India

• With 3 trading days left in the review period, there could be 7 changes (including 2 migrations) for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in September.
• Estimated one-way turnover is 18% resulting in a one-way trade of INR 55bn (US$660m). 9 stocks will have over 1x ADV to trade from passive trackers.
• All the deletes are F&O members while most adds are not. NSE Indices may have to revisit the index membership criteria especially given the launch of futures on the index.

• Ola Electric (1700674D IN), the largest Indian player in electric two-wheel vehicles (E2W), will launch a US$660 million IPO at a lower US$4.5 billion valuation (vs. the previous US$7-8bn target). 
• We previously discussed the IPO in Ola Electric IPO: The Bull Case and Ola Electric IPO: The Bear Case. In this note, we examine the latest updates in the RHP. 
• The investment case rests on rising market share in a growing market, rapid growth aided by product diversification, path to profitability supported by lower losses and declining cash burn.

• In Q1FY25, Cipla Ltd (CIPLA IN) posted 7% YoY revenue growth to INR66.9B. Despite surging R&D expenditure, EBITDA increased 26% YoY to INR17.2B, leading to 154bps margin expansion to 25.6%.
• Record high quarterly revenue in the U.S. market, double-digit revenue growth in India branded prescription business, and continued strong momentum in South Africa drove overall performance.
• Cipla is well-positioned for mid-to-high single-digit revenue growth through FY27. Sitting on a robust cash balance of INR90B, Cipla is eyeing on M&A. Valuation still looks reasonable.

• Credit metrics continue to improve, with NPLs down to INR404bn in 1Q25 from INR458bn YoY and from INR407bn QoQ
• Net loan growth continues to rise by about INR1tr each quarter, with net loans at INR9,465bn in 1Q25 up from INR8,554bn YoY and INR9,318bn QoQ
• There are pressures on costs and margins, so the story is not all perfect, with NIM pressure potentially to reverse as LDR expands

• NIFTY 50 represents the 50 largest stocks listed in the National Stock Exchange (NSE) of India and the NIFTY Next 50 index tracks the next 50 largest names.
• With three more trading days left in the reference period, we are presenting our final  expectations for ADDs and DELs for the September 2024 index rebal event.
• We see five changes for the NIFTY 100 index which will also affect the NIFTY Next 50 index. There could also be multiple changes for the NIFTY 50 index.

• Akums Drugs and Pharmaceuticals (0200361D IN) is looking to raise up to US$222m in its upcoming India IPO.
• Akums Drugs and Pharmaceuticals (ADP) is a pharmaceutical contract development and manufacturing organization (CDMO) offering a comprehensive range of pharmaceutical products and services in India and overseas.
• In our previous note, we talked about the company’s historical performance. In this note, we talk about its RHP updates and share our quick thoughts on peer comparison and valuation.

• Our long-term bullish outlook (since early-November 2023) remains intact. With that said, we believe a 1-3-month pullback has likely begun.
• Supports to watch are at $110 on MSCI ACWI (ACWI-US) and $41-42 on MSCI EM (EEM-US), and whether these levels hold or not will determine the severity of the pullback.
• The S&P 500 is violating its 20-day MA, Europe’s EURO STOXX 50 is breaking below 4884, and Japan’s TOPIX appears to be staging a false breakout at the 2800-2815 level

• Akums Drugs and Pharmaceuticals, the largest India-focused CDMO, has set price band of Rs 646–679/share for its upcoming IPO. The company has blue chip and sticky clientele.
• The Indian domestic CDMO market is forecasted to grow at a CAGR of 14.3% during FY24–28, nearly doubling its historical growth rate.
• Akums seeks a P/E valuation of 28.7–30.2x, which seems to be reasonable compared with listed peers.

• The NIFTY Index defied gravity and kept rallying higher for the past 8 weeks. According to our models it’s massively OVERBOUGHT and has been so for a while.
• While many other Asian markets have pulled back decisively, the NIFTY is just going higher and higher.
• Assuming it has its own uncorrelated drivers, where would it be a BUY again, if it pulls back this coming week? Let’s discuss this in this WEEKLY insight.

• In this insight, we take a look at the Potential ADDs/DELs for the BSE SENSEX, 100, and 200 indices in the December 2024 index rebal event.
• At present, 3 changes for the BSE 100 index and 7 changes for the BSE 200 index.
• The BSE 100 handling rules for names without futures and options (F&O) sometimes punish companies that have enjoyed good share price rallies and Zomato could get into such a trap.

• Reconstructed board of Yes Bank implemented an ill-conceived, poorly executed retail strategy to revive the bank
• Structural problem of low net interest margin and high overheads not resolved
• Retail assets strategy characterised by low yield, high operating cost and rising credit cost which the bank has finally acknowledged

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Adani Green Energy
• Sands China
• Vedanta Resources

• Shoppers Stop (SHOP IN) is a leading retailer in India specializing in fashion and beauty brands with 12 department stores, 7 premium home stores, and 87 specialty beauty outlets,
• SHOP has also launched its value retail format INTUNE in June 2023 generating excitement and interest around the same. 
• It seems SHOP is trying to play all cards of the retail game, i.e., premium, beauty, and value fast fashion, but so far has shown no signs of success.

• Akums Drugs and Pharmaceuticals (0200361D IN) is looking to raise up to US$239m in its upcoming India IPO. 
• Akums Drugs and Pharmaceuticals (ADP) is a pharmaceutical contract development and manufacturing organization (CDMO) offering a comprehensive range of pharmaceutical products and services in India and overseas.
• In this note, we talk about the company’s historical performance.

• With the review period nearly complete, Canara Bank (CBK IN) should replace Bandhan Bank Ltd (BANDHAN IN) in the NSE Nifty Bank Index (NSEBANK INDEX) in September.
• Passive trackers will need to buy over 2 days of ADV in Canara Bank (CBK IN) while selling over 1 day of ADV in Bandhan Bank Ltd (BANDHAN IN).
• There is a strong possibility of Bandhan Bank Ltd (BANDHAN IN) being deleted from a global index in August and that could put the stock under even more pressure.

• Garware Technical Fibres (GTFL IN) focuses on value-added products and has increased R&D investment significantly, with substantial growth in sports nets and geo-synthetics.
• The company’s strong export market presence, high-margin profile, and diversification will improve the margins in the future. 
• With refocus on the domestic market and growing demand for value-added products, Garware Technical Fibres (GTFL IN) is poised for significant growth with capex coming online.

• SAI Life Sciences(SLS) is looking to raise up to US$500m in its upcoming India IPO. The deal will be run by Kotak, IIFL, Jefferies and MS.
• SLS is a CRDMO. It provides end-to-end services across the drug discovery, development and manufacturing value chain, for small molecule NCE to global pharmaceutical innovators and biotechnology firms
• As per Frost & Sullivan, SLS was the fastest-growing Indian CRDMOs among listed Indian peers in terms of revenue CAGR as well as EBITDA CAGR from FY22 to FY24.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• JSW Steel Ltd
• Vista Land & Lifescapes

• Trent Ltd (TRENT IN) is a leading retail company in India known for its diverse range of fashion and lifestyle brands like Westside and Zudio. 
• With its own labels, operating efficiencies, and leverage at work, Trent has been able to expand its margins substantially. 
• We anticipate the strong operational performance to continue. We believe it will take a couple of years for peers to catch up to Trent’s execution prowess.

• Hyundai Motor (005385 KS) is looking to raise around US$3bn via listing its India unit, Hyundai Motor India. HMI is a wholly owned subsidiary of the Hyundai Motor Group.
• HMI primarily manufactures and sells four-wheeler passenger vehicles and parts. Currently its vehicle portfolio includes 13 passenger vehicle models across sedans, hatchbacks, SUVs and battery EVs.
• In our previous notes, we have looked at the company’s past performance and undertaken a peer comparison. In this note, we talk about valuations.

• Blackbuck (1355652D IN) is looking to raise up to US$300m in its upcoming India IPO. The deal will be run by Axis Capital, Morgan Stanley, JM Financial, IIFL Securities.
• Blackbuck is India’s largest digital platform for truck operators, with 963,345 operators in India transacting on its Blackbuck platform in FY24, comprising 27.52% of India’s truck operators, as per Redseer.
• Through Blackbuck, its customers digitally manage payments for tolling and fueling, monitor drivers and fleets using telematics, find loads on its marketplace and get access to used vehicle financing. 

• Trent Ltd (TRENT IN) and Bharat Electronics (BHE IN) are shoo-ins to replace LTIMindtree (LTIM IN) and Divi’s Laboratories (DIVI IN) in the NIFTY Index (NIFTY INDEX) in September.
• Passive NIFTY Index trackers will need to trade at least 3.3x ADV and 7.7x delivery volume on the stocks. There is some opposite flow from Nifty Next 50 Index trackers.
• Cumulative excess volume has increased in all stocks but there are some stocks where there will still be more positioning over the next few weeks.

• SAI Life Sciences (SAILS12 IN) is planning to raise INR50B, consisting of INR8B worth of fresh issue and the rest will be OFS. 
• Out of the proceeds from fresh issue, the company intends to utilize INR6B for repayment/pre-payment, in full or part, of all or certain outstanding borrowings availed by the company.
• Sai Life Sciences is the fastest-growing Indian CRDMOs among listed Indian peers in terms of revenue as well as EBITDA CAGR during FY22–24.

• ACME Solar Holdings (1700918D IN) is looking to raise US$360m in its upcoming India IPO. The bookrunners on the deal are ICICI, JM Financial, Kotak, Nuvama Wealth and Motilal Oswal.
• ACME Solar (ACME) is a renewable energy firm with a portfolio of solar, wind, hybrid and firm and dispatchable renewable energy (FDRE) projects.
• As per CRISIL, the firm was among the top 10 renewable energy players in India in terms of operational capacity as of FY24. 

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Powerlong Commercial Management Holdings
• Reliance Industries
• Sino-Ocean Service

• Weekly IVs marked significantly higher. Options demand returns post holiday-shortened week. Market focuses on 23.07.2024 Budget & Corporate Earnings announcements. 
• Put-Call Ratio compression + Rising IVs indicative of call-buying activity. Significant Open-Interest buildup seen in 25000 calls.
• Vol Term-structure: Entire curve in Backwardation. Much of which can be attributed to the India Budget event. Curve expected to flatten out post event.

• With the review period nearing completion, there could be 14/15 changes for the NIFTY Midcap 150 Index at the September rebalance.
• Estimated one-way turnover is 8.2% resulting in a one-way trade of INR 6.6bn (US$79m). With US$38bn tracking the index actively, the impact on the stocks will be much larger.
• Performance of a long adds/short deletes trade was very good in March, and we could see a repeat over the next couple of months.

• We spoke with multiple channels covering 3Ws, 2Ws, and 4Ws to understand the current dynamics of the Electric Vehicle (EV) scene in India.
• Adoption of E-3 and E-4 Wheelers is hindered by high prices, range issues, inadequate charging infrastructure, and platform stability concerns.
• E-2 Wheelers show resilience with stable sales led by aggressive pricing from Ola Electric (1700674D IN). 

• Premier Energies Limited (0377949D IN) is looking to raise US$300m in its upcoming India IPO. It is a manufacturer of solar photovoltaic (PV) cells, and solar modules. 
• It also executes engineering, procurement, and construction (EPC) projects and provides follow-up operation and maintenance (O&M) services. 
• In this note, we talk about the company’s historical performance.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Anton Oilfield
• Health And Happiness (H&H)
• Vedanta Resources