Nifty 17412.15 (0.06%)
Sensex 58683.96 (0.38%)
Nifty Bank 36703.75 (0.54%)
Nifty IT 36310.2 (0.42%)
Nifty Financial Services 18062.1 (0.44%)
Adani Ports 737.00 (-0.28%)
Asian Paints 3159.40 (-0.67%)
Axis Bank 683.55 (1.10%)
B P C L 387.30 (2.23%)
Bajaj Auto 3320.35 (-0.24%)
Bajaj Finance 7200.00 (0.27%)
Bajaj Finserv 17820.00 (0.35%)
Bharti Airtel 723.10 (-1.29%)
Britannia Inds. 3576.00 (-0.07%)
Cipla 912.75 (-0.92%)
Coal India 159.90 (0.38%)
Divis Lab. 4745.95 (-0.66%)
Dr Reddys Labs 4624.90 (-0.81%)
Eicher Motors 2479.50 (1.14%)
Grasim Inds 1728.00 (0.24%)
H D F C 2808.95 (0.04%)
HCL Technologies 1178.80 (-0.50%)
HDFC Bank 1533.00 (0.48%)
HDFC Life Insur. 701.55 (-0.53%)
Hero Motocorp 2481.10 (0.34%)
Hind. Unilever 2377.05 (-0.26%)
Hindalco Inds. 430.70 (-0.32%)
I O C L 122.50 (1.53%)
ICICI Bank 726.50 (0.57%)
IndusInd Bank 950.70 (0.54%)
Infosys 1769.85 (1.24%)
ITC 224.50 (-0.42%)
JSW Steel 645.85 (-0.14%)
Kotak Mah. Bank 1978.25 (0.71%)
Larsen & Toubro 1840.65 (2.88%)
M & M 851.70 (0.25%)
Maruti Suzuki 7288.00 (-0.50%)
Nestle India 19294.65 (-1.07%)
NTPC 129.40 (0.54%)
O N G C 146.40 (1.67%)
Power Grid Corpn 215.30 (0.37%)
Reliance Industr 2466.00 (-0.68%)
SBI Life Insuran 1179.00 (-0.76%)
Shree Cement 26287.25 (-0.01%)
St Bk of India 480.35 (0.70%)
Sun Pharma.Inds. 760.50 (-0.75%)
Tata Consumer 771.60 (-0.21%)
Tata Motors 480.65 (0.32%)
Tata Steel 1108.00 (-0.40%)
TCS 3638.55 (-0.12%)
Tech Mahindra 1625.30 (-0.27%)
Titan Company 2381.70 (-0.20%)
UltraTech Cem. 7369.95 (0.64%)
UPL 710.25 (1.73%)
Wipro 645.25 (-0.24%)

Highlights of RBI Monetary Policy and Market Performance

RBI Monetary Policy
by Nikita Bhoota 04/06/2021

The Reserve Bank of India (RBI) governor Shaktikanta Das addressed a press conference today and this was the second bi-monthly Monetary Policy Committee (MPC) meeting for this fiscal year. Governor Shaktikanta Das announced the MPC's decision after it concludes its three-day meet on June 4, 2021.

Highlights of RBI press conference:

  1. RBI MPC Keeps Rates Unchanged

RBI MPC keeps repo rate unchanged at 4%, reverse repo rate at 3.35%.  This is the sixth time in a row that RBI has kept the benchmark rates unchanged. Experts also earlier anticipated that RBI is likely to keep the policy rates unchanged and maintain accommodative stance amid the growing uncertainty over COVID-19 pandemic.

Repo Rate

Source: Media Reports, RBI

  1. MPC to Continue with Accommodative Stance:

The RBI's Monetary Policy Committee (MPC) has decided to continue with accommodative stance until necessary to mitigate impact of COVID-19. The Marginal Standing Facility (MSF) rate and bank rates remain unchanged at 4.25%.

  1. FY22 GDP Forecast Reduced to 9.5%:

RBI MPC reduced FY22 GDP forecast to 9.5% from earlier estimate of 10.5%. The Q1FY22 GDP forecast has been slashed to 18.5% from earlier estimate of 26.2%.

  1. RBI Forecast Normal Monsoon:

According to Governor, forecast of normal monsoon and resilience of agriculture and farm economy will provide tailwinds to growth revival.

  1. Operation Under G-SAP 1.0 Will Conducted on June 17:

Primarily, the G-SAP move is aimed at supporting the bond markets which also results in softening of corporate bond yields. The Reserve Bank of India (RBI) Governor Shaktikanta Das announced that another round of Government Securities Acquisition Program (G-SAP 1.0) worth Rs 40,000 crore will be conducted on June 17. Additionally, G-SAP 2.0 of Rs 1.2 lakh crore will be conducted in Q2 FY22. Of the additional round under G-SAP 1.0, Rs 10,000 crore would constitute purchase of state development loans (SDLs).

  1. CPI Inflation:

RBI says, CPI inflation is projected at 5.1% in FY22. 5.2% in Q1; 5.4% in Q2; 4.7% in Q3; and 5.3% in Q4 with risks broadly balanced.

  1. FOREX:

India’s foreign exchange reserves touches $600 billion. Formal announcement in due course. Later today, we will see it at $598 billion, RBI Governor.

  1. Big measures for MSMEs

Special liquidity facility of Rs 16,000 crore for MSMEs via SIDBI For 1-year at repo rate

Exposure Threshold Under Resolution Framework 2.0 Increased to Rs 50 crore from 25 crore for MSMEs

  1. On-tap Liquidity Window for Contact-intensive sectors:

The Reserve Bank of India (RBI) on Friday announced creating a special liquidity window of Rs 15,000 crore with a tenor of 3 years at the repo rate to provide liquidity support to the contact-intensive sectors hit by Covid-19.

 The special liquidity window encourages banks to provide fresh lending support to hotels, restaurants, tourism, aviation ancillary services, and other services including private bus operators, car repair services, rent-a-car service providers, event/conference organizers, spa clinics, and beauty parlours/saloons.

Market Performance:

Nifty 50  index dropped 64 points today

Below is the performance of Sectoral Indices

Indices

% Change

Nifty Bank

- 1.00

Nifty Auto

+ 0.83

Nifty Fin Service

- 0.22

Nifty FMCG

- 0.36

Nifty IT

+ 0.03

Nifty Media

+ 1.02

Nifty Metal

+ 1.35

Nifty Pharma

- 0.09

Nifty Psu Bank

- 0.16

Nifty Pvt Bank

- 0.81

Nifty Realty

+ 0.48

Source: NSE

Watch this video on RBI Policy

Disclaimer: The above report is compiled from information available on the public platforms.

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How Stock Markets Performed in May 2021?

Stock market Performance
by Nikita Bhoota 07/06/2021

Market Update:
In May 2021, global markets largely continued their upward moment supported by encouraging sentiments that the US economic recovery from the pandemic is gaining momentum. 

Further, progress towards US’s multi-trillion-dollar spending boost coupled with softness in the US 10-year bond yields despite sharp rise in inflation, added to the positive sentiments.

Indian markets played catch-up with the global markets and hit a fresh high on rapid fall in new Covid cases across the country.

Both Nifty 50 and BSE Sensex went up 6.5% in May. As the institutional investors remained absent during the month, retail and non-institutional investors lifted the frontline indexes.
Mid cap and small cap indexes outperformed frontline indexes due to very strong interest by the retail investors in the broader markets.

FIIs bought ₹197cr (vs. ₹6,559cr sold MoM) in Indian equities, while DIIs bought ₹254cr worth of equities (vs. ₹5,933cr bought MoM) during the month.

Indian Equity Markets:

On the sectoral front, PSU Bank Index led the gains (strong earnings and improved asset quality in Q4) with ~18% MoM returns followed by Energy with ~10% MoM returns (strong demand from China, weaker dollar index) 
As the states started to ease localized lockdowns after continuous decline in active cases throughout the May month, investors got enthused believing that relaxing of lockdowns would revive the economic activities in the respective regions.

Fixed Income Markets:
India’s 10-year bond yields remained stable at around 6.0% on RBI’s efforts to keep a lid on long term bond yields through Govt. Securities Acquisition Programs (GSAP), OMOs and Operation Twist.

India’s GDP for Q4FY21 grew by 1.6% (Q3FY21: 0.5%) mainly driven by exceptional performance by construction sector, further aided by manufacturing and utilities. However, hospitality ecosystem continued to suffer due to targeted lockdown across the country. The economy contracted 7.3% for FY21 (FY20: 4.0%). 

Despite muted foreign inflows, Indian rupee strengthened due to resilient domestic equities and weaker dollar index. Rupee appreciated by 2.2% to 72.44 vs. the USD at the close of May 2021

Stock Performance:
Below are the top 5 gainers and losers on Nifty50 in May 2021.
 

Company Name

03-05-2021

31-05-2021

Gain

UPL Ltd.

617.8

815.1

31.9%

State Bank Of India

350.6

424.4

21.0%

Indian Oil Corporation Ltd.

91.5

109.3

19.5%

Asian Paints Ltd.

2,582.2

2,977.5

15.3%

Bharat Petroleum Corporation Ltd.

416.0

472.0

13.5%

Source: Ace Equity 

UPL Ltd:
The company's signed a multi-year agreement with Soil Health Institute. Additionally, Brokerage firm CLSA has maintained its positive rating for this stock. The company also declared Q4 results which were better than expected.

State Bank of India:
Bank stocks were up during the month because of the increased interest of investors in the sector. Additionally, the bank's Q4 result were better than expected. The bank had reported an 80% rise in its net profit during the January to March quarter results.

Indian Oil Corporation Ltd.
The stock price climbed on petrol and diesel prices being increased. (IOC) share price touched a 52-week high in the month May 2021 

Asian Paints Ltd.
The company declared Q4 results which were better than expected. Revenue from operations has risen by 43.5% to Rs6,651.43cr from Rs 4,635.59cr. Profit before depreciation, interest, tax and other income (PBDIT) for the group (before share in profit of associates) increased by 53.4% to Rs1318.26cr from Rs 859.62cr. Profit Before Tax (from continuing operations) increased by 65.4 % to Rs1,156.31cr from Rs 699.22cr. Total dividend of Rs 17.85 per equity share (1785%) was distributed for FY 2020-21. The dividend payout ratio was 56.1% for FY 2020-21.

Bharat Petroleum Corporation Ltd.
The markets were expecting a huge dividend payout from the company. Also, according to a few news reports, the government is expecting bids to come in for BPCL's privatization by July end.
 

Company Name

03-05-2021

31-05-2021

Loss

Bharti Airtel Ltd.

558.9

534.9

-4.3%

Hindustan Unilever Ltd.

2,408.0

2,340.1

-2.8%

Tata Consumer Products Ltd.

677.1

663.9

-2.0%

JSW Steel Ltd.

723.3

710.9

-1.7%

Shree Cement Ltd.

27,989.9

27,578.0

-1.5%

Source: Ace Equity

Bharti Airtel Ltd.
Telecom major Bharti Airtel reported a consolidated net profit of Rs 759 crore for the quarter ended March 31, 2021 (Q4FY21). Mobile average revenue per user (ARPU) saw a dip on quarter-on-quarter basis during the March quarter to Rs 145. It was Rs 166 in Q3FY21.

 

Tata Consumer Products Ltd.
The company reported a profit in the January to March quarter but missed analyst expectations.

 

JSW Steel Ltd.
The crude steel production of JSW Steel stood at 13.71 lakh tonne in April 2021, a 5.2% drop from March. Additionally, Credit Suisse downgraded this stock as it sees multiple risks to steel prices ahead.

 

Shree Cement Ltd.
The company posted its Q4 results and posted better than expected results. The stock will down despite that.

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

 

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Shyam Metalics and Energy Ltd IPO Information Note

Shyam Metalics 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
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.

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Dodla Dairy Limited IPO information note

Dodla Dairy IPO note
by Nikita Bhoota 15/06/2021

Dodla Dairy IPO Details

Issue Opens - June 16, 2021

Issue Closes - June 18, 2021

Price Band - ₹ 421-428

Face Value - ₹10

Issue Size - ~₹520 cr (at upper price band)

Bid Lot - 35 Equity Shares

Issue Type - 100% Book building

 

Company Background

Dodla Dairy Limited was incorporated in 1995 and is an integrated dairy company in entire South India. Company is engaged in the procurement, processing, distribution, and marketing of milk and other dairy products. Company processes, sells milk (including standardized, toned, and double toned milk), and produces dairy products such as curd, butter, ghee, ice cream, flavored milk etc. Operations of DDL in India are primarily across the five Indian states of Andhra Pradesh, Telangana, Karnataka, Tamil Nadu and Maharashtra and overseas operations are based in Uganda and Kenya. Its Indian operations are undertaken under the brands “Dodla Dairy”, “Dodla” and “KC+”. Its overseas operations are undertaken under its brands “Dodla Dairy”, “Dairy Top” and “Dodla +”. Amongst private dairy players with a significant presence in the southern region of India, the company is the third highest in terms of milk procurement per day (Source: CRISIL Report) with an average procurement of 1.02 million litres of raw milk per day (MLPD) as of December 31, 2020 and second highest in terms of market presence across all of India amongst private dairy players with a significant presence in the southern region of India (Source: CRISIL Report)

 

Object of the Offer

The Offer for Sale(~Rs470cr)

The proceeds of the Offer for Sale shall be received by the Selling Shareholders after deducting their proportion of Offer expenses and relevant taxes thereon. The Company will not receive any proceeds from the Offer for Sale and the proceeds received from the Offer for Sale will not form part of the Net Proceeds.

The Fresh Issue (~Rs50 crore)

  • Repayment and/ or pre-payment, in full or part, of certain borrowings availed by our Company: Rs32.2cr
  • Funding capital expenditure requirements of our Company: Rs7.1cr; and
  • General corporate purposes.

Also Read: Upcoming IPOs in 2021

Financials of Dodla Dairy

Particulars (Rs Cr)

FY18

FY19

FY20

9MFY21

Revenue from Operations

1,590

1,692

2,139

1,413

EBITDA

119

142

147

210

PAT

57

63

50

116

    Source: RHP

 

Competitive Strengths

Consumer focused dairy company with a diverse range of products under the “Dodla Dairy” and “Dodla” brands:

DDL has developed one of the leading brands in the dairy products industry in south India with strong consumer recognition, particularly in the States of Andhra Pradesh, Karnataka, Tamil Nadu and Telangana. Its Indian operations are undertaken under its brands “Dodla Dairy” (for milk and perishable products such as curd, flavoured milk) and “Dodla” (for VAPs such as ghee, butter, paneer, butter milk and ice creams). It primarily derived all its revenue in Fiscal 2020 and nine months period ended December 31, 2020, from sale of milk and dairy based VAPs in the branded consumer market. It is the third largest private milk company in south India in terms of procurement and second highest in terms of market presence across all of India amongst private dairy players with a significant presence in the southern region of India. It offers a diverse portfolio of dairy based VAPs targeted at various consumer segments and this enables it to cater to the changing preferences of its retail customers. It sells fresh milk, ghee, butter, curd, paneer, gulab jamun, doodh peda, basundhi and junnu, which is targeted at consumption at home and UHT milk, flavoured milk, ice - cream and beverages such as buttermilk under its brand, primarily for direct consumption. The strength of its brands helps in many aspects of its business, including expanding to new markets, entering into agreements with distributors and retailers and building relationships with its customers, investors and lenders.

Focused engagement and long term relationship with dairy farmers:

DDL’s farmer-friendly policies and continuous engagement with them with welfare programs have strengthened its relationships with farmers which in turn have strengthened its raw milk procurement process. It offers a variety of initiatives for the farmers from whom it procures raw milk. As part of its diversified procurement network, it relies on third party suppliers and farmers. In order to ensure transparency, it tests the quality and quantity of the raw milk collected from the farmers with electronic milk analyzers. The Company pays the farmers once every 10 to 15 days with the money being sent directly to the bank accounts of 77.00% of its farmers as of March 31, 2021 and pay the remaining 23.00% of its farmers by way of direct cash payments, which motivates them to engage with it more frequently. It has consistently improved its direct procurement from farmers from 2018 from 0.50 MLPD to 1.03 MLPD as of March 31, 2021. It has also diversified into an ingredient input providing company by supplying upfront cattle feed under the “Orga “ brand, manufactured by its Subsidiary Orgafeed Private Limited, directly to its farmers through its procurement network which is adjusted against the value of the raw milk supplied to it by such farmers. DDL’s continuous engagement with farmers and its knowledge in the dairy industry combined with welfare programs for the farmers have enabled it to have a strong procurement network in the regions in which it operates and thus helped to contain the cost of raw milk and ensure supply of quality raw milk.

Financial Growth and operational efficiencies:

DDL has delivered consistent growth over the last three financial years both in terms of financial and operational metrics. Its revenue from operations increased at a CAGR of 15.98% over Fiscal 2018 to Fiscal 2020 and amounted to Rs. 21,393.73 million in Fiscal 2020. Additionally, its sales (sale of goods) increased from Rs. 15,891.60 million in Fiscal 2018 to Rs.21,361.64 million in Fiscal 2020. Despite cumulative capital expenditure of Rs.2,644.86 million over the past three years, towards inter alia, commissioning a new processing plant at Rajahmundry in Andhra Pradesh, acquisition of the processing plants at Batlagundu and Vedasandur in Tamil Nadu from KC Dairy Products Private Limited, acquisition of the cattle feed and mixing plant by Orgafeed Private Limited at Kadapa in Andhra Pradesh and establishment of new VLCCs, Its return on equity and return on capital employed for Fiscal 2020 were at 11.50% and 17.01%, respectively which is due to the successful integration of the acquisitions with its operations. Further, its receivable days were 1.23 days and 0.66 days as on March 31, 2020 and December 31, 2020 respectively with its trade receivables amounting to Rs.72.03 million and Rs.33.92 million as on March 31, 2020 and December 31, 2020 respectively.

Experienced Board and senior management team:

DDL is led by an experienced Board of Directors, who have extensive knowledge and understanding of the dairy business and has the expertise and vision to organically and inorganically scale up its business. Its Board, led by its Chairman Dodla Sesha Reddy, has led Company through sustained period of growth and has also taken initiatives to improve processes and efficiencies, implementation of enterprise resource planning system in the year 2000 and replication of India business model in Uganda and Kenya which led to its overseas operations turning profitable. The knowledge and experience of its senior and middle-level management team in the dairy business provides it with a significant competitive advantage as it seeks to grow its business. Its core managerial team has an average dairy industry experience of more than 20 years and most of them have been associated with the Company since its formative years.

For complete list of competitive Strengths kindly refer to the Red Herring Prospectus.

Key Risk Factors:

  • Operations are dependent on the supply of large amounts of raw milk, and inability to procure adequate amounts of raw milk from farmers and third party suppliers, at competitive prices, may have an adverse effect on the business, results of operations and financial condition.
  • The coronavirus disease (COVID-19) has had an adverse effect on DDL’s business and operations and the extent to which it may continue to do so in the future, is uncertain and cannot be predicted.
  • The supply of raw milk is subject to seasonal factors, and does not necessarily match the seasonal change in demand for its products. Consequently, inability to accurately forecast demand for products, may have an adverse effect on its business, results of operations and financial condition.

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

See detail video on Dodla Daity Ltd IPO : 

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Krishna Institute of Medical Science Ltd IPO Information Note

Krishna Institute of medical science
by Nikita Bhoota 15/06/2021

Krishna Institute of Medical Science IPO Details

Issue Opens - June 16, 2021

Issue Closes - June 18, 2021

Price Band - ₹ 815-825

Face Value - ₹10

Issue Size - ~₹2,144 cr (at upper price band)

Bid Lot - 18 Equity Shares

Issue Type - 100% Book building

% Shareholding

Pre-offer

Promoter Group

46.81

Public

53.19

Total

100%

 

 

 

 

 

 

Source: RHP

 

Company Background

Krishna Institute of Medical Science Ltd. (KIMS) provides multi-disciplinary integrated healthcare services, with a focus on primary, secondary & tertiary care in Tier 2-3 cities and primary, secondary, tertiary and quaternary healthcare in Tier 1 cities. The company operates 9 multi-specialty hospitals under the “KIMS Hospitals” brand, with an aggregate bed capacity of 3,064, including over 2,500 operational beds as of March 31, 2021, which is 2.2 times more beds than the second largest provider in AP and Telangana.

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

The company offers a comprehensive range of healthcare services across over 25 specialties and super specialties, including cardiac sciences, oncology, neurosciences, gastric sciences, orthopaedics, organ transplantation, renal sciences and mother & child care.

 

Object of the Offer

The IPO offer comprises of a fresh issue and an offer for sale. Out of the fresh issue component of Rs.200cr., Rs.150cr. is proposed to be utilized towards repayment/prepayment of certain debt availed by the company and its subsidiaries and the balance amount is attributable to general corporate purposes.

Read Now: Upcoming IPOs in 2021

Financials 

Particulars (Rs Cr)

FY19

FY20

FY21

Revenue from Operations

918

1,123

1,330

Adj. EBITDA

174

251

381

Adj. EBITDA Margin (%)

18.8

22.2

28.4

PAT

-49

115

205

ROE (%)

-8.8

19.9

23.3

Adj. Net Debt to Equity (x)

0.49

0.46

0.25

Source: RHP

Competitive Strengths:

Track record of strong operational and financial performance

The company has grown from a single, approximately 200-bed hospital at Nellore (AP) in year 2000 to a leading multi-disciplinary integrated private healthcare service provider with nine multi-specialty hospitals and over 3,000 beds today. The company has consistently delivered strong operational and financial performance through strong patient volumes, cost efficiency and diversified revenue streams across medical specialties. The company has achieved healthy profitability in both Tier 1 and Tier 2-3 markets by identifying markets with significant under-served healthcare demand and delivering quality healthcare services at affordable prices, which in turn drives patient volumes. Their hospitals in Tier 1 markets provide higher margin services such as organ transplants, oncology and neuro-critical care, resulting in higher average revenue per operating bed (ARPOB) and EBITDA. The company’s multispecialty healthcare platform has resulted in diversified revenue streams, with no single specialty accounting for more than 25% of the total income in any of the last three years. As of March 31, 2021, the debt-to-EBITDA ratio was 0.71x and the gearing ratio was 0.31x. The company has achieved strong free cash flow levels, in terms of the cash flows from operations relative to the capital expenditures. The company is one of only three hospitals in India that are rated AA by CRISIL

Well positioned to consolidate in India’s large, unorganized yet rapidly growing and underserved affordable healthcare market

The healthcare industry in India is poised for growth. The Indian healthcare delivery industry is expected to grow at a 17-18% CAGR (2020 - 2024E) and reach ₹7.07 trillion by 2024, according to the CRISIL Report. In Fiscal Year 2020, 68% of hospital treatments, in terms of the treatment value, were carried out in private hospitals, and the number is expected to reach 72% in Fiscal Year 2024, according to the CRISIL Report.

There is a significant and growing need for quality and affordable healthcare services across the country, particularly in AP and Telangana where the company’s hospital network is concentrated. AP and Telangana ranked among the top three in terms of overall health index score, according to the CRISIL Report. AP is also a leading state in terms of doctors per person in 2018 and has been attracting doctors and patients seeking treatments, according to CRISIL report. Health insurance penetration in India stood at only 37% as of March 31, 2018, while AP and Telangana also stand as one of the underpenetrated states in terms of health insurance, with a penetration rate of 4% and 12%, respectively, in Fiscal Year 2020. The government backed schemes in AP and Telangana will also help to set the stage for future growth.

Disciplined approach to acquisitions resulting in successful inorganic growth

The company has a successful history of sourcing, executing and integrating acquisitions. It has a disciplined and low-leverage approach to acquisitions that has enabled them to maintain their affordable pricing model, as they have grown in both tier I and II-III markets. Since Fiscal Year 2017, the company has expanded their hospital network primarily through acquisitions of other hospitals. In Fiscal Year 2017, they have acquired hospital in Ongole (AP), a 350-bed multispecialty hospital founded by local doctors, through a slump sale by Ongole Arogya Hospitals Private Limited. The company further expanded its hospital network to add KIMS Vizag, a 434-bed multispecialty hospital in April 2018 by entering into a service agreement. In addition, it acquired a 250-bed hospital in Anantapur (AP) in October 2018 and a 200-bed hospital in Kurnool (AP) in April 2019, which solidified their presence in southern AP and adjoining areas of Karnataka.

 

Key Risk Factor:

  • The company is highly dependent on their healthcare professionals, including doctors that are engaged on a consultancy basis.
  • Their revenues are highly dependent on the hospitals in Hyderabad (Telangana). There is also significant dependence on certain specialties for a majority of the revenues.
  • Any adverse impact on the title or ownership rights of the owner or breach of the terms or nonrenewal of the license agreement may lead to disruptions and affect the business operations of the company.

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

See Detail video of Krishna Institute of Medical Sciences :

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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