RateGain Travel, Shriram Properties, MapmyIndia, Metro Brands IPOs this week; what should investors pick?

IPOs in December

Investors will be spoiled for choice this week as four companies across varied sectors are set to launch their maiden initial public offerings during December 6-14.

While the largest software-as-a-service company in the hospitality and travel industry in India, RateGain Travel, will open subscription for its shares on December 7, Shriram Group’s South India-based real estate developer Shriram Properties will launch its IPO on December 8.

Just a day after, CE Info Systems, popularly known for its brand MapmyIndia, will launch its IPO on December 9, and is yet to disclose its price band and lot size.

Also read: Primary market buzzing with activity as 4 IPOs hit the Street next week. Check out all the details

Finally, Rakesh Jhunjhunwala-backed footwear specialty retailer Metro Brands will open for subscription on December 10 just a week after another Jhunjhunwala promoted company hit the primary market. However, Star Health and Allied Insurance did not receive a starry response from investors, and was subscribed only 79 percent. Incidentally, the latter is expected to debut on the bourses on December 10.

The slew of IPOs come just as Anand Rathi Wealth will close its IPO for subscription on December 6. The non-bank wealth solutions firm has been subscribed 3.02 times so far, and as per IPO Watch, it is expected to list at a decent premium since it is trading at a premium of Rs 100 in the grey market.

So, what should investors do and which one should they pick? Here’s what analysts are saying.

RateGain Travel Technologies

The company has fixed a price band for its IPO at Rs 405-425 per equity share and the anchor book of the company is expected to open for a day on December 6.

Wright Research Founder Sonam Srivastava is of the view that being in the travel-tech segment, RateGain plays well on the reopening theme. However, “the new variant could be a concern for the company,” she said.

Also read: Why Rakesh Jhunjhunwala-backed Star Health’s IPO failed to enthuse investors

Meanwhile, Prashanth Tapse, VP-Research, Mehta Equities, said even though future growth prospects are intact, the negative earnings status is a concern. “Risk-seeking investors could consider subscribing to the IPO with a long term perspective,” he added.

The company posted a consolidated loss of Rs 28.57 crore in FY21, against loss of Rs 20.1 crore in the previous year. Revenue in the same year declined to Rs 250.79 crore from Rs 398.71 crore.

However, brokerage Prabhudas Lilladher has a “subscribe” rating for the IPO. It believes in a highly fragmented market, the company is well positioned to capture wallet share given its comprehensive, inter-operable, innovative industry specific solutions and marquee client base.

“Rising adoption of technology in tourism and hospitality industry and increasing demand for third-party technology vendors due to COVID-19 is likely to double serviceable market to $8.45 bn in CY25E for RateGain,” the brokerage said in a note and expects recovery in growth in FY22 amid rapid vaccinations and easing travel restrictions.

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Arihant Capital Markets, in a recent note, advised investors to “subscribe for listing gains”. It believes the company has a diverse and expanding customer base with long-standing relationships, innovative solutions, a comprehensive product portfolio with a widespread distribution, and has seen successful strategic acquisitions.

Shriram Properties

One of the leading real estate developers in South India, Shriram Properties has a strong brand recognition, believe analysts.

“Shriram Properties is transitioning from a real estate development model to a combination of real estate development and real estate services based business model, with a shift towards an asset light business strategy,” said Axis Securities in its pre-IPO note.

“The real estate market is extremely attractive for the next few years and Shriram Properties could provide good prospects,” said Srivastava.

It had set its IPO size at Rs 800 crore earlier, but reduced it to Rs 600 crore. Its price band is set at Rs 113-118 per share, which values the company at Rs 1,752 crore at the top end of the band.

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This valuation, Tapse believes, could carry a risk as majority of the issue is from the OFS portion, which is a cause of concern to investors.

“Hence considering all factors, we believe investors can ignore this issue and relook post listing,” he said.

Srivastava concurred that valuations remain a concern since it is a loss-making company.

In FY21, it posted a loss of Rs 68.17 crore against a loss of Rs 86.39 crore in the previous year. Revenue from operations declined to Rs 431.5 crore from Rs 571.96 crore during the same period.

CE Info Systems (MapmyIndia)

CE Info Systems is a data and technology products and platforms company, offering proprietary digital maps as a service, software as a service and platform as a service.

Also read: Tega Industries IPO: Why is it commanding strong grey market premium?​

Prabhudas Lilladher believes the company is well positioned to cater to the Indian market given its leading position with a marquee client base, localised solutions for a challenging geography, solid network from a continuous feedback loop in digital mapping and an asset light business model with a high operating leverage.

Srivastava also finds the company an interesting play since its profitability has been rising backed by superior technology.

CE Info Systems recorded a profit of Rs 59.43 crore in FY21, up sharply from Rs 23.19 crore in the previous year.

“Even though the company has direct competition from Google Maps, its strong technology, and rising market share makes it attractive,” Srivastava said.

Tapse believes CE Info Systems has an early mover advantage in providing advanced digital mapping technology, geospatial software, and location-based IoT technologies in India.

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“Considering its market position in B2B and B2B2C with a competitive suite of software-as-a-service, platform-as-a-service, and maps-as-a-service offerings, CE Info Systems’ business model holds good for the long term,” Tapse said.

“Investors can look to subscribe for the long term, but valuations will remain a key factor before taking a view,” he added.

The company will disclose its price band and lot size this week.

Metro Brands

One of the largest Indian footwear specialty retailers backed by ace investor Rakesh Jhunjhunwala will launch its IPO on December 10-14, and has not disclosed its price band and lot size yet.

Metro Brands is Wright Research’s pick from this week’s IPOs, especially from a profitability and stability standpoint. Srivastava believes it could be investors’ preferred choice even if the market remains volatile during the week.

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“The company could also be a good long term hold since it has a strong promoter background, an experienced management and a long history of growth and profitability,” Srivastava said.

“Considering the overall demand of footwear reaching pre-COVID levels, along with rapid growth in online sales, we feel Metro Brands could generate healthy listing gains,” said Tapse. He also sees the company as a good long-term “hold” contestant.

“The issue size is small at Rs 250 crore with a clearly defined rationale for opening new stores, and a small OFS component,” reasoned Srivastava.

“Now it solely depends on bankers and promoters on how they will price this issue,” added Tapse.

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