Amit Pamnani, Chief Investment Officer & DGM for Investment Banking at Swastika Investmart, said based on the research on economic indicators like inflation, interest rates and the financial performance of companies, the real GDP growth rate in Q2FY22 is expected to be between 7.5 percent and 8 percent.
Pamnani, who has an experience of 15 years in the investment and advisory role, said he is bullish on the IT sector (which also includes profitable startups) and pharma-related companies in sub-segments like life sciences, API manufacturing and patient drugs.
Edited excerpts:
Q: After more than Rs 36,000 crore of fundraising via IPOs in November, what is your outlook for the primary market? What are the expected IPOs in the coming months?
There are more than 50 IPO applications awaiting for SEBI nod to go for listing, aggregating to over Rs 1 lakh crore (barring LIC). This includes companies like Adani Wilmer, Ruchi Soya, Mobikwik, Delhivery, Keventer Agro, Utkarsh Small finance, Pharmeasy and Star Health. It is a Nifty time for raising funds from primary markets as all categories of investors are aggressively investing in markets due to the lowest rates on FDs and bonds. There is no reason for companies to take a break, fundamentally strong companies will continue to get astonishing interest from investors.
Q: What could be the listing premium for Latent View Analytics, and Tarsons Products? And what should investors do with allotted shares on the listing day? These IPOs will list in the coming week…
Sapphire Foods is a leading quick-service restaurant brand with a large market presence and size. It recorded a loss of Rs 99.89 crore in the financial year FY21 against a loss of Rs 159.25 crore in the previous year FY20. Its issue was entirely offer for sale; also the company been loss-making in the last three financial years. Investors with moderate to high-risk appetites can hold it for long.
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Latent View Analytics’ expertise in data and analytics-based IT consultancy keep it in a prime league. It is showing growth in profit in last 3 years. Profits have grown from Rs 72.8 crore to Rs 91.4 crore over the period of FY20 to FY21. It got subscribed 326 times. We expect it may list at around 2 times higher to its issue prices of Rs 197 and it will not be surprising if it closes at the upper circuit. Investors can stay long for higher returns.
Tarsons Products is a company with great brand awareness and high-quality goods. It is India’s leading life sciences product supplier. The company aims to be debt fee post the IPO and is planning for CAPEX which will further increase the revenues. However, a major portion will be used for offer for sale. Its average grey market premium is Rs 200. It caters to pharma, laboratories, academia sectors which are growing exponentially, hence, Tarsons demand outlook seems to be attractive. We expect its shares to get listed at around Rs 850, investors can book part profit.
Q: Name the two sectors that are a must have in one’s portfolio right now to get healthy returns by the end of the next year 2022?
Also read – With 27% fall on debut day, Paytm emerges as biggest loser among IPOs listed in a decade
Looking at the macro-economic factors of the world and the Indian economy, we are bullish on the IT sector (which also includes profitable startups) and pharma-related companies in sub-segments like life sciences, API manufacturing and patient drugs.
Q: IT story is expected to remain solid going ahead, but is it time to increase exposure to the segment as the number of positive surprises has reduced?
We are in a bull run of IPOs where new-age businesses are on the front seat. IPO euphoria might lead to listing gains on 70 percent of the companies. We advise our investors that fundamentally strong and profitable companies in the tech business are bound to grow, hence investors can bet on the long-term perspective. While loss-making companies with a major OFS portion of the issue is a risky investment like Paytm, the Future of such companies will depend on their upcoming results.
Q: What are your broad expectations for Q2FY22 GDP that is expected to be announced at the end of this month?
Based on our research on economic indicators like inflation, interest rates, the financial performance of companies, we expect the real GDP growth rate in Q2FY22 may hit between 7.5 percent to 8 percent. Post lockdown of Q1, in Q2 Industrial output & demand, was higher and GDP growth rate could have touched 9 percent but with a little dent of input resource constraint & inflation on account of fuel prices, it seems doubtful.
Q: Since after hitting record highs last month (18,604 on Nifty), the market has been consolidating in a particular range. Do you think the consolidation to continue till the end of 2021?
Nifty is showing signs of distribution where it was consolidating between 20 and 50 – DMA throughout the November month and now it has witnessed closing below this band that may lead to further weakness. It is forming a bearish Head and Shoulder formation on the daily chart where 17,600 is neckline support; below this, Nifty is vulnerable for a meaningful correction towards the 16,700 level.
However, 17,450-17,250 is an intermediate support zone. On the upside, the 18,000-18,200 area has become a critical resistance area, and only above this zone, we can say that the bearish view has been negated therefore there is a good chance that Nifty may trade below the 18,000 level by the end of 2021.
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