Wednesday, October 20, 2021
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Listen In: Why Aditya Birla AMC IPO is a good bet for long-term investors | The Economic Times Podcast


Hi there, Good Morning. Welcome to ETMarkets Morning, the show about money, business and markets. I am Nikhil Agarwal. Let’s start with the headlines first.

– Invesco may invest in Swiggy at $10 b valuation
– Maruti to raise production in October
– DHFL lenders set to mark ₹37,400 crore recovery this week
– Reliance eyes $300 mn stake in Glance InMobi

Now lemme give you a quick glance on the state of the markets.

Dalal Street is likely to have a positive start this morning. Nifty futures on the Singapore Exchange traded 35 points higher at 8:30 hours (IST). Asian stocks opened lower on Tuesday following a mixed close on Wall Street, where investors were eyeing the risk of a US government shutdown. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.24 per cent.

Elsewhere, the yield on 10-year Treasuries fell one basis point to 1.48%. Dollar rose, bolstered by the rise in Treasury yields, ahead of a slew of Federal Reserve speakers this week who could affirm expectations of the start of asset purchase reduction before the end of the year. Oil markets eased on Tuesday after a five-day rally as investors took profits on fears that higher prices may weaken fuel demand, though market sentiment remained firm amid tight supply. Brent crude futures fell 17 cents, or 0.2 per cent, to $79.36 a barrel after surging 1.8 per cent and reaching its highest since October 2018 on Monday.

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That said, here’s what is making news.

Aditya Birla Sun Life AMC, the country’s fourth largest asset management company (AMC) by assets under management (AUM), plans to raise upto Rs 2,768.3 crore through an offer for sale by the two promoters, Aditya Birla Capital and Sun Life AMC. Investors may consider the issue given its wide distribution network, rising retail franchise, better return on equity, and reasonable valuation. Based on FY21 earnings, the company’s price-earnings multiple works out to be 38 compared with 39-51 for the peers including HDFC AMC, UTI AMC, and Nippon Life India Asset Management. Given the reasonable valuation, stellar growth in the past, and increasing popularity of mutual fund investment, long term investors may consider the IPO.

With stock markets rallying, it is not just companies that are raising significant funds from the primary market. Investment banks, too, are earning increasingly more as they ensure these companies get listed. Data compiled by Prime Database show that the fees paid to investment banks have risen at a faster rate than the increase in the number of IPOs – and the amount being raised in each calendar year. Thirty more IPOs are expected to hit the primary market over the next couple of months to raise around Rs 45,000 crore. Assuming the lead manager fees to be in the range of 2-2.5% of the amount raised, the investment banking firms will close the year making an additional income of Rs 900 to Rs 1,125 crore.

Swiggy is finalising a new financing round of about $500-600 million that is likely to be led by US asset manager Invesco, according to three people aware of the matter. The exercise is likely to catapult the valuation of the online food delivery company to as much as $10 billion, which is double the valuation ascribed to the seven-year-old venture a few months ago. If the deal fructifies, Swiggy will rank among India’s most valued privately owned startups after edtech firm Byju’s and fintech major Paytm, which is slated to go public later this year.

LASTLY,

In the cryptocurrency market, if you go beyond the top 100 or 500 tokens, the volatility spikes to mind-numbing levels. In those dark alleys, if your pick is right, you can multiply your wealth up to 10-fold in a day, or if it is wrong, can lose everything in the same period. The list of losers on Monday showed one token was down nearly 97 per cent. This list also included coins that gained over 800 per cent the day before. This reeks of a classic pump-and-dump scheme.

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NOW Before I go, here is a look at some of the stocks buzzing this morning…

Sarda Mines, a company affiliated with Jindal Steel and Power Limited (JSPL), has emerged as the winning bidder for Kwality Dairy after the milk and dairy products manufacturer was put on auction through an e-bidding process, ET reported.

Whirlpool India has inked a pact to acquire an additional 38% stake in Elica PB India for $57 million. The company said it has entered into a share purchase agreement with Elica S.p.A to acquire the
additional equity interest in Elica PB India to bring its total equity ownership to 87%.

Bharti Airtel’s direct-to-home (DTH) arm plans to stop imports of set-top boxes (STBs) by the end of this year, having started domestic manufacturing of the devices in Noida in partnership with Skyworth
Electronics.

Raymond has announced an organisational restructuring plan, which will see its fast-fashion business consolidating with the parent company and the auto components and tools and hardware businesses merging into its engineering division.

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Do also check out over two dozen stock recommendations for today’s trade from top analysts on ETMarkets.com.

That’s it for now. Stay with us for all the market news through the day. Happy investing!



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