In today’s briefing:
- Long Kotak Mahindra (KMB IN) Vs. Short Bajaj Finance (BAF IN): Statistical Arbitrage in Indian Banks
- Newgen Software Technologies- Forensic Update
Long Kotak Mahindra (KMB IN) Vs. Short Bajaj Finance (BAF IN): Statistical Arbitrage in Indian Banks
- Context: The Kotak Mahindra Bank (KMB IN) vs. Bajaj Finance (BAF IN) price-ratio has deviated more than two standard deviations from its one-year average, presenting a potential relative value opportunity.
- Highlights: Going long Kotak Mahindra Bank (KMB IN) and short Bajaj Finance (BAF IN) targets a 9% return, with the long position supported by cheaper valuations.
- 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.
Newgen Software Technologies- Forensic Update
- Newgen Software Technologies (NEWGEN IN) is the leading provider of a unified digital transformation platform with native process automation, content services, and communication management capabilities.
- The company continues to exhibit aggressive accounting practice in FY25, where growth driven by overseas subsidiaries was majorly tied up in credit period. Higher provision on debtors is further concerning.
- High remuneration to promoters and independent directors, insider trading complaints, are few governance concerns
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