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

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

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

TSMC (Taiwan Semiconductor Manufacturing) / Technical Analysis

TSMC (Taiwan Semiconductor Manufacturing)

Emerging market equities have been one of the worst areas to invest in 2021, but we see early signs of positive change. With the US dollar failing to break above resistance at $93.50 and the MSCI EM ETF (EEM-US) displaying a false breakdown at $52, we believe now is an opportune time to add exposure to emerging market equities. To be clear, we are not getting overly bullish on EM; we have favored developed int’l (EAFE) over EM since May, and we are now shifting back to a neutral stance between the two. We see reason to believe the tide is shifting in EM’s favor. Below we highlight attractive and actionable themes within EM.

Emerging market equities have been one of the worst areas to invest in 2021, but we see early signs of positive change. With the US dollar failing to break above resistance at $93.50 and the MSCI EM ETF (EEM-US) displaying a false breakdown at $52, we believe now is an opportune time to add exposure to emerging market equities. To be clear, we are not getting overly bullish on EM; we have favored developed int’l (EAFE) over EM since May, and we are now shifting back to a neutral stance between the two. We see reason to believe the tide is shifting in EM’s favor. Below we highlight attractive and actionable themes within EM.

Shifting Exposure To Emerging Markets; Buying TSMC/Taiwan Semi, ICICI Bank, Many Others

Aditya Birla Sun Life AMC / Equity Capital Markets

Aditya Birla Sun Life Asset Management Company’s (ABSL) shareholders aim to raise around US$300m 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.

Aditya Birla Sun Life Asset Management Company’s (ABSL) shareholders aim to raise around US$300m 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.

Aditya Birla Sun Life AMC Pre-IPO - Strong Profit Growth but It's Losing Market Share

Nuvoco Vistas (NV) raised around US$673m in its India IPO. It is promoted by the Nirma Group and has recently acquired Emami’s cement business.Nuvoco Vistas (NV) is the fifth largest cement company in India and the largest cement company in East India, in terms of capacity. It had a total consolidated capacity of 22.32 MMTPA across 11 cement plants, comprising five integrated units, five grinding units and one blending unit. It also operates a RMX business with 49 RMX plants across India. As of Dec 2020, its cement production capacity constituted approximately 4.2% of total cement capacity in India and 17% of total cement capacity in East India.The company’s past revenue growth has been subdued, largely owing to COVID-19 impact. Although, it has managed to expand its EBITDA margin, especially in FY20, thus shoring up EBITDA growth. However, there is nothing particularly alluring about the stock that makes it stand out versus its peers. We covered the background of the company in our previous note, <a href="https://www.smartkarma.com/insights/nuvoco-vistas-ipo-don-t-see-any-strong-reason-to-buy" target="_blank" rel="noopener">Nuvoco Vistas IPO - Don’t see any strong reason to buy.</a>In this note, we will talk about the trading dynamics.

Nuvoco Vistas (NV) raised around US$673m in its India IPO. It is promoted by the Nirma Group and has recently acquired Emami’s cement business.Nuvoco Vistas (NV) is the fifth largest cement company in India and the largest cement company in East India, in terms of capacity. It had a total consolidated capacity of 22.32 MMTPA across 11 cement plants, comprising five integrated units, five grinding units and one blending unit. It also operates a RMX business with 49 RMX plants across India. As of Dec 2020, its cement production capacity constituted approximately 4.2% of total cement capacity in India and 17% of total cement capacity in East India.The company’s past revenue growth has been subdued, largely owing to COVID-19 impact. Although, it has managed to expand its EBITDA margin, especially in FY20, thus shoring up EBITDA growth. However, there is nothing particularly alluring about the stock that makes it stand out versus its peers. We covered the background of the company in our previous note, Nuvoco Vistas IPO - Don’t see any strong reason to buy.In this note, we will talk about the trading dynamics.

Specialist in Indian Banking and Economic Research

Hemindra Hazari

A notable feature in <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> and <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> (KMB) is the historical absence of any commercial banking expertise amongst the independent directors on the boards. The founders ( <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>and Uday Kotak) and the Nomination and Remuneration Committee in both banks, as a deliberate strategy, have tried to ensure that only non-independent directors have commercial banking expertise. This is unusual, as other private sector banks such as <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/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/indusind-bank-ltd" target="_blank" data-smartkarma-citation="entities:1558:1" rel="noopener">Indusind Bank (IIB IN)</a> and <a href="https://www.smartkarma.com/entities/federal-bank-ltd" target="_blank" data-smartkarma-citation="entities:11784:1" rel="noopener">Federal Bank (FB IN)</a> have former commercial bankers as independent directors on their boards.Banking, being a specialised and highly regulated sector with an economy-wide systemic impact, needs that some directors have commercial banking expertise separate and distinct from the executive.The absence of such independent functional expertise on the board is a sign that the executive/controlling shareholders do not want to be challenged or to have close oversight in the banks’ core area of operations. HDFC Bank and KMB are poster banners for private sector banking in India, with a combined market capitalisation of US$ 159 bn. They have achieved this without the presence of former commercial bankers as independent directors. Both Aditya Puri (erstwhile HDFC Bank CEO) and Uday Kotak maintained an iron-clad grip on asset quality, which is visible in their track record of profitability and stock market valuation. However, banking should not be individual-based, but based on appropriate systems. A diversified board of directors, including those with commercial banking expertise independent of the executive, should be mandatory in all banks. Regardless of their track record and valuation, banks which deliberately exclude such critical functional expertise on their boards must be hauled up by the Reserve Bank of India, credit rating analysts and the capital markets. The fact that HDFC Bank and KMB have rewarded shareholders manifold without such independent expertise on their boards should not be an excuse for such an anomaly to continue, nor should it be replicated in other banks.

A notable feature in HDFC Bank (HDFCB IN) and Kotak Mahindra Bank (KMB IN) (KMB) is the historical absence of any commercial banking expertise amongst the independent directors on the boards. The founders ( HDFC Limited (HDFC IN) and Uday Kotak) and the Nomination and Remuneration Committee in both banks, as a deliberate strategy, have tried to ensure that only non-independent directors have commercial banking expertise. This is unusual, as other private sector banks such as ICICI Bank Ltd (ICICIBC IN), Axis Bank Ltd (AXSB IN),  Indusind Bank (IIB IN) and Federal Bank (FB IN) have former commercial bankers as independent directors on their boards.Banking, being a specialised and highly regulated sector with an economy-wide systemic impact, needs that some directors have commercial banking expertise separate and distinct from the executive.The absence of such independent functional expertise on the board is a sign that the executive/controlling shareholders do not want to be challenged or to have close oversight in the banks’ core area of operations. HDFC Bank and KMB are poster banners for private sector banking in India, with a combined market capitalisation of US$ 159 bn. They have achieved this without the presence of former commercial bankers as independent directors. Both Aditya Puri (erstwhile HDFC Bank CEO) and Uday Kotak maintained an iron-clad grip on asset quality, which is visible in their track record of profitability and stock market valuation. However, banking should not be individual-based, but based on appropriate systems. A diversified board of directors, including those with commercial banking expertise independent of the executive, should be mandatory in all banks. Regardless of their track record and valuation, banks which deliberately exclude such critical functional expertise on their boards must be hauled up by the Reserve Bank of India, credit rating analysts and the capital markets. The fact that HDFC Bank and KMB have rewarded shareholders manifold without such independent expertise on their boards should not be an excuse for such an anomaly to continue, nor should it be replicated in other banks.

HDFC Bank and KMB Carefully Select Independent Directors - For Their Lack of Banking Knowledge

India

ICICI Bank Limited operates as a bank. The Bank offers saving accounts, loans, debit, credit cards, insurance, investments, mortgages, and online banking services. ICICI Bank serves customers worldwide.

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ICICI Bank Ltd (ICICIBC IN)

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

Shifting Exposure To Emerging Markets; Buying TSMC/Taiwan Semi, ICICI Bank, Many Others

We see early signs of positive change within EM, and we present a strong case as to why we believe now is an opportune time to add exposure.

Vermilion Research

Nuvoco Vistas IPO Trading - Tepid Demand

Nuvoco Vistas (NV) raised around US$673m in its India IPO. It is promoted by the Nirma Group and has recently acquired Emami’s cement business.

Sumeet Singh

HDFC Bank and KMB Carefully Select Independent Directors - For Their Lack of Banking Knowledge

The absence of independent commercial banking expertise on the board is a sign that the executive do not want to be challenged or to have close...

Hemindra Hazari

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