IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

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Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

<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> is a leading food delivery platform in India. Zomato has two core business-to-customer (B2C) offerings which are Food delivery and Dining-out. It also has a business-to-business (B2B) offering called Hyperpure and Zomato Pro, the customer loyalty program which encompasses both food delivery and dining-out. Zomato’s key shareholders are <a href="https://www.smartkarma.com/entities/info-edge-india-ltd" target="_blank" data-smartkarma-citation="entities:14461:1" rel="noopener">Info Edge India (INFOE IN)</a> (18.55% of outstanding shares), <a href="https://www.smartkarma.com/entities/uber-technologies-inc" target="_blank" data-smartkarma-citation="entities:430:1" rel="noopener">Uber (UBER US)</a> (9.1%) and <a href="https://www.smartkarma.com/entities/ant-group-co-ltd" target="_blank" data-smartkarma-citation="entities:24240:1" rel="noopener">Ant Financial Services Group (6688 HK)</a>.  </p><p>Zomato is expected to launch its IPO on 19 July to raise up to Rs93.75 billion ($1.3 billion) with a primary/secondary split of 96%/4%, according to press reports. The selling shareholder is Info Edge. </p><div class="content-highlight"><p>Zomato will be a landmark IPO in India as it the first large new economy technology platform to list. The food delivery market in India is attractive to the large addressable opportunity. While <a href="https://www.smartkarma.com/entities/amazon-com-inc" target="_blank" data-smartkarma-citation="entities:409:1" rel="noopener">Amazon.com Inc (AMZN US)</a> entered the market last year, the food delivery market in India is effectively a duopoly between Zomato and Swiggy. Zomato claims to be larger but the key differentiator will be execution to drive growth with positive unit economics. On this front, Zomato has demonstrated a commendable track record. Overall, we think that Zomato's fundamentals are attractive. </p></div>

Zomato (ZOM IN) is a leading food delivery platform in India. Zomato has two core business-to-customer (B2C) offerings which are Food delivery and Dining-out. It also has a business-to-business (B2B) offering called Hyperpure and Zomato Pro, the customer loyalty program which encompasses both food delivery and dining-out. Zomato’s key shareholders are Info Edge India (INFOE IN) (18.55% of outstanding shares), Uber (UBER US) (9.1%) and Ant Financial Services Group (6688 HK).  Zomato is expected to launch its IPO on 19 July to raise up to Rs93.75 billion ($1.3 billion) with a primary/secondary split of 96%/4%, according to press reports. The selling shareholder is Info Edge. Zomato will be a landmark IPO in India as it the first large new economy technology platform to list. The food delivery market in India is attractive to the large addressable opportunity. While Amazon.com Inc (AMZN US) entered the market last year, the food delivery market in India is effectively a duopoly between Zomato and Swiggy. Zomato claims to be larger but the key differentiator will be execution to drive growth with positive unit economics. On this front, Zomato has demonstrated a commendable track record. Overall, we think that Zomato's fundamentals are attractive. 

Zomato IPO Initiation: Emerging Appetites

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<p>The <a href="https://www.smartkarma.com/entities/nifty-index" target="_blank" data-smartkarma-citation="entities:23617:1" rel="noopener">NIFTY Index (NIFTY INDEX)</a> is the flagship index of the National Stock Exchange of India (NSE). The index has 50 stocks and is a free float weighted market cap index. The next rebalance will be effective after the close of trading on 29 September 2021 and the announcement of the changes will be made four weeks prior to the effective date.</p><p>The review period runs from February to July and we are nearing the last leg of data that will be used to determine the inclusions and exclusions. We currently see no change to the index, though that could change if <a href="https://www.smartkarma.com/entities/adani-green-energy-ltd" target="_blank" data-smartkarma-citation="entities:29012:1" rel="noopener">Adani Green Energy (ADANIGR IN)</a> and/or <a href="https://www.smartkarma.com/entities/dmart" target="_blank" data-smartkarma-citation="entities:23656:1" rel="noopener">Avenue Supermarts Ltd (DMART IN)</a> are included in the Futures &amp; Options (F&amp;O) segment, or if there is a big rally in <a href="https://www.smartkarma.com/entities/info-edge-india-ltd" target="_blank" data-smartkarma-citation="entities:14461:1" rel="noopener">Info Edge India (INFOE IN)</a>.</p><p>20 stocks have been added to the F&amp;O segment so far this year and there is a possibility that <a href="https://www.smartkarma.com/entities/dmart" target="_blank" data-smartkarma-citation="entities:23656:1" rel="noopener">Avenue Supermarts Ltd (DMART IN)</a> and/or <a href="https://www.smartkarma.com/entities/adani-green-energy-ltd" target="_blank" data-smartkarma-citation="entities:29012:1" rel="noopener">Adani Green Energy (ADANIGR IN)</a> are included in the segment in the next month.</p><p><a href="https://www.smartkarma.com/entities/info-edge-india-ltd" target="_blank" data-smartkarma-citation="entities:14461:1" rel="noopener">Info Edge India (INFOE IN)</a>'s average free float market cap is 1.41 times the average free float market cap of <a href="https://www.smartkarma.com/entities/indian-oil-corp-ltd" target="_blank" data-smartkarma-citation="entities:7781:1" rel="noopener">Indian Oil Corp (IOCL IN)</a>. To reach the 1.5 times average free float market cap threshold, <a href="https://www.smartkarma.com/entities/info-edge-india-ltd" target="_blank" data-smartkarma-citation="entities:14461:1" rel="noopener">Info Edge India (INFOE IN)</a> will need to outperform <a href="https://www.smartkarma.com/entities/indian-oil-corp-ltd" target="_blank" data-smartkarma-citation="entities:7781:1" rel="noopener">Indian Oil Corp (IOCL IN)</a> by 32% on average over the rest of the review period.</p><p>If <a href="https://www.smartkarma.com/entities/dmart" target="_blank" data-smartkarma-citation="entities:23656:1" rel="noopener">Avenue Supermarts Ltd (DMART IN)</a> or <a href="https://www.smartkarma.com/entities/adani-green-energy-ltd" target="_blank" data-smartkarma-citation="entities:29012:1" rel="noopener">Adani Green Energy (ADANIGR IN)</a> are added to the <a href="https://www.smartkarma.com/entities/nifty-index" target="_blank" data-smartkarma-citation="entities:23617:1" rel="noopener">NIFTY Index (NIFTY INDEX)</a>, the impact of passive buying will be high at over 7 days of ADV. The impact on the potential deletions is around 3 days of ADV to sell.</p>

The NIFTY Index (NIFTY INDEX) is the flagship index of the National Stock Exchange of India (NSE). The index has 50 stocks and is a free float weighted market cap index. The next rebalance will be effective after the close of trading on 29 September 2021 and the announcement of the changes will be made four weeks prior to the effective date.The review period runs from February to July and we are nearing the last leg of data that will be used to determine the inclusions and exclusions. We currently see no change to the index, though that could change if Adani Green Energy (ADANIGR IN) and/or Avenue Supermarts Ltd (DMART IN) are included in the Futures &amp; Options (F&amp;O) segment, or if there is a big rally in Info Edge India (INFOE IN).20 stocks have been added to the F&amp;O segment so far this year and there is a possibility that Avenue Supermarts Ltd (DMART IN) and/or Adani Green Energy (ADANIGR IN) are included in the segment in the next month.Info Edge India (INFOE IN)'s average free float market cap is 1.41 times the average free float market cap of Indian Oil Corp (IOCL IN). To reach the 1.5 times average free float market cap threshold, Info Edge India (INFOE IN) will need to outperform Indian Oil Corp (IOCL IN) by 32% on average over the rest of the review period.If Avenue Supermarts Ltd (DMART IN) or Adani Green Energy (ADANIGR IN) are added to the NIFTY Index (NIFTY INDEX), the impact of passive buying will be high at over 7 days of ADV. The impact on the potential deletions is around 3 days of ADV to sell.

NIFTY50 Index Rebalance Preview: Catalysts for Change

External broker reports(aggregated public sources), ICICI Securities Ltd

ICICI Securities Limited

External broker reports(aggregated public sources)

Equity Bottom-Up

<p>InfoEdge's Q4FY21 numbers were below our estimates. However, the company has seen improving billing growth both on a YoY and QoQ basis. Billing increased 25.1% YoY, 39.8% QoQ to Rs 415.3 crore, mainly led by 26% YoY growth in recruitment and 41.5% YoY growth in 99 acres billing. As compared to Q4FY19 (a pre-pandemic quarter), overall billing was up 15.0%. Overall revenues on a QoQ basis increased 6.5% QoQ. EBITDA margins declined from 29.9% in Q4FY20 to 18.3% (below our estimate of 29.6%)...</p><div class="content-highlight"><em>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.</em></div>

InfoEdge's Q4FY21 numbers were below our estimates. However, the company has seen improving billing growth both on a YoY and QoQ basis. Billing increased 25.1% YoY, 39.8% QoQ to Rs 415.3 crore, mainly led by 26% YoY growth in recruitment and 41.5% YoY growth in 99 acres billing. As compared to Q4FY19 (a pre-pandemic quarter), overall billing was up 15.0%. Overall revenues on a QoQ basis increased 6.5% QoQ. EBITDA margins declined from 29.9% in Q4FY20 to 18.3% (below our estimate of 29.6%)...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.

Info Edge India: Billing Trajectory Continues to Improve

<div><p><a href="https://www.smartkarma.com/entities/kanzhun-ltd" target="_blank" data-smartkarma-citation="entities:33368:1" rel="noopener">Kanzhun (BZ US)</a> is the largest online recruitment platform in China, as measured by the average MAU in 2020, according to CIC. Its <em>BOSS Zhipin</em> mobile app connects job seekers and enterprise users. </p></div><div><p>Kanzhun has priced its IPO at $19.00 per ADS to raise gross proceeds of $912 million, <a href="https://www.ifre.com/story/2913154/kanzhun-prices-nasdaq-ipo-at-top-to-raise-us912m-smlgvfl3m3" target="_blank" rel="noopener">according to IFR</a>. At the final IPO price of $19 per share, Kanzhun will have a market cap of $7.6 billion. The IPO got off to a strong start due to indications of interest for $375 million worth of ADSs in the offering from existing investors (Sequoia Capital and Tiger Global) and new investors (UBS Asset Management, GIC and Mubadala Investment).</p></div><div><p>In <a href="https://www.smartkarma.com/insights/kanzhun-ipo-initiation-search-and-employ" target="_blank" data-smartkarma-citation="insights:51969" rel="noopener">Kanzhun IPO Initiation: Search and Employ</a>, we opined that Kanzhun’s strong growth in users and fast-paced revenue growth suggests another “growth at all costs” strategy. Encouragingly, the high revenue visibility, declining loss margin and cash generation suggest that Kanzhun can eventually deliver this growth profitability. We concluded that the Kanzhun story warrants a closer look. In <a href="https://www.smartkarma.com/insights/kanzhun-ipo-growth-margin-trade-off-vs-peers" target="_blank" data-smartkarma-citation="insights:52333" rel="noopener">Kanzhun IPO: Growth/Margin Trade-Off Vs Peers</a>, we opined that Kanzhun provides growth and revenue visibility vs margin and cash generation trade-off in comparison to its listed peers. In <a href="https://www.smartkarma.com/insights/kanzhun-ipo-valuation-insights" target="_blank" data-smartkarma-citation="insights:52575" rel="noopener">Kanzhun IPO: Valuation Insights</a> we noted that the IPO price range is attractive. </p></div><div><div><div class="content-highlight"><p>Updating for the final IPO net raise, our base-case DCF derived price target of $21.02 per ADS. As DCF-based target prices are subject to a wide range of variability, we present a sensitivity table to help investors gauge where target prices could head. Our DCF sensitivity analysis points to a meaningful upside based on achievable targets for market share and/or terminal EBIT margin. </p></div></div></div>

Kanzhun (BZ US) is the largest online recruitment platform in China, as measured by the average MAU in 2020, according to CIC. Its BOSS Zhipin mobile app connects job seekers and enterprise users. Kanzhun has priced its IPO at $19.00 per ADS to raise gross proceeds of $912 million, according to IFR. At the final IPO price of $19 per share, Kanzhun will have a market cap of $7.6 billion. The IPO got off to a strong start due to indications of interest for $375 million worth of ADSs in the offering from existing investors (Sequoia Capital and Tiger Global) and new investors (UBS Asset Management, GIC and Mubadala Investment).In Kanzhun IPO Initiation: Search and Employ, we opined that Kanzhun’s strong growth in users and fast-paced revenue growth suggests another “growth at all costs” strategy. Encouragingly, the high revenue visibility, declining loss margin and cash generation suggest that Kanzhun can eventually deliver this growth profitability. We concluded that the Kanzhun story warrants a closer look. In Kanzhun IPO: Growth/Margin Trade-Off Vs Peers, we opined that Kanzhun provides growth and revenue visibility vs margin and cash generation trade-off in comparison to its listed peers. In Kanzhun IPO: Valuation Insights we noted that the IPO price range is attractive. Updating for the final IPO net raise, our base-case DCF derived price target of $21.02 per ADS. As DCF-based target prices are subject to a wide range of variability, we present a sensitivity table to help investors gauge where target prices could head. Our DCF sensitivity analysis points to a meaningful upside based on achievable targets for market share and/or terminal EBIT margin. 

India

Info Edge (India) Limited operates an online job posting website. The website offers services for recruiters, job seekers, and employers. The Company also operates  an online matrimonial website for prospective brides, grooms, and relatives.

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Info Edge India (INFOE IN)

Zomato IPO Initiation: Emerging Appetites

Zomato is expected to launch its IPO on 19 July to raise up to Rs93.75 billion ($1.3 billion). Overall, we think that Zomato's fundamentals are...

Arun George

NIFTY50 Index Rebalance Preview: Catalysts for Change

There are no changes expected to the NIFTY Index at the September rebalance. However, the inclusion of DMART and/or Adani Green in the F&O segment...

Brian Freitas

Info Edge India: Billing Trajectory Continues to Improve

InfoEdge's Q4FY21 numbers were below our estimates. However, the company has seen improving billing growth both on a YoY and QoQ basis.

ICICI Securities Limited

Info Edge India: Billing Trajectory Continues to Improve

Info Edge's Q4FY21 numbers were below our estimates. However, the company has seen improving billing growth both on a YoY and QoQ basis. Billing...

ICICI Securities Limited

Kanzhun IPO: Trading Debut

Kanzhun has priced its IPO at $19 per ADS to raise $912 m. Our DCF sensitivity analysis points to a meaningful upside based on achievable targets...

Arun George

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