End of the Week Update
May 14, 2021 Contents
Page Section Title number 1 Our Views 3 2 Market Update 5 3 Sectoral Update 3.1 Financial Services 7 3.2 Technology, Telecom and Media 9 3.3 Pharma 11 3.4 Healthcare 12 3.5 Auto & Auto Components 13 3.6 Metals & Mining 14 3.7 Aviation 15 3.8 Power and Infrastructure 16 3.9 Consumer and Retail 18 3.10 Real Estate 20 3.11 Startup Update 21 NovaDhruva Team 22
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2 Our Views SEBI consultation on Lock-in – one step closer, one step away
Yesterday, SEBI issued a consultation paper to review the regulatory framework of promoter and promoter group. It is indeed remarkable that the regulator in these tough times is not just focused on business-as-usual, but also exhibiting resilience by working on progressive issues with a long-term impact. In my view, the consultation paper covered two very significant issues – first, the proposed reduction in lock-in periods for minimumpromoters’ contribution and other shareholders for public issue;second,shifting from the concept of ‘promoter’ to theconcept of ‘person in control’. Promoter shareholdingLock-in conditions At present, SEBI prescribes a minimum promoters’ contribution of 20% to be locked-in for a period of three years from listing. Additionally, any other pre-IPO capital is required to belocked-in for one year, except some exempt categories. The logic behind the lock-in requirement was to restrict the controlling shareholders from disposing of their holding after listing of the company, to ensure they have a ‘skin in the game’, and to make them take responsibility to deliver on the promises made in the offering circular. In fact, in my view, the origin of this thought goes back to the control environment pre-1991 when industries were being set up based on special permissions. In those days, the license conditions used to prescribe a minimum equity contribution by the promoter which was locked up until the lender’s money was paid off. Asimilar thought found resonance in the capital markets regulations and a minimum of 20% equity contribution from promoters was made compulsory with a lock-in period. SEBI has now proposed to reducelock-in period on the 20% minimum promoter shareholding to 1 year and on other pre-IPO shares to six months, except in situations of project financing. This reduced lock-in period is a welcome first step. This regulation certainly required a rethink, and I amglad that the regulator has put this out for public consultation. However,I do think we need to take the final step of letting market forces determine the lock-in period instead of prescribing a uniform fixed lock-in period. As SEBI inits consultation paper has noted, the Indian capital markets have not only matured over the years, but it has also adopted best international practices. When we look at the international benchmarks, in the global capital markets a number of these provisions are determined by the market forces. It is left to the market forces to decide and the equilibrium between the number of shares required in the market to createproper liquidity and the promoter lock-inperiod immediately after a transaction. The question of promoter lock-in is left to the underwriters to make a call on the lock-in period based on market feedback. These underwriters areregulated entities with deep understanding and wide experience of markets. If the market is willing to accept a shorter lock-in because of the liquidity in the stock, then weshould have that flexibility. Similarly, if the market feedbacksuggests that a longer lock-in is required for a certain type of issuer, then thatneeds to be built in so that the transaction goes through smoothly.Weshould not underestimatethepowerof marketas a decisionmaker. Shift from ‘Promoter’to‘Person in control’ The concept of ‘Promoter’ and the argument for Promoter having a skin in the game, as I have already mentioned earlier, is more historical. Given the paceat which thenature of businesses and business ownership in India are changing, regulations must match the stride. Recognizing the evolved business scenarios, SEBI is proposing just that – to remove reference to promoter fromvarious SEBI regulations and instead introduce the concept of person in control over a transition period ofthreeyears.
3 Our Views SEBI consultation on Lock-in – one step closer, one step away
Today, the concept of a promoter is blurred. Several Indian companies are now owned by financial investors rather than by a controlling family. Some businesses are owned by a group of professional investors. In such circumstances, thereis no identifiablepromoter, and thecompany is largely board controlled. Mostbanks,some other large financial institutions and several corporates are examples of board-controlled companies. Though the proposed simplification will necessitate reorientation of enforcement strategies and will have implications on other laws, it will facilitate more board control companies to tap Indian capital markets. This will eventually add further depth to themarket andbringitat par withtheglobalmarkets. Both thesesteps are in theright direction and would take us closer to the global standards. However, we need to walk one more step of letting market forces determine the lock-in period instead of prescribing a uniform fixed lock-inperiod! https://economictimes.indiatimes.com/markets/stocks/news/one-step-closer-one-step-away-sebi-moves-to- bury-two-licence-raj-legacies/articleshow/82598036.cms
4 Market Update Key Market Trends
Global and Indian Indices Performance
Rebased to 100 Last 1 Year Rebased to 100 Since Jan 01, 2021 200 1,500 120 (YTD) 1,500 180 115 160 1,000 1,000 140 110 120 105 500 500 100 100 80 60 0 95 0 The Indian indices, 13-May 25-Jul 06-Oct 18-Dec 01-Mar 14-May 01-Jan 27-Jan 23-Feb 21-Mar 17-Apr 14-May Nifty and Sensex, NIFTY Volume Nifty Sensex Dow Jones NASDAQ FTSE Nikkei Hang Seng decreased by c.1.0% (RHS) -Mn Current each Return (%) 1D 1W 1M 3M YTD 6M 1Y Level Nifty 14,678 (0.1%) (1.0%) 1.2% (3.2%) 4.7% 15.4% 56.4% Sensex 48,733 0.1% (1.0%) 0.4% (5.5%) 1.8% 12.2% 52.2% 1 Dow Jones 34,021 1.3% (2.2%) 1.0% 8.1% 11.2% 15.4% 46.3% 1 Nasdaq 13,109 0.8% (4.4%) (6.3%) (5.1%) 1.7% 9.8% 45.7% 1 FTSE 6,963 (0.6%) (2.3%) 1.1% 5.7% 7.8% 10.2% 17.9% Nikkei 28,084 2.3% (4.3%) (5.6%) (4.9%) 2.3% 10.6% 38.6% Hang Seng 28,028 1.1% (2.0%) (1.6%) (7.1%) 2.9% 7.2% 15.9% Indian Sectoral Performance Current Nifty Metal, Nifty Return (%) 1D 1W 1M 3M YTD 6M 1Y Private Bank, and Level Nifty IT were the Nifty Bank 32,170 (0.9%) (2.2%) 1.3% (10.9%) 3.0% 13.0% 68.7% biggest losers this Nifty Fin. Services 15,412 (0.6%) (2.3%) 1.3% (9.4%) 1.5% 11.8% 64.7% week Nifty FMCG 34,782 2.1% 1.9% 0.2% 2.5% 1.1% 11.4% 29.1% Nifty Pharma 13,886 (1.3%) 1.0% 8.4% 8.6% 6.8% 18.4% 51.4% Nifty IT 25,588 (1.0%) (2.6%) (1.0%) (1.9%) 4.6% 19.4% 92.5% Nifty Auto 9,810 (2.0%) (0.1%) (0.1%) (10.1%) 5.8% 18.1% 69.0% Nifty Media 1,604 (1.6%) 2.4% 10.1% (4.9%) (3.3%) 8.4% 38.5% Nifty Metal 5,091 (3.8%) (4.6%) 17.4% 46.0% 56.2% 89.9% 196.9% Nifty PSU Bank 2,194 (2.0%) 3.7% 5.6% (1.4%) 21.3% 55.4% 82.0% Nifty Private Bank 17,074 (0.9%) (2.7%) 0.3% (11.2%) (0.7%) 7.7% 63.5% Nifty Realty 300 (3.2%) (2.3%) (4.8%) (14.3%) (5.0%) 24.3% 71.5% BSE Telecom 1,383 (0.6%) (1.3%) 3.7% (3.9%) 7.5% 20.9% 14.2% BSE Healthcare 24,091 (1.2%) 0.2% 7.5% 10.6% 10.2% 21.5% 59.5%
Valuation multiples NTM PE Ratio – Last 1 Year
for NSE Metal, NSE May 18 Realty, and NSE IT Lock- down 32.1x, Realty recorded the 4.0 31.8x, FMCG biggest decline this 23.0x, IT 40.0x 28.5x, Healthcare week 27.5x, Pharma 21.1x, Auto 30.0x NTM PE Ratio chart 20.6x, Sensex shows the evolution 19.6x, Nifty of NTM valuation 20.0x 19.1x, Fin. Services multiple on each 15.9x, Bank 14.6x, Media day for the last 12 10.0x 8.9x, Metals months 0.0x 14-May 26-Jul 07-Oct 19-Dec 02-Mar 14-May Notes: 1 Current data as of May 13, 2021 Source: Bloomberg as on May 14, 2021
5 Market Update Key Market Trends Trading Activity by FII/DIIs in Capital Market Segment (USD mn) FIIs/FPIs were net Last 1 Week Weekly Total 14-May-21 12-May-21 11-May-21 10-May-21 sellers in the cash FII/FPI (Cash) (493.7) (355.8) (171.7) (45.8) 79.6 segment & net 1 FII/FPI (F&O) 692.7 549.3 940.6 (891.7) 94.6 buyers in the F&O segment whereas DII (169.5) 83.7 (95.9) (92.3) (64.9) DIIs were net sellers Total 29.5 277.2 673.0 (1,029.8) 109.2 this week Trading Activity by FIIs in Debt Segment (USD mn) Last 1 Week Weekly Total 14-May-21 12-May-21 11-May-21 10-May-21 FIIs/FPIs were net FII/FPI 106.8 61.1 (24.3) (2.4) 72.3 buyers in the debt segment Liquidity Position (USD mn) Last 1 Week 12-May-21 11-May-21 10-May-21 07-May-21 06-May-21 05-May-21 Net Liquidity 61,522 68,598 67,157 64,555 65,271 74,496 Absorption through RBI Reverse Repo 45,249 52,098 50,698 74,961 49,211 58,787 2 MIBOR (%) 3.44% 3.45% 3.46% 3.45% 3.45% 3.45% 3 MIFOR 1M 6.22% 5.77% 5.90% 5.37% 6.39% 6.91% 3 MIFOR 3M 5.81% 5.58% 5.70% 5.35% 5.56% 5.98% 3 MIFOR 6M 5.74% 5.48% 5.52% 5.22% 5.22% 5.50% 3 MIFOR 12M 5.57% 5.41% 5.47% 5.23% 5.20% 5.35% India Government and Corporate Bond Yields (%) The 10YR Yield (%) Current 1D 1W 1M 3M Jan 01 6M 1Y 4 Government bond 1YR AAA Rated Corp. Bond 4.30% 4.30% 4.31% 4.34% 4.50% 3.91% 3.83% 6.24% yield decreased by 1YR G-Sec 3.81% 3.81% 3.83% 3.85% 4.07% 3.34% 3.37% 3.95% 4 3bps this week 3YR AAA Rated Corp. Bond 5.04% 5.04% 5.05% 5.37% 5.20% 4.69% 4.89% 6.74% 3YR G-Sec 4.74% 4.73% 4.74% 5.01% 5.14% 4.41% 4.56% 4.78% 4 5YR AAA Rated Corp. Bond 5.73% 5.73% 5.69% 5.96% 5.94% 5.51% 5.60% 6.79% 5YR G-Sec 5.57% 5.55% 5.54% 5.95% 5.75% 5.04% 5.17% 5.61% 10YR AAA Rated Corp. Bond 6.79% 6.79% 6.79% 6.81% 6.75% 6.63% 6.58% 6.73% 10YR G-Sec 5.99% 6.01% 6.02% 6.13% 5.99% 5.88% 5.88% 5.78% Currency Market Snapshot
% Change in FX Current FX Rate 1D 1W 1M 3M YTD 6M 1Y USD-INR 73.30 0.2% 0.3% 2.2% (0.7%) (0.2%) 1.8% 3.1% EUR-INR 88.74 0.0% 0.0% 1.2% (0.7%) 0.6% (0.7%) (7.9%) GBP-INR 103.05 (0.1%) (0.7%) 0.3% (2.6%) (3.0%) (4.5%) (10.5%) JPY-INR 0.67 0.1% 0.5% 2.8% 3.5% 5.5% 6.0% 5.7% SGD-INR 54.91 0.1% 0.6% 2.2% (0.2%) 0.7% 0.8% (3.3%) CNY-INR 11.39 (0.1%) 0.3% 0.9% (1.1%) (1.6%) (0.9%) (6.6%) Commodity Market Snapshot
% Change Current 1D 1W 1M 3M YTD 6M 1Y WTI Crude (USD/barrel) 64.44 1.0% (0.7%) 7.0% 10.0% 32.5% 54.3% 92.8% Oil ICE Brent Crude (USD/barrel) 67.78 1.1% (0.7%) 7.1% 11.6% 31.6% 53.7% 81.7% Gold Spot Gold (USD/ounce) 1,835.36 0.5% 0.2% 5.1% 0.6% (3.3%) (2.8%) 6.1% India InvITs and REIT Performance % Change Current Price 1D 1W 1M 3M YTD 6M 1Y Indigrid 127.99 0.8% 0.4% 0.9% (6.9%) 4.9% 15.8% 32.6% InvITs IRBInvIt 55.67 (0.5%) 1.8% 6.3% 12.3% 32.5% 30.5% 72.4% Embassy Office Parks REIT 319.29 0.2% 1.8% 2.9% (8.8%) (9.2%) (4.3%) (6.9%) Mindspace Business Parks 289.95 (0.0%) 0.2% (2.6%) (9.3%) (11.8%) (4.9%) NA
Notes: 1Includes notional turnover in case of options, 2Financial Benchmarks India Overnight Mumbai Interbank Outright Rate, 3Mumbai Interbank Forward Offer Rate, 4 Current data as of May 13, 2021; Source: Bloomberg as on May 14, 2021
6 Sectoral Update – Financial Services India Financial Services Update
1 Month Share Price Performance India – Bank Stocks India – NBFC Stocks
HDFC Bank (1.0%) HDFC (3.6%) ICICI Bank 6.5% Bajaj Finance 12.7% KMB (3.9%) Shriram Transport (4.0%) Axis Bank 3.6% L&T Finance (10.2%) Indusind 1.5% Mahindra Finance (14.5%) Yes Bank (10.2%) Shriram City Union 10.3%
Trading Comparables¹
Share Weekly Market P/BV P/E ROE Price change in Cap (INR) price (%) USD mn FY22 FY23 FY22 FY23 FY22 FY23 Banks HDFC Bank 1,387 (2.0%) 103,361 3.3x 2.8x 19.9x 16.9x 16.9% 17.2% ICICI Bank 597 (1.6%) 55,845 2.5x 2.3x 21.2x 16.9x 12.7% 14.2% Kotak Mahindra Bank 1,707 (4.1%) 45,707 3.8x 3.3x 29.4x 25.8x 12.5% 12.9% Axis Bank 685 (4.4%) 28,363 1.9x 1.7x 19.7x 15.5x 10.3% 12.2% IndusInd Bank 891 (3.8%) 9,312 1.5x 1.3x 11.9x 9.4x 12.9% 14.7% Yes Bank 13 (1.1%) 4,469 1.0x2 NA NA NA NA NA NBFCs HDFC 2,422 (3.0%) 59,043 3.7x 3.3x 19.2x 16.5x 13.2% 13.3% Bajaj Finance 5,330 (3.0%) 43,478 7.3x 6.0x 38.8x 30.1x 20.1% 21.7% Shriram Transport 1,327 2.2% 4,536 1.4x 1.2x 10.3x 8.8x 14.2% 14.7% L&T Finance 85 (2.0%) 2,839 1.0x 0.9x 10.4x 8.0x 10.2% 11.9% Mahindra Finance 151 (2.2%) 2,522 1.1x 1.0x 10.2x 8.0x 11.6% 13.2% Shriram City Union 1,583 (3.9%) 1,412 1.1x 1.0x 8.5x 6.9x 13.8% 14.7%
Industry Update
▪ RBI came out with modified guidelines that allow sound private sector banks which are not under the PCA framework, to undertake government business after executing an agreement with the central bank ▪ Punjab National Bank and Geojit Financial Services have joined hands to offer a “three-in-one account”, which will combine savings and demataccounts of the bank with the non-bank’s trading account ▪ Shriram City Union Finance (SCUF) has invested USD 27.0 mn in its housing finance subsidiary, Shriram Housing Finance (SHFL) which will increase SCUF’s holding in SHFL to 81.2% from existing 77.3% ▪ TPG Growth, Norwest Venture Partners and Evolvence have invested USD 45.5 mn in the Series E funding round of Ess Kay Fincorp, a used-vehicle and SME financier ▪ HDFC Bank acquired 1.5% stake in Grameen E-Store, an ecommerce startup, for an undisclosed amount ▪ SBI Card’s stakeholders' relationship committee has approved the allotment of 4,550 fixed -rate, unsecured, rated, taxable redeemable, senior, NCDs aggregating to USD 61.5 mn Notes: ¹Financial year ending March; 2Represents P/B ratio calculated based on book value per share as of March 31, 2021; Source: Bloomberg as on May 14, 2021; USD 1 = INR 74
7 Sectoral Update – Financial Services India Insurance and Asset Management Update
1 Month Share Price Performance Life Insurance General Life Insurance AMCs
HDFC Life(2.4%) HDFC AMC (1.6%) ICICI Lomb. 9.0%
SBI Life 12.1% Nippon 4.6%
New India 4.6% ICICI Pru 26.2% UTI AMC 27.4%
Trading Comparables¹
Weekly P/BV P/Emb. Value² RoA RoE Share Price Market cap change in (INR) USD mn price (%) FY22 FY23 FY22 FY23 FY22 FY23 FY22 FY23
Life Insurance
HDFC Life 671 (0.3%) 18,318 14.0x 12.0x 5.4x 4.6x 1.0% 1.0% 17.0% 18.0%
SBI Life 978 (2.2%) 13,223 8.5x 7.3x 3.2x 2.8x 0.9% 0.9% 11.5% 12.1%
ICICI Pru 560 (0.3%) 10,870 8.3x 7.4x 3.1x 2.8x 0.8% 1.0% 14.1% 15.8%
Weekly P/BV P/E RoA RoE Share Price Market cap change in (INR) USD mn price (%) FY22 FY23 FY22 FY23 FY22 FY23 FY22 FY23
General Insurance
ICICI Lomb. 1,473 1.6% 9,050 7.6x 6.5x 39.0x 32.5x 3.8% 4.0% 20.2% 20.5%
New India 153 0.9% 3,396 1.2x 1.1x 13.5x 10.3x 1.9% 2.4% 9.4% 11.4%
Weekly EV³/AUM P/E RoA RoE Share Price Market cap change in (INR) USD mn price (%) FY22 FY23 FY22 FY23 FY22 FY23 FY22 FY23
Asset Management Companies
HDFC AMC 2,799 3.0% 8,056 11.6% 9.9% 39.4x 34.8x 28.0% 28.3% 29.9% 30.6%
Nippon 342 (2.6%) 2,846 5.1% 4.5% 33.3x 28.6x 19.2% 21.1% 20.3% 22.2%
UTI AMC 695 (0.8%) 1,190 4.6% 3.9% 20.5x 17.4x 12.7% 15.4% 13.7% 15.4%
Industry Update ▪ Indiabulls Housing Finance announced sale of its mutual fund business carried out by Indiabulls Asset Management Company (AUM of USD 93.8 mn) to Nextbillion Technology, part of Bangaluru based investment platform, Groww Group for an aggregate purchase consideration of USD 23.6 mn (including cash and cash equivalents of USD 13.5 mn) ▪ Gross Written Premium (GWP) of the general insurance industry for the month of April 2021 aggregated to USD 2.3 bn registering YoY growth of 22.1% on account of low base of April 2020 (decline in MoM GWP by 10.3%) ▪ HDFC in accordance with the direction of RBI to reduce its shareholding in HDFC ERGO to 50% or below, entered into a share purchase agreement for sale of 0.6% stake in HDFC ERGO to ERGO International AG for USD 32.0 mn
Notes: ¹Financial year ending March, ²Emb. Value refers to Embedded Value; ³EV represents Enterprise Value Source: Bloomberg as on May 14, 2021, News run; USD 1 = INR 74
8 Sectoral Update – Technology, Telecom and Media India Technology Update
1 Month Share Price Performance Large Cap IT Midcap IT and BPO Software and Consumer Internet TCS (1.7%) L&T Infotech (12.4%) InfoEdge (5.8%) IndiaMart (14.3%) Mindtree 2.7% Infosys (5.8%) MakeMyTrip (17.2%) Mphasis 6.3% Happiest Minds 14.1% Wipro 19.0% Intellect Design 2.3% L&T Tech (5.6%) Route Mobile (0.2%) HCL (7.4%) Infibeam Coforge 15.9% (1.3%) Nazara 1.9% TechM (5.0%) Peristent Systems 17.2% JustDial (10.1%) Trading Comparables¹ Weekly EV/Revenue EV/EBITDA P/E Share Price Market cap EV change in (INR) USD mn USD mn price (%) FY22 FY23 FY22 FY23 FY22 FY23 Large Cap IT TCS 3,052 (2.6%) 152,536 148,508 5.8x 5.2x 20.3x 18.3x 28.4x 25.4x Infosys 1,316 (2.7%) 75,796 72,918 4.6x 4.1x 17.1x 15.3x 25.0x 22.3x Wipro 498 (3.3%) 36,906 33,670 3.4x 3.1x 14.8x 13.6x 23.6x 21.5x HCL 910 (0.7%) 33,384 32,158 2.8x 2.5x 10.9x 9.9x 17.5x 15.8x Tech Mahindra 952 (2.9%) 12,462 11,212 2.0x 1.8x 10.5x 9.6x 17.3x 15.7x Midcap IT and BPO L&T Infotech 3,598 (4.5%) 8,498 8,014 4.1x 3.5x 19.4x 16.9x 28.3x 24.5x Mindtree 2,106 (5.2%) 4,687 4,396 3.5x 3.1x 16.8x 15.1x 26.6x 23.8x Mphasis 1,789 (3.1%) 4,523 4,414 3.0x 2.6x 15.5x 13.8x 22.9x 20.1x L&T Tech Services 2,540 0.7% 3,605 3,435 4.0x 3.5x 19.8x 16.9x 29.7x 25.4x Coforge 3,350 (0.9%) 2,743 2,631 3.2x 2.8x 17.2x 14.6x 30.4x 25.2x Persistent Systems 2,278 0.9% 2,353 2,148 3.2x 2.8x 19.2x 16.4x 30.4x 25.5x Software and Consumer Internet InfoEdge 4,292 (8.2%) 7,469 7,373 36.6x 31.6x NM NM NM NM IndiaMart 6,809 (8.7%) 2,794 2,492 22.9x 18.9x 50.7x 43.6x 60.7x 53.3x MakeMyTrip 1,739 (5.5%) 2,526 2,322 4.4x 2.7x NM 50.9x NM NM Happiest Minds 729 (12.6%) 1,446 1,443 10.5x 8.3x 44.9x 37.7x 57.9x 48.6x Intellect Design 720 (9.6%) 1,293 1,268 4.9x 4.4x 16.9x 16.1x 22.8x 18.7x Route Mobile 1,539 (4.1%) 1,200 1,192 5.1x 4.2x 41.4x 32.9x 53.9x 41.0x Infibeam 43 8.1% 770 759 5.3x NA 17.4x NA 24.0x NA Nazara Technologies 1,670 (3.3%) 687 669 10.0x 8.0x NA NA NA NA JustDial 781 (3.4%) 653 656 5.8x 5.1x 22.5x 17.9x 20.5x 16.7x Industry Update
▪ Mphasis announced dividend of INR 65 per share for FY21 (inclusive of a special dividend of INR 27 per share) aggregating to USD 164.3 mn ▪ Amazon India's digital payments arm received a capital infusion of USD 30.4 mn from its US parent through a Singapore unit ▪ BharatPe, a Delhi based fintech startup raised USD 6.8 mn in debt from Northern Arc Capital ▪ DeepTech firm Cron AI, which is building a 3D data edge perception platform raised USD 4.0 mn in funding led by VenturEast and Kitaki Ventures ▪ SuperOps.ai, a professional services automation and remote monitoring and management platform raised USD 3 mn financing led by Elevation Capital and Matrix Partners India Notes: ¹Financial year ending March Source: Bloomberg as on May 14, 2021, News run; USD 1 = INR 74
9 Sectoral Update – Technology, Telecom and Media India Telecom and Media Update
1 Month Share Price Performance Telecom Media and Entertainment
Reliance Industries 0.3% Sun TV 12.1% Zee 1.9% Bharti Airtel 4.5% PVR 7.0% Bharti Infratel (0.3%) Network18 10.4% Inox 11.1% Vodafone Idea (3.4%) Dish TV 32.4%
Trading Comparables¹ Weekly EV/Revenue EV/EBITDA P/E Share Price Market cap EV change in (INR) USD mn USD mn price (%) FY22 FY23 FY22 FY23 FY22 FY23
Telecom
Reliance Industries 1,937 0.3% 1,933,314 189,430 2.2x 2.0x 12.6x 10.4x NM NM
Bharti Airtel 560 (1.4%) 41,591 61,304 4.0x 3.5x 8.1x 7.0x 49.8x 25.0x
Bharti Infratel 244 (4.0%) 8,899 11,344 2.9x 2.8x 6.2x 5.7x 12.8x 11.7x
Vodafone Idea 9 4.2% 3,359 19,013 3.0x 2.7x 6.4x 5.4x NM NM
Media and Entertainment
Sun TV 522 5.4% 2,777 2,430 4.6x 4.3x 7.2x 6.8x 13.1x 12.2x
Zee Entertainment 192 2.9% 2,487 2,445 2.1x 1.9x 7.9x 7.0x 11.9x 10.3x
PVR 1,162 0.6% 954 1,569 4.1x 2.9x 13.6x 8.6x NM 26.7x
Network18 39 (1.7%) 557 1,267 NA NA NA NA NA NA
Inox 289 6.1% 441 439 2.8x 1.5x 13.3x 5.1x NM 19.3x
Dish TV 12 4.3% 306 520 NA NA NA NA NA NA
Industry Update
▪ TRAI floated a discussion paper on ‘validity period of tariff offers'' discussing the prospect of syncing plans with the duration of the month, rather than 28 days
▪ TRAI has directed the representative body of telcos-- the Cellular Operators Association of India to make a presentation outlining the pros and cons of the homegrown 5G standard, 5Gi, developed by the Indian Institute of Technology
▪ Overall subscriber net adds for the telecom industry in February 2021 stood at 8.3 mn (vs. 5.6 mn in January 2021) with Jio, Airtel and VIL registering addition of 4.3 mn, 3.7 mn and 0.7 mn net adds in February 2021
▪ Shareholders of Inox Leisure passed a special resolution approving a fund-raise of USD 40.5 mn either through a combination of equity and/or debt
Notes: ¹Financial year ending March Source: Bloomberg as on May 14, 2021, News run; USD 1 = INR 74
10 Sectoral Update – Pharma India Pharmaceuticals Update
1 Month Share Price Performance Large Cap Pharma Mid Cap Pharma MNC Pharma Sun Pharma 11.6% IPCA Labs (0.2%) Abbott India 7.0% Divi’s Labs 6.4% Laurus Labs 12.4% Dr. Reddy’s 4.0% Syngene Intl. 2.9% Cipla 0.2% GSK Pharma 3.4% Alembic Pharma (2.2%) Cadila Healthcare 23.5% Natco Pharma Pfizer Ltd 10.5% Aurobindo Pharma 10.0% 22.2% Lupin 12.8% Glenmark Pharma 14.7% Sanofi India (4.3%) Biocon (3.8%) Ajanta Pharma 1.0% Jubilant LS Torrent Pharma 6.5% 11.7% Novartis India 9.1% Alkem Labs 9.0% Eris LS 13.2% Trading Comparables1 Share Weekly Market EV/Revenue EV/EBITDA P/E EV Price change in cap USD mn (INR) price (%) USD mn FY22 FY23 FY22 FY23 FY22 FY23 Large Cap Pharma Sun Pharma 691 1.8% 22,419 22,584 4.5x 4.1x 17.9x 16.0x 27.1x 23.7x Divi’s Labs 4,021 (0.2%) 14,423 14,281 12.8x 10.8x 31.4x 26.3x 44.9x 37.2x Dr. Reddy’s 5,197 0.4% 11,678 11,621 3.5x 3.2x 13.4x NA 22.1x 16.9x Cipla 904 2.4% 9,853 10,042 3.5x 3.2x 15.4x 13.2x 26.4x 21.6x Cadila Healthcare 617 2.3% 8,538 9,511 4.3x 4.0x 19.9x 18.3x 29.6x 26.6x Aurobindo Pharma 1,007 (0.6%) 7,970 8,370 2.3x 2.1x 10.8x 9.7x 16.7x 14.9x Lupin 1,178 (1.5%) 7,226 7,091 2.7x 2.4x 13.3x 11.0x 24.2x 17.2x Biocon 389 2.0% 6,305 6,361 5.4x 4.4x 20.3x 15.7x 47.2x 32.5x Torrent Pharma 2,723 4.1% 6,226 6,925 5.7x 5.1x 19.2x 16.9x 33.1x 23.2x Alkem Labs 2,993 2.9% 4,836 4,915 3.6x 3.3x 17.3x 15.1x 22.4x 19.9x Mid Cap Pharma IPCA Labs 2,149 4.5% 3,683 3,687 4.5x 4.0x 17.3x 15.0x 23.6x 20.8x Laurus Labs 468 (4.0%) 3,394 3,569 4.6x 3.9x 14.3x 12.0x 21.6x 17.9x Syngene Intl. 566 (1.1%) 3,062 3,039 8.9x 7.3x 28.9x 22.7x 53.2x 40.1x Alembic Pharma 939 (0.3%) 2,494 2,474 3.3x 2.9x 13.2x 11.8x 19.3x 17.8x Glenmark Pharma 608 2.8% 2,319 2,870 1.8x 1.6x 9.8x 8.9x 18.0x 15.7x Ajanta Pharma 1,960 (2.9%) 2,292 2,244 4.5x 4.1x 13.7x 12.5x 19.9x 17.3x Natco Pharma 927 (1.5%) 2,285 2,317 7.0x 4.7x 20.5x 10.2x 29.9x 15.3x Jubilant LS 821 (1.8%) 1,767 2,230 2.2x 2.0x 9.7x 8.8x 14.2x 11.7x Eris LS 670 4.6% 1,230 1,219 6.0x NA 17.3x NA 20.2x NA MNC Pharma Abbott India 16,110 1.6% 4,626 4,353 6.6x 5.9x 31.3x 27.2x 43.2x 36.8x GSK Pharma 1,504 2.6% 3,443 3,303 6.8x 6.1x 29.9x 26.2x 40.9x 35.4x Pfizer Ltd 5,276 (1.2%) 3,262 2,979 9.0x 8.2x 29.1x 26.1x 42.7x 37.9x Sanofi India 7,751 (0.0%) 2,412 2,254 5.5x 5.0x 21.2x 19.1x 30.3x 26.8x Novartis India 633 (2.6%) 211 142 NA NA NA NA NA NA Industry Update
▪ Eli Lilly has signed additional voluntary licenses with MSN Labs and Torrent Pharma for manufacturing and sale of Covid - 19 drug Baricitnib in India. 5 other pharma companies, Dr Reddy's Laboratories, Cipla, Lupin, Natco and Sun Pharma also entered a royalty-free, non-exclusive voluntary licensing agreement with Eli Lilly ▪ In a relief to the Indian pharma industry, China airlines have resumed earlier suspended cargo services, which had threatened disruptions in pharma, medical devices and oxygen concentrator supply chains. India currently sources c. 70.0% of drug intermediates, key starting materials and APIs, all essential raw materials needed to manufacture medicines from China
Notes : ¹Financial year ending March – Sanofi India calendarized to March year end Source: Bloomberg as on May 14, 2021, Company information, News run; USD 1 = INR 74
11 Sectoral Update – Healthcare India Healthcare Update
1 Month Share Price Performance Hospitals Diagnostic and Medical Devices (15.0%) (5.0%) 5.0% 15.0% 25.0% Apollo Hospitals 5.4% Fortis Healthcare 10.4% Dr. Lal Pathlabs (7.8%) Narayana Hrudayalaya 5.7% Metropolis (2.2%) Aster DM Healthcare 8.5% Healthcare Global 9.0% Thyrocare 1.8% Shalby 41.3% Poly Medicure 19.5% Trading Comparables1
Weekly EV/Revenue EV/EBITDA P/E Share Price Market Cap EV change in (INR) USD mn USD mn price (%) FY22 FY23 FY22 FY23 FY22 FY23
Hospitals
Apollo Hospitals 3,141 (5.1%) 6,103 6,807 3.8x 3.3x 25.4x 21.0x 61.4x 42.6x
Fortis Healthcare 222 (4.7%) 2,263 2,516 3.5x 3.1x 21.9x 18.2x 59.3x 42.0x Narayana 434 5.3% 1,198 1,302 2.7x 2.5x 17.2x 14.8x 39.0x 30.8x Hrudayalaya Aster DM 154 3.9% 1,037 1,834 1.4x 1.2x 9.4x 8.2x 18.1x 13.3x Healthcare Healthcare Global 188 (2.1%) 318 491 2.9x 2.6x 17.3x 14.5x NM NM
Shalby 160 17.6% 234 225 3.1x 2.8x 15.3x 13.2x 31.7x 27.1x
Diagnostics
Dr. Lal Pathlabs 2,719 (4.9%) 3,063 3,034 12.4x 11.0x 43.5x 39.0x 64.6x 57.1x
Metropolis 2,334 2.5% 1,612 1,591 9.5x 8.6x 31.5x 28.5x 52.5x 46.5x
Thyrocare 1,040 (1.9%) 743 728 9.0x 8.5x 23.1x 21.2x 35.3x 32.3x
Medical Devices
Poly Medicure 1,004 0.9% 1,301 1,319 10.6x 9.2x 41.0x 34.3x 63.8x 52.5x
Industry Update
▪ According to reports, Tata Group has signed a definitive agreement with 1MG to buy c.65.0% stake in 1MG for c. USD 249.5 million at Enterprise Value of USD 379.9 million − This implies 7.3x FY20 revenue multiple. According to reports, co-founders including Prashant Tandon and Gaurav Agarwal will stay on at 1MG and head the operations ▪ MedTel Healthcare raised $500K in its Pre-Series A funding in a round led by undisclosed investors from the US, India, and Australia − The proceeds will be deployed for scaling up, product improvement, disease portfolio expansion, developing wearables, and foray into the health sensors segment
Notes: ¹Financial year ending March Source: Company news, Bloomberg as on May 14, 2021; USD 1 = INR 74
12 Sectoral Update – Auto & Auto Components India Auto & Auto Components Update
1 Month Share Price Performance Auto Makers Auto Components and Tyres
Maruti Suzuki 3.3% Motherson Sumi Systems 13.8% Bajaj Auto 8.7% Tata Motors 9.0% Bosch 0.7% M&M (1.3%) MRF (3.9%) Hero MotoCorp 0.9%
Trading Comparables1
Weekly EV/Revenue EV/EBITDA P/E Share Price Market cap EV change in (INR) USD mn USD mn price (%) FY22 FY23 FY22 FY23 FY22 FY23
Auto Makers
Maruti Suzuki 6,736 0.5% 27,499 26,023 2.2x 1.9x 24.1x 18.7x 30.5x 23.9x
Bajaj Auto 3,848 (0.5%) 15,048 13,891 3.1x 2.7x 17.3x 14.7x 19.8x 17.3x
Tata Motors 312 3.1% 15,025 26,347 0.6x 0.6x 5.0x 4.1x 15.5x 9.5x
M&M 742 (3.4%) 12,457 19,725 2.1x 1.9x 12.7x 11.3x 17.2x 15.2x
Hero MotoCorp 2,811 (1.7%) 7,589 6,791 1.4x 1.3x 11.3x 9.8x 15.5x 14.0x
Auto Components
Motherson Sumi 228 3.4% 9,749 11,347 1.2x 1.1x 10.7x 9.3x 27.6x 21.4x
Bosch 13,772 1.0% 5,489 5,155 NA NA NA NA NA NA
Tyres
MRF 76,136 (1.7%) 4,364 4,302 1.7x 1.5x 9.9x 8.8x 21.7x 18.8x
Industry Update
▪ Total production of passenger vehicles, three-wheelers and two-wheelers in April 2021 stood at 1.9 mn as compared to 2.4 units in March 2021, registering a drop of 21%. Vehicle registrations for April 2021 also witnessed a double-digit fall of 28% MoM ▪ The Federation of Automobile Dealers Associations has requested the Ministry of Finance and the RBI for provisions to tide over ongoing crisis, such as exemption on payment of GST for the next three months, reduction in payment of provident fund for employees and reduction in interest rates on loans taken by dealers by 400 basis points ▪ Auto makers Maruti Suzuki, Tata Motors and Mercedes have taken to offering customized and innovative warranty schemes, such as including warranties up to 8 years for suspension and engine of vehicles, to attract customers
Notes: ¹ Financial year ending March Source: Bloomberg as on May 14, 2021, Company information, News run; USD 1 = INR 74
13 Sectoral Update – Metals & Mining India Metals & Mining Update
1 Month Share Price Performance Integrated Mining & Metals Steel & Other Metals
Hindustan Zinc 6.0% JSW Steel 17.0%
Vedanta 27.8% Tata Steel 32.9%
Coal India 17.7% Jindal Steel & Power 7.3%
NMDC 38.4% Hindalco Industries 13.9%
Trading Comparables1 Weekly EV/Revenue EV/EBITDA P/E Share Price Market cap EV change in (INR) USD mn USD mn price (%) FY22 FY23 FY22 FY23 FY22 FY23
Integrated Mining & Metals
Hindustan Zinc 312 0.6% 17,803 15,660 4.4x 4.1x 7.8x 7.5x 12.9x 12.2x
Vedanta 272 (3.8%) 13,683 16,884 1.2x 0.8x 3.6x 2.0x 7.5x 6.8x
Coal India 147 7.3% 12,226 9,292 0.7x 0.7x 3.6x 3.3x 6.5x 6.0x
NMDC 186 0.5% 7,356 7,104 2.8x 3.0x 6.2x 7.6x 8.5x 10.4x
Steel
JSW Steel 707 (6.6%) 23,098 29,710 2.2x 2.1x 8.3x 8.3x 14.0x 14.1x
Tata Steel 1,132 (4.3%) 18,339 28,091 1.1x 1.2x 4.5x 5.5x 5.7x 8.2x
Jindal Steel & Power 417 (13.0%) 5,752 7,578 1.3x 1.3x 4.5x 5.1x 8.1x 10.7x
Other Metals
Hindalco Industries 383 (4.6%) 11,622 17,083 0.8x 0.8x 6.1x 5.9x 10.6x 10.1x
Industry Update
▪ Despite high prices, India’s demand for steel is expected to rebound by 19.8% in 2021 (calendar year), the highest among the top-10 consuming nations ▪ The government has proposed to slash import duties on steel items further bringing it to zero or near zero levels to provide relief to MSMEs, which have been under stress due to the high cost of raw materials. Cut in import duty is also expected to tame steel prices as the global prices of steel in certain markets are lower than domestic prices
▪ Coal India accounted for 0.65% of the country's total carbon dioxide (CO2) emissions of 2,616 MT during FY20. To balance the CO2 emission, CIL has taken up large scale plantation in its mining areas in FY21 Notes: ¹ Financial year ending March Source: Bloomberg as on May 14, 2021, Company information, News run; USD 1 = INR 74
14 Sectoral Update – Aviation India Aviation Update
1 Month Share Price Performance Indian LCCs Global FSCs Global LCCs
Interglobe Delta Airlines (9.9%) Southwest Airlines (4.4%) 6.3% Aviation Ryanair 5.2% Air China (7.3%) EasyJet 7.2% SpiceJet 5.3% IAG (5.5%) Air Asia Group (14.6%)
Indigo and Spice Jet Share Price Performance
Last 1 year 1 Last 1 month 1 110 240
200 100 160
120 90
80
80 40 14-Apr-21 21-Apr-21 29-Apr-21 06-May-21 14-May-21 May-20 Jul-20 Oct-20 Dec-20 Mar-21 May-21
Price (Indigo) Price (SpiceJet)
Trading Comparables2
Weekly EV/Revenue EV/EBITDA P/E Share Market Cap EV change in Price (INR) USD mn USD mn price (%) FY22 FY23 FY22 FY23 FY22 FY23
Interglobe Aviation 1,695 3.3% 8,815 9,087 2.2x 1.7x 12.8x 7.4x NM 21.2x
SpiceJet 70 11.6% 567 1,890 NA NA NA NA NA NA
Industry Update
▪ Financial bids for Air India and BPCL are likely to be delayed by three months to September 2021. Interested bidders have sought extra time for Air India, and the bids are expected to be under USD 2.7 bn ▪ The board of directors of InterGlobe Aviation, which operates IndiGo, has approved raising up to USD 405.4 mn through a QIP process. The latest decision by IndiGo's board of directors comes at a time when the airline is struggling with a declining passenger demand ▪ During 2020, SpiceJet reduced its passenger fleet capacity by 25.0% while expanding its cargo fleet. Meanwhile, IndiGo expanded by addition of 45 A321neo planes to its passenger fleet in 2020
Notes: ¹ Rebased to 100, 2 Financial year ending March Source: Bloomberg as on May 14, 2021, Company information, News run; USD 1 = INR 74
15 Sectoral Update – Power and Infrastructure India Power Update
1 Month Share Price Performance Integrated &Transmission Generation
Adani Trans. 27.2% Adani Green (2.5%) Tata 5.9% NTPC 10.7% Torrent 7.9% Adani Power 5.7% NHPC CESC 14.1% 8.8% JSW 18.2% Power Grid 9.6% Azure (32.3%) Trading Comparables¹ Share Weekly Market EV/Revenue EV/EBITDA P/E EV Price change in Cap. USD mn (INR) price (%) USD mn FY22 FY23 FY22 FY23 FY22 FY23 Integrated Adani Trans. 1,143 (2.8%) 16,994 20,428 12.6x 11.8x 27.2x 23.4x NM NM Tata Power 102 (1.2%) 4,383 9,861 1.9x 1.8x 8.8x 8.3x 17.4x 14.9x Torrent Pwr. 428 2.9% 2,782 3,874 2.0x 1.9x 7.5x 7.2x 14.7x 13.8x CESC 674 3.0% 1,208 2,622 1.6x 1.6x 6.0x 5.7x 6.5x 5.9x Generation Adani Green 1,088 (1.3%) 22,998 26,034 NA NA NA NA NA NA NTPC 111 6.0% 14,597 41,823 2.5x 2.2x 8.0x 7.0x 7.1x 5.9x Adani Power 96 (1.3%) 4,993 11,481 3.0x 3.0x 11.9x 11.6x NM NM NHPC 26 5.9% 3,509 6,573 4.7x 4.2x 8.2x 7.2x 8.3x 7.4x JSW Energy 114 (2.3%) 2,534 3,529 3.0x 3.0x 8.8x 8.6x 19.4x 17.1x Azure Power 1,389 (12.1%) 904 2,168 8.6x 6.7x 11.1x 8.5x NM NM Transmission Power Grid 229 6.7% 16,179 35,486 6.2x 6.0x 7.0x 6.8x 9.2x 8.7x
Key Parameters of USD Bonds Issued by Indian Renewable IPPs Issue Amt. Issued Curr. 1w 1m 3m 6m 1y Issuer Maturity Coupon Date (USD mn) YTM ago Ago ago ago ago Greenko 16-Aug-16 16-Aug-23 500.0 4.88% 4.07% 4.07% 4.14% 3.90% 4.36% 7.06% Greenko 24-Jul-17 24-Jul-24 650.0 5.25% NA NA 8.47% 4.00% 4.29% 6.99% Greenko 24-Jul-17 24-Jul-22 350.0 4.88% NA NA 3.52% 4.23% 4.25% 6.78% Azure Power 03-Aug-17 03-Nov-22 500.0 5.50% 4.10% 4.03% 4.25% 3.79% 3.85% 5.77% Renew Power 12-Mar-19 12-Mar-24 525.0 6.67% 4.70% 4.66% 4.80% 4.64% 4.79% 8.12% Adani Green 10-Jun-19 10-Dec-24 500.0 5.65% 3.78% 3.73% 3.93% 3.73% 4.03% 6.40% Greenko 29-Jul-19 29-Jul-26 535.0 5.95% 4.26% 4.26% 4.48% 4.19% 4.59% 6.96% Greenko 29-Jul-19 29-Jan-25 500.0 5.55% 4.58% 4.55% 4.74% 4.56% 4.59% 6.92% Greenko 21-Aug-19 21-Feb-23 435.0 6.25% 4.27% 4.24% 4.39% 4.48% 4.30% 7.57% Renew Power 12-Sep-19 27-Sep-22 300.0 6.45% 3.92% 3.70% 3.88% 3.59% 4.52% 8.75% Azure Power 24-Sep-19 24-Dec-24 350.1 5.65% 3.78% 3.73% 3.93% 3.73% 4.03% 6.40% Renew Power 29-Jan-20 05-Mar-27 450.0 5.88% 4.71% 4.69% 4.81% 4.36% 5.12% 7.65% Renew Power 14-Apr-21 14-Jul-28 585.0 4.50% 4.56% 4.54% 4.64% NA NA NA Notes: ¹ Financial year ending March Source: Bloomberg as on May 14, 2021 (May 13, 2021 for Azure Power – Trading Comps); USD 1 = INR 74
16 Sectoral Update – Power and Infrastructure India Infrastructure Update
1 Month Share Price Performance Ports, Airports and Roads City Gas Distribution
APSEZ 0.3% Adani Gas 14.8%
GMR 3.7% IGL (2.0%)
IRB (0.2%) Gujarat Gas (2.0%)
Ashoka Buildcon (5.6%) MGL (0.1%)
Performance of Listed InvITs
FY20 Dividends (INR) FY21 Dividends (INR)
Trust Unit Price (INR) Q1 Q2 Q3 Q4 Q1 Q2 Q3
India Grid 128.0 3.0 3.0 3.0 3.0 3.0 3.0 3.1
IRB InvIT 55.7 3.0 2.5 2.7 1.8 1.5 2.0 2.5
Trading Comparables¹ Share Weekly Market EV EV/Revenue EV/EBITDA P/E Price change in Cap. USD mn (INR) price (%) USD mn FY22 FY23 FY22 FY23 FY22 FY23 Ports, Airports and Roads APSEZ 734 (4.5%) 20,240 24,154 10.6x 8.9x 16.0x 13.3x 23.6x 19.1x GMR Infra 25 4.6% 2,051 6,066 6.2x 4.7x 20.0x 14.2x NM NM IRB Infra 106 (0.6%) 505 1,437 1.8x 1.7x 3.8x 3.3x 18.1x 9.7x Ashoka 86 8.7% 325 1,291 1.7x 1.5x 6.1x 5.5x 40.0x 16.9x Build. City Gas Dist. Adani Gas 1,193 (8.9%) 17,732 17,771 NA NA NA NA NA NA IGL 512 (0.7%) 4,840 4,558 5.0x 4.2x 16.7x 14.7x 24.0x 21.0x Gujarat Gas 515 (3.0%) 4,795 4,984 2.9x 2.6x 15.6x 14.0x 23.9x 21.0x MGL 1,093 (5.6%) 1,459 1,286 3.0x 2.8x 7.1x 6.4x 12.0x 11.2x Industry Update – Power and Infra
▪ Union Cabinet approved the ‘National Program on Advanced Chemistry Cell Battery Storage’ under the production - linked incentive (PLI) initiative with an outlay of USD 2.4 bn − The program aims to achieve 50 GWh of advanced chemistry cell and 5 GWh of niche advanced chemistry cell manufacturing capacity ▪ MNRE notified that renewable energy projects having their commissioning dates on or after April 1, 2021, can claim extension owing to the second surge of the Covid-19 pandemic − The Ministry also made it clear that the actual quantum of the time extension will be decided in due course depending on the developments related to the Covid-19 pandemic in the coming weeks ▪ JSW Hydro, a 100% subsidiary of JSW Energy raised USD 707 mn from International Bond Markets through debut Green Bond Issue. The bonds have a tenure of 10 years and coupon rate of 4.125% p.a. (to be paid semi -annually) − The proceeds will be used towards repayment of existing green project related INR debt Notes: ¹ Financial year ending March Source: Bloomberg as on May 14, 2021, Company Information, News run; USD 1 = INR 74
17 Sectoral Update – Consumer and Retail India Consumer Update
1 Month Share Price Performance Diversified, Wellness and Personal Care Food Tobacco and Alcohol
HUL (3.2%) Nestle India 0.3% ITC 1.7% Dabur (4.5%) United Spirits 7.8% Godrej Consumer 17.7% Marico 12.6% Britannia (6.5%) United Breweries 9.9% Colgate India 1.8% VST Industries (4.2%) Emami (3.0%) Tata Consumer (2.8%) Zydus Wellness 2.8% Godfrey Philips (1.5%)
Trading Comparables¹
Weekly Market EV/Revenue EV/EBITDA P/E Share Price EV change in Cap (INR) USD mn price (%) USD mn FY22 FY23 FY22 FY23 FY22 FY23 Diversified, Wellness and Personal Care HUL 2,377 (1.4%) 75,467 75,680 10.8x 9.8x 41.9x 36.5x 58.5x 50.2x Dabur 535 0.1% 12,778 12,583 8.8x 7.9x 41.4x 36.3x 50.4x 44.0x Godrej Consumer 852 21.3% 11,767 11,703 7.2x 6.5x 32.4x 28.8x 45.4x 39.7x Marico 475 0.1% 8,281 8,131 6.6x 6.0x 34.0x 29.6x 47.5x 41.2x Colgate India 1,567 3.7% 5,759 5,670 8.1x 7.4x 27.3x 24.8x 41.5x 37.4x Emami 501 3.5% 3,008 3,013 7.0x 6.4x 23.2x 21.2x 34.2x 28.9x Zydus Wellness 2,145 1.2% 1,844 1,836 6.5x 5.9x 35.3x 28.4x 38.1x 29.9x Food Nestle India 17,224 2.8% 22,442 22,125 10.6x 9.6x 43.1x 38.1x 49.5x 44.3x Britannia 3,501 1.2% 11,397 11,467 6.1x 5.5x 34.1x 30.1x 45.7x 40.0x Tata Consumer 645 2.6% 8,034 7,878 4.6x 4.2x 32.1x 27.6x 53.4x 44.3x Tobacco and Alcohol ITC 212 3.4% 35,321 32,024 4.4x 4.0x 11.5x 10.6x 16.2x 15.0x United Spirits 565 3.2% 5,551 5,887 4.5x 4.1x 27.1x 23.4x 43.9x 35.8x United Breweries 1,210 (0.5%) 4,322 4,275 5.0x 4.1x 33.2x 24.6x 63.1x 43.2x VST Industries 3,171 0.7% 662 539 NA NA NA NA NA NA Godfrey Philips 870 1.0% 611 642 1.5x NA 7.7x NA 10.1x NA Industry Update ▪ Ruchi Soya Industries announced the acquisition of biscuits business from Patanjali Natural Biscuits for a consideration of c.USD 8.1mn in a slump sale ▪ As per Nielsen, fast moving consumer goods (FMCG) increased by c.9.4% YoY in Q4FY21 driven by high demand of staples and c.14.6% YoY growth in rural areas in Q4FY21 ▪ As per industry leaders, the ‘summer categories’ of consumer goods and consumer durables which includes various product lines like cold beverages, ice-creams, air-conditioners, coolers, and refrigerators are expected to decrease by more than 50.0% in April-May 2021 vis-à-vis April-May 2019 Notes: ¹ Financial year ending March – Nestle India calendarized to March year end Source: Bloomberg as on May 14, 2021, Company information, News run; USD 1 = INR 74
18 Sectoral Update – Consumer and Retail India Retail Update
1 Month Share Price Performance Restaurant & Grocery Retailers Lifestyle Retailer
Jubilant Foodworks 1.5% Trent 6.0% Westlife Development 5.9% Aditya Birla Fashion & Retail 3.1% Burger King (1.5%) Vmart Retail (7.3%) Avenue Supermarts 0.4% Shoppers Stop 3.9% Future Retail (4.8%) Spencer’s Retail (0.7%) Future Lifestyle Fashions (5.0%)
Trading Comparables¹
Weekly Market EV/Revenue EV/EBITDA P/E Share Price EV change in Cap (INR) USD mn price (%) USD mn FY22 FY23 FY22 FY23 FY22 FY23
Restaurant
Jubilant Foodworks 2,805 2.4% 5,003 5,134 8.3x 7.1x 32.6x 27.5x 73.7x 58.0x
Westlife Development 428 0.3% 900 1,009 5.1x 4.0x 34.2x 23.2x NM 82.9x
Burger King 130 0.6% 674 775 4.8x 3.9x 34.3x 24.7x NM NM
Grocery Retailers
Avenue Supermarts 2,845 (1.8%) 24,901 24,759 5.8x 4.2x 71.1x 48.5x NM 74.7x
Future Retail 45 (2.9%) 333 333 NA NA NA NA NA NA
Spencer’s Retail 70 1.5% 85 90 NA NA NA NA NA NA
Lifestyle Retailer
Trent 773 2.7% 3,712 3,617 7.4x 5.2x 57.4x 32.2x NM NM Aditya Birla Fashion & 182 3.2% 2,264 2,944 2.5x 2.1x 17.5x 13.8x NM 57.4x Retail Vmart Retail 2,575 (5.5%) 686 754 2.8x 2.3x 22.6x 18.6x 68.3x 51.9x
Shoppers Stop 200 2.7% 295 577 1.4x 1.2x 8.2x 7.2x NM NM
Future Lifestyle Fashions 53 (1.6%) 144 508 NA NA NA NA NA NA
Industry Update ▪ Retailers Association of India (RAI) has urged the government to undertake necessary steps for capital infusion into the retail industry with Emergency Credit Line Guarantee Scheme (ECLGS) benefits and loan moratorium to combat the impact of restrictions imposed to restrain Covid-19 ▪ As per a report by Nielsen, fast moving consumer goods (FMCG) retailers are redesigning their assortments adhering to supply chain constraints. Retailers are either reducing the number of stock-keeping units (SKUs) per category or stocking lesser units per SKU
Notes: ¹ Financial year ending March Source: Bloomberg as on May 14, 2021, Company information, News run; USD 1 = INR 74
19 Sectoral Update – Real Estate India Real Estate Update
1 Month Share Price Performance
DLF 1.6% Phoenix Mills 1.4% Godrej Properties (3.8%) Prestige Estates Projects (11.3%) Embassy Office Parks REIT 3.1% Brookfield India REIT 8.2% Oberoi Realty (4.6%) Brigade Enterprises (4.6%) Mindspace Business Parks (2.6%) Sunteck Realty (2.2%)
Trading Comparables¹
Weekly Market EV/Revenue EV/EBITDA P/E Share EV change in Cap Price (INR) USD mn price (%) USD mn FY22 FY23 FY22 FY23 FY22 FY23
DLF 251 (2.9%) 8,381 8,887 10.7x 9.6x 35.0x 34.2x 39.3x 33.1x
Godrej Properties 1,221 (2.0%) 4,587 4,607 17.8x 12.9x 174.1x 70.6x 77.0x 49.5x
Embassy Office Parks 319 1.8% 4,090 5,328 12.9x 10.9x 15.8x 13.5x 31.0x 23.6x REIT
Oberoi Realty 533 (2.3%) 2,618 2,790 7.3x 6.5x 16.3x 13.8x 19.6x 17.1x
Mindspace Business 290 0.2% 2,324 3,224 12.3x 10.2x 14.9x 12.7x 20.7x 16.9x Parks
Phoenix Mills 730 (4.4%) 1,694 2,412 9.4x 7.7x 18.0x 14.4x 36.3x 27.5x
Prestige Estates Projects 267 (2.0%) 1,446 2,741 3.1x 2.8x 10.8x 9.6x 23.9x 18.9x
Brookfield India REIT 253 0.4% 1,037 1,918 14.4x 13.2x 20.8x 19.3x 18.8x 17.4x
Brigade Enterprises 244 (4.7%) 695 1,213 3.1x 2.7x 9.5x 8.2x 28.5x 19.0x
Sunteck Realty 265 5.1% 525 627 4.2x 3.9x 12.0x 12.9x 19.6x 19.0x
Industry Update
▪ Blackstone Real Estate acquired Embassy Industrial Parks from Warburg Pincus and Embassy Group, in a transaction worth USD 709.5 mn. Embassy Industrial Parks comprises 10.6 mn sq. ft of modern Grade A logistics and warehousing assets across major industrial hubs in India, including Bangalore, Delhi NCR, Hyderabad, and Pune ▪ Embassy Group has made an investment in venture capital firm Pi Labs' new fund that invests in proptechstartups. Pi Labs is Europe's most active proptech VC, with over 55 investments in its portfolio ▪ The Ministry of Finance has approved last-mile financing for 72 stressed housing projects and preliminary approval for financing in the case of 132 other projects under Special Window for Affordable and Mid -Income Housing
Notes: ¹ Financial year ending March Source: Bloomberg as on May 14, 2021, Company information, News run; USD 1 = INR 74
20 Sectoral Update –Startups Indian Startup
Select Deals This Week Deal Value Valuation Date Target Vertical Key Investors (USD mn) (USD mn)
Falcon Edge Capital, Westbridge E- Capital Partners, Matrix Partners 10-May 27.8 210.2 commerce India, Navroz D Udwadia, Ryan Khoury
11-May Fintech Amicus Capital Partners 7.9 NA
10-May Fintech Northern ARC Investments 6.8 NA
Artificial Venture East and Kitaki Ventures, 11-May 4.0 NA Intelligence Yournest Venture Capital
Elevation Capital (SAIF Partners), Matrix Partners India, Varun Shoor, 12-May SaaS 3.0 NA Saravana Kumar, Ashish Tulsian, Ramakant Sharma
Rainmatter Ventures, IndusLaw, 10-May Legal Kris Gopalakrishnan, Reddy Futures 1.4 NA Fund (GVK Reddy Family Office)
Artificial Beyond Next Ventures, Endiya 11-May 1.0 NA Intelligence Partners
Notes:` Valuation: Post-money equity value Source: News run; USD 1 = INR 74
21 NovaDhruva Team
Sunil Sanghai Dhruv Bhatia Founder & CEO Senior Vice President [email protected] [email protected]
Neel Jain Piyush Ramchandani Associate Vice President Senior Associate [email protected] [email protected]
Ponmathi Veerachami Siddharth Tripathi Associate Associate [email protected] [email protected]
Yogesh Gidwani Akash Prasad Senior Analyst Senior Analyst [email protected] [email protected]
Ayushi Modi Harshit Jain Analyst Analyst [email protected] [email protected]
Mandvi Dixit Vishal Naik Office Manager Senior Manager [email protected] [email protected]
NovaDhruva Capital Private Limited 902 One Indiabulls Centre, Tower 2A; Elphinstone Road (West), Mumbai 400 013; : +91 22 6246 6000 www.novadhruva.com