Sebi caps active debt funds’ single-company exposure
时间:2024-06-26 14:55:53 阅读(143)
By Siddhant Mishra
Sebi on Tuesday announced that active mutual fund (MF) schemes have to limit investments in debt instruments issued by a single issuer, based on the credit rating. Similar caps already exist for passive funds, such as exchange-traded funds, and are intended to reduce the risk from a fund’s assets concentrated in securities of a single company.
A circular by the regulator said active MF schemes shall not invest more than 10% of its net asset value (NAV) in debt instruments issued by a single issuer, comprising money market and non-money-market securities rated investment grade or above. The overall limit may be extended to 12% of the NAV of the scheme with prior approval of the board of trustees and board of directors of the asset management company.
According to new rules, an MF scheme shall not invest more than 10% of its net asset value in debt and money market securities of companies rated ‘AAA’. For companies rated ‘AA’, the exposure cannot be larger than 8%, while it is set at 6% for ‘A’-rated companies.
The norms will be applicable for all new mutual fund schemes launched from Tuesday, while existing schemes will be exempt until the maturity of the underlying debt and money market securities.
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Sebi said the long-term rating of issuers shall be considered for money market instruments, in the absence of which the most conservative long-term rating shall be taken for a given short-term rating, based on credit rating mapping of rating agencies between short-term and long-term ratings. Further, exposure to government money market instruments such as TREPS (Tri-Party Repo) on G-Sec/T-bills shall be treated as exposure to government securities.
The market watchdog had introduced credit risk-based single-issuer limits for debt ETFs/index funds to effectively manage risks associated with such investments, via an earlier circular in May on ‘Development of Passive Funds’.
Services miss estimates; Software better than expected: Services business grew 0.6% q-o-q cc and missed HCLT’s Q3FY23 guidance, mainly due to a 3.8% q-o-q cc decline in the ER&D segment. Growth in the IT&BS segment moderated slightly to 1.6% q-o-qcc but was in line with estimates. BFSI and Life Sciences were the key growth drivers, while communications were the drag among verticals. Growth was led by the Americas region, while Europe and ROW posted declines.
Decline in bookings reflects delays in decision-making: HCLT won 10 large deals in services and three large deals in Software with net-new deal TCV of $2.1bn, down 8% y-o-y. Deal wins were driven by the services portfolio, were centered on cost optimisation and vendor consolidation and came mainly from BFSI, manufacturing and Life Sciences verticals. Management highlighted a ramp-down in discretionary spending in Hitech and communications verticals but pointed to a strong deal pipeline.
FY24 guidance in line with expectations: HCLT has guided for 6-8% y-o-y growth for overall business and 6.5-8.5% y-o-y cc growth in services segment and 18-19% margins in FY24—all in line with our assumptions. We maintain our FY24-25 cc revenue growth and margin estimates and expect HCLT to deliver 6.5% cc revenue growth and 18.4% margins in FY24. However, we lower our earnings forecasts by 2% to factor the higher tax rate indicated by the management.
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Raise PT: HCLT has fared better in Q4, particularly in North America and BFSI, unlike its peers. However, rising demand uncertainty as a US recession nears remains a concern. HCLT’s stock at CMP trades at 17x PE and offers a 5% yield, which in our view should limit downsides and derating. Hence, we raise our target PE to 17x (16x earlier) and raise our PT to Rs 1,125, offering 8% potential upside.
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