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HOW TO PRESENT A SEMINAR PAPER ON STOCK MARKET
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| What is stock market |
Chapter 1
STUDY OF STOCK MARKET
Introduction
India is a booming economy in the world scenario and it has been developing gradually cutting through many challenges which even caused stagnation to the world economy. India’s developing economy is now trying to walk at the pace of the world’s developed economies. When it comes to indexing the speed of the economy, the study of the stock markets becomes essential. The stock markets of India are more or less the indicator of the economy. It is mostly believed that the indices of the stock markets highlight the economy. Whether it is moving up or crashing down, shows the economic trend.
However, the study of the stock markets is never so easy. Its affairs, trends are a sum-up of all the affairs the country irrespective of the fact that such activity may be a political one, economic, social, or from any other genre. The markets perform through regular ups and downs every time such movement acquiring effect from countless factors. The zigzag path of the market is often treated as the path of our economy too.
Broadly, the capital market is a mouth to two-stream of channels viz. Primary and Secondary markets. The primary market is the platform for new issues whereas the Secondary markets deal in the old securities. The new companies, as well as companies with a new lot of shares, offer their shares in the Primary markets. There are distinctly several methods of raising capital from Capital markets like IPO, private placement, book building process, etc.
The SEBI has set different guidelines for both of the listed companies as well as unlisted companies regarding public issues. The unlisted companies will be eligible for the public issue if it satisfies the guidelines set by SEBI. If it fails to meet the criterion, the unlisted companies have to go for public issues through the book-building process. A listed company is eligible if its issue size is less than five times its pre-issue net-worth, and if its issue size is equal to or more than five times its pre-issue net-worth then they have to take book building route and allot 60% of the issue size to the Qualified Institutional Buyers.
The objective of the study
The study aims at highlighting five IPO came into the capital markets during the year 2016 prior to demonetization. The study focuses to bring out the features of those issues with their post-issue market trends. It also includes a brief background of the issuing company.
Importance of the Study
This project features a comprehensive study of new IPOs in the markets in the year 2016. The year 2016 was historical as it experienced demonetization in November and post demonetization the markets met shivering effects from the policy. Was the Indian market so cushioned enough that it could absorb the effects of the policy? So, post demonetization the markets were not a favorable one. So the study of the IPOs prior to that not only helps us to understand the then markets but also post behavior of securities depicts implied meaning to the economic trend in large.
Methodology
The project work has been undertaken completely on the basis of secondary information which is collected from the internet. The collected information has been presented with the help of appropriate tables. The tabulated data have been then analyzed on the basis of observation of the data set.
Limitations
The study is completely based on secondary information as the primary access to the information is rather an impossible job. So the project may coincide with any such limitations which are inherent with the secondary source of information. The study covers only five IPOs whereas during the period there were more than thirty new IPOs came. The analysis is based on mere observation without any statistical tool or prescribed research models. The capital market of India is an ocean of thing that is affected by many factors and the study does not consider such factors which may cause inaccurate findings and the conclusion hence is not implicit.
Chapter 2 Quess Corp IPO
Quess Corp Limited is basically a business management service company that was incorporated in the year 2007 with its registered office in Bengaluru. It provides a wide range of services that include temporary staffing services, executive search, recruitment services, housekeeping, and facility management services, engineering services, food services, and skill development. The Company has diversified segments which may be identified as:-
People & Services (P&S): Its P&S segment is focused on specialized service offerings in search, recruitment and recruitment process outsourcing, general staffing, training and skill development, payroll and compliance, and retail solutions.
Global Technology Services (GTS) The GTS segment is scattered in three areas, including information technology (IT) staff augmentation, solution, and products.
Integrated Facilities Management (IFM): IFM segment deals in facility management services, including soft services, hard services, food and hospitality, and pest control.
Industrial Asset Management (IAM): The IAM segment encompasses business areas like plant asset management and it offers solutions in industrial operations and maintenance and managed services.
Thus the company is a package to business management solutions and its allied areas.
Quess Corp IPO in 2016
The company which is a worth 12,378 million company (as on 31st Mar 2016) with a share capital of 1133.4 million (as on 31st March 2016), the Share Capital being comprised of only Equity shares announced a new issue of shares from June 2016 till July 2016. The company which is listed both in the BSE and NSE offered through both of the giant stock markets a total of 125,953,353 Equity Shares.
The Company is promoted by-
1. Ajit Isaac
2. Thomas Cook (India) Ltd ('TCIL')
The New IPO of the company was backed by the following objectives-
1. Repayment of debt availed by the Company; (its Total Debt as on 31st March 2016 is 2629.1 million)
3. Funding incremental working capital requirement;
4. Acquisitions and other strategic initiatives; and
5. General corporate purposes
The IPO Details
Date of Opening: 29th June 2016
Type of Issue: Book Built Process
Size: 125,953,353 Equity Shares of Rs 10 total worth of which is Rs 400.00 Cr
At a face value: Rs. 10 per share
At an Issue Price: Rs. 317 per share.
In a lot of 45 share
For a Minimum Order Quantity: 45 Shares
Listed in: BSE and NSE
Date of Closure: 1st July 2016
Company Quess Corp has a good name and fame in the market as the company’s Balance Sheet highlights a lucrative position that attracts the investors. The 610.55 crore company is though not a giant company, yet its past performance is enormously eye-catching.
Issue Subscription Detail / Current Bidding Status
Number of Times Subscribed (BSE + NSE)
As on Date & Time
Qualified Institutional Buyers
Non-Institutional Investors
Retail Individual Investors
Total
Shares Offered / Reserved
3,903,023
1,916,251
1,277,500
7,096,774
Day 1 - Jun 29, 2016, 17:00 IST
0.0000
0.0500
2.1900
0.4100
Day 2 - Jun 30, 2016, 17:00 IST
2.8000
0.3200
9.8100
3.4000
Day 3 - Jul 1, 2016, 17:00 IST
59.0234
392.2087
31.2298
143.9902
Post issue the Company has a phase-wise allotment and listing in the stock exchanges. After the issue had closed on 1st July 2016 the Company called for allotment on 7th July 2016 and later was listed on 12th July 2016. The following table shows the listing day performance of the shares.
The Listing Day Story
BSE
Issue Price:
Rs 317.00
Open:
Rs 499.00
Low:
Rs 480.05
High:
Rs 508.60
Last Trade:
Rs 503.00
Volume:
3,222,979
NSE
Rs 317.00
Rs 500.00
Rs 480.00
Rs 509.30
Rs 503.10
16,364,151
The IPO of Quess Corp was lead by the following lead managers-
1. Axis Capital Limited
2. ICICI Securities Limited
3. IIFL Holdings Limited
4. YES Bank Limited,
In their report, the performance of the IPO is highlighted. The reports say, the company had a total issue of value Rs. 400 crore and the shares were oversubscribed by Rs. 143.9902 crores. On the opening date, the shares gained a hike by 58.68% in its price. So the company’s shares were winning horses in the race.
The Quess Corp Graph
Chapter 3 Advanced Enzyme IPO
The Advanced Enzyme Technologies Ltd was incorporated as a private limited company on March 15, 1989, under the provisions, of the Companies Act, 1956 as Advanced Biochemical Private Limited in Maharashtra. Pursuant to a special resolution passed by the shareholders, of the Company at the extra-ordinary general meeting held on April 21, 1992, the Company was converted into a public limited company. Advanced Enzyme Technologies Ltd is an Indian based company engaged in research, development, manufacturing, and marketing of Healthcare, Nutrition and Bio-Processing products.
The company produces over 400 proprietary products developed from 60 enzymes. Advanced Enzyme operates in two primary business verticals namely Healthcare & Nutrition (human and animal) and Bio-Processing (food and non-food).
The company has 13 patents registered in its name and applications for registration of 4 patents are pending.
Advanced Enzyme is among the top 15 companies in enzyme sales in the world and 2nd largest in India. The company has over 20 years of fermentation experience in the production of enzymes. The company offer these products to more than 700 global customers across 50 countries around the world.
Competitive strengths of the company:
1. Integrated Company with presence across the Enzyme Value Chain.
2. Strong R&D, enzyme development, and manufacturing capabilities.
3. Specialized Business Model with high entry barriers.
4. Diversified Product Portfolio and Wide Customer Base, served by a Strong Sales, Marketing, and Distribution network.
5. Experienced Promoters and Strong Management Team.
6. Financial stability and stable cash flows.
Company Promoters:
The promoters of the company are:
1. Mr. Chandrakant Laxminarayan Rathi
2. Mr. Vasant Laxminarayan Rathi
Objects of the Issue:
The Offer consists of a Fresh Issue by the company and an Offer for Sale by the Selling Shareholders.
1. Offer for Sale
The company will not receive any proceeds from the Offer for Sale.
2. The Fresh Issue
The object of the fresh issue is to invest in Advanced Enzymes USA, the wholly-owned subsidiary for repayment / pre-payment of certain loans availed by Advanced Enzymes USA; and general corporate purposes.
Issue Detail:
Issue Open: Jul 20, 2016 - Jul 22, 2016
Issue Type: Book Built Issue IPO
Issue Size:
Fresh Issue of [.] Equity Shares of Rs 10.
Offer for Sale of 4,034,470 Equity Shares of Rs 10.
Face Value: Rs 10 Per Equity Share
Issue Price: Rs 880 - Rs 896 Per Equity Share
Market Lot: 16 Shares
Minimum Order Quantity: 16 Shares
Listing At: BSE, NSE
Basis of Allotment:
Initial public offer of 4,594,875 equity shares of the face value of Rs 10 each ("equity shares") of advanced enzyme technologies limited ("company" or the "issuer") for cash at a price of Rs 896 per equity share (including a share premium of Rs 886 per equity share). An offered discount of Rs 86 per equity share (equivalent to 9.60%) on the offer price to eligible employees ("employee discount"). The face value of the equity shares is Rs 10 each.
Risks to Investors:
i. Out of Rs, 50 crores proposed to be raised as Fresh Issue, around Rs 40 crores i.e 80 % of the proceeds of the Fresh Issue shall be used to repay/ prepay certain loans availed by the Company from the promoter and group company through the Wholly-owned Subsidiary, Advanced Enzymes USA. The Company has decided to retain loans from other banks at a higher rate of interest and repay/prepay certain loans from promoters and group company which is a lower rate of interest.
ii. The 2 (two) Merchant Bankers associated with the Offer have handled 22 (twenty-two) public issues in the past three years out of which 7 (seven) issues closed below the issue price on listing date.
iii. The price/earnings ratio based on annualized consolidated diluted EPS for the year ended March 31,2016 for the Issuer at the upper end of the Price band is as high as 24.37 on a consolidated basis and 91.80 on an unconsolidated basis, as compared to the NIFTY 50 Index Price / Earnings ratio of 20.89 (as on March 31,2016).
iv. The average cost of acquisition of Equity Shares for Promoter Group Selling Shareholders is Rs 20.46 per share, the average cost of acquisition of Equity Shares for Investor Selling Shareholders is Rs 290.00 per share, the average cost of acquisition of Equity Shares for Other Selling Shareholders-II is Rs 4.24 per share and the Public Offer at the upper end of the Price Band is as high as Rs 896 per share.
v. The Weighted Average Return on Net Worth as per the Company's Unconsolidated Financial Information, as restated, and Consolidated Financial Information, as restated for the last three financial years (viz. FY 16, FV15, and FY 14) is 11.47% and 24.03% respectively.
Chapter 4 Spicy Entertainment IPO
Spicy Entertainment & Media Ltd is a media and entertainment company with a specific focus on event management. It also engaged in the business of distribution of films and provides event management services to leading Indian Insurance companies for their customer awareness programs, brand promotional activities, signboard management, marketing campaigns amongst others. It offers the most comprehensive range of solutions for corporate as well as private event management and media production needs. It also offers fully customized solutions that give shape to its clients’ special preferences, needs, and vision for the program.
The company has established mainly operations in media and entertainment operations, SAML plan and stage events to suit the needs of clients and thus provide services for all event management and media production requirements.
RISK FACTORS:
Risk factors
The risk factors are classified as under for the sake of better clarity and increased understanding:-
Internal Risk Factors
External Risk Factors
Issue Related Risk
Business Risk
INTERNAL RISK FACTORS:
A. Business Risk:
1. The registered office of the Company is not owned by the company:
The company operates from the registered office situated at 4, Fairlie Place, HMP House, 4th Floor, Room No – 408, Kolkata – 700 001, West Bengal, which is a rented premise. Any discontinuance of rent agreement/facility will lead to shifting to any other premises. This might hamper the company’s operations hurting the profitability of the Company.
2. The entertainment industry is subject to shifts in tastes and preferences of audiences.
The entertainment industry is prone to unforeseen shifts in tastes and preferences of audiences, which could have an impact on the operations of the Company. The success of the company will depend on the ability to understand the business environment and adapt/change the business strategy accordingly.
3. This Company does not have any long term supply contracts with the customers, which may adversely affect our results of operations.
This Company does not have any long term commitments with their customers for the existing business services. Major selling is done through verbal and orders through email hence there is no assurance that the Company will continue to serve with existing customers and any change in customers’ tastes and preferences may affect the company’s profitability in the future.
4. This Company has not taken any insurance cover at present. Hence it will not be able to protect the company from all losses and may adversely affect the financial condition.
As there is no insurance coverage, to the extent that the company suffers loss or damage that is not covered by insurance the results of operations or cash flow may be affected.
B: Risk related to this Issue on Equity Shares:
1. The company ability to pay dividends will depend upon future earnings, financial condition, cash flows, working capital requirements, capital expenditure and other factors:
This Company has not yet paid any dividends. There can be no assurance that the company shall have distributable funds or that it will declare dividends. The company cannot assure that it will be able to secure adequate financing in the future on acceptable terms, in time, or at all.
2. Any future issue of Equity Shares may dilute shareholding and sales of the Equity Shares by their Promoters or other major shareholders may adversely affect the trading price of the Equity Shares.
Any future equity issues by the company, including in a primary offering, may lead to the dilution of investors' shareholdings. Any future equity issuances by the company or sales of its Equity Shares by the Promoter may adversely affect the trading price of the Equity Shares. In addition, any perception by investors that such issuances or sales might occur could also affect the trading price of our Equity Shares.
3. There is no guarantee that the Equity Shares issued pursuant to this Issue will be listed on the BSE-SME in a timely manner:
In terms of Chapter XB of the SEBI (ICDR) Regulations, 2009 they are not required to obtain any in-principle approval for listing of shares issued. The company has only applied to BSE-SME to use its name as the Stock Exchange in this offer document for listing their shares on the BSE-SME. Approval for listing and trading will require all relevant documents authorizing the issuing of Equity Shares to be submitted. There could be a delay in listing the Equity Shares on the BSE-SME. Any delay in obtaining the approval would restrict shareholders' ability to dispose of their Equity Shares.
B. External Risk Factors:
1. Natural calamities and force events may have an adverse impact on their business:
Natural disasters may cause significant interruption to the operations and damage to the environment that could have a material adverse impact on us. The deficient or abnormal rainfall and other natural calamities could have an adverse impact on the Indian economy, which could adversely affect the business and results of operations.
3. Political instability, financial instability, or changes in the Government could adversely affect economic conditions in India generally and our business in particular.
The business, and the market price and liquidity of their Equity Shares, may be affected by interest rates, changes in Government policy, taxation, social and civil unrest and other political, economic or other developments in or affecting India. Elimination or substantial change of policies or the introduction of policies that negatively affect the Company’s business could cause its results of operations to suffer.
OBJECTIVES OF THE ISSUE:
There are mainly three objectives of the issue. They are-
1. To set up a recording studio in Kolkata and infrastructure development.
2. To Produce regional feature film.
3. To meet the expense of the issue.
DESCRIPTION:
The Company was originally incorporated as “Lahoti Entertainment & Media Limited” in Kolkata, West Bengal. Subsequently, the name of the Company was changed to “Spicy Entertainment and Media Limited" and a fresh certificate of Incorporation dated 7th November 2014 issued by the Registrar of Companies, West Bengal, Kolkata. This media and entertainment company with a specific focus on event Management. This Company also engaged in the business of distribution of films. Spicy is an efficiently run self-sufficient organization with its own facilities, equipment, and connections with talented, inspired and loyal writers, directors, production, post-production, and marketing personnel who are responsible for guiding every Spicy production from ideation to telecast, in a cost-effective yet quality-conscious manner.
Further, they have also planned to venture into the production of Bengali feature films. We aim to get real concepts to the audience. Our strategy is designed to address predictability, scalability, and sustainability, ultimately resulting in profitability.
The IPO Details
The IPO details of the Company has been presented in the following table:
Spicy Entertainment and Media Ltd Offer Details
Issue Open Date
01/09/2016
Issue Close Date
07/09/2016
Listing Date
15/09/2016
Face Value(Rs.)
10.00
Offer Price/Range(Rs.)
10.00
Issued at (Value)
PAR(0.00)
Issue Size (Retail)
4560000 Shares @10.00/Share
Issue Type
Public Issue (Fixed Portion)
Table no.1: Shows the SEML offer details
Spicy Entertainment and Media Ltd Listing Day Data:
Issue Price
10
Open
9.99
High
10.95
Close
9.70
Low
9.63
Volume
Rs. 22,88,200.00
Table no.2: Shows the SEML Listing Data
Return
Offer Price
Listing Price
*Holding Price Return
0.00%
9.90%
Holding Period(Days)
207
199
Annual Returns
17.63%
18.16%
*NOTE: Holding Period Return calculation on basis of 365 Days
Table No.3: Shows the SEML’s Return, Offer Price and Listing Price
Minimum Application for shares in Nos :10000 Further Multiples of :10000
Project Cost
4.5
Project Financed through Current Offer
4.82
Post Issue Equity Share Capital
16.51
Issue Price
10
Table no.4: Shows the Minimum application for shares (Figures in Rs. Crore)
Spicy Entertainment IPO Subscription Figures are as below:
Spicy Entertainment and Media Ltd (SEML) IPO Subscription Figures
Price (Rs.)
Quantity
Total Shares for Subscription
No. of Times Subscribed
10
57,60,000
Cut Off
11,80,000
Total
69,40,000
48,20,000
1.44
Table No.5: Shows the IPO Subscription
So against the total value of Rs 4.82 crore, Spicy Entertainment IPO Subscribed and received bids for 6.94 crores.In Total, 4820000 shares were there at the fixed price of Rs 10 per equity share forbidding of Spicy Entertainment and Media Ltd (SEML) IPO. Now this IPO stands closed at BSE SME IPO Platform.
Lead Managers to the Issue
First Overseas Capital Ltd.
Promoted by
Pink Lady Merchandise LLP, Anindya Bikas Datta
Listing At
BSE, SME
Registrar to the Issue
Maheshwari Datamatic Pvt. Ltd.
Table No.6: Table shows in details relating to SEML
ANALYSIS:
Public issue of 48,20,000 equity shares of Rs. 10 each (equity shares) of Spicy Entertainment and Media Limited (SEML or the company or the issuer) for cash at a price of Rs. 10 per share (the issue price), aggregating to Rs. 4.82 crores (the issue), of which, 2,60,000 equity shares of Rs. 10 each will be reserved for subscription by market makers to the issue (the market maker reservation portion). The issue less the market maker reservation portion i.e. Issue of 45,60,000 equity shares of Rs. 10 each is hereinafter referred to as the net issue. The issue and the net issue will constitute 29.19% and 27.62%, respectively of the post issue paid-up equity share capital of the company. The face value of the equity share is Rs. 10 each and the issue price of Rs. 10/- i.e. 1 time or at par of the face value.
Table no. 2 depicts the opening issued price at Rs. 9.99, the company's highest issue price is Rs. 10.95 (i.e. Rs. 0.96 more than the opening price) and its lowest issue price are Rs. 9.63 (i.e. Rs. 0.63 less than the opening issue price) whereas, the closing price of the company is Rs. 9.70 (i.e. Rs. 0.29 less than the opening price).
CONCLUSION:
From the above analysis, we found that Spicy Entertainment and Media Ltd hit capital markets to raise Rs 4.82 crore and increased price to Rs. 10.95 per share. On the other hand, there are comparatively fewer shares are issued and earnings also go down. So, their investors will not be willing to buy shares from the company if the share price trend is the same as at present. This Company should increase the issue of shares and also minimize their risk factors by using the optimum utilization of resources and proper management techniques.
