Sugar Stocks Shine on Record Sugar Exports

Sugar Stocks Shine on Record Sugar Exports
by 5paisa Research Team 05/10/2021

Sugar stocks may have been sharply up on 04-Oct, but if you look at sugar stocks from a slightly longer term perspective of 1 year, the outperformance is really visible.
 

Company

CMP (05-Oct)

52-week Low

Returns (%) from Low

EID Parry

Rs.440.80

Rs.260.05

69.51%

Balrampur Chini

Rs.386.60

Rs.147.50

162.10%

Dhampur Sugar

Rs.318.95

Rs.135.35

135.65%

Dalmia Bharat

Rs.469.00

Rs.122.55

282.70%

Triveni Engineering

Rs.200.90

Rs.62.35

222.21%

Shree Renuka Sugars

Rs.30.85

Rs.8.70

252.57%


Clearly, barring EID Parry, which has given a good performance, all the other major sugar stocks have given phenomenally strong returns. Sugar has been re-rated over the last 1 year for a number of reasons including export boost, better sugar prices and the big shift to ethanol. But the sugar spurt on 04-Oct was all about the export boost.

On 04-October, the ISMA (Indian Sugar Mills Association) announced the total sugar exports for the Sugar Cycle Year at 7.1 million tonnes, an all time record. In the sugar industry, the year coincides with the sugar crushing season and extends from October to September next year. That is also called the sugar year and that is period used for all sugar companies.

For the Sugar Year 2020-21, the exports at 7.1 million tonnes was 20% higher compared to 5.9 million tonnes in the sugar year 2019-20. There is an interesting shift that has happened in sugar in the last 10 years. Prior to 2010, sugar was always a cyclical sector but that has largely changed from 2011 onwards as sugar has stabilized due to huge buffer stocks.

For the sugar year 2020-21, the total sugar production is estimated at 31 million tonnes. If you add the 8.5 million tonnes of opening stock, that implies 39.5 million tonnes of sugar available. With domestic consumption at 26.5 million tonnes, the exports are expected to be at a record 7.1 million tonnes, after deducting the closing stock.

Sugar exports got a boost from higher sugar prices globally after the pandemic severely strained the supply of sugar from two of the world’s largest exporters viz. Brazil and Thailand. In addition, Indian government has given generous subsidies to ensure that Indian sugar producers get compensated for their higher cost of production. 

With ethanol blending picking up, the sugar situation is expected to stabilize further in the coming years.

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SEBI to Modify Norms for HNI Quota in IPOs

SEBI to Modify Norms for HNI Quota in IPOs
IPO
by 5paisa Research Team 05/10/2021

The Primary Markets Advisory Committee (PMAC) of SEBI has made some interesting recommendations for the HNI (non-institutional investors) segment. Currently, individual applications up to Rs.200,000 are classified as Retail Applications while individual applications above Rs.200,000 are classified as HNI/NII applications.

In addition, applications by corporates, small NBFCs etc are also classified under the NII/HNI category. This category has a standard allocation of 15% in all IPOs. Here are some key changes that the PMAC has proposed to ensure that the HNI segment is better represented and also ensures broader coverage of investors.

The HNI quota is proposed to be further dividend into 2 sub-segments. The category of applications in the range of Rs.2 lakhs to Rs.10 lakhs can be given 5% out of the 15% HNI quota while applications above Rs.10 lakhs can be given 10%. This will ensure better representation in the case of smaller HNIs applying in the Rs.2-10 lakhs range.

The PMAC has also suggested to move out of the proportionate allotment system that is applied to HNIs, as it is biased in favour of the large investors. Instead, PMAC wants the allotment to be based on “draw of lots” similar to the retail segment. The endeavour is to ensure that the ownership is as widespread as possible.

Underlining the importance of wider spread of ownership among HNIs, the PMAC pointed out that the oversubscription median had gone up substantially in the last 3 years. In 2018, the peak HNI oversubscription was 195X, while in 2021, Paras Defence IPO saw HNI oversubscription of 927X. The oversubscription was being driven by leveraged applications as investors just tried to put in larger applications to get higher proportionate allotment.

On a tangential note, the PMAC also noted that in a number of recent cases, the price band had been too narrow. Effectively, this becomes tantamount to a fixed-price issue defeating the very purpose of having a price band and enabling price discovery through book building. PMAC wants the price band to have a gap of at least 5%. So the price band for an IPO can be Rs.1,000-Rs.1,050 but not Rs.1,000-Rs.1,030.

Also Read:-

How to increase the chances of IPO allotment

How to apply for IPOs?

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How to Check the Allotment Status of Aditya Birla Sun Life AMC IPO

How to Check the Allotment Status of Aditya Birla Sun Life AMC IPO
IPO
by 5paisa Research Team 06/10/2021

The Rs.2,768.26 crore of Aditya Birla Sun Life AMC IPO, consisting entirely of an offer for sale (OFS), was subscribed 5.25X overall at the close of bidding on 01st October. The basis of allotment will be finalized on 06th October, demat credits will happen on 08th October and listing on 11th October. If you applied for the IPO, check your allotment status online now.

Check - Aditya Birla Sun Life AMC IPO Subscription Day 3

You can either check your allotment status on the BSE website or the IPO registrar, KFINTECH Private Limited (formerly Karvy Computershare). Here are the steps:


Checking the allotment status of Aditya Birla Sun Life AMC on BSE website


Visit the BSE link for the IPO allotment by clicking on the link below

https://www.bseindia.com/investors/appli_check.aspx 

Once you reach the page, here are the steps to follow:

i) Under Issue Type – Select Equity Option
ii) Under Issue Name – Select Aditya Birla Sun Life AMC from the drop down box
iii) Enter the Application Number exactly as in the acknowledge slip
iv) Enter the PAN (10-digit alphanumeric) number
v) Once this is done, you need to click on the Captcha to verity that you are not a robot
vi) After you answer a few pictorial questions and verify, click on the Search Button

The allotment status will be displayed on the screen in front of you informing about the number of shares of Aditya Birla Sun Life AMC IPO allotted to you.


Checking the allotment status of Aditya Birla Sun Life AMC on KFINTECH (Registrar to IPO)


Visit the KFINTECH registrar website for IPO status by clicking on the link below:

https://rti.kfintech.com/ipostatus/

Once you click on Recent IPOs, the dropdown will only show the active IPOs, so once the allotment status is finalized, you can select Aditya Birla Sun Life AMC from the drop down box.

I) There are 3 options:

i) You can either Query the allotment status based on PAN, Application Number or DPID-Client ID combination.

II) To Query by PAN, check the appropriate box and follow these steps:

i) Enter the 10-digit PAN number
ii) Enter the 6-digit Captcha Code
iii) Click on Submit button
iv) Allotment status gets displayed on screen

III) To Query by Application Number, check the appropriate box and follow these steps:

i) Select Application Type (ASBA or Non-ASBA)
ii) Enter the Application Number as it is
iii) Enter the 6-digit Captcha Code
iv) Click on Submit button
v) Allotment Status gets displayed on screen

IV) To Query by DP-ID, check the appropriate box and follow these steps:

i) Select the depository (NSDL / CDSL)
ii) Enter the DP-ID
iii) Enter the Client-ID
iv) Enter the 6-digit Captcha Code
v) Click on Submit button
vi) Allotment Status gets displayed on screen

Also Read:-

1) Aditya Birla Sun Life AMC IPO : 7 Things to Know About

2) Upcoming IPOs in 2021

3) List of Upcoming IPOs in October 2021

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Moody’s Upgrades India’s Rating Outlook to “Stable”

Moody’s Upgrades India’s Rating Outlook to “Stable”
by 5paisa Research Team 06/10/2021

On 05th October, Moody’s raised India’s sovereign rating outlook from “Negative” to “Stable”. However, the sovereign rating for India’s local and foreign currency debt was maintained at Baa3. It may be recollected that at the peak of the pandemic in May 2020, Moody’s had downgraded India’s sovereign rating from Baa2 to Baa3 with negative outlook.

Just to give a perspective, India’s ratings continue to be below the pre-2020 levels. The current rating of Baa3 is the lowest investment grade rating assigned by Moody’s and even one notch below this level would put India in speculative category. Among other major countries in the Baa3 category are Italy and Russia.

One of the big reasons for this outlook upgrade was that the vicious cycle created by the pandemic was abating in India. During the pandemic, the weak real economy was hitting the financial markets, which was in turn hitting the real economy. According to Moody’s India appears to have broken out of that vicious cycle for now.

Among the 3 major global rating agencies, now Moody’s and S&P have placed India in the low investment grade with stable outlook. However, Fitch continues to position India in the low investment grade category with negative outlook. By upgrading the outlook to stable, Moody’s gives additional buffer to India as protection against downgrade to speculative.

Moody’s has been Impressed specifically by the sharp bounce in GDP, despite the pandemic. Moody’s underlined that the aggressive vaccination program that had inoculated more than 90 crore Indians was largely instrumental in making India less vulnerable to any resurgence of delta variants. The current account moving from deficit to surplus was also positive.

Moody’s has raised some pertinent concerns too.

i) Per Capita income at under $2,000 in absolute terms and $6,400 in PPP terms is much lower than the peer group.

ii) Moody’s also pointed that the fiscal deficit levels at 9.5% and 6.8% were too high for comfort. The combined deficit at 13.5% was another dampener.

iii) One area of concern was the spike in debt levels with average debt levels surging in 2021 to well above the peer group median.

iv) Moody’s also appreciated the role of the government and the RBI in helping India spend its way out of trouble, but insisted on continued reforms.

As Moody’s summed it up, India has never defaulted on any debt in the last 38 years. That should put investors in comfort zone.

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Fino Payments Bank gets SEBI Nod for IPO

Fino Payments Bank gets SEBI Nod for IPO
IPO
by 5paisa Research Team 06/10/2021

The digital driven Fintech player, Fino Payment Bank, has got SEBI approval for its proposed IPO. Fino Payments Bank had filed the DRHP for the IPO in the last week of July. According to estimates, Fino Payments Bank will raise Rs.1,300 crore through the IPO. The next steps are to set in motion the road shows and then file the RHP with the Registrar of Companies.

The IPO will be a combination of fresh issue of shares and an offer for sale. The fresh issue component is expected to be worth Rs.300 crore and the balance will be the OFS. In fact, Fino Payments Bank plans to offer a total of 1,56,02,999 shares at Rs.630-Rs.650 as part of the OFS, in which some of the early investors in the payment bank will dilute their stake.

The fresh issue inflow of Rs.300 crore will be used to enhance its Tier-1 capital as well as bankroll some of its growth plans in the near future. Fino Payments Bank is also contemplating a Rs.60 crore pre-IPO placement and if the same is successful, the total IPO size will be reduced proportionately to the extent of the pre-IPO placement.

Fino Payments Bank primarily operates as a digital platform for financial products and services and offers a one-stop financial solution. It follows an asset-light model with most of its revenues coming from a fee-based pricing model relying on fee and commission flows from merchant networks and other strategic relationships. This boosts ROI.

As of the close of the fiscal 2021, Fino Payments Bank had access to nearly 94% of the districts in India via its purely digital model. These businesses have benefited substantially from the sharply lower pricing of bandwidth and sharp improvements in telecom coverage and broadband capacities post the advent of Reliance Jio.

Check: Reliance AGM 2021

Fino Payments Bank broke even in the Mar-20 quarter and has been profitable in every quarter since then. In FY21, the Fino platform facilitated a total of 43.5 crore transactions with a gross transaction value of Rs.132,931 crore in aggregate. The digitally biased model ensures that growth is scalable limitlessly with limited additional investments required.

Also Read:-

1) List of Upcoming IPOs in October 2021

2) List of Upcoming IPOs in 2021

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HDFC Bank to Sell Strategic Stake in Financial Services ARM

HDFC Bank to Sell Strategic Stake in Financial Services ARM
by 5paisa Research Team 06/10/2021

Just a couple of months back, HDFC Bank had officially put off plans of an IPO for its financial services arm, HDB Financial. Incidentally, HDB Financial is 95% owned by HDFC Bank and focuses on select retail and mid-level corporate lending. Their product portfolio includes gold loans, SME loans, car loans, commercial vehicle finance, personal loans etc.

Just a couple of months after the decision, it is reported that HDFC Bank may adopt the strategic sale route to sell a stake in HDB. HDFC Bank has already appointed Morgan Stanley to scout for a buyer for the business. HDFC Bank is of the view that in a world obsessed with digital stories, institutions may  be better positioned to grasp the strategic value of HDB.

To begin with, HDFC Bank is reportedly looking at an overall valuation of $9 billion for HDB Financial and that type of valuations may be hard to get in an IPO. HDFC bank, for now, only plans to divest about 20-25% of their overall holdings. This strategic sale is likely to become the benchmark for pricing the IPO at a future date.

HDB Financial has about 87 lakh customers across all its loan products. Its total AUM or assets under management as of the end of FY21 stood at Rs.61,567 crore. HDB contributes about 5% of the bottom line of HDFC Bank, so it is still quite small in impact terms. Even the estimated valuation of HDB at around $9 billion is just 8% of the market cap of HDFC Bank.

The real challenge for HDB in the last few quarters has been two fold. They have seen loan yields fall due to the sustained rate cuts initiated by the RBI in last 2 years. Secondly, the pandemic and its aftermath have resulted in the gross non-performing assets or Gross NPAs spike for fiscal year 2021 to 7.75% of the total book.

On the positive side, HDB enjoys net interest margins (NIMs) of 7.5%, which is best in class in the entire industry. However, the bigger challenge for Morgan Stanley will be to find a buyer for a company where NPAs have spiked and where the competition is becoming intense from the array of digital players in the market.