Category

India

India: NIFTY Index, Torrent Pharmaceuticals, Bajaj Auto Ltd, UPL Ltd, Max India Ltd, Birla Corp Ltd, Dalmia Bharat Sugar and Industries and more

By | Daily Briefs, India

In today’s briefing:

  • Nifty Floor Pressure with Exodus Risk
  • Torrent Pharmaceuticals (TRP IN): Stellar Domestic Show Makes It A Compelling Buy
  • Bajaj Auto – Domestic 2W Recovery on Track
  • Upl – Strong Performance in Q4; Transformation in Action
  • Max Financial – VNB Margin Surprises Positively; Growth to Take Centre Stage in FY23
  • Birla Corporation: Beat On Volume, Cost Pressure to Sustain; New Capacity Ramp Up Crucial!
  • Dalmia Bharat – Realization Drives EBITDA Beat; Outlook Cautious

Nifty Floor Pressure with Exodus Risk

By Thomas Schroeder

  • India stands out as a market at risk of breaking below congestive floor support (over owned, yield and FX pressure) like US big tech and more recently Europe.
  • Nifty 15,000 lower wedge support to come under pressure post bounce attempt.
  • USD/INR bull call to 77.80 and 78.64 on track. Watch rising resistance at 77.80/84 near term for a rally stall.

Torrent Pharmaceuticals (TRP IN): Stellar Domestic Show Makes It A Compelling Buy

By Tina Banerjee

  • Torrent Pharmaceuticals (TRP IN) is one of the front-runners in the Indian pharmaceuticals industry mainly having presence in chronic therapeutic segments. India contributes 51% of its total revenue.
  • Torrent is consistently outperforming Indian pharmaceutical market by a wide margin, due to its strong exposure to fast-growing and high-margin chronic therapeutic segments, which ensures high recurring revenue.
  • Despite the fading windfall from COVID therapeutics, Torrent is well-positioned for double-digit revenue growth, due to its sustained competitive positioning in anchor therapeutic areas of CVS, CNS, GI, and vitamins.

Bajaj Auto – Domestic 2W Recovery on Track

By Emkay

  • Exports: Management expects double-digit growth in retail sales, led by healthy demand in key markets and a continuous focus on network expansion.
  • Domestic 2Ws: Management expects strong growth in volumes, with a focus on profitable categories.
  • The share of first-time buyers stands at ~60% of demand, while the remaining portion is contributed by replacement/additional vehicle buyers.
  •  

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Upl – Strong Performance in Q4; Transformation in Action

By Emkay

  • UPLL delivered a stellar Q4 performance, beating consensus topline/EBITDA/Adj.
  • UPLL’s healthy double-digit Q4 top-line growth was supported by robust growth across geographies, with YoY growth of 62%/38%/25%/21% in India/North America/ROW/LatAM.
  • Management has guided for revenue/EBITDA growth of 10%/12-15% YoY for FY23E, supported by strong commodity prices, a favorable environment for biosolutions and conventional crop protection amid high costs and reduced availability of fertilizers.

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Max Financial – VNB Margin Surprises Positively; Growth to Take Centre Stage in FY23

By Emkay

  • Max Life delivers robust operational and financial performance: Max Life, the sole operating company of Max Financial, posted an overall good set of numbers in FY22, with VNB growing by 22% YoY to Rs15.3bn and VNB margin expanding by 2.2ppts YoY to 27.4%.
  • Focus on growth in FY23: In CY22, the company has so far delivered weaker topline growth owing to a host of factors, including a stronger base (on 2Y/3Y/5Y CAGR, Max Life has the best APE growth), Omicron-led disruptions in distribution and a slowdown in retail protection.
  • Current weakness in shares unwarranted: The performance of MAXF shares has traditionally been driven by a combination of fundamental performance of Max Life and noises around MAXF.

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Birla Corporation: Beat On Volume, Cost Pressure to Sustain; New Capacity Ramp Up Crucial!

By Axis Direct

  • Birla Corporation (BCL) reported Volume/Revenue growth of 2%/6% YoY owing to better demand in its operating region.
  • The company reported a volume of 4.24 mtpa which was higher by 5% than our expectation of 4.02 mtpa
  • We roll over our estimate to FY24 and value the company at 7.5x FY24E EV/EBITDA to arrive at a target price of Rs 1,300/share, (1,500 earlier), implying an upside of 35% from the CMP.

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Dalmia Bharat – Realization Drives EBITDA Beat; Outlook Cautious

By Emkay

  • Revenue increased 7% YoY to Rs33.8bn. Volumes rose 3% YoY/16% QoQ to 6.6mt. 
  • EBITDA declined 11% YoY/increased 66% QoQ to Rs6.8bn (Emkay est. – Rs5.6bn).
  • Project updates: Dalmia expects to commission 4mt debottlenecking capacity by Mar’23. 

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Before it’s here, it’s on Smartkarma

India: Aarti Drugs Ltd, Asian Paints, Bharat Petroleum Corp, Welspun India, Zensar Technologies and more

By | Daily Briefs, India

In today’s briefing:

  • Aarti Drugs: Price Hike and New Capacity to Aid in Growth
  • Asian Paints: Surprise on Margin Front; Maintain BUY
  • HSIE Results Daily: Asian Paints, SRF, Gujarat Gas, Dalmia Bharat, Max Financial
  • Bharat Petroleum – Tear Sheet – Lucror Analytics
  • Welspun India: No Respite from Margin Pressure Pain; Weak Outlook. Maintain Buy
  • Zensar Tech: Robust Recovery; Superior Outlook

Aarti Drugs: Price Hike and New Capacity to Aid in Growth

By Axis Direct

  • We believe the company’s profitability might be hit due to the above factors, prompting us to recommend a HOLD rating on the stock with TP Rs 450/share.
  • Aarti Drugs Q4FY22 reported revenue grew 38% YoY which stood above our expectations, led by healthy growth in Chronic therapies, especially in the anti- diabetic segment.
  • Domestic revenue grew ~37% on a YoY basis while exports grew by around 50% YoY and API volumes grew 23% on a YoY basis.

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Asian Paints: Surprise on Margin Front; Maintain BUY

By Axis Direct

  • Asian Paints delivered a strong set of numbers in Q4FY22 with revenue up ~21% YoY to Rs 7,893 Cr, led by a combination of volume growth (up 8%) and price mix.
  • However, the near-term challenge still persists and we would wait to see if the visibility of the near term performance sustains before we change our rating to BUY
  • We continue to maintain our HOLD rating with an unchanged TP of Rs 3,200 (57x FY24E EPS).

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HSIE Results Daily: Asian Paints, SRF, Gujarat Gas, Dalmia Bharat, Max Financial

By HDFC Securities

  • Asian Paints: Asian Paints’ (APNT) Q4 performance was broadly in line.
  • SRF: We retain our ADD rating on SRF, with a target price of INR 2,330, on the back of (1) continued healthy performance from speciality chemicals business and packaging films business; (2) strong balance sheet; and (3) deployment of Capex for high-growth speciality chemicals business over the next 3-4 years to tap opportunities emerging from agrochemical and pharmaceutical industries.
  • Gujarat Gas: Our BUY recommendation on Gujarat Gas (GGL), with a price target of INR 625, is premised on (1) margin improvement; (2) portfolio of mature, semi- mature, and new geographical areas (GAs); and (3) compelling valuations, given superior return ratios among the city gas distribution players. Q4FY22 EBITDA was 19% above our estimate and APAT was 18% above, owing to 27% above expectation per unit EBITDA margin.
    •  

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Bharat Petroleum – Tear Sheet – Lucror Analytics

By Trung Nguyen

We view Bharat Petroleum​ Corporation Limited (BPCL) as “Low Risk” on our LARA scale, primarily due to its strategic importance to India and its SOE status (52.98% government-owned). It is the Indian government’s vehicle to manage retail fuel prices. Thus, BPCL enjoys significant credit uplift. We like the company’s large scale and leading position in the oil & gas downstream sector. It owns many of the country’s refineries, fuel stations and gas pipelines. However, BPCL remains exposed to volatility in crack spreads and crude prices, which affect its profitability. Capex requirements in its refinery, marketing and petrochemicals operations remain significant. BPCL’s credit metrics are quite healthy.

Our Credit Bias is “Negative” given India’s intended sale of its BPCL stake. The divestment is expected to be concluded in 2023, which could end the company’s SOE status and trigger the Change of Control clause for its debt. Uncertainty over the buyer and hence the strength of BPCL’s new parent is a potential negative for the credit.

We initiate coverage with a “Hold” recommendation on the BPCLIN notes.


Welspun India: No Respite from Margin Pressure Pain; Weak Outlook. Maintain Buy

By Axis Direct

  • Welspun India Ltd (WIL) posted its worst quarterly numbers in the last two years as company continues to face severe headwinds on cost front and which is also beginning to weaken demand environment.
  • The numbers were a complete miss on all fronts. WILs revenue for the quarter stood at Rs 2,227 Cr (down 10% from our estimate of Rs 2,477 Cr), up 4.3% YoY
  • Effectively, we change our rating from BUY to HOLD with a revised target price of Rs 70 (from Rs 133 earlier), valuing the company at 9x FY24 EPS of Rs 7.8 per share, implying an upside of ~2% from the CMP 69.

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Zensar Tech: Robust Recovery; Superior Outlook

By Axis Direct

  • We recommend a BUY on Zensar, aided by strong revenue growth momentum and better recovery
  • Zensar Q4FY22 performance beat our expectations on the revenue front.
  • We assign 14.8x P/E multiple to its FY24E earnings of Rs 24.25 per share to arrive at a TP of Rs 360 per share, implying an upside of 25% from CMP.

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Before it’s here, it’s on Smartkarma

India: Zydus Lifesciences Ltd, Voltas Ltd, Navin Fluorine International, Reliance Industries and more

By | Daily Briefs, India

In today’s briefing:

  • Zydus Lifesciences (ZYDUSLIF IN): U.S. Business Is Cloudy; Innovative Portfolio Has A Long Way To Go
  • HSIE Results Daily: Voltas, Navin Fluorine International
  • Navin Fluorine: New Products and Customer Addition to Drive Growth
  • HSIE Results Daily: Reliance Industries, Tata Power, Federal Bank, DCB Bank
  • Results Review Q4FY22 – Reliance Industries

Zydus Lifesciences (ZYDUSLIF IN): U.S. Business Is Cloudy; Innovative Portfolio Has A Long Way To Go

By Tina Banerjee

  • Zydus Lifesciences Ltd (ZYDUSLIF IN) earns more than 40% revenue from the U.S. This business is under continued pricing pressure, which is squeezing the gross profit margin of the company.
  • The company has received approval for COVID-19 vaccine in India, which seems to have limited visibility and revenue potential, amid competition and uncertain COVID-19 outlook.  
  • Zydus has launched one new drug and received approval for another in India. However, its innovation portfolio has to go a long way to become a significant growth contributor.

HSIE Results Daily: Voltas, Navin Fluorine International

By HDFC Securities

  • Voltas: Voltas Q4 performance was quite unique; in a strong onset of summer, the market leader lost market share in room air conditioner (RAC) category.
  • The industry is witnessing robust demand after the slump of the last two summer seasons, while many markets and brands are witnessing a stock-out situation.
  • Navin Fluorine International: We retain our BUY rating on NFIL, with a target price of INR 4,640 on the back of (1) earnings visibility, given long-term contracts;

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Navin Fluorine: New Products and Customer Addition to Drive Growth

By Axis Direct

  • Given the fair visibility in earning in coming years and ability to manage costs, we maintain our recommendation of BUY with revised TP of Rs 4,153/share
  • Companies Q4 Revenue was up 21.6% YoY at 409 Cr (against our estimate of 390 Cr), but company reported lower than expected EBITDA of 94 Cr (+12% YoY) against our exp of Rs 103 Cr on account of higher than expected gross margin pressure.
  • Effectively, company posted 23% EBITDA margin which was down 300 bps over last quarter (against our estimate 26.4%).

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HSIE Results Daily: Reliance Industries, Tata Power, Federal Bank, DCB Bank

By HDFC Securities

  • Reliance Industries: Our ADD rating on Reliance Industries (RIL) with a price target of INR 2,825/sh is premised on (1) recovery in the O2C businesses; (2) continued EBITDA growth in the digital business, driven by improvement in ARPU, subscriber addition, and new revenue streams; and (3) potential for further value unlocking in the digital and retail businesses.
  • Tata Power: During Q4FY22, Tata Power completed the merger of Mundra into its standalone business and also secured the extension of mining lease in KPC for 10 years.
  • Federal Bank: Federal Bank’s (FB) Q4FY22 earnings missed our estimates, largely on account of accelerated absorption of family pension expenses, but these were partly offset by multi-quarter low credit costs (20bps).

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Results Review Q4FY22 – Reliance Industries

By HDFC Securities

  • Standalone oil to chemicals (O2C) segment: Revenue grew 53% YoY to INR 1,370bn, primarily due to improved realisation, led by increase in oil prices and higher volumes. 
  • Oil & gas: Revenue grew ~4x YoY to INR 20bn and EBITDA improved ~5x YoY to INR 15bn, driven by sharp improvement in price realisaton and stable production from the KG D6 block.
  • RJPL: Revenue improved to INR 261bn (+21% YoY, +8% QoQ) due to increase in ARPU to INR 168 (+21% YoY, +11% QoQ).

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Before it’s here, it’s on Smartkarma

India: Delhivery, Rainbow Children’s Hospital, Mindtree Ltd, Castrol India, Britannia Industries, Reliance Industries, Dcb Bank Ltd, Cholamandalam Investment and Finance, Blue Star Ltd and more

By | Daily Briefs, India

In today’s briefing:

  • Delhivery IPO: Peer Comparison and Valuation
  • Rainbow Children’s Hospital IPO Trading – Decent Anchor, Strong Insti Subs but Limited Upside
  • Mindtree-LTI: Merger Announced to Form India’s 5th Largest IT Services Player
  • Reliance Industries – Energy Business Outlook Sanguine. Maintain ADD.
  • 1QCY22 Results Update – Castrol (India)
  • 4QFY22 Results Update – Britannia Industries
  • Reliance Industries – Energy Business Outlook Sanguine
  • DCB Bank: Growth Pick-Up and Asset Quality Trends Encouraging
  • Cholamandalam Investment – Provision Write-Back Aids Profitability; Asset Quality Improves
  • Blue Star – Result Above Expectations; Expect Margin Improvement in FY23

Delhivery IPO: Peer Comparison and Valuation

By Shifara Samsudeen, ACMA, CGMA

  • Delhivery (1058656D IN) IPO will run from 11-13th May. The company plans to raise INR52.35bn (US$680m) through the issuance of a mix of new shares and OFS by existing shareholders.
  • At the indicative IPO price range of INR462-487 per share, Delhivery will have a market capitalisation of INR334.7-352.8bn and a post-money EV of INR294.8-312.9bn.
  • Delhivery plans to use the IPO proceeds for funding organic growth initiatives such as building scale and expanding network infrastructure as well as for funding inorganic growth.

Rainbow Children’s Hospital IPO Trading – Decent Anchor, Strong Insti Subs but Limited Upside

By Sumeet Singh

  • Rainbow Children’s Hospital (RCH) raised around US$200m via issuing a mix of primary and secondary shares in its India IPO.
  • RCH is a multi-specialty pediatric and obstetrics and gynecology hospital chain in India, operating 14 hospitals and three clinics in six cities, with a total bed capacity of 1,500 beds.
  • In this note, we will talk about our the trading updates.

Mindtree-LTI: Merger Announced to Form India’s 5th Largest IT Services Player

By Janaghan Jeyakumar, CFA


Reliance Industries – Energy Business Outlook Sanguine. Maintain ADD.

By HDFC Securities

  • Standalone oil to chemicals (O2C) segment: 1,370bn, primarily due to improved realisation, led by increase in oil prices Revenue grew 53% YoY to INR and higher volumes
  • Oil & gas: Revenue grew ~4x YoY to INR 20bn and EBITDA improved ~5x YoY to INR 15bn, driven by sharp improvement in price realisaton and stable production from the KG D6 block.
  • RJPL: Revenue improved to INR 261bn (+21% YoY, +8% QoQ) due to increase in ARPU to INR 168 (+21% YoY, +11% QoQ).

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1QCY22 Results Update – Castrol (India)

By Motilal Oswal

  • Volume recovery strong, expect margin to rebound- Castrol (CSTRL)’s revenue missed our estimate while its EBITDA and PAT were above estimates
  • Revenue below estimate, but beat on EBITDA and PAT – Revenue was 10% lower than estimate at INR12.4b (+9% YoY, +13% QoQ).
  • Strategic developments during the quarter – CSTRL expanded its Castrol Auto Service (CAS) network to 116 multi-brand passenger car workshops in 50+ cities across India.

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4QFY22 Results Update – Britannia Industries

By Motilal Oswal

  • Result beats expectations; but near-term outlook challenging
  • Sales in line; margins ahead of estimates BRIT’s consolidated sales rose 13.4% YoY to INR 35.5b (inline )in 4QFY22.
  • Highlights from the management commentary -forward commitments had helped protect margins in 4QFY22.

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Reliance Industries – Energy Business Outlook Sanguine

By HDFC Securities

  • Standalone oil to chemicals (O2C) segment: Revenue grew 53% YoY to INR 1,370bn, primarily due to improved realisation, led by increase in oil prices and higher volumes.
  • Oil & gas: Revenue grew ~4x YoY to INR 20bn and EBITDA improved ~5x

    YoY to INR 15bn, driven by sharp improvement in price realisaton and stable production from the KG D6 block.

  • RJPL: Revenue improved to INR 261bn (+21% YoY, +8% QoQ) due to increase in ARPU to INR 168 (+21% YoY, +11% QoQ).

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DCB Bank: Growth Pick-Up and Asset Quality Trends Encouraging

By Axis Direct

  • DCB Bank’s (DCB)Q4FY22 performance was strong with growth picking-up, NIMs at multiquarter high aided by better recoveries and asset quality improvement.
  • We believe the stock trades at attractive valuations (0.5x FY24E ABV) and the improving operating performance and asset quality are key triggers for re-rating the stock
  • We maintain our BUY rating with a target price of Rs 115/share (0.8x FY24E ABV), implying an upside of 47% from CMP.

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Cholamandalam Investment – Provision Write-Back Aids Profitability; Asset Quality Improves

By Nirmal Bang

  • Disbursements strong: Disbursements at Rs127bn were up 58% YoY and 22% QoQ. Vehicle Finance disbursements grew by 43% YoY and 15% QoQ.
  • Improved collections and higher write-offs lead to lower NPAs: Write-offs for 4QFY22 at Rs5.5bn (calc), 0.7% of gross advances, were higher than normal range of 10-20bps per quarter.
  • Other key takeaways: (1) Focus is to maintain NIM at ~7.5% levels and RoA at 3-3.5%

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Blue Star – Result Above Expectations; Expect Margin Improvement in FY23

By Nirmal Bang

  • UCP Segment Update: RAC business recorded 47% YoY growth in 4QFY22. BSTAR grew faster than the market and ended FY22 with a market share of 13.25% vs 13% in FY21.
  • EMPS and Commercial AC segment update: Carry forward order book at the end of FY22 was up 10.2% YoY at Rs32.53bn.
  • Net debt and capital employed position: Net borrowings at the end of FY22 were Rs671.4mn (vs net cash position of Rs1.51bn at the end of FY21) due to planned advancement in inventory levels related to the procurement of long-lead raw materials and components in order to de-risk supply chain constraints and investments in expansion projects at Wada & Sri City.

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Before it’s here, it’s on Smartkarma

India: Mindtree Ltd, Jindal Steel & Power, Life Insurance Corp of India (LIC), Kotak Mahindra Bank, Marico Ltd, Tata Consumer Products, Central China Real Estate, TVS Motor , Cholamandalam Investment and Finance and more

By | Daily Briefs, India

In today’s briefing:

  • Mindtree & L&T Infotech’s US$18bn Merger: Details and Index Implications
  • India: Preview of Stock Reclassification for Active Funds
  • ECM Weekly (9th May 22) – LIC, Campus, Rainbow, Delhivery, Shieldus, Yunkang, PAG, Keep, Air NZ
  • Dabur – Weak HPC Show; Expect Resilient Margin in FY23
  • Kotak Mahindra Bank – Accelerating on Growth Engines; Speed Bumps Ahead
  • Marico Ltd. – Expect near Term Demand to Be Uncertain and Margins to Be Subdued
  • Tata Consumer Products Ltd. – Operating Performance In-Line
  • Morning Views Asia: Adani Green Energy, Azure Power Global Ltd, Central China Securities
  • TVS Motor Company – Margin Beat; Supportive Outlook; EV Strategy Gathers Pace
  • HSIE Results Daily: Cholamandalam Investment and Finance Company

Mindtree & L&T Infotech’s US$18bn Merger: Details and Index Implications

By Brian Freitas


India: Preview of Stock Reclassification for Active Funds

By Brian Freitas

  • Two-Thirds of the way through the review period, we see 7 stocks migrating from MidCap to LargeCap, 8 stocks from LargeCap to MidCap, and 1 new listing added to LargeCap.
  • Post listing, Life Insurance Corp of India (LIC) (1248Z IN) should be added to the LargeCap segment while Delhivery (1058656D IN) should be added to the MidCap segment.
  • On average, stocks expected to migrate from Mid Cap to Large Cap have outperformed. Stocks expected to migrate from the Large Cap to Mid Cap segment have performed the worst.

ECM Weekly (9th May 22) – LIC, Campus, Rainbow, Delhivery, Shieldus, Yunkang, PAG, Keep, Air NZ

By Sumeet Singh

  • Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
  • On the IPOs front, LIC’s anchor book wasn’t great while Delhivery finally launched its IPO and Hong Kong market saw its first launch in a while.
  • Placements remained few and far between with only Air New Zealand (AIR NZ) launching its shortfall bookbuild.

Dabur – Weak HPC Show; Expect Resilient Margin in FY23

By HDFC Securities

  • Revenue miss, weak HPC: Net revenue grew by 8% YoY (+25% in Q4FY21 and +8% in Q3FY22), a miss on our expectation of 10.6% growth.
  • A miss in margin; expect resilient margin in FY23: GM contracted by 130bps YoY (-35bps in Q4FY21 and -205bps in Q3FY22) to 47.4%.
  • mployee/other expenses grew by 4/14% YoY (17/17% in Q4FY21). A&P spends were down 3% YoY.

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Kotak Mahindra Bank – Accelerating on Growth Engines; Speed Bumps Ahead

By HDFC Securities

  • Multiple tailwinds drive a strong quarter: KMB reported a strong set of earnings (NII growth of 18% YoY, RoA of 2.7%) on the back of reflating NIM (4.8% – best-in-class), strong loan growth, and negative credit costs (-0.5%) as asset quality continues to remain impressive (slippages at 1.2%; SMA II at 0.1%).
  • Growth vs. margins – watch out for trade-offs ahead: With its formidable leadership in cost of funds (3.2%), KMB, from here on, is fully geared to accelerate growth in its secured and unsecured book further, supporting its large floating rate book (~68%) in a rising interest rate scenario.
  • Subsidiary businesses continue to scale; maintain ADD: KMB’s subsidiaries continue to deliver a strong performance, contributing ~30% of the consolidated PAT on a steady basis.

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Marico Ltd. – Expect near Term Demand to Be Uncertain and Margins to Be Subdued

By Nirmal Bang

  • 4QFY22 headline performance: MRCO’s 4QFY22 consolidated topline grew by 7.4% YoY to Rs21.6bn (our est. of Rs21.5bn).
  • 4QFY22 margin performance: Gross margin improved to 44.5% (+30bps YoY and +80bps QoQ; vs our est. of 43.8%).
  • FY22 performance: Revenue, EBITDA and APAT grew by 18.2%, 6.4% and 5.9%, respectively.

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Tata Consumer Products Ltd. – Operating Performance In-Line

By Nirmal Bang

  • Headline performance: TCPL’s 4QFY22 consolidated revenue grew by 4.5% YoY to Rs31.8bn (vs our est. of Rs31.3bn).
  • Business performance: India Branded business was up 6% YoY in 4QFY22.
  • Consolidated 4QFY22 margin: Gross margin was up 540bps YoY at 44.6% (+90bps QoQ; vs est. of 43.7%)

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Morning Views Asia: Adani Green Energy, Azure Power Global Ltd, Central China Securities

By Charles Macgregor

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.


TVS Motor Company – Margin Beat; Supportive Outlook; EV Strategy Gathers Pace

By Nirmal Bang

  • Srong results; margin beat driven by tight cost controls: TVS reported revenue of Rs55bn, which was below our estimate (-3%), due to flattish ASP QoQ.
  • Encouraging outlook on demand and profitability: TVS expects the demand momentum to hold reasonably well in the export markets.
  • Expect premium valuation to sustain on continued volume and earnings outperformance

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HSIE Results Daily: Cholamandalam Investment and Finance Company

By HDFC Securities

  • Steady P&L outcomes, increasing opex intensity: Chola reported stable NII growth (+10% YoY), in line with AUM growth, as NIMs remained steady at 8.1%.
  • Receding stress pool; normalised credit costs: The aggregate stress pool has nearly halved to 12%, from the Q1FY22 peak of 21%, driven largely by strong collections and recoveries.
  • New businesses to augment growth; build-out key monitorable

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Before it’s here, it’s on Smartkarma

India: Delhivery and more

By | Daily Briefs, India

In today’s briefing:

  • Delhivery IPO: Valuation Insights

Delhivery IPO: Valuation Insights

By Arun George

  • Delhivery (1058656D IN) is the largest and fastest-growing 3PL express parcel delivery player in India. It will launch its Rs52.4 billion ($0.7 billion) IPO on 11 May.
  • In Delhivery IPO: Yet to Convincingly Deliver, we noted that the negatives outweigh the positives.  
  • In this note, we look at the valuation metrics. We think that Delhivery is at best fairly valued at the IPO price range. 

Before it’s here, it’s on Smartkarma

India: Delhivery, Campus Activewear Ltd, Tata Steel Ltd, Equitas Small Finance Bank , Security and Intelligence Services (India) Limited and more

By | Daily Briefs, India

In today’s briefing:

  • Delhivery IPO: Offering Details & Index Inclusion Timeline
  • Delhivery IPO – Thoughts on Valution, Touch-And-Go
  • Campus Activewear IPO Trading – Strong Bookbuild and Anchor
  • Tata Steel – Earnings Flash – FY 2021-22 Results – Lucror Analytics
  • Equitas Small Finanace Bank: Growth to Resume FY23 Onwards
  • SIS Ltd: International Business Struggles; Healthy Recovery to Support Growth

Delhivery IPO: Offering Details & Index Inclusion Timeline

By Brian Freitas

  • Delhivery (1058656D IN) is looking at raising INR 52,350m (US$685m) in its IPO by selling up to 113.3m shares at a range of INR 462-487/share.
  • At the mid point of the IPO range, Delhivery (1058656D IN) will be valued at INR 344.8bn (US$4.5bn) while the free float market cap will be much lower.
  • Delhivery (1058656D IN) could get entry to the FTSE All-World Index at the December QIR, while inclusion in the MSCI India Index could take place at the May 2023 SAIR.

Delhivery IPO – Thoughts on Valution, Touch-And-Go

By Sumeet Singh

  • Delhivery is now looking to raise around US$700m in its upcoming India IPO, the company is backed by a host of financial investors, the largest being Softbank
  • Delhivery is an online logistics service provider which covers express parcel delivery, heavy goods delivery, part truckload (PTL) freight, truckload (TL) freight, supply chain solutions, cross border solutions etc.
  • We have covered various aspects of the deal in our earlier notes. In this note, we talk about valuation. 

Campus Activewear IPO Trading – Strong Bookbuild and Anchor

By Clarence Chu

  • Campus Activewear Ltd (1535013D IN) India IPO raised around US$184m. The IPO was a 100% secondary selldown.
  • The overall subscription rate for Campus had led the likes of Zomato, PAYTM and PB Fintech, and was most similar to that of Polycab India.
  • Campus’ growth outlook and vertically integrated model should warrant it to trade at a premium to Metro Brands, while at a discount to Relaxo, given the latter’s more diversified offering. 

Tata Steel – Earnings Flash – FY 2021-22 Results – Lucror Analytics

By Trung Nguyen

Tata Steel’s Q4 and FY 2021-22 results were exceptionally strong, with revenue surging and EBITDA doubling. The company paid down a large amount of debt during the year, significantly above the guided figure. The financial risk profile improved substantially on the back of increased earnings and lower debt, and appears in line with the BBB level. Liquidity is sound.

We revise our LARA assessment to “Low Risk” from “Medium Risk”. Tata Steel has delivered outstanding results in recent years, with significant deleveraging and strong earnings growth. This has resulted in a substantial boost to its credit profile. We view favourably the company’s track record of delivering on guidance, especially in terms of deleveraging.


Equitas Small Finanace Bank: Growth to Resume FY23 Onwards

By Axis Direct

  • Equitas Small Finance Bank Ltd. (EQSFB) results were a mixed bag. While growth on the asset and liability side was encouraging and Opex growth was modest at 10% YoY thereby supporting operating profit, higher than expected provisions weighed on the bottom line.
  • Disbursements stood at Rs 3,279 Cr (+29% YoY,+21% QoQ)aiding loan growth revival.
  • We believe current valuations of 1.3x FY24E ABV are attractive and thus maintain our BUY rating on the stock with a target price of Rs 77 (1.9x FY24E ABV), implying an upside of 43% from the CMP.

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SIS Ltd: International Business Struggles; Healthy Recovery to Support Growth

By Axis Direct

  • SIS reported moderate growth in Q4FY22 with Revenue at Rs 2,648 Cr, registering an encouraging growth of 1.8% QoQ, (below our expectations).
  • Consolidated EBITDA for the quarter de-grew by 4.1% QoQ to Rs 124 Cr, owing to tepid international business
  • We recommend a BUY rating on the stock and assign a 21x P/E multiple to its FY24E earnings of Rs 28.4/share which gives a TP of Rs 590/share, implying an upside of 13% from the CMP.

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Before it’s here, it’s on Smartkarma

India: Delhivery, INR 10Y, Zepto, Kotak Mahindra Bank, Tata Steel Ltd, Titan Co Ltd, KEC International and more

By | Daily Briefs, India

In today’s briefing:

  • Delhivery IPO – Peer Comparison, What It Gains in Growth It Gives up in Margins
  • Delhivery (RHD Updates): Unit Economics Have Taken a Beat
  • India’s “Surprise” Rate Hike Was Overdue
  • Indian Quick Commerce Startup Nears Unicorn Status with $200m Round
  • 4QFY22 Result Update – Kotak Mahindra Bank
  • Result Update – Kotak Mahindra Bank
  • Kotak Mahindra Bank: Accelerating on Growth Engines; Speed Bumps Ahead
  • Tata Steel: Strong Q4FY22 Performance; Deleveraging and Growth to Continue
  • Titan – Underwhelming Print!
  • KEC International: Higher Costs Dent Margins; Order Book Robust

Delhivery IPO – Peer Comparison, What It Gains in Growth It Gives up in Margins

By Sumeet Singh

  • Delhivery is now looking to raise around US$700m in its upcoming India IPO, the company is backed by a host of financial investors, the largest being Softbank.
  • Delhivery is an online logistics service provider which covers express parcel delivery, heavy goods delivery, part truckload (PTL) freight, truckload (TL) freight, supply chain solutions, cross border solutions etc.
  • We have covered various aspects of the deal in our earlier notes. In this note, we will undertake a peer comparison. 

Delhivery (RHD Updates): Unit Economics Have Taken a Beat

By Shifara Samsudeen, ACMA, CGMA

  • Delhivery (1058656D IN) is a fully integrated logistics player in India. The company’s application for a listing has been approved by the regulators.
  • The IPO will be open from 11-13th May and the company has downsized the IPO from INR7,460 crore to INR5,235 crores, with existing shareholders offloading shares worth of INR1,235 crores.
  • This insight focuses on new data points from the company’s Red Herring Document (RHD).

India’s “Surprise” Rate Hike Was Overdue

By Gautam Jain, PhD, CFA

  • The Reserve Bank of India roiled the market yesterday with an unexpected inter-meeting policy rate increase, leading to rates moving higher across the curve.
  • I have been arguing for a few months that the RBI needs to start raising rates based on the high inflation and narrowing rate differential with the US.
  • Despite the move higher in rates in India, I continue to like paying rates in India, particularly against receivers in other countries to hedge against the volatile US rates.

Indian Quick Commerce Startup Nears Unicorn Status with $200m Round

By Tech in Asia

  • India’s quick commerce market is estimated to grow 15x by 2025 to hit a market size of nearly US$5.5 billion – large enough to propel prominent investors’ interest and gain the early-mover advantage.
  • One of the companies at the helm of this nascent yet flourishing industry is Zepto, a startup launched by two Stanford University dropouts, Aadit Palicha and Kaivalya Vohra.
  • The Y Combinator-backed startup promises 10-minute grocery deliveries, outpacing the delivery speeds of several ecommerce companies

4QFY22 Result Update – Kotak Mahindra Bank

By Nirmal Bang

  • Credit growth aided by retail loans: Overall loans increased by 21.3% YoY and 7.2% QoQ.
  • NII growth led by NIM expansion and strong loan growth: Calc. NIM expanded by 28bps YoY and 7bps QoQ.
  • Stepping up efforts on SA sourcing: Overall deposits increased by 11.3% YoY and 2.1% QoQ, implying improving credit/deposit ratio, which directly translated into better margins for 4QFY22.

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Result Update – Kotak Mahindra Bank

By Emkay

  • Sustained strong delivery on growth/NIMs; outlook remains positive
  • Bank draws down contingent buffer given better asset quality outcomes
  • Outlook and valuation: We revise our earnings estimates for FY23 by 4% but largely retain FY24 estimates.

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Kotak Mahindra Bank: Accelerating on Growth Engines; Speed Bumps Ahead

By HDFC Securities

  • Multiple tailwinds drive a strong quarter: KMB reported a strong set of earnings (NII growth of 18% YoY, RoA of 2.7%) on the back of reflating NIM (4.8% – best-in-class), strong loan growth, and negative credit costs (-0.5%) as asset quality continues to remain impressive (slippages at 1.2%; SMA II at 0.1%).
  • Growth vs. margins – watch out for trade-offs ahead: With its formidable leadership in cost of funds (3.2%), KMB, from here on, is fully geared to accelerate growth in its secured and unsecured book further, supporting its large floating rate book (~68%) in a rising interest rate scenario.
  • Subsidiary businesses continue to scale; maintain ADD: KMB’s subsidiaries continue to deliver a strong performance, contributing ~30% of the consolidated PAT on a steady basis.

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Tata Steel: Strong Q4FY22 Performance; Deleveraging and Growth to Continue

By Axis Direct

  • Tata Steel reported a strong Q4FY22 performance which stood largely in line with our estimates.
  • The company’s revenue increased by 39% YoY and 14% QoQ (in line with our estimate with a slight beat by 1%) but ahead of consensus by 5% at Rs 69,324 Cr
  • We ascribe 6.0x, 5.0x and 3.5x multiple to India standalone, other operations (excl standalone) and Europe on FY24E EBITDA to arrive at a 1-year forward TP of Rs 1,700/share (unchanged from our previous TP), implying an upside potential of 35% from the CMP.

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Titan – Underwhelming Print!

By HDFC Securities

  • Q4FY22 highlights: Consol. revenue grew 4% YoY to INR 77.9bn. Ex-bullion, jewelry sales declined 3% YoY to INR64.7bn (three-year CAGR for Q4FY22
  • Outlook: While Titan’s recovery execution has been on point, a tougher demand environment awaits (courtesy volatile gold prices).
  • Financial highlights: Revenue came in at INR 13.3bn (+3.1x/+4.8x YoY/QoQ, a beat of 77%).

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KEC International: Higher Costs Dent Margins; Order Book Robust

By Axis Direct

  • KEC International (KEC Int) reported a poor set of numbers in Q4FY22 with revenues at Rs 4,275 Cr (down 2% YoY), EBIDTA of Rs 252 Cr ( down 29% YoY), and PAT of Rs 112 Cr (down 42% YoY)
  • The company’s EBIDTA Margins declined to 5.9% in Q4FY22 from 7.2% in Q3FY22 and 8.1% in Q4FY21, primarily owing to an increase in material costs as well as interest costs during the quarter
  • We value KEC International at 12.5x (14x earlier) FY24E EPS to arrive at a target price of Rs 385/share (Rs.555 earlier) implying an upside of 3% from the CMP and revise our rating from BUY to HOLD.

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Before it’s here, it’s on Smartkarma

India: Delhivery, HDFC Bank, ABM Investama, Can Fin Homes, Inox Leisure, Shriram City Union Finance, Mahindra & Mahindra Fin Services Ltd., Shriram Transport Finance and more

By | Daily Briefs, India

In today’s briefing:

  • Delhivery Pre-IPO – RHP Updates – Growth Remains Strong, Pricing Remains Under Pressure
  • Delhivery IPO: Yet to Convincingly Deliver
  • Return of the Genteel Low Profile Bankers
  • Asia HY Monthly – Oil & Gas Update Following Russia’S Invasion Of Ukraine – Lucror Analytics
  • Can Fin Homes: Growth Momentum Strong; Maintain BUY
  • Inox Leisure – Business Back to Normalcy; No CCI Action Yet
  • Shriram City Union Finance – Upgrading Estimates on Strong Growth Outlook
  • Mahindra Finance – Treading Towards Normalcy
  • Shriram Transport Finance – Consistent Operational Performance

Delhivery Pre-IPO – RHP Updates – Growth Remains Strong, Pricing Remains Under Pressure

By Sumeet Singh

  • Delhivery is now looking to raise around US$700m in its upcoming India IPO, the company is backed by a host of financial investors, the largest being Softbank.
  • Delhivery is an online logistics service provider which covers express parcel delivery, heavy goods delivery, part truckload (PTL) freight, truckload (TL) freight, supply chain solutions, cross border solutions etc.
  • In this note, we talk about the updates from its RHP.

Delhivery IPO: Yet to Convincingly Deliver

By Arun George

  • Delhivery is the largest and fastest-growing 3PL express parcel delivery player in India. It has cut its IPO raise from Rs74.6 billion ($1 billion) to Rs52.4 billion ($0.7 billion).
  • In Delhivery IPO Initiation: Can It Deliver?, we noted that the fundamentals are mixed as it has been unable to leverage strong growth to deliver profits or cash generation.  
  • In this note, we look at the RHP which discloses 9MFY22 results. We continue to believe the negatives outweigh the positives. We are inclined to give the IPO a pass.

Return of the Genteel Low Profile Bankers

By Hemindra Hazari

  • Past phenomenal success of HDFC Bank (HDFCB IN) led to a belief that an oppressive work culture is the driver for performance and premium valuation
  • Present CEOs at ICICI Bank Ltd (ICICIBC IN) and HDFC Bank believe a genteel and more humane approach can deliver similar results.
  • Market has rewarded ICICI Bank and penalised HDFC Bank. Both CEOs are putting in place the building blocks for future sustained performance

Asia HY Monthly – Oil & Gas Update Following Russia’S Invasion Of Ukraine – Lucror Analytics

By Charles Macgregor

This month, we provide an update on the developments in the Oil & Gas sector following Russia’s invasion of Ukraine.

The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks, and discussing specific areas of interest in the “In-Focus” section. The Asia Monthly is intended to broaden investors’ understanding of the Asian USD high-yield market.


Can Fin Homes: Growth Momentum Strong; Maintain BUY

By Axis Direct

  • Can Fin Homes (CANF) reported strong set numbers in Q4FY22 with the pick-up in loan growth led by higher disbursements, improved NIMs due to higher yields, and robust asset quality
  • We remain positive on the stock given its favourable loan mix, comfortable liquidity position, and robust CAR (23.3%)
  • We maintain BUY with a target price of Rs 790 (2.5x FY24E BV), implying an upside of 23% from CMP.

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Inox Leisure – Business Back to Normalcy; No CCI Action Yet

By Nirmal Bang

  • Highest screen addition in the industry in FY22: INOL opened 8 screens in 2 properties in 4QFY22 (32 in FY22), taking the total screen count to 675.
  • ATP declines QoQ despite blockbuster performances: ATP at Rs218 grew by 27% YoY and SPH at Rs86 grew by 10% YoY.
  • However, both declined QoQ compared to ATP and SPH at Rs226 and Rs97, respectively, in 3QFY22.

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Shriram City Union Finance – Upgrading Estimates on Strong Growth Outlook

By Emkay

  • SCUF Q4 result highlights: Disbursements grew by 15% yoy but declined 1% qoq due to a high base in the seasonally strong Q3.
  • SHFL Q4 result highlights: SHFL continues to invest in its rapidly growing business in order to make a mark in the booming affordable housing space, the full effects of which will be visible from FY23.
  • Change to estimates: In the case of SCUF, we factor in increased disbursements in the gold loan portfolio.

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Mahindra Finance – Treading Towards Normalcy

By Nirmal Bang

  • Disbursements up 54% YoY; Advance growth flat: Disbursements at Rs92bn were up 54% YoY and 15% QoQ despite being affected by low inventory levels.
  • Stage 3 improvement impressive: GS3 at 7.7% (down 1.3p.p. YoY and 3.6p.p.QoQ) was led by higher collections and write-offs (Rs12bn).
  • Business update for April 2022: MMFS registered disbursements of Rs27.5bn in April’22, up 109% YoY but down 28% MoM.

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Shriram Transport Finance – Consistent Operational Performance

By Emkay

  • Q4 results highlights: Disbursement growth of 13% yoy resulted in 8.4% yoy growth in portfolio AUM, driven by strong yoy growth in M&LCVs (20%), PVs (6%) and HCVs (8%).
  • NIMs improved by 61bps qoq/89bps yoy due to the re-pricing of LT-debt and interest write- backs.
  • Excess liquidity, cash & bank balances and investments constituted ~16 % of total assets.

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Before it’s here, it’s on Smartkarma

India: Life Insurance Corp of India (LIC), Bajaj Finance Ltd, KPIT Technologies, Coromandel International, Can Fin Homes, IndiaMart, Gillette India and more

By | Daily Briefs, India

In today’s briefing:

  • Life Insurance Corporation of India IPO – Anchor Book Results Weren’t Great
  • Smartkarma Webinar | High-Conviction Ideas from the Indian Market
  • Bajaj Finance (BAF): Back to Pre-COVID Like Stellar Performance!
  • KPIT Tech: Robust Earnings and Strong Guidance
  • Coromandel International – Maintain Buy Despite Interim Worries on Input Costs
  • Coromandel International – Backward Integration and Operating Leverage Drive EBIDTA
  • Can Fin Homes – Record Disbursements and Margin Expansion Aid Earnings
  • IndiaMART – Strong Customer Additions; Growth to Bump up in FY23E
  • Indiamart Intermesh Ltd – Robust Revenue Growth; Margins Decline
  • Gillette India – Mixed Bag; Limited Upside Leads to Rating Downgrade

Life Insurance Corporation of India IPO – Anchor Book Results Weren’t Great

By Sumeet Singh

  • 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.
  • We have looked at various aspects of the deal in our earlier notes. In this note, we compare it’s anchor book results with recent listings.

Smartkarma Webinar | High-Conviction Ideas from the Indian Market

By Smartkarma Research

In our next Webinar, we welcome back Analyst Ankit Agrawal, CFA, who will share and elaborate on three high-conviction ideas from the Indian market, across sectors and market caps.

The webinar will be hosted on Wednesday, 11 May 2022, 17:00 SGT/HKT.

Ankit Agrawal, CFA is the founder and CIO of Yellowstone Equity, a firm providing unbiased and independent research on Indian equities. He was previously on the buy-side with Howe & Rusling and Investcorp. 


Bajaj Finance (BAF): Back to Pre-COVID Like Stellar Performance!

By Ankit Agrawal, CFA

  • BAF reported strong Q4FY22 earnings led by 1) healthy AUM growth and 2) decline in provisioning. YoY, the NIM growth was similar to the AUM growth suggesting no margin compression.
  • However, QoQ, BAF witnessed NIM compression, partly driven by interest reversal from a corporate account that became NPA. Overall, the management is confident of maintaining NIMs at current level. 
  • The pace of core AUM growth also declined QoQ. However, this could be due to seasonality and despite declining pace, Q4FY22 core AUM growth was still healthy at 5%+.

KPIT Tech: Robust Earnings and Strong Guidance

By Ankit Agrawal, CFA

  • KPIT Tech reported strong Q4FY22 revenue growth (5%+ QoQ in constant currency [CC] terms). It also reported margin improvement, despite supply-side headwinds; with EBITDA margin at 18.6% vs 18.5% QoQ.
  • FY23 guidance came in optimistic with revenue growth expected to be in 18-21% range in CC terms and EBITDA margin projected to remain stable in the 18-19% range.
  • Demand environment continues to be robust with high visibility for growth. Q4FY22 total deal win was healthy at USD 200mm; including a large deal of Euro 70mm value.

Coromandel International – Maintain Buy Despite Interim Worries on Input Costs

By Nirmal Bang

  • Revenue at Rs42.27bn was 14% below NBIE estimate: EBITDA margin at 9% was a beat on our estimate of 4.8% due to higher-than-expected gross margin of 25.7% – a beat of 668bps.
  • 4QFY22 revenue was up 48% YoY: Nutrient segment’s revenue was up 55.8% YoY at Rs36.82bn, a miss of 13.3% compared toth NBIE estimate of Rs42.47bn.
  • EBITDA margin beats NBIE est. by 418bps, but down 15bps YoY at 9%

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Coromandel International – Backward Integration and Operating Leverage Drive EBIDTA

By Motilal Oswal

  • 4QFY22 earnings beat our estimates – CRIN reported a better than expected operating performance despite rising input costs, due to backward integration, control on fixed costs, selective price increases, better outsourcing of raw material, mix management of raw material (while maintaining quality), and better capacity utilization.
  • Higher fertilizer margin drives operating performance – CRIN reported an overall revenue of INR42.3b (est. INR40.3b) in 4QFY22, up 44% YoY.
  • Highlights from the management commentary – Subsidy outstanding as of Mar’22 stood at INR2.94b (v/s INR5.9b in Mar’21).

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Can Fin Homes – Record Disbursements and Margin Expansion Aid Earnings

By Nirmal Bang

  • Record disbursements: The company recorded disbursements worth Rs27bn in 4QFY22, increasing by 35.2% YoY and 9.4% QoQ.
  • Loan growth strong on the back of record disbursements: Overall loan book increased by 19.7% YoY and 5.1% QoQ to Rs263.8bn.
  • NIM expansion aided by yield improvement and stable CoF.

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IndiaMART – Strong Customer Additions; Growth to Bump up in FY23E

By Motilal Oswal

  • Margin to drop on elevated investments; business fundamentals intact
  • Good topline growth but large miss on margins – Revenue stood at INR2.0b (1.8% above our estimates), +12.1% YoY and +7.1% QoQ.
  • Highlights from the management commentary – The company added the highest ever paid customers at 13k and plans to add customers in the range of 8-9k per quarter going forward.

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Indiamart Intermesh Ltd – Robust Revenue Growth; Margins Decline

By Axis Direct

  • Indiamart have reported consistent growth in registered buyers, registerd buyers grew to 149 Mn showed a growth of 4.2% QoQ.
  • Indiamart has also expanded its foothold on the number of the products live on the platform, total products live on the platform stood at 83mn grew 3.75% QoQ.
  • Total business enquiries delivered stood at 120 Mn demostrated a growth of 2.6% QoQ. Annualised ARPU for Q4 FY22 declind to Rs. 47,400 but likely to improve with better offering mix.

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Gillette India – Mixed Bag; Limited Upside Leads to Rating Downgrade

By Nirmal Bang

  • 3QFY22 performance: GILL’s 3QFY22 revenue grew by 5.6% YoY to Rs5.7bn (vs our est. of Rs5.9bn).
  • 3QFY22 segmental performance: In terms of revenue, while the Grooming segment (76.1% of sales in 9MFY22) grew by 8.9% YoY (largely in line with our estimate; 3-year CAGR of 5.5%), Oral Care disappointed with a decline of 5.1% YoY (a drop of 12% even on QoQ basis; 3-year CAGR of 12.2%).
  • 9MFY22 performance: Revenue was up by 8.3% YoY while EBITDA & PAT were down by 9.2% YoY & 16.8% YoY, respectively.

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Before it’s here, it’s on Smartkarma