Upcoming IPO in India 2021
The IPO market is expected to see a variety of major big releases, thanks to the strong market momentum that guided Sensex and Nifty to record highs in 2021. Investing in IPOs means a chance to get it in quick, get it in easy, and make a big profit. Some IPOs do extremely well, although others have a terrible reaction from investors.
Despite the pandemic completely decimating the third and fourth quarters of FY 2020 and a whole portfolio of IPOs being put on hold, the public sector has been able to successfully raise over 25,000 crores. This proves to be a significant upgrade over the measly 12,360 crores that were brought in FY 2019. Come 2021, an estimate of over 80 companies have walked through SEBI’s doors in an attempt to acquire the certifications and permissions needed to come out with an IPO in 2021. FY 2021 has a long-range of the latest IPOs in India already lined up, as investors gear up to pick their IPO investments next financial year.
What is an IPO?
The initial public offering (IPO) is a process by which a new company in the share market becomes a publicly-traded company by offering its shares for the first time to the public.
How to Apply for IPO?
In India, most national banks and popular stock brokers provide facilities for online IPO applications. An investor must open a Demat account or a trading account with the brokerage institution that provides IPO service in order to apply online.
Upcoming IPO in India for 2021:
Let’s have a look at some of the top new IPO listings that are getting investors excited and optimistic.
1. Kalyan Jewelers
The IPO is set to offer a fresh equity issue of 1000 crores with an additional 750 crores as OFS (offer for sale). Kalyan Jewelers is planning to raise around Rs 1,750 crores through its IPO. The IPO is set to offer a fresh equity issue of 1000 crores. The company has posted operating sales of 10,181 crores, up from 9,814 crores in the last financial year.
2. LIC
The LIC IPO expected to launch in 2021 is set to be the biggest IPO ever listed on Indian stock markets. As finance minister Nirmala Sitharaman hinted at a minority share sell-off through the company IPO, the company is looking to offer a 10% stake in the company via its IPO in 2021. Through this IPO, it is estimated that the government is looking to raise funds to the tune of 80,000 crores.
3. Flipkart
A couple of years after the news of Walmart acquiring a stake in Indian online retail website Flipkart hit the market, the retail industry giant is all set to unload its recent acquisition onto the IPO markets. With a valuation of about 25 billion dollars as per its last round of funding, the company would be the first-ever Indian original country to be traded on the US exchange.
4. Paytm
Paytm leads the Indian mobile payments market as it has acquired over 150 to 200 million active users alongside 16 million merchants being registered with the company looking to launch its IPO in 2021. While it is still unclear when the IPO will be launched exactly, some estimate that the IPO date might come after 2021. Softbank, Ant Financials, T Rowe Price and Discovery Capital are the main investors. Ant Financials is the largest investor with a 40% stake in the firm. Digital payments are at a significant milestone in India, with mobile payments dependent on UPI is expected to increase to over 60% of CAGR over the next five years.
5. BYJUs
BYJUs, India’s leading education site, soared to prominence during the pandemic. Online education website BYJU’s is currently backed by the likes of Lightspeed and Sequoia and holds a valuation of 10.8 billion dollars and has 70 million registered users. The lockdown and subsequent closure of schools and educational institutions are said to have fueled engagement on the website to increase by 300%. While the entry of the Ambani’s in the Ed-tech space means BYJUs will have to fight tooth and nail to maintain market share, it is still one of the most anticipated IPOs, though the exact date is unclear. Byju’s can go public by listing itself both in India and the US on stock exchanges. Byju’s, offers online kindergarten to Class 12 student learning courses, along with entrance exam training for engineering schools, medical colleges, and civil services. The list of prospective IPOs listed above is subject to significant modification as the information is not yet updated on the exchanges.
Related Article: The government announced PRODUCTION LINKED INCENTIVE schemes
6. Ola
Ola, a leading cab service provider plans to list on bourses this year. It is backed by Tiger Global alongside Tencent along with others. At present, the company reports more than 1 billion rides taken annually and retains the privilege of a 55% market share in Indian markets.
7. Delhivery
Delhivery is another online delivery service that has been shot into the limelight during the COVID-19 pandemic. The E-logistics service provider owns over 20% of the market share in its sector and has to date raised 780 million through its various funding rounds. Backed by industry Giant Softbank, the company is eying an IPO. The company’s last estimate stood at $1.5 billion and could go public in 2021-22.
8. Bajaj Energy
The thermal generation company Bajaj energy based out of Uttar Pradesh aims to launch its IPO by the end of 2020 to early 2021. With the company IPO amount reaching 5,450 crores, the IPO is split into 5,150 crores of fresh issue shares and 300 crores of scrips provided by its promoter Bajaj power ventures.
9. Policy Bazaar
Policy bazaar plans to secure nearly $250 million in a $2 billion-plus valuation funding round before an initial public offering in September 2021. With Info Edge being an early investor, Policy bazaar was founded in 2008. With more than 90 per cent market share, Policy bazaar is the biggest online insurance firm in India.
10. Zomato
Food delivery Unicorn Zomato is said to launch its IPO in the first half of 2021. While it is still unclear whether this company IPO will launch in US or Indian markets still remains to be determined, the company is currently valued at just about 3.5 billion dollars and has just received additional cash flows in the form of 146 million dollars raised by the company as part of its series J round of funding. Recently having included Tiger Global in its list of backers, the company is also supported by Temasek and Ant financial and has recently also added Kotak Mahindra Capital the foremost merchant bank for the IPO in 2021.
Conclusion
If looked at carefully, the year 2021 seems to be bringing out everything for everyone in the stock market. The dynamic mix of the IPO’s belongs to various verticals like from FMCG to high-end jewels to the education industry. However, IPO stock prices tend to fluctuate depending upon the time of listing, which may make it a little risky considering the volatile nature of stock markets.
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PRODUCTION LINKED INCENTIVE SCHEME – PLI
The Production linked incentive (PLI) scheme is a scheme that aims to give incentives to companies on incremental sales (base year is 19-20) from products manufactured in India. It aims to encourage local companies to set up and expand existing manufacturing units thus cutting down reliance on imports from other countries, mainly China. It will also invite foreign companies to set up manufacturing units in India.
Purpose of the Scheme
1. To introduce non tariff measures that would make imports expensive.
2. To focus more on the domestic market by producing locally and exporting to other countries
3. To offer production incentives and encourage investments both from within and outside.
Sectors covered in the PLI Scheme
The initial beneficiary of the PLI scheme was the Pharmaceutical industry where 53 drugs were made eligible for the scheme amounting to Rs 6940 Cr in March 2020. Then, As a part of the National Policy on Electronics, on April 1, 2020, the IT Ministry had notified a scheme which would give incentives of 4-6% to electronics companies that manufacture mobile phones and other electronic components amounting to Rs 40,951 Cr.
The other sectors that are covered are:
Source – CARE Ratings
• ACC battery manufacturing represents one of the largest economic opportunities of the twenty-first century for several global growth sectors, such as consumer electronics, electric vehicles, and renewable energy. The PLI scheme for ACC battery will incentivize large domestic and international players in establishing a competitive ACC battery set-up in the country.
• India is expected to have a USD 1 trillion digital economy by 2025. Additionally, the Government’s push for data localization, the Internet of Things market in India, projects such as Smart City and Digital India are expected to increase the demand for electronic products. The PLI scheme will boost the production of electronic products in India.
• The automotive industry is a major economic contributor in India. The PLI scheme will make the Indian automotive Industry more competitive and will enhance the globalization of the Indian automotive sector.
• The Indian pharmaceutical industry is the third-largest in the world by volume and 14th largest in terms of value. It contributes 3.5% of the total drugs and medicines exported globally. India possesses a complete ecosystem for the development and manufacturing of pharmaceuticals and a robust ecosystem of allied industries. The PLI scheme will incentivize the global and domestic players to engage in high-value production.
• Telecom equipment forms a critical and strategic element of building a secured telecom infrastructure and India aspires to become a major original equipment manufacturer of telecom and networking products. The PLI scheme is expected to attract large investments from global players and help domestic companies seize the emerging opportunities and become big players in the export market.
• The Indian textile industry is one of the largest in the world and has a share of ~5% of global exports in textiles and apparel. But India’s share in the manmade fiber (MMF) segment is low in contrast to the global consumption pattern, which is majorly in this segment. The PLI scheme will attract large investment in the sector to further boost domestic manufacturing, especially in the MMF segment and technical textiles.
• The growth of the processed food industry leads to better prices for farmers and reduces high levels of wastage. Specific product lines having high growth potential and capabilities to generate medium- to large-scale employment have been identified for providing support through the PLI scheme.
• Large imports of solar PV panels pose risks in supply-chain resilience and have strategic security challenges considering the electronic (hackable) nature of the value chain. A focused PLI scheme for solar PV modules will incentivize domestic and global players to build large-scale solar PV capacity in India and help India leapfrog in capturing the global value chains for solar PV manufacturing.
• White goods (air conditioners and LEDs) have a very high potential for domestic value addition and making these products globally competitive. A PLI scheme for the sector will lead to more domestic manufacturing, the generation of jobs, and increased exports.
• Steel is a strategically important industry and India is the world’s second-largest steel producer in the world. It is a net exporter of finished steel and has the potential to become a champion in certain grades of steel. A PLI scheme in Specialty Steel will help in enhancing manufacturing capabilities for value-added steel leading to an increase in total exports.
Must read: ELSS vs Public Provident Fund (PPF): What return Mr. Iyer may get with ₹ 5000/month in 5 years.
How Can India Benefit?
India will be well-positioned as a global hub for the manufacturing of Telecom and Networking Products. Incremental production of around Rs. 2 Lakh crore is expected to be achieved over 5 years. India will improve its competitiveness in manufacturing with increased value addition. It is expected that the scheme will bring more than Rs. 3,000 crore investment and generate huge direct and indirect employment. Through this policy, India will move towards self-reliance, thus realizing the goal of Atmanirbhar Bharat. The provision of higher incentives to MSME will encourage domestic telecom manufacturers to become part of the global supply chain.
Our View
The PLI is definitely a big boost to the manufacturing in India with some sectors to benefit specifically. The companies must deliver on both, the investment and sales to derive the benefit. Jobs will be created, local manufacturing will be boosted, India’s dependency on imports will reduce and exports will sharply rise. The base year of 2019-20 will be of advantage for the companies.
The only concern is that the performance parameters are stiff (For example, in case of the product of mobiles (value of above Rs 15,000) in the first year, companies must invest Rs 250 crore and show an incremental output of Rs 4,000 crore to claim the 6% benefit.)
If these norms and criterias are eased, the benefit derived would be greater.
There are a few companies that will directly benefit from this scheme and these would be shared in our sectoral reports at a later date.
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Indigo Paints IPO Review
Company Overview:
Indigo Paints Limited was founded in the year 2000 as the manufacturer of low-end cement paints. Right from the start, the company had a clear focus on establishing a vast distribution network to extend its reach across India.
Company’s Product Portfolio:
The company has expanded its range of products by including water-based paints like emulsions (interior and exterior), primers, distempers, etc. Today, Indigo Paints is one of the strongest contenders in the Indian decorative paints landscape.
Indigo offers a range of products including cement-based paints, putty, enamels, wood coatings, distempers, primers, and emulsions. The company claims that it is the first metallic paint in India for walls, the first-floor paint in India that can withstand vehicular traffic, specifically developed ceiling paint for brighter ceilings, and a unique tile paint for roofs.
Financials:
A quick glance at the financial performance of Indigo Paints over the last four years highlights significant growth. During this period, the total income of the company showed growth at a CAGR of 21.20%.
In 2017, the company did not fare well and reported a loss of Rs.17.58 crore. However, between 2018 and 2020, the profit after tax grew at a CAGR of 54.93%. Also, the company’s total assets grew at a CAGR of 14.42%. The long-term debt of Indigo Paints is under control making it a financially strong company.
Why should you invest in Indigo paints IPO:
- Indigo Paints Limited boasts of a track record of consistent growth in a highly competitive decorative paints industry with significant barriers to entry.
- Being the first company to offer differentiated products, Indigo Paints has managed to establish greater brand recognition and has expanded into the complete range of decorative paints.
- The company has undertaken focused brand-building initiatives to gain visibility and build brand equity.
- Catering to a country as vast and diverse as India, Indigo Paints has established an extensive distribution network strategically using the bottom-up approach for better brand penetration.
- The company has managed to leverage its brand equity to install tinting machines across its distribution network.
- Its manufacturing facilities are strategically located with proximity to raw materials.
- The management team consists of senior professionals from the paint industry with considerable experience.
Peer Comparison:
| Rate of Growth of Revenue | Return on Assets | Return on Equity | Operating Margin | |
| Asian Paints | -10.20% | 13.65% | 21.84% | 22.12% |
| Berger Paints | -10.62% | 10.36% | 19.29% | 17.36% |
| Nerolac | -19.63% | 7.79% | 10.03% | 15.89% |
| Indigo Paints | 16.59% | 11.33% | 24.27% | 10.72% |
Purpose of IPO:
Indigo Paints Limited proposes to utilize the net proceeds from the fresh issue for the following:
- Funding capital expenditure for expansion of the existing manufacturing facility at Pudukkottai, Tamil Nadu by setting-up an additional unit adjacent to the existing facility;
- Purchasing tinting machines and gyroshakers;
- Repaying/prepaying of all or certain of its borrowings; and
- General corporate purposes.
Offer Details:
| Bid/Offer Launch date | 20th Jan 2021 |
| Bid/Offer Last date | 22nd Jan 2021 |
| Basis of Allotment Finalization Date | 28th Jan 2021 |
| IPO Shares Listing Date | 2nd Feb 2021 |
| Fresh Issue | Rs 300 Crs |
| IPO Price | Rs 1488 to 1490 per equity share |
| Market Lot | 10 Shares |
Disclaimer: All investors are advised to make an informed decision based on their risk appetite and please note that returns in the equity market are not guaranteed. Please read the prospectus carefully before investing.
Indian Railway Finance Corporation IPO Review
The Indian Railway Finance Corporation (IRFC) has announced an IPO to be launched on January 18, 2021. The IPO price band is Rs.25 to Rs.26 per equity share and the lot size is 576 shares.
About the company
IRFC was founded in 1986 with the objective of borrowing funds from the markets to finance the creation and/or acquisition of assets to be leased to the Indian Railways. It is a public-sector enterprise that is wholly-owned by the Government of India.
It acquires assets and lease them to the Railways. IRFC also gets the benefit of depreciation of the assets. This is a risk-free business model since all the lease receivables from the MoR are factored in the Union Budget. The lease rentals are also earmarked in the Budget assuring revenue to IRFC.
Within five years, the total income of the company showed a CAGR of 12.99%. The profit after tax grew at a CAGR of 33.95%. Also, IRFC’s total assets grew at a CAGR of 16.04%. These are phenomenal figures for an NBFC. While the long-term debt also increased at a CAGR of 26.35%, it can be attributed to IRFC’s business model. While it takes long-term debt, it has a lease agreement with the MoR that ensures the repayment of the debt.
In fiscal 2019, the actual capital expenditures by the Indian Railways were Rs. 1,334 billion, out of which, IRFC financed Rs. 525.35 bn accounting for 39.34% expenditures.
Why should you invest in Indian Railway Finance Corporation IPO?
Monopoly: Incorporated in 1986, IRFC is a dedicated government entity engaged in financing the acquisition of rolling stock assets (wagons, trucks, electric multiple units, locomotives, coaches), leasing of railway infrastructure assets, and lending to entities under the Ministry of Railways (MoR), expansion plans, and asset management.
Healthy financial position: IRFC’s overall revenues grew at a compounded annual growth rate (CAGR) of 19 per cent during FY17-20, driven by strong growth in AAUM (25 per cent CAGR). Its net profit grew by a CAGR of 26.3 per cent to Rs 3,192.1 crore during FY18-20 while RoE stood at 11.6 per cent in FY20.
Strong credit rating: IRFC can source external commercial borrowings in the form of syndicated foreign currency term loans, issuance of bonds/ notes in offshore markets at competitive rates. It is categorized as an “Infrastructure Finance Company” and is allowed to borrow up to $750 million from ECBs without prior approval from RBI.
Low business-risk: As per its terms of agreement with the MoR, risks relating to damage to rolling stock assets, due to natural calamities and accidents, are passed on to the Railways ministry. Further, the MoR is required to “indemnify the company” at all times from and against any loss or seizure of the rolling stock assets under distress, execution or other legal process.
Growth outlook: Amid the ongoing expansion and transformation plans of the Indian Railways, IRFC is expected to remain a major beneficiary. The Indian Railways proposed highest-ever capital outlay worth Rs 1.61 trillion in FY21 compared with Rs 1.48 trillion in FY20. Besides, it also planned to increase the doubling of tracks to 9.5 km per day in FY18 to reach 19 km per day in FY22.
About IPO
Start Date – 18. 01. 2021
Closing Date – 20 . 01. 2021
Face Value – Rs.10/ per share
IPO Price – Rs. 25 to 26 per share
Market and Minimum Quantity lot – 575 Shares
Minimum Lot – 1 ( 575/ Rs.14,950 /-)
Allotment Date – 25 .01. 2021
Credit Of Share to Demat A/c – 28.01.2021
Listing Date – 29.01.2021
Recommendation
As we all know that in our past consecutive budget, government is focussing more on infra-development. Indian railways have higher connectivity across the country and it is playing a major role for Infra development. IRFC plays a very important role in fund raising for Indian railways under MOR (Ministry of Indian railway). If the Agreement between MOR and IRFC keeps renewing for long term, company will runs its business without any Risk. IRFC will be the first public NBFC which is going to list.
From the investment point of view, it is a good investment and suitable for all type of investor with Marginal risk and investors who are looking for listing gains.
Disclaimer: All investors are advised to make an informed decision based on their risk appetite and please note that returns in equity market is not guaranteed. Please read the prospectus carefully before investing.
IPO – Mrs. Bectors Food Specialities Ltd
Mrs. Bectors Food Specialities Ltd is one of the leading companies in the premium and mid-premium biscuits segment and the premium bakery segment in North India. They have come up with an IPO which opens on 15th December 2020 and closes on 17th December 2020. Please find below some basic details :-
Price band – 286 – 288 per share
Bid lot – 50 shares and in multiples of 50 shares
Minimum investment – 14,400
Maximum Investment – 1,87,200
IPO size – 540.54 crores
Listing at – NSE & BSE
Listing date – 28th December
About Bector foods
They are into manufacturing and marketing a range of biscuits such as cookies, creams, crackers, digestive, and glucose under their flagship brand ‘Mrs. Bector’s Cremica’. They also manufacture ‘Oreo’ biscuits and ‘Chocobakes’ cookies on a contract basis for Mondelez India Foods Private Limited. Apart from biscuits, they also manufacture and market bakery products in savoury and sweet categories which include bread, buns, pizza bases, and cakes under the brand ‘English Oven’.
The ‘English Oven’ is one of the fastest-growing large scale premium bakery brands in India.
They have a wide reach of their products as they are supplied to retail consumers in 26 states within India, as well as to reputed institutional customers with pan-India presence and to 64 countries across six continents.
Not only this, they are the largest supplier of buns in India to reputed chains such as Burger King India Limited, Connaught Plaza Restaurants Private Limited, Hardcastle Restaurants Private Limited, and Yum! Restaurants (India) Private Limited.
In total they have 6 manufacturing units and strong distribution network in India and globally. They are also one of the largest suppliers of biscuits to Canteen Stores Department of Government of India (“CSD”) supplying in 33 locations across India and an approved and listed supplier for Indian Railways having a strong presence across Railway Station Canteens and their stores in North India.
Objective of the company
As you have seen above, the company is doing well in the food segment with its wide reach domestically as well as globally. The company is focussing on high margin business.
They are raising money to finance the project cost towards the expansion of the Rajpura Manufacturing Facility by establishing a new production line for biscuits (“Rajpura Expansion Project”). Another objective for raising money is for General corporate purposes.
Mr. Anoop Bector who has over 25 years of industry experience is the promoter of the company.
Strength of Mrs. Bectors Food
- A leader in biscuits and bakery segments in North India.
- Largest supplier of buns in India
- Major food certifications i.e. BRC, USFDA, and FSSC.
- Leading biscuits exporter to 64 countries.
- Modern production process.
- Strong sales and distribution network.
Recommendation
FMCG sector performs well during volatile markets as well. The company’s established brand of Cremica and English Oven to carry out the business of selling biscuit and bakery products is a big positive for the company. This sector has huge potential. Recently, they have been into high margin products to improve the bottom-line. It is highly recommended to invest in this IPO to get listing gains which is expected to be in the range of 25%-50%.
Disclaimer: The recommendations given are just the view of the author and investor is advised to understand the risk involved while investing in equity market. Returns are not guaranteed.