The current monsoon session of parliament is halfway through and the passage of GST bill has never been so close. It appears the bill would be taken up for debate on Tuesday and would be cleared on that day and barring a few hiccups it may become Wednesday.Markets have been waiting for the passage of this bill and the momentum in the market is on expectation of this bill. The passing of GST would lead to euphoria and that could last between 48 to 72 hours. In short the correction is imminent post the euphoria. This period would be a good time to take money of the table and review what needs to be added before July-September results are announced in mid-October.
Markets had a decent week and the BSESENSEX gained 284.62 points or 0.89% while NIFTY gained 97.30 points or 1.14%. July series expired on a positive note and gained 378.55 points or 4.57%. Dow Jones ended with losses at 18,432.24 points, a loss of 138.61 points or 0.75%.
There is plenty of action in the primary market which sees one listing on Monday and 2 issues during the week. Advanced Enzyme Technologies Limited which had issued shares in a price band of Rs 880- 896 would be listing on Monday. The issue was subscribed 394 times by HNI’s and even on a lower interest rate of 5% would have a funding cost of about Rs 340-350 per share. The success of the issue is imminent with a premium of Rs 300 or thereabouts but the fate of the leveraged investor is not known.
The first issue is from Dilip Buildcon Limited which opens on Monday and closes on Wednesday and would be raising Rs 654 crs in a price band of Rs 214-219. The issue comprises of a fresh component of Rs 430 crs and an offer for sale of 102.27 lac shares. The price earnings multiple of the offer based on fully diluted and consolidated basis for March 2016 is between 12.75 and 13.04 times. Considering the nature of business being infrastructure developer who owns the entire equipment and believes in collecting early bonus from the client, this issue looks attractive and reasonably priced. The road development sector has received added impetus from the present government and with 90% land acquisition being completed prior to tendering, delays are becoming a thing of the past. Dilip Buildcon is currently executing and bidding for projects mainly from the government where payments are also streamlined. The anchor book which was allocated on Friday looks impressive and adds to the comfort.
The second issue is from S.P.Apparels who is looking to raise Rs 215 crs from a fresh issue and Rs 24.12 crs from the offer for sale of 9 lac shares in a price band of Rs 258-268. The company is in the business of manufacturing children’s garments for export and has marquee clients like Tesco and Primark. S.P.Apparels also has a subsidiary which has sublicensed the manufacture and retail of men’s garments under the brand “Crocodile”. This business is yet to realise the true potential and one would see benefits flowing in a couple of quarters post the IPO. The shares are being offered in a price earnings multiple of 15.04-15.63 times on a fully diluted and consolidated basis for year ended March 2016. The company has come through tough times and this could virtually be a second innings for them. The quality, systems and compliances followed has ensured that clients have remained with the company even during these tough times. Children’s wear is a tough segment and this is the second largest player in the country for exports in this segment. People should look to invest if they have patience for a minimum of 2-3 quarters. The anchor book opens on Monday the 1 st of August.
Keep an eye on proceedings in parliament for GST bill passage and then using the euphoria to exit.
