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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

The Indian mutual fund industry has assets of almost INR 7.93 trillion (US$106.3bn) across Multi cap, Large Cap, Large and Mid Cap, Mid Cap, Small Cap and Flexi Cap equity schemes. Equity schemes classified as large cap need to have at least 80% of their assets invested in large cap stocks, large and mid cap schemes need to have at least 35% of their assets in large cap stocks and at least 35% in mid cap stocks, mid cap funds need to hold at least 65% of their assets in mid cap stocks, and small cap funds need to hold at least 65% of their assets in small cap stocks. Flexi cap funds can invest across market caps.The Association of Mutual Funds in India (AMFI) publishes the list of the stocks in each market cap segment in January and July each year and mutual funds have one month to rebalance their portfolios to adhere to the new categorization.We are just past halfway through the review period for the second half of 2021. Using data to the close on 4 October, at the next recategorization in January 2022, we see 10 stocks moving from the mid cap segment to the large cap segment, 11 stocks moving from the large cap segment to the mid cap segment , 11 stocks are expected to move from the small cap segment to the mid cap segment, with16 stocks moving from the mid cap to the small cap segment. <a href="https://www.smartkarma.com/entities/zomato-media-pvt" target="_blank" data-smartkarma-citation="entities:28820:1" rel="noopener">Zomato (ZOMATO IN)</a> will be a part of the large cap universe, while 4 other newly listed stocks will be a part of the mid cap universe.Historically, stocks moving to a higher market cap category have outperformed stocks that migrate to a lower market cap category over the back half of the review period. In some cases, the outperformance continues past the announcement of the changes as well. This can be attributed to fund managers realigning their portfolios to meet the new categorization. This provides opportunities to pre-position for the move and unwind post the announcement of the reclassification.

The Indian mutual fund industry has assets of almost INR 7.93 trillion (US$106.3bn) across Multi cap, Large Cap, Large and Mid Cap, Mid Cap, Small Cap and Flexi Cap equity schemes. Equity schemes classified as large cap need to have at least 80% of their assets invested in large cap stocks, large and mid cap schemes need to have at least 35% of their assets in large cap stocks and at least 35% in mid cap stocks, mid cap funds need to hold at least 65% of their assets in mid cap stocks, and small cap funds need to hold at least 65% of their assets in small cap stocks. Flexi cap funds can invest across market caps.The Association of Mutual Funds in India (AMFI) publishes the list of the stocks in each market cap segment in January and July each year and mutual funds have one month to rebalance their portfolios to adhere to the new categorization.We are just past halfway through the review period for the second half of 2021. Using data to the close on 4 October, at the next recategorization in January 2022, we see 10 stocks moving from the mid cap segment to the large cap segment, 11 stocks moving from the large cap segment to the mid cap segment , 11 stocks are expected to move from the small cap segment to the mid cap segment, with16 stocks moving from the mid cap to the small cap segment. Zomato (ZOMATO IN) will be a part of the large cap universe, while 4 other newly listed stocks will be a part of the mid cap universe.Historically, stocks moving to a higher market cap category have outperformed stocks that migrate to a lower market cap category over the back half of the review period. In some cases, the outperformance continues past the announcement of the changes as well. This can be attributed to fund managers realigning their portfolios to meet the new categorization. This provides opportunities to pre-position for the move and unwind post the announcement of the reclassification.

India: Stock Reclassification & Active Portfolio Management (Dec 2021)

APAC IPOs & Placements, Aequitas Research

Clarence Chu

APAC 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

Puranik Builders Limited / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/puranik-builders-limited" target="_blank" data-smartkarma-citation="entities:34464:1" rel="noopener">Puranik Builders Limited (1607816D IN)</a> is looking to raise about US$150m in its upcoming India IPO. The deal will be run by Elara Capital and Yes Securities. This is a refiling after its previous two filings, in 2018 and 2019, lapsed. Puranik Builders is a residential real estate developer for the Mumbai Metropolitan Region (MMR) and Pune Metropolitan Region (PMR). According to Cushman &amp; Wakefield (C&amp;W), the firm is among the leading residential real estate developers in the growing Thane region of MMR, based on projects being marketed and corresponding units sold. As of Jul 2021, it had completed 35 projects amounting to 554,197 sqm of Developable Area across MMR and PMR.

Puranik Builders Limited (1607816D IN) is looking to raise about US$150m in its upcoming India IPO. The deal will be run by Elara Capital and Yes Securities. This is a refiling after its previous two filings, in 2018 and 2019, lapsed. Puranik Builders is a residential real estate developer for the Mumbai Metropolitan Region (MMR) and Pune Metropolitan Region (PMR). According to Cushman &amp; Wakefield (C&amp;W), the firm is among the leading residential real estate developers in the growing Thane region of MMR, based on projects being marketed and corresponding units sold. As of Jul 2021, it had completed 35 projects amounting to 554,197 sqm of Developable Area across MMR and PMR.  

Puranik Builders Pre-IPO Tearsheet (Refiled)

<a href="https://www.smartkarma.com/entities/vedant-fashions" target="_blank" data-smartkarma-citation="entities:34260:1" rel="noopener">Vedant Fashions (123D IN)</a> is looking to raise up to US$340m in its upcoming India IPO. The deal will be run by Axis Capital, Edelweiss, ICICI Securities, IIFL Securities, and Kotak. Vedant Fashions is a fashionwear company targeting the Indian wedding and celebration wear segment. According to CRISIL, it was the largest company in India in the men’s Indian wedding and celebration wear segment in terms of revenue, EBITDA and PAT for FY20. It operates an asset-light business where sales are generated primarily through its franchisee-owned exclusive brand outlets (EBOs). As of Jun 2021, it had a retail footprint of 1.1m sq ft covering 525 EBOs across 207 cities and towns in India, and 12 EBOs internationally, across the United States, Canada and the UAE.

Vedant Fashions (123D IN) is looking to raise up to US$340m in its upcoming India IPO. The deal will be run by Axis Capital, Edelweiss, ICICI Securities, IIFL Securities, and Kotak. Vedant Fashions is a fashionwear company targeting the Indian wedding and celebration wear segment. According to CRISIL, it was the largest company in India in the men’s Indian wedding and celebration wear segment in terms of revenue, EBITDA and PAT for FY20. It operates an asset-light business where sales are generated primarily through its franchisee-owned exclusive brand outlets (EBOs). As of Jun 2021, it had a retail footprint of 1.1m sq ft covering 525 EBOs across 207 cities and towns in India, and 12 EBOs internationally, across the United States, Canada and the UAE.

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

FSN E-Commerce Ventures (Nykaa) / Equity Capital Markets

FSN E-commerce (Nykaa) aims to raise around US$550m, via selling a mix of primary and secondary shares in its Indian IPO. Nykaa is a lifestyle focussed e-commerce platform and consumer brand offering a portfolio of beauty, personal care and fashion products, including its own branded products. As per RedSeer, it was the largest Specialty Beauty and Personal Care Platform in India in terms of value of products sold in FY21.As of March 21, it had 43.7m cumulative downloads across all its mobile applications. Its offline channel comprises 73 physical stores across 38 cities in India. It reported a gross merchandise value (GMV) of INR40,459.8m (around US$550m) in FY21. As of Mar 21, it offered approximately 2.0m SKUs from 3,826 national and international brands across its business verticals. Nykaa’s GMV, revenue and gross profit have more than doubled over FY19-21, even though the company suffered from a drop in orders due to COVID-19 in 4Q20 and 1Q21. Overall, GMV grew by 62.7% in FY20 and 50.7% in FY21. Revenue growth has broadly kept pace with GMV growth while the company has managed to turn a profit in FY21. However, the growth for its largest segment, beauty and personal care, appears to have slowed down in FY21. While its fashion segment is operated as a marketplace and hence, won’t be a big driver of revenue growth till it scales.

FSN E-commerce (Nykaa) aims to raise around US$550m, via selling a mix of primary and secondary shares in its Indian IPO. Nykaa is a lifestyle focussed e-commerce platform and consumer brand offering a portfolio of beauty, personal care and fashion products, including its own branded products. As per RedSeer, it was the largest Specialty Beauty and Personal Care Platform in India in terms of value of products sold in FY21.As of March 21, it had 43.7m cumulative downloads across all its mobile applications. Its offline channel comprises 73 physical stores across 38 cities in India. It reported a gross merchandise value (GMV) of INR40,459.8m (around US$550m) in FY21. As of Mar 21, it offered approximately 2.0m SKUs from 3,826 national and international brands across its business verticals. Nykaa’s GMV, revenue and gross profit have more than doubled over FY19-21, even though the company suffered from a drop in orders due to COVID-19 in 4Q20 and 1Q21. Overall, GMV grew by 62.7% in FY20 and 50.7% in FY21. Revenue growth has broadly kept pace with GMV growth while the company has managed to turn a profit in FY21. However, the growth for its largest segment, beauty and personal care, appears to have slowed down in FY21. While its fashion segment is operated as a marketplace and hence, won’t be a big driver of revenue growth till it scales.

FSN E-Commerce (Nykaa) Pre-IPO - Mixed Bag - Fashion Growing, Beauty Slowing

Tamilnad Mercantile Bank Ltd / Equity Capital Markets

Tamilnad Mercantile Bank is looking to raise about US$137m in its upcoming India IPO. The deal will be run by Axis Capital, Motilal Oswal and SBI Capital.Tamilnad Mercantile Bank is one of the oldest private sector banks in India, offering banking and financial services to micro, small and medium enterprises (MSME), agricultural and retail customers (RAM). As of Jun 21, it had 509 branches, of which 106 were in rural areas, 247 in semi-urban, 80 in urban and 76 in metropolitan centres. Its overall consumer base is approximately 4.93m and 69.96% of its customers have been associated with the bank for a period of more than five years, contributing 67.02% of deposits and 57.56% of advances.

Tamilnad Mercantile Bank is looking to raise about US$137m in its upcoming India IPO. The deal will be run by Axis Capital, Motilal Oswal and SBI Capital.Tamilnad Mercantile Bank is one of the oldest private sector banks in India, offering banking and financial services to micro, small and medium enterprises (MSME), agricultural and retail customers (RAM). As of Jun 21, it had 509 branches, of which 106 were in rural areas, 247 in semi-urban, 80 in urban and 76 in metropolitan centres. Its overall consumer base is approximately 4.93m and 69.96% of its customers have been associated with the bank for a period of more than five years, contributing 67.02% of deposits and 57.56% of advances.

Tamilnad Mercantile Bank Pre-IPO Tearsheet

India

Zomato Limited is an online restaurant guide and food ordering platform. The Company offers platform connects customers, restaurant partners and delivery partners to search and discover restaurants, read and write customer generated reviews, order food delivery, book a table, and make payments while dining-out at restaurants. Zomato serves customers worldwide.

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Zomato (ZOMATO IN)

India: Stock Reclassification & Active Portfolio Management (Dec 2021)

Halfway through the review period, we take a look at stocks that could migrate across the large, mid and small cap segments. With over US$100bn of...

Brian Freitas

Puranik Builders Pre-IPO Tearsheet (Refiled)

Puranik Builders Limited (1607816D IN) is looking to raise about US$150m in its upcoming India IPO. The deal will be run by Elara Capital and Yes...

Clarence Chu

Vedant Fashions Pre-IPO Tearsheet

Vedant Fashions (123D IN) is looking to raise up to US$340m in its upcoming India IPO. The deal will be run by Axis Capital, Edelweiss, ICICI...

Clarence Chu

FSN E-Commerce (Nykaa) Pre-IPO - Mixed Bag - Fashion Growing, Beauty Slowing

FSN E-commerce (Nykaa) aims to raise around US$550m, via selling a mix of primary and secondary shares in its Indian IPO.

Sumeet Singh

Tamilnad Mercantile Bank Pre-IPO Tearsheet

Tamilnad Mercantile Bank is looking to raise about US$137m in its upcoming India IPO. The deal will be run by Axis Capital, Motilal Oswal and SBI...

Clarence Chu

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