- RML is engaged in cloud communication platform providing services.
- Over the years, it has gained global acceptance for its niche play.
- The company has shown growing financial performances.
- Issue is priced reasonably around 19 P/E
- RML is set to generate fancy post listing being the first mover.
ABOUT COMPANY:
Route Mobile Ltd. (RML) is providing a cloud-communication platform as a service (“CPaaS”) to enterprises, over-the-top (“OTT”) players and mobile network operators (“MNOs”). According to the ROCCO Report 2020, it ranked as a tier one application-to-peer (“A2P”) service provider internationally. Further, it ranked second globally as a tier-one A2P service provider in 2017. (Source: ROCCO Report 2017). RML also ranked first for ‘value-added services’ provided, its ‘implementation process’ and ‘uptime performance’ among tier-one vendors. (Source: ROCCO Report 2017).
Company’s enterprise solution comprises two primary components – the front-end that provides an interface for enterprises to integrate with, and a back-end which is directly integrated with over 240 MNOs, and provides access to over 800 MNOs across the globe, as of June 30, 2020, enabling it to leverage their SMS and voice channels for digital communication (“Super Network”). Further, the backend is also integrated with OTT-business messaging solution providers and is capable of supporting Rich Communication Services (“RCS”) business messaging, offering multiple channels of communication to enterprises. RML’s Omni-channel platform enables enterprises to leverage various modes of digital communication to engage with their stakeholders – including customers, employees and vendors.
Company’s range of enterprise communication services includes application-to-peer (“A2P”) / peer-to-application (“P2A”) / 2Way Messaging, RCS, OTT business messaging, voice, email, and Omni-channel communication. Further, it also offers SMS analytics, firewall, filtering and monetization, SMS hubbing and Instant Virtual Number (“IVN”) solutions to MNOs across the globe. Its clients include some of the world’s largest and well-known organizations, including a number of Fortune Global 500 companies.
As of June 30, 2020, the company has serviced over 30,150 clients, cumulatively since inception, across sectors including social media, banking and financial services, aviation, retail, internet/ e-commerce, logistics, healthcare, hospitality, media and entertainment, pharmaceuticals and telecom. As on the date of this Red Herring Prospectus, its global operations included nine direct and 12 step-down subsidiaries serving its clients through 18 locations across Africa, Asia Pacific, Europe, Middle East and North America. Consistent with the strategy of pursuing inorganic growth to deepen a relationship with MNOs and broaden product and service portfolio, RML acquired 365squared Limited with effect from October 1, 2017, which operates in SMS analytics, firewall, filtering and monetization. Further, it also acquired Call2Connect, effective April 1, 2017, a company which offers voice, non-voice and consulting BPO services to some of the largest enterprises in India.
RML is an associate member of the GSMA and an accredited open hub connectivity solution provider with internally developed cloud communications platform allowing it to handle both A2P and peer-to-peer (“P2P”) traffic for enterprises, OTT players and MNOs. In addition, Route Mobile (UK) Limited is also an associate member of GSMA. In the three months ended June 30, 2020, through its cloud communications platform, it processed more than 6.95 billion billable transactions. In Fiscal 2020, its platform managed more than 30.31 billion billable transactions from clients and was used by more than 2,700 clients while it managed more than 24.74 billion billable transactions in Fiscal 2019. RML has established direct relationships with MNOs that provide clients with global connectivity. As of June 30, 2020, it had direct relationships with over 240 MNOs and four short messaging service centres hosted in various geographies across the globe. RML is able to access more than 800 networks across the world, with a headcount of 318 as of June 30, 2020.
ISSUE DETAILS / CAPITAL HISTORY:
To part finance its plans of repayment/prepayment of certain borrowings (Rs. 36.5 cr.), acquisition and other strategic initiatives (Rs. 83 cr.), purchase of office premises in Mumbai (Rs. 65 cr.) and general corpus funds, RML is coming out with a maiden IPO with a combo offer of fresh equity issue (Rs. 240 cr.) and offer for sale (Rs. 360 cr.). It consists fresh equity issue of approx 6857142 shares of Rs. 10 each and offer for sale of approx 10285714 shares. The issue opens for subscription on September 09, 2020, and will close on September 11, 2020. The company has fixed the price band of Rs. 345 – Rs. 350 per share. Minimum application is to be made for 40 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. RML mulls mobilizing around Rs. 600 cr. (based on upper price band) through this IPO. Issue constitutes 30.15% of the post issue paid-up capital of the company.
Having issued entire equity at par, the company also issued bonus shares in the ratio of 39 for 1 (January 2011), 9 for 1 (December 2015) and 3 for 2 (September 2016). Thus entire current paid up equity is issued at par coupled with bonus shares. The average cost of acquisition of shares by the promoters is Rs. 0.01 per share. Post issue, RML’s current paid-up equity capital of Rs. 50.00 cr. will stand enhanced to Rs. 56.86 cr. With this issue, the company is looking for a market cap of Rs. 1990 cr.
The issue is jointly lead managed by ICICI Securities Ltd., Axis Capital Ltd., Edelweiss Financial Services Ltd. and IDBI Capital Markets & Securities Ltd. while KFin Technologies Pvt. Ltd. is the registrar to the issue.
FINANCIAL PERFORMANCE:
On the financial performance front, on a consolidated basis, RML has posted revenue/net profits of Rs. 509.49 cr. / Rs. 46.68 cr. (FY18), Rs. 852.38 cr. / Rs. 54.53 cr. (FY19) and Rs. 968.10 cr. / Rs. 69.10 cr. (FY20). For the Q1 of FY21, it has earned a net profit of Rs. 26.93 cr. on revenue of Rs. 312.30 cr. Management is confident of sustaining its growth story considering the relationship with its long term marquee global clients. It has marked CAGR of 38% in revenue and total billable transactions for the past three fiscals.
For the last three fiscals, on a consolidated basis, RML has posted an EPS of Rs. 12.24 and RoNW of 26.55%. The issue is priced at a P/BV of 5.89 based on its NAV of Rs. 59.40 as on June 30, 2020.
If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 18.47. Since this company will be the first mover in the segment, there is no average industry P/E is available.
BRLM’s TRACK RECORD:
The four Book Running Lead Manager’s (BRLM’s) associated with this offer have handled 22 public issues in the past three years, out of which 9 issues closed below the issue price on listing date.
COMPARISION WITH LISTED PEERS:
As per offer documents, RML has no listed peers to compare with.
CONCLUSION / INVESTMENT STRATEGY:
At sub 19 P/E issue appears reasonably priced. being the First Mover Company, it will generate investors’ fancy post listing. This segment has entry barriers and this company is enjoying its leadership with niche place among its clients. Investors may consider investment for short to long term.
The original review has been penned by Dilip Davda, appears on chittorgarh.com and is available here.
- HMTL is a versatile digital business, product engineering and infra management solution provider company.
- It has established its niche with the successful execution of customer-centric developments.
- HMTL has posted the growing pattern for its top and bottom lines.
Based on Q1 FY21 parameters, the issue is lucratively priced.
PREFACE:
Ashok Soota and his group have incorporated this company. It is well known that earlier Ashok Soota emerged as the leader and instrumental in the growth of MindTree which was incorporated in August 1999. Subsequently, this company was taken over by L & T group in the year 2019. Ashok Soota exited this company in 2010 itself and parted with his stake in the company to other founders.
ABOUT COMPANY:
Happiest Minds Technologies Ltd. (HMTL) is claiming to have been positioned as “Born Digital. Born Agile”. It focuses on delivering a seamless digital experience to its customers. HMTL’s offerings include, among others, digital business, product engineering, infrastructure management and security services. Its capabilities provide an end-to-end solution in the digital space. The company believes that it has developed a customer-centric focus that aims to fulfil their immediate business requirements and to provide them strategically viable, futuristic and transformative digital solutions.
HMTL helps customers in finding new ways to interact with their users and clients enabling them to become more engaging, responsive and efficient. It also offers solutions across the spectrum of various digital technologies such as Robotic Process Automation (RPA), Software-Defined Networking/Network Function Virtualization (SDN/NFV), Big Data and advanced analytics, Internet of Things (IoT), cloud, Business Process Management (BPM) and security.
As of June 30, 2020, HMTL had 148 active customers. Its repeat business (revenue from existing customers) has steadily grown and contributed a significant portion of its revenue from contracts with customers over the years indicating a high degree of customer stickiness. The company believes its agility and resilience has stood out in recent years. In the three months ended June 30, 2020, and in Fiscal 2020, it delivered 90.1% and 87.9% respectively of projects through the agile delivery methodology. Over the years and currently, during the ongoing outbreak of Novel Coronavirus, it has successfully implemented business continuity plans including to achieve efficient work-from-home practices to ensure connectivity across the enterprise.
As of March 31, 2020, HMTL had a Glassdoor rating of 4.1 on a scale of ‘1- 5’, among the highest for Indian IT services companies (Source: Frost & Sullivan Report). The Company has been recognized and rewarded. In the Great Place to Work® survey for 2019, it has been ranked fourth in IT services, in India’s Top 25 Best Workplaces for IT & IT-BPM and among India’s Top 25 Best Workplaces for Women.
ISSUE DETAILS / CAPITAL HISTORY:
To part finance its long term capital requirements (Rs. 101 cr.) and general corpus funds, HMTL is coming out with a maiden IPO with a combo offer of fresh equity issue (Rs. 110 cr.) and offer for sale. It consists fresh equity issue of approx 6626505 shares of Rs. 2 each and an offer for sale of 35663585 shares. The issue opens for subscription on September 07, 2020 and will close on September 09, 2020. The company has fixed the price band of Rs. 165 – Rs. 166 per share. Minimum application is to be made for 90 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. HMTL mulls mobilizing around Rs. 697.79 – Rs. 702.02 cr. (based on lower and upper price bands) through this IPO. Issue constitutes 28.80% of the post issue paid-up capital of the company.
Having issued initial equity at par, the company raised further equity in the price range of Rs. 3 to Rs. 26. It has also issued bonus shares in the ratio of 162 for 1 (Nov. 2011). The company also converted preference shares into equity in the ratio of 163 for 1 (in March 2020, May 2020 and July 2020). Preference shares were having a face value of Rs. 652 per share and were issued in the price range of Rs.4890, Rs. 5500, Rs. 5930, Rs. 6150, Rs. 6700 and Rs. 11410 per share between October 2011 and April 2018.
The average cost of acquisition of shares by the promoters/ selling stakeholders is Rs. 24.91 and Rs. 34.68 per share. Post issue HMTL’s current paid-up equity capital of Rs. 28.05 cr. will stand enhanced to Rs. 29.37 cr. With this IPO, HMTL is looking for a market cap of Rs. 2437.94 cr. approx. The issue is jointly lead managed by ICICI Securities Ltd. and Nomura Financial Advisory and Securities (India) Pvt. Ltd. while KFin Technologies Pvt. Ltd. is the registrar to the issue.
FINANCIAL PERFORMANCE:
On the financial performance front, on a consolidated basis, HMTL has posted revenue/net profits (Loss) of Rs. 489.12 cr. / Rs. – (22.47) cr. (FY18), Rs. 601.81 cr. / Rs. 14.21 cr. (FY19), Rs. 714.23 cr. / Rs. 71.71 cr. (FY20). For Q1 of FY21, it has earned a net profit of Rs. 50.18 cr. on revenue of Rs. 186.99 cr. Thus after FY19, it has posted growth in revenue as well as net profits.
On a consolidated basis, for the last three fiscals, HMTL has posted an average EPS of Rs. 2.55 and an average RoNW of 3.1%. Based on HMTL’s NAV of Rs. 23.7 as on June 30, 2020, issue is priced at a P/BV of 7 (on the basis of upper cap).
If we annualize the latest FY21-Q1 results (with super-profits) and attribute it on fully diluted equity post IPO, then asking price is at a P/E of around 12 against the industry average of 27. On the basis of its trailing earnings and paid-up equity as on March 31, 2020, the issue is priced at a P/E of around 31. Management attributed the rise in net profit for Q1-FY21 for their ongoing cost-cutting as well as rent reduction for its staffing parks, following the work from home strategy. Despite pandemic, they had around 77% business running smoothly and yielding rewards. Management is confident of maintaining reasonable growth in their net earnings.
BRLM’s TRACK RECORD:
The two Book Running Lead Manager’s (BRLM’s) associated with this offer have handled 11 public issues in the past three years, out of which 5 closed below the issue price on listing date.
COMPARISION WITH LISTED PEERS:
As per offer documents, HMTL has shown TCS, Infosys, LTI and MindTree as its listed peers. They are currently quoting at a P/Es of around 27.5, 24.37, 27.52 and 25.04 (as on September 02, 2020). However, they are not strictly comparable on an apple to apple basis.
Conclusion / Investment Strategy
Based on financial parameters, the issue appears fairly priced with something on the table. The company has adopted a mindful IT strategy for its future growth. Investors may consider subscribing this IPO for medium to long term rewards.
The original review is authored by Dilip Davda, appears on Chittorgarh.com and is available here.
ABOUT COMPANY:
Rossari Biotech Ltd. (RBL) is one of the leading specialty chemicals manufacturing companies in India. It is providing customized solutions to specific industrial and production requirements of customers that are primarily in FMCG, apparels, poultry and animal feed industries. RBL has well-diversified activities and has a vast product portfolio comprising home, personal care and performance chemicals, textile specialty chemicals, animal health and nutrition products. Besides India, the company’s operation is spread across 17 foreign countries. According to the F & S Report, as on 30th September 2019, RBL is the largest manufacturer of textile specialty chemicals in India and it providing textile specialty chemicals in a sustainable, eco-friendly yet competitive manner. As on May 31, 2020, it had a wide range of 2030 different products (consisting of 1543 products for textile specialty chemical alone).
The company derives 46.81% of its total revenues from its home, personal care and performance chemicals, 43.71% from textile specialty chemicals and the rest from animal feeds and nutrition products. To stay tuned with the time and demand of its customers, RBL keeps monitoring the fast-changing trends across the segment it deals with. The company enjoys a long term relationship with most of its top customers. In domestic markets, the company’s client list includes HUL, Arvind Ltd., Raymonds, Panasonic, IFB, Bosch, etc.
The company has its R & D facilities with two most modern facilities in the western region. As on 31st May 2020, it has a network of 204 distributors for the domestic market and 29 distributors across the 17 countries and two international offices in the primary markets of its reach.
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CY 2020 started with the main-board IPO of ITI Ltd. that failed to garner the desired amount despite extension and change in the price band. However, SBI Card IPO created unprecedented hype ever since it filed DRHP with regulator and surprised one and all with hectic grey market premium activities even before the announcement of the price band, lot size etc. Anyway, since this IPO is currently the “Talk of the Town” and is attracting fancy across the board, it is expected to make new records of oversubscription opines primary market experts. But they cautioned that “Please do not be carried away with grey market activities, investors must study the fundamentals before investing.”
ABOUT COMPANY
SBI Cards and Payment Services Ltd. (SBI Card) a subsidiary of SBI is one of the leading credit card issuers in India, which is one of the fastest-growing economies in the world with an expanding and under-penetrated credit card market. As per the survey, India has just 3% penetration (lowest in the world) in the credit card segment leaving ample scope for advancement.
SBI Card is the second-largest credit card issuer in India, with a 17.6% and 18.1% market share of the Indian credit card market in terms of the number of credit cards outstanding as of March 31, 2019, and November 30, 2019, respectively, and a 17.1% and 17.9% market share of the Indian credit card market in terms of total credit card spends in fiscal 2019 and in the eight months ended November 30, 2019, respectively, according to the RBI. It offers an extensive credit card portfolio to individual cardholders and corporate clients which include lifestyle, rewards, travel and fuel, shopping, banking partnership cards and corporate cards covering all major cardholder segments in terms of income profiles and lifestyles.
It started operations in 1998, and since then SBI’s parentage and highly trusted brand have allowed it to quickly establish a reputation of trust, reliability and transparency with cardholders. According to the RBI, SBI Card has grown its business faster than the Indian credit card market over the past three years both in terms of numbers of credit cards outstanding and amounts of credit card spends. From March 31, 2017, to March 31, 2019, its total credit card spends grew at a 54.2% CAGR (as compared to a 35.6% CAGR for the overall credit card industry, according to the RBI) and the number of its credit cards outstanding grew at a 34.5% CAGR (as compared to a 25.6% CAGR for the overall credit card industry, according to the RBI).
It has a broad credit card portfolio that includes SBI Card-branded credit cards as well as co-branded credit cards that bear both the SBI Card brand and co-brand partners’ brands. It offers four primary SBI branded credit cards: SimplySave, SimplyClick, Prime and Elite, each catering to a varying set of cardholder needs. It is also the largest co-brand credit card issuer in India according to the CRISIL Report and has partnerships with several major players in the travel, fuel, fashion, healthcare and mobility industries, including Air India, Apollo Hospitals, BPCL, Etihad Guest, Fbb, IRCTC, OLA Money and Yatra, among others. Its credit cards portfolio is tailored to meet a diverse range of cardholder needs across the entire spectrum of its cardholders’ income profiles and lifestyles, from the “premium” cardholder category to the “affluent”, “mass affluent”, “mass” and “new to credit” categories. The company issues credit cards in partnership with the Visa, MasterCard and RuPay payment networks, and is continuously looking to expand its payment network partnerships to broaden the reach and functionality of credit card offerings.
It has a diversified customer acquisition network that enables it to engage prospective customers across multiple channels. It deploys a sales force of 32677 outsourced sales personnel as of December 31, 2019, operating out of 145 Indian cities and which engages prospective customers through multiple channels, including physical points of sale in bank branches, retail stores, malls, fuel stations, railway stations, airports, corporate parks and offices, as well as through telesales, online channels, email, SMS marketing and mobile applications. SBI Card is the leading player in open market customer acquisition in India according to the CRISIL Report. It has a presence in 3190 open market points of sale across India as of December 31, 2019. Also, its partnership with SBI provides with access to SBI’s extensive network of 21961 branches across India, which enables it to market credit cards to SBI’s vast customer base of 445.5 million customers as of December 31, 2019.
Its technology systems also leverage artificial intelligence and process automation technologies to automate routine activities, such as customer service and credit analysis, which have enhanced its operating efficiencies. It has a diversified revenue model whereby it generates both non-interest income (primarily comprised of fee-based income such as interchange fees, late fees and annual fees, among others) as well as interest income on its credit card receivables. The share of its revenue from operations that derive from non-interest income has steadily increased over the past three fiscal years, from 43.6% in fiscal 2017 to 48.9% in fiscal 2019.
ISSUE DETAILS / CAPITAL HISTORY
Currently, SBI group is holding 74% and CA Rover Holdings (26%) equity of SBI Card. To part finance augmenting its capital base to meet future capital requirements, SBI Card is coming out with a maiden combo IPO of fresh equity issue (FV ₹10) as well as offer for sale. SBI Card is issuing fresh equity share shares worth ₹500 cr. (approx 6,622,516 shares) and an offer for sale of 130,526,798 shares. It has fixed the price band of ₹750 – ₹755 and thus mulls mobilizing ₹10,286.20 cr. to ₹10,354.77 cr. (based on lower and upper price bands). The offer includes a reservation of up to 1,864,669 shares for subscription by eligible employees and a reservation of 13052680 shares for subscription by SBI Shareholders (who are holding SBI shares in their demat account on 18.02.2020). The company is offering a discount of ₹75 per share to eligible employees. There is no discount for any other category.
The issue opens for subscription on 02.03.2020 and will close on 04.03.2020 for QIB Bidders and 05.03.2020 for all other categories of bidders. Minimum application is to be made for 19 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. Issue constitutes approx. 14.61% of the post issue paid-up capital of the company.
Having issued initial equity at par, SBI Card raised further equity (52,222,222 shares) by way of the rights issue at a fixed price of ₹90 per share in July 2018 and then issued further equity (95,112,054 shares) in July 2019 on an amalgamation of SBI Business Process.
The average cost of acquisition of Equity Shares for the selling shareholders is in the range of ₹28.69 to ₹81.19 per Equity Share and the offer price at the upper end of the Price Band is ₹755 per equity share. The company will spend less than 1.5% for the overall IPO process.
Post issue, SBI Card’s current paid-up equity capital of Rs.932.33 cr. will stand enhanced to ₹938.95 cr. With this issue, SBI Card is looking for a market cap of approx. ₹70890 cr.
BRLM’s to this offer are Kotak Mahindra Capital Company Ltd., Axis Capital Ltd., DSP Merrill Lynch Ltd., HSBC Securities and Capital Markets (India) Pvt. Ltd., Nomura Financial Advisory and Securities (India) Pvt. Ltd. and SBI Capital Markets Ltd. Link Intime India Pvt. Ltd. is the registrar to the issue.
FINANCIAL PERFORMANCE
For the last three fiscals, SBI Card has reported total revenue/net profits of ₹3471.04 cr. / ₹372.86 cr. (FY17), ₹5370.19 cr. / ₹601.14 cr. (FY18) and ₹7286.84 cr. / ₹862.72 cr. (FY19). For nine months period ended on 31.12.19, it has earned a net profit of ₹1161.21 cr. on revenue of ₹7240.16 against a net profit of ₹614.52 cr. on revenue of ₹5278.68 cr. for the corresponding previous period.
For the last three fiscals, SBI Card has posted an average EPS of ₹7.97 and an average RoNW of 24.67%. The issue is priced at a P/BV of 14.60 based on its NAV of ₹51.73 as on 31.12.19. If we annualize latest earnings and attribute it on fully diluted equity post IPO then asking price is at a P/E of around 45.8 making it fully priced issue.
For FY17 to FY19 SBI Card has reported CAGR of 44.6% in revenues, 37.6% in interest income, 53.2% in non-interest income and 52.1% in profit after tax (PAT). With continuing leveraging technology SBI Card all set for expanding customer acquisition capabilities, stimulate growth in credit card transaction volumes and enhance cardholders experience and broadening its portfolio with more tie-ups.
COMPARISION WITH LISTED PEERS
As per offer documents, SBI Card has no listed peers to compare with.
BRLM’S TRACK RECORDS
The six merchant bankers associated with the offer have handled 46 issues in the past three financial years, out of which 17 issues closed below the issue price on listing date.
MAJOR CONCERNS
Any unfavorable change in Government/RBI policy for MDR (Merchant Discount Rate) and unsecured financing pattern are major concerns. Its dependence on SBI and the rising market competition may pose threats.
Conclusion / Investment Strategy
SBI Card enjoys fancy due to parent SBI’s credentials. Being a second-largest plastic money player in a growing economy like India and the first mover in the segment to get listed, it may continue to generate high interest going forward. Although the issue appears fully priced, investors may consider investment for short to long term rewards.
The original review is written by Dilip Davda, appears on chittorgarh.com and is available here.
IPO Snapshot:
Prince Pipes is entering the primary market on Wednesday 18th December 2019, to raise Rs. 500 crore, via an IPO of equity shares of Rs. 10 each, comprising fresh issue of up to Rs. 250 crore and an offer for sale (OFS) of up to Rs. 250 crore by promoters, in the price band of Rs. 175-178 per share. Issue, split 50:15:35 among institutional, HNI and retail investors respectively, represents 26% of the post-issue share capital and will close on Friday 20th December, with listing likely on 31st December.
Company Background:
Prince Pipes is a 30 year old, family run business, making polymer pipes and fittings at 6 plants (in Silvasa, Haridwar, Kolhapur, Chennai, Rajasthan) with total installed capacity of 2.4 lakh tonne per annum (TPA) while production capacity is assessed at 1.9 TPA. While Rajasthan plant is new (started in Q2FY20), its installed capacity is being expanded from current 6,221 TPA to 17,021 TPA by Dec 2019 and to 20,909 TPA by FY20-end. Company also plans a 51,943 TPA greenfield facility at Telangana, likely to be operational by Dec 2020, implying 28% capacity hike in the next 18 months. About less than 10% of production is also outsourced to 5 contract manufacturers (in Aurangabad, Guntur, Odisha and Bihar) as logistics cost are vital, given the bulky nature of products. Company markets its products pan-India under brands Prince and Trubore, via 1,027 distributors. Going forward, it plans to focus on plumbing and drainage segments and less on irrigation, given latter’s lower margins.
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Aavas Financiers is entering the primary market on Tuesday 25th September 2018, to raise up to Rs. 400 crore via fresh issue of equity shares of Rs. 10 each and an offer for sale (OFS) of upto 1.62 crore equity shares by 4 promoter group entities and 2 top management personnel, both in the price band of Rs. 818 to Rs. 821 per share. Representing 27.93% of the post issue paid-up share capital, total issue size is Rs. 1,734 crore at the upper end of the price band, of which, OFS accounts for 77%. Issue closes on Thursday 27th September and listing is likely on 8th October.
Company Overview:
Aavas Financiers, established by listed NBFC AU Small Finance Bank (formerly AU Financiers) in March 2012, as AU Housing Finance, is a Jaipur, Rajasthan head-quartered affordable housing finance company, providing home loans of Rs. 8 lakh average ticket size to 60,000 customers, through its 166 branches in tier 2 to tier 6 towns across 8 Indian states, with gross loan book of Rs. 4,356 crore (30-6-18).
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Garden Reach Shipbuilders and Engineers is entering the primary market on Monday 24th September 2018, with an offer for sale (OFS) of up to 2.92 crore equity shares of Rs.10 each by the Government of India (GoI), in the price band of Rs. 115 to Rs. 118 per share, with a discount of Rs. 5 per share for retail category. Representing 25.50% of the post issue paid-up share capital, total issue size is Rs. 340 crore at the upper end of the price band. Issue closes on Wednesday 26thSeptember and listing is likely on 5th October.
Company Overview:
Garden Reach Shipbuilders and Engineers is a Mini-Ratna Category 1 company under the Ministry of Defence, manufacturing warships for Indian Navy and Indian Cost Guard (90%+ revenue derived from them) under its ship building division. It also has an engineering division, accounting for less than 10% of revenues, manufacturing deck machinery for ships, pre-fabricated steel bridges and marine pumps. With 3 manufacturing facilities in Kolkata, company’s order book position (31-7-18) of Rs. 20,314 crore is very healthy, as it includes order for 3 ships for the Indian Navy, aggregating Rs. 19,300 crore, to be delivered from FY24 onwards. This will contribute to revenues meaningfully from FY21 onwards, as company is yet to commence work on these orders. Till then financial performance may be subdued as revenue peaks in the middle of the typical contract duration of 5-6 years.
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• IRCON is under Railway Ministry.
• It enjoys MINI RATNA status.
• It has planned relisting after a gap of 7 years.
• Issue is attractively priced with a discount of Rs. 10 per share for Retail investors.
• It has order on hand worth Rs. 22406 crore.
ABOUT COMPANY:
IRCON International Ltd. (IRCON) is an integrated Indian engineering and construction company, specialising in major infrastructure projects, including, railways, highways, bridges, flyovers, tunnels, aircraft maintenance hangars, runways, EHV sub-stations, electrical and mechanical works, commercial and residential properties, development of industrial areas, and other infrastructure activities. We provide EPC services on a fixed-sum turnkey basis as well as on an item-rate basis for various infrastructure projects. IRCON also executes on build, operate and transfer mode in various projects in order to meet the requirements of its bids. In 2016, the company ranked number 248 in the list of the top 250 international contractors by Engineering News Record (ENR) of the United States. IRCON is headquartered in Saket, New Delhi and has an overseas office in Malaysia. Additionally, have 26 project offices in India and abroad (including in Sri Lanka, Bangladesh, South Africa and Algeria) and five regional offices to support and manage business operations. IRCON enjoys “Mini Ratna” status.
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IPO Snapshot:
CreditAccess Grameen Limited is entering the primary market on Wednesday, August 8, 2018, to raise upto Rs. 630 crore via fresh issue of equity shares of Rs. 10 each and an offer for sale (OFS) of upto 1.19 crore equity shares by promoter, both in the price band of Rs. 418 to Rs. 422 per share. Representing 18.70% of the post issue paid-up share capital, total issue size is Rs. 1,131 crore at the upper end of the price band, of which 44% is the OFS portion. The issue closes on Friday, August 10, 2018 and listing is likely on 23rd August.
Company Overview:
CreditAccess Grameen is India’s 3rd largest micro finance institution (MFI) providing unsecured loans to women with annual household income upto Rs.1.6 lakh (urban area) and Rs. 1 lakh (rural area), of average ticket size of Rs. 20,000. With asset under management (AUM) of Rs. 4,975 crore (31-3-18) and a deep rural focus (81% customers in rural), 86% of loans provided is for income generating activities, 10% for home improvement and balance for emergency and family welfare. Despite widespread network of 516 branches across 132 districts in 9 Indian States and Union territory, company’s AUM is concentrated in Karnataka (58% of total) and Maharashtra (27%). While other MFIs have converted to banks (Bandhan, Equitas, Ujjivan, Bharat Financial on the verge of merger with Indusind), CreditAccess does not plan to tap the banking route and is comfortable being a standalone MFI.
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Verdict: A ‘no-brainer’ Buy
IPO Snapshot:
HDFC Asset Management Company (AMC) Limited is entering the primary market on Wednesday 25th July 2018, with an offer for sale (OFS) of up to 2.55 crore equity shares of Rs.5 each, by both the promoters, HDFC (34% of OFS) and UK’s Standard Life (66% of OFS), in the price band of Rs. 1,095 to Rs. 1,100 per share. Representing 12.01% of the post issue paid-up share capital, total issue size is Rs. 2,800 crore at the upper end of the price band. The issue closes on Friday 27th July and listing is likely on 6th August, which will be the 5th listing from HDFC stable.
Company Overview:
HDFC AMC, 56.97% subsidiary of HDFC Ltd, with foreign JV partner UK’s Standard Life owning 37.98% stake, is India’s second largest AMC (behind ICICI Prudential) with asset under management (AUMs) of Rs.2.91 lakh crore (31-3-18) and 13.7% market share. Company is the largest AMC with equity oriented funds (at 51.3% of AUM vis-à-vis industry average of 43.2%), which also helps it become the most profitable AMC in India, having earned net profit of Rs. 722 crore in FY18 or 18.1% market share of the industry PAT, due to higher fees earned in equity as against debt product. Thus, with only 13.7% market share in total AUM, 16.8% market share in actively managed equity-oriented AUM help the company garner 18.1% market share in net profits of the industry, comprising of 42 players. Besides high profitability, company also enjoys benefit of retailisation of portfolio, with 62% AUM coming from retail investors, unlike industry average of ~50%, again highest market share in retail AUM of 15.7%. Systematic investment plan (SIP) products, with average ticket size of Rs. 3,800, also provide high revenue visibility, as 77% of company’s SIPs are signed up for 5 years.
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