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Sensex Trades Flat; Consumer Durables Stocks Gain
Thu, 9 Mar 01:30 pm

After opening the day on a flat note, share markets in India have witnessed selling and are trading marginally below the dotted line. Sectoral indices are trading on a mixed note with stocks in the consumer durables sector and stocks in the auto sector leading the gains, while stocks in the oil & gas sector are trading in red.

The BSE Sensex is trading down by 26 points (down 0.1%), and the NSE Nifty is trading down by 12 points (down 0.1%). Meanwhile, the BSE Mid Cap index is trading flat, while the BSE Small Cap index is trading down by 0.3% The rupee is trading at 66.75 to the US$.

In news from the IPO space, the initial public offering (IPO) of Avenue Supermarts Ltd, which runs the D-Mart supermarket chain, opened to robust subscription on Wednesday with investors bidding for 1.36 times the number of shares on offer.

Institutional investors bid for 1.84 times the number of shares set aside for them, while high networth individuals and retail investors bid for 0.52 times and 1.44 times the shares available for them, stock exchange data showed.

The issue, worth Rs 18.7 billion, opened for subscription on Wednesday and closes on 10 March. The company is divesting 10% of its total equity shares.

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Avenue plans to use Rs 10.8 billion to repay debt and Rs 3 billion to purchase and build new stores.

The strong demand for the IPO can be attributed to the fact that the company is one of the most profitable retailers in the country, and posted a Rs 3 billion profit after tax on revenues of Rs 88 billion in fiscal 2017, until December 2016.

Rohan Pinto, my colleague, and head of the ValuePro team, has crunched the numbers and put together an exhaustive report on the D-Mart IPO and whether you should subscribe. You can give it a read here (Subscription Required).

Meanwhile, the IPO of Radio City FM operator Music Broadcast Ltd was oversubscribed 39.3 times on Wednesday, the last day of the offering. The issue had opened on 6 March.

D-Mart's is the third IPO this calendar year, following initial share sales of stock exchange BSE Ltd and Radio City FM operator Music Broadcast Ltd. 26 companies together garnered Rs 260 billion through IPOs in 2016.

Apart from these, there are a bunch of IPOs lined up in the coming months. Retail investors have a lot to look forward to in the IPO space. At least half-a-dozen companies are set to raise Rs 60 billion in the March-April period through IPOs.

IPOs attract retail investors on the promise of listing gains and big brand names. However, high valuations of these issues don't leave anything on the table for the regular investor.

Poor Returns on Big IPOs

Poor Returns on Big IPOs

It is evident from the chart that even big name IPOs have not been able to serve up consistent returns over the long term.

In our view, once should not base their judgements merely on the popularity of the IPO. Rather one must focus on the fundamentals of the business, and the attractiveness of valuations.

Rohan Pinto described how the lure of quick profits have made a mockery of the entire IPO process. But he also explained how Investors can profit from IPOs.

Moving on to news from stocks in the pharma sector. Lupin share price is in focus today as the company announced the launch of new drugs in the US market.

The drug firm today announced the launch of pain relief drug Hydrocodone Bitartrate and Acetaminophen in the US market.

In a regulatory filing, the company announced the launch of Hydrocodone Bitartrate and Acetaminophen tablets USP, in the strengths of 5 mg/300 mg, 7.5 mg/300 mg and 10 mg/300 mg having received an approval from the United States Food and Drug Administration (USFDA) earlier

Lupin had received the final approval from the USFDA for the tablets in November last year.

The tablets are primarily focused on the pain relief segment, and are a generic equivalent of Mikart Inc's Hydrocodone Bitartrate and Acetaminophen tablets.

According to IMS MAT sales data, product had sales of USD 79.6 million in the US market.

Notably, Lupin is looking to expand its footprint in the US markets, with plans to acquire Sanofi's dry powder inhalation brand - Pulmojet.

Reportedly, the two companies have been negotiating a deal for the last few months and a final transaction will help Lupin sharpen its global inhalation therapy business. Meanwhile, Lupin is already developing nine compounds in the inhalation segment.

On the financial front, Lupin clocked global sales of US$ 2.1 billion in 2016, a CAGR of 19% over the last decade (Subscription required).

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