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Friday, 27 November 2015

F N A November 27, 2015

November 27, 2015

TOP NEWS

Alert: Ashok Leyland has won an order worth $200 mln to supply 3,600 vehicles, including trucks and buses, to Cote D'Ivoire – Positive, could provide incremental annual volumes of 2-2.5%

Reliance Infra, Samtel and Bharat Electronics are likely beneficiaries of possible outsourcing contract from Dassault Aviation to manufacture Rafale fighter aircraft  -- Postive

Welspun Corp has won an order to supply 216,000 tn pipelines for an offshore project in North and South America -- Positive

RBI raises the loan limit to Rs 30,000 from 15000 ( tenure not less than 24 months)  for MFI-NBFCs– positive for SKS Micro finance
Based on the representations received from the micro finance NBFCs, the RBI has raised the loan limit to Rs 30,000 from Rs 15,000 earlier (the tenure of the loan shall not be less than 24 months). All loans necessarily be prepaid without any penalty. The move will help in increased borrowings and better leveraging of existing customer base for MFIs.

Government offers tax sops to spur shipbuilding  - Positive for ABG Shipyard, Bharati Shipyard, Western India Shipyard
As per media reports, the government has announced a slew of tax sops to spur shipbuilding in the country as a part of measures aimed at boosting the Make in India programme. These include exemption from customs and central excise duties on all raw materials and parts for use in the manufacture of ships, vessels, tugs and pusher crafts.

JP Associates – Formula One organizer seeks to encash bank guarantee of Rs350 crore – Negative for JP Associates
As per media reports, Formula One is seeking to encash Rs350 crore guarantee by JP Associates on the ground that it hadn’t paid the sport’s organizer money that had been contractually agreed upon. Bernie
Ecclestone led Formula One has moved the Bombay High Court in pursuit of the payment. The development is negative for JP Associates.

Ultratech closing in on Reliance Infrastructure’s cement units – Positive for Ultratech, Reliance Infrastructure
As per media reports, Ultratech is in talks to take over the cement units of Reliance Infrastructure. Reliance Infrastructure’s cement units were likely to fetch an enterprise valuation of Rs5000-5500 crore. Reliance Infrastructure put up its cement units for sale last month to reduce its Rs25,766 crore debt. The development is positive for Ultratech and Reliance Infrastructure.

INVESTMENT CALLS

JB Chemicals and Pharmaceuticals Ltd - Outlook remains uncertain due to currency headwinds; Book profit                      
·         Sluggish performance continued in Q2: In Q2FY2016, JB Chemicals and Pharmaceuticals Ltd (JBCPL) reported a subdued performance with a revenue growth of just 2%, while operating profit margin declined by 350BPS to 17%. This quarter was the fourth consecutive quarter of dismal operating performance by the company.
·         Volatility in currency affects exports in key emerging markets: JBCPL reported a moderate 3% growth in exports of formulation to Rs133 crore during Q2FY2016. The exports to the Rest of the World (RoW) markets (10% decline during the quarter) were affected due to lower demand and depreciation of market currencies against dollar.
·         Outlook remains bleak; Book profit: The volatility in currencies in key emerging markets is likely to have an effect on H2FY2016 performance too. Also, for FY2017, demand will continue to be weak as dollar is likely to strengthen further. Hence, the operating profit margin and profitability are likely to remain under pressure over the next few quarters. Hence, in view of bleak future, we advise our investors to Book profit from the stock.


OTHER NEWS

RBI allows foreign investors to buy bonds in default – positive read thru for Banking sector
RBI allowing foreign investors to buy corporate bonds that are either totally or partly in default ( tenure of more than 3 years. The is potential boost to the country's nascent distressed debt market and will help in expansion of bond markets.  In addition, this will provide an exit to existing investors and also help in reducing the level of stress in the banking sector.

Fortis Healthcare to acquire Religare Health Trust Trustee Manager for ~Rs100crore; strategically will help to focus on better utilization of assets but will increase debt burden – neutral for Fortis Healthcare 
Fortis Healthcare’s step down subsidiaries-Stellant Capital Advisory Services has entered into a share purchase agreement with RGAM investment advisors and other shareholders to acquire 100% equity stake in Religare Health Trust Trustee Manager (a company incorporated in Singapore) at consideration of USD 14.9 million (or Rs100crore). Since majority of assets owned by RHT are operated by Fortis and its subsidiaries, the acquisition will help the company to have more focused approach towards them strategically

Sebi penalizes Polaris promoter Arun Jain for insider trading, could be sentimentally negative for Intellect Design
SEBI has slapped a fine of Rs.1.84 crore on Arun Jain, chairman and managing director of Polaris Software Lab Ltd, Rs.19.69 lakh on R. Srikanth, the company’s ex-chief financial officer, for allegedly making illegitimate gains through trading in shares of the company while in the possession of unpublished price sensitive information in 2008.The order came after Sebi, on receiving an alert from the National Stock Exchange Ltd, conducted an investigation into the stock movement of Polaris between 21 April 2008 and 31 July 2008 to check for any possible violation of insider trading norms by the two individuals. The Sebi probe reportedly found Jain and Srikanth had traded in the shares of the company during the investigation period while being privy to the company’s price-sensitive information then.

Welpsun Corp: Bags order for supply of 216k MT line pipes, positive read-thru
Welpsun Corp Limited has announced that it has won an order for supply of 216k MT  line pipes for an onshore pipeline project in Americas. With the addition of this order, current order book of the Company has crossed 1040 K MTs worth Rs. 64 bn.

Heineken ups stake in United Breweries; buys shares worth Rs 39 crore (at Rs951.5 per share)
Heineken International BV has increased its stake in United Breweries as it bought shares worth Rs 39.48 crore in the company through an open market operation. Heineken International bought 4,25,000 shares, or 0.15 percent stake, in UBL for Rs 39.48 crore. The shares were bought from Yes Bank at an average price of Rs 951.50 per share. As on September 30, 2015, Heineken held 42.07 percent stake in UBL through three companies - Heineken International B V, Heineken UK Ltd and Scottish & Newscastle India Ltd.

L&T’s Transmission & Distribution has bagged orders worth Rs 1038 crore in the month of November – Positive for L&T (News came during market hour)

UK's Hardy Oil & Gas plc is in talks to acquire Reliance Industries' entire 90 per cent stake in a gas discovery GS-01 block off the Gujarat coast. RIL wants to exit GS-01 as it feels that reserves discovered so far are not economically significant. – Positive read thru for RIL


NMDC has cut iron ore prices by 12.5 per cent due to sharp decline in its demand from steel mills. In the last one year, NMDC has cut iron ore prices by over 50 per cent. Thus realisations of NMDC are coming down and in turn will affect profitability – Negative for NMDC

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