India

• Nifty50 IVs have finally cracked below 11.0% levels – in spite of upcoming event-risks. Moves lower have been exacerbated by the holiday shortened week.   
• Vol-Regime Model has switched to “Low & Down” vol-state in Nifty50. Tactical implications:  Short Vega exposure less favourable going forward.
• Risk premia selloff has driven Vol Term-Structure deeper into Contango. Smile & Skew characteristics have compressed in congruence with lower IVs.

• Global Health (Medanta) (MEDANTA IN) reported double-digit growth in revenue in Q1FY25, while sluggish developing hospitals was a drag on the margins.
• The company plans to add 1,000–1,500 beds in next 2–3 years, with most of the planned bed addition being at greenfield projects entailing higher capex per bed.
• Medanta does offer synergy as a possible takeover candidate for a leading hospital operator.

• In this insight, we briefly study forensics of Esds Software Solution (1603279D IN) , currently unlisted, had tried to float an IPO back in 2021 but it was later withdrawn.
• The company offers managed cloud service and end to end multi-cloud requirements provider. Revenue growth has been moderate while margin erosion has been a concerning issue for the company.
• Key forensic takeaways include nature of contingent liabilities, inability to generate cash and liquidity woes, quality of receivables, etc. 

• Swiggy (1255298D IN) , a popular food and grocery delivery platform in India, plans to launch its much-anticipated IPO in early November.
• The company has seen rapid growth in Gross Order Value and revenues, driven by increased food delivery demand and a surge in quick commerce, an on demand grocery delivery service.
• The Naspers and Softbank Group (9984 JP)  backed company that started operations in 2014 is yet to turn profitable while its close competitor Zomato reported profits in FY2024.

• NTPC Green Energy Ltd (2214556D IN) is looking to raise about US$1.2bn in its upcoming India IPO. The deal will be run by IDBI Cap, HDFC, IIFL and Nuvama Wealth.
• It is a renewable energy public sector enterprise and a wholly owned subsidiary of NTPC Limited. Its portfolio encompasses solar and wind power assets with presence in over six states.
• According to CRISIL, it was the largest renewable energy public sector enterprise (excluding hydro) in terms of operating capacity as of June 30, 2024 and power generation in FY24.

• Himadri Speciality Chemical (HSCH IN)‘s expansion into Li-ion batteries and tires, with a massive Rs. 1,100 crore capex and Birla Tyres acquisition.
• Diversification into sunrise industries boosts margins, strengthens competitive positioning, and supports long-term growth.
• HSCL’s evolving business model makes it more than just a carbon company, enhancing its growth potential and resilience.

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 Hongqiao
• Continuum Green Energy

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. Biocon Ltd
2. Yankuang Energy Group
3. Wynn Macau Ltd
4. Rakuten
5. China Jinmao Holdings

and more…

The Asia Trade Book for September 2024 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.

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. Meituan
3. Yankuang Energy Group
4. Genting Bhd
5. Delhi International Airport Limited

and more…

In our latest Asia Monthly, we discuss the performance of major Asian credit indices and review UST curve movements in August 2024. We also provide a recap of major news and macroeconomic releases, including those from the US, China, India, Indonesia and Japan.

In addition, we summarise the Top/Bottom performers, recent USD bond issuances and rating actions in Asian corporate credit, as well as a list of our recent research. The Asia Monthly publication serves to keep investors updated on developments in the Asian corporate USD bond market.

• Smartworks Coworking Spaces Ltd (1742134D IN) is looking to raise about US$120m in its India IPO.
• It is an office experience and managed campus platform, typically focused on leasing entire/large, bare shell properties in prime locations and transforming them into fully serviced, tech-enabled campuses with amenities.
• In this note, we talk about the company’s historical performance.

• RPSGV reported a decent Q1FY25 with FMCG business sustaining an annualized revenue run-rate of INR 500cr+. The Sports business also reported healthy Q1FY25 revenue (INR 500cr+) led by IPL contribution.
• To add to growth aggression, RPSGV announced a new CEO for the FMCG business in August. Mr. Sudhir Langer, an accomplished FMCG professional, took the baton from Mr. Rajeev Khandelwal.
• At the current valuation, RPSGV is available at a holding company discount of 75%+. As the scalability potential of the FMCG and Sports businesses become evident, significant re-rating could happen.

• Paras Defence & Space Technologies Ltd. (PARAS IN) is engaged in designing, manufacturing of various products and solutions for Defence & Space Industries. The company launched its IPO in FY22.
• The company’s operations and order book has picked up post covid, but revenue trajectory has slowed down. Moreover, inventory bulk up has been helping the margins. 
• Receivables ageing and provisioning shows concern on overall quality. Moreover, RPT and corp. governance with Promoters also need to be kept an eye on.

• Oswal Pumps Limited is looking to raise about US$122m in its upcoming Indian IPO. The deal will be run by IIFL Securities, Axis Capital, CLSA, JMF and Nuvama Wealth Management.
• Oswal Pumps is the fastest growing vertically integrated solar pump manufacturer in India.
• The firm manufactures solar-powered and grid-connected submersible and monoblock pumps, electric motors comprising induction and submersible motors as well as solar modules, sold under the ‘Oswal’ brand.

• The NIFTY Index, Nifty Next 50 Index, NSE Nifty Bank Index, CNXIT Index, Nifty Midcap 150 Index, Nifty100 Low Volatility30 Index and the CPSE ETF rebalance at the close tomorrow.
• The round-trip trade across the indices is US$3.3bn and there are 13 stocks with over 1 day of ADV to trade from passive trackers.
• Stocks with the largest inflows are Trent, Bharat Electronics, Canara Bank, Bharat Heavy Electricals, Oil & Natural Gas Corp, Coal India, Hindustan Aeronautics and InterGlobe Aviation.

• We spoke to cable distributors and industry experts to understand any concerns regarding industry-wide inventory levels and to gauge the current demand environment.
• Stocks in focus include Polycab India (POLYCAB IN); KEI Industries (KEII IN) & R R Kabel (2333180Z IN).  
• Overall industry business momentum remains strong, project delays and competition warrant attention. 

• Deepak Fertilisers & Petro (DFPC IN) commissioned 500KT of ammonia plant that will remove their dependence on import of critical raw material.
• DFPCL’s TAN capacity stands at 629 KTPA, with plans to increase it to 1,000 KTPA by FY26 through a new facility in Gopalpur, Odisha.
• Deepak Fertilisers & Petro (DFPC IN) is about to complete its restructuring by creating a separate subsidiary for mining chemicals, which in future they may plan to list separately. 

• In Q4FY24, Globus Spirits (GBSL IN) changed its raw material from rice to maize to improve the margin and stability in margins.
• Globus Spirits (GBSL IN) increased its capacity in Q4 recently 120KLPD, 60 each in Jharkhand and West Bengal.
• Recently, the government also removed the ban on using FCI grain and sugarcane for Ethanol production.

• Nesco reported a mixed Q1FY25. The IT Park business reported strong growth led by improved occupancy. IT Park revenue grew 20%+ YoY and 7.4% QoQ.
• The BEC business saw decline in its revenue due to seasonality. Q1 tends to be the weakest quarter for BEC. This also impacted the Nesco Foods business to an extent.
• BEC revenue declined -19% YoY. Nesco Foods revenue declined -14% YoY. Overall, Nesco’s PBT increased 7% YoY, however PAT declined -8% YoY due to deferred tax impact. 

• Kolte Patil reported a decent Q1FY25 with pre-sales of INR 711cr. This was lower than expected, however, adjusted for weak new launch activity, it was healthy.
• Q1FY25 pre-sales was mostly led by sustenance sales. New launches worth INR 1500cr have been initiated mostly in Q2FY25, thus will start reflecting in 2HFY25 pre-sales numbers.
• With highest-ever quarterly collection at INR 612cr, operating cash flows has remained strong. The balance sheet remains robust with negative net debt, allowing Kolte Patil to aggressively pursue new projects.

• IVs seesawed through the week on account of the Fed meeting. Trading up to 12.7% going into the meeting & selling-off to 11.4% thereafter.
• Vol-Curve Term-structure in Contango post Fed meeting – Nifty50 vol curve sheds its inversion & BankNifty vol curve loses its kinked-shape
• BankNifty Smile & Skew characteristics extend relative to previous weeks – despite falling IVs & strengthening index.

• Bajaj Finance (“BAF”) reported a decent Q1FY25 with robust AUM growth, however, loan losses came in slightly elevated. AUM grew 31% YoY to reach INR 3,54,192cr.
• Annualized credit cost inched up to 2.1% vs 1.75-1.85% guided for FY25. This was led largely by weak collection efficiency. BAF is working on enhancing its collection infrastructure.
• BAF listed its housing finance subsidiary on Sep 16, unlocking value for the shareholders. It created history with highest-ever subscription amount and got listed at a premium of 114%.

• HCG reported a decent Q1FY25 with revenue growth of 16.7% YoY, adjusted for a discontinued center in Bangalore. Growth was robust across both established and emerging centers.
• Emerging centers (Kolkata, Borivali and South Mumbai) grew strong at 33% YoY while established centers also grew healthy at 14% YoY. All emerging centers, but South Mumbai center, are profitable.
• We estimate that HCG could post a PAT of around INR 280cr+ by FY27. An investment in HCG at the current level has potential to provide an upside of 85%+.  

• KPIT Technologies (“KPIT”) reported constant currency (CC) revenue growth of 24.8% YoY in Q1FY25. Q1FY25 PAT grew 42.2% YoY, excluding one-time gains. Middleware and Architecture Consulting segment led the growth.
• EBITDA margin continues to expand led by operating leverage. Q1FY25 EBITDA margin grew to 21.1% vs 20.7% QoQ, despite two months of ESOP costs and quarterly promotions.
• New engagements’ TCV (Total Contract Value) at $202mm in Q1FY25 significantly exceeded the $150mm+ typical run-rate. KPIT’s Qorix venture received all the regulatory approvals and was restructured as 50:50 JV.

• Nuvama’s Q1FY25 results were yet again stellar with 60% YoY growth in revenues. The excess growth came from the Capital Markets segment where the activity has been upbeat. 
• The Wealth Management and Asset Management segments, which are core to the business, continued to post secular growth in the range of 18-25% YoY.
• For the first-time ever, Nuvama Wealth Management (“Nuvama”) also declared dividend. Given the capital light nature of the business, it indicates prudent capital allocation.

• IREDA (1845911D IN) is looking to raise INR45bn (US$538m) via its qualified institutional placement (QIP).
• Most recently on 19th Sept 2024, IREDA received the Department of Investment and Public Asset Management’s (DIPAM) approval for said QIP.
• Overall, the deal wouldn’t be a large one for the stock to digest at just 4.7 days of three month ADV.

• Ventive Hospitality Ltd (0807075D IN) is looking to raise up to US$238m in its upcoming India IPO. The deal will be run by JMF, Axis, HSBC, ICICI, IIFL, Kotak, SBI.
• Ventive is the largest hospitality asset owner amongst public listed market peers and is focused primarily on luxury offerings across business and leisure in India and Maldives.
• All of its hospitality assets are operated or franchised by renowned global operators i.e. Marriott, Hilton, Minor and Atmosphere. 

• Ather Energy (1207922D IN) is looking to raise about US$536m in its upcoming India IPO. The deal will be run by HSBC, Nomura, JM Fin and Axis.
• Ather is a pure play electric vehicle company in India designing and developing E2Ws, battery packs, charging infrastructure, associated software and accessories, also manufacturing battery packs and assembling E2Ws in-house.
• According to CRISIL, Ather was the third largest player by volume of E2W sales in FY24.

• Ola Electric (OLAELEC IN) reportedly faces challenges with poor product service, leading to dissatisfied customers. This underscores the urgency to improve its service infrastructure and restore brand trust.
• The Indian electric two-wheeler sector saw weak sales in August, following a robust July, with Ola experiencing a sharp decline in monthly volumes and a loss of market share.
• Meanwhile, Maruti Suzuki India (MSIL IN)  is gearing up for a January 2025 EV launch and is preparing to establish a 25,000-unit charging infrastructure in advance.