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Paytm IPO- Paytm share still trades at 31.52% discount to the issue price despite an 8% gain in intraday trading| What lies ahead?

by 5paisa Research Team 23/11/2021

Paytm IPO has been the biggest IPO in India, to date. The company raised approximately Rs.18,300 crore from the market but lost almost a fourth of its valuation on the listing day itself. The share debuted at a discount of 27.24% on the issue price, which was Rs.2,150 per share.

The share saw a drop of around 40% from its issue price in just two trading sessions, standing at Rs.1381.20 on Monday, 22 November. Paytm’s market value fell by a whopping Rs.56,233 crore after its disastrous debut on Thursday.

After plunging 40%, the share has finally opened with an upside gain of 7% on Tuesday, 23 November. It reported an intra-day high of Rs.1,454.30 on NSE, even then, the experts still maintain their price estimates of Rs.1000-1100 for the share.

The IPO was subscribed only 1.89 times as compared with Nykaa’s subscription of 82 times and Zomato’s 38.25 times. This poor subscription was also an indication of a poor market debut. Even the grey market premiums forecasted a poor market debut. Over the week end, the company released its financial details for October. The Gross Merchandise value increased by 113% and the loan disbursements, which is crucial for the company to turn profitable, increased by 400%. UPI reported a GMV increase of 117% which shows that paytm is just mirroring the industry trend for UPI. The company’s monthly transacting users also increased by 35% YoY to 63 million from 47 million in October 2021.

A scathing “sell” review released by Macquaire research just before the stock was listed stated that the company lacks any focus and direction, and set a target of Rs.1,200. According to the report, Paytm wallets are slowly becoming inconsequential due to the rise of UPI payments and Paytm is dabbling too much in a variety of avenues to concentrate and grow. According to the Macquaire research report, Paytm’s valuation was 26 times its estimated price to sales ration for 2022-2023.

The founder, Vijay Shekhar Sharma’s wealth decreased by over $781 million in just two trading sessions. Before the IPO was listed, Vijay’s share in the company was valued at $2.3 billion.

Why did the stock perform so poorly?

According to the investors, the valuation was highly inflated with a large market float. The company has become a jack of all trades, spreading over different avenues like financial services, movie tickets, fantasy sports, e-commerce and payments. This high diversification meant that there was no focus on growing the company and it was straying away from its main business of being a category leader in the wallets business. The company is also facing stiff competition from companies like Google Pay and Walmart owned Flipkart’s PhonePe.

Market sentiment towards this company is not very strong as it has been continuously making losses since inception along with its lack of focus on a great opportunity of lending.

Also, according to analysts, the valuation of the company has been done mainly by foreign investors who have a higher risk appetite, in contrast to the Indian public that decides whether to invest or not based on profitability and various earnings ratios. Approximately 75% of the initial investors from various countries sold their stakes in the OFS worth Rs.10,000 crore i.e. more than 50% of the value of the IPO. The point that keeps standing out is that Paytm is no longer a market leader in any of its businesses.

 

Paytm and it’s peers:

Company

Market Cap ($ bn)

EV to Sales (x)

Price to Sales (x)

Visa

437.94

15.69

16.22

Mastercard

333.79

15.79

18.93

Paypal

227.48

7.81

9.25

Affirm

38.26

27.04

23.31

Afterpay

24.48

21.38

35.87

Paytm

13.64

40.30

33.53

 

What next?

Paytm used to be a leader in the online wallets segment but is now losing its market share to UPI based payments. As mentioned before, Paytm’s inability to improve their profitability through distribution of financial products like mutual funds, insurances etc will prove to provide an edge to its other competitors.

In conclusion, we have seen many fairly valued companies like Latent View Analytics raised Rs.600 crore, Easemytrip raised Rs.510 crores and Policybazaar raised Rs.5,700 cores. Paytm being highly overpriced was in a way punished by the market. A Macquarie research report predicts a price target of Rs.1,200.

Paytm is set to release its Q2FY22 report on 27th November, Saturday.

 

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BEL surges on bagging its biggest export order worth US$ 93.15 million from Airbus

BEL surges on bagging its biggest export order worth US$ 93.15 million from Airbus
by 5paisa Research Team 23/11/2021

This order falls under the Airbus offset commitments given to the Government of India.

Bharat Electronics Ltd, a Navratna Defence PSU, announced today that it has secured a contract from Airbus Defence and Space, a European aircraft manufacturer for manufacturing and supply of Radar Warning Receiver (RWR) and Missile Approach Warning System (MAWS).

"This export order, worth US$ 93.15 million, is the biggest received till date by BEL," the company said in a statement. This order is a part of the Airbus offset commitments for the Government of India’s C295 aircraft programme.

Brief Background

With an intent to modernize the transport fleet of IAF, on September 24 2021, the central government had signed a contract with Airbus Defence and Space, for the provision of 56 C-295MW transport aircraft for the Indian Air Force (IAF). As per the agreement, Airbus shall deliver the first 16 aircraft in ‘fly-away’ condition, while the remaining 40 aircraft would be manufactured and assembled by the Tata Advanced Systems (TASL) in India.

Along with this, the government had also signed an offset contract with the aircraft manufacturer for discharging its offset obligations via the direct purchase of eligible products and services from Indian Offset Partners.

About the Airbus C295 aircraft

The Airbus C295 is a new-generation tactical airlifter in the light and medium segment. It is known for its ability to conduct multi-role operations worldwide under all weather conditions. Owing to these features, it is used extensively by military and civil operators all over the world.
 

Reacting to this development, at 12.50, the share price of Bharat Electronics Ltd was trading at Rs 208.3, which was an increase of 2.61% from the previous day’s closing price of Rs 203 on BSE.

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This smallcap stock gains after bagging first export order worth Rs 35 crore

This smallcap stock gains after bagging first export order worth Rs 35 crore
by 5paisa Research Team 23/11/2021

Due to this positive news, this stock got investor attention which made it open at Rs 212.00 from the previous day close of Rs 205.15.

Zen Technologies Limited has signed an export contract worth Rs 35 crore with one of its important Middle East customers. The order includes Live Simulation equipment which approximately equals Rs 19.7 crore and is expected to be executed in the next 3 quarters. In the operation and maintenance order value it is worth Rs 15.4 crore, which is expected to be executed in 4 years. Zen Technologies emerged as the winner against tough competition from Europe and USA.

Its total order book position as of date is Rs 427.79 crore. With the current order win, the order book as on date stands as follows,

1. In Domestic - Equipment – Rs 155 crore, Services – Rs 114 crore, totals to Rs 269 crore.

2. In exports - Equipment – Rs 143 crore, Services – Rs 15.39 crore, totals to Rs 158.79 crore.

Background

Zen Technologies Limited is a pioneer and leader in providing world-class state-of-the-art Defence Training Solutions, Drones and Anti-Drone solutions and has a proven and impeccable track record in building training systems for imparting defence training and measuring combat readiness of security forces.

The company is engaged in indigenous design, development and manufacture of sensors and simulators technology-based defence training systems and has relentlessly been providing Defence Training Solutions and seamless services to Ministry of Defence (Armed Forces), Security Forces Police, Para-military forces and is privileged to have served the nation for over 25 years.

The company manufactures land-based military training simulators, driving simulators, live range equipment and anti-drone systems. With a dedicated R&D (recognized by the Ministry of Science and Technology, Government of India) and production facility in Hyderabad, the company has applied for over 109 patents and shipped more than 1000 training systems around the world.

At noon, Zen Technologies was trading at Rs 208.75, up by 1.75% on November 23, 2021.

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Superstar stocks for tomorrow!

Superstar stocks for tomorrow!
by 5paisa Research Team 23/11/2021

Looking for stocks that could deliver good returns till tomorrow, here are the superstar stocks for tomorrow selected on a three-factor model.

Many of the time market participants see a stock opening with a gap-up and wish they should have bought this superstar stock a day before to take advantage of the gap-up move. To fulfil this wish, we have come out with a unique system, which would help us to get the list of candidates that can be probable superstar stocks for tomorrow. 

The superstock stocks for tomorrow selected are based on a three-factor prudent model. The first important factor for this model is price, the second key factor is the pattern, and last but not least is the combination of momentum with volume. If a stock passes all these filters it would flash in our system and as a result, it will help traders to spot the superstar stocks for tomorrow at the right time!

Here are the superstar stocks for tomorrow.

SpiceJet: The aviation stock rose 4.65% on Tuesday as it approaches near its major resistance of 84. It witnessed the volume 1.5-fold its previous day’s volume indicating active participation from the institutions. Huge volume was recorded towards the ending hour of the session. The stock trades above all key moving averages, and the RSI is also strong at 68. We could possibly see the stock breaking its resistance with bigger volumes in the upcoming trading sessions. The stock bounced from the lower levels, and one should include it in their watchlist given the potential it has.

Greaves Cotton: The stock surged 7.79% on Tuesday. The 52-week high for the stock is Rs 180 per share and after today's stellar performance it is seen approaching towards its 52-week high price. The stock witnessed heavy volumes in the past few trading sessions. With RSI already above 64, it looks to gain some momentum. With the stock making a bullish engulfing pattern, one can expect the stock to be trading at even higher prices for upcoming trading sessions.

KPIT Technologies: The stock gained about 6% on the session ending Tuesday. It traded firmly in green forming a bullish engulfing pattern. Almost double the previous day’s volume was recorded today as it approaches its all-time high level of 500. In an open=low scenario, the stock looks bullish for the next day. The RSI is in bullish territory and the stock looks attractive for BTST trade.

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Buzzing Stock: Alembic Pharmaceuticals rises after securing two approvals from USFDA

Buzzing Stock: Alembic Pharmaceuticals rises after securing two approvals from USFDA
by 5paisa Research Team 23/11/2021

Shares of Alembic Pharma were trading 2% higher intraday on Tuesday
 

Shares of Alembic Pharmaceuticals were trading 2% higher intraday on Tuesday after the drug firm secured two approvals from the United States Food and Drug Administration (USFDA).

Alembic Pharmaceuticals received USFDA tentative approval for Dabigatran Etexilate Capsules in the strength of 150 mg. The drug is indicated to reduce the risk of stroke and systemic embolism in patients with non-valvular atrial fibrillation and for the treatment of deep venous thrombosis (DVTY and pulmonary embolism (PE) in patients who have been treated with a parenteral anticoagulant for 5 to 10 days.

The tentatively-approved abbreviated new drug application (ANDA) is therapeutically equivalent to the reference listed drug product (RLD) PRADAXA Dabigatran Etexilate Mesylate Capsules, Eq to 150 mg base, Boehringer Ingelheim. The drug has an estimated market size of US$ 410 million for twelve months ending September 2021, according to IMS Health (IQVIA).

In a separate filing, the company also announced that it secured approval from USFDA for its ANDA for Formoterol Fumarate Inhalation Solution, 20 mcg/2 ml per Unit-Dose Vial. The ANDA has been co-developed with Orbicular Pharmaceutical Technologies Private Limited. According to IQVIA, Formoterol Fumarate Inhalation Solution, 20 mcg/2 ml per Unit-Dose Vial, has an estimated market size of USD 310 million for twelve months ending September 2021.

Alembic Pharma has received year to date (YTD) 14 approvals (11 final approvals and 3 tentative approvals) and a cumulative total of 153 ANDA approvals (134 final approvals and 19 tentative approvals) from USFDA, including this first inhalational ANDA approval.

The company has been witnessing heightened competition in the US market. Due to a fall in the US sales, Alembic Pharma has experienced a 680 bps decline in EBITDA margins to 19.9% and a 650 bps decline in net profit margin to 13.1% since Q4FY21. However, management believes that the US sales decline has bottomed out, although the market situation (excess supply) is expected to continue for another 6 months.
 

At 1.50 pm on Tuesday, the stock of Alembic Pharmaceuticals was seen trading at Rs 748.35, up by 1.73% or Rs 12.70 per share on BSE. The 52-week high of the scrip is recorded at Rs 1,150 and the 52-week low at Rs 720.80 on the BSE.

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Low-Priced Stocks: These shares below Rs 100 made a fresh 52-week high on Tuesday, November 23

Low-Priced Stocks: These shares below Rs 100 made a fresh 52-week high on Tuesday, November 23
by 5paisa Research Team 23/11/2021

The markets traded weak on Tuesday with BSE Sensex slipping by more than 200 points. Shares of 3i Infotech Limited, Art Nirman Limited, Digjam Limited and Goldstone Technologies gained more than 4% each during early market hours.

Some of the top large-cap gainers on Tuesday include Vedanta (4.12%), NMDC (3.72%), JSW Steel (3.57%) and Tata Motors (2%). Some of the top mid-cap gainers with a change of more than 6% are Rajesh Exports, Varroc Engineering and Apollo Hospital Enterprises.

BSE Metal index thrust to limelight on Tuesday with gains of 3.02% i.e. 577 points and is currently trading around 19,650 levels. On similar lines, BSE Utilities and BSE Realty index recorded healthy gains of more than 2% each. Godrej Properties, Mahindra Lifespace Developers and Phoenix Mills are among the top gainers. Reliance Infra and Reliance Power ascended by 4.99% and 4.59% amid a volatile trading session.

Few small-cap stocks were seen making fresh 52-week high on Tuesday including Precision Camshafts which rallied 17.31% and Nureca, which surged by 11.22%.

Shares of Vedanta zoomed by 7% on Tuesday on reports of multiple block deals as promoters plan to raise their stake. The scrip of Indian Metals and Ferro Alloys Limited (IMFA) a leading, fully integrated producer of Ferro Chrome in India (which is primarily used in the production of stainless steel) froze in the upper circuit as the Board of Directors of the company will be meeting on November 26, 2021, to take into consideration, the proposal for issue of bonus shares.

Following is the list of low-price stocks that made a fresh 52-week high on Tuesday.

SR NO    

COMPANY NAME    

LTP   

% CHANGE   

1   

3i Infotech Limited   

93.8   

4.98   

2   

Art Nirman Limited   

94.5   

5   

3   

Digjam Limited   

62.9   

4.92   

4   

Goldstone Technologies Limited   

63.75   

4.94   

6   

SBC Exports Limited   

85.25   

19.99   

7   

Thomas Scott (India) Limited   

29.45   

4.99   

8   

Trident Limited   

49.8   

4.95   

9   

Tata Teleservices (Maharashtra) Limited   

88.25   

5   

  

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