KIMS Hospitals – What Should You Know About This IPO? 😊
Yesterday’s Market Performance
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Howdy Toasters!
In today’s issue, we discuss; “should know” factors of KIMS Hospitals IPO, Motherson Sumi- all set to take advantage of a gradual uptick in global automobile demand, KPI Global Infrastructure’s performance, other important financial news, and an educative concept to help you keep learning. Read along!
KPI Global Infrastructure: 64.60 | 10.15 (18.64%)
- The share price surged 18 percent after the company signed a new long-term Power Purchase Agreement (PPA) with Polycab India.
LIC Housing Finance: 495.05 | 26.65 (5.11%)
- The share price was down over 5 percent after the company reported a 5 percent decline in its profit after tax to Rs 398.92 crore in the quarter ended in March 2021.
- Profit booking took place after the company approved offering 4.54 crore shares to its parent company Life Insurance Corporation.
Adani Ports: 706.70 | 55.15 (7.24%)
- Yet another Adani stock shed over 7 percent after Fitch Ratings affirmed India-based port operator’s long-term foreign-currency issuer default rating (IDR) at ‘BBB-‘ with a negative outlook.
KIMS Hospitals – what should you know about this IPO?
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- Low Cost, High Volume Hospital Chain, has the highest bed capacity in the Andhra – Telangana belt (9 Hospitals, 3064 Beds).
- Think: discount airline, but in the hospital space; the chain maintains a close eye on cost, and with per bed charges 20-30% lower in comparison to other players in Southern India, the company has a stronghold on unit economics & modus operandi,
- One of the few hospital chains that managed to post a profit in the pandemic year (surprising right?), the company’s matured hospitals (in operations for a particular period of time), constitute ~80% of the business
- The chain plans to maintain its focus in the Southern Markets and is expanding to neighboring areas of Chennai & Bangalore.
- The company has posted best in class RoCE, although there have been certain governance issues highlighted in the past (something about not having an OC and NoC from the Fire Department)
- The IPO is a mix of Fresh Issue (allocated towards debt repayment/prepayment) & Secondary Sale (investor, General Atlantic is selling half its share)
Motherson Sumi – primed for its next rally? 😁
- Auto Components Maker looks well-positioned to take advantage of a gradual uptick in global automobile demand, through its European Sub, SMP (contributes close to half of consolidated revenue).
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The last couple of years have stretched Motherson’s Balance Sheet, with European & Global Operations especially hurting the standalone (India Business) due to a general slowdown in the industry.
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A gradual positive move, backed by consecutive quarter margin improvement (& beat) has meant buoyancy for the manufacturer.
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Consolidated Net Debt (alluded above) has decreased from INR 69 Bn in FY 20 to INR 48 Bn in FY 21.
- Auto Industry is facing a near term struggle, with semiconductor chip shortage, and the copper rally increasing costs, although long term demand remains intact.
- Another ++ is strong order back in the EV Segment (with European & American Manufacturers increasing production), and EV Powertrains (high margin business) contributing ~25% of order book for the coming year.
- A restructuring exercise (deleveraging Sumitomo Wiring Systems from MSS) has market participants enthused, and giving MSS room to grow organically & inorganically (Sumitomo Wiring Systems has been a drag on the balance sheet, due to non-performance).
You’re recommending it? (we don’t do that at FinLearn man) 🤐
- MSS Vision 2025, targeting USD 40 Bn in revenue and touching a RoE of 40%, have the street excited.
- Currently, the stock is trading at 20x FY 23 (PEx), with various analyst estimates, pegging the stock at 24x FY 23, given the high growth expectations.
What else caught our eye?👀
FMCG Sales coming through post ease of hard lockdowns
- Some issues ago we’d highlighted the pain in the FMCG Sector (supply-side bottlenecks) because of hard lockdowns, with Tier 2 & 3 cities especially suffering.
- Relaxation of Covid curbs in the last month has seen an immediate positive effect, with a 15-20% increase in sales of FMCG goods at Grocery stores, and a 25-30% surge at Supermarkets and Standalone Modern Trade Stores.
- Supply-side issues have also decreased, with easier movement aiding in the quicker stocking of stores (we’re presently at 65% of pre-pandemic stocking).
Vegan Cosmetics & Beauty Products take center stage during the pandemic year
- A year that was all about cultural reset, extended to the cosmetics & personal brands space as well.
- Vegan Beauty products saw a 2x growth in demand, with sustainable living, with market research suggesting one in five participants identifying a sustainable beauty product as one that uses vegan ingredients.
- Increasing interest in this space, driven by growing demand from Gen Z & Millennials is still classified as Niche in the overall USD 15 Billion Indian Beauty Products Industry.
Sector & Thematic Funds generated returns & piqued interest for investors
- Data from AMFI shows that the month of June saw high inflows targeting Sector & Thematic Funds (signs of an educated investor?).
- Participants are mindful of the stellar returns stocks in Healthcare & Technology have given in a Post Covid rally (that is still strong) and are betting on that continuing for the foreseeable future.
- In the last year, in the top 10 categories that have seen inflows, 6 are Sector & Thematic Based funds.
Options
Best Industry-Based Tweet of the Day 💬
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