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00:00Hello and welcome. You are watching the IPO show. We have with us a special guest who
00:14joins us and who has been tracking the primary markets for decades now. Aastha Jain, Senior
00:20Research Analyst of HEM Securities joins in. Aastha, you have obviously had it extremely
00:24busy all of 2024. It's the time and the season of listings. I'm going to start with Orientech.
00:31This one, of course, listed on the exchanges today, was subscribed 152 times, got a debut
00:38with a 46% gap up. Now, over to you for questions. What does an existing investor who managed
00:47to get lucky and get subscribed to Orientech do? Should they take some profits off the
00:53table today? B, if they weren't lucky enough to get an allocation to Orientech, should
00:58they consider buying it today? Hi, good morning, Samina. First of all, yes, a very busy month,
01:05very busy week. And from last two years, we are seeing this trend that usually August
01:09and September are usually very hot months for the IPO and the number of the IPOs are
01:14quite high in these two months. So, yes. Now, talking about Orientech, first of all, we
01:19have already recommended subscribe for this IPO and we really congratulate to all the
01:23allottees who got this allotment. So, what should they do? I think they should book partial
01:30profit because now when the IPO came, it was at the price to earning multiple of somewhere
01:34at around 2021. But now at this high price, because now we are seeing that it is already
01:39quoting at 44, 45% premium. So, I think the valuations have become a little more expensive
01:45and we are not seeing a much upside from here. Maybe one can see the upside of around
01:5110 to 15% more from here, but now the upside, there is not more upside left from here and
01:58that's why we are recommending to book partial profit if anyone has got the allotment in
02:03this IPO. But for those who have not received any sort of allotment, please don't be in
02:08a hurry to enter into this IPO. The company is already quoting at a high premium multiple
02:14of more than I think around 25 at this price of around 302 or 303 at which it is quoting
02:22right now. So, just wait for some dip to come and then make entry into the stock because
02:27the upside is now limited from here. So, from the risk reward basis, I think it is not advisable
02:33to put money currently at the price of around 303, 300 gold at which it is quoting right
02:38now. Just wait for some dip, let the price fall to the level of around 280 odd levels
02:44and then make entry into the stock. So, those who have got the allotment, they can book
02:48partial profit, but those who want to make a new entry as they were unlucky at the time
02:53of allotment, they should wait for some fall and then make entry into the stock. This is
02:57what our recommendation is for Orion Technologies at present moment of time.
03:01Take your profits off the table, don't get caught. It's a great debut, but of course,
03:07wait it out because it does look expensive, especially after the sort of run-up the stock
03:11has seen on listing day. Well, one on top, of course, on top of our minds is Premier
03:18Energies. Premier Energies is the largest solar cell exporter to the U.S. market in
03:24FY 2024. Ahead of its IPO, Premier Energies mobilized 646 crores through anchor investors
03:32which included the names like Nomura, Blackrock, PGGM, Government Pension Fund Global, Abu
03:39Dhabi Investment Authority, Morgan Stanley, to name a few. How does this one look? I think
03:45there's a consensual, aggressive buy call on Premier Energies. Would you agree, Aastha?
03:50Because even the numbers were phenomenal and with the government's commitment to green
03:53energy, this cannot be missed, I would imagine. And of course, there's marquee clientele as
03:58well.
04:00Yes, you are absolutely right. Because the kind of concept it is into, that is into the
04:05solar cell manufacturing as well as solar module manufacturing. So I think the kind
04:10of business they are into, it is really very hot and the government's support is totally
04:15there with this sort of business. Along with that, what a financial performance they have
04:19shown. I mean, a strong CAGR growth both in the top line, bottom line. In fact, a marquee
04:24set of clients they have and the order book is also on the higher side. So looking after
04:29all this, the valuation has now become a prime focus of any IPO and the valuations
04:33are also reasonable because they are coming at somewhere around price to earning multiple
04:37of 27. This is, I'm considering the post-issue IPO where I've annualized the Q1 profit after
04:44tax for the company. So it is at around 27. And if I compare it to the pure, then it looks
04:51to be very reasonable. So this company is looking very strong. And one more important
04:56point, which I would like to highlight that why we are getting such a strong demand and
05:00good names in the anchor list, because if the IPO size is big, then definitely it always
05:06attract good names because most of the mutual fund, they never want to put the money in
05:10the small size IPO. Some of their compliances always, you know, come in front of them and
05:17that is why. So good mutual funds and strong names from the foreign investors also comes
05:23usually in the big size IPO, which is more than 1000 crores, 2000 crores, et cetera.
05:28So here the size of IPO is also big and the kind of team they are into. And this company
05:35has a huge track record because it is a 29 year old company with a strong management.
05:40So putting all these things together, this seems to be a very strong candidate for putting
05:44the money into it. And we are recommending to apply this IPO both from the listing gain
05:49perspective because most of the retail investors, they are majorly interested into the listing
05:54day premium or listing day pop. So it is a good IPO both from the listing day purpose
05:59as well as for the long term purpose. But here I would like to add one more point that
06:04if anyone will be lucky enough to get the allotment, then please put this stock into
06:10your portfolio because it will be giving a very strong return in the long term also because
06:15they have expanded a lot in the last few years. And now it's a time to get the results.
06:20And that is why we have seen some sort of volatility in the financials also because
06:24they have done some sort of expansion in the past. So looking after all this, we are recommending
06:30subscribe to our clients as well as to your viewers to go for this IPO both from the listing
06:36gain perspective as well as long term perspective. I completely understand. It's an opportunity
06:42to invest in this company. And if you're lucky, you may get an allocation to Premier
06:46Energies. But just important to draw out risk as well because this is a company that does
06:51face intense competition. They also in the past face challenges of underutilization and
06:57historical losses, even though I do know that F524 was rather positive. Any concerns that
07:03one needs to be mindful of because beyond listing day, if an investor would like to
07:08buy and hold it for the next maybe one to two years, is this advisable in your opinion
07:13from where we stand today? So addressing the concerns which you have highlighted, first
07:18of all, I want to say that yes, competition is there, but the industry demand is so strong
07:24and the government's focus is so high that even if some competition come, then it will
07:30not going to affect the business of the company. So that is the major thing which we believe
07:35that that will not going to harm in any case because the kind of demand for the product
07:40is really high. So that is one answer to the concerns related to the competition. Secondly,
07:48if we talk about the, you know, listing day buying because here for the retail, the number
07:54of issues are somewhere around two crores, I suppose. Beg me, I beg your pardon if I
08:00might be wrong with the figures, but it is somewhere at around two crores. So the number
08:04of shares are not that very high and the subscription amount, I think will gonna be
08:09very high because the kind of business the company is into, it will definitely going
08:12to attract the investor's attention. So my idea here is not to buy on the listing day
08:18because we are already expecting listing to be on a very, very strong note. It might be
08:23more than 30, 40% premium, which we can see on the listing day itself. So putting the
08:27money after 30, 40% pop-up is not advisable. So wait for the some time to, I mean, have
08:35a dip in the stock and then make entry into the counter. This is what we advise for the
08:40listing day purpose because we know that the allotment will going to be very tough. The
08:44kind of attraction for the cycle is so high that definitely it will be going to very tough
08:50if the allotment we talk about. So if anyone will not get any allotment, then they should
08:54not buy on the listing day. Wait for some call and then make entry to this counter.
08:58So don't get hasty. That's the sum of it all. Premier Energies does have a robust order
09:03book. They've also turned positive in recent times. The industry is in the high growth
09:08stage with the common initiatives that the company could benefit from. But of course,
09:13looking at all factors, risk and opportunities, valuations, Asta does recommend investors
09:19to subscribe to this issue with a long-term view, but do not buy it on listing day because
09:23a big gap up is what we are expecting. Well, moving on from there, we'll quickly hear out
09:28what the management of Premier Energies also has to say.
09:33Post COVID, we have seen a great, you know, growth story building up in the solar manufacturing
09:39sector in India, not only in India, across the world post COVID. Everybody started thinking
09:44about, you know, a China plus one strategy. India started the Atma Nirbhar and make in
09:51India. U.S. has got its Inflation Reduction Act where they're talking about make in America.
09:57So the manufacturing story is now here to stay. It's growing at a fantastic speed, looking
10:05at the robust demand. We don't see any challenge from China. You know, the import of cells
10:11from China are not a big issue today because Indian solar story is a little different where
10:19Indian government has two kinds of markets. One is where there is a very robust pipeline
10:25which the government of India has set up for local manufacturers. And this market is totally
10:31protected for local manufacturers to grow the local manufacturing story. And then there
10:38is also another market, which is the developer market where large power plants are being
10:42set up where you can get solar cells from China and cheaper the cells from China is
10:47a big, big advantage to the developers and to us as manufacturers to make modules for
10:53them at most effective cost. And how this helps is that while we are deploying as much
11:00solar as we can in India, because it's today the cheapest source of energy, we are also
11:05parallelly growing our manufacturing story. And it will not be far that, you know, we
11:10will be totally Atma Nirbhar. Today we have got solar module and cell manufacturers in
11:16India like us. We do intend to get into wafer manufacturing and ingot manufacturing in
11:23the PLI story, which the government of India came up with. There is also polysilicon, which
11:27is coming up. So I think this is something which is going to really develop very well,
11:33keeping in mind the robust demand.
11:35Well, the next one on our radar Aastha is ECOS Mobility. Now, this is such an interesting
11:45company, right? I believe it's a chauffeur driven car rental service provider in India
11:50based in New Delhi. It's a 600 odd crore IPO. And it does have a pan India presence across
11:56109 cities. It's an interesting model. They do have a fleet of 12,000 cars and they do
12:02about 8,400 trips at an average every day. But is this a business model you believe in?
12:08Is this a company you recommend subscribing to?
12:11Yes, we like the business model. I mean, the revenue is coming from the two parts, first
12:16of all, chauffeur driven car rentals and secondly, the kind of transportation services which
12:20the company is providing. And especially we have seen of the most of the big companies,
12:27they have now started using such sort of facility, especially for the transportation related to
12:31their employees. So I think this business model is very good. And why we are so much
12:36positive, because what we have seen is the strong, strong financial performance from
12:40this company. If you look at the CAGR growth of this company in the top line, more than
12:45100 percent. In the bottom line, sorry, it is more than 100 percent. In the top line,
12:50it is more than 50 percent. In the operating profit also, it is more than 100 percent.
12:55And the CAGR growth, which I'm talking right now, I'm taking from FY21 to FY23. So strong
13:01CAGR growth as compared to the peers which they have mentioned in the RHP, the companies
13:07coming at a reasonable valuation also. So valuations are reasonable. Our financial performance
13:12is very strong. Business model is very attractive. So again, this is also one of the candidates
13:18of a subscription from our side. So we are recommending subscribe to this IPO as well,
13:22both from the listing gain perspective as well as long term perspective.
13:26So Aastha, I do take your point. They seem to be well priced in this space. But what
13:32I would also want to understand from you is while they are seeing significant growth
13:37on top line, profitability has been declining. That is one concern I have. And the other
13:43one being that this is an OFS, right, which means that all the funds that are going to
13:48be raised are not going to go into the business for expansion. Is that a concern for you or
13:53you don't seem too worried about these two factors I've highlighted?
13:58So regarding OFSs, the company is basically, we can say the company is working on the asset
14:03light model. So I think they don't require any funds as such for the expansion, etc.
14:09And that is why company, I think there is no need for the company to raise some points
14:14for utilizing in the company itself. So that can be one of the reasons I can say that's
14:21why they have not bring any sort of fresh issue and only OFS. So yes, I mean, due to
14:27the asset light business model, I think there is no need for the company to go for any sort
14:32of issue, I mean, proceeds. And that is why they have not come out with a fresh IPO. This
14:40is one of the reasons. And what was the second question? Sorry, I missed your second question.
14:44The fact that the profitability has been declining. So while we've seen growth on the top line,
14:49margins while are very healthy at this stage, there's been a decline in profitability. That's
14:53the only concern that springs to my mind in that sense.
14:57So regarding profitability, I can say that it has been shown a strong CAGR growth of
15:02more than 100% because if I compare it from 22 to 24, in 22, F by 22, the profit was at
15:10about 9 to 10 crores odd level, which has completely risen to 62 crores odd level in
15:1524. So my idea is that they are on the growth trajectory and the growth trajectory is very
15:21strong. And that is why we are not finding any sort of concerns on the bottom line front.
15:28And the company has a high operating leverage, as we can understand. So whatever they will
15:33be adding in the top line going ahead also, that will be directly, they will be converting
15:37into the bottom line because of the kind of business model the company is into presently.
15:41We'll hear out what the management of ECOS Mobility has to say and of course, then come
15:48back to us and continue our conversation with a few more IPOs.
15:57Last 25 years, how corporate India has grown. They have set up their offices and now they
16:05have travels to most of the large business cities across the country. And for them, you
16:14know, their employees' safety, their employees' comfort, convenience really matters a lot.
16:21Keeping that in mind, that is how we also, you know, derived our strategies for growth
16:27and we grew into those cities, providing consistent level of services across these all major cities
16:35where our corporates are present. Having done that, our corporates found great convenience
16:43and in fact, they wanted someone, a company which could understand their requirements
16:48and provide them a consistent level of service across all these cities. And that became a
16:53big business opportunity for us. So having, you know, systems in place, processes in place,
16:59we are able to provide them, you know, standardized service experience across these cities. And
17:05based on this, you know, corporates are now moving towards unorganized players to organized
17:10players. And that basically, you know, helps them to also deal with fewer vendors or service
17:18providers who are able to understand their requirements, meet their standards and thereby
17:24also give them certain buying power because they are then able to consolidate their transportation
17:32spend which right now was probably being, you know, having to deal with so many different
17:38service providers in various different cities. Instead of that, working with pan-India player,
17:44you know, it kind of brings them much more convenience and cost advantages as well.
17:50Well, Aastha, the other big one that's drawing our attention also because of one of its investors
17:59being Rakesh Jhunjhunwala's wife, Rekha Jhunjhunwala, who is backing Style Bazaar. This is an industry,
18:06this is a vertical, you know, you have the likes of a trend who's traded a significant
18:11premium. Comparison may not be fair, but it is on top of our minds for whatever it's worth.
18:18What is your view on Style Bazaar? Are you constructive on this one? What stands out
18:22for you on this? And what do you recommend investors should be doing?
18:27So for Style Bazaar, again, the recommendation is subscribe. First of all, I want to say
18:31that all these three IPOs are looking very strong to us. So subscribe to the Style Bazaar
18:36IPO also. Yes, again, they are into retail space. We all know that. And what is the major
18:41focus point for this company is their same-store sales growth is very strong and their margins
18:46are very strong when I compare them to V2 Retail or Vmart Retail. So when I compare
18:52them, especially in FY24, the kind of margin this company has garnered, they are really
18:57strong as compared to the other listed space peers. So that is a major attraction for this
19:02company. And yes, I mean, if I talk about the valuation, maybe it looks a little bit
19:07on the higher side, but if I compare it to the peers, I think the valuation of, because
19:12they are coming at a P multiple of around 100. So when I see that valuation and isolation,
19:17it may be looking to be on the higher side. But when I compare it to the peers, the valuations
19:21are not that very high. And the kind of store expansion companies doing, I think they will
19:26be going to get very strong results in their financial performance going ahead also. So
19:32we are positive on this IPO. And yes, the strong investor backing is also there. So
19:37that will be the major attraction for this IPO. So we are recommending subscribe for
19:42this IPO as well as Style Bazaar, both from the listing in as well as long-term perspective.
19:48And from what I understand, Aastha, of the fresh issue, 98 crores will go to finance
19:53existing debt, while 50 crores will be used for general proceeds. They have also raised
19:5837 crores recently via the pre-IPO placement, which was again used to fund some of the loans.
20:05Do you feel like that's a little bit of a red flag? Because if you are raising money to
20:09repay debt, maybe a good thing because your cost of financing comes down, margins improve and
20:13gives you a little more bandwidth to sort of improve your debt equity ratio. But on the flip,
20:18if all of this money was going into expansion because this is a retail facing or consumer
20:23facing business, may have been a better option, you think? Or none of that worries you at this
20:28stage because it is a high growth business and relatively as compared to Lissipia still
20:32looks attractive. And it plays a segment which is the urban rich, the new urban,
20:36which is at 4 lakh rupees per annum of income. Yes. So yes, first of all, high growth business
20:43because the kind of CAGR growth they have posted in their top line from FY17 to FY24. So we have
20:49taken a huge track record of six to seven years. Their CAGR growth in the top line is the highest
20:54among the peers. So high growth business. Now talking about your second point about the debt.
20:59Yes, they are going to repay the debt. And now what we are working out is the debt to equity
21:03ratio. Presently it is standing somewhere at around 0.83. And after paying off the debt,
21:09it will come to 0.4. And in that we have included the post-issue equity also. So from 0.8 to 0.4
21:16debt to equity, that will be reduced at a significant level. So I think that will also
21:22be the interesting point because the interest cost definitely will be adding benefit on the
21:27bottom line of the company. So I think yes. And most of the time, if any company wants to raise
21:33funds, it will be only for two purposes majorly, either for the expansion or for the debt reduction.
21:39So they are going with that. So I think that is a beneficial point for the company going ahead and
21:45that will help the company showing strong financial performance going ahead. So growth is very strong
21:50as compared to the peers. Debt reduction will help the company posting strong financial performance
21:54going ahead, backed by the strong investors. And now their plan is to expand at the national level
22:01because presently they are somewhat concentrated to some regional levels. So I think that will all
22:07be helping the company in posting strong numbers going ahead. And that's why we are recommending
22:12subscribe to this IPO as well. In fact, even in the grey market, it's trading at a massive premium
22:17to its upper band, I believe of 141 rupees, which translates to about 37% of the upper end of the
22:24IPO price, which is very clearly indicating a positive sentiment for the IPO. Well, you know,
22:31Aastha, we talk about this every week when we chat, that the quantum or the pool of money is
22:36limited. Options are so many and of course, one is luck. But if you had to rank the IPOs in terms
22:42of preference, where is your bias? Can you rank them in one, two, three, your top most preferred
22:49IPO to subscribe to and bottom most IPO to subscribe to? Yes. So here I'm just saying from
22:56the perspective of the retail client, because what we are saying that we are recommending and
23:01subscribe to all these three IPOs. But now we have to see whether the retail client can get
23:06the subscription also or not. So it depends on the size of issue. So looking after all the factors,
23:12that the size of the issue as well, the kind of the business model these companies are working
23:16into it, along with the financial performance, we are rating these three IPOs. So I'm giving number
23:22one rating to Premier Energies. There are two, three points. First of all, strong business model.
23:27Right now, government focus is also very high. So industry tailwind is there. Financial performance
23:32is excellent, reasonable valuation. And along with that, the size of the issue, because I already
23:38told you that for retail investor, their quota is at around two crore equity shares. So it is
23:44little bit higher if I compare to the rest of two IPOs. So the chances of allotment will be high
23:50if the number of shares put in for the subscription is high. So in that way, also Premier Energies
23:56gets our number one ranking. So we are giving number one ranking to Premier Energies IPO.
24:01Apply for this IPO in case if anyone has a limited fund, then Premier Energies IPO is a
24:06must subscribe from our side. Secondly, we are giving it to Ecos Mobility. Although Ecos Mobility
24:12and Style Bazaar, both of them hold the same sort of rankings. But if anyone has to go only
24:19for one out of these two, then one can put their money into the Ecos Mobility. Again, business model
24:24is good, as well as what we have seen is the valuations are also at the attractive levels.
24:31So second ranking can be given to the Ecos Mobility and third comes Style Bazaar. But again, I want to
24:37mention if anyone can put money in all these three IPOs, then it is the best choice because all these
24:42three IPOs are must apply candidate. But in case of the limitation of funds, go with the Premier
24:48Energies at the top. Good. Subscribe to all three. Would you go one third, one third, one third? So
24:53you'd split your money 33% across each IPO? I think, see, if you are a retail investor,
25:00then 15,000 is the minimum amount which one need to put in the money. So I think 15,000 to all
25:06these three IPOs will hardly take 50,000 of the total amount. So don't put any one third, just put
25:1215,000 application because there is no need to put the application for full two lakh rupees
25:17because most of the retail investors, they usually do such sort of mistakes that they put
25:22the higher amount of application, just keeping in mind that we will get the allotment. No,
25:28minimum allotment will be there only. So there will be no difference whether you put 15,000
25:34or two lakh. So it is better go with the 15,000 sum of money as the minimum lot of application and
25:40put this money in all these three applications rather than distributing your funds. Aastha,
25:45one question and I may have caught you off guard and you can not have to answer this,
25:50but there's another, we usually talk about main board listings, but there's an SME IPO
25:54called Indian Phosphate, which is again when subscribed 28 times on its last day, which is
25:59today. Do you have any coverage on this one? No, Savina, we don't track SME IPOs because we
26:06ourselves are the merchant banker into the same space. So we don't track SME IPOs.
26:12But thank you very much for taking the time out and helping our viewers decipher
26:17this IPO world because it's too tough to take our eyes off this. In terms of ratings, Aastha,
26:22of course, likes all three IPOs we discussed today, but a top rating goes to Premier Energies
26:27followed by Ecos Mobility and then Style Bazaar. With that, we wrap up this edition of the IPO
26:33Show. Thanks for watching.