IPO Rush Continues

Tale of the Tape

Happy Wednesday everyone. We’re halfway through the week. 😇

Markets closed up on strong economic data. Manufacturing activity hit a 10-month high in November. Midcaps (+0.8%) and Smallcaps (+0.1%) traded mixed. The advance-decline ratio was evenly split. 🤏

All sectors, except for Pharma (-1.6%), closed higher. State-owned Banks and Metals rose +2%. Auto stocks (+1.3%) snapped their five-day losing streak. 📈

Supply chain issues are finally sorting out. Maruti Suzuki expects only 15%-20% production cut in December (vs 40% earlier). The stock jumped +3%. Read more below. (Bonus: a quick overview of November auto sales trend) 🚘

Vodafone Idea rallied +14%. Government may roll back one-time spectrum charges of nearly Rs 40,000 cr against telcos, according to media reports. 📱

Tata Power wins India’s largest solar & battery storage project worth Rs 945 crore. The stock closed +5% 🔌

Fertilizer stocks broke out in trade. Chambal Fertilizers rallied +9%. RCF and NFL rose +5% each. Check out their charts below. 💰

Sapphire Foods (+1%) aims to double its store counts in the next 3-4 years. 🍕

Seven more stocks join the Futures and Options segment from Dec 31. Here’s the full list. 📈

IPO Update. Star Health IPO got subscribed 16% on day 2. Tega Industries IPO received strong response, was oversubscribed 3.7 times. Anand Rathi Wealth IPO opens tom. Read more below. 🤑

Cryptos marched higher. Bitcoin rose 1%. Ethereum jumped +6% to over $4,700. Solana soared +10%. 🤗

Here are the closing prints:

Nifty	17,167	+1.1%
Sensex	57,685	+1.1%
Bank Nifty	36,365	+1.9%

Hot Wheels

Maruti Suzuki has hinted at the easing of the semiconductor situation. Finally!! 😃

India’s largest carmaker estimates volumes to drop 20% in December. However, this is down from the peak of 60% cut back in September. Yay! The semiconductor shortage has been the Achilles heel of the auto sector for months. Auto companies had to reduce their production resulting in lost sales in the critical festive season. However, the worst seems to be over. 🤞

Maruti is also working on a strategy to increase market share. The entry of large foreign brands like Morris Garages and Kia Motors plus new launches from Tata and M&M have brought its market share down to 43% (vs +50% YoY). The company plans to launch five new SUVs in the next three years to fill product portfolio gaps. 🚙

Notably, none of its new cars will be an EV. That is a bit concerning. Its key rival Tata Motors has a leg up. Tata controls 80% of the EV passenger car market in India. And, it plans to solidify its leadership with the launch of 8 new EVs by 2026. Experts believe Maruti has a lot of catch-up work to do, which is a hurdle for the stock. 👎

While we’re on the topic, November auto sales figures were released today. Most automakers reported lower than expected sales. Production cuts and high base of last year were key reasons. Here’s a complete lowdown. 📊

Chartbusters

Fertilizer stocks were the star performers today. The Government may double the subsidy on fertilizers to Rs 1.6 lakh cr in FY21, according to media reports. Chambal Fertilizers rallied +9%. RCF and NFL rose +5% each. Check out their charts below: 📈

More IPOs

Anand Rathi Wealth IPO will open on Dec 2. The price band is fixed at Rs 530-550 per share. The company plans to raise Rs 660 cr from the markets.💸

Anand Rathi is one of the largest mutual fund distributors in India. Over the years, the company has expanded to offer a complete basket of financial solutions. Its assets under management (AUM) has grown 23% over the past three years to Rs 30,000 cr+. Anand Rathi has a pan-India presence with offices in 11 cities across India and more than 6500 clients. 💪

Financial Snapshot:

FY21 Revenue: Rs 266 cr; -20% YoY
FY21: Net Profit: Rs 45 cr; -27% YoY

The wealth management space is estimated to grow 10% annually to $5.5 trillion by 2025. Rising financial awareness and increasing retail participation are key growth drivers. More options to play the retail trading boom than just broking stocks and CDSL. 😉

Except for the Covid year, the company has been consistently growing both its top and bottom-line. Fun fact: Anand Rathi has generated a profit of Rs 51 cr in the first five months of FY22 alone! Its superior financial performance along with positive industry outlook will definitely please investors. However, expensive valuations and high competition from banks are key negatives to consider. 🤓

Jio Dhan Dhana Dhan

Reliance Jio is planning to launch a Jio TV and a Jio Tablet.📺

Big picture: Telecom and tech companies across the globe, including Apple, have tapped into the services business. These services revolve around the app ecosystem, often requiring users to pay monthly subscriptions. This trend has created a recurring revenue stream for platform companies. Case in point, Apple earned over $18 billion in revenue from services, higher than its Mac revenues. 🤯

Where does this leave Jio? Jio has numerous apps including JioCinema and JioTV. The company is expected to offer these apps to users outside of its Jio ecosystem through the new products. The additional revenue stream will help Jio offset any weakness in its wireless business. 💰

The product expansion is on the heels of the company launching its JioPhone Next smartphone. The smartphone was developed in close partnership with Google. Global brokerage firm Jefferies estimates the new phone to add 10% to Jio’s topline. 💸