The much-touted IPO of Macrotech Developers has received an extremely tepid response with the issue getting subscribed just about 0.35 times at the end of the second day. The issue closes for subscription on Friday. It received bids for just 1.26 crore shares as against the issue size of 3.64 crore shares on offer. The retail portion has been subscribed just about 12%. Formerly called Lodha Developers, Macrotech proposes to raise Rs.2,500 crore through the IPO. It looks like investors are worried about the debt part.
Nearly 81% of Indian large-cap funds underperformed benchmark indices in 2020. The position was slightly better for ELSS and mid-caps where the underperformance was around 65%, but still nothing to write home about. Due to the 10% restriction on holding, most of the large cap funds could not participate in the index leaders to the fullest extent. In terms of returns, the large cap funds lagged benchmark indices by 217 bps on an average. Even over a 10-year period, 68% of large cap funds underperformed the index.
There is not so encouraging auto news from FADA. Cumulative vehicle registrations overall fell 28.64% yoy in Mar-21 largely due to the 7-day lockdown in the last week of March this year. Ironically, registration volumes are in contrast to the dealer dispatches reported by manufacturers. The state of Maharashtra contributes 11% of all-India vehicle registrations and the lockdown is likely to hit numbers badly. In all, 1.65 million units were registered in Mar-21 compared to 2.31 million units in Mar-20 last year.
Mukesh Ambani, will appeal the fine imposed by SEBI over alleged irregularities in a 20-year old share issue. RIL had issued debentures with convertible warrants in 1994 and then allotted equity shares against warrants in 2000. SEBI issued a show-cause notice in 2011 for alleged violation of takeover regulations. SEBI has now adjudicated and imposed a penalty of Rs.25 crore on Mukesh Ambani and others for this violation. In 2000, Ambanis raised their shareholding in RIL by 7% without proper regulatory disclosures.
BSE Metal index soared 4.4% on Thursday underpinned by a sharp rally in steel prices. HRC prices are up more than 20% in Asia and 40% in Europe. Due to the sharp rally in steel prices, most analysts and broking houses have upgraded their FY23 estimates of EBITDA for leading steel companies like Tata Steel and JSW Steel. Apart from global prices, the metal index has also gained from a likely surge in domestic demand as India prepares for post-COVID recovery. BSE Metal index is still below the peak levels of Dec-2007.
The Indian rupee fell for the fourth successive session to 74.58/$ in the middle of fears that a spike in COVID-2.0 cases in India could disrupt economic recovery. The dollar has also strengthened on the back of its massive $2.3 trillion infrastructure push. It may be recollected that on the day of the monetary policy on 07 April, the INR tanked by 105 paisa on fears that the GSAB could make the money market flush with liquidity and reduce rupee demand. FPI buying has also been tapering over the last one month.
March 2021 could be a landmark quarter for corporate results. After 8 quarters of flat to negative growth, corporate revenues could show 15-17% top-line growth in the Mar-21 quarter. This is likely to happen due to a combination of low base and better price realisations due to elevated commodity prices. As a result, the operating profits are expected to grow by 28-30% yoy. However, nearly 50% of the recovery is likely to be driven by automobiles, IT services and construction. Metals are also likely to be robust.
Barbeque Nation may have listed at a discount on Wednesday but has gained 47% from its Wednesday lows and 42% from the issue price after it was locked in 20% upper circuit for 2 days in succession. The promoters hold 60.24% while CX Partners has 33.79%. A small 2.05% is held by Alchemy Capital, which is backed by Rakesh Jhunjhunwala. Analysts are seeing Barbeque Nation as a play on the growth in consumer spending from higher disposable incomes. Barbeque will use the funds for expansion and debt reduction.