Syngene International Limited – Completes Anchor Allocation

July 27th, 2015 Comments Off on Syngene International Limited – Completes Anchor Allocation

Syngene International Limited which is tapping the capital markets with its offer for sale of 2.2 cr shares in a price band of Rs 240-250 completed its allocation to anchor investors. The allocation was made at the top end of the price band at Rs 250 to 13 entities. The list includes 14 entities comprising of 13 unique investors as Axis has subscribed in two different funds. A total of 60 lac shares were allotted. It may be mentioned that though the issue size is 2.2 cr shares there is a reservation of 20 lac shares for shareholders of Biocon, which reduces the size to 2 cr shares. Hence 60% of the QIB portion which can be allocated to anchors has been fully allotted. The full list is appended below: –

The issue is valued at 26.08 times at the lower band of Rs 240 to 27.17 times at the upper band of Rs 250. Considering the price performance of Biocon in its 10-11 years of listing history, investors are not too happy with the company. Considering all of that it would be a little tough getting the issue to get oversubscribed many times over even though there is so much of buzz in the pharma sector.

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PFC Offer for Sale – Floor price at Rs 254, a discount of 2.14%

July 27th, 2015 Comments Off on PFC Offer for Sale – Floor price at Rs 254, a discount of 2.14%

The government restarts its divestment program with an offer for sale of 6,60,02,035 shares of PFC. The OFS would happen on Monday the 27th of July. The floor price has been fixed at Rs 254 which is a discount of Rs 5.55 or 2.14% compared to the closing price of Rs 259.55 on the BSE and NSE.

There is a reservation of 20% for retail investors. This OFS has one unique feature which has been introduced after a lot of debate and discussion. Considering the fact that retail investors are not well equipped to determine the price at which allocation will happen in the OFS, it has been decided to allow them to bid at “CUT-OFF”. This cut-off price would be decided on the basis of the lowest price at which shares would be offered to investors in the non-retail category. The customary 5% discount to retail investors would be available.

The issue size at the floor price would be Rs 1676.45 crs. The six month high and low for the share has been Rs 313.50 and Rs 250. This means that the share is being sold virtually at the low of its six month price. It appears to be an attractive offering from the government and merits attention.

Incidentally this would be the first issue under new recent guidelines issued by SEBI for OFS. The announcement of the offer was made post closure of markets on Friday and the floor price announced on Saturday. This gave market players absolutely no chance to hammer the price of the stock. The weekly high low on the BSE is 270.50 and 256.

The offering is interesting without doubt and the success of this issue would embolden the government to come out with one or two such offerings every month and achieve its ambitious divestment target.

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Markets this week

July 27th, 2015 Comments Off on Markets this week

Indian markets followed the logjam in Parliament and lost on four of the five trading sessions. They had a sharp rally on Wednesday hoping that GST bill which was approved by the panel set up for examining the same would be cleared. To add to the concerns of the market, global cues were not positive either with Dow Jones losing 518 points or 2.86% to close at 17,568.53 points.

The week ahead has plenty of global data to be announced including the US FED meeting on 28th/29th of July. Clarity and time line on raising of interest rates should emerge post the meeting. In India we have July series futures expiring on Thursday the 30th of July. Currently the bulls have their noses ahead with the NIFTY’s Friday close higher by 123.55 points or 1.47% against June expiry value of 8,355 points. Not much they have four days to defend and win from the bears.

There is an OFS in PFC where the government is offering 6.6 cr shares at a floor price of Rs 254 against the close of Rs 259.55. This is the first OFS under the new rules where there are two changes which have been made. The first is the information about the offer is made 48 hours before opening and Saturday is treated as a working day. The second is that there is a cut off price for retail investors which is the lowest price at which shares are allotted to non-retail investors.

Monday also sees a primary offering from Syngene International Limited which is a subsidiary of Biocon Limited. The company is offering 2.2 cr shares in a price band of Rs 240-250. On Friday it completed allocation of 60 lac shares to 13 anchor investors and 14 entities at the upper end of the price band of Rs 250. The shares are being offered at a PE multiple of 26.08 to 27.17 times. The issue looks expensive considering that the parent has not made impressive returns for shareholders.

All in all an exciting week ahead with plenty of events to keep the market participants guessing about the trend. Keep a look out for the OMC’s when they declare results as Reliance has reported a hefty increase in gross refining margins of $10.4 a barrel for the June quarter against 8.7 in the previous year and 10.1 in the March quarter of FY15.

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