Latest news with #CanaraRobecoAMC
Time of India
14-05-2025
- Business
- Time of India
Mid & smallcaps will consolidate till earnings recover, says Shridatta Bhandwaldar
Shridatta Bhandwaldar , Head of Equities at Canara Robeco AMC, believes India's equity story needs a more balanced, professionally managed asset allocation approach. In this interview, he breaks down the rationale behind launching the Canara Robeco Multi Asset Allocation Fund and his outlook on small and midcap stocks. Edited excerpts: What was the core insight or market gap that inspired the launch of the Canara Robeco Multi Asset Allocation Fund—why now, and why this mix? Investors and households are persistently making asset allocation choices between – equities, fixed deposits, real estate, fixed income, precious metals etc. Fundamentally when you look at current asset allocation in a typical Indian household, it's skewed towards Fixed deposits and real estate. When you look at this skew – you know that there is a need for a professional approach to asset allocation to find a balance between risk and returns. Also, we observed that investors are either hyperactive or passive in their asset allocation approach. Fundamentally, Canara Robeco Multi Asset Allocation Fund will help investors to professionally manage asset allocation between equity & equity related instruments, debt instruments and Gold and Silver Exchange Traded Fund (ETF). We believe that there is a need for this product and as CRAMC, we can add value to investors through this category. Gross equity of 65% is chosen to ensure superior risk adjusted returns over period and equity taxation benefits. This apart, on 'why now'; in our opinion, Multi Asset Allocation Fund, being an all-weather category, timing the launch of the product has low relevance. Multi-asset strategies sound like the new black in a volatile world. How does your fund navigate the current global uncertainties—be it sticky inflation, shifting central bank tones, or geopolitical jitters? Canara Robeco Multi Asset Allocation Fund will be an interplay of equity (net equity of 30 %-80%, Gross equity of 65%), debt (10-25%) and precious metals (10-25% of Gold ETF/ Silver ETF). These assets have low or inverse co-relation with each other – thus reducing volatility of outcomes through cycles. While optimal equity allocation would help in enhancing returns through cycles; Gold ETF/Silver ETF and fixed income will enhance downside protection and act as a hedge against inflation / economic or geopolitical uncertainty respectively. This product is a good way to manage volatility and generate optimum returns across cycles. Investors love returns, but they hate surprises. What kind of risk-adjusted performance or consistency can investors realistically expect from this new fund? Based on category returns – one should expect returns in excess of fixed income with much lower volatility than any single asset class may generate. What's your call on equity valuations , especially in mid and small caps? Current valuations of mid and small caps are between 22-25x FY27 consensus earnings. This is 10%-15% higher than historical valuations and thus we expect consolidation in them till corporate earnings improve meaningfully. It is to be noted here that FY25 earnings growth has been low single digit so far. Are Indian markets priced for perfection, or do you still see underappreciated sectors where the story is just beginning? Large caps are largely in the fair value zone whereas mid and small caps continue to be expensive as highlighted in the previous question. Markets at all points in time have sectors which are expensive and others which are under-appreciated. We think pockets in discretionary consumption, financials and global cyclicals, building materials, etc. are under appreciated in the current market. Domestic SIP flows are holding the fort even when FIIs get cold feet. How sustainable is this retail resilience and can it shield us in the event of a global risk-off? Indian household's equity allocation through SIP has been resilient. If corporate earnings revive in FY26 from the current low single digit in FY25; this trend might continue for a longer period. These flows help in increasing our markets' resilience against global events. If you had to bet on just one theme for the next 12-18 months - be it consumption, manufacturing, AI, or energy transition—where would you place your chips? We don't think one should bet on one theme. We see markets in the next 12-18 months to be more bottom-up than top down and thus one needs to find out good opportunities across consumption, manufacturing and energy transition. There are limited plays on AI transition in India. One might find more bottom-up ideas in consumption over next 12-18 months against the other themes.
Mint
01-05-2025
- Business
- Mint
Is it wise to buy Canara Bank shares ahead of Canara Robeco IPO launch? EXPLAINED
Canara Robeco IPO: Canara Robeco Asset Management Company, the mutual fund arm of state-run lender Canara Bank, has filed draft papers for its initial public offering (IPO) with the capital markets regulator Securities & Exchange Board of India (SEBI). Canara Robeco IPO will be completely an offer for sale (OFS) of 4.98 crore equity shares by promoters with no fresh issue component, according to the Draft Red Herring Prospectus (DRHP). Under the OFS, Canara Bank is set to divest 2.59 crore equity shares, while ORIX Corporation Europe N.V. (formerly known as Robeco Groep N.V.) plans to sell 2.39 crore shares. Canara Bank possesses a 51% interest in Canara Robeco Asset Management Company, whereas Orix Corporation controls the rest of the ownership in the AMC. Since the IPO is entirely an OFS, the company will not receive any funds from the public issue, and the proceeds will go to the selling shareholders. Canara Robeco IPO is estimated to be around ₹ 800-1,000 crore, according to media reports and talks on Dalal Street. As Canara Bank is selling around 52% of the OFS shares, the lender is estimated to receive approximately ₹ 500 crore from the public issue. Additionally, Canara HSBC Life Insurance Company has also filed a DRHP with SEBI for an IPO, which is again entirely an OFS. The OFS includes up to 13,77,50,000 shares by Canara Bank, up to 47.50 lakh shares by HSBC Insurance (Asia-Pacific) Holdings Limited, and up to 9.50 crore shares by Punjab National Bank. The IPO could be valued around ₹ 16,500 crore, with Canara Bank expected to raise approximately ₹ 2,200 crore from its stake sale, according to Vaibhav Vidwani, Research Analyst at Bonanza Group. Experts debate if investing in Canara Bank shares ahead of Canara Robeco IPO would be a tactical decision or not. Seema Srivastava, Senior Research Analyst at SMC Global Securities explained that investing in Canara Bank shares ahead of the Canara Robeco AMC IPO could be a strategic move, given the bank's stake sale in the AMC would lead to raising of significant capital which can be utilise to strengthen the lender's balance sheet. Canara Robeco IPO, being a 100% OFS, means the Canara Bank will receive the proceeds from the IPO, which will help strengthen its balance sheet and improving its capital adequacy ratio. 'This influx of capital can help Canara Bank expand its lending capacity, invest in growth initiatives, and reduce its dependence on external funding. With a stronger balance sheet, the bank can lower borrowing costs and enhance its overall financial stability,' Srivastava said. According to her, with its strong fundamentals and growth potential, investing in Canara Bank shares ahead of the Canara Robeco AMC IPO can be a good investment strategy for long-term investors. 'The bank's ability to drive growth initiatives and improve its financial health makes it an attractive investment opportunity. Overall, Canara Bank's stake sale in Canara Robeco AMC is likely to have a positive impact on its balance sheet and growth prospects, making it a good investment option for those looking to invest in the banking sector. By investing in Canara Bank shares, investors can benefit from the bank's strong market presence and growth potential,' added Srivastava. Meanwhile, Prashanth Tapse, Research Analyst, Senior Vice President of Research at Mehta Equities said that before considering if investing in Canara Bank shares ahead of Canara Robeco IPO is a wise investment strategy, investors should understand that Canara Bank is trying to monetise its investment in Canara Robeco AMC, and potentially projecting it as an unlocking value for shareholders. 'Given that the parent owns ~51% stake in the AMC business can influence the bank's valuation as a one-time benefit, which can also be discounted in the current price. More upside in the strategy could come depending on many factors like IPO market momentum, peer valuations and overall market sentiments. On the risk part, delay in IPO process due to regulatory approvals can reduce the strategy return expectations,' Tapse said. As of date, there are four AMC listed stocks for reference on valuations - HDFC AMC, Nippon Life India Asset Management, UTI AMC & Aditya Birla Sun Life AMC - trading in the range as high as 11.5x and as low as 3x, based on price-to-book (P/B) value comparison, he noted. 'Considering the AUM size of Canara Robeco AMC, which is approximately ₹ 1 lakh crore as of FY25, we can assume the IPO price should be in the valuation range of ~3-7x P/BV. However, it is too early to conclude this will be a wise investment strategy,' advised Tapse. On the technical charts, the trend for Canara Bank shares remains bullish. "Canara Bank witnessed a breakout from an Inverse Head and Shoulders pattern on 17th April 2025, supported by rising volumes—indicating a potential shift in trend. Post-breakout, the stock is currently experiencing a throwback move, which is a typical retest of the neckline. A bounce is anticipated from the neckline level, which also coincides with the 50 EMA, reinforcing the zone as a strong support area," said Kunal Kamble, Sr. Technical Research Analyst at Bonanza Group. "The stock is trading above the 50 EMA, a sign of a positive trend, and reflects continued bullish sentiment, he added. Meanwhile, the RSI had entered the overbought zone, triggering some profit booking," Kamble added. Despite the short-term pullback, the overall trend remains intact as long as the stock sustains above the ₹ 90 level, he opined. Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision. First Published: 1 May 2025, 01:59 PM IST
