India

• 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

• Companies in India have disclosed their shareholding pattern as of end-December in January. There are companies with significant float changes from end-September and/or end-December.
• The changes in free float could be reflected in domestic and global indices over the next few weeks and months resulting in action from passive trackers.
• There are 15 stocks that could have passive inflows from global trackers while 9 could see passive outflows in February.

• Concord Biotech Ltd (658823Z IN) listed in India on 18th Aug 23 after raising US$188m. The IPO had been a 100% secondary selldown with Helix Investment selling its entire stake.
• Concord Biotech (Concord) is an India-based biopharma firm, which develops and manufactures fermentation-based active pharmaceutical ingredients (APIs).
• Coming up for six-month lockup expiry on 7th Feb 24 are the firm’s pre-IPO shareholders, along with a portion of its promoters’ stake.

• Apeejay Surrendra Park Hotel (PARK IN) (ASPH) plans to raise up to US$111m via selling a mix of primary and secondary shares in its India IPO.
• ASPH ranks as the eighth largest in India in terms of chain affiliated hotel rooms inventory as of Sep 2023, as per Horwath HTL Report.
• In this note, we talk about the past performance and our thoughts on valuations.

• Bharti Hexacom (6597372Z IN) is looking to raise up to US$1bn in its upcoming India IPO. The bookrunners are SBI Capital, Axis Capital, BOB Capital, ICICI Securities and IIFL Securities.
• 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.
• It offers its services under the brand ‘Airtel’. BH relies on a robust network infrastructure with a mix of owned and leased assets.

• Prime Minister Modi unveils the Pradhanmantri Suryoday Yojana, a groundbreaking initiative aiming to install rooftop solar panels on one crore households, aligning with India’s renewable energy targets.
• The Suryodaya Yojana addresses challenges in the rooftop solar landscape, focusing on household installations, affordability, income generation, and energy self-reliance.
• Despite challenges in implementation, the scheme, led by REC, holds the potential to significantly boost rooftop solar capacity, supporting India’s commitment to cleaner energy and a sustainable future.

• With the review period complete, Shriram Finance (SHFL IN) should replace UPL Ltd (UPLL IN) in the NIFTY Index (NIFTY INDEX) at the March rebalance.
• We have Trent Ltd (TRENT IN) marginally ahead of Bharat Electronics (BHE IN) as lower probability replacements for Bharat Petroleum Corp (BPCL IN) in the index.
• The impact on the stocks will be large in terms of delivery volume to trade, but the stocks have moved a lot over the last few months.

• India’s beauty and personal care market is expected to hit US$30 billion by 2027. While the segment as a whole is thriving, beauty ecommerce penetration in Tier 2 and Tier 3 cities suffers from long delivery periods as well as issues with product authenticity and quality.
• BuyEazzy, a beauty ecommerce platform, aims to solve this by leveraging the trust between neighborhood store owners and consumers.
• The startup has raised over US$4.2 million in a series A round led by Info Edge Ventures, with participation from existing investors Incubate Fund Asia and M Venture Partners.

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 Ports & Special Economic Zone

• Due to the ongoing earnings season, for the next couple of weeks, we will temporarily deviate from our regular format and instead focus on reported earnings.
• This edition focuses on earnings commentary from Financials highlighting the commentary on costs, growth, and elections. 
• Earnings review includes AU Small Finance Bank Limited (AUBANK IN), Home First Finance (HOMEFIRS IN), IIFL Holdings (IIFL IN), Shriram Finance (SHFL IN).