Smartkarma Daily Briefs

• Two-Thirds through the review period, we see 6 stocks moving from MidCap to LargeCap and vice versa, 7 stocks moving from SmallCap to MidCap, 8 moving from MidCap to SmallCap.
• There have been changes to the list of stocks over the last couple of months and there could be more, especially on stocks that are close to the cutoff ranks.
• There is a big gap in the performance of the stocks moving upward versus migrating downward and there could be some mean reversion over the next couple of months.

• In this insight, we take a look at the Potential ADDs/DELs for the BSE SENSEX, 100, 200, and 500 Indices in the December 2022 Rebalance.
• The reference period for the trading data used for the index selection ended on 31st October 2022.
• There have been a couple of key revisions to the index selection methodologies for SENSEX and SENSEX Next 50 which could have important consequences.

• KPIT Technologies (KPIT) reported decent Q2FY23 earnings. Sales grew 8.3% QoQ and 27% YoY in Constant Currency (CC) terms. EBITDA and Net Profit grew 33% and 28% YoY, respectively. 
• Led by an all-time high order pipeline, KPIT Technologies (KPITTECH IN) gave a bullish outlook and upgraded its FY23 growth guidance. KPIT’s Technica acquisition also looks very promising.
• In terms of order pipeline, KPIT has a couple of mega deals ($100mm+) in the offing, which if realized, would be the first-ever in its history.

• Annualized credit cost at 87bp was at the lowest in many quarters. This provides further room to the bank to invest for future growth.
• HDFCB continues to focus on enhancing its distribution presence, both physical and digital. It is continuing to add new branches. Its digital efforts are also paying off well.
• At a valuation of 20x P/E, HDFC Bank (HDFCB IN) is attractively priced and offers potential for 23%+ IRR over the next 3Y.

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.

• Adaro Minerals
• Greenland Holdings Corp
• Longfor Properties
• UPL Ltd

• Go Digit General Insurance  is looking to raise about US$503m in its upcoming India IPO. The deal will be run by ICICISec, MS, Axis, Edelweiss, HDFC Bank and IIFL.
• Go Digit General Insurance is a digital full stack insurance company, offering motor insurance, health insurance, travel insurance, property insurance, marine insurance, liability insurance and other insurance products.
• In this note, we talk about the not so positive aspects of the deal.

Tata Steel’s Q2/22-23 results were weak as expected, albeit the company outperformed most of the industry. While many peers posted record losses, Tata Steel still achieved a profit, with reasonable EBITDA/ton. That said, the financial risk profile has deteriorated, with lower earnings and given large cash outflows for the Neelachal Ispat Nigam Limited acquisition. Liquidity is weak.

We revise downwards our forecasts for revenue growth and margins, to reflect the deteriorating performance. We expect Tata Steel to continue facing pressure, given the weak industry dynamics. That said, the company should also continue to outperform peers, given its scale and deep vertical integration. 

• Bajaj Finance Ltd (BAF IN) reported a strong Q2FY23 earnings with an AUM growth of 7.0% QoQ and 31% YoY. AUM growth was broad-based with all business lines doing well.
• BAF is upbeat about its customer acquisition momentum and has upgraded its customer acquisition guidance for FY23 to 10-11mm vs 9-10mm earlier.
• Competitive intensity remains high, however, BAF continues to be disciplined around margins and risk management. Also, BAF’s increasing digital footprint is helping it to drive growth despite elevated competition.