IPO Performance in 2020

IPO Performance in 2020
IPO
by Nikita Bhoota 06/05/2020

The year 2020 has seen a fewer number of listings but witnessed a lot of participation on Dalal Street. Nearly 39 IPO got listed in the year 2020 (including SMEs). Some of the well-known IPO details are as follows:
 

Company Name

Open date

Close date

Listing Date

IPO Issue Size

(Rs. Cr)

Route Mobile Ltd.

09-Sep-2020

11-Sep-2020

21-Sep-2020

608.70

Burger King India Ltd.

02-Dec-2020

04-Dec-2020

14-Dec-2020

810.00

Rossari Biotech Ltd.

13-Jul-2020

15-Jul-2020

23-Jul-2020

496.49

Happiest Minds Technologies Ltd.

07-Sep-2020

09-Sep-2020

17-Sep-2020

386.11

Mrs. Bectors Foods Specialities Ltd.

15-Dec-2020

17-Dec-2020

24-Dec-2020

544.35

Gland Pharma Ltd.

09-Nov-2020

11-Nov-2020

20-Nov-2020

4,535.68

Mazagon Dock Shipbuilders Ltd.

29-Sep-2020

01-Oct-2020

12-Oct-2020

443.69

Chemcon Speciality Chemicals Ltd.

21-Sep-2020

23-Sep-2020

01-Oct-2020

318.00

Computer Age Management Services Ltd.

21-Sep-2020

23-Sep-2020

01-Oct-2020

2,244.33

Likhitha Infrastructure Ltd.

29-Sep-2020

07-Oct-2020

15-Oct-2020

61.20

Equitas Small Finance Bank Ltd.

20-Oct-2020

22-Oct-2020

02-Nov-2020

382.31

SBI Cards And Payment Services Ltd.

02-Mar-2020

05-Mar-2020

16-Mar-2020

7,571.10

Angel Broking Ltd.

22-Sep-2020

24-Sep-2020

05-Oct-2020

421.38

UTI Asset Management Company Ltd.

29-Sep-2020

01-Oct-2020

12-Oct-2020

1,515.24

Source: Ace Equity

Many of the IPO’s have given splendid returns and have doubled the wealth of investors. While, some of them have been listed at discount where investors have lost their invested capital. Below mentioned are some of the well-known IPOs that either created wealth for the investors or were listed on the exchanges at a discounted price. 

 

 

 

 

 

 

Company Name

Issue Price(Rs)

Listing Price(Rs)

Gain/Loss

Last Close(Rs)

Last Close/Listing Price Gain/Loss

Route Mobile Ltd.

350

708.00

102.3%

1,098.1

213.7%

Burger King India Ltd.

60

115.35

92.3%

175.5

192.4%

Rossari Biotech Ltd.

425

670.00

57.6%

939.3

121.0%

Happiest Minds Technologies Ltd.

166

351.00

111.4%

344.1

107.3%

Mrs. Bectors Foods Specialities Ltd.

288

501.00

74.0%

514.4

78.6%

Gland Pharma Ltd.

1,500

1701.00

13.4%

2,340.3

56.0%

Mazagon Dock Shipbuilders Ltd.

145

216.25

49.1%

218.2

50.4%

Chemcon Speciality Chemicals Ltd.

340

730.95

115.0%

500.3

47.1%

Computer Age Management Services Ltd.

1,230

1518.00

23.4%

1,805.5

46.8%

Likhitha Infrastructure Ltd.

120

130.10

8.4%

165.5

37.9%

Equitas Small Finance Bank Ltd.

33

31.00

-6.1%

37.7

14.1%

SBI Cards And Payment Services Ltd.

755

658.00

-12.8%

850.8

12.7%

Angel Broking Ltd.

306

275.00

-10.1%

337.8

10.4%

UTI Asset Management Company Ltd.

554

490.25

-11.5%

555.7

0.3%

Source: Ace Equity, Last close as on December 31,2020.

Companies belonging to the IT, food and beverages, BFSI sectors generally ruled the IPO calendar for the year. Companies generally go for IPOs for raising funds to expand their business or repay the debt. For the investors, it is an opportunity to invest in a business that may have growth opportunities in the future. 

Outlook:

Going forward, 2021 could be a strong year for IPOs again. The spectacular performance of recent IPOs in the year 2020 in the secondary market augurs well for the pipeline in the coming months across a range of sectors. Thus, investors can keep aside some funds to invest in upcoming IPOs after studying their fundamentals to create huge wealth in the long-run.

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

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Covid 19: A pain for Summer Stocks

summer stocks
by Nikita Bhoota 12/05/2020

As the temperature begins to rise, the experts generally recommend investors to buy stocks of companies associated with air conditioners, cooling systems, consumer durables and tours & travel that normally see an uptrend between March and June. Some of the other categories that benefit from a harsh summer include makers of talcum powders, ice creams, juices, fruit and aerated beverages, deodorants etc.

However, this year the scenario seems to be opposite. The demand for consumer durable goods, ice creams and beverages are shattered. The spread of coronavirus (Covid19) disease all over the world and in India has resulted in shutting down the manufacturing activities in the country.  Also, the consumers of beverages and ice creams are recommended not to consume these products to curb the spread of Covid19. Similarly, the aviation and hotel industry are not allowed to carry on their operations. Thus, the market performance of stocks associated with manufacturing and services like consumer durables, beverages and tours and travels will be adversely affected.

Company Name

2-Mar-20

8-May-20

Gain/ Loss

Indian Hotel

133.6

67.5

-49.5%

Mahindra Holidays

214.1

125.8

-41.3%

Bluestar

809.4

478.2

-40.9%

Vadilal Industries

774.3

494.3

-36.2%

Varun Beverages

804.9

619.6

-23.0%

Voltas

663.2

456.6

-31.2%

Symphony

1,291.6

829.6

-35.8%

Emami

258.4

182.3

-29.4%

Pidilite

1,529.0

1,367.4

-10.6%

Source: BSE

Indian Hotel

Covid-19 outbreak and the control measures introduced by the Centre have resulted in a severe drop in foreign and domestic travel, across both the tourism and business traveller segments. As per the Media reports, the hotels’ sector witnessed a decline of more than 65% in occupancy levels in the third week of March 2020 as compared to the same period of the previous year. Indian Hotel is the major brand in hotel sector in India. The stock price have declined 49.5% from March 02, 2020 to May 08, 2020.

Mahindra Holidays

Mahindra Holidays has over 55 resorts in India and 52 internationally, with over 2.51 lakh members. Due to complete lockdown in the country, the business of the company will be highly impacted. The company had suspended the operations in most of the resorts for the time being till 31st March, 2020. The stock price has tumbled 41.3% from March 02, 2020 to May 08, 2020.

Bluestar

Blue Star stock slips 40.9% on halting operations due to the COVID-19 outbreak. Blue Star is an air-conditioning and commercial refrigeration company. The company conducts various activities, such as electrical, plumbing and fire-fighting services. Its segments include electro-mechanical projects and packaged air conditioning systems, and unitary products.

Vadilal industries (VIL)

A harsh summer bodes well for ice-cream makers like Vadilal. However, this year the spread of Covid 19 has affected the consumption and production activity of the company. VIL operates in two major segments – ice cream, under the brand name Vadilal and processed food, under brand name Quick Treat. Ice-cream brand Vadilal has a legacy of 100+ years. It has a strong presence in north, west and east India.

Varun Beverages

PepsiCo India's bottling partner stock was down 23% as the production and distribution facilities have been temporarily shut down and will be operated as per the local guidelines. Varun Beverages is one of the largest franchisees in the world (outside the USA) for PepsiCo. The company has operations across 17 states and two union territories in India. The manufacturing footprint is well spread out and includes 17 units in India and four production facilities in international markets. Products manufactured by Varun Beverages include carbonated soft drinks - Pepsi, Mountain Dew, Seven Up, Mirinda; non-carbonated beverages - Tropicana Slice, Tropicana Frutz; and bottled water - Aquafina.

Voltas

Voltas, a Tata Group company founded in 1954, has successfully evolved from a refrigeration and air-conditioning company into a fully-fledged mechanical, electrical and plumbing (MEP) contractor. The company’s key offerings include heating, ventilation, air-conditioning and refrigeration (HVAC&R) solutions, turnkey electromechanical projects (EMP), and room AC products. The stock plummeted 31.2% from March 02, 2020 to May 08, 2020 due to covid19 impact.

Symphony

The heatwave is likely to be more towards the central and northern parts of India as per the IMD, and Symphony could be a major gainer as it is more into the cooler segment than the air conditioner. It also has a very good brand recall. However, this summers will get impacted by lockdown in the country. The Symphony management has said consumer footfalls dropped sharply in March, as malls, modern retail formats and small dealers in small towns started shutting operations. Transport and inland logistics services are disrupted. Even the e-commerce platform has stopped delivering non-essentials. Symphony is the leading manufacturer of evaporative air coolers in India, with a value market share of ~50% in the organized market.

Emami

Emami’s April- June quarterly volume growth likely to get impacted this summer due to the spread of Covid19.  Summer portfolio sales for products like Navratna Cool Oil, Talc and HE deodorant which contribute about 25% to the total portfolio on annualised basis may be impacted. The Emami Group is one of India’s leading consumer-goods companies, with a presence in niche categories such as ‘cooling oils, pain balms and antiseptic creams, with no competition from MNCs so far. The company also markets men’s fairness creams and ayurvedic OTC medicines.

Pidilite

Pidilite has a product that needs to be applied to roof and walls so that the walls absorb heat.  The halt on construction, repairs and maintenance activity in the country will impact the financial numbers of the company. The company’s product range includes adhesives and sealants, construction and paint chemicals, automotive chemicals, art materials, industrial adhesives, industrial & textile resins, and organic pigments and preparations. Consumer products form nearly 80% of Pidilite’s sales consisting of adhesives, construction and plant chemicals and art materials. Pidilite shares are down 10.6% from March 02, 2020 to May 08, 2020.

 

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Stimulus Phase 2 Focuses Less on India and More on Bharat

Stimulus Phase 2 Focuses Less on India and More on Bharat
15/05/2020

When the Prime Minister announced the Rs.20 trillion package on 12 May, he also emphasized that the nitty-gritty of the package would be rolled out by the Finance Minister in a phased manner.

Throwback to Day 1:

Day one had focused on Indian economy as a whole. The package appeared rolled out to a clear plan. On day 1, the focus was entirely on making the economy the nucleus of the government’s medium term policy direction. The package included generous loans to MSMEs, special packages for NBFCs and MFIs, a special Rs.90,000 crore package for the DISCOMS to be executed by REC and PFC etc. Apart from the slew of macro level measures, the government also gave a 25% concession on TDS deductions to small businesses. In addition, the last date for filing of returns was also postponed from July 31st to November 30th. Above all, the realty projects got a 6-month breather even as smaller businesses could look forward to prompt payments. For more details you can visit the detailed coverage on stimulus package 2020 Day 1:

Day 2 – Focus shifted from India to Bharat

The first day had enough for banks, NBFCs and industry to get their calculators out and start working. Hence the second day focused almost entirely on the more vulnerable sections of the Indian population like farmers, migrant workers and other low income groups. Here are some key announcements made by the government on Day-2.

  1. A comprehensive credit facility of Rs.5000 crore will be extended to cover nearly 50 lakh street vendors with a capital of Rs.10,000 each to get them back into business.
  2. The “1 nation - 1 ration card” scheme will benefit poor and migrant workers. Over 8 crore migrant workers to get free food grains for next two months. Non-ration card holders to get 5 kg of wheat/rice per family and 1 kg of gram free of cost. Government has already transferred Rs.11,000 crore to fund 3 meals per day at shelters for migrants.
  3. Concessional credit worth Rs.200,000 crore announced and will benefit 2.50 crore farmers across India. This will include fishermen and animal husbandry workers. FM also announced the extension of the special Interest subvention scheme on farmer loans until May 31, 2020. FM has also expressed willingness expand the ambit of MNREGA.
  4. Government will bring in Universal Minimum Wage (UMW) and National Floor Wage (NFW) to remove disparity between states. In addition, FM has announced mandatory ESIC coverage for employees of hazardous industries.
  5. A special scheme for the urban poor will include a special rental housing scheme launched by the government. Under this scheme, the empty government land will be leveraged to build more housing and make homes available to all.
  6. The FM also announced a further boost to affordable housing, which appears to have taken a back seat in the melee of COVID-19 and the lockdown. The credit linked subsidy scheme has been extended up to March 2021. This will be for families in the lowest strata of middle income group (income of 6-18 lakh/annum). This is also expected to reinvigorate construction demand.
  7. The finance minister has also extended the interest subvention support of 2% to all Shishu loan holders (up to Rs.50,000).

Day 2 may not have been as big bang as the first day but it has made some very important announcements at the grass root level. The government tacitly acknowledges three realities here. Firstly, any revival in the Indian economy is not possible unless the most vulnerable sections are supported. Secondly, the large swathes of rural India can have a multiplier effect on demand creation, if supported adequately at the right time. Lastly, migrant workers need to get back to their places of work if the supply chains have to work smoothly. The next few days could be interesting pointers to the road ahead.

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PM Modi’s Economic Package: A Historic one and its Highlights

Atmanirbhar Bharat
by Nikita Bhoota 15/05/2020

Prime Minister (PM) Modi has announced Rs 20 lakh crore (10% of GDP) economic package on Tuesday (May 12, 2020) to fight Coronavirus (Covid 19) economic crisis. The economic package announced by the PM is one of the largest in the world.

Stimulus as % of GDP
Japan 21
US 13
Sweden 12.00
Germany 10.7
India 10
France 9.3
Spain 7.3
Italy 5.7
UK 5
China 3.8
South Korea 2.2

Source: Media Article

This 20 Lakh crore package announced by Indian Prime Minister already includes earlier announced measures to save the lockdown battled economy like 1.7 lakh crore package of free food grains to poor and cash to poor women and elderly, announced in March, as well as the Reserve Bank's liquidity measures and interest rate cuts of ~Rs  6.3 lakh crore. Hence, it seems that additional Rs. 12lakh crore will be pumped into the economy to overcome financial loss due to Covid19 pandemic. The package will focus on land, labour, liquidity and laws. It will cater to various sections, including the cottage industry, MSMEs (Micro, Small and Medium Enterprises), labourers, middle class, and industries.

Finance Minister (FM) Nirmala Sitharaman on Wednesday shared the first tranche of the incremental measures. It included 15 relief measures with six aimed for MSME segment. The focus was on providing liquidity and credit support to ensure that MSMEs and Smaller NBFCs are able to sustain this tough time.

We are laying down these measures announced on May 13, 2020

1) Distressed MSMEs.

a) Rs. 3 lakh crore “guarantee” towards emergency working capital facility for businesses, including MSME availed from NBFCs and Banks:  This is an automatic collateral-free loans for borrowers with up to Rs. 25crore outstanding and Rs100crore turnover, having 4-year tenure with a 12-month moratorium on interest payment. The facility availed can be up to 20% of entire outstanding credit as on 29 Feb 2020. This will benefit 45 lakh units so that they can resume work and save jobs.

b) Rs. 20,000 crore subordinate debt for stressed MSMEs and Rs. 50,000 crore for “Viable” MSME to be used for Equity Infusion:  The GOI will facilitate provision of Rs. 20,000 crore as subordinate debt and will provide a support of Rs. 4,000 Crore to Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).

As for second part, a Fund of Fund with a corpus of Rs. 10,000 crore will be set up which will operate through a mother and few daughter funds. The setup will help these units increase capacity and help them list on Markets if they choose

2) Other Measures for MSMEs

a) New definitions: The investment limits have been revised upwards and additional criteria of turnover have been added. Micro units with investment till Rs 1 crore, turnover up to Rs 5 crore. Small units with investment till Rs 10 crore, turnover up to Rs. 50 crore. Medium units with investment till Rs 20 crore, turnover up to Rs 100 crore. At the same time, the distinction between manufacturing and services enterprises have been eliminated.

b) No global tenders for Government tenders (up to Rs. 200 Crore): To encourage MSMEs, global tenders will be not allowed in Government procurement tenders.

3) NBFC/HFC/MFIs

a) Rs. 30,000 crore special liquidity scheme: The Government will launch a special liquidity scheme where investments will be made in investment grade debt papers of NBFC/HFC/MFIs. The securities will be backed by GoI.

b) Rs. 45,000 crore Partial Credit Guarantee (PCG) scheme 2.0 for liabilities of NBFCs/MFIs: Existing PCG scheme is extended to cover the borrowings of lower rated NBFCs, HFCs and other MFIs. GoI will provide 20% first loss sovereign guarantee to Public Sector Banks.

4) EPF Support

a) Extending the EPF support: Payments (12% employer and 12% employee contribution) made in to EPF accounts of eligible establishments has been extended for another three months.

b) EPF Contribution reduced: EPF Contribution to be reduced for Employers and Employees to 10% from 12% for all establishments covered by EPFO for next three months

5) Liquidity injection for stressed DISCOMS: The government announced a Rs. 90,000 crore liquidity injection into fund-starved electricity distribution companies (discoms). State-owned Power Finance Corp. (PFC) and Rural Electrification Corp. (REC) will infuse the liquidity by raising Rs90,000 crore from the markets against the receivables of discoms. These funds will be then given to discoms against state government guarantees to discharge their liabilities.

6) Relief to Contractors: All central agencies like Railways, Ministry of Road Transport & Highways and CPWD will be providing extension of up to six months to complete projects. Also, the Government agencies will partially release bank guarantees to extent of completed work.

7) Relief to Real Estate Projects: State Governments are being advised to invoke the force majeure clause under RERA. The registration and completion date for all registered projects will be extended up to six months with further possible extension of three months based on the State’s situation.

8) Reduction in TDS /TCS: The TDS rates for all non-salaried payment to residents, and tax collected at source rate will be reduced by 25% of the specified rates for the remaining period of FY 20-21.

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Stimulus Day-5; One Final Push Given to the Stimulus Package

Stimulus Day-5; One Final Push Given to the Stimulus Package
18/05/2020

On 17 May, the Finance Minister, Nirmala Sitharaman laid out the details of the fifth and final tranche of the stimulus package. In terms of allocation, there was little left after the third day announcements. What was really ironic was that the last phase of the Stimulus Package announcement coincided with the extension of lockdown till May 31st in key geographies like Mumbai, Pune, Delhi and Tamil Nadu. These are also the worst affected by the COVID-19 syndrome. What it underlines is that despite the Rs.21 trillion already allocated, an extension of the lockdown means that more allocation may be required in the coming weeks. But let us first look at how the overall Stimulus package of Rs.21,00,000 crore has been spent by the government.

How the overall package has panned out?

As per the statement of Nirmala Sitharaman, the government has directly and indirectly allocated a total sum of Rs.20.97 trillion for the Stimulus Package to be precise. The table below captures the gist of the outlay.

Nature of Spend

Details of the Spend

Amount (Rs. in crore)

First Tranche (Fiscal)

Package for MSMEs, DISCOMS, NBFCs

5,94,550

Second Tranche (Fiscal)

Migrant workers, farmers and tribal

3,10,000

Third Tranche (Fiscal)

Farm infrastructure and agri marketing

1,50,000

Fourth & Fifth Tranche

Structural reforms focus

48,100

 

Stimulus 2.0 outlay

11,02,650

 

Earlier fiscal measures

1,92,800

RBI Measures (Monetary)

OMOs, CRR cuts, TLTRO, LTRO, TLTRO 2.0

8,01,603

 

Grand Stimulus Package (Total)

20,97,053

As can be seen from the above table, the amount of Rs.21 trillion encompasses the fiscal outlays made earlier plus the fiscal outlays announced in the last five days plus the monetary stimulus already done. This does not include the monetary stimulus that could be additionally taken up by the RBI.

Day 5 of the Stimulus – Rounding up the structural issues

The fifth day did not have too much by way of fiscal allocations since most of the allocations had been completed by the end of Day 3. However, the reforms on Day 5 did focus on making life simpler for businesses. Here are some quick takeaways.

  • The finance minister has proposed additional funding of Rs.40,000 crore for the MGNREGS scheme over and above the Budgetary allocation. This is expected to improve jobs and livelihood means in the rural areas.
  • The rapid spread of the COVID-19 pandemic has underlined the urgent need for quality healthcare at a primary level. Government has announced that all districts will have infectious disease hospitals and public health labs at block-level.
  • In a move long called for, the FM has announced that COVID-19 related debt would be excluded from the definition of default under the IBC. Minimum threshold to initiate insolvency raised 100-fold to Rs one crore. No new insolvencies in next one year.
  • Another heavy handed stipulation has been done away with. Violations under the Companies Act will be decriminalised. This will ease the burden on courts and tribunals and put less pressure on the entrepreneur taking on the business risk.
  • In a move that could be of great benefit to companies in the IT, pharma, biotechnology and ecommerce space, companies will now be permitted to directly list securities in foreign jurisdictions before listing locally.
  • All sectors hitherto reserved for PSUs are now open to the private sector and role of PSUs to be limited to only some critical areas. Government will notify strategic areas where 100% private partnership will not be permitted.
  • Considering the financial stress on states, the central government will hike borrowing limit of states from 3% to 5% for FY21. This will give ensure resources of Rs.428,000 crore to states. However, states have only used 14% of the limit authorised to them.
With the lockdown being extended, the stimulus looks more like work-in-progress. It would be interesting to see the overall impact on the fiscal deficit.
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Stimulus Day-4; It is Over to Structural Reforms

Stimulus Day-4; It is Over to Structural Reforms
18/05/2020

The penultimate day of the post-COVID reforms announcements shifted focus to more structural areas. The first 3 days were spent on addressing the pain points of COVID-19 including farm incomes, agricultural infrastructure, NBFCs, MFIs, migrant labourers and MSMEs. With the pain points addressed, the Finance Minister shifted focus on the fourth day to more structural issues pertaining to foreign participation, domestic self reliance, investment in critical sectors etc. if you were to sum up the reforms announced on 16th may, it can be divided into two distinct segments; strengthening the “Make in India” initiative and enhancing foreign investments / private participation. After all, any recovery will now predicate on a delicate balance between foreign investments and local jobs.

A big thrust for Make in India on Day-4

A slew of reforms have been announced to give a boost to the “Make in India” initiative by opening many sectors (hitherto closed) to the private sector.

  • In a major push for reforms, the government will now permit research into setting up of atomic reactors via public-private partnerships (PPP). Being a sensitive sector, this was hitherto closed to private participation. It will be drawn into the start-up ecosystem.
  • Space travel and space research to be opened up to private sector. Planetary exploration and space travel will be opened to the private sector. Private sector can use ISRO facilities to boost skills and private parties can now launch their own satellites.
  • As a means to boost business, the government has allocated Rs.8100 crore for viability funding. This will enhance the quantum of viability gap funding up to 30% of total project cost. This will ensure quick completion of pending projects.
  • Major power tariff policy reforms to encompass consumer rights, promote industry and ensure sustainability of power sector. In addition, as a starting step, the power distribution companies in union territories will be privatised. States will wait for now.
  • India to emerge as global hub for aircraft maintenance, repair, overhaul (MRO). Tax regime for MRO will be rationalised. This will reduce maintenance costs of airlines which can be passed on to fliers. Government to additionally invest in 12 airports.
  • Currently, there are stringent restrictions on the use of air space for civil aviation and only 60% of Indian airspace is freely available. Such restrictions on utilisation of air space will be eased so that civilian flying becomes more efficient.

Enticing foreign investments where they can add value

The second part of the reforms on the fourth day focused on getting foreign capital where warranted.

  • The big takeaway is that coal will no longer be a government monopoly but domestic and foreign private participation will be allowed. Govt will bring in commercial mining in coal sector for the sake of competition and transparency. Domestic and foreign investment will be encouraged through revenue sharing mechanism.
  • Foreign direct investment (FDI) limits in defence manufacturing to be increased from 49% to 74%. Ordnance boards will be listed on stock exchanges as corporate entities. This will go a long way in reducing the defence import bill.
  • Govt will introduce joint auction of bauxite and coal mineral blocks to enhance aluminium industry's competitiveness. Foreign participation will improve mining best practices, improve output and lower costs. In addition, stamp duty on mining leases to be rationalized and distinction between captive and non-captive mines scrapped.
In short, government will create an enabling environment to fast-track investments. This will include fast track investment clearance through an empowered group of secretaries with limited red tape.