Board of Directors of Thomas Cook (India) Ltd. has approved the proposal for buyback by the Company of its own fully paid-up equity shares of Re. 1/- each not exceeding 2,60,86,956 Equity Shares (being 6.90% of the total paid-up equity capital of the Company) from the equity shareholders of the Company at a price of Rs. 57.50.
Takeaway
As per shareholding data available in FY 2018-19 annual report, acceptance ratio comes around 20% for retail shareholders.* *Retail shareholders are classified as the one’s who hold shares of market value upto 2 lakhs on the record date.
Other Information about the Buyback
• The Entire procedure might take approximate 3 months. • Record date for the buyback is 7th March 2020 • The Promoters and Promoter Group of the Company have communicated their intention ‘Not to participate’ in the Buyback.
Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.
Posted by Mehul Kothari | Published on 28-FEB-2020
SBI Cards & Payment ServicesStrong play on spends digitisation What is the frenzy about? The much talked about IPO of the second largest credit card issuer has been awaited for multiple reasons: (a) a standalone credit card issuer, which (b) turned around strongly after being in red between FY08-FY10 and has ever since delivered robust profit growth (refer Exhibit 1, pp. 2), (c) a lucrative business that churned 38% RoE/6.9% RoA in 9MFY20 (refer financial snapshot table below), (d) SBI pedigree and an ocean of potential customers to farm (~430mn SBI customers) and harvest (~16mn that passed approval filters!), (e) giving investors a large canvas to paint the earnings in sky blue. No wonder SBICARDS MD Mr Hardayal Prasad, in an interview to a media channel, said ‘cash was his biggest competitor’! How does SBICARDS compare with competitors? It is already the second largest credit card issuer and actually betters the leader HDFCB on certain metrics (refer Exhibits 2 and 3 for detailed comparative data). With some consistent and aggressive open channel acquisition strategies alongwith strong acquisition through the banca channel, SBICARDS nurses ambitions of becoming the top card issuing company in India. At the current growth rates (+30%YoY) and assuming HDFCB sustains its mid-teen card addition rate, SBICARD could likely overtake HDFCB to become the largest issuer in the next two years (FY22E). Robust earnings stack: In FY19, SBICARDS had a spread ratio (NII/avg. assets) of 14% and non-spread income of 20.7%. With outstanding credit cards increasing ~21% YTD and 9MFY20 spends nearing 1x FY19 spends, we estimate the business momentum is likely to result in a net profit of Rs15-16bn in FY20E. We expect profit to compound at 40% over FY20E-FY22E. This should result in RoE in excess of 30%. Positive rub-off for SBIN: We currently value SBICARDS at a modest Rs11/share in SBIN SOTP based on 20x FY19 net profit. However, with the changes in corporate tax rate and a strong pick-up in growth momentum for SBICARDS, the IPO value discovery implies a stronger rub-off for SBIN in SOTP. The post-issue valuation of SBICARDS is likely to add at least Rs45 to our current SBIN target price of Rs370 (29% potential upside).Valuations rich but offer upside, SUBSCRIBE: We believe the fair value of SBICARDS to be between Rs900-950 implying a P/E multiple of ~32x on the FY22E net profit Rs27.5bn (+35% CAGR FY20-FY22E). At a price of Rs900, SBICARDS would trade at Rs845bn market capitalization. That’s nearly 1/3rd the market capitalisation of its parent SBI with a fraction of its assets! Valuations, therefore do appear rich. However, for the +30%RoE/6%ROA combination, we believe the pricing of SBICARDS does offer an upside.Key earnings risk is regulatory: Changes in merchant discount rate can affect fee income and increase in regulatory capital requirement (current minimum Tier 1 requirement of 10%, minimum CAR requirement of 15%).Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.)
Thomas Cook (India) Limited - Equity Shares Buyback Note 2020
Takeaway
As per shareholding data available in FY 2018-19 annual report, acceptance ratio comes around 20% for retail shareholders.*
*Retail shareholders are classified as the one’s who hold shares of market value upto 2 lakhs on the record date.
Other Information about the Buyback
• The Entire procedure might take approximate 3 months.
• Record date for the buyback is 7th March 2020
• The Promoters and Promoter Group of the Company have communicated their intention ‘Not to participate’ in the Buyback.
Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.
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4th Week of February 2020
Indian Markets Recap Indian Indices (% Change) INDEX Close 1D 5D 1M 3M NIFTY 12,081 -0.37 -0.8 -0.7 0.9 BSE500 15,787 -0.13 -0.7 -0.5 2.4 SENSEX 41,170 -0.37 -0.7 -0.4 1.5 MID CAP 100 18,110 0.66 -0.1 0.9 7.4 NSE SMALL CAP 100 6,162 0.36 -0.2 -1.4 8.0 Source: Company, IndiaNivesh Research Global Markets Global Markets (% Change) INDEX Close 1D 5D 1M 3M DJIA 28,992 -0.78 -1.5 0.0 4.0 NASDAQ 9,577 -1.79 -1.4 2.8 12.4 FTSE 7,404 -0.44 -0.1 -2.4 1.1 Nikkie 23,387 -0.39 -1.3 -1.8 1.2 Hangseng 26,881 -1.57 -3.9 -3.8 1.1 Source: Company, IndiaNivesh Research Nifty Outlook (SELL on RISE) Bank Nifty Outlook US 10 Year Bond Yield INDIA 10 Year Bond Yield Sectoral Movement INDEX Close 1D 5D 1M 3M Banking 30,943 0.3 -0.9 0.0 -1.3 IT 16,649 -0.73 -0.14 2.9 8.9 Pharma 8,364 -0.17 0.34 1.1 3.7 Fin Services 14,510 -0.1 -0.5 1.4 3.5 Media 1,872 -0.5 2.0 -0.3 -3.5 NIFTY PSU BANK 2,169 1.0 -3.9 -10.1 -15.4 Auto 7,698 0.14 -2.74 -6.6 -3.8 FMCG 30,636 -0.64 -1.30 -1.6 -0.8 Real Estate 306 0.0 -2.4 -4.6 11.2 Metals 2,612 0.8 -1.5 -6.7 5.7 NIFTY PVT BANK 16,895 0.3 -1.1 -1.2 -2.1 Source: Bloomberg Sectoral Recap / Lines on performance Sectoral Outlook FII Activity: Derivatives and Cash Market (Weekly) Derivative View LONG BUILT UP SYMBOL Close Price change % OI OI Change % MINDTREE 1033.3 2.12% 1392800 19.41% AMBUJACEM 205.8 0.02% 40725000 10.95% GMRINFRA 23.7 2.16% 199440000 10.50% CHOLAFIN 333 0.67% 6992500 9.22% RAMCOCEM 803.9 0.21% 1370400 8.90% Source: Company, IndiaNivesh Research SHORT BUILT UP SYMBOL Close Price change % OI OI Change % ESCORTS 881.75 -3.40% 5418600 9.91% HINDPETRO 223.25 -1.78% 18734100 8.89% HEROMOTOCO 2239.5 -0.75% 3901400 6.78% CANBK 173.05 -0.69% 23017800 6.66% IOC 112.7 -1.70% 55480000 6.56% Source: Company, IndiaNivesh Research Nifty 50 Pivot SYMBOL Close S2 S1 Pivot R1 R2 ADANIPORTS 370.85 367.28 369.07 371.78 373.57 376.28 ASIANPAINT 1842.25 1808.82 1825.53 1855.77 1872.48 1902.72 AXISBANK 744.30 728.90 736.60 745.30 753.00 761.70 BAJAJ-AUTO 3065.50 3032.00 3048.75 3074.40 3091.15 3116.80 BAJFINANCE 4880.45 4816.22 4848.33 4885.87 4917.98 4955.52 BAJAJFINSV 9709.70 9609.87 9659.78 9743.67 9793.58 9877.47 BPCL 471.75 464.65 468.20 474.10 477.65 483.55 BHARTIARTL 545.60 532.00 538.80 545.40 552.20 558.80 INFRATEL 226.20 220.87 223.53 227.27 229.93 233.67 BRITANNIA 3059.40 3007.17 3033.28 3078.37 3104.48 3149.57 CIPLA 435.75 425.38 430.57 439.68 444.87 453.98 COALINDIA 179.35 173.22 176.28 178.27 181.33 183.32 DRREDDY 3255.30 3161.87 3208.58 3286.77 3333.48 3411.67 EICHERMOT 18848.65 18322.22 18585.43 18807.72 19070.93 19293.22 GAIL 119.30 117.10 118.20 119.60 120.70 122.10 GRASIM 751.30 733.10 742.20 755.00 764.10 776.90 HCLTECH 608.05 600.92 604.48 608.72 612.28 616.52 HDFCBANK 1217.10 1204.50 1210.80 1220.40 1226.70 1236.30 HEROMOTOCO 2240.25 2210.02 2225.13 2250.57 2265.68 2291.12 HINDALCO 189.95 183.18 186.57 188.78 192.17 194.38 HINDUNILVR 2248.25 2212.78 2230.52 2260.23 2277.97 2307.68 HDFC 2369.50 2336.90 2353.20 2365.35 2381.65 2393.80 ICICIBANK 547.00 538.50 542.75 546.05 550.30 553.60 ITC 207.45 204.05 205.75 207.15 208.85 210.25 IOC 112.30 110.47 111.38 112.92 113.83 115.37 INDUSINDBK 1182.20 1118.23 1150.22 1177.03 1209.02 1235.83 INFY 797.00 786.73 791.87 798.98 804.12 811.23 JSWSTEEL 281.80 272.70 277.25 281.55 286.10 290.40 KOTAKBANK 1685.95 1664.08 1675.02 1687.13 1698.07 1710.18 LT 1280.60 1268.00 1274.30 1281.60 1287.90 1295.20 M&M 524.85 516.95 520.90 526.95 530.90 536.95 MARUTI 6757.60 6674.17 6715.88 6761.72 6803.43 6849.27 NTPC 111.35 110.12 110.73 111.57 112.18 113.02 NESTLEIND 16539.50 16387.03 16463.27 16601.63 16677.87 16816.23 ONGC 102.80 100.47 101.63 102.87 104.03 105.27 POWERGRID 189.25 183.82 186.53 188.62 191.33 193.42 RELIANCE 1485.95 1468.38 1477.17 1492.58 1501.37 1516.78 SBIN 327.65 314.75 321.20 325.20 331.65 335.65 SUNPHARMA 404.95 398.72 401.83 406.67 409.78 414.62 TCS 2156.80 2111.00 2133.90 2174.15 2197.05 2237.30 TATAMOTORS 158.50 152.63 155.57 158.93 161.87 165.23 TATASTEEL 51.45 49.95 50.70 51.95 52.70 53.95 TECHM 829.60 815.20 822.40 834.15 841.35 853.10 TITAN 1322.85 1306.92 1314.88 1327.97 1335.93 1349.02 UPL 584.35 571.55 577.95 587.10 593.50 602.65 ULTRACEMCO 4428.10 4364.03 4396.07 4452.03 4484.07 4540.03 VEDL 142.35 138.68 140.52 142.63 144.47 146.58 WIPRO 245.70 243.00 244.35 246.45 247.80 249.90 YESBANK 35.45 33.68 34.57 35.53 36.42 37.38 ZEEL 256.80 246.37 251.58 256.22 261.43 266.07 Source: Company, IndiaNivesh Research Note: The levels for TATASTEEL are of TATASTEEL Partly Paid up Share.DisclaimerInvestment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing. )
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SBI Cards & Payment Services IPO 2020
SBI Cards & Payment ServicesStrong play on spends digitisation What is the frenzy about? The much talked about IPO of the second largest credit card issuer has been awaited for multiple reasons: (a) a standalone credit card issuer, which (b) turned around strongly after being in red between FY08-FY10 and has ever since delivered robust profit growth (refer Exhibit 1, pp. 2), (c) a lucrative business that churned 38% RoE/6.9% RoA in 9MFY20 (refer financial snapshot table below), (d) SBI pedigree and an ocean of potential customers to farm (~430mn SBI customers) and harvest (~16mn that passed approval filters!), (e) giving investors a large canvas to paint the earnings in sky blue. No wonder SBICARDS MD Mr Hardayal Prasad, in an interview to a media channel, said ‘cash was his biggest competitor’! How does SBICARDS compare with competitors? It is already the second largest credit card issuer and actually betters the leader HDFCB on certain metrics (refer Exhibits 2 and 3 for detailed comparative data). With some consistent and aggressive open channel acquisition strategies alongwith strong acquisition through the banca channel, SBICARDS nurses ambitions of becoming the top card issuing company in India. At the current growth rates (+30%YoY) and assuming HDFCB sustains its mid-teen card addition rate, SBICARD could likely overtake HDFCB to become the largest issuer in the next two years (FY22E). Robust earnings stack: In FY19, SBICARDS had a spread ratio (NII/avg. assets) of 14% and non-spread income of 20.7%. With outstanding credit cards increasing ~21% YTD and 9MFY20 spends nearing 1x FY19 spends, we estimate the business momentum is likely to result in a net profit of Rs15-16bn in FY20E. We expect profit to compound at 40% over FY20E-FY22E. This should result in RoE in excess of 30%. Positive rub-off for SBIN: We currently value SBICARDS at a modest Rs11/share in SBIN SOTP based on 20x FY19 net profit. However, with the changes in corporate tax rate and a strong pick-up in growth momentum for SBICARDS, the IPO value discovery implies a stronger rub-off for SBIN in SOTP. The post-issue valuation of SBICARDS is likely to add at least Rs45 to our current SBIN target price of Rs370 (29% potential upside).Valuations rich but offer upside, SUBSCRIBE: We believe the fair value of SBICARDS to be between Rs900-950 implying a P/E multiple of ~32x on the FY22E net profit Rs27.5bn (+35% CAGR FY20-FY22E). At a price of Rs900, SBICARDS would trade at Rs845bn market capitalization. That’s nearly 1/3rd the market capitalisation of its parent SBI with a fraction of its assets! Valuations, therefore do appear rich. However, for the +30%RoE/6%ROA combination, we believe the pricing of SBICARDS does offer an upside.Key earnings risk is regulatory: Changes in merchant discount rate can affect fee income and increase in regulatory capital requirement (current minimum Tier 1 requirement of 10%, minimum CAR requirement of 15%).Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.)