Banking on Bangaluru

Brigade enterpise limited has entered the capital markets with an offer of 166.24 lac shares of Rs. 10 each at a price band of Rs. 351-390 per share. Investment Guru is of the view that realty and infrastructure sector would continue to be in limelight as it makes deeper inroads in the world of stock markets. Brigade enterprise’s business model comprises of a mix of residential, commercial and hospitality properties. The company’s operation and land bank are focused in and around Bangalore. Exposure of the company to a limited geographical area and a lean land reserve of just 44.16 million square feet might put a dent on the margins in future.

However, the bright side of the picture is that the company has sizeable ongoing projects which would keep the scorecard ticking in the medium term. On valuations parameters the stock looks aggresively priced leaving little scope of appreciation for Investors. The issue also has a green-shoe clause which would be used to provide stability to the price of the stock for one month if the market price falls below the issue price. Investors should consider subscribing to the issue purely from listing gains perspective. For long term perspective, there are better players available in the secondary markets with sizeable land bank and better geographical spread.

Issue highlights

• BEL is a real estate development company based in Bangalore, primarily focused on the development of residential, commercial and hospitality properties in South India. Company’s residential properties include
  integrated lifestyle enclaves and apartment buildings targeted towards middle income and high income customers.

• The company has completed a total of 67 properties, comprising of 41 residential properties, 21 commercial properties and five hospitality properties, aggregating to approximately 5.67 million sq. ft. of Saleable Area and approximately 6.74 million sq. ft. of Developable Area.

• The company is currently developing 16 properties, including Brigade Gateway and Brigade Metropolis, which are integrated lifestyle enclaves and that comprise of a combined Saleable Area of approximately 10.83 million sq. ft. and a combined Developable Area of approximately 11.89 million sq. ft.

• Consolidated total income was Rs. 4,170.20 million for the fiscal year 2007 as compared to Rs.2,032.32 million for the fiscal year 2006 and Rs. 1,605.03 million for the fiscal year 2005, representing year over year increases of 105.19%, 26.62% and 109.38%, respectively.

• The consolidated profit after tax was Rs. 714.98 million for the fiscal year 2007 as compared to Rs. 423.06 million for the fiscal year 2006 and Rs. 198.77 million for the fiscal year 2005, representing year over year increases of 69.00%, 112.84% and 85.06%, respectively.

• Return on Net worth is 47%. Net Asset value is 26.52 per share.

Issue Opens : December10, 2007
Issue Closes: December13, 2007
Registrar : Karvy Computershare

Click Here to Transforming the power equation

TRIL has entered the capital markets with a public issue of 29.95 Lac shares of Rs. 10 each at a price band of Rs. 425-465 per share through book building process. Investment Guru is of the view that Power transmission and distribution is an integral part of the power sector’s growth story and Transformers play a pivotal role in this process. TRIL is one of the major players in this segment.

However, in this case too the promoters have not left much on the table for the investors as similar companies are available at same valuations in the secondary markets. One can apply for the issue with a view of moderate listing gains on listing. However, from a medium term perspective investment in peers such as Indo-tech transformers is also advisable as the company is operating on better margins.

Let’s take a look at the company

• TRIL is one of the major players in the Indian markets manufacturing a wide range of transformers ranging from power generation, transmission and distribution transformers, industrial transformers and a wide range of speciality transformers.

• TRIL manufacture transformers upto 220 kV Class, having an installed capacity of 7,200 MVA transformers per annum.

• The company currently operate through two manufacturing units, located at Changodar, near Ahmedabad and Odhav, in Ahmedabad, both in Gujarat

• Key customers include utilities and power transmission companies. The company has also exported transformers to countries such as the England, Canada, United Arab Emirates, South Africa, Saudi Arabia and Indonesia.

• Company’s business strategy is to focus on manufacturing of high capacity transformers at the proposed manufacturing facility at Moraiya since high capacity transformers command better margins.

• The company intends to leverage its relationships with the power transmission companies to take up turnkey projects for setting up sub stations.

• TRIL has a healthy order book position of Rs.319 crore as on September 1, 2007 with most of the contracts having an embedded price variation clause, shielding the company from adverse movement in prices of key raw materials like copper and steel. TRIL has strong in- house design capabilities which is a key success factor for this industry as transformers are custom built as per the requirements of the customer.

• CARE has assigned a 'CARE IPO Grade 4' to the IPO which indicates above average fundamentals.

• Power transformers constituted 77% of total sales of the company in FY07 fol