Daily Brief India: Motisons Jewellers , Embassy Office Parks REIT, Vedanta Resources, INOX India Limited and more

• Regulatory Tangles:Promoters faced cricket betting allegations, SEBI penalties, debarment from financial markets and a litany of investigations. Legal and financial risks loom due to regulatory delays and unresolved litigations.
• Operational and Financial Hurdles:Excessive inventory, delayed payments, and opaque related-party transactions.Weaker margins, ROE, and underutilized manufacturing hint at broader governance frailty.
• Debt Dilemmas and Transparency Concerns: Heavy reliance on high-interest promoter loans. Governance lapses are reflected in financial metrics, raising questions about transparency and conflicts of interest.

• Blackstone (BX US) is looking to raise around US$834m through a secondary block deal. This will be a clean-up as Blackstone fully exits from Embassy Office Parks REIT (EMBASSY IN).  
• The deal is a large one to digest, at approximately 397.2 days of three month ADV and 20.7% of current mcap.  
• In this note, we will talk about the selldown and run the deal through our ECM framework.

Vedanta Resources (VRL) has launched a consent solicitation for an extensive liability management exercise. The company is seeking consent from noteholders of its four bonds to extend the maturities of three of the bonds (the January 2024, August 2024 and 2025 notes) to 2027-2028. There will be no haircut on the principal, and the coupon for the August 2024 notes and 2025 notes will be increased to match that of the January 2024 notes.

In our opinion, the terms of the proposal are mixed and the timeline is very tight. Failure to receive the requisite consent may lead to the company defaulting on the January 2024 notes. The new financing cannot be used to repay the January 2024 notes if the liability management exercise does not go through. In this case, there would be no time for VRL to come up with a revised proposal before the maturity of the January 2024 notes.

We acknowledge the company’s efforts in terms of the improved security packages and higher coupons. We recommend that noteholders accept the proposal and provide consent.

• INOX India Limited (INOX IN) raised around US$175m in its Indian IPO, after pricing the deal at INR660/share. It will begin trading tomorrow on 21st Dec 2023.
• Inox India is a manufacturer of cryogenic equipment. As per CRISIL, the firm was the largest Indian exporter of cryogenic tanks in terms of FY23 sales.
• We have looked at various aspects of the deal in our previous notes. In this note, we talk about demand and trading dynamics.