India

• Tata Technologies (TATATECH IN) awaited IPO is set to launch for subscription this week.
• The company is one of the largest ER&D player that is based in India with revenues crossing INR 44 bn in F23. 
• Balance sheet remains strong and cash rich. There are however, doubts on revenue recognition policy, forex risk and reliance on Tata Group.

• Indian IT services giant Tata Consultancy Svcs (TCS IN) launched a US$2bn Buyback last week.
• The company will buy up to 40,963,855 shares in a Tender Offer-style Buyback at a Buyback Price of INR4,150/share (an 18% premium to today’s close).
• In this insight, we take a closer look at the indicative timeline of key events in this Buyback, the company’s Buybacks history, proration details, and what this means for investors.

• IREDA (1845911D IN) is looking to raise at around US$258m in its India IPO. 
• Indian Renewable Energy Development Authority (IREDA) is a wholly owned Government of India (GoI) enterprise under the administrative control of the Ministry of New and Renewable Energy (MNRE).
• In this note, we look at the company’s past performance and share our quick thoughts on valuation.

• Flair Writing Industries (1656496D IN) ‘s INR 5.9 bn upcoming IPO consists of fresh issue worth INR 2.9 bn and OFS worth INR 3 bn (at the upper end).
• The company is the largest pen manufacturer in India and one of the top three players in the Indian Writing Instruments Industry.
• While the company has shown a handsome growth since the pandemic, some operating metrics pertaining to employees don’t seem to add up.

• Tata Technologies (TATATECH IN), the largest India-based ER&D service provider, seeks to raise gross proceeds up to US$366 million in a pure secondary offering.
• We previously discussed the IPO in Tata Technologies IPO: The Investment Case, Tata Technologies IPO: The Bull Case and Tata Technologies IPO: The Bear Case. 
• Our valuation analysis suggests that the IPO price range of Rs475-500 per share is attractive. Therefore, we would participate in the IPO.

• Existing Tata Technologies (TATATECH IN) shareholders are looking to sell 60.85m shares and raise between INR 28.9-30.4bn (US$347-365m) giving the company a market cap of between US$2.31-2.44bn.
• Tata Technologies (TATATECH IN) will have a float of around 10% at the time of listing and that will increase close to 30% after the pre-IPO lock-up ends.
• Tata Technologies (TATATECH IN) could be added to global indices in May and June, but inclusion in local indices with meaningful tracking assets will take longer.

• Tata Technologies (TT) is looking to raise around US$370m in its upcoming India IPO.
• 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 our previous note, we looked at the company’s past performance. In this note, we talk about valuations.

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. SJM Holdings
2. Melco Resorts & Entertainment
3. Lenovo
4. Longfor Properties
5. Tata Motors Ltd

and more…

• Tata Technologies (TATATECH IN) (TT) is looking to raise around US$370m in its upcoming India IPO.
• 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.
• We have looked at the company’s past performance and undertaken a peer comparison and provided our initial thoughts on valutions. In this note we talk about the RHP updates.

• In Q2FY24, Max Healthcare Institute (MAXHEALT IN) reported revenue growth of 17% YoY and 6% QoQ to INR18.3B, driven by higher ARPOB and occupied bed days.
• EBITDA grew 21% YoY and 14% QoQ to INR4.5B, leading to a 100 basis point YoY and 190 basis point QoQ margin expansion to 28.7%.
• MHIL expect greenfield 300 bed hospital in Dwarka, South-west Delhi will be commissioned in later half of Q4FY24. It was originally expected to be commissioned in Q2FY24.

• Jana Small Finance Bank (3667144Z IN) is looking to raise at least US$100m in its upcoming India IPO.
• Jana Small Finance Bank (JSFB) is the fourth largest small finance bank in India in terms of AUM and deposit size as of FY23 (Year ended 31st Mar 2023).
• JSFB has grown its number of banking outlets and amount of deposits fast, which allowed the firm to grow its gross advances by 1.5x over the track record period. 

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.

• Tata Motors ADR

• Tata Technologies (TATATECH IN), the largest India-based ER&D service provider, seeks to raise US$350-375 million, which is lower than its previous target of US$600 million.
• Tata Technologies is seeking a valuation of US$2.5 billion, which is 27.5% higher than the valuation TPG Inc (TPG US) acquired a 9.0% stake on 25 October.
• The investment case rests on top-tier growth rates, strong core business, lower reliance on Vinfast (VFS US), high repeat rates, top-tier profitability, solid FCF profile and no debt. 

• The NIFTY Index closed the last 2 weeks up (CC=+2), reversing from an oversold condition. This week the index started going up again, but it’s not going anywhere…
• The index barely crossed the Q1 resistance at 19334, but if closes this week up, the WEEKLY CC=+3 condition will be an “OVERBOUGHT” signal, a pullback could start.
• Going SHORT is probably not worth it, we don’t see a large pullback coming, it’s probably better to simply hedge your positions.

Adani Ports and Special Economic Zone’s (APSEZ) H1/23-24 results came in slightly above expectations, with revenue growth of 26% y-o-y exceeding management’s full-year guidance for a 15-20% increase. EBITDA (excluding FX losses) rose by 17%, at the higher end of the 13-17% guidance. Net adjusted leverage improved to 3.4x (FY 2022-23: 4.0x). We expect the company’s leverage to continue improving in FY 2023-24, in line with management’s guidance.

In our view, there remains a small degree of regulatory overhang and negative headline risk facing the broader Adani Group, which may affect group entities’ financing access in the offshore bond market (particularly on an unsecured basis). That said, the group’s access to onshore and bank financing remains intact.

Separately, we note that the Supreme Court hearing regarding the Securities and Exchange Board of India’s (SEBI) investigation on Adani Group has been repeatedly deferred. The Supreme Court requested on November 6th that all parties file final submissions regarding the case by November 8th. We believe the regulatory overhang may only be resolved by the eventual outcome of SEBI’s investigation and the Supreme Court’s judgement. 

• We retain Bank of Baroda as the deep value Indian bank from our peer group, for its modest valuations, healthy ROE and further improvements in pre- and post-provision returns
• The market seems unconvinced by HDFC Bank but we retain it as our quality bank pick, with its potential for savings from the HDFC merger and its strong balance sheet
• Axis bank stays on our watchlist, but its premium valuations are the challenge; we remain negative on State Bank of India for its delinquency risks and limited progress on returns

• Life Insurance of India (LICI IN) reported its 1H24 earnings which are a continuation of the poor performance of the largest life insurer in India.
• Total sales were down -10% (individual sales – flat y-o-y); VNB margins falling; outlook not positive. Not positive shifts in product mix or distribution trends.
• We value LIC at 0.5x FY25e P/EV, implying a -15% downside from the current price, reflecting poor sales growth, loss of market-share and its failure to turn-around the business model.

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.

• Studio City International Holdings Limited
• Tata Motors ADR
• UPL Ltd
• Wynn Macau Ltd

• Doms (DOMS IN) is looking to raise around US$140m in its upcoming 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’.
• In this note, we look at the company’s past performance.