India

• Every quarter, Indian companies report their “Shareholding Pattern” for all to see. They show holdings by category type, and holders over 1%. 
• The big news in Q1 in AdaniLand was the failed FPO, thwarted by the Hindenburg Research report, and the Adani Promoter sale of stakes in 4 companies to GQG Partners. 
• The details in the change of the shareholder structure are, however, interesting.

• Tata Technologies (TATATECH IN)  (TT) is looking to raise around US$600m in its upcoming India IPO.
• Tata Technologies is a global engineering services company offering product development and digital solutions, including turnkey solutions, to global original equipment manufacturers (OEMs) and their tier 1 suppliers. 
• In this note we talk about the not-so-positive aspects of the deal.

• In this insight, we take a look at the names leading the race to become ADDs/DELs for the NIFTY 50 and NIFTY 100 indices in the September 2023 rebalance.
• A couple of these names could become intra-review additions if the HDFC Limited (HDFC IN) – HDFC Bank (HDFCB IN) Merger closes prior to the September 2023 Rebalance.
• Apart from that, there could be five ADDs/DELs for the NIFTY 100 index which by definition will also be added/deleted from the NIFTY Next 50 index.

• TCS reported weaker than expected growth and margins. YoY growth in constant currency (CC) terms came in at just 10.7%. Operating Margin (OPM) came in at 24.1% vs 25% expected.
• North America in particular has seen some demand slowdown, largely due to deferment of discretionary projects and delayed decision making. Europe is improving as energy crisis is receding.
• Looking forward, Europe, in particular UK, is likely to lead the growth. North America may also come back as the banking crisis there seems to have been contained.

• Infosys reported a weak Q4FY23 with QoQ CC (Constant Currency) growth down by -3.2%. OPM (Operating Margin) contracted QoQ by -50bp to 21%, and was weaker than 21.5%+ expected. 
• Led by macro concerns, demand outlook remains cautious with FY24 growth guided to be 4-7% YoY in CC terms.
• The bottom end of the FY24 OPM guidance has been lowered to 20% vs 21% achieved in FY23. Overall OPM guidance for FY24 is 20-22%.

• Indegene Limited (1864095D IN), a healthtech firm focused on life sciences commercialization is looking to raise INR32B through an IPO, comprises of fresh issue and an offer for sale.  
• The IPO funds will be used to repay debt, fund capex, pay for one of the company’s past acquisitions, and pursue any future inorganic growth.
• Amid a large and growing underpenetrated addressable market, Indegene is poised for long-term profitable growth by leveraging on its marquee clientele, long-standing client relationship, and comprehensive offering.  

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
• Nickel Industries Ltd
• Vedanta Resources

• Tata Technologies (TATATECH IN) (TT) is looking to raise around US$600m in its upcoming India IPO.
• Tata Technologies is a global engineering services company offering product development and digital solutions, including turnkey solutions, to global original equipment manufacturers (OEMs) and their tier 1 suppliers. 
• In this note we talk about the positive aspects of the deal.

• In this insight, we take a look at the Potential ADDs/DELs for the BSE SENSEX, 100, 200, and 500 Indices in the June 2023 Rebalance.
• There are only few more days left in the reference period used for the constituent selection process for the June 2023 Rebalance.
• Currently, I see 6 ADDs/DELs for the BSE 100 index and 4 ADDs/DELs for the BSE 200 index.

• HPL Electric & Power (HPLE IN) is one of the key players in domestic electric meters market and domestic on-load, change-over switches market. The company also manufactures LED products.
• Forensic overview of the company indicates poor capital allocation in the past, along with cash generation issues.
• One must also keep a note of the inherent credit risk, as well as some interesting line items such as software and designs, on the balance sheet.

• Mankind Pharma (6596876Z IN), a pharmaceutical company, is seeking to raise up to Rs45 billion (US$550 million) in April, according to press reports.
• In Mankind Pharma IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
• The key elements of the bear case rest on worrying recent developments, FCF burn, rise in inventory days and a steady decline in RoCE.   

• Mankind Pharma (6596876Z IN), a pharmaceutical company, is seeking to raise up to Rs45 billion (US$550 million) in April, according to press reports.
• Mankind Pharma is India’s fourth-largest pharmaceutical company in terms of domestic sales and second-largest in terms of sales volume in FY22, according to IQVIA.
• The key elements of the bull case rest on a track record of growing brands and market share,  accelerating growth rates, and profitability with margins in a relatively tight range.

• Kotak Mahindra Bank (KMB IN) was added to the MSCI India Index at the November 2020 SAIR. However, a LIF of 0.5 was applied due to the low foreign room.
• The latest shareholding pattern as of end-March shows a foreign room higher than 25%. That should result in a removal of the LIF at the May QCIR.
• The increase in foreign room is a result of FPIs selling the stock despite the inclusion of Kotak Mahindra Bank (KMB IN) in a global index in March.

• Phonepe Pvt Ltd (1732974D IN) ‘s new app, “Pincode”, is based on the ONDC platform and offers hyperlocal e-commerce.
• ONDC-Enabled Pincode could disrupt Zomato (ZOMATO IN) food delivery and grocery businesses.
• Loyal restaurants may choose to offer discounts via ONDC, putting pressure on Zomato (ZOMATO IN)  and Swiggy (1255298D IN) to compete bringing back cash burn and discounting. 

• The Adani names are seeing new news and commentary. SEBI is probing offshore deals for rules violations, SEBI filed an interim report Sunday with the Court, Cements are refinancing US$4bn.
• GQG’s Jain was interviewed by Bloomberg TV in NY saying he sees his Adani basket being a “multi-bagger in five years.” 
• Assuming growth and margins equivalent to peer max rates, all profits reinvested, and 100% gain in stock price in 5yrs, NP CAGR=33%, 2028 EV/EBITDA average of four names is 29.4x. 

• Avalon Technologies (6594468Z IN) has launched its Initial Public Offering.
• The company states to have one of the highest ROCEs in the industry, one of the important reasons of high ROCE is unusual accounting treatment of capital reserve.
• Other forensic concerns include lack of cash generation and some auditor discomforts.

• Currently, we see 1 high probability inclusion and 2 high probability deletions from the MSCI India Index at the May QCIR. Plus there are stocks close to the cutoffs.
• There will be selling on two Adani Group stocks following a lowering of the Foreign Inclusion Factor (FIF). That could increase if one of them is deleted from the index.
• As expected, Hindustan Aeronautics Ltd (HNAL IN) has continued to move higher post the placement and there could be more buying in the weeks ahead.

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.

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.

• Central China Securities
• Vedanta Resources

• Synergy Green Industries (SYGIL IN)  is engaged in the business of foundry i.e., manufacturing of wind turbine casting and other large precision castings.
• The company has been quite aggressive regarding its capex in the last few years especially, but the value add of these projects remains to be seen.
• Levered balance sheet, volatile business operations coupled with high related party transactions are some of the discomforts on the forensic front.

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. Japfa Comfeed Indonesia
2. Yankuang Energy Group
3. Anton Oilfield
4. China Jinmao Holdings
5. Lifestyle International Holdings

and more…

• Dr Lal PathLabs Ltd (DLPL IN) reported 2% and 8% revenue and net profit decline in Q3FY23, respectively. Q3 results were dragged by an 80% YoY decline in COVID-19 revenue.
• While non-COVID revenue increased 9% YoY to INR4.78 billion, it declined 7% QoQ. In fact, Q3FY23 non-COVID revenue was the lowest over the last three quarters.
• Although diagnostics is a big and attractive market opportunity in India, the sector is overcrowded, leading to heated price competition and declining realization per test.

• Pokarna Ltd (POKR IN) is principally engaged in the business of quarrying, manufacturing & processing and selling of Granite & manufacturing and selling of Apparel under the brand name ‘Stanza’.
• One of the key audit matters related to IT systems risk, and these are reflected by some of the accounting misclassifications.
• Other forensic concerns include high cost of debt on and ICDs and director loans, added WC burden, inventory valuation, 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.

• ENN Natural Gas
• Japfa Comfeed Indonesia
• Vedanta Resources