India: Meghmani Organics, HDFC Bank, Solar Industries India, Tata Consultancy Svcs and more

• Meghmani Organics (MEGH IN) group was reconstructed lately; the NCLT approved the demerger post F21, as Meghmani Finechem was listed as new entity, while MOL got demerged with its subsidiary.
• MOL continues with the flagship Agrochemicals and Pigments business while MFL takes care of ChlorAlkali products and derivatives. 
• However, even post the restructuring of the group, MOL continues to have several setbacks in its balance sheet, as highlighted in the insight.

• A first look at the merger suggests that the value proposition is tilted towards HDFC Ltd (“HDFC”) vs HDFC Bank (“HDFCB”), given the declining regulatory arbitrage between large-NBFCs and banks
• However, given HDFCB’s intense focus on growing its distribution prowess, HDFCB stands to benefit immensely from the merger and is thus a win-win deal.
• With the expanded distribution network and cross-sell synergies, HDFCB, despite the larger base, will benefit from an accelerated growth post-merger.

• Solar Industries (SOIL) surprised with an investment (undisclosed amount) in an unarmed aerial solutions (UAS) company ZMotion Autonomous (ZM) incorporated in CY18.
• This is the second announced start-up investment by SOIL after a strategic stake (Rs175mn) into Skyroot – a space start-up helping ISRO with propulsion systems (SOIL incidentally also received ToT on 7th Apr’22 (propellant casting for Dual Pulse propulsion system).
• The rationale for the strategic investment has been shown as “will strengthen SOIL’s initiative to introduce weaponised unmanned aerial vehicle (UAVs) for offensive and counter drone system for defensive roles”.

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• In Q4FY22, Tata Consultancy Services Ltd (TCS) reported revenue growth of 3.4% QoQ in Rupee terms, beating our expectations.
• The company’s revenues stood at Rs 50,591 Cr, up 15.8% YoY.
• We recommend a BUY rating on the stock and assign a 31x P/E multiple to its FY24E earnings of Rs 135.2/share to arrive at a TP of Rs 4,200/share, implying an upside of 14% 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.