In today’s briefing:
- Kiri Industries (KIRI IN): Heads I Make 50%; Tails I Don’t Lose Much
- HDB Financial IPO: Valuation Insights
- HDB Financial Services IPO – Strong Franchise, Solid Backing, But Pricing Demands Delivery
- Kent R O Systems Ltd IPO- Purity at a Price
- The Beat Ideas: Poonawalla Fincorp Ltd.- Leading the Charge in Digital-First Financial Services
Kiri Industries (KIRI IN): Heads I Make 50%; Tails I Don’t Lose Much
- Dyes and pigments player Kiri Industries is set to realise $580mn post-taxes for its 37% stake in Singapore based DyStar Global; ~50% above its current marketcap of $370mn.
- Adjusting for Debt repayment, we estimate that once proceeds have been recieived and pending warrants have been converted, cash in books will stand at INR ~600/share vs CMP: 570
- The company’s core dyes business, its 40% stake in Lonsen Kiri Chemicals India and its copper investments could be worth 300+share taking SOTP to ~900
HDB Financial IPO: Valuation Insights
- HDB Financial Services Ltd (0117739D IN) is India’s seventh-largest non-banking financial company (NBFC). It is seeking to raise Rs125 billion (US$1.4 billion).
- I discussed the fundamentals in HDB Financial IPO: The Investment Case. The shares will be listed on 2 July.
- My valuation analysis suggests the HDB is fully priced at the IPO price range of Rs 700- 740 per share. I would avoid the IPO.
HDB Financial Services IPO – Strong Franchise, Solid Backing, But Pricing Demands Delivery
- Offer: ₹12,500 crore IPO (₹2,500 crore fresh issue + ₹10,000 crore OFS); price band ₹700–740 implies a ₹61,250 crore valuation.
- Track Record & Use of Funds: 15% AUM CAGR and 41% PAT CAGR over FY21–25; proceeds to bolster Tier-1 capital and fund growth.
- Valuation Caution: Backed by HDFC Bank with deep rural reach, but 3.9x P/BV implies a 27% ROE—well above current levels—leaving little margin for execution slippage.
Kent R O Systems Ltd IPO- Purity at a Price
- Kent R O Systems (6592700Z IN) Kent R O Systems Ltd plans to come up with its IPO
- The company is the second largest player in the Indian water purifier market with a market share of about 20%, behind Eureka Forbes.
- We are concerned with the related party transactions of the company, especially with the promoters. The lease rental policy, coupled with some impairments, and trademark infringement matter also attracts attention.
The Beat Ideas: Poonawalla Fincorp Ltd.- Leading the Charge in Digital-First Financial Services
- Poonawalla Fincorp is targeting a 5–6x AUM growth over five years, driven by new product launches, digital innovation, and branch expansion in the gold loan segment.
- Backed by the Cyrus Poonawalla Group and led by seasoned professionals, the company’s low cost of borrowing and tech-first approach enhances its competitive positioning in the NBFC space.
- The shift toward secured lending, digital underwriting, and MSME focus suggests a more resilient and scalable growth model, improving visibility on profitability and asset quality.
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