Foxconn's Rs 50 Bn IPO, Zee Entertainment - Sony Merger, and Buzzing Stocks Today

Thu, 23 Dec Pre-Open

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Indian share markets ended on a strong note yesterday.

The bulls took control of the proceedings on Dalal Street as benchmark indices hovered in the positive zone throughout the trading session.

The BSE Sensex rallied to a high of 56,989 led by strong gains in index heavyweights Reliance Industries, Bharti Airtel and financial shares.

At the closing bell yesterday, the BSE Sensex stood higher by 612 points (up 1.1%).

Meanwhile, the NSE Nifty closed higher by 185 points (up 1.1%).

Hindalco Industries and Tata Motors were among the top gainers.

SBI Life Insurance and Power Grid Corp, on the other hand, were among the top losers.

The BSE Mid Cap index and the BSE Small Cap index ended up by 1.5% and 1.7%, respectively.

Sectoral indices ended on a positive note with stocks in the realty sector, engineering sector and energy sector witnessing buying interest.

Shares of TCI Express and Minda Industries hit their respective 52-week highs.

Gold prices for the latest contract on MCX were trading down by 0.1% at Rs 48,016 per 10 grams at the time of closing stock market hours yesterday.

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Top Stocks in Focus Today

Among the buzzing stocks today will be Zee Entertainment.

The board of directors of entertainment major Zee Entertainment Enterprises (ZEE) has approved the binding agreement with Sony Pictures Networks India (SPN), a subsidiary of Sony Pictures Entertainment a day after the 90-day exclusivity period of the non-binding bid ended Tuesday.

Punit Goenka will lead the merged entity as the managing director and CEO of the company.

The majority of the board of directors of the combined company will be nominated by the Sony Group and will include the current SPN Managing Director and CEO NP Singh.

Singh will also assume a broader executive position at SPE as the Chairman of Sony Pictures India (a division of SPE). Singh will report to Ravi Ahuja, the chairman of Global Television Studios and SPE corporate.

The two had announced a merger on 22 September 2021 and as a part of the deal. Sony will own 50.86% of the merged entity, while the promoter group Essel will own a 3.99% stake. The public shareholding will stand at 45.15%.

Zee currently owns 960.5 m shares, post-merger their holding will rise to 1.7 bn. The promoters are expected to get over Rs 10 bn from the non-compete. The promoters will buy over 3.67 shares in the merged entity at Rs 300 per share to maintain the 3.99% stake.

As per the company's term sheet, SPE Mauritius Investments Limited will pay to Essel an aggregate amount of US$ equivalent of over Rs 10 bn towards the non-compete obligations.

Further, the promoters of Zee have agreed to own not more than 20% of its outstanding shares. The promoters or founders of Zee do not have any rights to acquire equity in the combined company from the Sony Group.

SPE was advised on this transaction by the likes of Morgan Stanley, KPMG, Shardul Amarchand Managaldas. Zee was advised by KPMG, JP Morgan, Trilegal, and Boston.

ITC share price will also be in focus today.

ITC Master Chef Frozen Snacks - a brand of frozen foods - has partnered with Havmor Ice cream brand to sell its range of products in what the company said is part of ITC's new route-to-market distribution strategy. ITC will leverage 100 ice cream carts for this purpose.

Havmor is an ice-cream brand owned by South Korean company Lotte. Its mobile carts will sell ITC's burger patties, fries, pizza pockets, kebabs, vegetable patty among other snacks. These carts will be located at 100 different locations across Delhi-NCR; the carts can be located via Google MyMap.

ITC will use the carts largely between November to March-a lean period for sales of ice-creams.

The distribution tie-up will give ITC Master Chef an opportunity to expand the availability and accessibility of its range of frozen food offerings during winters when demand for frozen foods is up 30% compared to summers.

For Havmor, the partnership creates an incremental earning opportunity for its channel partners and vendors and helps the company leverage its operating costs during the ice cream low season, ITC said.

The move is aimed at fulfilling the demand for convenience foods in the country, said Ashu Phakey, vice president and business head (frozen foods), ITC.

The association helps ITC Master Chef enhance availability during season and it allows Havmor Ice creams channel partners generate incremental revenues during winter months. Expanding Pushcart operations is an integral part of Havmor Ice creams strategy to enhance its reach.

Government's Ambitious Make-in-India Chip Manufacturing May Start in 2-3 Years

India expects at least a dozen semiconductor manufacturers to start setting up local factories in the next 2-3 years after the South Asian nation offered incentives for the sector, the country's information and technology minister told Bloomberg on Wednesday.

Prime Minister Narendra Modi's government is working on developing an entire ecosystem for the chip manufacturing industry and will start taking applications under the incentive schemes from 1 January 2022, Ashwini Vaishnaw, who also holds the railways and telecom portfolio.

Last week, the Indian government approved a Rs 760 bn scheme to boost semiconductor and display manufacturing in the country in a bid to position India as a global hub for hi-tech production, and attract large chip makers.

The move is aimed to further India's ambitions to be self-reliant in electronics manufacturing, bring massive investments and result in 35,000 specialised jobs apart from indirect employment for one lakh people.

In the current geopolitical scenario, trusted sources of semiconductors and displays hold strategic importance and are key to the security of critical information infrastructure.

The semiconductor scheme also comes at a time when the world is witnessing a severe crunch of semiconductors, a key component used in cars to electronic devices.

Foxconn's India Unit Bharat FIH Files for IPO

Bharat FIH, a subsidiary of FIH Mobiles and a Foxconn Technology Group company, on Wednesday filed papers with market regulator to raise around Rs 50 bn via an IPO, according to its draft prospectus.

FIH Mobile is a unit of Apple Inc supplier Foxconn.

Shares of FIH Mobile surged 6.7% yesterday in Hong Kong after the firm proposed the listing of Bharat FIH.

Bharat FIH's IPO will consist of a fresh issue of shares of up to Rs 25 bn and an offer for sale (OFS) of shares up to Rs 25 bn by promoter group and Foxconn unit Wonderful Stars, the prospectus read.

Bharat FIH's IPO comes at a time Foxconn's plant near Chennai will reportedly remain shut this week following protests sparked by a food poisoning incident.

The factory looked deserted on Tuesday, with a few cars including a police vehicle parked outside. No workers were seen at the site, which was manned by two guards and a few other security officials.

Citigroup Global Markets India, BNP Paribas, HSBC Securities and Capital Markets (India) are among the lead book runners for Bharat FIH's IPO.

Bharat FIH, which is an electronic manufacturing services provider in India, carries its operations across campuses in Andhra Pradesh and Tamil Nadu, each of which integrates manufacturing, warehousing, logistics and accommodation facilities.

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

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

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