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Route Mobile gets Board Approval to Raise Rs.2,000 CR

Route Mobile gets board approval to raise Rs.2,000 crore
by 5paisa Research Team 18/10/2021

In its latest meeting of shareholders, the board has approved the raising of funds to the tune of Rs.2,000 crore via the issue of securities. This could be via the issue of equity shares or other securities. The amount is likely to be raised in tranches through the year and this is more of a blanket approval from the board for the fund raising plans.

The shareholder meeting had two main items in its agenda. The first was to raise funds via issue of securities to the tune of Rs.2,000 crore. The other item on the agenda was to enhance the investment limit for foreign portfolio investors or FPIs considering the elevated levels of interest that the QIBs had been showing in new technology companies in India.

As per the scrutinizer report, more than 95% of the votes of shareholders were in favour of raising the Rs.2,000 crore funding. The public institutional shareholders did not share that enthusiasm as nearly a quarter of them voted against the fund raising. However, on the vote for raising FPI stake in Route Mobile, the mandate was more decisive at over 99% favourable votes.

Route Mobile offers comprehensive enterprise communication solutions and offers what is called the CPAAS (communication platform as a service). This is something akin to the logic of SAAS. The CPAAS global market is expected to grow from the current $8.7 billion to $34.2 billion by 2026, which is an exponential growth market for Route Mobile in the next 5 years.

For FY21, Route Mobile reported Rs,1,406 crore by way of revenues and Rs.176 crore as EBITDA. The company also has a solid ROCE of 34.4% and ROE of 30.8% as of FY21. In the next few years, Route Mobile is looking to organically and inorganically expand its CPAAS platform to offer better customer experience. That will be capital intensive.

One question that does arise is whether Route Mobile really requires funds just one year after a mega IPO that was oversubscribed nearly 74 times? But, then as the old saying in the stock market goes, it is always advisable to raise funds when the iron is hot, so that funds are available when you actually need it.

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Air India Accumulated Losses Stare at Rs.78,000 Crore

Air India Accumulated Losses Stare at Rs.78,000 Crore
by 5paisa Research Team 18/10/2021

Just a week after the government announced that Air India was being sold to the Tata group, Air India has come out with numbers. It just underlines that the bleeding of the national carrier continues almost relentlessly. This comes just a week after the Tatas won the bid for Air India for a total consideration of Rs.18,000 crore consisting of a cash payment of Rs.3,700 crore and the balance by way of assumption of debt.

For the fiscal year ended March 2021, Air India reported losses of Rs.7,017 crore, better than the loss of Rs.7,765 crore in FY20. However, this loss took the total accumulated loss of Air India to Rs.77,953 crore. Since Air India and Indian Airlines were merged in 2007, the company has been consistently making losses each year.

Check - Tata Group to Consolidate Airlines Under a Single Entity

The lower losses in FY21 compared to FY20 was largely on account of a sharp fall in expenses by 47.4% to Rs.19,083 crore. The fall in expenses is attributed to cut in variable costs as airlines remained out of operations for long periods of time due to COVID. However, it also meant that fixed costs could not be adequately absorbed in FY21.

Apart from the big losses in FY21 and FY20, Air India also reported net loss of Rs.8,556 crore in FY19 and Rs.5,348 crore in FY17. The result of all this years of losses has been that the net liabilities of Air India exceed its assets by Rs.58,316 crore. In addition, the government has been sinking Rs.20 crore of public money each day to keep the airline afloat.

This only underlines the huge task ahead of the Tata group as they look to integrate Air India into their larger aviation plan and eventually make the airline profitable. Tatas also have extraneous challenges like the COVID lag effect, high ATF prices etc. In the midst of all this, there have been allegations of the government selling Air India too cheap. Looking at the financials, it appears good enough that the government saves Rs.20 crore per day.

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PNB Housing Finance Decides to Scrap Carlyle Deal

PNB Housing Finance Decides to Scrap Carlyle Deal
by 5paisa Research Team 18/10/2021

In early trades on 18th October, the stock of PNB Finance was locked in lower circuit as a slew of brokers and analysts downgraded the PNB Housing stock. The downgrade came after PNB Housing and Carlyle decided to mutually call off the share placement deal due to the legal hassles and absence of any visibility of the deal getting through.

Chronology of the PNB Housing – Carlyle deal

Here is the chain of events that eventually led to the deal being scrapped

a) On May 31st, PNB Housing approved a fund raising plan of Rs.4,000 crore by Carlyle PE Fund which would entail allotment of shares and warrants to Carlyle group. The deal would have made Carlyle the largest single shareholder in PNB Housing Finance.

b) Subsequent to the deal, proxy advisor, Shareholder Empowerment Services (SES) objected to the deal on 3 grounds. Firstly, a private placement over a rights issue was unfair to shareholders. Secondly, no control premium was being paid by Carlyle for becoming the largest shareholder. Lastly, no independent valuation was done.

c) Subsequent to the furore raised by the case, SEBI instructed PNB Housing not to go ahead with the deal till an independent valuation was conducted. However, PNB and PNB Housing maintained their stand that independent valuation was not required since PNB Housing was already listed.

d) Meanwhile, PNB Housing approached the Securities Appellate Tribunal (SAT) against the SEBI order. The SAT offered a split verdict, which was ambiguous from an implementation perspective. However, SEBI has already approached the Supreme Court to strike down any order of SAT not in the interests of minority shareholders.

e) With the deal stuck in legal wrangles, the stock price of PNB Housing which had rallied from Rs.390 to Rs.920, has now fallen nearly 30% to Rs.607. PNB Housing and Carlyle have already initiated the process of cancelling the agreement.

While that puts the deal to rest, it does raise some positive vibes about the activist role played by SES in the deal. The deal was piloted by former HDFC Bank CEO, Aditya Puri. Puri is not only an advisor to Carlyle, but was also supposed to invest in PNB Housing via his investment vehicle, Salisbury Investments.

Also Read:-

PNB Housing shares fall 5% as SEBI halts Carlyle deal

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Ashish Kacholia Portfolio

Ashish Kacholia Investment Portfolio
by 5paisa Research Team 18/10/2021

Ashish Kacholia has emerged as a very focused value investor in mid-cap and small cap stocks in India. He floated Lucky Securities in 1995 but eventually went on to become one of India’s ace investors.

As of the close of September 2021, Ashish Kacholia held 26 stocks in his portfolio with a market value of Rs.1,770 crore as of 15th October. Here is a snapshot of his top holdings in rupee value terms.
 

Ashish Kacholia's portfolio as of Sept-21:
 

Stock Name

Percentage Holding

Holding Value

Holding Movement

Mastek Ltd

2.8%

Rs.232cr

No Change

Vaibhav Global

1.4%

Rs.161cr

No Change

Poly Medicure

1.7%

Rs.159cr

No Change

HLE Glasscoat

1.4%

Rs.140cr

No Change

Shally Engineering

6.5%

Rs.119cr

Reduced in Q2

NIIT Ltd

2.3%

Rs.104cr

No Change

Acrysil Ltd

3.8%

Rs.75cr

No Change

Mold-Tech Packaging

3.3%

Rs.69cr

No Change

Garware Hi-Tech Films

3.3%

Rs.68cr

Increased in Q2


The top-10 stocks account for 64% of the value of the portfolio of Ashish Kacholia as of end Sep-21.

Stocks where Ashish Kacholia added stake

Let us look at the fresh addition of stocks to his portfolio first in the Sep-21 quarter. Ashish added 7 stocks to his portfolio in the Sep-21 quarter to the extent of more than 1%. The fresh stock additions include Tarc Ltd (+1.5%), Gateway Distriparks (+1.5%), VRL Logistics (+1.4%), Somany Home Innovations (+1.6%), Ami Organics (+1.4%), Xpro India (+2.5%) and Venus Remedies (+1.1%). Two out of the seven fresh additions are logistics stocks.

Also Read: Stock holdings of top Stock Market Investors

There were also some stocks where Ashish increased his positions. For example, he raised his holdings in Garware Hi Tech Films by 70 bps from 2.6% to 3.3%. Holdings in Safari Industries and HLE Glasscoat were raised very marginally in the Sep-21 quarter.

What stocks did Ashish Kacholia downsize in his portfolio?

In the Sep-21 quarter, there were several stocks in which he cut down his stake. For example, his stake in Shally Engineering was cut by 70 bps from 7.2% to 6.5%. There were marginal cuts in Vaibhav Global and Mold Tech Packaging.

There were 4 stocks in which Ashish reduced his stake to below the 1% mark, as a result of which statutory reporting is not required. He cut his stake in Apollo Pipes from 3.6% to below 1%, Birlasoft from 1.2% to below 1%, Caplin Point Labs from 1.2% to below 1% and in Apollo Tricot Tubes from 2.4% to below 1%. There was no stock which Ashish exited fully from his portfolio in the Sep-21 quarter.

Ashish Kacholia’s Portfolio Performance over 1 year and 3 years?

How did his portfolio perform as of the end of September 2021 quarter compared to the year ago period and the 3 year ago period. His portfolio currently stands at Rs.1,770 crore while a year back the portfolio value stood at Rs.821 crore. That is an appreciation of 115.6% for Ashish Kacholia on his portfolio in the last 1 year.

Let us turn to a 3-year perspective. The value of his portfolio was Rs.747 crore in Sep-2018. In terms of compounded annual growth rate, the annualized returns stand at 33.4%, which is still impressive. But clearly,  most of the returns for Ashish appear to have come in the last one year only.

Also Check - Radhakishan Damani's Portfolio 2021

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Radhakishan Damani Portfolio

Radhakishan Damani Portfolio
by 5paisa Research Team 18/10/2021

In a way Radhakishan Damani’s wealth creation has been synonymous with D-Mart (Avenue Supermarts). That is true and D-Mart alone accounts for  over 97% of the total portfolio value of his holdings. However, Damani is also known to be one of the most astute value investors as some of his recent acquisitions like India Cements have shown.

As of the close of September 2021, Radhakishan Damani held 14 stocks in his portfolio with a market value of Rs.230,830 crore as of 15th October. Here is a snapshot of his top holdings in rupee value terms.

Radhakishan Damani's portfolio as of Sept-21:

Stock Name

Percentage Holding

Holding Value

Holding Movement

Avenue Supermarts

65.2%

Rs.224,747cr

No Change

VST Industries

32.3%

Rs.1,869cr

Increased in Q2

India Cements

21.14%

Rs.1,402cr

No Change

Sundaram Finance

2.4%

Rs.646cr

No Change

Trent Ltd

1.5%

Rs.626cr

No Change

United Breweries

1.2%

Rs.556cr

No Change

3M India Ltd

1.5%

Rs.434cr

No Change

Blue Dart Express

1.5%

Rs.227cr

Reduced in Q2

Metropolis Healthcare

1.6%

Rs.218cr

No Change


Avenue Supermarts alone accounted for 97.3% of the total portfolio and the top 3 stocks consisting of Avenue Supermarts, VST Industries and India Cements jointly accounted for 98.8% of the overall portfolio of Radhakishan Damani

Stocks where Radhakishan Damani added stake in Q2

Let us look at the fresh addition of stocks to the portfolio of Radhakishan Damani in the Sep-21 quarter. There was increase in holdings in just 1 stock during the September quarter. He increased his stake in VST Industries, the Hyderabad based cigarette manufacturer, by 210 bps from 30.2% to 32.3%. At 32.3%, Damani now holds one-third of VST Industries and as much as its global promoters, Raleigh Investments.

Check - Radhakishan Damani Portfolio - June 2021

What stocks did Radhakishan Damani downsize in his portfolio?

Mr. Damani has been a focused long term investor and not known to churn his portfolio too often. In the Sep-21 quarter, There was just one stock in which he cut his stake i.e., Blue Dart Express. He cut his stake in Blue Dart Express by 20 bps from 1.7% to 1.5% during the September 2021 quarter. In all the other holdings, his stakes have remained the same.

Radhakishan Damani Portfolio Performance over different time periods?

In the case of Damani, looking at his portfolio prior to March 2017 may not add much value as the stock of Avenue Supermarts was only listed on the bourses in March 2017. Prior to that, his listed portfolio was very small. We will look at 3 different time periods to evaluate the portfolio of Radhakishan Damani.

a) Over the last one year period i.e., between Sep-20 and Sep-21, the value of his portfolio increased from Rs.97,326 crore to Rs.230,830 crore. This 137% appreciation in one year was largely driven by Avenue Supermarts with India Cements doing its bit.

b) Over a 3 year period i.e. between Sep-18 and Sep-21, the value of his portfolio showed accretion from Rs.63,628 crore to Rs.230,830 crore. That is compounded annual growth in portfolio value of 53.65% over the last 3 years.

c) We also look at his portfolio since the listing of Avenue Supermarts in 2017 i.e. between Mar-17 and Sep-21. The value of his portfolio showed accretion from Rs.30,316 crore to Rs.230,830 crore. That is compounded annual growth in portfolio value of 57% over the last 4.5 years.

Also Read: 

Stock holdings of top Stock Market Investors

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Penna Cements gets Nod for Rs.1,550 Crore IPO

Penna Cements gets Nod for Rs.1,550 Crore IPO
by 5paisa Research Team 19/10/2021

Hyderabad based Penna Cements, which had filed DRHP with SEBI for its proposed IPO about 2 months back, has secured IPO approval from SEBI. It can now go ahead with the IPO and can take up the next steps like filing the RHP with the Registrar of Companies (ROC), doing the road shows and fixing the IPO dates as well as the price band for the issue.

The IPO of Penna Cements will be for Rs.1,550 crore. This will comprise of Rs.1,300 crore by way of fresh issue while Rs.250 crore will be way of offer for sale (OFS) wherein the promoters will hive off part of their stake in Penna Cements to the public. PR Cements, the holding company of Penna Cements, will offer its shares in the OFS.

Out of the fresh issue proceeds of Rs.1,300 crore, Penna will use Rs.550 crore for repaying debt. A sum of Rs.105 crore will be allocate for capex at its KP Line 2 project. Penna will invest another Rs.80 crore in upgrading its raw grinding cement plants. Finally, a total of Rs.240 crore will be used to set up waste heat recovery plants at 2 locations.

Penna Cements currently has a total of 4 integrated cement plants and 2 grinding units that are spread across the states of Telangana, AP and Maharashtra. Its current cement making capacity is 10 million tonnes per annum (MTPA) and as per its ongoing expansion plan, the capacity will increase to 16.50 MTPA by the year 2024.

For the Mar-21 quarter, Penna Cements had reported top line revenues of Rs.2,476 crore and net profits of Rs.152 crore implying; net margins of 6.14%. The profits had spurted by over 6-fold yoy due to robust cement prices. This is the second major cement IPO in the year 2021 after Nuvoco Cements of the Nirma Group raised Rs.5,000 crore in Aug-21.

Cement stocks have been in the limelight of late due to robust demand and higher cement prices. Cement demand is expected to grow at 7% CAGR over next 5 years and the key to leveraging this opportunity is capacity and reach. Interestingly, Nuvoco was the first cement company IPO after a gap of almost 14 years. We should hopefully see more of them now.

Also Read:-

List of Upcoming IPOs in 2021

List of Upcoming IPOs in October 2021

Upcoming IPOs to raise Rs.45,000 Crore in Oct-Nov

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