External broker reports(aggregated public sources), Axis Direct

Axis Direct

External broker reports(aggregated public sources)

Equity Bottom-Up

We maintain our Sell rating with a target price of Rs 4300/share (5x FY23E ABV) from Rs 4350/share earlier.
<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>

We maintain our Sell rating with a target price of Rs 4300/share (5x FY23E ABV) from Rs 4350/share earlier.
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.

BAJFINANCE: We Maintain Our Sell Rating with a Target Price of Rs 4300/Share

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

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The Government of India (GoI) aims to raise up to US$560m via selling a 1.9% stake in <a href="https://www.smartkarma.com/entities/axis-bank-ltd" target="_blank" data-smartkarma-citation="entities:768:1" rel="noopener">Axis Bank Ltd (AXSB IN)</a>. This won’t be the first selldown by GoI as it has been reducing its stake since 2019.
We have covered the past primary raising by the company in<a href="https://www.smartkarma.com/compose/insight/51718/Axis%20Bank%20Placement%20-%20Jumping%20the%20Queue" target="_blank" rel="noopener"> Axis Bank Placement - Jumping the Queue</a> and <a href="https://www.smartkarma.com/insights/axis-bank-placement-early-look-looking-to-raise-us-2bn" target="_blank" rel="noopener">Axis Bank Placement - Early Look - Looking to Raise US$2bn</a>. 
Most of the past deals in the name have done well, although the most recent one that didn’t do too well, was the earlier SUUTI linked selldown.
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The Government of India (GoI) aims to raise up to US$560m via selling a 1.9% stake in Axis Bank Ltd (AXSB IN). This won’t be the first selldown by GoI as it has been reducing its stake since 2019.
We have covered the past primary raising by the company in Axis Bank Placement - Jumping the Queue and Axis Bank Placement - Early Look - Looking to Raise US$2bn. 
Most of the past deals in the name have done well, although the most recent one that didn’t do too well, was the earlier SUUTI linked selldown.


Axis Bank Placement - Well Flagged, past Deals Have Done Well

Ngern Tid Lor (NTL), a financial service provider based in Thailand, aims to raise around US$1bn via selling a mix of primary and secondary shares in its Thailand IPO. Prior to listing, it was jointly owned by Bank of Ayudhya and CVC Capital Partners. As per Oliver Wyman’s estimates, NTL had a 16% market share in the vehicle lending market in Thailand, as of 2019. NTL provides hire purchase loans for motorcycles and cars, along with new and used trucks. It also provides insurance brokerage services through its branches for non-life and life insurance. It offers motor insurance, compulsory motor insurance, personal accident insurance, cancer insurance, and loan insurance. As of Dec 2020, it had over 730,000 accounts with total outstanding loans of THB51.3bn. In 2020, it generated non-life insurance premium sales of THB4bn. Over 2016-20, NTL’s gross loans grew at 25.1% CAGR, averaging 25%+ per annum over 2017-19 before slowing down to 7% YoY growth in 2020. Its total income has grown at 22.5% CAGR, while PAT did better with a CAGR of 29.1% over 2016-20. Although, asset quality has taken a hit owing to COVID-19 and Bank of Thailand's induced moratorium. We have covered various aspects of the deal in our earlier note, <a href="https://www.smartkarma.com/insights/ngern-tid-lor-pre-ipo-pre-covid-growth-track-record-has-been-very-strong" target="_blank" rel="noopener">Ngern Tid Lor Pre-IPO - Pre-COVID growth track record has been very strong</a>. In this note we’ll undertake a peer comparison.

Ngern Tid Lor (NTL), a financial service provider based in Thailand, aims to raise around US$1bn via selling a mix of primary and secondary shares in its Thailand IPO. Prior to listing, it was jointly owned by Bank of Ayudhya and CVC Capital Partners. As per Oliver Wyman’s estimates, NTL had a 16% market share in the vehicle lending market in Thailand, as of 2019. NTL provides hire purchase loans for motorcycles and cars, along with new and used trucks. It also provides insurance brokerage services through its branches for non-life and life insurance. It offers motor insurance, compulsory motor insurance, personal accident insurance, cancer insurance, and loan insurance. As of Dec 2020, it had over 730,000 accounts with total outstanding loans of THB51.3bn. In 2020, it generated non-life insurance premium sales of THB4bn. Over 2016-20, NTL’s gross loans grew at 25.1% CAGR, averaging 25%+ per annum over 2017-19 before slowing down to 7% YoY growth in 2020. Its total income has grown at 22.5% CAGR, while PAT did better with a CAGR of 29.1% over 2016-20. Although, asset quality has taken a hit owing to COVID-19 and Bank of Thailand's induced moratorium. We have covered various aspects of the deal in our earlier note, Ngern Tid Lor Pre-IPO - Pre-COVID growth track record has been very strong. In this note we’ll undertake a peer comparison.

Ngern Tid Lor Pre-IPO - Peer Comparison - Playing Catch up After Being Left Behind

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

*Pre-release Says Nothing About Capital And Credit: Bajaj Finance (BAF.IN) [Bajaj] released a FY 4Q21 balance sheet update, ahead of its scheduled earnings update. Key highlights were limited to: AUM growth; new customer acquisition; and deposit growth; and  *Credit Challenges Far From Over With: The day of reckoning is coming for Bajaj as net new NPLs amounted to INR 23.0 bn during FY 3Q21 – increasing at 520% on an annualized basis. By our calculation, reserves need to increase INR 177 bn or nearly 8x - representing nearly three years of PBT and over 50% of shareholder’s equity.

*Pre-release Says Nothing About Capital And Credit: Bajaj Finance (BAF.IN) [Bajaj] released a FY 4Q21 balance sheet update, ahead of its scheduled earnings update. Key highlights were limited to: AUM growth; new customer acquisition; and deposit growth; and  *Credit Challenges Far From Over With: The day of reckoning is coming for Bajaj as net new NPLs amounted to INR 23.0 bn during FY 3Q21 – increasing at 520% on an annualized basis. By our calculation, reserves need to increase INR 177 bn or nearly 8x - representing nearly three years of PBT and over 50% of shareholder’s equity.

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

Ankit Agrawal, CFA

Equity L/S Analyst | Forensic Accounting | India

Cholamandalam Investment and Finance / Equity Bottom-Up

Back in November 2020, M M Murugappan retired and Vellayan Subbiah joined the board as Chairman. At the time, the move seemed like a non-event, as it seemed like a group-wide replacement than a targeted role. But subsequently the CEO, Arun Alagappan, cousin of Vellayan Subbiah, who joined as Executive Director in 2017 and was elevated to CEO not too long ago in 2019, also resigned in Jan 2021. Meanwhile, since Nov 2020, there has been an increasing emphasis from RBI on converting large NBFCs into banks. These events together have translated this seemingly innocuous move (Vellayan Subbiah joining as Chairman) into a meaningful leadership change at <a href="https://www.smartkarma.com/entities/cholamandalam-investment-and-finance" target="_blank" data-smartkarma-citation="entities:17583:1" rel="noopener">Cholamandalam Investment and Finance (CIFC IN)</a> ["Chola"]. Going by the commentary from Vellayan Subbiah at the recent earnings call, this can potentially lead to long-run transformational changes at Chola. Below we share the history of Chola and the role Vellayan Subbiah has played in shaping it, to put in perspective our favorable view on the leadership change and highlight what could be in store for Chola.

Back in November 2020, M M Murugappan retired and Vellayan Subbiah joined the board as Chairman. At the time, the move seemed like a non-event, as it seemed like a group-wide replacement than a targeted role. But subsequently the CEO, Arun Alagappan, cousin of Vellayan Subbiah, who joined as Executive Director in 2017 and was elevated to CEO not too long ago in 2019, also resigned in Jan 2021. Meanwhile, since Nov 2020, there has been an increasing emphasis from RBI on converting large NBFCs into banks. These events together have translated this seemingly innocuous move (Vellayan Subbiah joining as Chairman) into a meaningful leadership change at Cholamandalam Investment and Finance (CIFC IN) ["Chola"]. Going by the commentary from Vellayan Subbiah at the recent earnings call, this can potentially lead to long-run transformational changes at Chola. Below we share the history of Chola and the role Vellayan Subbiah has played in shaping it, to put in perspective our favorable view on the leadership change and highlight what could be in store for Chola.

Leadership Change Alert | Chola Investment: Vellayan Is Back; Watch Out for Transformational Leap

India

Bajaj Finance Limited is a financial services company that operates branches in India, which provide an assortment of financial services.

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Bajaj Finance Ltd (BAF IN)

BAJFINANCE: We Maintain Our Sell Rating with a Target Price of Rs 4300/Share

We maintain our Sell rating with a target price of Rs 4300/share (5x FY23E ABV) from Rs 4350/share earlier.

Axis Direct

Axis Bank Placement - Well Flagged, past Deals Have Done Well

The Government of India (GoI) aims to raise up to US$560m via selling a 1.9% stake in Axis Bank Ltd (AXSB IN). This won’t be the first selldown by...

Sumeet Singh

Ngern Tid Lor Pre-IPO - Peer Comparison - Playing Catch up After Being Left Behind

Ngern Tid Lor aims to raise around US$1bn via selling a mix of primary and secondary shares in its Thailand IPO. Prior to listing, it was jointly...

Sumeet Singh

Bajaj Finance – Who’s Kidding Whom?

BAJAJ FINANCE: Bajaj gave a FY 4Q21 update on AUM; customer acquisition; and deposit growth. No disclosure on how it will deal with India's worst...

Thomas J. Monaco

Leadership Change Alert | Chola Investment: Vellayan Is Back; Watch Out for Transformational Leap

With Vellayan back at the helm and with the kind of vision he is approaching his role at Chola, Chola seems to be gearing up for a transformational...

Ankit Agrawal, CFA

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