The IPO is slightly expensive, but I think it is worth subscribing to.
MCX will be the first exchange to list in India.
It is business with tremendous growth potential and decent cash flows.
I expect the MCX to list at least 10% above the IPO price.
MCX will list only on BSE, but I am not concerned by it. MCX and NSE are involved in various legal battles and it is understandable that MCX doesn't want to list on the NSE.
There are quite a few companies that are listed only in BSE. Eg: SpiceJet Airlines.
Should this be a concern if the shares are listed and traded only in one stock exchange?
Also if the proceeds do not go to this company via stake sale then what is the use of listing it? For raising capitals most companies sell shares and list right, if they don't want the money then is it a good thing to try and invest in this?
Should this be a concern if the shares are listed and traded only in one stock exchange?
Also if the proceeds do not go to this company via stake sale then what is the use of listing it? For raising capitals most companies sell shares and list right, if they don't want the money then is it a good thing to try and invest in this?
If a company can't meet NSE's listing standards, then it is a cause of concern.
If a company meets NSE's listing guidelines, but decides not to list on the NSE, then it is not a cause of concern. As far as I know, MCX is one such company.
Certain shareholders want to partially sell their stake in MCX and also Financial Technologies has to bring down its stake to 26% to meet regulatory requirements. That's the primary reason for the IPO.
From the offer document:
Quote:
Post IPO, FTIL may own 26% of MCX’s post-offer equity share capital. This is in compliance with the Forward Markets Commission’s Equity Structure Guideline, which requires the original promoters to hold at least 15% and a maximum of 26% equity stake in a national commodity exchange.
As Alchemist mentioned, the only reason why MCX is not listing on NSE is legal battles and the fact that they compete across some products. Definitely looks to be a good buy at least for the long term. In short term though in this market you never know what can happen.
30x seems a bit high price. Since no similar comp. exist in india, can we check at what multiple similar exchanges being traded in other countries?
The revenue sources for MCX is transaction fee and membership fee majorly (Haven't read the RHP yet ), which will bound to grow in future. Alchem. may help us out here.
The IPO has already been subscribed 1.5 times in the retail segment.
The final retail subscription may go as high as 40 times.
Only investors who have ASBA should apply for this IPO.
Now, I think the stock will list at a minimum 20% premium to the IPO price.
Quote:
Originally Posted by nitinku5021a
30x seems a bit high price. Since no similar comp. exist in india, can we check at what multiple similar exchanges being traded in other countries?
From a valuation perspective, MCX is not comparable with exchanges in the west. In the western economies commodities trading has already matured, whereas in India, commodities trading still has a long way to go.
I don't think comparing multiples will be really helpful in this case.
MCX's main revenues come from gold, silver, oil and copper. These 4 commodities are non-food, globally-traded commodities and are less regulated compared to food and other agricultural commodities. That is a significant advantage that MCX has over other exchanges like NCDEX.
MCX posted a net profit of Rs 218 crore in the nine months to December 2011. On an annualised basis, this translates into a price-to-earnings multiple (P/E) of 15.1 to 18.1 depending on the lower and upper IPO price bands. Similarly, the IPO band is 4.1 to 4.9 times the book value of MCX shares as on December 31, 2011. On both these valuation parameters, MCX fares favourably when compared with mature international exchanges like Nymex and ICE, more so due to India's potential for rapid growth in commodity trading.
Hence PE comes out to be 19 pre-IPO (annualized EPS of 55, 9m profit of abt 220 cr)
This is a low capex, high RoE business with negative net current assets.
The investments stated above, corresponds to ~180 Rs per share.
Overall this one has solid fundamentals and is poised for good growth ahead.
MCX IPO subscribed 4.48 times on its day 2. MCX has received bids for 2,46,52,896 shares as against issue size of 55,00,772 shares.
Subscription Detail for Day 2
Qualified Institutional Buyers (QIBs): 3.68 Times
Non Institutional Investors: 1.88 Times
Retail Individual Investors (RIIs): 6.91 Times
Employees: 0.05 Times
The max possible bid for retail is 32 lots of 6 shares each = 192 shares.
You get a proportionate part of your bid quantity. For e.g. if retail portion bid goes up to 16 times, everyone who has bid 192 shares will receive 1/16*192 = 12 shares each.
Till up to 32 times bid, all investors with 192 shares bid will at least receive something.
For lower bids, from 1 to 31 lots, your chances of allotment depends on lottery. Only a handful of lucky bidders will receive at max 1 lot.
To understand the nuances, look at the Basis of Allotment for Lovable where retail segment over subscription was more than 20 times.
Typically, the demand is higher from institutional investors in initial part of the bidding, while retail investors follow the suit in the latter part. Bucking this trend, the retail portion of the MCX IPO got over-subscribed on the first day itself and continues to drive the demand.
The retail as well as institutional demand is expected to accelerate further tomorrow, investment bankers tracking the offer said, adding that the IPO should get over-subscribed multiple times by the end of the bidding.
Applied for 18 and 20 lots respectively from 2 accounts at cut off rate.
Not planning to hold this for long if i get the shares.No cash left for trading/investing for next 20 days in account.
Will sell on listing day and will buy again once the price goes around 800 whenever market is down for long term hold.
For long term
Advantages:
1::Strong dividend.
Disadvantages:
Commodity transaction taxes and competition by other players.
Wouldn't it had been better if you had applied for 1 full application? I remember the probability is on the favorable side if one applies for 1 full application rather than splitting it into 2 half application.
wouldn't it had been better if you had applied for 1 full application? I remember the probability is on the favourable side if one applies for 1 full application rather than splitting it into 2 half application.
Yes I agree .
But both accounts are of different party.
One of my mother other of my sis.
And in both account money was around 1.25l each.
And I don't wanted to create unfavorable entries for IT department as my sister already claims HRA by giving some sum of money as rent.
Then showing this gift or loan might create unwarranted attention in future you never know.
This has been replaced by Finance Act 2004 by inserting a new clause 'v' in section 56 bringing the following item under the head, Income From Other Sources-- where any sum of money exceeding Rs. 25,000 is received without consideration by an individual or an Hindu Undivided Family from any person on or after 1st day of September, the whole of such sum.
Provided that this clause shall not apply to any sum of money received
From an relative, or
On the occasion of the marriage of the individual, or
Under a will or by way of inheritance, or
In contemplation of death of the payer.
Explanation:-
For the purpose of this clause relative means
Spouse of the individual.
Brother or sister of the individual.
Brother or sister of spouse of the individual.
Brother or sister of either parents of the individual.
Any linear ascendant or descendant of the individual. >> Parents and children
Any linear ascendant or descendant of the spouse of the individual. >> Father and Mother-in-law,
Spouse of the persons referred in clauses (ii) to (iv)
The Bid must be for a minimum of [●] Equity Shares and in multiples of [●] Equity Shares thereafter, so as to ensure that the Bid Amount payable by the Eligible Employees does not exceed 200,000. The allotment in the Employee Reservation Portion will be on a proportionate basis.
Bidders under the Employee Reservation Portion may bid at Cut off Price.
Quote:
We had 242 full time employees as of December 31, 2011
An employee could have applied for a maximum of 192 shares.
242 X 192 = 46464.
So the 242 employees could have applied for up to 46464 shares.
That's awesome insight Alchemist. I have applied for 2 full applications (after steadily booking profits in last 2 months). Grey Market Premium quoted to be Rs. 350 at the moment.
Just because bids have been made at "cut-off" doesn't mean the bids are below the top price. Many people select the top-end of the price band and not "cut-off"
In case of MCX IPO, many people must have selected Rs 1032 instead of "cut-off".
As per Economic times "In terms of retail investors' demand, MCX IPO has already become one of the most over-subscribed public offers, while its overall subscription level is also probably the highest since R-Power, which got subscribed 73 times in January 2008. ". Is is the signal of repeat of of 2008 crisis?
MCX IPO - Multi Commodity Exchange of India
Mcx Ipo
Waiting for expert comments
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