In today’s briefing:
- Swiggy IPO Lockup – US$7.9bn Lockup Release
- Urban Company Ltd Pre-IPO Tearsheet
- Event Driven: Deep Dive into Siemens Limited’s Energy Demerger
- SENSEX Index Rebalance Preview: Trent, Bharat Electronics Could Replace IndusInd Bank, Nestle
- Canara HSBC Life Insurance Pre-IPO Tearsheet
- Business Breakdown: HP Adhesives- Building a Brand or Battling Giants
- CG Power: Strong Execution, Strategic Expansion, and Long-Term Growth Visibility
- Coal India: Volume Strength Intact, Profitability Headwinds Emerging
- APL Apollo Tubes: Volume Momentum Intact; Margin Expansion and Capex Execution Key to Valuations
Swiggy IPO Lockup – US$7.9bn Lockup Release
- Swiggy (SWIGGY IN) raised around US$1.35bn in its India IPO in Nov 2024. The lockup on its pre-IPO investors is set to expire soon.
- Swiggy is a business to commerce marketplace company offering users a platform for ordering grocery and household items and food delivery, through its on-demand delivery network
- In this note, we will talk about the lockup dynamics and possible placement.
Urban Company Ltd Pre-IPO Tearsheet
- Urban Company (URBAN IN) (UCL) is looking to raise about US$223m in its upcoming India IPO. The bookrunners for the deal are Kotak, Morgan Stanley, Goldman Sachs, JM Fin.
- UCL is a tech-enabled platform offering home and beauty services delivered by trained professionals at customer’s location.
- As of Dec 24, it operated in 59 cities across India and overseas.
Event Driven: Deep Dive into Siemens Limited’s Energy Demerger
- Siemens Ltd (SIEM IN) is spinning off its Energy Business into Siemens Energy India Limited (SEIL), creating two independent entities for focused growth and unlocking shareholder value.
- Post-Demerger, SEIL is well-positioned in the Indian energy sector, benefiting from decarbonization initiatives, capital investments, and strong export potential in the coming years.
- The remaining Siemens Limited will concentrate on technology sectors like Industry, Infrastructure, and Mobility, maintaining its strong business profile and order backlog, ensuring continued growth post-demerger.
SENSEX Index Rebalance Preview: Trent, Bharat Electronics Could Replace IndusInd Bank, Nestle
- With the review period complete, there could be two changes for the S&P BSE SENSEX Index (SENSEX INDEX) at the June rebalance.
- Trent Ltd (TRENT IN) and Bharat Electronics (BHE IN) are high probability inclusions while Indusind Bank (IIB IN) and Nestle India (NEST IN) are high probability deletions.
- Indusind Bank (IIB IN) is also a potential NIFTY Index (NIFTY INDEX) deletion in September and there will be continued pressure on the stock.
Canara HSBC Life Insurance Pre-IPO Tearsheet
- Canara HSBC Life Insurance (2908709Z IJ) is looking to raise about US$354m in its upcoming India IPO with bookrunners HSBC, JM Fin, Motilal, BNP Paribas and SBI Caps.
- Canara HSBC Life Insurance is a private life insurer in India and promoted by Canara Bank and HSBC Insurance (Asia-Pacific) Holdings Limited, a member of the HSBC group.
- According to CRISIL, it was ranked second amongst public sector bank-led life insurers in India based on the number of lives covered for FY24.
Business Breakdown: HP Adhesives- Building a Brand or Battling Giants
- HP Adhesives has expanded its product portfolio with high-growth categories like silicone sealants and diversified into high-margin niches such as epoxy putties, strengthening its market position.
- The company’s strategic distribution expansion, along with product innovation, aligns well with the growing demand in the Indian adhesives market, positioning HPAL for sustainable growth across various sectors.
- While facing challenges like raw material price volatility and competition from market leaders, HPAL’s strong capacity expansion and focus on high-margin products indicate significant potential for long-term value creation.
CG Power: Strong Execution, Strategic Expansion, and Long-Term Growth Visibility
- Consolidated revenue grew 23% YoY to Rs9,999 crore; PBT margin at 13.6%; order backlog rose 66%, supported by broad-based growth across key segments.
- Capacity expansions in transformers and semiconductors, export growth initiatives, and investments in consumer products and railway systems are key strategic priorities over FY26–FY28.
- Trading at 73–77x FY26E P/E; management targets sustained growth, high ROCE, and diversification, supporting a long-term compounding opportunity.
Coal India: Volume Strength Intact, Profitability Headwinds Emerging
- Coal India reported flat EBITDA YoY in FY25, with lower e-auction realizations offset by cost control; record-high volumes but profitability impacted by NSR pressures.
- FY26 guidance implies 7–8% offtake growth but appears largely aspirational given historical shortfalls; management remains cautious on realizations with weaker e-auction pricing and only modest FSA escalations.
- Valuations appear cheap at ~6.7x FY25 EPS but are justified by margin risks from the FY27 wage hike and limited operating leverage on an already high volume base.
APL Apollo Tubes: Volume Momentum Intact; Margin Expansion and Capex Execution Key to Valuations
- Q4 FY25 performance was strong with volumes up 25% YoY, EBITDA up 48% YoY, and net profit up 72% YoY; EBITDA per ton improved to Rs4,864 (+18%YoY).
- Management targets ~20% volume growth and ~Rs5,000/ton EBITDA for FY26, with capex of Rs1,500 crore over three years to expand capacity from 4.5 to 6.8mt.
- EPS is projected to grow ~55% in FY26 and 20%+ in FY27; stock trades at ~39x FY26E and ~33x FY27E earnings, supported by strong internal cash generation and low leverage.
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