Street signs: IPO clearances may get delayed, Federal-Mogul stock & more

IPO clearances may get delayed
 
The time taken by market regulator Securities and Exchange Board of India (Sebi) to issue final observation on initial public offering (IPO) documents is likely to increase from an average of two months to more than three months, said industry participants. The reason being the record number of filings during April-May coupled with restrictions. “At present, over two dozen offer documents are being processed by Sebi. Some delay is inevitable. A lot will also depend on how early the firms and the bankers are able to respond to Sebi’s queries,” said an investment banker. A final observation by Sebi on the offer document is akin to getting a green light to launch an IPO. Over 20 firms looking to raise a cumulative Rs 40,000 crore have filed their offer document since April.    

 
Rural push to aid PVC pipe makers
 

PVC pipe processors like Supreme Industries, Prince Pipes, and Astral Poly are likely to benefit from the central government’s push to provide tap water connections in rural India. Analysts said total investments to provide tap water connections could be above Rs 1 trillion every year till FY24, and an estimated 10-12 per cent of these investments will be in materials like PVC pipes and fittings / HDPE pipes and fittings, and plastic taps. The incremental demand for the plastic pipe industry works to rise by 25 per cent of the current industry size. “With regional/unorganised PVC pipe makers facing survival issues after Covid, due to increasing working capital requirements, burgeoning inventory losses, and their inability to source PVC resin, we may witness a decent pie of the above demand being met by large organised players as well,” said a note from ICICI Securities.

                 
Analysts see upside in Federal-Mogul
 
Federal-Mogul Goetze (India) has been a major underperformer this year amid concerns around promoter dilution. The stock is up 5 per cent this year even as the Nifty Smallcap 100 index has surged 34 per cent. The promoter holding in the stock is currently at 94.9 per cent which has to be pared below 75 per cent. Some believe this is acting as a major overhang. However, analysts believe the stock could soon play catch up. “In last few weeks, we witnessed a good base building in this stock and the volumes have been extraordinary in the up move from the recent low. The stock price has managed to surpass the sturdy wall of daily 200-day moving average convincingly, which is an encouraging sign. We recommend going long for a short term target of Rs 365. The stop loss can be placed at Rs 307,” says a note by Angel Broking.