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

<ul>
<li>In this insight, we take a look at the names leading the race to become ADDs/DELs for the NIFTY 50 and NIFTY 100 indices in the September 2023 rebalance.</li>
<li>The <a href="https://www.smartkarma.com/entities/housing-development-finance" target="_blank" data-smartkarma-citation="entities:252:1" rel="noopener">HDFC Limited (HDFC IN)</a> - <a href="https://www.smartkarma.com/entities/hdfc-bank-ltd-4b6b7a92-9087-468d-9dbe-ab169e77f014" target="_blank" data-smartkarma-citation="entities:558:1" rel="noopener">HDFC Bank (HDFCB IN)</a> merger could complete earlier than previously expected, triggering intra-review index replacements.</li>
<li>Separately, I have presented some interesting new trading ideas involving some of the index change candidates, and I discuss the status of pre-existing trade ideas.</li>
</ul>


In this insight, we take a look at the names leading the race to become ADDs/DELs for the NIFTY 50 and NIFTY 100 indices in the September 2023 rebalance.
The HDFC Limited (HDFC IN) - HDFC Bank (HDFCB IN) merger could complete earlier than previously expected, triggering intra-review index replacements.
Separately, I have presented some interesting new trading ideas involving some of the index change candidates, and I discuss the status of pre-existing trade ideas.


Quiddity Leaderboard NIFTY Sep 23: Some Interesting Long-Short Trades

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

Five Star Business Finance / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/five-star-business-finance" target="_blank" data-smartkarma-citation="entities:35238:1" rel="noopener">Five Star Business Finance (FIVESTAR IN)</a> raised around US$190m in its India IPO in Nov 2022.</li>
<li>Five-Star Business is a non-banking financial company (NBFC-ND-SI) that provides secured business loans to micro-entrepreneurs and self-employed individuals.</li>
<li>In this note, we will talk about the lock-up dynamics and updates since our last note.</li>
</ul>



Five Star Business Finance (FIVESTAR IN) raised around US$190m in its India IPO in Nov 2022.
Five-Star Business is a non-banking financial company (NBFC-ND-SI) that provides secured business loans to micro-entrepreneurs and self-employed individuals.
In this note, we will talk about the lock-up dynamics and updates since our last note.


Five Star IPO Lock-Up - Over US$1.3bn Lockup Release with Less than US$1m ADV

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

<ul>
<li>The <a href="https://www.smartkarma.com/entities/hdfc-bank-ltd-4b6b7a92-9087-468d-9dbe-ab169e77f014" target="_blank" data-smartkarma-citation="entities:558:1" rel="noopener">HDFC Bank (HDFCB IN)</a> / <a href="https://www.smartkarma.com/entities/housing-development-finance" target="_blank" data-smartkarma-citation="entities:252:1" rel="noopener">HDFC Limited (HDFC IN)</a> merger will result in capping and funding changes on the <a href="https://www.smartkarma.com/entities/nifty-bank-index" target="_blank" data-smartkarma-citation="entities:26811:1" rel="noopener">Nifty Bank Index (NSEBANK INDEX)</a> constituents.</li>
<li>We estimate one-way turnover of around 8.4% resulting in a one-way trade of INR 21,865m (US$266m) at the time of merger implementation.</li>
<li>The impact in terms of ADV is less than 1x on all stocks, but the impact in terms of delivery volume is higher than 1x on a few stocks.</li>
</ul>


The HDFC Bank (HDFCB IN) / HDFC Limited (HDFC IN) merger will result in capping and funding changes on the Nifty Bank Index (NSEBANK INDEX) constituents.
We estimate one-way turnover of around 8.4% resulting in a one-way trade of INR 21,865m (US$266m) at the time of merger implementation.
The impact in terms of ADV is less than 1x on all stocks, but the impact in terms of delivery volume is higher than 1x on a few stocks.


<ul>
<li>
<a href="https://www.smartkarma.com/entities/bikaji-foods-international-ltd" target="_blank" data-smartkarma-citation="entities:36502:1" rel="noopener">Bikaji Foods (BIKAJI IN)</a>, an ethnic snacks company, raised approximately US$107m in its India IPO. The stock was listed on 16th Nov 2022, its six-month lockup will expire soon.</li>
<li>Bikaji was the third largest ethnic snacks company in India and the second fastest growing company in the Indian organized snacks market in FY22, as per Frost &amp; Sullivan (F&amp;S).</li>
<li>In this note, we will talk about the lock-up dynamics and updates since our last note.</li>
</ul>



Bikaji Foods (BIKAJI IN), an ethnic snacks company, raised approximately US$107m in its India IPO. The stock was listed on 16th Nov 2022, its six-month lockup will expire soon.
Bikaji was the third largest ethnic snacks company in India and the second fastest growing company in the Indian organized snacks market in FY22, as per Frost &amp; Sullivan (F&amp;S).
In this note, we will talk about the lock-up dynamics and updates since our last note.


Bikaji Foods IPO Lock-Up - Small Expiry with a Chance to Lift the Overhang

External broker reports(aggregated public sources), Axis Direct

Axis Direct

External broker reports(aggregated public sources)

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.

Equity Bottom-Up

<ul><li>Relaxation in Priority Sector Lending (PSL)Compliance – RBI’s relaxation in terms of PSL compliance to HDFCB with only 1/3rd of HDFC’s O/S book to be considered in the 1st year of the merger, is a key positive.</li><li>This implies that at the effective date of merger, even though the ANBC would increase, the bank would have 12 months to comply with the PSL requirements on the added ANBC.</li><li>Assuming the merger concludes in Sep’23 (Q2FY24, management had indicated completion in Q2FY24 by Jul’23), the PSL requirement on HDFC’s ANBC will be effective from Q2FY25E.</li></ul>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.

Relaxation in Priority Sector Lending (PSL)Compliance – RBI’s relaxation in terms of PSL compliance to HDFCB with only 1/3rd of HDFC’s O/S book to be considered in the 1st year of the merger, is a key positive.This implies that at the effective date of merger, even though the ANBC would increase, the bank would have 12 months to comply with the PSL requirements on the added ANBC.Assuming the merger concludes in Sep’23 (Q2FY24, management had indicated completion in Q2FY24 by Jul’23), the PSL requirement on HDFC’s ANBC will be effective from Q2FY25E.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.

HDFC Bank - RBI’s Clarifications Ease Merger Roadblocks!

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)

Quiddity Leaderboard NIFTY Sep 23: Some Interesting Long-Short Trades

Apart from the HDFC merger-related intra-review change, there could be five ADDs/DELs for the NIFTY 100 index (and the NIFTY Next 50 index) but I...

Janaghan Jeyakumar, CFA

Five Star IPO Lock-Up - Over US$1.3bn Lockup Release with Less than US$1m ADV

Five Star Business Finance (FIVESTAR IN) raised around US$190m in its India IPO in Nov 2022. Its US$1.3bn worth IPO lockup expiry is coming up soon.

Sumeet Singh

HDFC/HDFCB Merger: Impact on Bank Nifty

The HDFC/HDFCB merger will result in a one-way turnover of around 8.4% for the Nifty Bank Index resulting in a one-way trade of INR 21,865m...

Brian Freitas

Bikaji Foods IPO Lock-Up - Small Expiry with a Chance to Lift the Overhang

Bikaji Foods (BIKAJI IN), an ethnic snacks company, raised approximately US$107m in its India IPO. The stock was listed on 16th Nov 2022, its six...

Sumeet Singh

HDFC Bank - RBI’s Clarifications Ease Merger Roadblocks!

RBI’s relaxation in terms of PSL compliance to HDFCB with only 1/3rd of HDFC’s O/S book to be considered in the 1st year of the merger, is a key...

Axis Direct

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