Bandhan Bank, Bharat Dynamics & HAL IPOs – Invest
After a long break, it’s again a month of good IPOs. Before you get excited, let us put a disclaimer – these companies are great companies in their respective sectors, but will not give you returns on day 1 of listing. Unlike in the past, you will have to stay invested for a slightly longer period. Since the euphoria in the IPO market has subsided, there is a good probability of allotment in all these IPOs.
Bandhan Bank
Apart from being the largest microfinance company in India, it is also India’s most profitable bank. Its presence in relatively under-banked regions of India (East & North East), its low cost operating model and strong liability franchise will ensure strong growth in coming years as well as the ability to generate similar levels of profits. Surely, such a bank will never be available at cheap valuations. At 4.2x P/B on post money basis, it is asking for valuations that are commanded by the likes of HDFC Bank and AU Finance. While we do not expect major listing gains, this stock can be a good 15% to 20% compounding story over medium to long term.
| Open/Close Date | 13th March/ 15th March |
| Issue Price (Rs.) | 413 – 428 |
| Market Lot | 35 shares (Retail investors should apply for 1 lot i.e. 35 shares only) |
| Minimum Application Size for Retail (Rs.) | 14,980/- |
Bharat Dynamics
It is one of India’s leading defence PSUs, engaged in manufacturing Surface to Air Missiles (SAM) and Anti-Tank Guided Missiles (ATGM). It is the sole supplier of these missiles to the Indian armed forces and is also engaged in the refurbishment and life extension of missiles manufactured. The company boasts of a strong order book, debt-free balance sheet and negative working capital management. Valuations at 17x on trailing earnings look attractive.
Bharat Dynamics Issue Details
| Open/Close Date | 13th March/ 15th March |
| Issue Price (Rs.) | 413 – 428 |
| Market Lot | 35 shares (Retail investors should apply for 1 lot i.e. 35 shares only) |
| Minimum Application Size for Retail (Rs.) | 14,980/- |
Hindustan Aeronautics Ltd (HAL)
It is India’s leading defense company involved in design, development, manufacture, repair and upgrade a wide range of products including aircrafts, helicopters, avionics, etc. Indian defense services contribute to 93% of its total revenues. The company boasts of a strong order book of Rs680bn, which is three times its annual revenue. Valuations at 17x on trailing earnings do not look expensive.
HAL Issue Details
| Open/Close Date | 16th March/ 20th March |
| Issue Price (Rs.) | 1,215 – 1,240 |
| Market Lot | 12 shares (Retail investors should apply for 1/2 lots i.e. 12/24 shares only) |
| Minimum Application Size for Retail (Rs.) | 14,880/- |
There have been a host of IPOs which have been hitting the markets since the past few months. We have refrained from writing on IPOs where – either the valuations are excessive or the business model is flimsy or our understanding about the business is modicum. IPO is a good way to enter into equity markets but serious investing happens in the secondary market. After a long time, the markets have corrected. This is your chance to make your debut or increase you allocations to stocks.