Indian Accounting Research Analyst, Trudence Capital Advisors

Nitin Mangal

Indian Accounting Research Analyst

Thematic (Sector/Industry)

The year 2020 was a wild swing for the capital markets; it was off in a flash but still won't be forgotten by many. It was a year marked by unpredictability, right from Covid-19 to the crashing of indices. It was a challenge to many, but still the year has uncovered several new, differentiated potholes for many companies on corporate governance, accounting engineering. We have provided critical views on few of the companies on these two aspects. 
Going forward we will continue to provide critical views on the companies especially in our core area of corporate governance and forensic research. Beginning 2021, we will be covering the same through our product 'AGE Analysis' (Accounting. Governance. Earnings). We also look to enhance our reach in macro coverage, along with event driven insights.

The year 2020 was a wild swing for the capital markets; it was off in a flash but still won't be forgotten by many. It was a year marked by unpredictability, right from Covid-19 to the crashing of indices. It was a challenge to many, but still the year has uncovered several new, differentiated potholes for many companies on corporate governance, accounting engineering. We have provided critical views on few of the companies on these two aspects. 
Going forward we will continue to provide critical views on the companies especially in our core area of corporate governance and forensic research. Beginning 2021, we will be covering the same through our product 'AGE Analysis' (Accounting. Governance. Earnings). We also look to enhance our reach in macro coverage, along with event driven insights.

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

On 31 May I wrote about the proposal from the <a href="https://www.smartkarma.com/entities/adani-power-ltd" target="_blank" data-smartkarma-citation="entities:247:1" rel="noopener">Adani Power Ltd (ADANI IN)</a> promoter group to take the Company private through a Delisting Offer, a measure that obtained shareholder approval, as expected, on 25 June.While the eventually unsuccessful delisting offer of <a href="https://www.smartkarma.com/entities/vedanta-ltd" target="_blank" data-smartkarma-citation="entities:514:1" rel="noopener">Vedanta Ltd (VEDL IN)</a> and the eventually successful delisting offer for <a href="https://www.smartkarma.com/entities/hexaware-technologies-ltd" target="_blank" data-smartkarma-citation="entities:7882:1" rel="noopener">Hexaware Technologies (HEXW IN)</a> took the spotlight, Adani Power effectively languished for months. I had, interestingly enough, been talking about this to people who would listen. It has been something of a no-brainer to me because...<ol style="list-style-type: lower-alpha;">
<li>As it was trading in the INR 35-36 area in July and August, then again in September to early November, it was trading VERY cheap on an option basis. With such a very high debt/EBITDA ratio, buying the company at a premium to then-current EV/EBITDA multiple required a large jump in price. </li>
<li>There was no premium being applied despite improvements in the positioning of IPPs in India. </li>
</ol>When <a href="https://www.adanipower.com/newsroom/media-releases/Adani-Power-announces-Q2-FY21-results" target="_blank" rel="noopener">Q2 Results</a> came out on 5 November (<a href="https://www1.nseindia.com/corporate/ADANIPOWER_06112020195030_Intimation06112020.pdf" target="_blank" rel="noopener">Q2 presentation 6 Nov</a>) much better than the market expected (revenues +29%yoy, consolidated EBITDA +126%yoy, PBT up 18-fold), the stock got a pop.  But it did not last long. The one-off nature of the regulatory (Appellate Tribunal Of Electricity (APTEL)) approvals of Adani Power Maharashtra Ltd’s claims for coal shortfall compensation and carrying costs meant the company's Q2 profits were less than exciting on their own, despite signs of stronger Average Plant Load Factor levels ahead. On a media call early Thursday 6 November, the MD and CEO of Adani Transmission and the MD of Thermal Power at Adani Power said that the delisting process "is in process", saying they have approval from six lenders, and other lenders would also like to approve. But the stock did not move much.<h3>Then Things Changed</h3>Things have been somewhat quiet since then, but this past week, things got exciting. The company won a short-term contract to supply 6,100MW of electricity to the Punjab Govt.<div class="content-highlight">And....   Adani Power shares rose 54.8% this past week (in four trading days), in fabulous volumes.</div><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/176/665/original/Screenshot%202020-12-06%20at%2012.33.14%20PM.png?1607229262" class="editor-image img-responsive" data-smartkarma-image-id="176665"></figure></section><div class="content-highlight">
That leaves us with questions about the Delisting Offer Reverse Book Build to come.
And given the shareholder structure, the questions are understandable. 
</div>More discussion below.

On 31 May I wrote about the proposal from the Adani Power Ltd (ADANI IN) promoter group to take the Company private through a Delisting Offer, a measure that obtained shareholder approval, as expected, on 25 June.While the eventually unsuccessful delisting offer of Vedanta Ltd (VEDL IN) and the eventually successful delisting offer for Hexaware Technologies (HEXW IN) took the spotlight, Adani Power effectively languished for months. I had, interestingly enough, been talking about this to people who would listen. It has been something of a no-brainer to me because...
As it was trading in the INR 35-36 area in July and August, then again in September to early November, it was trading VERY cheap on an option basis. With such a very high debt/EBITDA ratio, buying the company at a premium to then-current EV/EBITDA multiple required a large jump in price. 
There was no premium being applied despite improvements in the positioning of IPPs in India. 
When Q2 Results came out on 5 November (Q2 presentation 6 Nov) much better than the market expected (revenues +29%yoy, consolidated EBITDA +126%yoy, PBT up 18-fold), the stock got a pop.  But it did not last long. The one-off nature of the regulatory (Appellate Tribunal Of Electricity (APTEL)) approvals of Adani Power Maharashtra Ltd’s claims for coal shortfall compensation and carrying costs meant the company's Q2 profits were less than exciting on their own, despite signs of stronger Average Plant Load Factor levels ahead. On a media call early Thursday 6 November, the MD and CEO of Adani Transmission and the MD of Thermal Power at Adani Power said that the delisting process "is in process", saying they have approval from six lenders, and other lenders would also like to approve. But the stock did not move much.Then Things ChangedThings have been somewhat quiet since then, but this past week, things got exciting. The company won a short-term contract to supply 6,100MW of electricity to the Punjab Govt.And....   Adani Power shares rose 54.8% this past week (in four trading days), in fabulous volumes.
That leaves us with questions about the Delisting Offer Reverse Book Build to come.
And given the shareholder structure, the questions are understandable. 
More discussion below.

ADANI POWER On the Move - Fundamentals Better and Delisting Offer Imminent But... There Are RISKS...

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

MSCI Emerging Markets Index / Technical Analysis

China (MSCI China) continues to offer many attractive setups and accounts for the vast majority of today’s recommendations. Taiwan (TAIEX) continues to be worthy of an overweight within the EM universe, while Brazil (Bovespa) and India (SENSEX) display improving price and RS trends -

China (MSCI China) continues to offer many attractive setups and accounts for the vast majority of today’s recommendations. Taiwan (TAIEX) continues to be worthy of an overweight within the EM universe, while Brazil (Bovespa) and India (SENSEX) display improving price and RS trends -

US Dollar Weakness Remains A Tailwind For EM

<a href="https://www.smartkarma.com/entities/vedanta-ltd" target="_blank" data-smartkarma-citation="entities:514:1" rel="noopener">Vedanta Ltd (VEDL IN)</a>'s delisting has been one of the hot topics for the last couple of weeks given it approached the timeline for the reverse book building issue that was approved by its shareholders. However, the delisting event has deemed to have been failed according to the announcement filed by the company on October 10th. As a result, the stock had crashed by over 20% on Monday.This insight does not engage in the technicalities of the delisting, but rather we try to dwell on the increasing visibility of the shareholder activism in the country, one of the factors opposing the delisting in the first place.

Vedanta Ltd (VEDL IN)'s delisting has been one of the hot topics for the last couple of weeks given it approached the timeline for the reverse book building issue that was approved by its shareholders. However, the delisting event has deemed to have been failed according to the announcement filed by the company on October 10th. As a result, the stock had crashed by over 20% on Monday.This insight does not engage in the technicalities of the delisting, but rather we try to dwell on the increasing visibility of the shareholder activism in the country, one of the factors opposing the delisting in the first place.

Vedanta Delisting Failure: The Upsurge of Shareholder Activism in India?

Forensic Accounting

<a href="https://www.smartkarma.com/entities/jsw-energy-ltd" target="_blank" data-smartkarma-citation="entities:14949:1" rel="noopener">JSW Energy Ltd (JSW IN)</a> in its annual general meeting faced heat from the minority shareholders, who had turned against transactions with promoter group company. Also, the Executive Director and Chief Financial Officer Mr. Jyoti Kumar Agarwal has resigned from the company on August 24, 2020.

JSW Energy Ltd (JSW IN) in its annual general meeting faced heat from the minority shareholders, who had turned against transactions with promoter group company. Also, the Executive Director and Chief Financial Officer Mr. Jyoti Kumar Agarwal has resigned from the company on August 24, 2020.

India

JSW Energy Limited generates power by using Corex gas and coal. The Company, through its subsidiary, also operates lignite thermal power plant in Rajasthan and has a capacity to produce 3,140 megawatts of electricity. JSW is also present in the power trading and transmission businesses.

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JSW Energy Ltd (JSW IN)

Review for the Year 2020

We review our entire cloud of insights covered in 2020, and give a snapshot of how did they pay out in the market, including future prospects.

Nitin Mangal

ADANI POWER On the Move - Fundamentals Better and Delisting Offer Imminent But... There Are RISKS...

The ADANI POWER Delisting Offer process is set to end soon. The CFO suggested the RBB might be announced by year-end. The big price jump last week...

Travis Lundy

US Dollar Weakness Remains A Tailwind For EM

China accounts for the vast majority of today’s recommendations. Taiwan (TAIEX) continues to be worthy of an overweight within EM, while Brazil...

Vermilion Research

Vedanta Delisting Failure: The Upsurge of Shareholder Activism in India?

Vedanta's delisting failure has led us to believe that shareholder activism, which was once muted, has taken an emerging path in India. We also...

Nitin Mangal

JSW Energy: Fresh Trouble

JSW Energy Ltd (JSW IN) in its annual general meeting faced heat from the minority shareholders, who had turned against transactions with promoter...

Nitin Mangal

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