From Kitchen to Capital Market: Orkla India’s IPO Explained

सोने और चाँदी के भाव मे ऊपरी स्तरों से आई गिरावट पिछले सप्ताह रुकी और कीमती धातुओं में बढ़त दर्ज की गई है। अमेरिकी राष्ट्रपति जो बिडेन के द्वारा 1.9 बिलियन डॉलर के बिल का अनावरण और फेड प्रमुख जेरोम पॉवेल द्वारा मौद्रिक निति को डोवीश रखने की बात से कीमती धातुओं मे निचले स्तरों पर सपोर्ट देखा गया। गुरुवार को राष्ट्रपति बिडेन ने "अमेरिकी सुरक्षा योजना " का अनावरण किया जिसमे सरकार के खर्चे और अन्य दी जाने वाली सहायता के बारे मे बताया जिससे कीमती धातुओं को सपोर्ट मिला। अमेरिका से जारी होने वाले बेरोज़गारी के साप्ताहिक आंकड़े अनुमान 7.95 लाख से बढ़कर 9.65 लाख पर पहुंच गए।

बेरोज़गारी और बदतर होते कोरोना वायरस आकड़ो के कारण रोज़गार बाजार मे कमजोरी आ रही है। फेड प्रमुख जेरोम पॉवेल ने गुरुवार को कहा की जब तक मुद्रास्फीति अत्यधिक नहीं बढ़ जाती तब तक ब्याज दरे नहीं बढ़ाएंगे।पॉवेल के मुताबिक बांड खरीद योजना मे किसी भी तरह के बदलाव को पहले से ही आगाह कर दिया जाएगा। इस सप्ताह निवेशकों की नज़र अमेरिकी सीनेट पर रहेगी जिसमे पूर्व राष्ट्रपति ट्रम्प पर दूसरा दोषारोपण किया जायेगा।

तकनिकी विश्लेषण

इस सप्ताह फ़रवरी वायदा सोने के भाव मे तेज़ी रह सकती है और इसमे 48600 रुपय के निचले स्तरों पर समर्थन तथा 49600 रुपय के ऊपरी स्तरों पर प्रतिरोध है। चाँदी मार्च वायदा के भाव तेज़ रहने की सम्भावना है और इसमें 66000 रुपय पर समर्थन और 67000 रुपय पर प्रतिरोध है।

प्रमुख आंकड़े

इस सप्ताह ग्लोबल अर्थव्यवस्था से जारी होने वाले प्रमुख आंकड़े जिनमे, सोमवार को चीन की तिमाही जीडीपी, बुधवार को राष्ट्रपति बिडेन का भाषण, गुरुवार को बेरोज़गारी के दावे और यूरोपियन सेंट्रल बैंक की प्रेस कांफ्रेंस तथा शुक्रवार को अमेरिकी फ़्लैश मैन्युफैक्चरिंग पीएमआई के आंकड़े प्रमुख है।

Indigo Paints is the fastest growing amongst the top five paint companies in India. We are the fifth-largest company in the Indian decorative paint industry in terms of its revenue from operations for Fiscal 2020. Indigo has achieved this position in a highly competitive Indian decorative paint industry on the back of our multi-pronged approach.

This includes introducing differentiated products to create a distinct market in the paint industry, building brand equity for our primary consumer brand, creating an extensive distribution network, and installing tinting machines across our dealer network.

Indigo Paints has a strong market network with dealers in Tier 1, Tier 2, and Metros as well. It has 3 manufacturing facilities situated in Jodhpur (Rajasthan), Kochi (Kerala), and Pudukkottai (Tamil Nadu). It is further looking to expand its manufacturing capacities at Pudukkottai to manufacture water-based paints.

As of September 30, 2020, Indigo Paints owns and operates three manufacturing facilities in Rajasthan, Kerala and Tamil Nadu with an aggregate estimated installed production capacity of 101,903 KLPA for liquid paints and 93,118 MTPA for putties and powder paints.

As of September 30, 2020, Indigo Paints distributed their products to a network of 10,988 Active Dealers. In the six months ended September 30, 2020, their overall capacity utilization for liquid paint production was 20.77% and for powder, paint production was 57.98%.

Product Portfolio

Unique Products in the Existing categories:

• Dirt-proof & Water-proof Exterior Laminate – Indigo Paints launched India's first and only paint that gives equally effective protection from dirt as well as water. It offers superior resistance from dirt, while the silicone polymer repels water, and offers the walls an extremely smooth finish.
• Acrylic Laminate – Indigo Acrylic Laminate is a premium quality emulsion that gives the walls (both exterior and interior walls) a rich sheen finish offering a high-quality finish to the walls;
• PU Super Gloss Enamels – Indigo Paints’ PU Super Gloss Enamel is an all-surface enamel paint that delivers superior gloss and protects wood and metal with its anti-fungal and non-yellowing properties; and
• Polymer Putty – Indigo Paints’ Polymer Putty is a white cement-based putty with special polymers that gives double protection to the wall with a smooth and bright finish.

Unique Products disrupting the market to create a New Category (the first company to launch these products)

• Metallic Emulsion (Walls) – Indigo Paints pioneered the Metallic Emulsion segment, which gives a designer finish with glossy metallic texture effect. This has been used to glam up spaces suitable for interior and exterior walls of homes and offices and is available in shades of Gold, Silver, and Copper.
• Tile Coat Emulsion (Roof Tiles) – The Tile Coat Paint is a special paint for external roof tiles that provides unmatched gloss and sheen with excellent protection against algae and fungus.
• Bright Ceiling Coat (Interior Ceilings) – Indigo Paints created a new category for Ceiling Paints with the introduction of the Bright Ceiling Coat which offers unmatched brightness to the ceilings with a smooth matt finish to enhance the brightness of the room.
• Floor Coat Emulsion (Driveways) – This is India's first Floor Coat Paint that offers a glossy finish while also protecting the terrace floor, driveways, walkways and cement surfaces.

Strengths of the Company:

• Track record of consistent growth in a fast-growing industry with significant entry barriers.
• Differentiated products leading to greater brand recognition and enabling expansion into a complete range of decorative paint products.
• Focused brand-building initiatives to gradually build brand equity.
• The extensive distribution network for better brand penetration.
• Leveraged brand equity and distribution network to populate tinting machines.
• Strategically located manufacturing facilities with proximity to raw materials.
• Well-qualified and professional management team with a committed employee base.

IPO Details:

IPO DateJanuary 20, 2021, to January 22, 2021Issue TypeBook Built Issue IPOIssue SizeEquity Shares of Rs.10 totalling up to Rs.1169.12 CroreFresh IssueEquity Shares of Rs.10 totalling up to Rs.300 CroreOffer for Sale5,840,000 Equity Shares of Rs.10Face ValueRs.10 per equity shareIPO PriceRs.1480 to Rs.1490 per equity shareMin Order Quantity10Listing AtBSE, NSE

IPO Objective:

Offer For Sale: OFS money will not be received by the company.

Fresh Issue:

• To meet the capital expenditure requirements for manufacturing facility expansion at Pudukkottai, Tamil Nadu.
• To purchase tinting machines and gyro shakers.
• To repay all or certain borrowings.
• To meet general corporate purposes.

Financial Performance:

Financial Performance (in INR crore)FY2018FY2019FY2020H1 FY2021Revenue403.1537.3626.4260.2Expenses389.2503.2559225Net income13.22747.727.2Net margin (%)3.357.610.5

Tentative Time Table:

14 Jan 2021: Price Band announced

18 Jan 2021: Anchor List

20 Jan 2021: Offer Opens

22 Jan 2021: Offer Closes

27 Jan 2021: Finalization of Basis of Allotment

28 Jan 2021: Unblocking of ASBA

29 Jan 2021: Credit to Demat Accounts

02 Feb 2021: Listing on NSE & BSE

Outlook:

Among the top 5 in the Decorative Paint Industry in India, Indigo Paints is growing over 40% CAGR in terms of sales since inception. Revenue from operations has grown by 16.65% between FY19 to FY20, against the range of (8.8)% to 4.9% compared to peers. The quality of the paints is good, especially the exterior ones. The net margin of the company has been improving. We assign a "Subscribe" rating for listing gain and long-term eyeing the growth of their innovative products and their penetration in 3-tier and 4-tier cities.

India is predominantly an agrarian economy, ranking second in farm production in the world. The contribution of agriculture to the GVA has decreased from 18.2% in 2014-15 to 16.5% in 2019-20.

While keeping pace with the increasing population, the growing agricultural production over the past several decades has thrown up major challenges in marketing, as well as supply, storage, and distribution. With highly fragmented markets and volatile commodity prices, it is a challenge to ensure a ‘fair’ and ‘remunerative’ price for the Indian farmer. Keeping these in mind, the government introduced several reforms. In all this, the strengthening of existing institutions in spot and derivative trade has become crucial as commodity markets do influence the lives of millions of stakeholders in the country’s diverse and large commodity ecosystem.

There is so many agri-commodities that are available for commodity trading whereas some of them are available on more than one platform. Majorly, KAPAS is the only commodity that is available for trading on both platforms i.e., NCDEX and MCX.

The National Commodity & Derivatives Exchange of India (NCDEX) is a nation-level, technology-driven online commodity Exchange with an independent Board of Directors and professional management. It is committed to providing a world-class commodity exchange platform for market participants to trade in a wide spectrum of commodity derivatives.

Multi Commodity Exchange of India Ltd (MCX) is an independent commodity exchange based in India. It was established in 2003 and is based in Mumbai. It is India's largest commodity derivatives exchange. It mainly provides a platform for trading in bullion, Base Metals and Energy.

NCDEX AGRIDEX is India’s first return-based agricultural futures index which tracks the performance of the ten liquid commodities traded on the NCDEX platform. The index represents the basket of ten commodities that are selected based on the liquidity on the exchange platform. The NCDEX AGRIDEX serves as a benchmark and one can replicate the performance of the underlying commodities.

AGRIDEX COMPONENTS FOR FY 2020-21

Here's the corrected version of the product specifications for the mentioned agri-commodities:

And for the new product specifications:‍‍

NOTE: The expiry of every futures contract is on the 20th of the delivery month. If the 20th happens to be a holiday, a Saturday, or a Sunday then the due date shall be the immediate preceding trading day of the Exchange, which is not a Saturday.

Indian Railway Finance Corporation known as IRFC is a finance arm of the Indian Railways. Incorporated in 1986, Indian Railway Finance Corporation (IRFC) is a public-sector enterprise that is wholly-owned by the Government of India.

The company is registered with the RBI as a systemically important NBFC and is classified under the category of an “Infrastructure Finance Company”. Its primary business is financing the acquisition of rolling stock assets, which includes both powered and unpowered vehicles, for example, locomotives, coaches, wagons, trucks, flats, electric multiple units, containers, cranes, trollies of all kinds and other items of rolling stock components as enumerated in the Standard Lease Agreement (collectively, “Rolling Stock Assets”), leasing of railway infrastructure assets and national projects of the Government of India (collectively, “Project Assets'') and lending to other entities under the Ministry of Railways, Government of India (“MoR”).

It follows a financial leasing model to finance rolling stock assets procurement for a lease period of 30 years. The key thing to note is in the last 30 years IRFC has zero NPA. In fiscal 2019, the actual capital expenditures by the Indian Railways were Rs. 1,334 billion, out of which, IRFC financed Rs. 525.35 bn accounting for 39.34% expenditures.

Strengths of the Company:

1. Plays Strategic role in financing the growth of Indian Railways.
2. The cost of borrowings is comparatively low based on strong credit ratings in India and diversified sources of funding.
3. Financial performance is a consistent and cost-plus model.
4. Low-risk business model.
5. Strong asset-liability management.
6. Experienced senior management and committed team.

IRFC IPO is a main-board IPO of 1,782,069,000 equity shares of the face value of ₹10 aggregating up to ₹4,633.38 Crores of which Fresh Issue 11,88,04,60,000 Shares Equity Shares, aggregating up to Rs 3088.92 Crore Offer for Sale comprises: Up to 59,40,23,000 Equity Shares, aggregating up to Rs 1546.44 crore. The issue is priced at ₹25 to ₹26 per equity share.

The minimum order quantity is 575 Shares. The IPO opens on Jan 18, 2021, and closes on Jan 20, 2021. The shares are proposed to be listed on BSE, NSE.

IPO Objective:

• Offer for Sale: The Company will not receive any proceeds from the Offer for Sale.
• Fresh Issue: Net Proceeds from the Fresh Issue are proposed to be utilized in augmenting the company’s equity capital base to meet business future growth requirements.

Financial Performance:

FY2018FY2019FY2020H1 FY2021Revenue9,207.8010,987.4013,421.107,384.80Expenses6,675.908,232.0010,229.005,498.00Net income2,002.302,140.103,191.501,887.30Margin (%)21.719.523.825.6

Tentative Time Table:

• 13th Jan: Announcement of Price Band
• 12th Jan: Anchor Investors Allotment
• 18th Jan: Offer Opens
• 20th Jan: Offer Closes
• 27th Jan: Finalization of Basis of Allotment
• 27th Jan: Unblocking of ASBA Accounts
• 28nd Jan: Credit of Equity Shares to Depository Accounts
• 29th Jan: Commencement of Trading

Outlook:

The market cap @26/share on listing day will be around 33000 crores and it is going to enter the top 100 large-cap company list. IRFC operates on a unique business model, quite contrasting to REC/PFC. Whatever price they borrow from the market, while financing to MoR, they provide it with a 40 basis point margin.

For railway companies, the margin is 150 basis points. Eyeing the budget it is expected that IRFC may get further orders from the railways as the government is planning to run 150 private trains. However, if the government doesn't fix IRFC as the only NBFC for Railways, IRFC may lose its monopoly. We recommend a "Subscribe" rating only for the long term.

"We were not taught financial literacy in school. It takes a lot of work & time to change your thinking and to become financially literate" Robert Kiyosaki.

We all sent our children to school & colleges to learn new things which make them better as per today's scenario. But we never try to go through what they are learning; are they just mugging up with the book & notes or going through any new skills, will they be able to handle any situation which demands any special skill, in Indian we generally pamper our children while they are attending school till 12th standard and then, later on, we guide them to colleges there also we help them in every aspect, like pocket money, clothing, etc.

"A normal college graduate spent 16 years gaining skills that will help them command a higher salary; yet little or no time is spent helping them save, invest, and grow their money."

In the Indian educational system, we will find all kinds of course curriculum with lots of books and references, but we never found any sort of practical training for it as in the educational system we mainly focus on marks & grades, not on skills & talents.

One of the major things which we miss in the educational system is the knowledge of Financial Literacy, Basically, it is an ability to understand and effectively use various financial skills, including personal financial management, budgeting & investing. The lack of these skills is termed financial illiteracy.

Benefit of Financial Literacy

The main benefit of financial literacy is that it empowers us to make smart financial decisions. It provides the knowledge and skills we need to manage money effectively budgeting, saving, borrowing, and investing. This means that we're better equipped to reach our financial goals and achieve financial stability.

Why Financial Literacy is Important?

Financial literacy is important because it equips us with the knowledge & skills we need to manage money effectively. Without it, our financial decisions and the actions we take- or don't take- lack a solid foundation for success.

In Indian families decisions regarding investments & savings are generally done by senior members of the family, who are actually following the same old pattern for the same, which is not suitable as per the current demands. This is one of the major reasons why much young age person lack starting there at the early age of their job.

How to Create Awareness

Organizing financial literacy drives in colleges and schools with live practical case studies & situation analysis so that they actually learn and understand about it.

Making them understand about this will help them in the early days of the job, which actually tries to control their spent over earning habits. Organizing games & quiz contest which make them take real and practical decisions for the same.

SEBI notified the SEBI (Investment Advisers) Regulation, 2013 in January 2013 intending to regulate the activity of providing investment advisory services in various forms by independent financial advisors, distributors, banks, and other such entities. The regulations become effective from April 2013.

General Obligations of Investment Advisors

The relationship between the investment adviser and client is that of trust and the investment adviser while performing his role, should act in good faith in the best interests of the client. The Investment Adviser Regulations have cast upon investment advisers certain obligations and responsibilities while providing investment advisory services.

Conflicts of Interest

It is important that the investment adviser discloses all conflicts of interest to the client as and when they arise.

Only Advisory Earnings

An investment adviser must not receive any remuneration from anyone except the client in respect of securities or investment products for which he has provided advice.

Differentiation of Activities

There must be segregation of other business activities from investment advisory activity of the investment advisor. A professional relationship must be maintained between investment advisory activity and such other activities. If a conflict of interest arises, the same shall be disclosed to the client.

Confidentiality

The investment adviser must maintain strict confidentiality with respect to the information received from the client.

Compliance

An investment advisor shall follow Know Your Client procedure as specified by SEBI from time to time.

Code of Conduct

An investment adviser must abide by the Code of Conduct as specified in the Third Schedule of the Investment Adviser Regulations.

Reporting to SEBI

The investment adviser must file periodic reports or information to SEBI as may be required from time to time and take prior approval from SEBI if there is a change in control of the investment adviser.

Certification

It shall be the responsibility of the Investment Adviser to ensure that its representatives and partners comply with the certification stipulated by the Investment Adviser Regulations at all times.