The Indian primary market witnesses a historic milestone as the LG Electronics IPO shatters records, while investors weigh their options against Tata Capital. Here’s a detailed breakdown.
In a stunning display of investor confidence, the recently closed LG Electronics IPO has achieved a monumental milestone, leaving the market abuzz. The public issue garnered a staggering ₹4 lakh crore in applications, setting a new benchmark for the Indian IPO landscape.
A Landmark Achievement for Indian Markets
“This is a historic number,” the analyst began, reflecting on the overwhelming response. She highlighted the seeming paradox this IPO presents. “On one hand, it’s often said that this is, you know, a poor country. And on the other hand, applications worth ₹4-₹4 lakh crore are being applied for here. It is among the country’s largest IPOs, and you are getting record numbers in them.”
Why Did LG Electronics Become a Blockbuster?
When asked if this record-breaking number was expected, our expert was quick to point out the core reasons behind this success.
“I always say one thing,” she stated. “If the fundamentals are good, then absolutely everyone is ready and waiting to invest.”
She broke down the key factors that made the LG IPO so attractive:
- Attractive Valuation: “What I found most positive about LG was their valuation. Despite having such excellent financial performance, they kept their valuations very good compared to their peers. They kept them very decent.” She explained that while the company’s ratios were better than its competitors, the management did not let that inflate the valuation, which ultimately attracted massive public interest.
- Perfect Timing: “The second thing is timing,” she added, recalling a discussion from the previous Friday where three IPOs—Weav, Tata Capital, and LG—were analyzed. “Even then, I had said that if we have to go for one out of these three, we should go for LG because I was quite fond of it.” She credited the post-Navratri and pre-Diwali season, coupled with a positive boost from the government on GST rate cuts, for creating a perfect investment climate.
- Strong Financial Performance: The company’s robust financial health provided a solid foundation, making it a reliable bet for investors.
A Testament to Indian Saving Habits
Our expert also took a moment to praise the Indian investing public. “I have always believed that our Indian public has a good sense here because our country has always believed in savings. If you talk about the Western world, savings there are not that high. But if you talk about India, the savings here are very good. And that savings, that money, goes to the right place when opportunities arise, and we saw an example of that yesterday.”
The Tata Capital vs. LG Electronics Debate
The conversation then turned to the dilemma faced by investors who applied to both Tata Capital and LG Electronics, especially since the chances of allotment in such highly subscribed issues become slim.
When asked which company she leans towards more, our expert provided a clear and comparative analysis.
On Tata Capital:
- The Brand Strength: “It is a Tata Group company, so the Tata brand is there.”
- The Pricing: “They have priced it fully.”
- The Caveat: “They have just started the financing business of Tata Motors. So, for the time being, their ratios will appear a little diluted to us.” She clarified that this is a long-term story, and the benefits of the business will be seen over a longer horizon.
- Valuation Concern: “I had also said that the valuations have not been made very attractive and they haven’t given much valuation comfort.”
On LG Electronics:
She presented LG as the “living, breathing example” of her investment philosophy. “Both are brand names, but where valuation comfort was found, where good fundamentals were found, the money flowed in that direction.”
The Final Verdict
“So, I am still positive on LG,” she declared. “If we compare the two, LG was better. It appears to be on the much better side.”
For those who do receive an allotment in Tata Capital, she advises a long-term perspective. “If you do get an allotment, then only keep it with a long-term view. Do not expect a very big listing gain. I had already told you this last week… If it does get allotted, then only keep it with a long-term perspective. It might take a few months, so it’s not for keeping for a few days; keep it for a few months. Then, we will start to see some momentum there.”
The record-breaking subscription of the LG Electronics IPO is a powerful statement on the state of the Indian market, where strong fundamentals and fair valuation are ultimately rewarded by savvy investors.
Disclaimer: This blog post is based on an analyst’s commentary and is for informational purposes only. It is not investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
FAQs
Q1: What was the total application value for the LG Electronics IPO?
A: The LG Electronics IPO received a record-breaking ₹4 lakh crore in applications, making it one of the largest in Indian history.
Q2: According to the expert, what were the key reasons for LG Electronics IPO’s success?
A: The expert credited three main factors: attractive valuation compared to peers, perfect timing around the Diwali season, and strong fundamental financial performance.
Q3: How does the expert view Tata Capital’s IPO compared to LG’s?
A: While acknowledging the strength of the Tata brand, the expert believes LG was the better choice due to more attractive valuations. She views Tata Capital as a long-term story with less potential for short-term listing gains.
Q4: What is the advice for investors who get an allotment in Tata Capital?
A: The advice is to hold Tata Capital with a long-term perspective of several months, as significant momentum may take time to build and large listing gains are not highly expected.
Q5: Which IPO does the expert favor more, LG Electronics or Tata Capital?
A: The expert clearly states she is more positive on and favors LG Electronics, calling it the “better side” in a direct comparison between the two IPOs.
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