India

The Asia Trade Book for September 2023 includes a summary of our recommendations, as well as our high-conviction ideas. The report also features relative-value charts and lists of the bonds across Asia HY and crossover credits.

Please reach out to our analysts to discuss any of these ideas, or other trade recommendations from our Asia coverage.

• INOX India Limited (INOX IN) is looking to raise at least US$100m in its upcoming India IPO. The deal will be run by Axis Capital, and ICICI Securities.
• INOX India (INOX) is a manufacturer of cryogenic equipment, with over 30 years of experience in designing, engineering, manufacturing and installation of equipment and systems for cryogenic conditions.
• As per CRISIL, the firm was the largest exporter of cryogenic tanks from India in terms of FY22 sales.

• Life is good for the NIFTY Index (NIFTY INDEX) at 20K. Strong domestic sentiment is likely to continue. 
• Paytm (PAYTM IN) posted strong operating metrics for August, but this will be the second last update as the company moves to quarterly disclosures for reasons not completely justified. 
• Other Ideas discussed include Poonawalla Fincorp (POONAWAL IN) , Dabur India Ltd (DABUR IN) and Landmark Cars along with upcoming IPOs. 

• R R Kabel (2333180Z IN) is looking to raise up to US$238m in its India IPO.
• R R Kabel is an Indian consumer electrical company, which primarily sells wires, cables and fast moving electrical goods (FMEG).
• In our previous notes, we looked at the company’s past performance. In this note, we undertake a quick peer comparison and share our thoughts on valuation.

• R R Kabel (2333180Z IN) ‘s IPO will go live this week.
• The company is the fifth largest player in the wires and cables market in India, having a market share of 5% overall and 7% among the branded players.
• However, there our numerous aspects about the company and financials that warrant attention. These include RPT with promoters, misleading high CFO, promoter classification, high discounting, etc.

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.

• China Jinmao Holdings
• Vedanta Resources

• SAMHI Hotels (SAMHI IN) plans to raise around US$165m in its Indian IPO.
• Samhi is India’s third-largest hotel asset owner, by number of keys, with a portfolio of 25 operating hotel assets comprising 3,839 keys, as of Feb 2023.
• In this note, we talk about the updates from the recent filings and our final thoughts on 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. Country Garden Holdings Co
2. Hopson Development
3. Greentown China
4. ReNew Energy Global
5. China Jinmao Holdings

and more…

• We remain bullish global equities if the major $93 support level on MSCI ACWI (ACWI-US) continues to hold (1+ year base support and the 10.5-month uptrend)
• The 10-year Treasury yield remains below 4.35% resistance (a positive), but the DXY is climbing above $103.70-$104.70 resistance, and $105.70 is the last line of defense (9-month resistance).
• Japan and India remain top overweights, with many of today’s buy recommendations from these countries (Real Estate, Energy, Tech/Services, Discretionary). Also downgrading Taiwan and Greece to market weight.

• Godrej Properties (GPL IN) is one of the large real estate developers in India. The company has diversified presence across four of the largest markets in India. 
• Even though Godrej has strong booking pipeline, the company however faces trouble in generating cash historically.
• Its low ROCE, fragile earnings quality remains a concern. Other concerns include JV exposure, CWIP ageing along with few disclosure woes.

The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks. The Asia Monthly is intended to broaden investors’ understanding of the Asian USD high-yield market.

• Jupiter Life Line Hospitals (0372574D IN) has hit the market to raise INR8.7B via an IPO. The IPO is a combination of a fresh issue and an OFS portion.
• The company is a multi-specialty tertiary and quaternary healthcare provider in the Mumbai Metropolitan Area and western region of India. It intends to use the IPO proceeds for debt repayment.
• In FY23, revenue increased 22% YoY to INR8.9B, while EBITDA margin expanded 210bps to 23.45%. Ramping up of Indore facility and upcoming greenfield hospital in Maharashtra are major growth drivers.

• Shiva Pharmachem Limited (9155347Z IN) is looking to raise around US$110m in its upcoming India IPO. The bookrunners on the deal are JM Financial and Kotak.
• Shiva PharmaChem (SP) is a manufacturer in the Indian specialty chemicals business. 
• As per Frost & Sullivan (F&S), the firm is the largest manufacturer of acid and alkyl chlorides by volume in CY22 in India and a key player globally.

• Indusind Bank (IIB IN) reported 51% attrition in FY2023 from 37% in FY2022
• In the annual report the directors completely ignored acknowledging or discussing the attrition apart from the mandatory disclosure
• The sharply rising attrition indicates poor human resource policies in recruitment and training which adversely impact cost management

• Positive retail flows, HNI & AIF inflows, along with global market trends, suggest that the uptrend for the NIFTY Index (NIFTY INDEX) may continue.
• Bullish stocks include Metro Brands (METROBRA IN) and Zydus Wellness (ZYWL IN), while the sentiment for Whirlpool of India (WHIRL IN) is Bearish.
• Highlighted global stocks include Ebix (EBIX US) , Smith (A.O.) (AOS US) and Apple (AAPL US) 

• After a -5 weeks correction in August, the NIFTY Index has restarted its Bull run, ongoing from mid-March 2020. Let’s have a look to where MRM WEEKLY resistance levels are.
• The current pattern is BULLISH, the index could rise easily another 2-3 weeks from here.
• Target prices for a reversal (or pullback within the uptrend) are between 19846 -20294

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.

• China Vanke
• Lenovo
• Vedanta Resources
• Yuexiu Property

• Doms (DOMS IN) is looking to raise around US$140m (estimated) in its upcoming India IPO. The deal will be run by JM Financial, BNP, ICICI Securities and IIFL Securities.
• 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’.
• Its core products such as pencils and mathematical instrument boxes had market shares of 29% and 30% by value in FY23, respectively, as per Technopak.

• Elecon Engineering (ELCN IN)  (EECL) is one of the renowned manufacturers of Gears, often used in Industrials. 
• The company has gathered operational momentum in the last few years, coupled with debt reduction. 
• However, its balance sheet still has some concerns that are important. This relates to unaudited subsidiary, fixed asset disposals, write offs and ECL policy and large RPTs.

• Three PE investors are looking to raise up to US$158m via selling 5.9% of Five Star Business Finance (FIVESTAR IN) (FSB).
• Five-Star Business is a non-banking financial company that provides secured business loans to micro-entrepreneurs and self-employed individuals. FSB had raised around US$190m in its India IPO in Nov 2022.
• In this note, we will talk about the deal dynamics and updates since our last note.

• Epack Durable (1936389D IN) is looking to raise up to US$100m in its upcoming India IPO. The deal will be run by Axis Capital, DAM Capital and ICICI Securities. 
• Epack Durable (ED) is the fastest Indian growing room air conditioner original design manufacturer (ODM) based on growth in volume manufactured between FY20-23 (Year ended 31st Mar), according to F&S. 
• Further, it is the second largest ODM manufacturer in the Indian room air conditioner manufacturing market, with 29% market share in terms of volume manufactured in FY23, as per F&S.

• As part of our Narrative and Numbers themed Annual Report insights, we shift our focus to FSN E-Commerce Ventures (Nykaa) (NYKAA IN).
• We focus on Nykaa Fashion due to its financial significance in spite of not being a material subsidiary warranting the need for board review on materiality policy.
• Notable issues demanding scrutiny include (1) Declining Financials, (2) Inconsistent Reporting, (3) Misleading Narrative, and (4) Elevated Executive Compensation.

• We see 8 stocks moving from MidCap to LargeCap, 8 stocks moving from LargeCap to MidCap, 13 stocks from SmallCap to MidCap, and 13 stocks from MidCap to SmallCap.
• The expected migrations from SmallCap to MidCap have outperformed the other potential migrations with all stocks moving higher over the last six month.
• Active managers could continue to realign their portfolios. Some of the upward migrations will have passive flows in the next few days and over the next few months.