JainMatrix Investments – IPO Reports deliver 60.5% returns

Date: 12th July 2014

During the past year, JainMatrix Investments has published eight IPO analysis reports.

Analysis of an IPO is unusually challenging. The companies do not have a long operating history, and the detailed data about them is not available. Many of these firms may be from new or emerging industries and with unusual business models, rather than established sectors. But there can be good rewards from IPOs, as from this uncertainty there can emerge a few very valuable new companies.

JainMatrix Investments captures its record of recent IPO recommendations. Here we are are trying to pass judgement on our own reports and analyses in the Result Today column:

Chart

* – we have taken VRL, Inox and Adlabs  at absolute value as its been a short time since listing. The data in Table above is as of 12th July 2015. All reports from table above can be accessed through links below.

  1. Our call on the Manpasand Beverages IPO was an Avoid. The offering closed with a weak subscription of 1.4 times the offered shares. It is still 2 days since listing, and there has been no sharp movement of share price either way, so we will wait for some direction.
  2. Of these 8, it can be seen that 5 of our 7 calls were Right with VRL Logistics, Wonderla Holidays, Snowman Logistics and Inox Winds performing very well.
  3. Even with Monte Carlo, we had an overall negative opinion of the firm, but expected a pop on listing. However this never came through. So our judgement is that the Result Today is Wrong.
  4. Adlabs Entertainment did not get enough subscription, it had to extend the IPO and lower the price, and is yet to pick up. Hence our call to Avoid was a Right call.
  5. We had an Avoid call on Shemaroo Entertainment essentially because of inadequate information available about business prospects and segments of the company. It has appreciated well since listing. But we stand by this IPO judgement made at that time – it is better to avoid firms you do not know enough about, than take such a chance.
  6. Looking at the performance of the 5 BUY calls made by us, we can see that investors who went along with our recommendations would have gained an absolute 60.5%.

Our lessons from the IPO analysis:

  1. IPOs that do not meet our criteria including financial, valuation, management quality, business outlook and disclosure, will get an Avoid rating.
  2. The IPOs of firms with innovative business models or in new and high potential industries get valued at a premium by the market, if the other criteria above are met.
  3. IPOs can generate high returns only if promoters of even good companies, leave enough on the table for investors in terms of the pricing.

Note that Share Prices of stocks can change from day to day. However judgments of performance in Long Term investing must be done only periodically, say in 6 or 12 months to allow the analysis calls to pan out over time.

As we get into a season of possibly a lot of IPOs, I sure hope the promoters from these firms are generous and make their offers at reasonable valuations.

JainMatrix Investments will keep you posted on the upcoming IPO’s. We hope that our calls helped you invest better, and look forward to your support and feedback.

DISCLAIMER

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from a financial planner /advisor. JM has been publishing equity research reports since Nov 2012. JM has applied for certification under SEBI (Research Analysts) Regulations, 2014. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com

Inox Wind IPO – Positive, and for the Environment

Dear Investor,

Here is a short post facto report on the Inox Wind IPO.

  • The IPO received excellent response with an 18 times over-subscription.
  • Retail was only 2 times over while institutional, HNI and corporates’ portions were subscribed over 35 times.
  • Naturally the pent up demand showed up on listing.
  • Listing on April 9th, yesterday, was enthusiastic and the share closed the day with a 35% gain at Rs 438.
  • Today, at the time of going into the cloud, the share is at 442, a solid 43% gain for Retail investors.
  • We will reiterate our advice as below, its a medium risk BUY, and hold for 2 years.

Happily for us at JainMatrix, another win and a correct analysis, (so far).

Happy investing,

Punit Jain

———————————————————————————————–

  • Date 18th March 2015
  • Price range: Rs. 315-325
  • IPO Period:  18-20th Mar 2015
  • Mid Cap – Rs 7200 cr Mkt Cap
  • Industry – Wind Power (Equipment and Projects)
  • Advice: medium risk BUY, and hold for 2 years

Summary:

  • INOX is certainly in the right sector of Wind power generation, where we should see good double digit growth for a decade. It also is an environmentally positive segment. The government is doing a lot to promote / subsidize it.
  • The firm itself has scaled up well so far, and the promotor group is good. There is also a scarcity of good quality listed firms in this sector.
  • The challenge for this firm is to manage costs, cash flows and technology stability. It has to perhaps slow down growth in the next few years, in order to be a more financially feasible concern.
  • The INOX Wind IPO is rated a BUY, with medium risk, and investors can purchase for a 2 year holding period.

Financials

 Inox Wind – 5 year financials 

IPO highlights

  • IPO is open from 18-20th Mar 2015 with Issue Price band: Rs.315-325 per share
  • There is a discount of Rs 15 for retail and employee categories
  • Shares offered to public: 3.26 crores of Face Value: Rs.10 per share
  • Shares offered as portion of equity post issue: 13.9%
  • Amount proposed to be raised: Rs.1025 crores (at upper end). The IPO proceed will be used for:
    • 300 crore is an exit by Inox Wind promoter Gujarat Fluorochemicals
    • 300 crore will be used to fund long term working capital requirements
    • 150 crore towards expansion of manufacturing facilities in Himachal Pradesh and Gujarat
    • 150 crore for project site development, mostly by subsidiary IWISL
    • The rest of about 100 crore will be for General Corporate Purposes
  • These objects appear to be reasonable and will grow the core business of wind power generation.

Download this Research Report

JainMatrix Investments has created a 5 page Research report of INOX Wind IPO. This captures our unique perspective on INOX including Promoter Group review, Industry and Competition Notes, Strengths /Positives, Risks and Challenges and Overall Opinion.

Inox Wind IPO_JainMatrix Investments_Mar2015

This report is now available for your usage. Click link above to download the PDF format report.

JainMatrix Knowledge Base:

See other useful reports

Disclosures and Disclaimer

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an independent expert/advisor. JM has been publishing equity research reports since Nov 2012. JM and its promoters/ employees have no financial interest in Inox Wind Ltd or their group companies, and no known material conflict of interest as on date of publication of this report. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com

Also see: https://jainmatrix.wordpress.com/disclaimer/

Inox Wind IPO – Positive, and for the Environment

———————————————————————————————–

  • Date 18th March 2015
  • Price range: Rs. 315-325
  • IPO Period:  18-20th Mar 2015
  • Mid Cap – Rs 7200 cr Mkt Cap
  • Industry – Wind Power (Equipment and Projects)
  • Advice: medium risk BUY, and hold for 2 years

Summary:

  • INOX is certainly in the right sector of Wind power generation, where we should see good double digit growth for a decade. It also is an environmentally positive segment. The government is doing a lot to promote / subsidize it.
  • The firm itself has scaled up well so far, and the promotor group is good. There is also a scarcity of good quality listed firms in this sector.
  • The challenge for this firm is to manage costs, cash flows and technology stability. It has to perhaps slow down growth in the next few years, in order to be a more financially feasible concern.
  • The INOX Wind IPO is rated a BUY, with medium risk, and investors can purchase for a 2 year holding period.

Financials

 Inox Wind – 5 year financials 

IPO highlights

  • IPO is open from 18-20th Mar 2015 with Issue Price band: Rs.315-325 per share
  • There is a discount of Rs 15 for retail and employee categories
  • Shares offered to public: 3.26 crores of Face Value: Rs.10 per share
  • Shares offered as portion of equity post issue: 13.9%
  • Amount proposed to be raised: Rs.1025 crores (at upper end). The IPO proceed will be used for:
    • 300 crore is an exit by Inox Wind promoter Gujarat Fluorochemicals
    • 300 crore will be used to fund long term working capital requirements
    • 150 crore towards expansion of manufacturing facilities in Himachal Pradesh and Gujarat
    • 150 crore for project site development, mostly by subsidiary IWISL
    • The rest of about 100 crore will be for General Corporate Purposes
  • These objects appear to be reasonable and will grow the core business of wind power generation.

Download this Research Report

JainMatrix Investments has created a 5 page Research report of INOX Wind IPO. This captures our unique perspective on INOX including Promoter Group review, Industry and Competition Notes, Strengths /Positives, Risks and Challenges and Overall Opinion.

Inox Wind IPO_JainMatrix Investments_Mar2015

This report is now available for your usage. Click link above to download the PDF format report.

JainMatrix Knowledge Base:

See other useful reports

Disclosures and Disclaimer

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an independent expert/advisor. JM has been publishing equity research reports since Nov 2012. JM and its promoters/ employees have no financial interest in Inox Wind Ltd or their group companies, and no known material conflict of interest as on date of publication of this report. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com

Also see: https://jainmatrix.wordpress.com/disclaimer/