Fw: Market Insights 240325
D K Jain
Subject: Market Insights 240325
Dear Investor,
Markets always tend to be interesting with something or the other happening all the time. Our Morning Mantra is released before the opening bell and it includes the market commentary along with Corporate & Global news for the day.
US: US stock market ended higher on Friday after US President Donald Trump’s comments provided hope that previously announced tariffs expected to begin in early April may not be as burdensome as feared.
Dow
41,985
32
0.1%
Dow Futures
42,529
210
0.5%
Hangseng
23,689
-1
0.0%
Nikkei
37,678
1
0.0%
Gift Nifty
23,479
2
0.01%
Asia: Asian markets traded mostly lower on Monday ahead of the deadline for the implementation of US President Donald Trump’s reciprocal tariff on April 2.
Market is expected to open on a gap up note and likely to witness positive move during the day.
· Indian Hume Pipe: The company has completed the sale of nearly 10-acre land In Bengaluru for Rs 559 crore to arm Godrej SSPDL Green Acres. Positive
· Power Mech Projects Ltd: The company has secured a Rs.579 cr (excluding GST) order from BHEL for various civil structural and architectural works. Positive
· L&T: The company has approved a long-term borrowing of up to Rs 12,000 crore via external commercial borrowings, or other means.
· Reliance Industries: The company's arm Nauyaan Tradings completed the acquisition of 74% stake in Nauyaan Shipyard for Rs 383 crore.
· Power Grid Corp: The company has acquired Chitradurga Bellary REZ Transmission after being selected as the successful bidder under the tariff-based competitive bidding.
· Samvardhana Motherson International: The company will make an investment of Rs 200 crore in its arm CIM Tools.
· Ircon International: Conarch Associates has filed a Rs 159-crore claim against the company in an arbitral tribunal, relating to the Jaynagar-Bardibas Railway Project in Nepal.
· Godrej Properties: The company acquired acquired approximately 10 acres of land in Yelahanka, Bengaluru, with the revenue potential of Rs 2,500 crore.
· NCC: The company has received a Letter of Acceptance for a project worth Rs 1,480.34 crore from Bihar Medical Services & Infrastructure Corporation. The project involves the redevelopment of a medical college and hospital.
· Dr Reddy’s Laboratories: The company’s subsidiary, Dr Reddy’s Laboratories Inc. USA, has completed the sale of all issued and outstanding membership interests in its wholly owned subsidiary, Dr. Reddy’s Laboratories Louisiana LLC, including the manufacturing facility located in Shreveport, Louisiana. As a result, Dr Reddy’s Laboratories Louisiana LLC has ceased to be a step-down wholly owned subsidiary of Dr Reddy’s Laboratories.
Institutional Desk
· Betting on the market leaders- General Insurance | Initiating Coverage- Roadmap for healthy growth:
Key Points
Ø Low non-life insurance penetration/density indicates huge scope for growth over a multi-year horizon; outlook remains positive driven by strong inherent demand for motor and health insurance products.
Ø Market leaders delivering consistent growth across cycles, with a well-entrenched distribution network and favourable cost profile are best-positioned to capture the opportunity.
Ø The sector is in a transition phase with upcoming regulations (shift to 1/n guidelines, composite licenses, IFRS-17 implementation) resulting in suppressed valuation multiples.
Ø We initiate coverage on the India General Insurance sector- Star Health (BUY at TP Rs 480, 22x FY27E EPS) and ICICI Lombard (BUY at TP Rs 2,075, 29x FY27E EPS).
· Manappuram Finance (MGFL)- Hold- NBFC | Company Update- Entry of Bain Capital as Co-Promoter a Positive Development:
Key Points
Ø Manappuram Finance has announced that Bain Capital will be acquiring joint control in the company through its affiliates - BC Asia Investments XXV Ltd and BC Asia Investments XIV Ltd. Bain capital will be investing Rs 43.9bn to acquire an 18% stake on a fully diluted basis via preferential allotment of equity and warrants at a price of Rs 236.
Ø The investment will consist of 2 parts: (1) Equity allotment of Rs 21.92bn for 9% stake and (2) Warrants of Rs 21.92bn for 9% stake. The warrants can be converted into equity shares in one or more tranches during the period commencing from the expiry of 4 months until 18 months from the date of allotment of warrants.
Ø The transaction will trigger a mandatory open offer for the purchase of an additional 26% stake in the company on an expanded capital basis (excluding warrants). The open offer price has been fixed at Rs 236. Based on the open offer subscription, Bain Capital's stake post the investment will vary between 18% to 41.7% (including conversion of warrants).
Ø Existing promoters will hold a 28.9% stake in the company post this investment. Present MD & CEO, Mr. V P Nandakumar will be stepping into a non-executive chairman and mentor role.
Ø This transaction is expected to close by 2QFY26 or 3QFY26 subject to the receipt of necessary approvals.
Ø Post this transaction, Bain Capital will have the right to materially influence the strategic decision making at Manappuram Finance including the nomination for the appointment of a CEO and other key managerial personnel for Manappuram Finance and group companies.
Ø The board of directors of the MFI subsidiary, Asirvad Microfinance have approved for withdrawal of IPO DRHP and the company will apply to SEBI for withdrawal of the same.
Ø Valuation and view: This investment by Bain Capital will have the following benefits: (1) It will strengthen MGFL's financial position and enable it to expand into key segments including gold finance, MSME lending, vehicle finance and microfinance. (2) Bain's presence will provide a strategic direction and also lead to an improvement in corporate governance. However, in our view execution of a new strategy under the joint promotership will be key. In addition to this the company continues to face the following concerns: (1) Growth slowdown and asset quality stress in Asirvad Microfinance and (2) Growth of the standalone entity being affected due to RBI's ongoing restrictions on opening new branches and competition from other lenders. As per our estimates, this fund infusion will result in an equity dilution of 22%, after assuming equity allotment in 3QFY26 and warrant conversion in 4QFY27. Our ABV for FY26 and FY27 increases by 3.9% and 4.1% respectively. We maintain a ‘Hold’ rating on MGFL with a revised TP of Rs 245 (valued at 1.1x Mar 2027E ABV plus subsidiary value per share of Rs 24.9) as against Rs 215 earlier (valued at 1.1x Dec 2026E ABV plus subsidiary value per share of Rs 27.1). Our target multiple is at a 19.4% discount to past 5 year average multiple of 1.4x.
· Ceinsys Tech Ltd.- NOT RATED- Information Technology | Analyst Meet Update- In pursuit of global expansion to drive future growth:
We attended Ceinsys Tech Ltd.’s analyst meet on 20th March, 2025.
Ø Business and operations: Ceinsys has 2 main segments which are geospatial and automotive engineering. Geospatial refers to the work which goes behind things like google maps, drone capture, satellite imagery, etc. Automotive refers mainly to design work for top notch auto clients globally. One of the biggest clients is General Motors and Ceinsys is working as a direct supplier for most clients. Digital engineering is used for most utilities like power and water through the geospatial vertical. While energy and power generation was the largest segment 3 years ago, water is not the largest segment for the past 18 months as the government spending in this area has been high.
Ø Funds raised for M&A activity: Ceinsys Tech Ltd. has finalized preferential allotment money of US$28mn (Rs235cr) on 20th September. The fund raise was done in order to raise capital for inorganic growth as it is actively pursuing growth opportunities and is in active discussions with multiple companies for pursuing the inorganic path for the geospatial as well as automotive business. For the fund raise US$15mn was raised by the promoter and he did not want to dilute the stake, while the rest of the funds were brought in by a PE fund in the US. So far, Rs105cr has been received, with the rest Rs130cr due by March ’26, but investors are willing to release funds early if required by Ceinsys for inorganic growth. The idea is to acquire companies which are mainly in geospatial or mobility services with major revenue in foreign currency.
Ø The company has an annual revenue run rate of ~Rs250cr and strong EBITDA margin of ~25%. At the CMP it is trading at ~65x P/E on the TTM EPS of Rs24/sh. The company expects a strong growth of ~25-30% in its top line and similar growth in EPS at ~25-30%. Taking that, the company trades at ~34x FY27 EPS (taking 25% growth in its EPS). Strong order book of ~Rs1400cr executable over the next 18-24months, play on India digitization and strong margin execution caught our
