💹 Raging IPO market

Good morning. Happy Indian Independence Day. Hope you all have some fun plans for the long weekend.

Jai Hind 🇮🇳 🫡 

- Ruchirr Sharma & Shatakshi Sharmaa

TABLE OF CONTENTS

• 💹 ​​India's IPO market roars back to life

• ⚔️ India accelerates acquisition of US 'Hunter-Killer' drones

• 🗞️ Bite-sized summaries

  • 💰️ Bharti acquires interest in BT Group

  • 🏦 SBI selling stake in YES Bank

  • 💔 No medal for Phogat

• 🧑‍🍳 What else is cookin’?

• 🍿 Entertainment, Entertainment, Entertainment

MARKETS

🇮🇳 India

• Indian stock markets closed slightly higher on Wednesday, but over half of Nifty50 constituents declined. IT sector outperformed, while metal stocks fell after a Supreme Court ruling on mining taxes. Broader indices mostly settled lower, except for Nifty Next 50 and Nifty 100. TCS, HCL Tech, and Tech Mahindra were top gainers, while Divi's Labs and UltraTech Cement were among top losers.

🌍️ International

• U.S. markets held steady after consumer prices rose 0.2% in July, as expected, reinforcing hopes for Federal Reserve interest rate cuts. Global stocks also gained, while the dollar weakened against major currencies. Market speculation remains divided on whether the Fed will implement a 25 or 50 basis point cut in September, with traders closely monitoring upcoming economic data for further direction.

IPO

💹 ​​India's IPO market roars back to life

45. 

That’s how many Indian companies have filed for an IPO this year. 

57 companies filed an IPO all of 2023. 

So pardon my cliched comparison, but much like a phoenix rising from the ashes, India's initial public offering (IPO) market is experiencing a remarkable resurgence, dispelling previous concerns and cementing the country's position as Asia's IPO leader. 

Recent successful listings have boosted investor confidence and paved the way for larger offerings:

• E-bike manufacturer Ola Electric Mobility and baby products e-commerce firm Brainbees Solutions have both made impressive market debuts, with shares surging 42% and 46% respectively above their IPO prices. 

• These triumphs are particularly noteworthy given that both companies are currently unprofitable, marking a significant shift from the poor performance of previous high-profile tech IPOs, such as Paytm's disastrous 2021 listing.

So why is this happening now? 

• The key to this success appears to be more conservative valuations. 

• Ola, for instance, priced its offering at a 25% discount compared to its previous funding round. This approach has attracted both foreign and local investors, including sovereign wealth funds.

How’s India doing globally? 

• India's IPO market is outperforming traditional powerhouses like Hong Kong and China. Year-to-date, Indian IPOs have raised $7.3B, nearly matching the entire 2023 total. 

• When including follow-on issues and convertibles, India's $34B in proceeds far surpasses its regional competitors.

Overall: This momentum is expected to continue with several high-profile listings in the pipeline, including the Indian unit of Hyundai Motor and food delivery firm Swiggy. 

Additionally, tycoon Mukesh Ambani has announced plans to list the telecom and retail units of his Reliance Industries conglomerate.

As India's IPO market matures, bankers will need to price offerings more confidently, ensuring a balance between attracting investors and maximising value for issuers. With this recent string of successes, India is well-positioned to maintain its crown as Asia's IPO hub in the coming months.

Read more: Reuters

DEFENCE

⚔️ India accelerates acquisition of US 'Hunter-Killer' drones

In a strategic move to bolster its defence capabilities, India is fast-tracking negotiations to acquire 31 weaponised MQ-9B 'hunter-killer' drones from the United States. 

The deal, valued at $3.9B (over ₹33,500 Cr.), is expected to be finalised by November-December 2024.

Why now? 

• The procurement aims to counter the growing drone capabilities of China and Pakistan. China has been supplying armed drones to Pakistan, including the Cai Hong-4 and Wing Loong-II models. 

• Pakistan is reportedly seeking an additional 16 CH-4 drones from China, adding to its existing fleet.

The MQ-9B drones, considered superior to their Chinese counterparts, will be divided among the Indian armed forces:

• 15 Sea Guardians for the Navy

• 8 Sky Guardians each for the Army and Air Force

These high-altitude, long-endurance drones can fly for about 40 hours at altitudes over 40,000 feet. They are equipped with Hellfire air-to-ground missiles and smart bombs for precision strikes, in addition to advanced surveillance capabilities.

India's decision to accelerate this acquisition follows positive experiences with two unarmed Sea Guardian drones leased from US firm General Atomics. These drones have been conducting extensive intelligence, surveillance, and reconnaissance missions over the Indian Ocean Region and along the Line of Actual Control with China.

As part of the deal, the drones will be assembled in India, with General Atomics sourcing some components from Indian companies. The US firm will also establish a global maintenance, repair, and overhaul facility in India.

Overall: While the Indian negotiating team is working to reduce costs, the deal includes 170 Hellfire missiles, 310 GBU-39B precision-guided glide bombs, and various support systems. 

The first batch of 10 drones is expected to be inducted within two years of the contract signing, with subsequent deliveries every six months.

This acquisition marks a significant step in India's efforts to enhance its military capabilities and maintain strategic balance in the region.

Read more: Economic Times

GENERAL OVERVIEW

🗞️ Bite-sized summaries

💰️ Bharti acquires interest in BT Group - Bharti Global, the international investment arm of Bharti Enterprises, is set to acquire a 24.5% stake in British telecommunications company BT Group from Altice UK for $4B. This move demonstrates Bharti's confidence in BT and the UK market, potentially strengthening India-UK economic ties. The deal also aligns with recent UK-India technology collaboration initiatives and has received positive responses from BT's existing stakeholders, including Deutsche Telekom.

🏦 SBI selling stake in YES Bank - State Bank of India (SBI) is reportedly planning to sell its 24% stake in YES Bank, worth ₹18,420 Cr. ($2.2B), by March 2025. Japanese lender Sumitomo Mitsui Banking Corp and Dubai-based Emirates NBD are reportedly in advanced talks to acquire a 51% majority stake in YES Bank. The news caused YES Bank's share price to fall by 1% to Rs 24.23, while SBI's share price dropped 1.7% to ₹798.5. Both SBI and YES Bank have denied or refused to comment on these reports. YES Bank was restructured by the RBI in March 2020 with help from a consortium of local banks after its financial health deteriorated.

💔 No medal for Phogat - Indian wrestler Vinesh Phogat's petition against her disqualification at the Paris Olympics has been dismissed by the Court of Arbitration for Sports (CAS). Phogat was disqualified for weighing 100 grams over the limit before her gold medal bout. She had appealed for a joint silver medal with her opponent. Following the CAS decision, Phogat announced her retirement from wrestling in an emotional post, expressing her sense of defeat and gratitude. The Indian Olympic Association (IOA) expressed shock and disappointment at the CAS verdict.

HEADLINES

🧑‍🍳 What else is cookin’?

What’s happening in India (and around the world 🌍️)

• Foxconn chairman meets PM Modi in Gujarat.

• Fresh Bus raises $10.5M in funding led by VC Maniv.

• Wish taxes could be cut to zero, but a growing India needs funds: Sitharaman.

• Kotak investment to take over troubled Supertech Supernova project.

• Passenger vehicle sales fell for the first time in over two years in July.

CULTURE

🍿 Entertainment, Entertainment, Entertainment

• Netflix India releases the cast announcement of an exciting new series, The Royals, featuring a stellar cast.

• Sachin Tendulkar set to launch sports athleisure brand with former Swiggy Instamart head Karthik Gurumurthy.

• Asha Parekh to receive Maharashtra Govt's 'Raj Kapoor Lifetime Achievement Award'.