In today’s briefing:
- Sapphire Foods IPO – Smallish Stock with Big (US$550m) Multiple PE Lockup Expiry
- Bikaji Foods International IPO Trading – One of the Strongest Demand This Year
- Apollo Hospitals Enterprise (APHS IN): Mixed 2QFY23 Result; Outlook Is Positive
- Escorts Kubota (ESCORTS IN) | Costly Market Share Gains & AR Concerns
- Thermax (TMX IN): Strong Order Book Entails Visibility Amid Margin Pressure
Sapphire Foods IPO – Smallish Stock with Big (US$550m) Multiple PE Lockup Expiry
- In Nov 2021, Sapphire Foods Limited (SFL), one of Yum Brand’s franchisees in the Indian subcontinent, raised around US$280m in its Indian IPO.
- The lock-up on its shareholders will expire soon, with a number of PE funds on its register
- In this note, we will talk about the upcoming lockup expiry.
Bikaji Foods International IPO Trading – One of the Strongest Demand This Year
- Bikaji Foods (BIKAJI IN) , an ethnic snacks company, raised approximately US$107m in its India IPO.
- Its product range includes six principal categories: bhujia, namkeen, packaged sweets, papad, western snacks as well as other snacks which primarily include gift packs, frozen food, mathri range and cookies.
- We have looked at various aspects of the deal in our previous notes. In this note, we talk about the demand for the deal and the trading dynamics.
Apollo Hospitals Enterprise (APHS IN): Mixed 2QFY23 Result; Outlook Is Positive
- Apollo Hospitals Enterprise (APHS IN) recorded 14% y/y growth in revenue in Q2FY23. Occupancy in both the mature as well as new hospitals improved in Q2FY23 compared to prior quarter.
- Q2FY23 reported EBITDA declined 8% y/y to INR5.65 billion due to impact of 24/7 operating costs, which stood at INR1.74 billion (vs INR475 million in Q2FY22).
- In October, Apollo Hospitals entered into a definitive agreement to acquire 60% stake in Kerala First Health Services Limited, which offers Ayurveda medical services under the “AyurVAID Hospitals” brand.
Escorts Kubota (ESCORTS IN) | Costly Market Share Gains & AR Concerns
- Escorts Kubota Limited (ESCORTS IN) reported a 69 bps YoY gain in market share, but a -540 bps drop in EBITDA margins in spite of a 2% price hike.
- We believe the product and management issues highlighted earlier, are likely to ensure both margins and market share do not cross 10% for FY23.
- As per the FY22 Annual Report, auditors have received whistle-blower complaints, but no details are disclosed. Credit-impaired trade receivables are also increasing. Stock is not cheap and hence the caution.
Thermax (TMX IN): Strong Order Book Entails Visibility Amid Margin Pressure
- In Q2FY23, Thermax (TMX IN) recorded strong revenue growth of 41% y/y to Rs20.8bn, driven by strong growth across all the three segments.
- The company bore the brunt of high raw material prices as EBIT margins saw a 900 bps decline y/y to 6.9%. However, EBIT margin improved 200 bps over Q1FY23.
- The order book of the company grew 46% y/y to Rs94.8bn. Order book is well diversified across sectors. Domestic orders comprised ~84% of the order book.
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