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HCL Technologies 1177.15 (0.89%)
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Wipro 671.10 (0.44%)

FY21: A Rocking Year for the IPOs

IPO FY21
IPO
by Nikita Bhoota 05/04/2021

29 IPOs were listed in the FY21 with an issue size of more than Rs 200 cr. The 29 IPOs raised ~29000 cr. Some IPOs like Mrs. Bectors Food Specialities Limited, Burger King India Limited, Mazagon Dock Shipbuilders Limited, Chemcon Speciality Chemicals Limited, Happiest Minds Technologies Ltd, Nazara Technologies Limited, Laxmi Organic Industries Limited, Easy Trip Planners Limited and Indigo Paints Limited were subscribed more than 100 times.16 out of 29 IPOs listed at premium over the issue price.

MTAR Technologies signed off the year by being the highest subscribed IPO, 200 times. 

Let’s discuss, some of the IPOs of FY21 in detail.

Company Name List Date Issue
price (Rs)
List
price (Rs)
Last Close
Price (Rs)
Gain/ Loss on
Listing Date
Last Close/Listing
Price Gain/Loss
Last Close/Issue Price
Gain/Loss
Nazara Technologies Ltd. 30-Mar-2021 1,101.00 1,971.00 1,465.00 79.00% -25.70% 33.10%
Kalyan Jewellers India Ltd. 26-Mar-2021 87 73.9 68.1 -15.10% -7.80% -21.70%
Suryoday Small Finance Bank Ltd. 26-Mar-2021 305 293 273.8 -3.90% -6.60% -10.20%
Craftsman Automation Ltd. 25-Mar-2021 1,490.00 1,350.00 1,417.90 -9.40% 5.00% -4.80%
Laxmi Organic Industries Ltd. 25-Mar-2021 130 156.2 174.3 20.20% 11.60% 34.00%
Anupam Rasayan India Ltd. 24-Mar-2021 555 534.7 490.5 -3.70% -8.30% -11.60%
Easy Trip Planners Ltd. 19-Mar-2021 187 206 209.6 10.20% 1.70% 12.10%
MTAR Technologies Ltd. 15-Mar-2021 575 1,063.90 1,023.90 85.00% -3.80% 78.10%
Heranba Industries Ltd. 05-Mar-2021 627 900 631.6 43.50% -29.80% 0.70%
Railtel Corporation Of India Ltd. 26-Feb-2021 94 104.6 126.8 11.30% 21.20% 34.90%
Brookfield India Real Estate Trust REIT 16-Feb-2021 275 275.1 223.2 0.00% -18.90% -18.80%
Stove Kraft Ltd. 05-Feb-2021 385 467 458.1 21.30% -1.90% 19.00%
Home First Finance Company India Ltd. 03-Feb-2021 518 612.2 448.6 18.20% -26.70% -13.40%
Indigo Paints Ltd. 02-Feb-2021 1,490.00 2,607.50 2,389.30 75.00% -8.40% 60.40%
Indian Railway Finance Corporation Ltd. 29-Jan-2021 26 25 23 -3.80% -8.20% -11.70%
Antony Waste Handling Cell Ltd. 01-Jan-2021 315 430 243.9 36.50% -43.30% -22.60%
Mrs. Bectors Foods Specialities Ltd. 24-Dec-2020 288 501 336.1 74.00% -32.90% 16.70%
Burger King India Ltd. 14-Dec-2020 60 115.4 129.1 92.30% 11.90% 115.20%
Gland Pharma Ltd. 20-Nov-2020 1,500.00 1,701.00 2,477.80 13.40% 45.70% 65.20%
Equitas Small Finance Bank Ltd. 02-Nov-2020 33 31 60.1 -6.10% 93.70% 82.00%
UTI Asset Management Company Ltd. 12-Oct-2020 554 490.3 582.6 -11.50% 18.80% 5.20%
Mazagon Dock Shipbuilders Ltd. 12-Oct-2020 145 216.3 212.6 49.10% -1.70% 46.60%
Angel Broking Ltd. 05-Oct-2020 306 275 291.1 -10.10% 5.90% -4.90%
Computer Age Management Services Ltd. 01-Oct-2020 1,230.00 1,518.00 1,852.70 23.40% 22.00% 50.60%
Chemcon Speciality Chemicals Ltd. 01-Oct-2020 340 731 407.5 115.00% -44.30% 19.90%
Route Mobile Ltd. 21-Sep-2020 350 708 1,410.60 102.30% 99.20% 303.00%
Happiest Minds Technologies Ltd. 17-Sep-2020 166 351 540.1 111.40% 53.90% 225.40%
Mindspace Business Parks REIT 07-Aug-2020 275 304 294.7 10.50% -3.10% 7.20%
Rossari Biotech Ltd. 23-Jul-2020 425 670 1,037.60 57.60% 54.90% 144.10%

Source: Ace Equity, 
Last close as on 31st March 2021. List and close price is as per BSE.

Nazara Technologies:
Nazara Technologies India Ltd (Nazara) is a leading India based diversified gaming and sports media platform with presence in India and across emerging and developed global markets such as Africa and North America. Its offerings include interactive gaming, eSports and gamified early learning ecosystems. Some of the marquee individual investors include Mr. Rakesh Jhunjhunwala and Mr. Utpal Sheth.

The stock listed at 79% premium over the issue price. The Nazara Technologies IPO was subscribed 175.4 times. The issue size was Rs 321.60 cr.

Kalyan Jewellers India Ltd.
Kalyan Jewellers India Limited is one of the largest jewellery companies in India based on revenue as of March 31, 2020. It is a pan-India jewellery company with 107 showrooms located across 21 states and union territories in India, and 30 showrooms located in the Middle East. The company designs, manufactures, and sells a wide range of gold, studded, and other jewellery products across various price points ranging from jewellery for special occasions, such as weddings, to daily-wear jewellery.

The stock listed at 15% discount over the issue price. The IPO was subscribed 2.61 times. The issue size was Rs 832.67 cr.

Laxmi Organic Industries Ltd.
Laxmi Organic Industries Ltd is a specialty chemical manufacturer that operates in 2 business segments; Acetyl Intermediates (AI) and Specialty Intermediates (SI). It is the leading manufacturer of ethyl acetate with over 30% market share in the Indian ethyl acetate market and the only manufacturer of diketene derivatives in India.

The stock listed at 20% premium over the issue price. The IPO was subscribed 106.8 times. The issue size was Rs 423.26 cr.

Easy Trip Planners Ltd.
Easy Trip Planners Limited offers ‘end to end’ travel solutions which include air tickets, hotels and holiday packages, rail tickets, bus tickets and taxis as well as ancillary value added services. As per industry reports, it is ranked 2nd among the Key OTAs in India in terms of booking volume during 9MFY21 and third among the Key OTAs in India in terms of GBV in FY20.

The stock listed at 10% premium over the issue price. The IPO was subscribed 159.3times. The issue size was Rs 282.01 cr.

MTAR Technologies Ltd.
MTAR Technologies (MTAR) is a leading precision engineering solutions company engaged in the manufacture of mission critical precision components with close tolerances (5-10 microns), and in critical assemblies, to serve projects of high national importance, through its precision machining, assembly, testing, quality control, and specialized fabrication competencies, some of which have been indigenously developed and manufactured (Source: CRISIL Report). MTAR primarily serves customers in the clean energy, nuclear and space & defence, sectors. Some of its key customers include Nuclear Power Corporation of India Limited, Indian Space Research Organisation, Defence Research and Development Organisation, and Bloom Energy Inc., United States

The stock listed at 85% premium over the issue price. The IPO was subscribed 200.7 times. The issue size was Rs 417.49 cr.

Anupam Rasayan India Ltd.
Having commenced business as a partnership firm in 1984 as a manufacturer of conventional products, Anupam Rasayan India (ARIL) has evolved over the years into custom synthesis and manufacturing of life science related specialty chemicals and other specialty chemicals, which involve multi-step synthesis and complex technologies, for Indian and global customers. It has two distinct verticals, life science related specialty chemicals (95.37 % for revenue from operations for FY20) comprising products related to agrochemicals, personal care and pharmaceuticals and other specialty chemicals.

The stock listed at 4% discount over the issue price. The IPO was subscribed 44 times. The issue size was Rs 538.45 cr.

Indigo Paints Ltd.
Indigo Paints (Indigo) is the fifth-largest decorative paints company in India, with a larger presence in tier 3/4 towns and rural areas coupled with a strong portfolio of differentiated products. Indigo derives 45% of its sales from emulsion paints. Also, it has a distinguished portfolio of differentiated products based on end-use and value-added properties, which include products such as floor coat emulsion, bright ceiling coat, tile coat, dirt-proof and waterproof exterior laminate.

The stock listed at 75% premium over the issue price. The IPO was subscribed 117 times. The issue size was Rs 1,160.13 cr.

Mrs. Bectors Foods Specialities Ltd.
Mrs. Bectors Food Specialities Limited (MBFSL) is one of the leading companies in the premium and mid-premium biscuits segment and the premium bakery companies in the North Indian (Source: Technopak Report). It manufactures and markets its premium and mid-premium biscuits under its flagship brand ‘Mrs. Bector’s Cremica’ and its bakery products in savory and sweet categories under its brand ‘English Oven’.

The stock listed at 74% premium over the issue price. The IPO was subscribed 198 times. The issue size was Rs 544.35 cr.

Burger King India Ltd.
Burger King India (BKI) is the national master franchisee of the BURGER KING® brand in India, with exclusive rights to develop, establish, operate and franchise Burger King branded restaurants in India. Since the opening of its first restaurant in November 2014, it has reached 200+ stores in less than five years. Its total restaurant count stands at 261 as on September 30, 2020 including eight Sub-Franchised Burger King Restaurants, across 17 states and union territories and 57 cities across India.

The stock listed at 92% premium over the issue price. The IPO was subscribed 156.6 times. The issue size was Rs 810 cr.

Mazagon Dock Shipbuilders Ltd.
Mazagon Dock Shipbuilders Ltd. (MDL) is a Defence Public Sector Undertaking under ministry of Defence. It is one of the India’s leading shipyards with a maximum shipbuilding and submarine capacity of 40,000 DWT (Source: Crisil).  The shipyard builds and repair warships and conventional submarines at its facilities in Mumbai and Nhava for the MoD for use by the Indian Navy and other vessels for commercial clients. Since 1960, MDL has built a total of 795 vessels including 25 warships, from advanced destroyers to missile boats and three submarines. MDL had also delivered cargo ships, passenger ships, supply vessels, multipurpose suppose vessels, water tankers, tugs, dredgers, fishing trawlers, barges and border outposts for various customers in India as well as abroad.

The stock listed at 49% premium over the issue price. The IPO was subscribed 157.4 times. The issue size was Rs 443.69 cr.

Route Mobile Ltd.
Route Mobile Ltd. (RML) is a leading Global Cloud Communications Platform service provider, catering to enterprises, over-the top (OTT) players and mobile network operators (MNOs). Its range of services include messaging, Rich Communication Services (RCS), OTT business messaging, voice, email and SMS filtering, omni-channel communication, analytics & monetization.

The stock listed at 102% premium over the issue price. The IPO was subscribed 73.3 times. The issue size was Rs 608.70 cr.

Happiest Minds Technologies Ltd.
Happiest Minds Technologies Ltd. (HMTPL), is a relatively younger IT solutions provider (Incorporated in FY11) which was born digital and has specialization in disruptive technologies. It offers services like Software and Infrastructure as a Service, Security, Analytics, and IoT. As on FY20, its Product Engineering Services (PES, 50.5% of revenue) was the largest BU while Edu-Tech and Hi-Tech are the largest verticals accounting for ~21% of revenue.

The stock listed at 111%premium over the issue price. The IPO was subscribed 150.9 times. The issue size was Rs 386.11 cr.

The Road Ahead:
The pipeline for FY22 also looks strong with 18 companies holding market regulator Securities and Exchange Board of India’s (Sebi’s) approval proposing to raise nearly Rs 18,000 crore and another 14 awaiting the market regulator’s approval to raise nearly Rs 23,000 crore as per the media reports. “After the huge success in FY21, market experts believe that investors will be cautious and choose only those IPOs that are priced attractively and where companies operate in a niche segment.

Disclaimer: The above details is compiled from information available on public platforms. These are not buy or sell recommendations.

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Market Performance in March 2021

Market Performance in March 2021
by Nikita Bhoota 07/04/2021

Market Update:
Indian markets witnessed volatility during the month as risk-off sentiments affected the emerging economies

Nifty 50 edged up 1.1%, while BSE Sensex rose 0.8% on MoM basis in March 2021
Mid and small cap indexes outperformed large cap indexes due to retail investors’ continued interest in the broader market

FIIs bought ₹19,124cr (vs. ₹19,747cr bought MoM) in Indian equities, while DIIs bought ₹2,476cr worth of equities (vs. ₹16,306cr sold MoM) during the month

Fixed Income Market

During March month, India’s 10-year bond yields were almost flat at around 6.18% on stable FII flows amid signs of economic recovery

Meanwhile, the Govt. unveiled a very aggressive borrowings plan to auction ₹7.24 trillion ($99 billion) of bonds in the first half of FY22

The World Bank raised its forecast of India’s FY22 growth to 10.1% (vs. its earlier forecast of 5.4%) as it feel country's vaccination drive and Govt’s infrastructure push in the national budget can aid growth momentum and revive domestic demand

Stock Performance:
The market witnessed huge volatility in March 2021. Below are the top 5 gainers and losers on Nifty50 in March 2021.

Gainers

Company Name 01 March 2021 31 March 2021 Gain/Loss
JSW Steel Ltd. 405 469 15.60%
Grasim Industries Ltd. 1,266 1,451 14.60%
Hindustan Unilever Ltd. 2,143.40 2,431.50 13.40%
Tata Steel Ltd. 730.4 811.9 11.20%
UPL Ltd. 590.6 641.9 8.70%

Source: Ace Equity

Coal India Ltd.
The stock plummeted 15.5% in March 2021 as Coal India‘s production in February fell 6.6% to 61.9 million tonnes against 66.2 mt in February 2019.

Hero MotoCorp Ltd.
The stock fell 13% in the same month as the company will make an upward revision in the ex-showroom prices of its motorcycles and scooters, with effect from April 1, 2021, in order to partially offset the impact of higher commodity costs.

Other stocks that were top losers on Nifty50 were Oil & Natural Gas Corporation Ltd, IndusInd Bank Ltd and Indian Oil Corporation Ltd.

Disclaimer: The above report is compiled from information available on the public platforms. These are not buy or sell recommendations.

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Macrotech Developers Ltd Information Note

Macrotech Developers Ltd
IPO
by Nikita Bhoota 08/04/2021

Macrotech Developers Ltd IPO

Issue Opens: April 07, 2021
Issue Closes: April 09, 2021
Price Band: ₹483-486#
Issue Size: ₹2,500 cr#
Bid lot: 30 Equity shares
Issue Type: 100% Book building

Macrotech Developers Ltd Shareholding Pattern

% Shareholding Pre IPO
Promoter and Promoter Group 62
Public 38

Company Background
Macrotech Developers Ltd. (MDL) is one of the largest real estate developers in India, by residential sales value for the period FY14 to FY20 (Source: Anarock Report). Its core business is residential real estate developments with a focus on affordable and mid-income housing and currently has residential projects in the Mumbai Metropolitan Region (MMR) and Pune. MDL, in 2019, forayed into the development of logistics and industrial parks and entered into a JV with ESR Mumbai 3 Pte. MDL also develops commercial real estate, including as part of mixed-use developments in and around its core residential projects. MDL has strong focus on de-risking projects and improving return on investments with fast turnaround time from acquisition to launch to completion. As of December 31, 2020, MDL has 91 completed projects comprising approximately 77.22 mn sq. ft. of Developable Area, has 36 ongoing projects comprising approximately 28.78 mn sq. ft. of Developable Area and has 18 planned projects comprising approximately 45.08 mn sq. ft. of Developable Area across different segments like affordable and mid-income housing, premium and luxury housing, office space and retail space. Apart from the above, MDL as of December 31, 2020, has land reserves of approximately 3,803 acres for future development in the MMR, with the potential to develop approximately 322 mn sq. ft. of Developable Area.

Object of the Offer
The offer comprises entirely of Fresh Issue of 5.14 cr shares aggregating to ₹2,500 cr (at upper end of the price band). Proceeds from the fresh issue are proposed to be utilized towards

1. ~₹1,500 cr for reduction of the aggregate outstanding borrowings of MDL on a consolidated basis,

2. ₹375 cr for acquisition of land or land development rights and

3. Balance for general corporate purposes.


Key Financials and Operational Metrics

Particulars FY18 FY19 FY20 9MFY20 9MFY21
Sales (Value in ₹Cr) 8,130 7,163 6,570 -- 3,351
Sales (Developable Area in mn sq. ft.) 7.4 6.37 6.18 -- 3.3
Sales (number of units) 6,844 5,975 5,912 -- 3,163
Gross Collections (₹ Cr) 8,564 9,065 8,190 -- 2,893
Completed Developable Area (mn sq. ft.) 13.75 6.39 15.65 -- 0
Revenue from Operations (₹ Cr) 13,527 11,907 9,577 7,463.00 2,915.00
Adjusted EBITDA (₹Cr) 768 2,414 2,925 3,684 4,039
Adjusted EBITDAM (%) 29.9 30.9 30.5 32 26
Restated PAT (₹ Cr) 1,784 1,672 1,206 884 -264
PAT Margin (%) 13.2 14 12.6 11.8 -9.1
Return on Net Worth (%) 101.1 48.3 17.8 15 -7

Source: RHP

Description of Business
Broadly, MDL’s business can be classified into the following:

  • Residential portfolio (Affordable and mid-income housing projects; and Premium and luxury housing projects)
  • Logistics and industrial park portfolio
  • Commercial portfolio (Office projects; and Retail projects).


Strengths:

  • One of India’s largest residential real estate developers with a leadership position in the attractive MMR market
    MDL’s sales from India Operations for FY20 and 9MFY21 were ₹6,570 cr and ₹3,351 cr, respectively. Its Gross Collections from India Operations for FY20 and 9MFY21 were ₹8,190 cr and ₹2,893 cr, respectively. The MMR is considered the most attractive real estate market in the Top Seven Indian Markets, having the largest share of supply and absorption, as well as the highest average base selling price, of residential units from 2016 to 2020, catering to a wide spectrum of income and demography (Source: Anarock Report). MDL believes that the MMR has significant depth of demand for real estate developments across price points and that the MMR real estate market has high barriers to entry due to limited land availability, high prices of land and knowledge of the regulatory and approval processes required for developing a project. As a result of MDL’s strong brand, existing land reserves and industry knowledge & regulatory environment know-how in the MMR, MDL has attained a leadership position in the South Central Mumbai, Thane and the Extended Eastern Suburbs micro-markets of the MMR, with the largest share of supply (by units), absorption (by value) and completion (by area) of residential developments, among the five largest developers in the respective micro-market, from 2015 to 2020 (Source: Anarock Report). As per Anarock report, MDL has a strong presence in the Extended Western Suburb micro-market of the MMR, with the 2nd largest share of absorption (by value) and the 5th largest share of supply (of units) of residential developments, among the five largest developers in the respective micro-market, from 2015 to 2020. In addition, MDL has several planned projects in the MMR, which they believe will enable them to have a robust launch pipeline over the next few years.
  • Well-established brand with ability to sell at premium pricing and throughout the construction phase
    The company believes that its strong and recognizable brand is a key attribute in the industry, since it increases customer confidence, influences buying decision and helps target premium pricing for products. MDL focuses on branded realty, with a belief in developing and marketing its real estate projects as “branded products”. MDL’s brands include “CASA by Lodha”, “Crown –Lodha Quality Homes”, and “Lodha” for affordable and mid-income housing projects, the “Lodha” and “Lodha Luxury” brands for premium and luxury housing projects and “iThink”, “Lodha Excelus” and “Lodha Supremus” for its office spaces. The company believes that the strength of its brand and its association with trust, quality and reliability is primarily driven by its track record of delivering quality products, with modern amenities and innovative design elements and landscapes, largely within committed timelines. MDL has also increased its brand recall through celebrity endorsements and by collaborating with luxury designers. MDL typically aims to sell over 80% of the Saleable Area of a project during the construction phase. MDL leverages its brand value and focuses on selling sizeable percentage of units within one year from the launch of a project as well as prior to the receipt of the occupation certificate, which assists them in generating operating cash flows during the construction phase. Such sales help reduce the need for construction finance and enable them to achieve optimal returns on their projects. The company also believes that they have been able to leverage their brand presence, customer confidence, track record of successfully delivering projects and superior construction quality to increase sales volumes and also command premium pricing for its products vis-à-vis other projects in the respective micro-markets.
  • Highly diversified portfolio across price points and micro-markets in the MMR with a focus on affordable and mid-income housing
    MDL has a diversified portfolio of residential developments, spread across price points and micro-markets in the MMR. Its developments cater to wide spectrum of economic and demographic segments, from luxury residences in South Mumbai to large, integrated townships in the extended suburbs offering affordable homes. Over the years, MDL has established a strong reputation and track record in affordable and mid-income as well as premium housing projects. In affordable and mid-income housing, MDL has introduced one or more high-quality amenities, such as a large swimming pool, a private movie theatre, a cricket ground, a football stadium and an indoor swimming pool. MDL has developed prominent projects in the premium and luxury housing category in their respective locations as well. The company believes that its ability to design a high-quality and differentiated product and positioning it to the target segment through appropriate marketing and branding strategy, has enabled MDL to deliver several prominent projects in the premium and luxury housing category. Additionally, MDL believes that significant portfolio of completed and near-complete inventory in its premium and luxury housing, coupled with limited land availability in the South Central Mumbai micro-market where their premium and luxury housing projects are located, will drive sales volumes in this segment for MDL.
  • Unique ability to develop townships and generate annuity-like cash flows from them
    MDL has the ability to identify land, acquire it at competitive cost, aggregate it from several landowners and design a master plan to develop township projects. Upon development of the townships, Government agencies develop the surrounding infrastructure such as enhancing road and railway connectivity to improve the standard of living for the residents of the townships. MDL is currently developing large townships located at Palava (Navi Mumbai, Dombivali Region) and Upper Thane under affordable and mid-income housing projects. The company believes that its ability to develop such townships, coupled with the strength of its brand and innovative sales and marketing strategies will help them drive sales volumes and generate recurring operating cash flows.  As of December 31, 2020, they also have land reserves of 3,303 acres at Palava and 500 acres at Upper Thane, and total Saleable Area of 37.6 mn sq. ft and 5.6 mn sq. ft with respect to its completed and on-going projects at Palava and Upper Thane, respectively.

Key Risks:

  • MDL has substantial amount of debt (₹18,662 cr of aggregate outstanding borrowings on a consolidated basis as of December 31, 2020), which could affect its ability to obtain future financing or pursue growth strategy. The company also has contingent liabilities aggregating to ₹782 cr as of December 31, 2020.
  • COVID-19 has caused construction delays due to varying factors, caused a material decline in general business activity, impacted lease commitments for commercial developments, etc. The extent to which COVID-19 may affect MDL’s business and operations in the future is uncertain and cannot be predicted. 
  • There are material outstanding legal proceedings involving the Company, Subsidiaries, Associates, Directors, Promoters and Group Companies. These proceedings are pending at different levels of adjudication before various courts, tribunals, enquiry officers and appellate tribunals.


Lodha Developers IPO

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5 Stocks to BUY during Coronavirus (COVID 19) pandemic

5 Stocks to buy during COVID-19
by Nikita Bhoota 20/05/2021

The Indian economy has performed relatively better than expected in 2HFY2021. The efforts taken by the GoI in the FY22 Budget marked the clear path for driving growth whilst compromising on fiscal prudence in order to drag the economy out of the Covid led slide. However, the current Covid second wave has re-imposed fresh partial lockdowns, limiting the economic activities.  As some economic & health indicators are already pointing towards downward revision in the GDP forecast, investing in the covid resilient sectors would be an ideal strategy to tide the second wave of Covid. We believe, sectors like Healthcare, Pharma, Diagnostic & selected FMCG will continue to thrive during the FY22.

Recommended Stocks CMP (Rs) Target (Rs) Upside
JB Chemicals & Pharmaceuticals (JBCP) 1,372 1,680 22.40%
Thyrocare Tech 1,027 1,250 21.70%
Cipla 904.00 1,050.00 16.20%
Dabur 538 620 15.20%
Apollo Hospitals 3,230 3,550 9.90%

Source: 5paisa Research, * price as on 19th May ,2021.

Investment Rationale:
Cipla:
Cipla is one of the largest Indian pharma companies. It is a major player in the domestic formulations market, which contributes ~39% of its total revenue. Cipla makes drugs to treat cardiovascular disease, arthritis, diabetes, weight control, depression and many other health conditions. We are positive on the stock due to strong build-out expected in the US business led by the inhalation portfolio, where we believe respiratory products alone can add incremental sales of USD230-250mn (40-45%) to the US business by FY25E and drive 12% cc Cagr (18% incl. Revlimid) in US sales over FY21-23E.  Sustained traction in chronic therapies will drive 7.5% Cagr in India sales over FY21-23E, despite the higher base.  We believe US respiratory launches, synergies from the One-India strategy and further cost optimization would drive a sustainable increase in return ratios over the medium term. The stock trades at 24.3x FY23E EPS.

JB Chemicals & Pharmaceuticals (JBCP) 
JBCP is a 40-year old pharma company with several well established brands in the domestic market and wide geographical presence in the both regulated and semi-regulated markets. While JBCP has created strong brands in the cardiac & gastro segments in India, focus ahead will be to diversify into diabetes, nephrology, paediatrics and respiratory. Expansion into these therapies will not entail an additional sales force, as mgmt. is re-aligning the GTM strategy for its rep team, by combining existing divisions. JBCP also intends leveraging its relationships with 0.3m doctors, to drive penetration in new therapies. Mgmt. is targeting 12-14% growth in its India PCPM over medium term, driven by 6-8 annual launches & increasing contribution from chronic therapies. Incremental R&D investments and BD opportunities will help JBCP augment its product portfolio and drive better growth in its branded generics businesses. Two new product launches are also planned in Russia in FY22, while JBCP intends to ramp-up its US ANDA filings to 4-6 from 1-2 pa, going forward. Although JBCP will look to complement its organic growth through acquisitions, management stated that 50% of the incremental capital allocation will be dedicated to the India business, where it will look to acquire brands/mid-size companies and, possibly, enter into inlicensing deals with MNC companies for the cardio-diabetes.

Apollo Hospitals
Apollo Hospitals is an integrated healthcare provider, with services ranging from hospitals, retail pharmacies, health insurance, clinics etc. The company is a pioneer in corporate hospitals and forms the largest hospital chain & organized retail pharmacy chain in India. Apollo’s overall hospital occupancies improved to 63% in 3Q from 56% in 2Q. While non-Covid occupancy stood at 60% in 3Q, it was already at 67% in Dec-20. Mgmt. indicated that occupancies should reach pre-Covid levels of 68-70% by 1Q/2QFY22, led by pick-up in international patients, domestic travel and improving surgical volumes. Healthcare services margins improved QoQ, from 11.5% to 18.5%, led by higher ARPOB and increase in surgical volumes. Mgmt. targets expanding margins for mature hospitals to 23-24% (current 20- 21%) and for new hospitals to 15% (current 13-14%) over the next 12-18 months, led by international patients and high-end surgeries. Kolkata hospital expected to contribute Rs800-850mn Ebitda in FY22ii (vs. nil in FY21). Pharmacy margins are also expected to improve, to 7% in FY22E from 6.5% in 3Q. Of the Rs11.7bn QIP proceeds, Rs4.1bn will be utilized for acquisition of 50% stake in Kolkata hospital and Rs1.5bn each for Apollo 24/7 and the diagnostics business Apollo aims to achieve preventive healthcare revenue of Rs10bn in the next 3 years, from Rs2.5bn currently. It also aims to scale diagnostics revenues to Rs5bn from Rs1.6bnpa, by deepening presence in South/East market.

Dabur:
Dabur India is one of the largest FMCG companies in India, with interest in health care, personal care and food products. Building on its legacy of quality and experience of over 100 years, Dabur has a number of powerful brands like Dabur Amla, Dabur Chyawanprash, Vatika, Hajmola, Real, etc. The company primarily operates in four segments i.e. consumer care, international business, foods and retail. Its international business spans across Southeast Asia, MENA and USA, and contributes around 30% to its total revenue. Covid tailwinds resulted in acceleration in the healthcare portfolio, the momentum has sustained at a high level for the third consecutive quarter in categories such as honey, chyawanprash, OTC and ethicals. Growth is likely to settle at a lower, but robust level in this portfolio. Dabur is ticking the right boxes in terms of riding the healthcare momentum and has accordingly stepped up ad-spends intensity. Recovery in hair care, juices and international has further sweetened the performance. The management highlighted that input cost inflation has inched up to 5- 6% in categories such as honey, amla, herbs and spices and the company would look to pass it on to consumers. Also, management indicated that ad-spend intensity would remain high to support brand investments and new launches. Dabur aspires to increase its ad-spends as a percentage of sales to ~11.5-12%, similar to HUL.

Thyrocare Tech:
Thyrocare is the largest B2B diagnostics player in India primarily serving smaller standalone labs, hospitals, nursing homes and doctors. Thyrocare operates a Centralised Processing Laboratory (CPL) at Navi Mumbai, which is supported by 11 Regional Processing Laboratories (RPLs). B2B segment accounts 80-85% of Thyrocare’s pathology revenue, while Thyrocare has also created a strong brand for itself through ‘Aarogyam’ test profiles in the wellness segment.  Thyrocare’s strong B2B model and industry leadership in wellness testing allows it to process high volumes of routine tests which, along with lower sample acquisition costs, drive significant operational efficiencies and 40% margins for Thyrocare. While its revenue growth had slowed during FY17- 20, mgmt. is striving to drive improved accessibility for the brand by doubling company’s network of branded collection centers to ~1,000 TSPs by the end of CY21. While network expansion will contribute significantly to company’s growth from FY23E, it will also help Thyrocare to expand its customer base, improve TAT and further optimize logistics costs. Thyrocare trades at 30-50% discount to its B2C peers owing to higher pricing pressures in B2B/wellness segment, Thyrocare’s unparalleled focus on operating efficiencies enables it to offset such pricing impact.  We expect 12% revenue Cagr for Thyrocare over FY21-23E.

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Shyam Metalics and Energy Ltd IPO Information Note

Shyam Metalics IPO
IPO
by Nikita Bhoota 14/06/2021

This document summarizes a few key points related to the issue and should not be treated as a comprehensive summary. Investors are requested to refer the Red Herring Prospectus for further details regarding the issue, the issuer company and the risk factors before taking any investment decision. Please note that investment in securities is subject to risks including loss of principal amount and past performance is not indicative of future performance. Nothing herein constitutes an offer of securities for sale in any jurisdiction where it is unlawful to do so. This document is not intended to be an advertisement and does not constitute an invitation or form any part of any issue for sale or solicitation of an offer to subscribe for or purchase any securities and neither this document nor anything contained herein shall form the basis for any contract or commitment whatsoever.


Shyam Metalics IPO Details

Issue Opens - June 14, 2021

Issue Closes - June 16, 2021

Price Band - ₹ 303-306#

Face Value - ₹10

#Issue Size - ₹909 cr#

Bid Lot - 45 Equity Shares

Issue Type - 100% Book building

Post money Market cap of 7,805Cr - at upper price band; #at upper price band 

Share Reservation

Net Issue (%)

Promoter and Promoter Group

100.0

Public

0.0

Source: RHP

 

Company Background

Shyam Metalics and Energy Limited is a leading integrated metal producing company based in India (Source: CRISIL Report) with a focus on long steel products and ferro alloys. The company is amongst the largest producers of ferro alloys in terms of installed capacity in India, as of February 2021 (Source: CRISIL Report). It has the ability to sell intermediate and final products across the steel value chain. As of March 31, 2020, it is one of the leading players in terms of pellet capacity and the fourth largest player in the sponge iron industry in terms of sponge iron capacity in India (Source: CRISIL Report).

 

Object of the Offer

The IPO offer comprises a fresh issue and an offer for sale. Out of fresh Issue of ₹657cr, ₹470cr is proposed to be utilized towards repayment/prepayment of certain debt availed by the company and its subsidiaries.

 

Financials 

(Cr., unless specified)

FY18

FY19

FY20

9MFY21

Revenue from Operations

3,834

4,606

4,363

3,933

EBITDA

715

957

634

717

EBITDA Margin (%)

18.9

20.6

14.5

18.2

Diluted EPS ()

18.2

25.9

14.6

19.5

ROE (%)

22.89

24.27

12.04

13.89*

Gross Debt to Total Equity (x)

0.30

0.29

0.47

0.27

Source: RHP, *not annualized 

For additional information and risk factors please refer to the Red Herring Prospectus. Please note that this document is for information purpose only

Also Read: Upcoming IPOs in 2021

Key Points

Diversified product mix with strong focus on value added products

The company products primarily comprise of (i) long steel products, which range from intermediate products, such as, iron pellets, sponge iron and billets and final products, such as, TMT, customized billets, structural products and wire rods; and (ii) ferro alloys with a specific focus on high margin products, such as, specialized ferro alloys for special steel applications. The company also undertakes conversion of hot rolled coils to pipes, chrome ore to ferro chrome and manganese ore to silico manganese for an Indian steel conglomerate. The forward and backward integration of manufacturing plants has resulted in multiple points of sale across the steel value chain and provided with flexibility to sell intermediate products as well as use them for captive consumption, depending on the demand. This has resulted in a diversified product mix, which has reduced dependency on a particular product and de-risked revenue streams.

Strong financial performance and credit ratings

The company focuses on continuous efficiency improvements, improved productivity and cost rationalization has enabled it to deliver consistent and strong financial and operational performance. The company has a relatively better financial strength as compared to other companies operating in the long and intermediary steel sector. Revenue from operations increased at a CAGR of 6.56% from ₹3,843 cr in FY2018 to ₹4,363 cr in FY2020. Further, since the commencement of operations in FY 2005, the company has delivered a positive EBITDA in each of the Fiscals. As of March 31, 2020, the gearing ratio was one of the lowest amongst the competitors. In FY 2020, the interest coverage ratio was one of the highest amongst competitors (Source: CRISIL Report). The company has also obtained strong credit ratings. In particular, the company and its subsidiary, Shyam SEL and Power Limited, has received CRISIL A1+, CRISIL AA-/ Stable, and CRISIL A1+ rating from CRISIL for their short-term (bank facilities) rating, long-term (bank facilities) rating and commercial paper, respectively. In addition, the company and its subsidiary, Shyam SEL and Power Limited, has received CARE A1+, CARE AA-/ Stable, and CARE A1+ rating from CARE for their short term (bank facilities) rating, long-term (bank facilities) rating and commercial paper, respectively.

Experienced Promoters, Board and senior management team

The company is led by individual Promoters, Mahabir Prasad Agarwal, Brij Bhushan Agarwal and Sanjay Kumar Agarwal, who have several decades of experience in the steel and ferro alloys industry, and have been instrumental in the growth of the company. The company also has an experienced Board of Directors who has extensive knowledge and understanding of the metal industry and has the expertise and vision to scale up business. The chairman, Mahabir Prasad Agarwal, is responsible for strategic planning and overall administration of the company. The vice chairman and managing director, Brij Bhushan Agarwal, is responsible for implementing future growth strategies. The joint managing director, Sanjay Kumar Agarwal, is responsible for the entire production process at the manufacturing plants. The whole-time director Deepak Kumar Agarwal is responsible for the finance functions.

Key Risk

  • Loss of any of suppliers or a failure by suppliers to deliver some of primary raw materials such as iron ore, iron ore fines, coal, chrome ore and manganese ore may have an adverse impact on the company’s ability to continue its manufacturing process without interruption and its ability to manufacture and deliver the products to the customers without any delay.
  • The success of the company depends on stable and reliable logistics and transportation infrastructure. Disruption of logistics and transportation services could impair the ability of suppliers to deliver raw materials or the company’s ability to deliver products to its customers which may adversely affect operations.
  • The demand and pricing in the steel industry is volatile and are sensitive to the cyclical nature of the industries it serves. A decrease in steel prices may have a material adverse effect on the business, results of operations, prospects and financial condition.

* For complete list of risk factors kindly refer to the Shyam Metalics Red Herring Prospectus.

About 5paisa:- 5paisa is an online discount stock broker that is a member of NSE, BSE, MCX and MCX-SX. Since its inception in 2016, 5paisa has always promoted the idea of self-investment and has ensured that 100% operations are executed digitally with minimal to no human interventions. 

Our all-in-one Demat account makes investment hassle free for everyone, be it an individual newly venturing into the investment market or a pro investor. Headquartered in Mumbai, 5paisa.com - a subsidiary of IIFL Holdings Ltd (formerly India Infoline Limited), is the first Indian public listed fintech company.

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Sona Comstar (Sona BLW Precision Forgings Ltd) IPO Information Note

Sona Comstar IPO
IPO
by Nikita Bhoota 14/06/2021

Sona Comstar IPO Details

Issue Opens - June 14, 2021

Issue Closes - June 16, 2021

Price Band - ₹ 285-291

Face Value - ₹10

Issue Size - ~₹5,550 cr (at upper price band)

Bid Lot - 51 Equity Shares

Issue Type - 100% Book building

Share Reservation

Net Issue (%)

Promoter and Promoter Group

100.0

Public

0.0

Source: RHP

 

Company Background

The company is one of India’s leading automotive technology companies that is involved in designing, manufacturing and supplying highly engineered, mission critical automotive systems and components such as differential assemblies, differential gears, conventional and micro-hybrid starter motors, BSG systems, EV traction motors (BLDC and PMSM) and motor control units to automotive OEMs across US, Europe, India and China, for both electrified and non-electrified powertrain segments.

 

Object of the Offer

The offer comprises a fresh issue and an offer for sale. Out of fresh Issue of Rs300cr, Rs241cr is proposed to be utilized towards repayment and prepayment of identified borrowings availed by the company.

 

Financials 

Particulars (Rs Cr)

FY19

FY20

FY21

Revenue from Operations

1,427.70

1,220.10

1,566.30

EBITDA

412.2

325.4

441

EBITDA Margin (%)

29.9

26.70

28.20

ROCE(%)

40.3

29

34.8

ROE (%)

35.6

35.2

36.4

Net Debt to Equity (x)

0.84

0.17

0.26

Source: RHP, 5paisa Research

For additional information and risk factors please refer to the Red Herring Prospectus. Please note that this document is for information purpose only

Key Points

One of the leading manufacturers and suppliers to global EV markets

For calendar year 2020, Battery Electric Vehicle (BEV) sales as a percentage of total global vehicle sales stood at 3.3%, according to the Ricardo Report. The company derived 13.8% (Rs205.7cr) of the company’s total income from the BEV market for FY21. As a percentage of the total sale of goods, income from sale of goods to the BEV market has grown from 1.3% in FY19 to 13.8% in FY21. For FY21, Rs1,115.8cr representing approximately 74.9% of total income from sale of goods was derived from sale of goods to BEV, hybrid/ micro-hybrid and power source neutral products. The company has been supplying differential gears in the global EV market since April 2016 and differential assemblies since 2018, and according to the Ricardo Report, their global market share of BEV differential assemblies in calendar year 2020 was 8.7%. They also design and manufacture traction motors and motor control units for electric vehicles, with PMSM motors for EV and hybrid PVs and BLDC motors for electric two-wheelers and electric three-wheelers. 

Strong financial and development and technological capabilities in both hardware and software development.

 The company has developed strong in-house capabilities to deliver evolving green technologies for future mobility, with an aggregate expenditure on R&D of Rs156.4cr during FY2019-21. Company’s R&D expenditure amounted to Rs24.4cr, Rs40.5cr and Rs91.5cr during FY2019, FY2020 and FY2021, respectively and constituted 1.7%, 3.3% and 5.8% as a percentage of revenue from operations, respectively. In comparison, average spend of the top ten listed auto component players was 0.9% over FY2018-20, according to CRISIL Report. As at March 31, 2021, the company had 186 on-roll employees engaged in R&D activities, representing approximately 15.4% of their total on-roll manpower, with 16 software engineers focused on R&D. Moreover, R&D capabilities are further strengthened by their digital simulations, testing and validation facilities located at their three R&D centers in India (Gurugram, Chennai and MM Nagar), which are approved by the GoI’s Department of Scientific and Industrial Research. They are equipped with modern facilities including, design software and an electric & endurance testing laboratory. The company’s R&D capabilities are further supported by the intellectual property rights that they have in connection with their business. The company holds assignment of license rights in relation to eight patents in USA. It has been granted one patent in USA, one patent in China and one patent in the United Kingdom and await 21 patent approvals in India.

Strong business development with customer centric approach:

As at March 31, 2021, the company has been awarded 58 programs from 27 customers across the product portfolio, from customers in India and overseas, where the start of production was either during FY21 or a period subsequent to FY21. The company has long-standing relationships of 15 years and more with 13 of their top 20 customers. Some of their key OEM customers include a Global OEM of EVs, a North American OEM of PVs and CVs, Ampere Vehicles, an Indian OEM of PVs, CVs and EVs, Ashok Leyland, CNH, Daimler, Escorts, Escorts Kubota, Geely, Jaguar Land Rover, John Deere, Mahindra and Mahindra, Mahindra Electric, Maruti Suzuki, Renault Nissan, Revolt Intellicorp, TAFE, Volvo Cars and Volvo Eicher. They also serve selected leading Tier 1 automotive system suppliers such as Carraro, Dana, Jing-Jin Electric, Linamar and Maschio. The company participates in a lengthy and rigorous vendor selection process with their customers, which can take up to two to three years from the date of issue of a request for quote, to qualify and secure business for development of a program.

Key Risk

  • The business is dependent on the performance of the automotive sector globally, including the key markets such as US, Europe, India and China. Any adverse changes in the conditions affecting these markets can adversely impact their business, results of operations and financial condition. 
  • Inability to protect any of their intellectual property, including misappropriation, infringement or passing off of their intellectual property rights or failure to obtain their patents or failure to keep their technical knowledge confidential could have impact on their business and in turn on results of operation or financial condition and cash flows. 
  • The business largely depends upon top ten customers and the loss of such customers or a significant reduction in purchases by such customers will have a significantly adverse impact on their business. The discontinuation or loss of business with respect to, or a lack of commercial success of, a particular vehicle model for which they are a significant supplier could adversely affect their business and results of operations.

* For complete list of risk factors kindly refer to the Sona Comstar Red Herring Prospectus.

About 5paisa:- 5paisa is an online discount stock broker that is a member of NSE, BSE, MCX and MCX-SX. Since its inception in 2016, 5paisa has always promoted the idea of self-investment and has ensured that 100% operations are executed digitally with minimal to no human interventions. 

Our all-in-one Demat account makes investment hassle free for everyone, be it an individual newly venturing into the investment market or a pro investor. Headquartered in Mumbai, 5paisa.com - a subsidiary of IIFL Holdings Ltd (formerly India Infoline Limited), is the first Indian public listed fintech company.