Apart from the Assembly Elections the IPO action is what the street is watching out for this week- There was a lot of anticipation in the market about the Zinka Logistics Solution IPO and the NTPC Green Energy IPO.
Analysts and brokerages have maintained a “Subscribe” rating on both companies for long-term presenting these IPOs as promising picks for portfolio diversification. Here’s a closer look at their subscription status and sectoral appeal.
Zinka Logistics Solutions IPO vs. NTPC Green Energy IPO: GMP Comparison
In the grey market, the Zinka Logistics Solution IPO is trading with no premium or discount. It is 0 at the moment. This means that Zinka’s shares are likely to list at issue price of Rs 273. The GMP has slipped from Rs 21 to current 0.
In contrast, the NTPC Green Energy IPO shows a slight premium, with a last recorded GMP of 80 paise as of 11 a.m. on November 20, 2024. Based on this premium, the estimated listing price for NTPC Green Energy shares stands at Rs 108.80, reflecting modest demand ahead of its listing. The GMP has not been very high but it has fallen from Rs 12 to current 80 paise.
Zinka Logistics Solution IPO Vs NTPC Green Energy IPO: Subscription Status
Zinka Logistics Solution IPO Subscription Status
Zinka Logistics Solution, a major player in India’s logistics sector and parent of BlackBuck, saw a favorable response from investors during its subscription period. The IPO opened on Wednesday, November 13, and closed on Monday, November 18. By the close of the final bidding day, the subscription status revealed strong interest from various investor categories:
-Qualified Institutional Buyers (QIBs): The QIB portion was subscribed 2.76 times, indicating solid institutional interest.
–Retail Investors: Retail investors subscribed 1.66 times, showing healthy demand from individual investors.
–Non-Institutional Investors (NIIs): The NII portion saw a subscription rate of 24%, reflecting a more moderate uptake in this category.
–Employee Category: Zinka’s employee allocation was notably oversubscribed, reaching 9.88 times, signaling high enthusiasm among internal stakeholders.
Overall, Zinka Logistics Solution’s IPO subscription status reached 1.86 times by the third day, according to data from the Bombay Stock Exchange (BSE), demonstrating solid investor backing across the board.
NTPC Green Energy IPO Subscription Details
NTPC Green Energy, the renewable energy-focused subsidiary of NTPC, opened its IPO on Tuesday, November 19, and achieved a 33% overall subscription rate on its first day. Here’s how different investor groups responded to the offering:
–Retail Investors (RIIs): Retail participation was robust, with RIIs subscribing to 133% of their allocated 8.6 crore shares, indicating strong retail interest in NTPC Green Energy’s clean energy focus.
–Non-Institutional Investors (NIIs): NIIs bid for 2 crore shares, amounting to 15% of their 12.9 crore share allocation.
–Qualified Institutional Buyers (QIBs): QIB participation was minimal, with just 87,906 shares subscribed out of the 25.9 crore shares allocated to this category.
-Employee Category: The employee portion of the NTPC Green Energy IPO saw a 17% subscription rate, showing moderate interest among company employees.
NTPC Green Energy IPO: Brokerage Views
Anand Rathi on NTPC Green Energy IPO
Anand Rathi’s report on the NTPC Green Energy IPO underscores the company as a leading player among public sector units (PSUs) in renewable power generation, with a diverse portfolio that includes solar and wind assets, as well as a growing focus on hydroelectric power and energy storage.
The report views NTPC Green Energy as a potential leader in the renewable sector, particularly as it scales its hydroelectric projects. The company aims to expand its operational capacity significantly, from 3.3 GW as of September 2024 to 6 GW by FY25E, 11 GW by FY26E, and 19 GW by FY27E.
The IPO is set at an upper price band of Rs 108 per share, equating to a market capitalization of approximately Rs 91,000 crore. Based on FY25E annualized earnings and the fully diluted post-IPO paid-up capital, the issue’s price-to-book (PB) ratio stands at 4.96x, with a price-to-earnings (PE) ratio of 259.56x. Anand Rathi describes this pricing as “aggressively priced.”
Despite the high valuation, the report emphasizes NTPC Green Energy’s strong long-term growth potential due to its established capacity, strategic expansion plans, competitive operating costs, and access to low-cost capital supported by its NTPC parentage.
Given these factors, Anand Rathi recommends a “Subscribe for Long Term” rating for the IPO, highlighting NTPC Green Energy’s positioning to capitalize on the anticipated growth in renewable energy capacity in the coming years.
Bajaj Broking on NTPC Green Energy IPO
According to a report by Bajaj Broking, investors are encouraged to subscribe to the NTPC Green Energy IPO with a long-term perspective. The report highlights the company’s strong financial growth over recent years, noting that NTPC Green Energy’s total income rose significantly from Rs. 170.63 crore in FY23 to Rs. 2,037.66 crore in FY24.
Alongside a rise in net profit from Rs. 171.23 crore to Rs. 344.72 crore during the same period. For the first half of FY25, ending September 30, 2024, NTPC Green Energy reported a net profit of Rs. 175.30 crore on a total income of Rs. 1,132.74 crore. Bajaj Broking also points out that FY23 profits included a deferred tax credit of Rs. 118.68 crore.
In terms of valuation, the IPO’s price-to-earnings (P/E) ratio is 257.14 based on estimated FY25 earnings and 263.41 based on FY24 earnings, which Bajaj Broking describes as “aggressively priced.”
Despite this, the company’s established and expanding capacities make it well-positioned for long-term growth. Additionally, Bajaj Broking notes that NTPC Green Energy’s operations are fully India-based, meaning they are not impacted by U.S. renewable energy policies.
Brokerages views on Zinka Logistics Solution IPO
Anand Rathi on Zinka Logistics Solution IPO
According to a report by Anand Rathi, Zinka Logistics Solutions Ltd, India’s largest digital platform for truck operators, is positioned well in the market with a substantial user base. The report highlights that, as of FY24, Zinka’s platform serves 963,345 truck operators, representing 27.52% of the truck operators in India.
The company derives its revenue from various sources, including commission income from its payment offerings to truck operators, subscription fees from a mix of telematics, payments, and marketplace services, as well as service fees from vehicle financing solutions.
Financially, Zinka Logistics has shown a strong turnaround, transitioning from losses to profitability in Q1 FY25. At the upper price band, the company’s valuation stands at a market cap-to-sales ratio of 16.2x on an FY24 basis, with a projected market cap of ₹48,178 million post equity issuance.
Anand Rathi believes that the IPO is fairly priced, prompting the firm to give a “SUBSCRIBE – Long term” rating, indicating that the company presents a compelling investment opportunity for long-term investors.
Bajaj Broking on Zinka Logistics Solution IPO
Given its aggressive pricing, Bajaj Broking suggests that moderate, long-term investment may be considered by those looking for exposure to a leading platform in the logistics space.
At the IPO’s upper price band, the issue is priced at a Price-to-Book Value (P/BV) of 14.60 based on its NAV of Rs. 18.70 as of June 30, 2024, and at a P/BV of 5.38 based on its post-IPO NAV of Rs. 50.71 per share.
With annualized FY25 earnings, the issue’s price-to-earnings (P/E) ratio is 37.19 based on its fully diluted equity base post-IPO, while the P/E remains negative based on FY24 earnings, suggesting that the IPO may be aggressively priced.
According to a report by Bajaj Broking, Zinka Logistics Solution Ltd has shown a mixed financial performance over the last three fiscal years. The company recorded a total income of Rs. 156.13 crore with a net loss of Rs. 230.35 crore in FY22, Rs. 195.09 crore with a net loss of Rs. 236.85 crore in FY23, and Rs. 316.51 crore with a reduced net loss of Rs. 166.99 crore in FY24.
However, Zinka achieved profitability in Q1 FY25, posting a net profit of Rs. 32.38 crore on a total income of Rs. 98.33 crore as of June 30, 2024, marking a turnaround in its financial trajectory. Despite this improvement, Bajaj Broking notes that it will take time for the company to offset its accumulated losses.
Over the last three fiscal years, Zinka has reported an average EPS of Rs. -11.00 on continuing business and an average Return on Net Worth (RoNW) of -55.77%.
As a leading digital platform for truck operators, Zinka provides a wide range of logistics and vehicle financing services. While the company only recently reached profitability in Q1 FY25, Bajaj Broking points out that the issue may still appeal to informed investors with surplus capital who are willing to take risks.
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