S and European countries closed higher. Asian markets are expected to open and close in green. NIFTY may stage a 100 points rally today and another 150 points rally in the next 2-3 days. RIL, SBI, L&T, HERO, HINDALCO, ICICI, HDFC BANK, AXIS, Maruti, Tata Motors and Tech Stocks, among others would see renewed buying interest.

RELIANCE, TATA MOTORS AND CAIRN LEADS THE FIGHT BACK

2011-12-19T15:42:00.004+05:30

NIFTY recovered more than 60 points from the intra day low, to close at 4623, still down by 39 points. Reliance which has the highest weight-age among the NIFTY stocks, lead the fight back rally with 2% gain. Tata Motors and Cairn were up by more than 4% each. Banks, Infra and the metals were the hardest hit. Axis, ICICI, SBI, L&T, PNB, RCOM and Tata Power - all touched yearly lows, before recovering a little. Turnover, in cash segment was more than the average turn over witnessed in the last two weeks.

L&T INFRA BONDS ISSUE CLOSES ON 24-12-11 : INVEST

2011-12-19T14:48:00.004+05:30

L&T Infra, for the second year running has come out with the long term Infrastructure Bonds. This tax-saving bond facilitates to invest indirectly on a long term basis, in infrastructure projects across the country. By investing in L&T Infra 2011B Bond Series, investors can save tax and earn an annual interest rate of 9%.

The 2011B series provides investors buyback options at the end of 5 years and 7 years. In addition to this, 2011B Bond Series provides investors the option of holding the bonds in Physical or Demat form.

The bonds has been rated AA+ by ICRA AND CARE.

BUY L&T, ICICI AND TATA STEEL

2011-12-19T07:24:00.004+05:30

The negativism on the euro zone crisis and expected GDP growth has been over done. The bears have taken advantage of both the external and internal factors and have created fear psychosis in the market. The coalition completion is making it difficult for UPA-2 to take major reform initiatives. The retract of retail FDI, the 2G scam and Lokpal logjam have added fuel to the fire. The market is driven by sentiments, news flow rather than the fundamentals. The situation locally or in the euro zone is not as bad as is perceived. RBI is likely to cut CRR rates in Jan 2012. Major policy decisions are likely to be cleared in the next 3-4 weeks. Markets have almost bottomed out. Stay invested in quality stocks.

In this series, First Choice IPO recommends to buy Tata Steel (Rs 364), ICICI Bank (Rs 673) and L&T (Rs 1061).

NEW GUIDELINES FOR ANCHOR INVESTORS

2011-12-17T09:56:00.003+05:30

SEBI has modified and tightened the norms for allotment of shares to Anchor Investors, in an IPO. Hither to merchant bankers were using their discretionary powers to allot shares to favorite institutional entities as part of anchor investor(AI) mechanism. As per the new guidelines there should be minimum of 2 and maximum of 15 AIs for an allotment tranche above Rs 10Cr and up to Rs 250Cr, subject to a minimum allotment of Rs 5Cr per AI. In case of an allotment in excess of Rs 250Cr, a minimum of 5 and maximum of 25 AIs has been proposed. Shares to AIs are allotted just a day before the issue opens and are subject to 30 days lock in period.

The unscrupulous merchant bankers and the issuers were using this route sell the poor quality issues and rig the share price post listing. We have seen this happen in many recent IPOs.

GLOBAL CUES MAY HELP THE MARKET TO STAGE A SMART RALLY

2011-12-11T09:23:00.002+05:30

The possibility of finding some solution to the crisis in euro zone, coupled with positive economic data from U S may help the Sensex stage a smart rally this week.