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

Macrotech Developers / Equity Capital Markets

Macrotech Developers  (Lodha) aims to raise around US$350m in its India IPO. It is the largest real estate developer in India, by residential sales over FY14-20. In FY20, it had a share of 24% of total supply (by units), 32% of total absorption (by units) and 46% of total absorption (by value) in the Top Seven Indian Markets. Lodha's is primarily a residential developer with most of its operations restricted to the Mumbai Metropolitan Region (MMR).  It has projects across the value spectrum from the affordable segment to ultra-luxury high-end residential projects. As of Dec 2020, it had completed 91 projects with a developable area of 77.22m sqft. As of Dec 2020, it also had 36 ongoing and 18 planned projects in India with a developable area of 28.78m sqft and 45.08m sqft, respectively.This will be the company’s third listing attempt, after 2009/10 and 2018. The size of the deal is expected to be much smaller as well versus the US$800m that it was hoping to raise in 2018. We have looked at its previous listing attempt in our prior note, <a href="https://www.smartkarma.com/insights/lodha-developers-pre-ipo-second-time-lucky-but-not-really-that-much-affordable" target="_blank" rel="noopener">Lodha Developers Pre-IPO - Second Time Lucky but Not Really that Much Affordable</a>.In this note we will talk about the updates since our last note in 2018

Macrotech Developers  (Lodha) aims to raise around US$350m in its India IPO. It is the largest real estate developer in India, by residential sales over FY14-20. In FY20, it had a share of 24% of total supply (by units), 32% of total absorption (by units) and 46% of total absorption (by value) in the Top Seven Indian Markets. Lodha's is primarily a residential developer with most of its operations restricted to the Mumbai Metropolitan Region (MMR).  It has projects across the value spectrum from the affordable segment to ultra-luxury high-end residential projects. As of Dec 2020, it had completed 91 projects with a developable area of 77.22m sqft. As of Dec 2020, it also had 36 ongoing and 18 planned projects in India with a developable area of 28.78m sqft and 45.08m sqft, respectively.This will be the company’s third listing attempt, after 2009/10 and 2018. The size of the deal is expected to be much smaller as well versus the US$800m that it was hoping to raise in 2018. We have looked at its previous listing attempt in our prior note, Lodha Developers Pre-IPO - Second Time Lucky but Not Really that Much Affordable.In this note we will talk about the updates since our last note in 2018

Macrotech (Lodha) Developers Pre-IPO - New Name but up to Some of the Same Old Tricks

Financials Credit Analyst

Hank Calenti, CFA

CreditContinuum

Credit

Executive Summary:  Rapidly rising interest rates present a challenge for credit to generate positive total returns. Unfortunately, the upward sloping sawtooth pattern of rising US interest rates ended the month on an upswing. Credit spreads needed to compress by as much to generate positive total returns. Only a small handful of Asia’s US$-denominated bank bonds (x-Japan) managed to generate positive total returns during the month of March. This was concentrated in a select sweet spot.Long duration, low investment grade rated, and high BB rated bonds led tightening over the month. Lower risk tolerance, as evidenced by the rating preferences, combined with duration desires to drive performance in March, as in February. One differentiating factor between March and February is the concentration amongst Thai- and South Korean-headquartered banks during March; however, these institutions are also the largest issuers of longer duration bank paper in Asia. As such, we see this as more of a duration, than a country story.From a pure credit spread perspective, ignoring movements in the risk-free rate, Asia’s bank bonds had an outstanding month with each of the +100 bonds that we track tightening during the month. Global monetary accommodation is in large part responsible for this spread compression. Credit fundamentals have yet to catch-up. Continued tightening, however, cannot be ruled out as credit tourists crowd-in and markets melt-up. Unfortunately for most, the recent tightening did not exceed the speed with which interest rates rose.Q1 2021 was a tough quarter for real money asset managers. We anticipate that US interest rates will continue to climb higher and may even accelerate their upward trajectory. If the trend is your friend and longer duration bonds continue to outperform, the risk is that of buying a bond which either has a higher level of volatility or is fully priced. With South Korean long-dated Senior Unsecured notes trading just north of 100 basis points (bps), it is hard to imagine these notes continuing to compress faster than interest rates. Asset managers may need to consider more subordinated, higher yielding notes to generate positive total returns over the near term. Investors will likely be pushed towards lower rated Additional Tier 1 (AT1) bonds in April / May to achieve positive total returns. Security selection may become more important.

Executive Summary:  Rapidly rising interest rates present a challenge for credit to generate positive total returns. Unfortunately, the upward sloping sawtooth pattern of rising US interest rates ended the month on an upswing. Credit spreads needed to compress by as much to generate positive total returns. Only a small handful of Asia’s US$-denominated bank bonds (x-Japan) managed to generate positive total returns during the month of March. This was concentrated in a select sweet spot.Long duration, low investment grade rated, and high BB rated bonds led tightening over the month. Lower risk tolerance, as evidenced by the rating preferences, combined with duration desires to drive performance in March, as in February. One differentiating factor between March and February is the concentration amongst Thai- and South Korean-headquartered banks during March; however, these institutions are also the largest issuers of longer duration bank paper in Asia. As such, we see this as more of a duration, than a country story.From a pure credit spread perspective, ignoring movements in the risk-free rate, Asia’s bank bonds had an outstanding month with each of the +100 bonds that we track tightening during the month. Global monetary accommodation is in large part responsible for this spread compression. Credit fundamentals have yet to catch-up. Continued tightening, however, cannot be ruled out as credit tourists crowd-in and markets melt-up. Unfortunately for most, the recent tightening did not exceed the speed with which interest rates rose.Q1 2021 was a tough quarter for real money asset managers. We anticipate that US interest rates will continue to climb higher and may even accelerate their upward trajectory. If the trend is your friend and longer duration bonds continue to outperform, the risk is that of buying a bond which either has a higher level of volatility or is fully priced. With South Korean long-dated Senior Unsecured notes trading just north of 100 basis points (bps), it is hard to imagine these notes continuing to compress faster than interest rates. Asset managers may need to consider more subordinated, higher yielding notes to generate positive total returns over the near term. Investors will likely be pushed towards lower rated Additional Tier 1 (AT1) bonds in April / May to achieve positive total returns. Security selection may become more important.

Bank Credit Compass: Positive Total Return Sweet Spot

Kalyan Jewellers / Equity Capital Markets

Kalyan Jewellers raise around US$160m via a mix of selling new and existing shares in its Indian IPO. The company was established in 1993 and is backed by Warburg Pincus.We have looked at various aspects of the deal in our previous note, <a href="https://www.smartkarma.com/insights/kalyan-jewellers-pre-ipo-strategy-missteps-led-to-earnings-flatlining" target="_blank" rel="noopener">Kalyan Jewellers Pre-IPO - Strategy missteps led to earnings flatlining </a>and <a href="https://www.smartkarma.com/insights/kalyan-jewellers-ipo-no-glitter" target="_blank" rel="noopener">Kalyan Jewellers IPO - No Glitter</a>.In this note, we'll talk about deal updates and provide a table with implied valuations at different share price levels.

Kalyan Jewellers raise around US$160m via a mix of selling new and existing shares in its Indian IPO. The company was established in 1993 and is backed by Warburg Pincus.We have looked at various aspects of the deal in our previous note, Kalyan Jewellers Pre-IPO - Strategy missteps led to earnings flatlining and Kalyan Jewellers IPO - No Glitter.In this note, we'll talk about deal updates and provide a table with implied valuations at different share price levels.

Kalyan Jewellers IPO Trading - Subdued Demand

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

Thematic (Sector/Industry)

*Can Kicked Less Far: On March 23, 2021, the Supreme Court in a final ruling  rejected pleas for a complete waiver of interest on loans under moratorium; ; and*Good News For Banks Is Still Bad News: Despite the favorable RBI Supreme Court ruling, Indian financial sector credit quality remains amongst the worst in Asia and globally. Given the now increased interest pressure on those corporates which were given waivers, it is all but assured that we can add those to the woodpile of Indian NPLs. Massive capital raises need to occur within the sector.

*Can Kicked Less Far: On March 23, 2021, the Supreme Court in a final ruling  rejected pleas for a complete waiver of interest on loans under moratorium; ; and*Good News For Banks Is Still Bad News: Despite the favorable RBI Supreme Court ruling, Indian financial sector credit quality remains amongst the worst in Asia and globally. Given the now increased interest pressure on those corporates which were given waivers, it is all but assured that we can add those to the woodpile of Indian NPLs. Massive capital raises need to occur within the sector.  

Reserve Bank of India – Heads You Win, Tails I Lose

India Financials

Saumya Agarwal

Equity Bottom-Up

IDFC First Bank Limited / Equity Bottom-Up

IDFC first Bank, one of the youngest Banks in India, has been making steady progress on its strategic goals - that of de-risking the balance sheet and augmenting its retail liabilities. However it continues to trade at a marked discount vis-à-vis peers. What can close this valuation gap for IDFC First Bank?

IDFC first Bank, one of the youngest Banks in India, has been making steady progress on its strategic goals - that of de-risking the balance sheet and augmenting its retail liabilities. However it continues to trade at a marked discount vis-à-vis peers. What can close this valuation gap for IDFC First Bank?

IDFC First Bank- What Can Close the Valuation Gap of IDFC Bank Vis-A-Vis Its Peers?

India

ICICI Bank Limited operates as a bank. The Bank offers saving accounts, loans, debit, credit cards, insurance, investments, mortgages, and online banking services. ICICI Bank serves customers worldwide.

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ICICI Bank Ltd (ICICIBC IN)

Macrotech (Lodha) Developers Pre-IPO - New Name but up to Some of the Same Old Tricks

Macrotech Developers (Lodha) aims to raise around US$350m in its India IPO. It is the largest real estate developer in India, by residential sales...

Sumeet Singh

Bank Credit Compass: Positive Total Return Sweet Spot

The sweet spot for positive total returns seems to be in long duration, low investment grade, and high BB rated bonds. This was concentrated in...

Hank Calenti, CFA

Kalyan Jewellers IPO Trading - Subdued Demand

Kalyan Jewellers raise around US$160m via a mix of selling new and existing shares in its Indian IPO. In this note, we'll talk about deal updates.

Sumeet Singh

Reserve Bank of India – Heads You Win, Tails I Lose

RESERVE BANK OF INDIA: The Supreme Court rejected pleas for a complete waiver of interest on loans under moratorium. Nevertheless, the Indian...

Thomas J. Monaco

IDFC First Bank- What Can Close the Valuation Gap of IDFC Bank Vis-A-Vis Its Peers?

IDFC first Bank has been making steady progress on its strategic goals but continues to trade at a marked discount vis-à-vis peers. What can close...

Saumya Agarwal

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