India

• The street is excited about Zomato (ZOMATO IN) ‘s profitability, we are not.
• Zomato’s execution is strong, driving improved profitability despite the margin-dilutive Gold offering.
• Caution warranted due to market dynamics: slow growth, margin pressure, and increased competition.

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.

• Azure Power Global Ltd

• Multi Commodity Exchange India (MCX IN) has been having troubles at the bottom-line due to transaction fees, delay of commodity derivatives platform, etc. which is not totally within its control.  
• However what warrants attention is the investment yield that has dropped considerably in FY22, coupled with the non-traceable interest income from the bank deposits, which has affected the margins.
• Other forensic takeaways include no-provisioning of doubtful debts and misstatement of cash flows.

• Sun Pharmaceutical Industries (SUNP IN) recorded 14% YoY revenue growth in Q4FY23, driven by 21% growth in U.S. formulation business. Adjusted net profit for Q4FY23 was INR21.6B, up 36% YoY.
• Global specialty business continues to maintain strong momentum. Adjusted for milestone received, global specialty contributed 18% of Q4FY23 overall sales and grew 28% YoY to $244M.
• Sun Pharma has proposed to acquire the remaining stake in Taro Pharmaceutical for a purchase price of $38 per share in cash. Management expects high single-digit revenue growth in FY24.

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.

• Meituan
• Tata Motors ADR

• Rajshree Polypack’s (RPPL’s) Q4FY23 came in weaker than expected on both the sales volume and the margins front. Higher depreciation and interest costs led by capex further dampened the profitability.
• However, RPPL is executing well on its revenue growth targets led by regular capex led investments. It is on track to do INR 450cr revenues by FY25.
• RPPL has potential to post a PAT of INR 30cr+ by FY25, suggesting that RPPL is available at around 6x P/E on a base of FY25E PAT.

• We add value play Bank of Baroda to the peer group, and to our buy list; we also add liquidity and funding screens and a PEG ratio valuation metric
• We keep HDFC Bank as our higher quality bank, with its strong balance sheet, especially on NPA coverage, and further positive momentum from the upcoming HDFC merger
• We remain negative on State Bank of India, and we are also cautious on ICICI Bank; Axis bank remains a name to watch, although valuations are far from compelling

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We view Tata Motors’ ESG as “Adequate”, with “Adequate” Governance and Social pillars, while its Environmental pillar is “Strong”. Controversies are “Immaterial” and Disclosure is “Strong”.

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. Lenovo
2. Vedanta Resources
3. China Jinmao Holdings
4. Lifestyle International Holdings
5. Geely Auto

and more…

• Media reports indicate that the HDFC Bank (HDFCB IN) merger with HDFC Limited (HDFC IN) is expected to complete in 4-5 weeks.
• There will be inclusions to the NIFTY Index, Nifty Next 50 Index and S&P BSE SENSEX Index and capping changes to the Nifty Bank Index apart from changes to global indices.
• While the impact on the merging entities is not big, there will be fairly large flows on some stocks that are index inclusions or affected by capping changes.

The Asia HY Trade Book for May 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 (ex-Japan) HY and crossover credits.

• In this Insight, we review the recent performance of ABB India Ltd (ABB IN) , Siemens Ltd (SIEM IN) , Polycab India (POLYCAB IN) and Havells India (HAVL IN). 
• ABB posted a strong start, SIEM has a black dot with respect to its recent sale of subsidiary. POLYCAB continues to perform, and HAVL is back to capex mode. 
• Our picks remain the same, ABB instead of SIEM, POLYCAB instead of HAVL.

• Nodwin Gaming said it has secured US$28 million in funding from new and existing investors to grow its gaming and esports ecosystem in India.
• With the round, Nodwin, a subsidiary of media platform Nazara Technologies, said its post-money valuation has reached US$349 million. It added that its revenue has grown by a compound annual growth rate of 68% in the last 2 years.
• Nodwin didn’t disclose the names of five investors participating in this round.

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.

• Lenovo
• Vedanta Resources
• Xiaomi Corp

• CCL Products India (CCLP IN) is a coffee manufacturing company and has presence in both India and abroad.
• The company has seen an appealing growth in its top-line, growing at a three year CAGR of 22% till F23.
• However, when it comes to the forensics, there are several concerns, especially with its treatment of investment in subsidiaries and disclosures in the financials.

• JSW Infrastructure (5978490Z IN) is looking to raise up to US$341m in its upcoming India IPO. 
• The deal will be run by JM Financial, Axis Capital, Credit Suisse, DAM Capital, HSBC, ICICI Securities, Kotak and SBI Capital.  
• JSW Infrastructure (JSWI) is the fastest growing port-related infrastructure company in terms of growth in installed cargo handling capacity and cargo volumes handled during FY20 to FY22, according to CRISIL. 

• Jupiter Life Line Hospitals (0372574D IN) is looking to raise about US$135m in its upcoming India IPO. The deal will be run by ICICI Securities, Edelweiss Financial Services and JM Financial.
• Jupiter Life Line Hospitals (JLLH) is among the key multi-specialty tertiary and quaternary healthcare providers in the Mumbai Metropolitan Area (MMR) and western region of India, according to CRISIL. 
• Its hospitals function on an ‘all-hub-no-spoke’ model with each hospital being a full-service hospital, operating independently and offering services such as diagnostics to surgery and rehabilitation.

• R R Kabel (2333180Z IN) is looking to raise about US$200m in its upcoming India IPO. The deal will be run by Axis Capital, Citigroup, HSBC and JM Financial.  
• R R Kabel is an Indian consumer electrical company, which primarily sells wires, cables and fast moving electrical goods (FMEG). 
• According to Technopak, the company is the fastest growing consumer electrical company among its peers in India, growing at a CAGR of 33.0% between FY20 and FY22 (31st Mar 2022). 

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.

• Golden Eagle Retail
• Vedanta Resources

• KPIT reported a strong Q4FY23 with 8.5% QoQ growth in CC (Constant Currency) terms. Q4FY23 EBITDA margin at 19.1% came in higher than 18.5%+ expected.
• Deal TCV came in highest ever helped by a mega deal of INR $250mm. Even excluding the mega deal, the deal TCV was healthy at $173mm vs $150mm+ typically.
• KPIT has guided for an upbeat FY24. FY24 revenue growth is guided to be 27-30% in CC terms. FY24 EBITDA margin is guided at 19-20% vs 18.9% in FY23.

• Top longs have been India and Australia. Top shorts HSI and Korea. Korea’s bearish wedge is maturing and stands out as macro risk.
• Turned neutral the Nikkei above 29,200. 29,500 represents from buy support to threaten 31,000. Near term top at 31k for a pullback try.
• USD upside breakout is front running a softer equity bias in Asia for June. SPX 4,200/20 top zone throw over probable.

• Zydus Lifesciences Ltd (ZYDUSLIF IN) recorded 32% growth in revenue to INR50B in Q4FY23, driven by 58% YoY growth in US formulation business. India business revenue grew 11% YoY.
• US business growth was driven by volume expansion in existing products and new launches. The company has launched eight new products in the US during the quarter.
• Going ahead, growth is expected to moderate, due to high base effect. The company expects single-digit growth in the US business in FY24, slower than 28% growth recorded in FY23.

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. Melco Resorts & Entertainment
2. Hopson Development
3. China Jinmao Holdings
4. Lifestyle International Holdings
5. Geely Auto

and more…

• BAF ended FY23 with a PAT of INR 11508cr in line with our estimate of INR 11500cr+. BAF has guided for 5.1%+ ROA and 25%+ growth for FY24.
• Despite heightened competitive intensity from banks, Bajaj Finance Ltd (BAF IN) has managed to grow well as per its targeted levels without comprising on profitability. 
• BAF’s growing omnipresence via its digital platforms, branch expansion and deepening of product suite across branches will be key drivers of its next phase of growth.