India

• 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.

• Jyoti CNC Automation (0907734D IN) plans to come up with ~INR 10 bn IPO
• JCAL is an established player in manufacturing of metal cutting CNC machines, mostly in 5-Axis category. It has 8% market share in India and is 12th largest global player.
• Even though JCAL has bright order book visibility, it remains unprofitable, largely because of concerns with subsidiaries.

• While the earnings season continues, this will be the final dedicated earnings edition.
• For reference, the previous earnings editions are [Week 8] Namaste India 🙏 | Earnings Edition – Part I & [Week 9] Namaste India 🙏 | Earnings Edition – Part II 
• At the bottom, we provide a consolidated view of all earnings (~ 50) tracked so far and we would be happy to engage in discussions on any of them.

• Muthoot Microfin (1363943D IN) is looking to raise up to US$163m in its upcoming India IPO. 
• Muthoot Microfin (MMF) is a microfinance institution providing micro-loans to women customers with a focus on the rural regions of India.
• MMF has undergone fast network expansion, which allowed the firm to nearly double its AUM over the track record period. 

• Bajaj Finance Ltd (BAF IN) , one of India’s largest NBFCs, aims to raise around US$1bn via a QIP.
• Bajaj Finance is an NBFC offering auto, consumer and home loans, along with other products as well.
• In this note, we run the deal through our ECM framework and talk about the deal dynamics.

• Cello World raised around US$230m in its India IPO and will begin trading soon.
• Cello World (CW) is an Indian consumer products company. The firm is a leading company in the consumerware market in India.
• In our previous notes, we looked at the company’s past performance and valuations. In this note, we will talk about the demand and trading dynamics

Tata Motors has released Q2/23-24 results that significantly outperformed expectations. Revenue grew 32% y-o-y to INR 105 k cr. Reported EBITDA surged 86% to INR 14.4 k cr, with the margin expanding 430 bps to 14.9%. Automotive FCF was INR 3.9 k cr, up INR 2.9 k cr. Jaguar Land Rover and the Commercial Vehicle segment in India recorded robust growth and profits, while Q2 was a transition quarter for the Passenger Vehicle segment.

• Honasa Consumer (Honasa IN) raised about US$200m in its India IPO.
• HC’s product portfolio includes products in the baby care, face care, body care, hair care, color cosmetics and fragrances segments.
• In our previous note, we looked at the company’s past performance and valuations. In this note, we talk about the trading dynamics.

Vedanta Ltd (VEDL) has released puzzling Q2/23-24 results. The oil & gas segment recorded a huge y-o-y jump in earnings during the quarter, for no apparent reason. In our view, the lack of explanation and attribution for the unexpectedly large earnings jump is very strange, compounded by the timing of the call (on a weekend, when fewer analysts would have attended). It is unclear if VEDL has made an accounting error, or if this was an attempt to put itself in a more positive light to gain better access to capital. This is a crucial period for the group, with parent Vedanta Resources (VRL) facing significant debt maturities in the next two years (USD 3 bn, with the nearest being the USD 1 bn maturing in January 2024). The results have increased our scepticism of the group’s financial reporting.

We move our recommendation on the VEDLN notes to “Not Recommended” from “Hold”.

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.

• Alam Sutera Realty
• China Vanke
• Vedanta Resources

• KPIT raised its full-year FY24 revenue growth guidance to 37%+ from 27-30% earlier, led by a strong Q2FY24 performance. EBITDA margin guidance has been also raised to 20%+ from 19-20%.
• Despite wage hike impact of 250bp, EBITDA margin came in at 20%, at the upper end of the 19-20% FY24 guidance. Operating leverage and realization improvement helped offset the impact.
• With the strong Q2 performance, we are upgrading our FY24 PAT estimate to INR 580cr+ vs INR 550cr+ earlier and FY25 PAT of INR 730cr+ vs INR 700cr+ earlier.

• There were a bunch of indices where the review period ended last week. The changes will be announced this month and implemented in December.
• Emerald Resources Nl (EMR AU) replaced Invocare Ltd (IVC AU) in the S&P/ASX 200 (AS51 INDEX) at the close on Friday.
• There were large outflows from mainland China listed ETFs during the week. Outflows from iShares Emerging Markets (EEM US) continued for another week.