Consumer Analyst / Channel Surveillance Specialist, Trudence Capital Advisors

Pranav Bhavsar

Consumer Analyst / Channel Surveillance Specialist

Trudence Capital Advisors

Trudence Capital Advisors Private Limited is a SEBI-registered Research Analyst, holding SEBI registration number INH000015747. Our firm is dedicated to providing independent and unbiased research on Indian mid to large-cap companies. Trudence Capital is known for its counter-consensus views, with a focus on forensic research and on-ground primary investigations. Our research approach is thorough, involving detailed analysis of accounting practices and governance, alongside extensive channel checks.

Independent & Unbiased Research

Equity Bottom-Up

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<p>In this Insight, we present our takeaways from channel interactions that are focused on <a href="https://www.smartkarma.com/entities/asian-paints-ltd" target="_blank" data-smartkarma-citation="entities:6354:1" rel="noopener">Asian Paints (APNT IN)</a> , <a href="https://www.smartkarma.com/entities/ashok-leyland-ltd" target="_blank" data-smartkarma-citation="entities:20104:1" rel="noopener">Ashok Leyland (AL IN)</a>, <a href="https://www.smartkarma.com/entities/makemytrip-ltd" target="_blank" data-smartkarma-citation="entities:23580:1" rel="noopener">Makemytrip Ltd (MMYT US)</a> and <a href="https://www.smartkarma.com/entities/stove-kraft-ltd" target="_blank" data-smartkarma-citation="entities:31372:1" rel="noopener">Stove Kraft (0490943D IN)</a></p>
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<h3>About India Channel Insight</h3>
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<p>Our objective with India Channel Insight is to share snippets from our channel interactions that are part of our research process. These snippets can potentially be signals for larger themes/ideas emerging out of these interactions.  </p>
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In this Insight, we present our takeaways from channel interactions that are focused on Asian Paints (APNT IN) , Ashok Leyland (AL IN), Makemytrip Ltd (MMYT US) and Stove Kraft (0490943D IN)

About India Channel Insight


Our objective with India Channel Insight is to share snippets from our channel interactions that are part of our research process. These snippets can potentially be signals for larger themes/ideas emerging out of these interactions.  


India Channel Insight | Asian Paints, Ashok Leyland, Makemytrip, Stove Kraft

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><p><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$1.3bn in its India IPO. This will be the largest listing in India from the technology sector.</p></div><div><p>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.</p></div><div>
<p>We have covered some aspects of the deal in our earlier notes  </p>
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<li><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></li>
<li><a href="https://www.smartkarma.com/insights/zomato-pre-ipo-food-delivery-revenue-was-probably-up-16x" target="_blank" rel="noopener">Zomato Pre-IPO - Food Delivery Revenue Was Probably up 16x, and</a></li>
<li><a href="https://www.smartkarma.com/insights/zomato-pre-ipo-peer-comparison-listed-and-domestic" target="_blank" rel="noopener">Zomato Pre-IPO - Peer Comparison - Listed and Domestic</a></li>
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</div><p>In this note, we will talk about the updates from the RHP and the deal pricing.</p>

Zomato (ZOM IN)  aims to raise US$1.3bn in its India IPO. This will 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 have covered some aspects of the deal in our earlier notes  

Zomato Pre-IPO - Filings Lack Narrative, a Little Bit of History Helps, 
Zomato Pre-IPO - Food Delivery Revenue Was Probably up 16x, and
Zomato Pre-IPO - Peer Comparison - Listed and Domestic

In this note, we will talk about the updates from the RHP and the deal pricing.

Zomato IPO - Strong 4Q21, Has a Very Long Runway

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<div><p>The Indian mutual fund industry has assets of almost INR 6.6 trillion 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></div><div>
<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>At the next recategorization in July 2021, we see 7 stocks moving from the mid cap segment to the large cap segment with an equal number of stocks moving the other way, and 13 stocks are expected to move from the small cap segment to the mid cap segment with the 16 stocks moving from the mid cap to the small cap segment. There are 3 recent listings that will enter the mid cap segment with over 18 joining the small cap segment.</p>
<p>Historically, the stocks migrating upward to a higher market cap segment have outperformed stocks that migrate to a lower market cap segment over the 1 month and 2 month period post the publishing of the AMFI list. 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>
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The Indian mutual fund industry has assets of almost INR 6.6 trillion 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.
At the next recategorization in July 2021, we see 7 stocks moving from the mid cap segment to the large cap segment with an equal number of stocks moving the other way, and 13 stocks are expected to move from the small cap segment to the mid cap segment with the 16 stocks moving from the mid cap to the small cap segment. There are 3 recent listings that will enter the mid cap segment with over 18 joining the small cap segment.
Historically, the stocks migrating upward to a higher market cap segment have outperformed stocks that migrate to a lower market cap segment over the 1 month and 2 month period post the publishing of the AMFI list. 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

Thematic (Sector/Industry)

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<h3>In this Insight </h3>
<p>Our chemical industry coverage is primarily focused on understanding and analysing supply chain dynamics for our core consumer coverage. In this insight, we present our takeaways from channel interactions that are focused on the industry and specific companies. </p>
<p><strong>Domestic Chemicals: </strong>We interact with a local channel that is focused on the distribution of chemicals catering to the paint and construction industry. The business is upbeat, tailwinds remain and the business prospects for chemicals look good at least for the next two years. </p>
<p><strong><a href="https://www.smartkarma.com/entities/sudarshan-chemical-inds-ltd" target="_blank" data-smartkarma-citation="entities:12968:1" rel="noopener">Sudarshan Chemical Inds (SCHI IN)</a> :</strong> Highly regarded and respected management along with interesting product line up is poised well for growth. </p>
<p><a href="https://www.smartkarma.com/entities/camlin-fine-sciences-ltd" target="_blank" data-smartkarma-citation="entities:17667:1" rel="noopener"><strong>Camlin Fine Sciences (CFIN IN)</strong></a><strong>:</strong> Historical performance has been good and acquisitions offer good growth potential </p>
<p><strong>Clean Science and Technology Limited (Private):</strong> Clean Science a fine chemical manufacturer and also a competitor to CFIN in some products, has recently filed its <a href="https://www.sebi.gov.in/filings/public-issues/apr-2021/clean-science-and-technology-limited-drhp_49777.html" target="_blank" rel="noopener">DRHP</a>. Our channel interactions indicate a robust growth plan ahead. </p>
<h3>About India Channel Insight</h3>
</div>
<div>
<p>Our objective with India Channel Insight is to share snippets from our channel interactions that are part of our research process. These snippets can potentially be signals for larger themes/ideas emerging out of these interactions. </p>
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In this Insight 
Our chemical industry coverage is primarily focused on understanding and analysing supply chain dynamics for our core consumer coverage. In this insight, we present our takeaways from channel interactions that are focused on the industry and specific companies. 
Domestic Chemicals: We interact with a local channel that is focused on the distribution of chemicals catering to the paint and construction industry. The business is upbeat, tailwinds remain and the business prospects for chemicals look good at least for the next two years. 
Sudarshan Chemical Inds (SCHI IN) : Highly regarded and respected management along with interesting product line up is poised well for growth. 
Camlin Fine Sciences (CFIN IN): Historical performance has been good and acquisitions offer good growth potential 
Clean Science and Technology Limited (Private): Clean Science a fine chemical manufacturer and also a competitor to CFIN in some products, has recently filed its DRHP. Our channel interactions indicate a robust growth plan ahead. 
About India Channel Insight


Our objective with India Channel Insight is to share snippets from our channel interactions that are part of our research process. These snippets can potentially be signals for larger themes/ideas emerging out of these interactions. 


India Channel Insights | Chemicals - Sudarshan, Camlin, Clean Science

Kalyan Jewellers / Equity Capital Markets

<p>Kalyan Jewellers aims to 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.</p><p>The company is one of the largest jewellery companies in India based on FY20 (year ending Mar 2020) revenue, as per the Technopak report. As of Dec 2020, it had 107 showrooms across 21 states and union territories in India. It also had 30 showrooms in the Middle East.</p><p>Earnings haven’t grown much over the past few years, as the company appears to have suffered from a strategic misstep. Over 9M21, revenue declined by 30.6% and the company suffered a loss.</p><p>Having said that, the industry remains highly fragmented with ample scope remaining for organised players, like Kalyan, to gain market share. We have looked at the background of the company 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>. </p><p>In this note, we will run the deal through our ECM framework and talk about updates since our last note.</p>

Kalyan Jewellers aims to 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.The company is one of the largest jewellery companies in India based on FY20 (year ending Mar 2020) revenue, as per the Technopak report. As of Dec 2020, it had 107 showrooms across 21 states and union territories in India. It also had 30 showrooms in the Middle East.Earnings haven’t grown much over the past few years, as the company appears to have suffered from a strategic misstep. Over 9M21, revenue declined by 30.6% and the company suffered a loss.Having said that, the industry remains highly fragmented with ample scope remaining for organised players, like Kalyan, to gain market share. We have looked at the background of the company in our previous note, Kalyan Jewellers Pre-IPO - Strategy missteps led to earnings flatlining. In this note, we will run the deal through our ECM framework and talk about updates since our last note.

India

Indigo Paints Limited manufactures paints. The Company supplies exterior and interior paints. Indigo Paints serves customers in India.

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Indigo Paints (INDIGOPN IN)

India Channel Insight | Asian Paints, Ashok Leyland, Makemytrip, Stove Kraft

In this Insight, we present our takeaways from channel interactions that are focused on Asian Paints, Ashok Leyland, Makemytrip Ltd and Stove Kraft

Pranav Bhavsar

Zomato IPO - Strong 4Q21, Has a Very Long Runway

Zomato (ZOM IN) aims to raise US$1.3bn in its India IPO. This will be the largest listing in India from the technology sector.

Sumeet Singh

India: Stock Reclassification & Active Portfolio Management

There are a lot of segment changes expected in July when AMFI recategorizes stocks and mutual funds start to rebalance their portfolios. We...

Brian Freitas

India Channel Insights | Chemicals - Sudarshan, Camlin, Clean Science

In this insight, we present our takeaways from chemical channel interactions that are focused on the chemical industry and specific companies.

Pranav Bhavsar

Kalyan Jewellers IPO - No Glitter

Kalyan Jewellers aims to raise around US$160m via a mix of selling new and existing shares in its Indian IPO. The company was established in 1993...

Sumeet Singh

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