After more than 8 percent correction in the market from its record high levels, the market has been range-bound. The consolidation is expected to continue over the next 3-6 months after a steep run in prices, said Yuvraj Thakker, Managing Director at BP Wealth in an interview to Moneycontrol.
As far as events are concerned, the Union Budget 2022-23 and LIC IPO will be key things to watch out for in the near term, said Thakker who has been leading the BP Wealth since 2012.
What should investors learn from the year 2021 that has seen strong rally, created several multibaggers, higher commodity prices and many more things?
The year 2021 was one with significantly high volatility. There have been several multibaggers this year, but many investors are also stuck in stocks that were bought at very high levels. Investors should learn to not get carried away by just looking at the stock prices, but also study other fundamental factors and business risks before making an investment decision.
Commodity prices have shot up substantially in 2021, leading to multiplication of several commodity oriented stock prices. However, investors should understand the commodity cycle as entry and exit points in cyclical stocks matter a lot. As the famous saying goes, investors should “Buy when the company is posting historically low margins and sell when the company is posting historically high margins” when it comes to cyclical stocks.
The market remained range-bound for several weeks now. What could be triggers in short term that could push the markets beyond record high levels?
Overall long term visibility and growth outlook for Indian companies remain intact. We expect the market to consolidate over the next 3 to 6 months after a steep run in prices. Stock specific opportunities will be visible but a broad-based market is likely to be sideways. Triggers such as the Union Budget 2022-23 and LIC IPO will be watched out for in the near term.
CMS Info Systems IPO will be opened for subscription next week and it is entirely an offer for sale issue. Should one subscribe to the offer and why?
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We recommend subscribing to CMS Info Systems IPO, which will open for subscription next week. The company is India’s largest cash management company and has a pan-India fleet of 3,965 cash vans and a network of 238 branches and offices (As of August 31, 2021). High headroom for growth, strong order book, and expansion plans are key positives for the company. At the upper price band, the issue is reasonably priced at a P/E of 19.5x based on FY21 earnings.
Shriram Properties (December 20), MapmyIndia (December 21), Metro Brands (December 22), Medplus Health Services (December 23) and Data Patterns (December 24) will make debut on the bourses next week? What could be listing premiums for these IPOs?
Considering the subscription demand and market condition, the IPOs of Shriram properties and Metro Brands are expected to see a nominal listing premium.
Medplus Health Services and Data Patterns could see a listing premium in the range of 30-50 percent, while MapmyIndia is expected to list at a hefty premium with the potential to double on listing day.
Also read – Shriram Properties shares see muted demand in grey market. How will its listing be?
How do you sum up the primary market that saw fund raising of more than Rs 1.3 lakh crore in the year 2021? Do you expect similar kind of fund raising in 2022 and can you name the companies that are planning IPOs in 2022?
2021 has been one of the best years for IPOs despite the Covid-19 pandemic. Positive investor sentiment and no economic downturns have led to a successful year for the primary markets. Some of the IPOs such as Nureca and Paras Defence are doing exceptionally well. CY 2022 could see a similar or even bigger fund raising. The successful IPOs of Zomato and Nykaa have opened up the gates for several other Indian startups to get listed with companies such as Ola, Byju’s, Delhivery expected to launch their IPO in CY2022.
Several stocks after IPOs in 2021 including Latent View, Sigachi Industries, Paras Defence, TatvaChintan, GR Infraprojects, Clean Science, SonaComstar, Macrotech Developers, Barbeque Nation, Nazara Technologies, Laxmi Organic, Easy Trip Planners, MTAR Technologies, Nureca, and Stove Kraft remained multibaggers till the end of the year. Do you expect such performance from these stocks to continue in 2022 as well and will there be more multibaggers in 2022 compared to 2021? Also what is your overall reading?
Several stocks after IPOs in 2021 remained multibaggers till the end of the year, however, some of them were listed at very high valuations which remain a cause of concern. The significant correction could be seen in some highly-priced stocks over the next year.
CY2022 will continue to see more and more companies get listed and can expect similar multi-baggers, but investors should be careful about the IPO Euphoria and understand that not all IPOs will give significant returns.
Paytm, SJS Enterprises, Fino Payments Bank, Aditya Birla Sun Life AMC, CarTrade Tech, Krsnaa Diagnostics, Windlas Biotech, Glenmark Life Sciences, Suryoday Small Finance Bank, Kalyan Jewellers and IRFC were the biggest losers with double digit decline amongst IPOs that listed in 2021. Overall what are the key reasons for such underperformance, what should investors do with these kind of stocks and what should investors learn from this?
With the market sentiment being bullish throughout 2021, retail investors may tend to think that all IPOs will perform well, which is not the case. In such times, it is important to not get carried away and invest in IPOs with reasonable valuations and strong fundamentals. Investors should also study several other fundamental factors before investing for the long term.
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