Buffett’s firm to largest DII, all hooked to India’s grey market: Here’s what’s buzzing
Here are some of the names that have kept the grey market abuzz over past few weeks.
From the world’s richest investor, Warren Buffet, to the country’s biggest institutional investor, Life Insurance Corporation of India (LIC), all have large stakes in some of these stocks.
New Delhi: India’s unlisted market for securities has been buzzing a lot these days among both seasoned investors as well as the novice. From the world’s richest investor, Warren Buffet, to the country’s biggest institutional investor, Life Insurance Corporation of India (LIC), all have large stakes in some of these stocks, readying to get listed on the stock exchanges.
Here are some of the names that have kept the grey market abuzz over the past few weeks.
1. Chennai Super Kings
Renowned Investors: LIC of India, RK Damani
Chennai Super Kings (CSK) is one of the most successful and popular IPL franchises. While top-notch player MS Dhoni leads the team, the company has also been able to maintain a strong balance sheet. In FY19, it grossed Rs 417.83 crore in revenues and Rs 111.2 crore in profit after tax of, with an EPS of Rs 3.6, making a bargain bet. After its demerger from India Cements NSE -0.14 %, CSK allotted shares to 94,000 retail shareholders on a 1:1 ratio, each having a face value of 10 paise. The scrip, which had traded in the Rs 12-15 range in the last week of November 2018, jumped over 200 per cent by mid-April, 2019, to Rs 32-34. In the recent weeks, the stock price moved in the Rs 29-32 range. Kolkata-based Abhishek Securities, which deals in unlisted securities, says it is a decent bet in the unlisted space.
2. UTI AMC
Renowned Investors: LIC of India, SBI
UTI AMC is the oldest mutual fund house of the nation with total Asset Under Management (AUM) of Rs 1.54 lakh crore. UTI AMC’s IPO is a much-awaited one, but has been deferred repeatedly by promoters. LIC and State bank of India are among its key promoters, alongside Bank of Baroda and Punjab National Bank NSE -0.59 %. Each entity owns 18.24 per cent in the company. The AMC is projected to get a valuation of Rs 12,000-13,000 crore. According to Sagar Shah of Ascent Wealth Managers, the stock currently trade in the Rs 900-915 range in the grey market. “Listing may unlock value of UTI AMC. The stock can realise value up to Rs 1,000 post listing. In the listed space, HDFC AMC and RNAM have been performing well, highlighting the opportunities in the sector,” he said.
3. Metropolitan Stock Exchange of India (MSEI)
Renowned Investors: Rakesh Jhunjhunwala, RK Damani
Metropolitan Stock Exchange of India, or MSEI, is a full-service national-level stock exchange with a licence to operate in equity, equity derivatives, currency derivative and debt. The company has many diversified ownership among renowned institutional as well as individual investors. The company’s PAT and EPS have been negative since FY 16.
Sandip Ginodia of Abhishek Securities believes MSEI is a sinking ship. “The stock has been unable to deliver on the promises. The company management could not garner much revenue. It is continuously making losses and one may look to exit the stock,” said Shah of Ascent Wealth Managers.
4. Nazara Technologies
Renowned Investors: Rakesh Jhunjhunwala
Mumbai-based Nazara Technologies is one of the leading mobile games companies operating in India, with presence across West Asia, Africa, Southeast Asia and Latin America. Its operations comprise subscription, freemium and e-sports businesses. The company has independent subsidiaries, named Next Wave Multimedia and NODWIN GAMING. This venture, credited with some of the most popular games on Google Play Store, such as World Cricket Championship, ChhotaBheem Race. Dinesh Gupta of UnlistedZone says Nazara Technologies has been very aggressive in making acquisitions.
He believes the way the company is acquiring other players, investors may have to wait for its IPO as such practices contract bottom-lines. Both Gupta and Shah find it a decent bet.
5. FinoPaytech
Renowned Investors: LIC of India
Founded in July 2006, FinoPaytech is a business and banking technology platform enterprise with an extensive services delivery channel. The Mumbai-based firm in a preferred choice of many financial institutions, including banks and insurance companies. The company has been serving Government of India as well. FinoPaytech has enrolled over 25 million families under Rashtriya Swasthaya Bima Yojana (RSBY). In 2016, the company got a licence for payment bank.
Gupta of Unlisted Zone finds it a good buy. “The company has strong fundamentals, but the stock performance has not been up to the mark. Many institutional investors have stakes in the company but the stock has been hovering around its 52-week low,” he said.
Gupta expects the stock to pick up pace, once its performance improves. He expects the IPO to offer attractive valuation. The company has a vast rural base with a strong distribution network.
6. Paytm
Renowned Investors: Warren Buffett (Berkshire Hathaway), Jack Ma
Incorporated as a mobile payment app, Paytm is fast diversifying into e-commerce, financial services aggregation, ticket services, bill payments, insurance, hotel, bus and flight bookings. The company got its biggest breakthrough in 2016, post demonetization, but could not live up to expectations, say experts of grey markets.
The company has incurred huge capital expenditure for establishing itself as a brand. However, operational and capital expenditure is much higher than the revenues and it’s making huge losses.
Sahil Shah believes Paytm has stepped into various highly competitive markets. They are eyeing to gain market share in these markets, but have not been fruitful for investors. “If it does not strengthen its position, it might be arduous for it to survive in long run,” says Dinesh Gupta.