Winds of Change Halcyon Days Back Again!!: A Comprehensive Assessment (Q1 March 2010)

Market Global and India
A Comprehensive Assessment (Q1 March 2010)
Strategies for your Success
ARC
Winds of changeHalcyon days back again!!

2010 ARC Financial Services (P) Ltd. All rights reserved. Privileged and confidential information of ARC Financial Services

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Global IPO Market: Q1 Mar10 Synopsis
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The IPO market which started to recover in the second half of 2009, continued its recovery trend in Q1 Mar10
Driven by Asian and European market, Q1 Mar10 witnessed the highest first quarter activity since 2000 (in terms of number of deals and capital raised)
Asian markets witnessed 62% of total IPO volume in Q1 Mar10

Asia Pacific continued to be the leading region with 66% market share. EMEA and North America regions had 19% and 13% market share respectively
IPO activity by number of IPOs grew by 413% YoY in Q1 Mar10 to 267 deals compared to 52 deals in Q1 Mar09), though it declined by 10% QoQ from 297 deals in Q4 Dec09
In terms of deal proceeds, IPO proceeds increased by a huge 3,700% in Q1 Mar10 to $53.2B from $1.4B in Q1 Mar09, though they declined by 21% QoQ from $67.2B in Q4 Dec09
Emerging markets dominated the IPO market in Q1 Mar10

Developing countries made up to 72% of the total number of deals, whereas developed countries made 28%
Developing countries raised 58% of the total proceeds compared to 42% from developed economies
BRIC (Brazil, Russia, India and China) countries IPO activity, constituted 49% of global capital raised in Q1 Mar10
Seven of the top 10 IPOs and 13 of the top 20 IPOs by proceeds were from emerging markets 287 246
Global IPO Activity

2,500 2,000
167
1,500 1,000
167
94 111 53
124
50
500
864
-
1,517
1,537
1,537
1,729
1,979
745
577
267
300 275 250 225 200 175 150 125 100 75 50 25 0
2003
2004
2005
2005 2006 No. of IPO's
2007 Proceeds ($B)
2008
2009
Q1 Mar'10
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Global IPO Market Quarterly Performance..

IPO Proceeds ($B)
105 90 68
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Over last 7 years, Global IPO market witnessed highest number of deals in Q4 Dec07 and highest proceeds in Q4 Dec06
102
62 59 41 38
66 53
26 7 13
27
33 27
37
37
45
29 33 34 36
33
13 3 1
10
IPO Volume
585 455 386 337 339 381 226 171 337 403 440 269 297 267 454 567
591
IPO activities nosedived during this phase
458
333
347
344
342
251
130
164
78 52 82
146
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..Has Seen Spurt By The Emerging Countries

IPO Proceeds ($B)
43 36 43
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Over the last 7 years, the emerging countries market has increased from a fourth of the total global IPO proceeds to nearly half
35 26
15
28 18 7 3 1 0 18 13
23
7
3 4
6 3
7 4
4 4
13
11
IPO Volume
122 126 111
135 124
70 60 33 34 37 35 22 28 33 60 48
91 91
72 57 47
39
57
23
19
37
12
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Sector-Wise Global IPO Roulette..

Sector Breakup: Q1 Mar09 Sector Breakup: Q1 Mar10
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Consumer Staples 8% Consumer Products & Services 11%
Energy & Power Financials 6% 6% Retail 6% Media & Entertainment 4%
Consumer Products & Services 9% Healthcare 7%
Consumer Energy & Staples Power 7% 6% Financials 6% Real Estate 4% Retail 4% Media & Entertainment 3% Telecom 1%
Healthcare 12% Telecom 4% Technology 14%
Industrials*** 17%
Materials**** 20%
Technology 13%
Industrials*** 19%
Materials**** 13%
In Q1 Mar10, Materials was the leading sector witnessing 53 IPOs followed by Industrials with 51 and Technology with 38
All three sectors collectively accounted for 53% of total IPO deals
In Q1 Mar09, Industrials sector was the leading sector witnessing only 9 IPOs followed by Materials and Technology with 7 IPOs each Real Estate sector which remained silent in Q1 Mar09 due to global meltdown witnessed 11 IPOs in Q1 Mar10
***includes automobiles and components; building/construction and engineering; construction materials; machinery and other industrials; transportation and infrastructure ****includes chemicals; construction materials; containers and packaging; metals, mining and other materials; paper and forest products
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..Indicates Paradigm Shift To Financials From Consumer Products

Sector Breakup: Q1 Mar09 Sector Breakup: Q1 Mar10
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Financials Materials****
Consumer Staples
9%
Materials****
6% 5%
Industrials***
Technology Energy & Power Real Estate Consumer Products & Services Media & Entertainment Retail
12%
Telecom Healthcare Energy & Power Technology Industrials*** Financials
10% 5% 3% 15%
4%
2% 2% 2% 2% 1%
1% 19%
3% 3% 3% 2%
0% 60%
Consumer Products & Services

Media & Entertainment
Healthcare
Consumer Staples
31%
Telecom
In Q1 Mar10, Financials was the leading sector mopping up to $16.4B followed by Materials with $10.2B and Industrials with $7.9B
All three sectors collectively accounted for 65% of total IPO proceeds
In Q1 Mar09, Consumer Products & Services sector was the leading sector- 60% of total proceeds followed by materials with 12% and Telecom with 10% while in Q1 Mar10 these sectors garnered 4%, 19% and 0.1% respectively
Real Estate sector which remained silent in Q1 Mar09 due to global meltdown garnered $2.7B proceeds in Q1 Mar10
***includes automobiles and components; building/construction and engineering; construction materials; machinery and other industrials; transportation and infrastructure ****includes chemicals; construction materials; containers and packaging; metals, mining and other materials; paper and forest products
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Around The World In Three Quarters (IPO Market-Wise)

Volume (No.) In the last two quarters, the average value of proceeds has been equal across all regions, except in South and Central America where it is nearly 3 -4 times
North America 8% EMEA 19% EMEA 12% Central, South America & Carribean 3%
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Central, South America & Caribbean 2% North America 13%
North America 12%
EMEA 19%
Asia Pacific 73%
Asia Pacific 66% Asia Pacific 73%
Proceeds
Q1 Mar09
Q4 Dec09
Q1 Mar10
In the first quarter of 2009, the average value of proceeds was incredibly high in North America when compared to other regi ons
Central, South America & Carribean 6%
EMEA 11% Central, South America & Caribbean 13% Asia Pacific 30% North America 14%
EMEA 10%
North America 11%
EMEA 17%
North America 59% Asia Pacific 63%

Asia Pacific 66%
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The Global IPO PieStock Exchange-Wise

Volume (No.)
NYSE 6% Nasdaq 5%
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HKEx 4% HKEx 11%
ASX 4%
Toronto 3%
ASX 10% Other 71%

Tokyo 4% NYSE 2% SGX 2% Others 67%
AIM 3% SGX 3% Deutsche Borse 2% LSE 2% Tokyo 1%
Q1 Mar09
Proceeds
SGX 1% ASX 2% Tokyo 3% Other 22%
Q1 Mar10
Value of proceeds have increased humongously (nearly 400 times) in the Tokyo Stock Exchange, from Q1 Mar09 to Q1 Mar10
HKEx 7% Tokyo 21% NYSE 6% Deutsche Borse 4% Toronto 3%
HKEx 14% NYSE 59%
LSE 3%
Nasdaq 3% AIM 1% Others 51% SGX 1% ASX 1%
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The Heavyweights: Largest IPOs in Q1 Mar10 (Global)

Top 10 IPOs globally raised $24.4B which represents about 46% of global capital raised in Q1 Mar10 China dominated the largest IPO list, representing three of the largest ten initial public offerings
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Top ten IPOs in Q1 Mar10 include three financial and capital goods & services firms each, two materials firms and one each from energy and communication
Dai-ichi Life Insurance $10.9B was the largest IPO in Q1 Mar10 across the globe, followed by $2.3B IPO of Huatai Securities
The largest IPO of this quarter (Dai-ichi Life Insurance, Japan, $10.9B) was the largest IPO in last 15 months and it mopped up 21% of total global proceeds
Banco Santander Brasil SA IPO was the largest IPO of 2009 which mopped up $8.1B which was just 45% (in terms of value) of the largest IPO of 2008 (Visa, US, $17.86B), but equivalent to largest IPO of 2007 (VTB Bank, Russia, $8B)
Financial sector was the pick with 3 largest IPOs in top 10, contributing 60% of the top 10 IPO proceeds
Company Name Dai-ichi Life Insurance Huata Securities United Company RUSAL Country Japan China Hong Kong Offer Date 23 Mar10 12 Feb10 22 Jan10 Issue Size ($B) 10.9 2.3 2.2 Industry Financial Financial Materials Return (%)* N/A 8% (17%) (6%)
China First Heavy Industries

Korea Life Insurance China XD Electric
China
South Korea China
3 Feb10
5 Mar10 22 Jan10
1.6
1.5 1.5
Consumer
Financial Consumer
7%
(-4%) (13%) N/A (5%) 1%
OSX Brasil SA
Athabasca Oil Sands Corp Kabel Deuts chland African Barrick Gold
Brazil
Canada Germany United Kingdom
17 Mar10
30 Mar10 19 Mar10 19 Mar10
1.3
1.3 0.9 0.8
Consumer
Energy Communication Materials
Top Three IPOs in Q1 Mar10 accounted for 29% of the quarters global IPO proceeds
* Offer price to closing price on 31st Mar10
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Indias Largest IPOs in Q1 Mar10
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Of the total amount mobilized through the primary market by corporate India, 4 issues raised over INR 67B (72% of total IPO proceeds in Q1 Mar10)
Of the total amount mobilized in Q1 Mar10, largest IPO (JSW Energy) garnered 41% of total proceeds
Only 3 IPOs out of top 10 IPOs and 4 out of all the 18 IPOs were trading below their issue price as of 31 Mar10 Company Issue Size (INR M) Issue Size ($M) Issue Price (INR) Price (INR) 31 MAR09 Return* (%)
7 IPOs out of top 10 and a total of 14 of all the 18 IPOs were trading above the issue price as of 31 Mar10
JSW Energy
DB Realty IL&FS Transportation Networks
38,187
15,000 7,000
818
324 156
100
468 258
111.8
458.5 281.6
11.8%
(2.0%) 7.9%
Garnered 41% of total IPO proceeds
Hathway Cable & Data

Godrej Properties D.B. Corp
6,648
4,620 3,853
143
99 83
240
490 212
206.9
513.0 236.5
(13.7%)
4.7% 12.8%
Jubilant FoodWorks
United Bank Infinite Computers
3,287
3,300 1,898
72
71 42
145
66 165
314.9
68.7 190.0
116.3%
3.9% 15.7%
Vasco Engineers
Man Infra Constructions
* Offer price to closing price on 31st Mar10
1,782
1,418
38
31
165
252
154.0
359.3
(5.9%)
42.9%
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Indian Stock Market Performance Over Last 2 Years..

26000
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Lehman Brothers files for Bankruptcy AIG Bailout led by US fed Icelandic Financial Crisis First RBIs series of rate cuts
Sensex dips below 7,000 in intra day Citigroup Bailout by US Fed
Dubai Debt crisis
21000
20,286
(13%) 17,693
16000
Satyam fiasco Weak domestic flow

Bear Stern Collapse FIIs pulled out $3.2B in Jan08 RBI hikes CRR, first time since Sep08 UPA sans Left support, back in power
11000
6000
Quarter ended 2 Jan08 1 Apr08
BSE 20,301 15,627
Absolute Change 3,136 (4,839)
% Change 18.1% (23.6%)
P/E 27.8x 20.1x
Quarter ended 1 Apr09 1 Jul09
BSE 9,902 14,646
Absolute Change
% Change
P/E 13.9x 19.2x
(56)
4,744 2,489
(0.6%)
47.9% 17.0%
1 July08
1 Oct08 2 Jan09
12,962
13,056 9,958
(2,665)
94 (3,098)
(17.1%)
0.7% (23.7%)
15.9x
16.3x 12.7x
1 Oct09
4 Jan10 01 Apr10
17,135
17,559 17,692
22.2x
22.5x 21.49x
424
133
2.5%
0.8%
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Has Been Driven By And Dependent Upon FIIs Activity

Net Investment (INR B)
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In 2008 there was a net outflow of FIIs, the 1 st time in last 10 years
In 2009, FIIs came back in full gusto and invested INR 834B, which boosted the investor sentiments and pushed the Sensex beyond 17,000, posting a 81% gain in 2009
701 834
388
467
364 206
(530)
2004 2005 2006 2007 2008 2009 Q1 2010
Net Investment (INR B) UPA government won the general elections with full majority in May09 which boosted FIIs confidence in the Indian economy FIIs invested INR 201B in May and took Sensex 28% up
5
In Jan10 there was net outflow of FIIs, the 1 st time in last 11 months Mar10 witnessed the biggest monthly inflows into the Indian Equity markets from the FIIs since May09 which helped to markets to touch its 18 month high
201 183 199
111 65 38
91 49
55
102
12 (5)
(42)
Jan'09
(24)
Feb'09 Mar'09 Apr'09 May'09 Jun'09 Jul'09 Aug'09 Sep'09 Oct'09 Nov'09 Dec'09 Jan'10 Feb'10 Mar'10 www.arc-fs.com | 11
Indian IPO Market Performance On Par with Sensex

BSE Sensex
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17,527
+167%
6,556
IPO market fall or rise has been in sync with the stock markets clearly reflecting momentum value attached to buyers interest for an IPO
Jan'05 Apr'05 Jul'05 Oct'05 Jan'06 Apr'06 Jul'06 Oct'06 Jan'07 Apr'07 Jul'07 Oct'07 Jan'08 Apr'08 Jul'08 Oct'08 Jan'09 Apr'09 Jul'09 Oct'09 Jan'10 Mar10
Indian IPO Market

400 342
350
300 250 200 150 100 50 0 2005 2006 100 39 199
Q1 Mar 10 has seen more IPOs than the whole of 2009. However, the average value of proceeds has fallen considerably from INR 9.2B to INR 4.9B
185 157 103 93 37 17 2009
75
19
Q1 Mar'10
2007 Proceeds (INR M)
2008 No. of IPO
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The Fall From Crest &The Rise From Ashes

BSE Sensex
17,127 17,465
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17,528
15,644
14,494 13,462 12,860 BSE Sensex gained 85% in the last 15 moths
9,647 Q1 Mar'08 Q2 Jun'08 Q3 Sep'08 Q4 Dec'08
9,709
Q1 Mar'09 Q2 Jun'09 Q3 Sep'09 Q4 Dec'09 Q1 Mar'10
Indian IPO Market

The IPOs also crossed the pit and are entering a much better phase now
124.3 93.4
180 160 140 120 100 80 60 40 20 0
159.8
32.0 13 8.1 9 Q1 Mar'08 Q2 Jun'08 16.6 12 Q3 Sep'08
0.8
3 Q4 Dec'08
0.2 1 Q1 Mar'09
0.2 1 Q2 Jun'09 No. of IPO
8 Q3 Sep'09
19
7
Q4 Dec'09 Q1 Mar'10
Proceeds (INR M)
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IPO Subscription Diagnostic: Most IPOs Subscribed..

Trade Date 30 Mar10 29 Mar10 18 Mar'10 Company IL&FS Transportation Networks D Q Entertainment (International Ltd) United Bank Sector REI** TMT* Banking Size (INR M) 6,117 1,284 3,300 Price Bottom Range 242 75 60 Offering Price vs. Price Range
258 80

Price Top Range 258 80 66 Performance One Month Post IPO (%) 7.9%*** 40.3%*** 3.9%***
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66 252
90 450 240 468 45 220 75 75
11 Mar'10
10 Mar'10 03 Mar'10 25 Feb'10 24 Feb'10 24 Feb'10 23 Feb'10 19 Feb'10 15 Feb'10 15 Feb'10 08 Feb'10

Texmo Pipes & Products Arss Infrastructure Hathway Cable & Data Emmbi Polyarns DB Realty Aqua Logistics Thangamayil Jwellery Vasco Engineers Syncom Healthcare Jubilant FoodWorks
REI**
industrial REI** TMT* industrial REI** Industrial HCLS**** industrial TMT* CGR*****
1,418
450 103 6,648 431 1,500 150 106 1,782 563 3,287
243
85 410 240 468 40 200 70 65 165 135
165
252
90 450 265 486 45 225 75 75 185
42.9%***
2.6%*** 106.3%*** (14.6%) (48.8%) (3.7%) 11.6% 6.4% (15.9%) (62.1%) 77.9%
145
165 180 212 490 100
145
03 Feb'10
11 Jan'10 06 Jan'10 05 Jan'10 04 Jan'10
Infinite Computers
MBL Infrastructures D.B. CORP Godrej Properties JSW Energy
TMT*
REI** TMT* REI** Power
1,898
342 3,853 4,620 38,187
155
165 185 490 100
165
180 212 530 115
21.6%
12.7% 11.4% (2.6%) 9.7%
*Telecom, Media & Technology , **Real Estate & Infrastructure, ****Healthcare & Lifesciences *****Consumer Goods & Retail, *** as on 31 Mar10
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..At Higher Band Clearly Reflecting Customers Buoyancy

Real Estate & Infrastructure was the hottest sector among the investors, witnessed 32% of total IPOs
3 IPOs out of total 6 within this sector got subscribed by more than 30x times
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IPO Oversubscribed By
DQ Entertainment (International) Ltd IPO witnessed an overwhelming response from the investors followed by Man Infra Constructions, ARSS Infrastructure, Infinite Computers and D.B.Corp
86.32
62.52
47.62
39.54 43.22
33.38
31.11 Median: 5.17x
33.49
1.68
4.00
1.97
1.22
5.17
1.12
1.94
1.20
2.95
1.36
7.48
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IPO Activity Ramping Up, Coming Out Of Slumber

IPOs market in India made a good beginning in Q1 Mar10, raising $2.3B through 19 IPOs
In terms of volume, Q1 Mar10 was the best quarter in the last 9 quarters
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Only 1 IPO was withdrawn in 2009 as compared to 3 in 2008 IPO market got active in 3rd and 4th quarter of 2009 Activity in Q1 Mar10 was lead by Real Estate & Infrastructure sector which remained silent through the 2009
Sector witnessed 32% of the total IPO volume
With 19 IPOs in Q1 Mar10, India had the third largest number of IPOs after China and the US
2009 witnessed the lowest number of IPOs in the last 6 years followed by 2008,17 & 37 respectively In Q1 Mar10, the no. of IPOs oversubscribed by more than 30 times was 8 In 2009, only one IPO (OIL India) was able to oversubscribe by more than 30 times In 2008, two IPOs were able to oversubscribe by more than 30 times
No. of IPOs: (2005 2009)*
Only 3 months in 2010 witnessed more number of IPOs than issued in 12 months in 2009
13 9 12
IPO Volume (No.)*
19
103
75
8 39 37 17 18 3 1 1
2005
2006
2007
2008
2009
Q1 2010
Q1 Mar'08
Q2 Jun'08
Q3 Sep'08
Q4 Dec'08
Q1 Mar'09
Q2 Jun'09
Q3 Sep'09
Q4 Dec'09
Q1 Mar10
* On the basis of listings

contd www.arc-fs.com | 16
..With Renewed Optimism Being Felt In Markets

Capital raised by Corporate India through IPO route in Q1 Mar10 aggregated at INR 93.4B
Capital raised by Corporate India through IPO route in 2009 aggregated at INR157B, lowest in the last 5 years (Till YTD 2010)
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JSW Energy was the largest IPO of Q1 Mar10 mopping up INR 38B, contributing 51% of total proceeds
YTD 2010, JSW Energy IPO was the 3rd largest IPO in last 3 years followed by Reliance Power in 2008 and NHPC in 2009
Reliance Power was the largest IPO of 2008 contributed 63% to total proceeds NHPC was the largest IPO of 2009 contributed 39% to total proceeds
Q1 Mar10 was the second best quarter in terms of capital raised after Q3 Sep09 Q2 Jun09 and Q1 Mar09 were the leanest quarters in last 9 quarters witnessing only 1 IPO in each quarter First 6 months of 2009 contributed just 0.3% of the total IPO proceeds in 2009
The average IPO size in Q1 Mar10 was INR 4.9B

The average IPO size was INR 9.2B in 2009 and INR 5.0B in 2008
Proceeds* (INR B)
Proceeds* (INR B)
160
342
124
199 100
185 157 93
8 17 1 0
Q1 Mar'09
93
32 0
Q2 Jun'09 Q3 Sep'09 Q4 Dec'09 Q1 Mar10
2005
2006
2007
2008
2009
2010**
Q1 Mar'08
Q2 Jun'08
Q3 Sep'08
Q4 Dec'08

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IPO Scan: Performance Parameters In Last 2 Years

Only IPOs which got listed in Q1 Mar09 are trading above their issue price
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In 2008, investors had a conservative approach towards new market entrants which resulted in poor performance of the IPOs listed during this period
A good percentage of IPOs listed after the Q2 Jun09, have been performing reasonably well in the market
This can be attributed to the fact that investors are now looking to diversify and also encourage new entrants, as the market scenario slowly moves out of the recession
In the first two quarters of 2009, there were only two IPO listings, one in each quarter. So, nothing much can be read into the performance during this period
Kiri Dyes & Chemicals Limited, which was listed in Q2 Jun08, has been the top performer with nearly 400% returns
Performance* (% of IPOs)
100 71 50 31 78
33 11
8 Q3 Sep'08 Q4 Dec'08 Q1 Mar'09 0 Q2 Jun'09 Q3 Sep'09 Q4 Dec'09 Q1 Mar'10
Q1 Mar'08
Q2 Jun'08
*%age of total IPOs listed in their respective quarters which are trading above their Issue price as on 15 Apr10
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Sector Wise Comparison (Volume)

Volume (2008)#: 37
Volume (2009)#: 17
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Healthcare 5.3%
Volume (Q1 Mar10)#: 19
BFSI* 2.7% Consumer Goods & Retail 11.8% Outsourcing 5.9% Consumer Goods & Retail 10.5% Education 5.9% Energy & Power 10.8% Industrial 15.8% Energy & Power 17.6%
BFSI* 5.3%
Energy & Power 5.6%
Healthcare 8.1%
Industrial 37.8%
Hospitality 11.8%
REI*** 13.5% TMT** 13.5%
Consumer Goods & Retail 13.5%
REI*** 31.6% TMT* 17.6% Industrial 29.4% TMT** 26.3%
REI*** was the buzzing sector in Q1 Mar10 with 32% of total IPO offerings followed by TMT** with 26% and Industrials with 16%
REI***, Healthcare and BFSI* sectors which did not have any offerings in 2009, contributed nearly 42% (in total volume) in Q1 Mar10 REI*** sector which did not see any activity in 2009 was the hottest sector in Q1 Mar10 , witnessed 6 listings contributing 32% to total volume
# On the basis of listings *Banking, Financial Services& Insurance, ** Technology, Media & Telecommunication,*** Real Estate & Infrastructure
contd www.arc-fs.com | 19
Sector Wise Comparison (Proceeds)

Proceeds (2008)#: INR 185B
TMT** 4.1% BFSI* 2.7% Consumer & Retail 2.2% Industrials Healthcare 4.9% 0.8% REI*** 8.0% Industrials 22.0%
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Proceeds (2009)#: INR 157B

TMT** 3.0% Hospitailty 6.0% Consumer & Retail 1.2% Education 0.2% Outsourcing 0.0%
Proceeds (Q1 Mar10)#: INR 93B

BFSI* 3.5% Consumer & Retail 3.6% Industrials 2.9% Healthcare 0.6%
TMT** 16.3%
Energy & Power 40.9%
REI*** 32.2%
Energy & Power sector continued to remain the most active sector in Q1 Mar10 in terms of proceeds. The sector witnessed 41% of total proceeds followed by REI*** and TMT**
The Sector only witnessed a single IPO , that being JSW Energy which was also the largest IPO of Q1 Mar10
JSW energy IPO garnered INR 38B proceeds
REI*** sector which remained silent in 2009 witnessed 32% of total IPO proceeds in Q1 Mar10 DB Realty IPO was the second largest IPO of Q1 Mar10 garnering INR 15B followed by IL&FS Transportation Networks with INR 7B and Hathway Cable & Datacom Ltd. with INR 6.6B
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IPOs: Sector Wise Comparison in Q1 Mar10

IPOs Issued in Q1 Mar10
IPO Proceeds (INR B) % of IPO Proceeds IPO Volume % of IPO Volume
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Sector
Energy & Power Real Estate & Infrastructure
38.2 30.1 15.2
40.9% 32.2% 16.3%
1 6
5.3% 31.6%
Telecom, Media & Technology

Consumer Goods & Retail Banking, Financial Services * Insurance Industrials
5
2 1 3
26.3%
10.5% 5.3% 15.8%
3.4
3.3 2.7 0.6 93.4
3.6%
3.5% 2.9% 0.6% 100.0%
Healthcare & Life sciences

Total
1
18
5.3%
100.0%
Although Energy & Power sector witnessed the highest proceeds, there was only 1 IPO in Q1 Mar10 In terms of number of IPOs, Real Estate & Infrastructure witnessed the highest volume in Q1 Mar10 followed by Telecom, Media & Technology, 6 & 5 IPOs respectively Real Estate & Infrastructure, Banking, Financial Services & Insurance and Healthcare & Lifesciences which remained silent in 2009 witnessed 42% of total IPO volume in Q1 Mar10
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Indian IPO Market: The Road Ahead
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Symptoms of a bull-market cycle are on the cards: A slew of mid-sized companies are gearing up to tap the equity market in the near term, piggy-backing on the prevailing feel-good factor in the market
This rush to raise capital may also see some companies with not so good a track record, trying their hands
I-banks looking to earn more this year in higher fees: With the economy recovering, and rush for capital by going public set to return this fiscal, I-bankers are looking to turnaround the trend of cheap services in the past fiscal
While fees had on an average been about 2% of the deal size in the boom year of 2007, they had shrunk to less than 1% during these recessionary times when IPOs had all but dried up They plan to charge higher fees from mid to small size companies because greater effort has to be expended in marketing them, which is not the case with larger firms
Real Estate companies eyeing IPOs: With the stock markets perking up and the real estate sector's health also recovering, about 15 mid-and-large realty players are looking to tap the capital market through IPOs this year PSU Divestment: The Government is looking to go the IPO and FPO route for divestment in the current fiscal
Has set a target of raising INR 40B in the current fiscal, up from INR 25B from last fiscal
Finance Minister has provided a list of 28 PSUs for divestment in the services sector This fiscal should see 12-15 PSUs getting divested
On the block already are Satluj Jal Vidyut Nigam Ltd. (SJVNL), Engineers India Ltd. (EIL), Coal India and Steel Authority India Ltd. (SAIL). BSNL is a strong candidate as well for divestment this year given the heightened sense of anticipation for this scrip for quite some time now
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New Entrants Coming Up..Offer Document Filed With SEBI

In Q1 Mar10, 22 companies filed offer document with SEBI
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In 2009, 64 companies filled offer document with SEBI to raise nearly INR 400B through public issues. Besides, more than100 listed firms have announced plans to raise INR 1T through qualified institutional placement (QIPs) and more than 31 listed firms want to raise money through rights issues
Out of the 64 offer documents filled with SEBI in 2009, only 6 IPOs made their debut
Telecom, Media & Technology sector witnessed the highest filling (23%), followed by Industrial and Consumer Goods & Retail with 18% and 18% respectively in Q1 Mar10 Offer document filled with SEBI in 2009 declined to almost 34% from 2006
2006 witnessed the highest filing in last 5 years
DHRP Filled (Q1 Mar10): Sector Breakup

Education 4%
DHRP Filled: Volume

Healthcare 5%
188
BFSI* 5%
140 116 66 TMT** 17%

Energy & Power 9%
TMT** 23%
64
22
REI*** 18%
Industrials 18%
REI* 30%
2005
2006
2007
2008
2009
Q1 Mar'10
Industrial 19%
Consumer Goods & Retail 18%
*Banking, Financial Services& Insurance, ** Technology, Media & Telecommunication,*** Real Estate & Infrastructure
www.arc-fs.com | 23
ARC
Summary of IPOs Listed in Q1 March 2010
www.arc-fs.com | 24
Sector: Energy & Power

No. of IPOs 1* Issue Size (INR M) 38,187.2 Total Issue Size ($M) 818 % of total IPO proceeds 40.9%
ARC
Company Name
Issue Price (INR)
Issue Size (INR M) 38,187.2
Issue Size ($M) 818
IPO Grading
3
Subscription Listing Date
Price 31 Mar10
Return# (%)
JSW Energy
100
1.68x
04 Jan10
111.8
11.8%
# Offer price to closing price on 31st Mar10 www.arc-fs.com | 25
Sector: Real Estate & Infrastructure

ARC
Company Name
Issue Price (INR)
Issue Size ($M) 99
IPO Grading
Price 31 Mar10
Return# (%)
Godrej Properties
MBL Infrastructures
490
180
4
2
4.00x
1.97x
05 Jan'10
11 Jan'10
513.1
225.7
4.7%
25.4%
1,026.0
15.000.0 1,030.0 1,417.5 7,000.0
22
324 22 31 156
DB Realty
Arss Infrastructure
468
450
2
2
2.95x
47.62x
24 Feb'10
03 Mar'10
458.5
928.5
(2.0%)
106.3%

IL&FS Transportation Networks
252
258
3
4
62.52x
33.42x
11 Mar'10
30 Mar'10
360.1
278.5
42.9%
7.9%
Sector: Telecom Media & Technology

ARC
Company Name
Issue Price (INR)
Issue Size ($M) 83
IPO Grading
4
2
Price 31 Mar10
Return# (%)
D.B. Corp
Infinite Computers
212
165
39.54x
43.22x
06 Jan'10
03 Feb'10
239.2
190.1
12.8%
15.7%
1,898.0
1,521.6 6,648.0 1,238.8
42
33 143 282
Aqua Logistics
Hathway Cable & Data D Q Entertainment (International Ltd)
220
240
3
3
1.94x
1.36x
23 Feb'10
25 Feb'10
271.2
207.2
23.3%
(13.7%)
80
86.32x
29 Mar10
112.3
40.3%
Sector: Consumer Goods & Retail

ARC
Company Name
Issue Price (INR)
Issue Size ($M) 72
IPO Grading
3
3
Price 31 Mar10
Return# (%)
Jubilant FoodWorks
Thangamayil Jwellery
145
75
31.11x
1.12x
08 Feb'10
19 Feb'10
313.7
81.4
116.3%
8.5%
105.5
Sector: Banking, Financial Services & Insurance

No. of IPOs 1* Issue Size (INR M) 3,300 Total Issue Size ($M) 71 % of total IPO proceeds 3.5%
ARC
Company Name
Issue Price (INR)
Issue Size ($M) 71
IPO Grading
4
Price 31 Mar10
Return# (%)
United Bank
65
33.38x
18 Mar'10
68.6
3.9%
Sector: Industrials
ARC
Company Name
Issue Price (INR)
Issue Size ($M) 38
IPO Grading
3
2
Price 31 Mar10
Return# (%)
Vasco Engineers
Emmbi Polyarns
165
45
1.22x
1.20x
15 Feb'10
24 Feb'10
155.3
20.8
(5.9%)
(53.9%)
430.8
450.0
9
10
Texmo Pipes & Products
90
7.48x
10 Mar'10
92.4
2.6%
Sector: Healthcare & Lifesciences

No. of IPOs 1* Issue Size (INR M) 562.5 Total Issue Size ($M) 12 % of total IPO proceeds 0.6%
ARC
Company Name
Issue Price (INR)
Issue Size (INR M) 562.5
Issue Size ($M) 12
IPO Grading
2
Price 31 Mar10
Return# (%)
Syncom Healthcare
75
5.17x
15 Feb'10
88.0
59.9%
ARC
Appendix
www.arc-fs.com | 32
India vs China In Terms of IPOsBeyond Population Game

Volume* (No.) 183
ARC
124 103 109 76 37 17 19 79
65
39
17
2005
2006
2007 China
2008 India
2009
Q1 Mar'10
Proceeds* ($B) 65.9 50.4
China has seen a much greater volume of IPOs than India in this period. Similarly, average value of proceeds is also on the higher side for China
17.1 6.0 4.5 7.2
14.9
19.7 4.7 3.3 2.3
8.6
2005
2006
2007
China
2008
India
2009
Q1 Mar'10
www.arc-fs.com | 33
ARC
Disclosure
Deal value doesnt include those deals whose values are not disclosed Only those deals have been included in the report which been completed in the particular period The report also covers Venture Capital Deals The report doesnt includes block deals
About ARC Financial Services

ARC Financial Services (ARC) provides customized Business & Financial Advisory, Research, and Consultancy services to organizations across the globe. The research team provides the much required knowledge base for its clients to shape their investment strategies. The company also acts as advisor on various corporate, financial and commercial matters and provides content management services including Investors Relations Consulting to the organizations based on in-depth industry study and company research. ARC team covers the key sectors including TMT, Consumers Products and Retail, Banking and Financial Services, Healthcare and Life Sciences, Oil and Gas, Power, Pharmaceuticals, Infrastructure, Real Estate, Auto & Auto Ancillary and Manufacturing & Distribution amongst other. For further information visit us www.arc-fs.com and /or email us at info@arc-fs.com
Disclaimer
The information contained here in has been obtained from various public sources. The above information is believed to be correct but is not necessarily complete and its accuracy cannot be guaranteed ARC Financial Services is not responsible for any error or any decision taken by the reader based on this information. It should not be relied upon as a substitute for detailed advice and the company does not accept responsibility for any loss as a result of relying on material contained herein. ARC Financial Services Pvt. Ltd. will not accept any liability, whatsoever with respect to the use of this document or its content. This document has been distributed for information purposes only and does not constitute or form part of any offer or solicitation of any offer to buy or sell any securities. The Company may from time to time solicit from, or perform consulting, or other services for any company mentioned in this document
www.arc-fs.com | 34
For More Information Contact:

Himanshu Jain
Co-Founder & Director
ARC
Tapan Jindal
Co-Founder &Director
Manoj Goel
Co-Founder &Director
himanshu@arc-fs.com +91 11 4560 1622
tapan@arc-fs.com +91 11 4562 2127
manoj@arc-fs.com +91 11 4562 2128
Team Members worked on IPO report

NishantRustagi DheerajPrasanth Peter Sayal
ARC
ARC Financial Services (P) Ltd.

311, Ansals Majestic Tower PVR Complex, Block G, VikasPuri New Delhi 110018 India
Copyright 2010 by ARC Financial Services Private Limited No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means electronic, mechanical, photocopying, recording, or otherwise without the permission of ARC Financial Services Private Limited.
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