Daily Brief India: Five Star Business Finance, Tata Motors Ltd, Vedanta Resources and more

• Five Star Business Finance (FIVESTAR IN) raised around US$190m in its India IPO in Nov 2022.
• Five-Star Business is a non-banking financial company (NBFC-ND-SI) that provides secured business loans to micro-entrepreneurs and self-employed individuals.
• In this note, we will talk about the lock-up dynamics and updates since our last note.

In our view, Tata Motors’ Q4 and FY 2022-23 results were stronger than expected, with all business segments performing well. Most importantly, JLR improved strongly on the back of the easing semiconductor shortage situation. It is encouraging to see a solid and consistent improvement from the company throughout the year, from a very weak Q1 to a robust Q4. Earnings and cash flows were better than expected. We view positively the company’s efforts to rebrand itself into the sub-brands of Range Rover, Defender and Discovery. We note that Range Rover is viewed positively in the luxury space in emerging markets.

Vedanta Ltd has released disappointing Q4/22-23 results. Revenue fell 4.75% y-o-y while reported EBITDA decreased 30%, mainly due to lower prices of metals and minerals, along with higher costs. Production was weak. However, leverage ratios are acceptable, with Pro-forma Gross Debt/EBITDA and Net Debt/EBITDA of 3.5x and 2.9x, respectively, in April 2023.

Production guidance is essentially flattish, with no significant growth projected in the key segments that contribute the most to EBITDA, namely zinc, oil & gas and aluminium. Refinancing risk over the next one year remains the key risk.