In today’s briefing:
- Tata Consultancy Services (TCS IN): US$2.4bn Mega Buyback – Letter of Offer Out; TCS Cheap Vs Peers
- SENSEX Index Rebalance Preview (June): Down to the Wire
- Pick of the Week – Bank of Baroda
- Biocon: Viatris Deal – High Risk-Reward Play with Leverage
- Huhtamaki India: Higher Input Cost Drags Bottomline
Tata Consultancy Services (TCS IN): US$2.4bn Mega Buyback – Letter of Offer Out; TCS Cheap Vs Peers
- In early February 2022, Indian IT giant Tata Consultancy Svcs (TCS IN) officially announced a INR180bn (~US$2.4bn) Buyback which is one of the largest in Indian stock market history.
- Today the company published the Letter of Offer confirming the final details and the expected timeline for this Buyback.
- Below is a closer look at these details and their implications for shareholders.
SENSEX Index Rebalance Preview (June): Down to the Wire
- Tata Motors Ltd (TTMT IN) and Tata Motors DVR (TTMT/A IN) are likely inclusions to the S&P SENSEX INDEX in June while Dr. Reddy’s Laboratories (DRRD IN) could be deleted.
- Hindalco Industries (HNDL IN) could be added depending on sector balance while Nestle India (NEST IN) is a close delete on liquidity.
- The inclusion of Tata Motors could result in the discount on the DVR line Tata Motors DVR (TTMT/A IN) narrowing versus the common shares Tata Motors Ltd (TTMT IN).
Pick of the Week – Bank of Baroda
- Established in 1908 by Maharaja Sayajirao Gaekwad of Baroda, BoB was one of the 14 banks that were nationalised in 1969
- The bank has merged with Dena and Vijaya Bank and is now the second largest PSU bank in the country
- It has been one of the early players to have identified the potential and importance of international presence
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Biocon: Viatris Deal – High Risk-Reward Play with Leverage
- Biocon is a leading biopharma company operating in biologics, contract research (Syngene), small molecules and branded formulations.
- Biosimilar US pipeline: (approvals – Pegfilgrastim, Trastuzumab, Glargine, Adalimumab); filed – Aspart and Bevacizumab
- Target Price and Valuation: We value Biocon at Rs 390 on SOTP basis
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Huhtamaki India: Higher Input Cost Drags Bottomline
- Huhtamaki India’s (HIL) Q4CY21 performance was severally hit by a sharp rise in raw material costs and delay in taking price hikes.
- Gross margins declined ~683 bps YoY, mainly due to a sharp rise in raw material costs dragging down EBITDA margins by 473 bps YoY to 1.6%.
- On the topline front, revenues increased ~19% YoY to ~Rs 662 crore helped by a lower base.
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