In this briefing:
- Bharti Hexacom IPO - Unexciting and at a Half-Decent Discount
- Global Semiconductors: Winners Emerge as Fund Allocations Hit Record Highs
- Indraprastha Gas: CNG Strength Counters EV Threat
- Sai Silks (Kalamandir): VML’s TN Debut—a Mixed Bag. Maintain BUY
- Shoppers Stop: ‘Intune’—the only exciting thing to watch out for. Maintain SELL
1. Bharti Hexacom IPO - Unexciting and at a Half-Decent Discount
- Bharti Hexacom is looking to raise up to US$513m in its upcoming India IPO.
- Bharti Hexacom (BH) is a communications solutions provider offering consumer mobile services, fixed-line telephone and broadband services to customers in the Rajasthan and the North East telecommunication circles in India.
- We have looked at the company's past performance in our earlier notes. In this note, we talk about valutions.
2. Global Semiconductors: Winners Emerge as Fund Allocations Hit Record Highs
- Semiconductor Sector Hits Historic Highs: Record allocations highlight investor confidence in the sector as second phase of bull market drives allocations to fresh peak.
- Country Dynamics Shift: Peak Ownership in Taiwan, USA, Netherlands, while German Semiconductor holdings see strategic pullback through Infineon closures.
- TSMC, ASML, and NVIDIA establish dominance, reflecting investors’ preference for companies at the forefront of technological innovation, while traditional players like Infineon, Intel, and Texas Instruments face declining investor interest.
3. Indraprastha Gas: CNG Strength Counters EV Threat
- The Indraprastha Gas (IGL) stock price has seen an ~15% correction over the last five months and underperformed the Sensex by ~25%, owing to the threat of EV following the introduction of the Draft EV policy 2.0 and the recent cut of INR 2.5/kg in retail CNG price
- Notwithstanding the EV threat, we expect IGL, with higher exposure to the CNG segment, to benefit from the boost to volume growth, driven by favourable economics between CNG and alternative fuels and expansion of city gas network in new geographical areas (GAs)
- Our thesis of volume growth improvement is also supported by Vahan data, which indicates an improvement in monthly CNG vehicle registrations in Delhi.
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4. Sai Silks (Kalamandir): VML’s TN Debut—a Mixed Bag. Maintain BUY
- We recently conducted a comprehensive assessment of the saree ecosystem through management meetings and store visits across various Chennai-based saree companies
- Our findings reveal several key insights: (1) Category growth and pace of growth among major organised players are not encouraging, except for Pothys
- (2) The cash position across key players remains weak, suggesting that competitors with ample capital may enjoy an advantage in scaling operations over the next 2-3 years
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5. Shoppers Stop: ‘Intune’—the only exciting thing to watch out for. Maintain SELL
- If one zooms out and assesses STOP’s historical performance, it’s been among the weaker retailers in our apparel retail pack
- Its decadal revenue CAGR of ~6% is largely premiumization-led with no volume (bill cut) growth to speak of
- This is despite it scaling its Beauty segment during this phase
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