Of the qualitative IPOs, we recommend four companies that listed in the last two-to-three years and have delivered consistent performance in a volatile market
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Last two years were quite tough for midcap and smallcap stocks. In between this entire snag, the IPO market was also hit and fewer companies got listed. However, most of them gave higher returns on listing day and are still leading the market.
Indeed, many of the investors invest in IPOs for listing gains. In the past two-to-three years, most IPOs gave more than 20-25 percent returns on listing day itself, while many of them are still heading towards higher highs, delivering over 50-60 percent returns since listing.
On one side, newly listed companies are touching fresh highs or approaching fresh highs while on the other, traditional companies seems maturing or saturating. Companies like IndiaMART, IRCTC, Bandhan Bank, and CreditAccess are now market favourites due to their unique business model, low penetration and entry barriers. Investor are now ready to offer them higher valuations.
Of the qualitative IPOs, we recommend four companies that listed in the last two-to-three years and have delivered consistent performance in a volatile market. Some of them have a unique concept, monopoly, strong product line, financials and positive future outlook. Hence, they are likely to become potential multibaggers.IRCTC
Recently listed IRCTC, is the only stock that doubled on listing. It listed at 127.68 percent from its issue price of Rs 320. Looking at its unique business model and it being the sole provider of catering services & online bookings for the Indian Railways, we feel the stock is likely to benefit from the same in future and is still a potential buy.
It has introduced several tour packages for various tourist destinations, which would add to revenues. Also, it is in the process of introducing various new products and services. For instance, is in process of introducing IRCTC i-Mudra, i-Pay and developing payment services.
High return ratios, FY19 RoE and RoA at 27.3 percent and 11.1 percent, respectively, healthy dividend payout, a cash rich company and zero debt makes the stock attractive at current levels. We recommend investors to accumulate the stock as it could be a potential multibagger.Varun Beverages
Listed in November 2016, the stock has given hefty returns till date. Strong topline and PAT growth of 49 percent and 84 percent, with volume growth of 60.4 percent were witnessed in Q3 CY19. Its Indian and international businesses performed well. It reported double digit growth in its key markets of Morocco, Zimbabwe, Nepal and Sri Lanka in the current quarter. It has also introduced three variants of ambient temperature value added dairy beverages, which is gaining traction. It is likely to gain synergy by acquiring 20 percent stake in Lunarmech Technologies Pvt.
A symbiotic relationship with PepsiCo, value accretive acquisitions, the Pathankot facility, new product innovation and disciplined capex investments would expand the ratios in coming years. Additionally, margin expansion on the back of innovation, backward integration, optimisation in production and future growth prospects continues to make VBL a potential multibagger from current levels.Maheshwari Logistics
MLL listed on the NSE Emerge platform on January 16, 2017 at Rs 68. In has delivered two years of consistent performance and was migrated to the main board of NSE on April 15. The company is a fully backward as well as forward integrated player. It is adopting an asset light model, where outsourced trucks have reached over 5,000. Currently, 76,000MT of kraft paper is produced at a capacity utilisation of 80-85 percent. In the next two years, it is planning further expansion through a new production line.
We expect their operational profit to increase by around Rs 5-6 crore in FY20 and Rs 10-12 crore from next fiscal. MLL is planning for 20-25 additional waste paper and logistics centres by FY21. Last year, it added an office in Mangalore (South) in the logistic segment. The next target on the books is North India.
From its IPO price, MLL has touched new highs. Looking at the business expansion plans and consistent returns, the stock is a buy and it could be a multibagger in the long run.Reliance Nippon Life Asset ManagementRNAM, the India’s fifth-largest asset management company, is now Nippon Asset Management after acquiring the stake from ADAG group. Post-acquisition, Nippon is the sole promoter, holding 75 percent stake in the company. This is one of the largest private life insurer in Japan, having assets under management of $700 billion worldwide. The stock listed in November 2017.
The resultant acquisition would add significant value as RNAM would now be a fully MNC player. Given an opportunity, the company is open to inorganic growth. Additionally, the big question/concerns on corporate governance would end for the stock.
Growing consumer traction towards investment in financial assets, limited players, low penetration, huge market potential and considering higher valuation, the stock could lead to higher levels making it a multibagger.Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.