Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<ul>
<li>A couple of weeks ago, Indian Financial Services Conglomerate Shriram Group's founder R Thyagarajan announced a succession plan which involved the creation of the Shriram Ownership Trust. </li>
<li>As the next step in this process, the group announced yesterday that three of its companies will merge to consolidate the group's lending operations under one roof.</li>
<li>This is one of the most anticipated corporate restructuring processes in India this year. Below is a closer look at the details of this Transaction.</li>
</ul>


A couple of weeks ago, Indian Financial Services Conglomerate Shriram Group's founder R Thyagarajan announced a succession plan which involved the creation of the Shriram Ownership Trust. 
As the next step in this process, the group announced yesterday that three of its companies will merge to consolidate the group's lending operations under one roof.
This is one of the most anticipated corporate restructuring processes in India this year. Below is a closer look at the details of this Transaction.


Shriram Group: Merger Announced to Form Largest Retail NBFC in India

External broker reports(aggregated public sources), Edelweiss Broking Limited

Edelweiss

External broker reports(aggregated public sources)

Edelweiss Broking Limited

Edelweiss Broking Limited is an Indian Financial services company based in Mumbai, India. The company is a subsidiary of Edelweiss Group. 

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Equity Bottom-Up

<p>Steady quarter with positive outlook ; Retain BUY'</p><div class="content-highlight"><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></div>

Steady quarter with positive outlook ; Retain BUY'Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Shriram Transport Finance Company Ltd | Q2FY22 Result Update

External broker reports(aggregated public sources), HDFC Securities

HDFC Securities

Sun Pharmaceutical Industries / Equity Bottom-Up

<p>HSIE Results Daily Sun Pharma: Suns Q1 revenue/EBITDA grew by 28%/55% YoY, led by robust growth across markets and restricted spends driving sharp operating leverage and margin expansion to 28.7% (+495bps YoY, +404bps QoQ). Its specialty business surprised positively despite the generic impact of Absorica (USD148mn, +6% QoQ, +90% YoY). The consistent traction seen in the past three quarters gives us comfort on the companys ability to execute its specialty pipeline and break even by FY23. Further scale-up in the specialty business will improve profit growth visibility and support rerating, in our view.</p><div class="content-highlight"><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></div>

HSIE Results Daily Sun Pharma: Suns Q1 revenue/EBITDA grew by 28%/55% YoY, led by robust growth across markets and restricted spends driving sharp operating leverage and margin expansion to 28.7% (+495bps YoY, +404bps QoQ). Its specialty business surprised positively despite the generic impact of Absorica (USD148mn, +6% QoQ, +90% YoY). The consistent traction seen in the past three quarters gives us comfort on the companys ability to execute its specialty pipeline and break even by FY23. Further scale-up in the specialty business will improve profit growth visibility and support rerating, in our view.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

HSIE Results Daily: Sun Pharma, Shriram Transport Finance, JK Lakshmi Cement

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

<p><em><strong>*</strong></em><em><strong>Credibility Gap Widens:</strong></em> LIC Housing Finance (LICHF.IN) [LIC] reported FY 1Q22 bottom-line results of INR 1.5 bn, declining INR 2.5 bn (61.5%) linked quarter. Negative operating jaws, were the culprit, as costs increased INR 469 mn (21.1%) whilst revenues declined INR 2.6 bn (16.7%); and</p><p><em><strong>*Very Negative Credit Delta: </strong></em>Despite the limited NCOs, net new NPLs at LIC still skyrocketed INR 44.7 bn or 190.3% on an annualized basis linked quarter significantly accelerating from a very high INR 12.6 bn (62.0%) during FY 4Q21. By our calculation, if the large blip in credit continues, LIC management ought to think about adding another INR 158 bn to the reserve – which amounts to 78% of stated equity at just 50% cover of NPLs.</p>

*Credibility Gap Widens: LIC Housing Finance (LICHF.IN) [LIC] reported FY 1Q22 bottom-line results of INR 1.5 bn, declining INR 2.5 bn (61.5%) linked quarter. Negative operating jaws, were the culprit, as costs increased INR 469 mn (21.1%) whilst revenues declined INR 2.6 bn (16.7%); and*Very Negative Credit Delta: Despite the limited NCOs, net new NPLs at LIC still skyrocketed INR 44.7 bn or 190.3% on an annualized basis linked quarter significantly accelerating from a very high INR 12.6 bn (62.0%) during FY 4Q21. By our calculation, if the large blip in credit continues, LIC management ought to think about adding another INR 158 bn to the reserve – which amounts to 78% of stated equity at just 50% cover of NPLs.

LIC Housing Finance – Unmitigated Disaster

<p>Asset quality outcome better than expectations</p><div class="content-highlight"><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></div>

Asset quality outcome better than expectationsContent is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Shriram Transport Finance Company Ltd. Rs Q1FY22 Result Update

India

Shriram Finance Limited provides consumer finance services. The Company offers automobile, commercial vehicle, business, and gold loan services. Shriram Finance serves customers in India.

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Shriram Finance (SHFL IN)

Shriram Group: Merger Announced to Form Largest Retail NBFC in India

Indian Financial Services Conglomerate Shriram Group has announced a Merger between three of its group companies. This is one of India's most...

Janaghan Jeyakumar, CFA

Shriram Transport Finance Company Ltd | Q2FY22 Result Update

Steady quarter with positive outlook ; Retain BUY'

Edelweiss

HSIE Results Daily: Sun Pharma, Shriram Transport Finance, JK Lakshmi Cement

Sun Pharma: Suns Q1 revenue/EBITDA grew by 28%/55% YoY, led by robust growth across markets and restricted spends driving sharp operating leverage...

HDFC Securities

LIC Housing Finance – Unmitigated Disaster

LIC HOUSING: LIC's FY 1Q22 bottom-line results declined 61.5% linked quarter due to negative operating jaws. Net new NPLs skyrocketed 190.3%...

Thomas J. Monaco

Shriram Transport Finance Company Ltd. Rs Q1FY22 Result Update

Asset quality outcome better than expectations

Edelweiss

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