India

• Bajaj Finance Ltd (BAF IN) reported key performance metrics for Q3FY23. AUM growth came in weak with incremental AUM addition at just 12,500cr vs 14,700cr YoY. 
• QoQ, the AUM growth looks decent at 5.5%+, however, given that the Q3FY23 was a festive season quarter, QoQ comparison is not as relevant.
• However, BAF did a good job on customer acquisition. It acquired 3.1mm new customers (highest ever quarterly increase) vs 2.56mm YoY, a growth of 21%+.

• Vikram Solar (0490158D IN) is looking to raise around US$260m in its upcoming India IPO. 
• Vikram Solar (VS) is an integrated solar photo-voltaic (PV) modules producer and an integrated solar energy solutions provider.
• As per CRISIL, it was one of India’s largest module manufacturers and held a 19% domestic market share, as per operational module capacity.

We view JSW Steel as “Low Risk” on the LARA scale. The company has demonstrated a strong and resilient track record throughout the cycle. JSW’s large and growing scale, with increasing vertical integration, partly offsets the industry’s cyclicality as well as JSW’s aggressive expansion plan and acquisitions. The group has weathered the challenging operating environment well, despite a sharp slowdown in the Indian economy in 2019 and the COVID-19 pandemic. Furthermore, the company’s improving vertical integration (in terms of captive iron ore and coal supplies) has reduced exposure to supply and price volatility for raw materials. We note positively the Indian government’s continued willingness to support the domestic steel market, which has partly offset cheap exports from steel-surplus countries (e.g. China, Russia, South Korea and Japan). We also view favourably JSW’s position as the largest player in the Indian market, with a low cost base. The company has managed to turn around Bhushan Power & Steel, which had been acquired in bankruptcy court proceedings.

Our fundamental Credit Bias is “Negative”, due to the sharp deterioration in the operating environment. This was in turn driven by high coking coal prices and increased energy costs.

Controversies are “Immaterial”. While JSW has faced some issues (e.g. villagers’ protests against plants or controversial land sales by local governments to the company), such events are immaterial and quite common in India. The ESG Impact on Credit is “Neutral”. The metals & mining industry is exposed to regulatory and geopolitical risks, and the nature of the extraction process places JSW under scrutiny from environmental agencies and investors. However, the company has managed these well, considering the significant ESG efforts it has made.

• A third of the way through the review period of the June rebalance, we see one potential index change with Adani Enterprises (ADE IN) replacing Wipro Ltd (WPRO IN). 
• Adani Enterprises (ADE IN) could move lower in the short-term due to the public issue of shares but should find support from passive buying from local and global index trackers.
• Wipro Ltd (WPRO IN) has underperformed most of its peers by a wide margin over the last year and the passive selling could provide an entry point.

• We expect 5 changes to the Nifty 100 Index (NSE100 INDEX) at the March rebalance. The review period ends on 31 January and the announcement should be late February.
• The largest impact of passive trading will be on Page Industries (PAG IN), Biocon Ltd (BIOS IN), Mphasis Ltd (MPHL IN) and ABB India Ltd (ABB IN). 
• There are quite a few overlaps with the AMFI reclassification of stocks and there could be buying and selling from active fund managers over the next few weeks.

• The competitive position and demand environment for Eicher Motors (EIM IN)‘s “Classic 350” remains intact. 
• The recent launch “Hunter 350” is expanding markets by taking on the competition.
• Cannablisation fears from Hunter 350, remain unfounded, and unlikely to have any major impact on margin trajectory. 

• Radiant Cash Management Services (1926794D IN) has come up with INR 3.9 bn IPO which includes fresh issue to the tune of INR 600 mn.
• In spite of being one of the largest players in the retail cash management segment, there are few cautions one must take note of.
• These primarily include related party transactions with promoters, concentration risk and few industry related restraints

• BigBasket, an India-based online grocery player owned by conglomerate Tata Sons, has raised US$200 million at a US$3.2 billion valuation, the platform’s co-founder and CEO Hari Menon told Tech in Asia.
• Founded from a small office in Bengaluru in 2011 by Menon and four other partners, V S Sudhakar, Vipul Parek, Abhinay Choudhari, and V S Ramesh, BigBasket was acquired by Tata Sons through its subsidiary Tata Digital in 2021.
• Largely focusing on online grocery, BigBasket has also expanded to quick commerce via BB Now and subscription-based service via BB Daily.

• KFin Technologies (1804170D IN) raised around US$180m in its India IPO. The IPO had been a 100% OFS.
• KFin Technology (KFin) is a technology driven financial services platform providing comprehensive services and solutions to the capital markets ecosystem.
• We have looked at various aspects of the deal in our previous note, in this note, we talk about the demand and trading dynamics.

• Our flash checks for Go Fashion India (GOCOLORS IN) and LUX Industries Ltd (LUX IN) suggest weak consumer sentiment continues to prevail.
• Competitive intensity is an area of concern for category creator and leader Go Fashion India (GOCOLORS IN) 
• Rupa & Company (RUPA IN) is giving a tough fight to LUX Industries Ltd (LUX IN) in the rural markets.

• Polycab is a high-quality wires/cables and FMEG brand, benefitting from growing domestic consumption and rising capex led by India gaining foothold in global manufacturing.
• Its FMEG business is currently in nascent stage representing just 10-12% of revenues but is poised to scale up exponentially over the next 3 years.
• Its Wires and Cables business, despite commanding a dominant 22%+ market share, has been gaining share and is benefitting from strong demand tailwinds, positioning it well for double-digit growth.

• One of our routine channels is suggesting the possibility of some of Mahindra & Mahindra (MM IN) ‘s Scorpio-N bookings being fake.
• This channel (an online auto forum) has been a trusted source of information followed by various industry veterans including the company’s chairman.
• While the rationalisation of fake bookings as a recent industry practice could solace some, the fallacy of the bookings narrative only gets stronger. 

• Indegene Limited (1864095D IN) is looking to raise around US$400m in its upcoming India IPO. The bookrunners on the deal are Citigroup, JP Morgan, Kotak, and Nomura.
• Indegene is a digital commercialisation firm focused exclusively on the global life sciences industry.
• Its solutions enable biopharmaceutical, emerging biotech and medical devices companies to develop, launch and drive sales for their products in a more efficient manner.

• Sula Vineyards raised around US$117m in its India IPO, although demand wasn’t all that great.
• 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”. 
• We have looked at various aspects of the deal in our previous notes. In this note, we will talk about demand and trading dynamics.

• Near the end of the review period, we see 7 stocks moving from MidCap to LargeCap, 6 from LargeCap to MidCap, 8 from SmallCap to MidCap and vice versa.
• One spin-off should be added to the MidCap segment, while a bunch of recent listings will be added to the SmallCap segment.
• Stock migrating upwards have outperformed stocks migrating downwards and we expect there could be some mean reversion from the middle of January.

• Protean eGov Technologies (PET) is looking to raise up to US$600m in its upcoming India IPO.
• Protean eGov Technologies (PET) is a key IT-enabled solutions company in India engaged in conceptualizing, developing and executing nationally critical greenfield technology solutions. 
• In this note, we look at the company’s past performance.

• Consumer sentiment is soft, but competition is limited for both Bata India Ltd (BATA IN) and Campus Activewear (CAMPUS IN) 
• Bata enjoys good relationships with its distributors and franchisees, traction for offline sales channels is strong.
• Campus is in an aggressive expansion mode, with leadership in the sports shoe segment driving sales.