India

• Canara Bank (CBK IN) could replace Bandhan Bank Ltd (BANDHAN IN) in the NSE Nifty Bank Index (NSEBANK INDEX) at the March rebalance.
• Passive trackers will need to buy 2 days of ADV on Canara Bank (CBK IN) while selling over 1 day of ADV on Bandhan Bank Ltd (BANDHAN IN). 
• The impact is even higher where passives will need to buy nearly 6x delivery volumes in Canara Bank and sell 3x delivery volumes in Bandhan Bank Ltd.

• For this edition, we focus on our 2023 Bloopers, to improvise rather than get embarrassed.  We also share some thoughts on potential enhancements that can be anticipated going forward.
• On the NIFTY Index (NIFTY INDEX), we are still not bearish but do not find the markets to be very attractive either.
• Bloopers in focus include Zomato (ZOMATO IN); CarTrade (CARTRADE IN) ; Hero Motocorp (HMCL IN) and Aavas Financiers Ltd (AAVAS IN). 

• We visited the core of the Hindi Hinterland, the “City of Patna,” the capital and largest city of Bihar, the country’s third most populous state.
• While the trip paints an opportunistic and optimistic picture of Bihar, the situation of unemployment is something that still warrants attention.
• Focus companies: Aditya Vision (AVL IN) , Eicher Motors (EIM IN)  , Hero Motocorp (HMCL IN) and Fino Payments Bank Ltd (FINOPB IN). 

• Datamatics Global Services (DATA IN) or DGSL has seen a good operational performance especially since F23, on the back of a difficult IT macro environment. 
• Yet there are some discomforts on the forensic side, especially related to cash component. Low cash yield due to significant current account balances in subsidiaries raises alarm bells. 
• We find opaqueness regarding some important disclosures including Ind AS 115- Revenues and Ind AS 116- Leases. Decision to increase remuneration cap size also leaves us perplexed.

• Nuvama reported its first quarterly result since its listing, as a demerged entity. It reported strong growth across all its business segments.
• Wealth management revenues grew 30% YoY, adjusted for one-off accounting impact. Cyclical recovery in the capital markets segment further helped.
• Nuvama has potential to scale up rapidly and grow its profitability exponentially led by growth and operating leverage. At the current valuation, an investment in Nuvama has potential to triple.

• Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
• On the IPO front, things started to cool down into the year end with some smaller issuers still trying their luck to get listed before the year ends.
• On the placement front, most of the action continued to come from India. 

• Edelweiss reported a decent Q2FY24 with ex-Insurance PAT of INR 153cr vs INR 133cr YoY. All the businesses – ARC, Asset Management and Credit – performed well.
• Edelweiss is making decent progress in the Credit business aided by the co-lending business model. 80% of disbursals in NBFC and 30% in Housing Finance in Q2FY24 were through co-lending.
• Edelweiss is in process of selling a minority stake in its Alternative Asset Management business for value unlocking. It plans to sell 10-20% equity stake for INR 1500-2000cr.

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.

In this Insight:

1. Meituan
2. Lippo Malls Indonesia Retail Trust
3. SK Hynix
4. China Jinmao Holdings
5. Geely Auto

and more…

• Emcure Pharmaceuticals has re-submitted DRHP to the SEBI for the second time. The IPO consists of a fresh issue of INR8 billion and an offer-for-sale of up to ~14M shares.
• In the re-submitted DRHP, the company has trimmed the sizes of both the fresh issue and OFS. Emcure originally planned to launch IPO its in 2022.
• Emcure has added latest financial performances in re-filed DRHP.  During H1FY24, revenue from India increased only 3% YoY to INR16.4M, due to lower sales of anti-viral HIV products.

• Regulatory Tangles:Promoters faced cricket betting allegations, SEBI penalties, debarment from financial markets and a litany of investigations. Legal and financial risks loom due to regulatory delays and unresolved litigations.
• Operational and Financial Hurdles:Excessive inventory, delayed payments, and opaque related-party transactions.Weaker margins, ROE, and underutilized manufacturing hint at broader governance frailty.
• Debt Dilemmas and Transparency Concerns: Heavy reliance on high-interest promoter loans. Governance lapses are reflected in financial metrics, raising questions about transparency and conflicts of interest.

• Blackstone (BX US) is looking to raise around US$834m through a secondary block deal. This will be a clean-up as Blackstone fully exits from Embassy Office Parks REIT (EMBASSY IN).  
• The deal is a large one to digest, at approximately 397.2 days of three month ADV and 20.7% of current mcap.  
• In this note, we will talk about the selldown and run the deal through our ECM framework.

Vedanta Resources (VRL) has launched a consent solicitation for an extensive liability management exercise. The company is seeking consent from noteholders of its four bonds to extend the maturities of three of the bonds (the January 2024, August 2024 and 2025 notes) to 2027-2028. There will be no haircut on the principal, and the coupon for the August 2024 notes and 2025 notes will be increased to match that of the January 2024 notes.

In our opinion, the terms of the proposal are mixed and the timeline is very tight. Failure to receive the requisite consent may lead to the company defaulting on the January 2024 notes. The new financing cannot be used to repay the January 2024 notes if the liability management exercise does not go through. In this case, there would be no time for VRL to come up with a revised proposal before the maturity of the January 2024 notes.

We acknowledge the company’s efforts in terms of the improved security packages and higher coupons. We recommend that noteholders accept the proposal and provide consent.

• INOX India Limited (INOX IN) raised around US$175m in its Indian IPO, after pricing the deal at INR660/share. It will begin trading tomorrow on 21st Dec 2023.
• Inox India is a manufacturer of cryogenic equipment. As per CRISIL, the firm was the largest Indian exporter of cryogenic tanks in terms of FY23 sales.
• We have looked at various aspects of the deal in our previous notes. In this note, we talk about demand and trading dynamics.

• 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.
• In this insight, we take a look at the names leading the race to become ADDs/DELs for the NIFTY 50 and NIFTY Next 50 indices in the March 2024 rebalance.
• There could be multiple changes for NIFTY 50 and separately, there could be five changes for NIFTY Next 50. The NIFTY 50 changes could have high impact.

• India Shelter Finance (0570670D IN) raised around US$144m from its India IPO.
• India Shelter Finance (ISF) is a retail-focused HFC targeting the self-employed customer with a focus on first time home loan takers in the low and middle income group.
• We have covered various aspects of the deal in our previous note. In this note, we will talk about the demand and trading dynamics.

• We see 8 stocks moving from MidCap to LargeCap, 8 stocks moving from LargeCap to MidCap, 11 stocks from SmallCap to MidCap, and 14 stocks from MidCap to SmallCap.
• Some stocks were added to global indices last month while some could be added in February. There are potential index implications for the NIFTY Index and Nifty Next 50 Index too.
• The upward migrations have continued to outperform the downward migrations. The largest recent outperformance has come from stocks expected to move from the Mid Cap to the Large Cap segment.

• Credo Brands (Mufti) (CREDO IN) IPO opens as a full OFS worth INR 5.5 bn. 
• The company operates ‘Mufti’ which is one of the renowned brands in Indian Men Casual Fashion category. 
• CMBL faces several questions including employee pay vs KMP, accounting for unsold inventory, delay in important payments, conflict of interest with BoD/SMPs etc.

• While the profitability of Stylam Industries (SYIL IN) is growing healthily (>30% YoY) in H1 FY24 due to margin expansion, revenues are trending at -4.5% YoY.
• The company became net cash in H1 FY24 (73 crore INR)  and zero gross debt. A strong balance sheet would aid in the company’s expansion plans. 
• Trading at 23x/18x FY24e/25e, we see strong growth ahead for the company as it cements its position as one of India’s top laminate export players. 

• Muthoot Microfin (1363943D IN) is looking to raise up to US$116m in its Indian IPO, after downsizing from an earlier reported float of US$163m.
• Muthoot Microfin (MMF) is a microfinance institution providing micro-loans to women customers with a focus on the rural regions of India.
• In our previous note, we looked at the company’s performance. In this note, we talk about the company’s RHP updates and share our quick thoughts on peer comp and valuation.

• 7 weeks up in a row and very overbought, the NIFTY Index could pullback from its highs this week and/or the next.
• A pullback to the 21008-20542 support area could be an occasion to enter LONG, profitable if the index rebounds from there and continues to rally into January.
• The potential pullback appears to be a short-lived retracement down, based on MRM pattern readings.

• The Indian Market (~$4 trillion) has now overtaken Hong Kong as the 4th most-valued stock market after the US, China, and Japan. 
• We recently concluded an exploratory trip to Patna, the capital, and also the largest city of the state of Bihar, Summarized thoughts on companies focused in this insight. 
• Multiple stocks covered in the Insight. The future of Easy Trip Planners (EASEMYTR IN), especially if it’s banking on franchisee expansion, could go the other way around.

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 Infrastructure
• Lippo Malls Indonesia Retail Trust
• SK Hynix

• LICHF reported a decent Q2FY24 led by a strong NIM (3.04%). Growth has been somewhat subdued due to technical issues, however, these have been resolved and October is tracking well.
• LICHF reiterated its full-year FY24 NIM guidance at 2.6-2.8%. Credit cost, except for one-off item of INR 104cr in Q2FY24, continues to be below 50bp annualized.
• Despite a subdued H1FY24, LICHF has maintained its FY24 AUM growth guidance to 10%+. This implies that LICHF can grow AUM at 5%+ QoQ over the next two quarters.

• InterGlobe Aviation Ltd (INDIGO IN) (Indigo) has turnaround and is on path to achieve record profits in FY2024 on strong demand, stable FX and lower jet fuel prices 
• However, engine problems will hurt capacity deployment in 4QFY24 and FY2025, and the engine manufacturer has been very vague and unreliable in presenting its remedial plans 
• Share price near all-time high and valuations (PE, EV/EBITDAR) are expensive compared to global LCCs. TP of INR2,513 (14% DOWNSIDE) pegged to 15x FY2025 PE (top-end LCC cycle)