In today’s briefing:
- Indian Banks: Stick with Baroda and UBI on the Buy List, Downgrading Canara
- Kalyan Jewellers: Deleveraging “Pause,” Capital Absorption Rising, Contrasting Capital Allocation
- Silver Consumer Electricals Limited Pre-IPO Tearsheet
- Tata Capital IPO: The Investment Case
- Beat Ideas: Jayaswal Neco; Potential Turnaround Bet on Deleveraging and Restructuring
- Varmora Granito Pre-IPO Tearsheet
- Sahajanand Medical Pre-IPO: Superior Product Amid Favorable Industry Make the Issue Heartwarming
- Tata Capital Pre-IPO Tearsheet
Indian Banks: Stick with Baroda and UBI on the Buy List, Downgrading Canara
- We take profits on our Canara Bank buy recommendation, due to adverse credit quality trends, and we stick with our two high conviction buy names UBI and Bank of Baroda
- UBI ranks top in our proprietary scorecard, replacing Canara Bank; UBI has high earnings and dividend yields; it ranks highly on NPL coverage and it has a well-controlled write-off ratio
- Baroda remains our core value pick; it has attractive valuations and potential to expand returns which we expect to emerge over the medium term, especially given its control of write-offs
Kalyan Jewellers: Deleveraging “Pause,” Capital Absorption Rising, Contrasting Capital Allocation
- Management has paused its previously articulated plan to reduce debt by INR 300–400 crore.
- The pause defers balance‑sheet de‑risking and redirects internal cash toward a lean‑credit procurement pilot and a new regional‑brand roll‑out (inventory‑heavy upfront), raising working‑capital intensity just as gross‑margin mix is shifting.
- Near‑term FCF could compress despite strong topline; margin delivery needs to outpace capital absorption to sustain the rerating. Market reaction (‑9% on the day) shows low tolerance for capital‑allocation ambiguity.
Silver Consumer Electricals Limited Pre-IPO Tearsheet
- Silver Consumer Electricals (2301263D IN) is looking to raise US$160m in its upcoming India IPO. The deal will be run by Motilal Oswal Investment Advisors, ICICI, JM Financial, Choice Capital Advisors.
- Silver Consumer Electricals Limited (SCEL) is one of India’s leading manufacturers of electrical consumer durables and agricultural equipment, operating through own-branded sales (“Silver” and “Bediya”) and OEM supply
- The company operates India’s largest single-location, vertically integrated ECD and agri-equipment plant in Rajkot, Gujarat.
Tata Capital IPO: The Investment Case
- Tata Capital Limited (TATACAP IN) is the third-largest non-banking financial company (NBFC) in India. It is seeking to raise US$2.0 billion.
- On 8 May 2025, Tata Capital merged with Tata Motors Finance Solutions Limited (TMFL) through the issue of 183.9 million shares.
- The fundamentals are mixed. Positives include large size, high growth rates, low opex ratio and good asset quality. Negatives include below peer average NIM, interest spread and ROE.
Beat Ideas: Jayaswal Neco; Potential Turnaround Bet on Deleveraging and Restructuring
- Jayaswal Neco has transitioned from financial distress to operational momentum, with blast furnace upgrades completed, capacity ramp-up underway, and debt refinancing on the horizon.
- Removal of ARC stake sale overhang and scope for capacity expansion strengthen the investment case.
- If debt gets refinanced at 50% lower interest rate by Dec-25, it could double company’s PAT leading to potential re-rating
Varmora Granito Pre-IPO Tearsheet
- Varmora Granito Limited (6590052Z IN) is looking to raise at least US$100m in its upcoming India IPO. The deal will be run by Goldman Sachs, JM Financial and SBI Capital.
- Varmora Granito Limited (VGL) is a leading Indian manufacturer and trader of varied types of tiles. As of FY25, its portfolio comprised over 3,500 SKUs.
- VGL generates 78.69% of its revenue from India, selling its products through both B2C and B2B channels. Its domestic revenue is primarily driven by its B2C channel.
Sahajanand Medical Pre-IPO: Superior Product Amid Favorable Industry Make the Issue Heartwarming
- Sahajanand Medical Technologies has re-filed DRHP for its Indian IPO consisting entirely an offer for sale of up to 27.6M equity shares. Key details are yet to be announced.
- SMT is a medical device company, with focus on vascular intervention and structural heart products. The company markets its products in 76 countries, with international markets contributing ~70% of revenue.
- SMT is well-positioned for sustainable long-term growth, driven by wide portfolio of superior products, market leadership in India and key international markets, strong commercial execution capability amid favorable industry tailwinds.
Tata Capital Pre-IPO Tearsheet
- Tata Capital Limited (TATACAP IN) is looking to raise upto US$2bn in its India IPO, which will be run by Kotak, Citi, JPM, Axis, ICICI, HSBC, IIFL, BNP,SBI and HDFC.
- Tata Capital Limited (TCL) is the flagship financial services company of the Tata group and a subsidiary of Tata Sons Private Limited.
- It is categorized as an Upper Layer NBFC by RBI and caters to salaried and self-employed individuals, entrepreneurs, small businesses, small and medium enterprises and corporates.
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