Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

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<li>After market close on Friday 20th May 2022, the constituency changes for S&amp;P BSE 100, SENSEX 50, and SENSEX Next 50 Indices were announced. </li>
<li>There will be no changes for S&amp;P BSE SENSEX and S&amp;P BSE BANKEX Indices in the June 2022 Rebalance. </li>
<li>These changes will become effective at the open of Monday 20th June 2022. Below is a closer look at each of the names involved in the June 2022 Rebalance.</li>
</ul>


After market close on Friday 20th May 2022, the constituency changes for S&amp;P BSE 100, SENSEX 50, and SENSEX Next 50 Indices were announced. 
There will be no changes for S&amp;P BSE SENSEX and S&amp;P BSE BANKEX Indices in the June 2022 Rebalance. 
These changes will become effective at the open of Monday 20th June 2022. Below is a closer look at each of the names involved in the June 2022 Rebalance.


S&P BSE Indices: No Changes for SENSEX; 7 ADDs/DELs for BSE 100 in June 2022

External broker reports(aggregated public sources), Nirmal Bang

Nirmal Bang

External broker reports(aggregated public sources)

A Relationship Beyond Broking

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Thematic (Sector/Industry)

<div><div><div><div><ul><li>4QFY22 key takeaways: While the revenues were broadly in line with expectations, supply-side challenges meant that margins disappointed.</li></ul><div><div><div><div><ul><li>A massive margin regime change on the cards in FY24, but this will not mean much from a stock performance perspective in the next 12 months:</li></ul><div><div><div><div><ul><li>Tier-2 could face significant risks in the new environment: We fear Indian Tier-2 IT would suffer more because of vendor consolidation under the pressured profit picture for customers, a less diversified revenue mix (client, service line, vertical), which could throw up negative growth surprises, and a larger exposure to non-Global 1000 clientele whose profits are more vulnerable in the current challenging macro environment. Indian Tier-2 IT is now at a PE premium of ~20% to Tier-1 from a discount of 14% on 1st January, 2020.</li></ul></div></div></div></div></div></div></div></div></div></div></div></div><p><em>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.</em></p>

4QFY22 key takeaways: While the revenues were broadly in line with expectations, supply-side challenges meant that margins disappointed.A massive margin regime change on the cards in FY24, but this will not mean much from a stock performance perspective in the next 12 months:Tier-2 could face significant risks in the new environment: We fear Indian Tier-2 IT would suffer more because of vendor consolidation under the pressured profit picture for customers, a less diversified revenue mix (client, service line, vertical), which could throw up negative growth surprises, and a larger exposure to non-Global 1000 clientele whose profits are more vulnerable in the current challenging macro environment. Indian Tier-2 IT is now at a PE premium of ~20% to Tier-1 from a discount of 14% on 1st January, 2020.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.

Sector Update - Cut Target Prices yet Again; Customer Stress Shows up Earlier than Expected

Equity Bottom-Up

<div><div><div><div><ul><li>Need to see how 5G spending holds up in a stagflationary environment: 5G related demand is one of the reasons why we and the street have been bullish on TML.</li></ul><div><div><div><div><ul><li>While we are at the beginning of the 5G spend cycle (which could play out over a longer time compared to the 4G cycle, according to industry), we think the spends may be a bit cyclically constrained in 2HFY23 and in FY24 before they recover eventually - quite similar to how we expect the digital spends to behave.</li></ul><div><div><div><div><ul><li>However, unlike in Digital, we believe that TML has a better right to win in the this area because of its long-standing relationships has with &gt;150 Telcos, to which it has likely added a lot of value over the years.</li></ul></div></div></div></div></div></div></div></div></div></div></div></div><p><em>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.</em></p>

Need to see how 5G spending holds up in a stagflationary environment: 5G related demand is one of the reasons why we and the street have been bullish on TML.While we are at the beginning of the 5G spend cycle (which could play out over a longer time compared to the 4G cycle, according to industry), we think the spends may be a bit cyclically constrained in 2HFY23 and in FY24 before they recover eventually - quite similar to how we expect the digital spends to behave.However, unlike in Digital, we believe that TML has a better right to win in the this area because of its long-standing relationships has with &gt;150 Telcos, to which it has likely added a lot of value over the years.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.

Tech Mahindra - Margin Pressure Higher; Reduce Target Multiple on Vulnerability

External broker reports(aggregated public sources), HDFC Securities

HDFC Securities

HDFC securities is the best online trading platform for stocks, IPOs, mutual fund in India. 

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.

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<li>Tech Mahindra: With in-line revenue growth of +5.3% QoQ CC (organic ~2.2%), healthy net new deal wins (FY22 +48% YoY) lending growth visibility, and valuation reverting to its historical average, we maintain ADD on Tech Mahindra (TECHM).</li>
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<li>Eicher Motors: Royal Enfield posted better-than-expected margin in Q4 (up 310bps QoQ), led by improved volumes and better mix.</li>
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<li>Emami: Emami posted a slight beat on revenue and in-line EBITDA growth.</li>
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<p><em>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.</em></p>





Tech Mahindra: With in-line revenue growth of +5.3% QoQ CC (organic ~2.2%), healthy net new deal wins (FY22 +48% YoY) lending growth visibility, and valuation reverting to its historical average, we maintain ADD on Tech Mahindra (TECHM).





Eicher Motors: Royal Enfield posted better-than-expected margin in Q4 (up 310bps QoQ), led by improved volumes and better mix.





Emami: Emami posted a slight beat on revenue and in-line EBITDA growth.










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.

HSIE Results Daily: Tech Mahindra, Eicher Motors, Emami, CreditAccess Grameen, Brigade Enterprises

External broker reports(aggregated public sources), Axis Direct

Axis Direct

Axis Direct is the flagship brand under Axis Securities Limited, a subsidiary of Axis Bank in India. 

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.

Cross Asset Strategy

<ul><li>Q4FY22 is expected to be a roller coaster quarter with COVID 3.0 impacting the first month of the quarter.</li><li>However, Feb’22 witnessed some recovery as fewer fatalities revived the confidence in improving health conditions and thereby diminished the risk parameters.</li><li>OUR TOP 10 “TRADING BUYs” Earnings Play: SBI, ICICI bank, Tata Steel, Nalco, Ashok Leyland, Eicher Motors, PSP Projects, ITC, Varun beverages, Tech Mahindra</li></ul><p><em>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.</em></p>

Q4FY22 is expected to be a roller coaster quarter with COVID 3.0 impacting the first month of the quarter.However, Feb’22 witnessed some recovery as fewer fatalities revived the confidence in improving health conditions and thereby diminished the risk parameters.OUR TOP 10 “TRADING BUYs” Earnings Play: SBI, ICICI bank, Tata Steel, Nalco, Ashok Leyland, Eicher Motors, PSP Projects, ITC, Varun beverages, Tech MahindraContent 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.

Q4FY22 Result Preview: Management Commentaries on the Outlook Stand Critical

India

Tech Mahindra Ltd. develops and markets computer software.  The Company markets software for telecommunications equipment manufacturers, telecom service providers, software vendors, and systems integrators.

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Tech Mahindra (TECHM IN)

S&P BSE Indices: No Changes for SENSEX; 7 ADDs/DELs for BSE 100 in June 2022

S&P BSE Index changes for June 2022 were announced last week. No changes for SENSEX. 7 Adds/Deletes for BSE 100 including some negative and...

Janaghan Jeyakumar, CFA

Sector Update - Cut Target Prices yet Again; Customer Stress Shows up Earlier than Expected

Just 40 days post our downgrade of the IT sector to ‘underweight’, we have reduced target prices yet again and have moved our entire coverage...

Nirmal Bang

Tech Mahindra - Margin Pressure Higher; Reduce Target Multiple on Vulnerability

Tech Mahindra’s (TML) 4QFY22 revenue grew by 5.4% QoQ in CC terms against our estimate of 6%, of which ~250bps was inorganic contribution. EBIT...

Nirmal Bang

HSIE Results Daily: Tech Mahindra, Eicher Motors, Emami, CreditAccess Grameen, Brigade Enterprises

Tech Mahindra: With in-line revenue growth of +5.3% QoQ CC (organic ~2.2%), healthy net new deal wins (FY22 +48% YoY) lending growth visibility

HDFC Securities

Q4FY22 Result Preview: Management Commentaries on the Outlook Stand Critical

OUR TOP 10 “TRADING BUYs” Earnings Play: SBI, ICICI bank, Tata Steel, Nalco, Ashok Leyland, Eicher Motors, PSP Projects, ITC, Varun beverages, Tech...

Axis Direct

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