India

• In Nov 2021, PB Fintech raised around US$793m in its India IPO, via selling a mix of primary and secondary shares.  The lock-up on its pre-IPO shareholder will expire soon.
• The company operates two platforms: Policybazaar operates in India’s online insurance product and service industry; and Paisabazaar platform operates in India’s online credit industry. 
• In this note, we will talk about the upcoming lockup expiry.

• The Administrator of the Specified Undertaking of the Unit Trust of India (SUUTI) is offering 46.53m shares of Axis Bank Ltd (AXSB IN) at a floor price of INR 830.63/share.
• This will take SUUTI’s stake in Axis Bank Ltd (AXSB IN) to zero and remove an overhang on the stock.
• Coming in close to Bain’s partial stake sale last week, the stock could trade heavy. But Axis Bank Ltd (AXSB IN) still trades cheaper than peers.

• In Nov 2021, Nykaa raised around US$720m in its India IPO, via mostly selling secondary shares.
• Nykaa is a lifestyle focussed e-commerce platform and consumer brand offering a portfolio of beauty, personal care and fashion products, including its own branded products.
• In this note, we will talk about the upcoming lockup expiry.

• Delhivery (DELHIVER IN) raised US$675m in its IPO and started trading on 24 May. The stock dropped below its IPO price a couple of weeks ago.
• Lock-Ups on pre-IPO investors expire on 20 November with 598m shares (US$2.89bn) becoming available for sale. Sell before then or hold off on buying.
• Delhivery (DELHIVER IN) is a potential inclusion to the MSCI Small Cap and FTSE All-World indices in the next month. Passive buying will be overshadowed by lock-up expiry.

• Archean Chemical Industries (0810406D IN) is looking to raise about US$176m in its India IPO. 
• Archean Chemical Industries (ACI) is a specialty marine chemical manufacturer in India focused on producing and exporting bromine, industrial salt, and sulphate of potash to customers around the world. 
• ACI has been growing on the back of increasing production capacity, sales volume and average selling prices in recent years. However, the firm had nearly defaulted previously. 

• Cipla Ltd (CIPLA IN) is a strong play in Indian generic pharmaceutical industry, due to its niche and differentiated respiratory and peptide injectable portfolio, which has less competition.
• The company has launched couple of complex respiratory products in the US market, which has accelerated its revenue growth. Multiple high-value launches are also lined up for this year.
• Cipla’s India business is on a strong footing, led by core portfolio tailwind in prescription and trade generics businesses. Q2FY23 marked the sixth consecutive quarter of market beating growth.

Adani Ports and Special Economic Zone’s (APSEZ) H1/22-23 results were moderately strong. The company reported robust earnings growth and margin expansion, supported by organic growth in cargo volumes and improved pricing. Leverage improved, as the company applied positive FCF towards debt reduction. That said, we expect slightly negative FY 2022-23 FCF, owing to higher full-year capex and the Haifa port acquisition. 

We note APSEZ’s continued aggressive growth ambitions, which would keep Net Debt/EBITDA at a moderate 3-4x. The company’s intention to bid for the Container Corporation of India (valued at a hefty USD 5.8 bn) may present an event risk, though the impact on leverage would ultimately hinge on APSEZ’s funding plans.

• Five Star Business Finance (0958461D IN) is looking to raise around US$250m in its upcoming India IPO. 
• Five-Star Business is a non-banking financial company (NBFC-ND-SI) that provides secured business loans to micro-entrepreneurs and self-employed individuals.
• We have looked at various aspects of the deal in our previous note, in this note, we talk about valuations.

• Five Star Business Finance (0958461D IN) is looking to raise around US$250m in its upcoming India IPO. 
• Five-Star Business is a non-banking financial company (NBFC-ND-SI) that provides secured business loans to micro-entrepreneurs and self-employed individuals.
• In this note, we talk about the RHP updates and undertake a peer comparison.

• Equity markets have been under a correction phase for more a year now; Nifty topped out in Oct’21 and is now back to near highs.
• In fact, last month’s close was an all time high close for Nifty on a monthly basis and 1st ever close above 18000 levels.
• Though such market corrections are not good from the return’s perspective, but they play a very important role.

• Post the end of the review period, we see 7 potential adds and 2 potential deletes for the MSCI India Index at the November SAIR.
• Inclusion in the index will require passive trackers to buy 6-21 days of ADV on the stocks. That increases to 16-45 days of delivery volume.
• Cumulative excess volume indicates pre-positioning on most potential adds. Foreign Portfolio Investors (FPI) have increased their holding on all potential adds over the July-September quarter.

• Dr. Reddy’s Laboratories (DRRD IN) reported strong Q2FY23 results, with revenue growing 9% y/y, mainly driven by North America business due to launch of gRevlimid in the US market.
• GRevlimid is not a one-off opportunity and will contribute meaningfully over the next few quarters as well. Price erosion in the base business continues to be within normal range.
• Adjusted for the covid product sales during Q2 FY22, and the brand divestment income in Q1 FY23, Indian business has grown in mid-teens year-over-year and mid-single digit sequentially.

• Campus Activewear (CAMPUS IN) was listed on 9th May, 2022, with its six-month lockup expiring today, 4th November 2022. 
• Campus Activewear is a lifestyle-oriented sports and athleisure footwear firm based in India. Operating under the “CAMPUS” brand, it offers a diverse portfolio of styles, color palettes, and price points.
• Coming up for six-month lockup expiry are the pre-IPO investors and the Promoters, both of which had sold during the IPO.

• Crop and Ag Chem markets to consolidate after ~50% jump in CY19-22E
• Crop Chem key beneficiary of energy transition > more crops for fuel > more crop chem use
• UPL likely near peak debt, to consolidate position, reasonable valuations

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. Melco Resorts & Entertainment
2. Lenovo
3. China Jinmao Holdings
4. Lifestyle International Holdings
5. Geely Auto

and more…

• Q2FY23 Results weak on high base, H2FY23 to report single digit growth
• FII selling, led to stock’s underperformance in H1FY23, stock oversold
• Weak base to support growth forward, low sentiment, steep selling, turning valuation attractive, besides long term opportunity is improving

• Bikaji Foods (BIKAJI IN) , an ethnic snacks company, is looking to raise approximately US$107m in its India IPO.
• Its product range includes six principal categories: bhujia, namkeen, packaged sweets, papad, western snacks as well as other snacks which primarily include gift packs, frozen food, mathri range and cookies.
• In our previous note, we looked at the company’s past performance. In this note, we’ll talk about implied valuations.

• Bikaji Foods (BIKAJI IN), an ethnic snacks company, is looking to raise approximately US$107m in its India IPO.
• Its product range includes six principal categories: bhujia, namkeen, packaged sweets, papad, western snacks as well as other snacks which primarily include gift packs, frozen food, mathri range and cookies.
• In this note, we look at the company’s past performance.

• Fusion Micro Finance Ltd (1053199D IN) is looking to raise approximately US$134m in its India IPO.  
• Fusion Micro Finance (FMF) is a non-banking financial company – microfinance institution (NBFC-MFI) that provides financial services to unserved and underserved women in rural and peri-rural areas across India.
• We have looked at the background of the deal in our earlier notes. In this note, we talk about its recent RHP updates, peer comparison and valuations.   

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.

• While LIC Housing Finance (LICHF IN) posted substantial decline in NIM to 1.80% vs 2.54% QoQ, this was largely due to one-off impact from a couple of items.
• LICHF has maintained its prior guidance of beating FY22 NIM of 2.29%, which means that for full-year FY23, LICHF is still on track for a NIM of 2.3% or above.
• There was a one-off provisioning relating to INR 180cr of write-offs, which was fully provided for, but due to Ind-AS accounting had to be booked again resulting in excess provisioning.

• Two-Thirds through the review period, we see 6 stocks moving from MidCap to LargeCap and vice versa, 7 stocks moving from SmallCap to MidCap, 8 moving from MidCap to SmallCap.
• There have been changes to the list of stocks over the last couple of months and there could be more, especially on stocks that are close to the cutoff ranks.
• There is a big gap in the performance of the stocks moving upward versus migrating downward and there could be some mean reversion over the next couple of months.

• In this insight, we take a look at the Potential ADDs/DELs for the BSE SENSEX, 100, 200, and 500 Indices in the December 2022 Rebalance.
• The reference period for the trading data used for the index selection ended on 31st October 2022.
• There have been a couple of key revisions to the index selection methodologies for SENSEX and SENSEX Next 50 which could have important consequences.

• KPIT Technologies (KPIT) reported decent Q2FY23 earnings. Sales grew 8.3% QoQ and 27% YoY in Constant Currency (CC) terms. EBITDA and Net Profit grew 33% and 28% YoY, respectively. 
• Led by an all-time high order pipeline, KPIT Technologies (KPITTECH IN) gave a bullish outlook and upgraded its FY23 growth guidance. KPIT’s Technica acquisition also looks very promising.
• In terms of order pipeline, KPIT has a couple of mega deals ($100mm+) in the offing, which if realized, would be the first-ever in its history.

• Annualized credit cost at 87bp was at the lowest in many quarters. This provides further room to the bank to invest for future growth.
• HDFCB continues to focus on enhancing its distribution presence, both physical and digital. It is continuing to add new branches. Its digital efforts are also paying off well.
• At a valuation of 20x P/E, HDFC Bank (HDFCB IN) is attractively priced and offers potential for 23%+ IRR over the next 3Y.

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.

• Adaro Minerals
• Greenland Holdings Corp
• Longfor Properties
• UPL Ltd

• Go Digit General Insurance  is looking to raise about US$503m in its upcoming India IPO. The deal will be run by ICICISec, MS, Axis, Edelweiss, HDFC Bank and IIFL.
• Go Digit General Insurance is a digital full stack insurance company, offering motor insurance, health insurance, travel insurance, property insurance, marine insurance, liability insurance and other insurance products.
• In this note, we talk about the not so positive aspects of the deal.

Tata Steel’s Q2/22-23 results were weak as expected, albeit the company outperformed most of the industry. While many peers posted record losses, Tata Steel still achieved a profit, with reasonable EBITDA/ton. That said, the financial risk profile has deteriorated, with lower earnings and given large cash outflows for the Neelachal Ispat Nigam Limited acquisition. Liquidity is weak.

We revise downwards our forecasts for revenue growth and margins, to reflect the deteriorating performance. We expect Tata Steel to continue facing pressure, given the weak industry dynamics. That said, the company should also continue to outperform peers, given its scale and deep vertical integration. 

• Bajaj Finance Ltd (BAF IN) reported a strong Q2FY23 earnings with an AUM growth of 7.0% QoQ and 31% YoY. AUM growth was broad-based with all business lines doing well.
• BAF is upbeat about its customer acquisition momentum and has upgraded its customer acquisition guidance for FY23 to 10-11mm vs 9-10mm earlier.
• Competitive intensity remains high, however, BAF continues to be disciplined around margins and risk management. Also, BAF’s increasing digital footprint is helping it to drive growth despite elevated competition.

• Global Health (Medanta) (GH IN) is looking to raise approximately US$268m in its upcoming India IPO.  
• Global Health (GH) is a hospital network that operates under the Medanta brand. The firm currently has five hospitals in operation and one more planned for development.
• We have looked at the background of the deal in our earlier notes. In this note, we will talk about the peer comparison and valuations.

• Wpil Ltd (WPI IN) is principally engaged the business of pumps & pumping systems. The company recently has also started construction contracts related to water supply and irrigation.
• Key forensic takeaways include transactions with related parties and promoters, receivables related concerns, auditor woes, etc.
• Additionally, it is also noticed that WPIL does not exhibit strong disclosure norms in its annual report. Key disclosures regarding receivables, fixed assets, goodwill remain translucent.

• Trent Ltd (TRENT IN), one of India’s leading apparel retailers led by the Tatas, is on an accelerated growth path helped by its recently expanded apparel retail chain, Zudio.
• Zudio sells value fashion through its own stores targeted at India’s burgeoning youth that is high on aspiration while low on budget, a hitherto severely underserved category.
• Star Bazaar, Trent’s grocery retail JV with Tesco PLC (TSCO LN), is also beginning to gain traction and has the potential to expand and grow its presence across the country.

• Go Digit General Insurance is looking to raise about US$503m in its upcoming India IPO. The deal will be run by ICICISec, MS, Axis, Edelweiss, HDFC Bank and IIFL.
• Go Digit General Insurance is a digital full stack insurance company, offering motor insurance, health insurance, travel insurance, property insurance, marine insurance, liability insurance and other insurance products.
• In this note, we talk about the positive aspects of the deal.

• AMI Organics Ltd (AMIORG IN)  is engaged in business of drugs intermediate chemicals and related activities.
• Key forensic takeaways include bizarre accounting especially pertaining to JV, no provisioning on debtors and working capital woes, and mystery towards transfer from CWIP.
• There are governance related concerns surrounding related parties, churn in top management, etc that should also not be overlooked.