GR Infrastructure and Clean Science list at hefty premiums
The Udaipur based infrastructure company, G R Infrastructure IPO, listed on the NSE and the BSE on Monday, 19 July. Against the discovered IPO price of Rs.837, GR Infra listed at Rs.1,700 on the BSE and Rs.1,715.85 on NSE. On the NSE, GR Infra closed Day-1 at Rs.1,737.95, a premium of 107.64% over issue price. On the BSE, the stock closed at Rs.1,746.80. The IPO of GR Infrastructure had been subscribed 102.58 times overall.
On Day-1, GR Infrastructure touched a high of Rs.1,838 on the NSE and a low of Rs.1,550. GR Infra traded a total of 1.40 crore shares on NSE and 7.68 lakh shares on the BSE. At the close of Day-1 of listing, GR Infrastructure had a market capitalization of Rs.16,890 crore with a free-float market cap of just about Rs.1,351 crore.
The second big listing on Monday, 19 July, was Pune-based specialty chemicals company, Clean Science and Technology. Against the discovered IPO price of Rs.900, Clean Science IPO listed at Rs.1,784.40 on the BSE and Rs.1,755 on NSE. On the NSE, Clean Science came under pressure and closed at Rs.1,583, still a premium of 75.89% over the issue price. On the BSE, the stock closed at Rs.1,585.20. The IPO of GR Infrastructure had been subscribed 93.41 times overall.
On Day-1 of listing, Clean Science touched a high of Rs.1,852 on the NSE and a low of Rs.1,555. Clean Science traded a total of 1.36 crore shares on NSE and 10.87 lakh shares on the BSE. At the close of Day-1 of listing, Clean Science had market capitalization of Rs.16,838 crore with a free-float market cap of just about Rs.1,852 crore.
Glenmark Life Sciences IPO to open for subscription on 27 July
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.
Suggested To Read - To get more details like IPO Issues Size, IPO Open/Close Dates read Glenmark IPO Information Note
ACC Flatters the Street With Improved Volumes in Q2
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!
HCL Tech improves OPM and guidance even as Shiv Nadar steps down
HCL Technologies may be the fourth major IT company to declare results but there has been a common thread. The growth has flattered, margins have been better than expectations and guidance has been robust. For the Jun-21 quarter, HCL Tech reported 12.48% yoy growth in revenues at Rs20,068cr and 2.17% growth sequentially. For the Jun-21 quarter, HCL Tech added 8 clients in the $50 million-plus category and 19 clients in $20 million-plus category. Order flows were up by 37% YoY.
While the IT & Business Services vertical contributed 72% of revenues for HCL Tech, it was the Products and Platforms vertical which reported EBIT margins of 23.5%. The big story was about margins. Operating margins at 19.6% were sharply higher in the Jun-21 quarter compared to 16.71% in the sequential Mar-21 quarter. Net margins at 15.97% were 3-times the Mar-21 net margins at 5.61%. HCL Tech guided operating margins at 19%-21% for FY22. Revenue growth guidance is at double digits for FY22. Better employee engagement and upskilling resulted in attrition rate falling sharply to 11.8% from 14.6% in the previous year.
Check: Top IT Companies results
In the midst of the flurry of financials, another big news was Shiv Nadar stepping down as Managing Director of HCL Tech and limiting himself to play a strategic advisory role. This was on the cards as most executive responsibilities were already split between the CEO and Roshni Nadar. At 76, Nadar has decided to call it a day and appointed CEO Vijayakumar as the MD. As the baton passes, it is to the credit of Nadar that he built an organization that is robust and self-sustaining. It is likely to be business as usual at HCL Tech.
Dow Cracks 700 points as Crude also retreats
It looked like a panic-driven sell-off in global markets on 19 July. The Dow Jones cracked 725 points to 33,962 while the NASDAQ fell 152 points to 14,275. If Dow fell 2%, the fall in European markets on 19 July was much sharper. The London-based FTSE fell 2.35%, German DAX fell 2.62% and the French CAC fell 2.54% on Monday. The big driving factor was a sharp spike in COVID cases; what is now referred to as COVID 3.0 or Delta variant.
With the WHO hinting at a return of COVID in a new form and the state of California re-imposing restrictions, fear is returning to haunt the markets. Market experts concur that this fall is not just about COVID fears but also about too much optimistic expectations in indices, already driven higher by liquidity. With the Fed hinting at tightening from mid-2022, the assumptions of this rally are likely to be questioned. On 19 July, even US bellwethers like Apple and Microsoft were down sharply.
Read: Crude Oil at $75
For emerging markets, including India, there is an additional concern on the dollar index front. The Bloomberg Dollar Index has moved up from 89 in early June to 93 in July. That is a sharp strengthening of the US dollar and is one of the reasons explaining the sell-off by FPIs in emerging markets. That pressure is visible across EMs.
Finally, we turn to the sharp fall in crude oil. After recently scaling a high of $77/bbl, Brent Crude has given up chunk of the rally to trade in the range of $68.00-$68.50/bbl. The fears of COVID 3.0 has raised the spectre of another global slowdown in oil demand. OPEC supply hikes from August could only depress oil prices further.
SEBI insists preferential offers need independent valuation
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.