Consumer Analyst / Channel Surveillance Specialist, Trudence Capital Advisors

Pranav Bhavsar

Consumer Analyst / Channel Surveillance Specialist

Trudence Capital Advisors

Trudence Capital Advisors Private Limited is a SEBI-registered Research Analyst, holding SEBI registration number INH000015747. Our firm is dedicated to providing independent and unbiased research on Indian mid to large-cap companies. Trudence Capital is known for its counter-consensus views, with a focus on forensic research and on-ground primary investigations. Our research approach is thorough, involving detailed analysis of accounting practices and governance, alongside extensive channel checks.

Independent & Unbiased Research

Equity Bottom-Up

<ul>
<li>We speak to channels of <a href="https://www.smartkarma.com/entities/kajaria-ceramics-ltd" target="_blank" data-smartkarma-citation="entities:13916:1" rel="noopener">Kajaria Ceramics (KJC IN)</a> , <a href="https://www.smartkarma.com/entities/indigo-paints" target="_blank" data-smartkarma-citation="entities:31308:1" rel="noopener">Indigo Paints (INDIGOPN IN)</a> &amp; <a href="https://www.smartkarma.com/entities/finolex-industries-ltd" target="_blank" data-smartkarma-citation="entities:1469:1" rel="noopener">Finolex Industries (FNXP IN)</a> to understand the current operating environment.</li>
<li>For <a href="https://www.smartkarma.com/entities/kajaria-ceramics-ltd" target="_blank" data-smartkarma-citation="entities:13916:1" rel="noopener">Kajaria Ceramics (KJC IN)</a> volume outlook is cloudy.  Paint customers are opting for some down trading but within organised players only. </li>
<li>Improved product quality at competitive price is aiding <a href="https://www.smartkarma.com/entities/finolex-industries-ltd" target="_blank" data-smartkarma-citation="entities:1469:1" rel="noopener">Finolex Industries (FNXP IN)</a> to gain some market share.</li>
</ul>


We speak to channels of Kajaria Ceramics (KJC IN) , Indigo Paints (INDIGOPN IN) &amp; Finolex Industries (FNXP IN) to understand the current operating environment.
For Kajaria Ceramics (KJC IN) volume outlook is cloudy.  Paint customers are opting for some down trading but within organised players only. 
Improved product quality at competitive price is aiding Finolex Industries (FNXP IN) to gain some market share.


Channel Insight #30 - Kajaria, Indigo Paints, Finolex Pipes

AU Small Finance Bank Limited / Equity Bottom-Up

<ul>
<li>We spoke to channels associated with <a href="https://www.smartkarma.com/entities/au-small-finance-bank-limited" target="_blank" data-smartkarma-citation="entities:24196:1" rel="noopener">AU Small Finance Bank Limited (AUBANK IN)</a> , <a href="https://www.smartkarma.com/entities/kajaria-ceramics-ltd" target="_blank" data-smartkarma-citation="entities:13916:1" rel="noopener">Kajaria Ceramics (KJC IN)</a> , <a href="https://www.smartkarma.com/entities/apl-apollo-tubes-ltd" target="_blank" data-smartkarma-citation="entities:16132:1" rel="noopener">Apl Apollo Tubes (APAT IN)</a> &amp; <a href="https://www.smartkarma.com/entities/blue-star-ltd" target="_blank" data-smartkarma-citation="entities:5162:1" rel="noopener">Blue Star Ltd (BLSTR IN)</a> </li>
<li>Small Business Loan growth is slowing at AU, some down trading due to price increases seen in Kajaria </li>
<li>APL is getting hurt by cheaper alternatives, Blue Star channels are cautiously optimistic about the upcoming Air Conditioner season. </li>
</ul>


We spoke to channels associated with AU Small Finance Bank Limited (AUBANK IN) , Kajaria Ceramics (KJC IN) , Apl Apollo Tubes (APAT IN) &amp; Blue Star Ltd (BLSTR IN) 
Small Business Loan growth is slowing at AU, some down trading due to price increases seen in Kajaria 
APL is getting hurt by cheaper alternatives, Blue Star channels are cautiously optimistic about the upcoming Air Conditioner season. 


Channel Insight #29 | AU Bank, Kajaria, APL Apollo, Blue Star

<ul>
<li>We speak to a total of ten channels representing <a href="https://www.smartkarma.com/entities/apl-apollo-tubes-ltd" target="_blank" data-smartkarma-citation="entities:16132:1" rel="noopener">Apl Apollo Tubes (APAT IN)</a> , <a href="https://www.smartkarma.com/entities/kajaria-ceramics-ltd" target="_blank" data-smartkarma-citation="entities:13916:1" rel="noopener">Kajaria Ceramics (KJC IN)</a> and <a href="https://www.smartkarma.com/entities/somany-ceramics-ltd" target="_blank" data-smartkarma-citation="entities:10694:1" rel="noopener">Somany Ceramics (SOMC IN)</a> </li>
<li>There are some indications of Market share loss for <a href="https://www.smartkarma.com/entities/apl-apollo-tubes-ltd" target="_blank" data-smartkarma-citation="entities:16132:1" rel="noopener">Apl Apollo Tubes (APAT IN)</a> </li>
<li>Demand in metros remains strong and robust, while tier 2/3 locations seems to be grasping for growth. </li>
</ul>


We speak to a total of ten channels representing Apl Apollo Tubes (APAT IN) , Kajaria Ceramics (KJC IN) and Somany Ceramics (SOMC IN) 
There are some indications of Market share loss for Apl Apollo Tubes (APAT IN) 
Demand in metros remains strong and robust, while tier 2/3 locations seems to be grasping for growth. 


India Channel Insight #23 | APL Apollo, Kajaria, Somany

External broker reports(aggregated public sources), Geojit BNP Paribas

Geojit

External broker reports(aggregated public sources)

<p>Continued traction seen in export business. Additionally, company is well positioned to pass on the cost inflation to its customers. We expect the domestic business to bounce back as economic activity rises. With an optimistic outlook, we upgrade our rating to ACCUMULATE with revised target price of Rs. 1,110 based on 36x FY23E adj. EPS. Topline growth driven by demand rebound For Q4FY21, Revenue growth surged 46.1% YoY to Rs.</p><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>

Continued traction seen in export business. Additionally, company is well positioned to pass on the cost inflation to its customers. We expect the domestic business to bounce back as economic activity rises. With an optimistic outlook, we upgrade our rating to ACCUMULATE with revised target price of Rs. 1,110 based on 36x FY23E adj. EPS. Topline growth driven by demand rebound For Q4FY21, Revenue growth surged 46.1% YoY to Rs.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.

Kajaria Ceramics: Volume Growth Aids Topline; Outlook Positive

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<div><p>The Indian mutual fund industry has assets of almost INR 6.6 trillion across Multi cap, Large Cap, Large and Mid Cap, Mid Cap, Small Cap and Flexi Cap equity schemes. Equity schemes classified as large cap need to have at least 80% of their assets invested in large cap stocks, large and mid cap schemes need to have at least 35% of their assets in large cap stocks and at least 35% in mid cap stocks, mid cap funds need to hold at least 65% of their assets in mid cap stocks, and small cap funds need to hold at least 65% of their assets in small cap stocks. Flexi cap funds can invest across market caps.</p></div><div>
<p>The Association of Mutual Funds in India (AMFI) publishes the list of the stocks in each market cap segment in January and July each year and mutual funds have one month to rebalance their portfolios to adhere to the new categorization.</p>
<p>At the next recategorization in July 2021, we see 7 stocks moving from the mid cap segment to the large cap segment with an equal number of stocks moving the other way, and 13 stocks are expected to move from the small cap segment to the mid cap segment with the 16 stocks moving from the mid cap to the small cap segment. There are 3 recent listings that will enter the mid cap segment with over 18 joining the small cap segment.</p>
<p>Historically, the stocks migrating upward to a higher market cap segment have outperformed stocks that migrate to a lower market cap segment over the 1 month and 2 month period post the publishing of the AMFI list. This can be attributed to fund managers realigning their portfolios to meet the new categorization. This provides opportunities to pre-position for the move and unwind post the announcement of the reclassification.</p>
</div>

The Indian mutual fund industry has assets of almost INR 6.6 trillion across Multi cap, Large Cap, Large and Mid Cap, Mid Cap, Small Cap and Flexi Cap equity schemes. Equity schemes classified as large cap need to have at least 80% of their assets invested in large cap stocks, large and mid cap schemes need to have at least 35% of their assets in large cap stocks and at least 35% in mid cap stocks, mid cap funds need to hold at least 65% of their assets in mid cap stocks, and small cap funds need to hold at least 65% of their assets in small cap stocks. Flexi cap funds can invest across market caps.
The Association of Mutual Funds in India (AMFI) publishes the list of the stocks in each market cap segment in January and July each year and mutual funds have one month to rebalance their portfolios to adhere to the new categorization.
At the next recategorization in July 2021, we see 7 stocks moving from the mid cap segment to the large cap segment with an equal number of stocks moving the other way, and 13 stocks are expected to move from the small cap segment to the mid cap segment with the 16 stocks moving from the mid cap to the small cap segment. There are 3 recent listings that will enter the mid cap segment with over 18 joining the small cap segment.
Historically, the stocks migrating upward to a higher market cap segment have outperformed stocks that migrate to a lower market cap segment over the 1 month and 2 month period post the publishing of the AMFI list. This can be attributed to fund managers realigning their portfolios to meet the new categorization. This provides opportunities to pre-position for the move and unwind post the announcement of the reclassification.


India: Stock Reclassification & Active Portfolio Management

India

Kajaria Ceramics Limited manufactures glazed and unglazed ceramic tiles. The Company sells its products in India and it also exports them to other countries.

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Kajaria Ceramics (KJC IN)

Channel Insight #30 - Kajaria, Indigo Paints, Finolex Pipes

We speak to channels of Kajaria Ceramics (KJC IN) , Indigo Paints (INDIGOPN IN) & Finolex Industries (FNXP IN) to understand the current operating...

Pranav Bhavsar

Channel Insight #29 | AU Bank, Kajaria, APL Apollo, Blue Star

We spoke to channels associated with AU Small Finance Bank Limited (AUBANK IN) , Kajaria Ceramics (KJC IN) , Apl Apollo Tubes (APAT IN) & Blue Star...

Pranav Bhavsar

India Channel Insight #23 | APL Apollo, Kajaria, Somany

We speak to a total of ten channels representing Apl Apollo Tubes (APAT IN) , Kajaria Ceramics (KJC IN) and Somany Ceramics (SOMC IN) to understand...

Pranav Bhavsar

Kajaria Ceramics: Volume Growth Aids Topline; Outlook Positive

Continued traction seen in export business. Additionally, company is well positioned to pass on the cost inflation to its customers. We expect the...

Geojit

India: Stock Reclassification & Active Portfolio Management

There are a lot of segment changes expected in July when AMFI recategorizes stocks and mutual funds start to rebalance their portfolios. We...

Brian Freitas

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