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Grey Market Premium of Tarsons Products Ltd IPO

Grey Market Premium of Tarsons Products Ltd IPO
by 5paisa Research Team 17/11/2021

The Rs.1,023.47 crore IPO of Tarsons Products Ltd consists of an offer for sale of Rs.873.47 crore and a fresh issue of Rs.150 crore. The issue had been priced in the band of Rs.635 to Rs.662 per share and the price discovery will depend on the IPO response. The issue opened for subscription on 15-Nov and closed for subscription on 17-Nov.

Most of the shares start trading in the grey market well ahead of the IPO opening, which offers important indicators. Ahead of the issue and ahead of listing, one of the key parameters for evaluating the potential IPO is the GMP or the grey market price.

A word of caution here. The GMP is not an official price point, just a popular informal price point. However, in most cases, it has proved to be a good informal gauge of demand and supply for the IPO. Hence it does give a broad idea of how the listing is likely to be and how the post-listing performance would be.

Check - Tarsons Products IPO - Subscription Day 3

While the GMP is just an informal approximation, it has been generally seen to be a good mirror of the real story. More than the actual price, it is the GMP trend over time that really gives the insights about the stock being upgraded or downgraded over a period of time and which direction the wind is blowing.

One of the key factors that impacts the GMP in most cases, is the extent of oversubscription, which is above 77 times in case of Tarsons. The GMP premiums will largely predicate on the extent of oversubscription in each of the categories. That would make the GMP premiums robust in the informal trading market.

As per updates coming in on Tuesday, 17-Nov, the Tarsons Products Ltd IPO is commanding a premium of Rs.200 over the issue price in the grey market. The GMP has spiked sharply in the last 5 days from Rs.150 levels to Rs.200 levels. Of course, this GMP will keep changing even after the issue closes on 17-Nov and till the date of listing.

The current GMP of Rs.200 for Tarsons Products Ltd IPO translates into a 30.21% premium over the upper price band of Rs.662. It also hints at an indicative listing price of approximately Rs.862 when the stock lists on 26th November, but this is subject to real time change.

GMP is an important informal indicator of likely listing price. However, investors must keep in mind that this is just an informal indication and has no official sanction.

Also Read:-

Tarsons Products IPO - 7 Things to Know

Upcoming IPOs in 2021

Upcoming IPOs in November 2021

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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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SEBI Releases Investors Charter with Do's and Don’ts

SEBI Releases Investors Charter with Do's and Don’ts
by 5paisa Research Team 18/11/2021

With the proliferation of investment products in the market and a surfeit of options, investors are spoilt for choice. However, it also means that a competitive landscape forces many salespersons to hard-sell investment products and ideas to investors.

In the process, there is always the risk that it could result in mis-selling of products. To address this issue, SEBI has come out with a detailed investment charter with dos and don’ts for investors.

The charter was first proposed in the Union Budget 2021-22 and has finally seen the light of day on 17-Nov this year. Investors have to be enabled to deal with investments with an understanding of the risks involved and invest in a fair, transparent manner. All the SEBI registered entities will be mandatorily required to adhere to this charter.
 

Rights and responsibilities of investors


The charter clearly lays out the rights and the responsibilities of the investors and here is a gist of the same.

A) Investors have the right to get fair and equitable treatment as participants in the financial market. They also have the right to have their grievances redressed by SEBI, exchanges, depositories etc in a time bound manner. Investors also have the right to expect quality service and unbiased advise from SEBI registered entities like brokers, mutual funds etc.

B) However, investors also have some responsibilities. They are responsible for informing themselves about the risks in any investment by reading the offer document in detail. Investors also have the responsibility to only deal with SEBI registered intermediaries and also ensure updating of their details with the institutions proactively.
 

Dos and Don’ts specified in the Investor Charter


The dos and don’ts are an extension of the rights and responsibilities, just that specific action points are cited more clearly.

I) In the list of Dos, the investor must take the responsibility to read the offer document and familiarize themselves with the risks. They are also required to understand details of the fees charged, brokerage charged and other related charges.

Investors must also make it a point to keep track of their investments by downloading regular statements and maintain a record for reasonable period of time. Investors must also pay advance taxes and file tax returns on time for such investment income.

II) In the list of don’ts, investors must make it a point never to pay in cash and all dealings with brokers must only be done via cheque, DD or NEFT where there is an audit trail. The investor must never share sensitive information like trading password, username and other details in their own interest.

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Sapphire Foods India IPO - Listing Day-1

Sapphire Foods India IPO - Listing Day-1
by 5paisa Research Team 18/11/2021

Sapphire Foods India had a strong listing on 18th November and listed at a premium of 14.4%, but closed the day well below the listing price, although it was still above the IPO issue price. Sapphire Food had pulled back its listing date from 22-Nov to 18-Nov. While the stock did attempt a bounce during the day, it failed to hold on and kept falling from the listing price.

With overall subscription of 6.62X and stable trading interest in the GMP market, the listing was expected to be strong. However, the weak market sentiments and the deep cuts on Paytm had an impact on Sapphire Foods India too. Here is the Sapphire Foods India listing story on 18-Nov.

The Sapphire Foods India Ltd IPO price was fixed at the upper end of the band at Rs.1,180 considering the 6.61X subscription. The price band for the IPO was Rs.1,120 to Rs.1,180. On 18th Nov, the stock of Sapphire Foods India listed on the NSE at a price of Rs.1,350, a premium of 14.41% above the issue price of Rs.1,180. On the BSE also, the stock listed at Rs.1,311 a premium of 11.1% on the issue price.

On the NSE, Sapphire Foods India closed on 18-Nov at a price of Rs.1,227.70, a first day closing premium of just 4.04% on the issue price as the stock lost 9.06% from the listing price. On the BSE, the stock closed at Rs.1,216.05, a first day closing premium of just 3.06% on the issue price.

Check - Sapphire Foods India IPO subscription Day-3

On both the exchanges, the stock of Sapphire Foods listed well above the IPO issue price but closed Day-1 giving up most of its listing gains.

On Day-1 of listing, Sapphire Foods India touched a high of Rs.1,380.05 on the NSE and a low of Rs.1,160. The listing premium held through the day but contracted substantially by close. On Day-1 of listing, the Sapphire Foods India stock traded a total of 85.96 lakh shares on NSE amounting to value of Rs.1,094.29 crore. 

On 18-Nov, Sapphire Foods was the tenth most active share on NSE by traded value. On the BSE, Sapphire Foods India touched a high of Rs.1,383.60 and a low of Rs.1,160. On BSE, the stock traded a total of 5.31 lakh shares amounting to value of Rs.67.69 crore. It did not figure among the most liquid stocks on the BSE.

At the close of Day-1 of listing, Sapphire Foods India had a market capitalization of Rs.7,727.09 crore with free-float market cap of Rs.1,777.23 crore.

Also Read:- 

Upcoming IPOs in 2021

Upcoming IPOs in November 2021

Grey Market Premium of Sapphire Foods Ltd IPO

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Go Fashion IPO - Subscription Day 2

Go Fashion IPO - Subscription Day 2
by 5paisa Research Team 18/11/2021

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 has built on it on Day-2.

As per the combined bid details put out by the BSE at the close of Day-2, Go Fashion India IPO was subscribed 6.87X overall, with good demand coming from the retail segment followed by the QIB segment and HNI / NII segment. The issue closes for subscription on Monday, 22nd November, with one more day to go.

As of close of 18th November, out of the 80.79 lakh shares on offer in the IPO, Go Fashion India saw bids for 555.12 lakh shares. This implies an overall subscription of 6.87X. The granular break-up of subscriptions was dominated by the retail investors while the HNIs and QIB response has built up on Day-2.

However, the QIB bids and NII bids are expected to gather momentum only on the last day, as is the general trend in the IPO market.
 

Go Fashion India IPO Subscription Day-2
 

Category

Subscription Status

Qualified Institutional Buyers (QIB)

3.24 Times

Non Institutional Investors (NII)

2.30 Times

Retail Individuals

24.64 Times

Employees

N.A.

Overall

6.87 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 1

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 142.60 lakh shares on Day-2, implying a subscription ratio of 3.24X for QIBs at the close of Day-2. QIB bids typically get bunched on the last day but the heavy demand for the anchor placement forebodes well for the Go Fashion India IPO subscription overall, by the close of subscription on 22-Nov.

HNI / NII Portion

The HNI portion got subscribed 2.30X (getting applications for 50.58 lakh shares against the quota of 22.03 lakh shares). This is a relatively tepid response on Day-2 but of course this segment normally sees the maximum response bunched on the last day. Bulk of the funded applications and corporate applications, come in on the last day of the IPO. 

Retail Individuals

The retail portion was subscribed an impressive 24.64X at the end of Day-1, 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 361.94 lakh shares, which included bids for 286.71 lakh shares at the cut-off price.

The IPO is priced in the band of (Rs.655-Rs.690) and will close for subscription on 22nd November 2021.

Also Read:-

Go Fashion (India) IPO - 7 Things to Know

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Government May Privatize 6 PSUs by January 2022

Government May Privatize 6 PSUs by January 2022
by 5paisa Research Team 18/11/2021

Even as the government and the DIPAM are working overtime to complete the LIC IPO before March 2022, there is a simultaneous plan to privatize another 5 to 6 PSU and to complete the process by January 2022.

These are the PSU that have already been identified and earmarked for privatization. If that happens, it will be the first effective privatization done by the government in the last 19 years.

The government has already identified 5 PSUs for privatization in this round and may add one or two more. The list of 5 potential privatization candidates include BEML, Shipping Corporation of India, Pawan Hans, Central Electronics and Nilachal Ispat Nigam.

BEML has run into some issues with the employees unions that are opposing the privatization of the company. BEML essentially is a key player in heavy equipment and defence manufacture.

The government has already decided to exit most sectors where it does not see justification either in the form of being a strategic ownership or being specifically for the larger public good. Other that these handful of businesses, the government would be keen to exit all the other businesses.

For FY22, the government has set an aggressive target of Rs.175,000 crore to be raised via divestments and it is nowhere close with more than 7 months gone.

Of course, the government is counting on raising nearly Rs.50,000 crore from the sale of its 52.98% stake in BPCL and anywhere between 5% and 10% of LIC raising between Rs.60,000 crore and Rs.1,00,000 crore.

Even if both these deals go through smoothly, there would still be a gap and the plan to privatize these 5-6 entities is intended to fill that gap.

The government just completed the handing over of Air India to the Tatas and would be looking at more such candidates to hive off some of its PSU properties. Most of the PSUs are loss making and the government is spending big money maintaining them.

The divestment will not only free up capital resources but also allow the government to focus more on its core area of governance.

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