India

• Jubilant Foodworks (JUBI IN) is India’s largest food service company. In hindsight, CEO’s exit in March 2022 under a high inflationary environment was just “NOISE”.
• Industry drivers are favourable, JUBI’s renewed focus on growth, additional brands and a new CEO, all put JUBI back on track to deliver robust growth. 
• Currently trading at 68.5x NTM, JUBI is available at a 22% discount compared to it’s 3Y mean, considering the growth prospects discussed below, this discount is attractive.

• PayMate India Ltd (935383Z IN) is looking to raise approximately US$193m in its upcoming India IPO.  
• PayMate India is a business to business (B2B) payments and services provider that digitizes, automates and streamlines B2B payments in supply chains. 
• The firm remains unprofitable even on a gross profit level. Its cash burn also appears unsustainable as it has been financing its operations through equity raises. 

• Blue Jet Healthcare Ltd (BJHC IN) is looking to raise about US$300m in its upcoming India IPO. The deal will be run by Kotak, ICICI Securities and JP Morgan. 
• Blue Jet Healthcare (BJH) is a specialty pharmaceutical and healthcare ingredient and intermediate company, offering niche products targeted toward innovator pharmaceutical companies and multinational generic pharmaceutical companies. 
• It operates via a contract development and manufacturing organization (CDMO) model with specialized chemistry capabilities in contrast media intermediates and high-intensity sweeteners, including saccharin and its salts. 

• Biocon Ltd (BIOS IN) divested 5.4% stake in Syngene International Ltd (SYNG IN) and raised INR12.2B. The proceed will be used to finance Biocon’s acquisition of biologics business of Viatris.
• Biocon is still working on the equity-debt split of Viatris deal, and a final decision on the same will be announced soon.
• The strategic deal with Viatris will transform Biocon Biologics into a leading vertically integrated global biologics company, with one of the broadest and deepest commercialized biosimilars portfolio in the industry.

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
• Vedanta Resources

• Less than halfway through the review period, we see 6 stocks moving from MidCap to LargeCap and vice versa, and 7 stocks moving from SmallCap to MidCap and vice versa.
• There are a bunch of stocks that are close to the cutoff ranks and there will be more change as we move deeper into the review period.
• Over the last 6months, stocks expected to migrate upward have outperformed stocks that are expected to migrate downward. Given the large divergence, there will be a pullback at some point.

• Lupin Ltd (LPC IN) reported muted Q1FY23 performance, with revenue declining 15% y/y and 7% q/q to INR36 billion. Revenue from North America is down 24% y/y and 29% q/q.
• Price erosion in the U.S. coupled with shelf stock adjustment on the higher trade inventory are creating a dent to the quarterly numbers.
• We would like to see a sustainable revival in the company’s North America revenue performance and margin improvement, before taking any position in the stock.

• Matrimony.com (MATRIM IN) is a leading player with the highest market share in the Indian matchmaking market. 
• A close examination of the marketing expenses and subscriber additions reveals poor quality growth.
• Employee remuneration is perplexing and so is the decision that leads to a reduction in PP&E.

• Dr. Reddy’s Laboratories (DRRD IN) reported Q1FY23 results, with revenue growing 6% and 108% y/y, mainly driven by a 26% y/y growth in India business.
• Despite price erosion and increasing competition in some of the key products, North America revenue grew 2% y/y, driven by launch of new products and favorable forex rates.
• Bottom line got benefitted from one-off items including settlement income and non-core brand divestment proceeds. Net profit surged 108% y/y.

• Nvidia has been among the priciest semiconductor stocks for a while now.
• The company matched market expectations and delivered an earnings beat though the stock is still very expensive.
• We provide the stock of Nvidia with a ‘Hold’ rating with a revision in the target price.

• Throughout the second quarter, Lululemon’s momentum remained strong.
• The company’s total revenue accelerated by 29% compared to last year and 28% on a 3-year CAGR basis, helping the company surpass Wall Street expectations.
• It has been benefitting heavily from this launch as hiking has become increasingly popular among visitors since the pandemic.

• Marathon’s previous quarter was one of its best financial performances since transitioning to an independent E&P company.
• Despite these factors, the company delivered an all-around beat and continues to reward its shareholders with capital returns.
• In this report, we have carried out a fundamental analysis of the historical financial statements of the company.

• Gap saw a decline in its overall revenues in the past quarter but its results were still above analyst expectations.
• The company’s overall revenues of $3.86 billion were down 8% from the prior year or 7% when measured in constant currency but it did deliver an earnings beat.
• Further, they anticipate the near-term downturn in demand at Gap outlets, which they attribute to the persistent backlash from lower-income consumers.

• Ross Stores had quite a disappointing quarter where its revenues were well below Wall Street expectations.
• Comparable store sales were low in comparison to a strong increase in the second quarter of the last year.
• We provide the stock of Ross Stores with a ‘Hold’ rating with a revision in the market price.

• Global Health (Medanta) (GH IN) is looking to raise approximately US$270m 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.
• The company has managed to remain profitable throughout COVID-19 and even experienced margin expansion in FY22. However, its post-COVID growth might be short-lived given stiff competition amongst peers.

• InterGlobe Aviation Ltd (INDIGO IN)’s co-founder Rakesh Gangwal aims to raise around US$250m via selling 2.8% of the company.
• He had earlier stated his intention to pare down his stake after a long drawn, and very public battle, with the other co-founder Rahul Bhatia. 
• In this note, we will talk about the placement and run the deal through our ECM framework.

• Workday delivered another all-around beat, outperforming market expectations with respect to its operating indicators, highlighting the ongoing significance of digital transformation for finance and HR.
• Along with the significant expansion of their core HCM and financial apps, Q2 saw remarkable momentum throughout their broader spectrum of solutions.
• Customers create apps with Extend customized for their specific use cases, potentially eliminating the need for additional specialized development tools.

• Ulta Beauty performed well in this quarter and delivered an all-around beat.
• Based on point-of-sale statistics from the NPD Group, all key categories for the quarter exceeded its expectations, and they grew their market share in prestige beauty compared to the previous year.
• Haircare, their second-largest category, experienced double-digit growth for another quarter due to newness and excellent participation in their semi-annual Gorgeous Hair Event.

• Zydus Lifesciences Ltd (ZYDUSLIF IN) reported stable Q1FY23 results, with its U.S. business witnessing healthy rebound supported by volume share gain in base portfolio and new product launches.
• Excluding COVID-related products, generics portfolio, and divested products, India branded prescription business grew 9% y/y. India consumer wellness business rebounded with 18% y/y revenue growth.
• Zydus aims to grow across all our key businesses in FY23. Through cost control and improved efficiencies across the value chain, Zydus aspires to achieve 20%+ EBITDA margin for FY23.

• Moglix is an India-based e-commerce platform for B2B procurement of industrial supplies.
• The company has been actively expanding into the supply chain financing space in recent years by leveraging its supply chain network and expertise.
• The company was valued at $2.6bn in its last capital raise in Jan 2022.

• We continue to see global equities as being in pullback mode, with the MSCI ACWI index (ACWI-US) already testing important support in the $86-87 range, highlighted last week.
• A bounce here would be ideal for the bullish case, but we could easily see a test of the YTD lows near $81.50 if $86 fails to hold.
• Japan’s TOPIX/Nikkei225/TOPIX Small remain bullish, as does India’s SENSEX — add exposure. Seeing some failed breakouts in Europe, notably the EURO STOXX 50 and STOXX Europe 600; a concerning development.

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.

• Theft from SBI’s high security coin depot of Rs 110mn by insiders
• Contents of coin deposts like currency chests are the property of the central bank
• Theft reveals lax security protocols at SBI which raises concerns of operational risk management

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. ABM Investama
2. China Jinmao Holdings
3. Lifestyle International Holdings
4. Geely Auto
5. First Pacific Co

and more…

• Adani Total Gas (ATGL IN), Bharat Electronics (BHE IN), Hindustan Aeronautics (HNAL IN), IRCTC (IRCTC IN), Mphasis (MPHL IN), Samvardhana Motherson (MSS IN) and Shree Cement (SRCM IN) are adds.
• Adani Enterprises (ADE IN), Jubilant Foodworks (JUBI IN), Lupin (LPC IN), Mindtree (MTCL IN), Punjab National Bank (PNB), Steel Authority of India (SAIL) and Zydus Lifesciences (ZYDUSLIF IN) are deletes.
• There is significant impact on a lot of the stocks in terms of days of delivery volume to trade. Given the index is overlooked, there could be significant price movements. 

• Adani Enterprises (ADE IN) will replace Shree Cement (SRCM IN) in the NIFTY Index (NIFTY INDEX) at the close of trading on 29 September.
• We had forecast the change in April and Adani Enterprises (ADE IN) is up over 60% since then while Shree Cement (SRCM IN) is down a bit.
• Passive NIFTY Index (NIFTY INDEX) trackers will need to buy over 7% of the real float on Adani Enterprises (ADE IN). The stock could continue to move higher. 

• The September 2022 Rebalance results for the NIFTY 50, 100, and 500 Indices were announced after the close on 1st September 2022.
• There will be one ADD/DEL for the NIFTY 50 Index and 6 ADDs/DELs for the NIFTY 100 Index, mostly in line with our expectations.
• In this insight, we take a closer look at our expectations for index flows and potential trading ideas.

• TBO Tek (0395045D IN) is looking to raise approximately US$285m in its upcoming India IPO.  
• TBO Tek is a global travel distribution platform. Its two-sided technology platform serves companies involved in the travel industry such as hotels, airlines, travel agencies and travel management companies. 
• The firm’s profitability recovery is underway post-COVID. However, the implied take rate of its largest revenue contributor (Hotel and Ancillary) appears to be declining despite the overall increase in GTV.

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.

• ABM Investama
• Azure Power Global Ltd