Heads up! Rs11,000 crore worth of IPOs to hit D-Street next week

It has been a busy October for markets as India Inc. raised over Rs 15,000 crore so far in the month bolstered by a sustained rally in the stock market that took the benchmark indices to record highs this past week.


The euphoria in the primary markets is unlikely to die down soon as long as equity markers are flushed with liquidity.



Three companies are scheduled to open their issue in the coming week starting from 30 October to 3 November which includes names like Mahindra Logistics, New India Assurance, and Khadim India.




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· HDFC Standard Life fixes price band of Rs 275-290 for IPO




· Khadim India eyes Rs 543 cr from IPO



This trend is likely to be maintained as the market is breaking its own high, premium valuation of the secondary market which may be attracting investors towards IPOs and as many companies are waiting for a nod from SEBI due to attractive pricing, suggest experts.



“This trend cannot be shattered unless the market falls by more than 10 percent disturbing the confidence of retail investors which are currently shifting their liquidity towards primary, secondary and MF,” Vinod Nair, Head of Research at Geojit Financial Services told Moneycontrol.



“This is owing to a change in investment style of public from physical to financial assets due to investor awareness and structural reform undertaken by the government towards cash hoarding,” he said.



Companies which have raised capital via IPO route in the month of October include names like Godrej Agrovet, MAS Financial Services, Indian Energy Exchange, General Insurance Corporation of India, and Reliance Nippon Life Asset Management.



So far in 2017, nearly 30 companies have collectively mopped up over Rs 40,000 crore through IPOs, surpassing the previous high recorded seven years ago, said a report.



Recently, we have seen three mega insurance offerings such as General Insurance Company of India which raised 11,372 crores, SBI Life Insurance Company raised 8,400 crores, and ICICI Lombard General Insurance Company raised Rs5,700 crore.



Another big boy, New India Insurance will hit D-Street on November 1 to raise up to Rs9,600 crores from primary markets.







October 31: Mahindra Logistics to raise up to Rs829 crore



Mahindra Logistics, the subsidiary of Mahindra and Mahindra, has fixed the price band at Rs 425-429 per share for its initial public offering that is scheduled to open on October 31 and close for subscription on November 2. 2017.



The discount of Rs 42 per share will be offered to its eligible employees. The minimum bid lot for the offer is fixed at 34 equity shares and in multiples of 34 shares thereafter, the company said in its filing.



The public issue comprises an offer for sale of 1,93,32,346 equity shares by parent firm Mahindra and Mahindra (that will offload of 96,66,173 shares - 13.74 percent stake); Normandy Holdings (92,71,180 shares) and Kedaara Capital (3,94,993 shares).



Normandy Holdings is a 100 percent subsidiary of Kedaara Capital.



November 1: New India Assurance to raise up to Rs9,700 crore



New India Assurance (NIA), the largest general insurance company in India, will hit the capital markets on November 1 to raise an estimated Rs 9700 crore through IPO. The company's initial share sale will close on November 3, they added.



NIA has fixed the price range of Rs. 770-800 for its upcoming Initial Public Offering (IPO), said sources close to the matter.



The fully government-owned company is selling 12 crores shares with a face value of Rs. 5 each of which 2.4 crore shares are a fresh issue and 9.6 crore shares are an Offer for Sale (OFS).



November 2: Khadim India eyes Rs 543 crore from IPO



Footwear retailer Khadim India expects to raise Rs 543 crore through initial public offer next week, with the company fixing a price band of Rs 745-750 per share, said a report.



The IPO will open for subscription from November 2-6, the company said in a statement.



Khadim India's initial public offer (IPO) comprises a fresh issue of equity shares aggregating up to Rs 50 crore besides, an offer for sale of up to 65,74,093 equity shares by the existing shareholders. The net proceeds from the issue would be utilised towa.
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China will not set a target to double gross domestic product (GDP) from 2021

China will not set a target to double gross domestic product (GDP) from 2021, a senior Communist Party official said on Thursday, as top leaders look to high-quality growth in the long term.



Yang Weimin, vice minister of the Office of the Central Leading Group on Financial and Economic Affairs, told a news conference the government will not solely pursue economic growth and will emphasise the quality of its growth.



A shift away from the kinds of ambitious long-term growth targets Chinese policymakers have set around key leadership summits would be a departure from past practice and mark a new strategy for longer-term economic development.



China aims to double GDP and per capita income by 2020 from 2010 levels, a target set in 2012, and growth is on track to hit those goals.



The International Monetary Fund (IMF) and many economists have urged Beijing to lower or do away with official growth targets altogether to reduce the country’s reliance on debt-fuelled stimulus and get higher quality growth.



In the opening speech of a key twice-a-decade Communist Party Congress this week, President Xi Jinping said China would deepen economic and financial reforms and further open its markets to foreign investors as it looks to move from high-speed to high-quality growth.



Xi set bold long-term goals for China’s development, envisioning it as a modern socialist country by 2035, and a modern socialist “strong power” with leading influence on the world stage by 2050.



However, this week’s congress did not include any public announcements about new economic growth targets. Some analysts believe the government will continue to set annual growth targets through to 2020.



Yang said China will focus on preventing “major risks” in the economy, fighting poverty and pollution by 2020, and that the party congress will no longer set a target to double GDP from 2021.



“The main contradiction of our society has changed and our country’s economic development has been shifted to high-quality growth from high-speed growth,” Yang said.



“We will not solely pursue economic growth, but will achieve growth by enhancing quality, efficiency and changing growth drivers.”



In the opening speech of a key twice-a-decade Communist Party Congress this week, President Xi Jinping said China would deepen economic and financial reforms and further open its markets to foreign investors as it looks to move from high-speed to high-quality growth.



Xi set bold long-term goals for China’s development, envisioning it as a modern socialist country by 2035, and a modern socialist “strong power” with leading influence on the world stage by 2050.



China’s economy will likely grow 6.8 percent in 2017, topping the state target and accelerating for the first time in seven years, a Reuters poll showed, as Beijing walks a tightrope by containing debt and property risks without stunting economic growth.



China’s growth target for this year is around 6.5 percent and some analysts expect the government to keep the target in 2018.
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More relief for SMEs as GST Council set to cut late filing penalties

More respite could be on the way small and medium enterprises (SMEs), with the goods and services tax (GST) council set to ease a string of procedures, including partial relief on penalties on late filing of GST returns.

The tax department's proposal, if approved by the GST Council in its next meeting on November 10 on Guwahati, will lessen the struggles of small businesses still grappling to understand the nuances of the new indirect tax system that was rolled out from July 1.

“The idea is that an entity should not end up paying penalty higher than his tax liability,” a senior government official told Moneycontrol, adding that the government, however, doesn't intend to waive off the entire late fee.


For instance, there have been cases, where businesses have not been able to file returns due to slowdown in the information technology (IT) backbone of the tax system GST Network (GSTN). A late fee was charged, which turned out to be higher than the company's tax liability.




Similarly, a taxpayer might not have filed return as his tax liability is nil. However, such assessees are also subjected to penalty of late fee, the official explained.




The government does not want to penalise or pull up taxpayers who have missed filing returns, mainly due to technical snags on GSTN, such as slowdown of the system. In fact, small taxpayers are still not used to filing returns online and may have missed deadlines owing to lack of clarity pertaining to processes and the system.




The move is aimed at soothing frayed nerves of millions of small enterprises and exporters that have been battling with procedural irritants, delayed refunds and technical glitches on returns filing.




The easing on late fee penalties will follow the big changes that the finance minister Arun Jaitley-headed council approved on October 6 to iron out rough edges of the new tax system has been hit by multiple pain points since its rollout.




Currently, a late fee of Rs 100 each, under Central GST (CGST) and State GST (SGST) or Rs 200 per day is levied on an assessee. In addition to the late fee, an 18 percent interest per annum also needs to be paid.




“We are looking at giving relief to taxpayers so that they do not have to pay the entire Rs 200 per day late fee,” the official said.




Last month, the government had waived off the late fee of Rs 200 per day for taxpayers who failed to adhere to the deadline of the first set of GST returns for the month of July.




“Late fee for all taxpayers who could not file GSTR3B for month of July has been waived, but not the interest on late payment of dues. Interest will be applicable to all taxpayers who have not discharged their complete GST liability for July by August 25,” finance ministry said in the microblogging portal Twitter in September.


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What’s behind the sharp jump in foreign travel splurge between Nov 2016-Jan 2017?

sharp spike in Indians’ overseas travel-related spending between November 2016 and January 2017 has come under the government’s lens. Officials are now ascertaining whether some of these expenses were attempts to duck the clampdown on undisclosed cash following the sudden demonetization of high value currency notes in early November last year.



Indians spent USD 246.6 million in overseas travel-related payments in November 2016, up 581 percent compared to USD 36.2 million spent in the same month in 2015.



The trend repeated itself in the following two months. Indians splurged USD 201 million in December 2016 travelling across the world, spending 517 percent more than what they did in the same month of the previous year.



The spending spree continued well into the new year. Foreign travel-related spending vaulted 434 percent in January this year, spending USD 217.8 million abroad compared to USD 40.8 million in January 2016.



Growth in foreign travel related spending in the later months (February to August 2017, the latest for which data is available with the Reserve Bank of India) have tapered off significantly, averaging 45 percent, raising questions whether some wealthy Indians have hurriedly used up millions of undisclosed assets by holidaying abroad to escape the authorities’ scrutiny in wake of demonetization.



Travel-related and other overseas remittances take place through RBI’s Liberalised Remittance Scheme (LRS) that allows people to spend up to USD 250,000 overseas in a year through legitimate financial instruments such as travelers’ cheques without specific approval.



Authorities are now scrutinizing suspicious bank transactions that may have been used to remit money overseas through the LRS route after Prime Minister Narendra Modi outlawed Rs 500 and Rs 1,000 notes in a surprise announcement on November 8, 2016 as part of a broader strategy to crack down on black money.



Officials said that data mined after November 8 has thrown up several tax evasion methods that the government will now crack down on.



In some instances, account holders were found to have deposited large sums and later converted these into foreign country travellers’ cheques. Records during November and December 2016 also show a spike in credit card bill payments in cash exceeding more than Rs 1 lakh in thousands of cases. Officials are now examining overseas spending pattern on these credit cards.



The demonetisation announcement set in motion the world’s largest currency culling exercise. People were given 50-days to deposit old notes in banks and post-offices by December 30, 2016.



Records show that cumulative cash deposits of more than Rs 25 lakh were made in about of 4.62 lakh accounts during November 8 to December 30, 2016. Cash deposits of more than Rs 5 lakh were made in 23.87 lakh accounts during these 50 days.



Banks have also reported large number of accounts that show "unusual forex activity compared with past transactions," sudden transactions in foreign exchange in dormant accounts, and fund movement in accounts that are inconsistent with what would be expected from declared income.



Banks are required to report cash deposits of more than Rs 10 lakh in a financial year in one or more accounts. Banks have also been reporting cash payments above Rs.1 lakh in a financial year in one or more credit card bills of the same person.

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Top 10 market-beating stocks with mcap of $1 bn to buy this Diwali

Indian markets rose to a fresh record high in Samvat 2073 and all expectations are Samvat 2074 will also not disappoint investors. The benchmark indices are likely to hit new highs in the next 12 months but investors are advised to stay with quality.

Last Samvat was one of the most eventful years for the economy as well as the equity markets because of two unprecedented events, demonetisation, and introduction of Goods and Services Tax (GST).

The Nifty saw some correction from 8,638 levels on Muhurat Trading day to sub-7,900 levels in December after the announcement of demonetisation in November 2016.

“After hitting a low of 7,099, we have witnessed an almost secular positive movement with Nifty making a new life high of 10,179 during this period. Samvat to Samvat, Nifty has given a return of 15 percent in 1 year,” Reliance Securities said in a report.

“Mid-caps and Small Caps have outperformed with gains of 17 percent and 22 percent, respectively. Nifty achieved a new peak during the year helped by outperformance of financial services index (36 percent weight in Nifty) which increased 24 percent from last Samvat,” it said.

Going into Samvat 2074, investors should handpick stocks which can generate market‐beating returns. This portfolio should be well-balanced to provide superior returns, without any unnecessary risk.

Heavy exposure to small and midcap stocks should be avoided because most of them are already trading above their key long-term moving averages.

The market rally is the testimony of the strength of economy; however, recent macro data is giving mixed signal amid concerns of a further slowdown in the economy due to demonetisation and GST.

“The reforms undertaken in recent past be it demonetization or GST would be instrumental is shaping up the quality of growth in future. Coupled with other reforms viz., implementation of Aadhaar, IBC and Jan-Dhan Yojana, the economic progress would be all-inclusive and positively impacting each and every individual in the country,” Arun Thukral, MD & CEO, Axis Securities told Moneycontrol.

“The markets are expecting robust earnings growth from H2FY18, thereby keeping the markets upbeat. Mid and smallcap stocks have rewarded the investors handsomely in recent past,” he said.

Thukral further added that an investor should undertake a detailed study before investing in small and midcap stocks. Once convinced an investor should set a target based on the fundamentals and accordingly book profit once the target price is reached.

Here is a list of top 10 stocks to buy with a market capitalisation of more than $1 billion:

Research Firm: Centrum Wealth Research

Aditya Birla Capital Ltd (ABCL): Market Cap Rs 39,660 crore

Aditya Birla Capital Ltd (ABCL) is the holding company of all the financial services businesses of the Aditya Birla Group. It has a presence in segments like life insurance, asset management, private equity, corporate lending, structured finance, project finance, general insurance broking, wealth management, equity, currency and commodity broking.

The loan book in the housing finance business under Aditya Birla Housing Finance Ltd (ABHFL), has grown at an exponential rate of 29x over FY15-17 to Rs4,136 crore and stood at Rs4,816 crore as of 30 Jun’17.

Of the total ABHFL’s loan portfolio, 56 percent is individual housing loans, 32 percent LAP, and 12 percent corporate finance. The business has healthy NIM of 3.2 percent as on 31 Mar’17.

Aegis Logistics Ltd: Market Cap Rs7841 crore

Aegis Logistics Ltd (ALL) is India’s leading Oil, Gas, and Chemical logistics company. The company operates through two segments – liquid division (37 percent of FY17 revenue) and gas division (63 percent of FY17 revenue).

The Liquid Terminal Division undertakes storage and terminalling facility of oil and chemical products. Its Gas Terminal Division relates to imports, storage, and distribution of petroleum products, such as LPG and propane.

It is one of the largest bulk liquid and LPG terminal operators in India providing third-party supply chain management solutions to oil, gas, and chemical industries.

For Q1FY18, on a consolidated basis, revenue grew by 16 percent YoY to a Rs856 crore. EBITDA grew 19 percent to Rs58 crore, with margins expanding by 21bps to 6.8 percent. The net profit grew 47 percent to Rs40 crore. Debt to equity as of Mar’17 stood at 0.4x.

ICICI Lombard General Insurance Co. Ltd: Market Cap Rs31,036 crore

ICICI Lombard General Insurance Co. Ltd (ICICI Lombard) was formed as a joint venture between ICICI Bank Ltd and Fairfax Financial Holdings Ltd. It is the largest private-sector non-life insurer in India based on gross direct premium income (GDPI) in FY17.

The company has an extensive distribution reach through 51 corporate agents as on 30 Jun’17, including ICICI Bank, which provides access to its 4,850 branches along with 20,775 individual agents.

ICICI Lombard has a diversified composition of insurance products with major contribution coming from three major categories – Motor Insurance (36.5% of Q1FY18 GDPI), Crop Insurance (21.8%) and Health Insurance (18.2%). Over FY15-17, the GDPI witnessed 26.7% CAGR thus exceeding the Rs10,000 crore mark in FY17.

Over FY13-17, the net premium earned witnessed a 12.3 percent CAGR to Rs6,158 crore. The operating profit and profit before tax also grew at a healthy pace of 17.3 percent p.a. and 18.2 percent p.a., respectively. The net profit grew 5.2 percent. For Q1FY18, the net premium earned grew 10.1 percent.

Lupin: Market Cap Rs46,970 crore

Lupin Ltd. is the 4th largest generic pharmaceutical company by market capitalisation globally, as of Mar’17. It is the 6th largest by sales, 2nd largest Indian pharm company by global sales, and ranks 1st in Anti-TB ailment globally.

The company has global revenue of $255 million in FY17. Over the last 10 years (FY07-17), the company’s revenue and EBITDA grew 8.5x and 9.6x, respectively.

EBITDA margins also have improved over the years by 200bps to 27 percent. Further, the R&D spends of the company have increased 16.3x to 13.5 percent of sales in FY17 vs. mere 7 percent of sales in FY07. Thus, giving a boost to newer product launches along with growth in revenue and profits.

Manappuram Finance Ltd: Market Cap Rs8769 crore

Manappuram Finance Ltd (MFL), incorporated in 1992, is one of India’s leading gold loans NBFCs engaged in providing finance against used household gold ornaments. It has established a pan-India presence, with a strong distribution network of 3,293 branches across 23 states and 4 union territories, with a live customer base of 2.25 million.

The promoters of the company have been involved in the business of gold loans since 1949. It’s total AUM has grown from Rs7,549 crore in FY11 to Rs13,380 crore as of 30 Jun’17. Of the current AUM, gold loan business accounts for 80% as of 30 Jun’17.

MFL has strategically forayed into non-gold businesses - microfinance, home loans, CV loans and loan against property (LAP) to reduce dependence on the gold loan business. The share of new business currently stands at 16 percent of AUM (vs 12% in FY16).

The management expects this to increase to 25 percent of total AUM by FY18E. The diversification will enable faster utilisation of funds on the balance sheet and generate better return ratios going forward.

Brokerage Firms: Sharekhan Ltd

Aurobindo Pharma: Market Cap Rs43560 crore

Aurobindo Pharma Ltd (Aurobindo), headquartered at Hyderabad, manufactures generic pharmaceuticals and active pharmaceutical ingredients. The company’s manufacturing facilities are approved by several

Market leading regulatory agencies such as the USFDA, UK MHRA, among others. Its product portfolio encompasses leading regulatory agencies such as the USFDA, UK MHRA, among others. Its product portfolio encompasses antibiotics, anti‐retrovirals, CVS, CNS, gastroenterologicals, pain management drugs and anti‐allergics.

Management expects to launch over 25 products (more approvals of complex products) in the coming years, which will help Aurobindo to achieve higher growth and mitigate increasing pricing pressure in the US which will help Aurobindo to achieve higher growth and mitigate increasing pricing pressure in the US market.

Bajaj Finserv: Market Cap 84,255 crore

Bajaj Finserv (BFS) is the holding company comprising of lending business and insurance companies. Bajaj Finance Limited (BFL), subsidiary of BFS (58% stake), is the lending arm with a strong and well‐diversified loan book with niche segments.

Its strong operating performance with a healthy asset quality diversified loan book with niche segments. Its strong operating performance with a healthy asset quality, achieved on the back of a 38.9% y‐o‐y growth in assets under management (AUMs) indicates the strength of its business model.

We believe BFL, BAGIC, and BALIC have plenty of headroom to grow and can outperform the industry in terms of growth. Hence, we find significant long‐term value in BFS and expect its subsidiaries’ earnings momentum to continue.

Bata India: Market Cap Rs9505 crore

Bata India is the largest retailer and manufacturer of footwear in India with a network of over 1,300 stores; unmatched by any of its peers. The company has strong brands such as Bata, Hush Puppies and Power catering to varied strata of population in the Indian market.

With redefined strategies and senior management changes, Bata is transforming itself from a conventional footwear player to branded footwear player.

Sustained store expansion, premiumisation and steady same-store sales growth (SSSG) would help the company’s revenue and profit after tax (PAT) to clock CAGRs of 11 percent and 22 percent over FY17‐FY20, respectively.

IndusInd Bank: Market Cap Rs1,00,909 crore

IndusInd Bank (IndusInd) has been among the best‐performing private sector banks with its superior operating metrics. Its advances have recorded a 27.1% CAGR during FY14‐FY17, while net profit clocked a 26.8%. Net interest margin stood at a healthy 4.0% in FY17.

Currently, the bank is in merger talks with Bharat Financial Inclusion Ltd, which if successful, could bring in a lot of synergies for IndusInd.

These include the acquisition of high‐yielding loans, enhanced priority‐sector lending and capital release from Bharat Financial for the merged entity.

Mahindra & Mahindra: Market Cap Rs80,866 crore

Mahindra & Mahindra (M&M) benefits from the encouraging outlook for farm equipment segment, given the normal monsoon and higher minimum support prices (MSPs) that will boost farm incomes. Further, its focus on introducing new products will help it outpace industry growth.

M&M is the only Indian automobile company having a track record of manufacturing passenger electric vehicles (EVs).

Given the government’s push for EVs and M&M’s planned new launches in this space, it will clearly enjoy the first‐mover advantage and significantly benefit from the shift to EVs.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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