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Akasa Air Places Order for $9 Billion Worth of Boeing Planes

by 5paisa Research Team 17/11/2021

Akasa Air, the ultra-low-cost airline backed by Rakesh Jhunjhunwala, has placed orders for a total of 72 Boeing 737 Max airplanes in an order worth $9 billion. This is the largest order that Boeing has received from India and gives them the much needed foothold in the Indian aviation markets.

It may be recollected that the Max-737 had been under regulatory ban and only recently the DGCA had allowed the 737-Max to fly again in India.

The order was finalized and announced at the Dubai Air Show. It is estimated that this price was after a large bulk discount but the exact details of the pricing were not available.

Akasa Air plans to tap the rapid growth in the Indian aviation market by offering an ultra-low-cost offering that would encourage almost every person to fly. It is not yet clear what would be the profitability trajectory or unique positioning of the model.

Check - Akasa Air Gets Approval to Launch Operations

Akasa Air is expected to have its base in Delhi and Bengaluru and will commence operations around June 2022. It is expected to induct 20 aircraft into its fleet in the first year of operation and then gradually add to its fleet.

Most low-cost airlines make money when they are able to fly at full capacity and also churn their flights quickly. In addition, the absence of frills gives them a huge cost advantage.

Akasa Air will look to design a sale and lease back arrangement with a large lessor wherein it would buy the planes from Boeing and then sell the same to an aircraft leasing company and lease it back. This allows them to reduce the capital locked into the business and improve the ROI.

The only catch is that most of these aircraft lease contracts are covered by the “Hell or High Water” clause wherein there is no provision for “Force Majeure”.

For Boeing, this order is a ticket to the lucrative and fast growing Indian aviation market. India’s largest airline, Indigo Airlines with 55% market share, has opted to stick with Airbus aircraft all through. Once the 72 aircraft are procured by Akasa, it will have the fourth largest fleet in India after Indigo, Air India and Spice Jet.

Boeing 737 Max is reputed to deliver the lowest seat mile cost and that would be a big edge in the competitive Indian market.

Also Read - Big Bull Rakesh Jhunjhunwala's Portfolio 2021

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5paisa is now trusted by over 2 million customers, and counting

2 million customers
by Sheetal Agarwal 22/11/2021

In a short span of just 5 years, we, 5paisa Capital Limited (5paisa) have built a trusted, durable and sustainable bond with our customers. This fact is reflected in our pace of customer acquisition – average monthly rate of customer acquisition now stands at 1,25,000 versus 1,000 in 2016.

In fact, the quarter ending September 2021 marked our highest-ever quarterly customer acquisition at 3.4 lakh.

Today, we serve more than 2 million customers and want to extend our heartfelt gratitude to each one of them. Let us put this into perspective. Historically, traditional brokerages took at least a decade to achieve this milestone, while we have done it in a fraction of that time.

This feat provides testimony to two important facts. First, our motto of ‘making investing easy and rewarding’ resonates well with our customers. Second, we have successfully ‘walked the talk’ to imbibe this motto in everything that we do.

Needless to say, our management team has the foresight, vision and ability to not just develop but also implement winning strategies. In this write-up, we highlight some of the crucial decisions actioned by team 5paisa to achieve this important milestone. 
 

Pioneering ahead


Our ability to keep our ears close to the ground and gauge market trends swiftly; coupled with our strong execution capabilities have enabled us pioneer several concepts in the discount broking space in India.

With an aim to make the procedure for opening demat account simpler, easier and more transparent; we have been implementing several measures. That we were the first in the industry to launch these initiatives was an added bonus.

Back in 2016, the concept of Do-It-Yourself (DIY) virtually did not exist. Processes were largely in physical form and required manual interventions. At that time, we were the first brokerage to introduce complete digital opening of accounts.

Our processes were paperless, human less and did not require any physical signing or uploading of forms.

Back then, 5paisa became the first brokerage firm in India to start Aadhar-based demat account opening (one of the first broking companies to get UIDAI AUA license). We were also the first broker to introduce Electronic Delivery Instruction Slip or eDIS concept and scrap usage of Power of Attorney (PoA) for the purpose of opening a demat account.

This has now become an industry standard. From the 1st day of our operations, we opened 100% of demat accounts digitally. We were also among the first brokerages to provide robo-advisory services on mobile back then, when it was still a very nascent concept.
 

Extending investing beyond metros; guiding millennials


Our strategy of expanding the universe of investors helped us stand apart in a market where most of the incumbent large full service brokers were looking to churn existing investors. This strategy was the outcome of our in-depth market analysis which suggested that there is a vast universe of potential investors outside the big metros.

So, we enhanced our focus on acquiring customers in tier 2 and tier 3 towns of the country. Similarly, we identified millennials and DIY investors as other key target segments. Our ability to cater to them in the language of their choice acted as an important ice breaker, providing us an avenue to put a foot in the door.

We draw inspiration from the words of the father of marketing, Philip Kotler – “The best advertising is done by satisfied customers”. Our efforts are focused on hyper-personalization and localization to create superior customer experiences.

As a result, favorable word-of-mouth and organic initiatives bring 65-70% of new customers to our universe every year. This metric has grown from 35-40% levels in 2018. We have achieved 100% growth in customer acquisitions, every year, for the past 4 years.
 

Delivering superior customer experience, consistently


Customer-centricity is at the heart of all our activities. It is our constant endeavor to provide easy-to-use, simple and beneficial investing platforms and solutions to our customers. Our app is rated highly on all these parameters and was downloaded by 10 million+ users. The overall rating of our app stands at 4.3 stars.

In 2016, 14-15% of industry’s Average Daily Turnover (ADTO) was routed through mobile apps. Right from the start of our journey, we derived 75-80% ADTO from our mobile app. Currently, brokerage industry generates 35-40% of ADTO via mobile apps and we have maintained this metric between 75-80%.

Our app as well as our social media platforms (including our YouTube vides) are available in several Indian languages (8, including English), reaching a larger set of users. Every day users use 1 of the 7 regional languages.

Our app acts as a single-point investment destination for users. In addition to stocks, users can invest in mutual funds, buy insurance/gold, invest in US stocks and also avail loans through a single app.


Fast-tracking growth through technology


Cutting-edge technology forms the backbone of our business. Technology has the potential to drive growth at relatively lower costs, enhance efficiencies and create sustainable value for all our stakeholders. Over the past three years, technology has enabled us to do more with the same number of people.

We continue to build our technology capabilities with the primary objectives of serving existing customers better and acquiring more customers. All-round improvement in business processes is the secondary objective behind raising our tech-quotient.

While our journey so far has been exemplary, there are miles to go before we sleep. Keep watching this space to know more about our future journey.

Also Read:-

5paisa: Because Every Paisa Counts

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Elin Electronics Files for DRHP worth Rs. 760 Cr

Elin Electronics Files for DRHP worth Rs. 760 Cr
by 5paisa Research Team 22/11/2021

Elin Electronics, a company specialized in electronic manufacturing services, has filed draft red herring prospectus (DRHP) with SEBI for its proposed Rs.760 crore IPO. The issue will comprise of Rs.175 crore of fresh and an offer for sale of Rs.585 crore by the promoters and the selling shareholders.

Out of the total OFS of Rs.585 crore, the promoters will divest Rs.239 crore while other early shareholders will divest Rs.346 crore worth of shares.

Elin Electronics is based out of Delhi and is into electronic manufacturing services where it outsources production for other companies. Elin actually manufactures on behalf of major brands of lighting, fans, kitchen appliances as well as fractional horsepower motors.

Elin not only manufacturers on behalf of other producers but also provides end-to-end services including post-sales servicing for the products.

The fresh issue component of Rs.175 crore will be predominantly used for debt repayment or prepayment. While Elin will allocate nearly Rs.80 crore towards debt payments, around Rs.49 crore will be spent for funding capital expenditure to upgrade its expansion of existing plants in Ghaziabad in Uttar Pradesh and Verna in Goa. These facilities are used for manufacturing and assembling a wide array of product on behalf of its clients.

For the financial year ended March 2021, Elin reported a 9.8% growth in top line revenues at Rs.862 crore while the bottom line net profits were up 26.8% at Rs.34.9 crore on a YoY basis. That would entail net margins of just about 4% but that is the normal kind of margins one can expect in this outsourcing business.

It happens to be a cost plus approach to pricing where the profit margins are normally determined in advance, and don’t vary too much over time.

The issue of Elin Electronics will be lead managed by Axis Securities and JM Financials. The normal process for SEBI approval takes about 2-3 months so the IPO could be expected towards the end of the fourth quarter.

Also Read:- 

Upcoming IPOs in 2021

Upcoming IPOs in November 2021

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Go Fashion IPO - Subscription Day 3

Go Fashion IPO - Subscription Day 3
by 5paisa Research Team 22/11/2021

The Rs.1,014 crore IPO of Go Fashion India, consisting of a fresh issue of Rs.125 crore and an offer for sale (OFS) of Rs.889 crore, saw decent response on Day-1 of the IPO and built on it on Day-2.

As per the combined bid details put out by the BSE at the close of Day-3, Go Fashion India IPO was subscribed a whopping 135.40X overall, with good demand coming from the HNI / NII segment and QIB segment followed by the retail segment. The issue has closed for subscription on Monday, 22nd November.

As of close of 22nd November, out of the 80.79 lakh shares on offer in the IPO, Go Fashion India saw bids for 10,939.93 lakh shares. This implies an overall subscription of 135.40X. The granular break-up of subscriptions was dominated by the HNIs / NIIs and the QIBs followed by retail investors.

As expected, the QIB bids and NII bids gathered tremendous momentum only on the last day, as has been the general trend in the IPO market.
 

Go Fashion India IPO Subscription Day-3
 

Category

Subscription Status

Qualified Institutional Buyers (QIB)

100.73 Times

Non Institutional Investors (NII)

262.08 Times

Retail Individuals

49.40 Times

Employees

N.A.

Overall

135.40 times

 

QIB Portion

Let us first talk about the pre-IPO anchor placement. On 16th November, Go Fashion India did an anchor placement of 66,10,492 shares at the upper end of the price band of Rs.690 to 33 anchor investors raising Rs.456.12 crore.

Check - Go Fashion IPO - Subscription Day 2

The list of QIB investors included a number of marquee global names like Government of Singapore, Monetary Authority of Singapore, Nomura, Fidelity, Neuberger Berman, Volrado Venture, University of Notre Dame and Abu Dhabi Investment Authority (ADIA). Domestic anchor investors included SBI MF, HDFC MF, ICICI Pru MF, Axis MF, Birla MF, SBI Life, Mirae MF among others.

The QIB portion (net of anchor allocation as explained above) has a quota of 44.07 lakh shares of which it has got bids for 4,439.24 lakh shares at the close of Day-3, implying a subscription ratio of 100.73X for QIBs at the close of Day-3. QIB bids typically get bunched on the last day and that is what we saw in the case of Go Fashion, although the indications of robust institutional participation were already there in the anchor demand itself.

HNI / NII Portion

The HNI portion got subscribed 262.08X (getting applications for 5,775.01 lakh shares against the quota of 22.03 lakh shares). Bulk of the funded applications and corporate applications, came in on the last day of the Go Fashion IPO. That explains why the HNI portion has been subscribed so aggressively on the last day of the IPO.

Retail Individuals

The retail portion was subscribed an impressive 49.40X at the end of Day-3, showing strong retail appetite. It must be noted that retail allocation is only 10% in this IPO. For retail investors; out of the 14.69 lakh shares on offer, valid bids were received for 725.70 lakh shares, which included bids for 577.18 lakh shares at the cut-off price. The IPO is priced in the band of (Rs.655-Rs.690) and has closed for subscription on 22nd November 2021.

Also Read:- 

Upcoming IPOs in 2021

Upcoming IPOs in November 2021

Go Fashion (India) IPO - 7 Things to Know

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Bharti Airtel Hikes Tariff for Data Top-up Plans

by 5paisa Research Team 22/11/2021

In a move that could set the tone for the new paradigm in the telecom industry, Bharti Airtel took the lead in raising pre-paid tariffs by 20-25%. These new tariffs would be effective from 26-November.

The pre-paid set of customers are normally the entry level customers who actually depress the ARPU or the average revenue per customers. Bharti’s endeavour is to first take the ARPU to Rs.200 a month and then gradually scale it up to Rs.300 per month.

Bharti has huge outlays lined up and cannot afford the price war any longer. Bharti’s bet is that with digital contributing the second highest EBIT for Reliance group after oil and petchem, even Jio would not be too inclined to continue the price war any further.

Bharti needs funds to repay the pending AGR dues and spectrum usage charges as well as invest in making its networks more robust to improve voice and data quality ahead of 5G rollout.

With the current ARPU standing at Rs.153 per month, Bharti has made a start by raising the base price of the 28-day pre-paid package from Rs.149 to Rs.179.

This package comes with unlimited calling, up to 100 SMS messages per day and 2 GB data. By making the entry level data plan more expensive, Bharti hopes to give a substantial boost to its ARPU.

The more comprehensive data plan comprising of unlimited voice calling and 1GB of data per day, currently costs Rs.219 for a 28-day package. That pre-paid plan will now stand revised upwards to Rs.265 for the same package.

The higher end 50-GB pre-paid pack, which currently costs Rs.251 for the 28-day pack, now stands enhanced to Rs.301. All these changes will be effective from 26th November.

Apart from these basic data cum voice pack, the additional data pack of 12 GB, which used to cost Rs.98 will now cost Rs.118. The hike across the board ranges from 20% to 25% and the intent is to target the entry level consumers who actually pay below the ARPU.

Sunil Mittal had already mentioned about the need for higher tariffs about 6 months back and had also taken other telecom heads into confidence into the matter to get buy-in.

The stock of Bharti has rallied sharply even in the midst of the weak market on 22nd November on hopes that the new plan would boost their ARPUs.

Also Read:-

Telecom Relief Package

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IPO Flows make FPI Flows Look Rosy

IPO Flows make FPI Flows Look Rosy
by 5paisa Research Team 22/11/2021

You could call it the tale of 2 FPI flows. On the one hand, FPIs have been selling heavily in the secondary markets. This selling is on fears that inflation could go up further, Fed and RBI could hike rates sooner and valuation concerns could get elevated and highlighted.

The other is the consistent inflows into IPOs, especially the big digital IPOs like Nykaa, Policybazaar and Paytm. The anchor placements in these IPOs did see a robust response from these foreign portfolio investors.

If you look at the overall numbers for FPIs for the month of November, it looks quite impressive. FPIs infused a sum of Rs.19,712 crore into Indian markets in the month of November so far, which included Rs.14,051 crore by way of equity inflows and Rs.5,661 crore by way of debt flows.

The debt flows are normally indicative of reducing risk of interest divergence and also parking of funds on the lookout for opportunities.

The equity flows is a lot more interesting. Inflows of Rs.14,051 crore is nearly $2 billion in the first 2 weeks, which is quite impressive. However, there is a clear dichotomy here. FPIs actually pulled out Rs.9,128 crore from the equity secondary markets but infused Rs.23,179 crore into IPOs during this same period.

This is across some major big ticket IPOs that hit the primary markets in the first two weeks of November.
What explains this dichotomy. On the secondary markets front, the selling in equities is on account of concerns over inflation rate, interest rates and the valuations concerns highlighted by many of the large global brokers as well as by the RBI in its latest monthly bulletin.

That has kept the secondary market under pressure and the pressure is likely to continue until there is greater clarity on the macro front. 

However, the IPO flows could be the real challenge. Two major IPOs in the previous week viz. Paytm and Sapphire Foods are at a deep discount to their issue price.

That is unlikely to make the FPIs too happy and they are likely to be a little more wary participating in future anchor placements. The FPI enthusiasm would now largely depend on how the IPO markets perform. That is the challenge.

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