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Sapphire Foods India IPO - Listing Day-1

Sapphire Foods India IPO - Listing Day-1
by 5paisa Research Team 18/11/2021

Sapphire Foods India had a strong listing on 18th November and listed at a premium of 14.4%, but closed the day well below the listing price, although it was still above the IPO issue price. Sapphire Food had pulled back its listing date from 22-Nov to 18-Nov. While the stock did attempt a bounce during the day, it failed to hold on and kept falling from the listing price.

With overall subscription of 6.62X and stable trading interest in the GMP market, the listing was expected to be strong. However, the weak market sentiments and the deep cuts on Paytm had an impact on Sapphire Foods India too. Here is the Sapphire Foods India listing story on 18-Nov.

The Sapphire Foods India Ltd IPO price was fixed at the upper end of the band at Rs.1,180 considering the 6.61X subscription. The price band for the IPO was Rs.1,120 to Rs.1,180. On 18th Nov, the stock of Sapphire Foods India listed on the NSE at a price of Rs.1,350, a premium of 14.41% above the issue price of Rs.1,180. On the BSE also, the stock listed at Rs.1,311 a premium of 11.1% on the issue price.

On the NSE, Sapphire Foods India closed on 18-Nov at a price of Rs.1,227.70, a first day closing premium of just 4.04% on the issue price as the stock lost 9.06% from the listing price. On the BSE, the stock closed at Rs.1,216.05, a first day closing premium of just 3.06% on the issue price.

Check - Sapphire Foods India IPO subscription Day-3

On both the exchanges, the stock of Sapphire Foods listed well above the IPO issue price but closed Day-1 giving up most of its listing gains.

On Day-1 of listing, Sapphire Foods India touched a high of Rs.1,380.05 on the NSE and a low of Rs.1,160. The listing premium held through the day but contracted substantially by close. On Day-1 of listing, the Sapphire Foods India stock traded a total of 85.96 lakh shares on NSE amounting to value of Rs.1,094.29 crore. 

On 18-Nov, Sapphire Foods was the tenth most active share on NSE by traded value. On the BSE, Sapphire Foods India touched a high of Rs.1,383.60 and a low of Rs.1,160. On BSE, the stock traded a total of 5.31 lakh shares amounting to value of Rs.67.69 crore. It did not figure among the most liquid stocks on the BSE.

At the close of Day-1 of listing, Sapphire Foods India had a market capitalization of Rs.7,727.09 crore with free-float market cap of Rs.1,777.23 crore.

Also Read:- 

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Go Fashion IPO - Subscription Day 2

Go Fashion IPO - Subscription Day 2
by 5paisa Research Team 18/11/2021

The Rs.1,014 crore IPO of Go Fashion India, consisting of a fresh issue of Rs.125 crore and an offer for sale (OFS) of Rs.889 crore, saw decent response on Day-1 of the IPO and has built on it on Day-2.

As per the combined bid details put out by the BSE at the close of Day-2, Go Fashion India IPO was subscribed 6.87X overall, with good demand coming from the retail segment followed by the QIB segment and HNI / NII segment. The issue closes for subscription on Monday, 22nd November, with one more day to go.

As of close of 18th November, out of the 80.79 lakh shares on offer in the IPO, Go Fashion India saw bids for 555.12 lakh shares. This implies an overall subscription of 6.87X. The granular break-up of subscriptions was dominated by the retail investors while the HNIs and QIB response has built up on Day-2.

However, the QIB bids and NII bids are expected to gather momentum only on the last day, as is the general trend in the IPO market.
 

Go Fashion India IPO Subscription Day-2
 

Category

Subscription Status

Qualified Institutional Buyers (QIB)

3.24 Times

Non Institutional Investors (NII)

2.30 Times

Retail Individuals

24.64 Times

Employees

N.A.

Overall

6.87 times

 

QIB Portion

Let us first talk about the pre-IPO anchor placement. On 16th November, Go Fashion India did an anchor placement of 66,10,492 shares at the upper end of the price band of Rs.690 to 33 anchor investors raising Rs.456.12 crore.

Check - Go Fashion IPO - Subscription Day 1

The list of QIB investors included a number of marquee global names like Government of Singapore, Monetary Authority of Singapore, Nomura, Fidelity, Neuberger Berman, Volrado Venture, University of Notre Dame and Abu Dhabi Investment Authority (ADIA). Domestic anchor investors included SBI MF, HDFC MF, ICICI Pru MF, Axis MF, Birla MF, SBI Life, Mirae MF; among others.

The QIB portion (net of anchor allocation as explained above) has a quota of 44.07 lakh shares of which it has got bids for 142.60 lakh shares on Day-2, implying a subscription ratio of 3.24X for QIBs at the close of Day-2. QIB bids typically get bunched on the last day but the heavy demand for the anchor placement forebodes well for the Go Fashion India IPO subscription overall, by the close of subscription on 22-Nov.

HNI / NII Portion

The HNI portion got subscribed 2.30X (getting applications for 50.58 lakh shares against the quota of 22.03 lakh shares). This is a relatively tepid response on Day-2 but of course this segment normally sees the maximum response bunched on the last day. Bulk of the funded applications and corporate applications, come in on the last day of the IPO. 

Retail Individuals

The retail portion was subscribed an impressive 24.64X at the end of Day-1, showing strong retail appetite. It must be noted that retail allocation is only 10% in this IPO. For retail investors; out of the 14.69 lakh shares on offer, valid bids were received for 361.94 lakh shares, which included bids for 286.71 lakh shares at the cut-off price.

The IPO is priced in the band of (Rs.655-Rs.690) and will close for subscription on 22nd November 2021.

Also Read:-

Go Fashion (India) IPO - 7 Things to Know

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Government May Privatize 6 PSUs by January 2022

Government May Privatize 6 PSUs by January 2022
by 5paisa Research Team 18/11/2021

Even as the government and the DIPAM are working overtime to complete the LIC IPO before March 2022, there is a simultaneous plan to privatize another 5 to 6 PSU and to complete the process by January 2022.

These are the PSU that have already been identified and earmarked for privatization. If that happens, it will be the first effective privatization done by the government in the last 19 years.

The government has already identified 5 PSUs for privatization in this round and may add one or two more. The list of 5 potential privatization candidates include BEML, Shipping Corporation of India, Pawan Hans, Central Electronics and Nilachal Ispat Nigam.

BEML has run into some issues with the employees unions that are opposing the privatization of the company. BEML essentially is a key player in heavy equipment and defence manufacture.

The government has already decided to exit most sectors where it does not see justification either in the form of being a strategic ownership or being specifically for the larger public good. Other that these handful of businesses, the government would be keen to exit all the other businesses.

For FY22, the government has set an aggressive target of Rs.175,000 crore to be raised via divestments and it is nowhere close with more than 7 months gone.

Of course, the government is counting on raising nearly Rs.50,000 crore from the sale of its 52.98% stake in BPCL and anywhere between 5% and 10% of LIC raising between Rs.60,000 crore and Rs.1,00,000 crore.

Even if both these deals go through smoothly, there would still be a gap and the plan to privatize these 5-6 entities is intended to fill that gap.

The government just completed the handing over of Air India to the Tatas and would be looking at more such candidates to hive off some of its PSU properties. Most of the PSUs are loss making and the government is spending big money maintaining them.

The divestment will not only free up capital resources but also allow the government to focus more on its core area of governance.

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UBS Upgrades India’s GDP Targets for the Year

UBS Upgrades India’s GDP Targets for the Year
by 5paisa Research Team 18/11/2021

In the midst of all the valuation concerns floating around in the market, global investment bank UBS has raised India’s GDP growth forecast for FY22 by 60 bps from 8.9% to 9.5%. The RBI has pegged India’s growth rate for FY22 at around 10%. India reported GDP growth of 20.1% in the Jun-21 quarter.

The Sep-21 quarter will be reported on the last day of November and will form an important input for extrapolating full year GDP growth.

However, UBS does expect GDP growth to moderate in subsequent years as the base effect wanes. It is estimating India GDP to grow at 7.7% for FY23 and at just about 6% for FY24. During FY23, UBS is also pegging a reversal of the easy money policy wherein the RBI would hike the repo rates by at least 50 bps in two tranches.

The GDP upgrade for FY22 is predicated on 3 broad factors. Firstly, UBS expects that the faster than expected recovery from COVID 2.0 would translate into better growth traction. Secondly, it expects credit growth to have a multiplier effect on the overall economic growth.

Lastly, UBS also expects a sharp spike in consumption spending in the third and fourth quarters of the year led by revenge buying.

However, UBS has also underlined two risk factors to these estimates. It estimates that the current output gap, where demand far exceeds supply, may exist all the way up to 2024.

That would keep most of the commodity prices under pressure and put some strain on the input costs for corporates and hence their operating margins. UBS also expects consumer inflation to remain at elevated levels due to higher levels of core inflation in the economy.

UBS uses its proprietary UBS Activity Indicator which closely tracks growth momentum on a sequential basis. In the Jun-21 quarter, the UBS Activity Indicator had shown sequential contraction of -11% but that has turned around in the September quarter to a more positive +16.8%.

The momentum is further underscored by the fact that this Activity Indicator has remained in the positive even for the month of October, albeit at a moderated 3.1%.

UBS also expects the capital cycle to revive post FY22. Incremental growth would come from infrastructure spending, industrial capex and exports. However, the pace at which RBI winds down its easy money policy will be a key risk factor.

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Paytm IPO - Listing Day 1 Performance

Paytm IPO - Listing Day 1 Performance
by 5paisa Research Team 18/11/2021

One97 Communications (Paytm) had a tepid listing on 18th November and listed at a discount of -9.3%, and closed the day sharply lower. While the stock did attempt a bounce during the day, it failed to hold on and just kept falling. With overall subscription of just 1.89X and weak trading interest in the GMP market, the listing was expected to be weak.
 

Here is the One97 Communications (Paytm) listing story on 18-Nov.


The IPO price was fixed at the upper end of the band at Rs.2,150 despite a limited 1.89X subscription. The price band for the Paytm IPO was Rs.2,080 to Rs.2,150. On 18th Nov, the stock of One97 Communications (Paytm) listed on the NSE at a price of Rs.1,950, a discount of -9.3% on the issue price of Rs.2,150.

On the BSE also, the stock listed at Rs.1,955 a steep discount of -9.07% on the issue price.

On the NSE, One97 Communications (Paytm) closed on 18-Nov at a price of Rs.1,560, a first day closing discount of -27.44% on the issue price. On the BSE, the stock closed at Rs.1,564.15, a first day closing discount of -27.25% on the issue price.

On both the exchanges, the stock not only listed below the IPO issue price but closed Day-1 at a deep discount as sellers piled onto the stock.

Check - Paytm IPO - Subscription Day 3

On Day-1 of listing, One97 Communications (Paytm) touched a high of Rs.1,955 on the NSE and a low of Rs.1,560. The stock closed at the low price of the day. On Day-1 of listing, the One97 Communications (Paytm) stock traded a total of 239.55 lakh shares on NSE amounting to value of Rs.4,086.99 crore. On 18-Nov, Paytm was the most active share on NSE by traded value.

On the BSE, One97 Communications (Paytm) touched a high of Rs.1,961.05 and a low of Rs.1,564. On BSE, the stock traded a total of 10.06 lakh shares amounting to value of Rs.172.46 crore.

It was the fourth most active share on the BSE in terms of trading value.

At the close of Day-1 of listing, One97 Communications (Paytm) had a market capitalization of Rs.101,400 crore with free-float market cap of Rs.8,112 crore. Overall, it was a disappointing listing performance for Paytm on 18th November.

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Vedanta May Look to Demerge its Commodity Businesses

Vedanta May Look to Demerge its Commodity Businesses
by 5paisa Research Team 18/11/2021

At a time when metal companies have been having the time of their life, one of India’s largest commodity players, Vedanta, has not really outperformed. For Vedanta, it looks like the answer may be to restructure the business in order to deliver extra value to shareholders.

While the broad focus is on restructuring its business, Vedanta may be specifically looking to demerge 3 of its key businesses into separate listed entities.

Vedanta chairman, Anil Agarwal, believes that the Vedanta group has a Hindalco, JSW Steel and an Exxon hidden within his group. The need of the hour is just to demerge these businesses and let each business discover its own value as an independent units.

The concept of SOTP (sum of total parts) is nothing new. This is the reverse situation where the parts are estimated to be worth a lot more than the whole.

Getting to specifics, it is reported that Vedanta may look to hive off its aluminium business, oil & gas business and the Iron & steel business into 3 separate entities. Of course, the core Vedanta may still retain some of the business like the stake in Balco, Hindustan Zinc and the chrome business.

The plan is that the existing shareholders of Vedanta will be issued shares in each of the separate entities against their current holdings in Vedanta.

Historically, Vedanta has always grown by inorganic acquisitions. Over the last 2 decades, Vedanta has acquired a majority stake in a host of companies in India including Balco, Hindustan Zinc, Sesa Goa, Cairn India, Electrosteel, Madras Aluminium etc.

Having integrated most of these entities into Vedanta, it is now looking to separate these companies into separate entities to deliver better shareholder value.

The emerging thought process is that separating these companies based on their core activity would enable sharper business focus, better allocation of capital and more flexibility to drive long term growth.

This will allow the group to separate the capital intensive businesses from the capital light businesses so that ROI can be properly demarcated.

The company has been keen to generate value to shareholders. In the last few years, the group had taken a hit on account of corporate governance issues at the UK based holding company.

Subsequently, Anil Agarwal had tried to delist Vedanta from the stock exchanges at the bottom of the commodity cycle by buying out the shareholders. That had got stuck after LIC had rejected the price. This is one more attempt at value creation.

Also Read:- Vedanta to make a $20 billion capex bet on commodities

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