Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

Nomura Research Institute / Equity Bottom-Up

<p>On 21 June 2021, <a href="https://www.smartkarma.com/entities/nomura-research-institute-ltd" target="_blank" data-smartkarma-citation="entities:18129:1" rel="noopener">Nomura Research Institute Ltd (4307 JP)</a> announced (<a href="https://ir.nri.com/jp/ir/news/auto_20210621452515/pdfFile.pdf" target="_blank" rel="noopener">link</a>) a buyback program of up to 20,000,000 shares (3.30% of shares out) spending up to ¥60 billion, with the program running from 22 June 2021 to 30 December 2021, with possible buying on market and on ToSTNeT-3, but excluding dates in the 10 days around the day after the quarterly results announcements. </p><p>The company ALSO announced a ToSTNeT-3 buyback tomorrow morning for up to 16,925,200 shares at today's closing price of ¥3,545/share. </p><p>That 16.925mm shares at that price = ¥59,999,834,000 so one can assume that if the ToSTNeT-3 buyback is completed to the full extent, that will mean the buyback program will be done tomorrow before the market opens.</p><p>The announcement suggested that <a href="https://www.smartkarma.com/entities/nomura-holdings-inc" target="_blank" data-smartkarma-citation="entities:742:1" rel="noopener">Nomura Holdings (8604 JP)</a> intended to sell as many as 14.105 million shares in the buyback leaving 2.815mm shares for other holders if they want to sell Monday's close. </p><p>But I remind readers that a) short selling is allowed, and b) it is entirely <em>pro rata</em> (with some niggling little procedural exceptions) so if people stepped in to sell, they would probably get a decent portion of their offer sold at that price. </p><p>More below the fold. </p>

On 21 June 2021, Nomura Research Institute Ltd (4307 JP) announced (link) a buyback program of up to 20,000,000 shares (3.30% of shares out) spending up to ¥60 billion, with the program running from 22 June 2021 to 30 December 2021, with possible buying on market and on ToSTNeT-3, but excluding dates in the 10 days around the day after the quarterly results announcements. The company ALSO announced a ToSTNeT-3 buyback tomorrow morning for up to 16,925,200 shares at today's closing price of ¥3,545/share. That 16.925mm shares at that price = ¥59,999,834,000 so one can assume that if the ToSTNeT-3 buyback is completed to the full extent, that will mean the buyback program will be done tomorrow before the market opens.The announcement suggested that Nomura Holdings (8604 JP) intended to sell as many as 14.105 million shares in the buyback leaving 2.815mm shares for other holders if they want to sell Monday's close. But I remind readers that a) short selling is allowed, and b) it is entirely pro rata (with some niggling little procedural exceptions) so if people stepped in to sell, they would probably get a decent portion of their offer sold at that price. More below the fold. 

Nomura Research Institute ToSTNeT-3 Buyback

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

<div><p><a href="https://www.smartkarma.com/entities/zomato-media-pvt" target="_blank" data-smartkarma-citation="entities:28820:1" rel="noopener">Zomato (ZOM IN)</a>  aims to raise US$1.1bn in its upcoming India IPO. This would be the largest listing in India from the technology sector.</p></div><div>
<p>Zomato operates a technology platform that provides services for restaurant partners, customers, and delivery partners. During FY20, Zomato recorded 41.5m average MAU and was one of the leading Food Services platforms in India, in terms of value of goods sold, according to RedSeer. As of 31 Dec 20, it had a presence in 526 Indian cities and had 350,174 active restaurant listings.</p>
<p>We covered a little bit of the the company's history in <a href="https://www.smartkarma.com/insights/zomato-pre-ipo-filings-lack-narrative-a-little-bit-of-history-helps" target="_blank" rel="noopener">Zomato Pre-IPO - Filings Lack Narrative, a Little Bit of History Helps</a>.</p>
<p>In this note, we will talk about the financials.</p>
</div>

Zomato (ZOM IN)  aims to raise US$1.1bn in its upcoming India IPO. This would be the largest listing in India from the technology sector.
Zomato operates a technology platform that provides services for restaurant partners, customers, and delivery partners. During FY20, Zomato recorded 41.5m average MAU and was one of the leading Food Services platforms in India, in terms of value of goods sold, according to RedSeer. As of 31 Dec 20, it had a presence in 526 Indian cities and had 350,174 active restaurant listings.
We covered a little bit of the the company's history in Zomato Pre-IPO - Filings Lack Narrative, a Little Bit of History Helps.
In this note, we will talk about the financials.


Zomato Pre-IPO - Food Delivery Revenue Was Probably up 16x

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)

<p>The Indian IT Service companies all expect double-digit top-line growth for FY2022 (to end March 2022), which is a significant acceleration from what they have delivered over the past 5+ years, but very achievable due to the low base set during the onset of the COVID-19 pandemic in FY2021. </p>
<p>With all these companies currently trading at historically peak valuation levels, the key controversy on these stocks is whether this is still the early stages of a 3-5yr heightened growth period and whether this has already been priced in. </p>
<p>With the Indian IT Services sector set to record exceptional growth acceleration, at least for the early part of the coming financial year, in this insight, I analyse whether a multi-year hyper-growth scenario is already priced in, by looking at earnings forecasts, relative valuation levels, and implied future growth rates.</p>

The Indian IT Service companies all expect double-digit top-line growth for FY2022 (to end March 2022), which is a significant acceleration from what they have delivered over the past 5+ years, but very achievable due to the low base set during the onset of the COVID-19 pandemic in FY2021. 
With all these companies currently trading at historically peak valuation levels, the key controversy on these stocks is whether this is still the early stages of a 3-5yr heightened growth period and whether this has already been priced in. 
With the Indian IT Services sector set to record exceptional growth acceleration, at least for the early part of the coming financial year, in this insight, I analyse whether a multi-year hyper-growth scenario is already priced in, by looking at earnings forecasts, relative valuation levels, and implied future growth rates.

Indian IT Services: Is a Multi-Year Hyper-Growth Scenario Priced In?

Smartkarma Research Team, Smartkarma

Smartkarma Research

Smartkarma Research Team

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

<p>On our next webinar, we're happy to welcome back Insight Provider <a href="https://www.smartkarma.com/profiles/wium-malan-cfa" target="_blank" data-smartkarma-citation="accounts:9615" rel="noopener">Wium Malan, CFA</a> who will share an updated view on key IT services companies in India. The webinar will cover <a href="https://www.smartkarma.com/entities/tata-consultancy-svcs-ltd" target="_blank" data-smartkarma-citation="entities:18708:1" rel="noopener">Tata Consultancy Svcs (TCS IN)</a>, <a href="https://www.smartkarma.com/entities/infosys-ltd" target="_blank" data-smartkarma-citation="entities:267:1" rel="noopener">Infosys Ltd (INFO IN)</a>, <a href="https://www.smartkarma.com/entities/wipro-ltd" target="_blank" data-smartkarma-citation="entities:15360:1" rel="noopener">Wipro Ltd (WPRO IN)</a>, and <a href="https://www.smartkarma.com/entities/hcl-technologies-ltd" target="_blank" data-smartkarma-citation="entities:20025:1" rel="noopener">Hcl Technologies (HCLT IN)</a>, as Indian IT services companies expect significant growth in FY2022 - albeit off a low base. Is this the start of a hyper-growth period, and has this already been priced into their lofty valuations?</p>
<h3>The webinar will be hosted on Wednesday, 12 May 2021, 17:00 SGT/HKT.</h3>
<div class="content-highlight">
<h2><a href="https://share.hsforms.com/1H9pFZOB-RF2J00kbvMmxcw2c5gj?zoom_webinar_id=85689024246" target="_blank" rel="noopener">Register for the Webinar here</a></h2>
</div>
<p>Wium Malan is a Global Equity Analyst with 13+ years of experience on the Buy-side covering companies in Emerging and Developed markets. He specialises in Fundamental and Quantitative analysis on companies in the Internet, Telecommunication, Media, Technology, IT Services, Healthcare, Pharmaceutical, and other Industrial sectors.</p>

On our next webinar, we're happy to welcome back Insight Provider Wium Malan, CFA who will share an updated view on key IT services companies in India. The webinar will cover Tata Consultancy Svcs (TCS IN), Infosys Ltd (INFO IN), Wipro Ltd (WPRO IN), and Hcl Technologies (HCLT IN), as Indian IT services companies expect significant growth in FY2022 - albeit off a low base. Is this the start of a hyper-growth period, and has this already been priced into their lofty valuations?
The webinar will be hosted on Wednesday, 12 May 2021, 17:00 SGT/HKT.

Register for the Webinar here

Wium Malan is a Global Equity Analyst with 13+ years of experience on the Buy-side covering companies in Emerging and Developed markets. He specialises in Fundamental and Quantitative analysis on companies in the Internet, Telecommunication, Media, Technology, IT Services, Healthcare, Pharmaceutical, and other Industrial sectors.

Smartkarma Webinar | Indian IT Services: Picks and Pans

Event-Driven

<p>In 2016, a Blackstone fund purchased 60.5% of India-based IT Solutions Provider <a href="https://www.smartkarma.com/entities/mphasis-ltd" target="_blank" data-smartkarma-citation="entities:7672:1" rel="noopener">Mphasis Ltd (MPHL IN)</a> from Hewlett Packard (which had been looking to sell its stake for quite a while after having purchased it in 2008 when it bought out EDS) at Rs 430/share, then conducted an Open Offer to buy more shares at Rs 457 and change. The deal was to purchase 106.2mm shares from the sellers and another 26% or 54.93mm shares via an Open Offer, and if no shares were acquired in the Open Offer, the Blackstone fund would buy the other 20.9mm shares from the HPE entity selling and HPE would own no more shares. </p>
<p>When the deal was announced, the price was just below Rs 500/share and during the course of the summer the price rose further so that the Open Offer at the time obtained only 0.001% of shares out. </p>
<p>The shares rose, doubling reasonably quickly as Blackstone quickly revamped operations. Over the years, Blackstone opportunistically bought and sold small slices of the company in market operations. Late last year, it became clear that Blackstone was weighing the possibility of selling its 56.16% stake in the company as the valuation had run and shares were three times where they were when they bought. There were suggestions it might also be related to the possible departure of Blackstone India senior managing director Amit Jain who was rumored to be quitting to take up the co-head spot at Carlyle India. By January, seller due diligence had been conducted, banks were engaged, and Blackstone was en route to selling its stake (and the Buyer would be liable to launch an Open Offer) in its largest India investment to date to one of the four PE houses which were expected to put in bids - Brookfield, Bain, Carlyle, and Permira. </p>
<p>Final round bids were due 24 February and by early March, the sale had been called off as the prospective lead buyer Carlyle and Blackstone as seller couldn't come to terms.</p>
<p>Today, we have a deal. But it's not Carlyle.</p>
<p>Blackstone is selling to Blackstone. </p>

In 2016, a Blackstone fund purchased 60.5% of India-based IT Solutions Provider Mphasis Ltd (MPHL IN) from Hewlett Packard (which had been looking to sell its stake for quite a while after having purchased it in 2008 when it bought out EDS) at Rs 430/share, then conducted an Open Offer to buy more shares at Rs 457 and change. The deal was to purchase 106.2mm shares from the sellers and another 26% or 54.93mm shares via an Open Offer, and if no shares were acquired in the Open Offer, the Blackstone fund would buy the other 20.9mm shares from the HPE entity selling and HPE would own no more shares. 
When the deal was announced, the price was just below Rs 500/share and during the course of the summer the price rose further so that the Open Offer at the time obtained only 0.001% of shares out. 
The shares rose, doubling reasonably quickly as Blackstone quickly revamped operations. Over the years, Blackstone opportunistically bought and sold small slices of the company in market operations. Late last year, it became clear that Blackstone was weighing the possibility of selling its 56.16% stake in the company as the valuation had run and shares were three times where they were when they bought. There were suggestions it might also be related to the possible departure of Blackstone India senior managing director Amit Jain who was rumored to be quitting to take up the co-head spot at Carlyle India. By January, seller due diligence had been conducted, banks were engaged, and Blackstone was en route to selling its stake (and the Buyer would be liable to launch an Open Offer) in its largest India investment to date to one of the four PE houses which were expected to put in bids - Brookfield, Bain, Carlyle, and Permira. 
Final round bids were due 24 February and by early March, the sale had been called off as the prospective lead buyer Carlyle and Blackstone as seller couldn't come to terms.
Today, we have a deal. But it's not Carlyle.
Blackstone is selling to Blackstone. 

Blackstone Sells Mphasis Stake To.... Blackstone and Investors Get a CHEAP Option

India

Tata Consultancy Services, a division of Tata Sons Limited, is a global IT services organization that provides a comprehensive range of IT services to its clients in diverse industries. The Company, caters to finance and banking, insurance, telecommunication, transportation, retail, manufacturing, pharmaceutical, and utility industries.

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Tata Consultancy Svcs (TCS IN)

Nomura Research Institute ToSTNeT-3 Buyback

NRI is one of the higher-multiple (forward consensus EV/EBIT or EV/EBITDA) Japanese IT service companies. There is a PRE-OPEN ToSTNeT-3 buyback...

Travis Lundy

Zomato Pre-IPO - Food Delivery Revenue Was Probably up 16x

Zomato aims to raise US$1.1bn in its upcoming India IPO. This would be the largest listing in India from the technology sector.

Sumeet Singh

Indian IT Services: Is a Multi-Year Hyper-Growth Scenario Priced In?

With the Indian IT Services sector set to record exceptional growth acceleration, in this insight, I analyse whether a multi-year hyper-growth...

Wium Malan, CFA

Smartkarma Webinar | Indian IT Services: Picks and Pans

On 12 May, 5pm SGT, join us as we welcome back Wium Malan, who will share an updated view on key IT services companies in India like Tata...

Smartkarma Research

Blackstone Sells Mphasis Stake To.... Blackstone and Investors Get a CHEAP Option

Blackstone is selling its large stake in Mphasis purchased in 2016 to another Blackstone consortium. Price is 3% below here. There may be a 2% div...

Travis Lundy

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Nomura Research Institute ToSTNeT-3 Buyback

NRI is one of the higher-multiple (forward consensus EV/EBIT or EV/EBITDA) Japanese IT service companies. There is a *PRE-OPEN* ToSTNeT-3 buyback...

Travis Lundy

Zomato Pre-IPO - Food Delivery Revenue Was Probably up 16x

Zomato aims to raise US$1.1bn in its upcoming India IPO. This would be the largest listing in India from the technology sector.

Sumeet Singh

Indian IT Services: Is a Multi-Year Hyper-Growth Scenario Priced In?

With the Indian IT Services sector set to record exceptional growth acceleration, in this insight, I analyse whether a multi-year hyper-growth...

Wium Malan, CFA

Smartkarma Webinar | Indian IT Services: Picks and Pans

On 12 May, 5pm SGT, join us as we welcome back Wium Malan, who will share an updated view on key IT services companies in India like Tata...

Smartkarma Research

Blackstone Sells Mphasis Stake To.... Blackstone and Investors Get a CHEAP Option

Blackstone is selling its large stake in Mphasis purchased in 2016 to another Blackstone consortium. Price is 3% below here. There may be a 2% div...

Travis Lundy

NRI is one of the higher-multiple (forward consensus EV/EBIT or EV/EBITDA) Japanese IT service companies. There is a PRE-OPEN ToSTNeT-3 buyback...