}

Thursday, 31 March 2016

Equitas Holdings Limited - IPO

Issue Period: Tuesday, 05 Apr’ 2016 to Thursday, 07 Apr’ 2016 | Price Band : Rs 109 to Rs 110

IPO Details:
Issuer Equitas Holdings Limited
Issue Opening Date
Tuesday, 05 Apr’ 2016
Issue Closing Date
Thursday, 07 Apr’ 2016
Price Band
Rs 109 to Rs 110
Lot Size
135 Equity Shares and in multiple thereafter
Issue Size
Rs 2163.44 Cr to Rs 2176.68 Cr
Issue allocation
QIB - 50%, Non-Institutional - 15%, Retail - 35%
Listing
Proposed to be listed on BSE & NSE
BRLM
Axis Capital Limited, Edelweiss Financial Services Limited, HSBC Securities and Capital Markets (India) Private Limited and ICICI Securities Limited
Registrar
Karvy Computershare Private Limited

Competitive Strengths:
  • Robust corporate governance standards and transparent operations leading to institutional confidence and customer goodwill
  • Comprehensive understanding and successful track record with underserved customer segment offering significant growth opportunities
  • Standardized operating procedures and efficient use of technology resulting in effective risk management and improved efficiencies
  • Diversified product offering and markets with significant cross-selling opportunities
  • Experienced management and strong employee engagement
  • Commitment to social initiatives
Company Profile
Equitas Holdings Ltd is a diversified financial services provider focused on individuals and micro and small enterprises (MSEs) that are underserved by formal financing channels. Companies focus customer segment includes low income groups and economically weaker individuals operating small businesses, as well as MSEs with limited access to formal financing channels on account of their informal, variable and cash-based income profile. These customers require various financial products including small, short-term business loans as well as relatively large, longer tenor enterprise and home loans. Equitas offer a range of financial products and services that address the specific requirements of these customer segments that take into account their income profile, nature of business and kind of security available.

Microfinance- Company microfinance business provides loans ranging approximately between Rs 2,000 and Rs 35,000 to their customers, depending on the loan cycle and mode of disbursement. Companies microfinance business is conducted through their wholly-owned subsidiary EMFL. As of March 31, 2015, EMFL was the fifth largest microfinance company in India in terms of gross loan portfolio (Source:CRISIL MF Opinion).

Vehicle Finance- Equitas used commercial vehicle finance customers are typically first-time formal financial channel borrowers purchasing commercial vehicles. Companies customers also include small fleet operators. Equitas holding ltd is among a few NBFCs in India operating in the used commercial vehicle finance business.

Micro and Small Enterprise (MSE) Finance- Company provide asset backed financing primarily focused on self-employed individuals operating micro enterprises and small enterprises, typically in urban and semi-urban locations. Micro enterprises and small enterprises are internally classified as such on the basis of their loan eligibility.

Housing Finance- Company focus on providing micro-housing and affordable-housing loans to selfemployed individuals who have limited access to loans from banks and larger housing finance companies.

Objects of the Offer: The Issue comprises of a Fresh Issue and an Offer for Sale.
    Offer for Sale: Each of the Selling Shareholders will be entitled to their respective portion of the proceeds of the Offer for Sale. Company will not receive any proceeds from the Offer for Sale. All expenses in relation to the Issue will be shared amongst The Company and Selling Shareholders in accordance with applicable law.

    Fresh Issue: The Company proposes to utilise the Net Proceeds from the Fresh Issue towards funding of the following objects:

  • Investment in certain of their Subsidiaries, namely, EFL, EMFL and EHFL, to augment their capital base to meet their future capital requirements arising out of growth in our business (the “Investment”); and
  • General corporate purposes.
# For the purpose of information only, Invest only after referring to the Red Herring Prospectus dated 23rd March 2016.

31 March 2016 - Today's View & News

Market View

Markets are likely to open flat today. However due to schedule expiry and financial year ending may show some volatility during the day’s trade. 7640 and 7800 will be range that market will watch for. A break on either side will of this range, will decide further trend.

Nifty Spot Levels

Support 7670 – 7640 - 7580
Resistance 7800 – 7845 - 7890


Global Market Updates

US stocks plowed further into positive territory for 2016 on Wednesday, helped for a second session by comments from Federal Reserve Chair Janet Yellen that eased anxiety about potential interest rate hikes.

Yellen said on Tuesday the US central bank should proceed cautiously as it looks to raise interest rates. 

On Wednesday, her comments were echoed by Chicago Fed President Charles Evans, who said there was a high hurdle to raising rates in April, given low inflation.

That soothed investors who have been on edge for months about a slow global economy, a strong dollar, volatile oil prices and lackluster top-line growth at US companies.

The Dow Jones industrial average added 0.47 percent at 17,716.66 points

                                
TOP NEWS

Infra companies - RBI eases ECB norms for infra sector – Positive for infra, construction companies

Ashok Leyland - Hinduja Leyland Finance (subsidiary of Ashok Leyland) Files for a DRHP – Sentimentally Positive for Ashok Leyland; unlock value of its investments. Ashok Leyland currently holds 57.5% stake in Hinduja Leyland Finance
RBI eases ECB norms for Infra firms – positive for REC,PFC,L&T Finance Holding, SREI  and infra firms
RBI allowed all companies engaged in the infrastructure sector to raise external commercial borrowings with a minimum maturity of five years, including those non-banking finance companies (NBFC) regulated by the RBI. The borrowings have to be fully hedged and the individual limit of borrowing under the automatic route is $750 million. Apart from IFCs like PFC/REC/L&T Finance Holdings it will help companies like SREI and Shriram Finance also that are engaged in lending to various infrastructure related sectors such as transport and equipment financing.
Natural gas price to be revised down from 1st April 2016 to $3.06 from $3.82; lower than expected and Negative for Upstream companies
The government is likely to revise down the natural gas price from USD 3.82 to USD 3.06, in upcoming revision from 1st April 2016 (6 monthly revision in line with benchmark international gas prices). Negative for upstream companies (ONGC/OIL) as they will have revenue loss, however positive for gas based power producers. On the other hand, Government’s fertilizer subsidy burden will reduce.

Hindustan Zinc declared a special golden jubilee dividend of Rs24/share for FY 2015-16, which is a very high dividend yield of 13.7% on the last closing price.


Kansai Nerolac Paints – Kansai Nerolac Paints has sold 16 acre property in Perungudi, Chennai for a sale consideration of Rs537.86 crores to Brigade group and GIC. The development is positive for Kansai Nerolac Paints.

OTHER NEWS

Tata Global Beverages Ltd enters into the branded coffee with Tata Coffee Grand – positive from long term perspective
Tata Global Beverages has forayed into the branded instant coffee business in India by launching Tata Coffee Grand to tap the growing consumption of the drink in the country. The company has entered the branded coffee space at a time when coffee consumption has started rising rapidly across India. Tata Coffee Grand will be available in 50 gm jar, 50 gm and 5.5 gm pouch priced respectively at Rs 110, Rs 95 and Rs 10.
The per capita coffee consumption in India is one of the lowest if compared some of the developing economies and developed countries. The overall coffee consumption in India is expected to grow in mid single digit (retail segment is expected to grow at 20%). Thus sensing this as an opportunity TGBL launched Grand coffee in domestic market.

Coal India has received a green nod from environment ministry panel with some riders to Coal India's Ashok open cast mining project in Jharkhand. The estimated production from the mine is in the range of 10 to 14 MTPA – Positive read thru for Coal India

Apollo Tyres appointed Steven Smidlein as a Senior VP to boost  sales in North America. Steven Smidlein would be responsible for building the brand and sales in North America for both, Apollo and Vredestein brands. Steven comes with a 30+ years of experience in the sales Management and has served as a Director, OE Sales for a leading tyre maker in North America and as a Corporate Director for Daimler Chrysler.

ONGC  has found hydrocarbon deposit with an estimated production of 5.5 lakh SCF per day in Mizoram. – Positive for ONGC (News came during market hours)

Logistics sector – India’s major ports saw cargo traffic growth of 4.18% YoY to 549.98MT during April-February 2016. However container traffic for the same period grew by just 2.8% YoY. The data is yet show to major recovery in traffic growth from ports. The development is neutral for Container Corporation, Gateway Distriparks among others.

Saab, Ashok Leyland join hands to manufacture truck simulators
·  Defence and security company Saab and Ashok Leyland have joined hands to manufacture truck simulators in India under the Make in India concept.
·     The two companies signed a teaming agreement at the end of 2015. The simulator is based in the original Ashok Leyland cabin and is integrated with Saab simulation technology, according to a Saab press release.
·   The simulator has been developed on the Ashok Leyland Stallion 4x4 vehicle, which is used by Indian armed forces and paramilitary forces. The simulator enables the driver to drive and operate the Ashok Stallion vehicle in different terrains, different weather conditions and under all types of potential day to day challenges. The simulator combines the Ashok Stallion cabin realism with a motion base, 4K computer graphic visualisation for total trainee immersion.

Maruti Suzuki’s hybrid technology gaining ground
·         Maruti Suzuki India (MSIL) has said that its Smart Hybrid Vehicle from Suzuki (SHVS) technology is a win-win for all – customer and country — as it does not impact environment.
·     The company is enjoying the first mover advantage in the SHVS technology.
·    This is evident from the positive response to its two products – Ciaz sedan and multi-utility vehicle Ertiga – that have this technology.
·    There are more than 40,000 units of both the vehicles on road over the last four-five months. Of the around 5,000 units of the Ciaz and 6,000 units of the Ertiga sold every month, almost 58 per cent and 57 per cent sales come from the SHVS variants
·  With the government taking some initiatives such as Faster Adoption and Manufacturing of Electric vehicles (FAME), to provide subsidies on electric and hybrid vehicles, the traction of sales of such vehicles are going up. Apart from the customers getting better mileage, under the FAME rule, they also get discount of around Rs30,000 on such vehicles. The SHVS technology is low on emissions and offers ease of driving, and one of the major reasons for gaining popularity of such vehicles is fuel efficiency, which improves by more than 20 per cent (in come cases around 50 per cent).
·      The instructor operating station enables the instructor to observe and interact with the trainee in real time, and allows him to take over controls in emergency situations and to give the trainee the after action feedback for fast learning progress
Reliance Industries - Media reports reveals that Reliance Jio is likely to enter market with very competitive pricing for its 4G services, way ahead of its peers offerings. This is to intensify competition and RIL JIO could gain market share. As per media reports, the SIM cards will be available at a cost of Rs 200 and JIO will offer humongous 75GB of  4G data and 4500 minutes of call timeas well as some freebies. – Positive for Reliance Industries, Negative for incumbent telecomm players like Bharti Airtel & Idea Cellular

JMC projects declined to the media news stating that the company is in talk with few investors to sell its four road boot projects. 
More News

Sensex ends 438 points up on buying in metal, realty shares; Nifty settles at 7,735
Rel Jio is world’s largest startup: Mukesh Ambani
Cos with over Rs 500 cr net-worth under new Ind AS
Credit growth in Indian banks Slows down, says RBI
RBI allows infra firms to borrow overseas for short tenor
Fed's Evans sees high hurdle to April rate hike
Exiting UK operations a logical way of de-risking businesses: Tata Steel
India, WB sign $1.5 bn loan pact for Swachh Bharat Mission
Banks may not buy Mallya's settlement offer by September
RBI's take on liquidity most important in the policy: Economists
Cameron likely to hold emergency meet on Tata Steel UK business
ONGC has found hydrocarbon deposit in Mizoram
Suzlon bags 48.30 Mw wind power project from Indian Oil Corp
Kalyani eyes tie-up with Italian firm for making small arms
Adani Group enters defence sector with statement of intent
Small savings interest cut is ‘double taxation’: panel
Europe exit will help Tata Steel pare debt, trim losses
India-Australia joint research projects get $5.6 mn funding boost 
MOPE acquires 4.1% stake in Indian Energy Exchange
Special dividend for Hind Zinc shareholders
‘Start-ups are not a bubble, they are a necessity’
RBI gives loan defaulters’ list to Supreme Court, seeks secrecy
UTI AMC continues to push for IPO; plans to offload 26% stake
Govt extends import taxes on some steel products till March’18
Kandla Port poised to reach three-figure mark in cargo handling
Tata Motors’ defence business bets its future on FICV
United Bank of India to raise Rs480 crore from govt via preferential allotment             
Bharti Airtel's low-cost strategy unsustainable: BMI
Gas prices to dip 17 per cent to $3.15
Govt proposes strict penalty, jail term for ponzi operators
Vijay Mallya offers to pay Rs 4,000 cr to settle case
ADB cuts India's growth forecast to 7.4% for 2016-17
RIL invests over Rs 1.5L cr in telecom, internet venture
Nestle dragged to court in UP over 'sub-standard' Maggi
Swavalamban subscribers can switch to APY: PFRDA
Sun Pharma shares gain 2%; m-cap up by Rs 4,238 cr

Derivatives Updates


NIFTY PCR:
1.08
NIFTY IMPLIED VOLATILITY:
16.81
MARKET WIDE OPEN INTEREST:
Rs.2,63,642 Cr. and Rs.7,151 Cr. Sheded in OI
NIFTY CALL:
Shed 32.96 Lac shares
NIFTY PUT:
Added 60.51 Lac shares
MAJOR OI GAINERS
Hindustan Zinc (31%), Godrej Industries (25%), Cummins India (22%), Federal Bank (20%) and Adani Power (19%)
MAJOR OI LOSERS
IOB (-25%), HDIL (-20%), Titan (-14%), Syndicate bank (-12%) and PC Jewellers (-12%)


Stock in News


1. Sun Pharma to tap Japan's growing focus on generics
2. New FDI norms pose rejig challenge for Flipkart, Amazon
3. Reliance Capital completes 23% stake sale in life insurance venture
4. Tata Sons-promoted Indian Hotels Company, or IHCL, announced its exit from a property in Jaisalmer, the Gateway, which it had managed for the last several years.
5. Kalyani eyes tie-up with Italian firm for making small arms
6. Adani Group enters defence sector with statement of intent
7. Kansai Nerolac sells Chennai land to SPV floated by Brigade & GIC Singapore
8. Defence and security company Saab and Ashok Leyland have joined hands to manufacture truck simulators in India under the Make in India concept.
9. RInfra proposes 5.26% tariff increase for 2016-17
10. AstraZeneca saves $400 mn through in-house IT spending

Stock Update

LUPIN
USFDA issues 483 observations at Mandideep plant
Cmp: Rs 1475
Reco: Hold
Tgt: Rs 1758

Key points

Event: USFDA inspection reports 483 observations at Mandideep plant (both API and formulation units): Lupin has received two observations each (under 483) from the US Food and Drug Administration (USFDA) for its Mandideep active pharmaceutical ingredient (API) and formulation plants after the inspection, which was carried out in between February 8-19, 2016. The observations are related to “use of non-conforming intermediate for making APIs”, cleaning standard operating procedures and inappropriate equipment design.

Impact-Low risk to operations: Mandideep is the second largest revenue contributor to Lupin’s US business after Goa. However, there are no pending abbreviated new drug applications (ANDAs) from this plant and nor does it support ANDAs at other plants, as per the clarification of the management. Hence, it would not affect growth, given that no approvals are at risk.

Focus on Goa plant outcome: We remain focused on the Goa plant and the outcome of 483s issued there in March 2016 and July 2015, given that it is a large source of Lupin’s pipeline and any delay in product approvals could hurt earnings forecast. Product approvals from this plant would be the key to monitor.

Outlook and valuation: We believe that in the near term, the stock is likely to remain range bound till the USFDA concerns subside, especially since a few observations are repetitive in nature. Moreover, it is little worrying reflected by the fact that it is the second plant under the USFDA scanner in a short period of time. We have not reviewed the 483s yet but are relying on the management’s clarification on the issues. We have maintained our Hold rating on the stock and have retained our price target of Rs1,758 (valuing the stock at 22x its average earnings of FY2017E and FY2018E).

Wednesday, 30 March 2016

30 March 2016 - Today's View & News

Market View

Nifty likely to open on positive note back on positive global clues, index has a stiff resistance in the 7700-7750 zone. 7580 is acting as some kind of support, if Nifty sustaining below 7580 may see an acceleration of the trend on the downside.

Nifty Spot Levels 

Support  7550 – 7510 – 7470
Resistance  7645 – 7700 -7750

Market Update:‎

Sgx Nifty +42 pts ‎Dow +97.72 pts ,Nsdq +79.84 pts , S&P +17.96 pts ‎, Bovespa +316 pts , Ftse -0.58 pts , Dax -36 pts  , Cac -36 pts  , Nikkei  -119 pts , now, Crude @ $38.66 brl (+0.38), Brent @ $39.42 brl (+0.36) , Gold @ $1244.60 (+7.10), Silver @ $15.37 (+0.00), Euro @ $1.1296, JPY @ $112.5400, INR @ $66.5358
US GENERIC GOVT. 10-YEAR YIELD : 1.8105%

Global Market & International Data Update

The S&P 500 closed at its highest in 2016 on Tuesday after Federal Reserve Chair Janet Yellen called for caution on raising interest rates - music to Wall Street's ears.

Yellen's cautious tone contrasted with recent comments from other policymakers, including the chiefs of the 

Philadelphia and Atlanta Federal Reserves, who had expressed support for a more aggressive approach to raising interest rates this year.

The Dow Jones industrial average rose 0.56 percent to end at 17,633.11 points.

Today's Corporate Action 30th Mar Ex Date 

DATAMATICS Interim Dividend - Rs. - 0.5000DIGJAM Amalgamation
HDFC Interim Dividend - Rs. - 3.0000
MOHITIND Spin Off
NMDC Interim Dividend - Rs. - 1.5000
PRESTIGE Interim Dividend - Rs. - 1.2000
VIVIDHA Bonus issue 1:3

TOP NEWS

Sun Pharma to enter Japanese market through acquisition of 14 brands from Novartis – Long term Positive for Sun Pharma
Sun Pharma acquires 14 established prescription brands from Novartis in Japan. As per the agreement, Sun Pharma will acquire the portfolio of 14 established prescription brands from Novartis for a cash consideration of US$ 293 million (~ Rs 1900 crores). These brands have combined annualized revenues of ~ US$ 160 million(Rs 1050 crores) and address medical conditions across several therapeutic areas. Under the terms of the agreements, Novartis will continue to distribute these brands, for a certain period, pending transfer of all marketing authorizations to Sun Pharma’s subsidiary. It is positive for Sun Pharma as it marks Sun Pharma's foray into the Japanese prescription market and provides an opportunity to build a larger product portfolio in the future as Japan is the third largest pharma market.
Sun TV: I&B ministry rejected Red FM applicatation to participate in Phase III Auctions, sentimentally negative
I&B ministry has rejected Red FM applicatation to participate in Phase III Auctions, Govt to present MHA's decision before Delhi HC on April 29.Delhi HC Allows Red FM to continue broadcast in 3 circles till April 29. Red FM was not allowed to participate in auctions as it had no MHA clearance. Earlier, The Delhi high court has asked the home ministry to decide within two weeks on the issue of allowing Digital Radio Broadcasting to migrate to Phase III FM licenses. Last year, the information and broadcasting ministry had refused to allow DRB to participate in the Phase III FM auctions for want of a security clearance from the ministry of home affairs. DRB is part of the Kalanithi Maran-promoted Sun TV Network and runs Red FM.

RBI tweaks MCLR norms -- Fixed rate loans having tenure upto 3 years would be priced in accordance to MCLRnegative readthru for Banks
RBI has reviewed MCLR norms on fixed rate loans whereby it has decided that fixed rate loans upto three years shall be priced with reference to MCLR. Fixed rate loans of tenor above three years will continue to be exempted from MCLR system.  Earlier, the fixed rate loans were initially exempted from being linked to MCLR.

Sugar - The government has lowered its sugar output estimate by 1.4 per to 25.64 million tonnes (MT; earlier estimate was 26MT) in the cane crushing season 2016 (lower than 28MT produced in sugar season 2015) – positive for sugar companies like (Balrampur Chini and Dhampur sugar) as it will keep sugar prices firm in the domestic market

Tata Steel:  Board open to selling off UK biz, positive read-thru

BEL, Thales to develop PHAROS fire control radar: Positive for BEL step further in area of expertise

Ashok Leyland wins defense orders worth Rs 800 Cr: Positive for the company

More News

Investors see another financial meltdown in 3 years' time
Loan defaults may not always be promoters’ fault: RBI
Reserve Bank of India tweaks upcoming lending rate rules
Emerging market debt trading fell to 6-year low in 2015
RBI, SL central bank sign currency swap agreement
Sebi to pass fresh order in UBHL restatement of accounts case
Govt opens FDI gates wider for e-retail
SC allows SEBI to sell Sahara properties worth Rs 40k cr
Vodafone moves ICJ over tax arbitration with India
EPFO to invest more in govt bonds, FinMin hikes limit to 65%
Sebi tightens noose on commodity exchanges
Over $1 tn to enter global real estate market; up 6% from 2015
Jewellers begin registration with excise amid protest
Reliance Defence forms JV with Rafael to take up $10 bn worth projects 
Tata Sons keen to end row with domestic airlines over 5/20 rule 
GAIL drills first exploratory well in Cambay basin block
Resolved various legacy issues, moving to 25% corporate tax rate: Jaitley
Higher labour productivity, ease of doing business could boost growth: Montek
World’s best economy betraying investors as India earnings decay
Nestle turns to chocolate and dairy to reduce load on Maggi noodles
USFDA issues Form 483 to Lupin’s plant, stock dips 12%
Barclays joins Morgan Stanley in predicting more pain for rupee
Employees may earn interest on inoperative EPF savings account
Sebi to revise rules to reinstate discretionary power on penalties             
India business sentiment falls in March: Survey
Vijay Mallya offers Rs 2,000 crore to settle all Kingfisher loans
RBI may go for a 'measured' cut next week: DBS
Sensex ends 66 points down in volatile trade, Nifty settles below 7,600
Maharashtra, Gujarat accounted for 46 pct of exports in FY15: Report
Car, bike insurance premium rates go higher by up to 40%
FPI limits in govt securities pegged at Rs 10,500 cr from April
Nifty-based ETFs to debut on Taiwan Stock Exchange
ECB loans decline by 40% in February
25% wheat import duty to stay till June 30
RBI cancels registration of 22 NBFCs
S&P, Fitch assign stable outlook to Adani Transmission
Price fixed rate loans up to 3 yrs on marginal cost: RBI
UBI raises Rs 1k-cr via bonds; LIC to buy OBC stake

OTHER NEWS

Ashok Leyland wins defense orders worth Rs 800 Cr: Positive for the company
Ashok Leyland Ltd has  won defense Contract worth Rs.800 crore from Indian armed forces for supply of advanced-technology products - 450 units of Field Artillery Tractor (FAT) 6x6 and other similar Super Stallion vehicles; and 825 units of Ambulance 4x4. This contract is executable over the next two years. Further Ashok Leyland has identified Defense as a core area for growth and has targeted to more than double the share of defense revenues to 10% from the current level of 4% in the next 4 years.

RBI hikes FPI limit in government bonds and state bonds by Rs10,500 crore and Rs3,500 crore respectively

JSPL in talks with Japan's Yamato kogyo to sell 45% stake in rail mill at around Rs 3000 crore, as per media reports.

Reliance Industries imported 13.7% higher crude oil in February 2016 compared to that of in January 2016, as per media reports. Positive read thru for RIL.

Maharashtra's Power Discom proposes 5.5% tariff hike for FY2016-17                                         
The Maharashtra State Electricity Distribution Company (MahaVitaran) has proposed an average tariff hike of 5.5% for 2016-17, in its petition before the regulator. The discom needs rise in tariff to meet the revenue gap of Rs 38,987 crore and also to meet the inflation ranging between 5% and 8% in the country.

BEL, Thales to develop PHAROS fire control radar: Positive for BEL step further in area of expertise
BEL-Thales Systems Limited (BTSL) have signed a partnership agreement with Thales for joint development of PHAROS fire control radar which provides defence against small, fast moving and highly manoeuvrable air and surface targets that may also be encountered in littoral missions. The multiple target tracker is capable of simultaneously controlling in all weather conditions the engagement of these targets with guided ammunition. The responsibility of overall system design will be borne by Thales. BTSL will develop the mechanical design and radar processing modifications, while Thales will be responsible for the design and production of the radar antenna. The jointly developed PHAROS system will cater to both domestic Indian and international market requirements. 
PNC Infratech receives letter of acceptance for PWD road project in UP – Positive for PNC Infratech
PNC Infratech has received letter of acceptance for the project of construction of three lane road on both sides of Sharda Sahayak Feeder Canal from Lucknow-Faizabad Road to Lucknow-Sultanpur Road, in the state of Uttar Pradesh on 28th March 2016. During the current quarter PNC has received letters of award for a total contract value of over Rs. 1,000 crores.

Natural rubber price surge by 12-13% in one month; tyre companies likely to pass on the increased costs
Natural Rubber prices (which forms about 45% of the raw material costs for tyre companies) have surged by about 12-13% in the last one month on back of export cuts announced by major rubber producing countries viz Thailand and Indonesia (cuts announced are to the tune of about 5-6% of the global consumption). Surge in the rubber prices would result into increased cost of inputs for tyre companies. However, the tyre companies have indicated that increase in the input costs would be largely passed on to the customers thereby limiting impact on the margins.

ZEEL to reorganize channel distribution, advertisement sales functions
Zee Entertainment Enterprise Ltd (ZEEL) will reorganize its channel distribution and advertisement sales functions. The board of the company has in-principle approved the proposal of reorganization of channel distribution function, which is presently handled by its wholly-owned subsidiary Taj Television. The channel distribution activity with effect from April 1, 2016, shall be integrated within the company and  would also distribute its channels from the next fiscal as part of the reorganization. The company shall also distribute channels of broadcasting entities of associated/related entities of the company at a mutually agreeable commission on arms-length basis. This has been done to take the advantage of ongoing digitization of home cable delivery system and increasing penetration of DTH services.  The board has also approved the formation of a new company, Zee Unimedia Ltd, which would work as canvassing agent for the company from April 1 to provide an integrated solution to media buyers.

Rallis India : Rallis India has entered into an agreement with IKEA India to transfer its leasehold right over a land parcel in Mumbai for a consideration of nearly Rs 214 crore.

Tata Steel:  Board open to selling off UK biz, positive read-thru
As per media news, Tata Steel is considering the sale of its entire UK business to stem heavy losses. According to the report, the company’s European arm would now “explore all options for portfolio restructuring, including the potential divestment of Tata Steel UK, in whole or in parts. Meanwhile, Indian Board of Tata Steel in a meeting has  rejected current plan of UK Tata Steel union to sell of long product business in UK, Board has asked EU board for  Tata Steel to explore all options.

Majesco’s US Arm Enters Into Strategic Partnership With SPLICE Software
Majesco announced that SPLICE Software, a provider of solutions that connect insurance companies and customers with a real-time, data-driven engagement across all mediums of automated communication, has joined their partner ecosystem. SPLICE helps insurers to authentically interact with their customers in a personalized fashion that takes into account permissions and preferences, to create proactive, relevant communications, thereby improving the customer experience. Splice software is pre-integrated with Majesco’s DigitalConnect with an initial focus on billing and claims, the most common customer touchpoint for insurers. Additional plans for further use cases are in development.

Stock in News 
  • Reliance Defence Ltd, a 100 % subsidiary of Reliance Infrastructure Ltd, and Rafael Advanced Defence Systems Ltd have decided to set up a joint venture (JV) company in India in the areas of air-to-air missiles, air defence systems and large
  • Sun Pharma buys Novartis brands for Rs 1,900 cr
  • Ashok Leyland bags Rs 800 crore order from armed forces
  • Rating agencies assign BBB- with stable outlook to Adani Transmission
  • Zydus gets FDA nod for anti-viral Acyclovir capsules
  • Mobile tower companies to grow revenues by 8-10%: Moody's
  • Bank of India to get Rs 1,150 crore capital infusion from govt
  • Adani Ports raises Rs 500 crore via debentures
  • GSK Pharma to launch more combination vaccines

Derivatives Updates


NIFTY PCR:
0.97
India  VIX:
17.64
MARKET WIDE OPEN INTEREST:
Rs. 256548 cr and Rs. 5186 cr were Added in OI
NIFTY CALL:
Added 5.37 lakh shares in OI
NIFTY PUT:
Added 10.73 lakh shares in OI
MAJOR OI GAINERS
Hexaware (47%), Apollo Hospital (20%), Bank of Baroda (19%), IFCI (18%) and Unitech (17%)
MAJOR OI LOSERS
L&T Finance Holding (-15%), Pidilit Industries (-10%), PNB (-10%), Godrej Industries (-10%) and Uco Bank (-9%)

Stock Update

Bharat Electronics
Reco: Buy  
In a sweet spot CMP: Rs1,180

Key points
Increasing target market size with DPP-2016: In our special report on the defence sector dated March 29, 2016, on DPP-2016, we have highlighted the defence capital outlay opportunity for the industry to the tune of $150 billion over the next decade. Bharat Electronics Ltd (BEL) has already got a head start with four licences since 2004 in radar and wafers where the company enjoys a monopoly position. Further, the company has a market opportunity size of Rs70,000 crore over the next seven to eight years in its area of expertise.

Gearing up to compete with the private sector: BEL is planning to invest Rs1,500 crore over the next three years under its “Make In India” expansion and modernisation strategy. The company will also be increasing its R&D spends to 10% of turnover (currently at 8%). BEL will be increasing its procurement from MSMEs (thrust area in DPP-2016) from 8% in FY2015 (5% in FY2014) to focus on core areas and R&D. Additionally, BEL will be focusing on exports, offsets and buyer nominated equipment. The likely increased private sector participation has led BEL to diversify into areas of homeland security, smart cards, smart city elements and solar power plants which too have tremendous growth potential with better operating profit margins.

Maintain Buy with price target of Rs1,450: BEL remains our preferred pick in the defence sector on account of its strong manufacturing and R&D base. BEL has already started to reap benefits of indigenization of the defence procurement with 44% Y-o-Y jump in its order book which stood at Rs32,333 crore at the end of Q3FY2016 (order intake of Rs12,000 crore in Q3FY2016). BEL being a virtually debt-free company with cash of over Rs5,200 crore (Q2FY2016), return ratios (RoCE, RoE) at 15% (FY2015) and consistently paying dividend is suitably placed to capitalise on the upcoming defence procurement opportunities. Consequently, we reiterate our Buy rating on the stock with an unchanged price target of Rs1,450.

Defence Procurement Policy 2016

DPP 2016-Huge opportunity in offing but will not materialise immediately 
The defence minister recently cleared a long awaited Defence Procurement Policy of 2016 (DPP-2016) which will overtake DPP-2013 and govern all defence acquisitions initiated after April 1, 2016. The chapter 6 which deals with the appointment of “strategic partners” (priority partners in the manufacturing equipments like aircraft, warships, helicopters, submarines, tanks etc based on technology from foreign vendors) in the private sector would be finalised in another one to two months.

Tuesday, 29 March 2016

29 March 2016 - Today's View & News

Markets are likely to open flat to negative. The index has provided a breakdown from the uptrending support line, hence short-term bias is down for the target of 7405. 

Nifty Spot Levels 

Support  7585 – 7500 – 7520
Resistance  7645 – 7677 - 7710

Market Update

Sgx Nifty -3 pts ‎Dow +19.66 pts ,Nsdq -6.72 pts , S&P +1.11 pts ‎, Bovine  +1180 pts , Ftse Clsd , Dax Clsd , Cac Clsd , Nikkei  -105 pts , now, Crude @ $39.34 brl (-0.05), Brent @ $40.24 brl (-0.03) , Gold @ $1233.40 (+1.40), Silver @ $15.23 (+0.04), Euro @ $1.1200, JPY @ $113.3000, INR @ $66.5700

TOP NEWS

Cadila Healthcare acquires the gastro therapy 'Actibile’ from Albert David for Rs 55 Cr – Long term positive.
Zydus Healthcare, a subsidiary of Cadila Healthcare, has acquired gastrointestinal brand 'Actibile' from drug firm Albert David. The brand falls in the gastroenterology segment and is used for dissolving gall bladder stones. The deal will be financed through internal accruals.

Ashok Leyland sold 0.55% stake in Indusind Bank for Rs 300 cr. The proceeds are likely to be utilized to reduce debt.

Steel companies: Government likely to extend safeguard duty on some steel products till March 2018, positive for domestic steel companies
As per media news, The government is likely to extend safeguard duty of up to 20 per cent on certain steel products till March 2018, to protect the domestic industry from cheap imports from nations like China. The Board of Safeguards (BoS) in its meeting last week has recommended to the Finance Ministry for the restrictive duty. Earlier this month, the Directorate General of Safeguards (DGS) has recommended continuing restrictive duties of up to 20 per cent till March 31, 2018 

Defense orders worth Rs.2.8 trillion to be placed by year end, positive BEL, L&T among others
As per media reports, defence orders worth Rs.2.8 trillion by 2016 even as the ministry of defense is pushing for at least 40% indigenous content in the defence products. The ministry has already finalized defence procurement orders worth Rs.1,57,000 crore and orders worth Rs.1,38,000 crore will be finalized shortly

OTHER NEWS

Government unveiled Defence Procurement Procedure, which will ensure transparency and speed in acquisition process and boost the 'Make in India' initiative to reduce dependence on imports.
1.     The Defence Procurement Procedure (DPP) can push the agenda of 'Make in India' and India's target of achieving defence industry network
2.    DPP, it will be ensured that there is greater transparency and faster clearances. The new DPP mandates that all AONs (Acceptance of Necessity) of a particular platform will be valid only for six months as against the 12 months deadline now.
3.     The new policy has introduced an Indian Designed, Developed and Manufactured (IDDM)category which will benefit the local units. IDDM will be the first category of preference under new DPP.
4.   Increased the Foreign Direct Investment (in Defence sector) to 49 per cent which will be through automatic route.
5.     New blacklisting policy will also be issued separately next month and made it clear that there will be "no relaxation" for those who have already been blacklisted and "bribe givers" will be punished

UCO Bank has considered the proposal for issue of equity shares to Government of India on preferential basis relating to capital infusion of Rs. 935 crore in the bank.

Biocon gets nod from Japanese authority to sell its biosimilar product insulin Glargine – Positive for Biocon.
Biocon has received approval from the Japanese health authority to sell its biosimilar product 'Insulin Glargine' in Japan. The Insulin Glargine approval in the highly regulated market like Japan, marks a huge credibility milestone for Biocon. It is a significant achievement in making global impact in diabetes management through its affordable biosimilar insulin’s. Biocon's product is a ready-to-use prefilled disposable pen and is expected to be launched in first quarter of next fiscal.

Inox Wind- Inox Wind infrastructure services, a wholly owned subsidiary of Inox Wind has acquired Sarayu Wind Power (Kondapuram) Private Limited, with effect from March 25, 2016. This is in line with its strategy to expand its presence in southern states of India. Positive read thru for Inox Wind

Dalmia Bharat to amalgamate OCL and Bokaro with Odisha Cement and Adhunik Cement and Power with itself: Positive read thru as it will simply the cross holding and will also give synegy benefits to the company
Dalmia Bharat has announced the amalgamation of OCL India Limited and Dalmia Cement East Limited ‘Bokaro’ with Odisha Cement Limited (shall be renamed as OCL India Limited), amalgamation of Adhunik Cement with Dalmia Cement (Bharat) Limited (DCBL) and transfer of power assets  from Dalmia Cement Bharat Power Ventures Limited to DCBL.

Torrent Power – The company has entered into a contract with a leading WTG manufacturing group for development of the 197.40 MW Wind Power Project across three sites in Kutch and Bhavnagar, Gujarat. This Project is expected to be commissioned progressively by March 2017 and shall have off take arrangements for fulfilment of Renewable Power Purchase Obligations (RPO).

Plastiblends India starts commercial  production at new mfg unit in Surat

Tech Mahindra to work as member in GE Digital Alliance Program
Tech Mahindra, will work as a member in the GE Digital Alliance Program and devote over 1,000 developers for it over next few months. The company said it has been an early adopted of the Predix platform, GE’s cloud platform-as-a-service for the industrial Internet, and has over 100 experts trained in it.As part of the alliance, it will work with GE to jointly create solutions for the power, oil and gas, and transportation sectors.

NBCC Ltd: sought shareholders' approval for stock split as the company is likely to launch follow-on public offer ( FPO) under the government's disinvestment programme

M&M to launch compact Bolero and larger version of TUV3OO to broaden product portfolio
In order to widen the product offerings, M&M is developing a compact Bolero that will stretch less than four metres and sport a 1.5-litre engine. The compact Bolero will attract lower levies than the current model, which is 4.17-meter long and is powered by a 2.5-litre diesel engine. Internally codenamed U108, the new Bolero will expand the compact utility vehicle range at M&M to four: Bolero, TUV 300, KUV 100 and Nuvo Sport, which will be launched shortly. U108 is likely to be launched in the second half of 2016 and the company is working on a volume potential of 25,000 units a year (the current Bolero volumes stand at about 85,000 units per year). Apart from U108, Mahindra is also working on a 7-seat version of the TUV 300, called U302.The new launches would enable M&M to regain market share in the utility vehicle space. 

LIC ups stake in IDBI Bank to 14.3%
IDBI Bank has allotted 15.8 crore equity shares, equivalent to 7.16% stake for Rs 850 crore, on preferential basis to Life Insurance Corporation of India (LIC), which now holds over 14.3% stake in IDBI Bank. The allotment of shares is part of IDBI Bank's plan to offload government shareholding as part of its privatization move.

Government to infuse Rs 5,050 cr in PSU banks
As a part of Rs 25000 cr capital infusion plan for the current fiscal the Government will infuse additional capital of about Rs 5,050 crore in some public sector banks by this week. UCO Bank will raise Rs 935 crore ,while Syndicate Bank will raise up to Rs 740 crore via preferential allotment. Other lenders which are contenders for the fresh round of infusion are Central Bank of India, Indian Bank, Oriental Bank of Commerce, Vijaya Bank and United Bank of India.

Today's Corporate Action 29th Mar Ex Date

BALAJITELE Interim Dividend - Rs. - 0.8000BALAJITELE Special Dividend - Rs. - 0.4000
ORICON Interim Dividend - Rs. - 0.5000
POWERMECH Interim Dividend - Rs. - 1.0000RADIXIND Interim Dividend - Rs. - 1.0000RAJESHEXPO Interim Dividend - Rs. - 0.9000


More News

Global financial safety net fails many emerging markets: IMF
Disney in talks with DLF brands for India retail foray
Govt, RBI taking tough action to recover dues: PM
Rajan for guidelines on monetary policy behaviour
Govt reconstitutes Board of Trade, first meet on Apr 6
Tata Sons to hold 49% stake in AirAsia India
Pay dues honourably or face coercive action: FM to Mallya
Prem Watsa picks up GVK's 33% stake in Bengaluru airport for Rs 2,149 cr
Govt to infuse Rs 5,050 crore in PSU banks
Lloyd's India syndicates to retain minimum reinsurance business: IRDAI
BSE to suspend trading in 31 companies effective March 31
Dr Reddy's inks Rs 3,266-cr pact with XenoPort
3-year insurance after job cessation on cards for EPFO members
Weak economy spurs demand for low-priced coffees
JetLite merger: Jet to seek shareholders’ nod on April 22
ADB, USAID join hands to support India's clean energy expansion plan
Steel Strips bags €15-mn order from PSA Peugeot Citroen
ARSS Infra Proj wins Rs. 109 cr contract in Odisha
Coal scam: JIPL and its directors convicted of criminal conspiracy and cheating
Tata Power SED targets nearly Rs7 trillion in defence opportunities, says CEO
Dell sells IT services unit to Japan’s NTT Data for $3 billion
Regulator defers decision on importing genetically modified animal feed         
Sensex plunges 371 points on profit booking, Nifty settles at 7,615; Metal stocks tumble
'Inflation seen at 5 pct in March; RBI to cut rates by 25 bps'
India internet speed lowest at 2.8 mbps, Korea tops at 26.7 mbps
State govts likely to run wider fiscal deficit in FY17: HSBC
Grading of monetary policies needed: RBI paper
Fertiliser subsidy may come down by Rs 10k cr in FY17
Jewellery demand set to go down by 40-50 tonnes
Subsidy scheme to rescue shipbuilding firms
Earnings season may define FPI enthusiasm for India
Fairfax buys 33% stake in Bengaluru airport from GVK 
Hyundai to invest $200 mn yearly, to launch 2 models
Natco says addressing US FDA concerns
Dr Reddy's inks Rs 3,266-cr pact with XenoPort
Drug ban: Govt tells courts Pharma firms' licence to sell is irrelevant
HDFC Bank to raise up to Rs 5,000 cr infra bonds
Odisha to lose Rs 2,174 cr in FY17 on VAT deferment to IOCL
ONGC approves $5 billion investment to boost production
HCC bags orders worth Rs 623 crore for hydro power, tunnel
BHEL commissions 40 Mw hydro electric generating unit in West Bengal
Zydus acquires gastro drug 'Actibile' from Kolkata-based Albert David
L&T Infra Finance plans to raise Rs 200 crore through bonds
Shriram Transport Finance to raise Rs 250 crore via NCDs

Derivatives Updates

NIFTY PCR:
0.96
NIFTY IMPLIED VOLATILITY:
17.49
MARKET WIDE OPEN INTEREST:
Rs.2,51893 Cr. and Rs.2,423 Cr. Added in OI
NIFTY CALL:
Added 38.28 Lac shares
NIFTY PUT:
Sheded 29.66 Lac shares
MAJOR OI GAINERS
KPIT (24%), Bajaj-Auto (21%), M&M Finance (19%), Ambuja Cement (16%) and L&T Finance holding (15%)
MAJOR OI LOSERS
Reliance Infra (-9%), Siemens (-8%), Ceat Limited (-7%), Godrej Consumer (-6%) and Bank of India (-6%)

Global Update

Wall Street was mixed on Monday as weaker-than-expected US economic data reduced concerns about potential interest rate hikes and a dip in oil prices pushed down energy shares.

US consumer spending barely rose in February and inflation retreated, suggesting the Federal Reserve could remain cautious about raising interest rates this year even as the labour market rapidly tightens. 

Investors will pay close attention to Fed Chair Janet Yellen's speech in New York on Tuesday for clues about when the central bank might raise interest rates. 

The Dow Jones industrial average rose 0.11 percent to finish at 17,535.39 points

Stock Update:

PI Industries
Reco: Buy 
Change in licensing regime, marginal impact on PI CMP: Rs562

Key points

CIB to relook at framework for deemed registration regime: As per the order of the Gujarat High Court, the Central Insecticide Board (CIB) has decided to relook at the guidelines of the deemed registration (exclusivity and also started registration of exiting generic products, which are out of exclusivity period; stricter norms to follow three-year exclusivity). As per the earlier guidelines, deemed registration
does not require technical registration for three years. Due to non-availability of the technical registration (formula of active ingredients) competitors were unable to launch this type of products which resulted in high-profit margins for incumbent companies.

New regime to affect players with exclusivity licensing; will intensify competition: Uncertainty of time period under deemed registration has restricted competition, which has resulted in high margins for existing players in exclusive products. However, after transparency in policy framework (for time-bound registration) it will result in increased competition and there can be price erosion (exclusive products) of around 20-30% over three to five years (as per our interaction with industrial players). Also, the definition of the new molecule will be shortened which will reduce the benefits derived from in-licensing model going forward. However, there is ample of opportunity available for in-licencing companies in India due to lower penetration of agrochemicals.

PI Industries to face competition, but impact will be marginal: The domestic model of the PI Industries is depended on in-licenced products which the company acquires from global innovators. Nominee Gold (one of the company’s blockbuster products) is under deemed registration hence the High Court order may have marginal effect on the revenue and profitability (around 4-5% respectively in FY2018) of the company. However, looking at the brand advantage of Nominee Gold coupled with huge demography of India and the company’s presence in terms of geographical reach (strong distribution network), it’s unlikely to lose market share to a great extent. Apart from this very strong brand name, the company will also restrict the migration of farmers towards same product by competitors (it will take time for competitors to motivate farmer to buy their products) and over a period of time introduction of other innovative products will reduce the dependency on single products.

Retain Buy with price target of Rs800: We continue to like PI Industries in the agrochemicals space due to its strong brand, ability to introduce new innovative products, sooner or later revival in exports business and limited impact of the High Court order. Hence, we reiterate our Buy rating on the stock with a price target of Rs800.