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Mahindra and Mahindra Scouts for Investors for its EV Business

by 5paisa Research Team 10/11/2021

The stock of Mahindra & Mahindra is not known to shows spikes in volatility and has been a steady performer over time. However, in the last 3 months, the stock of M&M is up 18.04%. The latest quarter results were good and in the October auto sales numbers, Tata Motors and M&M were the only 2 large players to show positive growth in dispatch volumes.

What really triggered off a spate of interest in M&M is some key announcements in its latest AGM and the layout of a 5 year plan for the company. Among the two major steps, the first is to substantially expand its farm machinery franchise up to the level of its tractors business while the second is to look for ways to monetize its EV business at a later date.

A quick word on the farm machinery business of M&M first. Mahindra plans to grow its farm machinery business 10-fold by 2027 to touch revenues of Rs.5,000 crore. The idea is to bring the same traction in farm machinery as in tractors.

M&M currently has a 40% share in tractors and just 10% in farm  machinery. One of its commitments in the latest AGM is to expand the farm machinery share also to 40%. Globally, share of farm machinery is twice that of tractors.

Now for the more important electrical vehicles space. M&M plans to invest close to Rs.3,000 crore by the end of fiscal year 2024. The idea is to once again regain leadership in EVs, which it has since ceded to the Tatas, despite M&M pioneering EVs in India.

The bigger game will be on valuations and M&M will look to monetize its EV property at some point in the future, but first it will have to create the right ecosystem to generate value.

Tata Motors had recently raised $1 billion from global marquee investors including TPG, which valued the EV business of Tata Motors alone at $9.1 billion. Even players like TVS Motors, Ashok Leyland and Bajaj are heavily investing into green vehicles, while in the case of Tata Motors the rollout has already started quite aggressively.

Even in the global markets, it is EVs that drive valuations. For example, Elon Musk’s Tesla has given returns of 1,600% in the last 2 years and has a market cap that is more than the entire global auto industry combined. M&M believes that a strong EV franchise can also be accretive for group valuations.

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Tarsons Products IPO - 7 Things to Know

Tarsons Products IPO - 7 Things to Know
by 5paisa Research Team 10/11/2021

Tarsons Products has announced the opening of its IPO on Monday 15th November. Tarsons is a company with a 30 year pedigree and a major player in the Indian life sciences space. The focus of Tarsons is on labware products assisting scientific discovery. Here is a gist.
 

7 things to know about the Tarsons Products IPO


1) Tarsons Products is a life sciences company with focus on labware products. Its diversified life sciences product portfolio encompasses 1,700 SKUs across over 300 products. It manufactures laboratory consumables and also laboratory reusables.The addressable market for labware products is quite large in India.

2) Tarsons labware products find applications across a gamut of institutional clients including research organizations, pharmaceutical companies, academic institutes, contract research organizations, diagnostic companies, hospitals and medical labs. Tarsons also supplies its products to over 40 countries.

3) The IPO will be a combination of fresh issue and offer for sale (OFS). The fresh issue size will be Rs.150 crore while the OFS will be worth Rs.873.47 crore. This will take the total issue size to Rs.1,023.47 crore.

The price band for the IPO has been fixed at Rs.635-Rs.662 and the minimum application lot size will be of 22 shares.

4) The IPO will open for subscription on 15-November and close for subscription on 17-November. The basis of allotment will be finalized on 23-November while the refunds will be initiated on 24-November.

The shares will be credited to eligible investor demat accounts by 25-November while the stock will be listed on 26-November.

5) Tarsons currently has 5 manufacturing plants located across West Bengal supported by a network of 141 authorized distributors. The fresh issue component will be utilized by Tarsons to set up a new manufacturing facility in Panchia in West Bengal. Part of the funds will also be utilized to repay or prepay debt.

6) Tarsons is consistently profit making over last 3 years. For FY21, Tarsons reported revenues of Rs.234.92 crore and net profits of Rs.68.87 crore implying net margins of 29.3%.

The company has remained profitable in the June 2021 quarter also. Net margins have been above 20% in the last 3 years.

7) The Tarsons IPO will be lead managed by Edelweiss Financial Services, ICICI Securities and SBI Capital Markets. KFintech (formerly Karvy Computershare) has been appointed the registrar to the IPO.

The only overhang for the stock could be that Glenmark Life Sciences, which listed couple of months back, is currently quoting nearly 20% below the IPO price.

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PharmEasy parent API Files for DRHP for IPO

PharmEasy parent API Files for DRHP for IPO
by 5paisa Research Team 10/11/2021

With the season of digital IPO in full swing, the high-profile PharmEasy was unlikely to be too far behind. The holding company of PharmEasy, API Holdings, has filed the draft red herring prospectus with SEBI for its proposed initial public offer. The total offer size is expected to be Rs.6,250 crore but that is open to modifications based on how the demand and market valuations pan out.

Like in the case of Policybazaar, Nykaa and Paytm, this is again a case of the digital brand being more popular and better identified compared to the holding company. Ahead of the IPO, PharmEasy also plans a pre-IPO placement worth Rs.1,250 crore.

If the pre-IPO placement is successful, then the size of the IPO will be reduced proportionately. The anchor demand is also expected to be robust in the case of PharmEasy.

PharmEasy provides an agnostic platform for consumers to access online consultations and also buy medicines on the net with the appropriate checks and balances. In terms of gross market value (GMV), PharmEasy is the largest player in the digital medicine space.

PharmEasy offers digital tools, healthcare information, teleconsulting, diagnostic tests, radiology tests; apart from selling medicines. PharmEasy was founded in 2015.

PharmEasy had recently acquired India’s largest diagnostic services provider Thyrocare. In the last round of funding, PharmEasy had been valued at $5.6 billion and the company is expecting a higher valuation in the IPO.

However, most of the early investors have reiterated their faith in the PharmEasy business model and chosen not to offer their shares in the IPO. Till date, PharmEasy has raised $1.2 billion in equity and debt funding.

Out of the fresh issue component, PharmEasy will use Rs.1,929 crore for debt repayment, Rs.1,250 crore for financing organic growth and expansion initiatives, while another Rs.1,500 crore will be allocated to inorganic growth via mergers and acquisitions. Most of these applications of fresh funds are likely to be value accretive for the company.

To make its business model more robust, PharmEasy plans to focus on the 3 key areas as under to enhance growth in revenues and market share.

A) Marketing investments to increase brand awareness and recall.
B) Supply chain infrastructure to facilitate seamless and omnichannel fulfilment
C) Technology capabilities and technology infrastructure. 

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Nykaa IPO - Listing Day Performance

Nykaa IPO - Listing Day Performance
by 5paisa Research Team 10/11/2021

FSN E-Commerce Ventures (Nykaa) had a robust listing on 10th November as it listed at a premium of Rs.79.38%, but gained more heft to close at a broader premium to the issue price. The stock closed the day, well above the IPO price and also the listing price.

With overall subscription of 81.78X and GMP ranging from 80-85%, the listing was expected to be very robust. Here is the FSN E-Commerce Ventures (Nykaa) listing story on 10-Nov.

The Nykaa IPO price was fixed at the upper end of the band at Rs.1,125 after the 81.78X subscription. The price band for the IPO was Rs.1,085 to Rs.1,125 on 10th Nov, the stock of FSN E-Commerce Ventures (Nykaa) listed on the NSE at a price of Rs.2,018, a premium of 79.38% above the issue price of Rs.1,125. On the BSE, the stock listed at Rs.2,001 a premium of 77.87% over the issue price.

On the NSE, FSN E-Commerce Ventures (Nykaa) closed on 10-Nov at a price of Rs.2,208, a first day closing premium of 96.27% on the issue price. On the BSE, the stock closed at Rs.2,208.35, a first day closing premium of 96.3% on the issue price. On both the exchanges, the Nykaa stock not only held above the listing price but also closed at a premium.

On Day-1 of listing, FSN E-Commerce Ventures (Nykaa) touched a high of Rs.2,248 on the NSE and a low of Rs.2,000. It closed nearer to the high price of the day. On Day-1 of listing, the FSN E-Commerce Ventures (Nykaa) stock traded a total of 343.25 lakh shares on NSE amounting to value of Rs.7,172.30 crore.

Check - Nykaa IPO - Subscription Day 1

On 10-Nov, Nykaa was the most liquid stock on the NSE in terms of value and the 10th most liquid in terms of volumes.

On the BSE, FSN E-Commerce Ventures (Nykaa) touched a high of Rs.2,248.10 and a low of Rs.1994.10. On BSE, the stock traded a total of 16.21 lakh shares amounting to value of Rs.338.71 crore. Even on the BSE, Nykaa was ranked top in terms of value traded.

At the close of Day-1 of listing, FSN E-Commerce Ventures (Nykaa) had a market capitalization of Rs.104,361 crore with free-float market cap of just Rs.8,349 crore. The stock almost doubled over the issue price on day-1 of listing.

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Paytm IPO - Subscription Day 3

Paytm IPO - Subscription Day 3
by 5paisa Research Team 10/11/2021

The Rs.18,300 crore IPO of One97 Communications (Paytm), consisting of a fresh issue of Rs.8,300 crore and an offer for sale (OFS) of Rs.10,000 crore, saw tepid response on Day-1 of the IPO and the trend remained subdued on Day-2 also.

As per the combined bid details put out by the BSE at the close of Day-3, One97 Communications (Paytm) IPO was subscribed 1.89X overall, with strong demand coming from the QIB segment. The issue has closed on 10th November.

As of close of 10th November, out of the 483.89 lakh shares on offer in the IPO, One97 Communications (Paytm) saw bids for 914.10 lakh shares. This implies an overall subscription of 1.89X.

The granular break-up of subscriptions was dominated by the QIBs and retail investors. NII bids did not gather momentum even on the last day and that portion remained undersubscribed.
 

One97 Communications (Paytm) IPO Subscription Day-3
 

Category

Subscription Status

Qualified Institutional Buyers (QIB)

2.79 Times

Non Institutional Investors (NII)

0.24 Times

Retail Individuals

1.66 Times

Employees

N.A.

Overall

1.89 times

 

QIB Portion

The QIB portion of the Paytm IPO was subscribed 2.79 times at the end of Day-3. On 03rd November, One97 Communications (Paytm) did an anchor placement of 383.02 lakh shares at the upper end of the price band of Rs.2,150 to 122 anchor investors raising Rs.8,235 crore.

The list of QIB investors included a number of marquee names like Blackrock, GIC Singapore, Canadian Pension Fund, Alkeon Capital, Abu Dhabi Investment Authority (ADIA), Fidelity, Aberdeen, UBS, Aditya Birla Sun Life Mutual Fund; among others.

The QIB portion (net of anchor allocation as explained above) has a quota of 263.94 lakh shares of which it has got bids for 736.55 lakh shares, implying a subscription ratio of 2.79X for QIBs at the close of Day-3. QIB bids typically got bunched on the last day although the demand was lower than originally anticipated. 

HNI / NII Portion

The HNI portion got subscribed 0.24X (getting applications for 31.53 lakh shares against the quota of 131.97 lakh shares). This is a very tepid response on Day-3 and this segment did not see adequate response even on the last day. Typically, the active corporate applications and the funded applications were missing. This portion is likely to be reallocated.

Retail Individuals

The retail portion was subscribed a more reasonable 1.66X at the end of Day-3, showing decent retail appetite. However, it must be noted that retail allocation is just 10% in this IPO. For retail investors; out of the 87.98 lakh shares on offer, valid bids were received for 146.01 lakh shares, which included bids for 118.43 lakh shares at the cut-off price. The IPO is priced in the band of (Rs.2,080-Rs2,150) and has closed for subscription on 10th November 2021.

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Sapphire Foods India IPO - Subscription Day 2

Sapphire Foods India IPO - Subscription Day 2
by 5paisa Research Team 10/11/2021

The Rs.2,073 crore IPO of Sapphire Foods India, consisting entirely of an offer for sale (OFS) of Rs.2,073 crore, saw subdued response on Day-1 of the IPO. As per the combined bid details put out by the BSE at the close of Day-2, Sapphire Foods India IPO was subscribed 1.07X overall, with strong demand coming only from the retail segment. The issue closes on 11th November.

As of close of 10th November, out of the 96.63 lakh shares on offer in the IPO, Sapphire Foods India saw bids for 103.69 lakh shares. This implies an overall subscription of 1.07X. The granular break-up of subscriptions was dominated by the retail investors. QIB bids and NII bids are expected to gather momentum on the last day, as is the general trend in the IPO market.
 

Sapphire Foods India IPO Subscription Day-2
 

Category

Subscription Status

Qualified Institutional Buyers (QIB)

0.03 Times

Non Institutional Investors (NII)

0.29 Times

Retail Individuals

5.38 Times

Employees

N.A.

Overall

1.07 times

 

QIB Portion

The QIB portion of the IPO was subscribed just 0.03 times at the end of Day-2. On 08th November, Sapphire Foods India did an anchor placement of 79,06,473 shares at the upper end of the price band of Rs.1,180 to 53 anchor investors raising Rs.932.96 crore.

The list of QIB investors included a number of marquee global names like Government of Singapore, MAS, Fidelity, ADIA, Crestwood Capital, HSBC Global, Lion Global, Carmignac Ontario Teacher’s Pension Fund etc. Domestic anchor investors included ICICI Pru Life, Sundaram Mutual Fund, Bajaj Allianz, HDFC MF, Kotak MF; among others.

The QIB portion (net of anchor allocation as explained above) has a quota of 52.71 lakh shares of which it has got bids for 1.47 lakh shares, implying a subscription ratio of 0.03X for QIBs at the close of Day-2. QIB bids typically get bunched on the last day but the heavy demand for the anchor placement forebodes well for the Sapphire IPO subscription overall.

HNI / NII Portion

The HNI portion got subscribed 0.29X (getting applications for 7.75 lakh shares against the quota of 26.35 lakh shares). This is a tepid response on Day-2 but this segment normally sees the maximum response bunched on the last day. That is because, bulk of the funded applications and corporate applications, come in on the last day of the IPO.

Retail Individuals

The retail portion was subscribed an impressive 5.38X at the end of Day-2, showing strong retail appetite. However, it must be noted that retail allocation is just 10% in this IPO. For retail investors; out of the 17.57 lakh shares on offer, valid bids were received for 94.46 lakh shares, which included bids for 74.28 lakh shares at the cut-off price. The IPO is priced in the band of (Rs.1,120-Rs.1,180) and will close for subscription on 11th November 2021.

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