You are here: Home » Markets » News
Business Standard

Paytm vs Sapphire Foods: Which IPO is better for listing gains?

The parent firm of Paytm has launched India's biggest IPO. And the owner of Pizza Hut and KFC is opening its IPO today. Both these companies are loss-making. So, what should investors do?

Topics
Paytm | Pizza Hut | KFC

Nikita Vashisht  |  New Delhi 

Primary market investors are spoilt for choice as three companies are collectively looking to raise about Rs 21,000 crore via initial share sale this week. Of these, two companies -- One97 Communications-owned and Sapphire Foods, the owner of and chain of stores-- are alone looking to raise about Rs 18,000 crore and Rs 2,000 crore, respectively. Touted as India’s biggest public offer, Paytm’s share sale was launched yesterday and has been subscribed less than 20 percent so far. It comprises a fresh issue of Rs 8,300 crore and an offer for sale of Rs 10,000 crore and the company has already raised Rs 8,235 crore from anchor investors ahead of its share sale. The price band of the three-day share sale, which concludes on November 10, has been fixed at Rs 2,080-2,150 per share. But, analysts aren’t very bullish given its extremely stretched valuation. According to Manan Doshi, co-founder of Unlisted Arena, may fail to deliver on listing gains while long-term outlook also looks challenging. He says:

  • The revenue growth isn’t very exciting
  • Loss has been narrowed by curtailing advertising expenses
  • is well-diversified but lacks clear leadership
  • Sales to m-cap at 49x looks expensive
  • Road ahead looks challenging
  • Paytm may continue to incur losses to safeguard market share
Sapphire Foods IPO IPO date: November 9-11 Issue size: Rs 2,073 crore Price band: Rs 1,120-1,180 per share On the other hand, Sapphire Foods is planning to raise Rs 2,073 crore through its public issue at the higher end of the price band of Rs 1,120-1,180 per share.

The company will launch its IPO today and the issue will close on November 11. Its valuation is around 7 times FY21 sales which is lower than recently listed Devyani International (14 times FY21), Westlife Development (9.3 times), Burger King (12.5times) and Jubilant FoodWorks (15times). According to Ajit Mishra, VP-Research at Religare Broking:

  • Sapphire Foods stands to gain from industry growth
  • Looks to benefit from popularity among youngsters, good consumer experience
  • Turnaround of financial performance holds key
Against this backdrop, which IPO looks best for listing gains? And which one might offer good returns from a long-term perspective? Gaurav Garg, head of research at CapitalVia Global, said:
  • Paytm has diversified business model
  • It has 35 crore customers, of which 5 crores are active users
  • Valuations look expensive
  • Listing gains could be limited; subscribe from long-term perspective
  • Sapphire Foods’ per store revenue is more than peers
  • Listing gains could be decent
Hence, as both the companies are near pioneers in their sectors, investors with high risk-taking appetite and long-term view can subscribe to both these issues. Short-term investors, meanwhile, who are only interested in listing gains, may invest in Sapphire Foods. Apart from these IPOs, stock-specific action will continue to dominate the market trend on Tuesday amid the last leg of corporate earnings. Earnings today
  • BHEL
  • Hindustan Copper
  • M&M
  • Petronet LNG
Among the 160 companies that are set to report their September quarter earnings today, the prominent ones that will be on investor radar include BHEL, Hindustan Copper, M&M, and Petronet LNG. FII trends over the next few days will also hog the limelight as the stock exchanges and other market infrastructure institutions have come out with a roadmap for the implementation of T+1 settlement cycle. The settlement cycle will be implemented in a phased manner and will apply only to the bottom 100 companies starting February 25. And from March 2022 onwards, the next bottom 500 stocks will be available for introduction to T+1 settlement.

Watch Video

MONTHLY STAR

Business Standard Digital

Business Standard Digital Monthly Subscription
199.00  
subscribe
Complete access to the premium product
Convenient - Pay as you go
Pay using Amex/Master/VISA Credit Cards and VISA Debit Cards Only
Auto renewed (subject to your card issuer's permission)
Cancel any time in the future
Requires personal information

What you get?

ON BUSINESS STANDARD DIGITAL

  • Unlimited access to all the content on any device through browser or app.
  • Exclusive content, features, opinions and comment – hand-picked by our editors, just for you.
  • Pick 5 of your favourite companies. Get a daily email with all the news updates on them.
  • Track the industry of your choice with a daily newsletter specific to that industry.
  • Stay on top of your investments. Track stock prices in your portfolio.
  • 18 years of archival data.

NOTE :

  • The product is a monthly auto renewal product.
  • Cancellation Policy: You can cancel any time in the future without assigning any reasons, but 48 hours prior to your card being charged for renewal. We do not offer any refunds.
  • To cancel, communicate from your registered email id and send the email with the cancellation request to assist@bsmail.in. Include your contact number for speedy action. Requests mailed to any other ID will not be acknowledged or actioned upon.

SMART ANNUAL

Business Standard Digital
Subscribe Now and get 12 months Free

Business Standard Premium Digital - 12 Months + 12 Months Free
1799.00
subscribe
Subscribe for 12 months and get 12 months free.
Single Seamless Sign-up to Business Standard Digital
Convenient - Once a year payment
Pay using an instrument of your choice -all Credit and Debit Cards, Net Banking, Payment Wallets, and UPI
Exclusive Invite to select Business Standard events

What you get

ON BUSINESS STANDARD DIGITAL

  • Unlimited access to all content on any device through browser or app.
  • Exclusive content, features, opinions and comment - hand-picked by our editors, just for you.
  • Pick 5 of your favourite companies. Get a daily email with all the news updates on them.
  • Track the industry of your choice with a daily newsletter specific to that industry.
  • Stay on top of your investments. Track stock prices in your portfolio.

NOTE :

  • The monthly duration product is an auto renewal based product. Once subscribed, subject to your card issuer's permission we will charge your card/ payment instrument each month automatically and renew your subscription.
  • In the Annual duration product we offer both an auto renewal based product and a non auto renewal based product.
  • We do not Refund.
  • No Questions asked Cancellation Policy.
  • You can cancel future renewals anytime including immediately upon subscribing but 48 hours before your next renewal date.
  • Subject to the above, self cancel by visiting the "Manage My Account“ section after signing in OR Send an email request to assist@bsmail.in from your registered email address and by quoting your mobile number.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, November 09 2021. 08:00 IST
RECOMMENDED FOR YOU
.