India’s Biggest IPO of 2024 Gets Blockbuster Demand

By Chiranjivi Chakraborty and Alex Gabriel Simon

September 12, 2024 at 10:03 AM GMT+7

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Before the trading day starts we bring you a digest of the key news and events that are likely to move markets. Today we look at:

  • Bajaj Housing’s IPO
  • Telecom stocks
  • Auto woes

Good morning, this is Chiranjivi Chakraborty, an equities reporter in Mumbai. While grey clouds over the city bring a much-needed respite from the heat, traders are gearing up for a bright morning. Asian equities are surging, driven by a tech-fueled rally on Wall Street that’s spreading across the region. Locally, market participants are expecting tech names to follow suit, tracking gains of their global peers.

Bajaj Housing IPO’s Blockbuster Demand Stuns Market

Keeping up with expectations, Bajaj Finance’s home-finance unit’s $780 million IPO drew bids for a staggering 3.2 trillion rupees. To put this into perspective, the amount is a shade over 1% of India’s GDP for fiscal year ended 2024. But unlike previous trends, institutional investors — rather than the retail crowd — drove the frenzied applications. Shares reserved for foreign and local funds were oversubscribed over 200 times, the highest among all the categories of investors.

Stars align for telecom companies amid price hikes

The recovery in the telecommunications sector is gaining ground, driven by price hikes in mobile plans by market leaders Reliance Jio and Bharti Airtel in June. Additionally, a recent report indicated that banks completed their techno-economic evaluation of Vodafone Idea, positioning the company to secure a 350-billion rupees in financing. Moreover, the company’s founder recently increased stake in the company. Citi has a buy rating on Vodafone Idea, projecting the stock to rise to 22 rupees in the next 12 months, implying a gain of more than 60%.

Car makers face rising global challenges

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Passenger-vehicle manufacturers have had a great run this year, but concerns are rising due to high inventory and slowing demand abroad. On Wednesday, shares of Tata Motors posted their longest losing run in 16 years after UBS warned Jaguar-Land Rover’s order book is weak and fresh bookings are trailing supply. Mahindra & Mahindra’s latest export numbers were also uninspiring. While Maruti Suzuki India’s foreign sales were strong, bolstered by a tie-up with Toyota, signs of a global slowdown are likely to increase investor concerns.

Analysts actions:

  • Nykaa Rated New Buy at Ambit Capital Pvt Ltd; PT 252 rupees
  • Sun Pharma Raised to Buy at Phillip Secs; PT 2,050 rupees

Three great reads from Bloomberg today:

And, finally..

Indian companies are increasingly turning to the commercial paper market for short-term financing, a trend expected to continue due to lower borrowing costs, according to a Fitch Ratings unit. In August, corporates issued 524 billion rupees ($6.2 billion) of commercial papers, up 32% over the previous month, data from India Ratings & Research show. With its short maturity reducing repayment risk, commercial paper remains attractive, especially amid growing expectations of an interest-rate cut by the RBI later this year.

— With assistance from Saikat Das and Ashutosh Joshi

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