In today’s briefing:
- Asian Equities: Model Portfolio Outperformed Marginally; Focus More on Indian Industrials
- Hero Motors Limited (2313904Z IN): Synthetic Expert Call Transcript (17 Sep 2026)
Asian Equities: Model Portfolio Outperformed Marginally; Focus More on Indian Industrials
- Since the last reshuffle (August 11), our Model Portfolio has appreciated 1.18%, against MXASJ’s 0.92% advance. Since inception on May 15, 2025, our portfolio is up 44.9%, against MXASJ’s 45.8%.
- The main drivers of our portfolio were Korea (contributed 2.77% return) and Taiwan (0.34%). The returns were dragged down by China (-1.14%) and India (-0.66%).
- We exclude Reliance Industries and include Hitachi Energy, reaffirming our preference for Indian industrials. Our overweight on HK/China, Korea, India and underweight on Taiwan (but preference for Taiwan technology) continues.
Hero Motors Limited (2313904Z IN): Synthetic Expert Call Transcript (17 Sep 2026)
- Mismatched Valuation and Structural Drags: While Hero Motors’ EV-related Powertrain business shows an impressive 46.1% 2-year CAGR (reaching Rs 273.29 crore in FY26), the overall IPO valuation of Rs 3,815.41 crore (implying a 92.7x FY26 P/E multiple on its Rs 41.17 crore PAT) is highly inflated. This multiple is significantly higher than established peer Sona BLW (~70.2x P/E) despite Sona possessing superior ROCE (16.96%) and much stronger operational margins.
- The Alloys & Metallics Margin Drain: The legacy Alloys & Metallics (A&M) segment, which accounts for 46.33% of total revenue, has turned into a major profitability drag, slipping into an operating loss of Rs 16.00 crore (-3.00% segment margin) in FY26. Fixed-cost under-recovery is exacerbated by severe underutilization in overseas facilities (Thailand at 3.87% and Hewland UK at 24.19%), which undermines the global expansion narrative.
- Capital Allocation Misalignment: Earmarking Rs 200.00 crore of the fresh issue proceeds for further capacity expansion at Gautam Buddha Nagar seems logical given its high utilization (78.53%), but it doesn’t resolve the massive cash drag of underutilized overseas plants. Furthermore, allocating Rs 210.00 crore to unidentified technology acquisitions is a risky bet, especially when the top two executives’ compensation already consumes 24.30% of consolidated PAT.
Disclaimer: The following transcripts are synthetic, AI-generated on demand, and compiled exclusively from public data sources; no real-word experts were actually interviewed. This content is designed to highlight potential market mispricings, explore compelling lines of inquiry, and suggest strategic questions rather than present verified facts. All specific financial metrics and data points, including market shares, TAM, margins, and growth rates, are AI-estimated approximations. They may be inaccurate and must be independently verified.
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