India

• Northern Arc Capital (0542390D IN) is looking to raise at least US$100m in its upcoming India IPO. The bookrunners on the deal are Citigroup, Axis Capital, and ICICI Securities.
• Northern Arc Capital (NAC) is a retail-focused non-banking financial company (NBFC) catering its banking services to the under-served households and businesses in India.
• According to CRISIL, NAC was one of the leading players amongst India’s diversified NBFCs in terms of AUM as of Mar 23.

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.

• Rakuten Group
• UPL Ltd

• Stylam Industries (SYIL IN) reported its best-ever EBITDA margin of 22.3% Vs 16.8% due to a raw material price decline. Revenues continued to remain soft, with growth of -8% YoY.
• The company completed its brownfield expansion to increase the plant capacity by 40% and is now embarking on a capacity expansion of 200 crores in FY25, effectively doubling its revenues. 
• Stylam Industries (SYIL IN) trades at 22x/19x FY24e/25e, with a potential for doubling of revenues over the next 3-5 years.

• We screen our coverage universe for earnings disappointments, EPS downgrades, and management narratives to identify fundamental shorts.
• Stocks in focus include SBI Cards & Payment Services (SBICARD IN) , Pvr Inox (PVRINOX IN), and Escorts Kubota Limited (ESCORTS IN). 
• Credit Cost for SBI is expected to remain elevated, PVR management seems to be misreading consumer preferences, and Macro uncertainties cloud ESCORTS.

• Bharti Hexacom is looking to raise up to US$1bn 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.
• In this note, we talk about the not-so-positive aspects of the deal.

• At the last close, GMR Airports Infrastructure (GMRI IN) has a market cap of US$6.23bn and a free float market cap of US$2.48bn.
• Passive global trackers are estimated to need to buy 223.33m shares (US$230m; 4.4x ADV) of GMR Airports Infrastructure (GMRI IN) at the close on 29 February.
• GQG Partners (GQG AU) has been a big buyer since December and holds 4.98% of the company. The stock could run up for a few more weeks.

• Bharti Hexacom is looking to raise up to US$1bn 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.
• In this note, we talk about the positive aspects of the deal.

• In Q3FY24, Dr. Reddy’s Laboratories (DRRD IN) posted highest ever revenue of INR72B, led by U.S. and Europe generics businesses, with contribution from both base business and new product launches.
• Underperformance in the domestic market continued in Q3FY24. However, the company’s initiatives regarding innovative and new generic drugs for Indian market should place it for long-term accelerated growth.
• Last month, Dr. Reddy’s acquired MenoLabs, a leading women’s health and dietary supplement branded portfolio of seven products designed to provide health support and address symptoms of perimenopause and menopause.  

Key points (machine generated)

• Maithan Alloys is a leading manufacturer of Manganese (Mn) alloys used in the production of hardened steel.
• The company operates three plants in India and recently acquired a fourth, indicating its growth and expansion in the industry.
• India, where Maithan Alloys is based, is the largest exporter of Mn alloys in the world, providing 25% of global imports, and maintains its position as a low-cost supplier despite structural disadvantages.

This article is sourced from an online content aggregator through publicly available sources and is displayed below for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• LIC Housing Finance (LICHF) reported a strong Q3FY24 on the back of a strong NIM. Growth, however, has been tepid as LICHF recently transitioned its technology and organizational structure.
• FY24 has been a consolidation year due to technology and organizational changes; however, LICHF is setting up well to post strong growth in FY25.
• Among other things, affordable housing is going to be a key growth area going forward. Asset quality has been also improving and should further normalize with recoveries and upgradations.

• Zydus Lifesciences Ltd (ZYDUSLIF IN) reported 16% YoY and 7% QoQ growth in India formulation business revenue in Q3FY24 on the back of healthy volume growth and new product launches.
• Profitability improvement continued, with Q3FY24 improving 200 basis points YoY to 24.5%. Net profit surged 27% YoY.
• The Board approved INR6 billion buyback, representing 0.59% of total outstanding equity shares at a price of INR1005 per share (25% premium to last closing price) via tender offer route.

• There will be a bunch of rebalance announcements towards the start and at the end of the coming week. This includes the HSI, HSCEI, HSTECH, HSCI, HSIII and global indices.
• The review period for the March rebalance of the S&P/ASX 200 and related indices ends on 16 February. The announcement of the changes will come couple of weeks later.
• There were HUGE inflows to mainland China ETFs for yet another week as Central Huijin indicated that they would continue to buy/create ETFs units.

• Q3FY24 performance was slightly below expectation led by NIM margin compression and marginally elevated credit costs. Certain regulatory restrictions also dampened growth and profitability.
• However, from a medium-term perspective, BAF is setting up well to be a sustained growth powerhouse. It has widened its product catalogue and is deepening the product availability per branch.
• Led by growth tailwinds and market share gains, BAF has potential to grow at 25%+ for a prolonged period. The current headwinds seem temporary and provide a buying opportunity.

• The NIFTY Index was supposed to continue its rally but has stalled a bit this week.
• This modest pullback could be a buy-the-dip opportunity, based on our WEEKLY models reading.
• The price support area to buy is between the Last WEEKLY Close and  21229.

• British American Tobacco (BATS LN) owns 29.03% of ITC Ltd (ITC IN) and could sell a portion of its stake. But BAT will hold at least 25% of the company.
• British American Tobacco (BATS LN) paring its stake could also lead to SUUTI gradually reducing its own holding in the company.
• Any stake sales would not result in buying from global passive trackers while there will be small buying from local index trackers. Increased float could pressure the stock.

• Agilus Diagnostics Limited (SRLL IN) is looking to raise around US$200m in its upcoming India IPO.
• Agilus Diagnostics Limited (Agilus) is a diagnostic testing service provider.
• In this note, we look at the company’s past performance.

• Paytm Payments Bank faces regulatory scrutiny and compliance challenges, impacting its trajectory and profitability amid ongoing supervisory action by the RBI.
• With significant restrictions on operations and revenue streams, Paytm navigates a complex financial landscape, highlighting resilience amidst regulatory uncertainties and governance concerns.
• Despite proactive measures, including partnership diversification and service continuity, Paytm’s future hinges on addressing compliance lapses and fostering transparent governance to regain trust in the fintech sector.

• We retain Bank of Baroda as the value Indian bank, despite its strong share performance, for its modest valuations, healthy ROE and further improvements in delinquency metrics
• HDFC Bank remains out of favour with the market but we retain it as a buy, with its potential for medium term gains post-merger and its strong balance sheet
• Axis bank remains on our watchlist; we remain negative on State Bank of India for its delinquency risks, low core capital ratio and limited progress on returns

• SBFC Finance Limited (SBFC IN) raised around US$131m in its India IPO, after the deal was priced at INR57/share. Its six-month lockup will expire on 12th Feb 2024. 
• SBFC Finance is a systematically important, non-deposit taking non-banking finance company (NBFC-ND-SI), offering secured MSME Loans and Loans against Gold.
• In this note, we will talk about the lock-up dynamics and updates since our last note.

• Entero Healthcare Solutions Limited (2294842D IN) is looking to raise US$193m in its India IPO.
• Entero Healthcare Solutions (Entero) is a healthcare products distributor in India.
• In this note, we will look at the RHP updates, undertake a peer comparison, and share our thoughts on valuation.

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.

• Sands China
• Tata Motors ADR
• UPL Ltd

• Despite upping the FY24 guidance in the prior quarter (Q2FY24), KPIT is confident of beating even the raised guidance, led by strong Q3FY24 performance and an upbeat outlook.
• Despite accelerated revenue in H1FY24 from the Honda engagement, Q3FY24 saw robust revenue growth of 4.3% QoQ in CC terms. EBITDA margin expanded to 20.6% vs 20% QoQ. 
• KPIT’s new venture, Qorix, is coming along well and could prove to be transformative. This could enable KPIT to become a product company, alongside being a high-growth service company.

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.

• ENN Natural Gas
• UPL Ltd

• With the review period for the March rebalance complete, there could be 6 potential changes for the NSE Nifty Next 50 Index (NIFTYJR INDEX) using the current index methodology.
• Estimated one-way turnover is 13.9% resulting in a one-way trade of INR 28.6bn. Four inclusions will have over 1x ADV to buy; five deletions will have 2.5x+ ADV to sell.
• The potential adds have outperformed the potential deletes by 28.6% over the last month. With positioning from a rebalance perspective mostly done, gradually unwind over the next few weeks.

• There could be one change for the Nifty100 Low Volatility 30 Index that will be implemented at the close on 28 March.
• Constituent changes, volatility changes and capping changes will result in one-way turnover of 12.6% and in a one-way trade of INR 3.7bn.
• While the deletion is fairly certain, there are a few non-constituents around the same level of volatility and price movements over the next few weeks will determine the inclusion.

• State Bank Of India (SBIN IN) has reported its 3Q24 (Dec-23) results with a one-off pension and wages revision charge which impacts the short-term earnings profile.
• Medium-Term ROE Forecast Intact (16% to 18%) with management confident of even touching 20% in next couple of years; loan growth forecast of 14% to 16% for FY25e-FY26e.
• We reiterate our view: P/BV is cheap at 1.3x FY25e. SBIN has the potential to re-rate to P/BV of ~1.6x FY25e in the near term (~40% upside). Opportunity to ADD.

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.

• Bharti Airtel
• Guangzhou R&F Properties
• UPL Ltd