Daily Brief India: HDFC Bank, Bharat FIH, Piramal Enterprises, Innova Captab, Vedanta Resources and more

• Foreign selling has continued on HDFC Limited (HDFC IN) and HDFC Bank (HDFCB IN) and foreign room on the proforma merged entity is 17.23%.
• Higher than 15% foreign room will require passive MSCI trackers to buy 209m shares (US$4.05bn) of HDFC Bank (HDFCB IN) at the time of merger implementation.
• If foreign selling continues and foreign room on the merged entity exceeds 20%, there will be buying from passive FTSE trackers as well.

• Bharat FIH (BFIH) aims to raise around US$660m in its India IPO via selling a mix of both primary and secondary shares. BFIH is a subsidiary of Foxconn.
• Its initial operations were focused on mobile phones, of late it has been expanding its portfolio to include mechanics, electric vehicles, televisions and hearables. 
• In this note, we will talk about the not so positive aspects of the deal.

• Piramal Enterprises (PIEL IN) obtained shareholders nod for demerging its pharma business and consolidated under Piramal Pharma Limited (PPL). Later, PPL will be listed on India stock exchange.
• PPL has a differentiated pharmaceutical business model, with three business verticals. CDMO, the largest revenue contributor, has track record of consistent above-market growth due to its niche and complex capabilities.  
• Listed as a separate entity, PPL will see multiple expansion and command premium valuation over other Indian generic drug makers, due to its niche and limited competition portfolio.

• Innova Captab (1605221D IN)  is looking to raise about US$115m in its upcoming India IPO. The deal will be run by ICICI and JM Financial.
• Innova Captab is an integrated pharmaceutical company in India with a presence across the pharmaceuticals value chain including research and development, manufacturing, drug distribution and marketing and exports. 
• Its business includes a contract development and manufacturing organization (CDMO) business providing manufacturing services to Indian pharmaceutical companies, a domestic branded generics business and an international branded generics business.

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• Vedanta Resources
• Yankuang Energy Group