Attributing better performance of recent IPOs to easier norms, Sebi Chairman U K Sinha today said retail investors may not invest again if they lose money in the primary market. (PTI)

Attributing better performance of recent IPOs to easier norms, Sebi Chairman U K Sinha today said retail investors may not invest again if they lose money in the primary market.

“If retail investors feel they are continuously losing money in the primary market by subscribing to IPOs, they may not invest again,” Sebi Chairman U K Sinha told an investment bankers’ summit here.

Notably, the IPO market has seen a boom this year after a near-drought situation in the past five years. Companies like, InterGlobe, CCD, Alkem and Dr LalPath Labs, among others got tremendous response to their issues this year.

While most of the new issues of the past many years have been trading below the issue price, 56 per cent of the IPOs this year are trading above the issue price.

Attributing the better performance of the new issues partly to enabling regulations in the IPO market, such as reduced time to process and clear DRHPs, Sinha said the new IPO norms will be effective from January 1.

“If you look at data, the time taken by Sebi in examining and issuing observations on IPOs has come down by half now. Part of the reason for the delay in the past was that Sebi had proposed safety net for retail investors in the IPOs,” he said.

“If you look at data prior to 2013, more than two-thirds of the new issues were trading below issue price. Obviously, it had impact on investors. But I am happy that IPOs that have come this year, 56 per cent are trading above the issue price,” the Sebi chief said.

On the IPO market, he said the total primary issues in FY15 were worth Rs 9,700 crore, but this fiscal it is Rs 18,300 crore, out of which Rs 16,150 crore would come from sectors such as healthcare, education, hotel and restaurants, while there are no issues from banks, and power companies which have been traditionally active.

He also said the regulator has taken up with Reserve Bank and the banking lobby Indian Banks Association to train bankers on ASBA so that retail investors’ money is not blocked indefinitely by participating in IPOs.

On the proposed exit options and convertible issues, he expressed hope that comments from the public and other stakeholders would be in place soon so that Sebi could issue the final guidelines soon. “Our intent is to implement these norms early as possible,” he said. Describing the rising bad loans in the system as worrying, Sinha said the RBI report on top 500 companies shows that they are utilising only 71 per cent of their installed capacity.

“These companies are not in financial and banking sector. The worry is that these companies are hugely leveraged. One third of them can’t even generate net accruals to meet their interest obligations. One estimate is that Rs 7 trillion worth equity would be required if these companies don’t generate internal cash,” he said.

Regulation on municipal bonds have taken care that only solvent municipalities will issue bounds.

He also said Sebi is looking at the role of credit rating agencies and debenture trustees in the issuance of bonds.

On the call to regulate algo trading, he admitted that this is challenge.

On the much-talked about common KYC norms for all financial markets investments, the Sebi chief said this will take some more time.

Jain Irrigation share price climbed over 3 per cent in the morning trade on Tuesday after the Andhra Pradesh government allotted over 623 acres of land to the company for setting up an integrated agriculture and horticulture park in Kurnool district of the state. (Photo: Reuters)

Jain Irrigation share price climbed over 3 per cent in the morning trade on Tuesday after the Andhra Pradesh government allotted over 623 acres of land to the company for setting up an integrated agriculture and horticulture park in Kurnool district of the state.

At 11.19 am, Jain Irrigation shares were trading 3.35 per cent up at Rs 63.30. The scrip opened at Rs 61.90 and had touched a high and low of Rs 63.40 and low of Rs 60.65, respectively, in trade so far. Sensex was marginally down 29.30 points at 25,121.05.

The government after careful examination of the matter and after due examination of the report submitted by the VC&MD, APIIC… hereby accord permission to APIIC Limited for the allotment of the land of an extent of 623.40 acre Jain Irrigation Systems Ltd at Thangadancha Village, Jupadu Bangalow Mandal, Kurnool district on lease basis for 99 years.

The market value of the land is Rs 4.5 lakh per acre and the total cost of the land is Rs 28 crore.

In the past one year, the share price of Jain Irrigation plunged 18.11 per cent to Rs 61.25 on December 14. The benchmark index BSE Sensex slid around 8 per cent during the same period.

For the quarter ended September 2015, the company posted a consolidated net loss of Rs 29.48 crore, down 24.97 per cent against net loss of Rs 23.59 crore in the corresponding quarter a year ago.
(With inputs from PTI)

Brent crude fell as low as $36.33 a barrel on Monday, its weakest since December 2008. A fall below $36.20 would take oil down to levels not seen since 2004. (Photo: Reuters)

Crude oil prices are close to 11-year lows on account of excessive supply. A forecast from the International Energy Agency (IEA) that the global supply glut is likely to deepen next year dragging down the prices further. US crude was down 0.2 per cent at $36.24 after falling as low as $34.53 on Monday before ending nearly 2 per cent higher. Brent crude fell as low as $36.33 a barrel on Monday, its weakest since December 2008. A fall below $36.20 would take oil down to levels not seen since 2004.

Crude prices are on a downward spiral since OPEC on December 4 abandoned its output ceiling. In the past six sessions till December 11, crude oil prices shed more than 13 per cent in the inernational markets. On the domestic front, it slid nearly 11 per cent in the past five days. Prices of crude oil in the domestic markets fell from Rs 2,742 per barrel on December 4 to Rs 2,455 per barrel on December 11.

According to markets experts, OPEC is gripped by a deep divide between two factions, one led by the top oil producing nation Saudi Arabia and its rich allies in the Gulf that can stomach cheap oil and another led by Nigeria, Venezuela and other countries that need higher prices to boost their economies. America’s shale gas boom has also had a significant impact on the tapering demand for crude. The overall slowdown sentiment is also hurting crude prices negatively.

In a larger perspective, falling crude oil prices are positive for various sectors. G Chokkalingam, founder, Equinomics Research and Advisory said, “Sectors which would benefit from falling crude oil are oil marketing companies (OMCs), tyre industry, synthetic fiber producers, several range of businesses, which use oil derivatives as core inputs like the producers of lubricants, transformer oils, plastic products, soaps and detergents, etc.”

Nikhil Kamath, director, trading and risk, ZERODHA said, “Some of the sectors positively impacted by lower crude prices are aviation, auto and FMCG companies, with all of these directly or indirectly benefitting from lower crude prices.”

Below are five stocks which could benefit from sliding crude oil prices:

Supreme Industries
Recommended By: Geojit BNP Paribas Financial Services
Why Buy: Supreme Industries (SIL) is a major player in plastic industry. SIL’s product segment includes, plastic piping, packaging products, industrial and consumer segment. The company is a major beneficiary from steep fall in crude prices, as major raw materials used by SIL are directly derived from crude oil.

Anil R, research analyst, Geojit BNP Paribas, said, “The prices of key raw-materials used by SIL during the first quarter of the ongoing fianancial year (Q1FY16) (July–September), PVC – dropped by 15 per cent year-on-year (YoY) to Rs 65 per kg and polypropylene dropped by 28 per cent YoY to Rs78 per kg. Consequently, SIL’s Q1FY16 gross margin improved by 340 basis points YoY to 36.1 per cent vs 32.7 per cent. In addition, overall finance cost came down to 1.3 per cent of sales in Q1FY16 vs to 1.8 per cent YoY. We expect SIL’s revenue to grow at 11 per cent CAGR and PAT at 12 per cent CAGR during FY15-17E. Currently, we have an “Accumulate” rating for the stock with a target price of Rs 704.”

Asian Paints
Recommended By: Geojit BNP Paribas Financial Services
Why Buy: Asian paint is one of the beneficiaries out of this free fall of crude prices. Its key raw materials are derived from crude oil this includes Titanium dioxide (TiO2), additives, pigments, resins, solvents etc. Asian Paints is the market leader in the decorative paint segment with a 54 per cent market share. During the first half of FY2016 (H1FY16), the costs of raw material to sales come down by 641 basis points to 50.1 per cent YoY.

Antu Eapen Thomas, research analyst, Geojit BNP Paribas, said, “We have seen a rise in gross margin by 313 basis points YoY to 46.3 per cent and profit grew by 25 per cent YoY to 854 crore in H1FY16. We feel that the company may not pass all the benefit on the softening of oil prices. This will directly benefit Asian Paint’s margins and will add colours to their profitability even with the same volume. Consequently, it can use this additional funding for their marketing and promotional activities. Going forward, we expect Asian Paints can generate a sales and profitability growth of 12 per cent and 20 per cent CAGR respectively over FY15-18E. Hence, we recommend accumulating the stock with a price target of Rs 901.”

Hindustan Petroleum Corporation
Recommended By: Equinomics Research
Why Buy: Oil marketing firms would be the major beneficiaries of lower crude oil prices – this would reduce their subsidy burden and improve their balance sheets. Cheap fuel prices would also promote their consumption from the retail outlets. Chokkalingam, said, “Hindustan Petroleum Corp (HPCL), the country’s third biggest oil refiner, is negotiating with its partners in the Mozambique gas field, operated by Anadarko Petroleum Corp., to bring natural gas to India for its upcoming liquefied natural gas (LNG) terminal in Gujarat. The deal will not only give HPCL access to gas, which is logistically cheaper to source, it will also give the company a cost advantage in its natural gas trading business, which it started last financial year. We believe the share price of HPCL can touch Rs 1,000 in the next few quarters.”

Sutlej Textile
Recommended By: Equinomics Research
Why Buy: According to the brokerage house, Sutlej Textiles uses both natural fibre and synthetic fibre for manufacturing cotton and synthetic textiles, would be the major beneficiary of the crash in input prices with some time lag. Sutlej has a consistent track record of paying dividend since incorporation. A very few companies in this country have such track record. The dividend has grown from 10 per cent in FY2009 to 80 per cent in FY2014. The textile industry would change its prospects significantly in the next 2 to 3 years and hence, Sutlej Industries, with sound fundamentals, would be one of the major beneficiaries of changes in the valuation multiples visualised in next 1 to 3 years. The share price of the company can touch Rs 650.

InterGlobe Aviation
Recommended By: ZERODHA
Why Buy: Fuel Expenses form over 30 per cent of total expenses borne by airline companies. Kamath of ZERODHA, said, “Reduced fuel prices will have a significant positive impact on the bottom lines. We recommend a buy on InterGlobe Aviation shares with a stop loss at the Rs 900.”

(Disclaimer: The stocks are recommended by the respective brokerage houses and not a recommendation from Financial Express online).

Tata Motors stocks will be in focus the company said it will hike price of its entire passenger vehicle model range by up to Rs 20,000 from January due to the impact of various macro-economic factors. (Photo: Reuters)

The BSE Sensex and NSE Nifty opened on a cautious note on Tuesday tracking mixed global cues as US Federal Reserve is widely expected to go for a rate hike of 25 bps in its meet slated to begin later in the day. At 9.28 am, Sensex was trading 22.38 points down at 25,127.97. NSE Nifty was trading 1.50 points down at 7,648.55.
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Below are the top 12 stocks that are in focus today:

Jain Irrigation: Share price of the company climbed over 3 per cent in the morning trade after the Andhra Pradesh government allotted over 623 acres of land to the company for setting up an integrated agriculture and horticulture park in Kurnool district of the state.

Yes Bank: Shares of the private lender were trading 0.88 per cent up at Rs 688.20 after it on Tuesday said that its advance tax payment increased 38.11 per cent in December 2015 to Rs 424 crore from Rs 307 crore in December 2014.

Sun Pharma: Stocks of the drug major were trading 1.48 per cent up at Rs 780 (9.31 am) as the company has sold its manufacturing unit in Ohio to Nostrum Laboratories Inc for an undisclosed sum as part of the company’s consolidation of manufacturing business in the US.

Mahindra and Mahindra and Tech Mahindra: Stocks of both the companies were trading 0.25 per cent and 0.14 per cent at Rs 1283.80 and 541.95, respectively after it was announced that they will buy 76.06 pct of Pininfarina for 25.3 mln euros ($28 million).

Hotel Leelaventure: Shares of the hospitality chain was trading 3.46 per cent up at Rs 20.95 (at 11.15 am) after it completed the Rs 725-crore sale of its Goa property to Ceres Hotels.

Tata Motors: Stocks of the auto major will be in focus after the company said it will hike price of its entire passenger vehicle model range by up to Rs 20,000 from January due to the impact of various macro-economic factors..

Airtel, HDFC: Advertising industry watchdog ASCI has upheld complaints against 54 campaigns for misleading advertisements during September, including those of Bharti Airtel and HDFC. Customer Complaints Council (CCC) of Advertising Standard Council of India (ASCI) upheld 13 complaints of misleading advertisements from personal and healthcare category, seven in telecom and broadband category and six in ecommerce category during the month.

Reliance Industries: Download speed on 4G network of Reliance Jio during its beta-test phase peaked at 70 megabit per second but remained in 15-30 mbps range on most occasions, as per field trial report by brokerage firm Credit Suisse. The report said download speed of Reliance Jio 4G service was impressive but “it is still an empty network”. It also found urban coverage of RJio network at par with incumbents but remarked rural coverage as “poor”.

Suzlon Energy: Wind turbine maker Suzlon Energy Ltd  said it will allot over 3.58 lakh shares to bondholders upon conversion of some bonds due in July 2019.

Reliance Communications: Reliance Communications (RCom) impending deal for tower asset sale would lower its consolidated debt by 60 per cent, a report by CLSA said . RCom recently announced the signing of a term sheet with Tillman and TPG for the sale and leaseback of its 43,400 towers held by its subsidiary Reliance Infratel.

Cairn India: Delhi High Court  sought the government’s response on whether it would buy the excess “sweet” crude, containing higher levels of sulphur, produced by Cairn India’s Rajasthan oil field and if not, can the company export it.

NHPC: Hydro power major NHPC  said it will temporary shut down 520 MW Parbati project in Himachal Pradesh till February next year for carrying out repair and maintenance work. The Parbati-III Power Station (4X130 MW) in Himachal Pradesh “shall be complete shutdown w.e.f. December 15, 2015 to February 15, 2016 to carry out repair of pressure shaft, sealing of surge shaft gate & MIV seals and annual maintenance of units”, NHPC said in a filing to the BSE.