India

• 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

• As one of the fastest-growing economies globally, India is projected to become the third-largest economy, trailing only China and the US, by 2027.
• Amid macroeconomic challenges worldwide, investors are eager to tap into India’s robust economic growth.
• However, economic growth does not always correlate with equity market growth, as seen in Spain and Italy during the 1980s and 1990s, and more recently in China.

• Virtuoso Optoelectronics (VOEPL IN)  is a contract manufacturer company engaged into production of ACs, Lightings and other equipments. The company is renowned for supplying ACs to Voltas.
• The company has grown sharply over the last five years and has been engaging in constant capex. However, it does struggle in converting its earnings to cash.
• Among the forensic checks, it nets off receivables and payables/advances, the exact nature of these line items cannot be commented upon. VOEPL also faces high cost of borrowings

• 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

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.

• GMR Hyderabad International Airport
• Lippo Karawaci

• Adani Ports & Special Economic Zone (ADSEZ IN) will replace Wipro Ltd (WPRO IN) in the S&P BSE SENSEX Index at the close on 21 June.
• Adani Ports & Special Economic Zone (ADSEZ IN)‘s inclusion is a big surprise and there should be a move higher in the stock in the short-term. 
• Wipro Ltd (WPRO IN)‘s deletion was expected and there is positioning in the stock. But there is a lot that passives need to sell too.

• Multiple factors help IVs stabilize after last week’s spike. “High & Up” vol state to persist until elections results on 04-June-2024.
• SEBI makes changes to Dynamic Price-band Mechanism. Will impact options market-making & should have an overall Vol suppressing effect. 
• Nifty50 10-delta Risk-reversals extend to -8.5% as the Index reaches 23000. Risk-premia favouring puts over calls is looking over-extended.

• Recommendation to buy ISEC shares at Rs 840 per share with a price target of Rs 1200 per share
• Dissatisfaction among minority shareholders due to insider’s attempt to acquire remaining shares at a lower price
• Illiquidity and limited institutional investors due to Parent owning 75% of shares, potential merger poses a risk but shareholders can extract fair value even in a merger scenario

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

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.

• Lenovo
• UPL Ltd
• Xiaomi Corp

• Tata Technologies (TT) raised around US$370m in its India IPO in Dec 2023.
• Tata Technologies is a global engineering services company offering product development and digital solutions, including turnkey solutions, to global original equipment manufacturers (OEMs) and their tier 1 suppliers.
• In this note, we talk about the upcoming lock-up expiry and possible deal dynamics.

• Allied Blenders & Distillers (9844250Z IN) is looking to raise about US$180m in its upcoming India IPO.  
• ABD is the largest Indian-owned Indian-made foreign liquor (IMFL) company and the third largest IMFL company in India, in terms of annual sales volumes between FY14 and FY22.
• In this note, we provide a summary of its refiling updates, undertake a quick peer comparison and share our initial thoughts on valuation.

• Go Digit General Insurance raised around US$315m in its India IPO.
• Go Digit General Insurance is a digital full stack insurance company, offering motor insurance, health insurance, travel insurance, property insurance, marine insurance, liability insurance and other insurance products.
• We have looked at the company’s performance in our past note. In this note, we talk about the trading dynamics.

• We add value plays Bandhan and UBI to the buy list alongside HDFC Bank and Baroda, turning neutral from negative on SBI. Bandhan is our core Indian bank pick, UBI benefits from improving return trends

• Trent Ltd (TRENT IN) and Bharat Electronics (BHE IN) should replace LTIMindtree (LTIM IN) and Divi’s Laboratories (DIVI IN) in the NIFTY Index (NIFTY INDEX) in September.
• Jio Financial Services (JIOFIN IN) and Zomato (ZOMATO IN) meet the free float market cap requirements but are not part of the F&O segment.
• Passive NIFTY Index (NIFTY INDEX) trackers will need to trade at least 3.8 days of ADV and 9 days of delivery volume on the index changes.

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.

• Lippo Malls Indonesia Retail Trust

• With a week left in the review period, Bharti Airtel (BHARTI IN) could replace Power Grid Corporation Of India (PWGR IN) in the Nifty100 Low Volatility 30 Index in June.
• Constituent changes, volatility changes and capping changes will result in one-way turnover of 6.4% resulting in a one-way trade of INR 2.3bn.
• The flows on the stocks are not very large but there will be same side and offsetting flows from other index trackers at the same time.

• VBL has a history of commanding high growth through acquisitions, product portfolio and geographical expansions and operating leverage
• Varun is now focusing on interesting geographies and products which will aid its next level of growth
• There could be more than bigger success stories like Sting for Varun Beverages if it can repeat history

• In Q4FY24, Cipla Ltd (CIPLA IN) posted 10% YoY revenue growth to INR61.6B. Despite surging R&D expenditure, EBITDA increased 13% YoY to INR13B, leading to 54bps margin expansion to 21.4%.
• New launches in U.S. and outperformance in the domestic market driven by chronic portfolio should drive the growth. For FY25, the company has guided for EBITDA margin of 24.5–25.5%.
• Cipla shares soared 15% YTD. Last week, the promoters, Hamied family sold 2.5% stake in the company for ~INR26B, igniting a rally in share price.

While JSW Steel’s Q4/23-24 results were soft in our view, the full-year numbers were decent. Operational stats remained robust. The share of value-added products was high and continued to increase. The financial risk profile was unchanged q-o-q, but improved significantly from FYE 2022-23. However, liquidity deteriorated and was barely adequate.

We expect a stronger FY 2024-25 with higher revenue and earnings, as the steel operating environment appears to have bottomed out. Steel prices should remain stable, with possible upside. That said, the higher earnings could be offset by an increase in debt to cover the large and growing capex.

• Curtail Short Gamma & Short Vega exposure as Vol-regime has switched to “High & Up” state.  
• Short-Dated IVs traded markedly lower, driven by recovering equities & the 20-May market holiday
• Nifty50 vol curve is exhibiting unusual kinked shape. Monthly IVs are commanding a large vol markup relative to rest of the curve. 

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.

• Hopson Development
• Vedanta Resources

• Indian SMEs are new hot investment avenues selling stories to investors which might end to a case of pump and dump.
• SEBI in last few months have identified such cases in SMEs and microcaps.
• We delved into key guidelines on Indian Forensics to Identify and Avoid Storified Stocks

• Zen Technologies (ZEN IN) expands product range to drones, anti-drone systems, and medical simulators, enhancing opportunities beyond government contracts.
• Strong order book of Rs 1,401 crore, significant R&D investment, and government support for indigenous defence manufacturing drive growth.
• Zen Technologies (ZEN IN) diversified product portfolio and strategic government support position it well for significant growth in the defence and simulation markets.

• KPIT reported a strong Q4FY24 led by 5.1% QoQ revenue growth in constant currency (CC) terms. EBITDA margin came in better than expected at 20.7%.
• Overall, in line with our projection, KPIT even beat its upgraded guidance by posting YoY revenue growth of 39%+ in CC terms vs 37%+ guided.
• KPIT has guided for a strong FY25 with revenue guidance of 18-22% in CC terms and EBITDA margin of 20.5%+.

• LICHF faced some teething issues with technology during past 1Y due to which growth and reported asset quality had been subdued. However, with strong Q4FY24, LICHF is back on track.
• LICHF reported strong growth in disbursements. Q4FY24 disbursements were INR 18200cr+, a growth of 20%+ QoQ. NIM came in higher than expected at 3.15%, despite spike in bond yields.
• Asset quality improved significantly with Stage 3 assets declining to 3.31% vs 4.26% QoQ and Stage 2 assets declining to 4.20% vs 4.54% QoQ.

• A Detailed understanding of Thermal cum Renewable Power house JSW Energy Ltd (JSW IN) Business and their ambitious target to achieve 10 GW by FY25.
• Strategy 2.O, where company is planning for 20GW by 2025, energy storage system.
• JSW Energy’s strategic acquisitions and focus on renewables enhance growth prospects, with a vision to become a leading renewable energy provider.