India

• HCG reported a strong Q2FY4 with revenue growth of 16% YoY and 5.7% QoQ. EBITDA margin expanded 120bp QoQ to reach 17.8%.
• Emerging centers are scaling up well with revenue growing at 29% YoY in Q2FY24. Matured centers’ revenue also grew at a healthy pace of 13% YoY.
• HCG is continuing to upgrade infrastructure of existing hospitals. It added 3 robotic surgery machines across 3 centers. It operationalized 4 new LINACs and plans to install six more LINACs. 

• Bajaj Finance Ltd (BAF) reported a decent Q2FY24. AUM growth came in at 33% YoY. Profitability was also strong with ROA and ROE at 5%+ and 24%+, respectively.
• While, the overall outlook remains robust, BAF may see some NIM pressure due to rising cost of funds. However, majority of this is likely to be offset by operating leverage.
• BAF’s initiative to enter into new segments like microfinance and new car financing is progressing well. New car financing expansion is already ahead of plan with presence in 85 locations.

• INOX India Limited (INOX IN) is looking to raise up to US$175m in its Indian IPO.
• 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.
• In our previous note, we looked at the company’s background. In this note, we talk about the company’s performance and share our quick thoughts on valuation.

• India Shelter Finance (0570670D IN) is looking to raise 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.
• In this note, we will look at past performance, and share our thoughts on valuation.

• India Shelter Finance (0570670D IN) (ISFC) IPO worth INR 12 bn opens for subscription this week. The issue comprises INR 8 bn fresh issue and INR 4 bn OFS. 
• ISFC has been generating high growth in AUM and disbursements in the last few years. The company has also improved its NPAs and stability.
• However, there are few cautions regarding employee productivity and on the opex side. Also, slippages have increased in H1F24.

• IDFC First Bank Limited (IDFCBK IN)  has built a banking franchise that holds the best promise among the mid-sized banks in India for long-run outperformance.
• A high-yielding and retail-oriented loan book, track record of pristine asset quality, superior funding profile boosting best-in-class retail deposit base, and incrementally improving unit economics.
• We value the stock as a long-term Buy, with 35% upside in near-term, as the bank continues to realize the benefits of its increasing scale on its earnings profile.

• RPSGV’s BPO business, Firstsource Solutions, is stabilizing and reported flattish QoQ revenue growth. EBIT margin has also bottomed out and is now at around 11%, an expansion of 300bp YoY.
• FMCG Business continues to maintain an annualized revenue run-rate of INR 400cr+. The Sports business generated revenues of INR 50cr+ vs INR 15cr YoY. 
• The FMCG and the Sports businesses hold tremendous scalability potential going forward. The IPL Lucknow franchise also owns a team named Durban in the South Africa T20 league.

• Alkem Laboratories Ltd (ALKEM IN) is flying high on strong Q2 numbers. The shares rallied 23% since the company announced Q2FY24 result in early November, widely outperforming Nifty Pharma index.
• In Q2FY24, revenue grew 12% YoY, and gross margin expanded 380bps to 61.4% backed by lower raw material cost and lower intensity of price erosion in US market.
• For the U.S. business, Alkem is looking at high-single-digit growth in dollar terms for FY24. The company has reiterated FY24 gross margin guidance at 59.0–59.5%.

• Doms (DOMS IN) IPO opens for subscription soon. The INR 12 bn IPO includes INR 3.5 bn fresh issue and the remaining as offer for sale. 
• The company is a prominent player in the Indian stationary market and has one of the most diverse product portfolio with a market share of 12% in F23. 
• DOMS ticks right in majority of the boxes when it comes to operations and B/S health. One must still be cautious regarding dependence on FILA group, and faster depreciating rates.  

• A group of shareholders is looking to raise around US$600m via selling a 6.9% 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 and lock-up release earlier. In this note, we talk about the other deal dynamics.

• The broader sentiment remains positive, with markets primarily driven by participation from foreign investors, wise to increase the trailing stop at 20,600 for any possible change in trend.
• We have already highlighted the weak operational performance of Whirlpool of India (WHIRL IN) , the company’s tax woes continue. 
• Names covered in this insight include Whirlpool of India (WHIRL IN) , Thyrocare Technologies (THYROCAR IN), Paytm (PAYTM IN) and Flywire Corp (FLYW US) 

• Doms (DOMS IN) is looking to raise around US$140m in its India IPO.
• DOMS is a leading player and brand in India’s stationery and art products market. It designs, manufactures, and sells a wide range of products, primarily under its flagship brand ‘DOMS’.
• We have looked at the company’s past performance in our earlier note. In this note, we talk about valuations.

• Max Healthcare Institute (MAXHEALT IN) has entered into a share purchase agreement for acquisition of a 550-bedded Sahara Hospital in Lucknow, Uttar Pradesh for an enterprise value of INR9.4B (~$113M).
• The Hospital currently serves ~2 lakh patients every year, with FY24 revenue run rate of INR2B. It has a renowned center of excellence for Neurosciences.
• The Hospital has a potential to quickly ramp up beds in existing building and expand medical programs such as oncology, transplants, robotics, etc.  

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 Green Energy
• Azure Power Global Ltd
• China Jinmao Holdings
• Greentown China
• Hopson Development
• JSW Steel Ltd

• In Q2FY24, Ipca Laboratories (IPCA IN) reported 10% growth in domestic formulation business, driven by 12% growth in pain management. In FY24, domestic formulation is expected to growth 12–14%.  
• Ipca now holds 52.67% stake in Unichem Laboratories (UL IN). Ipca is confident to clock revenue of INR1.7–1.8B and EBITDA of INR300M from Unichem within two years of acquisition.
• As facilities are back onstream, Ipca is augmenting the supply chain and revalidating of all the formulations and updating them. Shipment to the U.S. may begin in Q1FY25.

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. Kawasan Industri Jababeka
2. China Jinmao Holdings
3. Vedanta Resources
4. Yanlord Land
5. Geely Auto

and more…

• There are 18 changes for the Nifty200 Momentum 30 Index that will be implemented at the close on 28 December. We had forecast all the index changes.
• Estimated one-way turnover is 57.7% resulting in a one-way trade of INR 21.75bn (US$261m). 8 stocks have over 1x ADV to trade; 21 stocks have atleast 0.5x ADV to trade.
• The adds have continued to outperform the deletes and the index and there could be further outperformance heading into year-end and buying from passive trackers.

• The Government of India (GoI) is looking to raise US$155m from trimming a portion of its stake in Ircon International (IRCON IN), assuming the deal upsizes.
• Assuming the deal upsizes, while it would represent 8% of the firm’s current shares outstanding, it would only represent 3.8 days of its three month ADV, given its strong liquidity.
• Given that it isn’t the first time the GoI has sold its stake in IRCON, the selldown here should be expected, in our view.

• Entero Healthcare Solutions Limited (2294842D IN) is looking to raise US$200m in its upcoming India IPO. The IPO will consist of both a primary and secondary component.
• Entero Healthcare Solutions (Entero) is a healthcare products distributor in India.
• In this note, we look at the company’s past performance.

• Softbank Group (9984 JP) is looking to raise US$135m from selling its remaining stake in Zomato (ZOMATO IN).
• Since receiving shares from Zomato’s acquisition of 91% of Blinkit’s outstanding shares, Softbank has been busy trimming its stake in Zomato. The stake sale now will be a cleanup one.
• Representing just 1.2 days of Zomato’s three month ADV, the deal here would be easily digested by the firm.

• Nesco reported strong growth in BEC revenues led by Q2 being a seasonally strong quarter for the exhibition business. Even in YoY terms, the growth was decent at 8%.
• Nesco IT Park revenues also jumped by 14% QoQ, suggesting that the occupancy level in Tower 3 has gone up from 82% earlier.
• Nesco Foods business continues to grow rapidly as the new Food Court and Restaurants have seen strong traction. Revenue in Foods business has more than doubled YoY.

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.

• China Jinmao Holdings
• China Oil And Gas
• Vedanta Resources

• Torrent Pharmaceuticals (TRP IN) reported 16% YoY revenue growth to INR26.6B in Q2FY24. Strong performance in India, Brazil, and Germany is partially offset by the revenue decline in the U.S.
• EBITDA increased 22% YoY to INR8.3, leading to 138bps YoY expansion in margin to 31%, due to cost optimization and discontinuation of the low margin business in the U.S.
• Initial bull thesis on the company regarding its domestic market strength is still intact. Further upside will be driven by superior performance in India and Brazil businesses and margin improvements.

• Several catalysts on the horizon support the case for a re-rating of Eicher Motors (EIM IN). 
• The recent launch of the 450cc platform is positioned as a significant launch pad, propelling EIM’s aspirations to establish global leadership in the middleweight segment.
• We anticipate EIM to deliver higher-than-anticipated revenue growth with the possibility of a multiple re-rating for the company.

• Market sentiment remains optimistic, we anticipate the rally to continue with 20,200 on the NIFTY Index (NIFTY INDEX) as a trend check level. 
• There are concerns about Paytm (PAYTM IN) growth in personal loans in the near term, but the merchant side provides a large enough opportunity.  
• Other names discussed include Eicher Motors (EIM IN), Poonawalla Fincorp (POONAWAL IN), and Five Star Business Finance (FIVESTAR IN)