Trend reversal or not !!
Month: January 2021
Cobra Effect!!
The lore goes that in British India, the city of Delhi was infested with cobras, so the administration announced a cash reward for submission of dead cobras. What did this policy do?
People of Delhi started rearing cobras, killing them, and then taking them to the authorities to collect their cash rewards. Instead of reducing Delhi’s cobra population, the policy turned the city’s homes into cobra farms. The administration was spending more and
more money, and the cobra population was increasing.
No one knows if this story is true. But it has come to be known as the cobra effect to demonstrate how governments often create wrong incentives for people and make policies that result in worsening problems rather than solving them
Excerpt taken from Puja Mehra article in Wealth Insight
Plant Based Meat and Milk : New Trend
Speed bumps for MNC tyre companies
Real Estat Sentiment on Cloud Nine
Gamestop Saga in India : Not possible!
FerroChrome : Price Journey to moon?
Dairy Products : Rising Prices
FMCG : Worst is Over?
Real Estate Revival !!
Container Roadblock to Exports growth!!
Home First Finance IPO : Subscribe or NOT?
The data has been compiled from various sources and might have small difference but overall theme is to subscribe or not — we will focus on that
Home First Finance IPO– 10 yr old company promoted by private equity funds.
Business — In the affordable housing segment in 11 states with 70 branches. 80% business from 4 states including 40% from Gujarat only
Offer purpose — Offer for sale (1153cr) including fresh issue of 265 cr. for expansion and general purposes
Key domains – Affordable housing finance for construction , loans for purchasing commercial property and loans against property to both salaried and small business owners/self-employed customers
Risks —
Consistently need to remain in limelight in highly competitive industry, Key financial metrics are not great as of now
With focus on middle class and recent Covid impact , NPA will always be struggle for few quarters
Strength
Focus on growing affordable housing category for middle income and low income category which is not serviced by many big banks
Company use technology to its advantage and do fast processing of loans
Average ticket size is 10 lacs approximately which makes it target highly growing category of loans
Future
Various government initiatives such as housing for all, amongst others are likely to offer exciting growth opportunities in the coming years.
Last three years CAGR is 60% plus although on smaller base shows future seems bright if it remains on track
Valuations
In almost all aspects except PE, Better listed options available
Should we apply?
People can avoid or subscribe only for listing gains
Recommended to sell if getting gains on listing day
One can wait to enter at low prices for investment purposes or choose peers for investment purpose during corrections
Also Read
Burger King IPO crisp Summary — Listing with huge gains as shared
UTI AMC IPO crisp Summary — Listed with loss as shared
CAMS IPO crisp summary — Listed with 20% gains as shared
Angel Broking IPO crisp summary –Listed with loss as shared
Happiest Minds IPO crisp summary –Listed with substantial gains as shared
In case you have any questions/ queries, please feel free to reach me through Contact Form
Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.
Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.
Stove Kraft IPO : Subscribe or NOT?
The data has been compiled from various sources and might have small difference but overall theme is to subscribe or not — we will focus on that
Stove Kraft IPO– Almost 20 yr old company involved in manufacturing, marketing and exporting kitchen appliances
Business — Company is into manufacturing LPG gas stoves, induction cooktops, non-stick cookware, pressure cookers, chimneys etc
Offer purpose — Offer for sale (412cr) including fresh issue of 95 cr. for repayment of debt and general purposes
Key domains -Company have three different segments. Pigeon for Mass market, Gilma for Mid level and Balck and Decker at top level premium category
Risks —
Company has yet to show sustainable profits.
It is operating in field of established players like Prestige, Hawkins so with such intense competition, profits margins will always face heat.
Company has ongoing litigation and not efficient to recover money from retailers.
Company has been into unrelated segments like LED which can derail the focus on key categories
Customers may not remain loyal as switching to other brands is easy, so basically no moat
Strength
Company has two under-utilised plants which can be ramped up without any major capex
Company have different brands catering to different segments and have good reputation of its products
Company has multiple distribution channels including e-commerce
Future
Market is expected to grow at 11% CAGR in near future
Company existing capacity is not fully utilised and with growth of overall market, company has room to grow
There is a systematic shift happening towards usage of kitchen appliances
Valuations
Recently turned profitable company with low ROE and margins seeking almost equal valuations as leaders in their categories
Bullish market and IPO frenzy makes the valuations stretched leaving little room for improvement
Should we apply?
People can subscribe for long term only if they want to bet on growth potential
If applying, recommended to sell on getting gains on listing day
One can avoid for investment purposes presently as there are better listed option available in market
Also Read
Home First Finance IPO Crisp Summary
Burger King IPO crisp Summary — Listing with huge gains as shared
UTI AMC IPO crisp Summary — Listed with loss as shared
CAMS IPO crisp summary — Listed with 20% gains as shared
Angel Broking IPO crisp summary –Listed with loss as shared
Happiest Minds IPO crisp summary –Listed with substantial gains as shared
In case you have any questions/ queries, please feel free to reach me through Contact Form
Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.
Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.
Paint industry : Is it disruption in high entry barrier business
Also Read : Indigo Paints IPO
Weekend HookUp: January 22,2021
Weekend HookUp: 22nd January, 2021
Gold from waste; Bitcoin Myths; Coffee; Founders to Funders
Gold from Waste: Antony waste Handling (Fortuneindia)
Bitcoin: Myths (ArkInvest)
Learning: Curious case of Coffee (LiveHistory)
Founders to Funders: Startups (Forbes)
In case you have any questions/ queries, please feel free to reach me through Contact Form
Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.
Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.
Sequent Scientific : Walking the Talk
Disclaimer : This is not a BUY/SELL/HOLD recommendation. Only for educational purposes. Please consult your financial adviser for investment purposes
Crystallized Intelligence : Make use of it
AI in EV : New Trend
FM and Budget 2021-22 focus
Kotak Nasdaq 100 Fund of Fund
Indian Start-up Ecosystem : Unicorns and Soonicorns
IRFC IPO : Subscribe or NOT?
The data has been compiled from various sources and might have small difference but overall theme is to subscribe or not — we will focus on that
IRFC IPO– Incorporated in 1986 by the Ministry of Railways (MoR), the Government of India, Indian Railway Finance Corporation (IRFC) is a wholly-owned public-sector undertaking
Business — Its engaged in the activity of mobilising funds on behalf of the Indian Railways to finance its procurement of locomotives, passenger coaches, and wagons as well as to fund other railway infrastructure assets. Apart from providing finance to the MoR, IRFC has provided loans to Rail Vikas Nigam Limited (RVNL), which is wholly owned by the MoR.
Offer purpose — Offer for sale (4600cr) including fresh issue of 3100 cr. for expansion and general purposes,1500 cr will flow to Goverment
Key Service domains – NBFC -Infrastructure finance to MoR
Risks —
Low RoE, lending to government entities at the fixed spread,
and risk of equity dilution from OFS in subsequent years
Strength
Zero NPAs, Lowest Borrowing cost (AAA rated), high operationally managed entity
Strategic role in financing growth of Indian Railways with regular demand for loans which is favorable for its asset growth.
Competitive cost of borrowings: Because IRFC belongs to GoI, and lends to GoI owned entities, the cost of borrowing is very low for IRFC.
Consistent financial performance and cost-plus model: IRFC charges a fixed interest rate for sourcing loans for MoR. It gets fixed spread in the range of 0.3% to 0.4% above its cost of borrowings.
Future
IRFC is strategically important to the MoR as it raises around 25-35% of the total funding requirement (plan outlay) of the Ministry.
It is growing at good rate but ROE can’t be expanded much.
Could be a consistent dividend player
Valuations
Profit making company with stable below par ROE
AUM growth (3yr CAGR>20%) coming at 1x H1FY21 P/BV, Valuations are underpriced to reasonable range of P/B ~1
Should we apply?
People can subscribe looking at mid term to long term prospects
Avoid if one is averse to PSU or looking at big gains
Stellar gains at IPO may not be visible due to large IPO size
One can wait to enter at low prices for investment purposes for dividend play as well
Also Read
Indigo Paints IPO crisp Summary — Apply or not
Burger King IPO crisp Summary — Listing with huge gains as shared
UTI AMC IPO crisp Summary — Listed with loss as shared
CAMS IPO crisp summary — Listed with 20% gains as shared
Angel Broking IPO crisp summary –Listed with loss as shared
Happiest Minds IPO crisp summary –Listed with substantial gains as shared
In case you have any questions/ queries, please feel free to reach me through Contact Form
Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.
Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.
INDIGO PAINTS IPO : Subscribe or NOT?
The data has been compiled from various sources and might have small difference but overall theme is to subscribe or not — we will focus on that
Indigo Paints IPO– Among top 5 in Decorative Paint Industry in India with growing over 40% CAGR in terms of sales since inception.
Business — In the Decorative paints industry with high share of differentiated products with high barriers of entry,
~28% business comes from differentiated products
Offer purpose — Offer for sale (1169cr) including fresh issue of 300 cr. for expansion and general purposes
Key Service domains – Repainting constitutes >70% demand and Tier 2, Tier 3, Tier 4 regions are major targets for company
Risks —
Consistently need to spend on Ads to remain in limelight. Currently they spend 12-13% of revenue on ad spends as compared to 3-5% for other big players
As they are expanding to big cities, competition from other 4 large players will pose serious challenge as retail outlets space is limited
Strength
Paint Industry has relatively high entry barriers and need a technologically advanced Manufacturing and distribution network
Company provides low discount on gross sales due to differentiated products
Have low operating expenses as compared to peers and high margins which sustain higher ad spends
Manufacturing locations are close to raw materials keeping costs low
Future
Various government initiatives such as housing for all, smart-cities, industrial corridors and Atmanirbhar Bharat amongst others are likely to offer exciting growth opportunities in the coming years.
As per capita income increases in India, re-painting cycles will be shortened possibly to 5-6 years. Also that will help people to upgrade to premium paints
GST, COVID-19 has shifted the paint market towards organised one and that will help this company in coming years
Valuations
Profit making company with improving ROE, ROCE but seeking very high valuations in IPO (~140X PE)
Asian Paints At 9X Capacity, 500 bps higher margin at 32X Higher Sales than Indigo currently trades at 70X FY22e
Should we apply?
People can subscribe looking at IPO frenzy and possible listing gains only
Recommended to sell if getting 10-30% gains on listing day
One can wait to enter at low prices for investment purposes and review holdings with each quarter earnings
Also Read
Burger King IPO crisp Summary — Listing with huge gains as shared
UTI AMC IPO crisp Summary — Listed with loss as shared
CAMS IPO crisp summary — Listed with 20% gains as shared
Angel Broking IPO crisp summary –Listed with loss as shared
Happiest Minds IPO crisp summary –Listed with substantial gains as shared
In case you have any questions/ queries, please feel free to reach me through Contact Form
Do spread the word among your peers, family members or anyone who can benefit from this blog and asked them to subscribe. But be selfish and take care of yourself first by subscribing before they do.
Enjoy the day and your life. Don’t forget, we are alone in this grand universe and may not get a chance to live again.
Orientbell Tiles : Turnaround?
Broadband ready Cable : Boost coming
REAL ESTATE : Greenshoots
Another Multibagger in making : Bad loans
Robot as a Service (RaaS)!!
Valuation : Indian vs Global firms : Where we will Land up
EMAMI : Looking for Inorganic Growth
Duopoly is set to go!!
A Decision which can have far reaching consequences for NSE, BSE, CDSL, NSDL
Out of these BSE and CDSL are listed on stock exchanges
More Details and discussion paper attached here ( from SEBI)
DHFL : Zero Valuation in offering
Marico : Marching Ahead
Tech Adoption and Sector resilience : Agritech Investments
Blockchain and Indian economy
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