Specialist in Indian Banking and Economic Research

Hemindra Hazari

In a little-publicised step, the Securities and Exchange Board of India (SEBI) has directed the first 1,000 companies by market capitalisation on the Indian bourses to disclose voluminous information in their <a href="https://www.sebi.gov.in/media/press-releases/may-2021/sebi-issues-circular-on-business-responsibility-and-sustainability-reporting-by-listed-entities-_50097.html" target="_blank" rel="noopener">business responsibility and sustainability</a> reporting. For FY2022 this is voluntary, but from FY2023 it is to be mandatory. This largely non-financial data may provide significant insights into large cap companies’ impact on the welfare of stakeholders (communities, employees, customers and channel partners) and the environment.Since 2012 the SEBI had mandated the disclosure of a Business Responsibility Report containing Environment, Social and Governance (ESG) parameters; however, the data was not standardised. The recent SEBI directive will standardise the data, facilitating its aggregation and its comparison across companies and industries. Even though they may not appear to be directly relevant to shareholders, these disclosures will shed light on how other stakeholders’ concerns are being addressed; and that can be relevant to the shareholders as well over the medium term. For the private sector banking and financial intermediaries, this data will reveal the near absence of trade unionism amongst their employees, and the high turnover of staff, especially at the lower levels. This turnover at the branches engaged in retail banking appears to be on account of ambitious sales targets set by the management. Such issues have typically been ignored by institutional investors, and indeed they often applaud such a policy, as it restrict wages and delivers higher profits.The disclosures stipulated by SEBI will also cover how the communities, customers, channel partners and employees view the company. Will this mean that companies will not be able to focus solely on shareholder interest, but will also have to pay attention to stakeholders’ concerns? In some cases, anti-corporate campaigners (representing workers, project-affected communities, or consumers) may find in such reports revelations that are embarrassing to the firm.The media and sell-side research have not reacted to these new requirements, as the disclosures are mainly non-financial. However, analysing and aggregating the data will provide valuable insights into companies and industries. In future, the cost of compliance for companies will increase. They will have to create separate departments, or outsource the function, in order to manage the voluminous data. It yet has to be seen how far the corporate sector cooperates, and the quality of the data provided. Nevertheless the step is likely to be helpful for understanding some aspects of the dynamics of corporate businesses in India.

In a little-publicised step, the Securities and Exchange Board of India (SEBI) has directed the first 1,000 companies by market capitalisation on the Indian bourses to disclose voluminous information in their business responsibility and sustainability reporting. For FY2022 this is voluntary, but from FY2023 it is to be mandatory. This largely non-financial data may provide significant insights into large cap companies’ impact on the welfare of stakeholders (communities, employees, customers and channel partners) and the environment.Since 2012 the SEBI had mandated the disclosure of a Business Responsibility Report containing Environment, Social and Governance (ESG) parameters; however, the data was not standardised. The recent SEBI directive will standardise the data, facilitating its aggregation and its comparison across companies and industries. Even though they may not appear to be directly relevant to shareholders, these disclosures will shed light on how other stakeholders’ concerns are being addressed; and that can be relevant to the shareholders as well over the medium term. For the private sector banking and financial intermediaries, this data will reveal the near absence of trade unionism amongst their employees, and the high turnover of staff, especially at the lower levels. This turnover at the branches engaged in retail banking appears to be on account of ambitious sales targets set by the management. Such issues have typically been ignored by institutional investors, and indeed they often applaud such a policy, as it restrict wages and delivers higher profits.The disclosures stipulated by SEBI will also cover how the communities, customers, channel partners and employees view the company. Will this mean that companies will not be able to focus solely on shareholder interest, but will also have to pay attention to stakeholders’ concerns? In some cases, anti-corporate campaigners (representing workers, project-affected communities, or consumers) may find in such reports revelations that are embarrassing to the firm.The media and sell-side research have not reacted to these new requirements, as the disclosures are mainly non-financial. However, analysing and aggregating the data will provide valuable insights into companies and industries. In future, the cost of compliance for companies will increase. They will have to create separate departments, or outsource the function, in order to manage the voluminous data. It yet has to be seen how far the corporate sector cooperates, and the quality of the data provided. Nevertheless the step is likely to be helpful for understanding some aspects of the dynamics of corporate businesses in India.

Newly Mandated Disclosures for India’s Top Corporates May Yield a Gold Mine of Information

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

Indiabulls Housing Finance / Equity Bottom-Up

*Bad News On The Doorstep: IndiaBulls Housing Finance (IHFL.IN) [IndiaBulls] reported FY 4Q21 results of INR 2.8 bn, declining INR 531 mn (16.1%) linked quarter. The linked quarter weakness can be attributed to both: a) net interest income decline of INR 804 mn (10.5%) tracking a decline in both loans of 6.8% and NIM compression of 59 bp to 2.94%; and b) loss provision increase of INR 1.7 bn (120.9%); and   *Wrong Turn: Net new NPLs had increased INR 8.0 bn for the quarter for an annualized rate of increase of 159.3% - a complete about face from FY 3Q21’s decline of 11.3%. Reserves ae now frighteningly low, and we would suggest INR 30.2 bn or 9x stated PBT.

*Bad News On The Doorstep: IndiaBulls Housing Finance (IHFL.IN) [IndiaBulls] reported FY 4Q21 results of INR 2.8 bn, declining INR 531 mn (16.1%) linked quarter. The linked quarter weakness can be attributed to both: a) net interest income decline of INR 804 mn (10.5%) tracking a decline in both loans of 6.8% and NIM compression of 59 bp to 2.94%; and b) loss provision increase of INR 1.7 bn (120.9%); and   *Wrong Turn: Net new NPLs had increased INR 8.0 bn for the quarter for an annualized rate of increase of 159.3% - a complete about face from FY 3Q21’s decline of 11.3%. Reserves ae now frighteningly low, and we would suggest INR 30.2 bn or 9x stated PBT. 

IndiaBulls Housing Finance – A Turn For The Worse

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><a href="https://www.smartkarma.com/entities/zomato-media-pvt" target="_blank" data-smartkarma-citation="entities:28820:1" rel="noopener">Zomato (ZOM IN)</a>  aims to raise US$1.1bn in its upcoming India IPO. This would be the largest listing in India from the technology sector.</div><div>
Zomato operates a technology platform that provides services for restaurant partners, customers, and delivery partners. During FY20, Zomato recorded 41.5m average MAU and was one of the leading Food Services platforms in India, in terms of value of goods sold, according to RedSeer. As of 31 Dec 20, it had a presence in 526 Indian cities and had 350,174 active restaurant listings.
We covered a little bit of the the company's history in <a href="https://www.smartkarma.com/insights/zomato-pre-ipo-filings-lack-narrative-a-little-bit-of-history-helps" target="_blank" rel="noopener">Zomato Pre-IPO - Filings Lack Narrative, a Little Bit of History Helps</a>.
In this note, we will talk about the financials.
</div>

Zomato (ZOM IN)  aims to raise US$1.1bn in its upcoming India IPO. This would be the largest listing in India from the technology sector.
Zomato operates a technology platform that provides services for restaurant partners, customers, and delivery partners. During FY20, Zomato recorded 41.5m average MAU and was one of the leading Food Services platforms in India, in terms of value of goods sold, according to RedSeer. As of 31 Dec 20, it had a presence in 526 Indian cities and had 350,174 active restaurant listings.
We covered a little bit of the the company's history in Zomato Pre-IPO - Filings Lack Narrative, a Little Bit of History Helps.
In this note, we will talk about the financials.


Zomato Pre-IPO - Food Delivery Revenue Was Probably up 16x

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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.
</div>


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

InterGlobe Aviation Ltd / Equity Capital Markets

Interglobe Aviation (Indigo)’s board approved a fund raising of around US$400m (INR30,000m) on 10th May 2021. This is the second time over the past year that the company has obtained a board approval for undertaking a fund raising. The previous instance was in Aug 2020, when the board approved a fundraising of up to INR40,000m. However, the quicker than expected recovery since then meant that the company never raised the funds and in Jan 2021, its CFO stated that it had no intention of doing so either.However, the brutal COVID-19 second wave in India probably led to a change of heart. In this note, we will talk about the deal dynamics.

Interglobe Aviation (Indigo)’s board approved a fund raising of around US$400m (INR30,000m) on 10th May 2021. This is the second time over the past year that the company has obtained a board approval for undertaking a fund raising. The previous instance was in Aug 2020, when the board approved a fundraising of up to INR40,000m. However, the quicker than expected recovery since then meant that the company never raised the funds and in Jan 2021, its CFO stated that it had no intention of doing so either.However, the brutal COVID-19 second wave in India probably led to a change of heart. In this note, we will talk about the deal dynamics. 

Interglobe Aviation (Indigo) QIP Early Look - Headwinds Lead to a Change of Heart

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)

Newly Mandated Disclosures for India’s Top Corporates May Yield a Gold Mine of Information

It is true that the explosion of ESG funds worldwide has not so far resulted in an improvement in ESG itself, but at least SEBI’s move may provide...

Hemindra Hazari

IndiaBulls Housing Finance – A Turn For The Worse

INDIABULLS HOUSING FINANCE: IndiaBulls reported a QOQ FY 4Q21 results decline of 16.1% due to a net interest income decline and loss provision...

Thomas J. Monaco

Zomato Pre-IPO - Food Delivery Revenue Was Probably up 16x

Zomato aims to raise US$1.1bn in its upcoming India IPO. This would be the largest listing in India from the technology sector.

Sumeet Singh

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

Interglobe Aviation (Indigo) QIP Early Look - Headwinds Lead to a Change of Heart

Interglobe Aviation (Indigo)’s board approved a fund raising of around US$400m on 10th May 2021. This is the second time over the past year that...

Sumeet Singh

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