Daily Brief India: Polycab India , Honasa Consumer, Adani Green Energy, Ask Automotive and more

• We see 8 stocks moving from MidCap to LargeCap, 8 stocks moving from LargeCap to MidCap, 13 stocks from SmallCap to MidCap, and 14 stocks from MidCap to SmallCap.
• Some stocks are expected to be inclusions to global indices later this month while others are potential NIFTY Index and/or Nifty Next 50 Index changes in March.
• On average, the upward migrating stocks have outperformed the downward migrating stocks by close to 100% over the last 8 months. The passive flow can be used as an exit.

• Honasa Consumer (1652951D IN) IPO is a book built issue worth INR 17 bn, comprising INR 3.65 bn worth fresh issue and INR 13.4 bn of OFS (41.2 mn shares). 
• The company is renowned for its flagship brand, Mama Earth while it has acquired other brands recently such as B-Blunt, Dr. Sheth and has also ventured in the salon business. 
• Our concerns remain on the A&P spends and related growth output, acquisition value and employee churning.

Adani Green Energy Limited (AGEL) has released acceptable H1/23-24 results, with the company reporting strong earnings growth and robust margins. Leverage improved on the back of the higher earnings, even though net debt increased slightly. That said, we anticipate that the negative FCF will deepen in H2 and FY 2024-25, as AGEL has guided for significant capex in order to expand capacity.

Positively, management has affirmed its plans to repay the USD 750 mn ADANIG 4.375 24 using funds already set aside at the promoter level. It also plans to refinance the USD 500 mn ADGREG 6.25 24 through a new bond issuance. The company is likely to formally announce its refinancing plans by December 2023 (as required under the bond indentures).

• Ask Automotive (7175293Z IN) is looking to raise around US$145m in its upcoming India IPO. 
• ASK Automotive (ASKA) is the largest manufacturer of brake-shoe and advanced braking (AB) systems for 2Ws in India, in terms of FY23 production volume for OEMs and the branded IAM.
• As per CRISIL, it had an approximate 50% market share in said market. The IPO is expected to consist of 100% secondary shares, with promoters trimming their stakes.