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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

<ul>
<li>The review period for the <a href="https://www.smartkarma.com/entities/nifty-bank-index" target="_blank" data-smartkarma-citation="entities:26811:1" rel="noopener">NSEBANK INDEX</a> ended on 31 Jan. The rebalance will be effective after the close on 30 March and the announcement will come end February.</li>
<li>Based on the index methodology, we see <a href="https://www.smartkarma.com/entities/bank-of-baroda" target="_blank" data-smartkarma-citation="entities:545:1" rel="noopener">Bank Of Baroda (BOB IN)</a> replacing <a href="https://www.smartkarma.com/entities/rbl-bank-ltd" target="_blank" data-smartkarma-citation="entities:22856:1" rel="noopener">RBL Bank Ltd (RBK IN)</a> in the index.</li>
<li>Passive trackers will need to buy 11 days of delivery volume on <a href="https://www.smartkarma.com/entities/bank-of-baroda" target="_blank" data-smartkarma-citation="entities:545:1" rel="noopener">Bank Of Baroda (BOB IN)</a> while selling 5 days of delivery volume on <a href="https://www.smartkarma.com/entities/rbl-bank-ltd" target="_blank" data-smartkarma-citation="entities:22856:1" rel="noopener">RBL Bank Ltd (RBK IN)</a>.</li>
</ul>


The review period for the NSEBANK INDEX ended on 31 Jan. The rebalance will be effective after the close on 30 March and the announcement will come end February.
Based on the index methodology, we see Bank Of Baroda (BOB IN) replacing RBL Bank Ltd (RBK IN) in the index.
Passive trackers will need to buy 11 days of delivery volume on Bank Of Baroda (BOB IN) while selling 5 days of delivery volume on RBL Bank Ltd (RBK IN).


NIFTY Bank Index Rebalance Preview: BOB Should Replace RBL Bank

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

Edelweiss

External broker reports(aggregated public sources)

Edelweiss Broking Limited

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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>RBL Bank’s Q3FY22 results are broadly better than our estimates; however, aggressive customer acquisition in the credit card segment led to substantial growth in operating expenses</li><li>Net revenue grew 10% YoY and 8% QoQ, aided by higher NII income and healthy traction in non-interest income. The bank reported 11bps YoY and 20bps QoQ expansion in NIM</li><li>Operating expenses shot up because of (a) strengthening branch network and workforce and (b) very aggressive customer acquisition in credit card business</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>

RBL Bank’s Q3FY22 results are broadly better than our estimates; however, aggressive customer acquisition in the credit card segment led to substantial growth in operating expensesNet revenue grew 10% YoY and 8% QoQ, aided by higher NII income and healthy traction in non-interest income. The bank reported 11bps YoY and 20bps QoQ expansion in NIMOperating expenses shot up because of (a) strengthening branch network and workforce and (b) very aggressive customer acquisition in credit card businessContent 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.

RBL Bank Ltd: On the Recovery Path; Retain ‘BUY

<ul><li>RBI has appointed Mr. Yogesh K Dayal, “Chief General Manager, RBI”, as an additional director on the Board of RBL Bank Limited w.e.f. 24th December, 2021 till December 23, 2023 or till further orders, whichever is earlier. </li><li>In another surprise move, the current MD &amp; CEO of the bank, Mr. Vishwavir Ahuja went on leave with immediate effect. </li><li>The Board has appointed Mr. Rajeev Ahuja (currently the Executive Director) as interim MD &amp; CEO of the Bank with immediate effect, subject to regulatory and other approvals.  Management hosted a conference call today to discuss the events mentioned above and below are the key takeaways from the conference call.</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>

RBI has appointed Mr. Yogesh K Dayal, “Chief General Manager, RBI”, as an additional director on the Board of RBL Bank Limited w.e.f. 24th December, 2021 till December 23, 2023 or till further orders, whichever is earlier. In another surprise move, the current MD &amp; CEO of the bank, Mr. Vishwavir Ahuja went on leave with immediate effect. The Board has appointed Mr. Rajeev Ahuja (currently the Executive Director) as interim MD &amp; CEO of the Bank with immediate effect, subject to regulatory and other approvals.  Management hosted a conference call today to discuss the events mentioned above and below are the key takeaways from the conference call.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.

RBL Bank Ltd: Shifting Stock to 'Under Review'

Specialist in Indian Banking and Economic Research

Hemindra Hazari

<ul>
<li>Reserve Bank of India imposes a senior regulatory official on the board of directors of <a href="https://www.smartkarma.com/entities/rbl-bank-ltd" target="_blank" data-smartkarma-citation="entities:22856:1" rel="noopener">RBL Bank Ltd (RBK IN)</a>
</li>
<li>Vishwavir Ahuja CEO since 2010 proceeds on leave with immediate effect</li>
<li>No clarity from RBI or RBL Bank on why the regulator took such a drastic action</li>
</ul>


Reserve Bank of India imposes a senior regulatory official on the board of directors of RBL Bank Ltd (RBK IN)

Vishwavir Ahuja CEO since 2010 proceeds on leave with immediate effect
No clarity from RBI or RBL Bank on why the regulator took such a drastic action


RBI Forcibly Gifts RBL Bank a Director, But Refuses to Say Why

Event-Driven

<p>The Indian mutual fund industry has assets of almost INR 7.93 trillion (US$106.3bn) 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><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>We are just past halfway through the review period for the second half of 2021. Using data to the close on 4 October, at the next recategorization in January 2022, we see 10 stocks moving from the mid cap segment to the large cap segment, 11 stocks moving from the large cap segment to the mid cap segment , 11 stocks are expected to move from the small cap segment to the mid cap segment, with16 stocks moving from the mid cap to the small cap segment. <a href="https://www.smartkarma.com/entities/zomato-media-pvt" target="_blank" data-smartkarma-citation="entities:28820:1" rel="noopener">Zomato (ZOMATO IN)</a> will be a part of the large cap universe, while 4 other newly listed stocks will be a part of the mid cap universe.</p><p>Historically, stocks moving to a higher market cap category have outperformed stocks that migrate to a lower market cap category over the back half of the review period. In some cases, the outperformance continues past the announcement of the changes as well. 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>

The Indian mutual fund industry has assets of almost INR 7.93 trillion (US$106.3bn) 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.We are just past halfway through the review period for the second half of 2021. Using data to the close on 4 October, at the next recategorization in January 2022, we see 10 stocks moving from the mid cap segment to the large cap segment, 11 stocks moving from the large cap segment to the mid cap segment , 11 stocks are expected to move from the small cap segment to the mid cap segment, with16 stocks moving from the mid cap to the small cap segment. Zomato (ZOMATO IN) will be a part of the large cap universe, while 4 other newly listed stocks will be a part of the mid cap universe.Historically, stocks moving to a higher market cap category have outperformed stocks that migrate to a lower market cap category over the back half of the review period. In some cases, the outperformance continues past the announcement of the changes as well. 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 (Dec 2021)

India

RBL Bank Limited operates as a commercial bank. The Company offers banking products and services such as savings accounts, fixed deposits, personal and business loans, debit and credit cards, insurance, investment management, and mobile banking. RBL Bank serves customers throughout India.

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RBL Bank Ltd (RBK IN)

NIFTY Bank Index Rebalance Preview: BOB Should Replace RBL Bank

With the review period complete, we see BOB IN replacing RBL IN at the March rebalance. Passive trackers need to buy 11 days of delivery volume on...

Brian Freitas

RBL Bank Ltd: On the Recovery Path; Retain ‘BUY

RBL Bank’s Q3FY22 results are broadly better than our estimates; however, aggressive customer acquisition in the credit card segment led to...

Edelweiss

RBL Bank Ltd: Shifting Stock to 'Under Review'

We are putting RBL Bank “UNDER REVIEW” and will continue to closely monitor any developments that pan out on both asset quality and the CEO...

Edelweiss

RBI Forcibly Gifts RBL Bank a Director, But Refuses to Say Why

The RBI has either overreacted on the succession issue, or there is a deeper malaise in the bank – in which case depositors and shareholders have...

Hemindra Hazari

India: Stock Reclassification & Active Portfolio Management (Dec 2021)

Halfway through the review period, we take a look at stocks that could migrate across the large, mid and small cap segments. With over US$100bn of...

Brian Freitas

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