Erasing all their morning gains, the benchmark indices ended in the negative territory on Friday due to selling in the financial counters.
The S&P BSE Sensex ended 134 points, or 0.34 per cent lower at 38,846 with HDFC Bank (down over 2 per cent) being the biggest loser and Bharti Airtel (up around 4 per cent) the top gainer. HDFC Bank, HDFC, Infosys, and Hindustan Unilever (HUL) were among the major contributors to the index’s loss.
NSE’s Nifty settled at 11,505, up 11 points, or 0.10 per cent. India VIX fell nearly a per cent to 19.93 levels.
Meanwhile, pharma stocks gained big in the trade. The Nifty Pharma index jumped 5 per cent to 12,321 levels with all the 10 constituents advancing. Dr Reddy’s hit a record high of Rs 5,496.95 during the trade after the company said it has settled its patent litigation with Celgene for the latter’s cancer drug capsules. The stock settled at Rs 5,306, up 10 per cent on the NSE.
Nifty Bank index fell 2%; RBL, Bandhan, HDFC Bank down over 3%. Bandhan Bank, RBL Bank, HDFC Bank, and IDFC First Bank were down 3 per cent, while Federal Bank, State Bank of India (SBI), Punjab National Bank, and IndusInd Bank from the index were down in the range of 1 per cent to 2 per cent on the National Stock Exchange (NSE).
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The domestic stock market ended flat with a positive bias on Friday. The S&P BSE Sensex settled 14 points, or 0.04 per cent higher at 38,854.5 levels while NSE’s Nifty ended at 11,464, up 15 points, or 0.13 per cent. India VIX dropped nearly 3 per cent to 20.68 levels.
SBI (up 2 per cent) ended as the top gainer on the S&P BSE Sensex while IndusInd Bank (down nearly 2 per cent) was the biggest loser. Of 30 constituents, 10 advanced while 20 declined.
On a weekly basis, Sensex gained 1.29 per cent while Nifty added 1.15 per cent.
The broader market, however, fared better than the frontline indices. The S&P BSE MidCap index settled at 14,660 levels, up 0.58 per cent and the S&P BSE SmallCap index ended 0.52 per cent higher at 14,558.
Sectorally, IT stocks rallied the most. The Nifty IT index ended 1.29 per cent higher at 18,633 levels. Nifty PSU Bank index gained 0.79 per cent while Nifty FMCG index settled 0.63 per cent higher at 30,972 levels.
Shares of Wipro and Tata Elxsi hit their respective 52-week highs on the BSE on Friday on the expectation of strong earnings growth in the current quarter (July-September) of the financial year 2020-21 (FY21). READ MORE
Shares of Max Healthcare Institute (MHIL) hit a high of Rs 133.80 on the BSE during the day on the back of heavy block deals. The stock settled at Rs 131.30, up around 17.5 per cent.
Strides Pharma ended nearly 13 per cent higher at Rs 685.90. In the past two months, the stock has rallied over 64 per cent after the company reported strong performance across all business segments in the April-June 2020 quarter (Q1FY21) despite significant disruptions and ambiguity in the business environment due to Covid 19.
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- 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.
The Indian markets ended over 1.5 per cent lower on Friday amid across-the-board sell-off. The volatility index, India VIX, rose over 7 per cent to 21.95 levels.
The S&P BSE Sensex tanked 634 points, or 1.63 per cent, to settle at 38,357 levels. Of 30 constituents, 29 declined and just one advanced. Axis Bank (down 4 per cent) ended as the biggest loser on the index. On the other hand, Maruti ended as the only gainer (up nearly 2 cent).
Reliance Industries (RIL), HDFC, ICICI Bank, and Infosys were the major contributors to the Sensex’s loss.
NSE’s Nifty ended at 11,334, down 194 points or 1.68 per cent.
On a weekly basis, Sensex declined 2.8 per cent while NSE slipped 2.69 per cent.
All the Nifty sectoral indices were painted red, led by Nifty Metal, which slipped 3 per cent to 2,451 levels. Nifty Bank dipped over 2 per cent to 23,011.50 levels, with all the 12 constituents declining.
In the broader market, the S&P BSE MidCap index fell 1.74 per cent to 14,817 levels while the S&P BSE SmallCap index fell over 1 per cent to 14,603 points.
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The bulls continued to dominate markets on Friday, thanks to a healthy buying in financial counters. The S&P BSE Sensex gained for the sixth consecutive session to settle at 39,467 levels, up 354 points, or 0.9 per cent.
NSE’s Nifty ended at 11,648, up 88 points or 0.76 per cent. Volatility index, India VIX, continued to decline and ended at 18.24 levels, down nearly 3.5 per cent.
Sun Pharma surges 4%, hits 52-week high; stock rallies 76% from March-low. For the quarter ended June 2020, Sun Pharma had reported a surprise loss due to one-time charges. The company’s US business posted a 33.5 per cent decline during the quarter, while India sales were up 3.2 per cent on a year-on-year (YoY) basis. Consolidated sales from operations at Rs 7,467 crore, a decline of about 9.6 per cent over the same quarter last year.
Shares of Edelweiss Financial Services rose as much as 3.16 per cent to Rs 86.50 on the BSE on Friday after Hong-Kong based private equity group PAG picked up 51 per cent stake in Edelweiss Wealth Management (EWM) for Rs 2,200 crore. The Edelweiss Group runs corporate and retail credit, wealth management, asset management and life and general insurance businesses.
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The Indian markets ended over half a per cent higher on Friday, lifted by financial stocks, while volatility index, India VIX, dipped 4 per cent to below 20 levels.
The S&P BSE Sensex gained 214 points, or 0.56 per cent, to 38,435 levels, and the Nifty50 index ended above the 11,350-mark at 11,372, up 59 points or 0.53 per cent. NTPC (up over 4.5 per cent), Asian Paints (up over 4 per cent) and Power Grid (up over 4 per cent) were the top Sensex gainers. Asian Paints hit a record high of Rs 1,971 during the day. The stock settled at Rs 1,958.35 on the BSE.
On a weekly basis, Sensex gained 1.47 per cent while Nifty added 1.72 per cent.
On the flip side, ONGC (down over 1 per cent), Bharti Airtel (down 1 per cent), and Tata Steel (down nearly 1 per cent) were the biggest losers on the index.
Among other individual stocks, GMM Pfaudler surged over 8 per cent in early deals after it said it has acquired a 54 per cent stake in its parent firm Pfaudler Group for a consideration of around $27.4 million.
The trend among Nifty sectoral indices was positive, led by Nifty PSU Bank index, up 1.8 per cent.
Meanwhile, the broader markets kept up their outperformance. The S&P BSE MidCap index ended at 14,954, up 0.57 per cent while the S&P BSE SmallCap index ended at 14,625.19, up nearly 1.5 per cent.
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The domestic stock market ended over 1 per cent lower on Friday amid selling in financial counters ahead of the Supreme Court’s decision on adjusted gross revenue (AGR) issue. Further, weak global cues such as lacklustre Chinese economic data and confusion over US fiscal stimulus, too, weighed on investor sentiment.
The S&P BSE Sensex today shed 433 points or 1.13 per cent to settle at 37,877 levels. HDFC Bank, ITC, ICICI Bank, Axis Bank, and Reliance Industries (RIL) were the major contributors to the index’s loss. NSE’s Nifty ended at 11,178, down 122 points or 1.08 per cent.
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Today let us take some time to value our nation and never forget the sacrifices from those who gave us freedom.
Team StockArchitect wishes you all a very Happy Independence Day!
stockarchitect
August 15, 2020
The benchmark indices ended on a subdued note on Friday; however, the mid and small-cap indices logged decent gains during the session.
The S&P BSE Sensex settled at 38,041, up 15 points or 0.04 per cent with Asian Paints (up over 4 per cent) being the top gainers and Titan Company (down over 2.5 per cent) the biggest loser. NSE’s Nifty50 ended at 11,214, up 14 points, or 0.12 per cent. India VIX dropped over 3 per cent to 22.37 levels.
In the broader market, the S&P BSE MidCap index gained over 200 points or 1.4 per cent to end at 14,219 while the S&P BSE SmallCap index closed the session at 13,669, up 106 points, or 0.78 per cent.
On a weekly basis, Sensex gained 1.15 per cent while Nifty added 1.26 per cent.
The sectoral trend on the NSE was mixed. While IT and pharma stocks fell, auto, metals and financial stocks gained. The Nifty IT index slipped 1 per cent to 18,004 levels while the Nifty Pharma index ended at 11,333, down 0.6 per cent. On the other hand, Nifty Metal gained 0.85 per cent and Nifty Auto rose 0.75 per cent. Nifty Bank ended 0.5 per cent higher at 21,754 levels.
Shares of Bayer CropScience hit an all-time high of Rs 6,449 apiece on the BSE during the day after the company reported encouraging numbers for the quarter ended June 2020 (Q1FY21). The stock ended at Rs 6,139, up 9 per cent.
Shares of Lupin ended over 6 per cent lower at Rs 879.40 on the BSE after the pharmaceutical company’s net profit for April-June quarter declined 60 per cent on a yearly basis to Rs 106.9 crore. Lupin had posted a profit of Rs 264.7 crore in the corresponding period of the previous year.
Shares of Torrent Power rallied 9 per cent to hit a 52-week high of Rs 357.50 on the BSE during the day after the company posted a 35.3 per cent year-on-year (YoY) rise in its consolidated net profit at Rs 372.66 crore against Rs 275.27 crore in the corresponding quarter of the previous fiscal. The stock ended at Rs 337, up nearly 3 per cent.
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