Indian Accounting Research Analyst, Trudence Capital Advisors

Nitin Mangal

Indian Accounting Research Analyst

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 Capital Markets

<a href="https://www.smartkarma.com/entities/go-air-limited" target="_blank" data-smartkarma-citation="entities:33416:1" rel="noopener">Go Air Limited (GO IN)</a>  is set to launch an IPO soon, becoming the 3rd active airlines company to get listed on the bourses after <a href="https://www.smartkarma.com/entities/interglobe-aviation-ltd" target="_blank" data-smartkarma-citation="entities:24877:1" rel="noopener">InterGlobe Aviation Ltd (INDIGO IN)</a> and <a href="https://www.smartkarma.com/entities/spicejet-ltd" target="_blank" data-smartkarma-citation="entities:5266:1" rel="noopener">Spicejet Ltd (SJET IN)</a>. The company, promoted by the Wadia Group was launched in 2005 and currently controls 10.8% of the market share.
Operated as a ULCC (ultra low cost airlines), Go Air has been one of the faster growing airlines domestically in the last two years, clocking an available seat kilometer (ASK) and revenue CAGR growth of 30.2% and 25.2% from F18-F20. Moreover, Go Air has also been one of the better cost-efficient airlines in the sector, factored by lesser maintenance and better fuel efficiency.
However, given these metrics, there are numerous setbacks identified in the DRHP, primarily pertaining to accounting changes and balance sheet health, which we try to uncover in this insight.

Go Air Limited (GO IN)  is set to launch an IPO soon, becoming the 3rd active airlines company to get listed on the bourses after InterGlobe Aviation Ltd (INDIGO IN) and Spicejet Ltd (SJET IN). The company, promoted by the Wadia Group was launched in 2005 and currently controls 10.8% of the market share.
Operated as a ULCC (ultra low cost airlines), Go Air has been one of the faster growing airlines domestically in the last two years, clocking an available seat kilometer (ASK) and revenue CAGR growth of 30.2% and 25.2% from F18-F20. Moreover, Go Air has also been one of the better cost-efficient airlines in the sector, factored by lesser maintenance and better fuel efficiency.
However, given these metrics, there are numerous setbacks identified in the DRHP, primarily pertaining to accounting changes and balance sheet health, which we try to uncover in this insight.

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.

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

Consumer Analyst / Channel Surveillance Specialist, Trudence Capital Advisors

Pranav Bhavsar

Consumer Analyst / Channel Surveillance Specialist

ASA Capital Management

ASA Capital Management is a boutique Research and Investment Advisory firm focusing on primary research in India. ASA provides bespoke research services to Institutional Clients with a focus on due diligence backed with primary research, Field Trips & Channel Checks.

Equity Bottom-Up

InterGlobe Aviation Ltd / Equity Bottom-Up

With the best business balance sheet and newer initiatives, <a href="https://www.smartkarma.com/entities/interglobe-aviation-ltd" target="_blank" data-smartkarma-citation="entities:24877:1" rel="noopener">Interglobe Aviation (INDIGO IN)</a> is likely to emerge stronger in the post pandemic world.
At current prices, INDIGO trades at 8.5x EV/EBIDTA estimates. We argue that multiple structural drivers are in place that could pose as an upside risk to consensus estimates and hence any weakness due to regulatory developments would be an attractive entry point to own this market leader.

With the best business balance sheet and newer initiatives, Interglobe Aviation (INDIGO IN) is likely to emerge stronger in the post pandemic world.
At current prices, INDIGO trades at 8.5x EV/EBIDTA estimates. We argue that multiple structural drivers are in place that could pose as an upside risk to consensus estimates and hence any weakness due to regulatory developments would be an attractive entry point to own this market leader. 

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<ul>
<li>IndiGo's (India’s largest domestic budget airline) parent company <a href="https://www.smartkarma.com/entities/interglobe-aviation-ltd" target="_blank" data-smartkarma-citation="entities:24877:1" rel="noopener">Interglobe Aviation (INDIGO IN)</a> on Monday (10th August 2020) said the company will raise up to INR 40 billion ($534m) through a qualified institutional placement, subject to shareholder and necessary regulatory approvals.</li>
<li>Airlines were among the hardest hit industries from COVID-19, and with no end in sight to this crisis, IndiGo who operates a fleet of over 272 airplanes have decided to layoff 10% of its staff in July 2020. Layoff was merely not enough to weather the storm and the company is now looking for a qualified institutional placement to reinforce the weakening balance sheet.</li>
</ul>


IndiGo's (India’s largest domestic budget airline) parent company Interglobe Aviation (INDIGO IN) on Monday (10th August 2020) said the company will raise up to INR 40 billion ($534m) through a qualified institutional placement, subject to shareholder and necessary regulatory approvals.
Airlines were among the hardest hit industries from COVID-19, and with no end in sight to this crisis, IndiGo who operates a fleet of over 272 airplanes have decided to layoff 10% of its staff in July 2020. Layoff was merely not enough to weather the storm and the company is now looking for a qualified institutional placement to reinforce the weakening balance sheet.


InterGlobe Aviation (IndiGo) To Raise up to $534m Via a Qualified Institutional Placement

Founder and Strategist, Entext Economics & Strategy

Sean Maher

Founder and Strategist

Entext Economics & Strategy

Entext provides institutional investors with distinctive, actionable asset allocation and thematic research, which typically challenges the market consensus. Our clients range from credit, equity and multi-asset hedge and pension funds to family offices and sovereign funds. 
 
We focus on identifying key inflection points in macro data and relative asset performance amid the 'groupthink'  and confirmation bias that characterizes most investment bank analysis.

Macro Driven Investment Insight

Thematic (Sector/Industry)

The Indian underweight stance has paid off this quarter - the consensus consumption boom thesis rarely asks how it can be funded, given the country’s structurally weak terms of trade, chronic twin deficits and  persistent INR depreciation pressure. One key lesson of recent years for EM investors from Brazil to Turkey is that you can’t have a sustained consumer boom without the means to pay for it, via hard currency trade earnings and/or capital inflows driving FDI and domestic credit growth.  If China’s core macro problem is a structural demand deficit driven by its 40% plus savings rate, India’s is a structural savings deficit that caps credit growth and investment without external funding, which then leaves it vulnerable to periodic ‘margin calls’ via the INR and bond yields. While the recent (but fast reversing) oil slump has delayed a reckoning, that vulnerability will intensify now that fiscal expansion is underway globally.

The Indian underweight stance has paid off this quarter - the consensus consumption boom thesis rarely asks how it can be funded, given the country’s structurally weak terms of trade, chronic twin deficits and  persistent INR depreciation pressure. One key lesson of recent years for EM investors from Brazil to Turkey is that you can’t have a sustained consumer boom without the means to pay for it, via hard currency trade earnings and/or capital inflows driving FDI and domestic credit growth.  If China’s core macro problem is a structural demand deficit driven by its 40% plus savings rate, India’s is a structural savings deficit that caps credit growth and investment without external funding, which then leaves it vulnerable to periodic ‘margin calls’ via the INR and bond yields. While the recent (but fast reversing) oil slump has delayed a reckoning, that vulnerability will intensify now that fiscal expansion is underway globally. 

Can India Fund A Sustained Consumption Boom?

India

InterGlobe Aviation Limited provides passenger airlines services. The Company offers ground management, air transportation, terminal maintenance, and other services. InterGlobe Aviation conducts its business globally.

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InterGlobe Aviation Ltd (INDIGO IN)

Go Air IPO- In Search Of Smooth Landing

Given the strong recent growth, there are numerous setbacks identified in the DRHP, primarily pertaining to accounting changes and balance sheet...

Nitin Mangal

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

INDIGO IN | Time to Get Aboard

Market Leader that is likely to emerge even stronger post-pandemic. Any material weakness due to regulatory issues offers an attractive opportunity...

Pranav Bhavsar

InterGlobe Aviation (IndiGo) To Raise up to $534m Via a Qualified Institutional Placement

IndiGo's (India’s largest domestic budget airline) parent company Interglobe Aviation (INDIGO IN) on Monday (10th August 2020) said the company...

Oshadhi Kumarasiri

Can India Fund A Sustained Consumption Boom?

The Indian underweight stance has paid off this quarter - the consensus consumption boom thesis rarely asks how it can be funded, given the...

Sean Maher

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