Moneycontrol Pro Panorama | Investors in IPOs should not shut eyes to profitability

Illustration: Suneesh K

Dear Reader,

The Panorama newsletter is sent to Moneycontrol Pro subscribers on market days. It offers easy access to stories published on Moneycontrol Pro and gives a little extra by setting out a context or an event or trend that investors should keep track of.

The joke doing the rounds on Whatsapp today after Fino Payments Bank listed at a 5 percent discount to the offer price goes like this:

Fino Payments Bank had a flat listing only because of one reason - it is profit-making. If it were loss-making, then it would have been listed at a huge premium.

Although it might not be entirely accurate (Nykaa is profitable, for example), it has a tinge of truth to it. Investors are flocking to companies which sometimes have no more than an idea or a futuristic vision, but promise rapid growth with no mention of profitability. Earlier, this used to be the domain of private equity funds, but retail investors are swimming along in the slipstream of the big fish.

The excitement is so high that even companies that have barely completed three years of existence are rushing to raise money through new share sales.

Another loss-making company riding to a high is Ola. Today, the Economic Times reported that Ola is arranging a pre-IPO funding round that will raise its valuation to $7 billion. Ani Technologies’ (Ola’s parent) losses for FY21 was Rs 1,326 crore on revenues of Rs 689 crore, said the report.

Ola is the news more these days for its electric scooters business though. It had spun off Ola Mobility and got deep-pocketed backers like SoftBank.

But the disruption it had promised to bring seems to be elusive. So far, we have seen a lot of promotions and hype about a low starting price, an all-women factory and world class production scale. But execution has been patchy. Will this come back to bite the company? Read Sundeep Khanna’s piece here.

Our research team has the following analyses for you:

Herd Immunity Tracker: Children vaccination gets delayed

Weekly Tactical Pick: Axis Bank

Zee Entertainment: Solid quarter, driven by ad revenue and Zee5

Page Industries: Will this premium inner-wear player sustain rich valuation?

Navin Fluorine: Executing multi-year contract template

Godrej Consumer Products: Margin pressure amid mixed top-line show

Nuvoco Vistas: Muted Q2 not a dampener for the long run

Cholamandalam Investment and Finance: Ready for next leg of growth

What else are we reading?

US inflation, rising crude weigh on rupee

It's high time the government cleared its stance on cryptocurrency

US price erosion, shrinking COVID-19 play expose drug firms to earnings risks

Threat of insolvency suits can nudge discoms to adopt better financial practices

Rivian and Tesla have inherited Thomas Edison’s power to thrill (Republished from the FT)

Picks from our technical analysts

Garden Reach Shipbuilders, Titan, KEC and Motherson Sumi Systems (These are published every trading day before markets open)

Ravi Krishnan
Moneycontrol Pro