In today’s briefing:
- NIFTY200 Momentum30 Index Rebalance: HUGE Turnover and Trade as Financials Shine
- Indian Banks: Adding Canara and UBI to the Buy List, Dropping Bandhan and PNB
- BDL IN – Bharat Dynamics: Missile Systems Specialist Strengthening India’s Defence Edge
- KTM Saga, Short Bajaj Auto – There’s a Lot to Chew On
- Shyam Metalics & Energy Ltd (NSE: SHYAMMETL) – A Capital-Efficient Growth Play in Indian Metals
- Apollo Hospitals (APHS IN): Positive Outlook; Expansion on Track; Growth Momentum to Continue
NIFTY200 Momentum30 Index Rebalance: HUGE Turnover and Trade as Financials Shine
- There are 20 changes a side for the Nifty200 Momentum30 Index that will be implemented at the close on 27 June. We had correctly forecast 39 of the 40 changes.
- Estimated one-way turnover is 68.4% resulting in a round-trip trade of INR 160bn (US$1.9bn). There are 22 stocks with over 1x ADV to trade.
- The Financials sector has 9 net inclusions to the index while the Information Technology and Consumer Discretionary sectors have 2 net deletions each.
Indian Banks: Adding Canara and UBI to the Buy List, Dropping Bandhan and PNB
- Our proprietary scorecard applies a series of metrics related to valuation, returns, capital adequacy, funding, liquidity and credit quality to generate rankings in an investment valuation scorecard
- Driven by the scorecard results, we keep Baroda on the buy list adding Canara and UBI, with the latter two replacing Bandhan and PNB previously on the buy list
- We remove Kotak Mahindra from the sell list; IndusInd ranks bottom on the scorecard, but we feel that a lot of bad news is now discounted, limiting further downside risk
BDL IN – Bharat Dynamics: Missile Systems Specialist Strengthening India’s Defence Edge
- BDL reported strong FY25 revenue of ₹3,345 Cr and PAT of ₹550 Cr, though EBITDA margins declined to 24.6% from earlier highs.
- With a ₹22,700 Cr order book, BDL is expanding via new plants in Jhansi, Amravati, and Ibrahimpatnam backed by ₹600+ Cr capex.
- At 100x PE and 75xPE FY27e valuations appear stretched, leaving limited margin of safety despite strong execution and order visibility.
KTM Saga, Short Bajaj Auto – There’s a Lot to Chew On
- We cover the multiple factors which led to the operational and financial mess at Pierer Mobility AG, the holding company of KTM.
- This insight highlights the past not so great track record of Indian companies acquiring European businesses due to cultural, operational integration and higher restructuring costs.
- Bajaj Auto Ltd (BJAUT IN) remains strong domestically, but KTM’s losses, debt, and integration hurdles risk compressing margins and return ratios at the consolidated level. We recommend Shorting Bajaj Auto.
Shyam Metalics & Energy Ltd (NSE: SHYAMMETL) – A Capital-Efficient Growth Play in Indian Metals
- Shyam Metalics reported robust FY25 results with 15% revenue growth and 21% EBITDA rise, driven by higher volumes and a shift toward value-added products.
- The company is executing a ₹10,025 Cr capex plan to double capacity by FY27, targeting high-margin segments like stainless steel and aluminium foil with backward integration.
- With zero net debt, strong cash flows, and a forward P/E of ~14×, Shyam Metalics offers a rare blend of growth, capital discipline, and low leverage in the steel sector.
Apollo Hospitals (APHS IN): Positive Outlook; Expansion on Track; Growth Momentum to Continue
- Apollo Hospitals Enterprise (APHS IN) reported strong FY25 result, with 14% revenue growth and a massive 61% jump in net profit. EBITDA margin improved to 13.9% (FY24: 12.5%).
- Overall margin expansion is mainly driven by AHLL (margin up 140bps YoY to 9.9%) and Apollo HealthCo (margin at 1.8% vs loss in FY24).
- AHEL plans to add 4,300 beds over the next three to four years, with 2,000 beds expected to become operational in FY26.
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