Zomato IPO gets 1.05X subscription at the end of Day 1

Zomato IPO Day 1 Subscription
IPO
14/07/2021

The Rs.9,375 crore Zomato IPO got subscribed 1.05 times overall at the end of the first day of subscription. The IPO will remain open till Friday 16 July. The QIB portion was subscribed 0.98X, while the non-institutional HNI portion got subscribed just 0.13X. Applications for the HNI and QIB segment tend to get bunched on the last day of the IPO. The retail portion got subscribed 2.70X, but retail quota is just 10% in the Zomato IPO. The IPO is priced in the band of Rs.72-76.

The IPO of Zomato comprises a fresh issue of shares worth Rs.9,000 crore and an offer for sale worth Rs.375 crore to give an exit to Info Edge. With 2 more days to go for the IPO, the HNI portion subscription will largely depend on the demand for funded applications. However, the QIB subscription is likely to be robust, if you go by the anchor investor demand evinced on Tuesday 13 July.

On 13 July, when the Zomato issue opened for anchor investors to raise Rs.4,196 crore, the total demand from institutions was in excess of Rs.100,000 crore. Eventually, Zomato allocated a total of 55.22 crore shares of Zomato to QIBs priced at the upper band of Rs.76 per share. Out of the 55.22 crore shares allocated, 36.81 crore shares were allocated to foreign investors like Government of Singapore, MAS, Wellington, Nomura, Aberdeen, Schroders among others. A total of 18.41 crore shares were allocated to domestic institutions like SBI MF, Birla Sun Life Insurance, Kotak MF, Nippon Life MF, HDFC MF, IIFL MF etc. That is a hint that QIB subscription in the IPO could be really very strong.
 

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Zomato IPO oversubscribed on Day-2

Zomato IPO Day 2 Subscription
IPO
15/07/2021

At the end of the second day of the Zomato IPO, there was substantial build-up of interest from QIBs and Retail Investors. At 5.00 PM on Thursday, Zomato IPO QIB portion had been subscribed 7.06 times, with predominant demand coming from FPIs. The HNI (non-institutional) portion was subscribed just about 0.45 times. However, a large chunk of this segment uses the funding route, with funding applications being logged on the last day. The retail portion was subscribed 4.73 times with 78% being cut-off bids. Overall, the Zomato IPO was subscribed 4.79 times at close of second day. Zomato IPO closes on Friday 16 July.

Read : Zomato Fun facts
With just 1 day to go for the issue to close, here are 3 strong reasons to apply for the Zomato IPO.

  1. Some sectors make the best of tough times and Zomato is one of them. From Work-From-Home (WFH) to lockdowns to social distancing; Zomato was the answer to all problems. When you have weathered a crisis, you are better positioned to participate in better times. The Zomato IPO gives you an opportunity to do exactly that.
  2. Digital ordering may look simple to the customer, but to create that simplicity, companies like Zomato have to sink in hundreds of crores into process, prices and publicity. The good news is that these 3P costs are down from 88% of revenues in 2019 to 25% in 2021. The IPO is perfectly poised to benefit from net gains.
  3. Businesses that do not go digital are as good as dead. Portfolios that don’t include digital plays are assured underperformers. Zomato is your opportunity to invest in Digital India at a reasonable price.

You still have Friday 16 July to invest in the Zomato IPO. You miss it at your own risk!
 

Check : Zomato IPO day 1 subscription 

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Maharashtra EV Policy 2021 to accelerate green shift

Maharashtra EV Policy 2021
15/07/2021

When there is a major shift, it is normally the financial capital that is expected to take the initiative. Maharashtra took the lead and unveiled the Maharashtra EV Policy 2021 with the intent of fast tracking EV adoption in an accelerated move away from fossil fuels. By 2025, the state of Maharashtra will overhaul the private and public transport infrastructure to ensure at least 10% EV adoption. For fleet aggregators, ecommerce companies and logistics operators; EV adoption is targeted at 25% by 2025.

The EV roadmap is aggressive and interesting. EV adoption needs supporting infrastructure. The EV Policy targets 1500 charging stations across Mumbai Metropolitan region. In addition, there will be 500 charging stations in Pune, 150 in Nashik and another 225 across Aurangabad, Amravati and Solapur. All state highways are targeted to be EV-ready by 2025 and vehicles of all state government officials will shift to EVs by 2022. The target is 25% electrification of intra-city fleets and 15% electrification for the MSRTC fleet by 2025.

Also Read: Is Road Contractors Segment Seeing a Recovery?

The big focus will be fast tracking electrification of two-wheelers with EV incentives for purchase of 100,000 two-wheelers. E2W manufacturers will get an incentive of Rs.12,000 for offering 5-year warranty on batteries with guaranteed buyback scheme. The total incentives will amount to a discount of Rs.37,000 per two-wheeler and with scrappage incentives, it will add up to Rs.44,000; sufficient to offset higher cost of EVs. In the case of 4-wheelers, the total of early bird discounts, basic incentives and scrappage incentives can add up to Rs.2.75 lakhs per car. Road tax on EVs has also been waived. In short, it is a great start and it is now over to implementation.
 

Check : 5 Stocks to Buy this Monsoon

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Mindtree EBITDA margins up 210 bps for Jun-21 quarter at 20.3%

Mindtree Q1 Results
15/07/2021

For the quarter ended Jun-21, Mindtree announced financial results on 13 July. Mindtree, currently owned by the L&T group, has a dominant franchise in the CMT (communication, media, telecom) as well as the RW (retail, warehousing) verticals. BFSI is much smaller in the case of Mindtree, unlike many traditional IT companies in India.

Here is a gist of the Mindtree quarterly numbers.

Rs in Crore

Jun-21

Jun-20

YOY

Mar-21

QOQ

Total Income (Rs cr)

₹ 2,291.70

₹ 1,908.80

20.06%

₹ 2,109.30

8.65%

Operating Profit (Rs cr)

₹ 406.30

₹ 262.30

54.90%

₹ 391.30

3.83%

Net Profit (Rs cr)

₹ 343.40

₹ 213.00

61.22%

₹ 317.30

8.23%

Diluted EPS (Rs)

₹ 20.83

₹ 12.93

 

₹ 19.25

 

OPM

17.73%

13.74%

 

18.55%

 

Net Margins

14.98%

11.16%

 

15.04%

 

Data Source: BSE filings

Top line gets a boost on yoy basis
Consolidated sales revenues for the Jun-21 quarter were up 20.1% yoy at Rs.2,292 crore. Mindtree also saw limited impact of COVID 2.0 as its revenues were up 8.65% on a sequential basis compared to top line revenues of Rs.2,109 crore in the Mar-21 quarter. For the first time, Mindtree crossed the psychological $500 million mark in terms of order book position during the Jun-21 quarter. In fact, the order book grew 34% over Mar-21 quarter to $504 million. 

Read: Result Expectation of Top IT Companies

In terms of revenue mix, the Jun-21 quarter was dominated by the CMT vertical accounting for 45.4% of revenues. While retail accounted for 22.1% of the top line, BFSI was just about 18.2%. North American continues to predominate the revenue mix with 77% share of total revenues, with the balance 23% distributed among Continental Europe, UK and Asia Pacific regions. Revenue thrust was also sustained by comparatively lower attrition at 13.1%.

On the operating front, the growth came from a mix of higher revenue clients, better product mix and cost controls initiated in the last one year. In fact, consolidated operating profits were up 55% yoy at Rs.406 crore. As of Jun-21, Mindtree had over 260 active clients which positively impacted the operating performance with more premium clients ensuring better ROI. EBITDA grew by 33.6%, while EBIT was up by 40% on a yoy basis. For the Jun-21 quarter, Mindtree reported EBITDA margin at 20.3%, compared to 18.1% in Jun-20. However, the EBITDA margins were lower on sequential basis. This still places the EBITDA margins of Mindtree well below the EBITDA margins reported by the frontline IT companies like TCS and Infosys, which are closer to 25% on an average over the last few quarters. Check TCS Q1 Results

For the Jun-21 quarter, Mindtree reported net profits of Rs.343 crore; up by 61.22% on a yoy basis. The big thrust to the bottom line came from improved EBITDA and EBIT margins on a yoy basis. While sequential EBITDA margins may have been lower, the sequential net profits were higher by 8.23% on the back of cost efficiencies. For the Jun-21 quarter, Mindtree reported net profit margins of 14.98%; an improvement of 382 bps on a yoy basis. Overall, Mindtree has reported robust profit numbers as well as strong growth in top line across verticals.

Brokerage view are mixed about Mindtree. Among global brokerages, Morgan Stanley has an Overweight rating on Mindtree, Goldman Sachs has a Buy rating but Citi has a sell rating. Rich valuations have been one of the concerns over Mindtree. Among domestic brokerages, Edelweiss has maintained its Buy rating while ICICI Direct has upgraded Mindtree from Hold to Buy. However, Emkay Global has maintained its Sell recommendation due to rich valuations.
 

Check - MSCI Index Rebalancing

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Tatva Chintan IPO - 6 Interesting Facts you must know

Tatva Chintan - Facts
IPO
15/07/2021

Tatva Chintan Pharma Chem IPO opens on 16 July and closes on 20 July. The IPO has been priced in the band of Rs.1,073-1,083 and will raise Rs.500 crore through a mix of fresh issue and offer for sale.

Here are 6 interesting facts about Tata Chintan that you must know -

1. Did you know that for a company with a market cap of just about Rs.2,400 crore, Tatva Chintan manufactures over 150 products. Surprised, here is the break-up. The company produces, 47 Structure Directing Agents (SDA), 48 phase transfer catalysts (PTC), 5 electrolyte salts and 53 pharmaceutical ingredients. That is surely a diverse portfolio.


2. Interestingly, Tatva Chintan is India’s largest producers of phase transfer catalysts (PTC) and among the top-3 in the world in producing PTC products. PTC products have huge applications in green chemistry, which is an important part of sustainable technologies.


3. Tatva Chintan has some very strong financial ratios. It is one of the few companies in India that enjoy ROE and ROCE of above 30%. While Return on Equity (ROE) is the return on capital to shareholders, the Return on Capital Employed (ROCE) is the return on capital to shareholders and lenders.


4. Tatva Chintan is the only Indian producer of Zeolites. Now, zeolites are SDAs which have huge applications as catalysts and absorbents. For example, automobiles use zeolites for emission control in automotive applications. This is likely to have huge applications in the coming years where the trend is towards eco-friendly automobiles.


5. Tatva Chintan services marquee clients like Merck, Bayer AG, Asian Paints, Laurus Labs, SRF, Divi’s Laboratories etc.


6. For a small company, Tatva Chintan services 508 customers with over 71% of its revenues coming purely from exports.

 

Check : Upcoming IPOs in July

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Tatva Chintan IPO is a reasonably good play on specialty chemicals story

Tatva Chintan IPO Details
IPO
15/07/2021

Tatva Chintan Pharma Chem is in an industry sweet spot. Specialty chemicals were in the limelight over the last few years as global demand was robust. However, the pandemic disrupted chemical supply chains as China decided to get tough with local companies on environmental norms. The result was a situation when most global buyers of specialty chemicals opted to spread their China bets by including India in their shopping list. It is in this background that the Tatva Chintan IPO must be viewed.

Also Read: Apply for Tatva Chintan Pharma IPO 

Key terms of the IPO issue of Tatva Chintan Pharma Chem

The total issue size of Rs.500 crore will consist of a fresh issue of Rs.225 crore and an offer for sale or OFS by promoters to the tune of Rs.275 crore. Tatva Chintan will use the new issue proceeds to expand its manufacturing facility at Dahej and also spruce up its R&D unit in Vadodara. It also has another manufacturing plant at Ankleshwar in Gujarat.

Key IPO Details

Particulars

Key IPO Dates

Particulars

Nature of issue

Book Building

Issue Opens on

16-Jul-2021

Face value of share

Rs.10 per share

Issue Closes on

20-Jul-2021

IPO Price Band

Rs.1,073 - Rs.1,083

Basis of Allotment date

26-Jul-2021

Market Lot

13 shares

Refund Initiation date

27-Jul-2021

Retail Investment limit

14 Lots (182 shares)

Credit to Demat

28-Jul-2021

Retail limit - Value

Rs.197.106

IPO Listing date

29-Jul-2021

Fresh Issue Size

Rs.225 crore

Pre issue promoter stake

100%

Offer for Sale Size

Rs.275 crore

Post issue promoters

79.17%

Total IPO Size

Rs.500 crore

Indicative valuation

Rs.2,400 crore

Listing on

BSE, NSE

HNI Quota

15%

QIB Quota

50%

Retail Quota

35%

Data Source: IPO Filings

 

Understanding the business model of Tatva Chintan Pharma Chem

Here is gist of the product and business highlights of Tatva Chintan Pharma Chem, a specialty chemicals player based out of Gujarat.

  • Tatva Chintan product portfolio is spread across four verticals. This includes structure directing agents (SDA), phase transfer catalysts (PTC), electrolyte salts and pharmaceutical intermediates. It counts the who’s who of pharma industry among its clients roster, both in India and abroad.
     

  • While pharma intermediates have been seeing a lot of stocking by pharma companies, PTCs have major applications in green chemistry and sustainable technologies. This can be a major asset in the post-fossil fuel scenario.
     

  • Tatva is a strong player in PTC, SDA and PASC in the domestic and also the global market. In fact, Tatva exports to over 25 countries including the US, China, Germany, Japan, South Africa and the UK.

Tatva Chintan – Financials are fairly alluring

The company has presented a strong growth story and has been largely a macro beneficiary of the robust performance of the specialty chemical stocks. Sales grew from Rs.206 crore in Fy19 to Rs.301 crore in FY21. If you look at the EBITDA in FY21, it has more than doubled over FY19 to Rs.72 crore resulting in the EBITDA margins expanding to 23.85%.

Tatva Chintan saw net profits growing by 2.5 times between FY19 and FY21 to Rs.52.3 crore, even as net margins doubled to 17.40%. Both the ROE and ROCE are above 31% and have gained nearly 600 bps in the last 2 years.

Take a macro investment view on Tatva Chintan

  1. With strong domestic demand and global companies hedging against China, Tatva Chintan IPO can be a good macro bet on chemicals as a medium to long term structural story. However, competition is likely to get stiffer in the coming years.
     

  2. The IPO price band values the stock at over 40X P/E ratio on FY21 EPS. However, if the company can even sustain half its EPS growth rate of 60%, this P/E can be justified. The industry average for specialty chemicals is closer to 70.

In a nutshell, look at Tatva Chintan as a macro play on specialty chemicals industry. That is surely a structural story for investors.