Tag: IPO

The Hidden Danger in IPOs of 2021

Post author By marketfeed Team
Post date December 13, 2021

The year 2021 saw a stream of Initial Public Offerings (IPOs) that entered many investors’ pockets. Companies from all sectors and industries tried to unlock their true value by listing on the stock market. According to credit rating agency India Ratings and Research (Ind-Ra), the financial year 2022 has the highest number of IPOs lined up in over two decades. A closer look at the 2021 IPO bull run shows that companies might have tried to list without sufficient reason or cause. The question is, can the recent and upcoming IPOs sustain investor gains? Are the listed companies overpriced? Have the IPO-raised funds been used in the right manner? Read on to know more.

Are IPOs Overpriced?

A total of 72 companies had their IPOs in FY22. Between January and November, 38 out of 52 mainboard IPOs ended up with listing gains. Listing gains happen when a company’s share debuts at a higher price than what the IPO subscribers bought it for. Based on the issue size, the top 10 companies gave average listing gains of nearly ~17%.

According to Ind-Ra, the IPO count for FY22 stood at 71, amounting to Rs 85,600 crores as against Rs 27,200 crore raised by 56 companies last year. Life Insurance Corporation or LIC is planning to raise nearly Rs 1,00,000 crore through an IPO. If it happens by year-end, it could drive the total issue size for the fiscal to nearly Rs 2,00,000 crore. The IPO bull run is being led by the new-age tech-oriented companies like Zomato, Nykaa, PayTM, Policy Bazaar, to name a few. Unlike traditional companies, new-age tech-oriented companies are listing for brand recognition and premium value unlocking.

IPOs Not Helping In Cutting Down Corporate Debt?

According to Ind-Ra, 26% of the companies used the funds for corporate purposes, 19% used them for funding capital expenditure, another 19% used them for repayment of existing loans, and the remaining 11% used it to carry out an offer for sale.

There has been a shift in trend regarding objects of offer that a company mentions in Red Herring Prospectus (IPO Report). While the purpose of an IPO is generally considered to be either for funding capital expenditure or repaying existing debt, many companies have clearly stated ‘brand recognition’ as the sole reason.

The availability of cheap Commercial Paper (CP) has also fueled the IPO of Bullrun. CPs are borrowings made from NBFCs for short-term use (up to one year). IPO Investors, mostly institutional ones, would borrow from Non-Banking Financial Companies (NBFCs) to fuel their IPO gig. The Reserve Bank of India has now capped an individual borrowers limit for NBFCs to Rs 1 crore. This move could significantly impact the subscription status of the IPOs.

The Way Ahead

The bull run in 2021 was fuelled by the enormous liquidity offered by monetary and fiscal easing. Once the central banks start cutting interest rates, the money could make its way out of the recent IPO stocks, many of which are known to be overvalued.

Another cause of worry is the reason why certain companies got listed. Many have done so with the intent of getting a premium valuation from the hype caused by retail and institutional investors alike. If a company does not utilize the IPO funds correctly, it might face operational or financial bottlenecks in the future, which could be the reason for the investor’s dissatisfaction. This dissatisfaction could drive down the valuation of the company. The upcoming quarter is crucial for the stock market. With fears regarding the Omicron variant of COVID-19, sensitive oil prices, and interest rate cut expectations, investors need to weigh their investments in light of these risks and make the right choices.

Tags Editorial, Initial Public Offering, IPO, IPO 2021, IPO Analysis, IPO Market, LIC IPO, paytm ipo

Editorial

MapmyIndia IPO: All You Need to Know

Post author By marketfeed Team
Post date December 10, 2021

C.E. Info Systems Ltd, popularly known through its brand MapmyIndia, has launched its three-day initial public offering (IPO) yesterday— Dec 9. In this article, we take a closer look into the company and learn more about its IPO.

Company Profile – C.E Info Systems Ltd

Incorporated in 1995, C.E. Info Systems Ltd (CEISL) offers advanced digital maps, geospatial software, and location-based Internet of Things (IoT) technologies. They provide products, platforms, application programming interfaces (APIs), and solutions across a range of digital map data and software under the MapmyIndia and Mappls brands. The digital maps offered by the company cover 6.29 million kilometers of roads in India, representing 98.5% of the total road network.

CEISL is an early mover in India’s digital mapping space. It has pioneered several digital mapping technologies such as AI-powered 4D HD digital maps and NCASE mobility suite for vehicles. The company offers the widest range of location-powered software and the most comprehensive set of offerings compared to its global competitors. MapmyIndia’s digital maps and solutions are localized for the challenging Indian geography and are extensive in terms of coverage.

Strong Customer Base:

The company caters to marquee global tech giants, new-age consumer IT companies, and leading automotive manufacturers. CEISL also offers its products to large businesses across industry segments, including banking, financial services and insurance (BFSI), telecom, fast-moving consumer goods, logistics, and government organisations. Their customer base includes PhonePe, Flipkart, Yulu, HDFC Bank, Bharti Airtel, Hyundai, MG Motors, and the government’s Goods and Services Tax (GST) Network.

Interestingly, MapmyIndia’s data powers Apple Inc.’s Maps and Amazon.com Inc.’s Alexa in India!

More than 93% of CEISL’s revenue comes from subscriptions, annuity, and royalties. It derives ~50% of revenue from the automotive and mobility sector. As of Sept 30, 2021 (Q2 FY22), they have serviced over 2,000 enterprise customers. C.E. Info Systems is now looking to expand its operations to Nepal, Bhutan, Bangladesh, Sri Lanka, Myanmar, Egypt, and the United Arab Emirates (UAE).

About the IPO

C.E. Info Systems’ public issue opens on December 9 and closes on December 13. The company has fixed Rs 1,000-1,033 per share as the price band for the IPO.

The IPO is entirely an offer for sale (OFS) of 1.006 crore equity shares by promoters and early investors, aggregating to Rs 1,039.61 crore. Individual investors can bid for a minimum of 14 equity shares (1 lot) and in multiples of 14 shares thereafter. You will need a minimum of Rs 14,462 (at the cut-off price) to apply for this IPO. The maximum number of shares that can be applied by a retail investor is 182 equity shares (13 lots).

The main objective of the IPO is to provide an exit strategy (or liquidity) to CEISL’s shareholders. The company aims to achieve the benefits of listing the equity shares on NSE and BSE. The total promoter holding in the company will decline from 61.71% to 53.73% post the IPO.

Financial Performance

CEISL has shown stable growth in revenue and profit. They reported a net profit of Rs 59.43 crore in the financial year 2020-21 (FY21), an increase of 156.3% YoY. Total income rose 17.6% YoY to Rs 192.27 crore during the same period. Profit in the six months ended September 2021 (H1 FY22) jumped to Rs 46.76 crore, compared to Rs 17.86 crore in the same period last year. Revenue rose 81% YoY to Rs 100.03 crore during the same period.

In FY21, 25 customers accounted for 80% of revenue. In the first half of FY22, 18 customers accounted for 80% of the company’s revenue.

Risk Factors

CEISL is dependent on trends in the sectors (such as automobile, consumer, logistics) where its enterprise customers operate. Any adverse changes in the conditions affecting these sectors can impact its business.
The inability to maintain or update the company’s map database or errors could harm its reputation and severely affect its ability to sell products and services.
The company is dependent on the success of its Research & Development (R&D) team. The failure to develop competitive new products could adversely affect its business and financial performance.
The inability to protect its intellectual property (IP) or third-party claims could harm CEISL’s reputation and overall operations.
C.E. Info Systems depends on a limited number of customers for a significant portion of its revenues. The loss of key customers or a reduction in demand for its products from them could severely impact its operations and financial condition.
They are dependent on telecom and information technology systems, networks, and infrastructure to operate their business. Any interruption or breakdown of such systems could impair the company’s ability to operate its platforms.

IPO Details in a Nutshell

The book-running lead managers to the public issue are Axis Capital, DAM Capital Advisors, JM Financial Consultants, and Kotak Mahindra Capital. C.E Info Systems Ltd had filed the Red Herring Prospectus (RHP) for its IPO on December 2. You can read it here. Out of the total offer, 50% is reserved for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs), and 35% for retail investors.

Ahead of the IPO, CEISL raised Rs 312 crore from anchor investors. The marquee investors include Fidelity, Nomura, Goldman Sachs, Morgan Stanley, SBI Mutual Fund (MF), Tata MF, and HDFC MF.

Conclusion

C.E. Info Systems has built a strong moat by capitalising on its early mover advantage, developing integrated technologies, constant innovation, and a robust sustainable business model. Its solutions are adopted by new-age companies and start-up firms across consumer tech, last-mile delivery, shared mobility, and e-commerce segments. As per reports, the total market for Indian digital map services is expected to grow from Rs 12,614 crore in 2019 to Rs 31,164 crore in 2025, at a CAGR of 16.1%. Meanwhile, the global digital map services market is expected to grow at a CAGR of 13.6% to Rs 11.27 lakh crore by 2025.

The company has received significant investor interest in the grey market. CEISL’s IPO shares are trading at a premium of ~Rs 780-795 in the unofficial market. Before applying to this IPO, we will wait to see if the portion reserved for institutional investors gets oversubscribed. As always, consider the risks associated with the company and come to your own conclusion.

What are your opinions on this IPO? Will you be applying for it? Let us know in the comments section of the marketfeed app.

Tags ce info systems, digital maps, Editorial, IPO, mapmyindia ipo, mappls

Editorial

Shriram Properties Ltd IPO: All You Need to Know

Post author By marketfeed Team
Post date December 9, 2021

Shriram Properties Ltd, a real estate developer, launched its three-day initial public offering (IPO) yesterday— Dec 8. In this article, learn more about the company and its IPO.

Company Profile – Shriram Properties Ltd

Shriram Properties Ltd (SPL) is one of the leading residential real estate development companies in South India. It is part of the Shriram Group, a reputed Chennai-based conglomerate with four decades of operating history. SPL primarily focuses on the mid-market and affordable housing segments. The company is also present in the mid-market premium, luxury housing, commercial, and office space categories. It has operations in Bengaluru, Chennai, Coimbatore, and Visakhapatnam.

The realty company completed 29 projects as of September 30, 2021 (Q2 FY22), representing 16.76 million square feet (msf) of saleable area. Out of the total, 24 projects are in Bengaluru and Chennai. Currently, SPL has a total portfolio of 35 ongoing, under development, and forthcoming projects aggregating to 46.72 million sq. ft. of estimated saleable area. Moreover, it has land reserves of approx. 197.47 acres, with a development potential of 21.45 msf of estimated saleable area. They have demonstrated capabilities in project identification and execution.

SPL is now transitioning to a combination of real estate development and real estate services-based business model, with a shift towards an asset-light business strategy. The company will continue to focus on mid-market and affordable housing categories in major cities in South India.

About the IPO

Shriram Properties’ public issue opens on December 8 and closes on December 10. The company has fixed Rs 113-118 per share as the price band for the IPO.

The fresh issue of shares (of the face value of Rs 10 each) aggregates to Rs 250 crore. The IPO also includes an offer for sale (OFS) by promoters and early investors, aggregating to Rs 350 crore. Individual investors can bid for a minimum of 125 equity shares (1 lot) and in multiples of 125 shares thereafter. You will need a minimum of Rs 14,750 (at the cut-off price) to apply for this IPO. The maximum number of shares that can be applied by a retail investor is 1,625 equity shares (13 lots).

SPL will utilise the net proceeds from the IPO for the following purposes:

Repayment and/or pre-payment of certain borrowings availed by the company and its subsidiaries Shriprop Structures, Global Entropolis, and Bengal Shriram – Rs 200 crore.
General corporate purposes.

The total promoter holding in the company will decline from 31.98% to 27.98% post the IPO.

Financial Performance

Shriram Properties has posted net losses over the past two financial years and in the six months ended September (H1 FY22). Its total income declined sharply from Rs 723.79 crore in FY19 to Rs 501.3 crore in FY21. The fall in revenue can be attributed to a decrease in the number of sale deed registrations and factors related to Covid-19 lockdowns. The company witnessed an increase in customer cancellations. However, EBITDA increased from Rs 79.93 crore in FY19 to Rs 121.05 crore in FY21. Operating margins have also improved during the same period.

SPL’s sales volumes from residential projects fell 7.7% year-on-year (YoY) to 3 million sq. ft in FY21. Its gross collections from the segment declined by 20.56% YoY to Rs 939.36 crore during the same period. There were no sales volumes and gross collections from commercial projects for the financial year ended March 2021.

The company’s total outstanding borrowings stood at Rs 695.1 crore as of Q2 FY22.

Risk Factors

SPL’s business and profitability are highly dependent on the performance of the real estate market in South India. Any fluctuations in market conditions could affect the company’s ability to sell projects at expected prices.
Shriram Properties has a significant amount of debt. This factor could affect its ability to obtain future financing or pursue growth strategies.
Some of the company’s ongoing and forthcoming projects may be delayed due to factors beyond its control. Such delays could adversely affect its reputation and financial condition.
The increase in prices, or shortages of, or disruption in the supply of labour and key building materials could severely impact estimated construction costs and timelines.
There are outstanding legal proceedings involving SPL, its subsidiaries, directors, and promoters.
The company’s business is capital intensive and is highly dependent on the availability of real estate financing in India. Difficult conditions in the global and Indian capital markets may cause SPL to experience limited availability of funds. Such a situation will adversely impact its overall operations.

IPO Details in a Nutshell

The book-running lead managers to the public issue are Axis Capital, ICICI Securities, and Nomura Financial Advisory & Securities (India). Shriram Properties Ltd had filed the Red Herring Prospectus (RHP) for its IPO on December 1. You can read it here. Out of the total offer, 75% is reserved for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs), and 10% for retail investors.

Ahead of the IPO, SPL raised Rs 268.65 crore from anchor investors. The marquee investors include Societe Generale, Pioneer Investment Fund, Nomura, Blue Mount Capital, Nippon Life, HDFC Trustee, etc.

Conclusion

The real estate sector is one of the largest contributors to India’s economy. The demand for residential properties has surged as a result of rapid urbanisation and rising household incomes. As we know, real estate developers were forced to halt construction activities amidst the Covid-19 pandemic. They saw a considerable decline in sales volumes last year. Fortunately, with the removal of lockdowns, things are looking positive for this sector. Various realty firms are now witnessing a recovery in demand and have also posted good results. To learn more about the real estate sector in India, click here. One could invest in SPL based on its strong brand image and long-term growth prospects.

India’s real estate development industry is highly competitive and faces massive hurdles. SPL will be directly competing with large developers such as Prestige Estates, Brigade Enterprises, Godrej Properties, Oberoi Realty, Sunteck Realty, and Sobha once it gets listed.

The company has not received much investor interest in the grey market. SPL’s IPO shares are trading at a premium of just Rs 10-15 in the unofficial market. Many analysts have red-flagged the expensive valuation of SPL when compared to its peers. Before applying to this IPO, wait to see if the portion reserved for institutional investors gets oversubscribed. As always, consider the risks associated with the company and come to your own conclusion.

What are your opinions on this IPO? Will you be applying for it? Let us know in the comments section of the marketfeed app.

Tags Editorial, IPO, real estate developer, real estate sector, shriram group, shriram properties ipo

Editorial

Rategain Travel Technologies Ltd IPO: All You Need to Know

Post author By marketfeed Team
Post date December 6, 2021

The IPO frenzy continues on Dalal Street, with four public issues opening for subscription this week! Rategain Travel Technologies Ltd, a travel technology firm, will launch its three-day IPO tomorrow— December 7. In this article, we take a closer look into the company and its IPO.

Company Profile – Rategain Travel Technologies Ltd

Rategain Travel Technologies Ltd (RTTL) is the largest Software-as-a-Service (SaaS) company in the hospitality and travel industry in India. It offers solutions across a wide spectrum of verticals, including hotels, airlines, online travel agents (OTAs), vacation rentals, package providers, car rentals, rail, travel management companies, and cruises.

The company provides a suite of interconnected products that manage the revenue creation value chain for customers by leveraging big-data capabilities and integration with other tech platforms. Thus, RTTL helps hospitality and travel providers to acquire more guests, retain them via personalized experiences, and ultimately maximize their margins.

Business Verticals:

The company delivers solutions through three business categories:

Data as a Service (DaaS) – Provides information such as market dynamic pricing and analytics. This segment tracks over 5.83 billion price points from various sources and issues data on pricing, rating, ranking, availability, and room descriptions.
Distribution – Provides information on availability, rates, and inventory to different hotel aggregators or agents.
Marketing Technology – Manages social media engagements and promotional campaigns.

RTTL served 1,462 customers as of September 30, 2021 (Q2 FY22), including eight Fortune Global 500 companies. Its prominent clients are Six Continents Hotels Inc., Kessler Collection, Lemon Tree Hotels Ltd, and Oyo Hotels and Homes Pvt Ltd. The company services its customers in multiple geographies and local go-to-market teams. Moreover, they have offices in six countries.

RateGain has grown its customer base over the years through well-developed sales and customer success. It focuses on marketing strategies/functions that generate and convert quality sales leads. The company has expanded its product portfolio to include artificial intelligence (AI) and machine learning capabilities. As a result, they are now one of the largest aggregators of data points for the hospitality and travel industry in the world.

About the IPO

Rategain Travel Technologies’ public issue opens on December 7 and closes on December 9. The company has fixed Rs 405-425 per share as the price band for the IPO.

The fresh issue of shares (of the face value of Rs 1 each) aggregates to Rs 375 crore. The IPO also includes an offer for sale (OFS) of up to 2.26 crore equity shares by promoters and early investors. Individual investors can bid for a minimum of 35 equity shares (1 lot) and in multiples of 35 shares thereafter. You will need a minimum of Rs 14,875 (at the cut-off price) to apply for this IPO. The maximum number of shares that can be applied by a retail investor is 455 equity shares (13 lots).

RTTL will utilise the net proceeds from the IPO for the following purposes:

Repayment and/or prepayment of debt availed by Rategain UK – Rs 85.26 crore
Payment of deferred consideration for the acquisition of DHISCO (a hotel distribution service) – Rs 25.2 crore
Strategic investments, acquisitions, and to boost inorganic growth – Rs 80 crore
To make investments in technology innovation, artificial intelligence, and other organic growth initiatives – Rs 50 crore
Purchase of capital equipment for the company’s data center – Rs 40.77 crore
General corporate purposes.

Financial Performance

RTTL has posted losses over the past two financial years. In FY20, the company registered total revenue of Rs 457.6 crore and incurred a loss of Rs 20.1 crore. Its revenue for FY21 stood at Rs 264.1 crore, and the net loss widened to Rs 28.6 crore. The negative earnings can be attributed to the adverse impact of the Covid-19 pandemic on its operations. However, their gross margins have been above 76% during this period. EBITDA fell 78.5% YoY to Rs 6.15 crore in FY21.

The company added 272 active customers from 110 countries during the period from FY19 to FY21.

Risk Factors

Factors such as Covid induced lockdowns and movement restrictions can have an adverse impact on RTTL’s business and financial performance.
RateGain’s customers are typically not obliged to renew, upgrade, or expand their contracts with the company. Thus, customer retention rates could be low.
The inability to attract new customers or retain existing customers in a cost-effective manner could severely affect the company.
The market for Software as a Service (SaaS) solutions in the hospitality and travel industry is new and yet to evolve. If the market develops slowly than anticipated or declines, RateGain’s business could be adversely affected.
RTTL derives a significant portion of its revenue (~82%) from a limited number of markets (mainly North America and Europe). Any adverse developments in these markets could harm the company’s overall operations.
The company has a history of net losses and anticipates increased expenses in the future.

IPO Details in a Nutshell

The book-running lead managers to the public issue are IIFL Securities, Kotak Mahindra Capital, and Nomura Financial Advisory & Securities (India). Rategain Travel Technologies had filed the Red Herring Prospectus (RHP) for its IPO on November 28. You can read it here. Out of the total offer, 75% is reserved for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs), and 10% for retail investors.

Conclusion

RateGain’s vision is to become the leading revenue maximization platform for the hospitality and travel industry. Its integrated technology platform, powered by artificial intelligence (AI), enables customers to increase their revenue through customer acquisition, retention, and wallet share expansion. As per reports, third-party travel and hospitality technology is estimated to be a $5.91 billion market in 2021. The market is expected to grow at a CAGR of 18% to reach $11.47 billion by 2025. RTTL could greatly benefit from the growth in this sector due to its first-mover advantage.

However, the company is exclusively focused on the hospitality and travel industry, which is highly sensitive to economic conditions. The general sentiments in this industry continue to be weak due to the Covid-19 pandemic. Analysts have also red-flagged the aggressive valuation of the issue.

RTTL’s IPO shares are trading at a premium of Rs 85-100 in the grey market. Before applying to this IPO, wait to see if the portion reserved for institutional investors gets oversubscribed. As always, consider the risks associated with the company and come to your own conclusion.

What are your opinions on this IPO? Will you be applying for it? Let us know in the comments section of the marketfeed app.

Tags Editorial, IPO, rategain ipo, rategain travel tech, SaaS, travel

Editorial

Tega Industries Ltd IPO: All You Need to Know

Post author By marketfeed Team
Post date December 1, 2021

Tega Industries Ltd has launched its three-day initial public offering (IPO) today— December 1. The Kolkata-based company is taking advantage of the recent IPO boom, and its investors are diluting their stakes. In this article, learn more about the company and its IPO.

Company Profile – Tega Industries Ltd

Tega Industries Ltd (TIL) is one of the leading manufacturers and distributors of specialised ‘critical to operate’ and recurring consumable products for the global mining and mineral processing industry. It offers comprehensive solutions to marquee mining clients in mineral beneficiation (the first step in extraction of metal from natural resources), mining, and bulk solids handling industry. TIL commenced operations in 1978 in India, with a foreign collaboration with Skega AB, Sweden.

The company’s product portfolio consists of specialised abrasion and wear-resistant rubber, polyurethane, steel, and ceramic-based lining components. These products are used across different stages of mining and mineral processing, screening, grinding, and mineral handling. It ultimately helps mining firms increase productivity and maximise operational efficiency. They also have in-house research and development (R&D) capabilities, with a strong focus on quality control.

TIL has manufacturing facilities in Dahej (Gujarat), Samali and Kalyani (West Bengal), Chile, South Africa, and Australia. The company had a presence in 479 installation sites across 70 countries in the previous financial year (FY21). For the quarter ended June 2021 (Q1 FY22), it was present in 212 installation sites. TIL’s primary end-customers are mineral processing sites involved in gold and copper ore beneficiation, accounting for 34.92% and 27.25%, respectively, of the total sale of products in Q1 FY22.

About the IPO

Tega Industries’ public issue opens on December 1 and closes on December 3. The company has fixed Rs 443-453 per share as the price band for the IPO.

The IPO is entirely an offer for sale (OFS) of 1.36 crore shares by promoters and early investors, aggregating to Rs 619.23 crore. Individual investors can bid for a minimum of 33 equity shares (1 lot) and in multiples of 33 shares thereafter. You will need a minimum of Rs 14,949 (at the cut-off price) to apply for this IPO. The maximum number of shares that can be applied by a retail investor is 429 equity shares (13 lots).

The main objective of the IPO is to provide an exit strategy (or liquidity) to TIL’s shareholders. Thus, the company is not raising any funds through the public issue. It aims to achieve the benefits of listing the equity shares on NSE and BSE. The total promoter holding in the company will decline from 85.17% to 79.17% post the IPO.

Financial Performance

Tega Industries has posted consistent growth in revenues and profits over the last three financial years (FY19-21). On a consolidated basis, the company posted revenues of Rs 856.68 crore in FY21 against revenues of Rs 695.54 crore in FY20, a growth of 23% YoY. Meanwhile, net profit jumped 108% YoY to Rs 136.41 crore in FY21. Earnings before interest, tax, depreciation, and amortisation (EBITDA) rose 76% YoY to Rs 187.47 crore during the same period. The company derived ~86.42% of the total revenue from its overseas operations last year.

TIL generates recurring revenues as mining processes include regular operational expenses. Nearly 75-80% of the company’s revenue comes from repeat orders from its clients.

Risk Factors

TIL’s global manufacturing facilities, sales, and operations expose the company to the risks (social and geopolitical) of doing business in foreign countries.
The failure to expand or effectively manage its sales and distribution network in India and overseas could have an adverse effect on its business.
The company is dependent on third-party logistics and support service providers for the delivery of raw materials and finished products. Any disruptions in their services can severely impact TIL’s overall operations.
Any shortfall or delay in the supply of raw materials or an increase in input costs could adversely impact the pricing structure and supply of the company’s products.
TIL is dependent on a few suppliers of certain raw materials. It does not have long-term contracts or exclusive arrangements with these suppliers. A significant reduction in supply by vital suppliers could harm its business operations.
Depreciation of the Indian rupee and exchange rate fluctuations in currencies in which it does business or have outstanding borrowings may impact business.
There are outstanding legal proceedings involving Tega Industries, its directors, and promoters.

IPO Details in a Nutshell

The book-running lead managers to the public issue are Axis Capital and JM Financial Consultants. Tega Industries had filed the Red Herring Prospectus (RHP) for its IPO on November 23. You can read it here. Out of the total offer, 50% is reserved for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs), and 35% for retail investors.

Ahead of the IPO, Tega Industries Ltd raised Rs 185.76 crore from 25 anchor investors. The marquee investors include Goldman Sachs, BNP Paribas Arbitrage, Kuber India Fund, SBI Mutual Fund (MF), ICICI Prudential, Axis MF, etc.

Conclusion

Tega Industries manufactures highly specialized and critical to operate products that have high barriers to replacement or substitution. The cyclical nature of the mining sector does not impact the company. According to reports, the global crushing, screening, and mineral processing equipment market was estimated at $20 billion in 2020. This market is expected to grow at a CAGR of 6.3% to reach $37 billion by 2030. Moreover, the mining sector would continue to grow due to the high demand for metals such as copper, iron, gold, and silver.

Tega Industries will be directly competing with AIA Engineering Ltd (AEL) once it gets listed. AEL is a leading manufacturer of high chromium wear, corrosion, and abrasion resistant castings in India.

TIL’s IPO shares are trading at a premium of ~Rs 385 in the grey market today. Before applying to this IPO, we will wait to see if the portion reserved for institutional investors gets oversubscribed. As always, consider the risks associated with the company and come to your own conclusion.

What are your opinions on this IPO? Will you be applying for it? Let us know in the comments section of the marketfeed app.

Tags Editorial, IPO, mineral processing products, mining sector, tega industries ipo, TIL

Editorial

Star Health & Allied Insurance Company Ltd IPO: All You Need to Know

Post author By marketfeed Team
Post date November 30, 2021

Health insurer Star Health & Allied Insurance Company has launched its initial public offering (IPO) today— Nov 30. It will be the sixth insurance company to go public in India. In this article, learn more about Star Health and its IPO.

Company Profile – Star Health & Allied Insurance Company Ltd

Star Health & Allied Insurance Company Ltd is one of the largest private health insurers in India, with a market share of 15.8% as of FY21. It primarily focuses on the retail health and group health segments, which accounted for 89.3% and 10.7%, respectively, of its total gross written premium (GWP) in FY21. [GWP is the total premium (both direct and assumed) written by an insurer before deductions and remitting commissions].

Coverage Options Offered by Star Health:

Retail health insurance— Paid for by private individuals or families through out-of-pocket expenses or private insurance.
Group health insurance— Paid for by employers, typically in the form of company health insurance plans. Such policies may involve co-payments by employees.
Government health insurance— Paid for by the government, typically in the form of central or state government health insurance
Personal accident
Travel insurance

The Chennai-based company distributes its policies through individual agents and corporate agents. As of Sept 31, 2021 (Q2 FY22), its network distribution included 779 health insurance branches across 25 states and 5 union territories (UTs) in India. Star Health has also built one of the largest health insurance hospital networks in our country, with more than 11,778 hospitals.

Star Health’s promoters include ace investor Rakesh Jhunjhunwala and private equity firms Westbridge Capital, Safecorp Investments India LLP.

About the IPO

Star Health’s public issue opens on November 30 and closes on December 2. The company has fixed Rs 870-900 per share as the price band for the IPO.

The fresh issue of shares (of the face value of Rs 10 each) aggregates to Rs 2,000 crore. The IPO also includes an offer for sale (OFS) of 5.8 crore shares by promoters and early investors. Individual investors can bid for a minimum of 16 equity shares (1 lot) and in multiples of 16 shares thereafter. You will need a minimum of Rs 14,400 (at the cut-off price) to apply for this IPO. The maximum number of shares that can be applied by a retail investor is 208 equity shares (13 lots).

Star Health will utilise the net proceeds from the IPO to augment/boost its capital base and maintain solvency levels. The company also aims to benefit from listing in terms of enhancing visibility and brand image.

The total promoter holding in the company will decline from 66.22% to 58.42% post the IPO.

Financial Performance

Star Health has been facing setbacks amidst the Covid-19 pandemic and fared poorly in FY21 and even the half-year ended September 2021 (H1-FY22). The company reported a net loss of Rs 825.6 crore in the financial year 2020-21 (FY21), compared to a net profit of Rs 268 crore in FY20. Total income stood at Rs 7,568.8 crore in FY21, up 36.3% year-on-year (YoY). Star Health settled and paid 1.5 lakh Covid-19 claims amounting to Rs 1,528.6 crore last year.

The health insurer had a solvency ratio of 1.52 as of September 2021, compared to the Insurance Regulatory & Development Authority of India’s (IRDAI) prescribed level of 1.50. The solvency ratio tells us whether an insurance company has the money to settle all claims at the time of liquidation. Higher solvency ratios indicate more capability of paying insurance claims during uncertain times, which gives more confidence to an insuree. To learn more about vital ratios related to the insurance sector, click here. The company had Rs 650 crore of outstanding debt liabilities as of Q2 FY22.

The company posted a 27.5% CAGR growth in the number of policies issued in FY21. It also reported a 31.4% CAGR increase in gross premiums, which stood at Rs. 9,349 crore in FY21. Star Health stands out among other standalone health insurers in terms of size, strong growth in gross written premium, and better operational performance.

Risk Factors

The Covid-19 outbreak has severely affected the company’s business and operations. Any potential future waves and effects of the Covid-19 pandemic on customers in terms of infection and need for hospitalisation will result in higher claim payments.
Any negative publicity could have an adverse impact on Star Health’s business and financial condition.
The unavailability or inaccuracy of data provided by customers could limit the functionality of insurance products and disrupt business.
The failure to develop and grow its distribution network of agents in a cost-effective manner could harm its overall operations. Moreover, the inability to maintain relationships with its existing hospital network could negatively impact its financial performance.
There are outstanding legal proceedings involving Star Health, its directors, and promoters.
Increased competition in the insurance sector could lead to aggressive pricing and adversely impact the company’s business.
Star Health will be forced to stop transacting any new business or change its strategies if it does not meet the solvency ratio requirements prescribed by IRDAI.

IPO Details in a Nutshell

The book-running lead managers to the public issue are Axis Capital, BofA Securities India, Citigroup Global Markets, CLSA India, Credit Suisse Securities (India), and more. Star Health & Allied Insurance Company Ltd had filed the Red Herring Prospectus (RHP) for its IPO on November 19. You can read it here. Out of the total offer, 75% is reserved for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs), and 10% for retail investors.

Ahead of the IPO, Star Heath raised Rs 3,217.13 crore from 62 anchor investors. The marquee investors include the Monetary Authority of Singapore, The New Economy Fund, Baillie Gifford Pacific Fund, Abu Dhabi Investment Authority, Morgan Stanley, Edelweiss, IIFL Special Opportunities Fund, etc.

Conclusion

According to a report from CRISIL Research, the retail health market segment is expected to emerge as a key growth driver for the overall health insurance industry in India. Factors such as low penetration of health insurance and high out-of-pocket expenses for healthcare costs would ultimately lead to better business for insurance firms. Moreover, only 10% of the Indian population has insurance policies outside of government plans. Star Health could benefit from the growth in this sector with its diversified product portfolio, which has a strong focus on innovation and specialised products.

However, the company has been reporting losses ever since the emergence of the Covid-19 pandemic (due to higher claims). A further impact of the pandemic could lead to higher claims. Moreover, an increase in competition could negatively impact its profitability. Star Health will be directly competing with leading players such as ICICI Lombard General Insurance Company and New India Assurance Co. once it gets listed.

Based on negative earnings and past losses, the issue price seems to be aggressively valued. Star Health’s IPO shares are trading at a Grey Market Premium (GMP) of just Rs 10 in the unofficial market. Before applying to this IPO, wait to see if the portion reserved for institutional investors gets oversubscribed. As always, consider the risks associated with the company and come to your own conclusion.

What are your opinions on this IPO? Will you be applying for it? Let us know in the comments section of the marketfeed app.

Tags Editorial, insurance, insurance sector, IPO, star health & allied insurance company

Editorial

Go Fashion (India) Ltd IPO: All You Need to Know

Post author By marketfeed Team
Post date November 17, 2021

2021 has been a record year for companies turning public. Go Fashion (India) Ltd, a leading women’s bottom-wear brand based in Chennai, has launched its IPO today— Nov 17. The company holds a nearly 8% market share in the branded women’s bottom-wear market in India. Let us take a closer look into the company and learn more about its IPO.

Company Profile – Go Fashion (India) Ltd

Incorporated in 2010, Go Fashion (India) Ltd (GFIL) is one of the largest women’s bottom-wear brands in India. The company is engaged in the development, design, sourcing, marketing, and retailing of a range of women’s bottom-wear products under the brand Go Colors. GFIL’s products include leggings, dhotis, harem pants, palazzos, pants, and jeggings. Their products are sold across multiple categories such as ethnic wear, western wear, athleisure, denim, and fusion wear.

GFIL is the first company to launch a brand exclusively dedicated to women’s bottom-wear category. It has leveraged this first-mover advantage to create a direct-to-consumer (D2C) brand with a diversified product portfolio of premium quality products at competitive prices. As of September 30, 2021 (Q2 FY22), Go Fashion sold bottom-wear in over 50 styles in more than 120 colors. The company’s products cater to women across all age groups and body types/physiques.

The company operates ~459 exclusive brand outlets (EBOs) across 23 states and union territories in India. Its distribution channels include large format stores (LFSs) such as Reliance Retail, Central, Unlimited, Globus Stores, and Spencer’s Retail. As of September, they operate around 1,270 LFSs. Go Fashion also sells products through its website, online marketplaces, and multi-brand outlets. GFIL has announced plans to increase the number of outlets to over 2,000+ in the next 5-6 years.

About the IPO

Go Fashion’s public issue opens on November 17 and closes on November 22. The company has fixed Rs 655-690 per share as the price band for the IPO.

The fresh issue of shares (of the face value of Rs 10 each) aggregates to Rs 125 crore. The IPO also includes an offer for sale (OFS) of 1.28 crore equity shares by promoters and early investors. Individual investors can bid for a minimum of 21 equity shares (1 lot) and in multiples of 21 shares thereafter. You will need a minimum of Rs 14,490 (at the cut-off price) to apply for this IPO. The maximum number of shares that can be applied by a retail investor is 273 equity shares (13 lots).

Go Fashion (India) will utilise the net proceeds from the IPO for the following purposes:

Funding the rollout of 120 new exclusive brand outlets- Rs 33.73 crore
Funding working capital requirements- Rs 61.39 crore
General corporate purposes

The total promoter holding in the company will decline from 57.47% to 52.78% post the IPO.

Financial Performance

Go Fashion (India) reported a net loss of Rs 3.5 crore for the financial year ended March 2021 (FY21), compared to a profit of Rs 62.63 in FY20. It can be attributed to the impact of the Covid-19 pandemic. Its total income declined 28.8% YoY to Rs 282.25 crore in FY21. The company was forced to shut down its physical sales channels, including stores, kiosks at malls, and franchise stores. The exclusive brand outlets and large format stores contribute 69% and 22%, respectively, to the total revenue.

GFIL’s net loss widened to Rs 18.99 crore in the quarter ended June 2021 (Q1 FY22) from Rs 8.59 crore in Q1 FY21. They were affected by lockdowns amidst the second wave of the Covid-19 pandemic and higher operational expenses. Now, the company is focusing on improving its online business to drive sales. GFIL plans to invest more in digital channels as part of its strategy to build an omnichannel engagement experience. Revenue from online channels has grown at a CAGR of 82.2%.

Interestingly, GFIL has a better track record of revenue growth, higher operating margins, and higher return on capital employed (ROCE) compared to its peers.

Risk Factors

The inability to effectively market its products and brand, or any deterioration in public perception of ‘Go Colors’ could lead to a fall in customer footfall and adversely affect its operations and financial performance.
GFIL is prone to risks associated with the locations of its exclusive brand outlets (EBOs). Further, the company derives a majority of its sales from EBOs in southern and western India. Any adverse developments affecting the operations in these regions can harm its overall business.
Go Fashion (India) carries out its operations from a single warehouse located in south India. Any disruption in the operations of this warehouse could have a severe impact on its business and financial results.
The inability to adequately protect its trademarks and intellectual property rights could adversely affect its business operations.
The failure to anticipate and respond to changes in fashion trends and changing consumer preferences in a timely and effective manner could severely impact its overall operations.
There is uncertainty surrounding the continuing impact of the Covid-19 pandemic on its operations.

IPO Details in a Nutshell

The book-running lead managers to the public issue are DAM Capital Advisors, ICICI Securities, and JM Financial Consultants. Go Fashion (India) Ltd had filed the Red Herring Prospectus (RHP) for its IPO on November 9, 2021. You can read it here.

Ahead of the IPO, GFIL raised Rs 456 crore from 33 anchor investors. The marquee investors include the Govt of Singapore, Nomura, Abu Dhabi Investment Authority, Fidelity, SBI Mutual Fund (MF), ICICI Prudential MF, etc.

Conclusion

The women’s clothing market in India has evolved over the past decade. According to a report by Technopak (a consultancy firm), the share of organized retailing within women’s apparel is likely to increase from 27% in FY20 to 42% by FY25. This rapid growth can be attributed to an increase in the number of working women, evolving fashion trends, and rising disposable income. Moreover, women’s bottom-wear is the fastest-growing category in the women’s apparel market segment. GFIL’s strength lies in its well-diversified portfolio, efficient & technology-driven supply chain, and in-house design & development capabilities. One could invest in the company based on its long-term growth prospects.

However, GFIL can be adversely affected by any kind of slowdown in consumer spending and increased competition from other players in the market. GFIL will be directly competing with leading firms such as Page Industries, Trent Ltd, Bata India, Aditya Birla Fashion & Retail, and TCNS Clothing once it gets listed.

The company has received a lot of interest in the grey market. GFIL’s IPO shares are trading at a Grey Market Premium (GMP) of Rs 560. Before applying, we will wait to see if the portion reserved for institutional investors gets oversubscribed. As always, consider the risks associated with the company and come to your own conclusion.

What are your views on this IPO? Will you be applying for it? Let us know in the comments section of the marketfeed app.

Tags Editorial, go colors, go fashion india ipo, IPO, womens apparel, womens bottom wear

Editorial

Tarsons Products Ltd IPO: All You Need to Know

Post author By marketfeed Team
Post date November 15, 2021

We have entered yet another busy week in the IPO markets! Tarsons Products Ltd, a company that makes essential labware products, has launched its IPO today— Nov 15. In this article, we take a closer look into the company and its IPO.

Company Profile – Tarsons Products Ltd

Tarsons Products Limited (TPL) is a leading life sciences company based in West Bengal. It is engaged in the designing, development, manufacturing, and marketing of labware products, which are used extensively in various laboratories across research organizations, academic institutes, pharmaceutical companies, Contract Research Organizations (CROs), diagnostic companies, and hospitals. It offers a wide range of quality equipment that helps advance scientific discovery and improve healthcare. TPL’s products are classified into three categories:

Consumables – Includes products such as centrifuge ware, cryogenic ware, liquid handling, petri dish, transfer pipettes, etc.
Reusables – Includes bottles, beakers, measuring cylinders, and tube racks.
Others – Comprises benchtop instrumentation such as vortex shakers and centrifuge pipettors.

As of June 30, 2021 (Q1 FY22), TPL had a diversified product portfolio of over 1,700 stock-keeping units (SKUs) across 300 products. Some of its clients include the Indian Institute of Chemical Technology (IICT), Dr Reddy’s Laboratories, Enzene Biosciences, Metropolis Healthcare, Dr Lal Path Labs, and Mylab Lifesolutions. The company distributes products to these end customers on a pan-India basis through ~141 authorized distributors. It also supplies its products to more than 40 countries.

Tarsons Products operates five manufacturing facilities in West Bengal, spread across an area of 20,000 sq. meters. These facilities are equipped with automated support systems that help in maintaining quality and reducing costs.

About the IPO

Tarsons Products Ltd’s public issue opens on November 15 and closes on November 17. The company has fixed Rs 635-662 per share as the price band for the IPO.

The fresh issue of shares (of the face value of Rs 2 each) aggregates to Rs 150 crore. The IPO also includes an offer for sale (OFS) of 1.32 crore equity shares by promoters and an investor. Individual investors can bid for a minimum of 22 equity shares (1 lot) and in multiples of 22 shares thereafter. You will need a minimum of Rs 14,564 (at the cut-off price) to apply for this IPO. The maximum number of shares that can be applied by a retail investor is 286 equity shares (13 lots).

Tarsons Products Ltd will utilise the net proceeds from the IPO for the following purposes:

Repayment or prepayment of all or certain of the company’s borrowings – Rs 78.54 crore
Funding a part of the capital expenditure for a new manufacturing facility at Panchla, West Bengal – Rs 62 crore
General corporate purposes.

The total promoter holding in the company will decline from 50.75% to 47.3% post the IPO.

Financial Performance

Tarsons Products Ltd has posted a robust financial performance over the past three years (FY19-21). The revenue of the company jumped from Rs 184.7 crore to Rs 234.3 crore during 2019-2021. It has posted good operating margins of over 21% in the last 3 years. TPL has also reported positive operating cash flows (cash inflow) during the same period. Their business and profitability have improved drastically amidst the Covid-19 pandemic. The consumable products that fall under the ‘Use and Throw’ category account for nearly 62% of its overall revenue and bring regular business for the company. Moreover, overseas sales accounted for 33% of revenue in FY21.

The company’s borrowings stood at Rs 105.95 crore as of September 2021, of which nearly Rs 50.6 crore were working capital loans. A significant portion of debt will be reduced after the IPO.

Risk Factors

The failure to meet quality and regulatory compliance standards could adversely affect the demand from end-users and their reputation.
Any delay, interruption, or reduction in the supply of raw materials to manufacture its products could severely impact its overall business.
All manufacturing facilities are geographically concentrated in West Bengal. Also, ~86.32% of its total manufacturing revenue comes from the units in Dhulagarh and Jangalpur. TPL’s operations are prone to civil unrest, natural disasters, regional conflicts, and poor weather conditions.
The inability to effectively manage its existing distribution network in the domestic or overseas markets (or further expand it) could harm its operations and financial performance.
Any disruption to power or water sources may increase TPL’s production cost and severely affect its overall profitability.
TPL faces stiff competition from domestic and multinational companies. The inability to compete effectively could result in the loss of customers and market share.

IPO Details in a Nutshell

The book-running lead managers to the public issue are ICICI Securities, Edelweiss Financial Services, and SBI Capital Markets. Tarsons Products had filed the Red Herring Prospectus (RHP) for its IPO on November 8, 2021. You can read it here.

Ahead of the IPO, TPL was able to Rs 305.96 crore from 32 anchor investors. The marquee investors include the Monetary Authority of Singapore, Abu Dhabi Investment Authority (ADIA), ICICI Prudential Mutual Fund (MF), Aditya Birla Sun Life MF, and Edelweiss MF.

Conclusion

As per a Frost & Sullivan report, Tarsons Products had a market share of 9-12% in the labware market in India in 2020. The company has been able to win the trust of the scientists and medical community in India. The report further states that the plastic labware market in our country is estimated to grow at a CAGR of 16% to reach Rs 2,576 crore by FY25. This expansion is on account of the superiority of plastic labware products in terms of shelf life, handling, and safety benefits. Moreover, increased investments by the Indian government in pharmaceutical and biotech research & development (R&D) offer an opportunity for firms such as TPL to grow further.

To establish strong and long-standing relationships with end customers, TPL will have to continue to expand its product portfolio, improve product applications, and build reliable supply chains.

The Grey Market Premium (GMP) of the company’s IPO shares stands at ~Rs 200. It means that shares are being traded in the unofficial market at Rs 200 more than the issue price. Before applying to this IPO, we will wait to see if the portion reserved for institutional investors gets oversubscribed. As always, make sure you carefully weigh out the pros and cons of the company before applying.

What are your opinions on this IPO? Will you be applying for it? Let us know in the comments section of the marketfeed app.

Tags Editorial, IPO, labware, life sciences, tarson products ipo

Editorial

Latent View Analytics IPO: All You Need to Know

Post author By marketfeed Team
Post date November 11, 2021

The IPO mania continues! Latent View Analytics, a leading data analytics company, launched its initial public offering (IPO) on November 10. The issue had received a great response on the first day of bidding. Let us take a closer look into the company and learn more about its IPO.

Company Profile – Latent View Analytics Ltd

Before investing in any company, it is always important to understand what it does or learn about the different products and services it offers. Latent View Analytics Ltd (LVAL) is a pure-play data analytics services company. It provides services such as data and analytics consulting, business analytics & insights, advanced predictive analytics, and digital solutions. The company caters to enterprises in Technology, Banking, Financial Services & Insurance (BFSI), Consumer Packaged Goods (CPG) & Retail, and other industry domains.

LVAL classifies its business into four divisions:

Consulting services – Involves understanding relevant business trends, challenges, and opportunities and preparing roadmaps of data and analytics initiatives that address them.
Data engineering – Design, architect, and implement the data foundation required to undertake analytics.
Business analytics – Delivers analysis and insights for clients to make more accurate, timely, and impactful decisions.
Digital solutions – Automate business processes, predict trends, and generate actionable insights.

Latent View has worked with over 30 Fortune 500 companies in the last three financial years. It serves clients across the United States, Netherlands, Germany, Singapore, and the United Kingdom. Some of the company’s key clients include Adobe, Uber Technology, and 7-Eleven. Enterprises primarily use their services to guide business strategy and optimize spending decisions. It helps them improve cash flows, profitability, marketing campaigns, and inventory management.

About the IPO

The public issue opens on November 10 and closes on November 12. The company has fixed Rs 190-197 per share as the price band for the IPO.

The fresh issue of shares (of the face value of Rs 1 each) aggregates to Rs 474 crore. The offer for sale (OFS) by existing shareholders aggregates to Rs 126 crore. Individual investors can bid for a minimum of 76 equity shares (1 lot) and in multiples of 76 shares thereafter. You will need a minimum of Rs 14,972 (at the cut-off price) to apply for this IPO. The maximum number of shares that can be applied by a retail investor is 988 equity shares (13 lots).

Latent View Analytics will utilise the net proceeds from the IPO for the following purposes:

Funding inorganic growth initiatives – Rs 147.9 crore.
Funding working capital requirements of Latent View Analytics Corp (a subsidiary) – Rs 82.4 crore.
Investment in subsidiaries to boost their capital base for future growth – Rs 130 crore.
General corporate purposes.

Financial Performance

LVAL has posted a consistent increase in profits over the past three financial years (FY19-21). Its net profit rose 25.4% YoY to Rs 91.4 crore for the financial year ended March 2021, while total income fell 1% YoY. The company’s operating margin expanded as a result of lower travel expenses and cost efficiencies. Earnings before interest, taxes, depreciation, and amortization (EBITDA) margins has increased from 27.11% in FY19 to 36.90% in FY21.

The company’s business model is highly scalable with the potential to improve the return on investment (ROI) per customer with ease. The Return on Equity (ROE) has been stable above 20%. ROE is a key metric of valuation that signifies how well a firm uses shareholders’ capital to generate profits.

Risk Factors

Latent View Analytics derives ~59.3% of the total revenue from its top five clients. The company’s operations could be adversely affected if existing clients do not renew their contracts or if long-term relationships are terminated.
More than 90% of LVAL’s revenues are derived from clients located in the US. Any disruption in the US market could impact their business.
Fluctuations in exchange rates may severely impact its financial performance as a significant portion of its expenditures are denominated in foreign currencies.
The failure to remain updated with new technologies and develop digital solutions to address the needs of clients could harm its overall operations.
LVAL faces intense competition in the data and analytics market. Its peers include TCS, Happiest Minds Technologies, Accenture, and Capgemini. The company may lack sufficient financial resources to maintain or improve its competitive position.
Revenues are highly dependent on a limited number of industry verticals. The decrease in demand for outsourced services in these verticals could adversely affect its business.

IPO Details in a Nutshell

The book-running lead managers to the public issue are Axis Capital, Haitong Securities India, and ICICI Securities. Latent View Analytics Ltd had filed the Red Herring Prospectus (RHP) for its IPO in November 2020. You can read it here.

Ahead of the IPO, LVAL raised Rs 267 crore from 34 anchor investors. The marquee investors include Abu Dhabi Investment Authority (ADIA), Ashoka India Opportunities Fund, HSBC, Hornbill Orchid India Fund, Mirae Asset, etc.

Conclusion

Latent View Analytics has extensive experience across a wide range of data and analytics capabilities. It delivers solutions that help companies drive digital transformation and use data to gain a competitive advantage. Data analysis is gaining momentum across the globe, and thus, the company has bright prospects ahead. According to LVAL’s prospectus, the analytics services market is expected to grow at a compounded annual growth rate (CAGR) of 19% to reach $68 billion in 2024! The company can benefit from the growth in this market, provided that they launch improved offerings and strengthen its client base. One could also invest in the company for the long term due to its decent track record and future prospects.

LVAL’s public issue has been receiving a massive response since its launch. As of 12:55 PM today, LVAL’s IPO has been subscribed 10.59 times! We expect institutional investors to show more interest in the IPO towards its closing on Friday evening. On the other hand, the Grey Market Premium (GMP) of the company’s IPO shares stands at ~Rs 285. It means that shares are being traded in the unofficial market at Rs 285 more than the issue price. As always, do consider the risks associated with this company and come to your own conclusion.

What are your views on Latent View Analytics’ IPO? Will you be applying for it? Let us know in the comments section of the marketfeed app.

Tags analytics services, data analytics, Editorial, IPO, latent view analytics, latent view ipo

Editorial

Sapphire Foods India IPO: All You Need to Know

Post author By marketfeed Team
Post date November 9, 2021

Sapphire Foods India Ltd., a company that operates some of our favourite fast-food brands, has launched its initial public offering (IPO) today— Nov 9. The IPO comes at a time when quick-service restaurant (QSR) players are witnessing a strong recovery. In this article, we shall dive into important details surrounding the company and its IPO.

Company Profile – Sapphire Foods India Ltd

Sapphire Foods India Ltd (SFIL) is one of the largest franchisee operators of popular fast-food chains such as KFC and Pizza Hut in the Indian subcontinent. Its franchisee agreement with US-based Yum! Brands allow the company to operate the KFC, Pizza Hut, and Taco Bell brands across India, Sri Lanka, and the Maldives.

As of June 30, 2021 (Q1 FY22), SFIL owns and operates:

209 KFC restaurants in India and the Maldives
239 Pizza Hut restaurants in India, Sri Lanka, and the Maldives
2 Taco Bell restaurants in Sri Lanka

Sapphire Foods India was Sri Lanka’s largest international QSR chain in terms of total revenue (Rs 190 crore— representing 35% of the total market revenue) in FY21. It operates 68 restaurants in the country, representing 39% of the total number of outlets in the market.

SFIL operates quick-service restaurants (QSRs) in high-traffic and high-visibility locations in key metropolitan areas and cities across these regions. They also develop new restaurants in new cities as part of their brand and food category expansion. The company has a well-defined new-restaurant roll-out process that enables it to identify new locations, build out restaurants quickly, and efficiently operate with optimally trained manpower. This process helps them achieve the targeted level of sales for restaurants.

SFIL also has an in-house supply chain function and works with vendor partners for food processing, packaging, warehousing, and logistics. The company has an experienced management team with robust governance practices.

About the IPO

On Oct 26, Sapphire Foods India received approval from the Securities and Exchange Board of India (SEBI) to raise funds via an IPO. The public issue opens on November 9 and closes on November 17. The company has fixed Rs 1,120-1,180 per share as the price band for the IPO.

The offer for sale (OFS) of 1.75 crore shares by existing shareholders aggregates to Rs 2,073.25 crore. Individual investors can bid for a minimum of 12 equity shares (1 lot) and in multiples of 12 shares thereafter. You will need a minimum of Rs 14,160 (at the cut-off price) to apply for this IPO. The maximum number of shares that can be applied by a retail investor is 168 equity shares (14 lots).

The main objective of the IPO is to provide an exit strategy (or liquidity) to SFIL’s shareholders and early investors. It aims to achieve the benefits of listing the equity shares on NSE and BSE. The total promoter holding in the company will decline from 60.08% to 49.97% post the IPO. SFIL also aims to enhance its brand name amongst existing and potential customers and create a public market for its equity shares in India.

Financial Performance

From the table shown above, it is clear that Sapphire Foods India has posted losses over the past three financial years. It can be attributed to high operating costs incurred towards the expansion of their store network. Moreover, the strict lockdowns imposed across the globe due to the Covid-19 pandemic had caused severe disruptions to all QSR companies. Interestingly, SFIL has a better revenue per store compared to Devyani International Ltd. In FY21, the income from takeaway and delivery services stood at Rs 551.88 crore or 68.8% of its total restaurant sales. SFIL is currently focusing on this segment to derive efficiency for long-term sustainable growth.

Cash flow is a key indicator of a company’s overall financial health. SFIL posted negative cash flows (or cash outflow) across FY19 to FY21. In the RHP, the company states that it may see negative cash flows in the future that could adversely affect its operations and implementation of its growth plans.

The company plans to continue to grow its business by opening a specific number of new stores every year. Thus, it expects to report losses until these new restaurants mature. However, SFIL will consider smaller formats for new restaurants to reduce rental expenses.

Risk Factors

Sapphire Foods India has reported restated losses in the last three financial years and anticipates additional losses in the future.
The company may suffer uninsured losses or experience losses that exceed the insured limits. Moreover, they may have to make extra payments to cover all uninsured losses.
They are dependent on the Franchisee Agreement with Yum! Brands for continuous operations. The imposition of certain restrictions or the termination of agreements with YUM could adversely affect SFIL’s business and financial condition.
SFIL has incurred substantial debts and may incur more debts in the future. It could affect the company’s ability to obtain funds or pursue its growth strategy.
There are outstanding legal proceedings involving the company, its subsidiaries, and its directors.
The failure or deterioration of its quality control systems and protocols for supply chain or restaurants could lead to the termination of the Franchisee Agreement.
The inability to recognize and respond to changes in consumer preferences and food habits could adversely impact SFIL’s overall operations.

IPO Details in a Nutshell

The book-running lead managers to the public issue are BofA Securities India, ICICI Securities, IIFL Securities, and JM Financial Consultants. Sapphire Foods India Ltd had filed the Red Herring Prospectus (RHP) for its IPO on October 27. You can read it here.

Ahead of the IPO, SFIL was able to raise Rs 932.96 crore from anchor investors. The marquee investors include Government of Singapore, Fidelity Funds, Abu Dhabi Investment Authority (ADIA), HSBC, ICICI Prudential, and Societe Generale.

Conclusion

As mentioned earlier, SFIL has announced ambitious plans to open new stores every year. This strategy will lead to a further increase in operating costs and other expenses in the upcoming quarters. Thus, the company may continue to report losses until these new stores mature. Moreover, another severe wave of the Covid-19 pandemic could affect its overall sales and expansion plans. If they are unable to open new stores and ensure store profitability, Yum! Brands could terminate their current arrangements with SFIL. Since a significant portion of their revenues comes from KFC and Pizza Hut stores, the company will have to focus on strategies to control the Covid-19 impact.

SFIL will be directly competing with prominent listed QSR companies such as Jubilant Foodworks, Barbeque Nation, Burger King India, Devyani International, and Westlife Development after it gets listed. [To learn more about these QSR firms, click here]. The continuing impact of the Covid-19 pandemic and increased competition among global QSR chains may continue to affect cash flows and the overall financial performance of the company.

It seems that the company has received some interest in the grey market. The Grey Market Premium (GMP) of SFIL’s IPO shares stands at ~Rs 120. It means that shares are being traded in the unofficial market at Rs 120 more than the issue price. Before applying, make sure you carefully weigh out the pros and cons of the company and come to your own conclusion.

What are your views on this IPO? Will you be applying for it? Let us know in the comments section of the marketfeed app.

Tags Editorial, IPO, kfc, pizza hut, qsr stocks, sapphire foods india, sapphire foods ipo

Editorial

Fino Payments Bank IPO: All You Need to Know

Post author By marketfeed Team
Post date October 31, 2021

Fino Payments Bank launched its three-day initial public offering (IPO) on November 29. The IPO closes in two days. It is inspiring to see such a young company doing an IPO just four years from its incorporation. In this article, we dive into the details surrounding the company and its IPO.

Company Profile – Fino Payments Bank Ltd

Fino Payments Bank Ltd (FPBL) is a fintech company that offers a diverse range of financial products and services. Since its incorporation in 2017, the company has grown its operational presence to cover over 90% of the districts in India as of September 2021. Its main products and services include:

Current accounts and Savings accounts (CASA)
Issuance of debit card and related transactions
Facilitating domestic remittances
Open banking functionality (through its Application Programming Interface or API)
Withdrawing and depositing cash via micro-ATM or Aadhaar Enabled Payment System (AePS)
Cash Management Services (CMS)

FPBL operates an asset-light business model. It relies on fees and commission-based income generated from merchant networks and strategic commercial relationships. The merchants facilitate FPBL in cross-selling its other financial products and services such as third-party gold loans, insurance, bill payments, and recharges. The company’s merchant network is primarily concentrated in Uttar Pradesh, Bihar, and Madhya Pradesh. Nearly 45% of the merchants working with the bank come from these states as of FY21, contributing 43% of its revenue.

Fino Payments also manages a large Business Correspondents (BC) network on behalf of other banks. BCs are retail agents that represent banks and are responsible for delivering banking services at locations other than a bank branch or ATM.

Last year, the Ministry of Electronics & Information Technology ranked Fino Payments Bank third among banks in facilitating digital transactions in India. The company also has the largest network of micro-ATMs in the country.

About the IPO

Fino Payments Bank’s public issue opens on October 29 and closes on November 2. The company has fixed Rs 560-577 per share as the price band for the IPO.

The fresh issue of shares (of the face value of Rs 10 each) aggregates to Rs 300 crore. The offer for sale (OFS) of up to 1.56 crore shares from existing shareholders aggregates to Rs 900.29 crore. Individual investors can bid for a minimum of 25 equity shares (1 lot) and in multiples of 25 shares thereafter. You will need a minimum of Rs 14,425 (at the cut-off price) to apply for this IPO. The maximum number of shares that can be applied by a retail investor is 325 equity shares (13 lots).

FPBL will utilise the net proceeds from the IPO to expand/boost its Tier-1 capital base to meet its future capital requirements. The funds will be used to develop its technology infrastructure, as it looks to expand into new geographies and broaden the suite of services offered. Tier 1 capital consists of shareholders’ equity and retained earnings (disclosed on their financial statements) and is a primary indicator to measure a bank’s financial health. The company will also use the proceeds to meet the expenses in relation to the public offer.

The total promoter in the company will decline from 100% to 75% post the IPO.

Financial Performance

Fino Payments Bank reported a net profit of Rs 20.4 crore for the year ended March 2021 (FY21), compared to a net loss of Rs 32 crore in the previous year. It was aided by a 14.4% year-on-year (YoY) rise in its total income to Rs 791 crore. The company’s expenses grew 6.5% YoY to Rs 770 crore in FY21. The capital adequacy ratio (CAR) stood at 56.3% in FY21, compared to 61% in FY20. CAR helps make sure that banks have enough capital to protect depositors’ money. Payments banks usually have high capital adequacy since they do not lend from their balance sheets.

In terms of total deposits, Fino Payments Bank ranks fourth amongst its peers at Rs 241 crore (as of FY21). The company registered a debit card base of 23.3 lakh and an annual transaction value of Rs 1,712 crore in FY21. For comparison, Paytm Payments Bank had a card base of 6.4 crore and recorded transactions worth Rs 8,453 crore last fiscal. FPBL generates 95% of its income through fees and commissions.

The company posted negative cash flows of Rs 836.73 crore in FY20 and Rs 322.24 crore in FY21. Cash outflows over extended periods could affect FPBL’s ability to undertake its day-to-day business and implement its growth plans.

Risk Factors

Fino Payments Bank is heavily dependent on income from fees and commission-based activities. Its financial performance could be severely affected if they are unable to generate income from such activities.
The company relies extensively on its technology systems/platforms to offer services. Any disruption or failure in these systems could harm its reputation and lead to loss of business.
A significant portion of FPBL’s merchant network is concentrated in Uttar Pradesh, Bihar, and Madhya Pradesh. Any adverse changes in the conditions affecting these states could harm the overall performance of the firm.
Payments banks in India are subject to strict regulations and norms. Such firms undergo frequent inspections from authorities such as the RBI. Fino Payment Bank’s operations could be negatively affected if they are unable to comply with such rules.
FPBL has a limited operating history, making it difficult for prospective investors to assess its potential.
There are pending litigations against the company and its promoters. HDFC Bank had filed a suit claiming Rs 1.86 crore in damages against FPBL’s subsidiaries. The private bank has alleged certain irregularities against the company in its role as a business correspondent.

IPO Details in a Nutshell

The book-running lead managers to the public issue are Axis Capital, CLSA India, ICICI Securities, and Nomura Financial Advisory & Securities. Fino Payments Bank Ltd had filed the Red Herring Prospectus (RHP) for its IPO earlier this month. You can read it here.

Ahead of the IPO, FPBL was able to raise Rs 539 from anchor investors. The marquee investors include Fidelity, HSBC Global, Pinebridge, Tata MF, Aditya Birla Sun Life MF, and Society Generale.

Conclusion

Currently, Fino Payments Bank is present in 94% of districts in India. The company plans to expand its network of over 7 lakh merchants, as they become outlets for financial transactions through micro ATMs. FPBL offers its remittance and payments services through these micro ATMs, further adding to its fee income. The payments bank is also looking to enter the consumer credit business through partnerships with leading banks and non-bank lenders. Moreover, it has applied for licenses to start offering mutual funds and is seeking permission to buy and sell gold on its digital platform. The lender’s growth depends on the rising digital payment opportunities in India. Thus, one could invest in the company based on its future prospects.

FPBL will be the first payments bank to get listed on the stock exchanges, beating out Paytm. The company became profitable in the fourth quarter of FY20 and has been profitable in the subsequent quarters. However, it faces stiff competition from players such as Paytm, Airtel Payments Bank, India Post Payments Bank, and Jio Payment Bank.

Before applying for the IPO, we will wait to see if the portion reserved for institutional investors gets oversubscribed. The issue was subscribed 51% on the first day of bidding. As always, ensure that you understand the risks associated with the company and come to your own conclusion.

What are your opinions on this IPO? Will you be applying for it? Let us know in the comments section of the marketfeed app.

Tags Editorial, fino merchants, fino payments bank ipo, FPBL, IPO, payments bank

Editorial

Nykaa IPO: All You Need To Know

Post author By marketfeed Team
Post date October 28, 2021

What a thrilling year for startups! After Zomato, companies such as Paytm, Oyo, and MobiKwik are lining up to launch their IPOs. FSN E-Commerce Ventures Ltd, the parent company of Nykaa, has launched its initial public offering (IPO) today— October 28. It is a unicorn (startup with more than $1 billion valuation) led by women with a lot of growth potential. In this article, learn more about Nykaa and its IPO.

Company Profile – FSN E-Commerce Ventures (Nykaa)

FSN E-Commerce Ventures Ltd is a digitally native consumer technology platform. It delivers content-led lifestyle retail experiences to consumers. The company has a diverse portfolio of beauty, personal care, and fashion products. It sells cosmetics, clothes, and grooming products.

The company operates under two verticals:

Nykaa: Beauty and personal care
Nykaa Fashion: Apparel and accessories

FSN E-Commerce Ventures (Nykaa) was established in April 2012 by Falguni Nayar, a former investment banker. She ventured into beauty and cosmetics products as it was an underpenetrated segment in online e-commerce at that time. Now, her company has grown multi-fold into one of India’s top digital retail sites for beauty products. Nykaa is seeking a valuation of $7 billion (~Rs 52,315.55 crore)!

The company records ~1.5 crore average monthly unique visits and lists over 4,000 brands on its platform. They own six prominent brands— Nykaa Cosmetics, Nykaa Naturals, Kay Beauty, Nykd by Nyka, Twenty Dresses, and Pipa Bella. Apart from its online presence, Nykaa currently operates 80 physical stores across 40 cities in India. It has grown into one of the preferred destinations for certain luxury and prestige products in India for consumers and brands. The company also focuses on educating consumers via digital content, digital communities, and tech-product innovations, which is an integral component of its business model.

About the IPO

FSN E-Commerce Ventures’ public issue opens on October 28 and closes on November 1. The company has fixed Rs 1,085-1,125 per share as the price band for the IPO.

The fresh issue of shares (of the face value of Rs 1 each) aggregates to Rs 630 crore. The offer for sale (OFS) of up to Rs 4.19 crore equity shares from existing shareholders aggregates to Rs 4,721.92 crore. Individual investors can bid for a minimum of 12 equity shares (1 lot) and in multiples of 12 shares thereafter. You will need a minimum of Rs 13,500 (at the cut-off price) to apply for this IPO. The maximum number of shares that can be applied by a retail investor is 168 equity shares (14 lots).

Objectives of the Issue

Nykaa will utilise the net proceeds from the IPO for the following purposes:

Investment of Rs 42 crore in subsidiaries FSN Brands and/or Nykaa Fashion for funding the establishment of new retail stores.
Rs 42 crore towards capital expenditure and investment in its subsidiaries Nykaa E-Retail, Nykaa Fashion, and FSN Brands for funding the set-up of new warehouses.
Rs 156 crore towards repayment or prepayment of outstanding borrowings availed by the company and one of their subsidiaries, Nykaa E-Retail.
Expenditure of Rs 234 crore for enhancing the visibility and awareness of its brands.
General corporate purposes.

The total promoter in the company holding will fall from 54.22% to 52.56% post the IPO.

Financial Performance

Nykaa has turned profitable in the financial year ended 2020-21 (FY21). Despite the Covid-19 pandemic hitting non-essential spending for more than a year, the company has reported a surge in revenues. It posted a net profit of Rs 61.94 crore in FY21, compared to a net loss of Rs 16.34 crore in FY20. The revenue from operations rose 38.1% year-on-year (YoY) to Rs 2,440.8 crore in FY21. Nykaa reported a 35.3% increase in total orders to 1.71 core over the previous year. Thus, it has a capital-efficient business model with a combination of strong growth and profitability.

The company’s online business has been growing rapidly, with cumulative downloads of nearly 4.37 crore across all its mobile applications.

While the company’s domain was the Beauty and Personal Care segment, it has made considerable progress in its Fashion segment. A key indicator in the e-commerce space is the Gross Merchandise Value or GMV. It indicates the value of goods and services that are sold on a marketplace at a given point in time. For Nykaa, the GMV is the monetary value of orders inclusive of taxes and gross of discounts. In FY21, the GMV in Beauty and Personal Care segment was Rs 33,804.10 crore, which is the amount of goods sold by the company inclusive of taxes and discounts before return or cancellation.

Risk Factors

The failure to acquire new customers in a cost-efficient manner may affect the company’s profitability.
Nykaa’s core business depends heavily on the growth of India’s online commerce industry and its ability to effectively respond to changing user behaviour on digital platforms.
There are pending litigations against the company, its subsidiaries, and its directors. Any adverse decisions in legal proceedings may render them liable to penalties.
Failure to identify and effectively respond to changing consumer preferences, spending patterns, and changing fashion trends in a timely manner may harm Nykaa’s overall operations.
Changing regulations in India could lead to new compliance requirements that are uncertain.
Any harm to the company’s brand or reputation may adversely affect its financial condition and cash flows.

IPO Details in a Nutshell

The book-running lead managers to the public issue are BofA Securities India, Citigroup Global Markets India, ICICI Securities, JM Financial Consultants, Kotak Mahindra Capital, and Morgan Stanley India.

Ahead of the IPO, the company was able to raise Rs 2,396 crore from 184 anchor investors.

Conclusion

The first two weeks of November will be raining with IPOs. Mostly tech IPOs such as Paytm, PolicyBazaar, Nykaa, and MobiKwik. The IPOs are coming out all at once with extremely high valuations and buzz in the market. It might leave the market out of liquidity. Nykaa is the first IPO going up in November and might therefore have a first-mover advantage. The company has grown significantly in a very small period, much faster than its other tech-commerce peers.

Nykaa scored two consecutive losses in the past financial years. According to SEBI regulations, the company needs to offer not less than 75% of the Net Offer to Qualified Institutional Buyers (QIBs). This will bring down the retail quota from 35% to 10% as is the requirement laid down by SEBI. Therefore, retail investors like you and me have a lesser chance of getting an allotment.

In today’s trend and time, wherein tech startup giants have extremely inflated valuations supported by the post-COVID market boom, it is difficult to project where these stocks might be headed. Just like its tech peers, Nykaa too is on the same path. The company’s growth has been good, it recorded a net profit last year despite the Covid-19 pandemic. Its key metrics hint towards a flourishing business. Even if one was to say that Nykaa is overvalued, one cannot question its growth metrics. Conclusively, there is considerable room for Nykaa’s IPO to be a successful one.

What are your views on this IPO? Will you be applying for it? Let us know in the comments section of the marketfeed app.

Tags Editorial, FSN E-Commerce, FSN E-Commerce Ventures Ltd, Initial Public Offering, IPO, Nykaa, Nykaa Cosmetics, Nykaa Fashion, nykaa ipo