Smart investors mint money in infrastructure, bank QIPs

Among the prominent gainers, Ashok Leyland, ITD Cementation India and J Kumar Infraprojects have more than doubled.

The rally in financial and infrastructure stocks has brought cheer to qualified institutional buyers (QIBs), as shares of most companies from these sectors are trading at a premium to their respective qualified institutional placement (QIP) issue prices. 

Over the past year, investors in companies like YES Bank, DCB Bank, SKS Microfinance, ITD Cementation India, J Kumar Infraprojects, Sadbhav Engineering, Poddar Developer, MBL Infrastructure, Texmaco Rail Engineering and Dynamatic Technologies have rallied more than 30 per cent over their QIP issue prices. 

In contrast, the benchmark indices, the BSE Sensex and the National Stock Exchange’s Nifty have gained between 26 per cent and 28 per cent. 

Since April 2014, a total of 37 companies have raised Rs 27,207 crore through the QIP route, data from CapitalinePlus show.

Of these, 25 stocks have outperformed the market, while the remaining 12 have underperformed, falling up to 60 per cent from their QIP prices. 

Among the prominent gainers, Ashok Leyland, ITD Cementation India and J Kumar Infraprojects have more than doubled their value, while SKS Microfinance, Sadbhav Engineering, Dynamatic Technologies and MBL Infrastructures have gained between 50 per cent and 97 per cent over their QIP prices, according to data compiled by Business Standard Research Bureau. 

Analysts say the government’s infrastructure push, which has enabled faster clearances for stalled projects and policy reform-oriented measures, has helped stocks do well on the bourses and attract investor attention. 

“In the infrastructure sector, a number of players faced headwinds because there were projects stuck due to a variety of reasons. What has been seen of late is that a lot of these projects are getting the requisite approvals/clearances. In some cases, the operations are likely to start or have already started. As a result, investors were attracted to this sector,” points out R Sreesankar, head of institutional equities, Prabhudas Lilladher. 

“Going ahead, we expect a pick-up in the order flow for infrastructure and related companies, since the government is now willing to spend more on this sector. As a result, the order flow for infrastructure companies will look better. That is a reason why the stock performance has been good,” he adds. 

Banking on gains

State Bank of India (SBI), the country’s largest public-sector lender, has also hinted that its biggest share sale issue, which might fetch Rs 10,000-15,000 crore, could hit the markets soon. 

In January, SBI had said its board and shareholders had approved its proposed QIP issue, the largest ever from a domestic institution. 

“Public-sector banks have been laggards as there have been concerns over the level of non-performing assets in the system. However, if priced attractively, I think the SBI’s QIP issue will find takers,” says Sreesankar. 

Mayuresh Joshi, vice-president (institutional), Angel Broking, says the banking sector will generate more interest among investors going ahead; so far, investors have believed in this future growth and got the stocks at a reasonable price. As regards SBI, he says the valuations are quite attractive. 

“Once the credit cycle improves, the valuation ratios for SBI will also look more attractive over the next few quarters. So, investors are playing the same theme of structural improvement, rate cuts and the probability that their spreads will be maintained, and capital infusion will aid balance sheet growth. The market has appetite for such issues,” he says.