The analysis of Altman Z-score for 290 companies from BSE 500 index in Heckyl Risk Analytics System (RAS) revealed that Automobiles, Utilities and Industrials sectors have led the volume of distressed companies in the financial year 2020.
The Altman Z-score is the output of a credit-strength test that gauges the company’s likelihood of bankruptcy. This score measures the performance of the company on profitability, leverage, liquidity, solvency, and activity to predict whether the organization has a high probability of becoming bankrupt.
Based on the value of Altman Z-score, the company cab be classified into three zones. A Z-score above 2.99 suggests that a company is in the safe zone. A Z-score between 1.8 and 2.99 is in the grey zone which suggests there is a good chance of the company going bankrupt. Meanwhile, a Z-score below 1.80 is in the distress zone which indicates a high probability of distress.
Here, we present some of the highlights of Altman Z-score analysis for 290 companies from BSE 500 index which have declared the annual results for the financial year 2020:
#1. Manappuram Finance, Shoppers Stop and Bombay Dyeing fall into Distressed category
#2. Tejas Networks, HEG and AllCargo Logistics slip into Grey zone
#3. Distressed Cholamandalam Investment, Reliance Capital and Can Fin Homes register further Deterioration
Heckyl RAS does all the heavy-lifting to save the time spent by the risk teams at the banks on the collection of various datasets and complex number crunching and thereby helping them to spend quality time on the ready to use output of business rules, financial modules and risk scores.
Heckyl RAS is the first of its kind innovative application that offers a 360-degree view on the portfolio of companies and individuals through analysis of the traditional and alternative datasets.
To know more about Heckyl RAS, email us at firstname.lastname@example.org.
Heckyl Risk Analytics System (RAS) is the first of its kind innovative application that offers a 360-degree view on the portfolio of companies and individuals through analysis of the traditional and alternative datasets.
On Wednesday, the Reserve Bank of India asked urban cooperative banks (UCBs) to undertake the system-based asset classification from Jun. 30, 2021, to improve efficiency and transparency.
RAS runs hundreds of business rules on the various datasets such as financials, news, provident fund, GST, directors, ownership, credit rating, etc. to derive the overall risk score for each company/ individual from the portfolio. Based on the overall risk score, the portfolio companies are bucketed into a high, moderate, and low-risk profile.
In our view, RAS can act as the perfect system for UCBs to classify their assets into a. Standard Assets; b. Sub-standard Assets and c. Doubtful Assets.
Here, we have presented the Highlights screen of RAS for the portfolio of Nifty50 index companies.
RAS not only provides the risk overview on the portfolio companies but also offers the option to dig deeper for the company level analysis. There are several other features (such as RBI Alerts screen, daily email newsletters for updates on portfolio companies, etc.) integrated into Heckyl’s application to make RAS a perfect partner for all types of banks.
To know more about Heckyl RAS, email us at email@example.com.
Heckyl has integrated RBI Alert screen in Risk Analytics System (RAS) which helps in the monitoring critical red flags defined by the central banks.
As per the RBI guidelines, the banks should have system which enables them to effectively monitor critical red flags on the portfolio companies. Some of the red flag alerts that the central bank has asked the banks to monitor are:
> Default in payment or bouncing of the high value cheques
> Raid by Income tax officials or other government authorities
> Escalation in project cost
> Resignation of the key personnel and frequent changes in the management
> Reduction in the stake of promoter / director
Our system has flagged news alerts on Eon Electric Ltd for default on payment of interest and repayment of principal amount under RBI Alert screen.
Heckyl’s Risk Analytics System (RAS) has shown that the 11 out 50 Nifty companies have earned negative risk scores. The list of companies having negative risk scores was topped by Zee Entertainment, followed by Vedanta and Mahindra & Mahindra.
On the other hand, the Heckyl risk score has been the strongest for HDFC Bank in Nifty 50 companies. HDFC Bank was followed by HCL Technologies and Bajaj Finserv.
Unstructured data sets such as News is the first credible source of information that can offer insights into both the present and future prospects of the company. The application of news data in the risk assessment of corporate borrowers helps in capturing important events and red-flags which can have impact on the company’s operations at a later date.
In our view, a significant drop in the company’s news sentiment can be a potential red-flag and at the same time, an early warning signal of future under-performance.
Our analysis of news data has shown a steep decline in sentiment score for 50+ companies from BSE 500 Index to a 2-year low. Here, we present the heat-map for top 20 companies witnessing significant drop in news sentiment score.
The deterioration in financials of the company did not happen overnight. There are one or more events happening internally and/ or externally in a span of time that could hamper the company’s operations. Moreover, the impact of events is known only at the later stage after the announcement of financial results.
Tracking multiple events involving the large number of corporate borrowers in portfolio is a daunting task. In our view, the analysis of Alternative Datasets such as PF, Ownership, Directors, News Sentiment, Credit Rating, GST, Charges etc. can offer an Early Warning Signal to spot deterioration in financials ahead of time.
Heckyl’s Risk Analytics System (RAS) offers 360-Degree view on Risk Assessment of Portfolio Companies by capturing and analyzing 1. Delay in Employees’ Provident Fund (PF) contribution; 2. Adverse Media and News Sentiment; 3. Changes in the Promoter Ownership or Pledging; 4. Director Resignations; 5. Delay in GST filing; 6. Credit Rating; and 7. Creation of New Charge on Assets in addition to Financial Data.
Here, we highlight the top 10 companies which have witnessed multiple red-flags ahead of decline in Financial Score.
RAS is the first of its kind innovative application that provides early warning signals through analysis of traditional and alternative datasets for identifying distress sectors and companies ahead of time.
To know more about Heckyl RAS, email us at firstname.lastname@example.org.
The manufacturing sector accounts for just one fifth of the global economy and its share is shrinking further in developed countries. Yet, the investing community spends much time on assessing the health of the sector. The manufacturing sector, being at the forefront of economic activity, provides the direction in which the overall economy will go. This explains why the manufacturing sector grabs the attention of the investor community.
The business surveys on the manufacturing sector have often helped in providing first reliable signals of turning points in the economy. One such key indicator is the manufacturing PMI which shows what the participating purchasing managers think about future capex, job creation and overall demand of goods.
A steep contraction in the latest manufacturing PMI numbers for April wasn’t surprising given the prevalent worldwide lockdown to tackle COVID-19 pandemic. However, a contraction of 20-30% versus a contraction of 50% should be looked upon separately.
While among the major economies, the manufacturing PMI numbers have contracted for all. However, the shrinkage of almost 50% in India’s April manufacturing PMI was steepest among the top 10 economies. This shows the damage caused by the lockdown has far deeper consequences on the Indian economy than its developed counterparts.
Companies from consumer services, industrials and financial sectors lead drop in PF score in FY20
Publicly available data from Employees’ Provident Fund Organization (EPFO) is one of the datasets that can be very useful to gain unique insights in the assessment of credit risk. In our view, a significant delay in monthly Provident Fund (PF) payment is a potential red-flag as the delay could be due to liquidity crunch faced by the company. Moreover, a substantial drop in the number of employees or amount paid for PF is also a potential red-flag as it signals layoffs or job cuts to reduce the company’s operational cost.
Heckyl’s Risk Analytics System (RAS) has several business rules to identify such red-flags from PF data. Based on the rule output of the PF module for the company, Heckyl system computes the PF score.
Heckyl study on PF data for 1,000 companies has shown a drop in the PF score for 540+ companies during the financial year 2020. The companies from consumer services, industrials, financial institutions, commercial services and chemical sectors have led the drop in the PF score for the FY20.
Moreover, 310+ companies, which have witnessed a fall in the PF score, have subsequently seen declined in the scores for other modules of RAS such as Financial, Charges, Credit Rating, Directors, Ownership, and GST. Read the rest of this entry »
With a rapid surge in the number of cases and mounting death toll, the coronavirus pandemic is wreaking havoc across the globe. So far, COVID-19 has claimed more than 1,25,000+ lives and has infected over 2 million people in more than 200 countries and territories around the world.
The death toll and the number of people infected by COVID-19 shows that the developed nations are the worst affected compared with the developing countries. The US led the number of casualties from Coronavirus, followed by Italy, Spain, France and the UK. These 5 countries constituted nearly 3/4th of the total number of deaths due to Coronavirus.
The rapid spread of Covid-19 has forced the governments around the world to announce Lockdowns, which has not only impacted the lives of people but also halted the overall global growth. The closure of plants and operations announced by companies from almost all the industries led to a short-term collapse in the global output.
Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF) has recently said that global growth will turn “sharply negative” in 2020, as COVID-19 has disrupted the world’s social and economic order “at lightning speed and on a scale that we have not seen in living memory”.
Though the developing countries have not witnessed major casualties, the economic shock triggered by COVID-19 will have devastating impact on both the formal and informal sectors of the economy.
On the other hand, the developed countries, with their financial might, are better placed to absorb the economic shock compared to the developing economies.
Heckyl’s Analysis of News Sentiment around Economic Indicators has also shown that the Developing Countries are most vulnerable to Economic shock than the Developed Countries.
India, Bangladesh, Indonesia and Philippines have recorded a downtrend in the Economic News Sentiment (200-DMA) after a spike in the number of coronavirus cases in March’2020 and subsequent announcement of Lockdowns.
On the contrary, the US has shown an improvement in its Economic News Sentiment helped by an announcement of Rate Cut and Liquidity Measures by the Fed along with USD 2 Trillion stimulus plan unveiled by the US government to cope up with the impact of the coronavirus crisis.
In January this year, China witnessed an outbreak of Coronavirus which has now infected more than 8,50,000 people globally. So far, Coronavirus has claimed the lives of more than 42,000 people. The rapid spread of Coronavirus across 199 countries and territories has forced the governments announced the lockdowns. Almost all the sectors were impacted by the lockdowns.
Analysis of unstructured datasets such as News can be very useful to unravel red-flags such as plant shut down, layoffs, supply disruption, lawsuits, drop in earnings, product recalls, regulatory actions etc. ahead of time.
We conducted analysis of news data on Coronavirus to measure its impact on the sectors. Our analysis showed that Automobile, Transportation, Consumer Services, Industrials and Software & Services were the worst hit sectors due to lockdown announced by Indian government to stop the spread of Coronavirus.
Heckyl Risk Analytics System is the first of its kind innovative application that provides early warning signals through analysis of traditional and alternative datasets for identifying distress sectors and companies ahead of time.
We have developed Sector News Sentiment Score in our Risk Analytics System for identifying the first sign of stress or green shoots of recovery in sectors. At the same time, our application offers deep-dive analytics on sectors through analysis of news flow under various categories.
Moreover, our application also helps in identifying the best and the worst performing companies within each sector through analysis of news sentiment.
To show the capabilities of our Risk Analytics System, we have prepared Sector News Report. Here, we present some of the key insights from the report:
#1. IT, Metals, Industrial Manufacturing and Telecom sectors have registered a steep fall in sentiment average in H2 CY19.
#2. Automobile sector sentiment average recorded the third consecutive sequential drop in H2 CY19.
#3. Chemicals, Pharma, Textiles and Fertilizers sectors’ news sentiment averages bounced back in H2 CY19.
The Dow Jones Industrial Average (DJIA) index witnessed a significant fall in the past week amid concerns over a surge in bond yields and trade war between the US and China. In our view, news sentiment based strategy can help investors to predict an impending movement in the market.
Heckyl has developed FiND Sentiment Indicator which reflects the underlying sentiment of news coverage on the companies within the index. The moving average strategy based on FiND Sentiment Indicator signals the potential impact of the news sentiment on the value of the underlying index.
For instance, FiND Sentiment Indicator turned bearish 4-days prior to the 832 points crash in the DJIA index on October 10 (Image 1). Our system analyzed 1,01,066 news items for 30 companies within the DJIA index for the past 6-months. Out the total, 74,780 news items were positive, while 26,286 news items were negative.
[Image 1: Bullish/ Bearish Signals defined by Sentiment Indicator Strategy vs. DJIA] Read the rest of this entry »
India’s national carrier Air India led the news share of voice (SoV) among major airlines for the second quarter in a row. On the other hand, the news SoV for Interglobe Aviation remained at the second position in the June 2018 quarter. Meanwhile, Jet Airways and SpiceJet’s news SoV for the quarter stood at third and fourth positions respectively.
[Image 1: Top 4 airlines’ web news share of voice]
Read the rest of this entry »
Heckyl’s FiND offers a singular repository to carry out deeper levels of due diligence for compliance risk assessment. Our unique alternative data platform allows screening of KMPs, Directors, Companies, and Institutions from compliance perspective by performing a check against:
Recently, the Central Bureau of Investigation (CBI) summoned AirAsia India head R Venkataramanan to join ongoing probe on July 3 over AirAsia money laundering case. The Enforcement Directorate (ED) is also probing an alleged violation of the Foreign Exchange Management Act involving Air Asia, which is related to the transactions of over Rs. 12 crore with Singapore-based HNR Trading Pte Ltd.
Earlier, the CBI has also named HNR Trading and its director Rajendra Dubey in the Air Asia case as alleged lobbyists who used their influence to secure a permit for international scheduled air transport services. It is also being alleged that owner of the firm, Rajendra Dubey, had a suspected association with an international terrorist Hamid Reza Malakotipour. In June 2014, the US Department of Treasury added Malakotipour in OFAC list as a “Specially Designated Global Terrorist”.
Here, we present a use case of how FiND could have help Air Asia to perform due diligence on HNR Trading Pte Ltd in below. Read the rest of this entry »
Sun Pharmaceutical Industries witnessed a significant improvement in the positive media coverage during the June 2018 quarter. Regulatory approvals and encouraging earnings led the positive news coverage for Sun Pharma in the June 2018 quarter.
At the same time, the volume of negative news has also dropped sharply in the same period. As a result, the long-term news sentiment has improved towards the end of the quarter.
Moreover, the improvement in news sentiment was also reflected in the recent rally in Sun Pharma’s stock price. Net-net, the news cycle was favorable for India’s leading drug maker in the June 2018 quarter.
[Compare screen: Sun Pharma – Share Price, News Volume, and Sentiment]
Telecom operator Bharti Airtel has accelerated the pace of new product launches in the past 3-months to fight competition from rivals like Reliance Jio, Vodafone, and Idea.
FiND media coverage study showed that Bharti Airtel topped the product launch related news flow among major telecos consistently for the past 3-months. Moreover, the product launch related news updates from India’s largest telecom operator for the current quarter touched the highest level in the past 4-quarters.
[Image 1: Monthly product launch news volume for the leading telecos]
Our analysis showed that Bharti Airtel has ramped up new product launches significantly following the launched of postpaid plan by Reliance Jio on May 10. India’s largest telecom operator has launched new prepaid plans; various data and unlimited calling offers; affordable 4G smartphones; and Apple Watch 3 LTE during the past month. As a result, Bharti Airtel’s product launch news volume touched a multi-year high in May 2018.
[Image 2: Daily product launch news volume for Bharti Airtel and Reliance Jio] Read the rest of this entry »
The discovery and real-time monitoring of macroeconomic data are the two key gaps that the financial researchers face. To bridge this gap, Heckyl has introduced a unique Macroeconomic Data Analytics product.
Historically, Singapore and the US 10-year bond yields have witnessed strong positive correlation. However, the recent rally in US 10-year bond yield above 2.9% (given better-than-expected jobs data) has changed historical correlation with Singapore 10-year bond yield. In fact, this correlation has turned negative in the past 7 days.
(Correlation as on Jun. 6, 2018)
Given the mean-reverting nature of yields, does this signify an opportunity to trade in the fixed income market?
To know more about our Macroeconomic Data Analytics platform, email us at email@example.com
An analysis of media coverage on the leading air carriers in India has shown that Interglobe Aviation was the most affected airline by the disruption in flight services during the past 5-months.
Interglobe Aviation, the operator of IndiGo Airlines has dominated disruption related news flow among major Indian airlines in the past 5-months. It was followed by Air India and Jet Airways. On the other hand, SpiceJet attracted fewer news items related to disruption.
[Image 1: Compare news volume by sentiment and/ or category]
Technical issues, engine failure (A320 Neo planes), and flight delays & cancellations have disrupted operations of IndiGo Airlines during the past 5-months. Read the rest of this entry »
Heckyl has developed FiND sentiment moving average (MA) strategy for measuring the potential impact of the positive/ negative news flow on the value of equities in real-time. The sentiment MA strategy indicates bullish/bearish signals based on the crossover of fast and slow moving averages of the company’s daily sentiment score.
We back-tested our sentiment MA strategy on 27 companies (excl. banks) from Straits Times index (STI). Our back-testing has proved the potential of sentiment MA strategy to beat STI companies’ stock price performance.
If an investor/a trader was to buy/sell STI stocks as per the bullish/bearish signal and hold the position for the period till the signal reverses, then an equal investment in 27 STI stocks could have yielded 6.3% return over the past 1-year (as against 0.3% price return).
[Image 1: Investment performance based on sentiment signal and stock performance]
Read the rest of this entry »
FiND study showed that the news sentiment for 3 drug-makers from top 25 pharma companies consistently remained below the industry average for the past 12-months. FDC, Sun Pharma Advanced Research and Caplin Point Laboratories were 3 companies whose short-term, medium-term and long-term news sentiment consistently stayed below the industry average for the past 12-months.
In our view, below industry average news sentiment for a prolonged period of time does not augur well for the company. Corporate communications team can step up media engagement at the appropriate time by picking up early signals for deteriorating news coverage.
[Image 1: Short-term news sentiment (50-DMA)] Read the rest of this entry »
Maruti Suzuki topped the share of voice for product launch news coverage among the leading automakers in the past 30-days. At the same time, India’s largest passenger car manufacturer has also led the share of voice for web news coverage during the same period.
[Image 1: Web News Share of Voice]
The media frenzy around new car launches helped Maruti to lead the share of voice for the product launch news. Brezza and Ertiga dominated the product launch related news flow for Maruti in the past 30-days.
[Image 2: News Mentions for Maruti’s Car Models] Read the rest of this entry »
Indian pharma market for anti-malarial products has shown declining trend over the last five years. Ipca, a leading player in anti-malarial products in India has also seen a downtrend in sales of these drugs. However, the trend in de-growth has been sharper in the industry when compared with a decline in IPCA’s revenue from anti-malaria products.
[Image 1: Compare screen shows anti-malarial products sales for the industry and IPCA]
[Image 2: Compare screen shows index for anti-malarial products sales for the industry and IPCA]
IPCA derives over 16% of revenues from anti-malaria products (Image 3). The company has maintained its position as a market leader in the domestic market for anti-malarial products with the share of ~50%. However, in recent months, IPCA’s market share has started dwindling marginally (Image 4).
Anti-malarial products account for 0.44% of the Indian pharma market while the average market share of the companies in this segment is pegged at 0.67%, which is fairly constant.
[Image 3: Therapeutic revenue contribution for IPCA]
[Image 4: Therapeutic market share for IPCA]
FiND collects, organizes and performs deep-dive analytics on structured and unstructured data sets to provide unique insights into companies, industries, and countries. Some of the key data sets that we offer for Pharmaceutical sector are litigation, new drug opportunity, detailed drug profile and clinical trial data from multiple locations.
To know more about FiND, email us at firstname.lastname@example.org
News flow related to growth-oriented business activities of Singapore firms touched the highest level in 2-years in April 2018, according to a study conducted by Heckyl, a leading Fintech engaged in news and financial data analytics. A surge in growth-oriented news flow signals improvement in the business confidence among companies listed in Singapore.
M&A, partnerships, product launch, contracts, and expansion were top 5 categories leading growth news flow for Singapore listed companies in April 2018. At the company level, Singapore Airlines Ltd, IHH Healthcare Bhd, and Comfortdelgro Corp Ltd led the growth news flow during April 2018.
Heckyl has a clear focus on reduction of the information arbitrage by “discovery and analysis” of the news flow in real time. Heckyl’s FiND News and Sentiment Analytics product analyses news + data from thousands of sources (including social media) in real time. Our proprietary tagging algorithm can tag a specific news category to any news based on the keywords in that news item.
[Image 1: Search by Tags screen for Singapore] Read the rest of this entry »
Negative news flow has outpaced positive coverage for 20 companies from BSE 200 index during April 2018, FiND media study showed. ICICI Bank, Wipro, Idea Cellular, IDBI Bank and Suzlon were top 5 companies receiving extremely negative media coverage in April 2018.
[Image 1: Positive to Negative News Ratio (The ratio value above 1 indicates mostly positive media coverage. On the other hand, the ratio value below 1 signals broadly negative media coverage.)] Read the rest of this entry »
April 2018 turned out to be a favorable month for crude oil prices. Rising geopolitical tensions in Syria and the Middle East coupled with higher demand and lower inventories aided a 5.6% rally in the crude oil prices in the past month. Moreover, the expectations of amicable resolution on trade war between the United States and China also supported a rise in crude oil prices.
FiND, alternative data platform has captured the key news items which supported rally in crude oil. At the same time, Heckyl platform has accurately captured underlying positive news sentiment around crude oil (Image 1).
[Image 1: Crude Oil News Flow during April 2018] Read the rest of this entry »
Toyota Yaris’s launch with an aggressive pricing will surely disturb the status quo in Mid-size Sedan segment in India.
In this study, we will be analyzing who will be getting impacted most by Toyota’s new arrival. We will be taking top 3 players from mid-size sedan segment as these names occupy close to 85% market share in a relatively less crowded segment. The top 3 models include Honda City, Maruti Suzuki Ciaz, and Hyundai Verna.
Honda City is by far the largest selling model of Honda in India, constituting 31% of company’s total sales (1Q-18). Hyundai Verna, launched in 3Q-17, has been the largest gainer in the segment. Its market share has picked to 29% in 1Q-18 from 6% in 1Q-17. Unlike Honda’s City, Hyundai’s reliance on the model is much less and Verna constituted just 9% of Hyundai’s total sales in India in 1Q-18.
Maruti Suzuki’s Ciaz was launched in 4Q-14. Given MSIL’s diverse small car portfolio, its reliance on Ciaz is minimal. We believe that any disruption by a new arrival will have little impact on it. A Ciaz facelift is also expected in August this year and this should help the model in capturing some lost ground. Ciaz’s market stood at 32% in Mid-size sedan segment in 1Q-18, down 560 bps vs. 1Q-17.
[Compare screen: PV Unit sales for top 3 models]
Given Honda’s reliance on City and time gap from now for its next-generation launch (2020), we suspect City to be the most vulnerable of the lot from Yaris aggressive launch. We understand that City has a loyal customer base. However, recent onslaught of the launches dented its market share.
Heckyl’s alternative data platform, FiND collects and organizes macro, micro, and financial data to provide unique insights into automobile sector.
To know more about FiND, email us at email@example.com
77% of companies with “below industry average news sentiment” witnessed a deterioration in financials
FiND Credit Risk Early Warning System (EWS) captures company related red-flags through analysis of millions of data points and news. Unstructured data sets such as “news” are an important piece of information that can be consumed in the risk assessment of corporate borrowers.
Our hypothesis is that the news sentiment acts as a lead indicator to the deterioration in the company’s financial performance. To test this hypothesis, we back-tested news data of 2,250+ companies for the year 2016 on the following business rule:
Company’s news sentiment average stays below the industry average for all 4-quarters in CY16
We identified 924 such companies. Then, we checked if there is any deterioration in the quarterly financial performance (measured by the score of financial business rules) for these companies in the next 4-quarters (CY17).
For 77% of companies (714/924), we found that A. The number of red flags on quarterly financials outpaced the number of green flags in CY17 and B. The net score of red flags was lower than minus 10 for all 4-quarters in CY17.
We have highlighted 3 such companies whose news sentiment remained below the industry average for all 4-quarters in CY16.
We have also listed quarterly result charts for these 3 companies which highlight a deterioration in their financial performance in the subsequent quarters.
Low base likely to push growth further in coming months
The Commercial Vehicle (CV) sector, which is considered to be the barometer of an economy, recorded a surge of 19.9% in unit sales during FY18. The remarkable feature of this growth has been recovery post GST implementation (Image 1). Overall sales of CVs increased by 34% and 31% respectively in Q4CY17 and Q1CY18 after a decline of 9% in Q2CY17.
[Image 1: India CV quarterly unit sales and y-o-y change]
At the same time, the 12-month moving sum of CV sales witnessed sharp northwards movement post July-17 (Image 2). We assign this surge to fleet owners’ bulk buying post GST implementation. Moreover, this trend is expected to continue in coming months given improved macro-conditions at ground level, huge pent-up demand, the higher average age of the fleet and lower comparable (Q2CY17 was down 9% y-o-y).
[Image 2: India CV unit sales 12-month moving sum] Read the rest of this entry »
FiND media coverage study for BSE 100 index companies showed a significant deterioration in the long-term news sentiment for Glenmark Pharmaceuticals, Vakrangee and fraud-hit Punjab National Bank (PNB).
These 3 companies have been receiving negative press coverage for quite some time. As a result, news sentiment 200-day moving average (DMA) for these 3 companies dipped to a 2-year low on Apr. 17, 2018.
[Image 1: Compare screen shows Sentiment 200-DMA] Read the rest of this entry »
Publically available data from Employees’ Provident Fund Organization (EPFO) is an important piece of information that can be consumed in risk assessment of corporate borrowers. In our view, deep-dive analytics on EPFO data can offer unique insights into the company’s functioning.
Through analysis of EPFO data, the banks can find out whether the companies in their loan portfolio are depositing employees’ provident fund (PF) on time or not; and whether there is any significant drop in the PF amount deposited by the company. At the same time, lenders can also identify companies which are downsizing the workforce.
FiND Credit Risk Early Warning System (EWS) consists of 25+ business rules that analyze the EPFO data for the companies every month. One of the key business rules is a delay in PF payment for a given month. In our view, a delay in PF payment may imply liquidity crunch for the company and hence it is a red flag for the banks.
Our hypothesis is that red flags related to PF payment can act as a leading indicator to the deterioration in the company’s financial performance. To test this hypothesis, we back-tested our engine on EPFO data for three months (Jan-17, Feb-17, and Mar-17) on the below-mentioned business rule:
Delay in monthly payment of PF by more than 10 days for more than 50 employees
From our EPFO data universe of 1,250+ companies, FiND EWS identified 35 companies who have delayed PF payment for all 3 months.
Then, we checked if there is any deterioration in the financial performance (captured by FiND Financial Risk score) for these companies post-March 2017 quarter.
We found that: 86% of companies (30/35) witnessed a deterioration in Financial Risk score in the subsequent quarters.
We highlight 10 such companies below:
[Image 1: Financial Risk Score for 10 Companies with PF red flags] Read the rest of this entry »
With a clear focus on reduction of the information arbitrage, Heckyl has developed a strategy based on FiND News Sentiment Indicator for identifying bullish/ bearish patterns for the benchmark index, sector as well as individual stocks.
FiND News Sentiment Indicator reflects the underlying sentiment of news coverage on the companies. The strategy based on this indicator signals the potential impact of the news sentiment on the value of underlying index or stock.
We have constructed our strategy by taking moving averages of FiND News Sentiment Indicator. Our system generates bullish/ bearish signals based on the crossover of shorter-term (20-days) and longer-term (60-days) moving averages of FiND News Sentiment Indicator.
Bullish: When short-term 20-DMA of FiND News Sentiment Indicator is above long-term 60-DMA, underlying index or stock tends to rise. It reflects an improvement in news sentiment in recent time when compared with the past 2-months.
Bearish: When short-term 20-DMA of FiND News Sentiment Indicator is below long-term 60-DMA, underlying index or stock tends to fall. It shows a deterioration in news sentiment in recent time when compared with the past 2-months.
For simplicity, we have defined sentiment intensity as a difference between 20-DMA and 60-DMA of FiND News Sentiment Indicator to showcase bullish and bearish phases.
When the value of sentiment intensity is above 0 (20-DMA > 60-DMA), then it is a sign of bullish trend ahead. On the other hand, fall in sentiment intensity value below 0 level (20-DMA < 60-DMA) reflects bearish trend ahead.
Our back-testing proved the application of FiND News Sentiment Strategy for trading/ investment in the market. FiND News Sentiment strategy has outperformed benchmark index, sector and stock returns across time periods.
Here, we are presenting the case study on the Nifty index, Nifty Pharma and Sun Pharma to showcase how bullish/bearish signals defined by News Sentiment Strategy can help trader/ investor for beating the index/ stock returns.
We analyzed over 1.56 lakh news items for 50 companies within the Nifty index for the past 3-years. Out the total, 1,19,162 news items were positive, while 37,175 news items were negative.
As can be seen in below chart (Image 1), bullish/bearish signals based on news sentiment strategy can give an early indication of upward/downward movement for the 50-share index.
[Image 1: Nifty Index and Bullish/ Bearish Period defined by Sentiment Intensity]
If a trader/ investor was to buy/sell Nifty as per the bullish/bearish signal and hold the position for the period till the signal reverses versus an investment in Nifty, the returns would be significantly higher.
[Image 2: Returns based on Sentiment Signal and Nifty Index performance] Read the rest of this entry »
Japan Airlines delivers industry-beating on-time performance; Air India consistently lags on punctuality
The on-time performance (OTP) is one of the most important performance indicators for airlines. It shows how frequently the airline has managed to operate flights within the declared scheduled time.
OTP is a measure of service quality/ punctuality. The higher OTP can help airlines to meet its customer expectations. At the same time, improvement in customer service can also boost airline’s profitability.
Over the past 24-months, OTP for Japan Airlines has consistently outperformed the industry average. On the other hand, OTP for state-run Air India has consistently remained below the industry average in the last 24-months except April 2017.
Heckyl’s alternative data platform FiND collects and organizes macro, micro, and financial data to provide unique insights into aviation sector.
To know more about FiND, email us at firstname.lastname@example.org
Mahindra & Mahindra (M&M), one of the leading automobile companies in India, witnessed a surge in news sentiment to a 5-year high helped by extremely positive media coverage in March 2018. A slew of new product launches by M&M over the past 1-month lifted news sentiment to the highest level in the past 5-years.
With buoyant media coverage, M&M has surpassed news sentiment of both Maruti Suzuki and Tata Motors in March 2018 for the first time in the last 16-months.
[Image 1: Compare screen highlights news sentiment 100-DMA]
A series of positive news items highlighting new product launches, alternative energy and partnerships during the past 1-month pushed M&M’s news sentiment 100-day moving average (DMA) to 84.11 on Apr. 7, 2018. Read the rest of this entry »
With a clear focus on reduction of the information arbitrage, Heckyl has built an alternative data platform FiND which collects and organizes macro, micro, and financial data to provide unique insights into pharmaceutical sector.
In our view, trading opportunities can be spotted in the stock market by discovery and analysis of vast amount of alternative data available on the web. One such data set is clinical trial study results for pharmaceutical companies.
Clinical trials are research studies that explore whether a drug or device is safe and effective for humans. The pharmaceutical products go through three phases of clinical trials followed by a regulatory approval process. After completing all three phases and the approval process, the company can start monetizing the drug or device.
The drugmakers report the progress of ongoing clinical trials for each phase from time to time. The result of late study trials (phase 2 and 3) can provide the best idea about a drug’s chances of approval. A favorable result of late study trials can be seen as positive by the market and vice-versa.
To help traders/ investors, we have introduced Calendar which tracks release dates for clinical trial, drug approval, patent expiry, operating stats and industry events.
We present a case study on Clearside Biomedical, Inc., a late-stage biopharmaceutical company developing drug therapies to treat back-of-the-eye diseases.
On Mar. 5, 2018, Clearside announced positive topline results from its pivotal Phase 3 clinical trial of suprachoroidal CLS-TA in patients with macular edema associated with non-infectious uveitis (Image 1).
(Image 1: News screen for Clearside) Read the rest of this entry »
Chanda Kochhar, managing director and chief executive officer, ICICI Bank, has been in the news lately after a controversy erupted over a conflict of interest in loan approved to the Videocon Group. There were reports in the media that Chanda Kochhar allegedly favored Videocon Group while granting Rs 3,250 crore loan.
However, ICICI Bank board termed the allegations as “malicious and unfounded” against its MD and CEO and reposed faith and confidence in Chanda Kochhar.
As the name of Chanda Kochhar cropped up in the Videocon loan controversy, news mentions for ICICI Bank chief surged towards the end of March.
Corporate default or bankruptcy do not happen overnight. There is a sequence of events such as layoffs, legal/ regulatory issues and management change leading to default or bankruptcy.
In our view, unstructured data sets such as news is an important piece of information that can detect such a sequence of events prior to default.
Our hypothesis is that deep-dive analytics on news data can capture the pre-default behavior of corporates. At the same time, it can also help banks to identify distress corporate borrowers ahead of time.
To test our hypothesis, we analyzed news data for 12 US-based oil and gas exploration & production companies which went bankrupt in the past 2-years.
Here, we present one such case of SandRidge Energy Inc which filed for bankruptcy protection in May 2016. Read the rest of this entry »
FiND News Analytics and Litigation product tracks and analyses news + legal cases from thousands of data sources in real time. We have a clear focus on reduction of the information arbitrage by “discovery and analysis” of the news flow and legal cases in real time.
Of late, Tesla stocks have tumbled by quite. The stock price downfall coincided with negative news coverage. A review of company media coverage shows that most of the negative news items were related to Legal, Recalls, and Bankruptcy.
99% of companies with significant promoter share pledging witnessed deterioration in financials: FiND Study
Recent fraud at Punjab National Bank (PNB) worth Rs 145 billion has once again brought to the fore the inadequate risk management in the Indian banking system. There is no denying that banks need to strengthen their existing risk management systems to avoid such frauds and arrest alarming rate of growth in stress assets.
There is a plethora of actionable data available on the web which can not only help banks be vigilant on a particular borrower but also help decide whether to increase the credit limit to a certain borrower. One such data set is promoters’ pledged shares holding, which can be consumed in risk assessment of corporate borrowers.
In our view, substantial pledging of shares by the promoters is a potential red-flag as it is an indication of the stress that has piled up on corporate finances. Moreover, a significant drop in the company’s share price may result in the invocation of pledged shares. This may also lead to loss of management control for the promoters.
At the same time, red flags related to promoter pledged shares can act as a leading indicator to the deterioration in the company’s financial performance. To test this hypothesis, we back-tested our business rule output to find out companies with a significantly higher percentage of pledged shares for the December 2016 quarter. We applied the below-mentioned rule to identify such companies:
Promoter’s pledged shares % is more than 50% of total promoter shareholding
Our system identified 269 companies meeting the above rule for the December 2016 quarter. As a next step, we checked if there is any deterioration in the financial performance (captured by FiND Financial Risk score) for these 269 companies post-December 2016 quarter.
We found that: 99% of companies witnessed a deterioration in Financial Risk score in the subsequent quarters. Read the rest of this entry »
FiND, an alternative data platform, analyses news + data from thousands of sources (including social media) in real time. We have a clear focus on reduction of the information arbitrage by “discovery and analysis” of the news flow in real time. Our proprietary Sentiment Engine analyzes news by applying NLP and various business rules to capture underlying sentiment (positive/ negative/ neutral) accurately.
Earlier this week, the shares of Facebook were beaten down at the Wall Street due to a privacy failure by the social media giant. It’s surfaced that Cambridge Analytica improperly used the data of 50 million Facebook users to manipulate voters in US Presidential Election 2016.
News reports highlighting concerns over privacy of FB users’ data and misuse of social network platform have been making the rounds across mainstream media for months now. The negative media coverage highlighting these concerns gathered momentum during this month. However, the stock corrected sharply only after the media reported the misuse of FB users data by Cambridge Analytica. We highlight some of the news items captured by FiND below:
[Image 1: Company News Screen for FB] Read the rest of this entry »
Geneva Motor Show 2018: EVs steal the show; Volkswagen, Tata Motors lead product launch news coverage
Geneva Motor Show 2018 turned to be one of the most successful shows in recent years. Now that it has come to an end, we at Heckyl believe that success of the OEMs in showcasing new products/launches can be measured by the amount of media coverage they have received.
One clear message, visible from the attention given by Press and the OEMs, was that Electric Vehicles are arriving earlier than expected. See below our Buzzwords compilation for passenger vehicle industry from last one month’s new flow (Image 1).
[Image 1: Buzzwords for Auto Industry]
At OEMs level, auto behemoth Volkswagen is back in the news for all the good reasons. A surprise inclusion in the list was that of Tata Motors whose news coverage came close 4th, almost in line with Toyota Motor but ahead of i-series manufacture BMW. We believe that this jump in news for Tata Motors can be attributed to the launch of Jaguar’s all-electric I-PACE at Geneva.
This assumption is further strengthened by the fact that in Product launch category (yes, you can search and analyze news by categories in FiND, Heckyl’s News and Data Terminal!), Tata Motors jumped to the second position in last one month’s news coverage (Image 2).
[Image 2: Share of Voice] Read the rest of this entry »
Promoter ownership data is an important piece of information that can be consumed in risk assessment of corporate borrowers. This is because steep fall in promoter ownership could mean low confidence of promoters in their own company. Moreover, promoter equity dilution may also invite a change in management.
Our hypothesis is that promoter ownership related red flags such as a significant drop in promoter shareholding can act as a leading indicator to the deterioration in the company’s financial performance.
To test this hypothesis, we back-tested business rule output derived from FiND Credit Risk Early Warning System for all listed companies. Our back-testing has shown 298 promoter ownership related red flags for 232 companies for the March 2016 quarter.
As a next step, we have checked if there is any deterioration in the company’s performance captured by our Financial Risk score for these 232 companies over the last 2 years.
We found that: 85% of companies witnessed a deterioration in Financial Risk score in the subsequent quarters.
Highway developer Dilip Buildcon received extremely positive media coverage during the past 1-month. Buoyant media coverage lifted Dilip Buildcon’s news sentiment (50-day moving average DMA) to the highest level in the past 1-year on Feb. 23, 2018.
We highlight media coverage trends for Dilip Buildcon below:
#1. At 43, Dilip Buildcon’s news sentiment 50-DMA was the highest among its peers. On the other hand, news sentiment 50-DMA for Sadbhav Infrastructure Project was the lowest among highway developers.
2017 was the first year when Tesla’s Model S outsold its German rivals in the luxury sedan segment in Europe. Model S was launched in Europe in 2013, the same year as Mercedes S-Class and has been the main rival of S-class till 2016 before outpacing it in 2017 (Image 1).
Globally, Model S remains Tesla’s best-selling model and constituted more than half (53%) of the global deliveries in FY17.
[Image 1: Luxury sedan annual retail sales in Europe for top 4 players]
Model S retail sales grew at a staggering 38.6% in 2017. On the other hand, BMW 7-Series and Mercedes S-Class recorded a drop of 13.4% and 1.4% respectively in 2017. Meanwhile, Audi A-8 reported a modest growth of 9.6% in 2017. Read the rest of this entry »
The Indian pharma market has grown at an 8% compounded annual growth rate (CAGR) during the calendar year 2013-2017, helped by impressive growth in chronic segment sales. The pharma sales stood at USD 17.87 billion for the moving annual total (MAT) ended December 2017, up from USD 13.35 billion in CY13 (Image 1). On a year-on-year basis, the pharma market witnessed an 8.83% increase in sales for twelve months ended December 2017.
[Image 1: The Indian pharma market sales – moving annual total]
The chronic segment (a disease that persists over a long period of time such as diabetes, high blood pressure, Alzheimer etc.), which accounts for 32% of total Indian pharma market, staged a stellar performance during the CY13-17 period. Changes in lifestyle and food habits coupled with higher disposable income fueled growth in chronic diseases in recent years. Read the rest of this entry »