Daily Brief India: HDFC Bank, Godfrey Phillips India, Union Bank Of India, Groww, HDFC Life Insurance, Epigral, Lalbaba Engineering Limited, Allcargo Logistics, Duroflex, Lenskart Solutions and more

• HDFCB’s balance sheet has been normalizing post the merger, allowing it to accelerate its growth trajectory. The demand and liquidity environment have also improved. 
• NIMs are likely to expand led by rate cut tailwind that will reflect fully over the next 18 months. Shift to CASA from term-deposits should further help. 
• Merger synergies are now being leveraged, especially for cross-selling and up-selling. At the current valuation, an investment in HDFCB offers 25%+ IRR over a holding period of two years.

• Godfrey Phillips India is demonstrating robust top-line growth, consistently outpacing its primary competitor and gaining market share, driven by its strong brand portfolio which includes the licensed production of Marlboro.
• Despite impressive revenue and net income growth, the company faces a significant challenge with deteriorating cash flow, as evidenced by negative 3-year compound annual growth rates for both operating and free cash flow.
• The company operates within a highly regulated and taxed industry, posing persistent risks to profitability and growth. However, its strong brand equity and expanding distribution provide a solid foundation to navigate these challenges.

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• Context: The Bank Of India (BOI IN) vs. Union Bank Of India (UNBK IN) price-ratio has deviated more two standard deviations from its one-year average, signaling a potential pair trade.
• Highlights: Going long Union Bank Of India and short Bank Of India targets a 5% return. Union Bank Of India is set to report on 30 October.
• Why Read: Essential for quantitative traders seeking mean-reversion opportunities, with detailed execution framework, risk management protocols, and historical simulation showing the statistical basis for this relative value play.

• Groww (1573648D IN) is looking to raise up to US$736m in its upcoming India IPO.
• Groww, officially called Billionbrains Garage Ventures,is a direct-to-customer digital investment platform providing financial products and services, where customers can invest/ trade in stocks, derivatives, bonds, mutual funds and other products.
• In this note, we talk about the company’s historical performance.

• Context: The HDFC Life Insurance (HDFCLIFE IN) vs. SBI Life Insurance (SBILIFE IN) price-ratio has deviated more than two standard deviations from its one-year average, presenting a potential relative value opportunity.
• Highlights: Going long HDFC Life Insurance (HDFCLIFE IN) and short SBI Life Insurance (SBILIFE IN) targets a 7% return.
• Why Read: Essential for quantitative traders seeking mean-reversion opportunities, with detailed execution framework, risk management protocols, and historical simulation showing the statistical basis for this relative value play.

• Epigral is strategically shifting its business mix towards higher-margin derivatives and specialty chemicals, which constituted 56% of revenue in H1 FY25, up from 25% in FY22. This transition is expected to enhance profitability and provide more stable growth.
• The company is in a significant capital expenditure phase, aiming to double its production capacity for CPVC Resin and Epichlorohydrin. These expansions position Epigral to capitalize on growing domestic and international demand, driven by initiatives like ‘Make in India’.
• While demonstrating strong top-line growth, the company faces risks associated with the cyclical nature of the chemical industry, volatility in raw material prices, and execution risks related to its large-scale expansion projects.

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• Lalbaba Engineering Limited (LALBABA IN) (LEL) is looking to raise about US$113m in its upcoming India IPO. The deal will be run by Motilal Oswal, Nuvama and IIFL.
• LEL is an engineering solutions company focussed on the development and manufacture of high-performance seamless tubes, precision forgings and integrated rail systems.
• As of Aug 31, 2025, LEL was ranked as India’s largest manufacturer of cold-finished seamless tubes and second-largest overall for cold-finished steel tubes, by installed capacity, according to CRISIL.

• Allcargo Logistics is a global leader in LCL consolidation and a major player in India’s integrated logistics sector. The company is currently undergoing a strategic restructuring to create four distinct listed entities, aiming to unlock value by fostering focused management and independent growth trajectories.
• The company has outlined an ambitious growth strategy to 2030, targeting significant expansion in emerging markets, the launch of new trade lanes, and the implementation of AI-driven digital platforms to enhance operational efficiency. Financial goals include a substantial increase in gross profit and EBITDA.
• Despite a challenging recent financial performance characterized by declining net income and negative cash flows, Allcargo is focused on a turnaround. The company is leveraging its extensive network and investing in technology to improve profitability and capitalize on the positive outlook for the Indian and global logistics industry.

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• Duroflex (1603801D IN) is looking to raise about US$114m in its upcoming India IPO. The deal will be run by JM Financial and Motilal Oswal.
• Duroflex Limited is a leading provider of sleep and comfort solutions in India, with a legacy spanning over six decades. 
• Its “house of brands” architecture comprising Duroflex, Sleepyhead, Perfect Rest, and Durofoam, caters to diverse consumer segments ranging from economy to luxury. 

• Lenskart Solutions has filed RHP for IPO with a total offer size of up to INR 72.8B, offering 181M shares at a price band of INR 382-INR 402 per share.
• This includes a fresh issue of INR 21.5B (~ 53.5M shares). The company intends to use the proceeds for new store capex, promotion, inorganic acquisition etc.
• We recommend the investors to subscribe to the issue for expected listing gain. Lenskart has a long way ahead of itself in terms of attaining long term sustained growth trajectory.