Shalby Hospital - Information Note

Shalby Hospital - Information Note
IPO
by Nikita Bhoota 12/04/2017

This document summarizes a few key points related to the issue and should not be treated as a comprehensive summary. Investors are requested to refer the Red Herring Prospectus for further details regarding the issue, the issuer company and the risk factors before taking any investment decision. Please note that investment in securities is subject to risks including loss of principal amount and past performance is not indicative of future performance. Nothing herein constitutes an offer of securities for sale in any jurisdiction where it is unlawful to do so.

This document is not intended to be an advertisement and does not constitute an invitation or form any part of any issue for sale or solicitation of an offer to subscribe for or purchase any securities and neither this document nor anything contained herein shall form the basis for any contract or commitment whatsoever.

Issue Opens - December 5, 2017
Issue Closes - December 7, 2017
Face Value - Rs.10
Price Band - Rs.245- 248
Issue Size – ~Rs.505 cr
Public Issue: 2.04 cr shares
Offer for Sale: 10 lakh shares
Employee Reservation - 1.21 lakh shares
Bid Lot - 60 Equity shares              
Issue Type - 100% Book Building

% shareholding Pre IPO
Promoter & Promoter Group 97.86
Public 0.99
Non Promoter-Non Public 1.15

Source: RHP

Company Background

Shalby Hospital is one of the leading multi-specialty chain of hospitals in India(Source: F&S Report).The company’s hospitals are tertiary care hospitals and few of which also offer quaternary healthcare services to patients in various areas of specialization such as orthopaedics, complex joint replacements, cardiology, neurology, oncology, and renal transplantations. They provide inpatient and outpatient healthcare services through their 11 operational hospitals with an aggregate bed capacity of 2,012 beds. As on June 30th 2017, it had 9 operational hospitals with an aggregate operational bed count of 841 beds. Since March 2007, Shalby Hospital has conducted an aggregate of 92,100 surgeries, and provided healthcare services to an aggregate of 10,25,533 patients, consisting 1,33,652 inpatients and 8,91,881 outpatients. Headquartered in Ahmedabad, India, it has a domestic and overseas outreach through a network of hospitals in India, and Outpatient Clinics and Shalby Arthroplasty Centre of Excellence (SACE) located in India, Africa, and the Middle East. Shalby hospital has presence in western and central India and focus on Tier – I and Tier – II cities.

Offer Details

Purpose of this offer is to utilise the net proceeds from the fresh issue towards the following objects-Repayment or prepayment in full, or in part of certain loans availed by the company; Purchase of medical equipment for existing, recently set up, and upcoming hospitals. Purchase of interiors, furniture, and allied infrastructure for upcoming hospitals and general corporate purposes.

Key Points

The company’s reputation and clinical capabilities in the field of orthopaedics, along with continuing expansion across other healthcare specialties position Shalby favourably to benefit from increasing demand in India for quality healthcare services. Company has been a market leader in the area of joint replacement surgeries and in total it has conducted 54,105 joint replacements since 2007 (Source: F&S Report).

It has an established presence and strong brand recall in Gujarat, and an emerging presence in western and central India. The brand equity and operational experience in its core markets provides Shalby Hospital with the platform to further expand presence and operations in select locations across the country.

Key Risk

Orthopaedic services contributed 67.77% of its total revenue in Fiscal 2017. Financial conditions and results of operations are dependent on the revenue from orthopaedics due to this dependence on the field of orthopaedics, a number of factors such as loss of key experienced medical professionalsor regulatory changes could cause material fluctuations or decline in revenue. A decline in revenue from orthopaedics could materially and adversely impact the business, prospects, financial condition and results of operations.

Research Disclaimer

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Future Supply Chain Solutions Ltd- Information Note

Future Supply Chain Solutions Ltd- Information Note
IPO
by Nikita Bhoota 12/04/2017

This document summarizes a few key points related to the issue and should not be treated as a comprehensive summary. Investors are requested to refer the Red Herring Prospectus for further details regarding the issue, the issuer company and the risk factors before taking any investment decision. Please note that investment in securities is subject to risks including loss of principal amount and past performance is not indicative of future performance. Nothing herein constitutes an offer of securities for sale in any jurisdiction where it is unlawful to do so.

 This document is not intended to be an advertisement and does not constitute an invitation or form any part of any issue for sale or solicitation of an offer to subscribe for or purchase any securities and neither this document nor anything contained herein shall form the basis for any contract or commitment whatsoever.

Issue Opens - December 6, 2017
Issue Closes - December 8, 2017
Face Value - Rs 10
Price Band- Rs 660- 664
Issue Size – ~Rs 650 cr
Public Issue: ~97.85 lakh shares
Bid Lot - 22 Equity shares              
Issue Type - 100% Book Building

% shareholding Pre IPO
Promoter 57.35
Public 42.65

Source: RHP

Company Background

Future Supply Chain Solutions (FSCS) is one of the largest organised third-party logistics (3PL) service operators in India, according to the A&M report. "The Company provides services in three key areas:  Contract Logistics - Warehousing, distribution and other services accounting for ~71% of overall revenues as on 1HFY18, Express Logistics - Point-to-point, less-than truck-load and time-definite transportation services accounting for ~20% of overall revenues as on 1HFY18 and Temperature-Controlled Logistics - Cold-chain warehousing, transportation solutions, distribution of perishable products accounting for ~4% of overall revenues as on 1HFY18.

Offer Details

The offer consists of an Offer for Sale (OFS) of up to ~97.85 lakh equity shares.

Key Points

FSCS’s customer base spans many sectors, including retail, fashion and apparel, automotive and engineering, food and beverage, FMCG, e-commerce, healthcare, electronics and technology, home and furniture and ATMs. Of the top 20 customers of the company (other than the promoter and certain group companies), which accounted for approximately 20.1% of the revenue from operations in FY17, the company has served nine customers for over five years. For FY17, company’s 10 largest customers (other than the promoter and certain group companies) accounted for 14.8% of the revenue from operations

FSCS is one of the India’s largest organised third-party logistics operators, according to the A&M Report. It has extensive network of 46 distribution centres, 14 hubs and 106 branches (including franchisees), covering 11,235 pin codes across 29 states and 5 union territories. A&M report further states that, its MIHAN distribution centre (Nagpur) is one of the largest and most automated distribution centres in India. As per the report, the Indian 3PL market has grown at a CAGR of approximately 12% over FY12-17 and the 3PL industry growth in India is expected to continue in line with the historical growth trajectory due to strong demand and supply side drivers.

Key Risk

Future Group Entities are the key customers of the company. The revenue from promoter and group companies accounted for 62.5%, 49.5% and 46.5% of the total revenue from operations for FY2017, FY2016 and FY2015 respectively. Further, the company is reliant on the various sectors in which the Future Group Entities operate. If any of those sectors suffer a downturn, the company’s financial performance would be impacted.

Research Disclaimer

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How to Read the Mutual Fund Offer Documents?

How to Read the Mutual Fund Offer Documents?
by Nutan Gupta 13/04/2017

It is very difficult to not notice the words of caution after every mutual fund commercial - “Mutual Fund investments are subject to market risks. Please read the offer documents carefully before investing.” How many of us actually read the offer documents? 5 investors in every 100 investors might be going through the documents. Rest 95 either do not know how to read the offer documents or do not consider it important enough to go through the documents.

Here are some important aspects you should consider while reading offer documents:

Investment Objective

This is one of the most important things to look at in an offer document. It gives a fair idea about the thought process of the fund manager and the strategies that he will use in order to achieve the fund’s objectives. An individual can compare these objectives with his own expectations as per his risk appetite.

Past Performance

The past performance of the fund can be looked at to know if the fund has given consistent returns or not. Investors can also look at the launch date if the fund, its total assets under management and compare it with other funds in the similar space. However, this cannot be used to predict future returns, as one cannot determine future returns on the basis of past performance.

Fund Managers

Fund manager is an experienced professional who has an expertise is managing funds. The offer document clearly states who the fund manager to a particular fund is. This gives the investor an insight about the investment style of the fund manager.

Loads and Taxes

The offer document also states all the charges applicable like the entry and exit load, transaction charges and other charges applicable for managing a fund. All mutual funds do not have same charges as the charges vary according to the type of mutual fund.

Expense Ratio

Expense ratio is the ratio which is charged by AMCs to manage an investors’ money. It is charged in percentage terms. Different funds have different expense ratios. However, SEBI has restricted the limit for expense ratios that a fund can charge. Equity funds can charge a maximum of 2.5% and debt funds can charge a maximum of 2.25%.

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5 Things to Know About Asset Allocation in Mutual Funds

5 Things to Know About Asset Allocation in Mutual Funds
by Nutan Gupta 17/04/2017
New Page 1

Asset allocation is putting your money across different asset classes - stocks, bonds, real estate, cash and commodities. Asset allocation ensures that you get the best returns out of your savings. Here are five things that an individual must know about asset allocation.

Asset allocation is not diversification

A lot of times people use the words asset allocation and diversification interchangeably. However, one needs to understand that these are two different terms. Asset allocation is the process of deciding the amount of exposure one needs to have in different asset classes. On the other hand, diversification is what you invest within these asset classes.

Asset allocation could be tactical

An investment strategy is planned to achieve long-term goals. A mutual fund invests in stocks which the fund manager believes will give higher returns in the future. Sometimes, a fund manager thinks that a particular fund will give good returns in the short-term but also has the potential to give superior returns in the long-term. Investment moves are based on what the fund manager thinks and this is known as tactical approach.

Asset allocation is not standard

Asset allocation differs based on the age and risk appetite of an investor. An individual who plans to retire next year will have a different asset allocation than a person who is a young entrepreneur. Asset allocation also differs depending upon the income stream of an individual. An individual with a fixed and regular income stream can have a more aggressive asset allocation than a person whose income is not regular.

Asset allocation could be dynamic

A dynamic asset allocation model is the one when a fund manager makes changes in the portfolio which reflects the most recent changes. These changes should be made keeping the long-term performance of the asset in mind. The riskiness of assets change with time.

Asset allocation needs periodic rebalancing

The asset allocations in our portfolio fluctuate every year depending on market fluctuations. Some assets may have performed extremely well in one year, while some may have underperformed in that period. Periodic rebalancing is required as it reduces volatility in the portfolio.

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Short Call Condor Options Trading Strategy

Short Call Condor Options Trading Strategy
by Nilesh Jain 17/04/2017

A Short Call Condor is similar to Short Butterfly strategy. The only exception is that the difference of two middle strikes bought has different strikes.

When to initiate a Short call condor?

A Short Call Condor is implemented when the investor is expecting movement outside the range of the highest and lowest strike price of the underlying assets. Advance traders can also implement this strategy when the implied volatility of the underlying assets is low and you expect volatility to go up.

How to construct a Short Call Condor?

A Short Call Condor can be created by selling 1 lower ITM call, buying 1 lower middle ITM call, buying 1 higher middle OTM call and selling 1 higher OTM calls of the same underlying security with the same expiry. The ITM and OTM call strikes should be equidistant.

Strategy

Sell 1 ITM Call, Buy 1 ITM Call, Buy 1 OTM Call and Sell 1 OTM Call

Market Outlook

Significant volatility above higher and lower strikes

Motive

Anticipating price movement in the underlying assets

Upper Breakeven

Highest strike price - Net credit

Lower Breakeven

Lowest strike price + Net credit

Risk

Limited (if expires above lower breakeven point and vice versa)

Reward

Limited to Net premium received

Margin required

Yes

Let’s try to understand with an example:

Nifty Current spot price

9100

Sell 1 ITM call of strike price (Rs)

8900

Premium received (Rs)

240

Buy 1 ITM call of strike price (Rs)

9000

Premium paid (Rs)

150

Buy 1 OTM call of strike price (Rs)

9200

Premium paid (Rs)

40

Sell 1 OTM call of strike price (Rs)

9300

Premium received (Rs)

10

Upper breakeven

9240

Lower breakeven

8960

Lot Size

75

Net premium received

60

Suppose Nifty is trading at 9100. An investor Mr. A estimates that Nifty will move significantly by expiration, so he enters a Short Call Condor and sells 8900 call strike price at Rs 240, buys 9000 strike price of Rs 150, buys 9200 strike price for Rs 40 and sells 9300 call for Rs 10. The net premium received to initiate this trade is Rs 60, which is also the maximum possible reward. This strategy is initiated with a view of significant volatility on Nifty hence it will give the maximum profit only when there is movement in the underlying security below 8900 or above 9200. Maximum profit from the above example would be Rs 4500 (60*75). The maximum profit would only occur when underlying assets expires outside the range of upper and lower breakevens. Maximum loss would also be limited to Rs 3000 (40*75), if it stays in the range of higher and lower breakeven.

For the ease of understanding of the payoff schedule, we did not take in to account commission charges. Following is the payoff schedule assuming different scenarios of expiry.

The Payoff Schedule:

On Expiry NIFTY closes at

Net Payoff from 1 Deep ITM Call Sold (Rs) 8900

Net Payoff from 1 ITM Calls Bought (Rs) 9000

Net Payoff from 1

OTM Call bought (Rs) 9200

Net Payoff from 1 deep OTM Call sold (Rs.) 9300

Net Payoff (Rs)

8600

240

-150

-40

10

60

8700

240

-150

-40

10

60

8800

240

-150

-40

10

60

8900

240

-150

-40

10

60

8960

180

-150

-40

10

0

9000

140

-150

-40

10

-40

9100

40

-50

-40

10

-40

9200

-60

-50

-40

10

-40

9240

-100

90

0

10

0

9300

-160

150

60

10

60

9400

-260

250

160

-90

60

9500

-360

350

260

-190

60

9600

-460

450

360

-290

60

The Payoff Graph:

Impact of Options Greeks before expiry:

Delta: If the underlying asset remains between the lowest and highest strike price the net Delta of a Short Call Condor spread remains close to zero.

Vega: Short Call Condor has a positive Vega. Therefore, one should buy Short Call Condor spread when the volatility is low and expect to rise.

Theta: Theta will have a negative impact on the strategy, because option premium will erode as the expiration dates draws nearer.

Gamma: The Gamma of a Short Call Condor strategy goes to lowest if it moves above the highest or below the lowest strike.

Analysis of Short Call Condor spread strategy

A Short Call Condor spread is best to use when you are confident that an underlying security will move outside the range of lowest and highest strikes. Unlike straddle and strangles strategies risk involved in short call condor is limited.

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5 Common Myths about Mutual Fund Investments

5 Common Myths about Mutual Fund Investments
by Priyanka Sharma 17/04/2017

Over the years, investing in Mutual Funds has emerged as a popular option among a vast population of investors with varied incomes and risk appetites. Like any other investment, putting money into Mutual Funds too requires a careful assessment, and study on your part even if you have a professional help. Listed below are some misconceptions related to MF investments:

Mutual Funds demand long-term, huge investments

The fact is that you can get started with a low amount of capital investment’ it could be as low as Rs 1,000. Another misconception is that all Mutual Funds investments are long-term investments and that it is a long wait before one draws benefits from it. The latter too is incorrect. Mutual Funds can be either short term or long term investments, depending upon the underlying assets the mutual funds invest in.

Mutual Fund investment is risk-free

Perhaps, one of the biggest misconceptions about Mutual Funds is that it is a risk-free investment. This is simply not correct. According to one school of thought, the risk of investing in MF is inversely proportion to the diversification of the portfolio. Taking this argument forward, if you hold 2 stocks in your portfolio then the risk is high compared to an investor with 20 stocks. Similarly, MF investments in multiple stocks are less risky compared to direct equity investment.

Also, it is generally advisable that the investment theme should be different to hedge the risk. It doesn’t make sense to invest in 3-4 large cap mutual fund schemes, as these are likely to invest in more or less the same stocks.

Mutual Funds with lower NAV will deliver higher returns

Another common myth related to Mutual Fund investment is that MFs with lower NAV will deliver higher returns. As an investor, we are led to believe that Mutual Fund scheme with NAV of Rs 1,000 will deliver lower returns compared to fund with NAV of Rs 100. The argument behind this is that it is more probable for a stock to climb from Rs 10 to Rs 12 i.e. 20% return compared to the jump from Rs 4,000 to Rs 4,800 for same 20% return. However, the fact is that the underlying theme of Mutual Fund investment decides the future returns irrespective of lower or higher NAV.

All Mutual Funds qualify for tax deduction

This is often sold as one of the biggest USPs for investing in Mutual Funds. However, the fact is that while MF investments do provide tax savings benefits, only the Equity Linked Savings Scheme (ELSS) is eligible for tax deduction under Section 80C of Income Tax Act. The dividends and long term capital gains from these investments are tax free.

Mutual Fund investment does not require regular monitoring

It is generally understood that Mutual Fund investments do not require any regular monitoring. In general, investors take it easy after putting their money in MFs. Well, it is true that MFs do not largely require a constant vigil, but you cannot afford to neglect it completely as it is your investment after all. This is largely because top performing Mutual fund schemes keep changing every year. Therefore, to maximize your returns, it’s a good idea to check the performance of your funds every year. You should keep modifying your portfolio depending on the performance of the funds in previous years. Some of the funds are conservative or invest in defensive stocks, which deliver consistent returns. Such schemes may not be top performers, but are but consistent performers and are best suited for the conservative investor. Such funds are also apt for SIP investment.

Top 5 Mutual Funds

 

Scheme Name

Corpus (Rs cr)

1 M (%)

6 M (%)

1 Y (%)

3 Y (%)

5 Y (%)

HDFC Prudence Fund(G)

17,776

3.1

10.6

30.8

19.7

16.5

SBI BlueChip Fund-Reg(G)

11,629

2.9

4.5

21.5

20.4

19.7

IIFL India Growth Fund-Reg(G)

345

1.0

5.1

33.0

0.0

0.0

Franklin India Smaller Cos Fund(G)

4,860

4.0

8.6

35.6

32.9

30.5

ICICI Pru Infrastructure Fund(G)

1,435

3.0

13.4

34.3

17.7

13.6