iStockNEW DELHI: Three primary and secondary issues are on the block: The Rs 496 crore Initial public offering (IPO) by Rossari Biotech is seeking a higher-than-industry valuation, but has received 'subscribe' ratings from the majority of analysts; the Rs 15,000 crore FPO from YES Bank at 50 per cent discount to current market price, and the Rs 14,000 crore second tranche of Bharat Bond ETF, which promises the safety of AAA-rating papers.
Analysts said Rossari Biotech can offer a decent listing pop and believe Bharat Bond ETF is for those investors, who prefer safety to income generation and are not looking at immediate liquidity. In the case of YES Bank IPO, existing shareholders should look to average out their holding prices, analysts said though they have not been able to form a consensus whether it is worth the risk.
“While the three offers are not comparable, Bharat Bonds ETF on the debt side looks attractive. Interest rates are falling, the quality of papers is good and the ETF delivers on tax efficiency. Rossari Biotech IPO also is a buy, as it manufactures a wide range of specialty chemicals products in house and is adding capacity by setting up a facility at Dahej. I would give YES Bank FPO a miss,” said Anil Rego, the Chief Executive Officer and founder of Right Horizons.
He said things have moved on for YES Bank following the capital infusion by a group of lenders led by State Bank of India, and there is no more concern for the bank. But he is not bullish on the banking and financial sector on a top-down basis, and hence has an 'avoid' call on the FPO.
YES Bank FPO
Not all experts find YES Bank FPO unattractive. Market veteran Ambareesh Baliga said he had expected the YES Bank stock to fall on Friday itself after the floor price for the FPO was fixed at Rs 12 price, a 55 per cent discount to the then prevailing market price. But the stock did not fall much that day. Despite a 13.7 per cent slide on Monday, the stock held at Rs 22 level, which Baliga said should allay investor fears.
"The gap between prevailing price and FPO price may not narrow more, as those who wished to sell YES shares would have done it on Monday. Those who had invested in the stock before March should look to average out their holdings. A Rs 12-13 price point looks a good entry point at YES Bank for both long-term investors and arbitrage players. I see this FPO sailing through easily," Baliga said.
He that the bank has been holding Rs 1.05 lakh crore of deposits and the new management is not carrying the baggage of Rana Kapoor and the capital adequacy ratio is all set to go up to 13 per cent.
Big private lenders today trade at an average market-capitalisation of over Rs 2.5 lakh crore while YES Bank's m-cap peaked at Rs 1 lakh crore in 2018. Assuming the new management performs, going back to the same level won’t be difficult, Baliga said.
The YES Bank FPO will run from Wednesday to Friday.
Bharat Bond ETF
Suresh Sadagopan, founder at financial planning firm Ladder7 Financial Advisories, said the second tranche of the ETF looks similar to the first tranche in structure. The only difference is the maturity, which is five years and 11 years this time, against the first tranche's three years and 10 years.
"The yields at 5.7 per cent for five years and 6.8 per cent for 11 years look good, as after indexation benefits, the yields should be 5.1-5.2 per cent compared with less than 5 per cent yield in tax-free bonds. Bharat Bond ETF is good for people who want to keep money really safe. The 11-year product looks more attractive, but it will also be more sensitive to interest rates. If interest rates in the system go up and you are not holding till maturity, the impact on an 11-year bond will be higher than that on a five-year bond," Sadagopan said.
The issue opened for subscription on Tuesday and will close on July 17, Friday.
Rossari Biotech IPO
Analysts said the IPO from the in-demand specialty chemicals space could offer a listing gain of 5-10 per cent.
Astha Jain, Senior Research Analyst at Hem Securities expects the stock to debut in the Rs 457-460 range. “The company has strong fundamentals and no debt. In the last three months, it has started manufacturing sanitisers. It is going with the flow. The Dahej facility will commence by March next year. Even on the conservative estimates, we expect the issue to list at 5-10 per cent premium,” she said.
The IPO was subscribed 60 per cent on the first day of bidding on Monday. The public issue, whose price band has been set at Rs 423-425, will close on Wednesday.
Analysts said Rossari Biotech can offer a decent listing pop and believe Bharat Bond ETF is for those investors, who prefer safety to income generation and are not looking at immediate liquidity. In the case of YES Bank IPO, existing shareholders should look to average out their holding prices, analysts said though they have not been able to form a consensus whether it is worth the risk.
“While the three offers are not comparable, Bharat Bonds ETF on the debt side looks attractive. Interest rates are falling, the quality of papers is good and the ETF delivers on tax efficiency. Rossari Biotech IPO also is a buy, as it manufactures a wide range of specialty chemicals products in house and is adding capacity by setting up a facility at Dahej. I would give YES Bank FPO a miss,” said Anil Rego, the Chief Executive Officer and founder of Right Horizons.
He said things have moved on for YES Bank following the capital infusion by a group of lenders led by State Bank of India, and there is no more concern for the bank. But he is not bullish on the banking and financial sector on a top-down basis, and hence has an 'avoid' call on the FPO.
YES Bank FPO
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"The gap between prevailing price and FPO price may not narrow more, as those who wished to sell YES shares would have done it on Monday. Those who had invested in the stock before March should look to average out their holdings. A Rs 12-13 price point looks a good entry point at YES Bank for both long-term investors and arbitrage players. I see this FPO sailing through easily," Baliga said.
He that the bank has been holding Rs 1.05 lakh crore of deposits and the new management is not carrying the baggage of Rana Kapoor and the capital adequacy ratio is all set to go up to 13 per cent.
Big private lenders today trade at an average market-capitalisation of over Rs 2.5 lakh crore while YES Bank's m-cap peaked at Rs 1 lakh crore in 2018. Assuming the new management performs, going back to the same level won’t be difficult, Baliga said.
The YES Bank FPO will run from Wednesday to Friday.
Bharat Bond ETF
Suresh Sadagopan, founder at financial planning firm Ladder7 Financial Advisories, said the second tranche of the ETF looks similar to the first tranche in structure. The only difference is the maturity, which is five years and 11 years this time, against the first tranche's three years and 10 years.
"The yields at 5.7 per cent for five years and 6.8 per cent for 11 years look good, as after indexation benefits, the yields should be 5.1-5.2 per cent compared with less than 5 per cent yield in tax-free bonds. Bharat Bond ETF is good for people who want to keep money really safe. The 11-year product looks more attractive, but it will also be more sensitive to interest rates. If interest rates in the system go up and you are not holding till maturity, the impact on an 11-year bond will be higher than that on a five-year bond," Sadagopan said.
The issue opened for subscription on Tuesday and will close on July 17, Friday.
Rossari Biotech IPO
Analysts said the IPO from the in-demand specialty chemicals space could offer a listing gain of 5-10 per cent.
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Astha Jain, Senior Research Analyst at Hem Securities expects the stock to debut in the Rs 457-460 range. “The company has strong fundamentals and no debt. In the last three months, it has started manufacturing sanitisers. It is going with the flow. The Dahej facility will commence by March next year. Even on the conservative estimates, we expect the issue to list at 5-10 per cent premium,” she said.
The IPO was subscribed 60 per cent on the first day of bidding on Monday. The public issue, whose price band has been set at Rs 423-425, will close on Wednesday.
( Originally published on Jul 14, 2020 )
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