Month: April 2023

Global Markets: Stocks slip, yields climb on oil, economy worries

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A two-day stock rally lost steam Wednesday, as Wall Street turned lower and Treasury yields regained ground as the prospect of higher oil prices and continued Federal Reserve rate hikes weighed on investors.

U.S. stocks stepped back from steep losses but remained lower in midday trading, after opening the fourth quarter with surging gains over the last two days. The Dow Jones Industrial Average was last down 0.22%, the S&P 500 fell and the Nasdaq Composite dropped 0.69%.

At the same time, U.S. Treasury yields reversed two days of losses to resume an upward climb as investors lost hope the Fed might be ready sooner to ease up on higher interest rates in its inflation battle. The yield on benchmark 10-year Treasuries , was up 16 basis points to 3.7729%.

Also Read: Global Markets: Dust settles on stocks surge, OPEC+ talks supply cuts

The dollar index, which tracks the greenback versus a basket of six currencies, regained 1.12% to 111.291 after two days of sharp declines.

Stocks surged earlier in the week on some signs that the economy was slowing, in turn hinting central banks could begin preparing to back away from persistent interest rate increases.

But that hope took a blow Wednesday on several fronts. The Bank of New Zealand stuck with a sizeable rate hike, the ADP National Employment report showed private employment rising by more than estimated in September, and the Institute for Supply Management reported the service sector shrank less than expected in September and employment ticked up. That all combined to suggest the economy was not yet slowing enough in response to rate hikes for central banks to rethink their approach.

“The stock and bond rally of the last few days was driven by weaker economic and labor market data. Today, stocks and bonds are both selling off after a more hawkish policy decision from New Zealand and stronger economic data from the U.S.,” said Jacob Manoukian, U.S. head of investment strategy at JPMorgan Private Bank.

“It’s hard to read too much into day to day price moves when markets are this skittish, but the broad driver of markets for the rest of the third quarter will probably be the trajectory of policy rates.”

Also Read: US stocks: Wall Street closes with sharp gains as final quarter begins

Oil prices looked set to enjoy a third straight day of gains, hitting a three-week high after OPEC+ key ministers, known as the joint ministerial monitoring committee, agreed to cut oil output by 2 million barrels per day, which accounts for roughly 2% of global supply.

Brent crude was last up 2.11% at $93.75 a barrel. U.S. crude was last up 1.88% at $88.14 per barrel.

Elsewhere, spot gold traded at around $1,711 per ounce, down about 84%.

CG Power case: Sebi slaps 5-year mkt ban on Gautam Thapar; penalises 11 entities

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Markets regulator Sebi on Tuesday imposed a five-year ban as well as penalties on CG Power and Industrial Solutions’ former chairman Gautam Thapar and three other entities for diversion of funds and misrepresentation of the company’s financial statements of earlier.

Besides, three other individuals — the company’s former CFO V R Venkatesh and two ex-directors Madhav Acharya and B Hariharan — have been barred for periods varying from 6 months to 3 years.The watchdog has penalised a total of 11 entities in the matter. Others are K N Neelkant, Atul Gulatee, Aditya Birla Finance Ltd and IndusInd Bank, according to a 248-page order.The markets regulator has imposed penalties totalling Rs 30.15 crore on 11 entities in the matter.

A fine of Rs 10 lakh has been imposed on Neelkant, Rs 5 lakh on Gulatee and Rs 1 crore each on Aditya Birla Finance Ltd and IndusInd Bank.”… noticees herein, acted in concert in order to execute a fraudulent scheme of diversion of funds or creating encumbrances of assets of a listed entity. In the said scheme, each Noticee played its assigned role in order to give these transactions a colour different than the one which they actually hold. In this process, they exceeded their authority, they exercised authority which was not vested in them and misused the authority given to them,” Sebi said.

Also read Deltatech Gaming, Pristine Logistics get Sebi’s go-ahead to float IPO

As a result of their acts, Sebi said the funds/assets belonging to the listed company were either diverted or were created encumbrance upon, because of which the company’s total liabilities and that of CG Power Group may have been potentially understated by around Rs 1,053.54 crore and Rs 1,608.17 crore, respectively, as on March 31, 2018 and by Rs 601.83 crore and Rs 401.83 crore, respectively, as on April 1, 2017. 

IPOs worth Rs 24k cr face uncertainty

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The turmoil in Indian equities last week has put a cloud on public share sales lined up for this year.

Regulatory approvals for as many as 19 initial public offerings (IPOs), valid for a year, expire in the next two months. Most of these IPOs may not be able to hit the market within the given timeframe, said a senior banker familiar with matter. Together, these firms aim to raise anywhere between Rs 23,000-24,000 crore.

“Markets are still volatile. A few launches would happen but a deluge of IPOs is unlikely,” said Pranav Haldea, managing director, PRIME Database. “We have seen this in the past as well. If market conditions are not good, companies are happy to let the approval lapse.”

Also Read: Mankind Pharma files papers for $700 million plus IPO; Largest ever in sector

The benchmark BSE Sensex slid 1.6% last week.

Experts suggest that there is a large pool of private capital available today and public markets are not the only source of funds.

“As we have seen lately, withdrawal of draft offers may happen for some issuers who may have imminent funding requirement or would want to pursue a strategic investment route instead,” said Ravi Dubey, partner, IndusLaw.

API Holdings, owner of India’s largest online pharmacy PharmEasy, for instance, withdrew its IPO last month, citing market conditions and strategic considerations. The company said it plans to raise funds via a rights issue.

“Investors have put in stronger filters in terms of business models, management quality and profitability while selecting companies. That’s why we are not seeing the kind of rush that we saw last year,” said a senior banker, on condition of anonymity.

This also rules out the possibility of new-age firms tapping the market any time soon. “It will be tough for loss-making companies to launch in these conditions, unless they become profitable or demonstrate a defined path to profitability,” said a second banker.

To be sure, the success of Dreamfolks Services and Harsha Engineer this month has buoyed sentiment somewhat. The sub-thousand crore issues were oversubscribed 57x and 74x, respectively.

“A fair number of mid-size issuers with strong fundamentals are receiving positive feedback during roadshows and investors are nudging them for a launch,” said a lawyer.

But the markets are still waiting for an opportune time to launch thousand-crore-plus issues. One of the reasons for the lacklustre response for big-ticket trades, according to the lawyer, is the mismatch in valuation expectations between promoters and investors.

Several larger companies had done their roadshows between May and July, and got a weak response from investors as the markets were in considerable turmoil. Investors were not receptive, particularly to sectors such as BFSI back then. Some of the companies in this space are trying to hit the market again amid an uptick in sentiment but the going may be difficult, said bankers.

Last week, Ujjivan Small Finance Bank raised Rs 475 crore through a qualified institutional placement. In August, AU Small Finance Bank raised around Rs 2,000 crore from qualified institutional investors.

“We have started receiving inquiries for mid-size IPOs in varied sectors, including financial services, manufacturing and healthcare,” said Dubey. However, the heightened regulatory scrutiny may impact the timelines in receiving final approval and it is advisable for IPO candidates to factor this in for their listing plans, he added.

Sixty seven companies with issuances worth nearly Rs 1 trillion have the regulatory approval. Another 46 companies that could potentially raise Rs 67,000 crore are awaiting regulatory nod.

Stocks to buy: HDFC Bank, HCL Tech look strong on charts; Nifty may hit 15,050 if Bank Nifty performs well

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By Shrikant Chouhan

On Tuesday, the market did much better than expectations. It was one of the exceptional or unique sorts of day for the market as, despite the rise in the long term bond yields from 1.65 to 1.75 and jump in the dollar index from 92.75 to 93.25, we saw an abnormal rally in the market. It was at 14500 last Friday and on Tuesday it closed above 14800 levels. The formation of a Bullish Harami, that the Nifty has made on the last Friday served as a powerful reversal formation for the market. In the previous session, all sectors, except Bank Nifty and Auto, performed well. If we correlate the data of the past few years then in the last few days of the financial year ending, we witness such type of broad-based activity in the market.

In brief, on Wednesday, a closing of the Nifty above the level of 14930 would be positive for the market. On Tuesday, the strategy should be to buy if Nifty drops between 14750/14700 levels and for that we need to keep a stop loss at 14600. On Wednesday, we would see a rally in bank stocks, mainly because the Bank Nifty closed above the level of 33700. Bank Nifty can go up to 34500/34700 above the levels of 33700. If the Bank Nifty performs, the Nifty could move closer to 14900 and 15050 levels. On the other side, Nifty / Sensex would find major support at 14750 and 14600 levels.

Technical stock picks are-

Sun Pharmaceutical Industries Ltd

BUY, CMP: Rs 597.7, TARGET: Rs 630, SL: Rs 585

The stock had been in a bullish trend forming higher lows on a weekly scale, however, the recent price drop from the highs of 650 seems over as the stock took multiple support at the rising short-term trend line. On the daily time frame after decent accumulation, we witnessed a range breakout and closing of above 20 DAY EMA hints at a bullish uptrend.

BPCL (Bharat Petroleum Corporation Ltd)

BUY, CMP: Rs 430.8, TARGET: Rs 455, SL: Rs 420

On the weekly scale, the 480 zone acted as the strong resistance area due to double top formation which resulted in the minor correction in stock from higher levels developing of a sloping bearish channel. Nevertheless, a reversal from an important support zone on the daily chart is evident for fresh up move.

HDFC Bank

BUY, CMP: Rs 1,553.7, TARGET: Rs 1,630, SL: Rs 1,520

Past few weeks the stock was into a correction mode and in the last week, it closed near its important Fibonacci retracement point, and simultaneously 20 days EMA acted as a support for the stock. On the whole, a strong bullish candle with the incremental volume activity indicates a new leg of a rising trend from current levels.

HCL Technologies

BUY, CMP: Rs 995.8, TARGET: Rs 1,050, SL: Rs 970

On a broader time frame, it is observed that the stock is trading into a rectangle pattern, even so, a breakout of a triangle formation with a strong bullish candle is evident on the daily chart with decent volume action, which specifies good strength in momentum in the near term.

(Shrikant Chouhan is the Executive Vice President, Equity Technical Research at Kotak Securities. Views expressed are the author’s own.)

Charts signal strong support for these two stocks; recent market correction may have bottomed out

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By Subash Gangadharan

Markets have corrected sharply in the last one week. A sharp bounce back in the last two sessions has however curbed the losses. Broad market indices like the BSE Mid Cap and Small Cap indices too have bounced back from close to their 50-day SMAs indicating a possibility that the short term correction is over and markets are ready to resume their intermediate uptrend.The Nifty, however, remains in a short term downtrend. This would reverse with a close above the recent highs of 13778. Immediate supports to watch for resumption of weakness are at 13432.With the intermediate uptrend still intact, we expect the recent correction to be more of a short term nature and may have possibly bottomed out with the strong price action seen in the last two sessions. It is important that the recent lows of 13131 are not broken for the intermediate uptrend to sustain.The below picks are for the next 15-26 trading sessions

After correcting from a high of 568 touched on 16th Dec 2020, Bharat Forge found support around the 492 levels yesterday. These levels also coincide with the 50 day SMA indicating that it is a strong support.The stock rebounded strongly in the last two sessions and made a higher bottom on the 15-minute intraday chart. In the process, there has also been a moving average crossover as the 20 period MA has crossed above the 50 period MA on the 15 min intraday charts. This augurs well for the short term uptrend to continue. We, therefore, recommend a Buy between 530 and 540 with a SL at 510 and Target of 600. CMP is Rs.538.Buy State Bank of India

SBI has corrected sharply from a high of 276 in the last two weeks. The stock found support at the 248.3 levels and has made a hammer pattern on the daily charts on 22nd Dec 2020.On Friday, the stock closed above the 20 day SMA, indicating that the bulls are gaining control. Zooming into the 15 min intraday charts, we notice that the stock has moved higher in the last two trading sessions and made a higher bottom in the process. This augurs well for the bullishness to continue.We, therefore, recommend a Buy between 260 and 263 with a SL at 255 and Target of 280. CMP is Rs.262.8.

(Subash Gangadharan is a Senior Technical and Derivative Analyst at HDFC Securities. The views expressed are the author’s own. Please consult your financial advisor before investing.)

Rupee likely to depreciate further on strong dollar, weak Asian peers; may slip to 82 per USD

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The Indian Rupee is expected to depreciate further on strong dollar, weak Asian peers, and risk aversion in markets. Rupee is likely to open at 81.40, and trade in a range of 81.20 to 81.70 for the day, according to forex analysts. The local unit may slip to 82 per dollar soon, they added. In the previous session, rupee tumbled to a record low of 81.66 against the US dollar as various risky assets continued to be pounded by concerns of a looming recession in developed economies that have prompted a worldwide hardening of interest rates. The US dollar has gained against several currencies, including the rupee. An indication of its global strength is being reflected in the Dollar Index which vaulted to a new 20-year high of 114.53.

Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors

Anindya Banerjee, VP, Currency Derivatives & Interest Rate Derivatives, Kotak Securities

“USDINR spot closed at a fresh all-time high at 81.62, up 64 paise, after touching a high of 81.65. Massive rally in the US Dollar Index and collapse in the British Pound triggered this up move. Additionally sharp rise in US and UK bond yields and sell off in global equities contributed to the bearish sentiments in EM currencies. Over the rest of the week, we could see massive two way volatility across currency pairs, including the USDINR, as central bank fight it out with speculators. As we can expect a range of 80.70 and 82.10 on USDINR.”

Anuj Choudhary – Research Analyst, Sharekhan by BNP Paribas

“Rupee depreciated by 0.59% on Monday and touched a record low of 81.6625 on strong Dollar and weak domestic markets. Dollar surged to fresh 20-year high of 114.527 amid weak global equities and sharp fall in riskier currencies such as Pound. Pound fell to record low levels of around 1.035 per US Dollar levels after UK’s Finance Minister Kwasi Kwarteng announced tax cuts and increased borrowing which spooked markets. Markets tanked on worries over UK’s economic growth.”

“We expect Rupee to trade on a negative note as deteriorating global risk sentiments may put downside pressure on Rupee. Weak global markets may lead of safe haven flows towards US Dollar. However, sharp fall in crude oil prices may prevent sharp downside in Rupee. Investors may remain cautious ahead of RBI’s monetary policy meeting towards the end of the month. RBI is expected to rise interest rates by 50 bps. USDINR spot price is expected to trade in a range of Rs 80.50 to Rs 82.50 in next couple of sessions.”

(The recommendations in this story are by the respective research analysts and brokerage firms. FinancialExpress.com does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)

Mcap of 7 of top 10 most valued firms climb over Rs 1.33 lakh crore; TCS, Reliance lead gainers

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The combined market valuation of seven of the top 10 most-valued firms climbed Rs 1,33,746.87 crore last week amid a firm trend in equities, with Tata Consultancy Services (TCS), Reliance Industries and Infosys leading the pack of gainers.

Last week, the BSE benchmark advanced 989.81 points or 1.68 per cent.

Reliance Industries added Rs 26,249.1 crore taking its valuation to Rs 17,37,717.68 crore.

Also Read| MCX Crude oil September futures: Go long for expected target of Rs 7000/bbl; MCX prices may see correction

The market valuation of Infosys climbed Rs 24,804.5 crore to Rs 6,36,143.85 crore and that of ICICI Bank advanced Rs 20,471.04 crore to Rs 6,27,823.56 crore.

The market capitalisation (mcap) of State Bank of India gained Rs 15,171.84 crore to Rs 4,93,932.64 crore and that of Adani Transmission went higher by Rs 7,730.36 crore to Rs 4,38,572.68 crore.

HDFC Bank’s valuation climbed Rs 7,248.44 crore to Rs 8,33,854.18 crore.

From the laggards, the mcap of Hindustan Unilever declined by Rs 3,618.37 crore to Rs 6,08,074.22 crore.

HDFC’s valuation fell by Rs 2,551.25 crore to Rs 4,41,501.59 crore and that of Bajaj Finance dipped Rs 432.88 crore to Rs 4,34,913.12 crore.

Also Read| Petrol and Diesel Price Today, 10 Sep 2022: Fuel prices unchanged; Check rates in Delhi, Mumbai, other cities

Reliance Industries continued to remain the most valued firm in the ranking of top 10 firms by market capitalisation, followed by TCS, HDFC Bank, Infosys, ICICI Bank, Hindustan Unilever, State Bank of India, HDFC, Adani Transmission and Bajaj Finance.

Sebi’s handling of insider trading cases under spotlight after SC rulings

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The Supreme Court this week turned down Sebi’s appeal to penalise a former stock broker in the case of circulation of unpublished price sensitive information (UPSI) through WhatsApp messages in the scrip of Bajaj Auto.

A Bench led by chief justice UU Lalit dismissed the Sebi’s appeal against the SAT order in March last year that had set aside the penalty of Rs 15 lakh imposed on Shruti Vora for allegedly forwarding UPSI of six companies on WhatsApp.

According to experts, the regulator has been relying a lot on circumstantial evidence as opposed to basing its findings on direct evidence substantiating the possession of UPSI. This, along with the significant delays in its investigation processes and stringent actions, gets difficult to sustain in higher forums when appealed.

“The Supreme Court has of late gravitated to the progressive intent of requiring a higher threshold of application of mind in insider trading cases. While acknowledging the complexity that comes from the vexed burden of proof that Sebi has to discharge, the court has rightly made it harder for the Sebi to catch the individuals with bona fide reasons in the insider trading net,” said Rachna Jain, senior partner, Desai and Diwanji.

“The burden of proof is higher in PIT cases than with Sebi PFUTP matters and cannot always be based on the notion of preponderance of probability,” added Tejesh Chitlangi, senior partner at IC Universal Legal.

Also Read: NCDEX relaunches derivatives contract in Robusta Cherry AB Coffee

For instance, in the Shruti Vohra case, the Court gave the correct weightage to the element of prior knowledge. This is necessary to delineate market hearsay from actually confidential trading data, according to Jain.

“In insider trading cases, gathering evidence of ‘connection’ and ‘communication’ is a daunting task for regulators worldwide, but one that cannot be done away with ‘assumption’ and ‘speculation’. The recent SC judgments are a reminder to consider the element of ‘knowledge’ and ‘motive’ in the context of serious charges of insider trading, which is a civil and criminal offence,” said Sumit Agrawal, managing partner, Regstreet Law Advisors, and a former Sebi officer.

“According to the recent judgments, one of the key takeaways is that it is imperative to also consider and provide weightage to the circumstances that have led to the trade in shares,” Gaurav Mistry, partner, DSK Legal, said.

In the GIPL matter, the SC concluded that while the information of termination of shareholders agreements was price sensitive information, the sale of shares by the respondent would not fall under the ambit of insider trading as it was somewhat similar to a distress sale, made before the information could have a positive impact on the price of the shares.

In the matter pertaining to PC Jewellers, SC observed that the trading pattern in itself cannot provide circumstantial evidence to prove communication of UPSI in the absence of material on record to show such frequent communication between the family members.

“What emanates from these judgments is the requirement to question and consider ‘why the trade’ as opposed to simply checking the boxes on ‘who made the trade’ and ‘when was the trade made’. Thus, essentially, sale of shares at a time when there is a surge in the stock price owing to the cleansing of UPSI by public disclosure of such information should not attract liability, nor should purchase of shares at the time of a slump owing to public disclosure of such information,” said Mistry.

Statistically, Sebi’s success rate is more than 95% in cumulative litigation, according to estimates. However, given the quasi judicial, legislative and executive powers it wields, the regulator may need to go to the drawing board and reassess the material evidence to determine cases requiring enforcement, said experts.

“The recent judgments have set a direction that going forward the regulator’s actions against persons need to be based on a lot more comprehensive investigation and higher degree of evidence, and thus it would do well to make tech and big data the answer. Data analytics, bank transactions, social media connections and call records can follow insider trading suspicions to detect more nuanced circumstantial evidence,” said Jain.

Sebi’s process of investigation and collection of evidence in insider trading matters may be tested again in the SAT and the SC in coming months.

An email sent to Sebi did not immediately get a response.

“It is hoped that Sebi and the stock exchanges would take these judgments as a learning rather than viewing these judgments in specific facts (and not as a principle to be followed) or amending the regulations with external credibility,” said Agrawal.

“The regulator needs to pick its battles and only take up cases where enough evidence is on record. The element of intent and why and how information is being used also has to be seen to ensure that Sebi’s wide powers are not misdirected at unintentional traders,” said Manshoor Nazki, partner, IndusLaw.

Tamilnad Mercantile IPO share allotment: Check status via BSE, grey market premium; listing on 15 Sep

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Tamilnad Mercantile Bank’s Rs 831-crore IPO, which got subscribed 2.86 times, is likely to finalise the basis of allotment on Monday, 12 September. The IPO was sold in the range of Rs 500-525 per equity share, and it received a strong response from all the categories of investors. The equity shares are expected to list on BSE and NSE on 15 September 2022. The initiation of refunds or unblocking of funds from ASBA account will take place on 13 September, and the equity shares will get credited to allottees demat account on 14 September 2022.

Also read: Harsha Engineers IPO opens on September 14: Check price band, GMP, lot size, other bidding details

Check Tamilnad Mercantile Bank share allotment status via registrar Link Intime India website

To check the share allotment status, select the company name as ‘Tamilnad Mercantile Bank — IPO’ from the drop-down list on the Link Intime India website when it gets declared. Check box either PAN, Application Number or Depository/Client ID. Accordingly, enter the permanent account number or Application Number or Depository/Client ID in the box. Enter the given captcha in the provided space and click the submit button. This will display the number of shares that have been applied and allotted to the investor.

Check share allotment status in Tamilnad Mercantile Bank via BSE website

Another way to check the allotment status in Tamilnad Mercantile Bank is through the BSE website. Select ‘equity’ as the issue type, and ‘Tamilnad Mercantile Bank’ as the issue name from the drop-down list, when it gets declared. Enter the application number and PAN (permanent account number). Click on ‘I am not a Robot’. In the last step, click on the search tab to view the status details.

Navi Technologies gets Sebi nod for Rs 3,350-cr IPO

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Sachin Bansal-promoted Navi Technologies has received a go-ahead from the capital markets regulator for its initial public offering (IPO). The fintech filed its draft red herring prospectus (DRHP) to raise Rs 3,350 via an IPO in March. Navi Technologies was issued an “observation letter” by Sebi on September 5, according to the latest update on the regulator’s website.

According to the DRHP, of the total Rs 3,350 crore that it plans to raise from the public issue, Rs 2,370 crore will be invested in Navi Finserv and Rs 150 crore will be infused into the general insurance arm. The rest will be used for overall expansion plans.

According to the DRHP, the company can be divided into four units – Navi Finserv, Chaitanya India Fin Credit, Navi General Insurance and Navi AMC.

As of Q3FY22, Navi’s microfinance loans had Rs 1,808 crore in assets under management (AUM) and a net non-performing assets (NPA) ratio of 0.98% after having disbursed Rs 6.75 lakh loans. Its personal loans category had Rs 1,418 crore in AUM with a net NPA ratio of 0.03% and the company had disbursed 2.18 lakh loans. The fintech’s insurance division sold 18,671 retail heath policies and had a gross written premium of Rs 29.6 crore. Its asset management business had Rs 943 crore in AUM and had 1.04 lakh mutual fund investors.

Also read: Tamilnad Mercantile Bank IPO fully subscribed on Day 2

The approval for the IPO comes as a relief to the company which was one among the six entities whose application for universal banking licence was earlier rejected by the Reserve Bank of India.

The total income of Navi Technologies grew from Rs 207 crore in financial year (FY) 2020 to Rs 780 crore in FY21. It incurred a loss of Rs 8 crore in FY20, but reported a profit of Rs 71 crore in FY21. In the nine months of FY22, the company had earned a total income of Rs 719 crore and incurred a loss of Rs 206 crore, its DRHP showed.