CL Educate

CL Educate IPO to open on March 20

CL Educate is a diversified and integrated technology-enabled provider of education products, services, content and infrastructure, with a presence across the education value chain. Since commencing operations in 1996, it has diversified operations across six business segments, spanning the education value chain:

1. Test preparation and training services, generally referred to as “test prep”, conducted under Career Launcher brand.

2. Publishing and content development, conducted under GK Publications brand.

3. Integrated business, marketing and sales services for corporates, conducted under Kestone brand, including event management, marketing support (including digital marketing support), customer engagement, managed manpower and training services.

4. Vocational training programs implemented under Government schemes in various States across India.

5. Integrated solutions to educational institutions and universities, including business advisory and outreach support services, under CL Media brand, as well as research incubation and support services conducted under the Accendere brand; and.

6. K-12 schools operated under Indus World School brand.

Promoters of CL Educate: Satya Narayanan R, Gautam Puri, Nikhil Mahajan, R. Shiva Kumar, Sreenivasan R, Sujit Bhattacharyya and Bilakes Consulting Private Limited.

CL Educate IPO details
Subscription Dates	20 - 22 March 2017
Price Band	INR500 - 502 per share
Fresh issue	2,180,119 shares (INR109.4 crore at upper end)
Offer For Sale	2,579,881 shares (INR129.5 crore at upper end)
Total IPO size	4,760,000 shares (INR238.9 crore at upper end)
Minimum bid (lot size)	29 shares
Face Value	INR10 per share
Retail Allocation	35%
Listing On	NSE, BSE

Company Financials:

Summary of financial Information
Particulars	For the year/period ended (in Rs. Million)
	30-Sep-16	31-Mar-16	31-Mar-15	31-Mar-14	31-Mar-13	31-Mar-12
Total Assets	3852.74	3789.34	3253.44	1838.88	1782.94	1707.98
Total Revenue	894.46	1738.46	1558.47	1247.42	1355.23	1021.74
Profit After Tax (PAT)	71.34	49.18	76.59	23.57	67.43	(53.76)

Objects of the Issue:

The object of the issue are:

1. Funding Working Capital requirement of the Company:
2. Acquisitions and other strategic initiatives;
3. Pre-payment of outstanding amount of a debt; and
4. General corporate purposes.

Should you invest?

So finally, we come back to the question if CL Educate IPO is good enough for subscription. There is no denying that Career Launcher is quite a strong and well-known brand and that it operates in an industry where demand of its services is unlikely to dip. The test preparation industry as of now is estimated at INR378 crore (INR3.78 billion) and continues to grow in double-digit percentage rates. The narrative for the necessity for coaching has not changed much in these years. High competition for the limited seats in even more limited quality institutions have ensured that parents spend a higher share of their income levels on coaching. This is all too well-known to our readers, so we will not spend much time here.

CL Educate is strong company but it is not really a high entry-barrier business which means there are always new entrants willing to spoil pricing for established players. The digital evolution of new generation is also a threat. CL Educate has also not been able to maintain steady profitability, despite very strong cash flows. This means we need rely on valuations to arrive at the investment decision. The EPS of 18.37 in FY2016 means CL Educate IPO is priced at a PE ratio of 27.5. This is not very high for a growing business. The situation has improved further in the latest six months and annualized EPS brings down PE ratio to 23.2. Given the natural downside of extrapolation, it is better to not take FY2017 estimates too seriously.

Analysts, however, are not very upbeat on the issue, as high valuation may not offer much scope for an upside on the stock.

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Shankara Building Products to raise up to Rs 400 crore through IPO

Mar 22, 2017 - Mar 24, 2017

About The Company

The company is one of the leading organised retailers of home improvement and building products in India based on number of stores, operating under the trade name Shankara Build Pro. As on August 31, 2016, it operated 98 Shankara BuildPro stores spread across 10 states in India. As on September 24, 2016, it operated 100 Shankara BuildPro stores spread across 10 states in India. It caters to a large customer base across various end-user segments in urban and semi-urban markets through its multi-channel sales approach, processing facilities, supply chain and logistics capabilities.

It serves home owners, professional customers (such as architects and contractors), and small enterprises, through retail stores. Additionally, in the semi urban markets, it also caters to specific agricultural requirements of individual customers and small enterprises. Under retail operations, it offers a comprehensive range of products at its stores, including structural steel, cement, TMT bars, hollow blocks, pipes and tubes, roofing solutions, welding accessories, primers, solar heaters, plumbing, tiles, sanitary ware, water tanks, plywood, kitchen sinks, lighting and other allied products. The company carries reputed third party brands such as Sintex, Uttam Galva, Uttam Value, Futura, APL Apollo and Alstone and  own brands such as Century Roof, Ganga and Loha at the  retail stores.

In Fiscal 2016, its revenue from retail sales was ‘8,077.56 million which contributed 39.68% of its total sales as of Fiscal 2016 representing a CAGR of 28.67%, as compared to its revenue from retail sales in Fiscal 2012, being ‘2,947.20 million. The balance revenue during this period comprised of enterprise sales, contributing 32.20% and channel sales contributing 28.13% of the total revenue.

It has backward integrated through its processing facilities in select building products like steel pipes, colour coated roofing sheets, bright rods, galvanized strips and cold rolled strips. Its sells these products under its own brands like Century Roof, Ganga, Loha, Taurus and Prince Galva through the retail and branch network. Its own processing facilities help to offer customized solutions and meet quality standards as well as timely delivery requirements of its customers. It has 11 processing facilities having a total installed capacity of 2,86,200 MTPA operating at an average capacity utilization of 93.75% in Fiscal 2016.

To cater to its customers, it has  a robust logistics network which, as of August 31, 2016, consisted of 58 warehouses aggregating 0.58 million sq. ft., and a fleet of 47 owned trucks to augment  last mile delivery. A large part of its warehousing backbone is owned which ensures stability of operations. It also helps in catering to the requirements of its retail outlets. With an aim to offer a comprehensive range of products, it has expanded its product offerings and as of August 31, 2016, product portfolio comprised of 17,842 SKUs.

Company Promoter

Sukumar Srinivas.The Promoter, Sukumar Srinivas is an alumnus of the Indian Institute of Management Ahmedabad, and a first generation entrepreneur.

Company Financials

Summary of financial information

Particulars	For the year/period ended (in Rs. Million)
	31-Dec-16	31-Mar-16	31-Mar-15	31-Mar-14	31-Mar-13	31-Mar-12
Total Assets	6,046.35	5,913.15	5,505.20	5,956.44	5,724.80	4,559.90
Total Revenue	14,576.79	17,750.07	17,204.70	18,840.21	17,024.89	13,855.32
Profit After Tax (PAT)	137.38	109.77	42.47	193.38	271.24	277.75

Objects of the Issue

The main objects of the issue are:

1.    Repayment or pre-payment of loans of the Company and VPSPL

2.    General corporate purposes

3.    Receive the benefits of listing of the Equity Shares on the Stock Exchanges

4.    Enhancement of Company’s brand name and creation of a public market for   the Equity Shares in India.

ISSUE DETAILS

ISSUE OPENS / CLOSES ON	Mar 22, 2017 - Mar 24, 2017
ISSUE SIZE	Fresh Issue of Rs. 45 crores and  Offer for sale of 816252 shares by the Promoter and 5705488 shares by selling shareholders.
PRICE BAND	Rs. 440 - Rs. 460 Per Equity Share
MARKET LOT	32 Shares
LISTINGS	BSE, NSE
FACE VALUE	Rs.10
BRLM	IDFC Bank, Equirus capital, HDFC bank
ISSUE TYPE	Book Build Issue IPO
BUSINESS	Mfrs of building products -TMT, Cement, Scaffolding, Msand, Steel Pipes, Roofing Solution, Plumbing, Electrical, Paints, Tiles, Exterior cladding, Solar products, etc
REGISTRAR	Karvy

An indicative timetable in respect of the Offer

• ·         21th March – Anchor Investors
• 
  
• ·         Bid/Offer Opens On: Mar 22, 2017
• 
  
• ·         Bid/Offer Closes On: Mar 24, 2017
• 
  
• ·         Finalisation of Basis of Allotment: On or about Mar 30, 2017
• 
  
• ·         Initiation of refunds: On or about Mar 31, 2017
• 
  
• ·         Credit of Equity Shares to demat accounts: On or about Apr 03, 2017
• 
  
• ·         Commencement of trading of the Equity Shares: On or about Apr 05, 2017

Another Opportunity To Invest in 10 Maharatnas & Navratnas At 3.5% Discount.

Reliance MF CPSE ETF Further Fund Offer (FFO) 2 – March 2017 Issue

CPSE ETF or Central Public Sector Enterprises Exchange Traded Fund – This ETF got launched in March 2014 by Goldman Sachs Asset Management Company and listed in April 2014 on the stock exchanges. While the retail investors got its units allotted at Rs. 17.45, it quickly touched a high of Rs. 29.82 in less than 2 months in May 2014 when there was a euphoria after Mr. Modi took charge to serve this big nation as the PM. It is currently trading at Rs. 27.70 a unit and likely to touch its new highs very soon.

CPSE ETF 2017

CPSE ETF was launched to facilitate Government of India's initiative of dis-investing its stake in selected Central Public Sector Enterprises through Exchange Traded Fund CPSE ETF route. The ETF is based on Nifty CPSE index which includes 10 listed Central Public Sector Enterprises.

CPSE ETF is an Open Ended Index Scheme which is listed on the Exchanges in the form of an Exchange Traded Fund (ETF) tracking Nifty CPSE Index.

The CPSE Exchange Traded Fund consists of shares of 10 public sector units 

1.    Oil & Natural Gas Corporation Limited Oil - 24.6%

2.    Coal India Limited Minerals/Mining- 19.6%

3.    Indian Oil Corporation Limited Petroleum Products - 18.4%

4.    GAIL (India) Limited Gas - 11.7%

5.    Rural Electrification Corporation Limited Finance - 5.8%

6.    Power Finance Corporation Limited Finance - 5.5%

7.    Container Corporation of India Limited Transportation - 5.0%

8.    Bharat Electronics Limited Capital Goods - 4.1%

9.    Oil India Limited  - 2.9%

10. Engineers India Limited Construction Project - 2.0%

CPSE ETF - Further Fund Offer 2, managed by Reliance Mutual Fund, After the anchor book gets over on March 14. CPSE ETF will open for three days for retail investors from March 15. This is the third tranche on offer through which the government aims to garner Rs 2,500 crore. Prior to this, the government raised Rs 3,000 crore in March 2014 and Rs 6,000 crore in January. 

Top Reasons to invest in CPSE ETF

1.    Play on India growth story through investment in the large CPSE stocks.

2.    Nifty CPSE index: P/E ratio and dividend yields better compared to broader market index

3.    Flexibility of trading on real time basis

4.      Lower expense ratios and transaction costs

Attractive Valuation:

Attractive Valuation and Superior Dividend Yield – Compared to Other Broader Indices

Index Name	P/E Ratio	P/B Ratio	Dividend Yield (%)
Nifty CPSE	11.72	2.17	3.74
Nifty 50	23.13	3.37	1.25
Nifty Next 50	25.02	3.75	1.49
Nifty 100	23.43	3.43	1.29
Nifty 500	26.57	3.11	1.20

Source: NSE. Data as of 28^th February 2017. Note :The stock composition of all the above indices are different

Features of CPSE ETF Further Fund Offer (FFO)

High Dividend Yield & Reasonable Valuations – All these listed CPSEs mentioned in the table above are profitable and pay relatively higher dividends on a regular basis. High dividend yield stocks have historically carried lower volatility in returns. So, you can expect a relatively stable performance from these stocks. Moreover, with years of underperformance, I think these CPSEs are set for a rerating going forward.

3.5% Discount for Investors – To attract more and more investors, the government is offering a discount of 3.5% on their investments. This 3.5% discount will be calculated on the “FFO 2 Reference Market Price” of the underlying shares of the Nifty CPSE Index and will be passed on to the CPSE ETF by the government of India.

Reference Market Price/NAV – As mentioned above, CPSE ETF is currently trading at Rs. 27.70 on the stock exchanges. This is also its reference market price or NAV. As the investors get allotment and FFO units get listed on the stock exchanges, market price of each unit of this ETF will be linked to the Nifty CPSE Index and its returns would be quite close to the returns generated by the CPSE Index.

Investment Objective – The scheme intends to generate returns that closely correspond to the total returns generated by the Nifty CPSE Index, by investing in the securities which are constituents of the Nifty CPSE Index in the same proportion as in the index. However, the performance of the scheme may differ from that of the Nifty CPSE Index due to tracking error, scheme expenses and the initial discount of 3.5%.

No Loyalty Units/Bonus in FFO 2 – Like its previous tranche, no loyalty/bonus units will be issued in this issue as well. With a reduced discount of 3.5% this time as against 5% in the previous issue, nobody could have expected of any such loyalty units.

Maximum Amount to be Raised – This ETF would target to raise Rs. 2,500 crore during this 4-day offer period. However, in case of oversubscription in the non-anchor investors category, partial allotment will be made to the investors.

Minimum/Maximum Investment Size – Individual investors can invest in the scheme with a minimum investment amount of Rs. 5,000 and there is no upper limit on the investment amount. However, retail investors investing upto Rs. 2 lakhs will be given preference in allotment in case there is an oversubscription.

Allotment & Listing – As per the offer document, units of this ETF will get allotted within 15 days from the closing date of the issue and listing on the NSE and BSE will happen within 5 days from the date of allotment. However, I expect the allotment and listing to happen a lot sooner than these indicative times.

Demat Account Mandatory – Investors need to have a demat account to apply for CPSE ETF. Applications without relevant demat account details are liable to get rejected.

Tax Saving u/s. 80CCG – Budget 2017 has proposed to end the benefits of Rajiv Gandhi Equity Savings Scheme (or RGESS) and tax exemption u/s. 80CCG from FY 2017-18. However, as this exemption is still available for the current financial year, this could be one of the last options we have to avail this tax exemption. CPSE ETF FFO 2 is in compliance with the provisions of Rajiv Gandhi Equity Savings Scheme and thus qualifies for a tax exemption of up to Rs. 25,000 under section 80CCG.

You need to fulfill two most important conditions to avail this tax exemption – one, your gross total income should not exceed Rs. 12 lakh in the current financial year and two, you must be a first time investor in equities. As maintained earlier as well, it is quite difficult to satisfy both these conditions simultaneously. Hence, only a few people would be able to qualify for it.

Lock-In Period with Tax Exemption – Investors, who seek tax exemption u/s. 80CCG, will be subject to a lock-in period of 3 years – 1 year of fixed lock-in and 2 years of flexible lock-in. The fixed lock-in period will start from the date of your investment in the current financial year and will end on March 31st next year i.e. 2018.

The flexible lock-in period will be of two years, beginning immediately after the end of the fixed lock-in period i.e. beginning April 1, 2018 till March 31, 2020.

No Tax Benefit Availed – No Lock-In Period – Investors who do not avail any tax benefit out of this ETF, would not be subject to any lock-in period. They can sell their units whenever they want.

Entry & Exit Load – This scheme is not subject to any entry load or any exit load.

Categories of Investors & Allocation Ratio

Anchor Investors – Maximum 30% of Rs. 2,500 Crore i.e. Rs. 750 Crore will be allocated to the anchor investors.

Retail Individual Investors – After the anchor book gets over on March 14, retail individual investors are allowed to take up all of the remaining portion of this FFO i.e. Rs. 1,750 crore.

Qualified Institutional Buyers (QIBs) & Non-Institutional Investors (NIIs) – QIBs and NIIs will have nothing reserved for them in this FFO. They will be allotted units only if the subscription numbers of the retail investors and/or anchor investors fall short of their reserved quotas.

"The outlook for the commodity sector has improved. The fund has a low expense ratio of 6 paise, 3.5% discount, 3.74% dividend yield and PE ratio of 11.72, all of which are attractive in the current environment," We recommended investors to set aside 5-10% of their equity portfolio in such thematic funds.