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

Aptus Value Housing Finance India / Equity Capital Markets

Aptus Value Housing Finance (AVHF) aims to raise around US$375m in its India IPO. The company is backed by a host of investors including WestBridge, Malabar Investments, Sequoia, Madison and Steadview CapitalAptus Value Housing Finance India Limited (AVHF) is a retail focussed housing finance company (HFC) primarily serving low and middle income self-employed customers in the rural and semi-urban markets in India. AVHF was one of the largest HFC’s in South India in terms of AUM, as of Mar 21. AVHF’s net interest income has grown by 38-55% pa over FY18-FY21, while its Pre-provision operating profit has done even better with 40-63% pa growth. Earnings growth has been driven by its rapid loan growth which has been between 28-58% pa over the past three years.Although loan growth has been slowing down and disbursements growth had already declined from 47% YoY in FY19 to just 2% YoY in FY21.In this note, we will look at the company’s past performance, run the deal through our ECM framework and talk about pricing

Aptus Value Housing Finance (AVHF) aims to raise around US$375m in its India IPO. The company is backed by a host of investors including WestBridge, Malabar Investments, Sequoia, Madison and Steadview CapitalAptus Value Housing Finance India Limited (AVHF) is a retail focussed housing finance company (HFC) primarily serving low and middle income self-employed customers in the rural and semi-urban markets in India. AVHF was one of the largest HFC’s in South India in terms of AUM, as of Mar 21. AVHF’s net interest income has grown by 38-55% pa over FY18-FY21, while its Pre-provision operating profit has done even better with 40-63% pa growth. Earnings growth has been driven by its rapid loan growth which has been between 28-58% pa over the past three years.Although loan growth has been slowing down and disbursements growth had already declined from 47% YoY in FY19 to just 2% YoY in FY21.In this note, we will look at the company’s past performance, run the deal through our ECM framework and talk about pricing

Aptus Value Housing Finance IPO - Valuation Is Too Rich, Especially with an Over-Capitalised Book

Specialist in Indian Banking and Economic Research

Hemindra Hazari

Pay obscene salaries to a favoured few, completely out of sync with the already inflated salary structure in the industry, silently watch as they bring the bank to near collapse – this was <a href="https://www.smartkarma.com/entities/yes-bank-ltd" target="_blank" data-smartkarma-citation="entities:767:1" rel="noopener">Yes Bank (YES IN)</a> ’s policy for senior management. It is not surprising that this was done under the earlier CEO, Rana Kapoor. The surprise is that the some of the grossly overpaid mismanagers were gracefully allowed to continue in their posts under the new owners, the <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>-led consortium, including prominent names in private financial capital. <a href="https://www.linkedin.com/in/agraashish/?originalSubdomain=in" target="_blank" rel="noopener">Ashish Agarwal</a> , the current Head-Wholesale Banking and the former Chief Risk Officer (CRO), who was also in charge of corporate credit appraisal, earned a salary (including staggered bonus) of nearly Rs 72 mn in FY2018, significantly higher than peers who were managing much larger balance sheets. Agarwal, who played a critical role in appraising and approving dodgy credit, has been allowed by the new board of  <a href="https://www.yesbank.in/about-us/our-team" target="_blank" rel="noopener">directors</a> to continue (like some of his senior colleagues) on a reduced remuneration. It is shocking that the new consortium of owners, which includes <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>, <a href="https://www.smartkarma.com/entities/kotak-mahindra-bank-ltd" target="_blank" data-smartkarma-citation="entities:126:1" rel="noopener">Kotak Mahindra Bank (KMB IN)</a>, <a href="https://www.smartkarma.com/entities/housing-development-finance-corporation" target="_blank" data-smartkarma-citation="entities:252:1" rel="noopener">HDFC Limited (HDFC IN), </a><a href="https://www.smartkarma.com/entities/icici-bank-ltd" target="_blank" data-smartkarma-citation="entities:547:1" rel="noopener">ICICI Bank Ltd (ICICIBC IN)</a><a href="https://www.smartkarma.com/entities/housing-development-finance-corporation" target="_blank" data-smartkarma-citation="entities:252:1" rel="noopener"> </a> and others, continues to employ an individual with such a track record. While Rana Kapoor, the erstwhile CEO, was the main culprit, extravagantly paid individuals like Ashish Agarwal made their own contributions to the downfall of the bank by failing to raise stringent objections, complain directly to the banking regulator or resign from the bank. The attractive financial package that such individuals were rewarded with by a servile Nominations and Remuneration Committee compromised professionalism, and an incompetent/complicit Credit and Risk Management Committees failed in its oversight responsibilities.  Supposedly, the free market rewards superior performance and punishes non-performance, but this role of the free market appears to have bypassed Yes Bank and its new board of directors.

Pay obscene salaries to a favoured few, completely out of sync with the already inflated salary structure in the industry, silently watch as they bring the bank to near collapse – this was Yes Bank (YES IN) ’s policy for senior management. It is not surprising that this was done under the earlier CEO, Rana Kapoor. The surprise is that the some of the grossly overpaid mismanagers were gracefully allowed to continue in their posts under the new owners, the State Bank Of India (SBIN IN)-led consortium, including prominent names in private financial capital. Ashish Agarwal , the current Head-Wholesale Banking and the former Chief Risk Officer (CRO), who was also in charge of corporate credit appraisal, earned a salary (including staggered bonus) of nearly Rs 72 mn in FY2018, significantly higher than peers who were managing much larger balance sheets. Agarwal, who played a critical role in appraising and approving dodgy credit, has been allowed by the new board of  directors to continue (like some of his senior colleagues) on a reduced remuneration. It is shocking that the new consortium of owners, which includes Axis Bank Ltd (AXSB IN), Kotak Mahindra Bank (KMB IN), HDFC Limited (HDFC IN), ICICI Bank Ltd (ICICIBC IN)  and others, continues to employ an individual with such a track record. While Rana Kapoor, the erstwhile CEO, was the main culprit, extravagantly paid individuals like Ashish Agarwal made their own contributions to the downfall of the bank by failing to raise stringent objections, complain directly to the banking regulator or resign from the bank. The attractive financial package that such individuals were rewarded with by a servile Nominations and Remuneration Committee compromised professionalism, and an incompetent/complicit Credit and Risk Management Committees failed in its oversight responsibilities.  Supposedly, the free market rewards superior performance and punishes non-performance, but this role of the free market appears to have bypassed Yes Bank and its new board of directors.

Yes Bank’s New Owners Keep Overpaid Mismanagers in Place

External broker reports(aggregated public sources), Axis Direct

Axis Direct

External broker reports(aggregated public sources)

Equity Bottom-Up

We maintain BUY on the stock with a revised target price of Rs 810 (SOTP basis core book at 2.6x FY23E and Rs 176 Subsidiary Value).<div class="content-highlight">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.</div>

We maintain BUY on the stock with a revised target price of Rs 810 (SOTP basis core book at 2.6x FY23E and Rs 176 Subsidiary Value).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.

ICICI Bank: Strong Operating Performance Continues

External broker reports(aggregated public sources), HDFC Securities

HDFC Securities

HSIE Results Daily Reliance Industries, ICICI Bank, ITC, Ambuja Cement, Mphasis, Persistent System, Indiamart, Federal Bank, Heidelbergcement India Reliance Industries: Our ADD rating on RIL with a price target of INR 2,280 /sh is premised on (1) recovery in the O2C businesses; (2) continued EBITDA growth in the digital business, driven by improvement in ARPU, subscriber addition, and new revenue streams; and (3) potential for further value unlocking in the digital and retail businesses. ICICI Bank ICICI Banks (ICICIBC) improving all-round performance over the past couple of years has been interrupted by the impact of the second wave in terms of asset quality during Q1FY22, a trend witnessed by all lenders.
<div class="content-highlight">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.</div>

HSIE Results Daily Reliance Industries, ICICI Bank, ITC, Ambuja Cement, Mphasis, Persistent System, Indiamart, Federal Bank, Heidelbergcement India Reliance Industries: Our ADD rating on RIL with a price target of INR 2,280 /sh is premised on (1) recovery in the O2C businesses; (2) continued EBITDA growth in the digital business, driven by improvement in ARPU, subscriber addition, and new revenue streams; and (3) potential for further value unlocking in the digital and retail businesses. ICICI Bank ICICI Banks (ICICIBC) improving all-round performance over the past couple of years has been interrupted by the impact of the second wave in terms of asset quality during Q1FY22, a trend witnessed by all lenders.
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.

HSIE Results Daily Reliance Industries, ICICI Bank, ITC, Ambuja Cement, Mphasis, Persistent System,

<a href="https://www.smartkarma.com/entities/icici-bank-ltd" target="_blank" data-smartkarma-citation="entities:547:1" rel="noopener">ICICI Bank Ltd (ICICIBC IN)</a> ’s 1QFY2022 results on July 24, 2021 highlight the need for shareholders to re-examine the bank’s retail asset strategy. ICICI Bank’s strategy was to focus on retail assets to compensate for the bulky poor-quality corporate assets that it had earlier emphasised. However, the broad economic slowdown even prior to the Covid-19 pandemic impacted all segments of the economy, and the pandemic dealt small and medium enterprises, and indeed the whole informal sector, a severe blow. A section of organised sector employees too lost their jobs or experienced pay cuts. All these developments affected retail assets of banks. Unlike <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> , which started shifting from retail assets, ICICI Bank surged ahead in retail lending even when retail asset profits declined in FY2021, and this strategy continued in 1QFY2022 despite a drastic fall in retail profits.Apparently the board of directors has taken a view that the bank has to continue to grow the overall balance sheet despite the weak economic conditions, and that, since corporate credit remains weak, the only other avenue is to grow retail assets. It is precisely this strategy that shareholders need to review and debate with the management. The past two years’ data from both ICICI Bank and HDFC Bank reveal that, on account of deteriorating retail asset quality, the contribution of retail profits before tax (PBT) to overall PBT is declining, and in 1QFY2022 it has fallen steeply. From ICICI Bank’s surge in retail assets in FY2021 and 1QFY2022, it appears that the bank believes that the past two years’ data are an anomaly, and that retail asset quality will bounce back.According to ICICI Bank, additions to gross NPAs are expected to be lower in 2QFY2022, and further improve in 2HFY2022. Given the state of the Indian economy, it may be more prudent for ICICI Bank to curtail its asset growth, de-emphasise retail loans and focus on treasury and select corporate credit to boost profitability.

ICICI Bank Ltd (ICICIBC IN) ’s 1QFY2022 results on July 24, 2021 highlight the need for shareholders to re-examine the bank’s retail asset strategy. ICICI Bank’s strategy was to focus on retail assets to compensate for the bulky poor-quality corporate assets that it had earlier emphasised. However, the broad economic slowdown even prior to the Covid-19 pandemic impacted all segments of the economy, and the pandemic dealt small and medium enterprises, and indeed the whole informal sector, a severe blow. A section of organised sector employees too lost their jobs or experienced pay cuts. All these developments affected retail assets of banks. Unlike HDFC Bank (HDFCB IN) , which started shifting from retail assets, ICICI Bank surged ahead in retail lending even when retail asset profits declined in FY2021, and this strategy continued in 1QFY2022 despite a drastic fall in retail profits.Apparently the board of directors has taken a view that the bank has to continue to grow the overall balance sheet despite the weak economic conditions, and that, since corporate credit remains weak, the only other avenue is to grow retail assets. It is precisely this strategy that shareholders need to review and debate with the management. The past two years’ data from both ICICI Bank and HDFC Bank reveal that, on account of deteriorating retail asset quality, the contribution of retail profits before tax (PBT) to overall PBT is declining, and in 1QFY2022 it has fallen steeply. From ICICI Bank’s surge in retail assets in FY2021 and 1QFY2022, it appears that the bank believes that the past two years’ data are an anomaly, and that retail asset quality will bounce back.According to ICICI Bank, additions to gross NPAs are expected to be lower in 2QFY2022, and further improve in 2HFY2022. Given the state of the Indian economy, it may be more prudent for ICICI Bank to curtail its asset growth, de-emphasise retail loans and focus on treasury and select corporate credit to boost profitability.      

Cause for Alarm – ICICI Bank’s Burgeoning Retail Lending Vulnerable to the Economy

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)

Aptus Value Housing Finance IPO - Valuation Is Too Rich, Especially with an Over-Capitalised Book

Aptus Value Housing Finance aims to raise around US$375m in its India IPO. It is backed by a host of investors including WestBridge, Malabar...

Sumeet Singh

Yes Bank’s New Owners Keep Overpaid Mismanagers in Place

In Yes Bank’s fall, while Rana Kapoor was the main culprit, he was ably assisted by his handsomely paid favoured few in critical posts, some like...

Hemindra Hazari

ICICI Bank: Strong Operating Performance Continues

We maintain BUY on the stock with a revised target price of Rs 810 (SOTP basis core book at 2.6x FY23E and Rs 176 Subsidiary Value).

Axis Direct

HSIE Results Daily Reliance Industries, ICICI Bank, ITC, Ambuja Cement, Mphasis, Persistent System,

HSIE Results Daily Reliance Industries, ICICI Bank, ITC, Ambuja Cement, Mphasis, Persistent System, Indiamart, Federal Bank, Heidelbergcement India...

HDFC Securities

Cause for Alarm – ICICI Bank’s Burgeoning Retail Lending Vulnerable to the Economy

It may be more prudent for ICICI Bank to curtail its asset growth, de-emphasise retail loans and focus on treasury and select corporate credit to...

Hemindra Hazari

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