India

• 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

• The promoters of Patanjali Foods (PATANJAL IN) are looking to increase the firm’s public shareholding to the minimum required 25% imposed by SEBI.
• We had discussed about this in their effective re-listing FPO last year, and the deal has been well covered by media sources as well, thus it is very well flagged.
• While it would be a large one to digest, representing at least 62.1 days of the firm’s three month ADV, the deal will lift the remaining overhang on the stock.

• Home First Finance (HOMEFIRS IN) lends to a customer segment exposed to high income volatility.
• Soft bounces are used by customers to manage their cash flow, with bounce charge collection done on a best-effort basis, management attitude towards financial discipline warrants attention. 
• While there may not be any immediate asset quality issues, caution is warranted. 

• Zydus Lifesciences Ltd (ZYDUSLIF IN) reported total revenue of INR43.6B, up by 20% YoY and 6% QoQ, in Q3FY23. Key markets, India and the U.S. continued to deliver robust performance.
• U.S. business is on track to register QoQ growth in near-term, with the launches of new products. Zydus plans to launch 2–3 transdermal products in U.S. in FY24.
• For its India business, the company aims to outperform the industry growth sustainably in the medium to long term. Lipaglyn is expected to be among top 25 products of 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. Evergrande
2. Vedanta Resources
3. Sino-Ocean Group
4. Lippo Karawaci
5. Japfa Comfeed Indonesia

and more…

• On 17 February, NSE Indices announced the results of the March index review for the Nifty Next 50 Index (NIFTYJR INDEX). There are 5 adds and 5 deletes. 
• Last evening, NSE Indices announced a change in the index methodology where the cumulative weight of non-F&O stocks in the index will be capped at 10% (down from 15% earlier).
• This changes the flows at the March rebalance that will be implemented at the close of trading on 29 March.

• The Government of India (GoI) aims to raise around US$372m (INR30.7bn) via an offer for sale of Hindustan Aeronautics Ltd (HNAL IN) stock. 
• The floor price of INR2,450 / share is set at approximately 6.7% to Wednesday’s (22nd Mar 2023) last close. The deal represents 10.5 days of ADV. 
• In this note, we will talk about the deal dynamics and run the deal through our ECM framework.

• This week it was reported that the release of Azure Power’s audited financial statements for FY2022 has been delayed again as appointed auditors Ernst & Young Mauritius have expressed an unwillingness to sign them off.
• An external agency is said to be investigating the whistle-blower allegations and the auditors are said to be uncomfortable with signing off the statements.
• Separately, the company recently released unaudited financials for two restricted groups – Azure Power Energy Limited and its restricted group entities, and Azure Power Solar Energy Private Limited and its restricted group entities.

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.

• AAC Technologies Holdings
• Evergrande
• First Pacific Co
• Vedanta Resources

• PNB Housing Finance Ltd (PNBHOUSI IN) (PHBHF) aims to raise up to US$300m via a rights issue in order to boost its capital base.
• PNBHF is the housing finance arm of Punjab National Bank and is partly owned by Carlyle, with investments from General Atlantic as well.
• In this note, we will talk about the rights issue and other deal dynamics.

• The Government of India is looking to sell up to 3.5% of Hindustan Aeronautics Ltd (HNAL) to meet the minimum public shareholding and will raise US$350m at the floor price.
• Hindustan Aeronautics Ltd (HNAL IN) is a potential inclusion to the MSCI India Index at the May QCIR and there will be buyers at the placement.
• Hindustan Aeronautics Ltd (HNAL IN) trades cheaper than its peers and there could be a move higher over the next few weeks.

• Nearly halfway through the review period, we see 10 stocks moving from MidCap to LargeCap and vice versa, and 9 stocks moving from SmallCap to MidCap and vice versa.
• Financials are poised to be the biggest gainers in the reshuffle with 6 stocks moving from MidCap to LargeCap and 5 stocks moving from SmallCap to MidCap.
• Over the last 6 months, stocks expected to migrate upward have outperformed stocks that are expected to migrate downward., though there has been a downward drift this year.

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.

• Sino-Ocean Service
• Vedanta Resources