In today’s briefing:
- NIFTY Indices: HDFC/HDFCB Merger Driven Market Consultation
- Oil India (OINL IN): Value Trap, Avoid
NIFTY Indices: HDFC/HDFCB Merger Driven Market Consultation
- There was a lot of confusion around how NSE Indices would handle the HDFC Limited (HDFC IN) / HDFC Bank (HDFCB IN) merger in its indices.
- The market consultation seeks to change the index methodology to bring it in line with other index providers. That will result in much lower turnover than the existing index methodology.
- Pidilite Industries (PIDI IN) is a high probability add to the NIFTY Index possibly in the first quarter of 2023. There will also be changes to Nifty Next 50 Index.
Oil India (OINL IN): Value Trap, Avoid
- Low valuations (3x Earnings, 8% cash yield) and an under supplied Oil market, nice value concoction
- However, large part of value hinges on growth beyond FY25E, execution challenges and regulatory intervention may necessitate additional debt to fund ongoing capex
- Thus deleveraging unlikely, narrowing TV for traditional fuels – risks both earnings and valuations
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