In the week gone by, global stock markets witnessed selling pressure on being cautious ahead of major central banks meet. Actually, the wave of selling came as central banks in Europe raised interest rates a day after the US Federal Reserve hiked its key rate again, emphasizing that interest rates will need to go higher than previously expected in order to tame inflation. Following the 50 bp rate hike and hawkish message from the Fed & the ECB, BoE too hiked rates by 50 bps each and delivered, perhaps, a more hawkish message than the Fed. Disappointing US retail sales for November suggested inflation is taking a toll on consumers and raising fears that the Fed's rate hikes are tipping the economy into a recession. On Thursday, the government reported that the number of Americans applying for unemployment benefits fell last week, a sign that the labor market remains strong. Meanwhile, China's economy lost more steam in November as factory output slowed and retail sales extended declines, both missing forecasts and clocking their worst readings in six months, hobbled by surging COVID-19 cases and widespread virus curbs.
Back at home, tracking a cautious global markets, domestic markets continued to remain watchful in the later part of the week. Actually, investor sentiment got dampened by recession fears in the US and hawkish commentary from major central banks. The recently announced CPI inflation came in at 5.88% falling below the RBI’s upper target of 6% for the first time since January 2022. Now with WPI too falling to a 21-month low of 5.85%, there is a larger scope for pause of interest rate hikes. Now the interest rate regime at home is going to be interesting. India’s merchandise exports posted a marginal increase in November on an on-year basis to $31.99 billion, data released by the commerce ministry showed. Going forward market trend will continue to take direction from both the global as well as domestic factors.
On the commodity market front, lower level buying emerged in CRB and it closed near 300 levels. After making multi months highs, gold and silver both saw a pause in the rally as Fed increased the interest rate by 50 basis points and gave hawkish indication to keep it rising to combat the inflation. On MCX, there was different story for bullion, both of them ended with marginal gains. Buying will return at dip and gold and silver can trade in a range of 53000-55000 and 65000-69000 respectively. Crude oil prices can see limited gain upto 6500 levels. Base metals may move in a range on mix triggers. We can witness an ambiguity in the market on thin volume trade. Ifo Business Climate, GfK Consumer Confidence of Germany, BoJ Interest Rate Decision, Building Permits Prel, CB Consumer Confidence, Core PCE Price Index Durable Goods Orders, PCE Price Index and Michigan Consumer Sentiment Final of US, Core Inflation Rate and Inflation Rate of Canada, GDP Growth Rate of UK, Inflation Rate of Japan, etc are some data, which will give direction to the commodity prices.
SMC Global Securities Ltd. (hereinafter referred to as “SMC”) is a registered Member of National Stock Exchange of India Limited, Bombay Stock Exchange Limited and its associate is member of MCX stock Exchange Limited. It is also registered as a Depository Participant with CDSL and NSDL. Its associates merchant banker and Portfolio Manager are registered with SEBI and NBFC registered with RBI. It also has registration with AMFI as a Mutual Fund Distributor.
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SAFE HARBOR STATEMENT: Some forward statements on projections, estimates, expectations, outlook etc are included in this update to help investors / analysts get a better comprehension of the Company's prospects and make informed investment decisions. Actual results may, however, differ materially form those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, Impact of competing products and their pricing, product demand and supply constraints. Investors are advised to consult their certified financial advisors before making any investments to meet their financial goals.
The company has made key launches in the last few quarters and plans to make more launches in the second half. It is also expanding its filed forces in the key international markets like Brazil. The recent acquisition and alliances auger well for the company in strengthen its position. Thus, it is expected that the stock will see a price target of Rs.1814 in 8 to 10 months’ time frame on a target P/BV of 7.85x and FY24 (E) BVPS of Rs.231.12.
The company has reported a robust performance in yet another quarter and it continued its strong operational and financial performance consistently over the last few quarters. According to the management of the company, the focus remained to consistently deliver on its commitments without pushing price escalations or time extensions. The company is well-placed to achieve a robust overall performance during the fiscal year ‘23 and plans to launch projects spanning a 10 mn sft area in the second half of the year. With the number of its newly launched projects in Mumbai, the management of the company is optimistic that its value would increase going forward. Thus, it is expected that the stock will see a price target of Rs.556 in 8 to 10 months’ time frame on a three-year average P/BV of 2.15x and FY24 BVPS of Rs.258.55.
The stock closed at Rs 2123.80 on 16th December, 2022. It made a 52-week low at Rs 1690.55 on 07th March, 2022 and a 52-week high of Rs. 2537.45 on 18th January, 2022. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 2062.18
Short term and medium term bias are looking positive for the stock as it is trading in higher highs and higher lows on chart, which are bullish in nature. Apart from this, stock is forming a “Bull Flag” pattern on daily chart, which is considered to be bullish. On the indicators front such RSI and MACD are also suggesting buying for the stock. Therefore, one can buy in the range of 2090-2105 levels for the upside target of 2350- 2400 levels with SL below 1990 levels.
The stock closed at Rs 393.90 on 16th December, 2022. It made a 52-week low at Rs 299.00 on 20th December, 2021 and a 52-week high of Rs. 525.90 on 08th April, 2022. The 200 days Exponential Moving Average (DEMA) of the stock on the daily chart is currently at Rs 368.60
We can see on chart that the stock is trading in higher highs and higher lows on charts, which is bullish in nature. Apart from this, the stock has formed an “Inverse Head and Shoulder” pattern on weekly chart, and has given the breakout of pattern and also has managed to close above the same. So, follow up buying is anticipated from the stock in coming days. Therefore, one can buy in the range of 388-390 levels for the upside target of 430-445 levels with SL below 370 levels.
Disclaimer : The analyst and its affiliates companies make no representation or warranty in relation to the accuracy, completeness or reliability of the information contained in its research. The analysis contained in the analyst research is based on numerous assumptions. Different assumptions could result in materially different results.
The analyst not any of its affiliated companies not any of their, members, directors, employees or agents accepts any liability for any loss or damage arising out of the use of all or any part of the analysis research.
SOURCE: RELIABLE SOFTWARE
Charts by Reliable software
Indian markets tumbled down last week with IT, Auto, Reality and Pharma counter seen sharp sell-off along with Banking index. The selling pressure was seen on the back of global factors as Federal Reserve raised benchmark interest rate by 50 basis point. From derivative front, call writers were seen adding hefty open interest at 18400, 18500 & 18600 strike while marginal put writing was observed at 18200 & 18000 strike. Implied volatility (IV) of calls closed at 12.33% while that for put options, it closed at 13.38%. The Nifty VIX for the week closed at 13.73%. PCR OI for the week closed at 1.13. Technically Nifty has slipped back below its 20 days exponential moving average on daily charts and expected to trade under pressure in upcoming sessions. On downside, 18200 levels likely to provide support to Nifty below which further sell off can be seen in upcoming week. Banking index has strong support at 43000 levels while any upside rally in prices likely to get capped around 43600-43800 zone. For upcoming sessions, we keep our stance a bit cautious for Indian markets as we expect further profit booking at higher levels.
**The highest call open interest acts as resistance and highest put open interest acts as support.
# Price rise with rise in open interest suggests long buildup | Price fall with rise in open interest suggests short buildup
# Price fall with fall in open interest suggests long unwinding | Price rise with fall in open interest suggests short covering
Turmeric prices extended their gains last week following shrinking supplies at physical market. Export demand for turmeric has been good & that is keeping market sentiments up. Supplies have shrunk due to off season arrivals and stocks dropped at major trading centers that prompted millers for buying to cover futures requirement. About 3.87 thousand tonnes of turmeric arrivals were reported so far in Dec’22 compared to 10.25 thousand tonnes of previous year, down by 62% Y-o-Y. Supplies will remain down unless new crop touch the market. Recent sowing numbers have suggested that turmeric production is likely to remain down in coming year due to fall in acreages. Export demand has been good in year 2022 as India exported about 99 thousand tonnes of turmeric during Jan’22-Oct’22 compared to 89 thousand tonnes of previous year for corresponding period. Turmeric NCDEX Apr prices are likely to sustain the support of 8000 and will move towards 8900 in near term.
Jeera NCDEX Jan futures extended their gains last week due to supply tightness. Emerging export demand from China, Bangladesh helped prices to trade on positive bias. About 2.24 lakh hectares were sown under jeera in Gujarat till 12th Dec’22 compared to 2.37 lakh hectares of previous year, down by 5% Y-o-Y. Some profit booking is likely to be seen in Jeera as stockists have started releasing their stocks after recent gains in prices. Marginal buyers are away from bulk buying due to higher prices. Although, major trend is likely to remain positive due to weaker production outlook of jeera. Jeera Jan prices are likely to trade in range of 26800- 27800.
Dhaniya NCDEX Jan Prices are likely to remain down due to improved supply outlook. Reports of rise in area under dhaniya and better yield prospects supported by normal crop progress will weigh on the market sentiments. Area under dhaniya jumped sharply in Gujarat in year 2022 reported at 2.07 lakh hectares as on 12th Dec compared to1.08 lakh hectares of previous year, higher by 92% Y-o-Y. Supplies are adequate at major trading centers due to rising imports that is keeping buyers away from bulk buying. India has imported about 22.01 thousand tonnes of dhaniya during Jan’22-Oct’22 compared to 4.89 thousand tonnes of previous year. Dhaniya NCDEX Jan Prices are likely to trade in range of 8400-9200.
Bullion counter witnessed range bound movement throughout the week and set for a weekly loss pressured by expectations of higher interest rates for a longer period by the U.S. Federal Reserve. The Fed on Wednesday raised interest rates by 50 basis points as expected, but Chair Jerome Powell said the central bank would deliver more hikes next year even as the economy slips towards a recession. Gold and silver prices are sharply lower on profit-taking pressure from the shorter-term futures traders, after recent gains. Central banks in Europe followed the Fed in slowing the pace of interest rate increases but offered a similar stark message that financial conditions will continue to tighten even as economic performance deteriorates. The inflation data received so far in October and November showed a welcome reduction in the pace of price increases, but it will take substantially more evidence to give confidence inflation is on a sustained downward path. Meanwhile, India plans to invite bids to extract gold from 50 million tonnes of processed ore in a cluster of colonial-era mines in the southern state of Karnataka, a senior government official with direct knowledge of the matter said. SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.3% to 913.88 tonnes. On COMEX Gold prices were facing resistance near $1810 and on the downside could take support near $1740. Silver on COMEX may trade in the wider range of $ 21.900-$24.000 levels. Ahead in the week, MCX Gold may continue to witness selling where it may take support near 52800 levels and could face resistance near 55300 levels. Silver may trade with higher volatility and possible trading range would be 65000-69500 levels.
Crude oil prices were poised for the biggest weekly gains in the last 10 weeks amid supply disruption concerns and China’s demand recovery hopes. Both the benchmarks witnessed correction in prices after the interest rate hike by the Central Banks. But the oil benchmarks are on track for their biggest weekly gains since early October, with market sentiment buoyed by potential supply tightness after Canada’s TC Enerfy corp shut its keystone pip,eline following a leak and by a demand resumption prospect in 2023. The IEA projections of Chinese oil demand recovering next year after a 2022 contraction to 400,000 barrels per day. The agency raised its 2023 oil demand growth estimate to 1.7 million bpd. OPEC stuck to its forecasts for global oil demand growth of 2.55 million bpd this year and 2.25 million bpd in 2023 after several downgrades, saying that while economic slowdown was “quite evident” there was potential upside such as from a relaxation of China’s zero-COVID policy. But the oil market is still mounted by downside pressures, including the slow recovery of China’s demand due to a swelling number of COVID infections and a supply overhang in the West of Suez market. Investors are very cautious now as the market is full of variables. Ahead in the week, Crude oil will continue to witness huge volatility where it may take support near 5700 levels and could face resistance near 6800 levels. Buy near support and sell near resistance would be the strategy. Natural gas witnessed positive rally, the highest in over two weeks, amid a bigger-than-expected draw from reserves and signs of strong foreign demand. Ahead in the week, NG prices may continue to trade with positive bias and trade in the range of 520-600 levels.
Base metals may trade sideways with a bearish bias as fears of surging COVID- 19 infections in top consumer China and interest rate hikes by major central banks, fuelled fears of an economic slowdown. Although, China has introduced some policies to bolster the property industry and is considering rolling out more to boost market’s confidence, but China’s efforts to boost domestic growth next year will not be felt in the near-term. China's economy lost more steam in November as factory output slowed and retail sales extended declines, both missing estimates and clocking their worst readings in six months, hobbled by surging COVID-19 cases and widespread virus curbs. Copper may trade in the range of 685-715 levels. Chile, the world's largest copper producer, state-owned Chilean Copper Commission (Cochilco) cut its 2023 price forecast to $3.70 per pound due to higher supply. In Peru, the world's second largest copper producer, a wave of political protests related to the ouster of its former leader affected supply routes to key mines in the Andean nation, raising a potential risk to production. Zinc can trade in the range of 270-290 levels . The prices may fell amid expectations of rising supply and poor spot transactions under high zinc prices. Lead can move in the range of 180-190. Aluminum may trade in the range of 200-220 with bearish bias. China's primary aluminium production in November climbed 9.4% from a year earlier to 3.41 million tonnes as easing power restrictions allowed some regions to ramp up output and as new smelters started operation. Steel long (Jan) is likely to trade in the range of 45200-46500 levels on NCDEX.
Cotton MCX Dec prices are expected to trade down due to bleak demand. Export orders have declined due to the higher inventories stocked by buyers to cover the shortages of the covid period. Recession fears have also impacted buying interest for Indian textile and yarn. Domestic millers are also waiting for cool down in prices and going for hand to mouth buying. The Cotton Association of India (CAI) has urged the central government to withdraw the 11 per cent import duty on cotton to help the textile industry access raw material, or ginned cotton, at economical prices. Increased imports of cotton yarn in India also dampened the demand prospects as millers preferred imported cotton yarn due to higher domestic price. Losses will be limited due to lower supply as cotton arrivals are below normal in this season as farmers are not releasing their produce in anticipation of better price realization in coming future. Prices are likely to hold the resistance of 33500 and expected to move towards 30400.
Cotton seed oil cake NCDEX (Jan) futures are likely to trade higher due to active demand at physical market. Spot demand is good due to supply tightness as farmers are not releasing cotton in anticipation of better price outlook. Stockists are active in wake of lower production of cotton seed oil cake as pace of cotton arrivals has been slower. Prices are likely to hold the support of 2600 and will move towards 2900 in coming week.
Guar seed Jan futures are likely to trade sideways and may keep bias on negative side. Farmers are releasing their stocks after strong rally in prices that will pull down the guar prices in near term. Guar seed prices are likely to trade in range of 5600-6200 levels in near term.
Mentha oil (Dec) is likely to trade mixed to positive next week. Buying interest in mentha oil has increased due to increased industrial demand. Production is lower that the affected the pace of arrivals as well. Prices are likely to hold support of 980 levels and will move gradually towards 1070 in near term.
Castor seed (Jan) prices are likely to trade on weaker note in the wake of sluggish export demand. Bleak demand prospects and lower export demand for castor oil suggests weaker trend in castor seed wherein supply tightness in physical market is restricting the major downfall. Millers are avoiding bulk buying in wake of commencement of new crop of castor after Jan. Going forward, castor seed prices are likely to trade in range of 6900-7400 levels.
It closed at Rs. 54107.00 on 15th Dec 2022. The 18-day Exponential Moving Average of the commodity is currently at Rs 53757.86. On the daily chart, the commodity has Relative Strength Index (14-day) value of 59.800. Based on both indicators, it is giving a sell signal.
One can sell near Rs. 54200 for a target of Rs. 53200 with the stop loss of 54700.
It closed at Rs. 185.25 on 15th Dec 2022. The 18-day Exponential Moving Average of the commodity is currently at Rs 184.90. On the daily chart, the commodity has Relative Strength Index (14-day) value of 56.516. Based on both indicators, it is giving a sell signal.
One can sell near Rs. 186 for a target of Rs. 174 with the stop loss of 192.
It closed at Rs. 27645.00 on 15th Dec 2022. The 18-day Exponential Moving Average of the commodity is currently at Rs 26202.71. On the daily chart, the commodity has Relative Strength Index (14-day) value of 69.745. Based on both indicators, it is giving a sell signal.
One can sell near Rs. 27300 for a target of Rs. 26000 with the stop loss of 27900
NOTE: *M.High / M.Low stands for Monthly High / Monthly Low
Lower level buying emerged in CRB and it closed near 300 levels. After making multi months highs gold and silver both see pause in the rally in COMEX as Fed increased the interest rate by 50 basis points and give hawkish indication to keep it rising to combat the inflation. Strangely, despite hawkish comment, dollar index didn’t react aggressively’ however it covered some of its weekly losses later on. Rising interest rates were the biggest headwind to gold markets this year, as they drove up the opportunity cost of holding non-yielding assets. With Wednesday’s hike, the Fed has raised its benchmark rate by 425 basis points this year, putting it at its highest level since the 2008 financial crisis. On MCX, there was different story for bullion, both of them ended in green regardless of sharp profit booking. Base metals were unable to stay at higher side amid continued uncertainty over a Chinese economic reopening. While the country relaxed several anti-COVID measures this month, it is facing a large spike in infections - so much so that the government said it was now impossible to track the virus’ spread. Weak industrial production of China’ further pressurized the market. Energy pack was on roller coaster ride; especially natural gas. The first likely polar vortex in four years might be just a week away, but natural gas still returned to a sell-off mode on Wednesday with players taking profit and attempting to correct a market that had jumped almost 30% over the previous five sessions. The last polar vortex occurred in 2014. Weather records show similar cold outbreaks prior to that, including several notable freezes in 1977, 1982, 1985 and 1989. Overall it closed in green, despite the rise in inventory. Oil settled up after OPEC and the International Energy Agency (IEA) forecast a rebound in demand over the course of next year. The Brent contract has returned to a backwardated market structure, which indicates worries about oversupply are subsiding. Looking into 2023, OPEC said it expects oil demand to grow by 2.25 million barrels per day (bpd) over next year to 101.8 million bpd.
In agri, mentha oil surprised the market participants with its two week sharp upside move with swelling volume on exchange. Castor saw a pause in rally on fresh arrivals. Dhaniya tried to recover from the low on fresh buying but closed the week in red overall. Area under dhaniya jumped sharply in Gujarat in year 2022 reported at 2.07 lakh hectares as on 12th Dec compared to 1.08 lakh hectares of previous year, higher by 92% Y-o-Y. Turmeric gave strong gain last week whereas jeera continued its northward journey for continuous third week. Guar counter slipped further. Ongoing sowing activities will be major price driver for prices as area under Jeera has dropped in Gujarat due to adverse weather condition.
Crude oil continued to slide as Brent, the benchmark for two thirds of the world’s oil, fell below $80 a barrel last week for the first time since January amid concerns of a recession in several countries and slowing growth in China, the world’s secondlargest economy and top crude importer. While lower oil prices came as a welcome relief to consumers faced by surging inflation, the full impact of embargoes on Russian crude and product supplies remained to be seen. Significant uncertainty remains around the impact that sanctions on Russia will have on global oil prices. The EU ban on seaborne imports of crude oil from Russia took effect on December 5, and the ban on petroleum product imports is set to begin on February 5.
International Energy Agency forecast
The International Energy Agency increased its global oil demand growth estimate for this year and the next on rising crude consumption in India, China and the Middle East. The IEA now expects oil demand to grow by 1.7 million barrels per day in 2023, up from its previous estimate of 1.6 million. This year, oil demand will grow by 2.3 million bpd, a 140,000 bpd increase over the agency’s previous forecast.
Demand in Organization for Economic Co-operation and Development (OECD) countries is still depressed because of weak petrochemical activity in Europe and Asia, the agency said.
Russia's oil exports rose in November ahead of a December 5 price cap imposed by the G7. The country’s oil exports increased by 270,000 bpd to 8.1 million bpd, the highest since April, as diesel exports surged nearly 38 per cent to 1.1 million bpd. But Russia’s oil export revenues dropped, by $700 million, to $15.8 billion on lower crude prices and steeper discounts.
Global oil supply last month fell 190,000 bpd to 101.7 million bpd after Saudi Arabia and other Gulf countries curbed supply in line with Opec+ output targets. A steeper drop is expected in December due to the EU ban on Russian crude imports and the G7 price cap, the agency added.
On December 13, Opec stuck to its oil demand growth forecast for this year and 2023. World oil demand in 2023 will rise by 2.25 million barrels per day (bpd), or about 2.3%. Chinese demand, hit by COVID containment measures, will average 14.79 million bpd in 2022, down 180,000 bpd from 2021, OPEC said.
The oil producer group expects the world economy to grow 2.8 per cent this year, up from its previous estimate of a 2.7 per cent growth. The 2023 global economic growth forecast was unchanged at 2.5 per cent.
Global economic growth is forecast to be as weak as it was in 2009 — during the global financial crisis — as a result of the Ukraine conflict and its impact on the world economy, according to the Institute of International Finance.
Risks to global economic growth remain skewed downwards due to challenges including high inflation, monetary tightening by major central banks and high sovereign debt levels in many regions. Moreover, geopolitical risks and the pace of the Covid- 19 pandemic during winter remain uncertain. However, a resolution of the geopolitical conflict in Eastern Europe and a relaxation of China's zero-COVID policy could provide some upside potential.
The rupee fell sharply this week to the lowest level in a month 82.83 after dollar got lifted amid Fed strikes back to the hawkish zone by raising rates by 50 bps. Accordingly, the statement released by Fed undoubtedly stayed hawkish with alarm at the 5.1% terminal rate in the dot plots vs. expectations of below 5.00%. However, the rupee somehow managed not to slide below 83/$ as RBI already delivered a hawkish monetary policy earlier this month and on top of that exporter's dollar sales turned out to be a bit supportive for the rupee as well. In the wake of light liquidity in the market for the rest of December, we don’t think there is scope for the rupee to fall abruptly from here on and gradually inch higher towards 82.40 in the coming days. In the majors, the euro shot to a one-year high vs. the dollar after European Central Bank delivered a very hawkish monetary policy this week by raising rates by 50 bps to 2.50% while stating for a further rate hike as inflationary risk is still on. Accordingly, EURUSD shot above 1.07 (later retreated to 1.0650 ) while EURINR scaled higher to 88.20 as well. However, we can expect now a bit of consolidation coming in the euro pairs while the pound heading lower after the Bank of England delivered a dovish tone in its latest December meeting. We think the weakness in GBPINR will extend may fall below 100.00 based on the divergence created between the Bank of England and the rest of the world.
USDINR (NOV)is trading above its major Exponential Moving Average indicating upwards trends for short term view. The Pair has major support placed around 82.27 levels while on higher side resistance is seen around 83.19 levels. The 21-day Exponential Moving Average of the USD/INR is currently around 82.27 Levels. On the daily chart, the USD/INR has Relative Strength Index (14-day) value of 61.82.
One can sell on bounce 83.20 for the target of 82.20 with the stop loss of 83.70.
GBPINR (NOV)is trading below its major Exponential Moving Average indicating downward trends for short term view. The pair has major support placed around 100.00 levels while on higher side resistance is seen around 102.00 levels. The 21-day Exponential Moving Average of the GBP/INR is currently around 99.64. On the daily chart, the USD/INR has Relative Strength Index (14-day) value of 66.07.
One can sell on bounce near 101.50 for the target of 100.50 with the stop loss of 102.00.
EURINR (NOV) is trading above its major Exponential Moving Average indicating upward trends for short term view. The pair has major support placed around 87.50 levels while on higher side resistance is seen around 88.48 levels. The 21-day Exponential Moving Average of the EUR/INR is currently around 86.10. On the daily chart, the EUR/INR has Relative Strength Index (14-day) value of 75.81.
One can buy on dip near 88.00 for the target of 89.00 with the stop loss of 87.50.
JPYINR (NOV) is trading between its major Exponential Moving Average indicating sideways trends for short term view. The pair has major support placed around 59.73 levels while on higher side resistance is seen around 61.39 levels. The 21-day Exponential Moving Average of the JPY/INR is currently around 59.72. On the daily chart, the USD/INR has Relative Strength Index (14-day) value of 59.84.
One can sell on bounce 60.70 for the target of 59.70 with the stop loss of 61.20.
The company will not receive any proceeds from the Offer and all such proceeds will go to the Promoter Selling Shareholder.
Considering the P/E valuation on the upper price band of Rs.366, EPS and P/E of Estimated annualised FY2023 are Rs.10.19 and 35.93 multiple respectively and at a lower price band of Rs. 347, P/E multiple is 34.07. Looking at the P/B ratio on the upper price band of Rs.366, post issue book value and P/B of Estimated Annualised FY23 are Rs. 38.45and 9.52 multiple respectively and at a lower price band of Rs. 347 P/B multiple is 9.02 . No change in pre and post issue EPS and Book Value as the company is not making fresh issue of capital.
Incorporated in 2017, KFin Technologies Limited is one of the largest registrars and a market leader, servicing over 90 million investor accounts spread over 1300 issuers including banks, PSUs, and mutual funds. The company serves the mission-critical needs of asset managers with clients spanning mutual funds, AIFs (alternative investments), pension, wealth managers, and corporates in India and abroad. KFintech provides SaaS-based end-to-end transaction management, channel management, compliance solutions, data analytics, and various other digital services to asset managers across segments, as well as outsourcing services for global players.
Scaled platform with strong track record of growth and market leadership:The company is a leading technology driven financial services platform providing comprehensive services and solutions to capital markets ecosystem including asset managers and corporate issuers across asset classes in India. The company is providing services to 24 out of 41 AMCs in India, as on September 30, 2022, representing 59% of market share based on the number of AMC clients. As on September 30, 2022, KFin holds a 46% market share based on the market capitalization of NSE 500 companies in India’s issuer solutions space, as per CRISIL.
Diverse multi-asset servicing platform: The company operates in multiple large markets in India, Hong Kong, Malaysia and Philippines, along with presence in Oman and Maldives, across several of these asset classes. This has allowed it to grow as a regional business and not just as an India focused business.
Unique “platform-as-a-service” business model: KFin’s technology offering enables transaction lifecycle management combined with highly secure data collection, processing and storage; It works with a data center which houses over 350 servers and data storage handling capacity of over 250 TB. The Company has launched over 20 new products over the last three Fiscals and six months ended September30, 2022, with two products in the pipeline.
Asset-light business model: KFin operates an attractive business model with a demonstrated track record of consistent profitability and returns, while operating an asset light model which has previously generated a strong free cash flow. The Company believes its business operations are highly resilient and predictable to a large extent due to deep client entrenchment and largely recurring nature of revenues.
Maintain the leadership in current businesses:The company’s strategy to enhance its value proposition to its clients and deepen client relationships includes initiatives such as Domestic mutual fund solutions, Issuer solutions, investor solutions and Global business services. As on September 30, 2022, the company had 24 operating clients in its domestic mutual fund solutions business. In investor solutions for other asset classes, the company has a strong pipeline of products under development such as ‘AIF-in-a box’, a comprehensive platform for AIFs, ‘NPS Agent Platform’, for assisted NPS sales and ‘IWAPP NXT’, an online web application-based solution for wealth customers. Global business services: The primary client for this business is Computershare and its various business lines across multiple regions.
Investing in technology solutions and product innovation: KFintech has comprehensive product platform solutions built on technology. It intends to develop a co-innovation laboratory with key industry players in ETF and index funds to drive research and development in this area. Its focus is to develop products and platforms with sector agnostic capability that will further allow it to diversify its client base.
Focused and selective international expansion: The company plans to expand internationally beyond the geographies it is already present by further enhancing its global delivery model wherein the company will look to become delivery partners to global investor and issuer services providers, so as to enter other markets.
Pursue strategic acquisitions: The company aims to continue to execute acquisitions to expand its platform and service offerings and acquire new clients to drive accelerated growth by leveraging its market access. The company aims to focus its efforts on established businesses in the key markets and businesses so as to add more clients across its business, existing businesses in new geographies as a tool for market entry and broadening product portfolio to deepen its client relationships.
The company is a leading technology-driven financial services platform. It has diversified streams of income sources. It posted a roller-coaster ride in the bottom lines for the last three fiscals. The company has an Asset-light business model with a recurring revenue model, high operating leverage, profitability, and cash generation. However, significant disruptions in its information technology systems or breaches of data security could adversely affect its business and reputation. A long term investor may opt the issue.
The share of mutual funds (MF) linked to systematic investment plan (SIP) category in the total MF assets under management (AUM) reached a record 17% in November 2022, the data from AMFI showed. It has expanded for eight months in a row and stays above the long-term average share of 11.7%. The AUM of the SIP funds and that of the total MF industry was at a record high of Rs 6.8 lakh crore and Rs 40.4 lakh crore in November respectively. The SIP flow has grown at a faster clip over the past few quarters. As a result, the SIP AUM grew by 35% annually in the past two years compared with 16% growth in the total MF AUM. The net inflow in equity funds dropped to a 21-month low of Rs 2,258 crore in November amid rising concerns over rich valuations. A sustained momentum in the SIP inflow suggests an elevated level of redemption pressure from lump sum investors, particularly from high networth individuals (HNIs) who booked profits as benchmark indices traded near record high levels. SIP-linked funds recorded an inflow of Rs 2.6 lakh crore over the past two years. The monthly SIP book reached a new high of Rs 13,306 crore in November. According to industry estimates, about 90% of the SIP linked funds are deployed in equity funds. A sustained inflow catapulted equity funds holding in the total MF AUM to a record 38%, a gain of 10% in the past two years.
Markets regulator Securities and Exchange Board of India (SEBI) on Wednesday cleared Bandhan-led consortium's proposed acquisition of IDFC Asset Management Company. Earlier this year, a consortium of Bandhan Financial Holdings GIC, and ChrysCapital signed an agreement to buy IDFC AMC and IDFC AMC Trustee Company from parent IDFC, for Rs 4,500 crore. After the transaction, BFHL will own about 60% and GIC and ChrysCapital will hold 20% each in IDFC AMC. Last month, the deal got approval from the Reserve Bank of India (RBI) and antitrust body competition commission of India (CCI) had already cleared it in August. Post the acquisition, IDFC AMC will be renamed as Bandhan AMC and IDFC Mutual Fund is proposed to be renamed as Bandhan Mutual Fund. "The consortium of incoming shareholders envisages the continuity of the current management team and investment processes at IDFC AMC," according to an official statement from IDFC. "As a result, the unitholders of IDFC MF would continue to benefit from the same high-quality investment approach and focus that IDFC AMC is reputed for," the release said. IDFC AMC is one of the top 10 AMCs in the country with an average assets under management of over Rs 1.2 lakh crore. It has investment products across equities, fixed income, and hybrid.