IR star of India: RPG’s Pulkit Bhandari on turning the IR function around
Pulkit Bhandari is head of group corporate finance at Mumbai-headquartered conglomerate RPG, which won the award for best investor meetings at the inaugural IR Magazine Awards – India this year. RPG’s subsidiary CEAT also took home a gong for best investor relations team (small to mid-cap). Here, Bhandari shares some highlights of how he boosted his firm’s IR program with a tailored targeting strategy, a smart investor day and social media campaigns.
Congratulations on winning the award for best IR team (small to mid-cap)! Can you tell us a bit about yourself and how you got into IR?
I was an investment banker before I joined RPG, working with Deutsche Bank and a couple of prominent local banks here in India. Then I transitioned into this corporate role at RPG where I handle IR, M&A and strategic financing.
How is RPG structured and where does CEAT sit within that?
Within RPG there are multiple listed entities, one of the largest of which is KEC International, an infrastructure firm with a market cap of $1.5 bn. The other listed companies we have are CEAT (tire production), Zensar Technologies, RPG Life Sciences (pharma) and Harrisons Malayalam (agriculture). It’s a pretty diversified conglomerate, and my role is to manage all IR activities, M&A and strategic financing across the group. There’s always something happening so for us it’s round-the-clock work.
Could you detail your investor base?
We have a lot of international investors on our share register. For CEAT, around 30 percent of shares are owned by foreign institutional investors, predominantly from Hong Kong and Singapore (18 percent), the US (7 percent-8 percent) and the UK (4 percent-5 percent). Consequently, we do a lot of US, UK and Asia roadshows.
Is senior management much involved in the IR program?
I’m the focal point for all IR events, but when we go on roadshows, it is mostly the CEO and me.
How do you conduct investor targeting?
We spend a lot of time on investor targeting. We do benchmarking exercises to understand which institutions are invested in our peers. We also track investors in terms of what we’re hearing on the street or their investment style. Some of them are long-term investors, some are hedge funds. Most of the time, we do an evaluation, set up our list of targets and then ask our brokers to arrange meetings during roadshows.
During my time in investment banking, I have taken between 25 and 30 companies to the public market through IPOs or secondary fund-raising, so I know most investors and their investment style. I know who to reach out to and how many times we’ll need to meet that investor before it buys a stake. In some instances you’ll need to meet investors six or seven times, so you need to be patient. That’s the insight I bring to the table here.
We don’t classify investors on the basis of geography but by tier. Tier one investors such as Capital Group, First State and Wellington, which have an investment horizon of three to five years, will take time to evaluate you very carefully on your governance standards, disclosure standards or ESG parameters, and of course on your business fundamentals and leadership. Tier three investors are easier to convince and investment from them happens quickly: those are the smaller funds where the investment horizon is one to two years.
You need different types of investors. If you didn’t have Tier one investors, there would be no trading volumes in the stock, but you don’t want only Tier three investors because there will be too much price volatility. I try to focus 60 percent of my efforts on Tier one and 20 percent each on Tier two and Tier three.
Do you hold investor days?
Every year in June we host an event for analysts and investors to meet with all our companies. The chairman of RPG addresses the audience in a public forum. When I joined, we had about 70 to 80 people attending; this year it’s grown to more than 450, so that was a super success. I’m not aware of any other conglomerate in India that does that.
What is the most popular question you get asked by investors and analysts at the moment?
For CEAT, the hottest topic at the moment is our capital expenditure. We have a capital expansion plan of around $600 mn and that is something we’re very busy explaining to investors in terms of what we are doing, how we are doing it and the results we expect.
Do investors want to discuss ESG issues and if so, which aspect do they put an emphasis on?
Governance is the most critical aspect at the moment but social and environment concerns are picking up. Investors do ask us about our ESG standards and our contribution back to society, but interest in these issues is still at a nascent stage.
Do you use technology in your IR program?
Our website is quite robust: call transcripts and relevant information are posted for all of our companies. We do videoconferencing for investor meetings if there’s a request. One thing we don’t do enough, if you ask me, is webcasts – a review of how we can best use webcasts is on the agenda. In India, the use of webcasts is not that prevalent at the moment but it’s picking up.
We do run social media campaigns with regards to stakeholder messaging. Most recently on LinkedIn and Twitter we launched a campaign about happy investing and what every company in the group stands for: RPG is ‘happily invested in innovation’, KEC is ‘happily invested in growth’, Zensar is ‘happily invested in digitalization’, and so on. We have those messages going out. We’re one of the very few conglomerates that do that.
In addition, all our major announcements get tweeted via their respective company handles and put on our LinkedIn pages.
How would you describe the IR scene in India?
In the past five years, I’ve seen IR departments become a more strategic function. Indian businesses that are generally family-owned are realizing the importance of good communication and how it impacts value creation. They realize that if they don’t focus on that they won’t be able to attract new capital.
I see a lot of good talent moving into IR. When I came on board at RPG, the firm wanted to develop a very structured approach to IR with a central person managing the IR program.
Domestic investors are also becoming very demanding. If you look at India as an economy, savings have been massive and that money is being channeled into the mutual funds. As a result, Indian fund houses are growing very fast, and they require proper IR channels and services, so it’s not just foreign investors pushing the demand for good IR.
What is the biggest IR challenge you have faced?
My biggest challenge was communicating the change RPG has gone through in terms of governance standards. When I came on board four years ago, I had to create awareness about what we were doing, how we were re-editing the investor base. There was no research coverage on CEAT and now there are 25 brokers. We changed how disclosures were done. Today, CEAT has the best disclosure standards among tire companies. And of course, you have to keep meeting people, keep pitching and keep delivering.
Is it difficult to get sell-side and investor attention when you’re a small or mid-cap in India?
Yes and no. If you’re a large cap, of course it helps. We are a mid-cap but we have a good story, so we are able to get traction.
The IR Magazine - Awards India 2019 are open for entries!
With six categories open for nomination, submit your entries before the deadline on March 8, 2019. Find out more information here.