Forensic Analyst, Trudence Capital Advisors

Nitin Mangal

Forensic 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

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<li>
<a href="https://www.smartkarma.com/entities/navi-technologies" target="_blank" data-smartkarma-citation="entities:35783:1" rel="noopener">Navi (NAVI IN)</a> is a tech-driven financial products and services company in India, with an end-to-end digital system, focusing on three key offerings i.e. lending, insurance and asset management.</li>
<li>Company has taken a major write offs in 9MF22 which may have glorified the NPA ratios. Moreover, there is an element of opaqueness on the equity issuance transaction in F20.</li>
<li>Other key forensic takeaways include high cash balances in current account, quality of goodwill, etc.</li>
</ul>



Navi (NAVI IN) is a tech-driven financial products and services company in India, with an end-to-end digital system, focusing on three key offerings i.e. lending, insurance and asset management.
Company has taken a major write offs in 9MF22 which may have glorified the NPA ratios. Moreover, there is an element of opaqueness on the equity issuance transaction in F20.
Other key forensic takeaways include high cash balances in current account, quality of goodwill, etc.


APAC IPOs & Placements, Aequitas Research

Ethan Aw

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.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/fusion-micro-finance-ltd" target="_blank" data-smartkarma-citation="entities:36450:1" rel="noopener">Fusion Micro Finance Ltd (1053199D IN)</a> raised approximately US$134m in its India IPO.  </li>
<li>Fusion Micro Finance (FMF) is a non-banking financial company - microfinance institution (NBFC-MFI) that provides financial services to unserved and underserved women in rural and peri-rural areas across India.</li>
<li>We have looked at various aspects of the deal in our previous notes. In this note, we talk about the demand for the deal and the trading dynamics.</li>
</ul>



Fusion Micro Finance Ltd (1053199D IN) raised approximately US$134m in its India IPO.  
Fusion Micro Finance (FMF) is a non-banking financial company - microfinance institution (NBFC-MFI) that provides financial services to unserved and underserved women in rural and peri-rural areas across India.
We have looked at various aspects of the deal in our previous notes. In this note, we talk about the demand for the deal and the trading dynamics.


Fusion Micro Finance IPO Trading - Weak Demand Seems Justified

External broker reports(aggregated public sources), Edelweiss Broking Limited

Edelweiss

External broker reports(aggregated public sources)

Equity Bottom-Up

<p>Improving growth and asset quality outlook</p><div class="content-highlight"><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></div>

Improving growth and asset quality outlookContent is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

CreditAccess Grameen Ltd. Rs Q1FY22 Result Update

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<div><p>The Indian mutual fund industry has assets of almost INR 6.6 trillion 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.</p></div><div>
<p>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.</p>
<p>At the next recategorization in July 2021, we see 7 stocks moving from the mid cap segment to the large cap segment with an equal number of stocks moving the other way, and 13 stocks are expected to move from the small cap segment to the mid cap segment with the 16 stocks moving from the mid cap to the small cap segment. There are 3 recent listings that will enter the mid cap segment with over 18 joining the small cap segment.</p>
<p>Historically, the stocks migrating upward to a higher market cap segment have outperformed stocks that migrate to a lower market cap segment over the 1 month and 2 month period post the publishing of the AMFI list. 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.</p>
</div>

The Indian mutual fund industry has assets of almost INR 6.6 trillion 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.
At the next recategorization in July 2021, we see 7 stocks moving from the mid cap segment to the large cap segment with an equal number of stocks moving the other way, and 13 stocks are expected to move from the small cap segment to the mid cap segment with the 16 stocks moving from the mid cap to the small cap segment. There are 3 recent listings that will enter the mid cap segment with over 18 joining the small cap segment.
Historically, the stocks migrating upward to a higher market cap segment have outperformed stocks that migrate to a lower market cap segment over the 1 month and 2 month period post the publishing of the AMFI list. 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

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<p><a href="https://www.smartkarma.com/entities/ngern-tid-lor" target="_blank" data-smartkarma-citation="entities:31103:1" rel="noopener">Ngern Tid Lor (NTL TB)</a>/TIDLOR is the leading auto-for-cash loan provider in Thailand with a 16% market share as measured by the outstanding vehicle title loans in 2019, according to Oliver Wyman. TIDLOR is an affiliate of <a href="https://www.smartkarma.com/entities/bank-of-ayudhya-pcl" target="_blank" data-smartkarma-citation="entities:136:1" rel="noopener">Bank Of Ayudhya (BAY TB)</a> (Krungsri), which is a strategic member of <a href="https://www.smartkarma.com/entities/mitsubishi-ufj-financial-group" target="_blank" data-smartkarma-citation="entities:218:1" rel="noopener">Mitsubishi UFJ Financial (MUFG) (8306 JP)</a>. </p><p>At the IPO price range of THB34.00-36.50, TIDLOR will raise total gross proceeds of THB30.9-33.1 billion ($1.0-1.1 billion). The offer comprises a primary/secondary spilt of 23:77. A total of 32 domestic and foreign cornerstone investors will subscribe for a total of 626.0 million shares or 69.0% of the offer shares. The foreign cornerstone investors include FIL Investment Management, JP Morgan Asset Management, Lion Global Investors and Neuberger Berman. </p><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/ngern-tid-lor-ipo-initiation-finance-on-four-wheels" target="_blank" data-smartkarma-citation="insights:50448" rel="noopener">Ngern Tid Lor IPO Initiation: Finance on Four Wheels</a>, we noted that the timing of the IPO is not ideal as a new COVID-19 outbreak has swept through Thailand. Nevertheless, for investors willing to ride the current market uncertainty, we believe that TIDLOR is well placed to capture the long-term opportunity of Thailand’s vehicle title loan market. Our valuation analysis suggests that TIDLOR is fairly valued at the proposed IPO price range.     </p></div>

Ngern Tid Lor (NTL TB)/TIDLOR is the leading auto-for-cash loan provider in Thailand with a 16% market share as measured by the outstanding vehicle title loans in 2019, according to Oliver Wyman. TIDLOR is an affiliate of Bank Of Ayudhya (BAY TB) (Krungsri), which is a strategic member of Mitsubishi UFJ Financial (MUFG) (8306 JP). At the IPO price range of THB34.00-36.50, TIDLOR will raise total gross proceeds of THB30.9-33.1 billion ($1.0-1.1 billion). The offer comprises a primary/secondary spilt of 23:77. A total of 32 domestic and foreign cornerstone investors will subscribe for a total of 626.0 million shares or 69.0% of the offer shares. The foreign cornerstone investors include FIL Investment Management, JP Morgan Asset Management, Lion Global Investors and Neuberger Berman. In Ngern Tid Lor IPO Initiation: Finance on Four Wheels, we noted that the timing of the IPO is not ideal as a new COVID-19 outbreak has swept through Thailand. Nevertheless, for investors willing to ride the current market uncertainty, we believe that TIDLOR is well placed to capture the long-term opportunity of Thailand’s vehicle title loan market. Our valuation analysis suggests that TIDLOR is fairly valued at the proposed IPO price range.     

India

CreditAccess Grameen is a leading Indian microfinance institution that provides micro-loans to women customers, predominantly in rural areas across India. The company offers a diverse range of financial products including income generation loans, family welfare loans, home improvement loans, and emergency loans. It is headquartered in Bengaluru, India, and was founded in 1999.

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CreditAccess Grameen (CREDAG IN)

Navi Technologies- Forensic Analysis

Other key forensic takeaways include major write offs, opaqueness with respect to equity issuance in F20, high cash balances in current account,...

Nitin Mangal

Fusion Micro Finance IPO Trading - Weak Demand Seems Justified

Fusion Micro Finance Ltd (1053199D IN) raised approximately US$134m in its India IPO. In this note, we talk about the demand for the deal and the...

Ethan Aw

CreditAccess Grameen Ltd. Rs Q1FY22 Result Update

Improving growth and asset quality outlook

Edelweiss

India: Stock Reclassification & Active Portfolio Management

There are a lot of segment changes expected in July when AMFI recategorizes stocks and mutual funds start to rebalance their portfolios. We...

Brian Freitas

Ngern Tid Lor IPO: Valuation Insights

At the IPO price range of THB34.00-36.50, TIDLOR will raise total gross proceeds of $1.0-1.1 billion. Our valuation analysis suggests that TIDLOR...

Arun George

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