India

• Ecuador’s crisis, driven by violence and narco-gang threats, impacts the global seafood supply chain, especially the lucrative shrimp exports sector.
• Resilient amid challenges, India holds its position as the second-largest global shrimp producer, balancing opportunities and persistent challenges in logistics and competition.
• Investors urged caution in the Indian seafood boom, yet potential opportunities arise from Ecuador’s supply disruptions, with reduced import duty enhancing India’s competitiveness.

• Ola Electric is looking to raise about US$1bn in its upcoming India IPO.
• Ola Electric Mobility is a vertically integrated pure EV player in India with manufacturing capabilities for EVs and EV components, including cells.
• In this note, we talk about the not-so-positive aspects of the deal.

• FirstCry (0172540D IN), India’s largest multi-channel retailing platform for mothers’, babies’ and kids’ products, has filed for a US$700 million IPO. 
• In Brainbees Solutions (FirstCry) IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
• The bear case rests on the worrying trend of India’s KPIs, margin pressures, cash burn, and deteriorating balance sheet strength. 

• In Q3FY24, Cipla Ltd (CIPLA IN) recorded revenue of INR66B, up 14% YoY, and EBITDA margin of 24.2%, driven by double-digit growth across India, North America, and South Africa.
• North America business reported highest ever revenue of $230M. India revenue is up 12% YoY, supported by growth across branded prescription, trade generics, and consumer health.
• EBITDA margin for the full year is trending at a higher end of earlier guidance range of 23–24%. Peptide product launches in the U.S. should strengthen near-term growth prospect.

• Ola Electric is looking to raise about US$1bn in its upcoming India IPO. 
• Ola Electric Mobility is a vertically integrated pure EV player in India with manufacturing capabilities for EVs and EV components, including cells.
• In this note, we talk about the positive aspects of the deal.

• With the “Postcard” series, our objective is to bring to our readers on-ground insights based on interactions across key channels located in tier 2 and tier 3 locations.
• For this Postcard, we travel to the east to the city of Ranchi, located in the heart of Jharkhand. 
• Stocks in focus include Utkarsh Small Finance Bank (1639303D IN), Aditya Vision (AVL IN), Mahindra & Mahindra (MM IN), Vedant Fashions (MANYAVAR IN). 

• Yatra (YATRA IN) had its IPO recently and is the third largest OTA players in India (among key OTA players) in F23. 
• When it comes to the financials and forensics, there are several red alarms that catch our attention. 
• These include weak internal controls as highlighted by auditors, poor earnings quality, revenue recognition woes, high litigation liabilities off the books, etc. 

• IDFC First Bank Limited (IDFCBK IN)  management has provided long-term strategic guidance along with its 3Q24 results, which lays down a clear roadmap for the bank’s progress.
• The latest results are slightly below estimates but the medium-term factors for our thesis haven’t changed – viz. a strong franchise underscored by heavy retail footprint and incrementally improving unit-economics.
• We reiterate “Long-term Buy”, with 42% upside in near-term, as the bank continues to realize the benefits of its increasing scale on its earnings profile.

• Adani’s $600 million acquisition of Sanghi Cement in August 2023 marked its significant debut in the cement sector, following controversies around the group’s infrastructure ventures.
• The Master Supply Agreement with Ambuja & pricing structure, based on cost plus a 10% markup, has raised concerns about lower EBITDA realizations for Sanghi Cement, deviating from industry norms.
• Issues surrounding potential profit loss (Rs 357 crore) and investor skepticism echo previous instances, like the NDTV case, where minority shareholders experienced less favorable terms compared to the promoter. 

• Cello World Limited (CW IN) is a renowned company in the consumer products market. The company primarily operates in houseware, stationary and moulded furniture industry.
• The promoters recently undertook a major corp. restructuring post which several promoter entities were acquired by CWL. This has led to abnormally high ROCEs.
• Other forensic takeaways pertain to RPT, poor cash management, mysterious sale proceeds of PPE, subsidiaries audit, etc.

• FirstCry (0172540D IN), India’s largest multi-channel retailing platform for mothers’, babies’ and kids’ products, has filed for a US$700 million IPO. 
• The substantial shareholders are Softbank Group (9984 JP) Vision Fund (25.55% of shares), Mahindra & Mahindra (MM IN) (10.98%), Premji Invest (10.36%) and Supam Maheshwari – founder and CEO (5.95%).
• The bull case rests on growing addressable markets, strong market positioning, robust GMV growth and strong organic growth.   

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

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.

• Greenko Energy Holdings

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.

• Anton Oilfield
• Greentown China
• Reliance Industries

• We have been covering Zee Entertainment Enterprises (Z IN) during the entire merger saga and had already highlighted several financial and governance issues with the entire group.
• The $10 bn merger deal with Sony has now been terminated but it is not a surprise to us, considering the events that were unraveled in the last two years.
• But where does ZEEL go from here is a question that lacks some clarity. There are uncertainties looming around and ZEEL can face further brunt. 

• FirstCry is looking to raise up to US$700m in its upcoming India IPO.
• FirstCry is India’s largest multi-channel retailing platform for Mothers’, Babies’ and Kids’ products in terms of GMV, for the year ending Dec 2022 (9M23), according to RedSeer.
• In this note, we talk about the not-so-positive aspects of the deal.

• 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.
• HDFC Bank (HDFCB IN) – The core concerns that worry the street do warrant attention. While the management believes it is temporary, we anticipate some more incremental pain ahead. 
• Other interesting names highlighted include Delta Corp Ltd (DELTA IN), IndiaMart (INMART IN), Polycab India (POLYCAB IN), and Poonawalla Fincorp (POONAWAL IN). 

• FirstCry is looking to raise up to US$700m in its upcoming India IPO. 
• FirstCry is India’s largest multi-channel retailing platform for Mothers’, Babies’ and Kids’ products in terms of GMV, for the year ending Dec 2022 (9M23), according to RedSeer.
• In this note, we talk about the positive aspects of the deal.

• HDFC Bank reported earnings last week. The next day the stock fell 8% followed by another 4% the day after.
• HDFC Bank is one of India’s bluest blue chip stocks with a reputation for being a high quality compounder.
• What happened and where do we go from here? First, some lessons from another life.

• Medi Assist Healthcare Services (0886371D IN) raised around US$140m in its India IPO.
• Medi Assist Healthcare Services (Medi Assist) provides third party administration services to insurance companies via its subsidiaries.
• We have covered various aspects of the deal in our previous note. In this note, we will talk about the demand and trading dynamics.

Key points (machine generated)

• IndiaMart is India’s largest online B2B marketplace with a market cap of $2 billion.
• The company has a 60% market share of B2B e-commerce in India, indicating a large potential for growth.
• IndiaMart benefits from a negative working capital business model, upfront supplier subscription payments, and a net cash balance sheet. It also has the option to invest in new business lines to expand its monetization opportunities. Despite limited advertising spend, the platform attracts over 1 billion in traffic.

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.

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. Lippo Malls Indonesia Retail Trust
2. Vedanta Resources
3. ReNew Energy Global
4. China Jinmao Holdings
5. Geely Auto

and more…

• Last week at Close the NIFTY Index was OVERBOUGHT, this week it became quickly OVERSOLD, bouncing off from a price area near the Inner Fence support  levels for CC=-1.
• Another week down is possible but we see strong support in the 21250-20800 price area.
• Should that support area be reached, it would be a good opportunity to re-enter this index’s Bull market.

• HDFC Bank’s (HDFCB) stock was down over -8% yesterday and is down over -3% today. The stock seems to have reacted to low deposit growth (~2% QoQ) in Q3FY24 .
• Post the merger with HDFC Ltd that completed in Jun 2023, HDFCB needs to grow its deposits at a fast pace to support its loan growth.
• We think HDFCB is well placed to do so. It also has an option to raise capital through affordable housing bonds which have good economics, similar to term deposits.

• The GoI is looking to raise US$199m in trimming a portion of its stake in NHPC (NHPC IN). There is an upsize option to increase the deal size to US$279m.
• Assuming that the deal upsizes, the deal here would be a relatively large one to digest at 11 days of the stock’s ADV.
• The deal appears to be well flagged, with the selldown by the GoI appearing to be part of its divestment drive across PSUs in India.

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 Steel Thailand