Capital Market Update - March 2021 Karan Vora - Vora Corporate Finance
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Capital Market Update
March 2021
Karan Vora
VoraFin.com
Table of Contents
Economic Update
• Union Budget 2020-21 – Highlights
Secondary Market Update
Primary Market Update
Initial Public Offers (IPOs)
• Indigo Paints Limited
• Nureca Limited
Mergers & Acquisitions Key Deals
• Mawana Sugars to offload unit to Bodal Chemicals
Private Equity Key Deals
• Advent International to acquire controlling stake in ZCL Chemicals Limited
Economy Secondary Market Primary Market IPO M&A Private Equity VoraFin.comEconomic Update India’s GDP growth contracted by 7.5 per cent Y-o-Y during Q2 of 2020-21 compared to -23.9 per cent growth Y-o-Y in Q1 of 2020-21. According to the First Advance Estimate released by MOSPI, GDP of India is estimated to fall by 7.7 per cent during the full Financial Year 2020-21, compared to 4.2 per cent expansion in 2019-20. Collections under the goods and services tax (GST) continued to remain above the Rs.1 lakh crore mark for the fifth straight month in February 2021, marking an increase of 7.4 per cent over the previous year and reflecting the sustained business activity. Economy Secondary Market Primary Market IPO M&A Private Equity VoraFin.com
Union Budget 2021 – Highlights Union Finance Minister Nirmala Sitharaman presented the Budget 2021-22 in February with aim to support the Indian economy hit by the coronavirus pandemic. Following are few highlights: Sharp increase in capital expenditure for next fiscal to Rs.5.54 lakh crore, up from Rs.4.39 lakh crore of last fiscal. Health allocations increased. In Income Tax, no depreciation to be allowed on goodwill from FY22. However, the amount paid for acquiring goodwill to be allowed as deduction on sale. Two PSU banks and one general insurance firm to be disinvested this year. IPO of LIC. A Bad bank; the government has decided to set up an asset reconstruction company that will take over bad loans of banks. Economy Secondary Market Primary Market IPO M&A Private Equity VoraFin.com
Trends in Secondary Markets
BSE Sensex went up by 6.08% in February 2021 to close at 49,100 and it touched a lifetime high of
52,516.76 in the month of February 2021 on account of well received union budget, vaccination drives and
good economic recovery. Nifty 50 closed at 14,529, higher by 6.56% from 13,635 in January closing.
Foreign Portfolio Investors (FPI) infused Rs. 25,787 Crore in Indian equity markets in the month of
February. This is the fifth consecutive month where FPIs have been net buyers of equity.
Equity Markets Jan-21 Feb-21 Change%
Sensex 46,286 49,100 6.08%
Nifty 50 13,635 14,529 6.56%
BSE 500 17,975 19,371 7.77%
BSE Bankex 34,663 38,981 12.46%
BSE Consumer
30,099 31,758
Durables 5.51%
BSE Healthcare 20,629 20,856 1.10%
BSE FMCG 12,218 11,967 -2.05%
Economy Secondary Market Primary Market IPO M&A Private Equity VoraFin.comPerformance of BSE sectoral Indices in % in Feb 2021
Amongst the BSE Performance of BSE Indices in % in February 2021
sectoral indices almost all S&P BSE Sensex 6.08%
indices were performed well S&P BSE Basic Materials 16.23%
in the month of February. S&P BSE Consumer Discretionery Goods & Services 4.32%
S&P BSE Energy 13.92%
Metal (24.37%) and Power S&P BSE Fast Moving Consumer Goods -2.06%
(20.66%) were the best S&P BSE Finance 11.15%
S&P BSE Healthcare 1.10%
performers. S&P BSE Industrials 15.34%
S&P BSE Information Technology -1.60%
S&P BSE Telecom 3.73%
FMCG (-2.30%), IT (-1.60%) S&P BSE Utilities 17.54%
and Teck (-1.30%) sectors S&P BSE AUTO 3.66%
S&P BSE BANKEX 12.46%
performed poorly. S&P BSE CAPITAL GOODS 10.46%
S&P BSE CONSUMER DURABLES 5.51%
S&P BSE METAL 24.37%
S&P BSE OIL & GAS 12.54%
S&P BSE POWER 20.66%
S&P BSE REALTY 15.23%
S&P BSE TECK -1.30%
-5.00% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00%
Economy Secondary Market Primary Market IPO M&A Private Equity VoraFin.comPrimary market Update
There were five main board IPOs Funds Mobilisation by Corporates (₹ in Crore)
of Indigo Paints Limited, Home
Particulars Dec-20 Jan-21
First Finance Company India
A. Funds Mobilisation through Public Issue (I+II) 1,652.0 10,262.0
Limited, Stove Kraft Limited,
Nureca Limited and Railtel I. Equity Public Issue 1,652.0 5,015.0
Corporation of India Limited in a. IPOs (i+ii) 1,353.0 4,933.0
February 2021 as against two i. Main Board 1,351.0 4,933.0
IPOs, Antony Waste Handling Cell ii. SME Platform 3.0 -
Limited and Indian Railway b. FPOs - -
Finance Corporation, in January c. Equity Right Issue 299.0 81.0
2021. II. Debt Public Issue - 5,248.0
B. Funds Mobilisation through Private Placement 97,335.0 62,127.0
There was one SME IPO of MRP
Agro Limited in February 2021 as 1. QIP/IPP 7,423.0
1,170.0
against no SME IPO in January 2. Preferential Allotment 1,782.0 5,333.0
2021. 3. Private Placement of Debt 88,130.0 55,624.0
Total Funds Mobilised (A+B) 98,987.0 72,389.0
Economy Secondary Market Primary Market IPO M&A Private Equity VoraFin.comInitial Pubic Offers (IPOs) – 1/2
Indigo Paints Limited:
Started in the year 2000, Indigo Paints is a paint company offering a range of interior & exterior wall paint
colour, enamels & wood coatings for homes & offices.
Indigo commands a price multiple of 60 times on expected FY23 earnings.
The price band of IPO was Rs.1488-1490 and the company raised about Rs.1176 Crore via the IPO.
The IPO was subscribed over 117 times and issue price of the stock was Rs.1490.
It got listed at a premium of 75%, at Rs.2607.5, over the issue price.
Economy Secondary Market Primary Market IPO M&A Private Equity VoraFin.comInitial Pubic Offers (IPOs) – 2/2
Nureca Limited:
Nureca Limited is in the business of the distribution of home healthcare and wellness products. It sells its
products through online channels.
Its IPO had a price band of Rs.396-400. Company raised about Rs.100 Crore through the IPO and it was
subscribed over 39 times.
It listed at Rs.634.95 at a premium of 58.74 per cent over the issue price of Rs.400.
At the issue price, the stock was priced at a P/E of 62.55 times on its earnings per share of Rs. 6.40.
Economy Secondary Market Primary Market IPO M&A Private Equity VoraFin.comMergers & Acquisitions Key Deals Economy Secondary Market Primary Market IPO M&A Private Equity VoraFin.com
M&A: Mawana Sugars to offload unit to Bodal Chemicals – 1/2 Transaction: Bodal Chemicals Ltd will acquire a Chemical Plant known as Siel Chemical Complex (SCC) situated at Rajpura, Punjab, India as a going concern from Mawana Sugars Limited. Business Transfer Agreement (BTA) has been entered with Mawana Sugars Limited and acquisition of Plant /Unit is expected to get completed in next 2 months subject to certain conditions. Consideration shall be Rs.137 Crores. About Bodal Chemicals Ltd: Located in Ahmedabad, Gujarat, Bodal Chemicals is into the business of manufacturing of Dyes, Dye Intermediates and Basic Chemicals. There are 21 companies in the Bodal Chemicals Limited corporate family. Company has 9 manufacturing units in Gujarat. About Mawana Sugars Limited: Emerged as an independent entity in 1989 out of the restructuring of erstwhile DCM Group, Mawana Sugars Limited is a diversified conglomerate. It is engaged in the business of manufacturing and selling of chemicals, sugar, ethanol and Edible oils. Economy Secondary Market Primary Market IPO M&A Private Equity VoraFin.com
M&A: Mawana Sugars to offload unit to Bodal Chemicals – 2/2 Rationale: The Proposed acquisition will help Bodal Chemicals in diversification of its existing Chemicals product line by adding new products. Target plant is engaged in the business of manufacturing caustic soda – chlorine, etc. While through sale Mawana Sugars will be getting rid of its non-core business unit and improve its debt-equity ratio. Economy Secondary Market Primary Market IPO M&A Private Equity VoraFin.com
Private Equity Key Deals Economy Secondary Market Primary Market IPO M&A Private Equity VoraFin.com
PE: Advent International to acquire controlling stake in ZCL Chemicals Limited – 1/2
Transaction:
Advent International (“Advent”), a global private equity fund for around Rs.2000 Crore, announced that it
has signed a definitive agreement to acquire a majority stake in ZCL Chemicals Limited. With this
transaction, Morgan Stanley Private Equity Asia (MSPEA), a private equity platform that previously
managed a minority investment in ZCL, will exit their investment along with promoters Parikh family.
About Advent International:
Founded in 1984, Advent International has been investing in India since 2007. It’s recent healthcare
investments include RA Chem Ltd. and Bharat Serums & Vaccines.
The firm focuses on investments in five core sectors, including business and financial services; health
care; industrial; retail, consumer and leisure; and technology.
About ZCL Chemicals Limited:
ZCL (formerly Zandu Chemicals Ltd.) is a pharmaceutical company in India. ZCL was driven by promoter
Nihar Parikh.
Economy Secondary Market Primary Market IPO M&A Private Equity VoraFin.comPE: Advent International to acquire controlling stake in ZCL Chemicals Limited – 2/2
Established in 1991, ZCL is headquartered in Mumbai and has a state-of-the-art US FDA successfully
inspected facility with a capacity of 214 KL along with strong research & development capabilities
strategically located in the industrial park of Ankleshwar, Gujarat. Company’s majority revenue comes
from exports in European and North American market.
Rationale:
The acquisition of ZCL will help Advent get closer to its goal of creating a top five merchant API platform
in India. ZCL will be its third pharmaceuticals investment in India and the second in the API space. ZCL is a
high-growth business, led by a capable management team, which will further fortify Advent’s presence in
the API market, a key sub-sector focus of Advent.
With the China plus one factor and government’s focus on increasing pharma API manufacturing in India,
the pharma API sector has seen strong interest which is likely to continue in future. Indian pharma sector
has seen both increase in returns and valuation upgrade post covid.
Economy Secondary Market Primary Market IPO M&A Private Equity VoraFin.comTHANKS
Acknowledgements:
RBI Bulletin (www.bulletin.rbi.org.in), SEBI (www.sebi.gov.in), NSE (www.nseindia.com), BSE (www.bseindia.com)
Disclaimer
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