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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<p>The Indian mutual fund industry has assets of almost INR 7.93 trillion (US$106.3bn) 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><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>We are just past halfway through the review period for the second half of 2021. Using data to the close on 4 October, at the next recategorization in January 2022, we see 10 stocks moving from the mid cap segment to the large cap segment, 11 stocks moving from the large cap segment to the mid cap segment , 11 stocks are expected to move from the small cap segment to the mid cap segment, with16 stocks moving from the mid cap to the small cap segment. <a href="https://www.smartkarma.com/entities/zomato-media-pvt" target="_blank" data-smartkarma-citation="entities:28820:1" rel="noopener">Zomato (ZOMATO IN)</a> will be a part of the large cap universe, while 4 other newly listed stocks will be a part of the mid cap universe.</p><p>Historically, stocks moving to a higher market cap category have outperformed stocks that migrate to a lower market cap category over the back half of the review period. In some cases, the outperformance continues past the announcement of the changes as well. 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>

The Indian mutual fund industry has assets of almost INR 7.93 trillion (US$106.3bn) 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.We are just past halfway through the review period for the second half of 2021. Using data to the close on 4 October, at the next recategorization in January 2022, we see 10 stocks moving from the mid cap segment to the large cap segment, 11 stocks moving from the large cap segment to the mid cap segment , 11 stocks are expected to move from the small cap segment to the mid cap segment, with16 stocks moving from the mid cap to the small cap segment. Zomato (ZOMATO IN) will be a part of the large cap universe, while 4 other newly listed stocks will be a part of the mid cap universe.Historically, stocks moving to a higher market cap category have outperformed stocks that migrate to a lower market cap category over the back half of the review period. In some cases, the outperformance continues past the announcement of the changes as well. 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 (Dec 2021)

External broker reports(aggregated public sources), Axis Direct

Axis Direct

External broker reports(aggregated public sources)

Equity Bottom-Up

<p>City Union Bank (CUB) Q1FY22 performance was largely stable with asset quality in check. Stress was wellmanaged in a tough environment with restructuring at ~5.5% and slippage ratio of ~5%. Strong CASA growth of 22% resulted in the Cost of Funds declining by 6bps QoQ (4.09%),aiding NIM expansion by 14bps(3.86%).Loan growth was muted at 5% YoY. PPOP growth was aided by improved NII, and cost controls, up 8%/35% YoY/QoQ. G/NNPA rose by 48bps/52bps QoQ to 5.6%/3.5%.PCR is healthy at ~63%. Credit costs stood at ~1.7% in Q1FY22 vs ~2% in Q4FY21. PAT was up 12%/56% YoY/QoQ to Rs 1.7 Bn.</p><p>We maintain our BUY recommendation with a target price of Rs 195/share (2.2x FY23E ABV).</p><div class="content-highlight"><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></div>

City Union Bank (CUB) Q1FY22 performance was largely stable with asset quality in check. Stress was wellmanaged in a tough environment with restructuring at ~5.5% and slippage ratio of ~5%. Strong CASA growth of 22% resulted in the Cost of Funds declining by 6bps QoQ (4.09%),aiding NIM expansion by 14bps(3.86%).Loan growth was muted at 5% YoY. PPOP growth was aided by improved NII, and cost controls, up 8%/35% YoY/QoQ. G/NNPA rose by 48bps/52bps QoQ to 5.6%/3.5%.PCR is healthy at ~63%. Credit costs stood at ~1.7% in Q1FY22 vs ~2% in Q4FY21. PAT was up 12%/56% YoY/QoQ to Rs 1.7 Bn.We maintain our BUY recommendation with a target price of Rs 195/share (2.2x FY23E ABV).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.

City Union Bank: Stable Performance; Asset Quality In Check

External broker reports(aggregated public sources), Edelweiss Broking Limited

Edelweiss

<p>Beat on operational front due to lower credit cost</p><div class="content-highlight"><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></div>

Beat on operational front due to lower credit costContent 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.

City Union Bank Ltd. Rs Q1FY22 Result Update

<p>A muted quarter</p><div class="content-highlight"><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></div>

A muted quarterContent 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.

City Union Bank Ltd. Rs Q4FY21 Result Update

India Financials

Saumya Agarwal

<p>City Union Bank, the oldest Private sector Bank in India, has been focused on providing credit to the small and medium businesses in South India. Despite being a regional bank, its stock commands premium valuation vis-à-vis many other private sector banks. What is driving the superior valuation for this South- India focused Bank?</p>

City Union Bank, the oldest Private sector Bank in India, has been focused on providing credit to the small and medium businesses in South India. Despite being a regional bank, its stock commands premium valuation vis-à-vis many other private sector banks. What is driving the superior valuation for this South- India focused Bank?

City Union Bank: What Is Driving Premium Valuation for This Oldest Private Sector Bank?

India

City Union Bank Ltd. is a full service bank. The Bank offers a wide range of banking and financial services across India, including both domestic and International banking services.

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City Union Bank (CUBK IN)

India: Stock Reclassification & Active Portfolio Management (Dec 2021)

Halfway through the review period, we take a look at stocks that could migrate across the large, mid and small cap segments. With over US$100bn of...

Brian Freitas

City Union Bank: Stable Performance; Asset Quality In Check

We maintain our BUY recommendation with a target price of Rs 195/share (2.2x FY23E ABV). City Union Bank (CUB) Q1FY22 performance was largely...

Axis Direct

City Union Bank Ltd. Rs Q1FY22 Result Update

Beat on operational front due to lower credit cost

Edelweiss

City Union Bank Ltd. Rs Q4FY21 Result Update

A muted quarter

Edelweiss

City Union Bank: What Is Driving Premium Valuation for This Oldest Private Sector Bank?

City Union Bank, the oldest Private sector Bank in India has been commanding premium valuation vis-à-vis many other private sector banks. What is...

Saumya Agarwal

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