Indian start-ups raise $6.5 billion in Jun-21 quarter
The COVID 2.0 may have impacted the manufacturing operations across major sectors. However, the second round of pandemic had little impact on the start-up fundraising scenario in India. On the other hand, the start-ups raised 71% more in the Jun-21 quarter at $6.50 billion compared to the Mar-21 quarter.
While there were a total of 160 start-up funding deals, there were a few prominent high-value deals that marked the Jun-21 quarter. Swiggy raised $800 million, ShareChat $502 million, Byju’s $340 million, PharmEasy $323 million, Meesho $300 million, Pine Labs $285 million, Delhivery $277 million, Zeta $250 million, Cred $215 million and Urban Company $188 million. These 10 Unicorns raised more than 50% of the start-up funding in Jun-21 quarter.
Prior to the June quarter, India had 42 Unicorns. A Unicorn is a term used to describe a start-up that achieves a $1 billion valuation. During the June quarter alone, India added another 11 Unicorns to take the total Unicorn count to 53 as of the end of Jun-21. Most of the start-up funding has flowed into digital start-ups with a strong futuristic tilt.
Let us turn to the specific sectoral mix of the start-up funding flows. Fintech accounted for 27% of the total start-up flows in the June quarter while Food Tech stood at 13%, Enterprise Tech at 11% and EdTech at 10%. More than a quarter of the Unicorns added in the June quarter were also Fintech.
In terms of nature of business, out of the 160 deals in the quarter, B2B start-ups raised $1.90 billion across 85 deals while B2C start-ups raised $4.50 billion across 75 deals. The balance contribution came from Deep Tech which raised $450 million in the quarter. The average deal size in B2C was more than twice that of B2B deals.
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Tata Realty goes aggressive with Rs.4,000 crore investment
In the last quarter, almost all realty companies have shown positive vibes in terms of demand pick-up. While revenge buying has been one factor, the more important factor has been home loan rates are at the lowest in history. Most home buyers are seeing the eminent wisdom of locking themselves into long-term mortgages at these rates.
One company with aggressive plans on the realty front is Tata Realty and Infrastructure, the real estate development arm of Tata Group. Tata Realty plans to invest Rs.4,000 crore into the real estate business. Out of this allocation, Rs.2,000 crore will be towards residential housing projects and the other Rs.2,000 crore will be for commercial projects. Tata Realty hopes to invest this sum in the next 2 years.
As per reports, Tata Realty is seeing a surge in demand for ready-to-move-in residential properties after the bitter experience of unfinished projects by many builders in the last few years. The aggression is evident from the fact that Tata Realty increased its construction worker count from 3,500 to 5,000 during the pandemic.
In FY21, Tata Realty reported revenues of Rs.1,500 crore which is 15% more than revenues in FY20. In volume terms, Tatas sold a total of 1,300 units during FY21 with record sales in Q4. That has encouraged Tata Realty to go aggressive on future projects with an outlay of Rs.4,000 crore. For FY22, Tata Realty expects another 20% growth from current levels.
Tata Realty currently has 4 residential projects under construction consisting of a total of 2,500 units spread across Mumbai, NCR-Delhi and Kolkata. Its residential portfolio has about 45 million SFT under construction. In addition, Tata Realty also has 3 commercial projects under progress with 7 million SFT of leased and owned space. Tata Realty has a 35-year track record in India.
Nuvoco Vistas IPO Listing
On 23rd August, Nuvoco Vistas listed at a discount of -15%, but the stock managed to bounce back. Both the NSE and BSE are showing positive returns on Nuvoco Vistas but that is misleading because the exchanges consider returns from the opening price. Compared to the IPO price, the stock closed lower.
The overall subscription of 1.71X in the Nuvoco Vistas IPO was tepid, especially when you consider that HNI portion was subscribed to just 0.66X and the Retail portion 0.73X. It was the QIB portion at 4.23X that had saved the day. Here is the Nuvoco Vistas listing story on 23rd August.
The IPO price was fixed at the upper end of the band at Rs.570 despite a very tepid 1.71X subscription. On 23rd Aug, the stock of Nuvoco Vistas was listed on the NSE at a price of Rs.485, a discount of -14.91% over the issue price. On the BSE, the stock listed at a price of Rs.471, representing a listing discount of -17.37%.
On the NSE, Nuvoco Vistas closed at Rs.529, a steep first-day closing discount of -7.19% over the issue price. On the BSE, the stock closed at Rs.531.30, a first-day closing discount of -6.79% over the issue price. Despite the bounce, the stock still closed below the IPO price.
On Day-1 of listing, Nuvoco Vistas touched a high of Rs.550 on the NSE and a low of Rs.485. The stock traded a total of 220.80 lakh shares on NSE amounting to value of Rs.1,167.09 crore. In terms of traded value, Nuvoco Vistas was the fourth most traded stock on NSE.
On the BSE, Nuvoco Vistas touched a high of Rs.550 and a low of Rs.471. On BSE, the stock traded a total of 8.21 lakh shares amounting to value of Rs.43.29 crore. At the close of Day-1, Nuvoco Vistas had a market capitalization of Rs.18,976 crore with free-float market cap of just Rs.4,175 crore.
Indian Hotels plans mega Rs.3,000 crore Rights Issue
One of the premium hotels and hospitality companies in India and the owner of the Taj brand, Indian Hotels is planning a mega rights issue. The Tata group company has secured board approval for Rs.3,000 crore rights issue. This is the largest fundraising by IHCL and is twice the size of the last rights issue of Rs.1,500 crore in 2017.
While the pricing and timing of the rights will be determined in consultation with merchant bankers, the purpose of the issue is already laid out. Indian Hotels will use the proceeds of the rights issue to fund its capital expenditure, expansion of properties globally as well as repaying some of the debt in the balance sheet.
Let us focus on debt reduction first. The last 18 months have been tough for the hospitality industry, being a high-contact business. The restrictions on international travel, business travel and leisure travel had severely curtailed the top line, resulting in a spike in borrowings. In fact, between FY20 and FY21, the total debt of Indian Hotels increased by 67.5% from Rs.1,857 crore to Rs.3,110 crore.
Indian Hotels wants to capitalize on the expected revenge spending with an expanded portfolio. It plans to expand its properties by 36% to 300 over the next 3-5 years. As part of its asset-light strategy, Indian Hotels will prefer to inorganically acquire ready-made hotels rather than pressuring the balance sheet with development costs.
Currently, Indian Hotels has a portfolio of 221 properties of which 150 are located in India, 21 abroad and another 50 are work-in-progress. Over the next 5 years, IHCL also plans to restructure its business model so as to have 46% of properties on a management contract basis. The rights issue is expected to be priced at a discount to factor in its dilution effect.
HDFC Bank to go all out on credit cards business
On 17th August, RBI lifted the ban on HDFC Bank pertaining to issue of credit cards. In December 2020, RBI had imposed a ban on HDFC Bank issuing new credit cards as well as launching new digital initiatives. This was following constant complaints from customers of HDFC Bank over numerous cases of a service outage. On 17-Aug, the RBI lifted the ban on the issue of credit cards, but the ban on launching digital initiatives stays.
With the ban on credit cards lifted, HDFC has charted out an aggressive plan to recoup its lost market share over next 3 quarters. In the first phase, HDFC Bank will issue 300,000 cards per month till the end of this year. Effective Feb-22, HDFC Bank will scale this up to 500,000 cards per month. This will help HDFC Bank recoup its lost client base over the next 3 quarters.
Prior to the RBI ban, HDFC Bank had a total of 15.38 million outstanding credit cards. During the ban period, HDFC Bank saw its outstanding credit card customers reduce by 3.6% to 14.82 million. In India, its market share in terms of number of credit cards fell by 200 basis points to 23.6%. However, its wallet share of card spend, continued to remain at the same level, indicating that most of the exits were by low-value customers.
During the ban period, even as HDFC Bank lost card customers, SBI, ICICI Bank and Axis Bank were the big beneficiaries. However, despite the ban, HDFC Bank remains at the top in terms of the number of cards issued followed by SBI, ICICI Bank and Axis Bank in that order.
During the ban period, HDFC Bank was sourcing an aggressive 400,000 liability customers per month. Its first priority will be convert these liability customers into credit card customers of HDFC Bank. Certainly, India’s most valuable bank has its game plan in place.
Chemplast Sanmar IPO Listing
On 24th August, Chemplast Sanmar listed at a marginal premium of 1.66% on NSE, but later slipped into a discount. The stock could not hold on to the premium listing as selling pressure piled up through the day.
The overall subscription of 2.17X in the Chemplast Sanmar IPO was tepid, especially when you consider that HNI portion was subscribed just 1.03X and QIB portion 2.70X, despite a successful anchor placement ahead of the IPO. Here is the Chemplast Sanmar listing story on 24th August.
The IPO price was fixed at the upper end of the band at Rs.541 despite a very tepid 2.17X subscription. On 24th Aug, the stock of Chemplast Sanmar listed on the NSE at a price of Rs.550, a premium of 1.66% over the issue price. On the BSE, the stock listed at a price of Rs.525, representing listing discount of -2.96%.
On the NSE, Chemplast Sanmar closed at Rs.536, a first day closing discount of -0.92% on the issue price of Rs.541. On the BSE, the stock closed at Rs.534.90, a first day closing discount of -1.13% on the issue price. Despite the bounce from lower levels on BSE, the stock closed below the IPO price.
On Day-1 of listing, Chemplast Sanmar touched a high of Rs.550 on the NSE and a low of Rs.510. The stock traded a total of 142.54 lakh shares on NSE amounting to value of Rs.769.12 crore. In terms of traded value, Chemplast Sanmar was the sixteenth most traded stock on NSE.
On the BSE, Chemplast Sanmar touched a high of Rs.550 and a low of Rs.510.30. On BSE, the stock traded a total of 20.42 lakh shares amounting to value of Rs.110.02 crore. At the close of Day-1, Chemplast Sanmar had a market capitalization of Rs.8,457 crore with free-float market cap of just Rs.2,114 crore.