The focus will be back on India’s primary markets next week as the largest initial public offering (IPO) opens for subscription even as the performance of two other new age firms that are likely to list will be monitored keenly.
One97 Communications, the parent of digital payments brand Paytm, will open for subscription on Monday. There will be two other IPOs vying for investor attention — Sapphire Foods India Ltd and Latent View Analytics Ltd that will open for subscription on the following day and close on November 11.
However, the most watched will be the Rs 18,300-crore float from One97 Communications which is the biggest after Coal India’s IPO in 2010. The offering comprises fresh issue of equity shares worth Rs 8,300 crore and Rs 10,000 crore from an offer for sale (OFS) by existing shareholders.
The company has fixed a price band of Rs 2,080-2,150 per share, indicating a valuation of around Rs 1.48 lakh crore. On Wednesday, Paytm raised Rs 8,235 crore from anchor investors.
Market circles expect a good response to the offering though some analysts cite its lofty valuations even as the key question remains as to when it will turn profitable.
Considering the trailing twelve month (TTM) sales of Rs 3,142 crore on a post-issue basis, the company is going to list at a market cap/sales of 44.36 with a market cap of Rs 13,93,79 crore.
“There are no listed companies in India whose business is comparable with that of company’s business,’’ says Saurabh Joshi and Kaushal Thakkar, analysts at Marwardi Financial Services.
They are assigning an "avoid’’ rating to the Paytm IPO pointing out that valuations are way too high for a loss-making company.
The brokerage has a subscribe rating to the initial offer from Sapphire Foods which operates KFC and Pizza Hut outlets in the country.
The company has fixed a price band of Rs 1120-1180 per share for its Rs 2,073 crore IPO.
ICICI Securities has given an “unrated” rating to the IPO of One97 Communications. The brokerage says that it has strengths like the Paytm’s brand, scale & reach, a wide addressable market, deepening merchants partnership and expansion of financial services.
On the other hand, there are risks such as extremely competitive markets, and the failure to attract merchants & grow relationships could affect its business.
While Paytm is reportedly trading at a premium of Rs 125-150 per share in the grey market, Arun Kejriwal, director, KRIS, an investment research firm, says that investors will also track the market debut of five companies which concluded their public offerings this week.
Among them, the most watched will be the listing of FSN E-Commerce Ventures, which runs the online marketplace for beauty and wellness products Nykaa, Fino Payments Bank and parent entity of Policybazaar PB Fintech. The grey market premium for Nykaa is reported to be around Rs 650.
Kejriwal cautioned a muted listing of some the companies may affect the subscription levels of the three IPOs.
In October, Aditya Birla Sunlife AMC had made a tepid debut, trading at Rs 647.60-a 9 per cent discount to the issue price of Rs 712 per share.
Some of have given stellar returns to investors. For instance, Paras Defence And Space Technologies which listed on October 1, closed at Rs 815.10 on Friday on the BSE — a 366 per cent premium to its issue price of Rs 175 per share.
