Muharram 2021 - Stock Market Holiday

Muhharram
18/08/2021

The stock markets will remain closed on 19-08-2021 on account of Muharram. It will be a trading holiday as well as a banking / clearing holiday on Thursday. As a result, this time the weekly index options settlement in F&O has been pulled back from Thursday to Wednesday. For more details you can check BSE Holidays 2021 or NSE Holidays 2021.

Muharram marks the first month of the Islamic calendar and the month of Muharram is considered as the second holiest month for Muslims after Ramadan. The Muharram festival marks the 10th day of this month, called Ashura, when Shia Muslims mourn the sacrifice of Hussain Ibn Ali’s family while Sunni Muslims practice fasting on this day. In India, Muharram is a banking and stock market holiday.

Since the stock markets will be shut on the occasion of Muharram on 19th August, there will be no trading in equities, futures or in options. Hence, there will obviously not be any settlement of trades on Thursday. However, since banking operations will also be shut on 19 August, it will impact the settlement cycle. Let us look at how the trade cycle and the funds settlement cycle will be impacted. 

Since Thursday will be a trading holiday, the cash and F&O settlements will shift accordingly. In the case of F&O transactions, the transactions up to Tuesday would have already been settled on Wednesday. However, the F&O trades of Wednesday will now be settled on Friday 20th August, instead of on 19th August. 

Similarly, the T+2 cash market trades of Tuesday will get settled on Friday instead of Thursday while the T+2 trades of Wednesday will get settled on the next week Monday, instead of on Friday. This will be the change in the settlement cycles. But how will the Demat and bank transfers be impacted by the Muharram holiday on BSE and NSE?

In the case of shares sold on Tuesday, the Demat debit would have happened on Wednesday itself. However, the bank credit will happen only on Friday, since Thursday is a trading cum banking holiday. In the case of shares sold on Wednesday, the Demat debit would happen on Friday instead of Thursday. However, the bank credit will happen only on the next Monday, since Thursday is a holiday for trading and for banking also. What about shares bought?

Also Read: How are stocks settled after a trading holiday

In the case of shares bought on Tuesday, the bank debit would have happened on Wednesday itself. However, the demat credit of shares will only happen on Friday, since Thursday is a trading cum banking holiday. In the case of shares bought on Wednesday, the bank account debit would happen on Friday instead of Thursday. However, the Demat credit of shares will happen only on the next Monday.

India is a land of diverse cultures and religions and hence the holiday pattern tries to accommodate all festivals in a secular manner. In year 2021, there are a total of 18 trading holidays, of which 13 fall on weekdays and 5 trading holidays fall on Saturdays or Sundays. On the other hand, there are a total of 20 banking holidays that fall on working days and clearing and settlement on NSE and BSE will remain shut on these days.

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Find the entire list of NSE/BSE Holidays 2021Commodity Market Holidays

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Aarti Industries to demerge pharma business

Aarti
20/08/2021

The board of Aarti Industries has approved the proposal to demerge the pharma business into a separate entity, Aarti Pharmalabs Ltd. Under the scheme of the arrangement, the pharma business of Aarti Industries and the allied specialty chemicals segment catering to the pharma business will be combined under Aarti Pharma labs.  

The entire deal will be done through a stock swap. While the pharma and allied businesses will be transferred to Aarti Pharmalabs, Aarti Industries will retail the remaining specialty chemicals business. As part of the scheme of the arrangement, shareholders of Aarti Industries will be issued 1 share of Aarti Pharmalabs for every 4 shares of Aarti Industries held. Aarti Pharmalabs was formerly called Aarti Organics and is a 100% subsidiary of Aarti Industries.

Also Read: Sector Update - Chemicals

The shares will be issued to shareholders whose names appear on the register of shareholders as on the record date. However, the record date for the demerger transaction is yet to be finalized. The deal is subject to approval by the stock exchanges and the relevant regulatory agencies.

Post the demerger, the segmental overlaps will be removed. The company will have two distinct business lines of pharmaceuticals and specialty chemicals, housed under separate companies. According to the company, this kind of clear demarcation will ensure greater operating efficiencies, better synergies as well ease of raising resources for both companies.

Reas: Rally Specialty Chemical Companies

For Aarti Industries, the pharmaceutical business is a high growth and high margin business. It enjoys EBIT margins of a healthy 23% and has been growing at a CAGR of 20% over the last five years. By demerging from the commoditized specialty chemicals business, it will ensure better valuations for the group as a whole. The stock of Aarti Industries was trading lower at Rs.929, but the stock price has already doubled since October last year.
 

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VLCC IPO - Beauty and fitness chain VLCC files DRHP with SEBI

VLCC
IPO
20/08/2021

VLCC Health Care filed with SEBI for a proposed IPO to raise funds through a combination of fresh issue and an offer for sale. VLCC is one of the most respected beauty and wellness names and was promoted by Vandana Luthra and Pramod Luthra in 1996. As of Mar-21, VLCC has a footprint in 310 locations across 143 cities which includes branches in South East Asia and the GCC countries.

As per the DRHP filed with SEBI, the public issue will consist of a fresh issue of Rs.300 crore and an offer for sale of 89.23 lakh shares. The selling  shareholders in the OFS will include Pramod Luthra (18.83 lakh shares), OIH Mauritius (18.98 lakh shares) and Leon International (51.42 lakh shares). OIH Mauritius and Leon International will fully exit their holdings.

The proceeds of Rs.300 crore will be utilized to expand VLCC’s presence across India as well as in GCC region. In addition, funds will be deployed to refurbish existing centres, repay high cost debt as well as to invest in building its brand as well as in other digital initiatives to boost growth.

The wellness and beauty industry in India is expected to grow at a CAGR of 12% annualized and is currently pegged at $42 billion. There is a rapid shift to the organized sector. For fiscal year ended Mar-21, VLCC reported net profits of Rs.6.24 crore on revenues of Rs.540 crore. The big takeaway has been the sharp growth in the traction of repeat customers.

Interestingly, VLCC had shelved its IPO plans twice in the past. In 2016, VLCC shelved its IPO plans due to demonetization. Later in 2019, it again abandoned its IPO plans due to the central elections. It hopes to make a success of the IPO this time around.

Read More:

Upcoming IPOs in 2021

IPOs in August 2021

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CarTrade Tech IPO Listing

Car trade
IPO
20/08/2021

The early warning signals for CarTrade Tech IPO were visible when the GMP contracted by 80% over few days. The stock eventually listed below the issue price. On 20 August, CarTrade Tech listed at a discount of -1.12%, but the stock just keep slipping through the day. The subscription of 20.29X in the IPO was robust, especially when you consider that HNI portion was subscribed 41X and QIB portion 35.50X. However, the listing was a relative disappointment. Here is the CarTrade Tech listing story on 20th August.

The IPO price was fixed at the upper end of the band at Rs.1,618 after the 20.29X subscription. On 20 Aug, the stock of CarTrade Tech listed on the NSE at a price of Rs.1,599.80, a discount of -1.12% over the issue price. On the BSE, the stock listed at a price of Rs.1,600, representing listing discount of -1.11%.

Check: CarTrade Tech IPO Subscription

On the NSE, CarTrade Tech closed at Rs.1,491, a steep first day closing discount of -7.85% over the issue price. On the BSE, the stock closed at Rs.1,500.10, a first day closing discount of -7.29% over the issue price. The stock just kept falling through the day on the bourses.

On Day-1 of listing, CarTrade Tech touched a high of Rs.1,618 on the NSE and a low of Rs.1,475. On Day-1, the CarTrade Tech stock traded a total of 115.73 lakh shares on NSE amounting to value of Rs.1,802.55 crore.  In terms of traded value, CarTrade recorded the second highest turnover during the day after Tata Steel.

On the BSE, CarTrade Tech touched a high of Rs.1,610 and a low of Rs.1,476. On BSE, the stock traded a total of 5.22 lakh shares amounting to value of Rs.81.08 crore. At the close of Day-1, CarTrade Tech had a market capitalization of Rs.6,878 crore with free-float market cap of just Rs.1,994 crore.

 

Read More:

Upcoming IPOs in 2021

IPOs in August 2021

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Insurance IPOs to raise Rs.10,000 crore in 2021

Insurance
IPO
23/08/2021

Even as the markets are speculating over the size and timing of the LIC IPO, there are three insurance IPOs that have already filed their DRHPs with SEBI and their IPOs are expected to hit the market during 2021. What is more interesting is that the 3 insurance companies are all from different sub-segments of insurance. Here is a quick take.

The first of the IPO candidates is PB Fintech, which runs the popular Policybazaar.com. This is an online portal where potential insurance customers can screen insurance policies, compare with the peer groups, shortlist policies and even execute the transaction of buying the insurance as well as renewing the policy each year. In this endeavour, the rich content deck of Policybazaar acts as the research support. Policybazaar.com plans to raise Rs.6,017 crore via the IPO. This will comprise a fresh issue of Rs.3,750 crore and an offer for sale of Rs.2,267 crore. Policybazaar has 93% market share of online policies sold.

Read: Policybazaar jumps on the digital IPO bandwagon

The second major IPO candidate is Star Health Insurance, India’s largest stand-alone health insurer with a 15% market share. Star Health is backed by Westbridge Capital and Rakesh Jhunjhunwala. Star Health will raise Rs.2,000 crore via the fresh issue and another Rs.1,000 crore via an offer for sale. A total of 6 crore shares will be sold under the OFS.

Check: Star Health Insurance Files DRHP

The third insurance IPO is Medi-Assist, which is India’s third-largest third-party administrator (TPA). Typically, the TPAs handle the entire administrative function pertaining to claims and settlement. Medi Assist plans to raise up to Rs.1,000 crore entirely through the OFS route. Medi Assist has a pan-India network of over 11,000 hospitals and is the preferred service provider for names like Apollo, Narayana Hrudayalaya, Manipal, Fortis etc. Medi Assist was floated by Dr. Vikram Jit Singh Chatwal, formerly with Apollo Health Street.

Of course, LIC IPO will be the biggest of all IPOs, as and when it hits the primary market.

 

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Read More:

Upcoming IPOs in 2021

IPOs in August 2021

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Indian start-ups raise $6.5 billion in Jun-21 quarter

Start Up
23/08/2021

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.