India

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. Tata Motors Ltd
3. Health And Happiness (H&H)
4. Central China Real Estate
5. Agile Property Holdings

and more…

• Zee Entertainment Enterprises (Z IN) ‘s tussle with the regulators and legalities seem to be perpetual in nature.
• SEBI’s interim order highlights the abuse of promoters’ position in the company in order to siphon-off funds, ultimately benefiting the promoter family. SEBI has directed promoters to resign as directors.
• Since the irregularities are now being made public, eyes now would be on the proposed Zee-Sony merger, which could further be delayed.

• Sula Vineyards  raised around US$117m in its India IPO in Dec 2022.
• Sula Vineyards (SV) distributes wines under a bouquet of brands. In addition to its flagship brand “Sula,” popular brands include “RASA,” “Dindori”, “The source,” “Satori”, “Madera” & “Dia”. 
• In this note, we will talk about the lock-up dynamics and updates since our last note.

• The CPSE ETF (CPSEBE IN) and Nifty Bank Index (NSEBANK INDEX) will have its quarterly rebalancing at the close on 29 June.
• There are no constituent changes for the indices in June but there will be capping and float changes for the stocks and there is a reasonable impact on many stocks.
• Both indices have performed well over the recent past and active investors can take advantage of the passive flows to increase or decrease existing positions.

• SBFC Finance Limited (1547353D IN) is looking to raise up to US$145m in its upcoming India IPO. 
• SBFC Finance is a systematically important, non-deposit taking non-banking finance company (NBFC-ND-SI), offering secured MSME Loans and Loans against Gold. 
• Even through COVID-19, it had managed to more than double its AUM through its branch expansion efforts. However, its NIM declined over the track record period and profitability growth slowed. 

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.

• NagaCorp Ltd
• Sunac China Holdings
• 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. 
• We have looked at the company’s past performance in our earlier notes, in this note we will undertake a peer comparison.

• IPL 2023 concluded recently with record streaming views and TV viewership. This bodes well for the valuation of the IPL Lucknow franchise owned by RPSG Ventures Limited (RPSGVENT IN) [“RPSGV”]. 
• FMCG business is currently doing a run-rate of INR 400cr+ revenue, however, needs to scale up faster. To drive this, Too Yumm! has entered into a new category, traditional Namkeens.
• The Firstsource Solutions business seems to be bottoming out. Operating margin has stabilized in the 11.5-12% range. FY23 revenues de-grew at -1.1% YoY as guided at -1% to -2%.

• Obnoxious video of bank official abusing staff for not meeting unrealistic sales targets
• Issue is widely prevalent in the private sector financial system demonstrating poor leadership, communicational and motivational training
• Setting aggressive sales target results in mis-selling, undermines confidence in the financial system and regulatory intervention may impact profitability.

• Indian Energy Exchange Ltd (IEX IN)  is a market leader among power exchanges. However, the company’s market share might be delicate, especially with the developments of market coupling.
• The company might be a market leader, however there are some aspects accounting wise that are unique to IEX as compared to other exchanges like MCX and BSE.
• This includes settlement guarantee fund, accounting of software license, etc.

• 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.