India

• Indiabulls Housing Finance (IHFL IN) Raised INR 3,693 crores through rights issue, issued $350 million bond.
• Strong balance sheet, low NPAs, poised for growth in the retail housing via its asset light model.
• Rebranding to Samman Capital signals new phase of the company with multi-year growth guidance.

Tata Steel’s Q4 and FY 2023-24 numbers were weak in our view, with the restructuring of the UK operations weighing on group performance and offsetting the robust Indian business. The financial risk profile deteriorated significantly, due to lower earnings and soft cash flows. Liquidity was inadequate, driven by the poor cash flows and large dividends.

We expect the steel industry’s operating environment in FY 2024-25 to be constructive and support Tata Steel’s earnings. However, the company’s solid earnings for the Indian operations should be offset by the restructuring of the UK business, for which another GBP 1.6 bn of additional costs is projected. It is unclear if there is light at the end of the tunnel.

• IVs Spike with Election Results release on 04-June-2024. Post event there’s a risk of large IV-crush regardless of the result.
• Current Vol-state is “High & Up”. Wait for the switch to “High & Down” before initiating new risk-premia harvesting strategies
• Weekly IVs have received large markups due to elections. Entire Vol Curve is now in Backwardation –  curve inversion at extreme levels

• Divi’s Laboratories (DIVI IN) reported steady performance in Q4FY24, marked by YoY and sequential growth in revenue and improvement in profitability. Double-digit growth is expected to continue.
• Custom Synthesis business grew 47% YoY and 38% QoQ to INR12B in Q4FY24, driven by increasing value realization from existing commercial projects and addition of new projects to the portfolio.
• In Custom Synthesis, Divi’s Lab is in the process of entering into a long-term supply agreement with an MNC customer and is planning for capacity addition at its manufacturing facility.

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 Ports & Special Economic Zone

• With Indian capital markets booming, companies are tapping capital markets regularly for fundraising even though they have recently raised funds.
• There are also cases where company after concluding IPO in recent years are going for fund raise
• The market are jittery about possible equity dilution and unclear fund raising objectives

• Dixon Technologies India Ltd (DIXON IN) growth is driven by mobile and EMS segment; majority of other businesses are muted in the last two years.  
• The company is able to convert earnings to cash quickly but cash yield is close to zero.
• The company has reported significant amount of refund liability, but is silent on its accounting policy. Other forensics takeaways include non-reconciliation of asset disposals, high forex risk, etc.

• Glenmark Pharmaceuticals (GNP IN) FY24 results have seen PBT reducing from INR 2.4 bn to INR 365 mn i.e. by nearly 85%. 
• This was on account for exceptional line items, which included gains from sale stake in Glenmark Lifesciences, but was offset by losses pertaining to legalities and heavy impairment in assets.
• The habit of having exceptional items, especially impairments is not something new or one-offs. There have been regular impairments carried in the past as well. 

• Antfin will come out of its placement linked lockup for its remaining stake in Zomato soon.
• Ant Group had earlier sold some of its stake in Nov 2023 and Mar 2024. It still has over US$800m worth of shares left to sell.
• In this note, we talk about the deal dynamics and run the deal through our ECM framework.

• Action Construction – a leader in construction and heavy equipment theme is going for transformation with a defence foray and new product launches
• With strong guidance and the historical success of good execution makes a good bet on the current infrastructure and manufacturing theme
• The risk includes a slowdown in the election period and stiff competition from larger players

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
• Lenovo
• Lippo Malls Indonesia Retail Trust
• NTPC Ltd
• Rakuten

• There could be 13 changes for the Nifty200 Momentum 30 Index that will be implemented at the close on 27 June.
• If all changes are on expected lines, one-way turnover is estimated at 48.8% and that will result in a one-way trade of INR 35.5bn (US$426m).
• Since January, the potential adds to the index have outperformed the potential deletes by a big margin. Watch out for the general election results on 4 June for momentum change.

• Impending block deals which generally create supply over-hang on the stock leads to a negative impact on the stock 
• These block deals generally include selling promoters and big funds at a price discount to its current market price 
• Historically, such events suggest once the block deal is done; stock reacts positively creating a Special Situation Opportunity

• Impending block deals which generally create supply over-hang on the stock leads to a negative impact on the stock
• These block deals generally include selling promoters and big funds at a price discount to its current market price
• Historically, such events suggest once the block deal is done; stock reacts positively creating a Special Situation Opportunity

• Part of our housing finance checks, we have been visiting Aavas Financiers Ltd (AAVAS IN)  branches for over two years now.
• While the situation was grim early on post the management change and increased competitive intensity, the current channel inputs are encouraging.
• Key areas that warrant attention are growth trajectory, yields, and tech upgrade. 

• Impending block deals which generally create supply over-hang on the stock leads to a negative impact on the stock. 
• These block deals generally include selling promoters and big funds at a price discount to its current market price. 
• Historically, such events suggest once the block deal is done; stock reacts positively creating a Special Situation Opportunity

• As one of the fastest-growing economies globally, India is projected to become the third-largest economy, trailing only China and the US, by 2027.
• Amid macroeconomic challenges worldwide, investors are eager to tap into India’s robust economic growth.
• However, economic growth does not always correlate with equity market growth, as seen in Spain and Italy during the 1980s and 1990s, and more recently in China.

• Virtuoso Optoelectronics (VOEPL IN)  is a contract manufacturer company engaged into production of ACs, Lightings and other equipments. The company is renowned for supplying ACs to Voltas.
• The company has grown sharply over the last five years and has been engaging in constant capex. However, it does struggle in converting its earnings to cash.
• Among the forensic checks, it nets off receivables and payables/advances, the exact nature of these line items cannot be commented upon. VOEPL also faces high cost of borrowings

• Impending block deals which generally create supply over-hang on the stock leads to a negative impact on the stock
• These block deals generally include selling promoters and big funds at a price discount to its current market price
• Historically, such events suggest once the block deal is done; stock reacts positively creating a Special Situation Opportunity

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.

• GMR Hyderabad International Airport
• Lippo Karawaci

• Adani Ports & Special Economic Zone (ADSEZ IN) will replace Wipro Ltd (WPRO IN) in the S&P BSE SENSEX Index at the close on 21 June.
• Adani Ports & Special Economic Zone (ADSEZ IN)‘s inclusion is a big surprise and there should be a move higher in the stock in the short-term. 
• Wipro Ltd (WPRO IN)‘s deletion was expected and there is positioning in the stock. But there is a lot that passives need to sell too.

• Multiple factors help IVs stabilize after last week’s spike. “High & Up” vol state to persist until elections results on 04-June-2024.
• SEBI makes changes to Dynamic Price-band Mechanism. Will impact options market-making & should have an overall Vol suppressing effect. 
• Nifty50 10-delta Risk-reversals extend to -8.5% as the Index reaches 23000. Risk-premia favouring puts over calls is looking over-extended.

• Recommendation to buy ISEC shares at Rs 840 per share with a price target of Rs 1200 per share
• Dissatisfaction among minority shareholders due to insider’s attempt to acquire remaining shares at a lower price
• Illiquidity and limited institutional investors due to Parent owning 75% of shares, potential merger poses a risk but shareholders can extract fair value even in a merger scenario

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

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.

• Lenovo
• UPL Ltd
• Xiaomi Corp

• Tata Technologies (TT) raised around US$370m in its India IPO in Dec 2023.
• Tata Technologies is a global engineering services company offering product development and digital solutions, including turnkey solutions, to global original equipment manufacturers (OEMs) and their tier 1 suppliers.
• In this note, we talk about the upcoming lock-up expiry and possible deal dynamics.

• Allied Blenders & Distillers (9844250Z IN) is looking to raise about US$180m in its upcoming India IPO.  
• ABD is the largest Indian-owned Indian-made foreign liquor (IMFL) company and the third largest IMFL company in India, in terms of annual sales volumes between FY14 and FY22.
• In this note, we provide a summary of its refiling updates, undertake a quick peer comparison and share our initial thoughts on valuation.

• Go Digit General Insurance raised around US$315m in its India IPO.
• 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.
• We have looked at the company’s performance in our past note. In this note, we talk about the trading dynamics.

• We add value plays Bandhan and UBI to the buy list alongside HDFC Bank and Baroda, turning neutral from negative on SBI. Bandhan is our core Indian bank pick, UBI benefits from improving return trends

• Trent Ltd (TRENT IN) and Bharat Electronics (BHE IN) should replace LTIMindtree (LTIM IN) and Divi’s Laboratories (DIVI IN) in the NIFTY Index (NIFTY INDEX) in September.
• Jio Financial Services (JIOFIN IN) and Zomato (ZOMATO IN) meet the free float market cap requirements but are not part of the F&O segment.
• Passive NIFTY Index (NIFTY INDEX) trackers will need to trade at least 3.8 days of ADV and 9 days of delivery volume on the index changes.

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.

• Lippo Malls Indonesia Retail Trust

• With a week left in the review period, Bharti Airtel (BHARTI IN) could replace Power Grid Corporation Of India (PWGR IN) in the Nifty100 Low Volatility 30 Index in June.
• Constituent changes, volatility changes and capping changes will result in one-way turnover of 6.4% resulting in a one-way trade of INR 2.3bn.
• The flows on the stocks are not very large but there will be same side and offsetting flows from other index trackers at the same time.