IPO Market

Avenue Super Market ( owner of DMart) March 2017

The Company is  an emerging national supermarket chain, with a focus on value-retailing. According to Technopak, in Fiscal 2016 the Company was one of the largest and the most profitable F&G retailer in India. It offers a wide range of products with a focus on the Foods, Non-Foods (FMCG) and General Merchandise & Apparel product categories.
It opened our first store in Mumbai, Maharashtra in 2002. As of September 15, 2016, we had 112 stores with Retail Business Area of 3.40 million sq.ft, located across 41 cities in Maharashtra (58), Gujarat (26), Telangana (13), Karnataka (7), Andhra Pradesh (3), Madhya Pradesh (3), Chhattisgarh (1) and NCR (1). At the end of Fiscals 2014, 2015 and 2016, it had
75, 89 and 110 stores with Retail Business Area of 2.14 million sq. ft., 2.66 million sq. ft. and 3.33 million sq. ft.,respectively. It plans to deepen the  store network in southern and western India and gradually expand its network in other parts of India pursuant to its cluster-focused expansion strategy.
For Fiscal 2016, Maharastra contributed a majority of its Revenue from Sales (62.57%) followed by Gujarat (18.83%), Telangana (10.15%), Karnataka (6.14%) Andhra Pradesh (1.03%), Madhya Pradesh (0.85%) and Chattisgarh (0.43%).
It operates and manages all its stores. It operates predominantly on an ownership model (including long-term lease arrangements, where lease period is more than 30 years and the building is owned by it) rather than on a rental model. It opens new stores using a cluster approach on the basis of adjacencies and focusing on an efficient supply chain, targeting densely-populated residential areas with a majority of lower-middle, middle and aspiring upper-middle class consumers.

It operates distribution centres and packing centres which form the backbone of its supply chain to support its retail store network. As of September 15, 2016, the company had 21 distribution centres and six packing centres in Maharashtra, Gujarat, Telangana and Karnataka.


Cafe Coffe Day : 7th oct 2015

The company behind Cafe Coffee Day, India's biggest coffee chain, will launch an initial public offering next week, aiming to raise up to USD 176 million in the country's biggest IPO in nearly three years.

 India has seen fewer IPOs in the last few years because of volatile markets and slowing economic growth, and the response of foreign and local investors to this offering will be a test of appetite for new issues in the current unsettled climate. Indian companies have raised about USD 1.1 billion via IPOs so far this year, higher than USD 223 million for all of last year and USD 285 million in 2013, but much lower than USD 3.5 billion raised in 2010, according to Thomson Reuters data. 

Coffee Day Enterprises Ltd, which competes with Starbucks Corp among others in India, is backed by private equity firm KKR & Co. It will launch its share sale on October 14, according to its IPO prospectus seen on Tuesday. The indicative price band for the offering has been set at between 316 rupees and 328 rupees a share, two sources directly involved in the deal separately told Reuters. They declined to be named ahead of a public announcement on Wednesday. The company said in its prospectus it wants to raise up to USD 176 million but has not said how many shares will be up for sale. Cafe Coffee Day has more than 1,500 outlets in India and 14 overseas outlets across Austria, the Czech Republic and Malaysia. The chain plans to use the IPO proceeds to open more outlets and repay loans, its prospectus showed. The cafe operator opened its first shop in 1996 in the tech hub of Bengaluru, previously known as Bangalore, and quickly expanded across the country as urban consumers sought out spaces to socialise in overcrowded, traffic-congested cities. The burgeoning cafe culture in a primarily tea-drinking country has also drawn global giants such as Starbucks and Britain's Costa Coffee, part of leisure group Whitbread, and McDonald's, all of which are opening more outlets. The cafe market in India, Asia's third-largest economy, was worth about 18 billion rupees (USD 279 million) in 2014 and is growing at 20 percent annually, according to estimates by consultancy Technopak.

 Cafe Coffee Day's share sale is scheduled to close on Friday next week and the stock is due to start trading in Mumbai on Nov. 2. Morgan Stanley, Citigroup Inc, and Kotak Investment Banking, Axis Capital, Edelweiss and Yes Bank are managers for the Coffee Day offering, the IPO prospectus showed.


Power Mech IPO

3rd Aug 2015: Power Mech Projects will hit the capital market with its initial public offer of 42.69 lakh equity shares on August 7, the company said Monday. 
The price band for the shares of face value Rs 10 each is Rs 615-640. The issue closes on August 11. 

Power Mech Projects is an integrated power infrastructure services company providing erection, testing and commissioning of boilers, turbines and generators and balance of plant works, civil works and operation and maintenance services.


There is a slow in investment in power sector from the private sector but the government is working hard to resolve the issues in the sector. We expect tremendous growth in the power sector over the next 3-4 years, driven by the public sector. NTPCBSE 0.15 % and state companies are likely to award 40,000 mw of projects going ahead," S.Kishore Babu, chairman and managing director, told ET. 

The issue comprises a fresh issue of 21.28 lakh shares under fresh issue and an offer for sale of up to 21.41 lakh shares by India Business Excellence Fund I, India Business Excellence Fund represented by its trustee IL&FS Trust company limited, P.Srinivasa Rao, and D.Aakashnag, a minor represented by his guardian D.S.Rao. The Issue will constitute 29.02 per cent of the fully diluted post issue paid-up equity share capital of the company. 

The issue proceeds would be used for funding working capital requirements of the company and general corporate purposes. 

Shares of the company would be listed on the National Stock Exchange and the Bombay Stock Exchange. 

The Book Running Lead Managers to the Issue are Kotak Mahindra Capital Company, IIFL Holdings and Motilal Oswal Investment Advisors. The registrar to the issue is Karvy Computershare. 

Wish You were Listed : Unlisted companies which are on the watchlist of investors

It is human nature – to always aspire for things which are not there, not available. The lure is primarily because it is unavailable. And that is why, despite over 5000 stocks being listed on the BSE, there is always the lure for those stocks, true blue blooded stocks which are unlisted. Maybe on the bourses, amongst listed stocks, we have reached a point where valuations are stretched over the select few stocks and the rest are not so safe or sound. Thus despite having over 5000 stocks listed, there are only a few which hold any lure and that is like too much money chasing too few stocks.

The newly listed stocks via the IPO route are mostly not priced right. They are too expensive and guaranteed to slip below the issue price soon after listing. Thus the faith on IPOs, especially quality IPOs is non­existent. And with nothing really lucrative to look at, a wish list came into mind – what if these stocks were listed? Its lusting after the unavailable, inaccessible.

PATANJALI AYURVED LTD Yes, this is Baba Ramdev’s company, the famous yoga guru of India. But his promise is that his company will give HUL a run for its money! And looking at the way in which it is growing, maybe it could just do that! Today it is bigger than Jyothi Labs and even Emami and in FY15, it had posted an eye­popping turnover of Rs.2000 crore. Don’t be surprised if in a few years from now, it does get listed, not only here in India but on NYSE too!

LIFE INSURANCE CORPORATION OF INDIA With one of the best managed portfolios in the country, having seemingly an unlimited amount of money to invest, running the most profitable insurance business in India, it is a dream company to have in one’s portfolio. It booked a record profit of Rs.20,000 crore in FY13, the highest net profit earned in 7­8 years. In the current fiscal, it will be investing Rs 2.15 lakh crore out of which 10% or Rs 21,500 crore will be in equities.

GUJARAT CO­OPERATIVE MILK MARKETING FEDERATION This sounds like some boring company but it is the owner of the brand Amul – now changes the entire perspective. One of the best brands of India, Amul is a success story which is told, retold and retold. Its milk, yoghurt, cheese, butter, paneer, flavoured milk drinks, ice creams and many more products are a part of our day­to­day life today. At a time when values of life stand eroded, this is one brand which is highly respected and instill faith. Its turnover in FY13 crossed Rs.13,000 crore. It procures 133 lakh litres of milk per day with a network of over 3.2 million farmers across India.

PARLE PRODUCTS Remember Parle­G or your Glucose biscuits. The simple biscuit which is the perfect dip with your cup of tea, earns more revenue for the company than the combined turnover of McDonalds, Dominoes, Pizaa Hut in India. That is the strength of this company. Its other brands – Krackjack, Monaco, Hide­n­Seek, Melody, Poppins are equally popular. Set up in 1929, the company is today an over US$1 billion company.

BENNETT COLEMAN & COMPANY This is the company which owns the brand of Times of India, Economic Times, Times Now, ET Now, Femina, Maharashtra Times, Navbharat Times. It is the largest media company of India, it is closely held and owned by the Jain family. It employs over 11,000 people and revenue exceeding US$2 billion. TATA SONS It is the trust company of the Tata group, owner of Tata brand name and trade mark. It holds stake in the over the 100+ listed and unlisted Tata companies. Its financials are one of the best kept secrets of India and its balance sheet is said to run into scores of pages. Its EPS is said to be higher than any company listed on the BSE.

AIRPORTS AUTHORITY OF INDIA Popularly recognized as AAI, this PSU is the largest airport operator in the country. It is valued at anywhere between Rs.80,000 crore to Rs.1 lakh crore. AAI has 120 airports under its control of which around 85 are operation

HINDUSTAN AERONAUTICS COMPANY LTD Known as HAL, it is one of the largest aerospace companies in Asia with its annual turnover exceeding US$2 billion. More than 40% of HAL's revenues come from international deals to manufacture aircraft engines, spare parts, and other aircraft materials. It has factories all across India and collaborations with some of the best – Airbus, Boeing, Sukhoi, Elbit Systems, BAE Systems, Rolls­Royce, ISRO and many more. These are just some of the names but there are many other names in the wish list, Indian as well as MNCs
SERUM INSTITUTE OF INDIA
JOLNSON & JOHNSON
CATERPILLAR INDIA
SECURITY PRINTING & MINTING CORP OF INDIA
YASHRAJ FILMS
IBM
COGNIZANT TECHNOLOGIES
CARGILL INDIA
APPLE
MAHANADI COALFIELDS
NUCLEAR POWER INDIA
RASHTRIYA ISPAT NIGAM
VODAFON

Overseas listing without listing in India

courtesy a 2005 amendment to the Indian regulations, a prior or simultaneous listing in India was a pre-requisite for an overseas listing. The companies that were listed before 2005, such as Rediff and Sify, were able to use direct overseas listing route and didn’t need a prior or simultaneous listing in India.

But the situation didn’t last long. Perhaps prompted by a not-so-encouraging market condition, volatile currency and the current account deficit, the Ministry of Finance on September 27, 2013 allowed unlisted firms to list abroad without a prior or simultaneous listing in India.

A step in right direction

According to the notification, unlisted Indian companies can list on the overseas markets that are compliant with the International Organisation of Securities Commissions (IOSCO) and the Financial Action Task Force (FATF) or where market regulator Sebi has signed bilateral agreements (IOSCO regulates securities and futures markets, while FATF tackles money laundering and terrorist financing). That gives unlisted Indian companies a choice of over 100 jurisdictions including the US and the UK, Singapore and Hong Kong.

This is a step in the right direction. Initially, this scheme will run on a pilot basis for two years. The Government and regulators will then review its impact. This could mean that the rule repose may be temporary and not a long-term structural change. Still, companies should be encouraged to take advantage of the window available to list overseas without listing in India.

The changes 

Now, before listing abroad companies need to file with Sebi a copy of the return they submit to the proposed exchange or regulators, and comply with the market watchdog’s disclosure requirements, in addition to that of the primary exchange. The requirement to comply with Sebi’s disclosure requirements raises a question. Do companies need to follow ICDR (Issue of Capital and Disclosure Requirements) guidelines, including restatement of Indian GAAP financial statements?

In the past, when primary listings on overseas bourses were allowed, companies could merely file a copy of the prospectus or offer document with Sebi and ensured that the disclosure requirements were consistent with those of the exchanges where securities were being listed.

However, under the new dispensation, if the offer document requires compliance with Sebi’s disclosure regime, it remains to be seen whether the market regulator will take on a greater role of review. Some may argue that Sebi’s participation in this process is not really warranted, as Indian investors are not going to participate in the company’s public issue outside India.

One of the advantages of overseas direct listing is to take advantage of meeting regulatory requirements of only one stock exchange or regulator. However, the current guidelines show the advantage, if any, would be minimal, especially when disclosure requirements are not aligned and reporting frameworks are different, and could possibly be burdensome to maintain disclosure requirements as per two regulatory regimes.

Fund use, FDI rules

The new rules also mention that capital raised abroad may be utilised for retiring outstanding overseas debt or for operations abroad, including acquisitions, thereby granting some level of flexibility.

If funds are not used abroad, they must be remitted to India within 15 days and deposited with the designated bank.

On November 8, 2013, an RBI circular on the relaxed norms also stated that such an amount brought into India shall be utilised for eligible purposes.

Safety Net in IPO : If you apply for Rs 50,000 or less and if stock falls by more than 20% in first six months. You get back your full money. No questions asked money back guarentee

The Just Dial IPO, was the second one to offer a safety net to investors. Proposed by market regulator, Sebi, in 2012, this is a scheme wherein the company promoters assure buying back of shares from retail applicants at the IPO price if the stock falls sharply during the first six months of listing.

Prithvi Haldea, Managing Director of PRIME Database

The Indian IPO market is in a disarray, but the retail investor is in a greater disarray. An analysis of all the IPOs between 2008 and 2011 reveals that over 62% of the issues had been trading below their issue price after six months of listing; in more than 80% of these, the fall was more than 20% of the issue price. The primary reason for this negative performance is being attributed to aggressive pricing. It is also believed that such poor post-listing performance has pushed away the retail investor.

The household savings are being invested in gold, real estate and bank deposits, and need to move to the markets. It is this urgency that appears to have moved the regulator to consider mandating the Safety Net Mechanism (SNM).


Though IPOs are risky, the Indian investor is saddled with the mindset that all issues should generate positive returns, forever. This is where the problem lies. There can be a debate on IPO pricing. Are IPOs overpriced? If they are, they should not sell, nor should people buy them. Merchant bankers often receive flak for overpricing, but in reality, for all large IPOs where retail investors throng in large numbers, the pricing call is primarily taken by the issuer. This was clearly evident in the case of PSU IPOs. The hard reality is that we are stuck in a comatose IPO market and need to take several measures to ensure its revival.

I am opposed to the idea of providing capital protection for a risk instrument. The safety net may also take the investors away from informed decision-making, an avowed goal of the regulator. However, drastic conditions require drastic action. At the end of the day, it is a small price to pay for reviving the primary market for the greater good of corporate India, and the Indian economy. By the same logic, RGESS is flawed as it offers tax breaks on equity. In any case, the safety net will bring some sanity in issue pricing and also absolve the merchant bankers of the accusation of over-pricing.

The opponents should not cry hoarse as the proposed mandatory safety net mechanism is reasonable. The provision will be triggered only when the price of shares depreciates by more than 20% of the issue price. This would be considered over and above the general fall in the market index. The facility will be available for all the allotted securities to original retail allottees, who had made an application for up to Rs 50,000, subject to the condition that the total obligation for the safety net provider is capped at 5% of the issue size.

The opponents of SNM suggest that the issuers may indulge in manipulation to remain above the SNM cut-off. To support the market for three months would, however, come at a heavier price than the proposed outflow on SNM. Some say the time limit of three months defies the logic of long-term investing. Why should investors hold on for the long term if the three-month performance is so poor?

Chances are that most such companies would not be worth a long-term bet. Another downside that is being pointed out is that since SNM is for people who are investing less than Rs 50,000, and the cap for retail investors is Rs 2 lakh, it may discourage them from investing more than Rs 50,000. However, the number of investors likely to participate in an SNM IPO will also increase dramatically.

Ashutosh Maheshwari, CEO, Motilal Oswal Investment Banking

The provision of a safety net is an important development in enhancing the growth of capital markets for the benefit of investors as well the issuers. The word net' has been coined for the investors, though in practice, I believe that it works as safety net for issuers rather than the investors as it mitigates the risk of IPOs being subjected to market conditions. As of now, the IPO marketing comes with a big event risk, and various external parameters can have a critical impact on the success and/or pricing of the issue.

A safety net mitigates the influence of these factors during the very short window of 3-5 days, in which the IPO is open, to a longer duration of six months. This has far more relevance for commodities or asset-heavy businesses, where the leverage is high and equity is required at periodic intervals to correct the ratios or cover for the volatility of business. For instance, an IPO of a large commodities company from Brazil failed when launched in August 2012, but the issue went through successfully when relaunched in April 2013 with a provision of safety net for investors for a year.