Precisely 4 years in the past, between November 8 and November 10, 2021, One97 Communications Ltd launched what was then India’s greatest preliminary public providing. The IPO of the corporate behind funds app Paytm comprised a recent problem of Rs 8,300 crore and a proposal on the market of Rs 10,000 crore by founder Vijay Shekhar Sharma, Japanese expertise investor SoftBank, Chinese language ecommerce big Alibaba’s affiliate Ant Monetary, and Indian enterprise capital agency Elevation Capital.
The IPO was coated barely 1.89 instances and Paytm allotted its shares at Rs 2,150 apiece at a valuation of Rs 1.49 trillion, or about $20 billion. However retail buyers, mutual funds and others who purchased the IPO suffered a shock when Paytm listed on inventory exchanges later that month. For, Paytm’s shares cratered 27% on the itemizing day.
Paytm’s shares stored falling over the next yr, as buyers fretted about its lack of profitability, its enterprise mannequin and different issues. By November 2022, the shares had plunged almost 80%. It wasn’t till this yr that the shares started to get well. Paytm’s inventory is at the moment round Rs 1,300 apiece and its market cap is sort of Rs 84,400 crore, or about $9.5 billion. That’s half of its IPO valuation!
However why are we reminding ourselves of Paytm now? Nicely, that’s as a result of after the fiasco of the primary main Indian fintech firm 4 years in the past, two extra fintech corporations are going public this week—inventory dealer Groww’s mother or father Billionbrains Storage Ventures Ltd and point-of-sale terminals supplier Pine Labs Ltd.
The Groww IPO consists of a recent problem of Rs 1,060 crore and a proposal on the market of Rs 5,572.30 crore on the higher finish of the Rs 95-100 value band. The sellers embrace enterprise capital buyers Peak XV Companions, Tiger World and Y Combinator, who will all earn multi-bagger returns on their investments—identical to Paytm’s pre-IPO buyers. Groww, which competes with Zerodha, Angel One and a number of other different inventory brokers, will command a valuation of about Rs 61,700 crore within the IPO.
As for Pine Labs, the fintech agency has set a value band of Rs 210-221 a share and is searching for a valuation of as much as Rs 25,400 crore. The IPO will increase about Rs 3,900 crore. This features a recent problem of Rs 2,080 crore whereas the remaining is a proposal on the market by Peak XV Companions, US-based PayPal and Mastercard, and Singapore’s Temasek.
So, will Groww and Pine Labs go the Paytm method or reward their IPO buyers? Nicely, we aren’t within the enterprise of fortune telling right here. However let’s simply level out a couple of issues. For one, Groww and Pine Labs appear to be on a a lot stronger footing than Paytm was on the time of its IPO. Groww, for example, has emerged as India’s largest inventory dealer by variety of energetic customers regardless of stiff competitors from the likes of Zerodha, Angel One and legacy gamers like Motilal Oswal and IIFL. (Disclaimer: Kuvera competes with Groww and Zerodha within the mutual fund funding phase).
In the meantime, Pine Labs has a powerful point-of-sale service provider fee enterprise and a funds aggregator enterprise the place it competes with Paytm, Walmart-owned PhonePe and Razorpay, amongst others.
There’s yet one more huge distinction—each Groww and Pine Labs are already worthwhile whereas Paytm was making losses when it floated its IPO. Nonetheless, there are some valuation issues—no less than for Groww. However, Pine Labs has stored its valuation goal comparatively modest and under the $5 billion tag it achieved in 2022 when it raised non-public funding.
General, the 2 IPOs add to the flurry of listings in what’s prone to be a file yr for India’s main markets this yr. Already, the native items of Hyundai and LG in addition to non-bank lenders Tata Capital and HDB Monetary have floated giant IPOs. Eyewear retailer Lenskart and edtech firm PhysicsWallah will even float IPOs this month. However, as we hold saying, don’t rush simply because everybody else is and do your due diligence earlier than investing.
Ola’s Struggles
Paytm isn’t the one tech startup that has left its IPO buyers with a hangover. One other such firm is Ola Electrical, the electrical scooter maker based by Bhavish Aggarwal.
Ola Electrical floated its IPO in August final yr, promoting shares at Rs 76 apiece. The IPO helped its enterprise capital buyers, equivalent to US-based Tiger World, India’s Matrix Companions and Japan’s SoftBank mint cash. However those that would have invested within the IPO and didn’t promote on the itemizing day or within the preliminary few weeks would now be sitting on losses.
The corporate’s shares jumped 20% on their debut and almost doubled in August 2024, touching a excessive of Rs 157.53 and giving it a valuation of virtually Rs 70,000 crore. Lower to 14 months later and the inventory is now tottering under Rs 50 apiece, valuing the corporate a shade under Rs 21,000 crore.
This disastrous inventory market efficiency is partly the results of its poor operational and monetary efficiency. The corporate has misplaced market share, stays within the pink and, this week, slashed its income forecast for the present fiscal yr.
The EV maker mentioned it now expects income for this fiscal yr to be between Rs 3,000 crore and Rs 3,200 crore, down from the Rs 4,200-4,700 crore it projected simply final quarter and a 3rd decrease than final yr’s income of Rs 4,665 crore.
The corporate posted a consolidated web lack of Rs 418 crore for the July-September quarter, in contrast with a lack of Rs 495 crore rupees a yr earlier. Quarterly gross sales volumes virtually halved, pulling income down 43% to Rs 690 crore.
On the plus facet, Ola retained its FY26 gross margin goal of 40% for its core automotive enterprise and hopes to scale back operational expenditure subsequent yr because it has began becoming its personal battery cells as a substitute of importing them.
The give attention to profitability as a substitute of gross sales quantity has dragged its market share down. The corporate, as soon as India’s prime electrical scooter maker with a share of over 50%, now ranks under TVS Motor, Ather Power and Bajaj Auto. In truth, Ather Power—an EV startup that floated its IPO in Could—now has a better market cap of over Rs 24,000 crore as its shares have almost doubled from the IPO value of Rs 321 to hover round Rs 634 at the moment.
Clearly, one thing isn’t going proper for Ola Electrical. To cut back its reliance on e-scooters, the corporate has now entered the battery storage market. Will that assist in reviving its fortunes? We are going to hold you posted!
Gross sales on Hearth
Ola Electrical could also be struggling however India’s auto trade recorded its highest-ever festive gross sales this yr, with a 21% soar in complete retail volumes through the 42-day Dussehra-to-Diwali interval, in line with the Federation of Vehicle Sellers Associations (FADA). The standout performer was the passenger automobile (PV) phase, which noticed a strong 23% year-on-year development, pushed by improved provide chains, aggressive discounting, and a GST charge lower on smaller automobiles introduced simply forward of the festive season.
In a breakdown of class efficiency, two-wheelers surged 22% as rural demand revived amid higher crop prospects and simpler financing. Business automobile (CV) gross sales rose by 15%, reflecting regular infrastructure exercise and pre-election logistics demand. Tractor gross sales had been up 14%, whereas three-wheelers grew by 9%. The one laggard was the development gear (CE) phase, which declined 24%.
“The GST rationalisation gave the market a psychological push, particularly in entry-level segments,” mentioned FADA President Manish Raj Singhania. “Coupled with new launches, improved availability, and widespread promotional schemes, the outcome was a file festive season.”
This marks a turnaround for the PV phase, which had been stagnating earlier within the yr as a consequence of stock pile-ups and excessive financing prices. Compact SUVs and small hatchbacks led the retail momentum, with city centres contributing a major share.
Business analysts view the festive rebound as an indication of pent-up demand lastly being met, however warning that sustaining this momentum into the ultimate quarter will rely upon broader macroeconomic circumstances and continued coverage readability.
The GST charge cuts got here into impact on September 22, so a part of the festive gross sales spike might mirror pre-existing demand. November’s gross sales knowledge, to be launched subsequent month, will higher reveal the complete impression of the tax cuts.
Smoke Alerts
Shifting on from particular person shares or sectors to take a broader image. Markets are at that unusual part the place everybody desires to speak about returns, no person desires to speak about threat, and the charts all go up, till they don’t. On the one hand central banks are hesitatingly slicing charges, citing have to prop development. On the opposite, the inventory markets have been flirting with file highs. However some are sending smoke indicators.
Again house, ICICI Prudential Mutual Fund’s Sankaran Naren, the closest factor Indian markets need to a risk-whisperer, has issued what can solely be known as a well mannered however agency “please don’t lose your shirt” advisory. In an interview, Naren says retail buyers are carrying the majority of the danger proper now as valuations float away like helium balloons. He isn’t saying the economic system is weak or company earnings are unhealthy. In truth, he says the macro set-up is nice and fundamentals are effective. The issue, he argues, is that somebody needs to be holding the bucket when the music stops, and more and more that somebody seems to be just like the smaller investor enthusiastically piling into high-priced equities.
“Everybody desires to purchase equities at very excessive valuations,” he says, lamenting the herd mentality of investing specifically asset class.
Hundreds of miles away, Jamie Dimon, the CEO of JPMorgan Chase, is singing a surprisingly related tune. His notes although are extra high-pitched. Dimon believes the market is dangerously complacent and estimates the possibility of a severe market crash is nearer to 30%, whereas buyers are pricing it as if there have been only a 10% probability. The US market, he warns, is behaving as if every single day had been a pageant of limitless positive aspects. Excessive valuations, geopolitical uncertainty, wars, elections, and a expertise bubble powered by AI hype are all a part of the cocktail. It’s not fairly The Massive Quick sequel, but it surely’s positively not The Sound of Music both.
Becoming a member of this warning refrain is Michael Burry, the legendary contrarian behind The Massive Quick.
Burry has flagged shares like Nvidia and Palantir as bellwethers of an AI-fueled speculative surge, likening the present market fervor to the dotcom bubble of the early 2000s. His concern isn’t concerning the promise of AI—it’s concerning the pricing of perfection, the place any whiff of narrative is sufficient to justify hovering valuations.
Market Wrap
India’s inventory markets started November with a weekly loss on profit-taking after a 4.5% surge in October pushed benchmark indexes close to file highs.
A resumption in international outflows additionally weighed on sentiment, offsetting optimism over company earnings and India-US commerce negotiations. International portfolio buyers offloaded shares value greater than $1.12 billion within the first three periods of this week after inflows hit a five-month excessive in October.
Each the Nifty 50 and the BSE Sensex dropped 0.9% this week. The small-cap index fell 1.7% whereas the mid-cap index was flat. As many as 12 of the 16 main sectoral indexes ended the week decrease.
Amongst sectoral indexes, client durables slid 2.6% as Amber Enterprises and Whirlpool of India posted weak outcomes. State-run banks gained 2.1%, lifted by State Financial institution of India after it topped earnings estimates.
Aditya Birla Group corporations Hindalco and Grasim had been the most important losers this week. Hindalco misplaced almost 7% after saying a hearth on the New York plant of its Novelis unit might hit its 2026 money stream by as much as $650 million.
Grasim slipped 6.6% through the week after Rakshit Hargave, the CEO of its paints enterprise Birla Opus, resigned to affix biscuits maker Britannia. In the meantime, Asian Paints rose 4.1%.
Energy Grid Corp, Maruti Suzuki, Adani Enterprises, ITC, Larsen & Toubro, and Zomato mother or father Everlasting had been the opposite main laggards.
Amongst gainers, non-bank lender Shriram Finance topped the record. Automaker Mahindra & Mahindra got here second, including 5.8% after its quarterly revenue surged. HDFC Life Insurance coverage, Bajaj Finance, SBI Life, Bajaj Finserv and SBI had been the opposite main gainers.
Earnings snapshot
- Bharti Airtel consolidated web revenue jumps 89% to Rs 6,792 crore
- Grasim Q2 standalone revenue rises to Rs 805 crore from Rs 721 crore a yr in the past
- Mahindra & Mahindra Q2 standalone revenue jumps to Rs 4,521 crore from Rs 3,841 crore
- Titan Q2 revenue soars 59% to Rs 1,120 crore, beats forecasts
- Solar Pharma revenue up at Rs 3,118 crore vs Rs 3,040 crore yr in the past; tops forecasts
- Aurobindo Pharma July-Sept consolidated web revenue rises 3.8% to Rs 848 crore
- IndiGo standalone loss widens to Rs 2,614 crore from Rs 989 crore a yr in the past
- Britannia Q2 consolidated web revenue jumps 23.1% to Rs 654 crore
- Tata Shopper consolidated revenue rises 11% to Rs 404 crore, exceed analysts’ estimate
- Adani Enterprises revenue earlier than distinctive objects and tax falls to Rs 814 crore vs Rs 2,409 crore
- Adani Ports Q2 revenue climbs 27% to Rs 3,109 crore on robust cargo volumes
- City Firm loss widens to Rs 59.33 crore vs Rs 1.82 crore a yr earlier
- KFC operator Devyani Worldwide swings to lack of Rs 21.9 crore vs year-ago revenue
Different Headlines
- Birla Opus CEO Rakshit Hargave to give up, be part of biscuits maker Britannia
- State Financial institution of India, French accomplice Amundi to promote 10% stake in SBI Mutual Fund subsequent yr
- MSCI so as to add Paytm, Fortis, 2 different Indian shares to flagship international index
- India Companies Buying Managers’ Index falls to 58.9 in October from 60.9 in September
- India Manufacturing PMI rises to 59.2 in October from 57.7 in September
- Mahindra & Mahindra sells complete 3.5% stake in RBL Financial institution for Rs 678 crore
- Diageo-owned United Spirits to evaluation funding in Royal Challengers Bengaluru cricket staff
- Emirates NBD to launch open provide for RBL Financial institution on December 12
- Hindalco expects as much as $650 million impression from hearth at US unit Novelis’ New York plant
- NSE units apart Rs 1,300 crore to settle pending regulatory circumstances
- Nationwide Firm Regulation Appellate Tribunal lifts WhatsApp data-sharing ban, upholds Meta effective
- Renewable power agency SAEL Industries recordsdata for Rs 4,575-crore IPO
That’s all for this week. Till subsequent week, glad investing!
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