Daily Brief India: Escorts Kubota, Edelweiss Financial Services, Balaji Speciality Chemicals and more

In today’s briefing:

Escorts Kubota (ESCORTS IN) | Alarming Allegations by Dealers
Edelweiss: Credit Business Is Normalizing; Rest of the Businesses Are Scaling Up Well
Balaji Speciality Chemicals Pre-IPO Tearsheet

Escorts Kubota (ESCORTS IN) | Alarming Allegations by Dealers

Escorts Kubota (ESCORTS IN) ‘s domestic market share as of FY22 stood at 10.3 % vs 12% in FY20 against the aspiration of 15% for FY22.
Our interactions with various dealers across key northern and eastern states suggest caution and structural inability to regain market share loss.
Post equity infusion, Kubota Corp (6326 JP) is probably in for more surprises than what it might have initially hoped for.

Edelweiss’ credit business is now normalizing with GNPA at 2.5% and NNPA at 1.8%. Credit costs came in negative as asset quality is improving and excess provisioning is being normalized.
Rest of the businesses continue to scale up well. Edelweiss is among the fastest grower in the mutual fund and insurance businesses. Wealth Management business continues to do well.
At current valuation, Edelweiss is available cheap and as per our estimates, an investment in it has potential to more than quadruple by the end of FY25.

Balaji Speciality Chemicals (1742663D IN) is looking to raise about US$126m in its upcoming India IPO. The deal will be run by JM Financial and HDFC Bank.
Balaji Speciality Chemicals (BSC) is the sole manufacturer in India of niche chemicals such as Ethylenediamine, Piperazine (Anhydrous), Diethylenetriamine, Amino Ethyl Ethanol Amines and Amino Ethyl Piperazine, according to CRISIL.
The chemicals it manufactures are import substitutes and are used in end-use industries such as speciality chemicals. Its customer base grew from 45 in FY20 to 182 in FY22.

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