In today’s briefing:
- Life Insurance Corporation of India IPO – Valuation Is Ok but Its Not the Best Deal Structure
- Axis Bank-Citi India M&A; The Devil Is in the Client Retention and Integration Detail
- Bajaj Finance: Business Momentum Strong, Outlook Remains Encouraging
- Privi Speciality Chemicals: Forensic Analysis
- Bajaj Finance – In Line Performance; Strengthening Itself for a Stronger FY23
- Gateway Distriparks – Gains Market Share in EXIM Rail Container Volumes
- HDFC Life Insurance – In Line Result; VNB Margin Stood Robust
- HDFC Life Insurance – Year Ends Well; Confident Outlook for FY23
- Mahindra CIE – All-Round Beat, Expect Improvement to Continue
- Ambuja Cements – Emphasizing on Growth, Efficiency and Sustainability
Life Insurance Corporation of India IPO – Valuation Is Ok but Its Not the Best Deal Structure
- Government of India (GoI) is looking to raise around US$2.7bn via selling a 3.5% stake in Life Insurance Corporation of India (LIC) in its upcoming India IPO.
- This is less than half of its initial plans in terms of fundraising target and comes at less than half of its initial valuation target.
- In this note, we will talk about the final deal terms and structure, RHP updates and do a quick valuation refresh.
Axis Bank-Citi India M&A; The Devil Is in the Client Retention and Integration Detail
- Axis Bank’s acquisition of the Indian Citi consumer banking franchise makes strategic sense, bolstering its market share and scale especially in credit cards, wealth management and incrementally in core deposits
- Strategy aside, Axis management’s execution needs to be totally on point to retain Citi clients and minimise the loss of key personnel given the acquisition’s seemingly full price tag
- Axis Bank tops the year-to-date share performance among the large cap Indian bank peers; yet we believe that, with regard to the Citi deal, management still has to deliver
Bajaj Finance: Business Momentum Strong, Outlook Remains Encouraging
- Bajaj Finance (BAF) reported a strong set of numbers in Q4FY22 which were ahead of our expectations, led by robust AUM growth of 29/9% YoY/QoQ and a strong PAT growth of 21/14% YoY/QoQ aided by lower provisions.
- The company’s AUM growth was driven by strong traction across products (except auto financing which de-grew by 16%)
- On the back of a recent correction in the stock, we revise our rating to BUY from HOLD with a revised target price of Rs 8,200 (7.8x FY24E ABV), implying an upside of 13% from the CMP.
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.
Privi Speciality Chemicals: Forensic Analysis
- Privi Speciality Chemicals (PRIVISCL IN) is a manufacturer, supplier, and exporter of aroma and fragrance chemicals.
- Promoter group and business restructuring took place last year where the Privi promoters bought majority stake from Fairchem, however, the source of funding remains unclear and yet to be observed.
- Even after restructuring of the business where oleochemicals was demerged into a seperate entity, Privi continues to have several discomforts in its balance sheet.
Bajaj Finance – In Line Performance; Strengthening Itself for a Stronger FY23
- BAF’s 4QFY22 earnings were in line, with a reported PAT of INR24.2b, led by healthy core AUM growth of 26% YoY and a pristine asset quality (GS3/NS3 stood at 1.6%/0.7% and credit cost moderated by ~150bp, despite having to provide INR1b on a large commercial account).
- BAF delivered an in line performance, despite a 7% miss on our NII estimate.
- NIM is likely to compress in FY23, driven by a pressure on yields, absence of large IPO financing (under new RBI guidelines), and expectations of an increase in borrowing cost.
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.
Gateway Distriparks – Gains Market Share in EXIM Rail Container Volumes
- GDL achieved EXIM volume increase of ~19% YoY in Q4FY22 while rail and port EXIM container volumes have increased by 2-5%.
- Management is confident of passing on the cost impact on account of removal of Indian Railway rebates.
- Maintain BUY with a revised target price of Rs102/share.
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.
HDFC Life Insurance – In Line Result; VNB Margin Stood Robust
- Persistency trends steady – HDFCLIFE reported a 11% YoY growth in premium, led by a 16% growth in renewal premium and an 8% growth each in single/first-year premium.
Net premium grows 11% YoY; VNB beats our estimate – HDFCLIFE reported an 11% YoY growth in net premium income (in line).
- Highlights from the management commentary – With the merger with Exide Life, the management aims to remain margin neutral.
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.
HDFC Life Insurance – Year Ends Well; Confident Outlook for FY23
- Robust performance amid challenging external environment: HDFCLIFE reported 17% YoY growth in APE in FY22 to Rs97.6.bn and 22% YoY growth in VNB to Rs26.8bn on a standalone basis.
- Board approves Rs3.5bn sub-debt raise to boost solvency: Solvency margins for FY22 stood at 176% (vs. 190% at 9MFY22 and 201% at FY21).
- Management confident about FY23 growth and margin outlook: Management sounded confident about achieving APE growth that is 2x the real GDP growth while gradually expanding standalone margins.
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.
Mahindra CIE – All-Round Beat, Expect Improvement to Continue
- MACA’s 1QCY22 performance was an all-round beat, led by strong revenue and profitability in the EU and robust margin in India
- We raise our CY22/CY23 EPS estimate by 29%/12% to account for an improvement in revenue and EBITDA margin in India and the EU business
- Consolidated revenue grew 18% YoY to INR25.9b (est. INR22.8b), EBITDA rose 3.5% to INR3b (est. INR2.24b), and adjusted PAT increased by 6% to INR1.6b (est. INR0.9b) in 1QCY22.
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.
Ambuja Cements – Emphasizing on Growth, Efficiency and Sustainability
- Capacity additions to drive volume growth – Ambuja Cements (ACEM) is a leading cement player with an installed cement capacity of 31.5mtpa as of CY21.
- Announces capacity expansion in the East, timely completion is vital.
- Robust volume growth and efficiency measure to drive profitability.
Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.
Before it’s here, it’s on Smartkarma