After two long, lethargic years, the domestic primary market is eagerly awaiting an IPO of some reputable companies.
These companies have associated the who’s who of India Inc and Dalal Street with them: from India’s top industrialist Mukesh Ambani to Big Bull Rakesh Jhunjhunwala and cricket biggie MS Dhoni.
Market watchers say a frenzy is already building in anticipation of an imminent listing of these stocks. Investors are rushing to the private market to buy these stocks before the value unlocking begins.
Some of these companies have strong balance sheets and credible financial data to support this frenzy.
ETMarkets.com has compiled a list of the privately held names that have been buzzing the gray market in recent weeks, amid talks they could potentially get on the list in the next 18 months.
HDB Financial Services (HDBFS) | Current price of the unlisted market share:
With the strong lineage of the HDFC group, HDB Financial Services is a leading NBFC stock buzzing in the gray market and seeing high demand from investors. Founded in 2008, the NBFC serves both private and commercial clients. It has an established business in lending, fee-based products and BPO services with a strong capital base. It has been accredited with an ‘AAA’ rating for its long-term debt and banking facilities by CRISIL and Care Ratings. Its current liabilities and CPs are rated A1+, making it a reliable financial institution.
Expert Take: Sagar Shah of Ascent Wealth Advisors believes it is a good NBFC bet. Despite expensive valuations, it is poised to grow with a clean and strong balance sheet.
“People buy this stock at a premium on the unlisted market. It is highly likely that the IPO will see robust oversubscription. So there’s this buoyancy,” he said.
Technologies | Current Unlisted Market Share Price: Rs 650
Mumbai-based Nazara Technologies is one of the leading mobile games companies operating in India, West Asia, Africa, Southeast Asia and Latin America. Its business includes subscription, freemium and esports activities.
The company has independent subsidiaries named Next Wave Multimedia and NODWIN GAMING.
Big Bull Rakesh Jhunjhunwala backs this venture, which is credited with some of the most popular games on the Google Play Store such as World Cricket Championship, Chhota Bheem Race and Motu Patlu Game.
According to the company, the drop in profits to Rs 1 crore for FY17-18 was due to one-off non-cash and exceptional expenses including group share payments and employee stock options.
Take expert: Dinesh Gupta of Unlisted Zone says the company has lost some of its luster lately. However, it has been aggressive in the acquisition and recently acquired a stake worth Rs 7.5 crore in India’s leading quiz app Sports Unity.
Tamilnad Mercantile Bank (TMB) | Current Unlisted Market Share Price: Rs 370
Formerly known as The Nadar Bank, this lender has more than 500 branches and 12 regional offices across the country. All branches are automated and connected to each other. The Tamil Nadu-based bank has strong roots in South India.
Take expert: This stock gets mixed reactions from market experts. Sandip Ginodia of Abhishek Securities thinks TMB is a worthwhile bet. “The inventory is available at 1.25 times book value. A robust loan book keeps estimates high,” he said.
UnlistedZone’s Gupta said the developments in YES Bank and RBL Bank have led to a carnage of this stock in the privately held market as there are better bets on the market.
Retail Dependency | Current Unlisted Market Share Price: Rs 600
Reliance Retail, part of the Reliance group, is the largest retail company in India. The Mukesh Ambani-led company operates Reliance Fresh, Reliance Smart and Reliance Market Stores and has a turnover of Rs 1.3 lakh crore. It also operates all Reliance Digital, Mini Express Stores and Jio Stores.
It also manages Reliance Trends, Trends Women, Reliance Jewels, Reliance Footprints and fashion website Ajio.
According to FY19’s annual report, the Reliance Industries subsidiary had 10,415 stores in more than 6,600 cities and towns of India, covering a total area of more than 22 million square feet as of March 31, 2019.
Take expert: Shah of Ascent Wealth believes its stock valuation is very high compared to its industry peer Avenue Supermarts. Reliance Retail operates on a large scale, which means that margins are under constant pressure. “The company has a very strong promoter. The retail story will flourish in India.”
He and Ginodia gave this stock a thumbs up from a long-term perspective.
Studds Accessories I Current Unlisted Market Share Price: Rs 700
Studds is one of the largest manufacturers of two-wheel helmets in the world. It has a 25 percent market share in India and offers safety, comfort and style.
The company was established in 1983 and has two production facilities spread over 2 hectares in Faridabad, Haryana.
The company is present in 39 countries and has launched 36 new products in seven different sizes in the last three years. The company also makes accessories for two-wheelers, such as jackets, gloves and glasses. The company has already filed DHRP with Sebi.
Take expert: Gupta said Studds would be the biggest beneficiary of the new Motor Vehicles Act. Helmets are in high demand in the market and the company has the largest market share. He pointed out that non-ISO-certified helmet manufacturers will soon receive hefty fines.
Chennai Super Kings (CSK) | Current Unlisted Market Share Price: Rs 30
Unlisted shares of this IPL franchise have attracted a lot of attention due to rumors of MS Dhoni’s possible retirement. CSK was the IPL’s most successful franchise, winning the title three times. The privately held scrip traded in the range of Rs 12-15 in the last week of November 2018 and then jumped to Rs 30-35 in mid-April 2019.
Take expert: Ginodia and Shah find the stock very attractive. Ginodia said the company’s FY19 PAT was on the expected line. However, Shah suspects a drop in brand value after Dhoni retires. But he also thinks the share’s performance is up to par.
This post Jhunjhunwala, Ambani, Dhoni and much of D-Street are waiting for these major IPOs
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