Consolidated Construction Consortium Ltd IPO Message Board (Page 13)

Consolidated Construction Consortium (CCCL) is not a bad company, it’s a reasonably sized company importantly. This year Rs 800 crore, next year Rs 1,200 crore kind of topline. I am told there were couple of thousand crore order book which is not bad. A bit expensive, it’s a good space construction; you have got a lot of listed construction players available at that kind of PE multiple. It should probably deliver something like Rs 20-22 earnings at the end of this year.

So the issue is coming at closure to 23-25 PE multiple which is horrendously expensive for construction stocks & for an IPO it’s a bit stretched which is not to say that Consolidated Construction won’t get subscribed and over subscribed. It’ s a ok company in the right space so it will get subscribed.

But they have left a nothing on the table so to argue for very large upside on listing might be little difficult. So maybe the over subscription might be bit reined in because of the pricing which is a bit on the stretched side.

OVER ALL AVOID CCC & PARK UR VALUABLE MONEY FOR KOUTONS IPO.

Must avoid
better to apply for koutons

BETTER TO AVOID .
After Purvankara Projects, probably this is the case of another aggressive pricing and needs to admire the courage of issuer, to ask for such a steep price that too of a company, engaged in a sector for which umpteen number of quality stocks are available in the secondary market.

Just give a pass to the issue, as its fundamental value is not more than Rs 250 per share.

SP Tulsian(Investment Advisor)

By Ruma Dubey

It is said that those in glass houses should not throw stones at others. Very true but then sometimes, it indeed becomes imperative to atleast point fingers and hope that the stone throwing would be done by those being taken for a ride.



We, being in the media, it is our basic duty to inform the people and protect the interests of the investors by disseminating the right and accurate information. Obviously, this is the duty of all those in the media but looking at the way in which journalism sometimes becomes irresponsible, the recent Uma Khurana “sting” operation being a fitting example of falling journalism standards, the names of those in good standing also gets tarnished. Its like the Godmen, a few rotten apples and now all Godmen are looked down upon with immense suspicion.



Financial journalism is also not above all this. Infact we have a higher responsibility as we are directly advising people about their life savings. So we were more than shocked to see that many of those in the print media, electronic media, even analysts’ and brokers are going all out, promoting a particular IPO – Consolidated Construction Consortium. Almost all the newspapers and TV channels, worth their name, have stated that one should surely go for the IPO and have infact justified the pricing of the issue.



Without getting into specifics of who’s who and how, it is enough that all these have used one common factor to justify the pricing of the IPO – they have used future projections and calculated, sometimes wrongly, that the issue is infact priced lower and is hence ripe for investment.



Now the biggest fallacy here is the use of projections. SEBI has banned the use of projections to sell the IPO, a lesson learnt the hard way after the fly-by-night issues of 1994-96, which used rosy future projections and ultimately led to the total collapse of the primary market. Now though the companies are not openly stating the projections in the RHP, the brokers and some of those in the print and electronic media, manage to get “privately circulated” copies of future estimates and then future pricing is worked out, based on which the IPO pricing is justified and the issue is sold.



This is most certainly a very dangerous and wrong precedent being set by some factions of the media. Advising the gullible investors to invest in such issues is wrong. Maybe, in the initial runup on listing, the stock does list and trade much above the IPO price. But later, within six months, in such issues, where valuations have run ahead of the fundamentals, truth does indeed soon catch up and invariably the stock price collapses, trapping small investors.



Many analysts say that they work out the future earnings themselves and then justify the pricing. Its great that analysts can work out the future estimates but that is possible for well established companies and that too for the current fiscal, where first or second quarter earnings have come in. Or when advance tax figures come in. But working out estimates out of thin air for one or two years ahead, is indeed not logical, it’s akin to building castles in the air. And especially for newly listed companies, it is just not right.



Just as SEBI has showed its claws against companies not complying to Clause 49, its high time SEBI looks into this practice of media using future projections to justify the IPO pricing. This practice is sure to once again kill the primary market if not checked right now.



And for all those who have raised doubts about our contrary view to the IPO of Consolidated Construction Consortium, we stick by our stand and feel that indeed the issue is highly priced and there is no question of considering future projections! You may miss out on quick listing gains but then do you want get stuck with laggards in your portfolio?

Valuations

The company has consolidated EPS of Rs 30.28 for year 2006-07 and it is available at 12.95 times at the floor price and 16.84 at the cap price. The NAV per share comes out to Rs 139.59 as on 31 st March, 2007

The company at the IPO band looks aggressively priced and since its peers like sobha developers is avaible at much cheaper valuation when we compare the NAV base valuation, therefore we recommend avoiding to the issue.

AVOID STRICTLY,,,,,,,,

i have applied for shares is there chance that can i getprofit on listing or i will loose the money what should i do know

Dont go for such higher price bcz marketmay collapse on listing date.....

NOT GOOD FOR INVESTMENT POINT OF VIEW , ENTER AFTER LISTING THE ISSUE BECAUSE IT GOES DOWN TO RS 300 APPROX

Posted by: josi on (17-Sep-07 11:29 )


It is both in construction & engineering business. The EPS post IPO equity dilution would be more than Rs.20. The promoters long association with L&T would yield good results and progress. I am sure 20-25% discount to the valuation of its peers and gives ample scope for upsite potential in short term as well. It is, however, not a large company, but a mid-sized one. It will fetch good return both in short and long term

Investors should teach a lesson by not subscribing to this extremely overpriced issue. It undergoes the same fate as what happened to IVR Prime issue or Purvankara issue.

Consolidated Construction: Invest at cut-off (BusinessLine Review)

Investors can subscribe to the initial public offer of Consolidated Construction Consortium (CCC), an integrated construction services company.

Bright growth prospects, backed by demand for quality construction contractors, strong management bandwidth and an order-book that lends visibility to earnings growth over the next couple of years are positives for this offer.

At the offer price of Rs 460-510, the price-earnings multiple is 14-16 times the company’s estimated consolidated earnings for FY-09 on an expanded equity base.

This valuation is comparable to its nearest peer B. L. Kashyap and Sons.

At the offer price band, the market capitalisation of the company’s stock on listing would be Rs 1,700-1,900 crore.

MY FRIEND AKKA I CAN GIVE YOU MORE THAN 100 EXAMPLES IN WHICH ANALYSTS HAVE MISGUIDED THE INVESTORS SEE BELOW THE CASE OF TIME TECHNOPLAST BY SP TULSIAN EXPENSIVE AT 315 NOT AFTER 3 MONTHS IT IS 800

LET ME GO THROUGH THE DETAILS OF THE ISSUE CCCIL THEN I WILL GET BACK TO YOU AND BY THE WAY I AM IN THE IPO MARKET FOR THE LAST 3-4 YEARS AND GOD IS BLESSING ME IN THE MARKET.

Time Technoplast is entering the capital market on 18th May 2007 with an issue of 39.22 lakh equity shares of Rs.10 each in the band of Rs.290 to Rs.315 per share.

The company is into manufacturing and sale of technology based polymer products serving the industrial and consumer packaging solutions, lifestyle products, auto components, healthcare products and infrastructure related products, with six production facilities located at six different locations. The group companies Shalimar Packaging Pvt. Ltd and Oxford Moulding Pvt. Ltd were merged with the company with effect from 01-04-05. The company further acquired 75% stake in Tainwala Polycontainers Ltd being 58.50 lakh shares at Rs.40 per share for Rs.23.40 crores. The company is engaged into manufacturing of extrusion blow moulded HMHDPE containers upto 250 litres capacity.

All these acquisitions caused big financial burden on the company and debt of the company got raised from Rs.67.53 crores (on 31-03-05) to Rs.164.32 crores on 31-12-06. This has resulted in default in repayment of Rs.40 crores, short-term loan availed from IL&FS Ltd for acquisition of Tainwala Polycontainers. The repayment of the same has been rescheduled by IL&FS and is now being mobilized from the proposed IPO.

The total fund requirement is estimated at Rs.146 crores (excluding issue expenses and general corporate purpose) against which the company is planning to mobilize Rs.179 crores, excluding internal accruals (of about Rs.35 crores annually) and considering issue at upper band of Rs.315 per share. This excess of Rs.33 crores is probably to tide over hard-pressed short term debt.

The company is now setting up new projects for manufacturing disposable medical devices at Himachal Pradesh an integrated injection moulding facility at Silvassa, with total outlay of about Rs.50 crores. Investment of about Rs.40 crores is earmarked for overseas projects. The company is further acquiring 49% shares of Mauser Holding Asia Pvt. Ltd from its promoters for Rs.19.20 crores. Hence, the company seems to be facing financial crunch due to too many expansions and acquisitions.

For FY '06 the company posted a total income of Rs.263 crores with PAT of Rs.24.53 crores. On fully diluted equity of Rs.20.93 crores EPS works out to Rs.11.72. For 9 months ending 31-12-06 topline was at Rs.256 crores and PAT of Rs.26.90 crores resulting into an annualized EPS of Rs.17.14. If we take the issue price at the upper band of Rs.315, the shares are being issued at historic P/E multiple of 18 plus which is very high when compared with the industry and peers. The discounting to this sector is quite low and due to multiple products being produced by the company (some are with very low discounting like HMHDPE barrels) the issue price definitely looks quite stretched and steep. Though the company had placed 6 lakh shares at Rs.325 per share on 16-03-07 to private equity investors, which is likely to get adjusted, in the event of the minimum threshold being price is reduced, still it doesn't infuse much confidence.

The operations of the company shall continue to remain a low margin business with highly working capital intensive and increase in topline, post commencement of new projects, are likely to put further pressure on the operating profit margins and working capital requirements. Also, sharp increase in margins in FY '06 and FY '07 over its previous year looks like presenting a rosy picture to lure investors.

Given this background, though the investors may make money in short run, it may not be too rewarding in the long run.

my dear friend AKA, in case of indo wind ipo not even tulsian but every one has given ..AVOID...RATING .EVEN GREY MKT WAS ALSO IN DISCOUNT. AND EVEN IT LISTED IN DISCOUNT AND AFTER THAT IT WAS RIGGED UP BY OPERATOR.ANY HOW IF U LIKE THIS IPO I REQUEST U TO APPLY IN MAX LOT AND IN MAXIMUM NOS OFTIMES U R HAVING DP ACCOUNT. GOD BLESS U.

DEAR akka,

Don't jump to conclusions by going through the analysis of these so called baised experts. wait for opening of the IPO I am giving below the analysis of sp tulsian for indo wing energy ipo see where it listed.



Aug 14, 2007
Issue with litigation and poor track record


Indowind Energy is entering the capital market on 21st August 2007, with a public issue of 1.25 crore equity shares of Rs.10 each, in the band of Rs.55 to Rs.65 per share.



The company is into wind power energy generation as also providing operations and maintenance (O&M) to wind power generators. The company owns 16.825 MW wind power generation capacity of its own and 17.915 MW for others, on an Operate and Maintain (O&M) basis. Despite this, the financial performance of the company is nothing great to talk about.



For year ended June 07, the company had total income of Rs.27.57 crores with PBT of Rs.6.67 crores and PAT of Rs.6.58 crores. It is very strange to see that the company has tax liability of just Rs.28.30 lakh for this year, inspite of the company having a misc. income of Rs.300.16 lakhs. For the year, power segment had profit of Rs.1.11 crores on an income of Rs.7.72 crores and on assets of Rs.57.47 crores. Project division had income of Rs.16.40 crores with profit of Rs.3.86 crores on total assets of Rs.18.26 crores while others had income of Rs.3.45 crores and profit of Rs.2.92 crores. This is mainly on account of misc. income of Rs.300.16 lakhs and financial income of Rs.45.19 lakhs.



The results analysis reveals that, the higher the value of assets, lower is the bottomline of the division. To make its bottomline look healthy, the company had income in different heads in different years, which are purely unrelated to the nature of business. In FY 03, financial income was Rs.8.62 crore, trading income was of Rs.1.48 crores in FY 04 while Rs.1.68 crore in FY 06.



Apart from this, the company has a long list of litigations against finance companies as also against its O&M clients. Even the promoters of the company, Subuthi Finance Ltd. has long list of violations and have received 23 show-cause notices from BSE. Also, this company has not been able to keep to its projections.



The company is now carrying out an expansion of Rs.97.54 crores, mainly to set up 9 MW wind farm in Karnataka and to purchase second hand wind energy generators from banks. When the company was unable to run its own power projects, how would they be able to run defective power projects by acquiring them from banks, which have been lying closed? Maybe the public money will turn it profitable?



The present equity of the company is Rs.36.46 crores, which would rise to Rs.48.96 crores. Present EPS of Re.1.80 does not justify such a steep valuation. Present topline of the company is lower than its equity base. The bottomline of the company is largely inflated from non-related income. The promoters have no compliance discipline.



All these, reflects badly on the promoters. Even fundamentally, the share has no justification of a price band of Rs.55 to 65. Probably, even half of this, would have attracted debate on valuations.

VALUE OF CONSOLIDATION CONSTRUCTION IS RS. 250/- ACCORDING TO SPTULSIAN.SO I REQUEST ALL RETAIL INVESTOR TO BE ..CAREFUL.. AND DONT THINK ABOUT THIS IPO EVEN IN DREAM.....AVOID ..AVOID..AVOID... IN PRICING TERM THIS IPO IS BIG BROTHER OF PURVANKARA..TAKE NOTE AND IGNORE THIS ISSUE.....

Hi all,

Seems to be expensive compared to peers of its size..Only factor to watch out is that ENAM is the book runner...it will get done at abt 10 times in retail...but instance like purvankara might happen..Better to apply for koutons...AVOID Consolidated Construction consortium...APPLY in KOUTONS....

this is not a real estate company.
its clientele is nice,
it has the max roce and roe.
the porject cycle is jus 12 to 18 months unline ivrcl or ncc.
sure revenues and sure profits.
professionally managed and started business. board of directs look eminent

Worth at Rs.250 only - Premium Investments Review

Consolidated Construction Consortium is entering the capital market on 18th September, 2007 with a public issue of 37 lakh equity shares of Rs.10 each, in the band of Rs.460 to Rs.510 per share.

While analysing the Red Herring Prospectus, we were stunned that how can this type of a company, fix band of as high as Rs.510 per share. Over 30 listed quality stocks, which are pure construction and contracting companies, are available in the secondary market at half of its valuation.

The company’s total income was Rs.868 crores in FY 07, while it was Rs.1,888 crores in last five years from FY 03 to FY 07. So a CAGR of 76% is witnessed in topline and 126% in bottomline, in last 4 years. Also, PAT in FY 07 was Rs.47.68 crores while total PAT was at Rs.82 crores in the last five years. EPS for FY 07 was placed at Rs.14.35 on pre-issue equity of Rs.33.26 crores. EPS for FY 07 has been shown at Rs.39.42, by the company, which is on equity base of Rs.13.30 crores. On 16-04-07, the company issued bonus in the ratio of 3 shares for every 2 shares held, and hence equity rose to Rs.33.26 crores, So, correct estimation of EPS has to be on the expanded equity.

The post issue equity of the company would be Rs.36.96 crores, and market capitalization at Rs.510 per share, would be Rs.1,900 crores. The company has orders on hand of Rs.2,050 crores as on 31-07-07. Adding debt of Rs.150 crores, enterprise value works out to 1 time of order book.

Nagarjuna Construction has market cap of about Rs.4,500 crores while order on hand of the company is over Rs.8,000 crores. IVRCL Infrastructure market capitalisation is about Rs.4,800 crores, while orders in hand are close to Rs.9,000 crores, apart from having 4 crore shares of IVR Prime with market value of Rs.1,440 crores. The same valuation comparison can be made for so many other pure construction companies, engaged in southern market, and this stock would be found expensive atleast by over 100%.

Preferential Allotment were made by the company on 31-03-06, at Rs.360 per share. Adjusting for bonus shares, the effective cost works out to Rs.144 per share. Now, IPO is made at Rs.460 to Rs.510. Fleecing the investors. This allotment was made to UTI Venture Funds and Evolvence.

After Purvankara Projects, probably this is the case of another aggressive pricing and needs to admire the courage of issuer, to ask for such a steep price, that too of a company, engaged in a sector, for which umpteen number of quality stocks are available in the secondary market.

Just give a pass to the issue, as its fundamental value is not more than Rs.250 per share.

any idea about this issue is there any gain after listing or just to avoid it

that is true. but for omaxe, it is widely said they left something for the investors, so it listed with good premium, though as said by you it is now hovering @ its issue price. Purvankara is very greedy and they did not left anything for the investors, as a result of which, now it is quoting less than even its revised issue price. I hope CCC Ltd is not like Purvankara. Anybody can throw more light on this?