Reliance may log in to local search engine, Just Dial

Reliance just dial
15/07/2021

Reliance is known for its penchant for aggressive inorganic growth. In the last one year, Reliance Industries became zero-net debt on the back of its mega rights issue as well as the placement with PE funds. With a war chest in place, Reliance may be about to announce a mega-deal to acquire a majority stake in Just Dial. While a formal announcement is expected over the weekend, Just Dial will be one more interesting addition to the digital ecosystem of Reliance. 

Read: Reliance AGM 2021

Promoted by VSS Mani more than 25 years ago, Just Dial is a market leader in the local search engine segment with 15 crore average quarterly unique visitors. For Reliance, the acquisition of Just Dial will give them the necessary bandwidth among customers and suppliers. For its mega digital plans as well as onboarding vendors and customers on the Retail platform, Just Dial will almost be a natural fit for Reliance Industries. 

The acquisition of Just Dial is likely to be done in two phases. In the first phase, Reliance will buy part of the promoter stake from VSS Mani and its family. The promoter family holds 35.5% in Just Dial, valued at Rs.2,388 crore. Subsequently, Reliance will also make an open offer to public shareholders of Just Dial to acquire another 26% from to comply with SEBI regulations. Just Dial is currently valued at Rs.6,900 crore, so it is estimated that Reliance could pay over Rs.4,100 crore for around 60% stake in Just Dial. Mani is expected to become a junior partner in the company.

Apparently, talks have been on since April, with Goldman Sachs advising on the deal.
 

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Wipro gives solid guidance, despite pressure on margins

Wipro Q1 number
16/07/2021

The big news was that revenue guidance for sequential growth in revenues was upped to 5-7%. We will come back to the guidance part later. First, the quarterly numbers! Net profits for the Jun-21 quarter were up 8.7% sequentially at Rs.3,232 crore with operating profits up 1.6% at Rs.3,472 crore. The one area of concern was operating margins lower by 170 basis points at 18.8%, nearly 600 bps lower than Infosys and TCS.

Check: TCS Share Q1 Results

The big story was on the revenues front. For the Jun-21 quarter, Wipro reported sales revenue growth of 12.2% on sequential basis at $2.42 billion. The revenue growth was largely led by the acquisition of Capco and Ampion, which added 8% to revenue growth. The erstwhile Wipro business grew at 4%; still better than the average sequential growth in last few quarters. The bigger story is on revenue guidance, which has been upgraded by 200 basis points to the 5-7% range. Full year revenue guidance was robust at above 11%.

Read: Mindtree Q1 Results

It was a mixed quarter for Wipro. On the risk perspective, operating margins contracted by 170 bps to 18.8%, nearly 600 basis points below Infy and TCS. Also, attrition was up sharply at over 13% for Wipro. But the good news was much more potent. The revenue guidance is indicative of the efficacy of the premium-client focused strategy adopted by the new CEO, Thierry Delaporte. That appears to be paying off, which is evident in the price. In the last one year, Wipro stock is up 145%, which also coincides with the tenure of the CEO. The focus on premium clients, digital rethink and the strong guidance; mean that Wipro may be poised for a new higher trajectory on stock performance!

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Tatva Chintan IPO elicits solid interest from retail investors

Tatva Chintan IPO - day 1
IPO
16/07/2021

If you go by the first day Tatva chintan IPO response trends, it does look like retail investors appear to be impressed by the issue. While the institutional response was tepid on Day 1 and HNIs managed to fill the book just once, it was the retail portion that got subscribed over 8 times at the end of the first day. The Rs.500 crore IPO of Tatva Chintan Pharmachem consists of Rs.225 crore of fresh issue and Rs.275 crore offer for sale to give partial exit to promoter shareholders. The IPO has been, priced in the band of Rs.1,073-Rs.1,083, opened on Friday 16 July and will close for subscription on Tuesday 20 July.

Out of the 32.62 lakh shares on offer in the IPO, Tatva Chintan saw applications for 1.47 crore shares at the end of Day-1 of the IPO, implying an overall subscription of 4.50 times. However, the granular break-up is a lot more interesting. The QIB portion got subscriptions for just 0.50X of the allocation quota, but that is normal as most QIB applications come in on the last day. Similarly, the HNI portion got subscribed just 1.13 times, but that is also the segment where typically the funded applications come in on the last day of the IPO. The real big story was the retail portion, which got subscribed 8.23 times at the end of the first day, showing tremendous retail investor traction.

On the first day, the QIB applications mainly came from FPIs and none from mutual funds. Among retail investors; out of the 16.31 lakh shares on offer, valid bids were received for 1.34 crore shares, of which bids for 1.01 crore shares were received at cut-off price.
 

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Zomato IPO closes with a bang, subscribed 38.25 times

Zomato IPO Day 3 Subscription
IPO
16/07/2021

There was not much of a surprise that the Zomato IPO saw substantial interest from the Qualified Institutional Buyers (QIBs). After all, we had seen the huge appetite for Zomato when the company did its anchor investment placement on Tuesday. We will come back to the more elaborate QIB portion later, but let us first look at the other portions. The retail portion got subscribed 7.45 times at the close of the IPO, not much of a change from the end of second day. Nearly 77% of retail bids came at the cut-of price. The HNI allocation of 19.43 crore shares saw bids for 640.56 crore shares, implying an oversubscription of 32.96 times.

Check: Upcoming IPO in July 2021

Let us come back to the QIB subscription. The Zomato IPO had a QIB allocation of 75%, while HNI had 15% and retail just 10%. However, the anchor investors got allocations worth Rs.4,196 crore implying that just about 38.88 crore shares were left in the QIB quota for IPO subscription. Against these shares on offer, Zomato elicited demand for 2014 crore shares, implying an oversubscription of the residual QIB portion by 51.79 times. While the FPIs were the most aggressive among the QIBs, domestic mutual funds and insurance companies also actively applied for the Zomato IPO.

The first signals of QIB appetite for the Zomato IPO was evident in the roadshows and later in the anchor placement on Tuesday. The anchor book, it may be recollected, was subscribed nearly 35 times. The anchor book allocation was made to marquee global investors like Government of Singapore, Morgan Stanley, Tiger Global, Ballie Gifford, Fidelity Funds, Canadian Pensions, New World Fund, Nomura, Goldman Sachs etc. Domestic anchor investors included UTI MF, HDFC MF, ICICI Pru MF, IIFL MF etc.
 

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It is not just Paytm Karo; Ab “Paytm IPO mein Invest Karo”

Paytm IPO
IPO
16/07/2021

If everything goes as per plan, you can not only spend through Paytm but also invest in Paytm and participate in the incredible growth of digital payments in India. One97 Communications, the company behind Paytm, has filed for an overall IPO of Rs.16,600 crore. While Rs.8,300 crore will be raised through fresh issue, the balance Rs.8,300 crore will be by way of offer for sale. Paytm will be one more in a slew of internet companies like Zomato and MobiKwik that are on the IPO path. At Rs.16,600 crore, the Paytm IPO will be the largest IPO till date in India beating Coal India IPO, which raised Rs.15,000 crore in year 2010.

Once the public issue is completed, Vijay Shekhar Sharma will be declassified as promoter of Paytm as it requires 20% shareholding. Sharma currently owns just 14.61% in One97 Communications, the company that owns the Paytm platform. However, Mr. Sharma who is almost synonymous with the rise and growth of Paytm, will continue as the chairman and managing director of Paytm. Marquee global investors like Ant Group, Alibaba and Warren Buffett’s Berkshire Hathaway have a stake in Paytm.

Read : Interesting facts on Paytm

Paytm was one of the early ecommerce start-ups in India and has completed 21 years of operations. For FY21, Paytm had clocked revenues of Rs.3,186 crore while the net loss narrowed to Rs.1,701 crore. Like most internet businesses, Paytm is also a business where costs are front-ended and returns are back-ended. As per the last fund raising done in Nov-19 from T Rowe Price, Paytm was valued at $16 billion. However, the IPO valuation is expected to be much higher. Paytm is already India’s second most valuable internet company after Flipkart.
 

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LIC IPO gets once step closer to becoming reality

LIC IPO
IPO
16/07/2021

It looks like the government is setting out on the LIC IPO on a war footing. The Department of Investments and Public Assets Management (DIPAM) has sent out request for proposals for bankers, registrars and legal advisors to the issue. The IPO is proposed to hit the market around January 2022. There appears to be a small change in the IPO structure. Originally, it was supposed to be just an offer for sale by the government. However, now it is proposed to be a combination of new issue and an offer for sale.

The IPO rules were earlier amended too allow companies with indicative market capitalization of over Rs.100,000 crore to sell just 5% of their shares through the IPO. The legal amendments needed in the Life Insurance Corporation Act have already been proposed and passed as part of the Finance Bill in both the Houses of Parliament. Hence, the complex task of approvals for change in ownership, change in investment pattern and a new dividend distribution policy are already in place. Under the new IPO rules, the company can divest just 5% if market cap is more than Rs.100,000 crore subject to 10%  divestment within 2 years and 25% dilution in 5 years. This would mean a series of capital raising by LIC.

Also Read: LIC IPO Government Approval

While the final details are awaited, the LIC IPO is expected to be to the tune of around Rs.70,000 crore. That would be substantial progress for the government towards its coveted Rs.175,000 crore disinvestment target for the fiscal year 2021-22. It will also create a listed corporate behemoth that would be larger than Reliance in terms of market cap when it lists.