In today’s briefing:
- Long ICICI (ICICIBC IN), Short HDFC (HDFCB IN): Fresh Statistical Arbitrage Signal in Indian Banks
- Tata Capital IPO: RHP Update Points to Mixed Fundamentals
- GST Exemption: A Catalyst for Growth and Margin Headwinds for ICICI Prudential Life
- RateGain Acquisition of Sojern: A Travel Tech Powerhouse in the Making?
- Tata Capital IPO – Peer Comp and Thoughts on Valuation
Long ICICI (ICICIBC IN), Short HDFC (HDFCB IN): Fresh Statistical Arbitrage Signal in Indian Banks
- Context: The ICICI Bank (ICICIBC IN) vs. HDFC Bank (HDFCB IN) price-ratio has deviated more than two standard deviations from its one-year average, presenting a potential relative value opportunity.
- Highlights: The combination of going long ICICI Bank (ICICIBC IN) and short HDFC Bank (HDFCB IN) has traded profitably in July and is now flagged again as a fresh opportunity.
- Why Read: Essential for quantitative traders seeking mean-reversion opportunities, with detailed execution framework, risk management protocols, and historical simulation showing the statistical basis for this relative value play.
Tata Capital IPO: RHP Update Points to Mixed Fundamentals
- Tata Capital Limited (TATACAP IN) is the third-largest non-banking financial company (NBFC) in India. It is seeking to raise US$1.7 billion.
- I had previously discussed the investment case in Tata Capital IPO: The Investment Case.
- The RHP updates show that the fundamentals remain mixed. Positives include large size, mid-tier growth rates and good asset quality. Negatives include below peer average NIM, interest spread and ROA.
GST Exemption: A Catalyst for Growth and Margin Headwinds for ICICI Prudential Life
- The GST Council’s decision to exempt all individual life and health insurance premiums from GST (0% vs. 18% earlier), effective September 22, 2025, is a landmark affordability move.
- The immediate drop in premiums for products like term and ULIPs is expected to drive a significant surge in demand, though insurers like ICICI Prudential will lose ITC on expenses.
- While the volume boost from higher affordability is a major long-term catalyst, immediate margin compression from ITC loss on commissions will require operational efficiency and pricing recalibration for ICICI Prudential.
RateGain Acquisition of Sojern: A Travel Tech Powerhouse in the Making?
- RateGain Travel Technologies has entered into a definitive agreement to acquire US-based, AI-powered travel marketing platform Sojern for an upfront consideration of $250 million.
- The acquisition is a bold move to create a scaled, AI-first digital marketing and distribution platform, significantly boosting RateGain’s MarTech business and nearly tripling its revenue/EBITDA run-rate (pre-synergies).
- The strategic upside of owning the full guest acquisition-to-retention cycle justifies the blended financing structure and the integration risk of two large, geographically dispersed travel tech companies.
Tata Capital IPO – Peer Comp and Thoughts on Valuation
- Tata Capital Limited (TATACAP IN) is looking to raise up to US$1.7bn in its upcoming India IPO.
- Tata Capital Limited (TCL) is the flagship financial services company of the Tata group and a subsidiary of Tata Sons Private Limited.
- We have looked at the company’s past performance in our earlier notes. In this note, we talk about valuations.
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