MC Inside Edge: Gensol bulls back in the game, ideaForge in tailspin, street awaits verdict on NBFC big boys, Tata IPO

Inside Edge

Advantage bulls

Bulls appear to be back in control of the Gensol stock. The big backers of the stock have had to spend a packet buying out the weaker hands in the aftermath of the Tibrewala fiasco. Some strategically timed announcements seem to be helping the cause of the bulls. On March 10, the company announced a Rs 450-crore battery energy storage project win.

On March 18, the company announced the successful completion of a 160 MW ground-mounted solar project in Gujarat.

A couple of days later, it announced that it had successfully commissioned a 10.6 Mwp single solar rooftop project in Madhya Pradesh.

A day later, it announced a Rs 520-crore EPC (engineering, procurement, and construction) order win from a power generation utility to be executed in Maharashtra.

Market watchers say it is going to be a closely fought battle between the bears and bulls in the days ahead. That is because current valuations are pricing in high expectations from the company’s earnings. The stock has a compelling narrative but the story will need to start reflecting in the earnings sooner rather than later, considering that leading sell-side analysts are advising clients to stay away from stocks with expensive valuations.

Crash landing

Drone manufacturer ideaForge is in danger of slipping below its issue price less than a year after a spectacular listing.

The selloff surprised the street, considering the company had a decent December quarter performance. The stock appeared to be making a comeback after having fallen below Rs 700 in February but the rally ended abruptly, and the stock has been sliding again since the start of this month.

With both book-running lead managers of the company’s IPO being closely watched by the regulators, market observers feel the odds are that the stock may end up breaching the issue price.

Missing in action

The market is keenly watching the progress of the Reserve Bank of India’s proceedings against JM Financial and IIFL Finance.

In the case of JM Financial, the Securities and Exchange Board of India, too, is parallelly looking at an instance of suspected inflating of IPO bids.

The liquidity tightness in the market will ease from the new financial year but if the regulators are keeping a hawk’s eye on the systems and processes of non-banking finance companies in general, the fear is that high net-worth individuals may not get leverage as easily as they used to in the past. That, in turn, could temper the enthusiasm for small and midcap stocks, at least till the election verdict is out.

Tata IPO

The Tata Sons IPO story may have fizzled out, for now. The chatter has now shifted to the possibility of an IPO from Tata Capital. This has led to a flurry of activity in Tata Capital shares in the market for unlisted stocks. The going rate is around Rs 790, according to brokers who deal in this market.

Down under

Meanwhile, no respite for retail investors who had swallowed the Tata Sons IPO story and bought into the group holding company Tata Investment Corp.

The stock has been continuously hitting the lower end of the circuit filter since peaking at Rs 9,757 a couple of weeks back. Investors suddenly seem to have woken up to the fact that when it comes to holding companies, there is something called net asset value, which is the value of investments in other companies. Holding companies always quote at a discount to their NAV, and the wider the discount, the better the margin of safety.

In the case of Tata Investment Corp, the stock price moved up way above NAV, setting up the buyers for eventual disappointment. No matter what the latest style of investing in the stock market, some rules never change — like holding companies always quoting at a discount to their NAV.