Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

Thematic (Sector/Industry)

<ul>
<li>Following 2 years of exceptional performance, share prices have started to correct. The demand outlook remains robust, but revenue and earnings growth rates are decelerating off a high base.</li>
<li>The key catalysts will be the FY2023 outlook and guidance, due April 2022, and the impact of increased shareholder returns.</li>
<li>Based on their recent financial performance, short- to medium-term growth outlook, shareholder return policies, and current valuation levels, the sector remains unattractive.</li>
</ul>


Following 2 years of exceptional performance, share prices have started to correct. The demand outlook remains robust, but revenue and earnings growth rates are decelerating off a high base.
The key catalysts will be the FY2023 outlook and guidance, due April 2022, and the impact of increased shareholder returns.
Based on their recent financial performance, short- to medium-term growth outlook, shareholder return policies, and current valuation levels, the sector remains unattractive.


Indian IT Services: Medium-Term Outlook Unattractive as Growth Slows, on Premium Valuation Levels

Alpha-Centric ESG Research

Kyle Rudden

<ul>
<li>In a recent Insight, <a href="https://www.smartkarma.com/insights/regulating-esg-ratings-in-india-outline-of-sebi-s-proposed-regulatory-framework" target="_blank" data-smartkarma-citation="insights:64468" rel="noopener">Regulating ESG Ratings in India: Outline of SEBI's Proposed Regulatory Framework</a>, I summarised SEBI's proposed regulatory framework for ESG ratings in India. </li>
<li>This Insight goes a bit further, looking at implications of regulation on stocks of ESG ratings providers (ERPs), especially Credit Rating Agencies (CRAs) and Research Analysts (RAs).</li>
<li>Downside risk are minimal for ERPs, but a few scenarios and stipulations related to conflicts of interest and compensation (how ERPs are paid, and by whom) could have an impact.</li>
</ul>


In a recent Insight, Regulating ESG Ratings in India: Outline of SEBI's Proposed Regulatory Framework, I summarised SEBI's proposed regulatory framework for ESG ratings in India. 
This Insight goes a bit further, looking at implications of regulation on stocks of ESG ratings providers (ERPs), especially Credit Rating Agencies (CRAs) and Research Analysts (RAs).
Downside risk are minimal for ERPs, but a few scenarios and stipulations related to conflicts of interest and compensation (how ERPs are paid, and by whom) could have an impact.


Credit Rating Agency Stocks Most Impacted by SEBI Regulation of ESG Ratings in India

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

Edelweiss

External broker reports(aggregated public sources)

Edelweiss Broking Limited

Edelweiss Broking Limited is an Indian Financial services company based in Mumbai, India. The company is a subsidiary of Edelweiss Group. 

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>Infosys is India’s second-largest provider of consulting and IT services to clients across the globe</li><li>It is also among the fastest-growing IT services organization in the world and leader in the offshore services space</li><li> The company provides business consulting, application development and maintenance, and engineering services to 1,738 active clients</li></ul><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>

Infosys is India’s second-largest provider of consulting and IT services to clients across the globeIt is also among the fastest-growing IT services organization in the world and leader in the offshore services space The company provides business consulting, application development and maintenance, and engineering services to 1,738 active clientsContent 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.

Asset Allocation & Fund Positioning, Copley Fund Research

Steven Holden

Asset Allocation & Fund Positioning

Copley Fund Research

Copley Fund Research provide research and data on asset allocation among Global and Emerging Market equity funds.  The analysis details absolute and relative positioning across countries, sectors and industries together with highly granular data on single stock and single fund allocations.  The data is updated monthly with time series going back to January 2011.

Global Research - Analysis of 165 prominent Global equity funds, combined AUM $335bn
GEM Research - Analysis of 127 prominent global EM equity funds, combined AUM $250bn

Asset Allocation - Global and GEM Equity

Cross Asset Strategy

<ul>
<li>India moves to largest underweight country holding among EM Value managers.  Current underweight the highest on record.</li>
<li>Among Value managers, India saw net fund outflows of $322m, the underweight increase by -1.92% and a further 7.7% of managers move to underweight over the last 6-months.</li>
<li>
<a href="https://www.smartkarma.com/entities/reliance-industries-ltd" target="_blank" data-smartkarma-citation="entities:198:1" rel="noopener">Reliance Industries (RIL IN)</a> is the key underweight, whilst <a href="https://www.smartkarma.com/entities/bajaj-finance-ltd" target="_blank" data-smartkarma-citation="entities:8950:1" rel="noopener">Bajaj Finance Ltd (BAF IN)</a><a href="https://www.smartkarma.com/entities/bharti-airtel-ltd" target="_blank" data-smartkarma-citation="entities:953:1" rel="noopener">Bharti Airtel (BHARTI IN)</a> and <a href="https://www.smartkarma.com/entities/larsen-toubro-ltd" target="_blank" data-smartkarma-citation="entities:2499:1" rel="noopener">Larsen &amp; Toubro </a>have been avoided by EM Value managers altogether.</li>
</ul>


India moves to largest underweight country holding among EM Value managers.  Current underweight the highest on record.
Among Value managers, India saw net fund outflows of $322m, the underweight increase by -1.92% and a further 7.7% of managers move to underweight over the last 6-months.

Reliance Industries (RIL IN) is the key underweight, whilst Bajaj Finance Ltd (BAF IN)Bharti Airtel (BHARTI IN) and Larsen &amp; Toubro have been avoided by EM Value managers altogether.


Value Funds Move to Record Underweight in India

External broker reports(aggregated public sources), ICICI Securities Ltd

ICICI Securities Limited

ICICI Securities Ltd

ICICI Securities Limited provides investment services. The Company provides corporate and investment banking, securities, wealth management, retail brokerage, initial public offerings, and advisory services. 

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.

<ul><li>Infosys Ltd (Infy) is one of the leading IT players catering to BFSI, retail, communication, manufacturing &amp; hi tech verticals.</li><li>The company generates &gt;58% of revenues from digital technologies</li><li>We continue to remain positive and retain our BUY rating on the stock. We value Infosys at Rs 2,300 i.e. 32x P/E on FY24E EPS</li></ul><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>

Infosys Ltd (Infy) is one of the leading IT players catering to BFSI, retail, communication, manufacturing &amp; hi tech verticals.The company generates &gt;58% of revenues from digital technologiesWe continue to remain positive and retain our BUY rating on the stock. We value Infosys at Rs 2,300 i.e. 32x P/E on FY24E EPSContent 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.

Infosys Ltd: Strong Revenue, Margin Resilience Is Key

India

Infosys Limited provides IT consulting and software services, including e-business, program management and supply chain solutions. The Group's services include application development, product co-development, and system implementation and system engineering. Infosys targets businesses specializing in the insurance, banking, telecommunication and manufacturing sectors.

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Infosys Ltd Sp Adr (INFY US)

Indian IT Services: Medium-Term Outlook Unattractive as Growth Slows, on Premium Valuation Levels

In this insight, I take a longer-term view on the 4 largest companies in the Indian IT Services sector, analysing their recent financial...

Wium Malan, CFA

Credit Rating Agency Stocks Most Impacted by SEBI Regulation of ESG Ratings in India

The potential impacts of SEBI's proposed framework for regulating ESG ratings are unclear at this stage, but a few things (related to conflicts of...

Kyle Rudden

Pick of the Week - Infosys

Infosys is India’s second-largest provider of consulting and IT services to clients across the globe. It is also among the fastest-growing IT...

Edelweiss

Value Funds Move to Record Underweight in India

India moves to the largest underweight country holding among EM Value managers. Current underweight the highest on record.

Steven Holden

Infosys Ltd: Strong Revenue, Margin Resilience Is Key

Infosys Ltd (Infy) is one of the leading IT players catering to BFSI, retail, communication, manufacturing & hi tech verticals. The company...

ICICI Securities Limited

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