Daily Brief Energy/Materials: ACC Ltd, Azelis Group NV, Vedanta Resources, Gold, HPCL-Mittal Energy Ltd, Rubicon Ltd, Empire Energy and more

• In this insight, we take a look at the names leading the race to become ADDs/DELs for the NIFTY 50 and NIFTY 100 indices in the September 2023 rebalance.
• The NIFTY Next 50 methodology was supposed to change in June 2023 but this has been kept on hold for now. This change could still take place before September 2023.
• In this insight, we take a look at our expectations for index changes under both the existing methodology and the proposed new methodology.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Azelis’ ESG as “Adequate”, in line with its Environmental and Governance scores. The company has a “Strong” score for the Social pillar. Controversies are “Immaterial” and Disclosure is “Adequate”. 

Vedanta Ltd’s Q1/23-24 results were weak in our view, as expected. The company is facing challenges from lower commodity prices and the large debt-servicing and repayment requirements from parent Vedanta Resources. Gross debt and net debt increased significantly, while the cash declined materially. The low and declining cash position will limit VEDL’s dividend-upstreaming capacity this fiscal year.

• Wheat futures soared as much as 9%, the biggest jump since 2012, as Russia threatened ships sailing to Ukrainian ports, escalating a conflict over exports from the key Black Sea region.

• Russia’s defense ministry said that all ships headed to the ports from Thursday will be considered as potentially carrying military cargo.

• It also said flag countries of vessels sailing to Ukraine will be considered as on Kyiv’s side in the conflict.

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.

• HPCL-Mittal Energy Ltd
• Innergex Renewable Energy

We believe ArborGen Holdings is in prime position, not only to address increasing demands from clients for its seedlings, but also for its ongoing investment in genetic improvement to continue to drive the switch to sales of higher-value, higher-margin seedlings to all its key markets. While this process plays out, underlying EBIT is set to increase five-fold in the next two years as gross margins return to and then exceed historical levels. We determine a value of NZ$0.49/share, implying attractive upside.