Units of Brookfield India Real Estate Trust and their performance was disappointing on expected lines. The discovered price was 275.05 on BSE and 281.70 on NSE against the issue price of Rs 275. The traded volume at the discovered price was 5,200 units at BSE and 2,86,600 at NSE.

The company had tapped the capital markets with its fresh issue of units in a price band of Rs 274-275. The issue was open between Wednesday the 3rd of February and Friday the 5th of February. The company had earlier allotted 6,21,80,800 units to 33 anchor investors comprising of 39 entities. The highest allocation of 1,27,63,600 units or 20.5% was made to 2 entities of HDFC. This was followed by SBI Life who was allotted 83,63,600 units or 13.5% of the anchor portion. The third highest was to TATA AIG who was allotted 61,81,800 units or 9.9%. This effectively means that the top three anchor investors which incidentally happen to be all domestic, have been allotted 43.9% of the total anchor book.

The issue was subscribed 4.80 times by QIB’s and 11.78 times by HNI’s and 7.97 times overall. The issue garnered a subscription of 16,663 crs excluding the anchor portion of Rs 1,710 crs.

The REIT opened for trading at Rs 275.05 on BSE, made a high of Rs 280.05, a low of Rs 258.35 and close of Rs 269.96, a loss of Rs 5.04 or 1.83%. On NSE, the open was Rs 281.70 which was also the high, the low was Rs 258 while the close was Rs 268.93, a loss of Rs 6.07 or 2.21%. The traded volume on the two exchanges combined was 95.52 lac units, which was 7% of the issue size and 13% of the non-anchor portion. Delivery volume was 78.17 lac units which were 81.84% of traded volume. It was 5.66% of issue size and 10.29% of the non-anchor portion of 760.01 lac units. A weighted average of the day’s trade was Rs 269.30 on BSE and Rs 269.20 on NSE.

The REIT from Brookfield is the third one to be listed after the earlier two from Embassy and Mindspace. The performance of Brookfield has been the poorest even though it claims to be the largest owner and manager of Real Estate trusts in the world. Why this poor performance? This offer of units had as many as 11 merchant bankers to market this issue of Rs 3,800 crs. The anchor portion was 45% of the issue size. Even with a battery of merchant bankers, the issue performed poorly on listing. The comparison with earlier issues would be apt at this time. Mindspace gained Rs 28.87 or 10.5% on listing day while Embassy gained Rs 14.10 or 4.7%.

The headline number given by Brookfield of leasable area of 28 MSF which matched with that of Mindspace was not accepted by the public. It had many ifs and buts and included a breakup as follows. The breakup was 10.3 msf leasable area plus 3.7 msf land with the right to develop, plus 8.3 msf identified assets and 6.7 msf right of the first offer as mentioned by Brookfield. All three additions entail capex and a period of time to construct and come to the stage where they begin earning lease rent.

There is a very famous saying in the stock market which goes as “BHAV BHAGWAN HAIN”. Translated this simply means that price is king. The markets have given its opinion about the issue from Brookfield and it has had a below-par performance clearly because the issue did not match up to standards. Investors are getting wiser and understand even a complex product like REIT. The poor trading volume would have a bearing on the price-performance in the immediate term and the units would be under selling pressure.

In finality, the record books would state that eleven merchant bankers who handled this public issue saw the same list below the issue price on day one.

RailTel Corporation of India Limited (RailTel) which is tapping the capital markets with its offer for sale of 8,71,53,369 equity shares in a price band of Rs 93-94 completed allocation to anchor investors. The company allotted 2,59,57,446 shares to 13 anchor investors comprising of 23 entities. The highest allocation of 37,23,100 shares or 14.34% was made to HDFC Life Insurance. This was followed by 4 entities which were allotted an identical 31,91,295 equity shares or 12.29% of the anchor allocation. They are Nippon Life, Goldman Sachs, HDFC Mutual Fund and ICICI Prudential Mutual Fund. This effectively means that the top five anchors have been allotted 63.5% of the anchor portion.

The issue opens on Tuesday the 16th of February and closes on Thursday the 18th of February.

The full list of anchor investors and their allotment is given below: –

Markets continued to gain ground in the week gone by, but significantly lesser than the previous week. They were up on three of the five trading days and lost on two days. However, on three of the five trading days, markets were sideways and more than sixty percent of the week’s gains came because of Monday alone. This clearly shows that markets seem to be running out of momentum and are seeking a reason to correct. Further there have been many an occasion when they spend their time recovering lost ground during the day. All of this suggests an impending sharp correction sooner than later. When? Is the million-dollar question and I am quite sure the exact date is not yet ascertained. Suffice to say we are there, and it could be just any day hereon.

BSESENSEX gained 812.67 points or 1.60% to close at 51,544.30 points while NIFTY gained 239.05 points or 1.60%. The broader markets saw BSE100, BSE200 and BSE500 gain 1.70%, 1.76% and 1.87% respectively. BSEMIDCAP gained 2.56% while BSESMALLCAP was up 2.75%. The top sectoral gainer was BSEREALTY, while loser was BSEFMCG. One single stock in the FMCG pack, ITC which lost 7.17% brought the BSEFMCG index down. Just for reference, the gains in the previous week were 9.61% on BSESENSEX and 9.46% on NIFTY.

The Indian Rupee gained 17 paisa or 0.23% to close at Rs 72.75 to the US Dollar. Dow Jones had a strong week and gained 310.16 points or 1.00% to close at 30,458.40 points.

The week ahead sees two primary issues being launched. The first is from Nureca Limited which plans to raise Rs 100 crs in a price band of Rs 396-400. The issue opens on Monday the 15th of February and closes on Wednesday the 17th of February. The company had reported sales of Rs 99.48 crs in year ended March 2020 which has shot up to Rs 122.97 crs in the six months ended September 2020. Its profit before tax in the same period has moved from Rs 15.74 crs to Rs 74.32 crs. Its EPS is an astonishing Rs 51.69 for the six-month period ended September 2020. The company which is a subsidiary of a private limited company has issued bonus shares in the ratio of six shares for every share held in September 2020. Post this bonus issue the PE ratio is 43.33 to 43.76 times based on March 2020 numbers. The company buys a large portion of its products from a listed group company Nectar Lifesciences Limited which has been struggling and reporting losses. Surprising that such a productivity and profitability jump for a trading company which is more than 12 times during covid-19 lockdown while the original manufacturer-supplier is still struggling. The company has also paid Rs 11.52 crs in the six-month period to the parent as business support services. This company chose not to make potential investors aware about itself through the now convenient and cost-effective method of organising a video conference. Beats me behind the logic of remaining incognito.

Robinhood investors take your call in subscribing to such an issue where credentials are suspect and the share would trade in the trade-to-trade category for the first ten trading sessions.

The second issue is from PSU company RailTel Corporation Limited. The issue opens on Tuesday the 16th of February and closes on Thursday the 18th of February. The offer for sale is for 8,71,53,369 shares in a price band of Rs 93-94. The company is into three broad verticals namely: national long distance internet service provider, telecom infrastructure and managed data centre and hosting. It also has a projects division which does activities in all these three areas plus more. The company had revenues of Rs 1,128 crs for March 20 and Rs 537 crs for the six months ended September 20. Its profits before tax were Rs 184 crs and 67 crs respectively. The company reported an EPS of Rs 4.40 for the year ended March 2020 and the PE multiple is 21.14 to 21.36 times this earning. The network for ISP has been created and this should see the company increasing its revenues and its profit in this segment going forward. Secondly being the telecom arm of the railways, it is executing a number of projects concerning railway safety and accident-free rail travel which on completion would increase profitability of the company significantly.

On the covid-19 front, the world saw 10,93,87,000 patients, 24,11,436 deaths and 8,14,70,600 patients who had recovered. In India we saw 1,09,16,172 patients, 1,55,764 deaths and 1,06,19,083 patients who had recovered. Compared to the previous week the world saw 27,09,628 new patients, 90,617 new deaths and 30,95,167 patients who recovered. In India we saw 77,329 new patients, 650 deaths and 86,007 patients who recovered. Globally number of patients recovering compared to new patients has seen a jump indicating that the covid-19 is coming under check. India continues to unlock itself and there have been pockets where number of covid-19 patients have seen a spurt, but overall conditions are well under control.

The week ahead is likely to see the actual correction hitting the market after giving us in the previous week all the early indicators necessary. Assuming I am wrong in my timing it would not make any significant difference as I am only suggesting booking profits and waiting on the side-lines for opportunities to present themselves before re-entering the markets. Results for the quarter October-December 2020 would have been completed and pockets of strength and weakness would be available for taking informed decisions. Use this opportunity wisely as it appears that markets are becoming heavy.