India

• IV PercentRank metrics indicate middle-of-the-range Risk Premia. “High & Down” vol-state persists for the Vol Regime-Switching model.   
• Front-End IVs battered  as Weekly options expire prior to Friday’s tier-1 event risks. IVs marked down -3.6 vols. 
• IV Term-Structure shifts drastically – from Backwardation to Kinked-Shape. Year-end calendar effects causing Vol-surface distortions.

• Q2 FY 2025 sees NR prices hitting all-time high of INR 247/kg
• Revenue of MRF, Apollo and CEAT goes up YoY; of JK Tyre dips
• Tire prices hiked to mitigate impact of NR price rises

• Aster DM Healthcare Ltd (ASTERDM IN) and Quality Care India are merging to form India’s third-largest hospital chain with over 10,150 beds. 
• This merger combines two major players, generating significant scale, diversification, and financial strength. The merged entity will benefit from  synergies and plans to expand to over 13,000 beds by FY27.
• The merged entity is expected to be EPS accretive and expected to increase EBITDA by 10-15% through synergies

• Q2FY25 performance was mixed with good growth in AUM and volumes, however, loan losses were elevated. AUM growth came in at 29% YoY and 5.5%+ QoQ in Q2.
• Asset quality deteriorated led by retail and SME segments. GNPA worsened to 1.06% in Q2FY25 vs 0.86% QoQ. Credit cost has been around 2.1% vs 1.75%-1.85% guided.
• BAF successfully listed its housing finance subsidiary, BHFL, on Sep 16 2024. Its shareholding in BHFL is down to 88.75% from 100%.

• In this insight, we present our top investment ideas in the Apparel & Fashion retail sector, analyzing recent earnings results and key insights from company earnings calls.
• Names discussed include Page Industries (PAG IN), Vedant Fashions (MANYAVAR IN), Aditya Birla Fashion and Retail Ltd (ABFRL IN), Arvind Fashions (ARVINDFA IN) and Go Fashion India (GOCOLORS IN). 
• We have a bearish stance on all names except Page Industries (PAG IN).  

• Vodafone Idea (IDEA IN) gains a lifeline with the waiver of Rs. 24,700 crore bank guarantees for pre-2022 spectrum acquisitions.
• The waiver eases financial strain, boosts cash flow, and enables critical investments in 4G and 5G upgrades amidst competition from Reliance Industries (RIL IN)‘s Jio and Bharti Airtel (BHARTI IN).
• While a positive step, Vi’s recovery depends on fundraising, reducing debt, and regaining market share, making its turnaround uncertain but slightly more plausible.

• In this insight, we examine the key challenges facing the sector and discuss potential paths forward for MFI-focused lenders. 
• Companies in this sector have seen sharp declines, with stocks down 45% from their 52-week highs and showing negative returns of -37% YTD.
• Considering the Industry data, it would be fair to conclude that the pain in the industry is likely to persist.  CREDAG, SPANDANA, AUBANK, and IIB are key names to watch.

• Saatvik Energy Green Ltd (1637892D IN)  is planning to raise about US$136m through its upcoming IPO in India. The lead bookrunners for the deal are Dam Capital, Ambit, Motilal Oswal.
• Saatvik Green Energy Ltd (SEG) specializes in the manufacturing of solar photovoltaic (PV) modules and provides comprehensive engineering, procurement, and construction (EPC) services.
• As per Crisil report, since its inception, the company has supplied over 1.5 GW of high-efficiency solar PV modules to both domestic and international markets.

• Phillips Carbon Black (PHCB IN) PCBL is the largest producer of Carbon Black in the country and seventh largest player in the world. 
• Transitioning to specialty carbon black, acquiring companies non-carbon linked companies and entering into JV for sunrise sectors EV battery chemical companies. 
• Guiding for 2400Cr Capex for 1Mn capacity of Carbon black capacity, 600Cr capex for Aquafarm chemicals and 500Cr for battery chemicals in the upcoming years for growth. 

• Belrise Industries (9156339Z IN)  is planning to raise about US$255m through its upcoming IPO in India. The lead bookrunners for the deal are Axis Capital, HSBC, Jefferies, SBI Capital
• Established in 1988, it specializes in safety-critical systems and engineering solutions for two-wheelers, three-wheelers, four-wheelers, commercial vehicles, and agricultural vehicles.
• As per Crisil report, Belrise held a market share of 24% in the two-wheeler metal components segment in India as of FY24.

• Delta Manufacturing (DELTAMAG IN)  manufactures hard-ferrite magnets, which it sells to OEMs and also manufactures garment trims in India i.e. woven labels, heat transfers, fabric printed labels, etc.
• DMG’s market cap is just about INR 1.2 bn but faces grim, loss making operations
• Other forensic setbacks include lack of FCF generation on the back of muted capex, cash flow misstatements, goodwill impairment, dependency on low cost promoter debt, etc.

• Asian Paints (APNT IN) reported a 42.4% drop in Q2FY25 net profit and a 5.3% revenue decline.
• Intense competition, extended monsoons, weak urban demand, and margin pressures are impacting performance.
• Asian Paints’ resilience hinges on premiumization, sustainability, and industrial coatings to offset short-term challenges.

• Carraro India Limited (810618Z IN) is looking to raise about US$216m in its India IPO.
• Carraro India Limited (CIL), is an independent tier 1 solution provider of axles, transmission systems and gears for the agricultural tractor and construction vehicle industries in India.
• In this note, we talk about the company’s historical performance.

• INROAD project prompts Tripura to extend CM’s Rubber Mission
• Nagaland aims to cover 30,000 hectares with rubber by 2030
• Northeast starts getting saplings from its own nurseries

• In today’s Morning Views publication we comment on developments of the following high yield issuers: Adani Ports, Vedanta Resources, Seazen Group
• In the US, October new home sales fell 17.3% m-o-m (-1.8% e / 7.0% revised p) to an annualised 610 k units, the lowest in almost two years, amid rising mortgage rates as well as disruptions caused by hurricanes Helene and Milton. Separately, the Conference Board consumer confidence index increased to 111.7 in November (111.8 e / 109.6 p), the highest since August 2023.
• “November’s increase was mainly driven by more positive consumer assessments of the present situation, particularly regarding the labour market. Compared to October, consumers were also substantially more optimistic about future job availability, which reached its highest level in almost three years”, according to Dana M. Peterson, Chief Economist at The Conference Board.

• Suraksha Diagnostic (1481262D IN) offers a one-stop integrated solution for pathology and radiology testing, and medical consultation services in Eastern and North Eastern states of India.
• The IPO comprises only an offer for sale of up to 19M equity shares, with no fresh issue. Suraksha Diagnostic has set price band of INR420–441 per share.
• The floor price of the IPO reflects fair value of the company and discounts all near-term growth catalyst. We would advise not to subscribe the issue for listing gain.

• In Oct-24, Ambuja Cements (ACEM IN) acquired 46.8% stake in Orient Cement (ORCMNT IN) at Rs. 396 per share.
• Now Orient cement is trading at 20% discount to open offer price.
• This process can take approx. 2 months and can generate ~10-15% risk adjusted return by Jan-25.

• PG Electroplast (PGEL IN) is India’s 2nd largest ODM player for washing machines. It also serve as ODM and OEM for leading brands in Room ACs, electronics, air coolers etc.
• Company is guiding for 76% of topline growth as well as 250Cr of PAT for FY25, out of which 103Cr is already delivered. Also company revised guidance upwards in Q2. 
• With 1500Cr of QIP in plan, company is looking for inorganic growth opportunities to make stronger growth going forward. 

• NTPC Green Energy Ltd (2214556D IN) raised around US$1.2bn in its upcoming India IPO.
• NTPC Green Energy Limited (NGEL) is a renewable energy public sector enterprise and a wholly owned subsidiary of NTPC Limited, a Maharatna central public sector enterprise (PSU).
• We have looked at the company’s past performance and valuations in our earlier notes. In this note, we talk about the trading dynamics.

• Aegis Vopak Terminals Ltd (1902844D IN) is looking to raise upto US$415m in its upcoming India IPO. The deal will be run by ICICI, IIFL, Jefferies, HDFC and BNP Paribas.
• It is a joint-venture between Aegis Logistics, India’s largest third-party LPG handler and Vopak India BV, part of Royal Vopak, one of world’s leading tank storage companies, according to CRISIL.
• AVTL was the largest Indian third-party owner and operator of tank storage terminals for LPG,  liquid products in terms of storage capacity, as of June 30, 2024, as per CRISIL.

• GQG acknowledges the seriousness of the charges, but maintains its confidence in the Adani Group companies.
• GQG sees a distinction between the allegations against the individuals and the operational strength of the businesses.
• The firm believes that the fundamentals of the companies remain strong. GQG will continue to monitor the situation closely.

• The December 2024 index review results for the BSE Sensex and BSE 100 Indices were announced after the close on Friday 22nd November 2024.
• On the same day, the Bombay Stock Exchange announced several new names will be added to the Futures and Options (F&O) segment resulting in multiple surprises among the index changes.
• There will be one change for BSE Sensex and six changes for BSE 100 during the December 2024 index rebal event.

• Deep Industries (DEEPI IN) targeting 800 Cr worth of revenue by FY26, with 35% CAGR in next 2 years.
• India is opening more oil & gas wells, needs services of company like Deep who can provide one stop shop for all Oil & Gas Needs.
• Key Triggers- Prabha Barge(60% Operating Margins) and Dolphin Offshore(for diversifying into offshore services) will further margin accretive.

• In this Insight, we share our channel inputs that might be relevant for SRF Ltd (SRF IN), Navin Fluorine International (NFIL IN), and Gujarat Fluorochemicals (FLUOROCH IN).
• Weak demand and operational conditions in China have forced companies to focus on clearing inventory rather than maintaining prices, which has negatively impacted India’s export-oriented companies.
• Industry-Wide product cycles, especially in Specialty Chemicals, are shortening, which is a potential threat to leaders like SRF Ltd (SRF IN).

• Polymatech Electronics (POLM IN) revenues have skyrocketed by 27x in the last three years, but the balance sheet is filled with several red herrings. 
• Topline looks out of sync with production and have been largely aided by receivables. Being an R&D oriented company, the R&D expense only appeared in FY24, when sales were INR6bn
• Mis-Classification of cash flows, questionable RPT with promoters, dubious transition towards IND AS, absurd nature of some key expenses, also warrant attention

• The NIFTY Index (NIFTY INDEX) finished last week in positive territory. A longer rally could ensue.
• This Insight provides option strategies based on the resistance and support levels identified in the quantitative Insight EQD | NIFTY 50: State Of The Odds.
• Volatility skew and option liquidity inform three strategies, which include a Capped Risk Reversal, a Risk Reversal, and a Call Spread.

• IVs trade higher in spite of a late-week recovery in equities. Negative correlation between Index & option premiums reasserted as multiple holidays fall off the calendar.    
• Vol-Regime Switching Model firmly lodged in “High & Down” state. Allocation to Iron Condors/ Iron Butterflies recommended.   
• Vol surface characteristics also reflecting increased risk premia – Skew extends away from overly compressed levels. Vol term structure swings from Contango to Backwardation.

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.

• Adani Ports & Special Economic Zone
• Bharti Airtel

• Zomato (ZOMATO IN) will replace JSW Steel Ltd (JSTL IN) in the S&P BSE SENSEX Index (SENSEX INDEX) at the close on 20 December.
• This is the first of many potential inclusions for Zomato in local indices over the next few months and is due to inclusion of the stock in the F&O segment.
• Futures and options in Zomato (ZOMATO IN) start trading from the open on 29 November. Expect increased volatility in the short-term and an increase in traded volumes.

• Adani Group’s handling of U.S. FCPA investigation disclosures highlights significant lapses in transparency, including delayed and contradictory statements.
• Inconsistent disclosures and wrong disclosure about US investigations raising red flags for regulatory compliance and governance.
• Search warrants for Sagar Adani, Nephew of Gautam Adani issued in Mar-23, which is not disclosed in fundraising documents as well as Annual Report. 

• After a period of prolonged sell-off, the NIFTY Index last week found support around the 23263 level and bounced.
• Below we introduce a new “quantitative chart” tool called “QUANTCHARTS“: it displays in a compact format all the information you need to evaluate the probability of trend reversal.
• As you will see the NIFTY Index closed just below the 25% (Q1) probability target, so it has room to rise further in the coming weeks, the CC is supportive.

• In the US, existing home sales rose 3.4% m-o-m in October (2.9% e / -1.3% revised p) to an annualised 3.96 mn units.
• That said, existing home sales grew at the slowest pace since late 2010, amid rising mortgage costs.
• Separately, the Conference Board leading index fell 0.4% (-0.3% e / -0.3% revised p) to 99.5 in October 2024. 

• Narayana Hrudayalaya Ltd (NARH IN) is on an expansion spree and looks to add further 1500 beds in the next four years, to its 5683 operational beds as at FY24.
• As far as forensics are concerned, the company has shown improvement in its capital allocation, shown ramp up/turnaround in some hospitals; also impairments are done with in the past. 
• However, few concerns loom over PPE disposals and non-reconciliation with cash flows, treatment of reversal of provisions and high growth rate assumed in goodwill CGU.