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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>Media reports indicate that the <a href="https://www.smartkarma.com/entities/hdfc-bank-ltd-4b6b7a92-9087-468d-9dbe-ab169e77f014" target="_blank" data-smartkarma-citation="entities:558:1" rel="noopener">HDFC Bank (HDFCB IN)</a> merger with <a href="https://www.smartkarma.com/entities/housing-development-finance" target="_blank" data-smartkarma-citation="entities:252:1" rel="noopener">HDFC Limited (HDFC IN)</a> is expected to complete in 4-5 weeks.</li>
<li>There will be inclusions to the <a href="https://www.smartkarma.com/entities/nifty-index" target="_blank" data-smartkarma-citation="entities:23617:1" rel="noopener">NIFTY Index</a>, <a href="https://www.smartkarma.com/entities/nifty-next-50-index" target="_blank" data-smartkarma-citation="entities:36053:1" rel="noopener">Nifty Next 50 Index</a> and <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 </a>and capping changes to the <a href="https://www.smartkarma.com/entities/nifty-bank-index" target="_blank" data-smartkarma-citation="entities:26811:1" rel="noopener">Nifty Bank Index</a> apart from changes to global indices.</li>
<li>While the impact on the merging entities is not big, there will be fairly large flows on some stocks that are index inclusions or affected by capping changes.</li>
</ul>


Media reports indicate that the HDFC Bank (HDFCB IN) merger with HDFC Limited (HDFC IN) is expected to complete in 4-5 weeks.
There will be inclusions to the NIFTY Index, Nifty Next 50 Index and S&amp;P BSE SENSEX Index and capping changes to the Nifty Bank Index apart from changes to global indices.
While the impact on the merging entities is not big, there will be fairly large flows on some stocks that are index inclusions or affected by capping changes.


HDFC/​​​​​HDFC Bank Mega Merger Expected to Complete in a Few Weeks: Index Implications

External broker reports(aggregated public sources), Axis Direct

Axis Direct

External broker reports(aggregated public sources)

Axis Direct is the flagship brand under Axis Securities Limited, a subsidiary of Axis Bank in India. 

Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

Equity Bottom-Up

<ul><li>Novelis’s numbers stood largely on expected lines.</li><li>EBITDA/t has recovered from the trough of $376/t in Q3FY23 to $431/t in Q4FY23 (5% beat) in line with the earlier management commentary of EBITDA/t touching +$400/t in Q4FY23.</li><li>Revenue (small beat by 2%) grew by 5% QoQ (below 9% YoY on the strong base of the last year), led by a recovery in shipments to 936kt (up 3% QoQ).</li></ul>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.

Novelis’s numbers stood largely on expected lines.EBITDA/t has recovered from the trough of $376/t in Q3FY23 to $431/t in Q4FY23 (5% beat) in line with the earlier management commentary of EBITDA/t touching +$400/t in Q4FY23.Revenue (small beat by 2%) grew by 5% QoQ (below 9% YoY on the strong base of the last year), led by a recovery in shipments to 936kt (up 3% QoQ).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.

Hindalco Industries Ltd - Margin Recovery at Novelis on Expected Lines

Index Rebalance

<ul>
<li>The <a href="https://www.smartkarma.com/entities/bharat-22-etf" target="_blank" data-smartkarma-citation="entities:28307:1" rel="noopener">BHARAT 22 ETF (ICICIB22 IN)</a> will rebalance on 17 March while the <a href="https://www.smartkarma.com/entities/cpse-etf" target="_blank" data-smartkarma-citation="entities:28191:1" rel="noopener">CPSE ETF (CPSEBE IN)</a> and <a href="https://www.smartkarma.com/entities/nifty-bank-index" target="_blank" data-smartkarma-citation="entities:26811:1" rel="noopener">Nifty Bank Index (NSEBANK INDEX)</a> will rebalance on 29 March.</li>
<li>There are no constituent changes for the indices in March but there will be capping changes for the stocks and there is a reasonable impact on some stocks.</li>
<li>There are stocks that will have opposing flows on the two days, while there are some stocks that will have same way flows from passive trackers.</li>
</ul>


The BHARAT 22 ETF (ICICIB22 IN) will rebalance on 17 March while the CPSE ETF (CPSEBE IN) and Nifty Bank Index (NSEBANK INDEX) will rebalance on 29 March.
There are no constituent changes for the indices in March but there will be capping changes for the stocks and there is a reasonable impact on some stocks.
There are stocks that will have opposing flows on the two days, while there are some stocks that will have same way flows from passive trackers.


CPSE / BHARAT22 / CNXBANK Index Rebalance Preview: Capping Changes in March

<ul><li>Novelis margins to remain impacted for a few more quarters: As we have written in the 8th Feb note, destocking in the key can segment (60kt impact) led to lower shipments (down 2%/8% YoY/QoQ), which along with higher energy costs led to a dip in the Adj EBITDA/t to a six-year low at $376/t.</li><li>Recovery from the low margin will be gradual as the headwinds are expected to persist for a few more quarters.</li><li>Upstream Aluminium EBITDA/t (down 57% YoY) improved sequentially on the easing of energy prices.</li></ul>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.

Novelis margins to remain impacted for a few more quarters: As we have written in the 8th Feb note, destocking in the key can segment (60kt impact) led to lower shipments (down 2%/8% YoY/QoQ), which along with higher energy costs led to a dip in the Adj EBITDA/t to a six-year low at $376/t.Recovery from the low margin will be gradual as the headwinds are expected to persist for a few more quarters.Upstream Aluminium EBITDA/t (down 57% YoY) improved sequentially on the easing of energy prices.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.

Hindalco Industries Ltd - Indian Operations Improve QoQ; Novelis Remains a Drag

<ul><li>Macro factors hit margin: Post Covid, pent-up demand in the beverage cans is abating. This along with easing supply chain has led to channel destocking in the key can segment (60kt impact) of the company.</li><li>Lower shipments (down 2%/8% YoY/QoQ) along with higher energy costs led to a dip in the Adj EBITDA/t to a six-year low at $376/t.</li><li>Recovery from the low margin will be gradual as the headwinds are expected to persist for a few more quarters.</li></ul>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.

Macro factors hit margin: Post Covid, pent-up demand in the beverage cans is abating. This along with easing supply chain has led to channel destocking in the key can segment (60kt impact) of the company.Lower shipments (down 2%/8% YoY/QoQ) along with higher energy costs led to a dip in the Adj EBITDA/t to a six-year low at $376/t.Recovery from the low margin will be gradual as the headwinds are expected to persist for a few more quarters.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.

Hindalco Industries Ltd - Macro Drives Weak Q3 at Novelis; Near Term Outlook Muted

India

Hindalco Industries Limited is an Indian aluminium and copper manufacturing company, and a subsidiary of the Aditya Birla Group. It is a major producer of primary aluminium, flat-rolled products, extrusions, and foils, and also manufactures copper cathodes and continuous cast copper rods. The company is headquartered in Mumbai, Maharashtra, India, and was founded in 1958.

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Hindalco Industries (HNDL IN)

HDFC/HDFC Bank Mega Merger Expected to Complete in a Few Weeks: Index Implications

Media reports indicate that the HDFC Bank merger with HDFC Ltd is expected to complete in 4-5 weeks. There will be ad hoc inclusions to the...

Brian Freitas

Hindalco Industries Ltd - Margin Recovery at Novelis on Expected Lines

EBITDA/t has recovered from the trough of $376/t in Q3FY23 to $431/t in Q4FY23 (5% beat) in line with the earlier management commentary of EBITDA/t...

Axis Direct

CPSE / BHARAT22 / CNXBANK Index Rebalance Preview: Capping Changes in March

There will be capping changes on the Bharat22, CPSE and NIFTYBANK indices in March. There are stocks that have opposite flows while some have same...

Brian Freitas

Hindalco Industries Ltd - Indian Operations Improve QoQ; Novelis Remains a Drag

As we have written in the 8th Feb note, destocking in the key can segment (60kt impact) led to lower shipments (down 2%/8% YoY/QoQ

Axis Direct

Hindalco Industries Ltd - Macro Drives Weak Q3 at Novelis; Near Term Outlook Muted

Post Covid, pent-up demand in the beverage cans is abating. This along with easing supply chain has led to channel destocking in the key can...

Axis Direct

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

HDFC/​​​​​HDFC Bank Mega Merger Expected to Complete in a Few Weeks: Index Implications

Media reports indicate that the HDFC Bank merger with HDFC Ltd is expected to complete in 4-5 weeks. There will be ad hoc inclusions to the...

Brian Freitas

Hindalco Industries Ltd - Margin Recovery at Novelis on Expected Lines

EBITDA/t has recovered from the trough of $376/t in Q3FY23 to $431/t in Q4FY23 (5% beat) in line with the earlier management commentary of EBITDA/t...

Axis Direct

CPSE / BHARAT22 / CNXBANK Index Rebalance Preview: Capping Changes in March

There will be capping changes on the Bharat22, CPSE and NIFTYBANK indices in March. There are stocks that have opposite flows while some have same...

Brian Freitas

Hindalco Industries Ltd - Indian Operations Improve QoQ; Novelis Remains a Drag

As we have written in the 8th Feb note, destocking in the key can segment (60kt impact) led to lower shipments (down 2%/8% YoY/QoQ

Axis Direct

Hindalco Industries Ltd - Macro Drives Weak Q3 at Novelis; Near Term Outlook Muted

Post Covid, pent-up demand in the beverage cans is abating. This along with easing supply chain has led to channel destocking in the key can...

Axis Direct

HDFC/HDFC Bank Mega Merger Expected to Complete in a Few Weeks: Index Implications