India

• Debt restructuring in 2021 reduced interest costs and improved profitability, with promoters increasing their stake by 4%.
• Revenue and EBITDA have grown significantly, with a revenue CAGR of 35% and EBITDA CAGR of 72% over the past 3 years.
• Strong export presence and increasing domestic market share indicate robust growth potential despite global economic fluctuations.

• We see 7 stocks moving from MidCap to LargeCap and vice versa, 17 stocks from SmallCap to MidCap, 19 stocks from MidCap to SmallCap and 2 new additions to MidCap.
• The expected migrations from SmallCap to MidCap have outperformed the other potential migrations with all stocks moving higher over the last six months.
• Momentum on the upward migrations could sustain as active managers reposition their portfolios. Some stocks will have passive flows over the next few months.

• The billion-dollar order that had initially seemed like a game-changer for Wardwizard Innovations turned out to be its downfall as it happens to be a Non Binding MoU. 
• While for an INR 300 crore revenue company billion dollar order was huge, hence stock price rose on the back of rosy picture.
• Promoter used the situation to dump the shares via stake sale as the news of order led to 20% rise in the stock price which eventually raises Corporate Governance Concerns

• Sanstar (SANSTAR123 IN) is primarily focused in producing maize based specialty products and ingredient solutions in India. It currently occupies a market share of around 7.8%. 
• The company has shown good growth in the last two years; however, when it comes to accounting and forensic checks there are several grey areas/unique policies.
• Examples: Revenues are stated gross of GST and are net of freight and brokerage costs. Classification of some of free reserves into revaluation reserve, Salaries paid to some senior personnel,etc.

• Patel Engineering (PEC IN) ‘s large order book, strategic sectors focus, and successful debt reduction through QIP and restructuring.
• Strong financial resilience, projected revenue growth, and robust order pipeline signal promising future prospects.
• Poised for growth strong order pipeline and increased government focus on Infrastructure, Hydro Power segment and Irrigation segment.

• Impending block deals which generally create supply over-hang on the stock leads to a negative impact on the stock.
• These block deals generally include selling promoters and big funds at a price discount to its current market price.
• Historically, such events suggest once the block deal is done; stock reacts positively creating a Special Situation Opportunity

• Independent Director’s resignation highlights the lack of strong corporate governance practices within Suzlon. 
• Suzlon Energy’s response to the outgoing director’s concerns demonstrates a willingness to address issues and make necessary changes to enhance corporate governance.
• Though it does not raise concerns on any financial irregularities and legal violation but resolution of issues remains a key event to watch for.

• Concord Biotech Ltd (CONCORDB IN) reported 19% revenue growth in FY24. EBITDA and PAT grew at a faster pace of 26% and 28%, YoY, respectively.  
• With focus on deeper market penetration, acquiring new customers, and introducing new products in niche categories, Concord is well-positioned for 25% revenue CAGR in 3–5 years.
• Despite a huge run-up from the IPO price, Concord shares are trading at forward P/E of 38.9x, which is lower than peers.

• There are 13 changes for the Nifty200 Momentum 30 Index that will be implemented at the close on 27 June.
• Estimated one-way turnover is 42.3% resulting in a one-way trade of INR 32bn (US$384m). There are 13 stocks with over 0.5x ADV to trade, mostly on the deletes.
• After steady outperformance over the last few months, there was a selloff in momentum names following the announcement of the election results. There has been a recovery since then.

• IVs were crushed in the aftermath of Election results & in spite of lingering political instability & significant moves in RV.
• Vol-Regime Switching Model is holding at “High & Up” state. Probability of switching to “High & Down” state has increased significantly.
• Vol term structure is still in Backwardation – should transition to Contango as IV & RV drift lower.

• The NIFTY Index has been swinging wildly as of lately, but the odds look good for a continuation of the rally at the moment.
• The index is in a pattern where it can rally for 1-2 more weeks.
• Wait for prices in the 23500/23700 resistance area before considering a SHORT trade.

• Alkem Laboratories Ltd (ALKEM IN) reports 1% revenue growth in Q4FY24. However, gross margin improved significantly backed by lower raw material cost and lower intensity of price erosion in U.S.
• For FY25, the company has guided for 10% YoY revenue growth, which is at par with the last five year’s average growth.
• Alkem expects to maintain FY25 gross margin and EBITDA margin at the current level. As API prices have become mostly stable, there is limited room for further margin expansion.

• Indiabulls Housing Finance (IHFL IN) Raised INR 3,693 crores through rights issue, issued $350 million bond.
• Strong balance sheet, low NPAs, poised for growth in the retail housing via its asset light model.
• Rebranding to Samman Capital signals new phase of the company with multi-year growth guidance.

Tata Steel’s Q4 and FY 2023-24 numbers were weak in our view, with the restructuring of the UK operations weighing on group performance and offsetting the robust Indian business. The financial risk profile deteriorated significantly, due to lower earnings and soft cash flows. Liquidity was inadequate, driven by the poor cash flows and large dividends.

We expect the steel industry’s operating environment in FY 2024-25 to be constructive and support Tata Steel’s earnings. However, the company’s solid earnings for the Indian operations should be offset by the restructuring of the UK business, for which another GBP 1.6 bn of additional costs is projected. It is unclear if there is light at the end of the tunnel.

• IVs Spike with Election Results release on 04-June-2024. Post event there’s a risk of large IV-crush regardless of the result.
• Current Vol-state is “High & Up”. Wait for the switch to “High & Down” before initiating new risk-premia harvesting strategies
• Weekly IVs have received large markups due to elections. Entire Vol Curve is now in Backwardation –  curve inversion at extreme levels

• Divi’s Laboratories (DIVI IN) reported steady performance in Q4FY24, marked by YoY and sequential growth in revenue and improvement in profitability. Double-digit growth is expected to continue.
• Custom Synthesis business grew 47% YoY and 38% QoQ to INR12B in Q4FY24, driven by increasing value realization from existing commercial projects and addition of new projects to the portfolio.
• In Custom Synthesis, Divi’s Lab is in the process of entering into a long-term supply agreement with an MNC customer and is planning for capacity addition at its manufacturing facility.

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 Ports & Special Economic Zone

• With Indian capital markets booming, companies are tapping capital markets regularly for fundraising even though they have recently raised funds.
• There are also cases where company after concluding IPO in recent years are going for fund raise
• The market are jittery about possible equity dilution and unclear fund raising objectives

• Dixon Technologies India Ltd (DIXON IN) growth is driven by mobile and EMS segment; majority of other businesses are muted in the last two years.  
• The company is able to convert earnings to cash quickly but cash yield is close to zero.
• The company has reported significant amount of refund liability, but is silent on its accounting policy. Other forensics takeaways include non-reconciliation of asset disposals, high forex risk, etc.

• Glenmark Pharmaceuticals (GNP IN) FY24 results have seen PBT reducing from INR 2.4 bn to INR 365 mn i.e. by nearly 85%. 
• This was on account for exceptional line items, which included gains from sale stake in Glenmark Lifesciences, but was offset by losses pertaining to legalities and heavy impairment in assets.
• The habit of having exceptional items, especially impairments is not something new or one-offs. There have been regular impairments carried in the past as well. 

• Antfin will come out of its placement linked lockup for its remaining stake in Zomato soon.
• Ant Group had earlier sold some of its stake in Nov 2023 and Mar 2024. It still has over US$800m worth of shares left to sell.
• In this note, we talk about the deal dynamics and run the deal through our ECM framework.

• Action Construction – a leader in construction and heavy equipment theme is going for transformation with a defence foray and new product launches
• With strong guidance and the historical success of good execution makes a good bet on the current infrastructure and manufacturing theme
• The risk includes a slowdown in the election period and stiff competition from larger players

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.

• Fosun International
• Lenovo
• Lippo Malls Indonesia Retail Trust
• NTPC Ltd
• Rakuten

• There could be 13 changes for the Nifty200 Momentum 30 Index that will be implemented at the close on 27 June.
• If all changes are on expected lines, one-way turnover is estimated at 48.8% and that will result in a one-way trade of INR 35.5bn (US$426m).
• Since January, the potential adds to the index have outperformed the potential deletes by a big margin. Watch out for the general election results on 4 June for momentum change.

• Impending block deals which generally create supply over-hang on the stock leads to a negative impact on the stock 
• These block deals generally include selling promoters and big funds at a price discount to its current market price 
• Historically, such events suggest once the block deal is done; stock reacts positively creating a Special Situation Opportunity

• Impending block deals which generally create supply over-hang on the stock leads to a negative impact on the stock
• These block deals generally include selling promoters and big funds at a price discount to its current market price
• Historically, such events suggest once the block deal is done; stock reacts positively creating a Special Situation Opportunity

• Part of our housing finance checks, we have been visiting Aavas Financiers Ltd (AAVAS IN)  branches for over two years now.
• While the situation was grim early on post the management change and increased competitive intensity, the current channel inputs are encouraging.
• Key areas that warrant attention are growth trajectory, yields, and tech upgrade.