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ACC Flatters the Street With Improved Volumes in Q2

ACC Cement Q2 Results
20/07/2021

For the Jun-21 (second quarter), ACC reported more than doubling of net profits at Rs.569.4 crore. While price realizations remained flat to moderately better, there was a visible spurt in volumes. We will come back to this point later. For the Jun-21 quarter, ACC reported 49.3% growth in sales at Rs.3,885 crore. Net profits were up 110.2% yoy at Rs.569.4 crore.

Check: Ultratech Cements Results


Even as the low base effect helped yoy growth at ACC, the company reported robust 43.7% growth in cement volumes at 6.84 million tonnes compared to 4.76 million tonnes in Jun-20 quarter. Sales were slightly lower sequentially owing to the impact of COVID 2.0 on domestic demand. However, export demand remained robust. The surge in volumes yoy were driven by sharply higher infrastructure spending by the Indian government as a conscious strategy to give a fiscal boost to the economy. 


The sales of ACC were driven by cement and RMC (ready mix concrete) sales. In terms of EBITDA contribution, RMC business turned around from EBITDA losses to EBITDA gains in FY21. The cement division, which accounts for over 95% of ACC revenues saw EBITDA improve yoy by 79% to Rs722cr. Cement, being a capital intensive business, gained from the sales growth as fixed costs got absorbed more effectively in the Jun-21 quarter. 


ACC also flattered on the margins front. Operating margins at 18.61% showed a sharp improvement over 13.94% in the Jun-20 quarter as well as 16.71% in the sequential Mar-21 quarter. Net margins at 14.66% in the Jun-21 quarter were also higher than the yoy quarter and the sequential quarter. In a nutshell, the big driver of ACC growth has been the demand generated by enhanced government spending on infrastructure. That is here to stay!

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Glenmark Life Sciences IPO to open for subscription on 27 July

Glennmark life science IPO
20/07/2021

If you have been tracking pharma industry in the past, you would have heard of this popular product called APIs. The active pharma ingredients (APIs) are the specialized raw inputs that go into manufacture of medicines. One of India’s leading players in APIs, Glenmark Life Sciences, is coming out with its much awaited IPO, which opens on 27 July. Glenmark Life Sciences will raise Rs.1,060 crore via fresh issue and will also offer 63 lakh shares of the promoter (Glenmark Pharma) via offer for sale or OFS.

 

Read More : Pharma Industry Updates

 
Understanding the China story in APIs


Over the last 20 years it was generally accepted that any medicine manufactured anywhere in the world has a China component at some point. That was the extent of domination that China built in APIs. Things changed in the last 2 years. Firstly, the Chinese government put severe environmental restrictions on chemicals and bulk drug companies. This impelled many global pharma names to look at India as an alternative source of APIs. Secondly, the pandemic resulted in severe supply chain constraints for API flows from China forcing most pharma companies to diversify their API sources. Lastly, with China’s role in the spread of Coronavirus becoming controversial, many pharma companies globally have consciously opted to reduce their dependence on China for APIs. These 3 factors immensely benefited the Indian API manufacturers.

What exactly is the Glenmark Life Sciences IPO story?

Needless to say, this is the API arm of Glenmark Pharma being hived off, so you have a strong legacy already. Glenmark Life Sciences is already one of the largest API manufacturers in specialized areas like cardiovascular diseases, central nervous system diseases, pain management, gastro-intestinal disorders and anti-infectives. Glenmark Life is also a key player in the Contract Development and Manufacturing Operations (CDMO) space, where again India has a huge global space to occupy. With 4 manufacturing facilities and an annual installed capacity of 726 KL, Glenmark Life Sciences will use the IPO funds for capital expenditure and deepening its relationships and imprint in the export market.

 

Glenmark Life Sciences IPO opens on 27 July and closes on 29 July. It is scheduled to list on the stock exchanges on 06 August.

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Suggested To Read - To get more details like IPO Issues Size, IPO Open/Close Dates read Glenmark IPO Information Note

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SEBI insists preferential offers need independent valuation

PNB Housing - SEBI
20/07/2021

In the last two months, the proposed Rs.4,000 crore preferential offer by PNB Housing to Carlyle has become the bone of contention. The first objection to the deal came from proxy firm SES. Shareholder Empowerment Firm (SES) is run by former SEBI ED, J N Gupta. SES expressed reservations about the preferential offer in that there was no independent valuation done, was priced at discount to book value and did not factor control premium. The legal stand-off began with SEBI asking PNB Housing to withhold the EGM vote and PNB Housing, in turn, approaching SAT.

SAT has heard the arguments of SEBI and PNB Housing but reserved its final judgment. Meanwhile, in an interesting development, SEBI has insisted that all preferential allotments of shares pre-suppose an independent valuation. In the PNB Housing case, SEBI insisted that since the Articles of Association mandate an independent valuation for such deals, it should have been done. PNB Housing has argued that since ICDR rules do not stipulate independent valuations for listed companies, they had done the preferential allotment to Carlyle based on ICDR formula.

Also Read: SEBI halts PNB housing - Carlyle deal

The latest clarification from SEBI makes some interesting points. Firstly, ICDR is only a guide to determine minimum price and not a formula for valuation. Secondly, SEBI has also underlined that in all such cases, the only guiding factor should be minority shareholders getting a fair and just price. Lastly, SEBI pointed out that since the PNB Housing case resulted in change of control, an independent valuation should have been done by PNB Housing. The last word is yet to be said, but it could have implications for LIC Housing, Barbeque nation and a host of other proposed preferential allotments.
 

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How to increase the chances of IPO allotment

IPO Allotment
by Nikita Bhoota 20/07/2021

IPO investors generally have questions such as “No shares allotted to me in IPO, why?”, “I haven’t got any allotment in multiple applications” “why I am not getting allotment in any of the IPOs?”. Thus, it is clear that the lucky people get the allotment in highly subscribed IPOs. Sometimes there are some IPOs in which even people who applied only through a single application get the allotment while some apply in multiple numbers but still do not get allotment. This shows that the process is automated and the lucky person is getting the allotment. 

We are here with some of the ideas which can increase the chances of IPO allotment. 

Avoid big applications

SEBI’s allotment process treats all retail applications (less than Rs 200,000) equally. There is no point in making a big application in case of over-subscription. For the oversubscribed IPOs, one should go for minimum bids with multiple accounts. That will help to invest spare money in multiple IPOs as well.

Apply via more than one account or multiple accounts for the same ipo

Do not apply with the maximum bid in just a single account but apply through multiple accounts for the IPO. One should apply via multiple IPOs accounts for highly subscribed IPOs. Applying through multiple accounts can definitely increase the chances of IPO allotment.

Bid at cut off price / higher price band

Investors are often confused between the bid price and cut-off price.” Cut-off price” means the investor is willing to pay whatever price is decided by the company at the end of the book-building process. Once the application is made at Cut off, the investor has to bid at the highest price band. The excess amount, in case the price is lower, the excess amount is refunded.

As an example, the price band of Anand Rathi IPO is Rs.530-Rs.550 per share. As Anand Rathi IPO is subscribed 1.60 times, bids below Rs.550 per share might not be considered in the allotment. Thus, retail investors are requested to bid at either cut-off or maximum price to increase Anand Rathi IPO allotment chances.

Avoid last moment subscription:

If already decided that you are going to apply for the IPO, then go for it on the very first day or the second day. If the investor applies on the last day, it might cause few issues like the bank account is not responding due to HNI and QIB high subscription or any other technical issues. It is to take care that the investor does not miss the opportunity to invest in the IPO.

Fill the details properly

Do not rush in filling the IPO forms. The investor should fill in the details correctly like the amount, name, DP id, bank details etc. Printed forms are also available so one should go with it as well. The most secure way to apply for the IPO is through ASBA. One can go with ASBA via their bank but the investor needs to check the details before applying the same. It will surely avoid technical rejection.

Buy parent or holding company shares

The above techniques will be applicable on all IPOs but this trick does not apply to all the IPOs. Although this tip is a brilliant one wherever applicable. Having at least a single share of the parent company in the Demat Account will make the investor entitled to apply through the Shareholder Category.

Although, it applies only in the cases where the parent of the IPO company is already listed in the stock exchange and there is a reservation for shareholders in the parent company. Thus, it is obvious that the chances of allotment are much better in the shareholder category. Additionally, one can place a bid in both retail as well as shareholder categories. Thus, this increases the chance of allotment.

Detailed Video:

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Tatva Chintan IPO closes with a bang; subscribed 180X

Tatva Chintan IPO - day 3
20/07/2021

The early indications were that Tatva Chintan IPO would get comfortably oversubscribed. However, at close on Tuesday, the overall issue got oversubscribed by a solid 180.35 times. The Rs.500 crore IPO of Tatva Chintan consisted of Rs.225 crore of fresh issue and Rs.275 crore offer for sale. As per the combined bid details put out by the BSE on 20 Jun at 5 pm, Tatva Chintan IPO was subscribed 180.35 times, with maximum demand coming from the HNI segment followed by the QIB segment. Here is the final subscription status of Tatva Chintan IPO on 20 July.

Out of the 32.62 lakh shares on offer in the IPO, Tatva Chintan saw applications for 58.83 crore shares. That implies an overall subscription of 180.35X. The granular break-up is more insightful and shows how funded HNI applications flooded on the last day. The QIB portion got subscriptions for 185.23X of the ex-anchor allocation quota, with most applications coming on the last day. The HNI portion got subscribed a whopping 512.22X, with a surge of funded applications on Day-3. The retail portion continued to build on the last day and was 35.34X subscribed at the close of the IPO.

At the close of Day-3, among QIBs, FPIs had bid for 4.28 crore shares, MFs 1.24 crore shares while banks/insurance had bid 7.41 crore shares. Among retail investors; out of the 16.31 lakh shares on offer, valid bids were received for 5.76 crore shares, of which bids for 4.41 crore shares were received at the cut-off price. The HNI portion got applications for 35.8 crore shares of which close to 29.31 crore shares were funded applications. Tatva Chintan is scheduled to list on 29 July.
 

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How are stocks settled after a trading holiday

Stock settlement on trading holiday
21/07/2021

We normally tend to use the words trading holiday and clearing holiday in the stock markets interchangeably. These are two different things altogether. The trading holiday is the day on which there is no trading permitted. That means you cannot use your trading account to place trades, either offline or online. No buy or sell orders in the stock market are allowed on trading holidays. Obviously, when there is no trading, there is no question of clearing and settlement of trades, hence there would also be no clearing of trades on such days.


However, there are a number of days on which there is trading in the stock market but then clearing is not available due to a bank holiday as stipulated by the RBI. In such cases, the clearing of trades get bunched together, as we will see in detail later in this article. But, let us first understand trading and clearing holidays from a practical perspective.

 
Trading and clearing holidays for calendar year 2021


The table below captures the NSE list of market holidays with the dates, description and the nature of the holiday.

 

Date

Day

Description

Holiday Status

26 Jan 2021

Tuesday

Republic Day

Trading Cum Clearing Holiday

19 Feb 2021

Friday

Chhatrapati Shivaji Maharaj Jayanti

Only Clearing Holiday

11 Mar 2021

Thursday

Mahashivratri

Trading Cum Clearing Holiday

29 Mar 2021

Monday

Holi

Trading Cum Clearing Holiday

01 Apr 2021

Thursday

Annual Bank Closing

Only Clearing Holiday

02 Apr 2021

Friday

Good Friday

Trading Cum Clearing Holiday

13 Apr 2021

Tuesday

Gudi Padwa

Only Clearing Holiday

13 Apr 2021

Tuesday

Gudi Padwa

Only Clearing Holiday

14 Apr 2021

Wednesday

Dr. Babasaheb Ambedkar Jayanti

Trading Cum Clearing Holiday

21 Apr 2021

Wednesday

Ram Navami

Trading Cum Clearing Holiday

13 May 2021

Thursday

Id-Ul-Fitr (Ramzan ID)

Trading Cum Clearing Holiday

26 May 2021

Wednesday

Buddha Pournima

Only Clearing Holiday

21 Jul 2021

Wednesday

Bakri Id

Trading Cum Clearing Holiday

16 Aug 2021

Monday

Parsi New Year

Only Clearing Holiday

19 Aug 2021

Thursday

Moharram

Trading Cum Clearing Holiday

10 Sep 2021

Friday

Ganesh Chaturthi

Trading Cum Clearing Holiday

15 Oct 2021

Friday

Dussehra

Trading Cum Clearing Holiday

19 Oct 2021

Tuesday

Id-E-Milad

Only Clearing Holiday

4 Nov 2021

Thursday

Diwali- Laxmi Pujan

Only Clearing Holiday

5 Nov 2021

Friday

Diwali-Balipratipada

Trading Cum Clearing Holiday

19 Nov 2021

Friday

Gurunanak Jayanti

Trading Cum Clearing Holiday

Data Source: NSE

 

Find the entire list of Stock Trading Holidays in 2021

 

The above is a comprehensive list of holidays published by the NSE but remember not all the above days are trading holidays. All the above days are clearing holidays when there will be no clearing done by the banks. We have marked the specific days in red colour in the last column where the particular day is a clearing holiday but not a trading holiday. For example, in the above 2021 list, 19 Feb and 01 April are clearing holidays but are not trading holidays. On these days, stock market trading goes on as usual. However, 05 November and 19 November 2022 are trading-cum-clearing holidays and on these days the stock market trading and bank clearing will be shut.


How is settlement managed when there are trading and clearing holidays?

We are all aware that the trade is not complete with executing the trade. The exchanges and clearing corporations along with the banks and Depositories perform the Clearing and Settlement function. For stock purchases, this entails calculating the Trading Member wise debits, collecting the debit amounts and ensuring that shares are credited to the respective demat accounts on T+2 day. For stock sales, it entails calculating the Trading Member wise credits, ensuring that clean demat delivery is given and the funds are credited to the respective bank accounts on T+2 day.


Now how would the above situation get impacted if there are trading / clearing holidays in between? Let us look at 2 situations.


1)    If there is an intervening trading holiday, then settlement gets postponed accordingly. For example, 21 July is a trading cum clearing holiday. All trades of 19 July will get settled on 22 July instead of 21 July. Similarly, all trades of 20 July will get cleared on 23 July instead of 22 July.

 

2)    What happens if it is only a clearing holiday. For example, 26 May, Buddha Purnima, was only a clearing holiday. In such cases, settlements would get bunched. So, the trades of 24 May and the trades of 25 May would get bunched and get settled on 27 May.


That is how your clearing and settlement of trades gets impacted by trading and clearing holidays.

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Find the entire list of NSE/BSE Holidays 2021, Commodity Market Holidays

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