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

Thematic (Sector/Industry)

Inspired by <a href="https://thetranscript.substack.com/" target="_blank" rel="noopener">"The Transcript"</a>, We build our very own version of the same called "The Narrative".
The objective of "The Narrative" is to aid us in assessing management commentary, which we can further connect with ground reality via primary checks, aiding us in identifying key catalysts that could be potential drivers of stock returns. 
For the narrative, we will be covering commentary on Demand environment and overall Industry, Consumer behaviour and premiumisation, Commodity costs, Pricing action, new product launches, Capex, PLI, Inventory, Competition and market share, Exports, E-commerce, Competitiveness with China and Future outlook.   
Companies covered include <a href="https://www.smartkarma.com/entities/amber-enterprises-india-ltd" target="_blank" data-smartkarma-citation="entities:32202:1" rel="noopener">Amber Enterprises India (AMBER IN)</a>, <a href="https://www.smartkarma.com/entities/bajaj-electricals-ltd" target="_blank" data-smartkarma-citation="entities:9615:1" rel="noopener">Bajaj Electricals (BJE IN)</a> , <a href="https://www.smartkarma.com/entities/crompton-greaves-consumer-electricals" target="_blank" data-smartkarma-citation="entities:24046:1" rel="noopener">Crompton Greaves Consumer Electricals (CROMPTON IN)</a> , <a href="https://www.smartkarma.com/entities/symphony-ltd" target="_blank" data-smartkarma-citation="entities:17047:1" rel="noopener">Symphony Ltd (SYML IN)</a> , <a href="https://www.smartkarma.com/entities/ttk-prestige-ltd" target="_blank" data-smartkarma-citation="entities:9779:1" rel="noopener">TTK Prestige (TTKPT IN)</a>

Inspired by "The Transcript", We build our very own version of the same called "The Narrative".
The objective of "The Narrative" is to aid us in assessing management commentary, which we can further connect with ground reality via primary checks, aiding us in identifying key catalysts that could be potential drivers of stock returns. 
For the narrative, we will be covering commentary on Demand environment and overall Industry, Consumer behaviour and premiumisation, Commodity costs, Pricing action, new product launches, Capex, PLI, Inventory, Competition and market share, Exports, E-commerce, Competitiveness with China and Future outlook.   
Companies covered include Amber Enterprises India (AMBER IN), Bajaj Electricals (BJE IN) , Crompton Greaves Consumer Electricals (CROMPTON IN) , Symphony Ltd (SYML IN) , TTK Prestige (TTKPT IN)

The Narrative | Q1 FY22 | India Household Durables - AMBER, BJE, CROMPTON, SYML, TTKPT

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

ICICI Securities Limited

External broker reports(aggregated public sources)

Equity Bottom-Up

Better gross margins (up 452 bps YoY) helped turned EBITDA positive at 4.3% vs. -3.2% in Q1FY21. However, lower-than-expected EBITDA margin is mainly due to higher advertisement expense (3x jump YoY)...<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>

Better gross margins (up 452 bps YoY) helped turned EBITDA positive at 4.3% vs. -3.2% in Q1FY21. However, lower-than-expected EBITDA margin is mainly due to higher advertisement expense (3x jump YoY)...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.

Symphony Ltd: Slow Recovery on Favourable Base

External broker reports(aggregated public sources), HDFC Securities

HDFC Securities

HSIE Results Daily Kotak Mahindra Bank: Kotak Mahindra Banks (KMB) 1QFY22 performance was broadly in line with our estimates on the back of continued funding cost tailwinds resulting in sequentially stronger NIMs even as loans shrank 2.8% QoQ. Annualised slippages were up at 2.8% (FY21: 2.4%) as collections were affected during Apr-May21 on account of the second wave (as witnessed by peers), with most of the stress emerging from secured retail portfolio. KMB maintained its stock of COVID provisions and the loan loss coverage at ~65%.<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 Kotak Mahindra Bank: Kotak Mahindra Banks (KMB) 1QFY22 performance was broadly in line with our estimates on the back of continued funding cost tailwinds resulting in sequentially stronger NIMs even as loans shrank 2.8% QoQ. Annualised slippages were up at 2.8% (FY21: 2.4%) as collections were affected during Apr-May21 on account of the second wave (as witnessed by peers), with most of the stress emerging from secured retail portfolio. KMB maintained its stock of COVID provisions and the loan loss coverage at ~65%.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: Kotak Mahindra Bank, Axis Bank and More

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

The Indian mutual fund industry has assets of almost INR 5 trillion across Multi cap, Large Cap, Large and Mid Cap, Mid Cap and Small 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.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.In the upcoming recategorization in January 2021, we see 6 stocks moved from the mid cap segment to the large cap segment with an equal number of stocks moving the other way, and 12 stocks are expected to move from the small cap segment to the mid cap segment with the same number moving the other way. There are quite a few IPOs that will join the small cap list, with just 1 joining the large cap list and 1 joining the mid cap list.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.

The Indian mutual fund industry has assets of almost INR 5 trillion across Multi cap, Large Cap, Large and Mid Cap, Mid Cap and Small 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.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.In the upcoming recategorization in January 2021, we see 6 stocks moved from the mid cap segment to the large cap segment with an equal number of stocks moving the other way, and 12 stocks are expected to move from the small cap segment to the mid cap segment with the same number moving the other way. There are quite a few IPOs that will join the small cap list, with just 1 joining the large cap list and 1 joining the mid cap list.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: AMFI Stock Categorization Changes to Drive Active Portfolio Churn

Value investor- India mid & small caps

Bhaskar Chakraborty

<ul>
<li>Bank lending to NBFCs has been flat since Oct-18 after rising by ~ Rs 1 tn in the previous 5-month period. Debt mutual fund holdings in NBFCs have declined 20% over Sep-18 to Feb-19. CP issuances by NBFCs have also fallen to a fraction of the size before IL&amp;FS defaulted.</li>
<li>This is percolating through the economy slowing down the flow of overall credit.</li>
<li>2-W channel inventories are nearly twice the normal level for some players</li>
<li>M&amp;HCV production has been cut 20-25% YoY in 4QFY19</li>
<li>Tractor volume growth is likely to be in single digits in FY20</li>
<li>Air conditioner and refrigerators are seeing steep discounting owing to large inventory build-up on delayed summer</li>
<li>FMCG players indicate both rural and urban demand weakness including in the modern retail segment</li>
</ul>


Bank lending to NBFCs has been flat since Oct-18 after rising by ~ Rs 1 tn in the previous 5-month period. Debt mutual fund holdings in NBFCs have declined 20% over Sep-18 to Feb-19. CP issuances by NBFCs have also fallen to a fraction of the size before IL&amp;FS defaulted.
This is percolating through the economy slowing down the flow of overall credit.
2-W channel inventories are nearly twice the normal level for some players
M&amp;HCV production has been cut 20-25% YoY in 4QFY19
Tractor volume growth is likely to be in single digits in FY20
Air conditioner and refrigerators are seeing steep discounting owing to large inventory build-up on delayed summer
FMCG players indicate both rural and urban demand weakness including in the modern retail segment


India Consumption: More Signs of a Widening Slowdown

India

Symphony Ltd. manufactures a wide range of air coolers.  The Company's products include evaporative air coolers, air conditioners, and water heaters.

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Symphony Ltd (SYML IN)

The Narrative | Q1 FY22 | India Household Durables - AMBER, BJE, CROMPTON, SYML, TTKPT

The objective of "The Narrative" is to aid us in assessing management commentary, which we can further connect with ground reality via primary checks.

Pranav Bhavsar

Symphony Ltd: Slow Recovery on Favourable Base

Better gross margins (up 452 bps YoY) helped turned EBITDA positive at 4.3% vs. -3.2% in Q1FY21. However, lower-than-expected EBITDA margin is...

ICICI Securities Limited

HSIE Results Daily: Kotak Mahindra Bank, Axis Bank and More

HSIE Results Daily Kotak Mahindra Bank: Kotak Mahindra Banks (KMB) 1QFY22 performance was broadly in line with our estimates on the back of...

HDFC Securities

India: AMFI Stock Categorization Changes to Drive Active Portfolio Churn

The reclassification of stocks to large, mid and small cap will set off a churn in mutual fund portfolios where historically stocks migrating...

Brian Freitas

India Consumption: More Signs of a Widening Slowdown

Bank lending to NBFCs has been flat since Oct-18 after rising by ~ Rs 1 tn in the previous 5-month period. Debt mutual fund holdings in NBFCs have...

Bhaskar Chakraborty

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