Monday, 19 March 2018

19 March 2018 - Views & News


ZEE Entertainment (ZEEL): ZEEL calls off deal to buy 9X Media, INX Music, positive for ZEEL, as this transaction would be marginally EPS dilutive for ZEEL in 2019E despite expansion into regional music genres ……(details in other news)

Maruti Suzuki: The new Swift crossed 90,000 bookings since launch on 18th Jan 2018; company aims for a double digit growth for FY2019 lead by sustained demand for Swift, Dzire, Baleno and Vitara Brezza – Positive……(details in other news)

Max Financial Services: Max Financial Services will hold a meeting of the Board of Directors of the Company on 21 March 2018, to consider proposal for raising of funds by the Company, by way of equity and / or debt or a combination thereof, for the purpose of making investments in its subsidiary Max Life Insurance Company Limited ('Max Life') to enable Max Life to drive growth through acquisition opportunities. - Sentimentally positive 

Oil & Gas: IOCL and BPCL may buy 26% stake each in GAIL (India); positive read through for IOCL and BPCL
Indian Oil Corp (IOCL) and Bharat Petroleum Corporation Ltd (BPCL) may buy 26% stake each in gas utility GAIL (India) paying the government around Rs20,000 crore each - positive read through for IOCL and BPCL as it would help these PSUs to diversify in mid-stream sector and also get access to fast growing city gas distribution business.

TV Today: to sell three radio stations with ISHQ 104.8FM to ENIL ltd, both the stock to be in focus ( the news is positive for TV Today, though already priced in. We have closed our viewpoint call on TV Today, which has  delivers healthy returns of 53% within six months.

Punjab National Bank: The due date of payment by PNB for LoUs worth half the scam  ~Rs6000 crore falls before 31st March this year. If PNB fails to pay other Banks ~Rs6000 crore will become NPAs on the books of the banks collectively in first quarter of FY19. RBI is expected to call a meeting soon to resolve the issue between the banks. – Negative read thru

Commercial vehicles: PMO approves mandatory scrappage of commercial vehicles from 1st April 2020 (as against earlier proposal of voluntary scrappage); positive read thru for Tata Motors, Ashok Leyland, M&M and ancillary players Jamna Auto, Ramkrishna Forgings and Bharat Forge..(details in other news)


Maruti Suzuki: The new Swift crossed 90,000 bookings since launch on 18th Jan 2018; company aims for a double digit growth for FY2019 lead by sustained demand for Swift, Dzire, Baleno and Vitara Brezza – Positive.
Maruti Suzuki’s third generation Swift, launched on 18th January 2018 has crossed 90,000 bookings is a very short time span of around two months. This is faster than the recently launched compact sedan Dzire. The new swift commands a waiting period of 4-5 months and the company is working towards reducing the waiting period by shifting production between the Gujarat and the Haryana plants. Also backed by a sustained demand for the recent launches – Dzire, Baleno and Vitarar Brezza and a strong initial response for the Swift, the management expects to clock a double digit volume growth in FY2019 as well.

Oil & Gas: The consortium of Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) has been awarded rights to develop and run a liquid terminal of 3-million-tonne (mt) capacity with investment of Rs393-crore at Kamarajar Port near Chennai. The terminal is expected to start operations in 2020-21 – positive read through for BPCL and HPCL.

Commercial vehicles: PMO approves mandatory scrappage of commercial vehicles from 1st April 2020 (as against earlier proposal of voluntary scrappage); positive read thru for Tata Motors, Ashok Leyland, M&M and ancillary players Jamna Auto, Ramkrishna Forgings and Bharat Forge
The vehicle scrappage policy received an approval from the PMO (Prime Ministers Office) for mandatorily scrapping of commercial vehicles (CV) that are more than 20 years old. The policy will be effective from April 1, 2020 and would offer overall benefit  of around 15-20% of the new vehicle cost in place of the scrapped old vehicle. Earlier the policy proposed was voluntary but now with mandatory scrappage, the demand for new trucks is set to rise. This is Positive for CV makers including Tata Motors, Ashok Leyland, Eicher Motors and M&M and ancillary players such as Jamna Auto, Ramkrishna Forgings and Bharat Forge

ZEE Entertainment (ZEEL): ZEEL calls off deal to buy 9X Media, INX Music, positive for ZEEL, as this transaction would be marginally EPS dilutive for ZEEL in 2019E
ZEEL has terminated a deal to acquire 9X Media and its unit INX Music from Rivendell PE LLC, earlier known as New Silk Route, and other shareholders. The deal was called off due to non-completion of certain material conditions precedent (though not disclosed those conditions). ZEEL had agreed to buy the two companies for a total of around Rs 160 crore in cash. The acquisition of 9XM and its subsidiary (INX) is expected to expand ZEEL’s regional presence in regional music genres and strengthen its Hindi music portfolio. However, we view the termination of deal is a positive read-thru, because 9X and INX Music recorded consolidated loss Rs 5.1 crore in 2017 (against profit of Rs11.7 crore in 2016). 

Oil and Gas: Reliance Industries Ltd (RIL) and Oil and Natural Gas Corp. Ltd (ONGC) are planning to bid for the ninth round of city gas distribution (CGD) as per media reports. The Petroleum and Natural Gas Regulatory Board (PNGRB) will offer compressed natural gas retailing licences in 100 cities - positive read through for RIL and ONGC if they win the bids. 

Tata Motors: aims to increase its market share by launching new products covering 95% of the domestic passenger vehicle industry and expand its dealer network to 1500 by 2020; aims to outpace industry in FY2019 - Positive
Tata Motors aims to increase its markets share in the passenger vehicle industry from the current 7%. It plans to do this by launching new models covering almost 95% of the Passenger Vehicle industry by 2020 as against 70% now. Also the company plans to expand its dealer network from 800 now to 1500 by 2020. Further the management expects the PV industry to grow by 7-9% for FY 2019 and Tata Motors is likely to outpace the industry growth. Also the company is considering exporting the Tata Ace from Bangladesh plant to Myanmar and north east India as it is logistically viable.

UPL Limited: infuses funds in Sinagro Group (a Brazillian group) along with other investors, however UPL  stake will reduce to 45% (earlier 49%) – Positive read through for UPL
It is believed that additional funding of the Sinagro Group by UPL through its step down wholly owned subsidiary and other investors through this transaction will lead to improvement of the business activities carried out by the Sinagro Group.

Indian Oil Corporation (IOCL): Has launched a project in Pune city under which customers can buy 5-kg LPG cylinder from 20 fuel stations of IOCL and select supermarkets and grocery stores just by submitting the identification proof. We believe that strategy is in the right direction to increase LPG penetration if implemented on pan India basis - long term positive for IOCL.

Cement: UltraTech Cement has challenged the sale of Binani Cement Ltd to Dalmia Bharat at the National Company Law tribunal (NCLT) alleging lack of transparency in the bidding process – sentimentally negative for Dalmia Bharat as it may delay the process to acquire Binani Cement Ltd.

Textile & Apparel industry - The Central Bureau of Excise and Customs (CBEC) has so far sanctioned more than Rs 10,000 crore in refunds to exporters for Integrated Goods and Services Tax paid by them and is also going to observe a special drive refund sanction fortnight from March 15-29 on an all-India scale – positive read through for exporters in the textile and apparel industry like Trident, S.P. Apparels, Orbit Exports and others which were seeing pressure on their working capital due to the delay in getting refund.
CBEC has taken an initiative to observe a special drive refund sanction fortnight from March 15-29 on an all-India scale for which additional staff and infrastructure has been mobilised. Special refund cells manned by experienced staff are being put in place in the country. It asked exporting community to get their errors rectified to enable sanction of refunds.

Ganesha Ecosphere - Maharashtra government has decided to ban plastic and make consumers pay more for everything from packaged milk and beverages and then seek refund on returning pouches and bottles – sentimentally positive for Ganesha Ecosphere as it can tie up with companies for recycling of plastics and use the same as its raw material.
Plastic carry bags, single-use disposables like cups, straws, plates, forks, spoons and spreadsheets, among others, can’t be used starting March 18. Dairies and manufacturers of packaged drinking water will have to set up recycling plants for plastic pouches and bottles. Centres for returning plastic items for recycling will be opened at government offices, municipal wards, sports clubs and other such places

Cadila: gets USFDA approval for omeprazole and sodium bicarbonate capsules, used to treat stomach problems. Product shall be manufactured at Moraiya facility in Ahmedabad – Positive for Cadila

Thermax: has won an Rs503 crore order from leading fertilizer company to set up three natural gas based EPC co-generation plant (each of 20MW); positive  

Friday, 16 March 2018

16 March 2018 - Views & News


Reliance Industries (RIL): As per CAG report, RIL has allegedly used its subsidiaries, resorted to merger and demerger of group entities, transactions with related parties to book losses and make financial accounts untraceable to avoid payment of taxes. In the response, RIL has said that there cannot be any difference in the recording of transactions among RIL and its group companies given its books of accounts as audited and the tax reliefs claimed by RIL are in accordance with laws - sentimentally negative for RIL.

Jaiprakash Associates: RARE Enterprises bought 300,00,000 shares at Rs 18.37 per share of Jaiprakash Associates – sentimentally positive for the stock

Aurobindo: gets USFDA approval for HIV drug, Abacavir Sulfate Solution – Positive for Aurobindo

General Insurance Corporation:  General Insurance Corporation of India (GIC Re) has said it will commence its operations as a Lloyd's syndicate from April 2018. London-based Lloyd's is a specialist insurance market wherein large insurers come together and form syndicates to cover mega risks. In December 2017, Lloyd’s granted an in-principle approval to GIC Re to create ‘GIC syndicate 1947’ which now has received permission to commence operations from April 2018, in accordance with the Lloyd’s-approved business plan. - positive read thru 

Rico Auto Industries: Government invites expression of interest to commence pod taxi project; positive read thru as Rico has entered into JV for manufacture of pod taxis …(details in other news)

PSU banks : Public Sector Banks have decided that they will not encourage  multiple banking arrangement for firms with more than Rs 2.5 bn exposure, and will push for consortium mode of lending with common loan documents. - Long term positive for the PSBs as will reduce chances of system misuse. 

Wipro: invests $2.02 million to acquire 20% stake in Avaamo Inc – positive read-thru
Wipro said it has invested $2.02 million in Avaamo, an artificial intelligence-based conversational computing platform. Strategic investment of $2.02 million in this tranche through further infusion of funds and conversion of convertible note issued earlier, taking the total investment to $3.02 million. This would give Wipro a minority stake of 20% on a fully diluted basis.

Banking Sector: India Govt, RBI Start Talks On Potential increase in  FII Cap In Sovereign Bonds - Sentimentally positive as will likely help ease bond yields 
India’s federal finance ministry and the Reserve Bank of India have started discussion on potential revision of foreign investment limit in government bonds, and while New Delhi favours raising the cap, the central bank is assessing macroeconomic conditions and global interest rate trend before arriving at a decision, as per media reports. The government is said to be working on a framework for the foreign investment limit in government bonds, and  expects the RBI to agree to some increase in the foreign investment limit. - Sentimentally positive as the move will help ease the bond yields

IDFC Bank, Capital First: IDFC Bank’s board approves scheme of amalgamation with Capital First – positive read thru


Dilip Buildcon:  NHAI declares Dilip Buildcon as lowest bidder for hybrid annuity model project worth Rs 1,004 crore in Madhya Pradesh – positive read through for the stock

Future Consumer: It has entered into a 50:50 Joint Venture with Bin Ablan Group to establish the business of manufacturing, packaging, marketing, selling, sourcing and distributing cupcakes and pound cakes – positive for the stock but will increase competition for other FMCG players manufacturing cakes like Britannia, Prataap Snacks

Rico Auto Industries: Government invites expression of interest to commence pod taxi project; positive read thru as Rico has entered into JV for manufacture of pod taxis
The government has invited expression of interest (EoI) to execute India's maiden pod taxi project on Delhi-Gurgaon corridor. The development follows a high-level panel recommending inviting fresh bids for the project, also known as Personal Rapid Transport (PRT), conforming to the strictest safety standards on the lines of those prescribed by an American body. EoI has been invited for development of PRT Delhi-Gurgaon pilot project corridor (length 12.30 km) from km 24 at NH 8 (Delhi-Haryana border) - km 33.5 (Rajiv Chowk, Gurgaon) NH 248A Sohna Road on design, build, finance, operate and transfer (DBFOT) basis. The proposed Rs 4,000-crore pod taxi scheme is an advanced public transport using automated electric pod cars to provide a taxi-like demand responsive feeder and shuttle services for small groups of travellers and is a green mode of uninterrupted journey.

Tata Motors (JLR): Has launched XE and XF sedans in India with a new engine priced at Rs 35.99 Lakh and Rs 48.80 Lakhs respectively - Positive
Jaguar Land Rover has announced a new  all-aluminium Ingenium petrol engine for the Jaguar XE and XF in India. The the Ingenium petrol engines gets it’s amazingly dual nature using Jaguar Land Rover’s low friction all-aluminium-intensive design to provide excellent thermal properties and lightweight construction for improved efficiency and enhanced vehicle dynamics. The Jaguar XE is priced at Rs. 35.99 Lakhs while the Jaguar XF is priced at Rs. 49.80 Lakhs (Ex. Showroom).

Fortis Healthcare: Yes Bank sells 1.12 crore shares or 2.17 percent stake in Fortis Healthcare - sentimentally negative for the stock (Sentimentally positive for Yes bank)

Adani Transmission: acquires 100 percent stake in Fatehgarh-Bhadla Transmission SPV from PFC Consulting

Branded Apparel Industry - Hennes & Mauritz (H&M) announced the launch of its online store in India with the aim of further accelerating its growth in the country – sentimentally negative for existing branded apparel players like Arvind, Raymond, ABFRL, Zara has it will increase competition in the market which is already reeling under pressure due to the continuous trend of giving discounts by e-commerce players
H&M's Shop Online will offer a wider range of collections with exclusive 'online-only' pieces available all year round. The product range will include ladies, men's, teens, kids, plus-size, maternity wear and a complete collection of lingerie and accessories. H&M has also introduced the scan-and-buy feature that allows customers to buy products online if appropriate size is not available in physical stores by scanning barcodes.

Ruchi Soya: Debt ridden Ruchi Soya attracts 26 bidders (Indian & Foreign) for 51% stake – sentimentally positive for Ruchi Soya

Bharti Airtel: Trai notice to Bharti Airtel for not complying with tariff norms – stock to remain in focus
Trai has pulled up Bharti Airtel for failing to comply with tariff reporting requirements by not informing it about certain segmented tariffs offered to consumers to retain them.

RCom: in advanced talks with Panchshil realty to develop Navi Mumbai property – positive read-thru
RCom is in advanced discussions to sign a development deal with Panchshil Realty for its 125 acre land at Navi Mumbai. In November 2017, RCom had invited potential bidders for outright purchase or co-development of the land housing Dhirubhai Ambani Knowledge City (DAKC). RCom is looking to monetise the asset as part of its larger debt restructuring plan to repay debt around Rs45,000 crore.

Thursday, 15 March 2018

15 March 2018 - Views & News


Textile Industry: The US Trade Representative (USTR) challenged Indian export subsidies schemes (including Merchandise Exports from India Scheme) at the World Trade Organisation and argued that at least half a dozen Indian programmes provide financial benefits to Indian exporters, which allow them to sell their goods cheaply than the US manufacturers – If such schemes are discontinued due to the appeal of USTR, it will be negative for textile and apparel players (export business) like Trident, SP Apparels, Himatsingka Seide, Welspun India, Arvind (only 25-30% of the business)and Raymond as it will affect the margins of the companies.

Wipro: to sell hosted data centre business for $405 million and to form a partnership with Ensono with an investment of $55 million – positive read-thru, as it is making strategic investments to provide service offerings in infrastructure space and shifting 900 employees to Ensono …..(details in others news)  

Dalmia Bharat, Ultratech Cement, Binani Industries: The creditors of Binani Cement voted in favour of the Dalmia Bharat led offer even after Ultratech told the insolvency court that it would pay about Rs700 crore more for Binai Cement. However the creditor’s vote would not deter Ultratech from contesting the lenders’ decision and continue the race for Binani Cement. The development is sentimentally positive for Dalmia Bharat while sentimentally negative for Ultratech.

Aditya Birla Capital, Grasim Industries: The certificate of Registration is issued by the RBI to Aditya Birla ARC Limited-wholly owned subsidiary of the Aditya Birla Capital, for commencement of Asset Reconstruction business. Positive for Aditya Birla Capital and Grasim Industries (holding company of Aditya Birla Capital).

Asian Granito: The Company is in process to enter into Joint Venture with a local Partner to establish 10,000 meters per day glaze vitritied tile manufacturing unit in Andhra Pradesh. Positive for the stock.

Havells India: signs an agreement with Hyundai Electric for manufacturing Magnetic Contractors; Positive
Havells India has signed an agreement with South Korean major Hyundai Electric & Energy Systems Co. Ltd. for manufacturing magnetic contractor (MC). Under the agreement, Hyundai Electric will provide technology know-how and grant a license to manufacture, and market MC under Havells brand. The MC market in India is presently estimated at Rs 1,200 crores and is growing at 6-8% annually. Havells India would also manufacture MC for Hyundai Electric.

TVS Motors: Aims for a 25% growth in premium “Apache” motorcycle for FY2018; launches new 2018 variant of Apache RTR 160 4V priced in the range of 81,490 to Rs 89,990: Positive……(details in other news)

Yes Bank: The TPG Capital-Manipal Health Enterprises combine and IHH Healthcare Bhd could acquire shares from the public and banks to wrest control of Fortis Healthcare. - Sentimentally positive for Yes Bank as it is having ~17% stake in Fortis Healthcare 


Bharat Petroleum Corporation (BPCL): Plans to shut Bina refinery (Bharat-Oman Refineries Limited; BPCL stake of 50%) for expansion (to 7.8mmt from 6mmt currently) related linkages in September-2018 for ~40 days. We highlight here that proposed shutdown is already known to the markets as it is part of expansion program at Bina refinery - short term negative for BPCL but structurally positive as expansion would lead to higher earnings from Bina refinery.

Petronet LNG: Plans to invest around Rs1,500 crore on a network of LNG filling stations on highways to promote the use of the fuel by trucks and buses. We have been highlighting the company's plan for setting up of LNG fuel stations in the country in our earlier FNAs - long term positive for Petronet LNG as the management does not expect anything material firming up in the near term.

HUL offers government third tranche of GST benefits of Rs36 crore for the month of January 2018 on old stock accrued with the distributors; reduce from the earlier months - positive read through for the stock
Hindustan Unilever (HUL) has offered another tranche of GST benefits amounting to Rs 36 crore for the month of January. A significant portion of this amount includes benefits accrued on stocks, which were lying with HUL’s distributors during the time of transition on November 15, 2017. With this third tranche, the total combined (HUL plus distributors) GST benefits offered by the company of its own accord to the government amounts to Rs 155 crore.

TVS Motors: Aims for a 25% growth in premium “Apache” motorcycle for FY2018; launches new 2018 variant of Apache RTR 160 4V priced in the range of 81,490 to Rs 89,990: Positive
TVS Motors expects sales of its premium motorcycle “Apache” series of motorcycles to hit 500,000 units at the end of FY2018, translating in to a 25% growth over FY2017.  The company has launched the 2018 version of motorcycle christened as – Apache RTR 160 4V is priced at Rs 81,490 for the carbureted variant and Rs 89,990 for the fuel injection trim. The 2018 TVS Apache RTR 160 4V is inspired by the bigger Apache RTR 200 4V and bike features a sharp, low-set headlamp and a muscular fuel tank cladding. The RTR 160 4V also receives the new tail lamp from its elder sibling and gets new seat cowls and a single-piece seat. It gets a race-derived 'Synchro Stiff' chassis and a race-tuned Showa monoshock at the rear and wider tyres as well. The new TVS Apache RTR 160 4V is powered by a new four-valve engine which now gets an oil-cooled as well for better long-run performance. According to TVS, the new RTR 160 4V has a best-in-class power-to-weight ratio.

Oil & Gas: Maharashtra government has assured farmers and fishermen to scarp proposed 60mmt refinery cum petrochemical project (IOCL holds 50% stake while BPCL and HPCL holds 25% stake each in the project) at the west coast. We highlight here that the refinery project has been proposed by the central government and it may not be possible for the state government to take a decision on the same - sentimentally negative for OMCs (IOCL, BPCL and HPCL) as the agitation by the locals may delay the commissioning deadline of 2020 for the refinery project. 

Indian Oil Corporation (IOCL): Has completed work on Rs225 crore Multi-User Liquid Terminal (MULT) jetty for unloading LPG at Cochin Port but the company still awaiting decision from the state government for the completion of the Rs490 crore storage terminal at Puthuvype - neutral read through for IOCL as the delay in completion of storage terminal is well known to the markets.

Wipro: to sell hosted data centre business for $405 million and to form a partnership with Ensono – positive read-thru, as it is making strategic investments to provide offerings in infrastructure space and shifting 900 employees to Ensono 
Wipro has signed an agreement to sell hosted data centre services business to Ensono for $405 million. Wipro and Ensono have also signed a partnership agreement to jointly address the hybrid IT need for Wipro’s new and existing enterprise customers. As part of the agreement, Wipro would make a strategic investment of $55 million in Ensono’s combined entity. Wipro would transition eight data centres and more than 900 employees of its hosted data center services business to Ensono.

Bharti Airtel: approves allotment of debentures to raise Rs 3,000 cr – positive read-thru
Bharti Airtel’s board of directors has approved the allotment of 30,000 debentures for raising about Rs 3,000 crore via private placement. The company plans to issue 30,000 listed, unsecured, rated and redeemable NCDs at a face value of Rs 10 lakh each. The proceeds of the issue will be used for general corporate purpose including routine treasury activities of refinancing of existing debt and spectrum liabilities.

Network 18 Media: RBI gave “no objection” for merger of foreign wholly owned subsidiaries in to company – stock to remain in focus

Tata Teleservices: to phase out CDMA service in Delhi from 19 March – neutral read-thru, the company is in process of transferring its wireless business asset to Bharti Airtel

Speciality Chemicals: Himadri Speciality Chemicals to invest Rs 1,000 crores for making speciality carbon black – Positive read through
The company intends to introduce close to 40 new grades of carbon black and expects to achieve additional revenues of Rs 2500-3000 crores from the new product line once its is fully operational and the production streamlines.

Interglobe Aviation: IndiGo and GoAir cancelled 60 flights on Wednesday, the third day since the DGCA ordered grounding of 11 Airbus aircraft as per media reports. Negative read thru for Interglobe Aviation.

Jet Airways (India): The company will introduce an additional 144 weekly flights as part of its summer schedule as per media reports. The move comes after DGCA grounded 11 IndiGo and GoAir aircraft. Positive read thru for Jet Airways (India).

NMDC: A meeting of Board of Directors of the Company will be held on March 17, 2018, inter alia, to consider declaration of first interim dividend for the financial year 2017-18.


Business Standard

World Bank projects India's FY19 GDP growth at 7.3% 
SBI may challenge order against taking over assets
Currency in circulation back to pre-demonetisation level
LTCG relief for investors of unlisted cos as govt extends indexation benefit
Indian realty sector market to reach $180 billion
Saudi turns to nuclear power to curb oil addiction
Decoding Videocon's move on Philips, Electrolux 
PNB fraud: RBI guv Urjit Patel blames regulatory constraints for scam
WB to raise lending to India by $1 bn for next five years
Strides Shasun gets US FDA approval for HIV treatment drug Efavirenz
Torrent may raise Rs 15 bn via QIP as it readies to bid for Sanofi assets
Revise GST, impose anti-dumping duty to boost textile sector: Parl panel


Cabinet approves India, Iran double taxation pact
Wholesale price inflation eases to 2.48% in Feb
Ban on LoUs to have disruptive impact: India Inc
Suzlon installs India’s largest wind turbine generator
Calderys India Refractories eyeing 25% capacity expansion
L&T wins contracts worth₹1,600 crore
BoI hits pay dirt on recoveries, helps lift sentiment for public sector peers
Yes Bank acquires 17.31% stake in Fortis Healthcare
Bharat Dynamics IPO sees 46% subscription on Day 2
UltraTech Cement hikes bid for Binani Cement to $1 billion
PNB fraud: ED seeks Interpol warrant against Nirav Modi, Mehul Choksi

Financial Chronicle

Sensex, Nifty end in red as blue-chip shares plunge, PSU banks rise up to 14%; OMCs tumble
Bharti Airtel approves allotment of debentures to raise Rs 3,000 cr
67% Indian businesses hit by ransomware, 38% twice: Sophos
Aviation ministry eyes 5-fold rise in passenger trips to 1 bn in 15-20 years: Jayant Sinha
Clean-up act: Banks may give PNB short-term loans
Bandhan Bank aims to keep gross NPA below 1%
Wipro to divest hosted data centre services biz to Ensono for $405m
RBI Guv calls for more powers to regulate state-owned lenders

Today's Corporate Action 15th Mar Ex Date

IOC Bonus issue 1:1
JDML Bonus issue 1:1
NBCC Interim Dividend - Rs. - 0.5500

Wednesday, 14 March 2018

14 March 2018 - Views & News


ALERT - IRB Infrastruture: The company in consortium with Modern Road Makers Private Ltd, a wholly owned subsidiary has emerged as a preferred bidder for two Hybrid Annuity Projects in Tamil Nadu at a total bid cost of Rs3465 crore (details in Other news). Positive for IRB Infrastructure.

RBI instructs banks to discontinue giving Letter of Undertaking (LoU) and Letter of Comfort (LoC) for imports – Negative impact on Jewelry companies and other import driven businesses along with lower fee income for banks; but Positive for API (bulk drug pharma companies), agri inputs & speciality chemicals  and some consumer disc businesses that are witnessing increased competition from cheaper imports

Punjab National Bank: PNB has informed that it has uncovered additional exposure of about Rs942 crore to the Nirav Modi / Gitanjali gems which is now being added to the existing amount. The bank, however, has clarified, that the Rs942 crore is not a new fraud but were the regular limits sanctioned to Geetanjali Group and were standard credit exposure at the time of detection. - Negative read thru

HDFC Ltd: HDFC board has approved offering up to 8,592,970 equity shares of HDFC AMC (HDFC Asset Management Co. Ltd) through an initial public offer (IPO). at Rs5 each, representing 4.08% of the paid-up share capital, for sale in the IPO. - Positive read thru 

ICICI Bank: ICICI Bank is expected to launch the IPO of ICICI Securities Ltd., at lesser valuation of Rs 16,500-18,000 crore as originally expected from originally looking at a valuation of Rs 25,000 crore. ICICI Bank is looking to sell ~22 percent of its stake This is as per media reports. - ICICI Bank Stock to be in focus. 

Torrent Pharma: likely to raise Rs 1500 crore for binding bid (of ~Rs 16000 crore)  for Sanofi’s generics unit Zentiva, as per media reports – Stock to remain in focus; Torrent’s acquisition of Zentiva, if it happens, will be the biggest outbound transaction however, it could weaken core earnings for short term (due to hangover of debt)…..(details in other news)

State Bank of India: SBI has  announced up to 75% reduction in charges levied on savings bank account customers for not maintaining the average monthly balance (AMB) but has retained the AMB. The new charges are applicable from 1 April 2018. - Negative read thru. SBI had collected Rs1,771 crore for non-maintenance of AMB between April and November 2017. The new reduced charges will result in lower other income stream and their lower contribution will be more conspicuous with absence / lower treasury profits due to the rising bond yields.

Maruti Suzuki: Planning to launch six speed gearboxes in its entire product range from Alto to Ciaz. Maruti is looking to shore up the use of six-speed transmissions in a gradual way. Starting with 50,000 units in the first year the demand is projected to go to 400,000 units per year by 2020. The introduction of six speed gearbox will enhance efficiency and power delivery. Positive.

Agri (Seeds) :  BT Cotton seed price cut to Rs 740 per packet – Negative read through for seed manufacturing companies like Kaveri Seeds and Monsanto….(details in other news)

Petronet LNG: The Ministry of Power has accorded principal approval for setting up of liquefied natural gas (LNG) terminal by Petronet LNG at Shore Point, South Andaman District as per media reports. The details about capacity of the LNG terminal and capex for the same has not been disclosed as of now - long term positive for Petronet LNG.

Oil India: The record date for the issuance of bonus shares (in the ratio of 1:2 i.e. one bonus equity share for two existing fully paid up equity shares) of Oil India will be 27-March-2018 subject to shareholder’s approval.

IRB Infrastruture: The company in consortium with Modern Road Makers Private Ltd, a wholly owned subsidiary has emerged as a preferred bidder for two Hybrid Annuity Projects in Tamil Nadu at a total bid cost of Rs3465 crore with a construction period of 730 days and 15 years of operation. 1) four laning of Poondiankuppam to Sattanathapuram of 56.8km at a bid cost of Rs2169 crore and 2) Four laning of Puducherry to Poondiyankuppam of 38km at a bid cost of Rs1296 crore. With addition of these projects, the company’s construction book stands at Rs10,000 crore to be executed in three years. Positive for IRB Infrastructure. We have a Buy rating on the stock.

Interglobe Aviation: Indigo and GoAir cancelled 65 flights a day after the aviation regulator ordered grounding of 11 aircraft belonging to them. Negative read thru for Interglobe Aviation

Agri (Seeds) :  BT Cotton seed price cut to Rs 740 per packet – Negative read through for seed manufacturing companies like Kaveri Seeds and Monsanto
BT Cotton seed prices cut to Ts 740 per packet (earlier Rs 800 per packet). Also the royalty payable by domestic companies to technology developer has been cut from Rs 49 per packet earlier to Rs 39 per packet now. This is likely to have a positive impacted on farmers as their cost of procuring cotton seeds will reduce, however will be negative for seed producers.

Yes Bank: The bank has acquired 17.31% stake of Fortis Healthcare pursuant to invocation of pledge – Neutral Read thru

Indusind Bank : IndusInd Bank has said that the Reserve Bank has approved the merger of Bharat Financial Inclusion Limited with the bank. - Positive read thru 

Phoenix Mills: The company is planning to more than double its office portfolio to 3.5 million sq. ft. in four years, Joint MD Shishir Shrivastava said in a print media article. The new commercial offices will be built across all of its existing retail-led mixed used developments in Pune, Bengaluru and Chennai. The company expects this year’s rental income to grow at least by 11-12%. Positive read thru for the stock.

Bharat Petroleum Corporation (BPCL): To participate in the insolvency process for Nagarjuna Oil Corporation at the National Company Law Tribunal (NCLT) and will submit a resolution plan by 17 March-2018. We highlight here that Nagarjuna Oil Corporation limited was implementing a six million tonnes per annum refinery project at Cuddalore - would be positive for BPCL if they are able to acquired the distressed assets.

Torrent Pharma: likely to raise Rs 1500 crore for binding bid (of ~Rs 16000 crore)  for Sanofi’s generics unit Zentiva, as per media reports – Stock to remain in focus; Torrent’s acquisition of Zentiva, if it happens, will be the biggest outbound transaction however, it could weaken core earnings for short term (due to hangover of debt).
As per media reports, Torrent Pharma is likely to raise at least Rs1,500 crore by selling shares to institutional investors, as it prepares a bid for the generic drugs unit( Zentiva) of France’s Sanofi. Company has tied up funding from several banks for the bid. The proposed fundraising will help Torrent Pharma strengthen its balance sheet as it looks to absorb yet another major asset. Zentiva is currently the third-largest generics company in Europe and sells medicines for cardiovascular, gastrointestinal, anti-inflammatory, pain management, metabolic and blood disorders, among others.

Hero Motocorp: Launches the new Passion Pro and Passion XPro priced at Rs 53,189 and Rs 54,189 respectively – Positive.
Hero MotoCorp has just launched the new Passion Pro and Passion XPro in India. While the new Passion Pro is priced at Rs. 53,189, the Passion XPro will set you back by Rs 54,189 (both prices, ex-Showroom Delhi). The two motorcycles have been launched in two variants viz -  drum and disc brakes. Both the new motorcycles share the same 110cc, air-cooled  engine mated to a four-speed gearbox and features the company's patented i3s technology for fuel saving. With the launch of the two new generation Passion 110cc motorcycles the company aims to further consolidate its leadership position in the domestic motorcycle market.

Shoppers Stop: Shuts HomeStop store in Vijaywada and now has 14 stores operational – neutral for the stock as revenue contribution of these closed stores was not significant

Future Retail: It will form a 50:50 joint venture with Oman-based Khimji Ramdas LLC to take its 'FBB' brand fashion outlets to Oman and other GCC countries – positive read through for the stock

J.M. Hosiery & Co. Ltd. and Ebell Fashions Pvt. Ltd. to merge with Lux Industries; Positive
Board of Directors of Lux Industries have approved in principle a proposal to consider merger of J.M. Hosiery & Co. Ltd. and Ebell Fashions Pvt Ltd. with the company. J.M. Hosiery is engaged into the business of knitted apparel including hosiery with revenue of Rs 251 crores and total assets of Rs 232 crores at FY’17 end and Ebell Fashions is engaged into the business of knitted apparel for women’s with revenue of Rs 165 crores and total assets of Rs 89 crores at FY’17 end.

Eicher Motors: 2W segment Royal Enfield Forays into Argentina market; positive
Eicher Motors (Royal Enfield)  announced its foray into Argentina, the second biggest motorcycle market in Latin America. It launched its first flagship store in Buenos Aires, commencing its full operation, including after sales, spares and service. Royal Enfield has appointed Grupo Simpa as its official dealer-partner for Argentina, which will look after all market development and support activities such as marketing and aftersales, for the brand in the country. Argentina is the third country after Brazil and Colombia in the Latin American region to have an exclusive Royal Enfield store. Royal Enfield in Argentina will be present with a lineup of four models featuring single-cylinder engines currently up to 535 cc. Available models include - The iconic Bullet (500cc), the Classic (500cc), the Continental GT (535cc) cafe racer and the Himalayan (410cc).

RBL Bank:  Partners with CreditVidya for better underwriting of salaried customers – Sentimentally positive

NTPC: has commissioned third unit of Kudgi Super Thermal Power Station (800MW)

Ultratech, Dalmia Bharat, Binani Industries: The Kolkata Bench of NCLT has asked the resolution professional of Binani Cement to appear in person in the tribunal in its next hearing to answer questions on the bidding process followed in the company’s debt resolution. The NCLT was hearing petition filed by Ultratech against the resolution professional for rejecting its bid for Binani Cement. The development can turn out to be positive if a favourable outcome comes out for Ultratech which recently had raised its bid for Binani Cement.

Bharti Airtel: as per media news, Airtel may sell higher stake in Bharti Telemedia (its DTH arm) to raise funds – proceeds from stake sale would help Airtel to gird up competition with RJio – positive read-thru
Bharti Airtel will transfer 19% stake in Bharti Telemedia to its wholly owned subsidiary Nettle. Post the transfer, Nettle will hold 44% stake in Bharti Telemedia. A part of that stake will be utilized for the completion of the stake sale in Bharti Telemedia to the private equity firm. As per media news, there are possibilities of additional stake sales in the DTH arm to global private players (in last December, the company has announced a deal to sell 20% stake in the DTH unit to Warburg Pincus for $350 million).

TCS: Tata Sons sells 3.1 crore shares at an average of Rs 2,874 per share – neutral read-thru

Majesco: leading insurer in Malaysia selects Majesco digital solutions – positive read-thru
Majesco announced the selection of Majesco digital solutions by a leading insurer in Malaysia. The insurer will implement Majesco digital solutions to automate the pre-inspection risk survey for their fire and burglary/theft insurance lines of business.

Tuesday, 13 March 2018

13 March 2018 - Views & News


NBCC: during the vigilance review, Chief Vigilance officer informed the board that CBI has no charges against CMD Mr. Anoop Kumar Mittal regarding the sub contracting of Pragati Maidan Re-development project. We believe this to be sentimentally positive as stock was under pressure post this allegation.

JP Associates: No buyers have emerged to acquire Jaypee’s hotel assets four months after an information memorandum was sent to select investors. Jaypee had initially asked for Rs2500 crore and the price was later brought down to Rs1500 crore as per media reports. Negative read thru for JP Associates.

Eicher Motors: Royal Enfield to face tough competition as Mahindra plans to bring back Java (Yezdi Java) bikes in 2018; to shut down its JV with Polaris due to poor sales performance and write off Rs 290 cr investment; negative read thru  ….(details in other news

TCS: Tata Sons to sell 28.3 million TCS shares at Rs 2,872–2,925 per share, this will be a discount of 4-6% to yesterday’s closing price (Rs 3,052 per share) – No impact fundamentally; but technically additional supply of share tend to result in near term undeperformance of the stock.


Infosys: announces to voluntarily delist from Euronext Paris and London stock exchanges – neutral read-thru

Eicher Motors: Royal Enfield to face tough competition as Mahindra plans to bring back Java (Yezdi Java) bikes in 2018; to shut down its JV with Polaris due to poor sales performance and write off Rs 290 cr investment; negative read thru  
Eicher Motors 2W segment Royal Enfield is likely to face intense competition as Mahindra plans to relaunch Java brand of bikes in India in 2018. Yezdi Java bikes were immensely popular in 1990’s and posed tough competition to Royal Enfield. Also, the board of Eicher Polaris Pvt Ltd JV (EPPL) has  passed a resolution to close the operations with immediate effect due to poor response to its product “Multix”. As of December 31, 2017, Eicher had invested Rs 289.50 crore in EPPL which would have to be written off. The JV has posted a net loss of Rs 91.8 cr as of FY2017.  
Tata Motors (JLR): Land Rover has announced a new SUV – the Range Rover Evoque convertible to be launched in India. The SUV is expected to be on similar lines of the Evoque except that it gets a fabric roof that is electronically retractable. The vehicle is likely to be priced around Rs 85 lakhs. Other details like launch date etc are awaited  (positive)

Unitech: The Supreme Court sought details of all the unencumbered assets of Unitech and said that they would be auctioned to refund money to home buyers as per media reports. Negative read thru for Unitech.

ITC: It has entered the liquid milk segment with pouches under the Aashirvaad Svasti brand two weeks ago in Munger in Bihar, each of the 500 ml packs is priced at Rs 19 and will expand it to other regions in future– positive read through for the stock

Bata India: Securities and Exchange Board of India (Sebi) asked Bata India to probe the leak of its December 2015 quarter earnings on social media platform WhatsApp – neutral read through
A preliminary examination by Sebi showed the financial numbers, including sales and profits, circulated through WhatsApp posts closely matched the actual results. Sebi has directed Bata to conduct an internal inquiry within three months into the leakage of unpublished price-sensitive information (UPSI) relating to its financial results and take appropriate action against those responsible.

Interglobe Aviation. The Directorate General of Civil Aviation has grounded 11 IndiGo Airbus following instances of engine failures during flights. Negative read thru for Interglobe Aviation

M&M: Launches KUV 100-Trip targeted at fleet operators priced in the range of Rs 5.16-Rs5.42 lakhs – Positive.
Mahindra & Mahindra, has launched a tailored version of its entry SUV KUV100 named as Trip targeted at the fleet operators and the business owners. The KUV100 Trip combines the spaciousness and design of an SUV with low operating cost, attractive price and high earning potential. It offers the unique proposition of comfortably seating up to 6 people. The vehicle is available in the Bi-fuel and diesel variant priced at Rs 5.16 lakh and Rs 5.42 lakh (ex showroom Delhi). Secondly, Mahindra two-wheelers will start the production of Jawa and BSA bikes at Pithampur plant in India by July 2018, though in the initial phase these motorcycles are intended for international markets. Mahindra will also be coming up with new Yezdi (Jawa Yezdi) based motorcycles and these are expected to be launched sometime next year and will be a tough competition to Royal Enfield. M&M aims to gain foothold in the fast growing leisure bike segment with the launch of Jawa  

Oil and Gas: The Petroleum and Natural Gas Regulatory Board has started the bidding process by offering nearly 86 geographical areas comprising 156 districts for development of city gas distribution network. We have already highlighted the same in our earlier FNA - long term positive for Indraprastha Gas, Mahanagar Gas and Gujarat Gas.

ACC, Ambuja Cements: ACC and Ambuja plan to enter into a ‘massive supply agreement’ as per media reports. The agreement is for supply of cement, clinker and raw materials such as fuels, fly ash, slag and gypsum. They would provide discount of 5% to each other on their average net selling price. Positive read thru for both the stocks.

Power Grid: enters into term loan facility agreement with State Bank of India worth Rs 5,000 crore.

Suzlon: bagged an order for development of 75 megawatt (MW) wind energy project from an independent power producer through Maharashtra State Electricity Distribution Company Ltd (MSEDCL) bid. Suzlon will install around 36 units of S111-140m wind turbine generators (WTGs) with rated capacity of 2.1 MW each.

Oil and Gas: GAIL and HPCL seek viability gap funding from Andhra Pradesh (AP) government for their proposed investment of Rs32,901 crore for petrochemical complex in the state as per media reports. As of now the exact amount of likely viability gap funding has not been disclosed - positive for GAIL and HPCL if they get funding from AP government.

Bank of India: BoI has recovered Rs7000 crore worth NPA which it had lent against stand by letter of credit and expects another Rs2000 crore to be recovered by March end – positive read thru

State Bank of India: SBI to take 5 Kolkata based companies to NCLT for Rs 3,250 crore – Neutral read thru

Bank of Baroda: A group of almost 20 South African companies linked to the Gupta family have lost a court bid which sought to have Bank of Baroda, maintain operations in the country – Sentimentally Positive

Bharti Airtel: gets its board approval to raise Rs 16,500 crore via NCDs, foreign currency bonds – stock to remain in focus
The Bharti Airtel board approved plans to raise upto Rs 16,500 crore through a mix of privately placed NCDs and a foreign currency bonds float for conducting treasury operations, including refinancing of debt and spectrum liabilities. The fund raising exercise is likely to be conducted over a period of time.

RCom: to file appeal to India NCLT on stay against tower sale – stock to remain in focus