India focused: IPO, special situations, Stylus Holdings

Himanshu Dugar

India focused: IPO, special situations

Stylus Holdings

Stylus Holdings is a buy-side equity research firm. We offer bottom-up investment ideas as well as provide on demand equity research and portfolio tracking. 
At Stylus, our focus is to identify market dislocations that can generate 20+% IRR with a reasonable margin of safety. As part of our research process, we do a deep dive into the fundamentals of the company, evaluate their competitive positioning and assess their valuation.
Our investment team is led by Himanshu Dugar. Himanshu is a Chartered Accountant and a CFA charter holder. He has 10+ years of active experience in the stock market with stints at CRISIL Research, a S&P Global copmany and Miras Investments, a single family office based in Dubai.

Equity Research Firm

Equity Capital Markets

Meesho operates as a software development company. The Company provides a platform for online resellers. Meesho offers timely and secure payments, low returns, and shipping services. Meesho serves customers in India.

<ul>
<li>Meesho has positioned itself as a value-shopping platform catering to rural consumers and small sellers. It charges the seller only for fulfillment and advertising while bringing value deals for consumers</li>
<li>We believe Meesho has a right to win in the value-shopping category ahead of Flipkart/Amazon with its focus on pricing vs quality/convenience. However, it may not attract high-spending aspirational consumers</li>
<li>IPO valuation at $5.6bn(5x FY25 sales) is relatively cheap vs listed e-commerce peers (6-13x). Closest peer Flipkart was most recently valued at $35bn (14x FY25 revenues).</li>
</ul>


Meesho has positioned itself as a value-shopping platform catering to rural consumers and small sellers. It charges the seller only for fulfillment and advertising while bringing value deals for consumers
We believe Meesho has a right to win in the value-shopping category ahead of Flipkart/Amazon with its focus on pricing vs quality/convenience. However, it may not attract high-spending aspirational consumers
IPO valuation at $5.6bn(5x FY25 sales) is relatively cheap vs listed e-commerce peers (6-13x). Closest peer Flipkart was most recently valued at $35bn (14x FY25 revenues).


Meesho - Potential Play on Value E-Commerce

Pine Labs Limited. designs and develops software solutions. The Company offers digital infrastructure and transaction platform that allows merchants to accept a wide range of payment methods for in-store and online purchases and simplifies the checkout process across various payment form factors. Pine Labs serves customers globally.

<ul>
<li>Pine Labs is a fintech company supporting digitization of commerce through digital payments and issuing solutions for merchants, consumer brands and enterprises, and financial institutions.</li>
<li>While the company has been growing in line with peers, its focus on enterprise customers and subscription pricing stands out, while peers have focused on merchants with a %-fee model.</li>
<li>IPO priced at sharp discount to expectations ($2.5bn vs $6bn), which is fair given changing business/industry dynamics. Pending RBI investigation and potential selling from early investors are other near-term concerns.</li>
</ul>


Pine Labs is a fintech company supporting digitization of commerce through digital payments and issuing solutions for merchants, consumer brands and enterprises, and financial institutions.
While the company has been growing in line with peers, its focus on enterprise customers and subscription pricing stands out, while peers have focused on merchants with a %-fee model.
IPO priced at sharp discount to expectations ($2.5bn vs $6bn), which is fair given changing business/industry dynamics. Pending RBI investigation and potential selling from early investors are other near-term concerns.


Pinelabs IPO Review - Another Fintech IPO Exactly 4yrs After Paytm - Can It Buck the Trend?

Nextbillion Technology Private Limited, doing business as Groww, operates as an online investment platform. The Company offers mutual funds, tax planning, investment management, and financial information services. Groww serves customers in India.

<ul>
<li>Groww is India's largest stockbroker with 13mn active users. It is progressing towards a full-stack investment platform, expecting to cross-sell multiple financial products to over 18mn users on its platform.</li>
<li>It is aggressively expanding into lending (MTF, LAS) and has recently acquired 'Fisdom' to offer premiumised wealth solutions (AIF, insurance, tax-filing). It also owns Groww AMC, offering debt/equity/Fixed income products.</li>
<li>At 33 times FY25 earnings, IPO is priced reasonably considering its deep penetration in the market (customers from 98% Pincodes) and strong ARPU and profitability supported by decent retention metrics.</li>
</ul>


Groww is India's largest stockbroker with 13mn active users. It is progressing towards a full-stack investment platform, expecting to cross-sell multiple financial products to over 18mn users on its platform.
It is aggressively expanding into lending (MTF, LAS) and has recently acquired 'Fisdom' to offer premiumised wealth solutions (AIF, insurance, tax-filing). It also owns Groww AMC, offering debt/equity/Fixed income products.
At 33 times FY25 earnings, IPO is priced reasonably considering its deep penetration in the market (customers from 98% Pincodes) and strong ARPU and profitability supported by decent retention metrics.


Groww IPO Review – India’s Largest & Fastest Growing Broker / Investment Platform.

Orkla India Ltd. / Equity Capital Markets

<ul>
<li>Orkla India owns two popular Indian food product brands 'MTR' and 'Eastern that offer Ready to Cook/Eat products as well as pure and blended spices.</li>
<li>Both its brands enjoy strong brand heritage in India as well as countries with a higher proportion of the Indian diaspora.</li>
<li>IPO is being valued at TTM PE of 40x (lower end of 35-90x ascribed to Indian FMCGs). With a low double-digit growth profile and high ROCEs, valuations look reasonable.</li>
</ul>


Orkla India owns two popular Indian food product brands 'MTR' and 'Eastern that offer Ready to Cook/Eat products as well as pure and blended spices.
Both its brands enjoy strong brand heritage in India as well as countries with a higher proportion of the Indian diaspora.
IPO is being valued at TTM PE of 40x (lower end of 35-90x ascribed to Indian FMCGs). With a low double-digit growth profile and high ROCEs, valuations look reasonable.


Orkla India IPO Review: Strong Brands and Valuations Are Not Too Spicy

Event-Driven

Sammaan Capital Limited is a mortgage-focused non-banking financial company. The Company offers housing loans to salaried and self-employed individuals for construction, purchase, renovation, and reconstruction of houses, as well as business loans to MSMEs, self-employed individuals, and proprietorships for working capital or business expansion. Sammaan Capital operates in India.

<ul>
<li>Sammaan Capital approved a 3-part preferential issue to Avenir, part of Abu Dhabi's sovereign-controlled IHC, aggregating INR 8,850 crore (USD 1.06 billion) in equity and warrants (convertible in 18 months)</li>
<li>Sammaan has been looking out for an equity partner for few quarters now. Avenir's backing not just improves capital positioning but also helps restructure overall liability side of the business</li>
<li>Upon consummation (80% probability), we anticipate material re-rating potential. However, there are multiple risks in the near term, including accelerated write-offs. Further, an ongoing litigation may jeopardize the deal itself.</li>
</ul>


Sammaan Capital approved a 3-part preferential issue to Avenir, part of Abu Dhabi's sovereign-controlled IHC, aggregating INR 8,850 crore (USD 1.06 billion) in equity and warrants (convertible in 18 months)
Sammaan has been looking out for an equity partner for few quarters now. Avenir's backing not just improves capital positioning but also helps restructure overall liability side of the business
Upon consummation (80% probability), we anticipate material re-rating potential. However, there are multiple risks in the near term, including accelerated write-offs. Further, an ongoing litigation may jeopardize the deal itself.


Sammaan Capital: Can Capital Boost from Abu Dhabi Turnaround Its Fortunes?

Himanshu is a SEBI registered independent equity research analyst (SEBI Reg No. INH200009944). He has 10+ years of experience in buy-side equity research through his stints at CRISIL and Miras investments.
At CRISIL, he has conducted deep analysis in multiple sectors ranging from consumer discretionary to pharma/ chemicals as well as consumer staples.
At Miras Investments, his role was to analyse late-stage investment opportunities in India focusing on Pre-IPO and IPOs.

Stylus Holdings is a buy-side equity research firm. We offer bottom-up investment ideas as well as provide on demand equity research and portfolio tracking. Our bottom-up ideas range from IPO/QIPs to special situations; the underlying criteria is to identify market dislocations that can generate 20+% IRR with a reasonable safety margin.
As part of our research process, we do a deep dive into the fundamentals of the company, evaluate their competitive positioning and assess their valuation.