Even as calendar year 2015 may have been the best in five years for initial share sale, a large portion of fund-raising was towards giving an exit to existing shareholders or repaying debt, and very little quantum was used as growth capital or business expansion.

Of the total R13,145 crore that Indian companies have raised through initial public offerings (IPOs) so far in 2015, nearly R6,700 crore was raised by promoters and private equity (PE) players through market sale, stock exchange data showed.  An additional 20-25% of the quantum is towards repayment of debt.

“There was no traction in primary markets in the last two to three years and PE firms have got a chance to exit the companies after a long time. Further, in some smaller issues, promoters had deliberately sold a part to make the issue bigger,” said Prithvi Haldea, chairman of Prime Database.

Sebi tweaked IPO rules last year, whereby companies with after IPO market capitalisation of less than R 4,000 crore are required to either dilute 25% or R400 crore of the issue, whichever lower.

Companies with post IPO market capitalisation of more than R4,000 crore are required to dilute only 10%, and would have an additional time frame of three years to achieve minimum public shareholding of 25%.

The last four public issues, where companies raised close to R5,514 crore, more than 70% of the money was towards secondary market sale. InterGlobe Aviation —  the biggest IPO since December 2012  — raised R 3,018.2 crore from the primary markets. Of the total portion, amount of fresh issue was only R1,272 crore, while rest of the money was mopped up to provide partial exit to promoters and promoter group, data showed.

Most recent entrants into the successful IPO list – Alkem Laboratories and Dr Lal PathLabs – were completely OFS issues as companies did not raise any money for their business requirement. The value of both the IPOs is around R2,000 crore.

Satyen Shah, executive VP and head – ECM, Edelweiss Investment Banking, said that 2015 was a mixed bag for IPO markets with issues like Alkem Laboratories and Dr Lal were completely secondary market sale, whereas issues like Coffee Day Enterprises (CDE) were completely fresh issues.

“2015 was a fairly good year for primary markets. Many a times offer for sale component was there to meet with the regulatory requirements of minimum offer size or to ensure that there was adequate float in the offering,” Shah explained.

CDE tapped primary markets in October to raise R1,150 crore. Although the complete offering was a fresh issue, CDEL planned to use R638.2 crore of the total money raised to repay existing loans, according to information made available in the regulatory filing.

Initiate coverage on InterGlobe Aviation with ‘buy’ rating Despite our 44% earnings CAGR through FY18, we assign lower FY17e target P/E multiple of 17x (10% premium to comparable global LCC player RyanAir) owing to high earnings sensitivity to oil prices to arrive at a fair value of R1,478 (an upside of 48%).

At our target price, implied FY17e EV/ebitdaR stands at 9.7x (v/s 9.6x for RyanAir). On FY17e, the stock currently trades at 11.5x EPS and adjusted EV/ebitdaR of 7.4x with an implied dividend yield of >4%.

In our estimates through FY18, we model a) fleet size growth from 94 in FY15 to 154 in FY18 and b) load factor (seat utilization) moving from 80% in FY15 to 84% in FY18.

Despite double-digit passenger CAGR of 12% over the last two decades, the Indian aviation sector is significantly under penetrated-per capita seats at 0.08 v/s 2.6/1.6 in the US/Canada and average of 0.5 in Brazil, Thailand, Indonesia and China. However, India is set to become the 3rd largest aviation market by 2030, driven by a) value migration from rail to air, b) increasing per capita GDP and disposable income, c) growing tourism and d) favorable aviation policy. Compared with the passenger growth estimate of 13% CAGR through FY20, YTD growth has been very robust at 20% (v/s last 5-/10-year CAGR of 9%/13%)-supported by lower ticket prices owing to benign oil prices.

SpiceJet share price fell as much as 4.77 per cent on Friday on reports that the company has allegedly defaulted on payments to the Airports Authority of India

SpiceJet share price fell as much as 4.77 per cent on Friday on reports that the company has allegedly defaulted on payments to the Airports Authority of India (AAI) towards landing, parking and route navigation charges, among others, and its total dues stand at Rs 155.49 crore.

At 1.23 pm, the share price of SpiceJet was trading 3.43 per cent down at Rs 64.80. The scrip opened at Rs 67.40 and had touched a high and low of Rs 67.45 and Rs 63.90, respectively, in trade so far. Sensex was down 190.25 points at 25,062.07.

However, SpiceJet in a statement to PTI said that there is no default in payment to AAI since January this year. “There is no default in payment to AAI since January 2015. SpiceJet has been making regular payments to AAI as per agreed payment terms between SpiceJet and AAI,” the airline said in the statement.

In the past one year, the share price of SpiceJet climbed 314.20 per cent to Rs 67.10 on December 10. Sensex fell 9.27 per cent during the same period.

For the quarter ended September 2015, the company posted net profit of Rs 23.77 crore, up 107.66 per cent, against net loss of Rs 310.45 crore in the corresponding quarter a year ago.

At 12.25 pm, Tata Steel, Jindal Steel, SAIL and JSW Steel were up 3.41 per cent, 2 per cent, 1.47 per cent and 1.33 per cent, respectively. Sensex was down 142 points at 25,109. (Photo: Reuters)

Share price of steel majors gained over 3 per cent on reports that government is likely to impose more curb on steel imports. Government in September imposed 20 per cent import tax on some steel imports which failed to contain losses for producers.

At 12.25 pm, Tata Steel, Jindal Steel, SAIL and JSW Steel were up 3.41 per cent, 2 per cent, 1.47 per cent and 1.33 per cent, respectively. Sensex was down 142 points at 25,109.

According to market analysts, duty on minimum import price (MIP) or increase in MIP likely in next few weeks. In November steel imports declined 6.9 per cent to 0.76 mt tonnes, its first decline in almost eight months.

SBI Securities in a research report said, “We expect an upward bias in steel prices, mainly driven by curtailment in steel production across regions, including China, due to decline in spreads. We believe this curtailment will likely slow down the pace of steel exports from China. We have ‘Buy’ rating on Tata Steel and JSW Steel and have ‘Hold’ rating on SAIL. The likely revival in earnings is yet to be factored in stock price.”

The government is considering imposing safeguard duty on certain steel imports to protect the domestic industry from the surge in shipments from countries like China and Korea. Dometic steel companies, which have taken huge loans for capacity expansion, are under severe stress as cheap imports are eating into their domestic share.

Earlier, SAIL, Essar Steel, JSW Steel and Jindal Steel & Power moved the Directorate General of Safeguard for imposing levy on imports of ‘hot-rolled flat sheets and plates of alloy or non-alloy steel’ to “protect the domestic producers” from increased imports.

In September, the government imposed a provisional safeguard duty of 20 per cent on import of hot-rolled flat products of non-alloy and other alloy steel.

In August, the government had hiked import duty on base metals, including iron and steel, by 2.5 per cent, in a move aimed at helping domestic players battle out cheap Chinese imports after the currency devaluation by China.

In June, India also slapped anti-dumping duty of up to $316 per tonne on imports of certain steel products from three countries, including China.

(With inputs from agencies)