India

• Singapore VII Topco III (Blackstone-affiliate) is looking to raise at least US$585m in its stake sale of Sona BLW Precision Forgings (SONACOMS IN) . 
• The share sale is a clean-up one and will lift the overhang on the stock.
• The block is marketed at a floor price of INR400/share, at a 8.3% discount to last close. 

• 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.
• The BSE AllCap March 2023 Rebalance results were announced and this changes the main universe from which SENSEX, BSE 100, and BSE 200 members are selected.
• In this insight, we take a look at the recent updates to my expectations and the price and volume performance of the candidates.

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 Transmission
• Country Garden Holdings Co

• The current slowdown in volume can be attributed to both the broader macroeconomic slowdown & the pausing of the inventory system during the COVID, which has resulted in some mismanagement.
• However, the slowdown is not due to a loss of market share, product quality, or adverse distributor policies, indicating a cyclical issue rather than a structural one.
• In case of a gradual recovery of the macroeconomic situation and appropriate measures taken by Page Industries (PAG IN) , volume growth may pick up in the future.

• Balaji Speciality Chemicals (1742663D IN) is looking to raise about US$126m in its upcoming India IPO. 
• Balaji Speciality Chemicals (BSC) is the sole manufacturer in India of niche chemicals such as Ethylenediamine, Piperazine (Anhydrous), Diethylenetriamine, Amino Ethyl Ethanol Amines and Amino Ethyl Piperazine, according to CRISIL.
• BSC’s profitability growth has been stupendous, given its quick production ramp up. However, its growth is very likely to normalize. 

• Late Thursday night, the Adani Group announced that the family entities had sold Rs 154bn or US$1.8bn+ of stock in four listed entities to Australian-listed GQG Partners (GQG AU). 
• GQG is a US$90bn AUM asset manager specialising in emerging markets. They bought stakes of 2.55-4.10% in each of four entities. 
• This “increases” float, but doesn’t. As of now, this will partially offset one MSCI downweight in May, and will likely cause three FIF uplifts.

• The lock-up on nearly 9.4bn shares of Yes Bank (YES IN) expires on 13 March. Most of that is from the banks that helped in the recapitalisation in March 2020.
• There will be forced sellers as soon as the lock-up ends, and there will be other sellers that will want to sell.
• The forced and discretionary selling will be offset to a very small extent by inflows from passive trackers in May/June as the free float for the stock increases.

• Global Health (Medanta) (MEDANTA IN) reported double-digit growth in revenue, EBITDA, and net profit during Q3 and 9MFY23, driven by increasing footfalls, rising ARPOB, and faster-than-expected ramp-up of new hospitals.
• The company plans to add 1,000–1,500 beds in next 2–3 years, with ~70% of the planned bed addition being at existing hospitals, thereby entailing lower capex per bed.
• Recently, Medanta has announced a new asset light partnership to launch a 300-bed hospital in Indore under operations and management arrangement. The hospital is expected to commence operation in FY27.  

• The BHARAT 22 ETF (ICICIB22 IN) will rebalance on 17 March while the CPSE ETF (CPSEBE IN) and Nifty Bank Index (NSEBANK INDEX) will rebalance on 29 March.
• There are no constituent changes for the indices in March but there will be capping changes for the stocks and there is a reasonable impact on some stocks.
• There are stocks that will have opposing flows on the two days, while there are some stocks that will have same way flows from passive trackers.

• Post market close yesterday it was announced that GQG Partners (GQG AU) had invested INR 154.46bn (US$1.87bn) in four Adani Group companies via block deals.
• The blocks were at a discount of 4.3% for Adani Ports & Special Economic Zone (ADSEZ IN) to 12.2% for Adani Enterprises (ADE IN). 
• There will be an increase in the free float for some Adani Group companies as a result of the blocks and there are implications for the stocks in indexes.

• In Q3 FY23, Aurobindo Pharma (ARBP IN) recorded net profit of INR4.9B (~$60 million), down 19% YoY. Consensus expected the company to report net profit of INR5.2B during the quarter.
• Net profit was negatively impacted by 51% YoY increase in R&D expenditure due to biosimilar pipeline progress. R&D expenses are expected to remain high over the next 6–7 quarters.
• The company had negative free cash flow of $82M. With lack of any immediate catalyst or shareholders’ reward, we don’t expect multiple expansion for Aurobindo Pharma at least in near-term.

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.

• Greenko Energy Holdings (“Greenko”; “the company”) is one of the leading independent clean energy companies in India.
• As of September 2022, the company had total operational capacity of about 5.3 gigawatts (GW) – excluding a stake in hydropower operator Teesta Urja Limited – across a diversified portfolio of renewable energy assets.
• Wind energy contributes about 3.2GW of operational capacity, hydro contributes about 0.6GW and solar contributes about 1.5GW.

• Nexus Select Trust (NST IN)  is looking to raise up to US$500m in its upcoming India IPO. 
• NST is a REIT with a portfolio of 17 Grade A urban consumption centers. It is backed by Blackstone.
• In this note, we will talk about the not-so-positive aspects of the deal.

• Nexus Select Trust (NST IN)  is looking to raise up to US$500m in its upcoming India IPO. 
• NST is a REIT with a portfolio of 17 Grade A urban consumption centers. It is backed by Blackstone.
• In this note, we will talk about the positive aspects of the deal.

• Varun Beverages Ltd (VBL IN) is engaged in manufacturing, selling, bottling and distribution of beverages of Pepsi brand.
• It operates mostly in India but also looks after, Sri Lanka, Nepal, Zambia, Morocco and Zimbabwe, as per franchisee agreement with PepsiCo India.
• Key forensic concerns include unusual accounting with respect to containers, trend in discounting, advances to a related entity, etc and some governance alarms. 

• Dr. Reddy’s Laboratories (DRRD IN) entered into a definitive agreement to acquire the U.S. retail generic prescription product portfolio of Mayne Pharma (MYX AU) for $105M.
• The deal will add approximately 85 approved generic products and four pipeline products. For the fiscal year ending June 30, 2022, this portfolio generated revenue of $111M.
• Considering the revenue potential, the acquisition price seems to be reasonable. Being a high margin and limited competition portfolio, the acquisition will be earnings accretive for Dr. Reddy’s.

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 Jinmao Holdings
• Vedanta Resources

• A key re-rating trigger for Edelweiss’ stock is nearing as its wealth management (WM) arm gets close to demerge and list over the next couple of months.
• Edelweiss’ WM business could list at a market cap of around INR 8750cr, suggesting that Edelweiss’ 44% stake in it alone could be valued at INR 3850cr.
• Edelweiss also reported strong Q3FY23 earnings with 31% YoY growth in ex-insurance PAT. Edelweiss has significant potential to re-rate over the next couple of years as the credit business normalizes.

• Schneider Electric Infrastructure (SCHN IN) is engaged in manufacturing of products and systems for electricity distribution, such as distribution transformers, medium voltage switchgears, etc.
• After plagued with losses for most of last decade, the company has entered into positive net worth and profit territory. 
• However, forensics do indicate concerns on aspects such as borrowing rates, inventory verification, contingent liability, etc. including few governance woes.

• Short-Term borrowing plays an important role in the Adani group
• Rescinding of Adani Enterprises FPO and meltdown in share prices heightened liquidity concerns of the group
• This analyst estimates the liquidity gap to be around US$ 8 bn for FY2023 which needs to be bridged by long-term funds and/or cash flow from operations

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 Jinmao Holdings
• Lenovo
• China Datang Corp Renewable Power