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Media and entertainment giant Zee entertainment Enterprises Ltd said in an interview that it has given official approval for its merger with Sony Pictures Network India. Post this announcement, the stocks of Zee entertainment limited rose nearly 20% on the 24th of September.

It has marked that Zee, has been experiencing constant pressure from the top investors in regards to management shuffle which also include the exit of the chief executive Punit Goenka from the board.

Zee further said that the company and Sony Pictures signed a non-binding term sheet into which they had to work together in multiple streams such as digital assets, production operations, linear networks, program libraries and more.

As part of the proposed deal, Sony Pictures Network India will hold a 52.93% stake in Zee entertainment while Zee shareholders will hold a 47.07% stake.

The total period of a term sheet is of 90 days during which both the companies will conduct mutual diligence and finalize definitive agreements, the filing said.

As a part of the merged entity, Punit Goenka will continue to be the managing director and CEO of the whole deal.

Let’s understand, what’s the merger means to Zee entertainment and its shareholders:

How Does the Deal Benefit Zee Entertainment?

Zee Entertainment is considered as one of the largest entertainment players in the industry with an outstanding market share including a strong pan-India presence. Apart from the Hindi entertainment segment, the company nailed its presence in regional languages as well.

Currently, the company operates 49 channels in 11 different languages which in turn help the company to generate an extra audience base in the country. Also, Zee has its own OTT app called Zee5, which attracts its young audience as well.

However, during the pandemic, many things have been restricted which also hits the company hard in terms of revenue and fresh content availability. However, the company again took a fresh start and now it has started growing again.

The promoter's stake sale has been addressed and the company has some plans to undertake investment in the upcoming years. At this time, Sony’s merger with the company would aid the growth of Zee entertainment in the upcoming year.

Now, the company is planning to increase its content offering on the OTT platform Zee5 app to receive worldwide attention from the audience. The increased consumption of the content on the OTT platforms will surely benefit Zee entertainment in many ways.

As per the sources, the company continues to increase its viewership base and is likely to see a rise in it due to its lowered annual subscription fee which is Rs. 499 per year.

Recently, Zee released 11 shows and movies on the Zee5 platform. With fresh investments, there are more such shows and movies are likely to be released in the upcoming months. This, in turn, improves its overall subscription revenue.

As per the source, the company is all set to release 30 new shows in September month that is going to be featured in Hindi, Marathi and Tamil languages.

Also, it has started thinking to expand its movie production business which has suffered a lot in this pandemic.

Although the company faced a huge loss during the pandemic; it keeps maintaining its audience through the OTT platform Zee5.

As Zee entertainment is one of the oldest and leading companies in the entertainment and media industry, it has a strong audience base. It leaves no stone unturned in retaining and mesmerizing its new audience base through the television channel. In addition to this, Zee also plans to expand the movie production business that assists the company to monetize from different business segments.

Financials

If we look at the revenue model of Zee entertainment, then we will get to know that the company gets 40-45% of its revenue from its subscription and the rest is generated from the advertisements.

In the June quarter FY22, the company achieved revenue growth of nearly 30% than the last year. This was only due to the low base effect of the June quarter last year. The main reason behind the 30 per cent recovery growth is the subscription and the advertising revenue which has helped the company a lot.

If you compare the revenue of the company to the previous quarter i.e. March, id had failed by 17% due to the lockdown restrictions due to the second wave of COVID 19.

How Does This Deal Impact on the Investors

As everything looks good with the Zee-Sony merger, it takes a while for it to start generating revenue. This is because the pandemic leaves a heavy impact on all of us. In such cases, going to a theatre would be a huge risk.

However, the company can achieve revenue growth with the help of advertisements and the OTT platform Zee5.

The company’s advertisement revenue will heavily depend on the corporates’ performance also. Hence, in the long run, the Zee-Sony merger will bring something positive for the company and the investors.

Let’s quickly review the highlights of the Zee-Sony Pictures Limited Deal

Highlights

Sony Pictures will hold a majority stake in the Zee-Sony merger, where Zee holds 47.07% and the remaining stakes 52.93% to be held by Sony Pictures shareholders.

The board of directors will be nominated by Sony Pictures.

This merger is going to be a publicly listed company in India.

As per the non-binding term sheet, the promoters of the Zee-Sony group are free to raise their shareholders from 4% to 20%.

The final transaction would be subject to completion of customary due diligence and execution of definitive agreements and required third party approval, regulatory and corporates, including the votes of Zee’s shareholders.

Takeaway

Zee-Sony merger would take a drastic turn in investors lives. As the deal is closed, the shares of Zee entertainment ltd have increased to a greater extent. This will improve investors’ portfolios. The merger also leaves a heavy impact on retail investors as they can benefit a lot from Zee entertainment shares.

Traders invest most of their time in planning entry strategies but ending up taking bad exits. Do remember, just like entry trading, exit also matters in stock trading.

Many of us lack in planning effective share trading exit strategies which in turn force us to leave the stock market at the worst possible price.

There are bundles of questions that revolve in our minds while online trading. For instance, people don’t know how to deal with the fear of missing out. Do they think what happens if the scrip goes up after I sell?

The question often circulates in the mind of retail investors. If you are the one who has many doubts about exit trading, we have got you covered.

Before getting started, let’s take a quick tour of the holding period i.e. why the holding period is so important and how it plays an important role in the successful exit strategies.

Holding Periods

It’s impossible to discuss exit strategies without explaining holding periods. The holding period is the duration at which you can hold the stock and sell it after the relevant time. The time frame in the holding period helps you to identify the time you need to extract money from the stock market.

• Day Trading or Intraday Trading: Minutes to Hours
• Swing Trading: Hours to Days
• Position Trading: Days to Week
• Investment Timing: Week to Month

Here, you need to select the category that aligns most closely with your market because it shows how long you have to book profit or loss. This approach requires strict discipline as some positions perform exceptionally well so that you want to hold them beyond time constraints.

While you can stretch the holding period according to market conditions, don’t forget to take an exit within the time limits. Because such things increase your profitability and stock market trading skills.

Market Timings

Before entering the stock market, it would be ideal to get into the habit of profit and loss and risks associated with it. Try to figure out the next resistance level within the time constraints of your holding period.

Now, try to analyze the point at which you will be proven wrong if the stock prices go against your prediction and hit it. That’s your risk. Now calculate the risk-reward ratio which should be 2:1. If anything less and you should skip the trade, move for a better opportunity.

Signs That Shows to Exit from the Particular Stock

Let’s understand it with an example:

Imagine a situation where you invested in a company called ABC Limited. The price of the stock went high within a few years to touch a level of Rs 700 but started to make a fall and now it is trading at Rs 27 today.

Now, let’s think you did full stock market research in the company ABC limited and you believe the company may show a heavy growth and hence you have decided to stick with the stock even if the prices drop.

So, where did you go wrong? Aren't, you supposed to buy right, sit tight? The answer is Yes. Yes should do so but this is not the case sometimes.

There are few things you need to ponder that give you an idea: what is the best time to exit from a stock?

1. Fundamentals of a Company are Constantly Changing

Is there any change in the fundamentals of a company that affects a stock’s price?

Check out the quarter performance of the company. If you see any sort of delays in the company’s growth report and the company consistently underperforms, then it’s high time to deeply monitor the company’s fundamentals.

Check the company’s fundamentals for at least 3-4 quarters. Also, check the other parts such as the utilization of a company (if there is any decline) or if the NPA is growing up.

Another important factor to check the company’s performance is Debt. Many stocks now have become multi-baggers only because they have zero or negligible debt. Take a quick tour of the debt to market cap ratio.

The debt to market ratio is a way to measure the debt against the company’s ability to raise capital. If the debt percentage is less, the company’s performance is more stable. If you see the number has increased, it’s high time to exit from the stock.

2. Company’s Involvement in Corporate Governance Issues

Corporate governance issues tell you many things such as how well a company manages its stakeholder relations. Here, as an investor checkout for their disclosure policy, dividend policy, conflict resolution between internal and external shareholders. It’s also important how well the upper management handles these setbacks.

Another important thing to note is: if there has been any legal dispute between the senior authorities that haven't been resolved yet or if the company suffers a lot where you can see the exit of the senior business leader. These heavily impact the price of scrip and you see it gets down to a greater extent.

3. When the Company becomes Extremely Overvalued in Short Time

Normally, the share price of a fundamentally strong company goes high with time. There are certain cases, where the price of a stock goes too high compared to a very short period. In such circumstances, it would be ideal if you immediately sell the stock and book profit.

What to do After You Sell the Stock?

Many times it happens that after selling a stock, you keep questioning your decisions. This is apt for the investors who have worked with the company for years and get emotionally attached to the company.

The bottom line here is that you are in the stock market only to create wealth and hence you should not have stuck with the emotions. Don’t let your emotions overpower your mind.

Takeaway

Planning an exit strategy is effectively important as an entry into the stock market. Proper exit from stock not only prevents you from huge losses but also helps you to take certain actions on time which will help you in the near future. See, the stock market always depends on the strategies and therefore a meaningful strategy will lead you to achieve more returns from the stock market.

पिछले सप्ताह की शुरुवात में सोने के कीमतों में अच्छी बढ़त देखि गई लेकिन अमेरिकी फ़ेडरल रिज़र्व की बैठक में मौद्रिक नीति को नियंत्रित करने के निर्णय पर सोने और चांदी के भाव ऊपरी स्तरों से टूटे गए। 10 वर्ष अमेरिकी बांड उपज में भी लगातार बढ़त दर्ज की गई है। फेड के अतिरिक्त कुछ देशो की अर्थव्यवस्थाओं में मौद्रिक नीति को नियंत्रित करने की बात से कीमती धातुओं में दबाव रहा है।

घरेलु बाज़ारो में श्राध्द के चलते सोने और चांदी की खुदरा मांग में कमी रहने के आसार है जिससे कीमती धातुओं में दबाव बना हुआ है। लेकिन, फेस्टिवल सीजन करीब होने के कारण निचले स्तरों पर सपोर्ट रहने की सम्भावना है। चीन मे चल रहे रियल स्टेट संकट के कारण कीमती धातुओं में निवेश की मांग बढ़ सकती है।

एमसीएक्स वायदा सोने के भाव में 300 रुपये प्रति दस ग्राम की साप्ताहिक बढ़त रही और पिछले सप्ताह के अंत तक कीमते 46100 प्रति दस ग्राम के करीब रही है। अमेरिकी फ़ेडरल रिज़र्व के निर्णय का असर चांदी के भाव में कम रहा और घरेलु वायदा चांदी के भाव में भी 700 रुपये प्रति किलो का साप्ताहिक सुधार देखा गया है। अमेरिकी बेरोज़गारी और सर्विस पीएमआई के कमजोर आकड़ो से भी चांदी के भाव को सपोर्ट रहा है। डॉलर जो सोने की विपरीत दिशा में चलता है, सप्ताह के निचले स्तरों पर है।

तकनीकी विश्लेषण

इस सप्ताह प्रमुख अर्थव्यवस्थाओं के केंद्रीय बैंक सदस्यों के बयान होने के कारण कीमती धातुओं में उठा पटक रहने के आसार है लेकिन कीमतों में निचले स्तरों से सुधार होने की संभावना तकनीकी चार्ट पर नज़र आ रही है। सोने में 45600 रुपये पर सपोर्ट है और 46500 रुपये पर प्रतिरोध है। दिसंबर वायदा चांदी में 58000 रुपये पर सपोर्ट और 61800 रुपये पर प्रतिरोध है।

IPO Season is On!

Like other months, this week will be a busy one on the IPO front. Here, we will discuss some of the companies that are likely to file or have drafted DRHP with SEBI for the initial public offering to make their company public limited from private limited.

In the IPO process, the company is required to file DRHP (draft red herring prospectus) and then final RHP (red herring prospectus). After the completion of these processes, SEBI approves the initial public offer for the companies and they are ready to get launched in the primary market.

Here is a complete list of IPOs in September 2021:

• Sansera Engineering Limited
• Paras Defence and Space Technologies
• Arohan Finance Services Limited IPO
• MobiKwik IPO
• Seven Islands Shipping IPO
• Aadhar Housing Finance IPO
• Ruchi Soya Industries FPO
• ESAF Small Finance Bank
• PayTM IPO
• LIC IPO

IPO Launches Later in 2021

• Nykaa
• LIC
• Bajaj Energy
• Penna Cements
• Paytm IPO
• Annai Infra Developers
• Apeejay Surrendra Park Hotels
• Samhi Hotels

Now, let’s discuss the IPOs that may hit the primary market in 2021

1) Sansera Engineering Limited IPO

Sansera Engineering Limited is an engineering-led integrated manufacturing company that develops complex and critical engineered products in various sectors mainly automotive and non-automotive sectors.

If we talk about the automotive sector, the company primarily manufacturers and supply a wide range of machined components and assemblies such as rocker arm, gear shifter fork, crankshaft, stem comp, aluminum forged parts that are essential for engine, transmission, suspension, braking and other systems that are used for a two-wheeler, passenger vehicle and commercial vehicle verticals.

In the non-automotive sector, the company manufactures and supplies critical yet precision components for aerospace, agriculture, off-road and other things including capital goods.

2) Paras Defence and Space Technologies Limited IPO

As of December 2020, the company is known as the third largest seaborne logistics company in India by deadweight tonnage. As per the CRISIL Report, In 2020, the company held a significant market share in crude oil imports.

The company is involved in liquid products such as white oil, black oil, lube oils etc. Furthermore, the company is also engaged in crude oil logistics where it transports the crude oil in vessels classified as Suezmax and Very Large Crude Carriers.

3) Arohan Financial Services Limited IPO

Arohan Financial Services Limited is a leading NBFC-MFI mainly operated under low-income states in India. Arohan’s main objective is to provide income-generating loans and financial inclusion related products to the people who are not capable of accessing financial services or who have limited access.

Arohan offers a broad range of financial products to under served customers. The financial products are classified into credit and insurance products that include income-generating loans for numerous household purposes.

Also, the company generates several insurance products that include life cover and health insurance covers that are underwritten by certain insurance companies with whom the company has done tie-ups.

4) MobiKwik IPO

MobiKwik is a fintech company that is one of the largest mobile wallets yet largest buy now pay later players in India.

As we have seen digital payment has been rapidly growing in India but the credit card penetration is still only 3.5%. Keeping in mind, MobiKwik comes with an idea to promote digital payment with a unique concept of buy now pay later.

The company was founded in 2009 by Bipin Preet Singh and Upasana Taku, who came up with an idea to start a mobile wallet to make digital payments convenient for users.

Here, the services provided by MobiKwik includes digital bill payment, food delivery, petrol pump, eCommerce shopping, large retailer chain, grocery shops and more. The platform also enables peer to peer payments through Unified payment interface or UPI or MobiKwik Wallet to bank payments.

5) Seven Islands Shipping IPO

Seven Islands Shipping Limited is a Mumbai based liquid seaborne liquid logistics company that has been operating ocean-going for the past 19 years after coming under the Companies Act 1956.

Also, the company is committed to safe transportation with efficient services and cleaner seas. They do all the transportation with a huge responsibility such as safety of life at sea and thus ensuring a cleaner environment which in turn maintains high standards of their fleet.

Seven Island Shipping Limited currently owns a fleet of 21 vessels - 2 crude oil tankers and 18 product carriers.

6) Aadhar Housing Finance IPO

Aadhar Housing Finance Limited is one of the leading affordable housing finance companies that is known for fulfilling the home financing needs of the low-income sections of society.

With a motive to provide a home to underserved millions, Aadhar offers a wide range of mortgage-related loan products including loans for residential property purchase and construction, home improvement and extension loans, loans for commercial properties and construction and acquisition.

7) Ruchi Soya Industries FPO

Ruchi Soya Industries is one of the leading FMCG brands in the Indian edible oil sector. If we talk about the soya foods, Ruchi soya comes as the largest manufacturer of soya foods with a presence in almost the entire value chain in upstream and downstream business with secured palm plantation.

8) ESAF Small Finance Bank

ESAF Small Finance Bank is one of the leading small finance banks in India in terms of CAGR, AUM, client base size, the yield on advances, net interest margin in rural and semi-urban areas and the ratio of microloan advances to growth advances.

9) Paytm IPO

Paytm covers payments (wallet/UPI), merchant acquiring, credit saving, insurance and broking services to upgrade its e-commerce/e-ticketing platform. As of now, Paytm covers over 350 million installed base, 50 million active user base, and over 20 million merchant base. Paytm has around 100 million users which are KYC compliant.

10) LIC (Life Insurance Corporation)

In India, there are nearly 24 life insurance companies currently in operation. Out of which LIC comes at the top place with a market share of 69% in FY20. LIC comes under the government segment that holds a 95% stake in the overall company.

Takeaway

The IPOs that are stated above are not the only ones for this month. Many of the IPOs are still in the pipeline and may expect to get launched in the primary market by 2021 i.e. may be in the month of November and December.

We have seen a major decline in startup funding in the past few weeks. However, this week saw a significant rise in the total funding and startup raised.

The current week comes with many unexpected things such as Indian Startups that have raised over $130 Mn this week compared to $ 228 Mn in the last week i.e (Before 16 August - 21 August).

With over 27 funding rounds, the biggest round raised was by Skit, earlier known as Vernacular.ai which secured $23 Mn in series B round.

D2C health brand Soothe Healthcare just finished its Series C round and raised $ 13.6 Million to improve its growth plans and domestic manufacturing.

Also, Mumbai based fraud detection startup company IDfy has managed to raise a capital of $ 12 Mn through TransUnion International and Blume Ventures.

Mobile e-commerce company Bikayi raised $ 10.8 Million in series A funding by Sequoia capital India in order to increase product development, talent hiring and acquisition.

Out of all the 27 IPO deals, most investments have come into the following categories: enterprise tech, fintech and eCommerce sectors.

Here, we have mentioned all the funding rounds disclosed this week:

Startup Sector Sub sector Funding InvestorsSkit (Vernacular.ai)Enterprise TechSaaS$ 23 MnWestBridge Capital, Kalakari Capital & moreSoothe HealthcareHealth TechPersonal Hygiene$ 13.6 MnGulf islamic investment, Northern Arc, IncredIDfyEnterprise TechHR Tech$ 12 MnTransunion international, Blume VenturesBikayiEcommerceEcommerce Enablers$ 10.8 MnSequoiaSugar.fitHealth TechFitness & Wellness$ 10 MnCult.fit, Endiya Partners, Tangline Venture PartnersApps For BharatMedia & EntertainmentSpiritual$ 10 MnElevation capital, Saurabh Gupta, Ankur Sachdeva, Farid Ahsan, Kunal Shah and more.SkepsFintechEnterprise Tech$ 9.5 MillionBertelsmann India Investments, AccelDezervFintechInvestment Tech$ 7 MillionElevation Capital, Matrix Partners India, Kunal Shah, Ramakant Sharma, Ashish Mohapatra, Vidit Atreya, Anurag Sinha and more.OTOFintechLeading Tech$ 6 MnMatrix Partners India, Prime Venture Partners, Better Capital, Ramakant Sharma and moreApp JarFintechInvestment Tech$ 4.5 MnTribe Capital, Akram ventures, WEH Ventures and moreREVOSTransport techEV Charging$ 4 MillionUnion Square Ventures, Prime Venture PartnersBumberryE-commerceD2C$ 3.04 MnThe Chennai Angels, Konglo, Kerala AngelsMagicpinEnterprise TechSaaS$ 3 MillionRitesh Agarwal, Lightspeed, The Bunting FamilyRattleEnterprise TechSaas$ 2.8 MillionLightspeed, Sequoia Capital India, Ellen Lavy, Krish and RamanElevarEcommerceD2C$ 2.6 MillionKalaari Capital, Dream Capital1BridgeEcommerceRural Ecommerce$ 2.5 MillionC4D Partners, KAAJ Ventures and moreMy Classroom FoundationEdtechFoundation Courses$ 1.5 MillionPrem PrakashmoneyHOPFintechNeobank$ 1.25 MillionUndisclosedCondigalEdtechSkill Development$ 1.2 MillionY Combinator, Summer Capital, Nate Lipscomb, Peter Weck and moreAltiusFintechInvestment Tech$ 821 KUndisclosedPeppermintEnterprise TechSaaS$ 684 KVenture Catalysts, Indian Angel Network, Vinners Group and moreHabbitEdtechSkill Development$ 320 KAshok Goyal, Sanjeev Goenka, Kunal Ojha and more.Powerhouse 91EcommerceEcommerce EnablersUndisclosedFJ Labs, Ryan Gnesin, Sujay Tyle, Haresh Chawla and more.KraftInnEcommerceD2CUndisclosedNEDFi Venture CapitalSecLogicEnterprise techCyber SecurityUndisclosedIndia AcceleratorSynergyXHealth TechEnterprise ServicesUndisclosedAsha TripathiTealfeedMedia & EntertainmentKnowledge SharingUndisclosedAh! Ventures

Other Startup Deals

Startup Files for DRHP Startups Going for IPO Startups M&A this Week MapmyIndiaSnapdealBillDeskNykaaOlaJustdial – Acquired by RelianceMobiwikOYO RoomsThe Better Home – Acquired by GLobal BeesPaytmFlipkartCoding Elements- Acquired by Scalar Academy-Nykaa

Startups Already file DRHP with SEBI

MapmyIndia

MapmyIndia has recently filed its DRHP i.e. draft red herring prospectus with SEBI. As per news sources, the startup wants to go public by selling 7,547,959 equity shares to raise funds.

In the IPO, MapmyIndia’s executive director Rashmi Verma will be uploading (approve) 3,070,033 shares. MapmyIndia’s early backer Qualcomm is seeking to sell 2,026,055 equity shares.

Start-Up Going for IPO

Snapdeal is All Set to Raise $ 400 Mn IPO

Soon, Snapdeal files for an SME-IPO which could raise a capital of $ 400 Mn. The Softbank backed eCommerce site is seeking its first listing on the Bombay Stock Exchange with a valuation of $ 2.5 Billion.

Apart from Snapdeal, there are other startups too who are planning to go public next year.

These startups are: Olacabs, OYO rooms, and Walmart owned company Flipkart.

Ola offers Citigroup and Kotak Mahindra to Manage its IPO

Ridesharing company Ola has selected Citigroup and Kotak Mahindra to manage its IPO, which is going to happen next year. Also, Ola has hired an investment bank, Morgan Stanley, for its speculated $1 Billion IPO.

Soon Ola will file DRHP with SEBI before the end of the year. In August, Ola’s founder Bhavish Agarwal had mentioned ola’s plan to go public for the next year, followed by a public listing.

US- Based T Rowe Marks up Paytm’s Share by 16% and Above

T Rowe; an investment giant which invested in Paytm in 2019, has decided to raise the share price of the company by 16% or more from the original price it paid during its investment.

In June 2021, at least two mutual funds priced at $ 295 compared to the original $ 254 (complete the sentence) This is an increase of approximately 57% in the company valuation services as compared to the previous year where the shares were marked to $ 188.

Startups M&A This Week

PayU Acquires BillDesk For $4.7 Billion

This is going to be the biggest fintech deal where Prosus, the parent company of Fintech startup PayU has acquired Indian payment gateway company BillDesk for $4.7 Billion.

This deal allows both payU and Billdesk to own a wide market share in the online payments and billing providers and become one of the biggest online payment industries.

It may be noted that Billdesk will be the fourth major acquisition by PayU post-Wimbay, Paysense and CitrusPay.

Global Bees Acquire D2C Home Care Brand: The Better Home

Firstcry’s Global Bees has acquired sustainable home care product company The Better Home, which began as a content platform The Better India. Soon, the core team of Better India will join Globalbees and start working as per the prevailing product roadmap.

Reliance Acquires India’s Biggest Local Search Engine Company Justdial

Reliance Retail has now become the largest shareholder and takes sole control of Just Dial by purchasing a 40.98% stake in the company.

Justdial allotted 2.12 Crore equity shares of INR 10 each at INR 1022.25 per share on September 1.

This represents 25.35% of the post preferential issue paid-up share capital of Justdial to Reliance Retail.

Scaler Academy Acquires Coding Elements for $1 Mn

Interviewbit, now known as Scaler academy is an upskilling platform that has acquired edtech platform coding elements in a full cash deal which is worth $1Mn. Both the companies have been in talk post Scaler ventured into data science and machine learning process.

Takeaway

Startups play an important role in making the country self-dependent. They are the primary element of a country’s growth story. Startups not only upgrade a country’s economy but also uplift and benefit society at large.

As the economy, India now becomes the most favorite investment destination for FIIs. The primary thing that has initiated India’s growth in terms of a startup is its digital adoption, improved stock market listings and growing infrastructure. In this blog, we have mentioned all the major startups that have raised over $ 130 Million this week.

COVID 19 has increased the use of digital technologies which turned out well for the IT sector. If we talk about the pharma sector, there has been a much increase in the pharma stocks as investors focus shifted to COVID 19 related opportunities.

Till December 2020, many things have changed as many SMEs faced a huge decline in their growth. Also, top-notch companies have gone through crises that can’t be ignored.

In such a deeply problematic situation, one thing that performs exceptionally well during a financial and economic crisis in Indian Stock Markets.

The Nifty 50 index has experienced a remarkable recovery from its all-time lows in March. At the beginning of January 2021, the index had risen to 14%.

If you look at the top ten stocks that have generated outstanding stock market trading returns in 2020, it's none other than IT and Pharma companies that have emerged as the largest stocks.

In 2021, stocks of pharma companies remain on the top yet best-performing sectors in the Indian stock market.

In addition to this, the importance of pharma companies has been rising continuously as the demand for medicines, immunity boosters, and life-saving drugs take superiority to save lives.

Further, as the news of the third wave of COVID has come out, the people of India again keep their eyes on the pharma sector to save the country from the upcoming disaster.

Few companies have benefited from the vaccination drive.

1. Cadila Healthcare (Zydus Cadila)

Cadila Healthcare, popularly known as Zydus Cadila, is a leading pharmaceutical company headquartered in Ahmedabad.

India primarily engaged in the manufacture of generic drugs and the company is ranked 100th in the Fortune India 500 list in 2020.

Cadila Healthcare has produced the first vaccine called ZyCoV-D, built on a DNA platform.

Also, it has received a EUA (Emergency Use Authorization) from regulators. As per the sources, ZyCoV-D is considered India’s second home-grown vaccine post-Covaxin. The vaccine has come in 3 doses with a success rate of 66.6%.

In the June quarter of 2021, Cadila Healthcare witnessed a rise of 29.3% net profit Year on Year. Also, the huge demand for the vaccines made outstanding sales in the Indian market as it has witnessed a revenue increase of 14.5% year on year.

2. Cipla

Introduction:

Cipla Limited is an Indian multinational pharmaceutical company, known for manufacturing medicines to treat depression, respiratory diseases, cardiovascular diseases, arthritis, weight control and other medicinal conditions.

Furthermore, the Drugs Controller General of India has given a go-ahead signal to import India’s Moderna’s Covid 19 vaccine.

The success rate of Moderna’s vaccine is 94.1%. It will be imported in ready to use form. As per the prescription, the vaccine can be stored for seven months, however, if a vial is opened, it can be used for a maximum of 30 days.

As of June 2021, Cipla witnessed a sharp rise of 24% in net profits Year on Year. Furthermore, the revenue also saw a massive increase of 27% year on year. The figures for profit have clearly shown that the Cipla has benefitted from the impact of the second wave of Covid-19.

3. Dr Reddy’s Laboratories

Introduction:

Dr Reddy’s Laboratories is an Indian multinational pharmaceutical company. Headquartered in Hyderabad, the company is committed to providing affordable and innovative medicines for normal people.

Dr Reddy’s Laboratories entered into a partnership with the Russian Direct Investment Fund and produced a vaccine called Sputnik V. According to sources, the vaccine has marked a success rate of 91.6%.

From September 2021 onwards, the company is likely to begin the production of this vaccine. However, the company saw a slight decline in operating profits in June 2021. Profits declined 13% year on year as there was a marginal slump in the profits of Rs 5.7 billion.

4. Panacea Biotec

Introduction:

Panacea Biotec is a pharmaceutical company and vaccine maker company registered in India. With principal offices in Delhi, Mumbai, the company got listed in 1995 as Panacea Biotec.

The company has tied with Dr Reddy’s Laboratories, Human Vaccine and Generium to produce nearly 25 million doses of Sputnik V. In other words, it acts as an intermediary between Generium and Dr Reddy’s Laboratories.

Panacea purchases the products from the company Generium prepares vaccines and distributes them to Dr Reddy for the overall supply within the country.

Even though the company manufactures vaccines, it also suffers from losses. In June 2021, the net loss observed for Panacea is $ 574 Million. Unfortunately, the revenue is still flat for the company.

5. Wockhardt

Introduction:

Wockhardt Limited is a pharmaceutical and biotechnology company that manufactures biopharmaceuticals, nutrition products, formulations, active pharmaceutical ingredients and more.

Headquartered in Mumbai, the company has manufacturing plants in India, UK, Ireland, France, the US, Ireland and France.

Besides panacea, Wockhardt is the next company that is responsible for the supply of Sputnik V and Sputnik Light vaccines. The deal had taken place among three companies: i.e. Wockhardt, Enso Healthcare and Human Vaccine LLC.

Human Vaccine LLC is a subsidiary of the Russian Direct Investment Fund. Wockhardt is likely to supply nearly 600 million doses of vaccine Sputnik V and Sputnik Light Vaccines.

In the June 2021 quarter, the company received 3 patents and currently holds 766 patents. However, the company also faced a huge loss of Rs 65.8 billion for the first quarter.

Takeaway

The pharma stocks stated above are likely to benefit from the vaccination drives. Hence, it is essential to figure out how much time is left for the vaccination approval. Some companies already have their vaccines out in the market, while few just started their manufacturer setup.

Also, check out the companies that have completed all the clearances required by the regulators. Select those companies’ stocks whose products are being prepared or ready to release in the future. It will be a more profitable long-term plan.