In today’s briefing:
- Go Air (Go First) Pre-IPO – The Positives – Was Flying Reasonably High Pre-COVID
- The Puzzle of HDFC Bank’s Rapidly-Growing MSME Loans
- Morning Views Asia: Adani Transmission, Bharti Airtel, Fosun International, Lenovo
- Go Air (Go First) Pre-IPO – The Negatives – Competition Is About to Pick-Up Again
- Trent – Pursuing Aggressive Growth
- Muthoot Finance – Channel Checks in Southern India: A Few Interesting Insights
- Shree Cements Ltd. – Sluggish Demand in April’22; Cost Inflation Remains an Overhang
- State Bank of India – Well Poised to Sustain the Growth Momentum
Go Air (Go First) Pre-IPO – The Positives – Was Flying Reasonably High Pre-COVID
- GoAir (Go First) is looking to raise up to US$500m in its upcoming India IPO. The company is owned by the Wadia family, who also own Britannia Industries (BRIT IN).
- Go Air is an ultra-low-cost carrier (ULCC) primarily operating in India. It had a market share of 10.8% in FY20 in the domestic market.
- In this note, we will talk about the positive aspects of the deal.
The Puzzle of HDFC Bank’s Rapidly-Growing MSME Loans
- Issues with HDFC Bank’s Head-MSME statements which analysts and shareholders need to consider.
- In MSME lending based on cash credit system verfication of stock statement is extremely important but there is no mention of it in his speech
- HDFC Bank’s MSME loans growing at a rapid pace but asset quality remain sound. It appears HDFC Bank’s customers are very different as compared to the industry.
Morning Views Asia: Adani Transmission, Bharti Airtel, Fosun International, Lenovo
Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.
Go Air (Go First) Pre-IPO – The Negatives – Competition Is About to Pick-Up Again
- GoAir (Go First) is looking to raise up to US$500m in its upcoming India IPO. The company is owned by the Wadia family, who also own Britannia.
- Go Air is an ultra-low-cost carrier (ULCC) primarily operating in India. It had a market share of 10.8% in FY20 in the domestic market.
- In this note, we talk about the not so positive aspects of the deal.
Trent – Pursuing Aggressive Growth
- Despite the adverse impact of COVID-19 over the last two years, Trent’s standalone revenue/PAT reported an encouraging CAGR of 11%/27% over FY20 to reach INR39b/INR2.5b, respectively, which was by far the best among peers.
- However, due to the increased losses in its subsidiary (Booker India), Trent’s consolidated PAT (post-minority interest) contracted to INR346m in FY22 from INR1.0b in FY20.
- Consolidated EBITDA (Pre IND-AS 116) posted a 7% CAGR to INR2.3b over FY20-22.
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Muthoot Finance – Channel Checks in Southern India: A Few Interesting Insights
- Teaser rates have not gone away – 6.9% replaced with 9.9%-11.9% rates
- We agree with consensus to the extent that the 6.9% p.a. (0.57%p.m.) products have been withdrawn by the gold loan NBFCs and that disbursement yields in 1QFY23-QTD are much better than the insanity that was evident in the gold lending segment in 4QFY22.
- However,westillchoosetocallthe9.9%-11.9%goldloanproductsasteaser- rate products since: a) these products are being offered at ticket sizes above INR50K (albeit with a lower LTV of 65%), and b) we believe that if MUTH continues to offer these interest rate products, there is a risk to the compression in the blended portfolio yields (in FY23E) despite the sequentially higher disbursement yields in 1QFY23E.
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Shree Cements Ltd. – Sluggish Demand in April’22; Cost Inflation Remains an Overhang
- Eastern region poised to grow: Eastern states are comparatively under-developed and in the last few years, new cement companies have entered these markets and existing players have added capacities to capitalize on the potential boom in the region in the medium to long term.
- SRCM has commissioned a third clinker line at Chhattisgarh (4mn mt), which will supply clinker to the recently commissioned grinding units in the Eastern markets.
- The recent clinker capacity additions by SRCM and UTCEM are likely to result in higher supply in the near term.
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State Bank of India – Well Poised to Sustain the Growth Momentum
- Digital penetration improving; remains watchful of rising rate environment
- Loan growth gaining traction; utilization levels improving
- Deposit share steady; high mix of floating loans to support NII growth
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