In today’s briefing:
- NIFTY100 Index Rebalance Preview: Five Potential Changes in September
- Life Insurance Corporation IPO Trading – Demand Shored up by Policyholders, Trading Won’t Be
- Paradeep Phosphates IPO – Operates in a Regulated Industry and Hasn’t Done Much over the past Decade
- Result Update – Bandhan Bank
- Result Update- Escorts
- Result Update – Relaxo Footwear
- Result Update – State Bank of India
- Result Update – State Bank of India
- Result Update – Amber Enterprises
- Vinati Organics – Existing Products to Drive FY23 Growth
NIFTY100 Index Rebalance Preview: Five Potential Changes in September
- We are past the halfway mark in the review period for the September rebalance of the NIFTY100 Index. We see five potential changes which should be announced end August.
- There is a high probability of Tata Power (TPWR IN), Indian Railway Catering and Tourism (IRCTC IN), Bharat Electronics (BHE IN) and Mphasis Ltd (MPHL IN) being added to the index.
- High probability deletions are Lupin Ltd (LPC IN), Jubilant Foodworks (JUBI IN), Zydus Lifesciences Ltd (ZYDUSLIF IN), Punjab National Bank (PNB IN) and Steel Authority of India (SAIL IN).
Life Insurance Corporation IPO Trading – Demand Shored up by Policyholders, Trading Won’t Be
- Government of India (GoI) raised around US$2.7bn via selling a 3.5% stake in Life Insurance Corporation of India (LIC) in its India IPO.
- As of FY21, LIC was the largest life insurer in India with a 64.1% market share in terms of gross written premium (GWP).
- In this note, we will talk about the demand and trading dynamics.
Paradeep Phosphates IPO – Operates in a Regulated Industry and Hasn’t Done Much over the past Decade
- Paradeep Phosphates (75690Z IN) is looking to raise up to US$194m in its India IPO. The IPO will consist of a mix of primary and secondary shares.
- Paradeep Phosphates (PP) is a fertilizer manufacturing company based in India. The firm engages in manufacturing, trading, distribution and sales of a variety of complex fertilizers.
- While profitability improved, margins have fluctuated over the track period. Subsidies provide some downside risk protection from a raw mat price squeeze, however, MRP also limits the firm’s pricing power.
Result Update – Bandhan Bank
- MFI growth prospects improving, while bank remains determinant to accelerate non- MFI growth
- Sharp run-down in GNPA ratio; higher specific PCR and recovery to contain incremental LLP
- Outlook and valuations: Factoring in a better growth trajectory and lower LLP, we raise our FY23E/FY24E earnings by 16-17% and expect RoE to return to 20-23% by FY24-25E.
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Result Update- Escorts
- Demand Outlook: The management expects the tractor industry volume to grow by ~20% in Q1FY23E on account of normal monsoon expectations and higher food grain prices.
- Margin outlook: To mitigate the impact of higher input cost, company took a price hike of ~2% in Apr’22 and would further take a price hike of ~2% in Q2FY23 as well.
- Railway Equipment Division (RED): The segment revenue stood at Rs 173 Cr for the quarter as against Rs 146 Cr in Q4FY21.
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Result Update – Relaxo Footwear
- Mgmt has undertaken 25% price hike across categories, to counterRM inflation and GST hike& remains cautious on further price hikes depending on demand scenario.
- The Margins are impacted due to high base, Covid, GST rate differential & inflation (leading to substantial increase in raw material prices and normalisation of selling, marketing and admin expenses).
- Good growth is observed in athleisure and sports category in line with industry.
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Result Update – State Bank of India
- System-beating credit growth; surpasses expectations: Overall credit growth improved to 11% yoy/6% qoq, led by continued strong traction in retail (up 15% yoy) and resurging corporate book.
- Steady improvement in asset quality, higher PCR to contain incremental LLP
- Outlook and valuation: SBI remains one of our preferred picks, given its healthy growth trajectory and improving RoA/RoRWA/RoE profile.
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Result Update – State Bank of India
- Strong Loan growth Performance: On the business front, the bank’s loan growth reamined strong and was up by 11%/6% YoY/QoQ compared to 9%/5.5% YoY/QoQ in Q3FY22.
- Continued Strong Asset quality:Asset quality improved with G/NNPAs declining by 53bps/32bps QoQ to 3.97%/1.02%.
- Operating performance: Domestic NIM remained flat QoQ to 3.4% and improved 29bps YoY.
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Result Update – Amber Enterprises
- Strong overall performance,however RAC volumes impacted due to supply chain constraints : RAC revenues stood at Rs 1,002 Cr, contributing 52% to the company’s total revenues during the quarter.
- The RAC volumes stood at ~15 Lc/26 Lc for Q4FY22 /FY22 which were impacted due to supply chain issues.
- Thus volume impact , due to supply chain issues, are expected to recover in Q1FY23.
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Vinati Organics – Existing Products to Drive FY23 Growth
- 4QFY22 earnings performance: Key products like ATBS, IBB and Butyl Phenol delivered strong volume-led growth for VO in 4QFY22.
- Update on new growth drivers: Management has already announced further expansion of the Butyl Phenol capacity through a brownfield expansion (~14KTPA incremental capacity, capex of Rs1.5bn), which will be largely be used captively for AOs.
- Demand as well as pricing for AOs has increased and hence after considering additional lube additives, management expects peak revenue of Rs7bn from AOs.
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