Technofab Engineering Ltd IPO Message Board (Page 18)

Dear Sreedhar,
I am happy that after a long time we are getting an IPO worth its salt. I hope to wipe out some of the losses I incurred in Shree Ganesh applying this. I thought of the same thing while applying for SJVN, but it didn't materialize. Hope this will not go the SJVN way.
Comparable peers:
BGR Energy
FV 10; EPS 27.92; PE 27.67
Hind. Dorr Oliver
FV 2; EPS 7.71; PE 15.86.

GUYS TRUE PREMIUM OF TECHNOFAB IS ONLY RS.9............
DONT FOOL INVESTORS.....THAY ARE ALREADY TRAPPED IN IPOS......BETTER TO INVEST IN SECONDRY MARKET.......
BUY STERLITE AT 165-168...220 IN 10-15 DAYS.....AND ITS VERY SAFE

King of all past ipo/fpo/idr,s. It will oversubcribe 35 to 40 times.

A MUST APPLY IPO.

Issue Highlights: Technofab Engineering
Sector      Engineering - EPC
No. of Share on Offer      2990000
Price Band (in Rs)      230 - 240
Post Issue Equity (Rs Crore)      10.49
Post-Issue Promoter stake (%)*      36.00
Issue Open/Close date      29/06/2010 - 02/07/2010
Listing      BSE, NSE
Rating      45/100
* Including the stake of promoter group


Technofab Engineering: Standalone Financials
1003 (12)      0903 (12)      0803 (12)      0703 (12)      0603 (12)
Sales      200.37      149.31      81.00      61.36      53.91
OPM (%)      16.8      14.5      11.2      4.7      4.9
OP      33.66      21.60      9.11      2.87      2.65
Other income      0.11      0.26      0.64      0.25      0.09
PBIDT      33.77      21.86      9.75      3.12      2.74
Interest      3.17      2.82      1.48      1.59      2.07
PBDT      30.60      19.04      8.27      1.53      0.67
Depreciation      1.35      1.02      0.26      0.33      0.12
PBT      29.25      18.02      8.01      1.20      0.55
Taxation      10.16      6.29      2.73      0.41      0.07
PAT      19.09      11.73      5.28      0.79      0.48
Adjustments      0.00      0.00      0.00      -0.03      0.03
Net Profit      19.09      11.73      5.28      0.76      0.51
EPS** (Rs)      18.2      11.2      5.0      0.7      0.5
* On post IPO equity of Rs 10.49 crore & Face Value: Rs 10
** EPS annualised for Half year ended Sep '07
Figures in Rs crore

SIR ,GEM IPO FINDER & SHREEDHERBHAI

ASTER OR TECHNOFAB ENG MESE KOUNSE IPO ME LISTING GAIN KE LIYE APPLY KAR SAKTE HAI?
OR DONO IPO KE PRIMIUM KYA HAI ?
TECHNOFAB KE LIYE MUJHE APPLY KARNE KE LIYE NEWS HAI.KYA WAKEHI YE LISTING GAIN DE SAKTI HAI?
PLEASE REPLY SIR................

PRINCEEEEEEEEEEEEEEEEEEEEEEEEEEE

TECHNOFAB PREMIUM :-
17 Rs. Only Buyer (no seller)
Premium is daily going high..Please don't make any short positions
Premium can go upto 40 %(aorund 100)

Correction. In my post No. 63, please read the order book as 5337 million, not 5337 crores. For an additional 4000 plus million order, this company is the lowest bidder.

"Technofab engineering has over the past 4 years posted an earning CAGR of 151% on the back of a revenue CAGR of 39% over the same period. Company currently has an unexecuted order book of Rs.5337 crores (as on 31.3.2010), 2.7X sales of FY10 thereby enhancing strong revenue visibility," says a report of LKP research.

has anyone notices rhat post issue promoters holding will be only 36% ??????

It will beat ARSS infra
fundamentally sound company
Good company with good results
Jaipur Grey market:- 12 Rs only buyer(No seller)
Some big operators are active in this script,and buying the shares from grey market
The good time of IPO will start from this issue again

It is another Arss infara ,must apply fair value rs. 455.

dont underestimate this co.
455 revenues coming fromm africa.india has just started.
if it have a 1000 cr ruveneus in nect 3-5 yrs...then it will command market cap of 1000 cr atleast.hence stock rate will be over 800 definately......
a stock to be on radar......buy in a bear market.....potential of 800 plus.....and fair rates are around 150-300 any time.....so if in bear market when ever u get below 80.....grab....

I admire Shankar Sharma for his thought but, not those stocks he recommends in open forum: -

Analysts are not doing any social service. It is a capital market, there is no free-lunch. Player's motto is to make profit cheating others.

If you could tell the future from a Balance Sheet then accountants and mathematicians (if technical analysis is perfect) would be the richest people in the world. I could be buying & selling stocks recommended here quitting my profession.

You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. If you want to earn Rs.3, take a risk of Re.1.

"Be humble", "do not try to act like market-makers". If you try, market will make you humble.

Market is smarter than analysts.

Develop your own system for investment. Don't invest just because Warrent Buffet has invested. His time horizon & risk appetite may not be suitable to you.

Dear IPOIPO,

Thanks for providing a nice platform for a healthy and nice discussion. Couple of things i am still at the learning stage of life and i believe that your entire life can be spend doing that and for that u need to debate and follow advice wherever required.

1. Nature of work done : they provide the following services a)Industrial utility and low pressure piping b) Fuel oil storage and handling system c) Fire detection alarm and protection system d)Water, waste water and effluent treatment,tankages,raw and sea water intake system,plant electrification, renovatin and modernization of cal feeding systems.

They have common engineering skillset to provide these services in various sector like thermal power, nuclear power, oil and gas and other industrial sector.They are electromechanical service company providing EPC services.

They have competition from Walchandnagar, L&T in nuclear, Tyco. Kiddai in fire fighting , Sunil Hitech and mcnally bharat in piping, ion exchange and hindustan doroliver in water and other unlisted companies in unlisted space. 80% of their orders are thru bidding process.

2) it is stupidity to any compare any company in india with L&T. All i said is they bid with L&T. Many fund managers pushed Punj to compete with L&T and that lead to its downfall. If u see technofab's vision they aim to be only a mid size epc co providing excellent execution work and i feel they would take minimum 3 to 4 years to reach 1000 cr turnover.

3) Regarding job order ticket size they are biding along with Simplex, promac, Gammon by a consortium method and are likely to win orders in the consortium.

4) My only access to management was the recently concluded analyst meet in mumbai wherein i put all these questions to them and spend decent time with them to understand the entire model of working.

5) The main advantage is the business model does not require very heavy assets in tune to the above mentioned nature of work. it will continue to be a low asset business and with 16 cr of investment in asset the management is of the opinion it would enable them to reach close to 700 cr turnover

6)The recent margins are high due to very good margins in the nuclear field sector. They also indicated that the margin will moderate going forward to around 8% as against 9.5% currently, however they are chances of couple of more jobs in the nuclear sector in next 6 months in that case the margins better than 8%.

7) negative operating cash flow: it is combination of creditors being at same level inspite of turnover increasing , debtor days increasing to 103 days from 78 days as 45% of revenue for epc co's come in the last quarter. and substantial decrease in advances from customer. My view is majority f epc co has negative operating cash flow including the best of the companies due to the business model, one cannot compare manufacturing co. cash flow to epc business cash flow.


Lastly, i am very clear that in no way i am encouraging any member to subscribe to this issue, it is an individual opinion. I state that i contributed since i felt it was a good long term bet and i dont know about listing gains.

Sorry if i have hurt anyone with wrong words and thank IPIPO for a excellent discussion. No business comes with risk pls read risk factors in RHP before investing.

52. Investor superg / 54. ipoipo

I think both of them know this business well.

I would like to share few points -

Dear Investor Superg

1. In EPC Contract & IT business, winning orders competing with big giants is not easy task. Small companies will survice if their business is unique & if they have nil or very few compeitors in their line of business.

I agree with 54 IPOIPO.

2. No comments.

3. No comments.

4. You might have met the management. But generally, management does not share all information with everybody. They share when with large funds house to attract capital for their business. Sometimes they help fund-houses by providing inside information before making public. They even establish unholy nexus with Operators to jack-up stocks when they want to raise additional capiatal or to take loans which will help to boost their networth.

If analyst make negative comments about company, management may not share all vital price sensitive information with such analysts. It is great disadvantage for public.

5. No comment.

54. ipoipo

6. Civil contractors as well as real-estate developers are not honest in accounting. Huge black money is involved in their business. They need to bribe politicians & babus for land acquisition etc.

Importantly, fundamental analysis is not simple. Market participants know publicly avaialble information & stock price reflects that. Hence, inside information plays vital role. As most of financials are from company, information could be biased.

One has to familiarize himself with the country, industry, company in order to reach a conclusion in the stock analysis. Besides, different valuation models or relative valuation models apply to different industries.

In a nutshell, investing is a game of probability.
Only the insiders in the company know almost everything about the company.

For us, who are outsiders, although we may have gathered extensive sources of information on the company, industry, we may still be wrong.

In additions, with same set of publicly available information, different analysts intrepet differently. For common investors, it is extremely difficult to make a decision.

It is better to collect some more information before making investment decision.

Dear Sreedhar,
I am positive about Technofab. The advantage is that we can wait for the response of the FIIs and then take a decision and apply on the last day. I am watching with interest the arguments going on about Technofab and also Ravi, Bangalore's arguments with some others in the Aster Silicate page.

Dear 52. Investor superg
I did not wanted to reply, but eventually drawn into this due to your quality of assessment and wanted to correct a bit….
1.      I do not understand your word on nature of work done. There are so many contractors doing piping and mechanical work. Few are listed but many are large unlisted quality player (like neo structo, OES, Supreme, Das ). Technofab can not qualify for doing BOP work as turnkey business, as they do not have networth as of now. May be 2-3 years down the line, they may, if they garner enough bandwidth and networth.
Every tom dick and harry in engineering and construction co. coming on our street start comparing themselves with L&T and that makes me really wonder. Its different matter against customer, they know that.
I have full respect for technofab engineering for what they are but please my request is not to compare them with L&T.
Now a days it is fashionable on the street to hook on nuclear work….. Without paying attention and understanding the actual scope of work as undertaken.
2.      Petron engg. average order size now inching towards 100cr.which is much larger order in size. You want to compare IPO bound company’s latest margin with other company’s past margin. What was technofab’s margin 2 years back. Just check the data ? But I agree on Petron engg, they are equally great atleast in past ? Like another Great contractor Punj ? PL has got L&T bug in their body for quite some time now.
3.      Sunil high tech is another great company? But does that mean this one will be better. I am astonished about shear diversity of jobs undertaken by this 5cr. net block company to do work in power BOP, Nuclear, electrical, mechanical and even Road project and they have job in 4 countries in Africa too. That too total revenue in last 3 yrs standing at FY8-81cr,FY9-149cr.and FY10-200cr. But does it really matter when u do piping work in pharma company or power BOP company ???
4.      You have better access to management may be you know more. But I fail to understand what competitive advantage a contractor with piping mechanical, electrical ability with light asset will command over long period of time. In fact they want to go back to asset heavy and require fund for working capital etc. mentioned in objects of the issue.
5.      I just pointed out on –ve operating cash flow. Point to note is operating cash flow –ve. I can understand if cash flow –ve after investment. That too at higher level than past couple of years. It can be anything …best known to mgt.
6.      Why quality of earning of civil contractor will be an issue ??? and mechanical- electrical contractor will not ?? I do not think you can generalise like that you have to go case by case. Civil contractor can be as good as bad as electrical-mechanical contractor.
dear , did I say anywhere “not to invest” . As you were going gung ho about on public forum, I used cautioned in going gung ho. In fact I agree on your point that in long term this will have positive return on your investment . Every body has different style. Some take early bet , some take measured bet .
it was interesting debating with you and not necessarily advising you. There is saying…on advice …. Everybody wants to give, but no body likes to take.

Dear Investor superg,
Your analysis is spot on.I completely agree with you.Even Mr Gutte of Sunil Hitech said he was desperate to enter BOP segment as a consequence of which he had quoted such a meagre sum.Hence there is no comparison with Technofab & Sunil Hitec.Technofab is better than it on all counts.Hope such constructive discussion takes place more often in the discussion board.Welcome to you both .

Dear IPOIPO,

I am just putting across the positives in this IPO on merit basis. I have never earlier recommended companies because i feel most of them did not justify the valuations. Would like to answer the points raised by you in a professional manner and i feel the points are really the best querries raised till now.

1. Yes the Company is a small company as far as turnover is compared but not when compared to the nature of the work done. Technofab operates in balance of part in thermal and nuclear power and utilities sector in other industrial sector. Its a Electromechanical engineering service company and not manufacturing or civil construction companies. How many companies compete with L&T and Walchandnagar for nuclear BOP and manage to win bids??

2. Petron Engineering does not take job on turnkey basis they do pure mechanical installation of boilers, turbines and BTG. They are best in their execution. Petron turnover is 520 crore and 24 Cr of PAT. Technofab has 200 Cr of turnover and 19 Cr of Pat. need to say which margins are better?

3. Sunil Hi-tech : Co. which has just entered Balance of part business and does more of civil erection, 700 cr turnover and less than 5% margin. Recently they won a order in Parli for BOP package at 440 cr. The next bidder was around 700 cr. Image chasing turnover and doing work without margins. They have skipped dividend for F.Y.10 due to lack of clash flow

4. I not only study the bal sheet but also meet the management before coming to any conclusion. If you have understood technofabs business model they are into light installation packages where you dont require fixed asset for doing business but large working capital. Every one is proud of a company being Asset Light i am surprised one thinks investing in capex continuously is a good model.

5. The operational cash flow is negative by 9 cr and not 24 cr. and which is the most common in any EPC business as their billings happen maximum in the last 2 qtrs and they need to keep lot of bank guarantees and performance guarantee advances. How many epc business do you know with positive cash flow?Debtors more than 6 months is only 3 cr and that is what you should look for.

6. Lastly all your "Civil Contract" companies will have excellent growth but the quality of earnings will be an issue and hence they will be at 5 to 8 multiples.

Chief, I am an pure analyst and advice funds for investment. I felt after a long time here's a company where investment over a long period will give very good returns. I do not understand the listing gain business.

I have my reasons to be Gungho and i dont think anyone needs to guide me on my research.

Thanks

Investing Technique: Cut-loss Triggers

Has your share lost 35% of its value since you acquired it?

Selling a losing position and reinvesting the money in a more profitable security is probably the most logical tactic to apply in order to enhance the overall value of your portfolio. This technique can be one of the most difficult to execute. When you can easily find recommendations on what to buy, it's harder to get advice on when to cut your losses.

To minimize the odds of ending up with worthless shares, you should establish a sell strategy. This is when you can think most clearly about why and when to sell.

If there is a golden rule of investing, it should be the discipline to cut your losses when a stock drops 35%. The usual protest to this idea is "what if the stock goes right back up, as I know it's going to do? I've lost 35% of my money for no good reason."

Let's take a logical look at this argument. If a company's stock price drops 35%, it can then do three things. It can go right back up (but then why did it take a big drop in the first place? Hmmm), stay right where it is, or most likely drop even further. Sorry, but dropping to even a lower price is what’s most likely to happen.

This applies to IPO investment also. When an IPO breaks issue price, it is probably time to sell & book loss. 7 out 10 IPOs don't come back to cost level in the medium-term when it breaches issue price.

Don't let yourself become trapped by a stock that's costing you money. The only good stock is one that's making money for you.

Golden Rule of Investing: Stop-loss should be in the ratio of 1:3. If you expect Rs.300 upside, then, probably it is time to sell if it falls by Rs.100 from your cost price.

Avoid Psychological Traps to Have Successful Investing
From time to time, even the most successful investors will hit a losing streak. When this happens, people have a tendency to fall into these psychological traps.

Denial and Rationalization: Watching your stock fall and refusing to accept that it’s going to fall further. Trying to explain away bad decisions and bad market situations.

Projection of Blame: Blaming someone else for your bad decisions, not taking responsibility for your mistake.

Idealization: Putting your faith in a particular stock or the opinions of a analyst and following them blindly.

Sometimes it's good to have a trusted friend or advisor evaluate your investing habits and the way you react when your investments are not going well. Sometimes you've got to take a step back and take a serious look at your investing style.