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Rakesh Jhunjhunwala Bets Big on Indian Aviation with Akasa Air

Rakesh Jhunjhunwala Akasa Airlines
29/07/2021

The good news for Indian aviation is that no less a person than Rakesh Jhunjhunwala is bullish on the sector. Known for his shrewd long-term bets on stocks like Titan, Rallis and Lupin; Rakesh Jhunjhunwala plans to put aviation industry in India in a new light altogether.

What the Big Bull plans in Indian aviation?

Rakesh Jhunjhunwala is planning to invest $35 million (Rs.260 crore) to launch an ultra-low-cost airline in India with a starting fleet of 70 planes. These plans are expected to fructify over the next 4 years. The proposed airline will be called “Akasa Air”. 

Rakesh is extremely bullish on the demand side of Indian aviation and expects the real growth to commence when flying truly becomes a mass product. That is only possible through an ultra-low-cost airline, which is what Akasa Air is supposed to be.

The first step is to get the aviation license, which they are expecting from the Ministry of Civil Aviation during Aug-21. The planes will be mid-sized aircraft with a seating capacity of 180 persons. Rakesh Jhunjhunwala has already zeroed in on a senior executive from Delta Airlines to drive business at Akasa Air.

Conscious of headwinds, but not deterred, says the Big Bull

Rakesh Jhunjhunwala has underscored that he is fully conscious of the headwinds in aviation today like flying restrictions, steep fuel costs, low load factor and negative spreads of RASK over CASK. However, all this is expected to normalize and Rakesh is confident that they have the business model and the alliances in place to tap what is going to be the world’s biggest aviation market. For an investor known for his unbridled optimism, the aviation foray will need mountains of optimism to make a difference.
 

Also Read - Big Bull Rakesh Jhunjhunwala's Portfolio 2021

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Tatva Chintan Pharmachem IPO lists at 95% premium

Tatva Chintan NSE-BSE Listing
29/07/2021

Even before Tatva Chintan Pharmachem listed on the bourses, there was already a huge expectation built around the stock. Well ahead of listing, the GMP was hinting at listing premium of 90-100%. That is exactly what it turned out to be. After a phenomenal subscription of over 180 times in the IPO, the listing response was expected to be robust. Here is the Tatva Chintan Pharmachem listing story on 29 July.

Also Read - Tatva Chintan IPO Final Subscription


With the kind of response that the IPO got, the IPO price was fixed at the upper end of the band at Rs.1,083. On 29 July, the stock of Tatva Chintan Pharmachem listed on the NSE at a price of Rs.2,111.85, a premium of 95% over the issue price. On the BSE, the stock listed at a price of Rs.2,110.80, again implying a listing premium of 95%.

On the NSE, the Tatva Chintan IPO closed at Rs.2,303.30, a first day closing premium of an impressive of 126.77% over the issue price. On the BSE, the stock closed at Rs.2,310.25, a first day closing premium of 133.19% over the issue price.

On Day-1 of listing, Tatva Chintan touched a high of Rs.2,534.20 on the NSE and a low of Rs.2,111.85. On Day-1, the Tatva Chintan stock traded a total of 78.61 lakh shares on NSE amounting to value of Rs.1,812 crore. On the NSE, Tatva was ranked Number 4 by traded value on 29 July.

On the BSE, Tatva Chintan touched a high of Rs.2,486.30 and a low of Rs.2,111.80. On the BSE, the stock traded a total of 8.99 lakh shares amounting to value of Rs.207 crore. At the close of Day-1, Tatva Chintan had a market capitalization of Rs.5,121 crore with free-float market cap of just Rs.768 crore.
 

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Rolex Rings IPO subscribed 9.26 times at end of Day-2

Rolex Rings IPO Subscription Day 2
29/07/2021

The Rs.731 crore IPO of Rolex, consisting of Rs.56 crore fresh issue and Rs.675 crore OFS, has gradually built on the response from retail investors on Day-1 and Day-2. As per the combined bid details put out by the BSE, Rolex Rings IPO was subscribed 9.26X overall, with bulk of the demand coming from the retail segment followed by the HNI segment. The issue had been subscribed 3.84X on Day-1 itself.

 

Also Read: Rolex Rings IPO Day 1 Subscription


As of close of 29 July, out of the 56.86 lakh shares on offer in the IPO, Rolex Rings saw applications for 526.39 lakh shares. This implies an overall subscription of 9.26X. The granular break-up of subscriptions were tilted in favour of retail investors but HNI portion has seen good traction on Day 2. 


The QIB portion remains tepid at the end of Day-2 also. On 27 July, Rolex Rings did an anchor placement of 24.37 lakh shares to QIB investors like HDFC MF, Axis MF, ICICI Pru MF, Birla MF, Kotak MF and SBI MF. QIB portion is just subscribed 0.23X, but is likely to see action on the last day.


The HNI portion got subscribed 5.58X (getting applications for 71.22 lakh shares against the quota of 12.18 lakh shares). Of course, funded applications and corporate applications, will come in on the last day. The real big story was the retail portion, which is already subscribed 15.88 times at the end of Day-2, showing strong retail appetite.


Among retail investors; out of the 28.43 lakh shares on offer, valid bids were received for 451.47 lakh shares, of which bids for 356.11 lakh shares were at the cut-off price. The IPO is priced in the band of (Rs.880-Rs.900) and will close for subscription on Friday, 30 July. 
 

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Colgate Palmolive and Tech Mahindra - Quarterly Results

Colgate Palmolive and Tech Mahindra - Quarterly Results
30/07/2021

Colgate Palmolive Ltd reported 12% growth in sales for Jun-21 quarter at Rs.1,166 crore. However, sales were lower on sequential basis due to supply chains getting impacted by COVID 2.0. Net profits grew 17.69% to Rs.233.23 crore, supported by cost cuts, inventory efficiency gains and selective price hikes. This resulted in a 300 bps improvement in gross margins at 68.9% and 90 bps spurt in EBITDA margins at 30.7%.

Colgate Palmolive Quarterly Results:-

Rs in Crore

Jun-21

Jun-20

YOY

Mar-21

QOQ

Total Income (Rs cr)

₹ 1,165.97

₹ 1,040.62

12.05%

₹ 1,283.19

-9.14%

Net Profit (Rs cr)

₹ 233.23

₹ 198.18

17.69%

₹ 314.66

-25.88%

Diluted EPS (Rs)

₹ 8.58

₹ 7.29

 

₹ 11.57

 

Net Margins

20.00%

19.04%

 

24.52%

 


Colgate managed to sustain growth momentum across various product categories. During the quarter Colgate launched its first augmented reality toothbrush, Colgate Magik. Input cost impact was more than 20% but offset by selective price hikes. Net Margins at 20% in Jan-21 were higher than 19.04% NPM in the Jun-20 quarter, albeit lower sequentially due to COVID 2.0 stress.

Tech Mahindra Ltd net revenues for Jun-21 quarter grew 11.98% to Rs.10,198 crore. COVID 2.0 hardly had any impact as sequential revenues were up 4.81%. During the quarter, Tech Mahindra increased its headcount by 5,209 people to 126,263 employees. The two principal business lines of CME and enterprise grew at 12% and 16% respectively. Net profit for the Jun-21 quarter was up 39.18% at Rs.1,353 crore on 44% growth in EBITDA margins.

 

Tech Mahindra Quarterly Results:-

Rs in Crore

Jun-21

Jun-20

YOY

Mar-21

QOQ

Total Income (Rs cr)

₹ 10,198

₹ 9,106

11.98%

₹ 9,730

4.81%

Net Profit (Rs cr)

₹ 1,353

₹ 972

39.18%

₹ 1,081

25.13%

Diluted EPS (Rs)

₹ 15.32

₹ 11.07

 

₹ 12.26

 

Net Margins

13.27%

10.68%

 

11.11%

 


In terms of top line growth, it was led by the technology vertical followed by BFSI, retail and manufacturing in that order. While Americas accounted for 46.7% of revenues, Europe accounted for 27.2% and ROW 26.1%. The onsite share came down from 64% to 62% with the new deals tripling in CME and enterprise space. Tech Mahindra had 1058 active clients against 981 last year with 96% repeat business penetration. Net margins for the quarter were at 13.27% compared to 10.62% in the Jun-20 quarter.

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Windlas Biotech IPO - 5 Things You Must Know Before Applying for an IPO

Windlas Biotech IPO - 5 Things to know
30/07/2021

Windlas Biotech, a company engaged in formulations CDMO business, is tapping the primary market with an IPO. Windlas will raise Rs.402 crore through a mix of fresh issue and offer for sale. The IPO will open on 04 August and close for subscription on 06 August. The price band for the IPO is fixed in the range of Rs.448-460. Here are 5 things  you must know about the Windlas Biotech IPO

Key things to know about the Windlas IPO

1.  Windlas is engaged in formulations CDMO. Contract Development Manufacturing is the emerging area within pharma industry. It entails contract manufacture and research on behalf of large companies. These are dedicated outsourcing units driven by R&D. Globally, this is a high growth business and India has been making rapid inroads.

2.  Windlas has a premium client list its contract manufacturing and research outsourcing. Its client roster includes marquee names like Pfizer, Sanofi India, Intas Pharma and Systopic Laboratories. Windlas also has an exports division which caters exclusively to global clients.

3.  The company has a state-of-the-art manufacturing facility at Dehradun with installed operating capacity of 706.38 crore capsules / tablets annually. In addition, the Dehradun facility also has the capacity to manufacture 5.45 crore pouches and 6.11 crore liquid bottles annually. Fresh issue proceeds will be used to expand production capacity.

4.  Between FY18 and FY20, Windlas has been a profit making company. During this period, the profits grew by 50%. Its asset turnover ratio has been consistently above 1, indicating efficient asset utilization.

5.  In terms of valuations, the company has reported P/E of 64X at the upper band of the IPO price band. However, revenues have grown at 38% CAGR while 58% growth in gross profits, which can justify this price.

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Why did the metal index rally 5%

metal index rally
30/07/2021

Metals have been in the limelight for some time now. Most of the metal stocks have either doubled or tripled since January 2021 and that has been triggered by strong demand and pricing power for steel companies and aluminium. This offset the spike in input costs that most metal companies faced. On 29 July, there was a sharp rally in metal stocks with the overall NSE metals index rallying 5%.

 

Stock Name

Closing Price (28-Jul)

Closing Price (29-Jul)

Gains (%)

Tata Steel

Rs.1,365

Rs.1,459

6.89%

JSW Steel

Rs.721.70

Rs.748.40

3.70%

SAIL Ltd

Rs.133.85

Rs.141.95

6.05%

Hindalco Ltd

Rs.416.30

Rs.458.10

10.04%

NALCO Ltd

Rs.85.50

Rs.92.95

8.71%

Vedanta Ltd

Rs.270.10

Rs.288.60

6.85%

NSE Metals Index

5,532.80

5,810.75

5.02%

Data Source: NSE


The table above captures the rally uniformly across metal stocks on 29 July. Clearly, the rally was driven by the Bloomberg news item about China planning export curbs on Steel. 

This means two things. Firstly, China itself would rely more on imports of metals to meet its insatiable appetite for metals. Secondly, less of Chinese steel will be available for exports, so the global steel market opens up for India.

Effective 01 August, China is imposing 10-25% export duties on hot-rolled coils. It wants to reduce carbon emissions from manufacture of steel and that will reduce China’s supply in the world metals market; keeping prices buoyant. 

Domestic tailwinds are also positive. Brokerages are expecting steel companies to report higher EBITDA/tonne in Q1. Tata Steel is expected to post record EBITDA/tonne of Rs.33,000 against Rs.27,775 in Q4. Demand for aluminium, lead and nickel is already robust on EV demand. Hindalco is also expected to post 71% growth in EBITDA/tonne. Overall, it looks like Q1 could be a record-breaking quarter for metals.

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