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Paytm Taps Sovereign Wealth Funds as Anchor ahead of IPO

Paytm Taps Sovereign Wealth Funds as Anchor ahead of IPO
IPO
by 5paisa Research Team 08/10/2021

Paytm may be a household name in India across urban and rural centres. But they have a huge challenge on hand and that is to get their Rs.16,600 crore IPO oversubscribed. The size of the issue is too large and the stakes are too high, so obviously Paytm is plugging all the missing links to ensure a smooth IPO process.

While Paytm has filed for its Rs.16,600 crore IPO, the SEBI approval is yet to come in. The Paytm IPO will consist of Rs.8,300 crore of fresh issue and another Rs.8,300 crore by way of offer for sale or OFS. At Rs.16,600 crore, Paytm will be the largest IPO in Indian history, beating the Rs.15,000 crore raised by Coal India in 2010. The IPO would be smaller than LIC.

Check - LIC to File for its IPO in November 2021

Currently, Paytm is in talks with marquee SWF investors like the Abu Dhabi Investment Authority (ADIA), GIC of Singapore, Canadian Pension Fund etc. Even before the anchor placement, Paytm may look at a sizable pre-IPO placement of around Rs.2,000 crore. The eventual IPO size will be reduced to the extent of pre-IPO placement.

In addition, Paytm has also been tapping into some large institutional investors like Nomura of Japan and Blackrock of the US for participating in the Paytm pre-IPO placement as well as the anchor placement. Considering the size of the issue, Paytm may look at institutional participation to a much larger extent to see the issue through comfortably.

The big difference between a pre-IPO placement and an anchor investment is that the anchor investment has a lock-in period of just 30 days. Also, in the case of the anchor investor, there is no price discount and it is at the same rate as the IPO. As per extant rules, the anchor investor can be offered up to 60% of the institutional quote for the IPO.

The eventual pricing would depend on the valuation arrived at, although informal estimates peg the valuation of Paytm at between $22 billion and $25 billion at the time of the IPO. Paytm is owned by One-97 Communications.

Read More:-

8 Interesting facts about Paytm that you must know ahead of the IPO

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TCS Share Q2 Results

TCS Reports 29% Growth in Net Profit at Rs.9,653 Crore
by 5paisa Research Team 08/10/2021

It was another robust quarter for TCS, India’s largest and most valuable software company and the second most valuable company on the stock exchange after RIL. TCS reported 16.77% growth in total sales at Rs.46,867 crore for the Sep-21 quarter. The sales were also higher on a sequential basis, albeit at a more moderate level of 3.21%. There was all-round growth seen across all verticals of the company.

Here is a gist of the top line, bottom line and margin numbers for Sep-21 quarter:

 

TCS Ltd

 

 

 

 

Rs in Crore

Sep-21

Sep-20

YOY

Jun-21

QOQ

Total Income (Rs cr)

₹ 46,867

₹ 40,135

16.77%

₹ 45,411

3.21%

Operating Profit (Rs cr)

₹ 12,000

₹ 10,515

14.12%

₹ 11,588

3.56%

Net Profit (Rs cr)

₹ 9,653

₹ 7,504

28.64%

₹ 9,031

6.89%

 

 

 

 

 

 

Diluted EPS (Rs)

₹ 26.02

₹ 19.93

 

₹ 24.35

 

OPM

25.60%

26.20%

 

25.52%

 

Net Margins

20.60%

18.70%

 

19.89%

 

Data Source: Company Filings
 

Here are some of the highlights of the results announced by TCS for the Sep-21 quarter.


A) North America has driven TCS top line not only in terms of volumes but also in terms growth, showing 17.4% YoY growth in constant currency terms.

B) Among other markets, while UK grew by 15.6%, continental Europe grew at 13.5% yoy. Among the emerging markets, India showed the best growth traction at 20.6%.

C) Growth was a lot more decisive in terms of specific verticals. Manufacturing led the way at 21.7%, followed by life sciences growing 19% and retail at 18.4%. The BFSI growth at 17% is less of a trigger to growth compared to other verticals. 

D) Operating margins or OPM remained steady at 25.6%, but was certainly slightly lower by 60 bps on a yoy basis. The net margins crossed 20% for the first time in the last few quarters. 

E) The premium client segment of $100 million plus continues to be the high profile focus area for this business. TCS added 5 clients in the $100 million plus bulge bracket and also enjoyed a healthy net cash from operations at 103% of net income. 

Unlike the other IT companies like Infosys, Wipro and HCL Tech; TCS does not provide guidance on earnings. But it is one more quarter of top line and bottom line surprising on the upside.

Also Read:- 

TCS crosses $200 billion market capitalization

TCS Share Q1 Results

Next Article

Reliance to Acquire Stakes in Sterling & Wilson Solar

Reliance to Acquire Stakes in Sterling & Wilson Solar
by 5paisa Research Team 11/10/2021

Reliance New Energy is already getting aggressive in its latest domain of green energy. A day after the company had picked up 100% in Norwegian REC Solar Holdings for $771 million, it announced an important acquisition in India. Reliance New Energy signed a deal to buy 40% of Sterling & Wilson Solar for a total consideration of Rs.2,850 crore.

The purchase will be made by Reliance New Energy via a combination of preferential offer and an open offer to shareholders. In the first phase, Reliance New Energy will acquire 15% by way of preferential allotment of 2.93 crore equity shares. In addition, it will also buy 25.9% in Sterling & Wilson via open offer to shareholders taking total holding to above 40%. 

Reliance is expected to pay approximately Rs.2,850 crore for the overall stake. Sterling & Wilson Solar (SWSL) is owned by Shapoorji Pallonji group, which had been looking to hive off some of its interests in various businesses to raise the much needed cash to address its immediate liquidity crunch. It also had some recent defaults on its loans.

The Shapoorji Pallonji group has diversified interests across businesses but its predominant construction business had been badly hit by the pandemic. The liquidity situation at the Pallonji group had worsened after their fallout with the Tata Group over the removal of Cyrus Mistry from the chairmanship of Tata Sons in October 2016.

SWSL is a global end-to-end pure play on the solar energy business. SWSL is into engineering, procurement and construction of solar plants. It has a strong franchise in project design and execution; managing all aspects of the project design ranging from concept to commissioning. For Reliance group, with its aggressive green energy plans, this would be one more inorganic fit into its overall business model.

Market expert are also hinting that this could be the beginning of a closer association between two large business groups viz. the Reliance group and the Shapoorji Pallonji group. For a long time, the Tata group and the Pallonji group had very closer relations and were virtually synonymous with each other. After the fallout, the Pallonji group may be looking to spread its business bets and this deal surely fits into that logic.

Also Read:-

Highlights of Reliance AGM - 2021

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OYO IPO - 7 Things to Know About

OYO IPO - 7 Things to Know About
IPO
by 5paisa Research Team 11/10/2021

In a market where digital IPOs have been the rage, one more Unicorn name from India is expected to hit the IPO market soon. OYO requires no introduction. Anybody who has tried to book hotel rooms at reasonable rates at short notice have used OYO at some point. OYO is planning a massive IPO in the Indian market.

Here are 7 things to know about OYO IPO:-

1) OYO Rooms is owned by Oravel Stays Limited, which will actually come out with the public issue. However, it is better known by the brand it represents i.e. OYO Rooms and is an online syndicator of hotel rooms and short stay homes.

2) The total IPO size is expected to be Rs.8,430 crore. This will comprise of a fresh issue of Rs.7,000 crore and an offer for sale of Rs.1,430 crore. SVF India Holdings, a unit of Softbank Vision Fund, will be tendering shares worth Rs.1,329 crore in the OFS.

Check - Oravel Stays (OYO) Files for Rs.8,430 Crore IPO

3) The promoter of OYO Rooms, Ritesh Agarwal, holds 24.94% stake in the holding company of OYO, Oravel Stays. However, Ritesh will not be offering any of his shares as part of the OFS and will continue to hold his entire stake.

4) Like most digital start-ups, OYO Rooms has also been making losses each year since its inception in 2012. In FY21, OYO reported net loss of Rs.3,942 crore. In FY20, OYO net losses were much higher at Rs.13,123 crore.

5) The Rs.7,000 crore fresh issue proceeds will be used by OYO Rooms to reduce its debt and also for organic and inorganic expansion of its business. As of March 2021, OYO has consolidated debt of Rs.4,891 crore.

6) The OYO model is largely based on the US based Airbnb model. It was Airbnb that pioneered the concept of Bed and Breakfast (BNB) rooms sold over the net. Airbnb is today valued at more than most of the large hotel chains.

7) OYO currently operates over 157,000 storefronts (hotels and homes) spread across 35 countries. Its biggest concentration is in India, Europe, Malaysia and Indonesia. The OYO is the second largest loyalty franchise in India after Inter Miles of Jet Airways.

OYO has filed the DRHP with SEBI and regulatory approval is awaited.

Also Read:-

1. Upcoming IPOs in 2021

2. OYO to Become a Public Limited Company Ahead of IPO

3. List of Upcoming IPOs in October 2021 

Next Article

Macrotech on an Aggressive Debt Cutting Spree

Macrotech on an Aggressive Debt Cutting Spree
by 5paisa Research Team 11/10/2021

Macrotech Developers, better known for its Lodha brand of properties, has embarked on a major debt reduction program. It may be recollected that when Macrotech came out with its IPO in April 2021, one of its major focus areas was to cut down on debt. That is expected to give the company more operating freedom to grow.

One of the commitments in the Macrotech IPO prospectus was to sharply cut down on the total debt. Accordingly, in the Jun-21 quarter, Macrotech cut its total debt from Rs.16,076 crore to Rs.12,435 crore. Now, Macrotech is looking to further pare its total outstanding debt to a level of Rs.10,000 crore. How does it propose to do so?

In the current year, the debt reduction will be largely funded through collections. In the Sep-21 quarter, it clocked sales of Rs.3,453 crore which includes Rs.2,003 crore from the India business and Rs.1,450 crore from London’s Grosvenor Square and Lincoln Square projects. Macrotech is planning pre-sales of Rs.9,000 crore in FY22.

For the Sep-21 quarter, the total collections were Rs.1,912 crore. This will be used to reduce the debt from the current Rs.12,508 crore to Rs.10,000 crore. Apart from these regular sales flows, debt reduction will also be managed through sale of non-core assets like warehousing assets and commercial rental assets, which are not central to the Macrotech model.

For the full year FY22, out of the total pre-sales of Rs.9,000 crore projected, Macrotech expects Rs.8,000 crore from the sale of homes and the balance Rs.1,000 crore from the monetization of assets. This monetization is expected to pick up steam in the second half of the fiscal year FY22.

In FY22, Macrotech has already launched five projects across Mumbai and Pune with total saleable area of 4 million SFT. In addition, the company has a steady pipeline and plans to launch another 4.5 million SFT worth of projects in the remaining six months of the current fiscal year FY22. 

Home sales have got a big boost post-COVID with the Jan-Aug period seeing sales grow 3-fold. Macrotech also expects to see sharp sales growth from the festive season which runs from October to December and is a busy month for property purchases.

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NCD Issue of IIFL Finance Closes Ahead of its Scheduled Date

IIFL Finance Closes NCD issue 10 days
by 5paisa Research Team 11/10/2021

The non-convertible debenture issue of IIFL Finance, which had opened for subscription on 27-Sep was closed on 08-Oct, a week ahead of its scheduled closing on 18-Oct. The response to the IIFL NCD was much bigger than originally anticipated and with the NCD issue already subscribed 9.35 times, the company decided to close the NCD issue early.

IIFL Finance had launched its NCD issue for investors with a base size of Rs.100 crore and a Greenshoe option to retail additional subscription up to Rs.1,000 crore or 10 times the base size of the issue. With subscription worth Rs.935 crore received till 08-Oct, IIFL Finance opted to close the issue early. All NCD allotments will be on compulsory demat mode only.

IIFL Finance is the fund-based business of the IIFL group and its business activity encompasses loans to individuals, professionals, MSMEs etc. It has a loan AUM in excess of Rs.61,500 crore. IIFL Home Finance is a subsidiary of IIFL Finance. IIFL has two more listed companies for its securities business and its wealth management business.

The IIFL Finance NCDs were offered in 3 tenors of 24 months, 36 months and 60 months. Each of these tenures had an annual interest payment option as well as a deep discounted bond option. There was an additional option of monthly interest payments, but that was only available in the 5 year tenure bonds.

The NCDs offered peak yields of 8.75% for the highest tenure of 60 months, which is among the best in the peer group in the market. In addition, there was an additional incentive in the form of bonus 0.25% coupon payable to shareholders and bondholders of IIFL Finance as well as to the bondholders of IIFL Home Finance.

Check - What are Pros and Cons of Investing in NBFC NCDs

The NCD issue had been assigned credit rating of AA/Stable by CRISIL and a rating of AA+/Negative by Brickwork. This represents high degree of safety with respect to the timely servicing of interest and principal obligations from time to time. In addition, IIFL group has enjoyed high degree of customer trust considering its stellar track record of servicing debt.

In a tweet, the group chairman, Nirmal Jain, thanked the investors for making the bond issue a resounding success and for reposing their trust in the company.

Also Read:-

IIFL Finance NCD - All you need to know

Different Types of Debentures and Their Use

Difference Between Convertible and Non-Convertible Debentures