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

Apollo Hospitals Enterprise / Equity Capital Markets

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<a href="https://www.smartkarma.com/entities/apollo-hospitals-enterprise" target="_blank" data-smartkarma-citation="entities:880:1" rel="noopener">Apollo Hospitals Enterprise (APHS IN)</a> plans to raise around US$140m via a QIP which was launched last night.
I have covered various aspects of the deal in my earlier note,  <a href="https://www.smartkarma.com/insights/apollo-hospital-placement-qip-early-look-this-time-it-s-different" target="_blank" rel="noopener">Apollo Hospital Placement/​QIP Early Look - This Time It’s Different</a>.
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In this insight, I'll run the deal through our ECM framework and talk about recent updates.
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Apollo Hospitals Enterprise (APHS IN) plans to raise around US$140m via a QIP which was launched last night.
I have covered various aspects of the deal in my earlier note,  Apollo Hospital Placement/​QIP Early Look - This Time It’s Different.


In this insight, I'll run the deal through our ECM framework and talk about recent updates.


Apollo Hospital Placement/​​QIP - Well Flagged Deal with Well Planned Use of Proceeds

Indigo Paints (IP) aims to raise around US$165m in its India IPO. It is engaged in the business of manufacturing paints in India. It was the fifth largest company in the Indian decorative paint industry, in terms of revenue from operations in FY20 and was the fastest growing among the top five paint companies.Revenue from operations have grown at 41.9% CAGR over FY10-19 and 24.7% CAGR over FY18-20. Margins have been on an uptrend as well and hence, over FY18-20, gross profit grew at 36% CAGE, EBITDA at 87.8% and PATMI at 92.8%. The company has adopted a strategy of targeting smaller cities and rural areas to build its dealer network and then work its way up to the larger cities. It also claims to have introduced a host of differentiated products which have helped in brand building.IP aims to expand its distribution network further, and is focusing on installing tinting machines. However, it hasn’t been able to ramp-up the installation per year. In addition, some of the margin gains recorded over 6M21 might not be sustainable.

Indigo Paints (IP) aims to raise around US$165m in its India IPO. It is engaged in the business of manufacturing paints in India. It was the fifth largest company in the Indian decorative paint industry, in terms of revenue from operations in FY20 and was the fastest growing among the top five paint companies.Revenue from operations have grown at 41.9% CAGR over FY10-19 and 24.7% CAGR over FY18-20. Margins have been on an uptrend as well and hence, over FY18-20, gross profit grew at 36% CAGE, EBITDA at 87.8% and PATMI at 92.8%. The company has adopted a strategy of targeting smaller cities and rural areas to build its dealer network and then work its way up to the larger cities. It also claims to have introduced a host of differentiated products which have helped in brand building.IP aims to expand its distribution network further, and is focusing on installing tinting machines. However, it hasn’t been able to ramp-up the installation per year. In addition, some of the margin gains recorded over 6M21 might not be sustainable.

Indigo Paints IPO - Growing Fast but Future Growth Won’t Come as Easy

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Tata Consultancy Svcs / Technical Analysis

The IT services industry continues to benefit from secular tailwinds, and below we lay out what we believe is a compelling case to add exposure to Indian IT consulting stocks at current levels. In today’s report we highlight the following actionable names which display bullish price and RS trends: Tata Consultancy Services Limited (532540-IN), Infosys Limited (500209-IN), and Wipro Limited (507685-IN). Add exposure..

The IT services industry continues to benefit from secular tailwinds, and below we lay out what we believe is a compelling case to add exposure to Indian IT consulting stocks at current levels. In today’s report we highlight the following actionable names which display bullish price and RS trends: Tata Consultancy Services Limited (532540-IN), Infosys Limited (500209-IN), and Wipro Limited (507685-IN). Add exposure..

Indian IT Consulting Stocks Resuming Uptrends; Buy Tata Consultancy Svcs, Infosys, & Wipro

Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Thematic (Sector/Industry)

The key takeaways, from the recent reporting season, was that 1) management teams seem more upbeat about growth going forward, driven by accelerated adoption of cloud services and investments in technology solutions, which they believe could drive a multiyear growth story, 2) the significant majority of deal momentum is driven by smaller engagements (apart from maybe Infosys), and 3) companies are reinstating salary increases given confidence on the growth outlook and significant margin recovery following steep discretionary cost cuts in reaction to the COVID-19 pandemic. The sector has significantly outperformed the local index over the past 3-months, delivering over 30% local currency share price return, on average. These companies are, however, currently trading at peak valuation multiples, based on sell-side estimates which, in most cases, are already well ahead of management guidance.Given the strong share price performance and peak valuation multiple levels, based on arguably elevated earnings, I am turning bearish on the sector despite the strong medium-term growth outlook. The numbers which are currently baked-in leave truly little room for disappointment at a time when we are going into a seasonally weaker quarter, impacted by employee furloughs and possible margin headwinds. These remain extremely high-quality companies which will benefit from accelerated technology investments in the wake of the COVID-19 pandemic, but I would wait for a better entry point.<div class="content-highlight">
 Please also see previous notes on the subject:
<a href="https://www.smartkarma.com/insights/smartkarma-webinar-indian-it-services-picks-and-pans" target="_blank" data-smartkarma-citation="insights:42241" rel="noopener">Smartkarma Webinar | Indian IT Services: Picks and Pans</a> 
<a href="https://www.smartkarma.com/insights/indian-it-services-covid-19-revenue-impact-troughed-recovery-already-priced-in" target="_blank" data-smartkarma-citation="insights:41387" rel="noopener">Indian IT Services: COVID-19 Revenue Impact Troughed, Recovery Already Priced In?</a> 
<a href="https://www.smartkarma.com/insights/wipro-net-cash-equal-to-24-of-its-market-cap-deep-value-or-a-value-trap" target="_blank" data-smartkarma-citation="insights:39663" rel="noopener">Wipro: Net Cash Equal to 24% of Its Market Cap, Deep Value or a Value Trap?</a> 
<a href="https://www.smartkarma.com/insights/tata-consultancy-services-premium-at-excessive-levels-pricing-in-overly-optimistic-relative-growth" target="_blank" data-smartkarma-citation="insights:38750" rel="noopener">Tata Consultancy Services: Premium at Excessive Levels, Pricing in Overly Optimistic Relative Growth</a> 
<a href="https://www.smartkarma.com/insights/hcl-technologies-doubts-over-organic-growth-eroding-returns-drives-undeserved-discount-rating" target="_blank" data-smartkarma-citation="insights:38545" rel="noopener">HCL Technologies: Doubts over Organic Growth, Eroding Returns, Drives Undeserved Discount Rating</a> 
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The key takeaways, from the recent reporting season, was that 1) management teams seem more upbeat about growth going forward, driven by accelerated adoption of cloud services and investments in technology solutions, which they believe could drive a multiyear growth story, 2) the significant majority of deal momentum is driven by smaller engagements (apart from maybe Infosys), and 3) companies are reinstating salary increases given confidence on the growth outlook and significant margin recovery following steep discretionary cost cuts in reaction to the COVID-19 pandemic. The sector has significantly outperformed the local index over the past 3-months, delivering over 30% local currency share price return, on average. These companies are, however, currently trading at peak valuation multiples, based on sell-side estimates which, in most cases, are already well ahead of management guidance.Given the strong share price performance and peak valuation multiple levels, based on arguably elevated earnings, I am turning bearish on the sector despite the strong medium-term growth outlook. The numbers which are currently baked-in leave truly little room for disappointment at a time when we are going into a seasonally weaker quarter, impacted by employee furloughs and possible margin headwinds. These remain extremely high-quality companies which will benefit from accelerated technology investments in the wake of the COVID-19 pandemic, but I would wait for a better entry point.
 Please also see previous notes on the subject:
Smartkarma Webinar | Indian IT Services: Picks and Pans 
Indian IT Services: COVID-19 Revenue Impact Troughed, Recovery Already Priced In? 
Wipro: Net Cash Equal to 24% of Its Market Cap, Deep Value or a Value Trap? 
Tata Consultancy Services: Premium at Excessive Levels, Pricing in Overly Optimistic Relative Growth 
HCL Technologies: Doubts over Organic Growth, Eroding Returns, Drives Undeserved Discount Rating 


Indian IT Services: Valuation and Earnings Levels Suggest We Are Nearing the Point-Of-Peak-Optimism

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

On the 4th of October, <a href="https://www.smartkarma.com/entities/tata-consultancy-svcs-ltd" target="_blank" data-smartkarma-citation="entities:18708:1" rel="noopener">Tata Consultancy Svcs (TCS IN)</a> made an <a href="https://www.tcs.com/content/dam/tcs/pdf/discover-tcs/investor-relations/corporate-actions/2020-21/proposal-buyback-equity-shares-company-october-2020.pdf" target="_blank" rel="noopener">announcement</a> to the Exchange to the effect that its Board would on the 7th of October consider a buyback. 
On the 7th, the Board duly considered the buyback and afterwards announced that it had approved a proposal to buy back up to 53,333,333 shares (five crore thirty three lakh thirty three thousand three hundred and thirty three shares only) for an aggregative amount of INR 16,000 crore or INR 160 billion (US$2.18bn), which is 1.42% of shares out. 
It looks small, but there have been two previous buybacks which were worth looking at when they came around. They were 1.99% and 2.85% and were done at similar premia. The structure of these buybacks was different than the structure of the <a href="https://www.smartkarma.com/entities/wipro-ltd" target="_blank" data-smartkarma-citation="entities:15360:1" rel="noopener">Wipro Ltd (WPRO IN)</a> buybacks discussed in <a href="https://www.smartkarma.com/insights/how-indian-buyback-offers-work-the-wipro-example" target="_blank" data-smartkarma-citation="insights:44215" rel="noopener">How Indian Buyback Offers Work - The Wipro Example</a>. 
That first insight is worth a read to know how they work. 
This one is potentially a much more interesting event.

On the 4th of October, Tata Consultancy Svcs (TCS IN) made an announcement to the Exchange to the effect that its Board would on the 7th of October consider a buyback. 
On the 7th, the Board duly considered the buyback and afterwards announced that it had approved a proposal to buy back up to 53,333,333 shares (five crore thirty three lakh thirty three thousand three hundred and thirty three shares only) for an aggregative amount of INR 16,000 crore or INR 160 billion (US$2.18bn), which is 1.42% of shares out. 
It looks small, but there have been two previous buybacks which were worth looking at when they came around. They were 1.99% and 2.85% and were done at similar premia. The structure of these buybacks was different than the structure of the Wipro Ltd (WPRO IN) buybacks discussed in How Indian Buyback Offers Work - The Wipro Example. 
That first insight is worth a read to know how they work. 
This one is potentially a much more interesting event. 

Tata Consultancy Share Buyback Offer - The Numbers Are Interesting

India

Infosys Limited provides IT consulting and software services, including e-business, program management and supply chain solutions. The Group's services include application development, product co-development, and system implementation and system engineering. Infosys targets businesses specializing in the insurance, banking, telecommunication and manufacturing sectors.

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Infosys Ltd Sp Adr (INFY US)

Apollo Hospital Placement/QIP - Well Flagged Deal with Well Planned Use of Proceeds

Apollo Hospitals Enterprise plans to raise around US$140m via a QIP which was launched last night. I have covered various aspects of the deal in my...

Sumeet Singh

Indigo Paints IPO - Growing Fast but Future Growth Won’t Come as Easy

Indigo Paints aims to raise around US$165m in its India IPO. Revenue grew at 41.9% CAGR over FY10-19. Over FY18-20, Revenue grew at 24.7% CAGR,...

Sumeet Singh

Indian IT Consulting Stocks Resuming Uptrends; Buy Tata Consultancy Svcs, Infosys, & Wipro

In today’s report we highlight the following actionable names which display bullish price and RS trends: Tata Consultancy Services Limited, Infosys...

Vermilion Research

Indian IT Services: Valuation and Earnings Levels Suggest We Are Nearing the Point-Of-Peak-Optimism

Given the strong share price performance and peak valuation multiple levels, based on arguably elevated earnings, I am turning bearish on the...

Wium Malan, CFA

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Apollo Hospital Placement/​​QIP - Well Flagged Deal with Well Planned Use of Proceeds

Apollo Hospitals Enterprise plans to raise around US$140m via a QIP which was launched last night. I have covered various aspects of the deal in my...

Sumeet Singh

Indigo Paints IPO - Growing Fast but Future Growth Won’t Come as Easy

Indigo Paints aims to raise around US$165m in its India IPO. Revenue grew at 41.9% CAGR over FY10-19. Over FY18-20, Revenue grew at 24.7% CAGR,...

Sumeet Singh

Indian IT Consulting Stocks Resuming Uptrends; Buy Tata Consultancy Svcs, Infosys, & Wipro

In today’s report we highlight the following actionable names which display bullish price and RS trends: Tata Consultancy Services Limited, Infosys...

Vermilion Research

Indian IT Services: Valuation and Earnings Levels Suggest We Are Nearing the Point-Of-Peak-Optimism

Given the strong share price performance and peak valuation multiple levels, based on arguably elevated earnings, I am turning bearish on the...

Wium Malan, CFA

Tata Consultancy Share Buyback Offer - The Numbers Are Interesting

The TCS buyback offer is interesting in a way that the Wipro buyback is not. There are many more good trades to do around this situation.

Travis Lundy

Apollo Hospital Placement/QIP - Well Flagged Deal with Well Planned Use of Proceeds