MAS, IEX, GIC IPOs – Invest
There are three more IPOs hitting the markets this week. Two of them (MAS and IEX) are relatively small sized IPOs and there is only a 15% chance of getting an allotment. However, the third one i.e. GIC is slightly more exciting. It’s a mega IPO and chances of getting an allotment are close to 100%.
MAS Financial – Made for Masses
With the intent to serve the under-served segments of the society, MAS Financial (MAS) has built its presence in 2-wheeler, Commercial Vehicle, SME and MSME finance through a combination of wholesale and retail businesses.
Given its small size, scope to expand in states outside Gujarat & Maharashtra and capable management, MAS has the potential to grow at 25% for next few years. At the upper price band of Rs. 459 per share, MAS will trade at 3.0x on FY19E book, which appears reasonable.
|Open/Close Date||6th Oct/ 10th Oct|
|Issue Price (Rs.)||456 to 459|
|Market Lot||32 shares (Retail investors should apply for 1 lot i.e. 32 shares only)|
|Minimum Application Size for Retail (Rs.)||14,688/-|
India Energy Exchange (IEX) – Powering India’s Energy Market
India Energy Exchange is India’s largest and the only exchange that is involved in trading of electricity products. It boasts of more than 3,500 active participants (mainly corporates) who buy or sell power on this exchange.
Power trading is relatively new concept in India. With the huge amount of reforms in the power sector (Electricity for all, National Grid, Renewable Energy), trading volumes could witness an exponential increase and IEX is the obvious beneficiary of this trend.
At the upper price band of Rs. 1,650 the stock will trade at P/E ratio of 41x. While there are no direct comparisons, MCX trades at similar valuations while BSE trades at much lower valuations. We don’t expect immediate gains here, but like this company as a concept.
|Open/Close Date||9th Oct/ 11th Oct|
|Issue Price (Rs.)||1,645 to 1,650|
|Market Lot||9 shares (Retail investors should apply for 1 lot i.e. 9 shares only)|
|Minimum Application Size for Retail (Rs.)||14,850/-|
GIC Reinsurance – India’s only Re-insurer
While most of you would be familiar about the concept of insurance, re-insurance is a relatively esoteric concept. A few lines won’t do justice to the complexities involved in the reinsurance business but here is a simple analogy – you hedge your risks by buying insurance policies; similarly, the insurance companies hedge their risks by buying a re-insurance cover.
GIC is India’s only re-insurance company and under-writes 60% of India’s re-insurance business. In fact it is the world’s 12th largest reinsurance company. Given that the under-lying markets (motor insurance, health insurance, fire insurance, crop insurance, etc) are growing at 12% to 15% per annum, we expect similar growth rates for GIC’s business.
At the upper end of Rs. 912 the stock will trade at P/E ratio of 23x. While there are no direct comparables in India, global re-insurance giants trade at 10x to 15x. GIC is growing at a much faster rate than its foreign peers, so some premium is definitely warranted. Also, it is a one of its kind business in India and should deliver good returns over long term (thought there may not be immediate listing gains).
|Open/Close Date||11th Oct/ 13th Oct|
|Issue Price (Rs.)||855 to 912|
|Market Lot||16 shares (Retail investors can apply for anywhere between 1 to 13 lots)|
|Minimum Application Size for Retail (Rs.)||14,592/-|
Team GreenEdge wishes you all a very Happy& Prosperous Diwali in advance. Don’t get swayed by all the rosy predictions that people make about the stock markets, especially during Diwali. Have a disciplined approach and a systematic plan to create wealth from equities.