On the AMC Mazagon Dock and UTI Charts
From a valuation perspective, the Mazagon Dock IPO was very attractively priced. It has been a great experience for retail investors. Let me give you another perspective on Mazagón. This was a highly leveraged issue and in the HNI category, there were over 600 subscription requests. For most investors, the finance cost alone was close to Rs 160-170. HNI investors, with leveraged funding, cost almost Rs 310. I don’t see that price coming in at all in the short term. So I wouldn’t be surprised if you actually see short-term pressure and you’re already seeing it because in the morning it was trading at Rs 215 and then down. This is the leverage that investors sell and exit the market.
The stock was priced very attractively, so once this sale is over, you may see Mazagón pull back and rise again.
As far as UTI AMC is concerned, it is now trading at a considerable discount. The concern of most investors when it came to UTI was the fact that the capital portion of the business was shrinking and they were not getting enough income from there. So there was a valuation discount, but I’m sure there was even financing. What typically happens is that when you have an initial public offering that has been funded and the price is much lower than what investors expect, you have all fund-based investors selling initially. So there is pressure to play your role there. Once the dust settles, you’ll start to see UTI AMC starting to come back as well and at least it will start to reflect value.
About buying NBFC
In recent months, the manufacturing PMI has shown quite strong growth with September figures close to 56.8. My own hypothesis is that in the closed lockdown period, there was a lot of channel stock reduction and now we are seeing channel stocks repeating.
Manufacturing companies are increasing production in anticipation of festival demand. On the other hand, the services PMI is nowhere near where it was in February and even today’s measures on the LTC of government employees was an attempt by the finance minister to try to improve consumer demand or demand. retailer.
In the current September quarter, manufacturing companies will do well, but if you don’t see consumer and retail demand flowing, especially in October and November, you may again see the manufacturing PMI start to emerge. So I wouldn’t say we’re out of the woods. But right now there is optimism on the ground.
Also with the opening of several other service sectors, such as hospitality, including hotels, restaurants, and even cinemas, theaters, and shopping malls, you will see the PMI for services start to show some signs of improvement. But it is still early and only after October-November, will we know where the situation is.
But from a longer-term perspective, we’ve clearly seen the worst. If we stick to the data published by the rating agencies, they are not talking about taking until 2023 for the economy to return to the path it was on when we entered the lockdown. So the long-term momentum is to the upside with maybe a few changes here and there every quarter.
.
