- In this issue
- » IPO Market on a Roll
- » Secret Behind the Bull Run
- » Market Update
- » And more...
Have you heard of Sequelsoft India, Prosoft Technologies, Synfosys Business Solutions, or Hifunda.com?
If not, you are not alone.
These are some of the stocks that debuted on the bourses at the peak of dotcom bubble. Newbie tech stocks comprised the bulk of the IPOs we analysed in the year 2000. And needless to say, none survived the dotcom bust.
It wasn't until 2003 that investor interest began to return to IPOs. One of the issues that aroused our interest that year was Maruti Udyog. We bet on Suzuki's management and technological edge.
Maruti went on to return 4,300% to its IPO investors over the next fourteen years. Stocks like UCO Bank, Indian Overseas Bank, and TV Today, which listed within months of Maruti's IPO, got nowhere close.
2004 saw a flood of issues from promising businesses in the banking, power, oil and gas, pharma, and media sectors. Imagine having to choose from the issues of ICICI Bank, ONGC, GAIL, NTPC, Biocon, and NDTV!
For us, TCS stole the show. The fact that TCS was better hedged against political backlashes in the US, even back then, was one of the reasons we recommended the IPO. And anyone who chose TCS over the other big IPOs that year made a brilliant decision. TCS has returned 1,050% since listing.
2008 is remembered as the year of the Reliance Power IPO. The thousands of small investors who lost their shirts are etched in our memories. But we forget that Rural Electrification Corp, which listed less than a month later, went on to become a four-bagger.
In 2010, such was the IPO frenzy that we had to analyse at least two or three issues every month. Tons of real estate stocks made a beeline for the bourses. And we had to pour over their opaque balance sheets. But among the chaff was Jubilant Foodworks. While most of its IPO contemporaries have faded into obscurity, by mid-2015, Jubilant had become an eight bagger for its IPO investors.
I could go on with the history of blockbuster and failed IPOs. But the takeaway is that every IPO is different. The problem is few investors take the pains to discern the differences.
2017 will likely be remembered for the DMart IPO (and possibly for some big insurance IPOs yet to list).
The chief of Bombay Stock Exchange believes a 1,000-odd companies will queue up to list once GST kicks in. The tax reform, he says, will force companies to become more transparent with their financials and encourage them to cash in on their newly acquired formal status through listing.
So while hundreds of new businesses will vie for our attention, just a handful of IPOs will join the ranks of Maruti and TCS. Investors who assume the rest of this year's IPOs will have DMart-like fortunes are fooling themselves.
We don't need thousands of IPOs to get rich. That's not how super investors make their fortunes. But a few good IPOs could certainly become the multibaggers in your portfolio in a few years.
Download this FREE report now and discover How to Get Rich with IPOs. This guide will show you how to safely profit from the 2017 IPO rush.
| --- Advertisement --- |
EXCLUSIVELY Published For Our Readers...Claim Your Copy Today!
You will never find this in a bookstore...
Nor will it be available on Amazon...or anywhere else.
Our Latest Special Guide has been published EXLCUSIVELY for our readers and it can ONLY be claimed through this invitation.
It is a must-read guide that reveals the secret investing strategies of India's Super Investors.
And today, you can get instant access to an Absolutely Free Downloadable Copy.
Click Here To Download Your Free Guide (Worth Rs 950) More than 25,000 readers have already downloaded their copies...Hurry
02:30 Chart of the Day
The IPO market has been on a firm uptrend since FY15. In FY17, the amount of money raised through 25 IPOs nearly doubled to Rs 282 billion. The IPOs were well received, with a majority (15 of them) getting oversubscribed by over 10 times.
A striking feature of the IPOs that hit the market during the fiscal was that a large chunk of Rs 109.5 billion or 39% of the total amount constituted offers for sale by promoters. Offers for sale by PE and venture capital investors at Rs 42.4 billion made up 15% of the total IPO amount. This means that a little more than 45% of the funds raised through IPO were meant for deployment in the business.
After a bumper year in FY17, abundant liquidity has fueled expectations that fund raising through IPOs would remain robust in FY18. And may even surpass the amount raised in FY17. The fiscal started with 26 offerings in the first three months. In fact, India was the most active regional market in the Europe, Middle East, India and Africa (EMEIA) region as per a quarterly report by consultancy firm Ernst and Young.
IPO Market Buzzing
Strong foreign capital inflows seem to be providing the resilience to the markets. As per data from Institute of International Finance, India received US$ 17.5 of net capital inflows till date in 2017 which has already exceeded 60% of the amount it received in 2016. This at a time when the fund flows to the emerging markets have slowed down. In fact, China has witnessed a net capital outflow of US$ 41.9 billion till date in 2017 on deteriorating corporate sector indebtedness. Therefore, as domestic equity markets heat up, it is all the more important to exercise caution and follow a bottom-strategy in stock picking.
Vivek introduced the Indian Economic Thermometer (IET) in a recent issue of The Vivek Kaul Letter. The IET is made up of 24 economic indicators. These are real numbers which tell us the real state of the Indian economy.
The way the IET works is very simple. Vivek looks at how an economic indicator has performed over a given period of three months during the course of this year in comparison to the same period in the previous year.
For a detailed understanding of how the IET works click here (requires subscription).
With 14 of the 23 economic parameters losing steam this year, Vivek concludes that the economy remains on a weak footing.
Indian equity markets opened the day on a firm note. At the time of writing, BSE Sensex was trading higher by 151 points and NSE-Nifty was higher by 51 points. Both the mid cap and small cap indices are trading up by 0.7% and 0.6%, respectively. Stocks from the healthcare and metal sectors are the major gainers.
04:56 Investment Mantra of the Day
"It's almost a mathematical impossibility to imagine that, out of the thousands of things for sale on a given day, the most attractively priced is the one being sold by a knowledgeable seller (company insiders) to a less-knowledgeable buyer (investors)." - Warren Buffett
|DISCLOSURES UNDER SEBI (RESEARCH ANALYSTS) REGULATIONS, 2014
Equitymaster Agora Research Private Limited (hereinafter referred to as "Equitymaster"/"Company") was incorporated on October 25, 2007. Equitymaster is a joint venture between Quantum Information Services Private Limited (QIS) and Agora group. Equitymaster is a SEBI registered Research Analyst under the SEBI (Research Analysts) Regulations, 2014 with registration number INH000000537.
An independent research initiative, Equitymaster is committed to providing honest and unbiased views, opinions and recommendations on various investment opportunities across asset classes.
There are no outstanding litigations against the Company, it subsidiaries and its Directors.
GENERAL TERMS AND CONDITIONS FOR RESEARCH REPORT:
For the terms and conditions for research reports click here.
DETAILS OF ASSOCIATES:
Details of Associates are available here.
DISCLOSURE WITH REGARDS TO OWNERSHIP AND MATERIAL CONFLICTS OF INTEREST:
DISCLOSURE WITH REGARDS TO RECEIPT OF COMPENSATION:
- 'subject company' is a company on which a buy/sell/hold view or target price is given/changed in this Research Report
- Neither Equitymaster, it's Associates, Research Analyst or his/her relative have any financial interest in the subject company.
- Neither Equitymaster, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one percent or more securities of the subject company at the end of the month immediately preceding the date of publication of the research report.
- Neither Equitymaster, it's Associates, Research Analyst or his/her relative have any other material conflict of interest at the time of publication of the research report.
- Neither Equitymaster nor it's Associates have received any compensation from the subject company in the past twelve months.
- Neither Equitymaster nor it's Associates have managed or co-managed public offering of securities for the subject company in the past twelve months.
- Neither Equitymaster nor it's Associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
- Neither Equitymaster nor it's Associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
- Neither Equitymaster nor it's Associates have received any compensation or other benefits from the subject company or third party in connection with the research report.
Definitions of Terms Used:
- The Research Analyst has not served as an officer, director or employee of the subject company.
- Equitymaster or the Research Analyst has not been engaged in market making activity for the subject company.
- Buy recommendation: This means that the subscriber could consider buying the concerned stock at current market price keeping in mind the tenure and objective of the recommendation service.
- Hold recommendation: This means that the subscriber could consider holding on to the shares of the company until further update and not buy more of the stock at current market price.
- Buy at lower price: This means that the subscriber should wait for some correction in the market price so that the stock can be bought at more attractive valuations keeping in mind the tenure and the objective of the service.
- Sell recommendation: This means that the subscriber could consider selling the stock at current market price keeping in mind the objective of the recommendation service.
If you have any feedback or query or wish to report a matter, please do not hesitate to write to us.
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringementDisclosure & Disclaimer:
Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. The Author does not hold any shares in the company/ies discussed in this document. Equitymaster may hold shares in the company/ies discussed in this document under any of its other services.
This document is confidential and is supplied to you for information purposes only. It should not (directly or indirectly) be reproduced, further distributed to any person or published, in whole or in part, for any purpose whatsoever, without the consent of Equitymaster.
This document is not directed to, or intended for display, downloading, printing, reproducing or for distribution to or use by, any person or entity, who is a citizen or resident or located in any locality, state, country or other jurisdiction, where such distribution, publication, reproduction, availability or use would be contrary to law or regulation or what would subject Equitymaster or its affiliates to any registration or licensing requirement within such jurisdiction. If this document is sent or has reached any individual in such country, especially, USA, Canada or the European Union countries, the same may be ignored.
This document does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Our research recommendations are general in nature and available electronically to all kind of subscribers irrespective of subscribers' investment objectives and financial situation/risk profile. Before acting on any recommendation in this document, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. The price and value of the securities referred to in this material and the income from them may go down as well as up, and subscribers may realize losses on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur. Information herein is believed to be reliable but Equitymaster and its affiliates do not warrant its completeness or accuracy. The views/opinions expressed are our current opinions as of the date appearing in the material and may be subject to change from time to time without notice. This document should not be construed as an offer to sell or solicitation of an offer to buy any security or asset in any jurisdiction. Equitymaster and its affiliates, its directors, analyst and employees will not be responsible for any loss or liability incurred to any person as a consequence of his or any other person on his behalf taking any decisions based on this document.
As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use
, available here. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited (Research Analyst) 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407