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Worst Week Since Feb

Tale of the Tape 

Heya guys. The weekend is here! 🍻

Markets snapped their 3-week gaining streak. Nifty and Sensex dropped -0.3% each on Friday, capping off the worst week in 7 months! Midcaps (-0.1%) and Smallcaps (+0.3%) traded mixed. The advance-decline ratio (2:3) remained in favor of the bears. 📉

State-owned Banks (+3.5%) were the only saving grace as every other sector closed in the red. Pharma, Real Estate and Metals were taken to the cleaners. 🙈

Glenmark Pharma will sell a 75% stake in its subsidiary Glenmark Life Sciences for Rs 5,651 cr. More details below. 💸

JSW Infrastructure’s Rs 2,800 cr IPO opens on Monday. Check out our detailed analysis below. 🔍

India will soon be a part of the JP Morgan Emerging Market Bond Index. Wipro (-3%) was amongst the top losers on Nifty after the sudden resignation of its Chief Financial Officer. Read more below. 💯 

Maruti bounced +2.5% after global brokerage firm Citi hiked its 12-month target price to Rs 13,600 p/sh; +30% from current levels. 🔥

Listing pop. SAMHI Hotels closed at Rs 143 p/sh; +14 from its issue price. On the other hand, Zaggle Prepaid closed down -3.5%. 👎

Bajaj Healthcare gained +5% intraday. Promoter Sajankumar Rameshwarlal Bajaj bought 56,000 shares on Sept 21. ✅

Zomato was in focus after Blinkit launched 10-minute delivery of Apple’s new iPhone 15 models. 📲

Lux Industries fell -3% after the Income Tax Department raided its offices. 🚨

NCC (+1%) joint venture won new orders worth Rs 6,301 cr. 💰

Here are the closing prints:

Nifty 19,674 -0.3%
Sensex 66,009  -0.3%
Nifty Bank 44,612 -0.1%

Pullin In The Dough

Glenmark Pharma plunged nearly 6% intraday. The company will sell its 75% stake in subsidiary Glenmark Life Sciences for Rs 5,651 cr to the Nirma Group. PS – The business primarily produces APIs (active pharmaceutical ingredients) for chronic and acute therapeutic drug segments. The deal will likely close by Q4FY24. 🤝

So why are markets upset? Glenmark is going through with this to repay debt. FYI – the company’s gross debt is around Rs 4,600 cr. Following the stake sale, Glenmark will become net cash positive for the next two years. This is a good thing, but selling a profitable franchise to repay debt isn’t usually the most prudent idea. Especially when there are other ways of rolling over that debt. Which is why investors are a little nervous. 😨

The management has defended the deal, saying its life sciences division isn’t vital to Glenmark Pharma’s overall growth. This is true: the company currently buys less than 15% of APIs from GLS. 📊

While Glenmark’s top line will be affected in the short-term, experts believe the deal to be overall earnings neutral. This is because the net reduction in EBITDA from the API biz will be offset by lower interest costs. FWIW – brokerage firms are divided over the stock’s medium-term future. Motilal Oswal has a target price of Rs 750 p/sh (-2.5% from current levels), while Nuvama Research is at Rs 830 p/sh (+3% from current levels). 🤷

Stocktwits Specials

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JSW Infra IPO 

JSW Infrastructure IPO opens for subscription on Monday! The price band is fixed at Rs 113 – Rs 119 p/sh. The company aims to raise Rs 2,800 cr from the IPO. 💸

For the unaware, JSW Infra is the second-largest commercial port operator in India. It handles cargo, offers storage & logistics solutions and even develops port-related infrastructure. The company currently operates nine port concessions in India with an installed cargo handling capacity of 158.43 MTPA as of June 2023. It also operates two port terminals under O&M agreements for a capacity of 41 MTPA in the UAE. Fun Fact: Its installed cargo handling capacity grew at a CAGR of 15.3% from FY21-23, making it the FASTEST growing port operator in the country. 🚀

FYI – the IPO is a 100% fresh issue, which is a big positive! Roughly Rs 880 cr will go into repaying debt, while the rest will be used to expand or upgrade its Jaigarh Port in Maharashtra. 👌

FY23 Snapshot:

  • Revenue:  Rs 3,195 cr; +40% YoY
  • EBITDA: Rs 1,798 cr; +42% YoY
  • EBITDA Margin: 56%
  • PAT: Rs 750 cr; +128% YoY

Big Picture: The company has been on a roll post-pandemic, with healthy bumps in the bottom + top line. But, there are several risk factors at play. For starters, a good chunk (~35%) of the total cargo volumes handled by JSW Infra are either coal or iron ore. Global headwinds in either of those sectors could cause a dent in the firm’s bottom line. And while the overall financial picture looks good, 8 of its 11 subsidiaries reported a net loss in the June quarter. 👀

FWIW – the IPO is reasonably priced. And grey market data suggests the stock may list at a decent 11% premium! 😇

Bullets For The Day 

✅ Indian government bonds will FINALLY be included in JP Morgan’s emerging market debt index. For the unaware, this move has been discussed for over a decade now, and it’s finally happening. Why is it such a big deal? Well, because the bond market may now see foreign fund inflows to the tune of $25 billion – $50 billion by 2025! FYI – foreign investors own less than 2% of outstanding GOI debt.

Currently, 23 GOI bonds with a combined value of $330 billion are eligible for the index. They will be added over a staggered 10-month period, starting from June 2024 to March 2025.

FYI – the move is also a positive for the rupee, for banks, NBFCs and even highly-leveraged companies. Lastly, it’s a sign of India’s growing appeal to international investors as our economic growth + geopolitical influence beats other peers.

🚨 Wipro slumped 2.5% intraday after its Chief Financial Officer Jatin Dalal resigned. Reports indicate that Dalal’s exit was abrupt and a bit of a surprise. Investors are a little spooked because Dalal is the latest in a long line of top execs that have left Wipro. In FY23 alone, the company lost its COO (Sanjeev Singh), chief marketing officer (Gurvinder Sahni), its America CEO & CFO, and several vertical heads.

The exodus has spooked long-standing company insiders. Suresh Senapaty, former Wipro CFO and close confidant of Azim Premji told Moneycontrol: “Wipro must regain its intolerance towards losing great talent by working deeper in understanding of its talent repository. That’s critical for regaining its success trajectory of growth, which has been subdued compared to industry for quite some time now.”

FYI, Goldman Sachs recently slapped a ‘sell rating’ on Wipro, assigning a target price of Rs 385 p/sh.

Movers and Shakers

Here’s a look at this week’s top Nifty 500 movers. HUDCO took the pole position after gaining +17%. 🥇 KSB Ltd (+15%) hit a new all-time high. Cochin Shipyard (-9.5%) saw profit booking for a second straight week. Star Health (-9%) hit a 2.5-month low. 📉 Check out their charts below: