Post bullish IPO trent

 

After a great IPO season, now new IPOs are coming but they are not getting much traction.

Due to the global slowdown in economic growth and inflation situation now new most of the IPOs are getting listed either at discount or at a 5-10% premium.

Most new-age companies listed last year given high listing gains but eventually became the greatest wealth destroyers.

Below are the companies which are down by 40% or more below their issue price

Company Name	Profit/Loss
One 97 Communications Limited	-71%
Suryoday Small Finance Bank Ltd	-67%
CarTrade Tech Limited	-62%
Fino Payments Bank Limited	-58%
Windlas Biotech Limited	-51%
Nuvoco Vistas Corporation Ltd	-47%
Shriram Properties Limited	-46%
Krsnaa Diagnostics Limited	-45%
Glenmark Life Sciences Limited	-41%
Aditya Birla Sun Life AMC Ltd	-41%

 A study says newly listed companies are available at a reasonable price within 2-3 years of listing.

In 2022 how well IPOs performed?

Company Name	Listing Day Gain	Profit/Loss
Prudent Corporate Advisory Services Limited	-11%	-19%
Life Insurance Corporation of India (LIC)	-8%	-13%
Rainbow Children's Medicare Limited	-17%	-9%
AGS Transact Technologies Ltd	-8%	-47%

 IPOs will perform well on listing days when the market is bullish and investors are optimistic about the market.

For IPO the valuation is made ignoring the company’s fundamentals and based on a STORY about how the company will prosper in the future.

But post listing market will show how important the fundamentals are.

When fear/other factors impact the market the investors gets panic due to this grey market premium also going downwards and the market also goes bearish.

Especially when Paytm got listed the dark side of the IPOs has been seen, after that most of the company's IPOs got stalled or listed at a marginal premium.

Now retail investors are staying away from the IPOs as most of them are investing in IPO only for listing day gains. Due to this low retail participation and social media traction will get reduced automatically premium will not be seen in the issue price.

You witnessed that due to Paytm disastrous listing OYO has postponed listing decisions many times and also reduced its IPO size.

How you are changing investment decisions in an ongoing bearish market and inflation situation?

Indian OTT market and Netflix

In India OTT(Over The Top) platform entertainment provider market is dominated by Disney+ Hotstar with 43 million subscribers, followed by Netflix with 5 million subscribers and Amazon Prime with 17 million subscribers.

Netflix India reduced its subscription plan prices by 18% to 60% in India with the intention of increasing its user base but compared to others still priced higher than most of its competitors in India. India being a price sensitive market this action definitely add more paid subscribers.

Recently Mr Hastings told that “the great news is in every single other major market, we've got the flywheel spinning. The thing that frustrates us is why we haven't been as successful in India. But we're definitely leaning in there".

To boost its presence in India Netflix is planning to increase more and more Indian content to its subscribers.

• With this plan Netflix is partnering with Anushka Sharma and Karnesh Ssharma's production house Clean Slate Filmz with a deal worth about ₹400 crore ($54 million).

In this partnership Clean Slate Filmz will release eight films and series on streaming services in the next 18 months.

• Netflix has entered into a multi-year partnership with Mumbai-based Excel Entertainment headed by Ritesh Sidhwani and Farhan Akhtar.

 Under the deal, the both will produce a variety of projects now it will commence with Dabba Cartel and Queen of the Hill.

• Netflix also partnered with RIL Jio and recently with Tata play (Previously Tata sky) will gain subscribers and more concreate business for Netflix in India.

• Previously Netflix has also partnered with the digital content arm of Viacom18 Tipping Point Studios.

With all this Netflix planning to increase its user base in India and also facilitate to take Indian content to global audience.

 

Clean Slate Filmz:

It is established by actress Anushka Sharma and her brother Karnesh Ssharma 2013, in Mumbai, it mainly produces and distributes the Hindi films and web series.

Both Sharma’s "Believe in and audiences love while supporting exciting hot new talent.

It already produced NH10, Phillauri, Pari, Paatal Lok, Bulbbul.

Excel Entertainment:

Founded by Ritesh Sidhwani and Farhan Akhtar in 1999. Based in Mumbai.

They partnered with amazon prime in India's first original series Inside Edge.

It produced Dil Chahta Hai, Rock On, Zindagi Na Milegi Dobara, Lakshya, Toofaan and the Don franchise and others also.

Closing points:

There has been an exceptional surge over SVOD (subscription video on demand) content over the last few years and is expected to overtake the AVOD (advertising-based video on demand).

According to a report, the Indian Media and Entertainment industry has revived to pre-COVID stage and is expected to grow to USD 55-70 billion by 2030 with a CAGR of 10 to 12 per cent, driven dominantly by strong growth in OTT, Gaming, Animation and VFX.

The Indian OTT streaming industry is expected to grow to USD 13-15 billion over the next decade at a CAGR of 22-25 percent.

By this the Indian entertainment market will be expanding enormously in coming years.

 

Facebook's Lending Initiative to MSMEs

 

Facebook India announced a new program called "Small Business Lending Initiative", in partnership with online lending platform Indifi, to help small and medium-sized businesses (SMEs) advertising on Facebook to get quick access to credit from through independent loan partners.

The social giant said its new program, ‘the Small Business Loan Initiative’, addresses some of the biggest hurdle point small businesses face when borrowing.

The company, which last year announced a $ 4.3 million grant for small businesses in India.

 

Indifi:

Indifi, a Gurgaon-based company backed by the CDC Group, is the first loan partner Facebook has partnered with.

Indifi disbursed more than 25,000 loans, served more than 200 clients, more than 80 active partners, more than 12 industries served and 15 lending partners to date.

 

Facebook and Indifi:

India is the first country where Facebook implements this program in partnership with the Indifi online lending platform.

As part of a new partnership with Indifi, an online lending platform at 200 locations in India,

Facebook will help businesses to discover and apply to Indifi for a loan that can help your business get through these tough times. Facebook does not receive income through this association.

 

Benefits of this programme:

• INR 5 lakh - INR 50 lakh loans: either for cash flow management or expansion

• Unsecured and fast-paced - If approved, get your loan within 3 business days of completing all paperwork.

• Predefined interest range: the interest range will be between 17% and 20% per year.

• Support for women: if your company is wholly or partially owned by women, Indifi will grant you a 0.2% reduction on the applied loan interest rate.

• Quick support

• MSME’s applying for this loan will not be charged a processing fee by Indifi.

 

Eligible business:

• Be located in an eligible Indian city. To see the list of eligible Indian cities, click here.

• Have been an advertiser in the Facebook family of applications for at least 180 days at the time of application.

 

This will help Indian MSMEs to get quick financial support for their business needs.

India’s First aircraft leasing company

 

Although it is among the fastest growing aviation markets in the world and with the second largest aircraft order book in the world, India has never had a leasing company.

India currently has 700 (commercial) aircraft and 800 aircraft currently on order to be delivered in the next 4-5 years. Until now, not a single one of them was rented in India.

The total value of the backlog of commercial aircraft orders from India is $ 19.32 billion.

Why suddenly now Indian  companies started Aircraft leasing business?

The Union budget had proposed the tax holiday for capital gains and tax exemption on aircraft rentals paid to foreign lessors to IFSC-based leasing companies in the GIFT city of Ahmedabad.

So who are going to start/started this ?

To capitalize on this opportunity, the first company to go with is the private charter provider. The JetSetGo aircraft leasing unit will begin operations from GIFT City.

The founder and CEO of the company is Kanika Tekriwal.

The airline plans to bring in six planes by the end of the 2021-21 year, at least two of which can be rented through the next unit.

The service provider plans to purchase used aircraft in the US and Europe through its leasing subsidiary, allowing it the flexibility to access customers both in India and abroad.

Used jets could cost between $ 2 million and $ 15 million.

Urban air mobility is likely to only take off via aggregators through asset-heavy business models, unlike Old / Uber, which operate light-asset models in the automobile segment.

"The first aircraft (Hawker 800XP) will be leased to Info Pacific Aviation Pvt Ltd, a subsidiary company of JetSetFleet."

To lease the aircraft, the company is experimenting with a novel financing strategy in which JetSetFleet plans to use the pay-as-you-go arrangement and is also looking into a revenue sharing arrangement.

The aircraft acquired under the GIFT City scheme operates with an Unscheduled Operation Permit (NSOP), intended to be used by corporations or business leaders.

Facilitating the purchase of less-used aircraft by registering within the country will save valuable foreign currency in terms of leasing, which previously had to be deposited in the foreign country where the company was registered.

So far, Indian airlines lease planes to lessors in Ireland, Hong Kong and Singapore. Currently, it is 48 percent more expensive to do this from India than from Ireland.

SpiceJet, HAL, Acumen Aviation, VMan Aero, Investec are the other companies seeking to open aircraft leasing services in India, based at GIFT City in Ahmedabad.

Global Aircraft leasing industry:

Globally, the largest independent aircraft leasing company is the Irish company AerCap.

In 2020, AerCap's fleet was valued at nearly US $ 29.8 billion.

The company had an estimated fleet size of around 1,074 aircraft in that same year.

In March 2021, GECAS parent company General Electric announced a US $ 30 billion agreement to merge GECAS with AerCap.

The global commercial aircraft leasing market is estimated at US $ 33. 7 billion in 2020, projected to   reach a size of US$ 47.1 billion by 2027 growing at a compound annual rate of 4.9% during the period 2020-2027.

Europe generated the highest revenue in the aircraft rental industry in 2020 due to high disposable income and high living standards in the region. The development of new aircraft, increased air traffic, efficient commercial aircraft operation, and technological advancements have led to a growing adoption of aircraft rental in the region.

India is emerging as a global growth hub has immense potential to for growth, this aircraft leasing will improve domestic business and also lower foreign exchange outflow which are currently high.