The preliminary public providing (IPO) market is in for an thrilling week with three contemporary points opening for subscription and one itemizing as effectively. This week markets noticed the bumper itemizing of Happiest Minds Technologies which surged 111%, over the higher finish of the worth band, to make its market debut. Now, in the approaching week, traders will witness Route Mobile’s share getting listed together with IPOs of CAMS, Chemcon Speciality Chemicals Ltd, and Angel Broking opening for subscription. Collectively the three IPOs opening will look to lift Rs 3,160 crore in the approaching week.
Computer Age Management Services (CAMS)
CAMS IPO will open on Monday for subscription. The difficulty is made up of a suggestion for sale (OFS) of 1.82 crore shares by NSE Investments and won’t see a contemporary difficulty. Hence, not one of the capital raised via the issuance will go in the direction of the corporate. While NSE Investment is promoting all of its 37.48% stake in the corporate via the problem to lift Rs 2,244 crore, Great Terrain, the promoter can even trim its stake to 31% from the pre-issue 43.5% however this is not going to be a a part of the IPO. At the provide worth of Rs 1,229-1,230 per share traders can bid for fairness shares in a bid lot of 12 fairness shares.
The difficulty will see 90 lakh shares being reserved for Qualified Institutional Buyers (QIB), 27 lakh shares supplied to Non-Institutional Investors (NII), and Retail portion consisting of 63 lakh shares. Employee portion has 1.82 lakh shares reserved. CAMS, a Chennai based mostly Mutual Fund Transfer Agency has a market share of 70%. It caters to 4 of the 5 largest MFs in India in addition to 9 of the 15 largest MFs based mostly on AAUM as of July 2020.
Brokerage and analysis agency Motilal Oswal mentioned that over FY 2017-2020, CAMS’ Revenue/EBITDA/PAT grew at a CAGR of 14%/13%/12%. “The balance sheet is lean with zero debt and negative working capital, thus resulting in healthy return ratios.” it mentioned. IIFL Securities mentioned that CAMS is a play on India mutual fund trade. The mutual fund trade nonetheless has a giant market to faucet into. India’s AUM-to-GDP ratio is at 12% for whereas the common throughout the globe is 63%.
Should you subscribe?
IIFL Securities values CAMS at 35x FY20 EPS, at a 10-15% low cost to listed AMCs, Exchanges and Depositories based mostly on its higher worth band and has a subscribe ranking. Motilal Oswal likes the corporate for its management place, built-in enterprise mannequin, pan India presence and sturdy financials because it recommends subscribing with a long-term view. Geojit Financial Services too recommends subscribing the problem and so does Yes Securities.
Chemcon Speciality Chemicals Rs 318 crore difficulty additionally opens for subscription together with CAMS. Chemcon’s IPO consists of an OFS of Rs 153 crore and a contemporary difficulty of Rs 165 crore. The worth band for the problem has been fastened at Rs 338-340 per share and traders can bid in a bid lot of 44 shares. A producer of pharmaceutical chemical compounds, the corporate plans to make use of the proceeds of the problem to fund the capability growth and the remainder for working capital necessities and normal company functions. Post difficulty the promoter share will probably be 74.47%.
The firm is coming into the market at a time when prescribed drugs have had a respectable rule and speciality chemical producers are trying up. Along with pharma chemical compounds, Chemcon can be a main producer of Oil Well completion chemical compounds in India. 50% of the provide is reserved for QIBs whereas NIIs get 15% and 35% of the problem is reserved for retail traders. “Revenue and PAT CAGR from FY18-FY20 is 29% and 36% respectively. On FY20 PE basis it is demanding a valuation of 22.2x. Company ROE is quite strong, it is 49.2%, 44.9% and 34.2%, for FY18, FY19 and F20 respectively,” mentioned Keshav Lahoti – Associate Equity Analyst, Angel Broking.
Chemcon derives income primarily from sale of merchandise and job work providers. In the earlier fiscal over 93% of the income got here from sale of merchandise of which home pharma chemical gross sales make up a giant chunk. In the publish pandemic world, analysts do anticipate Indian speciality chemical corporations to faucet into extra share of the worldwide provide chain.
Should you subscribe?
“Considering healthy business performance, regular capacity expansions, strong customer base, expanding margin profile and improving outlook for the sector, we have a ‘SUBSCRIBE’ rating on this IPO,” mentioned Geojit Financial Services. According to brokerage agency Choice Broking, on the increased worth band of Rs 340 per share, Chemcon’s share is valued at a P/E a number of of 25.5x, which is at a low cost to the peer common of 40x. However, it famous that it’s cautious owing to the promoter group’s company governance difficulty. The brokerage agency highlighted that one among Chemcon’s promoter group members is convicted for a felony case by the CBI Special court docket and in addition that RBI has initiated proceedings in opposition to one of many promoter group entities for failing to hold out its operations from the registered workplace.
The brokerage agency will see its IPO open for subscription on Tuesday in the approaching week because it appears to lift Rs 600 crore from the problem. The IPO will embody a contemporary difficulty of Rs 300 crore, and a suggestion for sale (OFS) of Rs 300 crore from present traders of the agency. The Rs 300 crore OFS will embody sale of fairness shares price Rs 120 crore from International Finance Corporation (IFC). Pre difficulty the promoter & promoter group holds 55.20% stake in the corporate, this can come right down to 47.67% publish difficulty.
50% of the fairness shares on provide will probably be supplied to Qualified Institutional Buyers (QIB), whereas Non-institutional traders will get 15% of the problem and Retail traders may have 35% of the problem accessible for subscription. The bid lot for retail traders will probably be of 49 fairness shares and in multiples thereafter. The technology-driven brokerage is among the largest retail broking companies in the nation with a important market share in the money and commodity phase. Over the previous two fiscal years, Angel Broking has managed to generate over Rs 500 crore in income from the broking enterprise.
Being among the many 5 of the biggest broking homes in the nation, Angel Broking can be effectively positioned to faucet into the brand new prospects. The firm has been gaining share in tier-2 and tier-3 cities. The firm has a mean each day turnover of Rs 61,900 crore in the primary quarter of the fiscal 12 months.