If someone wants to invest for a long-term wealth creation, ‘Bharat Bond ETF, Rossari Biotech, and Yes Bank IPO are preferred choice filtered on the basis of wealth creation/protection of capital.
The bulls remained in control of Indian markets for the fourth week in a row and as we head into a new week, traders are spoilt for choice.
The week beginning from July 13 presents an opportunity for investors to choose from any of these three options--Rossari Biotech IPO, Yes Bank FPO and Bharat Bond ETF--and secure good returns.
Specialty chemicals manufacturer Rossari Biotech will open its nearly Rs 500-crore IPO for subscription on July 13. The price band of the issue, which closes on July 15, is set at Rs 423-425 per share.
The second tranche of the Bharat Bond exchange-traded fund (ETF) will open for bidding between July 14 and 17, with two more new ETFs maturing in 2025 and 2031.
The Bharat Bond ETF will be managed by Edelweiss AMC and the base size of the issue is Rs 3,000 crore with a green-shoe option of Rs 11,000 crore.
And, lastly, Yes Bank's capital raising committee on July 10 fixed a floor price of Rs 12 per equity share and cap price of Rs 13 per share for its follow-on public offer (FPO). The FPO issue will be open from July 15 to July 17.
All three options do look exciting but they cater to different segments of market participants and can't be bunched in one category. If someone wants to invest for long-term wealth creation, then ‘Bharat Bond ETF, Rosari Biotech, and Yes Bank IPO are preferred choice, filtered on the basis of wealth creation/protection of capital.
“Seeing the current market situation, we would advise investors to invest in Bharat ETF Bond for the long term because the return is predictable and also earlier bonds have delivered annualised return in the range of 14-18 percent. Additionally, it has a high credit rating and a good tool for diversification into debt,” Ajit Mishra, VP - Research, Religare Broking told Moneycontrol.
“Though Roosari Biotech has a strong product portfolio and it is well diversified, the company's valuation seems expensive. We would advise investors to wait until there is much clarity of the demand scenario and things getting stabilize.”
Mishra added that Yes Bank FPO is likely to help existing shareholders to dilute their holding, however, the impact of past issues is still lingering, and hence fresh investment is not advisable.
We spoke to several experts about their choice and here is what they said:
Expert: Siddharth Panjwani, Chief Strategy Officer Pickright Technologies
Between Rossari Biotech, Yes Bank FPO, and Bharat Bond ETF, if we take a long-term view and moderate to high-risk profile, we like Rossari the most, given that it ticks the right boxes when it comes to sector and growth profile. At the offer price, Rossari would be valued at a premium relative to some of its larger peers (P/E of around 36) like Vinati, Atul, and Fine Organics. This valuation could be justified given its higher revenue and net income CAGR numbers.
While Yes Bank is now majority-owned by SBI and its brethren, even with around 50 percent dilution happening at FPO price, new investors should question the upcoming problems that a bank could be subjected to in the near future in terms of NPAs.
With Bharat Bond ETF, while the principal is largely protected since the debt has quasi-sovereign characteristics, the returns are capped given that this is ultimately a bond instrument.Expert: Nirali Shah, Senior Research Analyst, Samco Securities
All three cater to the needs of different investors and ideally, cannot be compared. However, if an investor is looking for a safer bet for a long-term investment in equity, Rossari Biotech IPO will be a good pick.
With a sound management team, strong fundamentals, stable book with minimal debt, Rossari Biotech is a value buy for long-term returns to shareholders.
As far as Yes Bank’s FPO is concerned it is a high-risk high reward punt for equity investors who have a high-risk appetite as this investment will require patience. Recovery in Yes Bank could take a while with SBI’s support and in the process, there can be many ups and downs.
Investors looking to fulfill the debt component of their portfolio can invest in the Bharat Bond ETF.
Expert: Vijay Kuppa, Co-Founder, Orowealth.
With respect to the options provided, the investment caters to different asset classes, considering it has equity and debt. We would prefer Bharat Bond ETF due to the following reasons: -
a) Bharat Bond ETF consists of papers by public sector enterprises, which is backed by the government, leading to safety on the investment being done.
b) It provides capital protection and is a good fixed-income instrument for an investor who can hold on to the investment for longer periods.
c) Considering the falling interest rates, the returns being provided by the bonds are normal, considering the sovereign guarantee and with a further decline in interest rates going forward, it may lead to higher returns on the bonds.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.