Analysing Performance of IPOs Released in 2019

Analysing Performance of IPOs Released in 2019
27/02/2020

Year 2019 was a year of few IPOs but there were many outperformers with just 3 out of 16 IPOs giving negative returns as on date. Analysis of the performance of the IPOs in the previous year is vital to give us a fair picture of what to expect in the current year, when we are looking forward to some remarkable upcoming IPOs.

Check the table below for the list of initial public offerings in 2019 with their listing and current performance.

Name of Issuer

IPO Open

IPO Close

Issue Type

Issue Size (Rs. cr)

Issue Price (Rs.)

Listing Day Gain / Loss

CMP (25th Feb 2020)

Gain / Loss to date (%)

Xelpmoc Design and Tech Limited

Jan 23, 2019

Jan 25, 2019

BB

23

66

-9.32%

52.60

-20.30%

Chalet Hotels Limited

Jan 29, 2019

Jan 31, 2019

BB

1,641

280

3.71%

329.00

17.50%

MSTC Limited

Mar 13, 2019

Mar 20, 2019

BB

212

120

-4.83%

192.50

60.42%

Rail Vikas Nigam Limited

Mar 29, 2019

Apr 3, 2019

BB

482

19

0.26%

22.55

18.68%

Metropolis Healthcare Limited

Apr 3, 2019

Apr 5, 2019

BB

1,204

880

9.04%

1,820.00

106.82%

Polycab India Limited

Apr 5, 2019

Apr 9, 2019

BB

1,346

538

21.75%

1,124.00

108.92%

Neogen Chemicals Limited

Apr 24, 2019

Apr 26, 2019

BB

132

215

22.58%

464.40

116.00%

IndiaMART InterMESH Limited

Jun 24, 2019

Jun 26, 2019

BB

476

973

33.87%

2,588.00

165.98%

Affle (India) Limited

Jul 29, 2019

Jul 31, 2019

BB

459

745

17.46%

2,119.00

184.43%

Spandana Sphoorty Financial Ltd

Aug 5, 2019

Aug 7, 2019

BB

1,202

856

-0.89%

1,099.00

28.39%

Sterling and Wilson Solar Ltd

Aug 6, 2019

Aug 8, 2019

BB

3,145

780

-7.01%

189.75

-75.67%

Vishwaraj Sugar Industries Ltd

Sep 30, 2019

Oct 4, 2019

BB

60

60

0.58%

74.00

23.33%

IRCTC Limited

Sep 30, 2019

Oct 3, 2019

BB

645

320

127.69%

1,959.00

512.19%

CSB Bank Limited

Nov 22, 2019

Nov 26, 2019

BB

410

195

53.90%

165.05

-15.36%

Ujjivan Small Finance Bank Ltd

Dec 2, 2019

Dec 4, 2019

BB

750

37

51.08%

51.20

38.38%

Prince Pipes and Fittings Ltd

Dec 18, 2019

Dec 20, 2019

BB

500

178

-6.40%

177.55

-0.25%

Data Source: NSE

What drove the IPO performance?

IRCTC was the clear leader with 512% returns as investors saw in the stock a combination of consumption play, monopoly profits, hefty OPMs and a solid internet play. After all, Flipkart was valued at $16 billion when it was sold to Wal-Mart. Even at the current valuations, IRCTC has a market value of just $4 billion despite having 18 million transactions per month and millions of customer touch-points on a daily basis.

Among the other IPOs gaining more than 100% since listing, Indiamart and Affle were again internet plays. Metropolis operated in the low risk / high margin segment of healthcare while investors are increasingly looking at Polycab as the next potential Havells in the electrical goods segment.

The two disappointments were Sterling & Wilson Solar and CSB. Sterling & Wilson was understandable as it belongs to the Shapoorji Pallonji group, which is currently in the midst of a cash crunch. The bigger disappointment was Catholic & Syrian Bank, which has fallen sharply after a very encouraging listing debut.

In a nutshell, the story of IPOs in 2019 was the story of few quality IPOs dominating the year.

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All you need to know about SBI Cards IPO

All you need to know about SBI Cards IPO
27/02/2020
SBI Cards IPO opens on March 02nd 2020 and closes on March 05th 2020. The IPO will have an offer for sale component and a fresh issue component. The total size of the issue is Rs.10,354 crore and post the issue the stake of State Bank of India in SBI Cards will come down from 74% to 69.51%. The issue price band will be Rs.750-755 and at the higher end of the band, the company could be valued at close to Rs.70,000 crore. This is one of the most awaited among upcoming IPOs.

The company management has also been quite excited about it. Take a look at the video below to know the management’s take on the same.

Why SBI cards IPO is beneficial

SBI Cards IPO will give investors an opportunity to invest in the first listed credit card business in India. With a market share of 18% (number of cards), SBI Cards is already the second largest credit card player in India. It runs a profitable business with net margins at a healthy 15%. It is a solid play on the increasing digitization of payments in India and also rising consumption.

What is the amount of the IPO?

The initial public offering of SBI Cards will open on 02nd March and close on 05th March. The IPO has been priced in the band of Rs.750-755. SBI will hive 5.49% of its holdings and the balance will be hived off by Carlyle Group. Out of the total issue size of Rs.10,354, the fresh issue portion will be Rs.500 crore and Rs.9,854 crore will be an offer for sale (OFS). Here are some additional details of the latest IPO from the SBI stable.

  • IPO open from – March - 02nd to March 05th
  • Finalization of basis of allotment – March 11th
  • Demat Credit – March 13th
  • IPO Listing – March 16th
  • IPO Price Band – Rs.750-755
  • Minimum Retail Application – 1 lot = 19 shares at Rs.14,345
  • Maximum Retail Application – 13 lots = 247 shares at Rs.186,485

What is anticipated return?

It is tough to estimate the anticipated returns but being the first of its kind credit card IPO in India, it is likely to elicit interest from retail, HNI and institutional investors. The expected oversubscription and the 15% net margins will ensure a good listing for the stock. Even for a long term investor, SBI Cards will be a good play on the digitization of Indian shoppers and the consumer propensity to spend; especially the millennial consumer.

Benefits to the retailer

One interesting thing to remember is that if you are an existing SBI shareholder, you can apply for a maximum of 247 shares under the shareholder quota and 247 shares in the retail quota. If you are eligible for the employee quota, then you can make a third application under that category also. You can use the same demat account for all these applications. The employee quota offers an additional discount of Rs.75 per share.

How to apply for SBI Cards IPO

You can apply for the SBI Cards IPO either offline or online. Ideally, you can use the ASBA route to apply for the IPO. Application Supported by Blocked Amount (ASBA) allows you to just block the monies without debiting at the time of application. On allotment, only the amount allotted will be debited and the balance amount is released. You can also use the UPI facility to apply for the IPO with select brokers.

The video below will help you know the entire IPO application process.
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Hurled by the IPO Rush? Here’s All You Need to Know About ASBA

ASBA IPO
IPO
by Nikita Bhoota 27/02/2020

ASBA (applications supported by blocked amounts) was introduced by SEBI to protect the interests of the retail investors. ASBA can used to apply for IPOs, FPOs, rights issues etc. In ASBA, the designated bank account only gets blocked to the extent of the application money. On the date of allotment, the amount gets debited to the extent of allotted shares and the balance gets released. If zero shares are allotted to the applicant, then the entire blocked amount under ASBA is released.

Who can make an ASBA investment?

ASBA is mandatory for all IPOs after January 01st 2016. However, an ASBA investor has to fulfil some basic conditions.

  • He must be a resident individual applying under the Retail Quota
  • Bid must be at cut-off price with a single option of number of shares bid
  • ASBA application has to be made through self certified syndicate bankers (SCSB)
  • Such price intibid made in ASBA cannot be revised later on
  • ASBA cannot be used for other categories like employees / shareholders etc.

What are the advantages of ASBA?

ASBA comes as a major boon to retail investors. Here are some of the major advantages.

  • Since the amount is only blocked, you continue to earn interest
  • You don’t worry about refunds as only the allotment money is debited
  • The application process is very simple and you can apply through your bank
  • The blocked amount is included in average quarterly balance (AQB)
  • Even through bids cannot be revised, they can be cancelled.

How can an ASBA application be cancelled?

While an ASBA application cannot be revised as per the rules, the ASBA application can certainly be cancelled. There are two distinct situations here. If the IPO has not closed, you can cancel the ASBA application through your online trading account or through the bank. Your SCSB will cancel the bid and unblock the amount right away. However, if you withdraw after the issue closes, then you have to write to the registrar to cancel the bid. The SCSB will only remove the block after the allotment is complete and they get intimation from the registrar.

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E-trade in India - scope

E-trade in India - scope
01/03/2020

In a way online trading is as simple as online shopping. Of course, you need to do a little more research and do some follow up monitoring, online trading is effectively as simple as that. Your trading account and demat account are online and everything from research to stock screening to order placement, execution, monitoring and follow-up are done online through a single trading platform. It can become a lot more seamless if you are accessing online trading on your smart phone, but we will leave that discussion aside for the time being. That is because, today trading platforms provide all the necessary support and assistance by providing secured real time access to trading, research reports, price analysis of stocks, market news, etc. even the interface between your trading account, demat account and bank account is virtually seamless.

How to start online trading (e-trading)

You can place trade orders or cancel orders at your will from the comforts of your home. It is as simple as that. It allows you to make your own decision with regards to trading without any interference of the broker. You can buy shares or invest in IPO or buy mutual funds as well. Even bonds, including RBI bonds are available for purchase online. Online trading can be done by simply opening a trading cum demat account with any SEBI registered broker offering the online trading facility. With the power of e-KYC, the account opening can be completed less than an hour. The documents required to open an account are PAN card, address proof, AADHAAR card, mobile number linked to AADHAAR, bank statement, cancelled cheque leaf and passport photograph. That is all.

How online trading has a distinct edge over offline trading

  • Online trading is simple as it enables a trader to have a hassle free trading experience. Anyone can use these platforms as specific skill is not required to carry out trading online. Just worry a tad about online security; that is all.

  • It is less expensive and therefore more economical. Brokers also promote online trading and charge lower rates of brokerage as it reduces maintenance and monitoring as well as RMS costs incurred by the broker.

  • Online trading can be relatively less time consuming. Before the advent of online trading, the process was cumbersome as you had to visit the broker or call your broker for placing or cancelling orders. Now a PC or a smart phone is sufficient.

  • Online trading gives complete control over the process; end to end. It allows the trader to have complete control from order placement to order modification to order cancellation and monitoring. Online trading is also extremely flexible.

  • Reduced chances of errors are one more advantage. In case of traditional offline trading, there were more chances of errors due to miscommunication between the traders and brokers. In online trading, the trader or investor can manage and control the entire trade transactions and execution.

  • It also provides effective and seamless monitoring of investment at all times. You can monitor investments at any time and from anywhere. Loss making stocks can be removed and profit making stocks can be added to your portfolio by observing the market moves.

  • Online trading enables seamless call to action. You can get access to top research recommendations, screeners, sorters, reports and analysis on stock price charts at the click of a button. You can decide the best move and also execute the same with less than three hops.

Future of online trading in India

Online trading has already grown close to 20% of the overall broking market in India and is likely to grow much bigger in the days to come. Online trading is not only being preferred by traders but also being encouraged by brokers. Here is why it has huge scope.

  • With the advent of broadband and low cost bandwidth, the internet access is becoming much more economical to operate.

  • The millennial crowd is having a soft corner for online trading as it gives them more control over their actions.

  • Online trading has now started incorporating machine learning and artificial intelligence so that focused planning of finances is also facilitated.

  • Low cost broking is here to stay and the largest broker in India (by number of registered clients) is already a discount broker predominantly online.

  • With mobile trading catching on, trading is becoming a lot more personal and contiguous. That could make all the difference.

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Budget Impact on Personal Taxes: Good, Bad or Ugly?

Budget Impact on Personal Taxes: Good, Bad or Ugly?
02/03/2020

The one big story of the budget was the dual tax regime with individuals now having to choose their tax regime. What does that mean? How the scrapping of DDT and status quo on LTCG tax impacts taxes!

Now you need to choose your personal tax regime

If you thought that only corporates have a dual tax regime to choose from, then think again. Even individuals will now have to make a choice: old regime versus new regime. Check out the new rates of taxes applicable in contrast to the old rates.

Income Level

Old Tax Rate

New Tax Rate

Up to Rs2.50 lakhs

Nil

Nil

Rs2.50 lakhs to Rs5 lakhs

5%

5%

Rs5.00 lakhs to Rs7.50 lakhs

20%

10%

Rs7.50 lakhs to Rs10 lakhs

20%

15%

Rs10 lakhs to Rs12.5 lakhs

30%

20%

Rs12.5 lakhs to Rs15 lakhs

30%

25%

Above Rs15 lakhs

30%

30%

Source: Budget Documents

If you are delighted about the lower tax rates, just think again. Here is a catch! If you opt for the new tax regime, you forfeit most of the tax exemptions. Effectively, you forfeit tax exemptions under Section 80C, Section 80D and even benefits under LTC, HRA and standard deduction. In a nutshell, 70 out of the 100 exemptions will go away. Only a handful of exemptions like the CPF, gratuity, VRS compensation, retrenchment allowance etc will remain. But you give up on the standard deduction of Rs.50,000 and you don’t get any benefit from life insurance premiums, tuition fees or ELSS investments if you opt for the new tax regime. Let us look at the impact on two distinct income levels.

Income of Rs.15 lakhs

Income of Rs.30 lakhs

Details

Old Regime

New Regime

Details

Old Regime

New Regime

Income

15,00,000

15,00,000

Income

30,00,000

30,00,000

Deductions

2,00,000

Nil

Deductions

4,25,000

Nil

Taxable Income

13,00,000

15,00,000

Taxable Income

25,75,000

30,00,000

Tax

2,02,500

1,87,500

Tax

5,85,000

6,37,500

Cess @ 4%

8,100

7,500

Cess @ 4%

23,400

25,500

Tax Payable

2,10,600

1,95,000

Tax Payable

6,08,400

6,63,000

Standard Deduction 50K & Section 80C of 150K

SD + 80C + 80D + Sec 24 considered

There is a marginal benefit at the income level of Rs.15 lakhs but as you go to higher income levels, the old regime appears to be clearly more profitable. You need to make a smart relative assessment before opting for the right tax regime for you.

Dividend tax incidence will now be on the investor

After 20 years, dividend distribution tax has come to an end. DDT was always unfair because it hit the small and large investor alike. It was a steep cost because while the rate was 15%, the effective cost of DDT came to 20.56%. However, promoter groups have to shell out tax at close to 43% on their dividend income. Of course, governments will collect a huge sum by way of dividend tax but it could impact dividend declaration.

Some good news on homes; but only for old regime

The special tax incentive of Rs1.50 lakhs per annum on low cost houses, over and above the existing benefit of Rs2 lakhs under Section 24 of the Income Tax Act has been extended by one more year till March 2021. This benefit will not be available if you opt for the new tax regime.

In addition, the Budget also made some progress on granting partial amnesty in the case of pending litigations and also the move towards faceless appears. But the big story remains the dual regime and the efficacy of the new tax regime.

Next Article

Did the Budget 2020 Really Disappoint the Capital Markets?

Did the Budget 2020 Really Disappoint the Capital Markets?
02/03/2020

If you gauge the markets by the movement of the Sensex and the Nifty on the day of the Budget then it was surely disappointing. A loss of 1000 points on the Sensex is just one side of the story. The bigger worry is that the last 1 year’s efforts to breach the 40,000 mark on the Sensex have virtually come to a naught after the Sensex fell through that level with a vengeance. But there are some long term positives though there are some short term negatives. Let us first look at the long term positives and then come to the short term negatives that directed the crash in the indices.

Here are some long term capital market positives from Budget 2020

It is easy to get caught up in the panic of the moment, but don’t forget some genuine long term positives in the Union Budget 2020.

  • The decision of the government to exit IDBI Bank entirely is a good starting point and could lead to underlining the fact that the government has no business to be in business. Also, the proposed mega sale of stake in LIC could be a game changer considering its size. It will be almost as important as the Aramco IPO.

  • Partial credit guarantee scheme for NBFCs has been enhanced and that is likely to be a major positive for the NBFCs and the stressed realty sector.

  • The Rs.1000 crore packages for export oriented sectors like pharma and auto ancillaries can weigh positively on the trade deficit and the rupee value.

  • India may get to see the controversial credit default swaps (CDS) making an entry giving a bigger opportunity to hedge risk and to play risky debt on the downside.

  • Budget 2020 has also opened up the floodgates for Government securities to NRIs in a bid to broaden the market.

  • Finally, the Budget has also spoken about a big push to Debt ETFs to fill the gap in the bond markets. All these could be structurally positive for the capital markets.

But the short term outlook for the markets may be under pressure

Short term markets are more optical and less structural. Here is why markets are jittery.

  • LTCG tax was a bad idea in the first place. It impairs long term portfolio values and there were strong expectations of it being scrapped. That did not happen.

  • Getting rid of DDT is a good move but it is now being replaced by dividend tax. This may reduce the burden on lower holding groups but will make companies and promoters wary of paying out dividends.

  • Fiscal deficit at 3.8% was a shocker and the budget has used the full leeway for next two years. Higher fiscal deficit has negative implications for sovereign rating as well as for borrowing costs for corporates.

  • There was little detailing on infrastructure spending other than reiterating the commitment to infuse Rs.103 trillion into infrastructure in the next 5 years.

  • Budget 2020 did almost nothing to assuage the pain of small investors and consumers. The expectation was that the budget would give big breaks to the income groups between Rs.5 lakh and Rs.20 lakhs. Instead, we have a tax scheme that is immensely complicated.

  • Finally, disinvestment target has been enhanced to Rs.210,000 crore (what is that). While it looks optically appealing it is predicated on the LIC divestment and that may be much easier said than done.

It is true that long term efforts are there in the budget but the short sure looks hazy. That explains why markets are unimpressed.