IPO Flurry in December, Lakshmi Vilas Bank Fiasco, and Top Buzzing Stocks Today

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Indian share markets witnessed volatile trading activity on Friday and ended marginally lower, ahead of Q2 GDP data.

Benchmark indices traded on a volatile note, swinging between gains and losses, following muted trends in Asian peers.

Sentiment was also weighed on renewed doubts about a highly-anticipated coronavirus vaccine.

British drug maker AstraZeneca's coronavirus drug was touted as a "vaccine for the world" due to its inexpensive cost, but the efficacy of the vaccine is now facing more intense scrutiny, which experts say could delay its approval.

At the closing bell on Friday, the BSE Sensex stood lower by 110 points. The NSE Nifty ended down by 18 points.

Asian Paints was among the top gainers. Power Grid, on the other hand, was among the top losers.

The BSE Mid Cap index ended up by 1.9%. The BSE Small Cap index zoomed 2.4%.

Sectoral indices ended on a mixed note with stocks in the realty sector and consumer durables sector witnessing buying interest. Energy and IT stocks, on the other hand, witnessed selling pressure.

Market participants were also tracking automobile stocks on Friday ahead of the November month sales numbers, which release this week.

Shares of Cummins India, Tata Motors and TVS Motor Company gained over 5% on Friday, while Ashok Leyland, Motherson Sumi Systems, Bajaj Auto, Balkrishna Industries, Exide Industries and Amara Raja Batteries from the BSE auto index gained in the range of 3-5%.

Gold prices for the latest contract on MCX were trading up by 0.2% at Rs 48,618 per 10 grams at the time of closing stock market hours on Friday.

A rally in equities after upbeat Covid-19 vaccine trial results from Pfizer, Moderna and AstraZeneca has weighed on gold prices.

To know more about gold, you can check out our detailed article on investing in gold here: How to Invest in Gold?

Top Stocks in Focus Today

Adani Green Energy will be among the top buzzing stocks today.

The company said that it released the promoter pledge of 33.5 million equity shares on Thursday last week.

Vistra ITCL India released 33.5 million equity shares of the company. Vistra ITCL is a security trustee acting on behalf of one of the lenders of the company.

Speaking of Adani Green, note that shares of the company have seen a meteoric rise and are up almost 10x in the last one year.

The company is now the 17th or the 18th largest company in India by market value.

In his latest video, co-head of Research at Equitymaster, Rahul Shah, discusses the hype around Adani Green Energy and analyses whether it is justified.

Tune in to find out more:

Mahindra and Mahindra (M&M) share price will also be in focus as the company announced the sale of its vehicle service business, Mahindra First Choice Services to TVS Automobile Solutions (TASL), part of Chennai based TVS Group, in a share swap deal.

As part of the engagement, M&M will take 2.8% stake in TASL and will invest approximately Rs 350 million.

The Mumbai based conglomerate has been restructuring its loss-making businesses and exiting the auto after-market business seems to be a part of the same strategy.

IPO Buzz: Half a Dozen Companies Lining Up to Launch IPO in December

In latest developments from the IPO space, as per a leading financial daily, nearly half a dozen companies are lining up to launch their initial public offer (IPO) next month.

Companies like Suryoday Small Finance Bank, ESAF Small Finance Bank, Nazara Technologies, RailTel, Burger King, Kalyan Jewellers and Antony Waste Management are among those that are conducting road shows and planning IPOs in December, The Economic Times mentioned in a report citing bankers.

The IPO of quick service restaurant chain Burger King India will open on December 2.

The price band for the IPO has been set at Rs 59-60 per share.

The company is aiming to raise Rs 8.1 billion through the issue which comprises a fresh issue of shares worth Rs 4.5 billion, and an offer for sale of up to 60 million shares by promoter entity QSR Asia Pte worth Rs 3.6 billion.

Burger King intends to utilize the fresh proceeds to finance the roll-out of new company-owned Burger King Restaurants and to meet the general corporate purposes.

So far this year, 12 companies have raised nearly Rs 250 billion through IPOs compared with Rs 123.6 billion raised by 16 companies in 2019.

Some of the companies that had deferred their IPO plans, now want to tap the market again on robust investor appetite, said bankers.

How the above IPOs sail through remains to be seen. Meanwhile, we will keep you updated on the latest developments from this space.

Speaking of IPOs, in one of his videos, Vijay Bhambwani shares his thoughts on the recent spate of IPOs and what it means for the market.

You can check out the same here: My View on the IPO Market

Indiabulls Housing Finance Moves Court Challenging LVB-DBS Merger

Indiabulls Housing Finance, one of the major shareholders of the Lakshmi Vilas Bank (LVB) has moved the Bombay High Court (HC) seeking legal intervention in the merger of the bank with Singapore-based DBS Bank. The petition urges the court to protect the interest of the equity holders.

According to the final scheme of amalgamation, the entire equity paid-up capital of LVB shareholders will be written off and the shares will cease to trade and get de-listed from the exchanges with effect from November 27.

Indiabulls has close to 5% stake in the bank. Besides Indiabulls, a clutch of other shareholders including one of the founders, KR Pradeep, too has moved courts. Pradeep has filed his petition in the Bombay HC.

Other investors who have moved court include Kare Electronics & Development Private and Pranava Electronics Private.

Other major shareholders in LVB include Prolific Finvest Private (3.4%), Srei Infrastructure Finance (3.3%), MN Dastur and Co. (1.9%), Capri Global Holdings (1.8%), Capri Global Advisory Services (2%), Boyance Infrastructure (1.4%) and Trinity Alternative Investment Managers (1.6%).

As per the scheme for the amalgamation, all the branches of LVB will function as branches of DBS Bank India with effect from November 27. Customers, including depositors of LVB, will be able to operate their accounts as customers of DBS Bank India.

Consequently, the moratorium on the Lakshmi Vilas Bank will cease to be operative from that date.

DBS Bank India is making necessary arrangements to ensure that service, as usual, is provided to the customers of the LVB.

How this pans out remains to be seen. Meanwhile, stay tuned for all the updates from this space.

Note that LVB is the third bank to be placed under moratorium since September last year after the co-operative bank PMC in 2019 and Yes Bank this March.

Back in May 2019, we wrote an article around how we avoided a 60% loss in Lakshmi Vilas Bank.

Here's an excerpt from the article:

• "LVB had an interesting story.
  
  The bank had a new management team in place. The bank was shedding its old image to bring out a new look.
  
  The new management had a clear vision and set several goals. These included deposit and loan growth targets, CASA (current account saving account) ratio targets, a focus on retail loans, and the reduction in cost-to-income ratio.
  
  So far so good.
  
  But the bank had its own legacy issues. These were rising bad loans, a weak balance sheet with a poor capital adequacy ratio (CAR).
  
  The falling CAR was a concern.
  
  The CAR is the ratio of a bank's capital in relation to its risk-weighted assets and current liabilities. The RBI has set the minimum CAR at 9% for all banks.
  
  A ratio below 9% indicates the bank does not have enough capital to expand its operations. It ensures that banks don't expand their business without having adequate capital.
  
  On one hand, LVB had bad loan issues and on the other, it badly needed capital to shore up its CAR."

If you look at the shareholding pattern of LVB during the 2-year time frame between May 2017 to May 2019, retail investors increased by 15% while the number of shares owned by them increased by 24%.

A typical example of retail investors catching a falling knife!

To know more, you can read about it in one of the latest editions of Profit Hunter: Lesson for Investors from the Lakshmi Vilas Bank Fiasco.

And to know what's moving the Indian stock markets today, check out the most recent share market updates here.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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