PTC India Financial Services-IPO Status

Company Profile: Incorporated in 2006, PTC India Financial Services Ltd (PFS) is an Indian non-banking financial institution, a subsidiary of and promoted by PTC India Limited ("PTC"). They are financial institutions in India that provide both equity and debt financing, including short-term and long-term debt, as well as structured debt financing. They are currently focusing on power generation projects in India. Thet also provide fee based syndication and advisory services as well as carbon credit financing against certified emissions reduction (CER) exclusively to the power sector.

Issue Details:    

  Issue Open:       16.03.2011- 18.03.2011
  Issue Type:       100% Book Building
  Issue Size:         156,700,000 Equity Shares of Rs. 10
  Issue Size:          Rs. 407.42 - 438.76 Crore
  Face Value:        Rs. 10 Per Equity Share
  Issue Price:        Rs. 26 - Rs. 28 Per Equity Share
  Market Lot:       250 Shares
  Minimum Order Quantity:      250 Shares
  Listing At:          BSE, NSE

** Discount of Rs 1 to the issue price is available for the retail Individual Bidders

IPO Rating: 

Organisation: CRISIL            Grade: 3 (1-5)                Indication: Average Fundamentals

Organisation: ICRA/CARE            Grade: 4 (1-5)                Indication: Above Avg Fundamentals

Over-subscription detail:

Qualified Institutional Buyers (QIBs): 2.85 Times

Non Institutional Investors: 0.22 Times

Retail Individual Investors (RIIs): 1.18 Times

Total: 1.70 Times

Our Recommendation : Avoid

Low risk, High Return--------- An opportunity

Answer may be yes in current scenario. Thanks to a roaring inflation, the gap between equity and debt return is going thinner day by day.RBI has increased the rate six times in last one year which has forced the banks to increase their borrowing and lending rates. Repo rate reached to 6.5% from 5 % in last one year. Repo Rate simply means the interest rate at which banks borrows money from RBI. This step from RBI to check liquidity has automatically resulted into a hike in borrowing rate which is almost at the doorstep of a double digit. A person whose income does not fall under tax bracket will enjoy a 9.5-10 % yearly return on their FDs because of this rate hike.

Now let us concentrate on our very own stock market. It is as sensitive as a new born baby. It gets affected for numerous causes. It does not need to be a CFP to understand that if Reserve bank of a country is trying to cut the liquidity, how adverse effect will flow in market. For the last couple of months we are going through a negative trend because of numerous macro and micro economic factors. Starting from European debt crisis, followed by Indian scams and conspiracies, roaring inflation and costlier crude oil because of an unhealthy scenario in middle east, has sent the Bull for a long vacation.

Now being a CFP, my job is to gift a tension free life and a financial freedom to my client. If he can get a return around 10% on investing in debts, then why should I look for a stock market which will increase my client’s blood sugar level? The taxation aspect is there and as most of our clients fall under 30 % tax bracket hence a post tax return comes down to around 7 %.But let me give you some returns generated by blue-chips in last one year which will tell you the original story.

    

Script	Value as of 1st Apr,2010	Value as of 18th Mar,2011	% Return
Reliance Industries	1092.5	993	-9.10
SBI	2102	2590	23.21
Tata Steel	652.2	597.15	-8.44
Cipla	339	293	-13.57
Infosys	2670	2941	10.15
LT	1630	1512	7.24
NIFTY	5290	5373	1.57

          

At the same time one should consider the fact that a stock return is not a proper reflection of a portfolio return because of the charges and taxes he need to pay on his investment. If fixed income securities offer these kinds of lucrative returns after capital protection then a reshuffle in client’s portfolio by adding some more debt instruments in it will not be a bad option.

   

F&O Strategy at the Time of Right Issue...

A right issue means giving fresh new shares to the existing share holders at a discounted price.Now the share price automatically gets reduced in the ratio of allotting right shares after the Ex-date.In this circumstance investors may ask for a Future sell to make a profit from the position if that particular share has derivatives contract in market.but i afraid that is not a proper strategy to make profit because it may end in a loss.

Let me give an example: Say, On 16th February share of xyz ltd is trading on 170.It has decided to give right share at a price of 103.The record date has been fixed on 18th Feb.hence the ex-date will be 16th of February.

On 16th Feb, Future of XYZ is trading at 174.One may thought that it is obvious that after Ex-date,the price will come down,and he can go for a future short on 16th February.On 17th February the price will actually come down to 150 level.Hence the future will also come down to 155 level.If investor wants to book his profit by squaring off his short position,his profit may go for a toss because of the fact that from 17th February(Day after the Ex-Date) the lot size of the particular future contract will increase.

hence if he short the future @174 (Lot size-1000) on 16th Feb,then total sell value= 174*1000= 174000

& if he squares it off @ 155(Lot size-1180) on 17th Feb, then total buy value=        155*1180= 182900

Now we know that  Net Profit = Sell Value- Buy Value

                                               = 174000-182900

                                               = (-)8900

Hence ultimately that investor will loss 8900 in this particular transaction.

INFERENCE: Corporate action never gives instant profit.

Fundamental is taking over technical

Its bear bear everywhere.Bulls went for a holiday I suppose.People who bought shares on 31st December,2010 and have not sold them on 3rd January morning session, I am sure they have postponed their financial commitments for next two months.Market saw a huge down trend starting form 3 rd January second half till end of February.Just for an example, a bluechip share like ICICI Bank came to 950 from 1150 level.People will say that it happens in market.After a huge uptrend in november,2010, market formed a channel which resulted into a big downtrend in January-February.But the interesting part in this particular down trend is the macro economic factors.This movement proved that if fundamental is looking gloomy,then no technical support level is there to stay.Too many macro economic news made the south journey perfect. Did anybody guess that market will fall from 6250 to 5400 without any  significant rally ? A rising interest rate, rising inflation, low industrial production, high crude oil price and last but not the least some great memorable SCAMS ruled in the market for the first two month.

Well a hat's off to our honorable Finance Minister,that in-spite of all these negatives , he has produced a budget which has turned the market direction.People can say that it is not a game changer budget,but according to me he has done a perfect job for the market.Anything not negative is almost same as positive at this level for the market.Though it is just a rally and obviously not a change of trend, a good Q4 result,low food inflation, reduce in crude oil price, good global cues are the real game changers which can take the market into 6000 level once again.Whatever may be the direction of Indian market in next few months, main thing which can be said is, it is mainly dependent on fundamental clues than that of technical.May be this the reason why an investor should be a fundamental analyst while choosing a company and then go for technical recommendations before taking position in it.

Indian Economy-Heading towards a super power

Being a respectable citizen of India, today I can cheerfully utter that "I Proud To Be an Indian"...Politically we need to correct, socially we need to unite, but economically and financially we are one of the best countries..being a Financial planner by profession, i have came across many facts that proves our supremacy in global market.Lets talk about current market scenario..After a deep recession (major one after 1930), India is the country which is recovering at a faster pace than other developed and developing countries. Sensex is once again at 18k level and those few investors who took position at 8k level in early 2009, are ready to book their profit (Though country's biggest company RIL is trading at a support level--Good time to go long at 1020 level).Thanks to our strict regulation, I can bet that among the BRIC countries (Brasil, Russia, India, China), we have recovered better and faster than other three investor's preferable zone.A great regulatory body, two fine exchanges and a sound proof risk management system is the back bone of India's growth towards super economy.