In today’s briefing:
- Banking on Success: A Long-Short Strategy for Nifty Banks
- Inventurus Knowledge Solutions IPO: Superior Margins and Growth Warrants a Premium
- KPIT Tech: Steady Q2FY25 Although Near-Term Outlook Is Uncertain
- EQD / NSE NIFTY50 Vol Update / Markdown in Short-Dated IVs Overdone Given Upcoming FOMC Event Risk
Banking on Success: A Long-Short Strategy for Nifty Banks
- A long-short strategy with HDFC Bank, ICICI Bank, and State Bank Of India outperformed the NSE Nifty Bank Index by 2.1% from 21 November to present.
- The trade is supported by strong fundamentals, institutional and systemic aspects, and favorable technical factors.
- The strategy is market-neutral with zero correlation to the Nifty Bank Index, enhanced by the yield pick-up from shorting the futures in a contango market.
Inventurus Knowledge Solutions IPO: Superior Margins and Growth Warrants a Premium
- Inventurus Knowledge Solutions (IKSINCD IN) is looking to raise up to US$295m in its upcoming India IPO.
- It is a technology-enabled healthcare solutions provider, assisting physician enterprises in US, Canada and Australia, with a core focus in the US.
- We have looked at the company’s past performance in our earlier notes. In this note, we discuss the industry growth, conduct a quick peer comparison and discuss the company’s valuation.
KPIT Tech: Steady Q2FY25 Although Near-Term Outlook Is Uncertain
- KPIT Technologies (“KPIT”) reported a decent Q2FY25 with revenue growth of 20.1% YoY in constant currency (CC) terms. Growth came largely from Asia – Japan, Korea and India.
- EBITDA margin has been steady at 20.5%+ and grew 27.7% YoY. This is despite the salary increments and one-time ESOP costs, which impacted the margin adversely by about 270bp.
- KPIT has guided that FY25 revenue growth could be at the lower end of the guidance, however, profit margin is projected to be on the higher side led by offshoring.
EQD / NSE NIFTY50 Vol Update / Markdown in Short-Dated IVs Overdone Given Upcoming FOMC Event Risk
- IVs guided lower as Inflation data furthers expectations of easier monetary policy. Weekly IVs lower by -3.3 vols, Monthly IVs lower by -1.6 vols & Quarterly IVs remained unaffected.
- IV mark-down seems overdone given the heavy upcoming event-risk calendar. Weekly contracts capture the 18.12.2024 FOMC meeting.
- Strategic Implications: (1) Consider Long Gamma positioning given upcoming event risk & IV markdown (2) Retain Short Vega allocations while Monthly IVs still above 10.5%.
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