Oil India IPO subscribed 31 Times; QIB Over 50 Times

2009-09-27T12:17:00.000-07:00

Oil India's initial share sale to raise Rs 2,782 crore received demand for as much as Rs 86,000 crore, as its shares are seen offering profits since its valuation is lower than rivals ONGC and Cairn India.

The 2.65-crore share sale that ended on Thursday was subscribed 31 times, with institutional investors making maximum bids, while retail investors, who were burnt in the past IPOs, such as NHPC and Adani Power, were less enthusiastic. "OIL is offering shares at a valuation that translates into a EV/2P reserves (enterprise value divided by proven and probable reserves) of $4.1 compared to $5.4 for ONGC, $12.8 for Cairn and $7-8 for most international players," said a note by brokerage house HDFC Securities to clients.

For oil companies, the enterprise value to proven

and probable reserves are used as a gauge for valuation. For manufacturing companies price-to-earnings multiple is used as a metric. The institutional portion of the issue was subscribed 54 times, the non-institutional (mostly high net worth individuals and some corporates) nearly 11 times, with almost the entire bids coming on the last day, and the retail portion nearly two times. Oil India, the second company from the government stable to raise funds after NHPC since the Manmohan Singh government returned to power triggering reform hopes, invited bids in a price band of Rs 950-1,050.

In unofficial trading, the so-called grey market, shares are trading at a premium of Rs 35- 40, some brokers, who did not want to be identified, said. The date of listing is still not known. "Higher production of oil and gas, going forward, growing accretion to acreage, lower subsidy burden due to soft crude oil prices, high success ratio and operational efficiency, greater use of better technology (eg horizontal well technology), upsides from pipeline and downstream business, upside from likely revision in gas APM (administered price mechanism) prices, better financial and return ratios - all this could mean that the difference in valuation attracted by ONGC and OIL could narrow," the HDFC Securities note said.

Till Wednesday, most brokers were of the opinion that the retail portion may not be fully subscribed since their investments in NHPC and Adani Power have already eroded in value.

Source: economictimes.indiatimes.com

Sensex & Nifty at 15 month High

2009-09-27T12:10:00.000-07:00

The benchmark indices notched new 52-week highs in noon trade, boosted by of higher advance tax numbers from a few corporates. This led to hopes of strong earnings for the September quarter.

Bajaj Auto paid an advance tax of Rs 170 crore for the July-September quarter vs Rs 50 crore in the previous quarter. Ambuja Cements paid an advance tax of Rs 150 crore for the July-September quarter vs Rs 70 crore in the previous quarter. SBI’s second quarter advance tax stood at Rs 1,832 crore.

PwC expects strong advance tax numbers from companies in the auto, PSU banks and power generation space.

The Sensex was up 223 points at 16,437, led by gains in metal and realty stocks. It had clocked a new 52-weak high when it hit 16,448. Nifty was up 79 points at 4,888 after clocking fresh 52-weak high of 4,890 in intraday trade today.

Among the Sensex stocks, DLF was up over 4 per cent to be the biggest gainer among the pack. Tata Steel, Sterlite Ind, and SBI were also up over 2 per cent.

Asian markets were mixed on Tuesday after Wall Street shrugged off trade tensions between the US and China to end at its highest point in nearly a year.

Source: profit.ndtv.com

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Oil India IPO subscribed 31 Times; QIB Over 50 Times

Sensex & Nifty at 15 month High