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Macrotech on an Aggressive Debt Cutting Spree

Macrotech on an Aggressive Debt Cutting Spree
by 5paisa Research Team 11/10/2021

Macrotech Developers, better known for its Lodha brand of properties, has embarked on a major debt reduction program. It may be recollected that when Macrotech came out with its IPO in April 2021, one of its major focus areas was to cut down on debt. That is expected to give the company more operating freedom to grow.

One of the commitments in the Macrotech IPO prospectus was to sharply cut down on the total debt. Accordingly, in the Jun-21 quarter, Macrotech cut its total debt from Rs.16,076 crore to Rs.12,435 crore. Now, Macrotech is looking to further pare its total outstanding debt to a level of Rs.10,000 crore. How does it propose to do so?

In the current year, the debt reduction will be largely funded through collections. In the Sep-21 quarter, it clocked sales of Rs.3,453 crore which includes Rs.2,003 crore from the India business and Rs.1,450 crore from London’s Grosvenor Square and Lincoln Square projects. Macrotech is planning pre-sales of Rs.9,000 crore in FY22.

For the Sep-21 quarter, the total collections were Rs.1,912 crore. This will be used to reduce the debt from the current Rs.12,508 crore to Rs.10,000 crore. Apart from these regular sales flows, debt reduction will also be managed through sale of non-core assets like warehousing assets and commercial rental assets, which are not central to the Macrotech model.

For the full year FY22, out of the total pre-sales of Rs.9,000 crore projected, Macrotech expects Rs.8,000 crore from the sale of homes and the balance Rs.1,000 crore from the monetization of assets. This monetization is expected to pick up steam in the second half of the fiscal year FY22.

In FY22, Macrotech has already launched five projects across Mumbai and Pune with total saleable area of 4 million SFT. In addition, the company has a steady pipeline and plans to launch another 4.5 million SFT worth of projects in the remaining six months of the current fiscal year FY22. 

Home sales have got a big boost post-COVID with the Jan-Aug period seeing sales grow 3-fold. Macrotech also expects to see sharp sales growth from the festive season which runs from October to December and is a busy month for property purchases.

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NCD Issue of IIFL Finance Closes Ahead of its Scheduled Date

IIFL Finance Closes NCD issue 10 days
by 5paisa Research Team 11/10/2021

The non-convertible debenture issue of IIFL Finance, which had opened for subscription on 27-Sep was closed on 08-Oct, a week ahead of its scheduled closing on 18-Oct. The response to the IIFL NCD was much bigger than originally anticipated and with the NCD issue already subscribed 9.35 times, the company decided to close the NCD issue early.

IIFL Finance had launched its NCD issue for investors with a base size of Rs.100 crore and a Greenshoe option to retail additional subscription up to Rs.1,000 crore or 10 times the base size of the issue. With subscription worth Rs.935 crore received till 08-Oct, IIFL Finance opted to close the issue early. All NCD allotments will be on compulsory demat mode only.

IIFL Finance is the fund-based business of the IIFL group and its business activity encompasses loans to individuals, professionals, MSMEs etc. It has a loan AUM in excess of Rs.61,500 crore. IIFL Home Finance is a subsidiary of IIFL Finance. IIFL has two more listed companies for its securities business and its wealth management business.

The IIFL Finance NCDs were offered in 3 tenors of 24 months, 36 months and 60 months. Each of these tenures had an annual interest payment option as well as a deep discounted bond option. There was an additional option of monthly interest payments, but that was only available in the 5 year tenure bonds.

The NCDs offered peak yields of 8.75% for the highest tenure of 60 months, which is among the best in the peer group in the market. In addition, there was an additional incentive in the form of bonus 0.25% coupon payable to shareholders and bondholders of IIFL Finance as well as to the bondholders of IIFL Home Finance.

Check - What are Pros and Cons of Investing in NBFC NCDs

The NCD issue had been assigned credit rating of AA/Stable by CRISIL and a rating of AA+/Negative by Brickwork. This represents high degree of safety with respect to the timely servicing of interest and principal obligations from time to time. In addition, IIFL group has enjoyed high degree of customer trust considering its stellar track record of servicing debt.

In a tweet, the group chairman, Nirmal Jain, thanked the investors for making the bond issue a resounding success and for reposing their trust in the company.

Also Read:-

IIFL Finance NCD - All you need to know

Different Types of Debentures and Their Use

Difference Between Convertible and Non-Convertible Debentures

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Aditya Birla Sun Life AMC IPO Lists at a Premium of Rs.3

Aditya Birla Sun Life AMC IPO Listing
by 5paisa Research Team 11/10/2021

Aditya Birla Sun Life AMC had a rather tepid listing on 11th October as it listed at a premium of Rs.3, but soon slipped into a discount and closed the day at a discount to the issue price. The stock closed the day, below the listing price as well as the IPO price. With overall subscription of 5.25X and GMP ranging from 4-5%, the listing was expected to be tepid. Here is the Aditya Birla Sun Life AMC listing story on 11th October.

The IPO price was fixed at the upper end of the band at Rs.712 after the 5.25X subscription. The price band for the IPO was Rs.695 to Rs.712. On 11th Oct, the stock of Aditya Birla Sun Life AMC listed on the NSE at a price of Rs.715, just Rs.3 above the issue price of Rs.712. On the BSE, the stock listed exactly at the issue price of Rs.712.

On the NSE, Aditya Birla Sun Life AMC closed on 11-Oct at a price of Rs.698, a first day closing discount of -1.97% on the issue price. On the BSE, the stock closed at Rs.699.65, a first day closing discount of -1.73% on the issue price. On both the exchanges, the stock of ABSLAMC failed to hold on to the listing price and slipped into a discount to issue price.

Check -  Aditya Birla Sun Life AMC IPO

On Day-1 of listing, Aditya Birla Sun Life AMC touched a high of Rs.722.90 on the NSE and a low of Rs.695.35. It closed exactly nearer to the low price of the day. On Day-1 of listing, the Aditya Birla Sun Life AMC stock traded a total of 78.77 lakh shares on NSE amounting to value of Rs.557.81 crore. The stock did not feature in the top 20 list on the NSE, either based on total volumes trade or in terms of total value traded on the first day.

On the BSE, Aditya Birla Sun Life AMC touched a high of Rs.721 and a low of Rs.696. On BSE, the stock traded a total of 6.80 lakh shares amounting to value of Rs.48.11 crore. Like on the NSE, even the volumes on the BSE were relatively lower than many of the previously listed IPOs in the last couple of months and did not feature among the most active stocks.

At the close of Day-1 of listing, Aditya Birla Sun Life AMC had a market capitalization of Rs.20,150 crore with free-float market cap of Rs.2,015 crore.

Also Read:-

1) Aditya Birla Sun Life AMC IPO : 7 Things to Know About

2) Upcoming IPOs in 2021

3) List of Upcoming IPOs in October 2021

4) Grey Market Premium of Aditya Birla Sun Life AMC Ltd IPO

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Rally in Tata Group Stocks: Tata Motors and Tata Power

Tata Motors and Tata Power
by 5paisa Research Team 11/10/2021

The Tata group overall has been one of the biggest wealth creators in the last one year. You pick any stock be it TCS, Tata Steel, Tata Motors, Titan or Tata Power; they have all given exceptional returns in the last one year. But two stocks have stood out in the last one month for their breath-taking rally. They are Tata Motors and Tata Power.

Stock

CMP (Rs.)

1-Month Returns

Returns from yearly low

Tata Motors Ltd

Rs.420.65

39.66%

233.85%

Tata Power Ltd

Rs.195.15

48.91%

277.83%

 

A quick look at the table is enough to underline the kind of rally that these stocks have been through. Till about a couple of years ago, these stocks virtually did nothing. Today, both Tata Motors and Tata Power are at multi-year highs. Interestingly, the broad underlying theme is also the same. In the case of Tata Motors, the reason for the enthusiasm is the foray into green EVs while in the case of Tata Power it is the focus on Green Energy.

Let us look at Tata Motors first. Clearly, the markets are extremely enthused about the aggression shown by the company on the electrical vehicles foray. At a time when the Maruti Chairman has refused to even seriously look at EVs, the Tatas are heavily investing their bandwidth into the electrical vehicles business. Now there is talk of stake sale.

Check: Best EV Stocks to Buy

According to latest reports, Tata Motors may look at selling a stake in the EV business to TPG, Temasek and others to monetize about $1 billion. The deal is expected to value the EV business alone at around $8-9 billion. If you add the domestic PV, CV and the global JLR business, it surely makes a case for re-rating Tata Motors. That is evident in prices.

On the green energy front, Tata Power is making aggressive forays. Along with its subsidiaries, Tata Power has installed / managed capacity of over 13 GW of solar power capacity. The sharp bias in favour of green energy got a sudden fillip in the last one month when the coal shortage created a crisis of sorts for the thermal power sector.

Currently, its solar order book is worth Rs.9,264 crore and that is helping valuations in a big way. The price action in Tata Motors and Tata Powers clearly highlights their green shift.

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NSE Launches Weekly Currency Futures on USDINR

NSE Launches Weekly Currency Futures on USDINR
by 5paisa Research Team 12/10/2021

Monthly currency futures contracts on USDINR are one of the oldest and most popular currency futures contracts traded on the NSE. To make the markets for USDINR futures deeper and more liquid, NSE has now launched weekly currency futures on the USDINR. Normally, USDINR futures are bought when the trader is positive on the dollar and the USDINR futures are sold when the trader is negative on the dollar.

The mock trading for the weekly USDINR futures was conducted on 09-Oct and the trading was officially launched on the NSE on 11-Oct. The trading has commenced with 3 weekly contracts comprising of the near-week, mid-week and the far-week. In addition, NSE has also permitted trading in two spread contracts across different maturities.

The table below captures the weekly USDINR contracts to begin with.
 

Instrument

Symbol

Expiry Date

Description

FUTCUR

USDINR

14-Oct-2021

Near-Week

FUTCUR

USDINR

22-Oct-2021

Mid-Week

FUTCUR

USDINR

29-Oct-2021

Far-Week


In addition, there will be 2 spread contracts made available as under.
 

Symbol

Leg-1

Leg-2

USDINR

14-Oct-2021

22-Oct-2021

USDINR

14-Oct-2021

29-Oct-2021

 

In the equity futures market, weekly options on the Nifty and the Bank Nifty are extremely popular and also very liquid. It is hoped that the introduction of weekly futures in the currency markets will be instrumental in bringing more participation and depth to the currency futures trading in India. Weekly futures tend to be lower on the risk scale.

On the first day of trading on 11-Oct, the volumes were fairly robust and there appeared to be a lot of trading interest in this relatively lower risk product. According to data put out by the NSE, a total of 122 members participated in the trading of weekly USDINR futures and a total of 1.43 lakh contracts got transacted on the day. The total value of the trading in weekly USDINR futures on the day of launch stood at Rs.1,080 crore.

While the USDINR remains the most popular rupee pair in terms of volumes and OI, the exchange also offers pairs of GBPINR, EURINR and JPYINR. In addition to these four rupee pairs, the exchange also offers 3 cross-currency pairs viz. EURUSD, GBPUSD and USDJPY.

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Invesco Objects to the Merger of Zee and Sony Pictures

Invesco Objects to the Merger of Zee and Sony Pictures
by 5paisa Research Team 12/10/2021

The stand-off between Zee Entertainment board and its largest investor, Invesco Fund, has played out in the public domain for the last 1 month. A lot has transpired in this period. It all started with Invesco calling for the removal of Punit Goenka from the post of MD & CEO. This was followed by Zee announcing a quickly stitched merger with Sony Pictures. Repeated requests by Invesco to call an EGM were denied by the Zee board.

Check - Invesco wants EGM to Replace Punit Goenka from the Post of MD & CEO

In the midst of all the legal and procedural wrangling, there is a latest development in which Invesco has objected to the merger of Zee and Sony Pictures. Invesco’s contention is two-fold. Firstly, Invesco is unhappy that despite being the largest shareholder of Zee with 17.88% stake, it was not consulted on the deal. Secondly, Invesco has expressed concerns that the deal would favour the Subhash Chandra family at the cost of other shareholders.

It is actually about the non-compete fee

The bone of contention is the non-compete fee that Sony is paying to the Subhash Chandra family. The fee will not be a cash payment but it will be a stock payment. As per the term-sheet, Sony will have 53% in the merged entity while Zee will have 47%. 

However, Sony will transfer 2% out of its shareholding to the Subhash Chandra family as non-compete fee. Invesco’s contention is that non-compete fee questions should not arise when Punit Goenka has been appointed the MD and CEO of the merged entity for next 5 years.

The real catch in this story is the ownership shift that Invesco is wary of. Currently Invesco holds 17.88% in Zee while the Subhash Chandra family holds 3.44%. Post the deal, Invesco will only hold 8.4% while Subhash Chandra family will hold 4% (including the non-compete fee). That is what is riling Invesco as it feels that the narrowing of ownership gap between Invesco and Subhash Chandra family was not justified.

The next steps would depend on the verdict of the NCLT on the holding of EGM and how the voting happens at the EGM. For now, the battle lines are drawn and neither side is willing to relent on their stand.

Also Read:-

Zee Refuses to Call for EGM at the Request of Invesco Fund

What does the Zee merger with Sony mean

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