India

• Ramkrishna Forgings (RMKF IN)  is primarily engaged in manufacturing and sale of forged components of automobiles, railway wagons & coach and engineering parts.
• On inspection of the annual report, there were several red flags visible; pertaining to accounting and the overall health of the company.
• Most prominent forensic checks included misstatement of operating cash flows, Debt alarms, working capital mis-management and some governance setbacks.

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. Fosun International
2. Country Garden Holdings Co
3. Logan Property Holdings
4. China Jinmao Holdings
5. Lifestyle International Holdings

and more…

• Cashify, an India-based recommerce marketplace, has closed a US$90 million series E round, which saw participation from NewQuest Capital Partners, Prosus, and Paramark Ventures.
• The new funds will be used to further develop Cashify’s team, marketing efforts, technology infrastructure, and market expansion.
• Founded in 2013 by Mandeep Manocha, Siddhant Dhingra, Nakul Kumar, and Amit Sethi, Cashify provides aftersale services such as repairs and buybacks to extend the lifespan of gadgets

• Hotel Brands (Traditional business): IH has introduced AHVAAN 2025 strategy, under which it expects to reach a portfolio of 300 hotels, comprising Taj (100), Vivanta and SeleQtions (75), and Ginger (125).
• For details on AHVAAN 2025, refer to IH Analyst meet report.
• As on 31st March 2022, IH has 20,581 rooms, after adding around 1,156 rooms in FY22.

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• The domestic formulation (DF) segment continues on its robust growth path, led by market share gain, favorable price hikes, addition of medical representatives (MRs), and its increased presence particularly in the cardiology segment.
• The exports opportunity is expected to improve with increased product launches in the UK, new launches and market share gain in Russia, and industry outperformance in Africa branded generics market.
• After 18% YoY decline in earnings in FY22, we expect 11% earnings CAGR over FY22- 24, led by 13%/8%/8% sales CAGR in DF, exports formulations, and API, respectively.

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• Our channels in Assam indicate a high impact of floods this year on the overall state economy. Normalcy is expected to take 4-5 months in order to be restored. 
• Despite the high impact, Bandhan Bank Ltd (BANDHAN IN) may not see an increase in NPAs.
• New recovery tools, changing regulations and customer mindsets are aiding faster than anticipated recovery even for older loans. 

• Ashok Leyland (AL IN) ‘s volumes recovered in FY22 thanks to a much milder than expected omicron wave and market share gains.
• Discounting lead gains, the absence of retail fleet owners in the market, and little excitement around the scrappage policy all warrant caution. 
• While the stock is currently outperforming, channel feedback and valuations point to caution. 

• Keystone Realtors (3324626Z IN)  is looking to raise about US$109m in its upcoming India IPO. The deal will be run by Axis Capital and Credit Suisse.
• Keystone Realtors is a real estate developer which develops projects under the Rustomjee brand, with operations based solely in India.  
• As of March 31, 2022, it has developed 20.05m sqft of residential buildings, premium gated estates, townships, corporate parks, retail spaces, schools, iconic landmarks and various other real estate projects.

• Apollo Global Management is in advanced talks with LTFH to acquire real estate loans worth Rs80-90bn in a deal pegged at $1bn, reported The Economic Times
• The report suggests the deal is expected to be finalized in the next few weeks. 
• The transaction will help LTFH get upfront cash, which it could use to deleverage the balance sheet and move toward its aim of becoming a retail-focused NBFC.

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• Nearing the end of the review period, we see 5 stocks moving from MidCap to LargeCap, 2 new listings added to LargeCap and 7 stocks moving from LargeCap to MidCap.
• We see 7 stocks moving from SmallCap to MidCap, 3 new listings added to MidCap, and 12 stocks moving from MidCap to SmallCap.
• Stock migrating upward have, on average, outperformed stocks that are downward migrations. Stocks moving from MidCap to LargeCap have performed the best.

• Sona Comstar (Sona) raised around US$761m in its Indian IPO in Jun 2021. 
• The shares are now trading well above the IPO price and its largest PE investor, Blackstone, will be released from its lockup soon.
• In this note, we will talk about the lock-up dynamics and updates since our last note.

• In its analyst meet, APTY management reiterated its revenue target of USD5bn in FY26, implying a 15% CAGR over FY22-26E vs. a 9% CAGR over FY18-22.
• Management maintained the ROCE (pre-tax) target at 12-15% by FY26E (7% in FY22), led by better asset turnover and margins.
• In the near term, cost pressures due to an increase in prices of crude derivatives and a lag in the pass-through of commodity inflation are likely to impact margins.

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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.

• Fosun International
• Sands China Ltd
• SJM Holdings
• Vedanta Resources

On our next Webinar, we’re excited to welcome back Analysts Charles Macgregor, Trung Nguyen, and Leonard Law, CFA of Lucror Analytics, who will present their high-yield/crossover picks in India and Indonesia.

The webinar will be hosted on Wednesday, 22 June 2022, 17:00 SGT/HKT.

Charles Macgregor is an industry veteran with over 35 years of experience. As Head of Asia, he is responsible for the Asian credit research product at Lucror, which he joined in 2013. Previously, he had worked for Deutsche Asset Management, where he was Head of Credit Research, Asia-Pacific and Co-Chair of their Global Credit Methodology Committee. He also worked at Moody’s, where he was a Senior Credit Officer and a member of their New Instruments Committee and Symbols & Definitions Committee.

Leonard Law covers a portfolio of Chinese and Indonesian high-yield corporate credits. Prior to joining Lucror in 2017, he was an Associate Analyst with Moody’s Investors Service for three years, responsible for credit analysis and research.

Trung Nguyen is responsible for covering high-yield companies in the Southeast Asia region. He joined Lucror in 2013 from ST Asset Management, a credit investment arm of Temasek Holdings, where he spent over six years in investment research and portfolio management.

• Dalmia Bharat Cement (DBCL) – a wholly-owned subsidiary of the company, added 5.15 MTPA of Grinding Capacity (2.25 MTPA at Dalmia DSP Unit- II, near Cuttack (Odisha) and 2.9 MTPA at Murli Plant in Maharashtra) during the year.
• The said expansion increased its total capacity to 35.9 MTPA in FY22 from 30.75 MTPA in FY21
• We value the company at 10x FY24E EV/EBITDA to arrive at a target price of Rs 1,635/share implying an upside potential of 30% from the CMP and maintain our BUY rating on the stock.

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• Motherson Sumi Wiring India (MSUMI), a JV between Sumitomo Wiring System (SWS) and Motherson Group, is a market leader in the Indian wiring harness industry with a market share of over 40%.
• MSUMI enjoys superior profitability led by improved efficiency and economies of scale, as reflected in the industry leading gross/EBITDA/ EBIT margins
• After the restructuring of Motherson Sumi Systems (MSS), MSUMI transformed into an India-based pure play wiring harness player with a focus on the domestic market

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• Maruti Suzuki India (MSIL IN) ‘s dealers are optimistic, expecting easing supply, new launches and the Maruti brand promise to drive back some of the lost market share. 
• Kia Motors Corp (000270 KS) is gaining when it comes to fighting with its big brother Hyundai Motor Co (005380 KS). 
• There is a set of customers that now prefers Indian brands giving a good tailwind for Tata Motors Ltd (TTMT IN) & Mahindra & Mahindra (MM IN). 

• Nifty short bet from 16,750 is panning out. Gap lower and downside impulse calls for further weakness.
• India remains vulnerable to spill over from the global cycle after holding up over recent months. Any break below lower wedge line support would be a bigger negative structurally.
• Watch for bounce just under 15k near lower wedge support w RSI near 25. 15,800 fresh sell resistance stands out.

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• We had highlighted in our prior note that IPL Media Rights for next 5Y (2023-27) could fetch a value of over INR 40,000cr.
• The bidding concluded recently. Total value of IPL Media Rights came in at INR 48,390cr, well above the INR 40,000cr expectation and closer to our optimistic scenario of INR 50,000cr.
• RPSGV’s IPL team will receive INR 480cr+ per year from its share in media rights vs INR 300-350cr projected earlier. This improves IRR for RPSGV’s investment in IPL team substantially. 

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.

• Country Garden Holdings Co
• JSW Steel Ltd
• China Datang Corp Renewable Power
• Wynn Macau Ltd

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• GoAir (Go First) is looking to raise up to US$500m in its upcoming India IPO. The company is owned by the Wadia family, who also own Britannia Industries (BRIT IN).
• Go Air is an ultra-low-cost carrier (ULCC) primarily operating in India. It had a market share of 10.8% in FY20 in the domestic market.
• In this note, we will talk about the positive aspects of the deal.

• Issues with  HDFC Bank’s Head-MSME statements which analysts and shareholders need to consider. 
• In MSME lending based on cash credit system verfication of stock statement is extremely important but there is no mention of it in his speech
• HDFC Bank’s MSME loans growing at a rapid pace but asset quality remain sound. It appears HDFC Bank’s customers are very different as compared to 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.

• Adani Transmission
• Bharti Airtel
• Fosun International
• Lenovo

• GoAir (Go First) is looking to raise up to US$500m in its upcoming India IPO. The company is owned by the Wadia family, who also own Britannia.
• Go Air is an ultra-low-cost carrier (ULCC) primarily operating in India. It had a market share of 10.8% in FY20 in the domestic market.
• In this note, we talk about the not so positive aspects of the deal.

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