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

PB Fintech (PBF), India’s largest online platform for insurance and lending products, aims to raise up to US$800m via selling a mix of primary and secondary shares in its India IPO. The company is backed by a strong set of investors including Info Edge, Tencent, Temasek, Tiger Global and Softbank.The company operates two platforms: Policybazaar operates in India’s online insurance product and service industry; and Paisabazaar platform operates in India’s online credit industry. As per Frost &amp; Sullivan, the company is a leader in the online sphere in both segments. Despite Paisabazaar having taken a hit due to COVID-19, the company has managed to grow its revenue by 80% over FY19-21. In addition, it has been able to rein in expenses as well leading to an improvement in margins. Although, it was still making losses in FY21.In this note, we will talk about the positive aspects of the deal.

PB Fintech (PBF), India’s largest online platform for insurance and lending products, aims to raise up to US$800m via selling a mix of primary and secondary shares in its India IPO. The company is backed by a strong set of investors including Info Edge, Tencent, Temasek, Tiger Global and Softbank.The company operates two platforms: Policybazaar operates in India’s online insurance product and service industry; and Paisabazaar platform operates in India’s online credit industry. As per Frost &amp; Sullivan, the company is a leader in the online sphere in both segments. Despite Paisabazaar having taken a hit due to COVID-19, the company has managed to grow its revenue by 80% over FY19-21. In addition, it has been able to rein in expenses as well leading to an improvement in margins. Although, it was still making losses in FY21.In this note, we will talk about the positive aspects of the deal.

PB Fintech (Policybazaar) Pre-IPO - The Positives - Fast Growth

Aditya Birla Sun Life AMC / Equity Capital Markets

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Aditya Birla Sun Life Asset Management Company’s (ABSL) shareholders raised around US$369m via reducing their stake in the company’s Indian IPO. 
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ABSL is the largest non-bank affiliated asset management company (AMC) in India by quarterly average assets under management (QAAUM) and the fourth largest AMC in India. according to CRISIL. ABSL managed total AUM of INR2.9tn across mutual funds, portfolio management services, offshore and real estate offerings, as of Jun 21.
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We have covered various aspects of the deal in our previous notes, <a href="https://www.smartkarma.com/insights/aditya-birla-sun-life-amc-pre-ipo-strong-profit-growth-but-it-s-losing-market-share" target="_blank" rel="noopener">Aditya Birla Sun Life AMC Pre-IPO - Strong profit growth but it’s losing market share</a> and <a href="https://www.smartkarma.com/insights/aditya-birla-sun-life-amc-ipo-at-a-slight-discount-but-there-s-no-compelling-reason-to-buy" target="_blank" rel="noopener">Aditya Birla Sun Life AMC IPO - At a Slight Discount but There’s No Compelling Reason to Buy</a>.
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In this note, we will talk about the deal dynamics.
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Aditya Birla Sun Life Asset Management Company’s (ABSL) shareholders raised around US$369m via reducing their stake in the company’s Indian IPO. 


ABSL is the largest non-bank affiliated asset management company (AMC) in India by quarterly average assets under management (QAAUM) and the fourth largest AMC in India. according to CRISIL. ABSL managed total AUM of INR2.9tn across mutual funds, portfolio management services, offshore and real estate offerings, as of Jun 21.


We have covered various aspects of the deal in our previous notes, Aditya Birla Sun Life AMC Pre-IPO - Strong profit growth but it’s losing market share and Aditya Birla Sun Life AMC IPO - At a Slight Discount but There’s No Compelling Reason to Buy.


In this note, we will talk about the deal dynamics.


Aditya Birla Sun Life AMC IPO Trading - Tepid Demand

Aditya Birla Sun Life Asset Management Company’s (ABSL) shareholders aim to raise around US$369m via reducing their stake in the company’s Indian IPO. ABSL is the largest non-bank affiliated asset management company (AMC) in India by quarterly average assets under management (QAAUM) and the fourth largest AMC in India. according to CRISIL.ABSL managed total AUM of INR2.9tn across mutual funds, portfolio management services, offshore and real estate offerings, as of Jun 21.ABSL enjoys a strong brand name in the country. However, unlike other AMC’s it lacks a strong parent, i.e. a bank for it to piggyback on its network. Therefore, the company has lagged its larger peers in terms of equity AUM exposure, which flows down to it having lower profitability as well.We have covered various aspects of the deal in our previous note, <a href="https://www.smartkarma.com/insights/aditya-birla-sun-life-amc-pre-ipo-strong-profit-growth-but-it-s-losing-market-share" target="_blank" rel="noopener">Aditya Birla Sun Life AMC Pre-IPO - Strong profit growth but it’s losing market share</a>.In this note, we will talk about valuations.

Aditya Birla Sun Life Asset Management Company’s (ABSL) shareholders aim to raise around US$369m via reducing their stake in the company’s Indian IPO. ABSL is the largest non-bank affiliated asset management company (AMC) in India by quarterly average assets under management (QAAUM) and the fourth largest AMC in India. according to CRISIL.ABSL managed total AUM of INR2.9tn across mutual funds, portfolio management services, offshore and real estate offerings, as of Jun 21.ABSL enjoys a strong brand name in the country. However, unlike other AMC’s it lacks a strong parent, i.e. a bank for it to piggyback on its network. Therefore, the company has lagged its larger peers in terms of equity AUM exposure, which flows down to it having lower profitability as well.We have covered various aspects of the deal in our previous note, Aditya Birla Sun Life AMC Pre-IPO - Strong profit growth but it’s losing market share.In this note, we will talk about valuations.  

Aditya Birla Sun Life AMC IPO - At a Slight Discount but There’s No Compelling Reason to Buy

Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Thematic (Sector/Industry)

<ul>
<li>We screen 7 Indian banks for their core profitability and their credit quality credentials, in order to identify banks that are good value and have potential to deliver higher returns going forward</li>
<li>We use a number of metrics including pre-provision and post-provision profit, cost of risk and credit quality, as well as capital adequacy ratios</li>
<li>We expect credit quality to continue to worsen in the coming quarters, especially as the moratorium on new NPL classification began to normalise as from April; yet we believe that certain Indian banks are well positioned and have already taken action to counter the threat of higher delinquencies, through cost of risk charges and write-offs</li>
<li>We highlight <a href="https://www.smartkarma.com/entities/axis-bank-ltd" target="_blank" data-smartkarma-citation="entities:768:1" rel="noopener">Axis Bank Ltd (AXSB IN)</a> as a restructuring and earnings recovery story, and <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> for its high quality balance sheet and premium returns, which are not yet fully reflected in valuations; we also see <a href="https://www.smartkarma.com/entities/state-bank-of-india" target="_blank" data-smartkarma-citation="entities:160:1" rel="noopener">State Bank Of India (SBIN IN)</a> as an attractive value play, despite its lighter core capital ratio</li>
<li>We are cautious on <a href="https://www.smartkarma.com/entities/canara-bank" target="_blank" data-smartkarma-citation="entities:543:1" rel="noopener">Canara Bank (CBK IN)</a>, seeing it as a potential value trap; at first look, <a href="https://www.smartkarma.com/entities/bandhan-bank-ltd" target="_blank" data-smartkarma-citation="entities:26705:1" rel="noopener">Bandhan Bank Ltd (BANDHAN IN)</a> looks appealing on prospective PBV ratio to ROE and high pre-provision returns but we are wary of its high share of micro-finance and SME credit risk exposure in the light of rising NPA ratios</li>
<li>Risks to our view include, for our bullish calls, worse than expected credit quality resulting in higher cost of risk, higher than expected opex and weak revenue generation; for our bear calls, better than expected revenues with lower than expected opex and cost of risk leading to higher post-provision returns</li>
</ul>


We screen 7 Indian banks for their core profitability and their credit quality credentials, in order to identify banks that are good value and have potential to deliver higher returns going forward
We use a number of metrics including pre-provision and post-provision profit, cost of risk and credit quality, as well as capital adequacy ratios
We expect credit quality to continue to worsen in the coming quarters, especially as the moratorium on new NPL classification began to normalise as from April; yet we believe that certain Indian banks are well positioned and have already taken action to counter the threat of higher delinquencies, through cost of risk charges and write-offs
We highlight Axis Bank Ltd (AXSB IN) as a restructuring and earnings recovery story, and HDFC Bank (HDFCB IN) for its high quality balance sheet and premium returns, which are not yet fully reflected in valuations; we also see State Bank Of India (SBIN IN) as an attractive value play, despite its lighter core capital ratio
We are cautious on Canara Bank (CBK IN), seeing it as a potential value trap; at first look, Bandhan Bank Ltd (BANDHAN IN) looks appealing on prospective PBV ratio to ROE and high pre-provision returns but we are wary of its high share of micro-finance and SME credit risk exposure in the light of rising NPA ratios
Risks to our view include, for our bullish calls, worse than expected credit quality resulting in higher cost of risk, higher than expected opex and weak revenue generation; for our bear calls, better than expected revenues with lower than expected opex and cost of risk leading to higher post-provision returns


Indian Banks; Screening for Investment Ideas, Despite the Credit Quality Hurdles

Star Health and Allied Insurance (SHAI), the largest private health and retail health insurance company in India, plans to raise around US$1.0bn in its India IPO. It is backed by Westbridge and Rakesh Jhunjhuwala. Owing to the latter, it will draw a lot of retail interest. SHAI insured 20.5m people in FY21. SHAI primarily offers retail health insurance which accounted for 87.9% of its FY21 GWP. Individual agents accounted for 97% of its FY21 GWP. Its GWP has grown by 72.6% over FY19-21 on the back of 58.6% growth in agents and 62.5% growth in the number of policies. SHAI has consistently grown faster than the industry over the past few years resulting in a steady increase in its market share. With a gross written premium (GWP) of INR93.5bn in FY21, SHAI had a market share of 15.8% in the Indian health insurance market and 31.3% in the retail health insurance market. Along with growing fast, SHAI has also managed to remain profitable since FY16 with its claims ratio remaining below 67% in most years. Although, the company recorded a loss in FY21 on the back of higher claims due to COVID-19 and reinsurance related adjustments. In addition, as the second COVID-19 wave only peaked in 1Q22, FY22 will be impacted as well.

Star Health and Allied Insurance (SHAI), the largest private health and retail health insurance company in India, plans to raise around US$1.0bn in its India IPO. It is backed by Westbridge and Rakesh Jhunjhuwala. Owing to the latter, it will draw a lot of retail interest. SHAI insured 20.5m people in FY21. SHAI primarily offers retail health insurance which accounted for 87.9% of its FY21 GWP. Individual agents accounted for 97% of its FY21 GWP. Its GWP has grown by 72.6% over FY19-21 on the back of 58.6% growth in agents and 62.5% growth in the number of policies. SHAI has consistently grown faster than the industry over the past few years resulting in a steady increase in its market share. With a gross written premium (GWP) of INR93.5bn in FY21, SHAI had a market share of 15.8% in the Indian health insurance market and 31.3% in the retail health insurance market. Along with growing fast, SHAI has also managed to remain profitable since FY16 with its claims ratio remaining below 67% in most years. Although, the company recorded a loss in FY21 on the back of higher claims due to COVID-19 and reinsurance related adjustments. In addition, as the second COVID-19 wave only peaked in 1Q22, FY22 will be impacted as well.

Star Health Insurance Pre-IPO - Leading the Retail Healthcare Insurance Space

India

ICICI Bank Limited operates a network of banks located throughout India. The Group specializes in retail and corporate banking, in addition to Forex and treasury operations. ICICI Bank also provides a wide variety of investment banking, insurance and financial services to its clients.

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Icici Bank Ltd Spon Adr (IBN US)

PB Fintech (Policybazaar) Pre-IPO - The Positives - Fast Growth

PB Fintech (PBF), India’s largest online platform for insurance and lending products, aims to raise up to US$800m via selling a mix of primary and...

Sumeet Singh

Aditya Birla Sun Life AMC IPO Trading - Tepid Demand

Aditya Birla Sun Life Asset Management Company’s (ABSL) shareholders raised around US$369m via reducing their stake in the company’s Indian IPO.

Sumeet Singh

Aditya Birla Sun Life AMC IPO - At a Slight Discount but There’s No Compelling Reason to Buy

Aditya Birla Sun Life Asset Management Company’s (ABSL) shareholders aim to raise around US$369m via reducing their stake in the company’s Indian IPO.

Sumeet Singh

Indian Banks; Screening for Investment Ideas, Despite the Credit Quality Hurdles

Screening for ideas, we are positive on Axis Bank and HDFC Bank, and State Bank of India too; due to credit quality concerns, we are cautious on...

Victor Galliano

Star Health Insurance Pre-IPO - Leading the Retail Healthcare Insurance Space

Star Health and Allied Insurance (SHAI), the largest private health and retail health insurance company in India, plans to raise around US$1.0bn in...

Sumeet Singh

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