IPO Tag

Daily Market Analysis – 10th June 2021 (Adani)

Adani Group plans launch IPO and hive off it’s airport business

The Adani Group has begun preliminary talks to separate its airport business from the holding entity Adani Enterprises Ltd. It is expected to raise $500 million through a private placement of shares in Adani Airports Holdings. Adani controls Mumbai airport, India’s second busiest, as well as six regional facilities – Ahmedabad, Lucknow, Mangaluru, Jaipur, Guwahati and Thiruvananthapuram. It is targeting a valuation of ₹25,500-29,200 crore ($3.5-4 billion) for the business. The group is awaiting better air passenger numbers after the Covid. The unit has become the country’s top airport platform, catering to at least 10% of India’s air passenger traffic, exceeding 200 million people in FY20. 

Adani Wilmar prepares to launch IPO of nearly $1 billion In 2021

Gautam Adani-led port-to-power conglomerate Adani Group is preparing to raise nearly $1 billion in 2021 through an initial public offering (IPO) by Adani Wilmer, which aims to be the largest food company in India by 2027, is trying to muscle its way into the fast-growing consumer segment and unlock value through the IPO. If the plans fructify, it will be the seventh firm to be listed from the diversified group’s stable. “Most of the Adani Group business is infra-related. It’s a good opportunity now to showcase their consumer business.

Also read: What is an IPO? | How to choose in which IPO to Invest? – Fintoo Blog

FMCG sector sees drop in sales for two consecutive months 

India’s fast-moving consumer goods (FMCG) market contracted by a third in May from the preceding month due to lockdowns and restrictions in most states that led to a significant drop in orders from local grocers. FMCG sales declined by 32%. In April, sales had shrunk by 16%. The reason can be because companies focus on providing the essential key products rather than the entire range of products. The personal care segment declined by 52% as consumers avoided stepping out of their homes. During this lockdown, people didn’t expect shortage and controlled their essential shopping rather than piling up and creating unnecessary demand.

Yes Bank jumps 6%, board to consider fund raising

Shares of Yes Bank surged 6% on Monday after the private lender announced the board meeting to be held on Thursday, June 10, 2021, to consider the fundraising. The board will consider and approve, seek shareholders’ approval for borrowing/raising funds in Indian/foreign currency by issue of debt securities including but not limited to non-convertible debentures, bonds, Medium Term Note (MTC).  The company had reported a net loss of Rs 3,787.75 crore for the quarter ended March as against a net loss of Rs 3,668.3 crore in the year-ago quarter due to a rise in provisions.

Cabinet Allocates 5 MHz spectrum for Indian Railways to improve communication and signalling

The Union Cabinet on Wednesday allocated a 5 MHz spectrum in a 700 MHz band for Indian Railways in order to boost hi-speed radio communication. 25,000 crore will be spent in the next 5 yeasts for signal modernizations and 5g spectrum implementation in Railways. This will improve the signaling train protection system and ensure seamless communication between two loco pilots and guards. It will also enable the Internet of Things-based remote asset monitoring especially of coaches, wagons and locos, and live video feed of CCTV cameras in the train coaches to ensure efficient, safer, and faster train operations. The modern rail network will result in reduced transportation costs and higher efficiency.

ITC 

ITC – A Giant about to get un-shackled. It is going to split into three companies in the next 12-18 months. ITC Hotels business manages large amounts of top quality hotels in India and abroad and also has a huge land bank and this will give rich valuation to ITC Hotel business as well. Analysts are expecting an ITC share that is trading at Rs. 205-215 levels to have a valuation of Rs. 1500-2000  (combined value of all three demerged shares) by 2026-27 (5-6 yrs from now). 

The three companies which are likely to get formed are:

1. ITC Cigarette Division
2. ITC Hotel Division 
3. ITC Agro & Consumer Division

The fourth division which is Infotech is likely to get sold as it is not a focus area for the company. Once this Demerger is done, ITC Cig Division share will get the highest valuation, followed by ITC FMCG share and followed by ITC Hotel Division.

Paytm unit seeks RBI exemption from NBFC

Paytm Entertainment – a subsidiary of fintech giant Paytm – faces the risk of being classified as a Non-Banking Financial Company (NBFC) after it lent money to a joint venture business that exceeded the central bank’s limits. RBI rules say if a company derives 50% of its total assets and income from financial assets, it needs to register with the central bank as an NBFC. They have approached the Reserve Bank of India, seeking exemption from being categorised as a finance company as it is not in the business of lending.

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What is an IPO? | How to choose in which IPO to Invest?

• What is an IPO?

Initial Public Offering (IPO) can be defined as the process in which a private company or corporation can become public by selling a portion of its stake to the investors. Through the IPO, the company gets its name listed on the stock exchange.

Before the IPO, a company has very few shareholders. This includes the founders, angel investors and venture capitalists. But during an IPO, the company opens its shares for sale to the public. As an investor, you can buy shares directly from the company and become a shareholder.

• Why does a Company offer an IPO?

To raise capital for growth and expansion

Every company needs money to increase its operations, create new products or pay off existing debts. Going public is a great way to gain this much-needed capital for a company.

 Allowing owners and early investors to sell their stake to make money

It is also seen as an exit strategy for initial investors and venture capitalists. A company becomes liquid through the sale of stocks in an IPO. Venture capitalists sell their stock in the company at this time to reap returns and exit from the company.

 A company going public means that the brand has gained enough success to get its name flashed in the stock exchanges. It is a matter of credibility and pride to any company. This is a great way for a company to publicise its products and services to a new set of customers in the market.

• Types of IPOs

1. Fixed Price Offering 

Fixed price offering is pretty straightforward. The company announces the price of the initial public offering in advance. So, when you partake in a fixed price initial public offering, you agree to pay in full.  

• Book Building Offering 

In book building offering, the stock price is offered in a 20 percent band, and interested investors place their bid. The lower level of the price band is called the floor price, and the upper limit, cap price. Investors bid for the number of shares and the price they want to pay. It allows the company to test interest for the initial public offering among investors before the final price is declared.  

• Benefits of Investing in an IPO

·                     First-mover advantage

This is especially true when reputed companies announce an IPO. You get a chance to buy the company’s shares at a much lower price. This is because once the company’s shares reach the secondary market, the share price may go up sharply.

·                     Listing gains

When a company gets listed on the stock market, it may be traded at a price that is either higher or lower than the allotment price. When the opening price is higher than the allotment price, it is known as listing gains.

Most Popular Article: What Is Reverse Mortgage? How You Can Benefit From It

• Process of Applying for an IPO

Nowadays, it has become easier to apply for an initial public offering because of the online application process. However, if you are a new investor, you need to learn a few things before applying. 

The first important thing is funding. Whether it is a fixed price or a book building IPO, you will have to make a payment in advance, and for that, you must have funding ready. Investors can use their savings or take a loan from a bank or NBFC for the purpose. 

However, without a DEMAT account, you can’t invest in stocks. So, the next thing you need is to open a DEMAT account. Select a reputed broker with atrack record to have a DEMAT.  

You can use the DEMAT account not only for IPOs, but to receive all sorts of investment instruments like gold bonds, corporate bonds, shares, and more.

The online process is an easy way to apply. You can do it from the investor portal on the broker’s website or by downloading the ASBA form from your bank’s net-banking platform. 

ASBA stands for Application Supported by Blocked Account (ASBA). It allows banks to block funds in the applicant’s account against your bidding for the IPO. 

If you apply through the broker, you need to use UPI enabled payment gateways to make payment. In either case, cheques and demand draft payments are not accepted for bidding. 

Bidding

An investor needs to bid while applying for the shares in an IPO. It is done according to the lot size quoted in the company’s prospectus. Lot size can be referred to as the minimum number of shares that an investor has to apply for in an IPO.

A price range is decided and the investors require to bid within the price range. Though an investor can make a revision in his biddings during an IPO, it should be noted that he needs to block the required funds while bidding. In the meantime, the arrested amount in the banks earns interest until the process of allotment is initiated.

Allotment

There are different investor categories when it comes to IPOs. This includes:

1. Qualified Insititutional Buyers (QIBs)
2. Non Institutional Investors (NIIs)
3. Retail Individual Investors (RIIs)

The allocation of shares differs for all the above groups in an IPO. As an individual investor, you come under the last category.

As an individual investor, you are allowed to invest in small lots worth Rs 10,000-15,000. You can apply for a maximum of Rs 2 lakh in an IPO. The total demand for shares in the retail category is judged by the number of applications received. If the demand is less than or equal to the number of shares in the retail category, you are offered a full allotment of shares.

When the demand is greater than the allocation, it is known as oversubscription. Many times an IPO can be over-subscribed five times over. This means that the demand for shares exceeds the supply by five times!

In such cases, the shares in retail category are offered to investors on the basis of a lottery. This is a computerised process that ensures impartial allocation of shares to investors.

• Terminology Associated with IPO’s

Draft Red Herring Prospectus

The DRHP is the document that makes the public know about the company’s IPO listings after the approval made by SEBI. A DRHP contains the following information about the company:

• Purpose of raising funds through listings
• Balance sheet
• Promoter’s expenses
• Earning statement of the last three years (if applicable)
• Net proceeds of the company
• Commission and discounts of the underwriter
• Details such as the name and address of all the underwriters, officers, directors and stockholder who possess 10% or more than the currently outstanding stock.
• Legal opinion on the listings
• Copy of the underwriting document

Underwriter

• An underwriter can be a banker, financial institution, merchant banker or a broker. It assists the company to underwrite their stocks. The underwriters also commit that they will subscribe to the balance shares in case the stocks offered at IPO are not picked by the investors.

What is IPO grey market?

An IPO grey market is one where a company’s shares are bid and offered by traders unofficially. This takes place before the shares are even issued by the company in an Initial Public Offering (IPO).

Since this is an unofficial market, there are no rules and regulations. Market regulators like Securities and Exchange Board of India (SEBI) are not involved in these transactions. The regulator doesn’t endorse this either.

Grey markets are generally run by a small set of individuals. All deals are based on mutual trust.

Grey Market Premium

Grey market premium is nothing but the price at which the shares are being traded in the grey market.

For instance, let’s assume the issue price for stock X is Rs 200.

If the grey market premium is Rs 400, it means that people are ready to buy the shares of company X for Rs 600; (i.e. 200+400).

This is how a typical deal works out in the grey market.

Daily Market Analysis – 17th May 2021 (IPO)

Upcoming IPO

Supriya Lifescience IPO

Supriya Lifescience has filed for preliminary papers with SEBI to raise 120 Crore through IPO. It is one of India’s key manufacturers and suppliers of API with its focus on research and development. The IPO is said to issue fresh equity shares worth Rs200 Cr and an offer for sale of up to Rs 1,000 Crore by its promoter Satish Waman Wagh. The proceeds from the IPO will be utilized for the Capex requirements, repayment of the debt, and general corporate purpose. Supriya Lifescience has product offerings of 39 APIs focused on diverse therapeutic segments such as antihistamine, analgesic, and anesthetic, vitamin, anti-asthmatic and anti-allergic.

CarTrade IPO

CarTrade has filed with SEBI to raise Rs2000 Cr through IPO. There is no fresh issue of shares, the IPO consists of a pure OFS or offers for sale of 12,354,811 equity shares. The IPO will facilitate a partial exit for CarTrade investors like Warburg Pincus, Temasek, JP Morgan, March Capital, and other parties who are the selling shareholders. CarTrade.com is an online auto marketplace providing buyers and sellers a structured platform for transacting in new and used vehicles. The firm competes with the likes of Droom, Cars24, Quikr, Olx, and Mahindra First Choice Wheels.

Devyani International IPO

Devyani International files to raise Rs 1400 Cr IPO. It is the largest franchise operator of global restaurant chains like Pizza Hut, KFC, and Costa Coffee. It is the third Quick service Restaurant filing for an IPO this year after Burger King and Barbecue Nation. Devyani International is an arm of conglomerate RJ Corp, the largest bottler for Pepsi Co in India and it currently operates 692 stores of global restaurant chain Yum Brands owned KFC and Pizza Hut, British Café Costa Coffee, and its own brand including Vangoo and Food Street. Devyani International is currently operating in 155 cities of India besides Nepal and Nigeria.

More People willing to make a will

Legal firms and lawyers are witnessing an increase in the consultation on Will and Estate Planning. According to Will Jini, it has witnessed a 400% increase in the number of queries at over 58000 queries in FY21 as compared to 15600 queries in FY20. The cities with major inquiries about will and estate planning are coming from Mumbai, Bengaluru, Delhi, Pune, Gurgaon, Hyderabad, Chennai, Ahmedabad, Kolkata, and Chandigarh.

Also read: Realising the importance of having a WILL during this Pandemic. All about wills. – Fintoo Blog

Shrink in Oil Demands due to Covid Restrictions

The demand for oil in India has worsened as the country is witnessing strict lockdown and curfews in various states. Road transport fuels dropped by a fifth during May 1-15 as compared to the previous month and 28% as compared to the year 2019. A sharp drop in the consumption of oil from the third biggest crude oil consumer will weigh on sentiment on oil prices and damp expectations for a strong global demand rebound in the summer. 

Shilpa Medicare to tie-up with Dr. Reddy’s for production of Sputnik V vaccine

Shilpa Medicare Limited has tied up with Dr. Reddy’s Laboratories Limited for the production of the Sputnik V vaccine. The company on Monday announced that its wholly-owned subsidiary Shilpa Biologicals has entered into a 3-year definitive agreement with Dr. Reddy’s for production supply for Sputnik V vaccine from its integrated biologics R&D cum manufacturing center at Dharwad, Karnataka. DRL has partnered with HVI/RDIF for the clinical development of the vaccine and has distribution rights in geographies including India. Under the agreement, SBPL will be responsible for the manufacture of the vaccine, while DRL is responsible for the distribution/marketing of the vaccine in its marketing territories. The companies are also exploring the option to manufacture Sputnik Light, a single-dose version of the vaccine in the near future.

McDonald’s plans ₹100 crore investment to open 30 outlets this fiscal

Westlife Development, which operates McDonald’s restaurants in the southern and western region in India, plans to invest Rs 100 crore to open up to 30 outlets of the quick-service restaurant brand in the current financial year. In the last quarter of 2020-21, 55-60 percent of the company’s sales came from convenience channels and 40-45 percent from in-store business. Vice President Amit Jatia said that he is bullish about FY 22 leaving out the next 2-3 months

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Daily Market Analysis – 30th Apr 2021

20% salary of mutual fund managers to come by way of scheme units: SEBI

• A minimum of 20% of a fund manager’s salary shall be paid in the form of units of mutual fund schemes that they manage. Aside from fund managers, all other “key employees” of the fund house will also be covered, such as the chief executive officer, chief investment officer, and other employees that the fund house identifies as key employees.
• In the case of a fund manager managing only one scheme, he has the option to receive half of the compensation in the units of the scheme he manages. The other half would come by way of other schemes whose risk profile (as defined by SEBI’s risk-meter guidelines) are the same or higher.
• Index funds, exchange-traded funds, overnight funds and existing close-ended schemes will be excluded from unit allocation.
• View- Though this is expected to increase the transparency and may boost the confidence of the investors as the key employees will have ‘skin in the game’ – aligned interest, the norm is expected to hit the fund house employees hard.

Mutual Fund – Low-interest rates. Where should you invest?

IRDA sets a time limit to approve cashless claims in COVID-19 cases

• All insurance companies have to convey a decision on approving all cashless claims against COVID19 hospitalisation within an hour.
• View- This move has been implemented to keep a check on delays in discharging patients. It will help to make hospital beds available to new patients at a time when the second wave of coronavirus has crippled the healthcare system across the country.
• Bad bank to get Rs 2 lakh crore of defaulting companies’ loans
• The Indian Banks’ Association has asked members to identify large loans where they are lead bankers and get approval from co-lenders so that these loans can be sold to a bad bank (NARC). Approval from 75% of the lenders by value is required to transfer the loans to an ARC.
• The association has identified 102 corporate bad loans of Rs 2 lakh crore, where the amount outstanding in each is over Rs 500 crore.
• Once the lenders decide on selling the loan, the NARC will make them an offer based on the scope of recovery. With the NARC’s offer on hand, the lenders will hold a ‘Swiss Challenge’, where rivals are allowed to better the offer made by a chosen bidder.

Zomato files for Rs 8250 crore IPO

• Food aggregator business Zomato filed its much-awaited draft red herring prospectus (DRHP) with SEBI for INR 8,250 Cr IPO this year. The offer consists of fresh issue amounting to INR 7,500 Cr and a secondary component of INR 750 Cr, which will come from the company’s largest stakeholder Info Edge.
• Zomato has reported a revenue of INR 1,367 Cr in the first three quarters of the financial year 2021. The company’s expenses were at INR 1,724 Cr in the same period, leading to a loss of INR 684 Cr. The company’s overall revenue for FY21 is bound to increase as the company witnessed more stability in the last quarter due to a decrease in covid cases.
• View- Zomato is obviously one of the two main food delivery service companies in India. It is a duopoly structure as of now and that goes in its favour. Clearly, they are meeting a need that exists currently and there is a lot of excitement in this sector. This kind of business has a potential high operating lever. So, as the business scales up, costs do not go up in line and as a result, one cannot look at the profitability in the coming years.

Related Article: Upcoming IPO in India 2021

Tata gets nod by CCI for the proposed acquisition of BigBasket

• The CCI approves acquisition by Tata Digital Ltd of up to 64.3% of the total share capital of Supermarket Grocery Supplies Private Ltd and SGS’ sole control over Innovative Retail Concepts Pvt Ltd. The proposed combination will result in the acquisition by Tata Digital of the majority stake of and control over SGS.
• While SGS is engaged in online business-to-business sales through business.bigbasket.com, IRC is engaged in online business-to-consumer sales and operates the BigBasket website.
• Tata Group is into diversified businesses; including steel, software, retail, tea and FMCG. It plans to launch a super app to bring all the Tata consumer-facing brands and products on one platform. The acquisition of Bigbasket is a part of these plans.
• View- The Tata Super app might take on Reliance Industries’ JioMart and the e-commerce giants like Amazon and Walmart-owned Flipkart with robust business strategy.

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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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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 15^th December 2020 and closes on 17^th 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 – 28^th 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.

Daily Market Analysis – 05th Oct 2020

News Updates

1.Pradhan Mantri Awas Yojna (PMAY):-  Pradhan Mantri Awas Yojana is an initiative by Government of India in which affordable housing will be provided to the urban poor with a target of building 20 million affordable houses by 31 March 2022. Some defined benefits of PMAY are given below:-

• Avail subsidy upto 2.67 Lakhs*
• Interest subsidy at a rate of 6.5%* for a tenure of upto 20yrs.

It is a very good scheme run by the Government. Here we are getting defined benefits and the GST rate on affordable houses is 1% without ITC.

Conditions to avail Subsidy:-

1. It should be the first house of the buyer.
2. The beneficiary family should not have availed of central assistance under any housing scheme from the Government of India.
3. Aadhaar Card is Mandatory 

2. Angel Broking IPO:- Angel Broking IPO listed today, i.e. October 5. They had predicted the higher price band between Rs.304-306 but on a listing day, it was open at Rs.275. There is less demand in the grey market. This is the first IPO in 2020 opened at a discounted price. The reason behind this could be low revenue, negative cash flow and high level of competition. From an investment point of view, we need to explore more options in other sectors.

3.Automobile industries:-  There is a sharp growth in the two-wheeler segment in September sales. In September, the 2 wheeler segment Bajaj had recorded a 10% rise in sales, TVS rose by 4% in sales, Royal Enfield rose by 1%. As far as lockdown is concerned and limited availability of public transport, we can see good growth in this sector.

4.TCS Buyback:- TCS is going for the buyback of share on 7 Oct 2020 during the pandemic period. TCS is sitting on a high Cash reserve of Rs. 73, 993 cr in March 2020. This Buyback indicates the interest of promoter, confidence in business and future expansion plans. 

5.JSW Paints:- According to industries, the paint market business is estimated to cross Rs.50,000 cr in value and expected to grow by 15 % YoY. In the current Market scenario, JSW had entered into the paint business competing with Asian paints – Berger paints with an investment of Rs. 600cr ( 250 cr Equity and 350 cr debt). The competition is big in this segment, however, the consumption is there in the Market.

6.GST Collection:- Gross GST revenue collected in September 2020 stood at ₹95,480 crores, the Finance Ministry said in a statement. This included collection of ₹17,741 crores under Central GST, ₹23,131 crores under State GST, and ₹47,484 crores under Integrated GST. The gross GST revenue collected in the month of June 2020 is Rs. 90,917crore. There is a growth in the GST collection from the last quarter of June 2020 which indicates the positive sign in the market and economic activity.

7.Advance tax Collection :-Total advance tax collection in the second quarter fell by 25.5 per cent to Rs 1,59,057 crore from Rs 2,12,889 crore y-o-y. Reasons behind the low collection of Advance Tax are slow down in business in quarter 1 and 2 and low earnings by industries. In the next quarter, we can expect to see the rise in advance tax collection as the economy slowly is opening and industries are working at maximum capacity.