HDB IPO’s Deep Discount Offers Reality Check to Indian Investors

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(Bloomberg) — Before the trading day starts we bring you a digest of the key news and events that are likely to move markets. Today we look at:

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Good morning, this is Alex Gabriel Simon, an equities reporter in Mumbai. 

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Local stocks may follow Asian markets lower as the US attack on Iran’s three main nuclear sites has investors heading for safe havens like the dollar. Traders will also be watching the manufacturing and services PMIs for cues on the health of the domestic economy. Shares of Aditya Birla Lifestyle Brands will list today following a demerger, and the HDB Financial Services Ltd. initial public offering will be launched this week.

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Wealth managers in vogue as markets gather steam 

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Stocks like 360 One WAM and Nuvama Wealth have surged over 30% in the past year amid a boom in wealth management services across India. Citigroup expects further gains in these stocks near term, betting that recurring inflows and transactional revenues could surprise as activity in the primary markets and unlisted shares picks up. Several upcoming IPOs also bode well for KFin Technologies, Citi noted, supporting the broader case for capital market plays in India — a theme that continues to command rich valuations due to its growth potential.

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HDB’s IPO pricing rattles investors in unlisted shares

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HDB Financial’s $1.4 billion IPO, priced at a discount of up to 40% to its rate in the unlisted market, has wrong-footed many wealthy individuals active in this unregulated platform where shares of companies trade before their official listing. While there’s precedent for such discrepancies, the gap this time is particularly sharp. This is likely to dampen enthusiasm for investing in closely held firms. It also serves as a reminder to high-networth individuals that institutional investors wield a bigger sway in the primary market.

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Private-label apparel firms to outperform: HSBC

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India’s apparel sector is seeing pockets of growth opportunity, fueled by rising penetration and improved affordability, according to HSBC. The industry is projected to grow at a compounded annual rate of 11% from fiscal 2024 to 2029, with active wear and organized value retail leading the charge. The bank prefers format-driven companies with strong private-label offerings, citing better inventory control and a broader customer base. Stocks on the bank’s watchlist include Trent, Vishal Mega Mart and Page Industries.

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Analysts actions:

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Three great reads from Bloomberg today:

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And, finally.. 

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Electronics contract manufacturers have underperformed the broader market this year, weighed down by margin concerns and rich valuations after a rally in 2024 saw many of them double. For Dixon, the sector leader, anxiety is mounting over the lack of clarity on whether the production-linked incentives (PLI) for mobile phones — set to expire in 2026 — will be extended. Without it, margin pressures could emerge. While revenue growth for the sector is not in doubt, the question is whether it can be accompanied with decent profitability.

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—With assistance from Ashutosh Joshi, Savio Shetty and Kartik Goyal.

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