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Chemplast Sanmar IPO Listing

Chemplast Sanmar
IPO
24/08/2021

On 24th August, Chemplast Sanmar listed at a marginal premium of 1.66% on NSE, but later slipped into a discount. The stock could not hold on to the premium listing as selling pressure piled up through the day. 

The overall subscription of 2.17X in the Chemplast Sanmar IPO was tepid, especially when you consider that HNI portion was subscribed just 1.03X and QIB portion 2.70X, despite a successful anchor placement ahead of the IPO. Here is the Chemplast Sanmar listing story on 24th August.

Check: Chemplast Sanmar IPO Subscription

The IPO price was fixed at the upper end of the band at Rs.541 despite a very tepid 2.17X subscription. On 24th Aug, the stock of Chemplast Sanmar listed on the NSE at a price of Rs.550, a premium of 1.66% over the issue price. On the BSE, the stock listed at a price of Rs.525, representing listing discount of -2.96%.

On the NSE, Chemplast Sanmar closed at Rs.536, a first day closing discount of -0.92% on the issue price of Rs.541. On the BSE, the stock closed at Rs.534.90, a first day closing discount of -1.13% on the issue price. Despite the bounce from lower levels on BSE, the stock closed below the IPO price.

On Day-1 of listing, Chemplast Sanmar touched a high of Rs.550 on the NSE and a low of Rs.510. The stock traded a total of 142.54 lakh shares on NSE amounting to value of Rs.769.12 crore. In terms of traded value, Chemplast Sanmar was the sixteenth most traded stock on NSE.

On the BSE, Chemplast Sanmar touched a high of Rs.550 and a low of Rs.510.30. On BSE, the stock traded a total of 20.42 lakh shares amounting to value of Rs.110.02 crore. At the close of Day-1, Chemplast Sanmar had a market capitalization of Rs.8,457 crore with free-float market cap of just Rs.2,114 crore.

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Aptus Value Housing IPO Listing

Aptus
IPO
24/08/2021

On 24th August, Aptus Value Housing listed at a discount of -5.67%, but the stock managed to recoup losses by close. Both the NSE and BSE are showing positive returns on Aptus Value Housing but that is misleading because the exchanges consider returns from the opening price. Compared to the IPO price, the stock closed lower. 

The overall subscription of 17.20X in the August, Aptus Value Housing IPO was largely supported by HNI subscription at 33.91X and QIB subscription at 32.41X, even as retail participation was just 1.35X. Here is the Aptus Value Housing listing story on 24th August.

The IPO price was fixed at the upper end of the band at Rs.353 after a decent response at 17.20X subscription. On 24th Aug, the stock of Aptus Value Housing listed on the NSE at a price of Rs.333, a discount of -5.67% on the issue price. On the BSE, the stock is listed at a price of Rs.329.95, representing a listing discount of -6.53%.

On the NSE, Aptus Value Housing bounced back to close at Rs.352, just Rs.1 below the issue price. On the BSE, the stock closed at Rs.346.50, a first-day closing discount of -1.84% on the issue price. Interestingly, BSE has displayed returns on opening price and issue price.

On Day-1 of listing, Aptus Value Housing touched a high of Rs.354.80 on the NSE and a low of Rs.333. The stock traded a total of 325.81 lakh shares on NSE amounting to the value of Rs.1,120.31 crore.  In terms of traded value, Aptus Value Housing was the seventh most traded stock on NSE.

On the BSE, Aptus Value Housing touched a high of Rs.354.60 and a low of Rs.329.95. On BSE, the stock traded a total of 16.21 lakh shares amounting to the value of Rs.55.98 crore. At the close of Day-1, Aptus Value Housing had a market capitalization of Rs.17,172 crore with a free-float market cap of just Rs.1,889 crore.

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NSE Revises Stock Selection Criteria for Nifty Indices

Change in index
25/08/2021

On 23 August, the NSE Index committee made some significant changes to the criteria and the composition of the various capitalization indices and sectoral indices. There are two very significant shifts that the Index Committee has made in the index criteria, effective 30-Sep.

The first big shift is with respect to the eligibility for inclusion of REITs and INVITs in the indices. Currently, only equity shares are eligible to be included in the index. Going ahead, even REITs and INVITs have been declared as eligible securities to be included in indices. This will bring a lot of global passive funds to invest in REITs and INVITs.

The second big change is to give a better representation to the pharma sector in the sectoral index. Currently, only the top-10 pharma stocks are considered for inclusion in the pharma index based on 6-month average free-float capitalization. That is now being modified to 20 pharma stocks to give a wider choice for inclusion in the pharma index.

Major changes in key indices

There will be no changes in the Nifty 50 Index composition as part of this semi-annual review. However, other indices are likely to see shifts as captured in the table.
 

NSE Index
Category

Number of
stocks changed

Nifty Next  50

05

Nifty 500

23

Nifty 100

05

Nifty Midcap 150

20

Nifty Small Cap 250

32

Nifty Midcap 50

10

Nifty Midcap 100

10

Nifty Small Cap 50

16

Nifty Small Cap 100

24

Nifty 200

06

Nifty Large-Midcap 250

15

Nifty Mid-Small-cap 400

28

Nifty Microcap 250

40

Nifty FMCG

01

Nifty Healthcare

04

Nifty IT

01

Nifty Media

03

 

For a detailed list you can visit the NSE website at the following: https://www.niftyindices.com/Press_Release/ind_prs23082021.pdf

All the above changes will be effective from September 30th, 2021.

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Government plans to allow FDI in LIC

Government
25/08/2021

Foreign direct investment or FDI in the proposed LIC IPO may be permitted as a special case. To begin with, Indian government permits FDI in insurance up to 74% under the automatic route. Only if the FDI is above 74%, the matter is referred to the Cabinet Committee of Economic Affairs or CCEA for final approval. Then why does LIC need special approval?

The anomaly has to do with the regulatory ambit of LIC. Unlike other insurers that are entirely regulated by the Insurance Regulatory & Development Authority of India (IRDAI), LIC is governed by a statute of parliament under a separate Life Insurance Corporation Act. Hence the regular approval of 74% FDI will not apply to LIC and special approval has to be sought under the LIC Act, or an appropriate amendment made to the same.

The LIC IPO is expected to happen during the current fiscal year 2021-22 and the actuarial valuation report is still awaited. As per informal estimates, the government may sell around 5% stake in LIC as against the originally indicated 10%. The IPO will be a combination of a fresh issue and a sale of stake by the government of India. The indicative valuations of LIC based on its AUM and policyholder equity is pegged at over $250 billion, making it India’s most valuable company.

The government is clear that an IPO with a size of Rs.1 trillion cannot be absorbed by retail and HNIs, so aggressive institutional participation is inevitable. The government may also look at 75% allocation to QIBs to make absorption of the issue much easier. The government is firing on all cylinders as it needs to make a grand success of the LIC IPO if it has to even get close to its disinvestment target of Rs.175,000 crore for fiscal year 2021-22.

 

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Read all stories on life insurance corporation (LIC) IPO:

1.   LIC - IPO Update
2.   LIC IPO gets the Government Stamp of Approval
3.   LIC IPO once step closer to becoming reality

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Bajaj Finserv gets Approval for Mutual Fund

Bajaj finance
25/08/2021

Bajaj Finserv, the holding company of the consumer finance and insurance business of Bajaj group, got SEBI approval to sponsor a mutual fund AMC. The next steps for Bajaj Finserv would be to put in place a full-fledged asset management company as well as a trustee company to hold funds in trust.

The stock markets received the news with enthusiasm considering that the stock price scaled new highs in the aftermath of the news. If you look at the last 3 months, Bajaj Finserv is up nearly 42%, when the Nifty is up just 10%. That has been largely driven by the anticipated mutual fund approval for Bajaj Finserv.

The mutual fund segment in India currently manages over Rs.35 trillion with SBI Mutual Fund, ICICI Prudential Fund and HDFC Mutual Fund being top-3 in terms of AUM. There are over 40 AMCs in India but the top-10 AMCs account for over 80% of industry AUM. In short, this is a business where scale is a distinct advantage.

What is the distinct advantage for Bajaj Finserv from the AMC business. The first is synergy. Bajaj Finserv has built a solid retail franchise with deep reach across India through its consumer finance and insurance business. The AMC licence will facilitate Bajaj Finserv to cross sell one more product offering to its massive customer base.

The second advantage is valuations. Currently, there are 3 listed AMCs. While HDFC AMC is valued at 15% of AUM, Nippon AMC is at 10% and UTI AMC at 8% of AUM. Even if you assume a median valuation for Bajaj Finserv AMC business at around 12% of AUM, there is a lot of value that the group can build by originating mutual funds. For Bajaj Finserv, the AMC business will be a cross selling as well as value enhancement strategy.

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Rakesh Jhunjhunwala picks up 1.6% Stake in Canara Bank

JhunJhunWala
25/08/2021

Last week, we had reported about the Rs.2,500 crore qualified institutional placement (QIP) of equity shares by Canara Bank. This week it emerges that nearly Rs.431 crore in the QIP was invested by Rakesh Jhunjhunwala. In short, Jhunjhunwala has absorbed more than 17% of the total QIP issue of Canara Bank. Post the allotment, Rakesh Jhunjhunwala now holds a 1.59% stake in Canara Bank.

Canara did QIP of 16.74 crore shares to qualified institutional buyers at a price of Rs.149.35 per share taking the total size of the QIP to Rs.2,500 crore. Out of this total QIP placement, Canara Bank has allotted 2.885 crore shares to Rakesh Jhunjhunwala at the price of Rs.149.35 pegging his investment in the QIP at Rs.431 crore. However, there were other major QIPs that also participated in the QIP.

Check: Big Bull Rakesh Jhunjhunwala's Portfolio

While Rakesh Jhunjhunwala took 17% of the QIP issue, there were several institutions that took more than 5% of the QIP issue. The major investors in the QIP of Canara Bank included LIC (15.91%), BNP Paribas Arbitrage (12.55%), Societe Generale (7.97%), Indian Bank (6.37%), ICICI Prudential Life (6.37%), Morgan Stanley Asia (6.16%) and Volrado Venture Partners (6.05%).

However, on 25th August, after the disclosure, the stock of Canara Bank closed 3% lower at Rs.151.05 on the BSE. There could be two reasons for the tepid stock price performance. Firstly, the QIP placement has increased the paid up capital from Rs.1,647 crore to Rs.1,814 crore. To that extent, it will be EPS dilutive.

The other reason is that the market wants to see more traction in earnings growth and NIM expansion. The profit growth in the Jun-21 quarter was largely on the back of lower provisioning. Till there is greater clarity on performance, it looks like the markets will bide its time before getting enthusiastic about the stock.