In today’s briefing:
- NIFTY NEXT50 Index Rebalance Preview: 7 Changes as Non-F&O Stocks Replace F&O Members
- Ola Electric IPO: The Investment Case
- Cipla (CIPLA IN): Starts FY25 On Firm Note; EBITDA Margin Ahead of Guidance Range
- Canara Bank – Bad Debt Charges Down in the Quarter, Net Loan Growth Nearly INR1tr YoY in 1Q25
NIFTY NEXT50 Index Rebalance Preview: 7 Changes as Non-F&O Stocks Replace F&O Members
- With 3 trading days left in the review period, there could be 7 changes (including 2 migrations) for the NSE Nifty Next 50 Index (NIFTYJR INDEX) in September.
- Estimated one-way turnover is 18% resulting in a one-way trade of INR 55bn (US$660m). 9 stocks will have over 1x ADV to trade from passive trackers.
- All the deletes are F&O members while most adds are not. NSE Indices may have to revisit the index membership criteria especially given the launch of futures on the index.
Ola Electric IPO: The Investment Case
- Ola Electric (1700674D IN), the largest Indian player in electric two-wheel vehicles (E2W), will launch a US$660 million IPO at a lower US$4.5 billion valuation (vs. the previous US$7-8bn target).
- We previously discussed the IPO in Ola Electric IPO: The Bull Case and Ola Electric IPO: The Bear Case. In this note, we examine the latest updates in the RHP.
- The investment case rests on rising market share in a growing market, rapid growth aided by product diversification, path to profitability supported by lower losses and declining cash burn.
Cipla (CIPLA IN): Starts FY25 On Firm Note; EBITDA Margin Ahead of Guidance Range
- In Q1FY25, Cipla Ltd (CIPLA IN) posted 7% YoY revenue growth to INR66.9B. Despite surging R&D expenditure, EBITDA increased 26% YoY to INR17.2B, leading to 154bps margin expansion to 25.6%.
- Record high quarterly revenue in the U.S. market, double-digit revenue growth in India branded prescription business, and continued strong momentum in South Africa drove overall performance.
- Cipla is well-positioned for mid-to-high single-digit revenue growth through FY27. Sitting on a robust cash balance of INR90B, Cipla is eyeing on M&A. Valuation still looks reasonable.
Canara Bank – Bad Debt Charges Down in the Quarter, Net Loan Growth Nearly INR1tr YoY in 1Q25
- Credit metrics continue to improve, with NPLs down to INR404bn in 1Q25 from INR458bn YoY and from INR407bn QoQ
- Net loan growth continues to rise by about INR1tr each quarter, with net loans at INR9,465bn in 1Q25 up from INR8,554bn YoY and INR9,318bn QoQ
- There are pressures on costs and margins, so the story is not all perfect, with NIM pressure potentially to reverse as LDR expands
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