India

• Edelweiss reported a decent Q4FY23. Across businesses, Edelweiss reported strong growth. The credit business is also now scaling up with Q4FY23 disbursements at INR 400cr in housing finance.
• The demerger of Nuvama Wealth Management is now complete with record date as Jun 2 2023. Nuvama is on track to list on the exchanges by the end of July.
• Based on our sum-of-the-parts valuation, Edelweiss can be valued at INR 15000cr+. At the current market cap of INR 4400cr, it is trading at a huge discount of 70%+.

• Stylam Industries (SYIL IN) is a play on the Indian laminate space with a 25% CAGR growth predicated on growth in both international and domestic markets.
• The stock trades at 23.6x/19x FY24e/25e. While this is not cheap by any stretch of the imagination, the company is a high grower/best in class amongst its competitors. 
• Stylam Industries (SYIL IN)  is completing an expansion to increase capacity by 40% in FY24 and expanding in a new segment that can double its revenue over FY23-25e. 

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. China SCE
2. China Hongqiao
3. Times China
4. Greentown China
5. Seazen (Formerly Future Land)

and more…

• Balkrishna Industries (BIL IN) is one of the big names in Off-Highway Tyre (OHT) segment across the globe.
• The company is currently in a capex mode and looks to augment its tyre capacity and expand the carbon black manufacturing.
• However, there are some corporate level discomforts regarding the payouts to the stakeholders on the back of capex, and disclosure errs in few lone items on the balance sheet.

• CPPIB aims to raise around US$750m via selling a 1.6% stake in Kotak Mahindra Bank (KMB IN). 
• This is not the first time that CPPIB will be selling down some of its stake, the previous deal held up well.
• In this note, we will talk about the placement and run the deal through our ECM framework.

• Apollo Hospitals Enterprise (APHS IN) reported a 21% YoY growth in revenue in Q4FY23, mainly driven by 31% and 18% revenue growth in Apollo HealthCo and hospital business, respectively.
• For FY24, Apollo expects HCS segment revenue growth at 15% YoY, mainly driven by higher occupancy. The company aims to improve hospital occupancy to 70% by the end of FY24.
• Apollo 24/7 business is on track to achieve breakeven at an entity level in Q4FY24. GMV of Apollo 24/7 is expected to be double in FY24 compared to FY23 level.

• GMR Airports Infrastructure (GMRI IN) saw pressure on its scrip after its results, that witnessed losses widening to INR-8.4 bn in F23 from INR -7.5 bn in F22 (continuing operations).
• The losses have further dented the balance sheet, that already looked fragile over a number of years.
• The company also faces cash generation problems on the back of debt burden, apart from severe contingent liabilities, that could further hamper the net-worth. Investors should remain cautious.

• We see 8 stocks moving from MidCap to LargeCap, 9 stocks moving from LargeCap to MidCap, 9 stocks from SmallCap to MidCap, and 10 stocks from MidCap to SmallCap.
• Following a strong listing, Mankind Pharma (6596876Z IN) should be added to the Large Cap segment of the market in July.
• The expected migrations from SmallCap to MidCap have outperformed the other migrations by a huge margin over the last couple of months and there could be profit taking ahead.

• HCG ended FY23 with decent profitability and is on track to see significant scale up over the next 12-18 months as its emerging centers become mature.
• During the course of the next couple of years, HCG is also looking to enhance its presence through the inorganic route.
• We project that HCG may do a PAT of INR 200cr by FY25. At the current market cap of INR 4450cr, HCG is attractively valued at 22x per FY25E PAT. 

• It was a busy week with index rebalance implementations and announcements of index changes.
• The coming week has the KOSPI200 and KOSDAQ150 rebalancing on Thursday and a bunch of onshore China indices rebalancing on Friday.
• There were big inflows to China ETFs during the week while the largest inflows went to the Tracker Fund of Hong Kong Ltd (2800 HK) ETF.

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. Vedanta Resources
2. China Jinmao Holdings
3. Lifestyle International Holdings
4. Geely Auto
5. First Pacific Co

and more…

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.

• The Government of India is looking to raise up to US$540m via selling around 3% of Coal India.
• This will be the third divestment by the Government since 2015 and the past two deals didn’t end up doing much.
• In this note, we will talk about the placement and run the deal through our ECM framework.

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

Adani Ports and Special Economic Zone’s (APSEZ) FY 2022-23 results were in line with expectations, with revenue and EBITDA exceeding management’s guidance. That said, cargo volume growth slightly missed estimates. Leverage was largely stable (despite heavy outlays for acquisition and capex), thanks to strong earnings improvement. For FY 2023-24, we anticipate the company will generate FCF of INR 50-60 bn, assuming APSEZ does not make any material new acquisitions.

Management reiterated that the company’s priority is to deleverage in FY 2023-24, and guided for Net Debt/EBITDA to improve to 2.5x (from 3.1x in FY 2022-23). There are recent media reports that the Adani Group has committed to USD 10 bn of investments in Vietnam. Management clarified that the investments are meant to be carried out over the medium to long term.

We believe the fallout for Adani Group from Hindenburg Research’s short-sell report in late January 2023 is largely over. We view positively that the group has been addressing some of Hindenburg’s allegations by reducing leverage and raising equity to repay share-backed loans.

• As projected, Nesco’s BEC business has completely normalized and clocked INR 45cr+ revenues in Q4FY23. With this, Nesco clocked FY23 PAT of INR 290cr+, well above our INR 250cr+ estimate.
• Alongside the BEC business, Nesco’s foods business has also seen significant recovery led by footfalls from the BEC. Independent of BEC also, Nesco Foods is growing significantly on its own.
• Nesco is on track to earn PAT of INR 320cr+ for FY24, suggesting that at the current market cap of INR 4250cr, it is valued attractively at 13x P/E.

• Kolte Patil delivered on the optimistic expectations for Q4FY23 which led to a stellar close for FY23 with all-time-high pre-sales and robust deliveries.
• Its flagship project, Life Republic, was at an inflection point as outlined in our original thesis. It contributed immensely in FY23 and is now all set for accelerated growth.
• Despite high base of FY23, Kolte Patil is all set to post a strong FY24 with 25% pre-sales growth, led by new launches and strong sustenance sales.

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

• NSE Indices have started a market consultation on dropping stocks that are not a part of the Futures & Options segment from the Nifty Next 50 Index (NIFTYJR INDEX). 
• This will be done in two phases with a weight reduction for non-F&O stocks in June and deletion from the index in September.
• That will result in 11 inclusions to the Nifty Next 50 Index (NIFTYJR INDEX) in September and bring in a lot of flow to the stocks.

• LICHF reported a strong Q4FY23 with a PAT of INR 1180cr. This takes the FY23 PAT to INR 2891cr, well above our estimate of INR 2700cr.
• Asset quality worsened as Stage 2 assets increased to 5.25% vs 3.92%. However, this is temporary due to one-off interest rate hike related technical issues in EMI payments.
• LICHF has guided for a strong FY24, led by margin expansion and AUM growth. As credit costs remain benign, profitability should jump significantly.

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.

• Fosun International
• Vedanta Resources