Do it yourself

The recent discussion triggered by a viral video featuring Sanjeev Prasad , Co-Head – Institutional Equities at Kotak Institutional Equities, has reignited scrutiny of India’s IPO markets. Prasad highlighted that over the past five years, roughly 40% of IPO proceeds have gone to promoters and early investors, while only around 15% has been deployed toward capital expenditure—suggesting limited contribution to real economic asset creation. His statement resonated widely, reflecting growing investor unease over whether public equity markets are increasingly serving as exit avenues rather than engines of new growth. While the concern is valid and deserves examination, the broader picture is more nuanced than a headline statistic reveals. The Concern: Is the IPO market becoming exit driven? The disproportionate share of Offer for Sale (OFS) raises legitimate questions: ·          Are IPOs being priced and marketed primarily to facilitate stake...

The central government presently derives 63% of its resources from taxes (Direct Taxes 36% and Indirect Taxes 27%). 27% comes from borrowing and 10% from other sources. The present socio-political milieu is such that (i) the central government is becoming increasingly dependent on the regional parties, hence it is imperative that it would need to allocate more resources to the states ruled by the supporting regional parties; (ii) a larger proportion of the population is becoming increasingly dependent on the government for the basic necessities like food, shelter, education and healthcare, requiring the basic social sector spending to rise without any major improvement in the quality of life; (iii) supply side pressures are not abetting, keeping the inflation (including imported inflation) elevated, pressurizing USDINR and yields; and (iv) economic growth continues to be disproportionately dependent on government spending (both revenue and capex). Under these circumstances, the governm...

In a significant move for the banking industry, the central government has proposed to lift the embargo on grant of government business to private banks. Whereas, de facto the government has always favored public sector banks for grant of government business, the de jure embargo was imposed in 2012 post global financial crisis to protect the small savers and public entities from a potential collapse. Initially the embargo was imposed for a period of 3years; but it was extended further in 2015; through some private sector banks with public sector legacy (ICICI, Axis etc) were continued to be permitted to conduct some part of the government agency business. As per the latest announcement, the embargo is proposed to be lifted completely. This announcement has come at a time when the government would be starting the process privatize couple of public sector banks (PSBs), and diluting its shareholding in other PSBs. In past couple of decades, many public sector undertakings have faced s...

Last week the media (both social and mainstream) was buzzing with the "source based news" that the government may be considering yielding a controlling stake in public sector oil company Bharat Petroleum Corporation Limited (BPCL) to some large foreign petroleum company. There was however no hint of confirmation from the "official sources". On Friday, The stock price of BPCL jumped sharply on the basis of this news. However, most of the gains were given up within 5 minutes of the market opening on Monday. The fall was apparently outcome of the rise in global crude prices due to attack on a large oil facility in Saudi Arab. The enquiry with some large brokerages and traders indicated that the traders, who bought on Friday, were mostly in panic throughout the weekend and capitulated into selling their positions as soon as the opening bell sounded on Monday morning. This stock price movement, though it confirmed the "herd mentality" theory of...

Some food for thought "I may neither choose who I would, nor refuse who I dislike; so is the will of a living daughter curbed by the will of a dead father." —William Shakespeare (English writer 1564-1616) Word for the day Ideogram (n) A written symbol that represents an idea or object directly rather than a particular word or speech sound, as a Chinese character.   First thought this morning I chanced upon a twitter handle @theworldindex. It has some very interesting data about various countries in the world. Though there is no way to authenticate the data, but intuitively I can say it does not sound too off the mark in many cases. The following is some data I found interesting to note and actionable for the government. Chart of the day Use PSE for public good There are hundreds of not for profit organizations that have been set by government in post independence period. These organizations are f...