India

• Aditya Birla Fashion and Retail Ltd (ABFRL IN) on 1st April announced a vertical demerger and separate listing of its matured and asset-light Madura brand portfolio.
• Assessment of demerger: whether it is seriously a value creation opportunity or just a strategic gimmick for merger-demerger in Mega Bull Run.
• Valuation of Aditya Birla Fashion and Retail Ltd (ABFRL IN) , whether any juice left in the company?

• Aster DM Healthcare Ltd (ASTERDM IN) shares took a beating as Olympus Capital offloaded ~49M shares at a price range of INR405.00–406.72 (~7% discount to the last close price).
• GCC business separation is expected to complete in Q4FY24. Aster DM plans to consider distributing 70–80% of the upfront consideration of $903M as dividend to its shareholders.
• Stake sale by Olympus Capital is not a warning sign for the company. Despite CGHS rate overhang, we think recent pullback in Aster DM share provides an attractive entry point.

• Our popular, text-only weekly is back, hopefully in an improved version, and aims to be more consistent throughout this financial year.
• The market structure and momentum seem to be positive. Upcoming earnings season and elections are likely to be key drivers going forward.
• Stocks discussed include Bajaj Finance Ltd (BAF IN), SBI Cards & Payment Services (SBICARD IN), Honasa Consumer (HONASA IN) and Delta Corp Ltd (DELTA IN) 

• Waaree Energies  is looking to raise up to US$400m in its upcoming India IPO.
• Waaree Energies is a solar PV module manufacturer in India with an aggregate installed capacity of 12 GW, as of Jun 2023. 
• In this note, we talk about the company’s past 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.

• Kawasan Industri Jababeka
• Rakuten
• Tata Motors ADR

• On-The-Run Quarterly Options now capture India General Elections. Position buildup can be seen in the 21,000 put and 24,000 call strikes
• Weekly and Monthly contract risk premia being squeezed lower due to holiday shortened trading but Quarterly contracts exhibit vol richness
• Scale back short gamma exposure as reward-risk unappealing at current IV levels

• With the “Postcard” series, our objective is to bring to our readers on-ground insights based on interactions across key channels located in tier 2 and tier 3 locations.
• For this postcard, we travel to the magnificent and iconic city of Agra. 
• We were pleasantly surprised by the rapid pace of electrification among three-wheelers, which is the topic of this postcard.

• The NIFTY Index has been rallying for months, but in the last few weeks there has been a considerable slow down in its rising pace.
• Currently the index is at a point where it could pull back this coming week, based on our MRM patterns reading.
• A possible alternative scenario would be a continuation of the rally for a total of 4-5 weeks up in a row.

• Bharti Hexacom (6597372Z IN), a 70% owned subsidiary of Bharti Airtel (BHARTI IN), aims to raise up to US$513 million at an IPO price range of Rs542-570 per share.
• We previously discussed the IPO in Bharti Hexacom IPO: The Bull Case and Bharti Hexacom IPO: The Bear Case. 
• Our valuation analysis suggests that the IPO price range is unattractive. Therefore, we would not participate in the IPO.

• Bharti Hexacom is looking to raise up to US$513m in its upcoming India IPO.
• Bharti Hexacom (BH) is a communications solutions provider offering consumer mobile services, fixed-line telephone and broadband services to customers in the Rajasthan and the North East telecommunication circles in India.
• We have looked at the company’s past performance in our earlier notes. In this note, we talk about valutions.

• There is a lot of excitement and uncertainty about the paint sector especially Asian Paints’ leadership in the broader market and among analysts.
• We interact with a couple of paint dealers across Delhi and Dimapur to gauge the sentiment on the ground.
• While there is no denying that Grasim Industries (GRASIM IN) poses a credible threat it might be too early to write off the market leader Asian Paints (APNT IN). 

• Genesys Intl Corp (GENE IN) or (GICL) is engaged in Geospatial services.
• The balance sheet of the company is surrounded by impairments; in the last few years, the company has impaired a major chunk of its intangibles, investments, goodwill and advances
• Other forensic insights include doubts on revenue recognition, struggle with the cash flows and earnings quality, recon issues and treatment of few line items

• Discover SCILAL’s debut in the stock market after demerger form Shipping Corp Of India (SCI IN), its strategic disinvestment, and the hidden value within its diverse asset portfolio.
• Real Estate Assets in company and future outlook by management of SCILAL over the years going forward.
• The market value of assets is twice more than the book value. Value bet but can take longer time to monetize the same.

• With around 3.4% QoQ CC revenue growth in Q3FY24, the BPO business, Firstsource Solutions (“Firstsource”), is recovering back to normal, after seeing cyclical dip over the past couple of years.
• The FMCG business is scaling up well. Q3FY24 revenues came in at INR 135cr, a growth of around 12% QoQ, led by festive season demand. YoY growth was 17%+.
• The Sports business reported muted revenues in Q3FY24 as currently the revenue stream is dominated by the IPL event which typically happens in the March to June period.

• Nesco reported a strong Q3FY24 led by significant growth in the exhibition business. It grew by 55%+ YoY and grew 3%+ QoQ despite Q2 being a seasonally strong quarter.
• The IT business performed steady with revenues at around INR 80cr and EBIT at around 65cr. Revenue declined by -4% QoQ, led by slight decline in occupancy.
• Nesco is now on track to beat our prior FY24 upgraded PAT estimate of INR 330cr+. It may now end FY24 with a PAT of INR 350cr+.

• Despite Q3 being seasonally weak, HealthCare Global Enterprises (“HCG”) reported 11% YoY growth in revenues. Q3FY24 revenue came in at INR 470cr.
• HCG has been focusing on fortifying its clinical talent strength and increasing business promotion. This has been yielding positive result, with Kolkata and Mumbai seeing 57% and 17% YoY growth.
• With the operationalization of four radiation machines now behind us, Q3 saw improved mix of radiation oncology with its growth at 13% YoY vs 11% YoY in overall revenue.

• Rajshree Polypack (“RPPL”) reported a robust Q3FY24 led by strong volume growth of 29%+ YoY. EBITDA margin also expanded leading to EBITDA growth of 35%+ YoY.
• Export business continues to grow steadily with quarterly run-rate now at INR 10cr. This suggests that on an annualized basis, exports could be INR 40cr vs INR 30cr guided earlier.
• Injection molding business is doing well and has reached optimum capacity utilization. RPPL is exploring to expand this capacity and is also expecting it to become profitable from next quarter.

• Bharti Hexacom (6597372Z IN), a 70% owned subsidiary of Bharti Airtel (BHARTI IN), aims to raise up to US$513 million at an IPO price range of Rs542-570 per share.
• In Bharti Hexacom IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
• The bear case rests on low geographic diversification, slowing growth, share overhang from TCIL’s desire to exit fully, mid-tier revenue growth and EBITDA margin. 

• ChrysCap is looking to raise around US$295m via selling a 2.8% stake in Mankind Pharma.
• MP is a pharmaceutical company engaged in developing, manufacturing and marketing a range of pharmaceutical formulations across various acute and chronic therapeutic areas, as well as several consumer healthcare products.
• We have looked at the IPO, lock-up release and prior placement in our earlier notes. In this note, we talk about the current deal dynamics.

• Bharti Hexacom (6597372Z IN), a 70% owned subsidiary of Bharti Airtel (BHARTI IN), aims to raise around US$500 million at a valuation of US$3.3-4.2 billion. 
• The offer is a pure secondary offering. The Government of India aims to reduce its stake from 30% to 15% of outstanding shares. 
• The bull case rests on market share gains, ARPU growth, low churn rates, improving margins, cash generation and low leverage. 

• B2B ecommerce startups in India and Southeast Asia have been facing challenges in scaling up their businesses after the pandemic.
• In December 2023, Indian unicorn Udaan laid off at least 100 employees after raising US$340 million, while two months earlier, Indonesia-based Ula announced that it was also cutting jobs and transitioning out of its inventory-led FMCG distribution business.
• However, positive news comes from B2B startup Jumbotail, which has raised US$18.2 million in an equity round.

• SynPhNe (Synergistic Physio-Neuro Platform), a wearable solution designed to treat stroke and other neurology-related disorders, has received US$5 million in a Series A funding round.
• Event Horizon Technologies, an affiliate of the Nadathur Group, is one of the key investors in this round. The Group is the family office of Nadathur Raghavan, co-founder of Indian software giant Infosys.
• This fresh capital will be used by Singapore-based SynPhNe to expand its rehabilitation services, particularly in the US market.

• Ipca Laboratories (IPCA IN) reported strong Q3FY24 results, with revenue and net profit increasing 33% and 67%, YoY, respectively. Domestic formulation and generic exports remained main growth drivers.
• Ipca’s India formulation business revenue is expected to grow 15% YoY to ~INR7,000 million in Q4FY24. The company guided for 13–14% domestic revenue growth in FY25.
• Riding on improving profitability at Unichem operation and launch of U.S. product, Ipca is expecting 10–12% growth in EBITDA and 2% improvement in EBITDA margin in FY25.