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Rail Vikas Nigam Limited OFS

RVNL OFS
by Nikita Bhoota 24/03/2021

About Rail Vikas Nigam Ltd (RVNL):
Rail Vikas Nigam Limited (RVNL) was incorporated in New Delhi as a public limited company on 24 January 2003. The Company was issued its Certificate of Commencement of Business on 18 February 2003. The Company has been conferred the status of ‘Schedule A - Public Sector Enterprise'. Further, the company has the status of `Category-I Miniratna Company'. The Company is a wholly-owned government company as a project executing agency working for and on behalf of the Ministry of Railways (MoR). It is in the business of executing all types of railway projects including new lines doubling, gauge conversion, railway electrification, metro projects, workshops, major bridges construction of cable-stayed bridges, institution buildings etc. As part of the mandate of RVNL to undertake project development, mobilization of financial resources and to implement projects pertaining to strengthening of Golden Quadrilateral and better connectivity to various ports, six Special Purpose Vehicles (SPVs) as Joint Ventures (JVs) have been created.

All About OFS

  • The central government is all set to sell its 15% stake in Rail Vikas Nigam Ltd via an offer for sale to raise around Rs 800 crore. The issue opened on Wednesday (March 24, 2021) for non-retail investors, and on Thursday (March 25,2021) for retail investors, the company informed in a regulatory filing on Tuesday. The RVNL OFS shall take place on a separate window of the stock exchanges on March 24, and March 25 from 9:15 a.m. to 3:30 p.m

  • The initial plan would be to sell 10% of the total equity or 20.85 crore shares, according to latest exchange filing. The government will have a greenshoe option to sell another 5% of the total equity or 10.4 crore shares. 

  • As of December, the government held an 87.84% stake in the company, which on full 15% stake sale will fall to 72.84%.

  • In a revised notice, the company stated that there would be Offer for sale of equity shares of face value of Rs 10 each of Rail Vikas Nigam Limited (RVNL) by its promoter, the President of India, acting through Ministry of Railways, Government of India, through stock exchange mechanism.

  • Rail Vikas Nigam Limited (RVNL) share price fell over 8% intraday on March 24 as the government said it will sell 20,85,02,010 equity shares (or 10 percent of total paid-up equity) of Rail Vikas Nigam via offer for sale route on March 24-25.

  • In case of oversubscription, the government will sell additional 10,42,51,005 equity shares (or 5 percent shareholding) in the company. The floor price for the offer has been fixed at Rs 27.50 per share.

How to Apply for RVNL OFS from 5paisa?

  1. Login to 5paisa
  2. go to invest.5paisa.com/ofs 
  3. Enter the quantity and bid amount
  4. Click on Place order 

 

 

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Nazara Technologies - IPO Note

nazara technologies IPO
by Nikita Bhoota 24/03/2021

Nazara Technologies India Ltd.
Issue Opens: March 17, 2021
Issue Closes: March 19, 2021
Price Band: ₹ 1,100-1,101#
Issue Size: ~₹583cr (at upper price band)
Bid lot: 13 Equity shares
Issue Type: 100% Book building
 

Share Holding

Net Issue (%)

Promoter and Promoter Group

23.0

Public

77.0

Source: RHP

Company Background

Nazara Technologies India Ltd (Nazara) is a leading India based diversified gaming and sports media platform with presence in India and across emerging and developed global markets such as Africa and North America. Its offerings include interactive gaming, eSports and gamified early learning ecosystems. Its content is developed in India for the Indian as well as global audience, providing economies of scale. Given its market-first position in India across sports simulation and eSports (Source: F&S Report), Nazara believes that they are well placed to leverage the opportunity that interactive mobile games, eSports content and gamified early learning apps offer. Its effort has been to grow revenue and profitability concurrently by leveraging its capabilities of in-house content creation, game engine development, technology stack development and relationships with other participants in gaming ecosystems. During H1FY21, Gamified early learning, eSports, Telco subscription, Freemium and Real money gaming accounted for 39.25%, 31.78%, 21.33%, 4.50% and 3.14% of the revenue from operations, respectively. The same for FY20 was 7.73%, 34.00%, 33.05%, 7.99% and 17.23%, respectively. Its Monthly Active Users (MAU) averaged 40.17 Mn during FY20 and 57.54 Mn during 9MFY21 across all games.

Business Segments

The company’s expansion into global markets has been strategic, both in terms of geographies as well as timing for entering new markets. Nazara has built capacities and capabilities across offerings in India, targeting gamers within the country, and then replicating the business model in global markets to target gamers.
Nazara’s offerings across interactive gaming, eSports and gamified early learning ecosystems include World Cricket Championship (WCC) and CarromClash in mobile games, Kiddopia in gamified early learning, Nodwin and Sportskeeda in eSports and eSports media, and Halaplay and Qunami in skill-based, fantasy and trivia games.

Offer Details:
The offer consists entirely of Offer for Sale by the selling shareholders of up to 5,294,392 shares aggregating to ₹583cr at upper end of the price band. Nazara will not directly receive any proceeds from the offer.

Financials
 

(Cr., unless specified)

FY18

FY19

FY20

H1FY21

Revenue from Operations

172

170

248

200

EBITDA

59

33

9

13

EBITDA Margin (%)

32.3

17.6

3.5

6.1

Diluted EPS ()

1.0

6.3

-0.8

-1.8

ROE (%)

0.7

4.2

-0.5

--

Source: RHP

Strengths:
  • Leadership position in a diversified and scalable business 
    Nazara believes that its current position of leadership in India across a diversified set of offerings provides it a strong foundation for continued growth. Nazara has successfully leveraged its capabilities for in-house content creation, game engine development and propriety technology stack development, ability to deliver positive LTV/CAC ratios across offerings and relationships with telecom operators, app stores and other participants in gaming ecosystems. (Source: F&S Report).
    Nazara’s content is developed in India for the global audience, allowing them to achieve scale. Nazara has an operating leverage in gamified early learning on account of captive development of content being undertaken in India, while it generates revenues from North America. As of December 31, 2021, its user base across offerings spanned 58 countries. 
    In eSports, it has the largest market share across unique IPs, unique events, unique event days and prize pool with a market share of 78%, 82%, 85% and 73%, respectively for CY19 (Source: F&S Report). As the eSports market continues to grow in India, the company believes that its leadership position in eSports premium content (Source: F&S Report) will continue to deliver high revenue growth and improvement in EBITDA margins, thus providing huge value creation opportunity by individually developing and unlocking value for different verticals. 
    The company believes that it is well-positioned against competitors operating only in India and operating only in single segment of gaming, due to its presence in multiple markets and insight of heterogeneous consumer segments due to diverse cohort of gamers, and benefits from economies of scale leading to operating leverage.
  • Portfolio of premium intellectual property and content across regions and businesses 
    Nazara owns and has sustained access to premium IP and popular, local brands across eSports and mobile games in India. Ownership of IP as a developer and publisher for mobile games, premium esports content (live and on-demand) combined with them as an operator for eSports organising leagues and ability to distribute content leveraging its existing distribution channels, leads to significant value creation. 
    The Indian Gen-Z and millennial population forms a significant portion of the gaming user-base, and companies including Nazara, have capitalised on the ever-growing interest of this population segment in sports and eSports through popular and relatable content (Source: F&S Report). It has established strong relationships with global gaming publishers and platforms including market leaders such as ESL and Valve Corporation (Source: F&S Report), allowing it to bring to India online and offline gaming leagues and tournaments with participation from Indian and international teams such as the ESL India Premiership, Airtel India E-Sports Tour, DreamHack India, Dew Arena by ESL, Counter Strike: Global Offensive, The Northeast Cup and KO Fight Nights. It also partners with other brands to create multiple gaming event IP in India, such as Mountain Dew Arena, Indian Gaming Show and Asus ROG Masters. (Source: F&S Report).
  • Strong leadership team backed by marquee investors
    Promoters are highly experienced, with Vikash Mittersain having several years of experience in multiple business sectors, and Nitish Mittersain, who has been associated in the promotion of Nazara for 20 years. Manish Agarwal, CEO, has approximately 20 years of experience in various fields including the gaming space and marketing. Nazara also benefits from a second, specialised level of leadership in P.R. Rajendran, P.R. Jayashree, Akshat Rathee and Gautam Virk, Porush Jain, Anupam Dhanuka and Anshu Dhanuka, founders and key personnel from its subsidiaries and associates, who have significant experience in various verticals within the mobile entertainment and gaming industry. Some of the marquee individual investors include Mr. Rakesh Jhunjhunwala and Mr. Utpal Sheth.
Key Risk
  • The company’s businesses generate and process a large amount of data, and the improper use or disclosure of such data could harm its reputation. Disclosure of customer information (including mobile numbers or other personal information) on account of security breach or otherwise could harm its reputation and the company may face liability under applicable laws or contractual obligations in relation to such confidential information.
  • Consumer preferences for mobile games are usually cyclical and difficult to predict, and even successful titles remain popular for only limited periods of time, unless refreshed with new content or otherwise enhanced. Additionally, there is rapid technology change in the mobile games, eSports and gamified early learning businesses, like for instance virtual reality and augmented reality have experienced significant growth and popularity in games and sports media platforms. For this, the company needs to constantly upgrade its technology to provide improved performance, increased scale and better integration among businesses, which requires investment of financial resources in research and development, upgrading hardware, software and internet infrastructure, and significant investments of time and resources.
  • The company is dependent on telco subscription business for a substantial portion of its profits. There can be no assurance that telco subscription business will continue to remain a successful or profitable business, or that it may not decline for any reason whatsoever, including reasons beyond company’s control. For instance, changes in policies of payment collection models adopted by telecom partners, any adverse changes to the regulations governing the telecom operators or their statutory obligations, or the increasing popularity of free-to-play and freemium mobile games, the easy availability of mobile games content across platforms without the involvement of telecom operators and a reduction in payment barriers may all result in a decline of the telco subscription business.

Watch this video to know more about Nazara Technologies Ltd IPO

 

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Do you Know the Difference Between Investing and Trading in the Stock Market?

Investing Vs Learning
by Nikita Bhoota 31/03/2021

When it comes to wealth creation, investing and trading are the two ways to make money in the stock market. However, investing and trading are very different styles of wealth creation or earning profits in the equity market. For example, today, you and your friend bought an equal amount of seeds to sow in your fields but you sold them to someone in a day because you could earn profit. However, your friend sowed the seeds and let them grow for a few years till they gave new seeds. He sowed the new seeds and continued this for years and sold a lot more seeds eventually than were bought. By investing his seeds, he would have made profit quite different than what you made by trading your seeds. This is simply the difference between investing and trading. To learn the same in financial markets, let’s learn other key differences between investing and trading.

1. Time Horizon
Investment and trading can be differentiated based on the time horizon. Let’s understand this with an example. Suppose you have money and you buy a shop to start a Kirana business. Within two weeks the price of your property increases and you sell it for a profit. This is called trading. However, if you purchase a property because you know that it has huge long-term appreciation potential since the area will be developed into a residential area, and hence hold on to it then you are investing. 
Trading simply means holding stocks for a short period and making a profit by selling stocks as soon as the price touches a high. The period of consideration for traders can range anywhere from a day to weeks to months.  On the other hand, the stock investor selects stocks based on strong fundamentals and holds on to them for a longer time, ranging from a few years to decades to maximize their wealth in the long-run.

2. Method
The other difference between trading and investing is in the method used to make money in the stock market. Traders use technical analysis to conclude their buy and sell decisions whereas investors use fundamental analysis. Fundamental analysis focuses on the company’s financials, analysis of the industry and the general macroeconomic situation in the country.

Technical analysis does use the market price of the stock to predict future patterns and analyse historical ones but does not focus on factors affecting the market price. It studies trends in price, volumes and moving averages over a period of time.

3. Capital Growth
Traders look at the price movement of stocks in the market. If the price goes higher, traders may sell the stocks. Simply, trading is a skill of timing the market whereas investing is an art of creating wealth by compounding interest and dividend over the years by holding quality stocks in the market.

4. Risk
Both trading and investing involve risk on your capital. However, trading comparatively involves higher risk and higher potential returns as the price might go high or low in a short while. However, investing involves comparatively lower risk and lower returns in the short run but might deliver higher returns by compounding interests and dividends if held for a longer period. Daily market cycles majorly do not impact quality stock investments for a longer time.

Financial Takeaway:
Trading can be an exciting way to earn quick money. However, like with gambling, it can also quickly lead to major losses. Investing usually means smaller short-term wins, but also fewer severe losses. If you're comfortable with the risks, trading with a portion of your money can be enjoyable and could lead to profits. 

If minimizing risk and exposure to volatility are your main goals, then long-term investing is recommended. But if you're saving for a financial goal that you hope to reach by a specific time, a slow-and-steady investing approach is usually best.

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FY21: A Rocking Year for the IPOs

IPO FY21
by Nikita Bhoota 05/04/2021

29 IPOs were listed in the FY21 with an issue size of more than Rs 200 cr. The 29 IPOs raised ~29000 cr. Some IPOs like Mrs. Bectors Food Specialities Limited, Burger King India Limited, Mazagon Dock Shipbuilders Limited, Chemcon Speciality Chemicals Limited, Happiest Minds Technologies Ltd, Nazara Technologies Limited, Laxmi Organic Industries Limited, Easy Trip Planners Limited and Indigo Paints Limited were subscribed more than 100 times.16 out of 29 IPOs listed at premium over the issue price.

MTAR Technologies signed off the year by being the highest subscribed IPO, 200 times. 

Let’s discuss, some of the IPOs of FY21 in detail.

Company Name List Date Issue
price (Rs)
List
price (Rs)
Last Close
Price (Rs)
Gain/ Loss on
Listing Date
Last Close/Listing
Price Gain/Loss
Last Close/Issue Price
Gain/Loss
Nazara Technologies Ltd. 30-Mar-2021 1,101.00 1,971.00 1,465.00 79.00% -25.70% 33.10%
Kalyan Jewellers India Ltd. 26-Mar-2021 87 73.9 68.1 -15.10% -7.80% -21.70%
Suryoday Small Finance Bank Ltd. 26-Mar-2021 305 293 273.8 -3.90% -6.60% -10.20%
Craftsman Automation Ltd. 25-Mar-2021 1,490.00 1,350.00 1,417.90 -9.40% 5.00% -4.80%
Laxmi Organic Industries Ltd. 25-Mar-2021 130 156.2 174.3 20.20% 11.60% 34.00%
Anupam Rasayan India Ltd. 24-Mar-2021 555 534.7 490.5 -3.70% -8.30% -11.60%
Easy Trip Planners Ltd. 19-Mar-2021 187 206 209.6 10.20% 1.70% 12.10%
MTAR Technologies Ltd. 15-Mar-2021 575 1,063.90 1,023.90 85.00% -3.80% 78.10%
Heranba Industries Ltd. 05-Mar-2021 627 900 631.6 43.50% -29.80% 0.70%
Railtel Corporation Of India Ltd. 26-Feb-2021 94 104.6 126.8 11.30% 21.20% 34.90%
Brookfield India Real Estate Trust REIT 16-Feb-2021 275 275.1 223.2 0.00% -18.90% -18.80%
Stove Kraft Ltd. 05-Feb-2021 385 467 458.1 21.30% -1.90% 19.00%
Home First Finance Company India Ltd. 03-Feb-2021 518 612.2 448.6 18.20% -26.70% -13.40%
Indigo Paints Ltd. 02-Feb-2021 1,490.00 2,607.50 2,389.30 75.00% -8.40% 60.40%
Indian Railway Finance Corporation Ltd. 29-Jan-2021 26 25 23 -3.80% -8.20% -11.70%
Antony Waste Handling Cell Ltd. 01-Jan-2021 315 430 243.9 36.50% -43.30% -22.60%
Mrs. Bectors Foods Specialities Ltd. 24-Dec-2020 288 501 336.1 74.00% -32.90% 16.70%
Burger King India Ltd. 14-Dec-2020 60 115.4 129.1 92.30% 11.90% 115.20%
Gland Pharma Ltd. 20-Nov-2020 1,500.00 1,701.00 2,477.80 13.40% 45.70% 65.20%
Equitas Small Finance Bank Ltd. 02-Nov-2020 33 31 60.1 -6.10% 93.70% 82.00%
UTI Asset Management Company Ltd. 12-Oct-2020 554 490.3 582.6 -11.50% 18.80% 5.20%
Mazagon Dock Shipbuilders Ltd. 12-Oct-2020 145 216.3 212.6 49.10% -1.70% 46.60%
Angel Broking Ltd. 05-Oct-2020 306 275 291.1 -10.10% 5.90% -4.90%
Computer Age Management Services Ltd. 01-Oct-2020 1,230.00 1,518.00 1,852.70 23.40% 22.00% 50.60%
Chemcon Speciality Chemicals Ltd. 01-Oct-2020 340 731 407.5 115.00% -44.30% 19.90%
Route Mobile Ltd. 21-Sep-2020 350 708 1,410.60 102.30% 99.20% 303.00%
Happiest Minds Technologies Ltd. 17-Sep-2020 166 351 540.1 111.40% 53.90% 225.40%
Mindspace Business Parks REIT 07-Aug-2020 275 304 294.7 10.50% -3.10% 7.20%
Rossari Biotech Ltd. 23-Jul-2020 425 670 1,037.60 57.60% 54.90% 144.10%

Source: Ace Equity, 
Last close as on 31st March 2021. List and close price is as per BSE.

Nazara Technologies:
Nazara Technologies India Ltd (Nazara) is a leading India based diversified gaming and sports media platform with presence in India and across emerging and developed global markets such as Africa and North America. Its offerings include interactive gaming, eSports and gamified early learning ecosystems. Some of the marquee individual investors include Mr. Rakesh Jhunjhunwala and Mr. Utpal Sheth.

The stock listed at 79% premium over the issue price. The Nazara Technologies IPO was subscribed 175.4 times. The issue size was Rs 321.60 cr.

Kalyan Jewellers India Ltd.
Kalyan Jewellers India Limited is one of the largest jewellery companies in India based on revenue as of March 31, 2020. It is a pan-India jewellery company with 107 showrooms located across 21 states and union territories in India, and 30 showrooms located in the Middle East. The company designs, manufactures, and sells a wide range of gold, studded, and other jewellery products across various price points ranging from jewellery for special occasions, such as weddings, to daily-wear jewellery.

The stock listed at 15% discount over the issue price. The IPO was subscribed 2.61 times. The issue size was Rs 832.67 cr.

Laxmi Organic Industries Ltd.
Laxmi Organic Industries Ltd is a specialty chemical manufacturer that operates in 2 business segments; Acetyl Intermediates (AI) and Specialty Intermediates (SI). It is the leading manufacturer of ethyl acetate with over 30% market share in the Indian ethyl acetate market and the only manufacturer of diketene derivatives in India.

The stock listed at 20% premium over the issue price. The IPO was subscribed 106.8 times. The issue size was Rs 423.26 cr.

Easy Trip Planners Ltd.
Easy Trip Planners Limited offers ‘end to end’ travel solutions which include air tickets, hotels and holiday packages, rail tickets, bus tickets and taxis as well as ancillary value added services. As per industry reports, it is ranked 2nd among the Key OTAs in India in terms of booking volume during 9MFY21 and third among the Key OTAs in India in terms of GBV in FY20.

The stock listed at 10% premium over the issue price. The IPO was subscribed 159.3times. The issue size was Rs 282.01 cr.

MTAR Technologies Ltd.
MTAR Technologies (MTAR) is a leading precision engineering solutions company engaged in the manufacture of mission critical precision components with close tolerances (5-10 microns), and in critical assemblies, to serve projects of high national importance, through its precision machining, assembly, testing, quality control, and specialized fabrication competencies, some of which have been indigenously developed and manufactured (Source: CRISIL Report). MTAR primarily serves customers in the clean energy, nuclear and space & defence, sectors. Some of its key customers include Nuclear Power Corporation of India Limited, Indian Space Research Organisation, Defence Research and Development Organisation, and Bloom Energy Inc., United States

The stock listed at 85% premium over the issue price. The IPO was subscribed 200.7 times. The issue size was Rs 417.49 cr.

Anupam Rasayan India Ltd.
Having commenced business as a partnership firm in 1984 as a manufacturer of conventional products, Anupam Rasayan India (ARIL) has evolved over the years into custom synthesis and manufacturing of life science related specialty chemicals and other specialty chemicals, which involve multi-step synthesis and complex technologies, for Indian and global customers. It has two distinct verticals, life science related specialty chemicals (95.37 % for revenue from operations for FY20) comprising products related to agrochemicals, personal care and pharmaceuticals and other specialty chemicals.

The stock listed at 4% discount over the issue price. The IPO was subscribed 44 times. The issue size was Rs 538.45 cr.

Indigo Paints Ltd.
Indigo Paints (Indigo) is the fifth-largest decorative paints company in India, with a larger presence in tier 3/4 towns and rural areas coupled with a strong portfolio of differentiated products. Indigo derives 45% of its sales from emulsion paints. Also, it has a distinguished portfolio of differentiated products based on end-use and value-added properties, which include products such as floor coat emulsion, bright ceiling coat, tile coat, dirt-proof and waterproof exterior laminate.

The stock listed at 75% premium over the issue price. The IPO was subscribed 117 times. The issue size was Rs 1,160.13 cr.

Mrs. Bectors Foods Specialities Ltd.
Mrs. Bectors Food Specialities Limited (MBFSL) is one of the leading companies in the premium and mid-premium biscuits segment and the premium bakery companies in the North Indian (Source: Technopak Report). It manufactures and markets its premium and mid-premium biscuits under its flagship brand ‘Mrs. Bector’s Cremica’ and its bakery products in savory and sweet categories under its brand ‘English Oven’.

The stock listed at 74% premium over the issue price. The IPO was subscribed 198 times. The issue size was Rs 544.35 cr.

Burger King India Ltd.
Burger King India (BKI) is the national master franchisee of the BURGER KING® brand in India, with exclusive rights to develop, establish, operate and franchise Burger King branded restaurants in India. Since the opening of its first restaurant in November 2014, it has reached 200+ stores in less than five years. Its total restaurant count stands at 261 as on September 30, 2020 including eight Sub-Franchised Burger King Restaurants, across 17 states and union territories and 57 cities across India.

The stock listed at 92% premium over the issue price. The IPO was subscribed 156.6 times. The issue size was Rs 810 cr.

Mazagon Dock Shipbuilders Ltd.
Mazagon Dock Shipbuilders Ltd. (MDL) is a Defence Public Sector Undertaking under ministry of Defence. It is one of the India’s leading shipyards with a maximum shipbuilding and submarine capacity of 40,000 DWT (Source: Crisil).  The shipyard builds and repair warships and conventional submarines at its facilities in Mumbai and Nhava for the MoD for use by the Indian Navy and other vessels for commercial clients. Since 1960, MDL has built a total of 795 vessels including 25 warships, from advanced destroyers to missile boats and three submarines. MDL had also delivered cargo ships, passenger ships, supply vessels, multipurpose suppose vessels, water tankers, tugs, dredgers, fishing trawlers, barges and border outposts for various customers in India as well as abroad.

The stock listed at 49% premium over the issue price. The IPO was subscribed 157.4 times. The issue size was Rs 443.69 cr.

Route Mobile Ltd.
Route Mobile Ltd. (RML) is a leading Global Cloud Communications Platform service provider, catering to enterprises, over-the top (OTT) players and mobile network operators (MNOs). Its range of services include messaging, Rich Communication Services (RCS), OTT business messaging, voice, email and SMS filtering, omni-channel communication, analytics & monetization.

The stock listed at 102% premium over the issue price. The IPO was subscribed 73.3 times. The issue size was Rs 608.70 cr.

Happiest Minds Technologies Ltd.
Happiest Minds Technologies Ltd. (HMTPL), is a relatively younger IT solutions provider (Incorporated in FY11) which was born digital and has specialization in disruptive technologies. It offers services like Software and Infrastructure as a Service, Security, Analytics, and IoT. As on FY20, its Product Engineering Services (PES, 50.5% of revenue) was the largest BU while Edu-Tech and Hi-Tech are the largest verticals accounting for ~21% of revenue.

The stock listed at 111%premium over the issue price. The IPO was subscribed 150.9 times. The issue size was Rs 386.11 cr.

The Road Ahead:
The pipeline for FY22 also looks strong with 18 companies holding market regulator Securities and Exchange Board of India’s (Sebi’s) approval proposing to raise nearly Rs 18,000 crore and another 14 awaiting the market regulator’s approval to raise nearly Rs 23,000 crore as per the media reports. “After the huge success in FY21, market experts believe that investors will be cautious and choose only those IPOs that are priced attractively and where companies operate in a niche segment.

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

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Market Performance in March 2021

Market Performance in March 2021
by Nikita Bhoota 07/04/2021

Market Update:
Indian markets witnessed volatility during the month as risk-off sentiments affected the emerging economies

Nifty 50 edged up 1.1%, while BSE Sensex rose 0.8% on MoM basis in March 2021
Mid and small cap indexes outperformed large cap indexes due to retail investors’ continued interest in the broader market

FIIs bought ₹19,124cr (vs. ₹19,747cr bought MoM) in Indian equities, while DIIs bought ₹2,476cr worth of equities (vs. ₹16,306cr sold MoM) during the month

Fixed Income Market

During March month, India’s 10-year bond yields were almost flat at around 6.18% on stable FII flows amid signs of economic recovery

Meanwhile, the Govt. unveiled a very aggressive borrowings plan to auction ₹7.24 trillion ($99 billion) of bonds in the first half of FY22

The World Bank raised its forecast of India’s FY22 growth to 10.1% (vs. its earlier forecast of 5.4%) as it feel country's vaccination drive and Govt’s infrastructure push in the national budget can aid growth momentum and revive domestic demand

Stock Performance:
The market witnessed huge volatility in March 2021. Below are the top 5 gainers and losers on Nifty50 in March 2021.

Gainers

Company Name 01 March 2021 31 March 2021 Gain/Loss
JSW Steel Ltd. 405 469 15.60%
Grasim Industries Ltd. 1,266 1,451 14.60%
Hindustan Unilever Ltd. 2,143.40 2,431.50 13.40%
Tata Steel Ltd. 730.4 811.9 11.20%
UPL Ltd. 590.6 641.9 8.70%

Source: Ace Equity

Coal India Ltd.
The stock plummeted 15.5% in March 2021 as Coal India‘s production in February fell 6.6% to 61.9 million tonnes against 66.2 mt in February 2019.

Hero MotoCorp Ltd.
The stock fell 13% in the same month as the company will make an upward revision in the ex-showroom prices of its motorcycles and scooters, with effect from April 1, 2021, in order to partially offset the impact of higher commodity costs.

Other stocks that were top losers on Nifty50 were Oil & Natural Gas Corporation Ltd, IndusInd Bank Ltd and Indian Oil Corporation Ltd.

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

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Macrotech Developers Ltd Information Note

Macrotech Developers Ltd
by Nikita Bhoota 08/04/2021

Macrotech Developers Ltd IPO

Issue Opens: April 07, 2021
Issue Closes: April 09, 2021
Price Band: ₹483-486#
Issue Size: ₹2,500 cr#
Bid lot: 30 Equity shares
Issue Type: 100% Book building

Macrotech Developers Ltd Shareholding Pattern

% Shareholding Pre IPO
Promoter and Promoter Group 62
Public 38

Company Background
Macrotech Developers Ltd. (MDL) is one of the largest real estate developers in India, by residential sales value for the period FY14 to FY20 (Source: Anarock Report). Its core business is residential real estate developments with a focus on affordable and mid-income housing and currently has residential projects in the Mumbai Metropolitan Region (MMR) and Pune. MDL, in 2019, forayed into the development of logistics and industrial parks and entered into a JV with ESR Mumbai 3 Pte. MDL also develops commercial real estate, including as part of mixed-use developments in and around its core residential projects. MDL has strong focus on de-risking projects and improving return on investments with fast turnaround time from acquisition to launch to completion. As of December 31, 2020, MDL has 91 completed projects comprising approximately 77.22 mn sq. ft. of Developable Area, has 36 ongoing projects comprising approximately 28.78 mn sq. ft. of Developable Area and has 18 planned projects comprising approximately 45.08 mn sq. ft. of Developable Area across different segments like affordable and mid-income housing, premium and luxury housing, office space and retail space. Apart from the above, MDL as of December 31, 2020, has land reserves of approximately 3,803 acres for future development in the MMR, with the potential to develop approximately 322 mn sq. ft. of Developable Area.

Object of the Offer
The offer comprises entirely of Fresh Issue of 5.14 cr shares aggregating to ₹2,500 cr (at upper end of the price band). Proceeds from the fresh issue are proposed to be utilized towards

1. ~₹1,500 cr for reduction of the aggregate outstanding borrowings of MDL on a consolidated basis,

2. ₹375 cr for acquisition of land or land development rights and

3. Balance for general corporate purposes.


Key Financials and Operational Metrics

Particulars FY18 FY19 FY20 9MFY20 9MFY21
Sales (Value in ₹Cr) 8,130 7,163 6,570 -- 3,351
Sales (Developable Area in mn sq. ft.) 7.4 6.37 6.18 -- 3.3
Sales (number of units) 6,844 5,975 5,912 -- 3,163
Gross Collections (₹ Cr) 8,564 9,065 8,190 -- 2,893
Completed Developable Area (mn sq. ft.) 13.75 6.39 15.65 -- 0
Revenue from Operations (₹ Cr) 13,527 11,907 9,577 7,463.00 2,915.00
Adjusted EBITDA (₹Cr) 768 2,414 2,925 3,684 4,039
Adjusted EBITDAM (%) 29.9 30.9 30.5 32 26
Restated PAT (₹ Cr) 1,784 1,672 1,206 884 -264
PAT Margin (%) 13.2 14 12.6 11.8 -9.1
Return on Net Worth (%) 101.1 48.3 17.8 15 -7

Source: RHP

Description of Business
Broadly, MDL’s business can be classified into the following:

  • Residential portfolio (Affordable and mid-income housing projects; and Premium and luxury housing projects)
  • Logistics and industrial park portfolio
  • Commercial portfolio (Office projects; and Retail projects).


Strengths:

  • One of India’s largest residential real estate developers with a leadership position in the attractive MMR market
    MDL’s sales from India Operations for FY20 and 9MFY21 were ₹6,570 cr and ₹3,351 cr, respectively. Its Gross Collections from India Operations for FY20 and 9MFY21 were ₹8,190 cr and ₹2,893 cr, respectively. The MMR is considered the most attractive real estate market in the Top Seven Indian Markets, having the largest share of supply and absorption, as well as the highest average base selling price, of residential units from 2016 to 2020, catering to a wide spectrum of income and demography (Source: Anarock Report). MDL believes that the MMR has significant depth of demand for real estate developments across price points and that the MMR real estate market has high barriers to entry due to limited land availability, high prices of land and knowledge of the regulatory and approval processes required for developing a project. As a result of MDL’s strong brand, existing land reserves and industry knowledge & regulatory environment know-how in the MMR, MDL has attained a leadership position in the South Central Mumbai, Thane and the Extended Eastern Suburbs micro-markets of the MMR, with the largest share of supply (by units), absorption (by value) and completion (by area) of residential developments, among the five largest developers in the respective micro-market, from 2015 to 2020 (Source: Anarock Report). As per Anarock report, MDL has a strong presence in the Extended Western Suburb micro-market of the MMR, with the 2nd largest share of absorption (by value) and the 5th largest share of supply (of units) of residential developments, among the five largest developers in the respective micro-market, from 2015 to 2020. In addition, MDL has several planned projects in the MMR, which they believe will enable them to have a robust launch pipeline over the next few years.
  • Well-established brand with ability to sell at premium pricing and throughout the construction phase
    The company believes that its strong and recognizable brand is a key attribute in the industry, since it increases customer confidence, influences buying decision and helps target premium pricing for products. MDL focuses on branded realty, with a belief in developing and marketing its real estate projects as “branded products”. MDL’s brands include “CASA by Lodha”, “Crown –Lodha Quality Homes”, and “Lodha” for affordable and mid-income housing projects, the “Lodha” and “Lodha Luxury” brands for premium and luxury housing projects and “iThink”, “Lodha Excelus” and “Lodha Supremus” for its office spaces. The company believes that the strength of its brand and its association with trust, quality and reliability is primarily driven by its track record of delivering quality products, with modern amenities and innovative design elements and landscapes, largely within committed timelines. MDL has also increased its brand recall through celebrity endorsements and by collaborating with luxury designers. MDL typically aims to sell over 80% of the Saleable Area of a project during the construction phase. MDL leverages its brand value and focuses on selling sizeable percentage of units within one year from the launch of a project as well as prior to the receipt of the occupation certificate, which assists them in generating operating cash flows during the construction phase. Such sales help reduce the need for construction finance and enable them to achieve optimal returns on their projects. The company also believes that they have been able to leverage their brand presence, customer confidence, track record of successfully delivering projects and superior construction quality to increase sales volumes and also command premium pricing for its products vis-à-vis other projects in the respective micro-markets.
  • Highly diversified portfolio across price points and micro-markets in the MMR with a focus on affordable and mid-income housing
    MDL has a diversified portfolio of residential developments, spread across price points and micro-markets in the MMR. Its developments cater to wide spectrum of economic and demographic segments, from luxury residences in South Mumbai to large, integrated townships in the extended suburbs offering affordable homes. Over the years, MDL has established a strong reputation and track record in affordable and mid-income as well as premium housing projects. In affordable and mid-income housing, MDL has introduced one or more high-quality amenities, such as a large swimming pool, a private movie theatre, a cricket ground, a football stadium and an indoor swimming pool. MDL has developed prominent projects in the premium and luxury housing category in their respective locations as well. The company believes that its ability to design a high-quality and differentiated product and positioning it to the target segment through appropriate marketing and branding strategy, has enabled MDL to deliver several prominent projects in the premium and luxury housing category. Additionally, MDL believes that significant portfolio of completed and near-complete inventory in its premium and luxury housing, coupled with limited land availability in the South Central Mumbai micro-market where their premium and luxury housing projects are located, will drive sales volumes in this segment for MDL.
  • Unique ability to develop townships and generate annuity-like cash flows from them
    MDL has the ability to identify land, acquire it at competitive cost, aggregate it from several landowners and design a master plan to develop township projects. Upon development of the townships, Government agencies develop the surrounding infrastructure such as enhancing road and railway connectivity to improve the standard of living for the residents of the townships. MDL is currently developing large townships located at Palava (Navi Mumbai, Dombivali Region) and Upper Thane under affordable and mid-income housing projects. The company believes that its ability to develop such townships, coupled with the strength of its brand and innovative sales and marketing strategies will help them drive sales volumes and generate recurring operating cash flows.  As of December 31, 2020, they also have land reserves of 3,303 acres at Palava and 500 acres at Upper Thane, and total Saleable Area of 37.6 mn sq. ft and 5.6 mn sq. ft with respect to its completed and on-going projects at Palava and Upper Thane, respectively.

Key Risks:

  • MDL has substantial amount of debt (₹18,662 cr of aggregate outstanding borrowings on a consolidated basis as of December 31, 2020), which could affect its ability to obtain future financing or pursue growth strategy. The company also has contingent liabilities aggregating to ₹782 cr as of December 31, 2020.
  • COVID-19 has caused construction delays due to varying factors, caused a material decline in general business activity, impacted lease commitments for commercial developments, etc. The extent to which COVID-19 may affect MDL’s business and operations in the future is uncertain and cannot be predicted. 
  • There are material outstanding legal proceedings involving the Company, Subsidiaries, Associates, Directors, Promoters and Group Companies. These proceedings are pending at different levels of adjudication before various courts, tribunals, enquiry officers and appellate tribunals.


Lodha Developers IPO

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