PVR fundamentals intact despite near-term hiccups

PVR has scheduled a board meeting on December 18 to consider raising funds through issue of equity (or other instruments) by way of QIP (or other modes). We believe that the company is adequately funded to sustain operations for 6-7 months even if occupancy remains subdued and cash burn elevated at current levels. Additional funding would help reduce debt to enable investments in organic/inorganic opportunities post-Covid, or in event of resurgence of Covid-19.

PVR had liquidity of Rs 5.5 billion as at end-October 2020. It has to repay debt of Rs 1 billion by March 2021. As per our estimate, PVR is incurring Ebitda loss of Rs 500-600 million/month and interest expense of Rs 110 million/month at present (from November 2020).

Cash burn is higher (on expected lines) versus 1HFY21, as operations have resumed at subdued occupancy pending release of key movies. PVR is adequately funded to sustain operations for 6-7 months even if one assumes cash burn to continue at the current run rate.

PVR’s gross/net debt is about Rs 15 billion/Rs 10 billion as of date; equity fund raise would reduce leverage enabling PVR to invest in organic and inorganic growth opportunities post-Covid. We note that PVR raised Rs 3 bn in August 2020 through a rights issue.

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Burger King India shares fall, hit 10% lower circuit; what should investors do now?

Burger King India share price sharply fell in the afternoon deals today after surging for the last three days. The stock fell to hit the 10 per cent lower circuit at Rs 179.35 apiece today afternoon, after rising in the morning to hit the upper circuit. In the morning deals, Burger King shares were locked in the 10 per cent upper circuit. The company’s market capitalisation has also fallen to Rs 6,844.98 crore from Rs 8,363.96 crore in the morning.

According to an analyst, the rally in Burger King India shares was beyond expectations, and the stock became much more expensive above Rs 200 levels. “The expected profit booking is on cards. The listing day high of 135 may be tested soon. Below 135 one should not hold it in the portfolio,” Vishal Wagh, Head of Research, Bonanza Portfolio Ltd, told Financial Express Online.

Burger King India made stock market debut earlier this week with 92 per cent premium over the issue price of Rs 60 apiece. At the current level, Burger King shares are up 55 per cent from the listing price of Rs 115.35 per share, and 199 per cent up from the IPO price. Burger King India’s Rs 810-crore initial public offer was subscribed a massive 156.65 times during the three-day bidding process. During the IPO process, most of the research and brokerage firms had recommended to ‘subscribe’ to Burger King India IPO for the listing gains.

Out of the 12 IPOs that the stock markets witnessed so far this year, Burger King India is among the top four IPOs. From the listing day, Route Mobile shares have gained 221.6 per cent, Happiest Minds Technologies 94.7 per cent while Rossari Biotech stock price surged 94 per cent.

Meanwhile, Mrs Bectors Food Specialities’ Rs 540-crore IPO has also witnessed strong demand from investors across categories so far on the last day of the bidding.

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Laxmi Organic to launch Rs 800-cr IPO following strong listing by Rossari Biotech, Chemcon Speciality

Laxmi Organic Industries is set to raise Rs 800 crore through initial public offer (IPO). The speciality chemicals manufacturer has filed preliminary papers with the capital market regulator Securities and Exchange Board of India (Sebi). Laxmi Organic Industries’ issue will comprise fresh issue of shares aggregating to Rs 500 crore and an offer-for-sale (OFS) worth Rs 300 crore by the promoter Yellow Stone Trust, according to the draft red herring prospectus (DRHP) filed.

The book running lead managers to the Mumbai-based Laxmi Organic are Axis Capital Ltd and DAM Capital Advisors Ltd (formerly known as IDFC Securities Limited), while the registrar is Link Intime India Private Ltd. Laxmi Organic Industries’ plan comes after the recent success and fundraising by specialty chemical companies, Rossari Biotech and Chemcon Specialty Chemicals, which were subscribed almost 80 times and 149 times respectively. Moreover, Chemcon Speciality Chemicals has witnessed the best share market listing, gaining 114 per cent from the IPO price, so far in 2020.

Laxmi Organic Industries is a leading manufacturer of acetyl intermediates and specialty intermediates. According to the draft red herring prospectus (DRHP), net proceeds from the issue will be utilised for setting up of a manufacturing facility for fluoro specialty chemicals, working capital requirement, and for the purchase of plant and machinery for augmenting infrastructure development. In addition, funds would be used for prepayment or repayment of all or a portion of outstanding loans, besides general corporate purposes. The company will not receive any proceeds from the offer-for-sale. The company has a global presence with customers in over 30 countries including China, Netherlands, Russia, Singapore, United Arab Emirates (UAE), United Kingdom and the United States of America.

The two recently listed specialty chemical companies, Rossari Biotech Ltd shares were trading at Rs 826.60 apeiece, up 0.89 per cent, while Chemcon Speciality Chemicals Ltd shares ended 0.79 per cent up at Rs 432.50 apiece. In comparison, S&P BSE Sensex ended at 46,666, up 0.87 per cent, at an all-time high closing level.

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Asian shares up as strong Japan data offsets Wall St losses

Shares have risen in Asia, shrugging off a weak close last week on Wall Street after Japan’s central bank reported a strong improvement in business sentiment.

Tokyo’s Nikkei 225 climbed 0.6 per cent and shares were also higher in Shanghai, Seoul and Sydney. Hong Kong’s Hang Seng declined.

The quarterly “tankan” survey by the Bank of Japan showed business sentiment has improved sharply with expectations for a recovery from a year-long recession.

The main measure of business conditions of large manufacturers rose to minus 10 from minus 27.

It showed rebounds in all categories, both manufacturing and nonmanufacturing companies, large and small. It was a marked improvement from the past several quarterly reports as Japan battled the coronavirus pandemic.

The tankan measures corporate sentiment by subtracting the number of companies saying business conditions are negative from those responding they are positive.

U.S. markets ended last week on a downbeat note. Benchmarks pulled further away from their recent highs Friday as prospects for another aid package from Washington faded while a surge in virus cases is threatening to inflict more damage on an already battered economy.

The proposed $900 billion aid package from a bipartisan group of lawmakers has essentially collapsed because of continued partisan bickering.

But President Donald Trump signed a temporary government-wide funding bill into law, averting a federal shutdown at midnight and buying Congress time for the on-again, off-again talks on COVID-19 aid.

“Given these talks have been running since July, the market may be bored to tears, but if the stimulus door slam shut before Christmas, it could still change the positive vaccine mood music,” Stephen Innes of Axi said in a commentary.

The S&P 500 slipped 0.1per cent to 3,663.46, its third-straight decline since it set a record high on Tuesday. It ended the week 1per cent lower after two weeks of solid gains.

Treasury yields fell broadly, a signal that traders were seeking to lessen their exposure to riskier holdings. On Monday, the yield on the 10-year Treasury was at 0.90per cent, up from 0.89per cent on Friday.

The Dow Jones Industrial Average got a boost from Disney, which hit a new high after giving investors an encouraging update on subscriber growth and future plans for its Disney Plus streaming service. The index rose 0.2per cent, to 30,046.37. The tech-heavy Nasdaq lost 0.2per cent to 12,377.87. The Russell 2000 small-cap index gave up 0.6per cent to 1,911.70.

Investors are watching for updates on the rollout of coronavirus vaccines that might help beat back surging infections that threaten to derail recoveries from business shutdowns and other pandemic-related shocks.

The first of many freezer-packed COVID-19 vaccine vials made their way to distribution sites across the United States on Sunday, as the nation’s pandemic deaths approached the horrifying new milestone of 300,000.

Widespread vaccination will take months and the virus pandemic is prompting tighter restrictions on businesses. An already slow economic recovery appears to be stalling in the wake of the latest surge and unemployment is rising.

Wall Street is also waiting for a special election in Georgia in early January, which could potentially switch the balance of power in the U.S. Senate.

In other trading, benchmark U.S. crude oil gained 13 cents to $46.70 per barrel in electronic trading on the New York Mercantile Exchange. It lost 11 cents to $46.57 per barrel on Friday. Brent crude, the international standard, picked up 16 cents to $50.13 per barrel.

The dollar weakened to 103.98 Japanese yen from 104.93 yen late Friday. The euro rose to $1.2135 from $1.2115.

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IRCTC share price falls over 3% on day two of OFS; bidding opens for retail investors

IRCTC share price fell 3.5 per cent to Rs 1,400 apiece in intraday deals on BSE on the back of ongoing offer-for-sale (OFS). Through this OFS, the government is planning to sell up to 20 per cent stake in IRCTC at a floor price of Rs 1,367 apiece. IRCTC’s OFS received a good response from non-retail investors and was subscribed 198 per cent on the first day with an indicative price of Rs 1,391.42. Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said that retail investors will get a chance to bid for IRCTC offer-for-sale (OFS) on Friday. “We have given a Neutral rating to this OFS as there will be very limited upside left for retail investors also there is no retail discount in this OFS,” said Yash Gupta, Equity Research Associate, Angel Broking Ltd.

IRCTC shares ended 1.84 per cent lower at Rs 1,425.20 apiece on Friday. DIPAM Secretary said that the issue was subscribed 1.98 times of base size at a clearing price above the floor price by non-retail investors. “Government has decided to exercise the greenshoe option,” Pandey added. The promoter proposes to sell up to 2.4 crore equity shares of IRCTC, representing up to 15 per cent stake, with an option to additionally sell 80 lakh shares, representing 5 per cent of the total issued and paid-up equity share capital, tIRCTC had said in a regulatory filing. In all, the promoter, Government of India will sell 3.2 crore shares, which is expected to garner Rs 4,374 crore for the exchequer starved of funds due to the COVID-19 crisis.

In April 2017, the Union Cabinet had approved listing of five railway companies. Out of which IRCON International, RITES Ltd, Rail Vikas Nigam Ltd and IRCTC, have already been listed. IRFC is likely to be put on the block this fiscal, according to a PTI report.

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