Key Changes in IPO Rules, ITC's Solar Project, and Buzzing Stocks Today

Wed, 29 Dec Pre-Open

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Indian share markets ended on a strong note yesterday.

Benchmark indices climbed nearly 1% on the back of all-round buying as investors side-lined Omicron related fears.

At the closing bell yesterday, the BSE Sensex stood higher by 0.8 points (up 0.8%).

Meanwhile, the NSE Nifty closed higher by 147 points (up 0.9%).

Sun Pharma and Asian Paints were among the top gainers.

Power Grid Corp and IndusInd Bank, on the other hand, were among the top losers.

The BSE Mid Cap index and the BSE Small Cap index ended up by 1% and 1.4%, respectively.

Sectoral indices ended on a positive note with stocks in the engineering sector, auto sector and consumer durables sector witnessing buying interest.

Shares of Minda Industries and KPIT Technologies hit their respective 52-week highs.

Gold prices for the latest contract on MCX were trading up by 0.1% at Rs 48,130 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 ITC.

ITC has commissioned its first offsite solar plant in Dindigul, Tamil Nadu, at an investment of Rs 760 m, the company said in a statement.

The 14.9-megawatt (MW) solar plant will help reduce carbon dioxide (CO2) emissions over the course of its lifetime.

This new project is in line with ITC chairman Sanjiv Puri's 'Sustainability 2.0' vision, under which the conglomerate plans to meet 100% of grid electricity requirements from renewable sources by 2030.

ITC's renewable portfolio comprises 138 MW of wind power plants and 14 MW of solar plants with 53MW of additional solar capacity under execution.

Currently, projects are also underway in other sources of renewable energy such as biomass boilers.

ITC has so far invested Rs 10 bn in renewable energy assets.

Renewable energy powers the company's 20 factories, nine hotels, and six office buildings across Telangana, Tamil Nadu, Karnataka, Maharashtra, Andhra Pradesh, Rajasthan, Uttar Pradesh, Delhi, Bihar, Haryana, West Bengal, and Punjab.

The Dindigul solar plant is spread over 59 acres. The unit will generate over twenty-two million units of renewable energy annually for ITC's hotels, food manufacturing plants, paper manufacturing facility, and printing and packaging factories in Tamil Nadu.

Besides investments in new renewable energy assets, as part of its sustainability agenda, ITC plans to achieve 50% reduction in specific emissions and 30% reduction in specific energy consumption by 2030 over a 2014-15 baseline.

Ajanta Pharma share price will also be in focus today.

Shares of Ajanta Pharma rallied 6% to Rs 2,310 apiece on the BSE after the company announced that its board at its meeting held yesterday has approved share buyback proposal.

The board has fixed Friday, 14 January 2022 as the record date for the proposed buyback offer.

The board has approved buy-back of up to 11.2 lakh fully paid-up equity shares of face value of Rs 2 (representing 1.3% of the total number of equity shares of the company) at a price of Rs 2,550 per share payable in cash for a total consideration not exceeding Rs 2.9 bn through the 'tender offer' route, the pharma company informed in an exchange filing today.

The total pay-out towards buyback of shares will be not exceeding Rs 3.6 bn (equity shares buyback consideration not exceeding Rs 2.9 bn + buyback tax not exceeding Rs 700 m) on a proportionate basis through the tender offer process.

This buyback represents 1.3% of the total number of equity shares of the company and 9.9% of the paid-up share capital and free reserves of the company as per the audited financial statements for the financial year ended on 31 March 2021.

Last week, the company had said that it will hold a board meeting on 28 December to consider a proposal for buyback of equity shares.

Supriya Lifescience Lists at 55% Premium Over Issue Price

Shares of Supriya Lifescience made a stellar debut yesterday as the scrip listed at Rs 425 on BSE, a premium of 55.1% over its issue price of Rs 274. On NSE, the scrip listed at Rs 421.

Supriya Lifescience is a manufacturer and supplier of active pharmaceutical ingredients (APIs) with a focus on research and development. As of 31 October 2021, it had niche product offerings of 38 APIs focused on diverse therapeutic segments such as antihistamine, analgesic, anesthetic, vitamin, anti-asthmatic and antiallergic.

The Rs 7 bn initial public offering (IPO) by the API manufacturer was sold from 16 December to 20 December and was subscribed nearly 72 times, with the IPO getting fully subscribed within a few hours of bidding on Day 1.

The IPO comprised a fresh issue of up to Rs 2 bn and an offer for sale (OFS) of up to Rs 5 bn.

Proceeds from the fresh issue will be used for funding capital expenditure requirements, debt repayment, and general corporate purposes.

The API maker has consistently been the largest exporter of Chlorpheniramine Maleate and Ketamine Hydrochloride from India, contributing to 45-50% and 60-65%, respectively, of the API exports from India, between fiscals 2017 and 2021.

It was among the largest exporters of Salbutamol Sulphate in India contributing to 31% of the API exports from India in the financial year 2021 in volume terms.

Market Regulator Clears Slew of Norms to Tighten IPO Process

In peak bull market, while public listings kept the market buzzing with momentum it also exposed gaps in regulations particularly when new age companies made their debuts on stock exchanges.

With just days left for the year to end, the market regulator on Tuesday cleared rules which will address gaps such as those involving price bands, anchor investor lock-in period, and the quantum of holding a majority shareholder can offload on listing day.

These changes are based on a 16 November discussion paper. The board has ratified norms aimed at addressing price volatility the stock witnesses either on the day of listing or when anchor investors exit their holding.

Currently, during an OFS shareholders can exit part or their entire holding. But in the case of new age companies, which typically do not have an identifiable promoter and are making consistent losses, a complete exit from prominent shareholders does not inspire confidence in investors.

To do away with this anomaly, the markets regulator has mandated that shareholders, who hold more than 20% stake, cannot exit their entire holding on listing day but only 50% of their holding.

Regulator has also tightened disclosures around the objective of IPO proceeds. It observed that in IPO draft papers of new age companies, the stated objective for fund raising is 'funding of inorganic growth initiatives.

'Raising fund for unidentified acquisition leads to some amount of uncertainty ambiguity in the IPO objects', the markets regulator had said in the discussion paper issued on 16 November.

Now companies will be able to use only 25% of the IPO proceeds for such growth initiatives. The use of funds raised during IPO will be monitored by rating agencies going forward.

We will keep you updated on the latest developments from this space. Stay tuned.

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