External broker reports(aggregated public sources), ICICI Securities Ltd

ICICI Securities Limited

External broker reports(aggregated public sources)

ICICI Securities Ltd

ICICI Securities Limited provides investment services. The Company provides corporate and investment banking, securities, wealth management, retail brokerage, initial public offerings, and advisory services. 

Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

Equity Bottom-Up

<ul>
<li>IDFC Ltd is registered with RBI as NBFC - Investments. Besides banking, it also has investments in diverse businesses such as asset management, and infrastructure debt fund.</li>
<li>IDFC Ltd has jumped over 11% with the reverse merger news coming in; while in the past one year, the stock has increased over 50%</li>
<li>In our SoTP, IDFC First Bank is valued at ~1.6x FY23E ABV and AMC business at 4% of AAUM to arrive at a revised target price of Rs 70 per share for IDFC Ltd </li>
</ul>
<div class="content-highlight">Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</div>


IDFC Ltd is registered with RBI as NBFC - Investments. Besides banking, it also has investments in diverse businesses such as asset management, and infrastructure debt fund.
IDFC Ltd has jumped over 11% with the reverse merger news coming in; while in the past one year, the stock has increased over 50%
In our SoTP, IDFC First Bank is valued at ~1.6x FY23E ABV and AMC business at 4% of AAUM to arrive at a revised target price of Rs 70 per share for IDFC Ltd 

Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

IDFC Ltd: Three-Way Merger Getting Closer

Equity L/S Analyst | Forensic Accounting | India, Yellowstone Equity

Ankit Agrawal, CFA

Equity L/S Analyst | Forensic Accounting | India

Shareholder activism is on the rise in India. Institutional shareholders are making their vote count. Proxy advisor firms are also playing a role in guiding institutions to leverage their voting rights prudently. Over the past few months, we saw several instances of activism, mostly through adverse voting and complaining on public forums like earnings call. In a couple of cases, large shareholders (&gt;10% ownership) have also used their rights under Companies Act to call an extraordinary general meeting (EGM) to push for change of board and management.
In our detailed insight below, we discuss many such instances that transpired over the past few months. We also discuss our key takeaways for the Indian markets from this uprising activism.

Shareholder activism is on the rise in India. Institutional shareholders are making their vote count. Proxy advisor firms are also playing a role in guiding institutions to leverage their voting rights prudently. Over the past few months, we saw several instances of activism, mostly through adverse voting and complaining on public forums like earnings call. In a couple of cases, large shareholders (&gt;10% ownership) have also used their rights under Companies Act to call an extraordinary general meeting (EGM) to push for change of board and management.
In our detailed insight below, we discuss many such instances that transpired over the past few months. We also discuss our key takeaways for the Indian markets from this uprising activism.

The Rise of Shareholder Activism in India

Specialist in Indian Banking and Economic Research

Hemindra Hazari

The <a href="https://www.smartkarma.com/entities/idfc-ltd" target="_blank" data-smartkarma-citation="entities:518:1" rel="noopener">IDFC Ltd (IDFC IN)</a> ’s board of directors’ decision to <a href="https://www.idfc.com/pdf/IDFCLettertoSEOutcome25052021.pdf" target="_blank" rel="noopener">reclassify</a> Vinod Rai, hitherto independent director, as a non-independent non-executive director provides a backdoor entry for all those independent directors whom founders/promoters and executive management want to retain after the mandated two consecutive terms. In the critical financial sector there is a reason why regulators stipulate maximum continuous tenures for auditors and independent directors. The purpose is to prevent excessive proximity to the promoters/executive management. It is surprising that not only does the IDFC board fail to comprehend this basic principle, but that Vinod Rai himself is willing to compromise his “independence” and stature to continue on the IDFC board on such terms.It is equally surprising that the IDFC, which in its FY2021 annual report describes itself as being “renowned for exemplary governance”, declined to inform the stock exchanges of Vinod Rai’s resignation, and failed to upload his resignation letter on the grounds that this stipulation would be effective from January 1, 2022. Pertinently, when two of Zee Entertainment’s directors resigned on September 13, 2021, the firm <a href="https://www.bseindia.com/xml-data/corpfiling/AttachHis/52a91184-ea90-4412-bf35-9e2998867d22.pdf" target="_blank" rel="noopener">promptly disclosed</a> this to the exchanges. While IDFC claims to practice “exemplary” governance standards, in reality it is barely conforming to the stipulated minimum.Apparently, for IDFC, the 73-year old Vinod Rai is indispensable, and he has to be retained on the board at all costs. Indeed, Rai’s public pronouncement on the recent <a href="https://www.idfc.com/pdf/Transcript-of-IDFC-Ltd_Pre-AGM-Call_14Sep2021.pdf" target="_blank" rel="noopener">conference call</a>  suggests that he plays an executive role in the company.There is no explicit legal requirement which prohibits a person from continuing on the board as a non-independent director after his/her mandated two consecutive terms as independent director. However, the underlying principle of independence would have required an independent director gracefully leave the board after the mandated two consecutive terms. That Vinod Rai is willing to continue as a non-independent director on IDFC, with the support of the executive, raises suspicions about the extent of his “independence” when he was an independent director from <a href="https://www.idfc.com/pdf/apptofdirectorNSEBSe.pdf" target="_blank" rel="noopener">2015</a>  to <a href="https://www.idfc.com/pdf/IDFCLettertoSEOutcome25052021.pdf" target="_blank" rel="noopener">May 2021</a>  .That a prominent company with significant institutional ownership declines to disclose the resignation of its independent director to the exchanges and seamlessly reclassifies its independent director as a non-executive non-independent director is an indication of poor standards of corporate governance.  Far from being “exemplary”, it has devised a method of subverting governance for all those companies who would want to continue with compromised independent directors after their mandated tenures as independent directors are over.

The IDFC Ltd (IDFC IN) ’s board of directors’ decision to reclassify Vinod Rai, hitherto independent director, as a non-independent non-executive director provides a backdoor entry for all those independent directors whom founders/promoters and executive management want to retain after the mandated two consecutive terms. In the critical financial sector there is a reason why regulators stipulate maximum continuous tenures for auditors and independent directors. The purpose is to prevent excessive proximity to the promoters/executive management. It is surprising that not only does the IDFC board fail to comprehend this basic principle, but that Vinod Rai himself is willing to compromise his “independence” and stature to continue on the IDFC board on such terms.It is equally surprising that the IDFC, which in its FY2021 annual report describes itself as being “renowned for exemplary governance”, declined to inform the stock exchanges of Vinod Rai’s resignation, and failed to upload his resignation letter on the grounds that this stipulation would be effective from January 1, 2022. Pertinently, when two of Zee Entertainment’s directors resigned on September 13, 2021, the firm promptly disclosed this to the exchanges. While IDFC claims to practice “exemplary” governance standards, in reality it is barely conforming to the stipulated minimum.Apparently, for IDFC, the 73-year old Vinod Rai is indispensable, and he has to be retained on the board at all costs. Indeed, Rai’s public pronouncement on the recent conference call  suggests that he plays an executive role in the company.There is no explicit legal requirement which prohibits a person from continuing on the board as a non-independent director after his/her mandated two consecutive terms as independent director. However, the underlying principle of independence would have required an independent director gracefully leave the board after the mandated two consecutive terms. That Vinod Rai is willing to continue as a non-independent director on IDFC, with the support of the executive, raises suspicions about the extent of his “independence” when he was an independent director from 2015  to May 2021  .That a prominent company with significant institutional ownership declines to disclose the resignation of its independent director to the exchanges and seamlessly reclassifies its independent director as a non-executive non-independent director is an indication of poor standards of corporate governance.  Far from being “exemplary”, it has devised a method of subverting governance for all those companies who would want to continue with compromised independent directors after their mandated tenures as independent directors are over.

Vinod Rai Re-Enters the IDFC Board Through the Backdoor Highlighting “Exemplary” Governance

Research and consultancy, Tabbush Report

Daniel Tabbush

Research and consultancy

Tabbush Report

We provide research and consultancy on Asian banks. Our focus is on what we call “Asian bank research, without the noise.” We are interested in the most critical swing-factors for banks, the NPL and credit cycle, and where we believe there is a gap between perception and reality. We often focus on the less studied components of bank financial statements.  Our research is highly thematic, sometimes examining unlisted banks and companies as a window on mainstream banks. 

Being independent allows us to look at smaller banks, often overlooked by others. Analysis of BIS bank guidelines in the context of Asia, is also a focal point, while we also analyze global banks operating in the region. We use what we believe is the most comprehensive, reliable financials database, SNL Financial. S&P Capital IQ augments our database, with corporate data and CEIC, with economics. 

Asian bank research, without the noise.

Thematic (Sector/Industry)

There are many banks globally that have restricted dividends. This is less apparent in Asia. Even so, we are less concerned with temporary deferment or postponement on dividends, as economies reopen and recover.  Their reinstatement will only be an additional positive delta alongside likely lower credit costs. In Asia, there are many banks where yields are over 9% and where capital levels are high, suggesting dividends can remain in place and where many banks, have not deferred, or postponed dividends. When we remember that dividend restrictions were imposed in the more dire days of shutdown, well before the sharp recovery seen in many economies, it makes it even less likely that these restrictions will remain in place for long. And many banks in Asia, continue to pay dividends as normal.

There are many banks globally that have restricted dividends. This is less apparent in Asia. Even so, we are less concerned with temporary deferment or postponement on dividends, as economies reopen and recover.  Their reinstatement will only be an additional positive delta alongside likely lower credit costs. In Asia, there are many banks where yields are over 9% and where capital levels are high, suggesting dividends can remain in place and where many banks, have not deferred, or postponed dividends. When we remember that dividend restrictions were imposed in the more dire days of shutdown, well before the sharp recovery seen in many economies, it makes it even less likely that these restrictions will remain in place for long. And many banks in Asia, continue to pay dividends as normal.  

Indian Accounting Research Analyst, Trudence Capital Advisors

Nitin Mangal

Indian Accounting Research Analyst

<a href="https://www.smartkarma.com/entities/vodafone-idea-ltd" target="_blank" data-smartkarma-citation="entities:15678:1" rel="noopener">Vodafone Idea (IDEA IN)</a> has been under some significant hardships for quite a while. Since the telecom market disruption caused by Reliance Jio, the company has not been able to walk steadily as it continued reporting operational losses. Further, India's telecom sector has been facing heavy duress ever since the Hon'ble Supreme Court's verdict which upheld the definition of Adjusted Gross Revenues (AGR). The adjusted AGR meant that the telecom operators were liable to pay more than INR 1 trillion to the government as revenue dues by January 24.Lastly, Franklin Templeton's measure to mark down its exposure to the company's debt securities to zero shall be a final nail in the coffin.In the report below, we discuss the highlights and see who faces the maximum heat arising out from the saga.

Vodafone Idea (IDEA IN) has been under some significant hardships for quite a while. Since the telecom market disruption caused by Reliance Jio, the company has not been able to walk steadily as it continued reporting operational losses. Further, India's telecom sector has been facing heavy duress ever since the Hon'ble Supreme Court's verdict which upheld the definition of Adjusted Gross Revenues (AGR). The adjusted AGR meant that the telecom operators were liable to pay more than INR 1 trillion to the government as revenue dues by January 24.Lastly, Franklin Templeton's measure to mark down its exposure to the company's debt securities to zero shall be a final nail in the coffin.In the report below, we discuss the highlights and see who faces the maximum heat arising out from the saga.

Vodafone Idea Ltd- Telco's Debt Bomb Ticking Fast and Louder

India

IFCI Limited provides medium and long-term credits to industrial concerns in India.

Piramal Enterprises Limited provides diversified commercial services. The Company offers pharmaceutical production and distribution, real estate, healthcare insights and analysis, and financial services. Piramal Enterprises serves customers globally.

Aavas Financiers Limited provides consumer finance services. The Company offers home, land purchase, construction, home improvement, balance transfer, and business loans. Aavas Financiers serves customers in India.

Tourism Finance Corporation of India Limited specializes in tourism related business. The Group works in association with the Government of India, in order to create and develop projects to help with accommodations and hospitality services, car rental services, ferries for water transport, highway facilities and training institutes for hotel personnel.

Crest Ventures Limited is an investment company.  The Company invests in financial assets and real estate.

Vardhman Holdings Ltd sells a variety of fabrics.  The Company sells yarn, threads, fibers, garments, and steels.

Microsec Financial Services, Ltd. is a financial services company. The Company provides investment banking, retail brokerage, wealth management, insurance broking, and financing services to corporates, institutional, and individual clients.

A.K Capital Services Ltd. provides financial services such as private placements of debt, initial public offering management, debt trading, project finance, investment advisory, and loan syndication. The Company has offices located throughout India.

Muthoot Capital Services Limited is a financial services company. The Company offers capital market solutions that include leasing and hire purchase, vehicle loans and bonds and deposits.

Golden Goenka Fincorp Limited operates as non-bank financial institution. The Company provides short to medium term loans, and offers a variety of financial services including acquisition funding, lending against land, promoter funding, and illiquid collaterals. Golden Goenka was established in 1993, and is based out of Kolkata, India.

First Pacific Company Limited is an investment holding company with operations located in Asia-Pacific. The Company principally invests in consumer food products, infrastructure, natural resources, and telecommunications.

AMP Limited provides life insurance, superannuation, asset management products, pensions, retirement planning and other diversified financial services throughout Australia and New Zealand.  The Company services individual customers, small businesses, corporations and associated superannuation funds.

Fuyo General Lease Co Ltd leases machinery and equipment.  The Company also provides other financial services such as installment sale and lending.

Paymentus Holdings, Inc. operates as a holding company. The Company, through its subsidiaries, develops cloud-based bill payment technology and solutions. Paymentus Holdings serves customers worldwide.

Mizuho Leasing Company, Limited operates as a leasing company. The Company provides finance leasing, operating leasing, automobile leasing, real estate leasing, and other services.  Mizuho Leasing also offers payment outsourcing, installment sales, and other services.

Bohai Leasing Company Ltd. offers lease financing services.  The Company finances the leasing of aircraft, ships and other transportation equipment.

Plus500 Ltd. operates a trading platform for investors. The Company allows users to trade financial instruments, such as shares, forex, commodities, indices, and ETFs through its contracts for difference (CFD) service

China Development Bank Financial Leasing Co. Ltd. provides financial leasing services. The Company offers aircraft leasing, ship leasing, commercial vehicle leasing, construction machinery leasing, highway leasing, rail transit leasing, new energy leasing, enterprise equipment leasing, urban infrastructure leasing, house leasing, and other services. 

China Development Bank Financial Leasing (1606 HK)

Far East Horizon Ltd is a financial services provider. The Company specializes in providing financing solutions through equipment-based financial leasing. Far East currently targets industries that include healthcare, education, infrastructure construction, shipping, printing and machinery industries.

Metro Pacific Investments Corporation is an investment holding company. The Company, through its subsidiaries, provides water, sanitation and sewerage services, and also operates in real estate, infrastructure projects, toll roads, electricity distribution, hospital operations and light rail.

IDFC Limited offers infrastructure project financing services.  The Company primarily finances energy, telecommunications, and transportation projects.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

IDFC Ltd (IDFC IN)

IDFC Ltd: Three-Way Merger Getting Closer

IDFC Ltd is registered with RBI as NBFC - Investments. Besides banking, it also has investments in diverse businesses such as asset management, and...

ICICI Securities Limited

The Rise of Shareholder Activism in India

Shareholder activism is on the rise in India with several recent instances where investors have raised concerns through voting rights and EGMs as...

Ankit Agrawal, CFA

Vinod Rai Re-Enters the IDFC Board Through the Backdoor Highlighting “Exemplary” Governance

The present case may become known in the future as the “Rai loophole”, showing the way for other firms to continue with compromised ‘independent’...

Hemindra Hazari

Asia Banks – Oversized Dividends

There are many banks globally that have restricted dividends. This is less apparent in Asia. Even so, we are less concerned with temporary...

Daniel Tabbush

Vodafone Idea Ltd- Telco's Debt Bomb Ticking Fast and Louder

Vodafone Idea (IDEA IN) has been under some significant hardships for quite a while. Since the telecom market disruption caused by Reliance Jio,...

Nitin Mangal

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)