India

• Polycab India, Macrotech Developers, Paytm, Tata Communications, Tata Motors DVR, Apl Apollo Tubes, Persistent Systems and Suzlon Energy have run up over the recent past and have heightened investor attention.
• The increase in market cap has put the stocks on active manager radars and could also result in the stocks being added to global indices in the near future.
• We take a look at the positioning on the stocks and recommend pair trades to reduce market risk while trying to capture alpha.

• LICI has significant 62% market share of new business premiums with 92% coverage of all districts in the country, compared with 72% for all of the private sector combined.
• Long track record of operations since 1956 and strong growth, with recent years seeing exceptional strength in net profit, and with ROE reaching 148%.
• Well maintained SG&A costs with revenue growth exceeding policy benefits growth, with strong investment returns, especially in FY23. 1Q24 also shows continued operational strength, in a hugely under-penetrated market.

• HDFC Life Insurance (HDFCLIFE IN) reported 2Q24/ 1H24 results last week which were decent given the context: moderating VNB Margins amid changing product-mix and growth outlook positive for remaining year.
• The strong growth at the HDFC Bank counter is the key positive, though expected, on back of the HDFC Bank-HDFC merger.
• We value HDFC Life (HDFCL) at ~2.4x FY25e P/EV, implying a ~5% upside to current price. HDFCL is fairly valued in our view.

• Agilus Diagnostics Limited (SRLL IN) is looking to raise around US$200m in its upcoming India IPO. The deal will be run by Citi, Axis Capital, and ICICI Securities.
• Agilus Diagnostics Limited (Agilus) is a diagnostic testing service provider.
• As per the CRISIL report, the firm was the largest diagnostics service provider in terms of number of laboratories and the second largest in terms of FY23 sales.

• The NIFTY 50 Index closed last week up at 19751.05, 2nd week up, in synch with the S&P 500 INDEX WEEKLY bounce.
• The index has not moved up much from a price perspective, weak bounce. Resistance levels must be monitored: if the index rallies this week it could pull back next week.
• The trade orientation is to go SHORT once the NIFTY reaches Q2/Q3 OVERBOUGHT resistance levels in the 20167-20230 price area, this week. SHORT Trade at Close is also valid.

• The trade remains Long Nifty with a watch on earnings. 
• Infosys Ltd (INFO IN) reported a beat on revenues and a miss on EPS, heading into seasonally weak quarters is the pain now consensus? 
• Other names discussed include Delta Corp Ltd (DELTA IN), HDFC Asset Management Co Ltd (HDFCAMC IN) and Avenue Supermarts Ltd (DMART IN). 

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.

• Lippo Malls Indonesia Retail Trust
• Tata Motors ADR

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. Shui On Land
2. Seazen (Formerly Future Land)
3. Yuexiu Property
4. China Hongqiao
5. Longfor Properties

and more…

• SBI Life leads the Private Life Insurers in India in terms of market share, thanks to exclusive access to Banca channel of the largest bank in the country.
• SBI Life has been one of the best-performing life insurers in terms of growth as well as margin expansion among peers in recent years, which we expect to continue. 
• SBIL is our primary pick in the Indian Life Insurance space with an upside of ~24% and its relatively cheaper valuations offers a margin of safety to cover near-term risks.

• We visit the ‘City of Joy,’ Kolkata, to understand the state of the industry, focusing on microfinance and the status of lenders concentrated in the region.
• Multiple factors argue for a cyclical bottom for lenders operating in West Bengal and Assam. 
• We have been positive on Bandhan Bank Ltd (BANDHAN IN), but it is a play on cyclicality rather than a complete turnaround & transformation of its habits.

• Market concern on company’s redemption of Bonds of $ 3 bn in 2024 
• Liquidity gap for company is much larger estimated at nearly $11 bn
• Company needs to raise long term funds and/or divest assets to raise the required amount

• In Aug 2022, Zomato (ZOMATO IN) completed the acquisition of 91% of Blinkit’s outstanding shares via issuing its own shares. These shares were released from their lockup in Aug 2023.
• Softbank then sold a part of its stake in Aug 2023, the rest of its stake will come out of lockup soon.
• In this note, we will talk about the lock-up dynamics and recent updates.

• The WisdomTree Emerging Markets ex-State-Owned Enterprises Index measures the performance of emerging markets stocks that are not state-owned enterprises.
• The October rebalance will result in a one-way turnover of ~16% and in a one-way trade of US$329m. There are 16 stocks with over US$3m to trade.
• HDFC Bank (HDFCB IN) will be added to the index while there will be selling in Taiwan Semiconductor (TSMC) (2330 TT).

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
• Shui On Land
• Yuexiu Property

• In just five years, India’s electric-vehicle sector has surged, positioning the country to become the world’s largest EV market by 2030.
• In addition to their cost and environmental advantages, EVs also enjoy tax benefits in India. However, despite having 3 million EVs on the road, the country hasn’t established standardized charging protocols for these vehicles.
• With that in mind, Raptee said it is the first Indian EV startup to opt for the Combined Charging System Type 2 connectors, or CCS2. By integrating both AC and high-power DC charging, the system expedites the charging process, particularly at Level 3 charging stations.

• India’s inclusion in global bond indexes by JP Morgan is significant, but the expected foreign inflow is relatively small, not likely to impact exchange rates or interest rates significantly.
• The bond inclusion won’t strengthen the Rupee against the Dollar due to limited foreign inflows. A slight reduction in interest rates is expected with JP Morgan’s inclusion.
• Indian bonds offer attractive yields, but rising US bond yields and rupee depreciation could affect foreign investor interest. This development could lead to improved fiscal policies and Indian bond markets.

• Devyani International (DEVYANI IN) is one of the largest franchisee of Yum! Brands Inc (YUM US)  in India and operates brands like KFC, Pizza Hut and Costa Coffee, etc.
• After a turbulent pandemic, the company has reported growth in topline and robust profitability in F22 and F23. But, these have been boosted by several one-off items.
• The company also faces difficulty in generating positive FCFs while we also remain caution about the Nigerian Operations and the associated forex losses.

• In this insight, we take a look at the Potential ADDs/DELETEs for the BSE SENSEX, 100, and 200 Indices in the December 2023 Rebalance.
• At present, I do not see any changes for the SENSEX index. For the BSE 100 and BSE 200 indices I see six and five changes respectively.
• Some of these changes are different from those expected in my last insight. However, the changes expected in this insight will be my final expectations for the December 2023 Rebalance.

• With rising urbanization and increased social media exposure to global beauty trends, India’s beauty and personal care market is now set to hit US$38 billion in value by 2028.
• A big part of that growth has come from direct-to-consumer brands: in the past four to five years, over 80 of them have emerged, accompanied by a wave of investments.
• One of these D2C players is Pilgrim, which recently raised US$20 million in a series B funding round led by Vertex Ventures Southeast Asia and India. 

• Our dealer checks across a couple of Eicher Motors (EIM IN) and Bajaj Auto Ltd (BJAUT IN) dealerships indicate a strengthening competitive position for Royal Enfield. 
• After the initial hype, customers are now shifting back to Royal Enfield. 
• As competition ramps up production, we continue to believe that the market will expand, and there will be no fight for market share.

• The index seems to be finding support at 19,500 for the second consecutive week. Bullish momentum could resume when we close above 19,800 on the NIFTY Index (NIFTY INDEX) .
• Names discussed include Titan Co Ltd (TTAN IN), Maruti Suzuki India (MSIL IN) and Metro Brands (METROBRA IN).  
• We also introduce the Earnings Diary which will be part of the publication, tracking estimates and narratives around over coverage. 

• Juniper Hotels (6593708Z IN) is looking to raise up to US$217m in its upcoming India IPO. The deal will be run by JM Financial, CLSA and ICICI Securities. 
• Juniper Hotels is the largest owner by no. of keys of Hyatt affiliated hotels in India as of 2Q23 (30th Jun 23), according to Horwath. 
• The company is jointly held by Saraf Hotels and its affiliate, Juniper Investments and Two Seas Holdings (an indirect subsidiary of Hyatt Hotels Corporation).

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.

• Hopson Development
• Lenovo
• Tata Steel Thailand
• West China Cement

• Foreign shareholding in HDFC Bank (HDFCB IN) has dropped to 59% and the HDFC Bank (ADR) (HDB US) premium to the local line has dropped to 7%.
• HDFC Bank (HDFCB IN) has underperformed its peers and the local indices on expectations of lower NIMs and higher NPAs.
• There will be passive buying in HDFC Bank in December and March. Further passive buying will require foreign room to increase above 25% which will first require foreign investor selling.

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.

• Greentown China
• Tata Motors ADR

• Cost at PNB are high and rising, a major drag on its ROA and RORWA, which largely offsets better credit metrics.
• There are many market positives in India banks, but relative to all large peers, Punjab National Bank (PNB IN)has the lowest RORWA
• There is no LDR expansion at PNB. NIM is languishing. Its high 20% govt loans/total loans is high, with 2 peers’ even higher, but better returns.

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. AAC Technologies Holdings
2. Vedanta Resources
3. China Vanke
4. JSW Infrastructure
5. Medco Energi

and more…

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.

• AAC Technologies Holdings
• Tata Motors ADR

• IDFC First Bank Limited (IDFCBK IN) is looking to raise up to INR30bn (US$361m) via a Qualified Institutional Placement (QIP). 
• The deal is a relatively small one to digest at 6.3 days of three month ADV and 4.9% dilution.
• In this note, we will talk about the placement and run the deal through our ECM framework.

• Apar Industries (APR IN) is the global leader in aluminum and alloy conductor manufacturing. The company is also India’s largest and world’s third largest transformer oil manufacturers. 
• After two silent years during covid, the company’s operations have taken off and there is growth reported in each of its three business segments.
• The balance sheet has also shown improvement and looks stable. But, our principle concerns remain on the operating cash flow side, which looks to be misstated.

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.

• Vedanta Resources