IPO application dates: 21 – 23rd May’25, with Price Band of ₹ 85 – 90 per share, FV: ₹ 5. Lot Size: Investors can bid for a minimum of one lot of 166 shares, and in multiples of this.
IPO Size is ₹ 2,150 cr.; it’s entirely a Fresh Issue of shares, no OFS.
This IPO will expand the Equity Share Capital of Belrise as it is a Fresh Issue of shares.
Objects of Issue: 1) ₹ 1,618 cr. will be used repay or prepay certain borrowings, reducing its debt burden, currently D/E is 1.01 2) A portion will fund capital expenditure to expand and modernize its mfg. facilities, especially for EV and aluminium components. Some funds will support working capital needs, while 3) the rest will go toward general corporate purposes.
The IPO share quotas of QIBs: NIIs: Retail is 50:15:35. (Qualified, Non-Institutional Investors)
The unofficial/ grey market premium of HMI is ₹ 18/share over the IPO price.
IPO allotment is by 26th May, crediting shares/ refunds by 27th, and listing on BSE / NSE on May 28th.
Summary
Why Belrise Industries: The Indian auto sector is growing impressively and India is #1 in 2-wheelers and a leader in small cars globally.Belrise is one of India’s largest auto component suppliers, with a diversified portfolio spanning sheet metal, chassis, suspension, plastic/polymer, and EV systems. It has a 24% market share in metal parts of Indian 2W segment, and is #3 here. It caters to leading OEMs such as Bajaj, Hero, TVS, and Tata Motors. With 15 mfg. plants in India, it benefits from proximity to OEMs. Belrise has pivoted towards EV parts like battery packs and electric chassis assemblies, this positions it well for the next phase of auto growth in India and abroad.
Why now in IPO: The IPO is a fresh issue, and will help the firm repay debt and fund capex. At current valuations with PE of 27 times, it is reasonably priced among auto component peers, with significant upside potential as volumes scale in India and globally. Belrise is now focusing on CVs and 4W which provide higher volumes and revenue per vehicle.
Risks: 1) High dependence on a few OEM customers 2) RM price fluctuations can impact margins 3) Execution risk in scaling up EV and aluminium divisions 4) Supply chain disruptions or cost inflation 5) sector or economic downturn 6) Shift in OEM product design preferences 7) Regulatory risks around import-export policies and tariffs. 8) Location risk – 7/15 of plants are in Mah.
Punit Jain discloses that he has no shareholding in Belrise Industries Ltd., or any group company. In addition, JainMatrix Investments Bangalore (JMI) and its promoters/ employees have no direct or financial interest in this company, and no known material conflict of interest as on date of publication of this report. We may apply for the IPO through a stock broker in line with our recommendations.
This document has been prepared by JMI, and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JMI. This report should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JMI has not independently verified the accuracy or completeness of the same. Neither JMI nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein.
Investment in the securities market are subject to market risks. Read all the related documents carefully before investing. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from a RIA Registered Investment Advisor.
JMI has been an equity investment adviser commercially since Nov 2012, and a SEBI certified and registered since 2016, under SEBI (Research Analysts) Regulations. Registration granted by SEBI, and certification from NISM in no way guarantee the performance of the Research Analyst or provide any assurance of returns to investors.
Any questions should be directed to punit.jain@jainmatrix.com. Name of the RA as registered with SEBI – Punit Jain, SEBI Registration No. INH200002747. Logos / brand name –
Why IRCTC: This next gen Railways PSU has monopolies in internet rail ticketing, food and catering and Rail Neer. High potential segments include Tourism, travel packages and running luxury trains. Indian Railways is making high investments in train networks for speed, safety, passenger amenities and eco-friendly operations. These will accelerate trains as a preferred travel mode. IRCTC has a key passenger facing role in this.
Why Now: IRCTC has recovered post Covid and has excellent FY23-25 results. At a PE of 47 times, it is below historical average PE of 55 times, so undervalued. It has also invested on new capacities, new initiatives and better services. Across India we see a travel and tourism rebound at airports, tourist destinations and train stations. Its internet ticketing business is growing share of overall rail tickets, adding to convenience and access. PSUs are safer investments, in a volatile market.
Risks: 1) PSUs are slower to respond to market opportunities 2) Frequent transaction failures and website crashes, especially in Tatkal hours 3) It has vast user data and centralized systems, so is exposed to cyber-attacks, which can be damaging 4) Regulator is GoI and regulatory changes is an issue like loss of monopoly 5) Private online travel firms are raising competition 6) Absolute valuations of PE and EV/EBITDA ratios are high, even after a large recent fall.
Opinion: Buy with a price Target of ₹ 1,179 by May’27, a 65% upside.
IRCTC (Indian Railway Catering & Tourism Corporation) is a listed subsidiary of Indian Railways (IR). Incorporated in 1999, IRCTC has its HO in New Delhi. It operates in 4 business segments of Catering, Internet Ticketing, Tourism, and packaged drinking water under the name “Rail Neer”.
It reported total revenue of ₹ 4,270 cr. and PAT of ₹ 1,111 cr. for FY24. For the last 8 years the Revenue, EBITDA and PAT grew at 17%, 23% and 27% CAGR. It has 2,726 employees.
IRCTC runs operations for Indian Railways (IR) in catering services, online railway tickets and packaged water. It has streamlined the ticket booking process with its Online Ticket Booking system, called the advanced Next Generation E-Ticketing (NGeT) System.
IRCTC has established strategic partnerships with leading online travel agencies, including MakeMyTrip, RailYatri, and Goibibo to enhance accessibility and convenience in online tickets. It has 5 zonal offices and 10 regional offices; 1 internet ticketing office, 19 Rail Neer Plants, 11 base kitchens and 1 tourism office across India.
Revenue from Catering services is 46%, Internet ticketing-30, Tourism-16; Rail Neer 8%.
Management team – Sanjay Kumar Jain (CMD), Neeraj Sharma (Govt. Director), Rabindra Nath Mishra (Dir- Finance) and Dr. Lokiah RaviKumar (Dir – Catering & Services). Shareholding of IRCTC is Promoter (President of India) 62.4%, FIIs 7.45%, DIIs 13.72%, Public 15.33, Others 1.1%.
The rest and entire equity research report is available as a PDF, please feel free to download. More such quality reports are available with the JainMatrix Investments paid subscription.
Punit Jain discloses that he has no shareholding in IRCTC as on date of report. In addition, he has no financial interest or transactions with IRCTC, except occasional train travel bookings. In addition, JainMatrix Investments Bangalore (JMI) and its promoters/ employees have no direct or financial interest in IRCTC, and no known material conflict of interest as on date of publication of this report.
This document has been prepared by JMI, and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. This report should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JMI has not independently verified the accuracy or completeness of the same. Neither JMI nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Investment in the securities market are subject to market risks. Read all the related documents carefully before investing. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from a RIA Registered Investment Advisor. Registration granted by SEBI to JMI, and certification from NISM in no way guarantee the performance of the Research Analyst or provide any assurance of returns to investors.
JMI has been an equity investment adviser commercially since Nov 2012, and a SEBI certified and registered since 2016, under SEBI (Research Analysts) Regulations. Any questions should be directed to punit.jain@jainmatrix.com. Name of the RA as registered with SEBI – Punit Jain, SEBI Registration No. INH200002747. Logo/brand names –
07th April – Time to read article – text 10 min, video 43 minutes.
Today the Indian markets fell sharply, up to 5%, but lets look at this event in the global context.
I came across this wonderful video by Ray Dalio recently, (43 minutes) and this helps us put the current market scenario in context.
My lessons from this video:
The USA is in a down cycle and is showing the classic signs of this – more expenditure than revenue, high and rising debt, signs of domestic unrest and discomfort, and now this big one, new tariffs that are trying to curb imports and hopefully boost domestic production.
China has been rising for long in trade and defense, with strong manufacturing, and till now was a big exporter to USA and ran a massive trade surplus.
As USA fights China in the trade war, there may be bumps here, but this is a period of transition as China finds other markets and continues its rise.
In an era of extended cold wars (USA-Russia) and nuclear powered countries, my expectation is that modern transition of Big Cycles will happen in the form of Trade wars and slow stagflation of economies.
One example here is of Japan, which was a rising economic power till the 1980s, and could not sustain the rise, but has preserved its economy, and GDP has grown at about 1-2% p.a for 2-3 decades
So where is India and what is India’s play?
China is a manufacturing giant, making products in high volumes, from metal – steel and aluminium, to cars, EVs, toys, furniture, ships, trains, etc.
India’s play is in services –
Indian IT services industry is a miracle, with customers in over 150 countries. It gained momentum in the 1990s, and is today a massive industry commanding 50% of the global outsourced IT services market.
The second generation of Outsourced services has already rolled out – consisting of – Engineering services, contract medical & pharma services and Knowledge Process Outsourcing.
Global Competency Centers (GCCs) of many MNCs present in India also provide additional services like Marketing, Legal, HR, transaction processing, Finance and Accounts, etc.
The following Services sectors must learn from the Indian IT services giants and look at the global market potential:
Banking, Financial Services and Insurance – We have yet to see Indian BFSI firms grow aggressively abroad and establish a global brand. Given the domestic strengths and penetration, this is possible.
Hotel Chains – not just Taj hotels, but also Oberoi, ITC, Leela, etc. can also expand globally.
Education – Indians spend $60 billion (₹5.1 lakh cr.) per year on education abroad, mostly graduation and post grad degrees. This is 4X the entire GoI annual education budget. Quality education should be available more easily domestically, at a fraction of the cost in USA, UK or Australia. This will save outflows, and can even earn inflows.
Tourism – If packaged well, tourism to India can attract large numbers. The Himalayas in Kashmir, HP and Arunachal, the Goan and Kerala beaches, the Taj Mahal, historic forts and monuments, food and rich culture, etc. can draw in millions for the exotic Indian holiday.
Healthcare – the opportunity exists not just for domestic services, but medical tourism in India, and also hospital chains in the developed world, where there is a shortage. Yoga and Ayurveda are traditional Indian healthcare systems already admired globally.
Telecom – Bharti Airtel ventured successfully to Africa, the next stage is a global brand, and even other companies can roll out the India success model.
Aviation – Indigo & Air India have the opportunity to grow globally, building on the India base.
Retailing – the success by Reliance Retail, Zudio (Trent) and DMart can expand globally. Titan with Tanishq can also be in this category.
Food services – the Jubilant Foodworks franchise in India is a scalable QSR model, and Indian chains can expand abroad. Saravanaa Bhavan has expanded into several countries. Indian food is popular internationally, so there is a demand that can be tapped.
Infrastructure services – firms like L&T already have global footprints, and other firms with a good domestic projects roster can grow internationally.
Logistics – as India itself improves its infra, expands domestic capacities and cuts the costs of logistics, opportunities exist globally in Ports, Shipping and Railway services, where we can deliver projects to friendly nations through GoI.
Shipping – Indian shipmen dominate global merchant navies & shipping. India’s coastline stretches for 7,500 km. But how big is the Indian merchant shipping industry? There is massive potential here.
How can this play in Services be accelerated?
The need is for Industry focused colleges, universities and education, practical training with industry participation, and for skills development of the students at scale.
GoI should provide Plug and play industry infrastructure – Offices and Factory parks, ready with connections of water, electricity, road connectivity access and ready to occupy workspace.
Focus on growth in Tier 2 cities and towns by Govt. and current industry players.
Exports have to be encouraged more. The IT Services industry grew on the basis of all exports being Income Tax free in the 1990s. While GST is exempt today, broader encouragement like Global Sales Support desks, Trade Commissions, Think Tanks on exports markets, desks by Ministry of External Affairs, and various Ministries of GoI, and loans / funding will help.
While english speaking is an advantage for services, competence in Japanese, German, Spanish and French may also help in communication and business. A case – In a recent Vietnam holiday, we visited a mid sized Suits and Garments Tailoring showroom. A few minutes later, a batch of 20 odd Italian tourists walked in. I was stunned to see, a showroom sales staff made a fluent 20 minute presentation in Italian to them. Selling them 8 hour turnaround formal suits and traditional women’s dresses. No doubt the tourists bought lots of clothes that day.
Manufacturing and related thoughts
Manufacturing in India remains a massive opportunity, with the first objective to meet domestic needs. Here the sectors with potential are Defense, Shipping, Railways, airplanes, electronic products – mobiles, laptops, TVs, music equipment, Air conditioners and gadgets. Silicon chips are a key input which also can be made domestically.
Assembly in India is just the first step to get the supply chain and value add to increase in India.
We have to build on our success stories in automotive and pharmaceutical mfg. When will we be able to see an Indian made car succeed all over the world? Who will do this – Tata Motors? M&M?
The success of Indian 2W is admirable – Bajaj Auto, Eicher Motors and Hero Motors are doing well.
Why do Indian companies not list abroad? A quick check on ADRs and GDRs from India reveals a very short list of 10-11 companies. Any Indian company with significant global presence should list in USA or Europe.
Many years ago Cognizant listed in USA. It was riding global trends – HQ and listing in USA, IT workforce primarily in India, and customers in USA and spread across the world.
Chinese companies have long exploited this trend. A quick search reveals 286 Chinese companies listed in USA. Why have Indian companies missed this trick? The deepest stock market in the world is USA, listing here can give rich valuations, and help raise growth funds for Indian firms.
A large number of MNCs operate in India with subsidiaries, GCCs and factories or development centers. Like Hyundai India and Schneider Electric Infra., can they be nudged to list in India? This would cement their presence and commitment to India, and help to deepen Indian markets.
India has benefited from the free markets of the last few decades. With USA imposing tariffs for protection, India should continue trade with USA while growing free markets and trading with other countries and gain from global trade growth. To do this, it will have to lower tariff and non tariff barriers and sign Free Trade Agreements. At present 6-7 FTAs are under negotiation.
Japan can be an excellent target country, for Indian firms to partner with Japanese MNCs, and help them develop India as a manufacturing base for global sales, with success stories like Maruti Suzuki.
Conclusions
So Mr Leading Indian Bank CEO. USA isn’t just the place where you go on annual vacation to your brother’s house to admire the opulence and great roads. It’s the place you go with a crack team of CFO, CMO, retail head and CHRO, and plot your company’s 40% annual growth for the next decade.
In the wake of Trump Tariffs, we see a change in global order, with China emerging strong.
As some doors close, others can be opened. Indian firms have an opportunity to grab large chunks of the global services pie, while some can excel in select manufacturing opportunities.
We see a future of the parallel rise of China and India, CHINDIA, in the next BIG Cycle.
However there is little hope of cooperation, their rise will be independent and mutually exclusive, offering different products and services.
Any mention of companies in this article are purely to explain and illustrate a point, and these are not investment suggestions.
This document has been prepared by JMI, and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JMI. This report should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JMI has not independently verified the accuracy or completeness of the same. Neither JMI nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Investment in the securities market are subject to market risks. Read all the related documents carefully before investing. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from a RIA Registered Investment Advisor. Registration granted by SEBI to JMI, and certification from NISM in no way guarantee the performance of the Research Analyst or provide any assurance of returns to investors.
JMI has been an equity investment adviser commercially since Nov 2012, and a SEBI certified and registered since 2016, under SEBI (Research Analysts) Regulations. Any questions should be directed to punit.jain@jainmatrix.com. Name of the RA as registered with SEBI – Punit Jain, SEBI Registration No. INH200002747. Logo/brand names
In this Article, we extend our thoughts and analysis to a related situation
Introduction
Last month, my conversation with an investor went like this –
Rahul (not his real name): I have a home loan of ₹ 75 lakhs, of 20 years duration, and am paying an EMI every month. Right now I have cash available with me of ₹ 10 Lakhs. I have already been an investor in Equity markets for 10 years. Should I use this amount to repay my Home loan, or should I add it to my investments in the markets?
The rest of the conversation, I share below in a formal manner:
Approach – Review Rahul’s Profile:
Deciding whether to use cash savings to pay off the home loan or invest in equity depends on several factors, including Rahul’s financial goals, loan terms, risk profile and the potential returns on investment. Here’s how to think through this:
1. Consider his Home Loan Details
Interest Rate: Is Rahul’s home loan interest rate high (above 10-11%)? For Rahul it was 10%.
Loan Tenure Remaining: If he is in the early years of the home loan, paying off part of the principal can save more in interest, than in the latter half of the repayment period.
Tax Benefits: If he is availing tax deductions on interest (Section 24(b)) and principal repayment (Section 80C in India), consider how much benefit he is getting. The real post tax cost of Home loan may be lower, so from a 10% Home Loan rate, he may be actually paying about 6-7%.
2. Evaluate his Market Investment Details
Equity Returns: Historically, equity markets have offered average returns of 12-13% over the long term per the Sensex. However, the returns can vary depending upon Rahul’s actual market instruments – Equity Mutual Funds, Direct Equity Portfolio or ETFs. For Rahul it was 15% compounded on average over the last 7 years.
Rahul’s Risk Tolerance: Is he comfortable with short-term investment fluctuations? Equity investments certainly face market risks and volatility.
Time Horizon: Equity Investments generally perform better over a longer horizon (3+ years). If Rahul has a shorter time horizon for his equity investments, adding to these may not be a good idea.
3. Assess his Financial Situation
Emergency Fund: Rahul must ensure he has 6-12 months of expenses saved in a liquid emergency fund before considering his options.
Other Debts: High-interest debts (e.g., credit cards, personal loans) should be prioritized for repayment before addressing the home loan.
Working years: Are Rahul’s working years before retirement more than the Home Loan Tenure?
Retirement Goal: Is he on track for retirement savings? Equity investing might help achieve these if the Time Horizon is larger.
Calculate Two Data Points for Rahul
Tax adjusted cost of Home Loan: let’s assume that for Rahul from (1) that it is 7%.
Rahul’s expected Equity market returns: The past is apparent, while the future is unpredictable. However we can be conservative and project lesser returns in future than in the past. As noted in (2) Rahul got 15% returns compounded from his mix of Equity MFs and Direct equity. Let’s project future returns from these instruments at a lower 12%. Tax here is difficult to project but if fair tax planning is happening, capital gains can be within annual zero tax limits.
With the above data points it becomes obvious that for Rahul, Equity gives higher returns of 12% than the cost of Home Loan (7%).
Conclusion
The immediate conclusion would be that Rahul should use the 10 L funds in Equity investments and continue to repay the Home Loan as per the original plan. Here Rahul should be able to grow his incremental savings of ₹10 L by (12 – 7) = 5% annual average over the duration of the Home Loan.
However several caveats and conditions can color or even change this conclusion:
The Home Loan repayment is an almost fixed commitment of monthly payments. There can, of course, be some interest rate resets, but otherwise, EMI and tenure are fixed. On the other hand, the Equity market returns can be volatile and unpredictable in the short term. So Rahul has to be comfortable with taking on these uncertainties and both commitments together.
If the Home Loan tenure is longer than expected working years of Rahul, it may be wiser to repay the Home Loan partly with the Rs 10 L, reduce the tenure, and plan for an EMI-free retirement
If the returns that Rahul projects to get from Equity markets are on average 9% or less, then the benefit is lower, and it may be better to repay the Home Loan than to invest in equity.
If Rahul’s job or business future cash flows are uncertain or constrained, early repayment of Home Loan again might be the prudent choice.
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This note has been prepared by JMI, and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JMI. This report should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JMI has not independently verified the accuracy or completeness of the same. Neither JMI nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein.
Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from a financial planner or RIA Registered Investment Advisor.
JMI has been an equity investment adviser commercially since Nov 2012, and a SEBI certified and registered Research Analyst since 2016, under SEBI (Research Analysts) Regulations. Registration granted by SEBI, and certification from NISM in no way guarantee the performance of the Research Analyst or provide any assurance of returns to investors.
Any questions should be directed to punit.jain@jainmatrix.com. Name of the RA as registered with SEBI – Punit Jain, SEBI Registration No. INH200002747. Logos / brand name –
JainMatrix Investments, a Research Analyst firm, is pleased to present a note on Mid and Small Cap Market Trends. We have done some research and here are the key findings:
The Sensex peaked recently at 85,900 (26Sep) and then fell to 77,100 (21Nov), a fall of 10.2%. For the NIFTY Midcap 100 the fall has been sharper at 11.7%, over the same period.
The fall can be described as a recovery to better valuations, and investors can look at starting (or continuing) with equity investments and SIPs at these levels.
Our rating and ranking of attractive sectors is:
Financials (Bank / NBFC)
Power sector
Auto and Auto Ancillary (manufacturing)
Infotech
Consumer QSR,
Also travel, tourism and hospitality, pharma and healthcare.
Investing Trends: The trends we notice are:
Valuations have corrected sharply, but are not cheap yet.
However, valuations can remain expensive for extended periods, as we saw in 2004-07, and if they do not get excessive, it should not inhibit investors.
Mfg. and IT services can have an export component, the rest are more domestic-focused
From 2021 till recently, we have not had big broad corrections, but several waves of sectoral rises and micro-corrections, such as Infotech, Speciality Chemicals, Defense, PSUs, Shipyards and Rail stocks.
These cycles have in aggregate kept valuations in check.
IPOs too may now become more sober in terms of pricing and valuations, but this route continues to work, and throw up exciting companies, and encourage risk-taking promoters and Private Equity/startup investors.
We do not want to choose or trade-off between Large-cap, Mid-cap and small-cap stocks.
Large caps have had a big correction as the FIIs pulling out have been more invested in these.
Mid-caps present the potential ideas, and if they scale, they are the large caps of tomorrow (and good investments too).
Small caps are a higher risk and potentially higher return play and investors with such a risk appetite can look for success here. However, these need deeper primary research as firms are not very good at communicating their story and progress, and may even be secretive.
Investors new to our service may look at our OFFERINGS, and sign up using the PRICING AND PAYMENT OPTIONS link, to grow their Direct Equity portfolios.
This note has been prepared by JMI, and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JMI. This report should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JMI has not independently verified the accuracy or completeness of the same. Neither JMI nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein.
Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from a RIA Registered Investment Advisor.
JMI has been an equity investment adviser commercially since Nov 2012, and a SEBI certified and registered since 2016, under SEBI (Research Analysts) Regulations. Registration granted by SEBI, and certification from NISM in no way guarantee the performance of the Research Analyst or provide any assurance of returns to investors.
Any questions should be directed to punit.jain@jainmatrix.com. Name of the RA as registered with SEBI – Punit Jain, SEBI Registration No. INH200002747. Logos / brand name –
IPO is open from 15-17th Oct, at ₹ 1,865-1,960/share
The IPO is the largest from India, to raise ₹ 27,870 cr.
Large Cap. with mkt cap ₹ 1,59,000 cr.
Sector: Automobile
Opinion: Buy with a 2-year perspective
Summary
Why Hyundai India: As the #2 company in Indian passenger vehicles, Hyundai Motor India has been popular for its attractive cars. Combining good riding with fair prices, it’s products have held up well against Maruti’s value offerings and the Indian, European and Japanese automobile firms. Capacity utilization is close to 100%, so the new plant in Pune by next year will be useful. The financials and balance sheet look healthy to support needed investments. HMI’s auto products have evolved in sync with Indian consumers, and we expect this to continue.
Why now in IPO: 1) This will beIndia’s largest IPO by value, aiming to raise about ₹ 28,000 cr. The next 7 largest IPOs suffered problems post IPO, but we believe This Time It’s Different, and it will succeed 2) HMI’s strong Indian presence and product excellence can help command a valuation superior to Maruti Suzuki 3) The success of recent IPOs suggests that the large size of this IPO is not an issue 4) The IPO will be Hyundai’s first stock market listing outside South Korea. It’s an opportunity.
Risks: 1) Increase in competitive intensity 2) GoI regulatory changes including taxes, pollution, etc. 3) raw material price inflation 4) any manufacturing or factory disruptions 5) sector or economic downturn 6) increase in royalty to Hyundai Motor Company, South Korea, and related party transaction pricing.
Punit Jain discloses that he has no shareholding in HMI, or any group company as on date of report. In addition, JainMatrix Investments Bangalore (JMI) and its promoters/ employees have no direct or financial interest in these companies, and no known material conflict of interest as on date of publication of this report. But Punit Jain is the owner of a Hyundai i10 bought in 2013. And in line with his recommendation, he may apply in the IPO.
This document has been prepared by JMI, and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JMI. This report should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JMI has not independently verified the accuracy or completeness of the same. Neither JMI nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein.
Investment in the securities market are subject to market risks. Read all the related documents carefully before investing. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from a RIA Registered Investment Advisor.
JMI has been an equity investment adviser commercially since Nov 2012, and a SEBI certified and registered since 2016, under SEBI (Research Analysts) Regulations. Registration granted by SEBI, and certification from NISM in no way guarantee the performance of the Research Analyst or provide any assurance of returns to investors.
Any questions should be directed to punit.jain@jainmatrix.com. Name of the RA as registered with SEBI – Punit Jain, SEBI Registration No. INH200002747. Logos / brand name –
JainMatrix Investments 