Three IPOs opening for subscription this week, should you invest?

We witnessed the last two IPOs of Happiest Minds and Route Mobile getting a fantastic response. Out of which Happiest Minds got listed at 138% premium to its IPO price, while Route Mobile is set to get listed tomorrow.

Now, again in the coming week, 3 IPOs viz. CAMS, Chemcon and Angel Broking, are opening up for a subscription. Let’s take a closer look at each offer and decide if it’s a good bet.

Computer Age Management Services limited (CAMS)

CAMS is a technology-driven financial infrastructure and services provider company to Mutual Funds and other financial institutions for over two decades. It is the market-leading Registrar and Transfer agency to mutual fund industry in India, enjoying 70% market share as of July 2020. Along with providing B2B services to mutual funds, alternative investment funds and insurance companies, CAMS also serve end-retail customers through its PAN India service centres, CAMS online mobile App, white label call centre and chatbot services.

Chennai headquartered company is currently co-owned by NSE investments, Warburg Pincus, Faering Capital, ACSYS Investments and HDFC Group. The IPO offer comprises of only NSE owned entire stake of 37.4% or 1.82 crore shares. NSE didn’t take SEBI’s prior permission while purchasing a majority stake in CAMS, which resulted in a violation of Stock Exchanges and Clearing Corporation (SECC) Regulations, 2018. Thus, SEBI asked NSE to divest its entire stake in CAMS within one year.

During FY 2017-20 CAMS overall revenue grew at a CAGR of 14%, while net profit grew at a rate of 12%. The IPO priced in the band of Rs.1229-1230, which makes its P/E ratio stand around 34.6. Though the issue price looks expensive, having a lion’s market share along with the privilege of 1^st firm to be listed in this business segment makes this offer a cut-out.

Therefore, we recommend to Subscribe to CAMS IPO with a long term perspective.

Chemcon Speciality Chemicals limited:

Started in 1988, Chemcon Speciality Chemicals limited is a manufacturer of specialised chemicals, such as HMDS and CMIC which are predominantly used in the pharmaceuticals industry. It also produces inorganic bromides which are used in the oilfields industry. The company also has ISO 9001:2015 and ISO 14001:2015 certification. Its manufacturing facility is located at Manjusar near Vadodara in Gujarat.

Company’s customers include Laurus Labs Ltd, Aurobindo Pharma Ltd, Ind-Swift Laboratories Ltd. Its revenue and profit-after-tax during FY 2018-20 grew at a CAGR of 29% and 36% respectively. The IPO is priced in the band of Rs.348-350, which makes its P/E ratio stand around 25.5, which is at a discount as compared with its competitors in the market (like Aarti Industries, Vinati Organics, etc.)

We recommend to Subscribe to Chemcon Speciality Chemicals IPO with a long term perspective and also for booking profits through listing gains.

Angel Broking limited:

With over 2 decades of experience and 7.7 lakh active traders/clients, Angel Broking limited is one of the renowned name in full-service retail broking industry. Company offers its services with its network of over 11000 authorised persons along with its online platforms.

Discount brokers like Zerodha, Upstox disrupted the broking business with their cost-effective models. Recent IPO of ICICI securities, which is also a full-service broker and competitor to Angel Broking ltd didn’t go well. Though Angel Broking is again entering the discount broking business, we are still not sure if it can achieve the sizable market share. Company’s revenue and profit numbers are also not consistently rising.

So, we recommend at this point Not Subscribe/Avoid to Angel Broking IPO.

Summary: