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Vijaya Diagnostic, Ami Organics IPOs open; Should you invest?

Two IPOs have hit the street on monday, with Hyderabad based Vijaya Diagnostic and Gujarat based Ami Organics seeking to raise a combined sum of about Rs 2,500 crore. Amid the stock markets hitting new highs every day, the IPO mania continues in full swing. Here are all the details you wanted. 1. Vijaya Diagnostic Vijaya Diagnostic Centre Limited (“VDCL”) was incorporated on June 5, 2002. VDCL is the largest integrated diagnostic chain in southern India, by operating revenue, and also one of the fastest growing diagnostic chains by revenue for fiscal year 2020. VDCL offers an one-stop solution for pathology and radiology testing services to their customers through their extensive operational network, which comprises 80 diagnostic centres and 11 reference laboratories across 13 cities and towns in the states of Telangana; Andhra Pradesh; the National Capital Region and Kolkata.  

Vijaya Diagnostic is offering IPO shares in the price band of Rs 522 to Rs 531 per share. The face value of shares is Re 1. The implied market cap at issue price is about Rs 5,400 crore. The issue opens on September 1 and closes on September 3. The lot size for IPO application is 28 shares, which means the minimum investment is Rs 14,868. The IPO shares will be listed around September 14.  The IPO is an offer for sale of Rs 1,895 crore. The objects of the offer are to (i) carry out the OFS of up to 35,688,064 equity shares by selling shareholders; (ii) achieve the benefits of listing the equity shares on the stock exchanges. At the upper band of Rs 531, the Vijaya Diagnostic IPO is valued at P/E of 64 times its FY21 EPS of Rs 8.26. Here is what top brokers have to say about Vijaya Diagnostic IPO. IIFL Securities:  “At the upper price band, Vijaya Diagnostic Centre Limited valuation is lower than the industry average of 90.8 times. Considering the future growth potential of healthcare industry, revenue from operation, EBITDA and PAT growth of 13.5%, 23.9% and 35.5% CAGR during FY19 to FY21, respectively, strong ROE and ROCE of 23.64% and 42%, respectively in FY21, debt-free company with plans for acquisition and expansions, diversified service offerings and strong technical capabilities of the company, we recommend ‘Subscribe’ to the issue with a long-term perspective.” KR Choksey: ” Vijaya has consistently posted strong performance in terms of operating growth and profitability in last few years. Revenues have grown at a CAGR of 13.5% over FY19-21 to Rs 377 crore. VDCL’s ‘hub and spoke’ model has provided economies of scale and cost optimization benefits, resulting in EBITDA growth of 23.9% and even stronger 35.5% growth in PAT over FY19-21. Integrated network and high B2C business has translated into higher cash flow conversion. Company also recorded strong return on net worth of 23.64% and return on capital employed (pre cash) of 42.00% during FY21.” 2. Ami Organics IPO Ami Organics Limited is a research and development (“R&D”) driven manufacturer of specialty chemicals with varied end usage, focussed towards the development and manufacturing of advanced pharmaceutical intermediates (“Pharma Intermediates”) for regulated and generic active pharmaceutical ingredients (“APIs”) and New Chemical Entities (“NCE”) and key starting material for agrochemical and fine chemicals, especially from their recent acquisition of the business of Gujarat Organics Limited (“GOL”)(“Acquisition”). They are one of the major manufacturers of Pharma Intermediates for certain key APIs, including Dolutegravir, Trazodone, Entacapone, Nintedanib and Rivaroxaban. The Company have developed and commercialised over 450 Pharma Intermediates for APIs across 17 key therapeutic areas since inception and NCE, with a strong focus on R&D across select high-growth high margin therapeutic areas such as anti-retroviral, anti-inflammatory, anti-psychotic, anti-cancer, anti-Parkinson, antidepressant and anticoagulant, for use across the global pharmaceutical market. Their Pharma Intermediates used for manufacturing of APIs and NCEs portfolio has expanded from over 425 products as of March 31, 2019, to over 450 products as of March 31, 2021.

Ami Organics is offering IPO shares in the price band of Rs 603 to 610 per share. The face value of shares is Rs 10. The issue opens on September 1 and closes on September 3. The lot size for IPO application is 24 shares, which means the minimum investment is Rs 14,640. The IPO shares will be listed around September 14.  The Ami Organics IPO comprises a fresh issue of Rs 200 crore for repayment/prepayment of certain financial facilities availed, funding working capital requirements and general corporate purposes. The other IPO component is the OFS of Rs 369.6 crore where the company will not receive any proceeds from.   With an EPS of Rs 17.14 as of 31st March 2021, the issue is priced at 35.59 times calculated at the upper price band of Rs 610 per share. The P/BV is 11.51 at a NAV of Rs 52.99 per share. Here is what top brokers have to say about Ami Organics IPO.

Anand Rathi: “The company has shown consistent financial performance with sales growth at CAGR of 19.5% and restated profit after tax growth at CAGR of 52.3% between the Fiscals 2019 and 2021. The financials for 2020- 21 doesn’t include revenue from the acquisition of the two plants. We are positive on the long-term prospects of the Company. Hence, we recommend a “Subscribe” rating to this IPO.” Marwadi Financial Services: “The competitive strengths of the company are strong and diversified product portfolio ably supported by strong R&D and process chemistry skills. Extensive geographical presence and diversified customer base with long standing relationships. High entry barriers in the chemicals manufacturing industry in which the Company operates. Strong sales and marketing capabilities. Experienced and dedicated management team. Consistent financial performance.”  

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The company has shown consistent financial performance with sales growth at CAGR of 19.5% and restated profit after tax growth at CAGR of 52.3% between the Fiscals 2019 and 2021. The financials for 2020- 21 doesn’t include revenue from the acquisition of the two plants. We are positive on the long-term prospects of the Company.

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The asset under management (AUM) of the systematic investment planning (SIP) accounts have touched a record Rs 5 lakh crore in July 2021. This is following a sustained inflow and buoyancy in the capital market.

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Even a few months ago, some investors complained of a majority of largecap funds were failing to beat the benchmarks. The situation is improving with some largecap equity funds delivering alpha against their respective largecap benchmarks. While actively managed funds are supposed to generate alpha given their higher expenses, nevertheless it is important to see which funds are beating indices consistently. Here is a detailed look.

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Nuvoco Vistas and CarTrade Tech IPOs open today; should you subscribe?

The IPO mania continues on Dalal Street. Opening for subscription on August 9 are IPOs of Nuvoco Vistas and CarTrade Tech. The companies will be together mopping up ₹8,000 crore as IPO frenzy reaches fever pitch. Here are all the key details you wanted about the IPOs, business, fundamentals and valuations. Read on.

1. Nuvoco Vistas IPO

Part of Nirma Group, Nuvoco Vistas Corporation Ltd (NVCL) is the fifth largest cement manufacturer in terms of installed capacity. The company is in the industry for 7 years and has been growing inorganically.

The IPO comprises a 23 per cent stake sale by the promoter entity (Niyogi Enterprises), amounting to ₹3,500 crore and a fresh issue for ₹1,500 crore to pare debt.

At a price band of ₹560-570, the company is valued at an EV/EBITDA of about 18 times (FY21). UltraTech Cement and Shree Cements trade at a premium valuation of 20-25 times EV/EBITDA. Other listed peers such as ACC, Ambuja and Dalmia Bharat trade at about 13 times EV/EBITDA.

Nuvoco has a concentrated presence in East, thanks to the recently acquired plants of Emami Cement. Going ahead, the company expects its EBITDA levels to rise by achieving operational efficiencies from its recent acquisitions. The company has debt outstanding of ₹6,885 crore, of which ₹1,500 crore will be repaid post the IPO. Besides, the company has planned capex outlay of about ₹550 crore up to FY23.

The minimum IPO application lot for Nuvoco is 26 shares, which mean investment of ₹ 14,820. Nuvoco IPO closes on August 11 and the shares are expected to get listed on August 23.

What brokers say about Nuvoco Vistas IPO * Canara Bank Securities – “The company utilises 50% of its power requirement through its captive power generation which lead company to derive operating efficiency. The company’s D/E stood at 0.83x in FY2021 and post issue, D/E would stand at ~0.63x. The company would trade at EV/EBITDA of 16.87x for FY21 which is attractive as compared to its peer competitors. We recommend ‘SUBSCRIBE’ for listing and long term gains.”

* IDBI Capital – “NVCL has plan of organic expansion in east of 2.7mtpa (12% addition) over FY22E and FY23E. We understand NVCL IPO at upper band is priced at 10x FY23E EV/EBITDA or EV/t of USD131. Valuation is at discount to its large cap peers at 12x-19x FY23E EV/EBITDA. Discount partially factors high debt in its books (FY21 Net Debt / EBITDA of 4.5x) and low ROCE. But given up-cycle in the cement industry and expectation of improvement in margin and balance sheet deleveraging over FY21-23E we recommend SUBSCRIBE.”

2. CarTrade Tech IPO

CarTrade Tech (CTT) is an asset light tech company operating as market place for automotive sales. The company is diversely held and has no promoter. Its IPO consists entirely of a secondary offer of sale by existing shareholders of around ₹3,000 crore, will value the company at a market cap of around ₹7,400 crore.

The IPO values the company at a price to revenue (trailing) of around 30 times and EV/ revenue of around 27 times. However, the revenue considered here includes 100 per cent revenue of a subsidiary (Shriram Automall) in which the company has only 55 per cent economic interest.

The company derives revenues from the three main segments. One, the Shriram Automall platform where it makes commission and fees for sale of used cars in its platform (57 per cent of FY21 revenue). Two, online advertising and lead generation solutions on its branded online platforms such as CarWale, BikeWale, Cartrade etc. Three, inspection and valuation services for banks and other financial institutions, insurance companies and OEMs. The company has a strong balance sheet with net cash of around ₹650 crore as of March 31, 2021.

The IPO closes on August 11. Shares are expected to get listed on August 23. IPO application minimum lot is 9 shares, which involve amount of ₹14,562.

What brokers say about CarTrade issue * Anand Rathi – “CarTrade Tech Ltd has a unique business model with no listed peers in the market. Covid-19 has impacted its FY21 financials. At the upper end of the IPO price band, it is offered at 4.4x P/BV and 29.6x EV/Sales and 73.4x P/E if we exclude accounting adjustments for deferred tax and attribute it on equity, then the asking price is at a P/E of around 199.26x to its FY21 earnings with a market cap of Rs 7,416 crore which shows the issue is priced exorbitantly. However, considering the future prospect of the company and it is also placed at a sweet spot as the first mover advantage we assign “Subscribe” Rating to this IPO investors can invest in this company with medium to long term perspective.”

* ICICIdirect – “CTT offers a unique play on rising digitisation of new and pre-owned vehicle transaction value chain/ecosystem. Given the prevailing preference for digital platforms including the recent listings, we assign SUBSCRIBE rating to the issue for listing gains. Long term wealth generation at CTT will be a function of scalability, relevance and journey towards healthier return ratios.

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The IPO mania continues on Dalal Street. Opening for subscription on August 9 are IPOs of Nuvoco Vistas and CarTrade Tech. The companies will be together mopping up ₹8,000 crore as IPO frenzy reaches fever pitch. Here are all the key details you wanted about the IPOs, business, fundamentals and valuations. Read on.

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On August 2, Prime Minister Narendra Modi launched a digital payment solution e-RUPI, a person and purpose specific digital payment solution. e-RUPI is a cashless and contactless instrument for digital payment. e-RUPI voucher is going to play a huge role in making DBT (direct benefit transfer) more effective in digital transactions in the country and  will give a new dimension to digital governance. Let us find out more about this unique instrument.

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What is e-RUPI: Cashless, contactless instrument for digital payment

On August 2, Prime Minister Narendra Modi launched a digital payment solution e-RUPI, a person and purpose specific digital payment solution. e-RUPI is a cashless and contactless instrument for digital payment. e-RUPI voucher is going to play a huge role in making DBT (direct benefit transfer) more effective in digital transactions in the country and  will give a new dimension to digital governance. Let us find out more about this unique instrument.

e-RUPI explained

The users of this seamless one-time payment mechanism will be able to redeem the voucher without a card, digital payments app or internet banking access, at the merchants accepting e-RUPI.

e-RUPI would be shared with the beneficiaries for a specific purpose or activity by organizations or Government via SMS or QR code.

This contactless e-RUPI is easy, safe and secure as it keeps the details of the beneficiaries completely confidential.

The entire transaction process through this voucher is relatively faster and at the same time reliable, as the required amount is already stored in the voucher.

The users of this seamless one-time payment mechanism will be able to redeem the voucher without a card, digital payments app or internet banking access, at the merchants accepting e-RUPI. e-RUPI would be shared with the beneficiaries for a specific purpose or activity by organizations or Government via SMS or QR code.

State Bank of India, HDFC Bank, Axis Bank, Punjab National Bank, Bank of Baroda, Canara Bank, IndusInd Bank, and ICICI Bank are e-RUPI bank partners.

Why it is important

e-RUPI is aimed at bridging the digital gap among the unbanked population. The beneficiaries or users of this payment mechanism will not require a card, digital payments app, or internet banking access to redeem the voucher.

e-RUPI transaction process will keep the details of the beneficiaries completely confidential, maintaining their privacy.

There are 190 million unbanked citizens and e-RUPI will fold them into a formal financial system, and close this part of the digital gap.

Is this a digital currency?

Many view the introduction of e-RUPI as the first step towards having a digital currency in India.

However, e-RUPI in its current form in itself is not a digital currency. At this moment, it is a social service voucher system.

A cryptocurrency or digital currency will let you buy goods and services, or trade them for profit. But e-RUPI as a prepaid voucher will be utilized, at least initially, to provide welfare subsidies.

Also, do note that while cryptocurrency is based on blockchain, e-RUPI is based on UPI systems.

The USA, South Korea and several other countries have used similar voucher-based incentives for welfare services.

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It’s raining initial public offers (IPOs) on Dalal Street. The IPO pipeline for August 2021 looks strong, with four public issues hitting the market this week. Devyani International, Windlas Biotech, Krsnaa Diagnostics and Exxaro Tiles will open for subscription on August 4 and close on August 6. Here are all the key details you wanted.

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Over a year after the shock freezing of six schemes of Franklin Templeton Mutual Fund, credit risk has become a bad word. Many say credit risk funds are shying away from taking credit risk, despite SEBI norms that allow them to invest at least 65% of their assets in debt paper rated below AA+. Let us take a status check on who is playing it safe in credit risk funds, who is taking more risk than others.

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Tax-saving equity funds or otherwise known as Equity Linked Savings Schemes (ELSS) are very popular for a multitude of reasons. They offer tax deduction of up to Rs. 1.5 lakh (per financial year) from total income available under Section 80C of the Income Tax Act, 1961. The three year lock-in period enables participation in the long term growth potential of equity markets. Since every fund-house has its own ELSS, it can be difficult to pick and choose the best funds from such a large universe. Instead of going for the best performer, investors should select the most consistent ELSS funds. We looked at various time periods to find out 6 most consistent ELSS schemes. Read on.

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Glenmark Life Sciences Limited (GLS), a leading developer and manufacturer of active pharmaceutical ingredients, plans to open its Initial Public Offering on July 27, 2021. The IPO size is about Rs 1,500 crore. With chemicals and pharma stocks now darlings of Dalal Street, it is expected GLS IPO will be an attractive bet. Here are more details.  

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Want to understand about investing in global stocks and in cutting edge innovations? Here is your chance to learn about diversifying abroad. Wealthzi in association with PhillipCapital is hosting a special webinar on ‘Investing in International Equities and Global Innovation’ on Saturday, July 24, 2021 at 130 PM (IST)/ 12 PM Dubai.    

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Tata Mutual Fund announced the launch of Tata Business Cycle Fund. This would be an open-ended equity scheme following business cycles based investing theme.The New Fund Offer (NFO) opens on July 16, 2021 and will close on July 30, 2021. In this niche category, there are already ICICI Prudential Business Cycle Fund and L&T Business Cycles Fund.

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The scheme is being managed by Senior Fund Manager Rajat Chandak and overseas investments will be managed by Fund Manager Priyanka Khandelwal. ICICI Prudential Mutual Fund has one of India’s largest and experienced investment and research team led by S Naren, who is well known for his calls on macros and market cycles.

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Zomato Limited, India’s leading online food ordering company, is hitting the markets with its blockbuster ₹9375-crore Initial Public Offering on July 14, 2021. The price band of the IPO has been fixed at ₹72 to ₹ 76 per equity share. Taking part in the IPO may be tempting given the brand’s high visibility. Also, Zomato is India’s first unicorn to hit the capital markets. Let us find more about the much-awaited IPO.

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Axis Mutual Fund has announced the launch of their new fund offer – ‘Axis Floater Fund’. The fund offers efficient solutions for short term investors looking to navigate a possible rising interest rate environment and also an ideal parking solution for their investment. The fund will be actively managed by Aditya Pagaria, Fund Manager – Fixed Income. Read on to know more details of the NFO that will open on July 12.