Consumer: SRF Ltd, Seven & I Holdings, Huitongda, Sony Corp, Jcontentree Corp, Vedant Fashions, Mitsubishi Motors, Siyaram Silk Mills, Marico Ltd, Dixon Technologies India Ltd and more

• The review period for the NIFTY 100 Index ended on 31 Jan. The rebalance will be effective after the close on 30 March and the announcement will come end February.
• Potential inclusions are Zomato (ZOMATO IN), Mindtree Ltd (MTCL IN), SRF Ltd (SRF IN), Indian Railway Catering and Tourism (IRCTC IN) and Tata Power (TPWR IN). 
• Potential deletions are Yes Bank (YES IN), Indraprastha Gas (IGL IN), Jindal Steel & Power (JSP IN), Aurobindo Pharma (ARBP IN) and Hindustan Petroleum (HPCL IN). 

• Nikkei reported yesterday that Seven & I Holdings (3382 JP) is in final negotiations to sell its underperforming department store business Sogo Seibu, amidst pressure from several of its investors.
• The company has indirectly confirmed the news by saying that they are considering changes to Seven & I’s business portfolio including the sale of the Sogo & Seibu business.
• The disposal of underperforming department stores could increase the efficiency of capital usage and generate upside to shareholders returns and enable the company to focus on growth through geographic expansion.

• Huitongda (9878 HK) is looking to raise up to US$318m in its Hong Kong IPO.
• Huitongda (HTD) is a leading commerce and service platform serving businesses in the lower-tier retail markets of China.
• In this note, we will look at deal dynamics, assumptions, and share our thoughts on valuation.

• Sony is due for a tactical rise, stall and minor new low after completing a full count rise at 15,700. Trendline support break and gap resistance will attract sellers. 
• RSI bear divergence stands out. 12k tactical buy zone with 14k sell area. Ideal C wave buy zone lies at 10,500 support or within this range.
• Sony remains an attractive macro bull play but has some backfill risk to iron out toward higher conviction long support.

• Jcontentree has hit a home-run with “All of Us Are Dead” zombie drama reaching number one in Netflix Inc’s global charts.
• According to Flixpatrol on the 31 January, All of Us Are Dead took the top spot in Netflix’s global popularity rankings for two consecutive days from its release.
• Jcontentree’s valuation multiples are likely to rise 20-30% or more in the coming days, driven by the global success of the All of Us Are Dead zombie drama.

• Vedant Fashions is looking to raise up to US$420m in its India IPO.
• It is a fashionwear company targeting the Indian wedding and celebration wear segment. According to CRISIL, it was the largest company in India in the men’s Indian wedding wear segment.
• In this note, we will run the deal through our ECM framework and talk about the deal background.

• MMC reported its 3QFY22 results on 31st January which saw revenues of ¥526bn (+14.6% QoQ, +39.1% YoY) and OP of ¥30.8bn. 
• Revenue was in-line, only 0.3% higher than consensus estimates while OP beat consensus estimates by ¥15bn thanks to the 5.9% OPM. 
• The result bodes well for the auto sector overall but weak top line and a dependence on forex have us going… meh.

• Siyaram Silk Mills (SSML), a fabric and apparel manufacturer, has created a strong brand portfolio largely catering to the Tier II & III towns.
• Siyaram’s brand portfolio consists of reputed brands like Siyaram (flagship brand), Oxemberg, MSD and J Hampstead
• Over the last decade, the company has gradually expanded its fabric and garment capacities and simultaneously managed to reduce the debt/equity from 1.0x in FY12 to 0.2x in FY21

AU Small Finance Bank: AUBANK’s Q3FY22 earnings were 14% ahead of our estimates due to lower-than-expected provisioning. Asset quality continued to improve with negative net slippages in the quarter, driving GNPA down to 2.6% (Q2FY22: 3.2%). The bank sustained its business momentum, with strong disbursement growth (+33% YoY, +59% QoQ). AUBANK has further stepped up its investments on franchise-building blocks (employees, branches, tech) and new asset classes (credit cards, merchant acquiring), which are likely to stretch expense ratios and drag near-term profitability metrics (opex to assets at ~5%).

• Dixon Technologies is India’s leading electronic manufacturing (EMS) provider and one of the largest beneficiaries of the government’s PLI scheme.
• Dixon operates in both original equipment manufacturing (OEM) and original design manufacturing (ODM)
• Strong RoE, RoCE at ~20%, ~24%, respectively (three year’s average)