Astha Jain, Senior Research Analyst at Hem Securities, told Moneycontrol that she had assigned 'subscribe' rating to all four IPOs - Metro Brands, MapmyIndia, Medplus Health Services, and Data Patterns which will be available for subscription next week.
If anyone has limited funds to deploy in these IPOs, then "pecking order will be CE Info Systems (MapmyIndia) on top, followed by Data Patterns, Medplus Health Services and Metro Brands," says Astha Jain who has 15 years of wide experience in the equity research.
Q: Rakesh Jhunjhunwala-backed Metro Brands will close its Rs 1,367-crore IPO on December 14. What is your suggestion to investors who are willing to buy the IPO and why? Why is it getting low response in grey market?
We recommend 'subscribe' on Metro Brands issue for long term gain as the company is bringing the issue at price-to-earnings (P/E) multiple of more than 150x on post issue FY21 earnings per share (EPS) which makes the valuation little stretched. Company being one of India's largest pan India footwear retailers with a brand appeal among aspirational consumer segments in the fast-growing footwear retail industry has a wide range of brands and products catering to all occasions across age groups and market segments resulting in strong customer loyalty. Company's efficient operating model through deep vendor engagements and Theory-of-Constraints (TOC) based supply chain & asset light business with sustained profitable growth indicates strong future potential.
Q: MapmyIndia IPO fully subscribed in its first two-day of opening and will have final day of closing on December 13. Do you think investors should bet on this IPO and why? What is it getting strong response in the grey market as its premium is Rs 900 against upper price band of Rs 1,033 per share?
We recommend 'subscribe' on MaymyIndia issue for both listing gain & long term purpose as company being B2B and B2B2C market leader in India with a comprehensive suite of software as a service (SaaS), platform as a service (PaaS) and maps as a service (MaaS) offerings is capitalizing on early mover advantage. Also, the company is bringing the issue at P/E multiple of 93 on FY21 EPS.
Click Here To Know All IPO Related News
The company being independent, global geospatial products and platforms & strong data governance has a market position built around proprietary technology and network effect resulting in strong entry barriers. Also, the company's marquee customers across sectors with strong relationships and capability to up-sell and cross-sell have a profitable business model with consistent financial track record, high operating leverage and strong cash flows.
We recommend Subscribe on issue for long term investment as the company being India’s second largest pharmacy retailer with established brand and value proposition to customers has a successful track record of expansion using a distinct Cluster-based and Replicable Store Unit Expansion Approach.
Also the company's high density store network enhancing omni-channel proposition & lean Cost Structure with well Qualified, experienced management makes the issue strong for long term investment purpose.
Q: Data Patterns seems to be getting huge response from investors as in the grey market, it traded with a massive premium of 68 percent over upper price band of Rs 585. What is your suggestion to investors and why is it getting that much grey market premium?
We recommend Subscribe on issue for both listing gain as well as long term investment as the company being indigenous integrated and strategic defence and aerospace electronics solutions provider is well positioned to benefit from the Make in India opportunity. Company's innovation focussed business model with sound order book & consistent track record of profitable growth due to a scalable business model makes this issue an attractive destination to deploy the funds in.
Q: What is your pecking order amongst these four IPOs and what is your most preferred bet, and why?
If anyone has limited funds to deploy in, then pecking order according to us will be CE Info Systems on top followed by Data Patterns. However, on third position we will be placing Medplus while on fourth position we will be placing Metro Brands.
Q: Tega Industries will make its debut on the bourses on December 13. What is your expected listing premium or price and what should investors do with the stock on listing day, and why?
We are expecting Tega Industries to list at more than 40 percent premium. We recommend investors to book partial profit and hold remaining allotment for long term as the company being leading producer of specialized and 'critical to operate' products, with high barriers to replacement or substitution is insulated from mining capex cycles, as its products cater to after-market spends, providing recurring revenues.
Also, the company's high value add and technology intensive products, backed by strong research & development (R&D) and focus on quality control has a longstanding market player with marquee global customer base and strong global manufacturing and sales capabilities.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.