Daily Brief India: Adani Enterprises, Adani Ports & Special Economic Zone, Syngene International Ltd, Lippo Karawaci, IndiaFirst Life Insurance, Tata Steel Ltd and more

• In an unprecedent step, MSCI will reassess the float and likely lower the FIF of the Adani Group companies at the February QCIR. There will be BIG passive selling.
• The affected securities will be further reviewed as part of the scheduled Full Country Float Review during the May QCIR. There could be some index deletions and BIGGER passive selling.
• Expect active selling before the passive selling and the rally in the Adani Group stocks over the last couple of days should come to a grinding halt today.

Adani Ports and Special Economic Zone’s 9M/22-23 results were broadly stable. The main takeaway was management’s commitment to reduce debt by INR 50 bn using FCF in FY 2023-24, supported by lower capex and limiting new acquisitions. This would cover the INR 16 bn in repayments for onshore bonds maturing in H1/23-24, as well as the prepayment of certain bank debt. Management expects the company to generate the same amount of FCF in FY 2024-25, which would be channelled to repay the USD 650 mn ADSEZ 3.375 24 due in July 2024.

• Syngene International Ltd (SYNG IN) provides integrated services from early discovery to commercial supply across all major therapeutic areas and modalities. The company has 400+ active clients.
• To capitalize on the secular industry tailwind, the company has been investing to enhance capacity and capability, which has led to extension of existing client relations and engaging new clients.
• For FY23, the company expects high-teens revenue growth and EBITDA margin of ~30%. Operating leverage is expected to improve from next year onwards, and that should improve the overall profitability.

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• Adani Green Energy
• Lippo Karawaci

• IndiaFirst Life Insurance (1083896D IN) is looking to raise about US$250m in its upcoming India IPO. 
• IndiaFirst Life Insurance (IFLI) is a private life insurer in India with a product portfolio of retail and group products, ranging across different segments. 
• Its GWP and AUM have grown over the track record period. However, bottomline growth has on the other hand, declined further. 

Tata Steel has reported significantly weaker than expected Q3/22-23 results. This was driven by a material loss in the European business. Meanwhile, the Indian operations remained reasonable. The consolidated financial risk profile deteriorated significantly, albeit Net Debt/EBITDA remained within the company’s long-term target. Liquidity is adequate.

The next few quarters are likely to be weaker for Tata Steel in Europe, as markets remain subdued. Steel prices are projected to weaken in Q4/22-23, with the drop likely to be steeper than the decline in coking coal and iron ore prices.