In today’s briefing:
- NIFTY100/NIFTY NEXT50 Index Rebalance Preview: Five Potential Changes in March
- Max Healthcare Institute (MAXHEALTH IN): Aggressive Expansion Amid High Occupancy to Boost Margin
- Vedant Fashions IPO – Dominant Position in a Small Niche but Appears Pricey
- Dixon Technologies
- Vardhman Special Steel
- Kabra Extrusion Technik
- Kotak Mahindra Bank (Q3FY22 Result review): Capitalising on growth impulses; upgrade to ADD
- HSIE Results Daily: NTPC, IndusInd Bank, Marico, AU Small Finance Bank, Max Financial, UTI Asset…
- Intellect Design
Arena - Siyaram Silk Mills Limited
NIFTY100/NIFTY NEXT50 Index Rebalance Preview: Five Potential Changes in March
- The review period for the NIFTY 100 Index ended on 31 Jan. The rebalance will be effective after the close on 30 March and the announcement will come end February.
- Potential inclusions are Zomato (ZOMATO IN), Mindtree Ltd (MTCL IN), SRF Ltd (SRF IN), Indian Railway Catering and Tourism (IRCTC IN) and Tata Power (TPWR IN).
- Potential deletions are Yes Bank (YES IN), Indraprastha Gas (IGL IN), Jindal Steel & Power (JSP IN), Aurobindo Pharma (ARBP IN) and Hindustan Petroleum (HPCL IN).
Max Healthcare Institute (MAXHEALTH IN): Aggressive Expansion Amid High Occupancy to Boost Margin
- Max Healthcare Institute (MAXHEALT IN) plans to double its bed capacity with an investment of $450 million over the next four years. The company has a net debt/EBITDA of 0.2x.
- Due to its favorable market positioning, Max Healthcare demonstrates best-in-class occupancy and ARPOB. Its non-COVID occupancy was at five-month high of 82% in October.
- Despite having a big run in 2021, further stream is left in Max Healthcare shares, with upcoming capacities, business recovery, and margin expansion.
Vedant Fashions IPO – Dominant Position in a Small Niche but Appears Pricey
- Vedant Fashions is looking to raise up to US$420m in its India IPO.
- It is a fashionwear company targeting the Indian wedding and celebration wear segment. According to CRISIL, it was the largest company in India in the men’s Indian wedding wear segment.
- In this note, we will run the deal through our ECM framework and talk about the deal background.
Dixon Technologies
- Dixon Technologies is India’s leading electronic manufacturing (EMS) provider and one of the largest beneficiaries of the government’s PLI scheme.
- Dixon operates in both original equipment manufacturing (OEM) and original design manufacturing (ODM)
- Strong RoE, RoCE at ~20%, ~24%, respectively (three year’s average)
Vardhman Special Steel
- Vardhman Special Steel (VSSL) is among India’s leading steel bar producers for automotive applications. It has specialised product offerings, which include steel bars, rods & bright bars of various categories of special & alloy steel.
- VSSL, incorporated in May 2010, is headquartered in Ludhiana, Punjab
- In August 2019, VSSL had entered into a strategic alliance with Aichi Steel Corporation (ASC) Japan, the main material producer for Toyota Group wherein ASC had participated in equity and had entered into a Technical Assistance Agreement
Kabra Extrusion Technik
- Kabra Extrusion Technik (KET), incorporated in 1982, is India’s prominent player (~40% market share) in the organised plastic extrusion machinery used for manufacturing pipes, profiles & films. It is primarily a capex linked product.
- Interestingly, in the recent past, KET has ventured into manufacturing (assembly) of lithium-ion battery packs for EV under its new division Battrixx
- Export turnover amounts to ~30% of total revenue as of FY21
Kotak Mahindra Bank (Q3FY22 Result review): Capitalising on growth impulses; upgrade to ADD
We upgrade from REDUCE to ADD with an SOTP-based target price of INR2,040 (standalone bank at INR1,448, 3.7x Sep-23 ABVPS). Kotak Mahindra Bank’s (KMB) Q3FY22 performance was broadly in line with our estimates, predominantly on the back of a favourable credit cost outcome (credit costs at negative 20bps due to lower slippages and reversal of COVID provisions). However, the biggest surprise was on the balance sheet front with a second straight quarter of 8% sequential loan growth, driven by sustained acceleration across home loans as well as unsecured personal loans and credit cards.
HSIE Results Daily: NTPC, IndusInd Bank, Marico, AU Small Finance Bank, Max Financial, UTI Asset…
AU Small Finance Bank: AUBANK’s Q3FY22 earnings were 14% ahead of our estimates due to lower-than-expected provisioning. Asset quality continued to improve with negative net slippages in the quarter, driving GNPA down to 2.6% (Q2FY22: 3.2%). The bank sustained its business momentum, with strong disbursement growth (+33% YoY, +59% QoQ). AUBANK has further stepped up its investments on franchise-building blocks (employees, branches, tech) and new asset classes (credit cards, merchant acquiring), which are likely to stretch expense ratios and drag near-term profitability metrics (opex to assets at ~5%).
Intellect Design
Arena
- Intellect Design Arena (Intellect) provides software products to retail, corporate banking, insurance & treasury.
- The company is a transition from a product company to a platform company
- Intellect generates 55% of revenues from developed markets and rest from emerging markets Recently, it saw a turnaround in margins (from 5% in FY20 to 23% in FY21)
Siyaram Silk Mills Limited
- Siyaram Silk Mills (SSML), a fabric and apparel manufacturer, has created a strong brand portfolio largely catering to the Tier II & III towns.
- Siyaram’s brand portfolio consists of reputed brands like Siyaram (flagship brand), Oxemberg, MSD and J Hampstead
- Over the last decade, the company has gradually expanded its fabric and garment capacities and simultaneously managed to reduce the debt/equity from 1.0x in FY12 to 0.2x in FY21
Before it’s here, it’s on Smartkarma