Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<ul>
<li>On Monday, Bloomberg reported that <a href="https://www.smartkarma.com/entities/larsen-toubro-ltd" target="_blank" data-smartkarma-citation="entities:2499:1" rel="noopener">Larsen &amp; Toubro (LT IN)</a> was planning a merger between its public-listed subsidiaries <a href="https://www.smartkarma.com/entities/mindtree-ltd" target="_blank" data-smartkarma-citation="entities:7297:1" rel="noopener">Mindtree Ltd (MTCL IN)</a> and <a href="https://www.smartkarma.com/entities/larsen-toubro-infotech-ltd" target="_blank" data-smartkarma-citation="entities:22778:1" rel="noopener">Larsen &amp; Toubro Infotech (LTI IN)</a>. </li>
<li>The companies have responded by saying that the news reports of a merger between MINDTREE and LTI are "speculative in nature".</li>
<li>Below is a closer look at the likelihood of this Deal and the valuations of the two companies involved in this event.</li>
</ul>


On Monday, Bloomberg reported that Larsen &amp; Toubro (LT IN) was planning a merger between its public-listed subsidiaries Mindtree Ltd (MTCL IN) and Larsen &amp; Toubro Infotech (LTI IN). 
The companies have responded by saying that the news reports of a merger between MINDTREE and LTI are "speculative in nature".
Below is a closer look at the likelihood of this Deal and the valuations of the two companies involved in this event.


Mindtree-LTI: A Potential US$20bn+ Indian Tech Merger; Mindtree Could Outperform LTI

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

Shanghai Stock Exchange Composite Index / Technical Analysis

While there are always exceptions at the individual stock level, MSCI Emerging Markets (EEM-US) and Japan (TOPIX, TOPIX Small) have been some of the weaker areas to invest throughout 2021. We now see early signs of positive change and we recommend adding exposure to emerging markets and Japan.

While there are always exceptions at the individual stock level, MSCI Emerging Markets (EEM-US) and Japan (TOPIX, TOPIX Small) have been some of the weaker areas to invest throughout 2021. We now see early signs of positive change and we recommend adding exposure to emerging markets and Japan.

Buying Opportunities Within Emerging Markets and Japan; US Dollar Failing At 93.50

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

<div>The <a href="https://www.smartkarma.com/entities/s-p-bse-sensex-index" target="_blank" data-smartkarma-citation="entities:31494:1" rel="noopener">S&amp;P BSE SENSEX Index (SENSEX INDEX)</a> is the flagship index of the Bombay Stock Exchange (BSE). The index has 30 stocks and is a free float weighted market cap index. The next rebalance will be effective after the close of trading on 18 June.</div><div>
The June review uses the market cap and turnover data from 1 November to 30 April to determine the stocks to be included and excluded from the index, and the announcement of the changes is made 4 weeks before the rebalance effective date.
We see <a href="https://www.smartkarma.com/entities/oil-natural-gas-corp-ltd" target="_blank" data-smartkarma-citation="entities:3456:1" rel="noopener">Oil &amp; Natural Gas Corp (ONGC IN)</a> as a high probability deletion, while <a href="https://www.smartkarma.com/entities/wipro-ltd" target="_blank" data-smartkarma-citation="entities:15360:1" rel="noopener">Wipro Ltd (WPRO IN)</a> holds the edge over <a href="https://www.smartkarma.com/entities/tata-steel-ltd" target="_blank" data-smartkarma-citation="entities:20934:1" rel="noopener">Tata Steel Ltd (TATA IN)</a> as an index inclusion.
There will be between 3-6 days of average delivery volume to trade from passive funds on the stocks that are included into and deleted from the index.
</div>

The S&amp;P BSE SENSEX Index (SENSEX INDEX) is the flagship index of the Bombay Stock Exchange (BSE). The index has 30 stocks and is a free float weighted market cap index. The next rebalance will be effective after the close of trading on 18 June.
The June review uses the market cap and turnover data from 1 November to 30 April to determine the stocks to be included and excluded from the index, and the announcement of the changes is made 4 weeks before the rebalance effective date.
We see Oil &amp; Natural Gas Corp (ONGC IN) as a high probability deletion, while Wipro Ltd (WPRO IN) holds the edge over Tata Steel Ltd (TATA IN) as an index inclusion.
There will be between 3-6 days of average delivery volume to trade from passive funds on the stocks that are included into and deleted from the index.


Sensex June21 Index Rebalance Preview: Index Committee Has a Decision to Make

The <a href="https://www.smartkarma.com/entities/s-p-bse-sensex-index" target="_blank" data-smartkarma-citation="entities:31494:1" rel="noopener">S&amp;P BSE SENSEX Index (SENSEX INDEX)</a> is the flagship index of the Bombay Stock Exchange (BSE). The index has 30 stocks and is a free float weighted market cap index. The next rebalance will be effective after the close of trading on 18 June.The June review uses the market cap and turnover data from 1 November to 30 April to determine the stocks to be included and excluded from the index, and the announcement of the changes is done 4 weeks before the rebalance effective date.At the current time, we see <a href="https://www.smartkarma.com/entities/wipro-ltd" target="_blank" data-smartkarma-citation="entities:15360:1" rel="noopener">Wipro Ltd (WPRO IN)</a> being included in the index and <a href="https://www.smartkarma.com/entities/oil-natural-gas-corp-ltd" target="_blank" data-smartkarma-citation="entities:3456:1" rel="noopener">Oil &amp; Natural Gas Corp (ONGC IN)</a> being deleted.<a href="https://www.smartkarma.com/entities/tata-steel-ltd" target="_blank" data-smartkarma-citation="entities:20934:1" rel="noopener">Tata Steel Ltd (TATA IN)</a> could be included in the index at the expense of <a href="https://www.smartkarma.com/entities/wipro-ltd" target="_blank" data-smartkarma-citation="entities:15360:1" rel="noopener">Wipro Ltd (WPRO IN)</a> if it jumps one rank - it has around two and a half months to do that, though each passing day will require a bigger outperformance to make that possible.

The S&amp;P BSE SENSEX Index (SENSEX INDEX) is the flagship index of the Bombay Stock Exchange (BSE). The index has 30 stocks and is a free float weighted market cap index. The next rebalance will be effective after the close of trading on 18 June.The June review uses the market cap and turnover data from 1 November to 30 April to determine the stocks to be included and excluded from the index, and the announcement of the changes is done 4 weeks before the rebalance effective date.At the current time, we see Wipro Ltd (WPRO IN) being included in the index and Oil &amp; Natural Gas Corp (ONGC IN) being deleted.Tata Steel Ltd (TATA IN) could be included in the index at the expense of Wipro Ltd (WPRO IN) if it jumps one rank - it has around two and a half months to do that, though each passing day will require a bigger outperformance to make that possible.

Sensex June21 Index Rebalance Preview: Deletion Almost Certain; Addition a Wild Card for Now

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

Happiest Minds Technologies / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/happiest-minds-technologies" target="_blank" data-smartkarma-citation="entities:29128:1" rel="noopener">Happiest Minds Technologies (HAPPY IN)</a> (HM) is an information technology services company providing end-to-end solutions in the digital space. Its offerings include digital transformation, product engineering, infrastructure management and security services to its clients. It aims to raise around US$100m in its India listing.HM was started by Ashok Soota, who earlier worked with Wipro Limited as Vice Chairman and Mindtree Limited as Chairman and CEO. He was one of the co-founders of Mindtree.HM’s revenue has grown at 23% CAGR over FY18-20 and the company has managed to turn profitable owing to improving employee utilization. In addition, the industry outlook remains robust with IT spending on HM’s chosen areas of focus expected to grow at 20%+ CAGR.At the same time, the company’s average revenue per customer has been growing faster than its overall revenue. This is because the number of customers has been declining. Even if one looks at its largest customers, there are no clear signs of growth picking up. Furthermore, the company’s acquisition track record hasn’t been all that great and the founder has already pledged a substantial part of his shareholding.

Happiest Minds Technologies (HAPPY IN) (HM) is an information technology services company providing end-to-end solutions in the digital space. Its offerings include digital transformation, product engineering, infrastructure management and security services to its clients. It aims to raise around US$100m in its India listing.HM was started by Ashok Soota, who earlier worked with Wipro Limited as Vice Chairman and Mindtree Limited as Chairman and CEO. He was one of the co-founders of Mindtree.HM’s revenue has grown at 23% CAGR over FY18-20 and the company has managed to turn profitable owing to improving employee utilization. In addition, the industry outlook remains robust with IT spending on HM’s chosen areas of focus expected to grow at 20%+ CAGR.At the same time, the company’s average revenue per customer has been growing faster than its overall revenue. This is because the number of customers has been declining. Even if one looks at its largest customers, there are no clear signs of growth picking up. Furthermore, the company’s acquisition track record hasn’t been all that great and the founder has already pledged a substantial part of his shareholding.

Happiest Minds Pre-IPO - Decent Growth, Reputed Founder but Less than Reassuring Metrics

India

LTIMindtree Limited provides information technology services and solutions. The Company offers analytics and information management, enterprise integration, applications management, cloud computing, testing, and consulting services, as well as geographical information and manufacturing execution systems. LTIMindtree serves customers worldwide.

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LTIMindtree (LTIM IN)

Mindtree-LTI: A Potential US$20bn+ Indian Tech Merger; Mindtree Could Outperform LTI

Indian Tech Companies MINDTREE and LTI could announce a merger as early as next week and our analysis shows MINDTREE could outperform LTI in the...

Janaghan Jeyakumar, CFA

Buying Opportunities Within Emerging Markets and Japan; US Dollar Failing At 93.50

MSCI Emerging Markets (EEM-US) and Japan (TOPIX, TOPIX Small) have been some of the weaker areas to invest throughout 2021. We now see early signs...

Vermilion Research

Sensex June21 Index Rebalance Preview: Index Committee Has a Decision to Make

ONGC is a high probability deletion from the Sensex at the June review. The index committee needs to decide whether to include Wipro or Tata Steel....

Brian Freitas

Sensex June21 Index Rebalance Preview: Deletion Almost Certain; Addition a Wild Card for Now

ONGC is an almost certain deletion at the Sensex review in June. The inclusion at the current time is Wipro, but Tata Steel could be included if it...

Brian Freitas

Happiest Minds Pre-IPO - Decent Growth, Reputed Founder but Less than Reassuring Metrics

Happiest Minds Technologies (HAPPY IN) (HM) is an information technology services company providing end-to-end solutions in the digital space. Its...

Sumeet Singh

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