Archives: Ipos

DreamFolks Services Ltd has coverage across 54 operational airport lounges constituting 100% of airport lounges in India, as at March 31, 2022. They hold a 95% market share of all India issued credit card and debit card (Card Based) access to airport lounges and accounted for around 68% of the overall lounge access volume in India in Fiscal Year 2022. Currently they facilitate access to 100% of the 54 lounges currently operational in India and have a global footprint extending to 1,416 touch-points in 121 countries across the world out of which, 244 touch-points are present in India and 1,172 Touch-points overseas.

Due to its market leadership position in many speciality chemical product areas, Aether is wellpositioned to capitalize on these market opportunities. Their revenue for their key products has grown much faster than the industry highlights. They benefit from their established relationships with multinational, regional and local customers. In particular, they propose to introduce new products with varied applications across industries. They also intend to capitalize on the growing demand for their products by expanding their manufacturing capacities, strengthening their sales and distribution network in existing markets, and gaining access to newer markets. Apart from Organic growth, Aether is looking for strategic acquisition targets in the United States and the EU for R&D and manufacturing assets in line with their existing or desired competencies. They also look for opportunities to acquire businesses to add additional chemistry or technology competencies or to add business segments where they are currently not present. (for example, cytotoxic compounds, advanced silicone products, API and formulations). At the upper end of the price band, the issue is valued at a P/E of 72.3x based on FY22 annualized earnings, which we believe is aggressively priced. As we are witnessing the negative market sentiment towards the expensively valued stocks and due to limited financial track record, we suggest investors to “Avoid” this issue.

Extensive experience of the promoter in the information technology industry and Emudhra Limited’s (Emudhra) established track record of operations and strong market position as a leading licensed certifying authority for issuing digital signature certificate (DSC) in India, supported by its wide sales and distribution network across the country. Its diversified customer base in the DSC segment given it is largely retail in nature and established relationship with reputed customer base and strong order book in the enterprise solutions segment. Further, the company has invested a total amount of ~INR 303mn in its overseas subsidiaries to increase its market share in the foreign market. At the upper end of the price band, the issue is valued at a P/E of 96x based on FY22 annualized sales, which we believe is fully priced. Therefore, we suggest investors to “Avoid” this issue.

Ethos is the largest retailer for luxury watches in India commanding a 20% market share of the organized market for luxury watch retail in India. They have the sizeable portfolio of premium and luxury watches in India enabling them to retail 50 premium and luxury watch brands. Ethos benefits from strong levels of domestic demand for luxury watches. Brands command significant pricing power, which has enabled them to raise the list prices of their products almost every year and to carefully monitor and control potential arbitrage across regions. The company derives significant benefits from the tendency of consumers in the luxury watch markets to become repeat customers and span age and income groups. The company’s understanding of the luxury customers has enabled them to evolve their luxury customer base, enabling them to drive the sales of their luxury and high luxury watches. Their networks of retail stores allow them to cater to a large section of consumers and ensure effective penetration of the luxury watch brands that they retail. At the upper end of the price band, the issue is valued at a P/E of 96x based on FY22 annualized sales, which we believe is aggressively priced. As we are witnessing the negative market sentiment towards the expensively valued stocks, we suggest investors to “Avoid” this issue

PPL is one of the largest manufacturers of DAP/NPK fertilizers in India, with a total installed capacity of 1.5MMTPA post debottlenecking of two trains in FY21. The capacity will increase further to 1.7 MMTPA in FY2023 post debottlenecking of the remaining two lines. Post the acquisition of ZACL’s assets the company will have around 2.5 MMTPA of annual manufacturing capacity of phosphatic fertilizers making it the third largest P&K manufacturer in the country. PPL is partially backward integrated into production of phosphoric acid by using rock phosphate and sulphuric acid which provides cost advantage to PPL as phosphoric acid produced is cheaper than imported phosphoric acid. PPL had commissioned a 1.32 MMTPA sulphuric acid plant in FY16 which has improved the company’s cost structure due to lower cost of power (produced from steam generated from the sulphuric acid plant) sulphuric acid. Additionally, with the company in midst of installing an evaporator to increase the inhouse production of strong phosphoric acid and increase in the phosphoric acid production capacity to 1500 TPD, the extent of backward integration will further improve, leading to improvement in the contribution margins. At the upper end of the price band, the issue is valued at a P/E of 7x based on FY22 annualized earnings, which we believe is reasonably priced. Hence, we recommend a “SUBSCRIBE” rating on this issue for the long term.

Currently, Venus Pipes has a total production capacity of 10.8 ktpa, of which 3.6 ktpa is dedicated to seamless SS pipes & 7.2 ktpa for welded SS pipes. The company plans to expand its seamless capacity to 9.6 ktpa and welded capacity to 14.4 ktpa and 9.6 ktpa of new capacity towards backward
integration to manufacture mother hollow pipes. Total capacity would double from 10.8ktpa to 24ktpa. Their products are largely used in industries like pharmaceuticals, food processing, etc. The
GoI has announced Production Linked Incentive (“PLI”) schemes for boosting the domestic manufacturing in certain sectors, which shall have a consequent positive impact on their order book. Backward integration with in-house production of hollow pipes, acquisition of slitting machine for cutting steel strips/coils as per desired width and enriched product mix with higher diameter pipes would lead to continued improvement in margins. At the upper end of the price band, the issue is valued at a P/E of 21x based on FY22 annualized earnings, which we believe is reasonably priced. Hence, we recommend a “SUBSCRIBE” rating on this issue for the long term.

Delhivery is the largest integrated and fastest growing fully integrated logistics services player in India by revenue as of FY21. Their revenue from contracts with customers has grown from INR16.5bn in FY19 to INR 36.5bn in FY21, or a CAGR of 48.5%. Further, the revenue from contracts with customers has improved from INR 26.4bn for the 9MFY21 to INR 48.1bn for the 9MFY22, or an increase of 81.9%. The company’s network structure, quality of engineering and technology and data intelligence capabilities have helped them establish scale in all of their business lines and ensure synergies across them. This has driven higher network utilization, resulting in cost efficiencies while maintaining service speed and reliability. At the upper end of the price band, the issue is valued at a Price/Sales of 5.5x based on FY22 annualized sales, which we believe is aggressively priced. Moreover, despite improvement in the topline, the company continues to make losses. As we are witnessing the negative market sentiment towards the similar category stocks (Zomato, PayTM), we suggest investors to “Avoid” this issue.

The company offers a technology-enabled, comprehensive investment and financial services platform with end to end solutions critical for financial products distribution and presence across both
online and offline channels. They grew faster among national distributors (amongst the Top-10 mutual fund distributors) in terms of commission and AAUM with a CAGR of 34.4% and 32.5% respectively for the 5 year period ending Fiscal 2021. With the increasing financialization of investments
and a greater understanding of financial investments among Indians, there is significant potential to
launch newer products and enter into newer segments. In particular, certain asset classes are underpenetrated among their customer base and they will leverage their analytics capabilities to recommend customized products for their investor base. Apart from product distribution, they also wish to
strengthen their research and advisory offerings to their partners and retail customers. On the upper
end of the price band, the issue is valued at a PE of 33.9x based on FY22 annualized earnings,
which we believe is fairly priced. Hence, we recommend a “SUBSCRIBE” rating on this issue for the
long term.

LIC has the leading market position in the sector with the strong rebound of business traction in an underpenetrated market with improving the financialization of savings. LIC’s massive scale of operations and concomitant operating leverage, cost efficiencies, and stellar track record it has established over the decades have allowed it to emerge as a market leader and sustain its position despite the liberalization of the last 20 years. In addition, the management also has plans to improve its VNB margins in the future through a focus on the sale of Non-Participating and group products. At the upper hand of the price band, the IPO is valued at 1.1 P/EV, which is attractive as it is much lower than the listed private life insurance companies that trade at P/EV of 2.5-3.9x. Hence, we recommend a “SUBSCRIBE” rating on this issue for the long term.

CAL enjoys a virtual monopoly in branded sports and athleisure footwear in India due to its excellent design, manufacturing, and distribution capabilities, particularly in the semi-premium price range (largest market share in India). At the time of the pandemic, because of its experienced management and extensive local procurement it was able to maintain its operations at the gross levels and enjoy the growth of its D2C market, which is now poised for significant growth because of low penetration of the product in India. On the upper end of the price band, the issue is valued at a PE of 78.2x based on FY22 annualized earnings, which we believe is fairly priced. Hence, we recommend a “SUBSCRIBE” rating on this issue for the long term.