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

Equity Bottom-Up

*Results Down, Credibility Continues To Increase: We applaud for LIC Housing Finance (LICHF.IN) [LIC] for having the fortitude to properly manage its balance sheet during this difficult pandemic period. Its now paying off with respect to credit quality, with credit leverage fully anticipated in FY 4Q21.  As for the actual bottom-line, LIC reported FY 3Q21 INR 721.1 crs - declining INR 68.6 crs (8.7%) linked quarter. We fully anticipate bottom-line improvement in FY 4Q21; and*Credit Continues To Mend:  We note that net new NPLs at LIC were negative again as well – declining INR 47.3 crs for an annualized rate of NPL decline of 3.2% (versus a decline of 4.0% in the previous quarter). Reserves are likely where they need to be unlike most other Indian financials who have massive shortfalls.

*Results Down, Credibility Continues To Increase: We applaud for LIC Housing Finance (LICHF.IN) [LIC] for having the fortitude to properly manage its balance sheet during this difficult pandemic period. Its now paying off with respect to credit quality, with credit leverage fully anticipated in FY 4Q21.  As for the actual bottom-line, LIC reported FY 3Q21 INR 721.1 crs - declining INR 68.6 crs (8.7%) linked quarter. We fully anticipate bottom-line improvement in FY 4Q21; and*Credit Continues To Mend:  We note that net new NPLs at LIC were negative again as well – declining INR 47.3 crs for an annualized rate of NPL decline of 3.2% (versus a decline of 4.0% in the previous quarter). Reserves are likely where they need to be unlike most other Indian financials who have massive shortfalls.

LIC Housing Finance – This Is How It Should Be Done

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

Brookfield India Real Estate Trust / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/brookfield-india-real-estate-trust" target="_blank" data-smartkarma-citation="entities:31036:1" rel="noopener">Brookfield India Real Estate Trust (BIREIT IN)</a> (BREIT from hereon) aims to raise around US$500m in its India IPO. Its initial portfolio consists of four large campus-format office parks located in Mumbai, Gurugram, Noida and Kolkata. The initial portfolio was 87% occupied and had a weighted average lease expiry (WALE) of 7.1 years, as of Sep 2020. The portfolio has recorded steady net operating income (NOI) growth in the past of 6.46% and 7.64% in FY19 and FY20, respectively. Future growth as well appears promising with NOI for the initial portfolio expected to grow by 20% over FY20-23. However, BREIT hasn’t provided a whole lot of details about the past performance of its assets, which leaves some doubts about their past performance and future potential.I’ve covered various aspects of the deal in my earlier notes, <a href="https://www.smartkarma.com/insights/brookfields-india-real-estate-trust-pre-ipo-the-positives-provides-different-geographic-exposure" target="_blank" rel="noopener">Brookfields India Real Estate Trust Pre-IPO - The Positives- Provides Different Geographic Exposure </a>,  <a href="https://www.smartkarma.com/insights/brookfields-india-real-estate-trust-pre-ipo-the-negatives-asset-details-leave-questions-unanswered" target="_blank" rel="noopener">Brookfields India Real Estate Trust Pre-IPO- The Negatives- Asset Details Leave Questions Unanswered </a>and <a href="https://www.smartkarma.com/insights/brookfields-india-real-estate-trust-pre-ipo-gurgaon-site-visit-takeaways" target="_blank" rel="noopener">Brookfields India Real Estate Trust Pre-IPO- Gurgaon Site Visit Takeaways</a>In this note, I’ll talk about the recent updates and valuations.

Brookfield India Real Estate Trust (BIREIT IN) (BREIT from hereon) aims to raise around US$500m in its India IPO. Its initial portfolio consists of four large campus-format office parks located in Mumbai, Gurugram, Noida and Kolkata. The initial portfolio was 87% occupied and had a weighted average lease expiry (WALE) of 7.1 years, as of Sep 2020. The portfolio has recorded steady net operating income (NOI) growth in the past of 6.46% and 7.64% in FY19 and FY20, respectively. Future growth as well appears promising with NOI for the initial portfolio expected to grow by 20% over FY20-23. However, BREIT hasn’t provided a whole lot of details about the past performance of its assets, which leaves some doubts about their past performance and future potential.I’ve covered various aspects of the deal in my earlier notes, Brookfields India Real Estate Trust Pre-IPO - The Positives- Provides Different Geographic Exposure ,  Brookfields India Real Estate Trust Pre-IPO- The Negatives- Asset Details Leave Questions Unanswered and Brookfields India Real Estate Trust Pre-IPO- Gurgaon Site Visit TakeawaysIn this note, I’ll talk about the recent updates and valuations.

Brookfields India Real Estate Trust IPO - Not Very Convincing but the Yield Looks Tempting

*Bottom-line Worse Than It Looks: Axis Bank (AXSB.IN) [Axis] reported FY 3Q21 results of INR 11.2 bn, declining INR 5.7 bn (33.8%) on a linked quarter basis. Given the hefty increase in net new NPLs, results would appear to be incredibly overstated. The largest delta during the quarter was an INR 8.2 bn (19.3%) increase in operating expenses, led by a compensation increase of 18.9% and an other opex increase of 19.6%; and *Poor Provisions: Without accounting for the linked quarter increase in restructured loans, we find that Axis’ net new NPL growth is extremely elevated at 84.5% - which is troubling even for an Indian bank. We would like to see Axis add INR 321 bn or 146% to loss reserves. Instead of overstating profit figures, Axis needs to begin taking the requisite losses in order to buttress reserves. Axis reserve shortfall, in our view, represents over five years of PBT and 25% plus of stated equity.

 *Bottom-line Worse Than It Looks: Axis Bank (AXSB.IN) [Axis] reported FY 3Q21 results of INR 11.2 bn, declining INR 5.7 bn (33.8%) on a linked quarter basis. Given the hefty increase in net new NPLs, results would appear to be incredibly overstated. The largest delta during the quarter was an INR 8.2 bn (19.3%) increase in operating expenses, led by a compensation increase of 18.9% and an other opex increase of 19.6%; and *Poor Provisions: Without accounting for the linked quarter increase in restructured loans, we find that Axis’ net new NPL growth is extremely elevated at 84.5% - which is troubling even for an Indian bank. We would like to see Axis add INR 321 bn or 146% to loss reserves. Instead of overstating profit figures, Axis needs to begin taking the requisite losses in order to buttress reserves. Axis reserve shortfall, in our view, represents over five years of PBT and 25% plus of stated equity.  

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Quantitative Analysis

In this report, we screen for the largest overweight Country/Sectors across Global EM by analysing the allocations of long-only active Emerging Market funds.In part one of the series, we focus on Indian Financials.  We look at where current allocations sit versus history, drill down to find the most widely held stocks in the sector, the key overweight and the key underweight holdings. We find that despite it being the largest overweight holding, Indian Financials exposure is far from excessive, both versus its own history and versus peers.  Furthermore, recent activity points to an increase in exposure among managers.Our Emerging Market fund universe consists of 242 Global Emerging Market active long-only funds, with combined AUM of $450bn.

In this report, we screen for the largest overweight Country/Sectors across Global EM by analysing the allocations of long-only active Emerging Market funds.In part one of the series, we focus on Indian Financials.  We look at where current allocations sit versus history, drill down to find the most widely held stocks in the sector, the key overweight and the key underweight holdings. We find that despite it being the largest overweight holding, Indian Financials exposure is far from excessive, both versus its own history and versus peers.  Furthermore, recent activity points to an increase in exposure among managers.Our Emerging Market fund universe consists of 242 Global Emerging Market active long-only funds, with combined AUM of $450bn. 

Emerging Market Overweights Series.  Part 1:  Indian Financials

Indian Railway Finance Corporation / Equity Capital Markets

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Indian Railway Finance Corporation (IRFC) raised around US$630m via selling new and existing shares in its Indian IPO.
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IRFC is the dedicated financing arm of the Indian Railways for mobilizing funds from domestic as well as overseas capital markets. Its primary business is financing the acquisition of rolling stock assets and project assets of the Indian railways and lending to other entities under the Ministry of Railways.
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<div>We have covered various aspects of the deal in our previous notes: </div>
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<a href="https://www.smartkarma.com/insights/indian-railway-finance-pre-ipo-low-risk-low-margin-business" target="_blank" rel="noopener">Indian Railway Finance Pre-IPO - Low risk, low margin business</a>
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<li dir="ltr"><a href="https://www.smartkarma.com/insights/indian-railway-finance-ipo-low-risk-low-margin-low-returns" target="_blank" rel="noopener">Indian Railway Finance IPO - Low Risk, Low Margin, Low Returns</a></li>
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In this note, we’ll talk about the updates for the deal and provide a table with implied valuations at different share price levels.
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Indian Railway Finance Corporation (IRFC) raised around US$630m via selling new and existing shares in its Indian IPO.


IRFC is the dedicated financing arm of the Indian Railways for mobilizing funds from domestic as well as overseas capital markets. Its primary business is financing the acquisition of rolling stock assets and project assets of the Indian railways and lending to other entities under the Ministry of Railways.

We have covered various aspects of the deal in our previous notes: 



Indian Railway Finance Pre-IPO - Low risk, low margin business

Indian Railway Finance IPO - Low Risk, Low Margin, Low Returns



In this note, we’ll talk about the updates for the deal and provide a table with implied valuations at different share price levels.


Indian Railway Finance IPO Trading - Not a Bad Subscription Result

India

HDFC Bank Ltd. offers a wide range of services to the global corporate sector. The Bank provides corporate banking and custodial services and is active in the treasury and capital markets. HDFC also markets project advisory services and capital market products such as Global Deposit Receipts, Euro currency loans, and Euro currency bonds.

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HDFC Bank (HDFCB IN)

LIC Housing Finance – This Is How It Should Be Done

LIC HOUSING FINANCE: We applaud for LIC for properly managing its balance sheet. FY 3Q21 results declined 8.7% linked quarter but expect bottom...

Thomas J. Monaco

Brookfields India Real Estate Trust IPO - Not Very Convincing but the Yield Looks Tempting

Brookfield India Real Estate Trust aims to raise around US$500m in its India IPO. Its initial portfolio consists of four office parks located in...

Sumeet Singh

Axis Bank – Evil Result

AXIS BANK: Axis reported a 33.8% decline in linked quarter FY 3Q21 results. Given the hefty increase in net new NPLs, results make little sense....

Thomas J. Monaco

Emerging Market Overweights Series. Part 1: Indian Financials

Emerging Market Overweights Series. Part 1: Indian Financials. Analysing the make-up of the overweight in Indian Financial stocks.

Steven Holden

Indian Railway Finance IPO Trading - Not a Bad Subscription Result

Indian Railway Finance Corporation (IRFC) raised around US$630m via selling new and existing shares in its Indian IPO. The shares will start...

Sumeet Singh

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