Consumer Analyst / Channel Surveillance Specialist, Trudence Capital Advisors

Pranav Bhavsar

Consumer Analyst / Channel Surveillance Specialist

Trudence Capital Advisors

Trudence Capital Advisors Private Limited is a SEBI-registered Research Analyst, holding SEBI registration number INH000015747. Our firm is dedicated to providing independent and unbiased research on Indian mid to large-cap companies. Trudence Capital is known for its counter-consensus views, with a focus on forensic research and on-ground primary investigations. Our research approach is thorough, involving detailed analysis of accounting practices and governance, alongside extensive channel checks.

Independent & Unbiased Research

Equity Bottom-Up

<ul>
<li>We visited some paint dealers representing <a href="https://www.smartkarma.com/entities/asian-paints-ltd" target="_blank" data-smartkarma-citation="entities:6354:1" rel="noopener">Asian Paints (APNT IN)</a> and <a href="https://www.smartkarma.com/entities/akzo-nobel-india-ltd" target="_blank" data-smartkarma-citation="entities:17499:1" rel="noopener">Akzo Nobel India (AKZO IN)</a>  to understand the current competitive intensity in the industry.</li>
<li>While three months is too short of a time frame to observe a significant change in industry structure, current signals seem to favor the incumbent. </li>
<li>Opus may influence dealers and painters, but what if consumers simply prefer APNT?</li>
</ul>


We visited some paint dealers representing Asian Paints (APNT IN) and Akzo Nobel India (AKZO IN)  to understand the current competitive intensity in the industry.
While three months is too short of a time frame to observe a significant change in industry structure, current signals seem to favor the incumbent. 
Opus may influence dealers and painters, but what if consumers simply prefer APNT?


India Channel Insight | Asian Paints (APNT IN) | Mindshare Master

<ul>
<li>
<a href="https://www.smartkarma.com/entities/berger-paints-india-ltd" target="_blank" data-smartkarma-citation="entities:5431:1" rel="noopener">Berger Paints India (BRGR IN)</a> / <a href="https://www.smartkarma.com/entities/pidilite-industries-ltd" target="_blank" data-smartkarma-citation="entities:20573:1" rel="noopener">Pidilite Industries (PIDI IN)</a> are exposed to similar customers but different demand dynamics offering an opportunity to build an L/S trade.</li>
<li>The valuation premium commanded by PIDI over BRGR is not justified in spite of having a similar customer base, similar growth and capital allocation profile.</li>
<li>The Price ratio of the pair BRGR/PIDI has been trading in a tight range since September 2022 and is now showing signs of breaking out of the sideway trend.</li>
</ul>



Berger Paints India (BRGR IN) / Pidilite Industries (PIDI IN) are exposed to similar customers but different demand dynamics offering an opportunity to build an L/S trade.
The valuation premium commanded by PIDI over BRGR is not justified in spite of having a similar customer base, similar growth and capital allocation profile.
The Price ratio of the pair BRGR/PIDI has been trading in a tight range since September 2022 and is now showing signs of breaking out of the sideway trend.


Berger Paints (BRGR IN) / Pidilite Industries (PIDI IN) | Fundamental Factors Back the Signal

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<div><p>The Indian mutual fund industry has assets of almost INR 6.6 trillion across Multi cap, Large Cap, Large and Mid Cap, Mid Cap, Small Cap and Flexi Cap equity schemes. Equity schemes classified as large cap need to have at least 80% of their assets invested in large cap stocks, large and mid cap schemes need to have at least 35% of their assets in large cap stocks and at least 35% in mid cap stocks, mid cap funds need to hold at least 65% of their assets in mid cap stocks, and small cap funds need to hold at least 65% of their assets in small cap stocks. Flexi cap funds can invest across market caps.</p></div><div>
<p>The Association of Mutual Funds in India (AMFI) publishes the list of the stocks in each market cap segment in January and July each year and mutual funds have one month to rebalance their portfolios to adhere to the new categorization.</p>
<p>At the next recategorization in July 2021, we see 7 stocks moving from the mid cap segment to the large cap segment with an equal number of stocks moving the other way, and 13 stocks are expected to move from the small cap segment to the mid cap segment with the 16 stocks moving from the mid cap to the small cap segment. There are 3 recent listings that will enter the mid cap segment with over 18 joining the small cap segment.</p>
<p>Historically, the stocks migrating upward to a higher market cap segment have outperformed stocks that migrate to a lower market cap segment over the 1 month and 2 month period post the publishing of the AMFI list. This can be attributed to fund managers realigning their portfolios to meet the new categorization. This provides opportunities to pre-position for the move and unwind post the announcement of the reclassification.</p>
</div>

The Indian mutual fund industry has assets of almost INR 6.6 trillion across Multi cap, Large Cap, Large and Mid Cap, Mid Cap, Small Cap and Flexi Cap equity schemes. Equity schemes classified as large cap need to have at least 80% of their assets invested in large cap stocks, large and mid cap schemes need to have at least 35% of their assets in large cap stocks and at least 35% in mid cap stocks, mid cap funds need to hold at least 65% of their assets in mid cap stocks, and small cap funds need to hold at least 65% of their assets in small cap stocks. Flexi cap funds can invest across market caps.
The Association of Mutual Funds in India (AMFI) publishes the list of the stocks in each market cap segment in January and July each year and mutual funds have one month to rebalance their portfolios to adhere to the new categorization.
At the next recategorization in July 2021, we see 7 stocks moving from the mid cap segment to the large cap segment with an equal number of stocks moving the other way, and 13 stocks are expected to move from the small cap segment to the mid cap segment with the 16 stocks moving from the mid cap to the small cap segment. There are 3 recent listings that will enter the mid cap segment with over 18 joining the small cap segment.
Historically, the stocks migrating upward to a higher market cap segment have outperformed stocks that migrate to a lower market cap segment over the 1 month and 2 month period post the publishing of the AMFI list. This can be attributed to fund managers realigning their portfolios to meet the new categorization. This provides opportunities to pre-position for the move and unwind post the announcement of the reclassification.


India: Stock Reclassification & Active Portfolio Management

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<div>
<p>Indigo Paints (IP) raised around US$160m in its India IPO and will start trading tomorrow. It is engaged in the business of manufacturing paints in India. It was the fifth largest company in the Indian decorative paint industry, in terms of revenue from operations in FY20 and was the fastest growing among the top five paint companies.</p>
</div>
<div>
<p>I've covered the background and company performance in my previous insight, <a href="https://www.smartkarma.com/insights/indigo-paints-ipo-growing-fast-but-future-growth-won-t-come-as-easy" target="_blank" rel="noopener">Indigo Paints IPO - Growing Fast but Future Growth Won’t Come as Easy</a> and <a href="https://www.smartkarma.com/insights/indigo-paints-ipo-not-leaving-a-whole-lot-on-the-table" target="_blank" rel="noopener">Indigo Paints IPO - Not Leaving a Whole Lot on the Table</a>.</p>
</div>
<div>
<p>In this insight, I'll talk about deal updates and provide a table with implied valuations at different share price levels.</p>
</div>


Indigo Paints (IP) raised around US$160m in its India IPO and will start trading tomorrow. It is engaged in the business of manufacturing paints in India. It was the fifth largest company in the Indian decorative paint industry, in terms of revenue from operations in FY20 and was the fastest growing among the top five paint companies.


I've covered the background and company performance in my previous insight, Indigo Paints IPO - Growing Fast but Future Growth Won’t Come as Easy and Indigo Paints IPO - Not Leaving a Whole Lot on the Table.


In this insight, I'll talk about deal updates and provide a table with implied valuations at different share price levels.


Indigo Paints IPO Trading - Already the Most Expensive Amongst Peers

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<p>Indigo Paints has been growing at a stellar pace within Indian market after expanding production capacity through the acquisition of facilities in Kerala and Tamil Nadu. The company also offers a relatively unique strategic take on the market, differentiating itself from the top four, Asian Paints, Berger Paints, Kansai Nerolac Paints and Akzo Nobel India. The question is how sustainable the growth in market share will be.</p>

Indigo Paints has been growing at a stellar pace within Indian market after expanding production capacity through the acquisition of facilities in Kerala and Tamil Nadu. The company also offers a relatively unique strategic take on the market, differentiating itself from the top four, Asian Paints, Berger Paints, Kansai Nerolac Paints and Akzo Nobel India. The question is how sustainable the growth in market share will be.

India

Akzo Nobel India Ltd. manufactures specialty chemicals, paints and starches.  The Company's products include surfactants, methyl ethyl ketone peroxides, epoxy intumescent passive fire protection coating, chelating agents, powder polymers, rust preventive, salt and adhesives; and decorative paints, automotive finishes, and marine coatings.

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

Akzo Nobel India (AKZO IN)

India Channel Insight | Asian Paints (APNT IN) | Mindshare Master

Exploring competitive intensity in the paint industry, current signals favor incumbent Asian Paints over Akzo Nobel India despite Opus influence...

Pranav Bhavsar

Berger Paints (BRGR IN) / Pidilite Industries (PIDI IN) | Fundamental Factors Back the Signal

Berger Paints India (BRGR IN) / Pidilite Industries (PIDI IN) are exposed to similar customers but different demand dynamics offering an...

Pranav Bhavsar

India: Stock Reclassification & Active Portfolio Management

There are a lot of segment changes expected in July when AMFI recategorizes stocks and mutual funds start to rebalance their portfolios. We...

Brian Freitas

Indigo Paints IPO Trading - Already the Most Expensive Amongst Peers

Indigo Paints (IP) raised around US$160m in its India IPO and will start trading tomorrow. It was the 5th largest in the Indian decorative paint...

Sumeet Singh

Indigo Paints IPO – Tinting on Up

Indigo Paints offers a very interesting growth profile combined with some tantalising potential for margin expansion. The question is, does this...

Mio Kato

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

India Channel Insight | Asian Paints (APNT IN) | Mindshare Master

​Exploring competitive intensity in the paint industry, current signals favor incumbent Asian Paints over Akzo Nobel India despite Opus influence...

Pranav Bhavsar

Berger Paints (BRGR IN) / Pidilite Industries (PIDI IN) | Fundamental Factors Back the Signal

Berger Paints India (BRGR IN) / Pidilite Industries (PIDI IN) are exposed to similar customers but different demand dynamics offering an...

Pranav Bhavsar

India: Stock Reclassification & Active Portfolio Management

There are a lot of segment changes expected in July when AMFI recategorizes stocks and mutual funds start to rebalance their portfolios. We...

Brian Freitas

Indigo Paints IPO Trading - Already the Most Expensive Amongst Peers

Indigo Paints (IP) raised around US$160m in its India IPO and will start trading tomorrow. It was the 5th largest in the Indian decorative paint...

Sumeet Singh

Indigo Paints IPO – Tinting on Up

Indigo Paints offers a very interesting growth profile combined with some tantalising potential for margin expansion. The question is, does this...

Mio Kato

Exploring competitive intensity in the paint industry, current signals favor incumbent Asian Paints over Akzo Nobel India despite Opus influence...