Thursday, 30 June 2016

30 June 2016 - Today's View & News


Markets are expected to open positive in accordance with global markets. Today being NSE FNO expiry, markets may show volatility during the day. Overall, if Nifty breaks and sustains above 8260 then upside momentum can continue. On the downside 8165 – 8125 will act as major support.

Nifty Spot Levels

Support 8165 – 8125 – 8080
Resistance 8220 – 8260 - 8295

Sgx Nifty +39 pts  ‎Dow +284.96 pts ,Nsdq +87.38 pts , S&P +34.68 pts ‎,  Bovespa +995 pts , Ftse +219 pts , Dax +164 pts  , Cac +106 pts , Nikkei  +164 pts, now, Crude @ $49.49 brl (-0.39), Brent @ $50.61 brl (+2.01 ) , Gold @ $1318.40 (-8.40), Silver @ $18.34 (-0.07), Euro @ $1.1122, JPY @ $102.8400, INR @ $67.6850


• Wall Street recorded big gains for a second day on Wednesday as investors continued to scour for bargains and digest the fallout from Britain's stunning vote to leave the European Union.
• Wall Street's rebound in the past two days has coincided with a bounce in oil prices, which rose on Wednesday after a larger-than-expected drawdown in U.S. crude inventories.
• The Dow Jones industrial average rose 284.96 points, or 1.64 percent, to 17,694.68.
• Traders have largely discounted a near-term U.S. interest rate increase, betting on only a 16-percent chance of a hike at the Federal Reserve's December meeting, according to the CME Group FedWatch website.

Today's Corporate Action 30th June  Ex Date
BIRLACORPN Dividend - Rs. - 6.0000
RISHIROOP Dividend - Rs. - 0.8000
SOUTHBANK Dividend - Rs. - 0.5000


Tyres: Natural rubber climbs 12-15% in June 2016 to a 2-month high of Rs 143/kg; negative for tyre companies Apollo Tyres, Ceat, MRF and JK Tyres as entire pass thru difficult

Natural rubber prices climbed to a two-month high of Rs 143 per kg on tight supply. Prices have increased by 12 % in June alone, as monsoon rains have led to reduced tapping. Natural rubber prices are showing an uptrend in the global market as well despite prediction of an oversupply in the top producing countries. The international price of sheet rubber stood at Rs 118 per kg, an increase of 15% during the month. The surge in the rubber prices would be difficult to pass thru entirely given the subdued demand environment (due to increased imports from China) and sub optimal capacity utilization of tyre companies leading to impact on the margins.

Max Ventures (demerged entity of Max India which houses film packaging business) open offer (at Rs40/share) to start on Aug 12 (till Aug 29) – Offer price is lower than CMP of Rs60 (which is largely fairly priced; further upside would depend on corporate action, if any)

Axis Bank may tie up with Wells Fargo and/or others in Fintech to offer products on digital platform – Positive (technology to play important role in aggregation on distribution and liability side for banks/financial services companies)

Bharti Airtel’s promoter suggests high possibility of pressure on tariff (and margins of telecom companies) due to entry of Reliance Jio which would look to gain market share though aggressive strategies initially – Overhang on telecom sector (concerns highlighted by us in our updates on Bharti Airtel)


L&T is going to list its IT subsidy L&T Infotech. The Offer will be open for subscription to public from 11 July till 13 July. The price band is fixed at Rs 705 to Rs 710 per equity shares.

ICRA has downgraded rating outlook of Syndicate Bank’s bonds to negative – Negative Read through
While ICRA has reaffirmed the "AA plus" rating for the Rs 3,250.00 crore Basel III compliant tier-II bonds of Syndicate Bank, but it said the outlook on the rating has been revised to negative on account of the lender's severe weakening of asset quality and falling profitability. The bank's surge in fresh NPA generation has impacted its rating outlook.

Road Sector – The Cabinet committee on Economic affairs approved four laning of three national highways in Punjab, Odisha and Maharashtra at an investment of nearly Rs6000 crore. The development is positive read thru for road sector which comprises companies like IRB Infrastructure, L&T, IL&FS Transportation, Ashoka Buildcon, Sadbhav Engineering, KNR Constructions among others.

Logistics sector – JNPT plans Rs500 capex – positive read thru for Container Corporation of India, Gateway Distriparks
Jawaharlal Nehru Port will be spending nearly Rs500 crore in the next two-three years to beef up evacuation of cargo from the port and further increasing connectivity with the hinterland as per media reports. This investment will go towards building a coastal shipping berth and a common railway yard. At present only 18% of the cargo is moved out of JNPT through rail which it plans to increase to 30% in the next few years. The development is positive read thru for Container Corporation of India, Gateway Distriparks.

Sagar Cement: Company to acquire M/s Toshali cement with installed capacity of 1.81 lac tone at Rs60 crore (Ev/tone of $49) in Andhra Pradesh.

Bharti Group planning to sell off its Insurance business – Positive for Bharti Airtel
Bharti Group is scouting for prospective buyers to exit its insurance venture. Bharti AXA Insurance is a JV between Bharti Group (49%)  and AXA Group (49% stake increase in 2015). The deal may provide much needed cash for Bharti. AXA's life insurance valuations are pegged around Rs 3000-3500 crore. The deal if happens, will help Bharti Group to monetise its insurance business and use deal proceeds to build war chest for its telecom venture Bharti Airtel. Bharti is said to be in talks with PE firms like Blackstone, Advent, Actis, Warburg Pincus for selling stake in its insurance JV. Bharti Group, however, has denied the reports and maintained that it remains committed to its insurance business.

MCX: CME group may pick up stake (The news of CME picking stake in MCX was doing round from last one month or so)
As per media news, US based CME group is keen on picking a 15% stake in MCX. It can buy shares straight from the market if the limits, toting up to 49%, are made fungible. If not done, it will have to have an agreement with an existing shareholder wherein price, etc will have to be fixed. Kotak Mahindra Bank, with 15%, is the single-largest shareholder, while FPIs like Blackstone, Goldman Sachs and Smallcap World Fund together hold 15.29%.
Coal India’s major subsidiary MCL plans to open two Greenfield mines – positive read thru for CIL
Mahanadi Coalfields, the largest coal producing subsidiary of Coal India (CIL) is aiming to open two new Greenfield (Siarmal and Garjanbahal) coal mines by 2018 as it gears up to reach the targeted production of 250 million tonne (mt) by 2020. This would be helpful for CIL to meet target coal production of one billion tonne by 2020. Also, CIL and Solar Energy Corporation have signed two agreements for implementation of 200 MW Solar Power Project in the State of Madhya Pradesh.

Aegis Logistics purchased additional 2,04,901 equity shares of its subsidiary, Sea Lord Containers at a consideration of Rs. 3 crore, taking its holding to 91.39% in Sea Lord Containers.

Automobiles: Supreme Court may lift ban on large diesel vehicles on payment of green cess
Supreme Court said it was open to lifting the ban on registration of diesel-run SUVs and cars with engine capacity of 2000 CC and above in Delhi and NCR subject to a levy of one-time environment compensation cess. Unveiling a slew of measures to curb alarming pollution level in Delhi and NCR, the apex court had on December 16, 2015 last year banned registration of diesel-run sports utility vehicles.

Inox Leisure: Opens 2 new screens in  Visakhapatanam

Majesco: Isign announces partnership for electronic signature solutions
Majesco and iSign Solutions Inc. (“iSIGN”) a supplier of electronic signature and other software solutions enabling secure and cost-effective management of document-based digital transactions, announced that iSIGN has joined Majesco’s partner ecosystem. Through this strategic partnership, Majesco will use iSIGN’s electronic signature solution to deliver Majesco’s solutions to its insurance customers enhancing their digital footprint.

Pioneer Distilleries’ Balapur MENA (molasses based extra neutral alcohol) plant closed for overhaul of boilers & dryer (Plant to re-open from January 2017); plant constituted 35 percent (Rs 50.2 crore) of company's revenue in FY16 – negative for Pioneer distelleries


Telcos may seek withdrawal of Trai’s paper on free data
SEBI issues new norms for foreign portfolio investors
CME group may pick up stake in MCX
Minority shareholders take Ricoh India to task
One country can't stop India's NSG membership: US
India lifts ban on trade of certain items with Iran
Dubai awards Alstom-led consortium $ 2.88 bn metro
Cabinet approves new mineral exploration policy
GST passage to be key to monsoon session success
General Motors' market share goes below 1% in India
Sebi has no jurisdiction to pursue NSEL scam
New law allows shops, malls, eateries to stay open 24x7
Supereme Court declines stay on payment to Sasan UMPP
Service tax dept begins e-auction for Mallya's luxury jet
Cabinet clears pay hike for 1 cr govt employees, pensioners
No dual power tariff for coop, public sector cogeneration plants
ArcelorMittal buys back bonds worth $576.30 mn
L&T Infotech’s ₹1,233-crore IPO to open on July 11
Vedanta beats mine blues to generate ₹11,000-cr cash in FY16
Central govt staff disappointed, call for strike on July 11
Raghuram Rajan resists plan to fund banks from RBI coffers
Monsoon session of Parliament to start on 18 July
Brexit will not affect UK sale process: Tata Steel
Govt decides to extend budgetary grants to Gail, GSPC
Siemens India chasing large orders, says CEO Sunil Mathur
Govt targets $8.9 billion in energy efficiency cost savings
India has shown sustained commitment to non-proliferation: US
SBI seeks DRT certificate to recover debts from Mallya
Irdai imposes Rs 10 lakh penalty on Max Life Insurance
Crayon Software appointed Microsoft's cloud distribution partner
No expectation of major reforms from government: Ruchir Sharma
Consumer spending to rise 5% with central pay hike
Brexit to have major impact on earnings: Suzuki Motors
NMEP will permit auction of 100 mineral blocks
Toyota recalls 3.37m cars over airbag, emissions issues
Sensex rallies 216 pts on govt wage bonanza, GST hopes
Uday may not destabilise fiscal consolidation: Ind-Ra
GIC Re eyes new markets to grow foreign business

1. IKEA to hire 15,000 to set up 25 stores
2. Essar settles $500 million of Iran oil bill: Sources
3. UCO Bank expects to return to profitability by FY18
4. TVS Shriram Growth fund exits Wonderla Holidays with 70 % IRR
5. ICRA downgrades outlook on Syndicate Bank's tier II bonds
6. GAIL begins gas supplies to Chinese wheel producer
7. Suzuki Motors says Brexit to have 'major' impact on earnings
8. SBI seeks DRT certificate to recover debts from Mallya
9. BSE secures shareholders' nod to launch IPO through offer for sale
10. Maharashtra Govt cuts industrial power tariff in Marathwada, Vidarbha


Back to basics; catalysts in place for re-rating of valuation multiple
Cmp: 69
Reco: Buy
Tgt: 83

Key points

  • Back to basics, sale of non-core business to turn CFCL into pure urea company: As part of long-term strategy, Chambal Fertilisers & Chemicals (CFCL) has divested its non-core businesses [software, textiles and shipping (sold only twoships)]. These three businesses are either loss-making or have relatively lower margins, but account for close to 30% of the company’s capital employed. The business reorganisation would enable CFCL to focus on its core business of urea manufacturing and trading in complex fertilisers, where it is planning an aggressive expansion. The company is setting up a 1.3 million tonne plant in Gadepan with a total capex of around Rs6,000 crore, thereby making CFCL one of the largest players in the urea segment by 2019.
  • Direct benefit transfer (DBT) a game changer for fertiliser sector; will improve working capital cycle: The government has initiated policy steps that could structurally improve the fertiliser industry’s dynamics. After the great success of the direct benefit transfer (DBT) scheme in cooking gas (LPG), the government has started a pilot project to implement DBT in the Fertiliser sector where farmers will receive subsidy directly in their bank accounts. DBT will be a game changer for the fertiliser sector because it will drastically reduce the working capital requirement (majority of loans taken by fertiliser companies is to fund working capital needs arising from delayed subsidy payments). Lower working capital requirement will considerably reduce the interest burden (78% of total loan book in FY2016 was towards working capital loans). The outstanding fertiliser subsidy as on March 31, 2016 was Rs3,100 crore as against Rs2,700 crore in the same period last year. The company received subsidy of Rs4,200 crore in FY2016 as against Rs4,800 crore in FY2015.
  • Valuations do not fully reflect focus on core business, favorable policy framework and better demand environment: Notwithstanding the expectations of a weak performance in Q1FY2017, the valuations of CFCL are expected to see a re-rating on the back of three key triggers: strategy to focus on core business, better demand environment (expectation of good monsoon) and a favourable policy environment (DBT implementation). Moreover, the creeping acquisition by CFCL promoters adds to our confidence. We have a positive view on the stock and expect 18-20% return from the current level over the next couple of quarters.
  • Risks: 1) Execution risk on Gadepan project (Rs6,000 crore, more than double the current market cap). 2) Currency fluctuations, as part of the debt is in US Dollar.

Positives priced in; book profit (38% gains in four weeks)
Cmp: 762

Key points

  • TCPL Packaging (TCPL) stock price has run-up by 38% in the past one month on the back of strong operating performance in FY2016 and improving growth prospects for the paper packaging industry in the long run. Revenues grew by 19% YoY (largely driven by strong double-digit volume growth) and the operating profit grew by 23% YoY in FY2016. Being one of the largest packaging players, TCPL would achieve strong double-digit revenue growth (largely volume driven) in the near to medium term on the back of improvement in consumer demand, growing e-retailing business and emergence of new players in the FMCG sector.
  • In addition to operating efficiencies, improvement in working capital will remain a key focus area for TCPL in the coming years. With no major capex planned, TCPL would also see improvement in cash flows and strong return ratios in the coming years.
  • However, the recent sharp run-up in TCPL’s stock price (38% since our viewpoint on May 23, 2016) have priced in all the above positives. We believe that the current valuation of TCPL at 10x FY2018 earnings is fair, capping any significant upside from the current level. Hence, we recommend our investors to take home handsome gains within short span and wait for a better point to re-enter the stock.

Wednesday, 29 June 2016

29 June 2016 - Today's View & News

Nifty likely to open on positive note back on Strong global clues, Since the Nifty has closed above 8120, a move towards 8165 is very much likely. The current upmove is possibly a technical bounce, and the Nifty should resume its downtrend once the pullback is done.

Nifty Spot Levels

Support 8080 – 8040 -7992
Resistance 8165 – 8220 - 8260

Sgx Nifty +9 pts ‎Dow +269.48 pts ,Nsdq +97.42 pts , S&P +35.55 pts ‎,  Bovespa +761 pts , Ftse +158 pts , Dax +178 pts  , Cac +104 pts , Nikkei  +129 pts, now, Crude @ $48.21 brl (+0.36), Brent @ $48.58 brl (+1.36 ) , Gold @ $1317.40 (-0.40), Silver @ $17.86 (-0.02), Euro @ $1.1074, JPY @ $102.6500, INR @ $67.9525


• Wall Street bounced back on Tuesday, recouping some recent losses, as investors sought cheap assets after a two-day equities rout sparked by Britain's decision to leave the European Union.
• Investors pointed to solid US economic data as helping to stabilize stocks.

• The Dow Jones industrial average .DJI rose 269.48 points, or 1.57 percent, to 17,409.72.

Today's Corporate Action 29th June  Ex Date

DABUR Final Dividend - Rs. - 1.0000
HAVELLS Final Dividend - Rs. - 3.0000
HDFCBANK Dividend - Rs. - 9.5000
OBIL Final Dividend - Rs. - 0.6000


ICICI Bank: ICICI Prudential Life Insurance to launch IPO by September – Positive for ICICI Bank
ICICI Prudential Life Insurance Co. Ltd is likely to launch its Rs.6,000 crore initial public offering (IPO) by September. ICICI Prudential Life Insurance is a joint venture of ICICI Bank Ltd (67.6% stake) and Prudential Corporation Holdings Ltd (25.9% stake). While ICICI Bank will dilute its shareholding in the IPO, it plans to continue to hold a controlling stake in the company. The firm is seeking a valuation of over Rs.40,000 crore for the business. In December 2016, ICICI Bank had sold 6% stake in the life insurance company in a transaction that valued the insurer at Rs.32,500 crore. This is positive for ICICI Bank as it would lead to value unlocking.

Indian Oil & Gas exploration companies set to invest $27  billion in exploration/production as per Bloomberg  -- Positive sentimentally for upstream exploration companies like ONGC, OIL; more positive for oil anci companies like Mercator, Aban, Seamec, Alphageo among others

Consumer Goods & Discretionary sector- 7th pay commission likely to come up before the cabinet on Wednesday – The Pay panel has recommended 23.55% overall hike for the government employees , thus the same if passed would have positive impact on consumer discretionary demand for companies like TTK prestige, Whirlpool, Arvind , Relaxo, Havells, V-Guard, Maruti Suzuki, Hero Motocorp.  

Bosch Ltd will hold a board meeting on July 1,2016 to consider share buyback proposal. Currently, the promoters holding is 71.18%, while the rest is with the public. Positive for the company


RBI’s Financial Stability Report gives cautious outlook on banks and economy – Neutral read through

Financial Stability Report (FSR) of RBI indicates that de-leveraging of highly leveraged companies has started with the number improving from 19% (Sep-2015) to 14% (Mar-2016) which is a positive. However, the RBI doesn’t expect an improvement in asset quality in near term, and has indicated GNPAs to go to 8.6% (Sep-2016E) from 7.6% (Mar-2016). Overall the FSR seems cautiously optimistic.

ITC to invest Rs 4,000 crore to set up to 9 plants to expand its foods business; new product launches in fast growing categories to sustain – positive read through for the stock
ITC will invest Rs 4,000 crore over the next 2-3 years to set up 8-9 factories across the country for manufacturing of food products. Its branded packaged foods division grew by around 11 y-o-y to clock a turnover of Rs 7,097.49 crore in 2015-16 and is second largest business for the company after the core cigarette business. The company is focusing on fastest growing categories in the foods space (especially in the health and wellness and dairy segments). We can expect more new launches in the coming months as consumer demand environment is expected to improve on back of expected better monsoon and improvement in the urban demand.

SBI to divest stake in non-core assets to raise Rs3000 cr: Positive read thru
M&M aims to turnaround two wheeler business with focus on employee reduction and introducing premium products
In a bid to turnaround the two wheeler business, M&M is controlling costs by reducing the workforce from current 1,100 workers to 400. It is also focusing on introducing high margin premium products (premium scooters from Peugeot stable and premium motorcycles). The two wheeler business has been a drag on the company reporting a loss of Rs 529 cr in FY2015.  

Ashok Leyland impaired Rs 558 crore in 2015-16; completes most of the balance sheet cleaning
Ashok Leyland has seen an impairment of Rs 558 crore in 2015-16, which is essentially provisions towards its investment. The company also disposed off the shares in Ashok Leyland John Deere at a loss of Rs 233 crore. The impaired Rs 558 crore in 2015-16, made after studying joint ventures, associates and subsidiaries, include writing off value of the investment in the Nissan JV aggregating Rs 296 crore, a provision of Rs 107 crore towards Albonair Germany, Rs 150 crore towards Optare Plc, UK and Rs 5 crores towards Albonair India. With the huge impairment it has mostly cleaned its balance sheet and will now focus on the core business of commercial vehicles.

OCL India to merge Dalmia Cement East to consolidate its position in eastern markets: Positive for the company
OCL India, a subsidiary of Dalmia Cement Bharat, has approached authorities to merge Dalmia Cement East with itself for consolidating operations in the eastern part of the country. OCL's market share in West Bengal is 15-16 %, making it the second-biggest player in the state. Demand for cement in West Bengal is expected to grow 10-11% during the current fiscal. Average capacity utilisation at the plants, which are located in West Bengal, Odisha and Jharkhand, is above 70%. 

Surya Roshni: Media reports suggests that company has plans to sell the lightening product business. However, the management has denied the same.

ITNL acquires 1.02% stake in Noida Toll Bridge at Rs23.5per share total investment is Rs4.46cr
ARCIL (Asset Reconstruction Co) Acquires 19.05% Stake in Sakthi Sugar by way of pref allotment

Eicher Motors: Royal Enfield banks on R&D edge to take on global competition

Royal Enfield Motors, the manufacturer of 350-500 cc motorcycles including the cult brand Bullet, which has global aspirations is strengthening its research and development (R&D) focus to take on international competition. The company has announced plans to expand its product range to cover the entire mid-size segment from 250-750 cc motorcycles. Over the last couple of years the Eicher Motors group company has enhanced its engineering and product design capabilities. Eicher Motor’s R&D investment has tripled to about Rs 90 crore (which accounted for about 1.5% of the revenues) in 2015-16. A significant portion of this R&D is devoted to acquire a design edge for Royal Enfield. For 2016-17, Royal Enfield has announced an investment of Rs 600 crore in building strong foundations across all areas of its business. A part of this will be for setting up two technical centres in Leicestershire (UK) and Chennai. The UK technology centre will be operational by the latter half of this fiscal, while the Chennai centre will be ready by the next fiscal.

Strides Shasun gets shareholders nod for UK unit Shasun Pharma Solutions Ltd (SPSL - CRAMS business) divestment- Positive for Strides shasun

NHPC to invest Rs3000 cr on solar, wind projects


Tata Communications has sold its majority stake in South African internet service provider Neotel to Econet Wireless Global for $295 million (about Rs 1,992 crore).
SBI to sell non-core assets to raise Rs 3k cr
United Bank gets shareholders' nod to raise Rs 1,000 crore
Nestle's new chief expected to drive health expansion
Punjab National Bank cuts fixed deposit rates by up to 0.25%
30 of 50 banks may not meet capital adequacy norms: RBI
Chinese building material firms to set up base in AP, sign MoU
Dr Reddy's completes Rs 1,569.41 crore share buyback
RCom to provide 10 GB for Rs 93 in a 28-day promotional offer
ITC to invest Rs 4,000 crore to set up 9 plants


Jamna Auto Industries 
View: Positive
Riding the MHCV upsurge CMP: Rs169
Key points

MHCV to be fastest growing automotive segment; JMNA to be key beneficiary: The Medium & Heavy Commercial Vehicle (MHCV) segment has been on an upswing in the last two years, clocking a healthy 23% CAGR over FY2014-2016 due to firm freight rates, reduction in diesel prices and huge pent-up demand. Despite the strong growth, the MHCV industry volume today is still 11% below the peak levels witnessed in FY2012. We believe that the MHCV segment would maintain its uptrend and would be the fastest growing automotive segment (we expect 15% CAGR volume growth in FY2016-2018). 

New product launches to aid topline: JMNA has been a pioneer in the introduction of parabolic springs (more load bearing capacity compared to conventional leaf springs) in the domestic market and is virtually the only supplier, commanding a market share of about 90%. 

Cash flow generation strong; aims to be debt free by FY2018: The company’s cash flow from operations is likely to remain strong on the back of robust topline growth, margin improvement and efficient working capital management. JMNA enjoys a negative working capital cycle given the prudent inventory management policies and better debtor management. With no major capex lined up, the free cash flow from operations is expected to grow at a robust CAGR of 50% over the next two years. JMNA is aiming to become a net debt-free company by FY2018 which would further strengthen its balance sheet. The return ratios are also likely to be strong, with ROE of 29% and ROCE of 42% estimated in FY2018.

Outlook and valuation: JMNA’s topline is likely to grow by a healthy 13% CAGR over FY2016-2018, driven by an uptrend in the MHCV industry and new product launches, viz parabolic springs and lift axles. Also, the company’s operating margins are expected to improve owing to operating leverage advantage, a better product mix and operating efficiencies. Further, the healthy cash flow generation and minimal capex requirement would enable JMNA to become a debt-free company at the net level, adding further strength to the balance sheet. The company’s earnings are expected to register a strong 24% CAGR over FY2016-2018. JMNA is a quality company in the auto ancillary space with healthy financials and strong balance sheet. It is well poised to reap the benefits of the ongoing MHCV upcycle. At the CMP of Rs169, the stock is trading at an attractive valuation of 15.0x and 12.3x its FY2017 and FY2018 estimated earnings, respectively. We have a positive view on the stock and believe it can generate 15-20% returns from the current levels

Tuesday, 28 June 2016

28 June 2016 - Today's View & News


Markets are likely to open weak behind global markets. Nifty has broken short-term and medium-term trendline support levels, indicating reversal of the near term uptrend.

Nifty Spot Levels

Support 8060 – 7992 – 7930
Resistance 8120 – 8165 - 8220


Sgx Nifty -56 pts ‎Dow -210.51 pts ,Nsdq -113.53 pts , S&P -36.87 pts ‎,  Bovespa -859 pts , Ftse -156 pts , Dax -288 pts  , Cac -122 pts , Nikkei  -245 pts, now, Crude @ $46.65 brl (+0.32 ), Brent @ $47.16 brl (-1.25 ) , Gold @ $1328.40 (+3.70), Silver @ $17.79 (+0.04), Euro @ $1.1015, JPY @ $101.9100, INR @ $67.9450


• Wall Street tumbled again on Monday after Britain's shock vote to leave the European Union, sending major U.S. stock indexes to their worst two-day swoon in about 10 months.
• The Nasdaq dropped more than 2 percent, underperforming the other major indexes, amid fears that fallout from Britain's decision could hit business investment spending in the technology sector.
• The Dow Jones industrial average fell 260.51 points, or 1.5 percent, to 17,140.24.


Sun : Sun Pharma’s subsidiary Taro receives USFDA approval for Adapalene gel, used as topical cream to treat mild-moderate acne – Positive for Sun Pharma.

Bajaj Finserv likely to buy out Allianz’s stake in insurance JVs for Rs10,000 crore as per media reports -- Positive
As per media reports, Bajaj Finserv could buy 26% stake held by its joint venture partner Allianz [in both Life and General Insurance ventures;  Bajaj Allianz Life Insurance (BAL) and Bajaj Allianz General Insurance (BAGIF)] in a deal estimated at as much as Rs.10,000 crore. Bajaj Finserv Ltd, owns 74% and Allianz SE holds 26% in both the ventures. 
Implications: If the deal goes through Bajaj Finserv will pay around Rs.10,000 crore to buy Allianz’s 26% stakes in the two insurance companies, thereby valuing the BAL and BAGIF combined at around Rs.39,000 crore at a multiple of 1.7x FY17E EV (higher than our estimated combined value of around Rs23,500 crore  on FY2017 forecast). Thus, the deal is favourable for Bajaj Finserv for two reasons: 1) Bajaj Finserv gets 26% stake in two entities at decent valuation of 1.7x EV (which is higher than around 2.8x EV of Max India merger with HDFC Standard Life); 2) It highlights value of insurance businesses in Bajaj Finserv (higher than as estimated by the street) and roughly could add to Rs324/- (taking value of Rs39,000 crore instead of Rs23500 crore and adding for outflow of Rs10,000 crore) to our target price of Rs2290 (if the deal goes thru at valuations as speculated in the media report)

Pharma Sector: Bombay HC imposes stay order on government’s move to cap drug prices  - Positive.
The High Court has said that the companies are unlikely to take any further price cuts over the WPI which would be under the revision of the national list of essential medicines. The drug price control order would have impacted sales of Indian pharma companies to the tune of 2% of sales. Pharma companies have already undertaken price cuts on the account of wholesale price index, which was -2.7 percent in 2015, as prescribed by norms of drug price regulator National Pharma Pricing Authority (NPPA).

Automobiles: Auto component sector to grow 19% CAGR upto 2020; positive read thru
The auto component market in India is expected to grow at a CAGR of more than 19% by 2020, according to latest study released by Technavio, a leading global technology research and advisory company. Technavio expects India to become an attractive destination for complex manufacturing as it holds distinct advantages compared to its peers such as South Korea, Taiwan, and China. The evolution of automotive clusters should help invite investments and the establishment of research centers (by both domestic and international players). Further, OEMs are expected to increase locally sourced components in their vehicles, driven by cost savings and protection from currency fluctuations. The high taxation on imports levied by the Government of India is also a driving factor behind increased localization.

Siemens has won an order worth Rs. 570 crore to supply Static Synchronous Compensator (STATCOM) solutions to PGCIL. The scope of the order includes design, engineering, supply, civil, installation, testing and commissioning of STATCOMs at four substation locations of PGCIL: Ranchi, Rourkela, Kishenganj and Jeypore across the states of Bihar, Jharkhand and Odisha.- Positive for Siemens (News came during market hours)

IDBI Bank and IFCI: NSE plans to file IPO document by Jan 2017 – Positive for IDBI Bank and IFCI they hold 3.0% and 3.5% stake in NSE

Government proposes 15 logistics parks at Rs 33,000 cr
To reduce transportation cost and minimise pollution, the government plans to set up 15 logistics park (covering more than 40% of the total road freight movement in India) in cities with high freight movement at an investment of about Rs 33,000 crore. A total of 4,800 acres is needed for the development of the proposed 15 multimodal logistics parks, including land for storage space, allied infrastructure, trunk infrastructure and land for future expansion. A total cost of Rs 10,700 crores will be needed for land acquisition.

MEP Infrastructure bags Rs 605 cr project from NHAI (during market hours)
MEP Infrastructure bags Rs 605 cr project from NHAI. This is the second project on hybrid annuity mode in Gujarat in less than a month. The project scope involves four-laning 40 km section of Mahuva to Kagavadar section of NH-8E under National Highways Development Project (NHDP) Phase IV. The construction period is of two years and six months from the appointed date and the concession period is 15 years excluding the construction period. The company now has a basket of six HAM projects in the states of Maharashtra and Gujarat totaling to Rs 3,837 crore.
V-Guard Industries has launched a smart water brand Verano, which is app enables and smart one- positive read thru
V-Guard Industries has launched a new water heater under the brand name of Verano. This water heater can be controlled by a smartphone (by an App) from anywhere in the world and also controlled with an infrared (IR) remote. Verano is priced at Rs 17,500 for the 25-litre variant and Rs 16,000 for the 15-litre variant and will be available now in South India only. Features include automatic failure notification sending mechanism in case of any failure of water heater components to the customer through the app.

NDTV: In Clarification to Exchanges, company acknowledged that it  has received show cause notice for 525.38 Cr on June 17 for AY10.  Company is sure of legal remediation. 

Ashok Leyland’s 57.4% subsidiary Hinduja Leyland Finance gets Sebi approval for Initial Public Offer; plans to raise Rs 700cr

Markets regulator Sebi has given IPO approval to Hinduja Leyland Finance, a 57.43% subsidiary of Ashok Leyland. The regulator cleared the proposed initial share sales and gave final observations on the initial public offers (IPOs) on June 24, as per the latest information. Hinduja Leyland Finance’s IPO comprises fresh issue of equity shares worth Rs 500 crore and an offer for sale up to 26,608,810 scrips by existing shareholders. The company is considering a pre-offer placement of up to 2.6 crore equity shares for an amount not exceeding Rs 200 crore.IPO by the subsidiary would enable Ashok Leyland to monetize investments and the proceeds are likely to be utilized to reduce debt.

Exide Industries plans Rs. 1400 cr capex for technology upgradation and capcity expansion 
Exide Industries is planning to spend over Rs.1,400 crore for the next one year on capital expenditure for technology up-gradation and capacity expansion. A significant amount of this capex will be incurred at its Haldia facility in West Bengal. Exide is investing heavily for implementing the punch grid technology at Haldia facility in East Midnapore district by building an entirely new unit there. For the technology up-gradation, the company has tied up with leading US-based lead-acid batteries manufacturer East Penn Manufacturing Company (EPM), which is providing the knowhow, technical assistance and support for the punch grid technology. Punched battery grids is a superior technology as the punching system produces consistent grids, in turn providing better life and reducing warranty cost of the battery in both automotive and industrial segments.

Maruti Suzuki: Utility vehicle Vitara Brezza capacity increased to 10,000 units a month on back of strong demand.
Maruti Suzuki has increased the capacity of its Compact SUV “Vitara Brezza” to 120,000 units per annum from a level of 100,000 units per annum. The strong response for the vehicle since it's launch has resulted in the company increasing its production capacity. Currently the company has 52,000 pending orders for the vehicle.

NHPC & PTC India - Environment Ministry has given green nod to the Rs 4,640.88 crore Kiru hydroelectric power project to be developed on Chenab river in Kishtwar district of Jammu and Kashmir. This projects is a joint venture amongst NHPC, JKSPDC and PTC India Ltd established in 2011 to harness the vast hydro power potential of J&K State. Positive read thru for NHPC and PTC India.

Hotel Leela to sell 3.85 acre land in Hyderabad in the current fiscal for ~Rs150crore; funds wil be utilized to reduce debt on books – positive read through for the stock

Ashok Leyland to continue exiting noncore areas to keep growth momentum intact in FY2017
Ashok Leyland will look at exiting non-core areas to keep its growth momentum in FY17. As per the company, portfolio rationalisation was already in process and that would see progressive exit from non-core and non-performing businesses. As per the company, The capacity of the Ras-Al-Khaimah plant will be almost doubled this year. To cope up with increasing demand, a new assembly unit in Bangladesh is in the offing and further units in Africa are under active consideration. Further, Defence-related business is also being reappraised with a two-pronged strategy of growing the traditional tactical vehicles as well as broadening the offerings to address the government’s ‘Make in India’ requirements. With the strong revival in the M&HCV segment, coupled with replacement demand and gradual implementation of BS-IV norms by April 2017, the expected pick up in infra and mining sectors are expected to give a strong push for higher sales in FY17.

Gujarat Gas - PNGRB grants authorisation to lay, operate, build & expand Gas Distribution in Ahmedabad – positive


Net neutrality: US follows Indian counterpart Trai’s steps
EU leaders reject informal talks with UK on EU exit
Goldman Asset Management sees UK downgrade
Rules for creating RBI monetary policy committee notified
World Bank President Jim Yong Kim to visit India
NSE to file draft papers for domestic listing by Jan 2017
Govt bonds oversubscribed; FPIs bid worth Rs 9,348 crore
Brexit only a near-term worry: Poll
Govt requires Rs 1.4 lakh cr to meet road targets for FY17
RBI sets rupee reference rate at Rs 68 against US dollar
Bank debt bears brunt of Brexit turmoil
Online system to check delay in pension soon: Govt
FDI relaxation credit positive for India: Moody's
Mukesh Ambani's pvt firms hit slow lane
Britain can cope with EU exit turmoil: Osborne 
Sterling hits 31-year low; gilt yield below 1% for first time ever
India officially joins Missile Technology Control Regime
FM to meet industry chambers, CAs on black money window 
Reliance ADAG looks to sale of tower, road assets to ease debt
MNRE asks states to set up 1 lakh family size bio-gas plants
India among Asia’s least exposed to Brexit: Morgan Stanley
Sebi set to allow e-commerce firms to sell mutual funds
Titan is slowly reinventing itself to keep up with the times
Sistema to buy back 17% of Indian unit Sistema Shyam TeleServices from Russia govt
Starbucks, Tata extend partnership beyond India           
S&P cuts UK sovereign rating from AAA to AA
Goldman Sachs sees post-Brexit UK recession; cuts EU, US growth 
'US-India investment treaty 'a bit more difficult' now'
ECB, BoE and Fed heads cancel panel chat after Brexit vote
David Cameron hails 'partner' India in post-Brexit statement
China eyes steel merger to create rival to ArcelorMittal
Science & tech key to 4% agri growth: official
Siemens wins Rs 570 cr order from Power Grid Corp
Due diligence must when taking personal loan
L&T faces challenges in getting large deals
Nissan ties up with MyTVS to expand service outlets


1. Volkswagen's US diesel emissions settlement to cost $15 billion: Source
2. Tata Group and US-based Starbucks Coffee Company signed multiple agreements on Monday to strengthen their four-year partnership,
3. Hotel Leela to sell Hyderabad land this year
4. Oriental Bank of Commerce to raise Rs 1,000 cr via tier-II bonds
5. Reliance May oil imports down 13.2%
6. AirAsia unveils promo fares starting Rs 786 for one-way domestic trip
7. BHEL commissions two hydel units in Afghanistan
8. L&T's construction arm bags orders worth Rs 2,416 cr in June
9. Catholic Syrian Bank plans to raise Rs 500 crore, investors shown interest include Fairfax

Sun Pharmaceutical Industries
Reco: Buy
Buyback a non-event; Halol inspection and its outcome will be near term trigger CMP: Rs774

Key points

Buyback Update: Sun Pharmaceutical Industries (Sun Pharma) has announced buyback of 75 lakh shares at a price of Rs900 each through the tender route, with the promoters intending to participate in it. The buyback is valued at Rs675 crore ($100 million) and accounts for the company’s 0.3% of outstanding equity capital. We feel that the company is utilising its surplus cash efficiently by rewarding the shareholders by way of a share buyback and a dividend.

Improvement in operating performance of base business will act as key trigger: We feel that stability and improvement in the company’s base business, along with margin expansion, will be crucial from the valuation viewpoint. However, Sun Pharma is likely to face some pressure in the near term (H1FY2017) on the base business due to pricing pressure in the US, Halol plant issues and the ongoing Ranbaxy integration. We expect the Q1FY2017 numbers to be better due to continuing exclusivity sales from Gleevec for full three months.

Stable long-term outlook: Remedial efforts at Halol are on track and the management expects the USFDA to re-inspect the plant in the current week. If the USFDA inspection happens this week and if the outcome of the audit is satisfactory, it will be significant positive for Sun Pharma’s stock. We also believe that Sun Pharma will take one or two quarters more to complete its Ranbaxy integration. Therefore, we could see some improvement in its operations and profitability from H2FY2017 onwards.

Maintain Buy rating with PT of Rs945: Positive outcome of the Halol plant inspection by the USFDA, along with improvement in the base business and in-line Ranbaxy integration will lift the overall performance of the stock. We maintain our Buy rating with an unchanged price target of Rs945. Key downside risk to our call is delay in outcome of the USFDA’s Halol plant inspection /escalation of warning letter to import alert.

 Cox & Kings
Reco: Buy
Brexit: impact on earnings would be limited to translation effect due to currency volatility CMP: Rs162

 Key points

Brexit – Weaker GBP to result in translation loss; business fundamentals intact: Our interaction with the management of Cox and Kings (CKL) suggests that Brexit will not have any major impact on the company’s business fundamentals in the UK and Europe. However, a sharp fall in the pound (GBP) against INR would lead to negative translation effect, as 42% of CKL’s EBIDTA is in GBP. According to CKL’s management, a 2% drop in GBP against INR leads to a 1% negative impact on its EBIDTA. Going ahead, if GBP depreciation sustains, it would continue to have a negative translation effect on the company’s earnings. However, it is too early to gauge the impact of a weaker GBP and we will keenly monitor the same in the coming months.

Depreciating GBP unlikely to affect Meininger business; but could hit Education business in FY2018: CKL’s Meininger business is unlikely to get affected by Brexit and volatile currency, as its cost and revenues are both denominated in Euro (only ~3% of Meininger’s bed bank is in the UK). On the other hand, the education business might see some negative impact, as 7 of its 25 PGL campuses are located in France. Thus, a depreciating GBP against the Euro might lead to tours turning costlier in FY2018. But, the FY2017 booking season for the education business is almost over. Therefore, there would be very little negative impact from currency fluctuations on UK’s education business in FY2017.

Marginal debt reduction in INR terms due to fall in GBP: CKL has about Rs1,600 crore worth of consolidated gross debt denominated in GBP. Thus, depreciation in GBP has led to a reduction of Rs32 crore in consolidated debt owing to currency translation. If GBP continues to weaken against INR in the coming quarters, we might see further reduction in gross debt. On the other hand, USD has remained almost stable against INR, and hence dollar-denominated debt has remained almost stable on a year-on-year (YoY) basis. Going ahead, a key trigger for CKL would be reduction in consolidated debt through improvement in cash flows.

Cheaper GBP could be positive for Indian leisure travel business: CKL’s Indian outbound tourism business is unlikely to get impacted by Brexit, as Indian travelers require two visas to travel to the UK and Europe. On the positive front, GBP getting cheaper against INR might result in more leisure travelers opting for the UK (which was earlier considered as an expensive international holiday destination). Weaker GBP may also augur well for MICE tours, which happen throughout the year. The Indian leisure travel business accounts for about 23% of CKL’s overall revenues and a major chunk of its revenue is coming from outbound tourism. We have already factored in double-digit (about mid-teens) revenue growth in our earnings estimates.

Maintain earnings estimates; will await more clarity; retain Buy: We believe that more clarity would emerge on issues related to Brexit in the coming months. Also, it is too early to gauge the currency translation impact on CKL’s earnings. We would keenly monitor currency movement in the coming quarters. The key trigger for CKL in the future would be reduction in its consolidated debt through international cash
flows and improvement in the international leisure travel business. We maintain our Buy recommendation with a price target of Rs250.

Key risk: Any significant slowdown in bookings for education and Meininger businesses in the UK and Europe, and lack of reduction in debt as per plans would act as key risks to our earnings estimates

Monday, 27 June 2016

27 June 2016 - Today's View & News


Based on global market, Indian markets are likely to open on weak note. On breach of 8000 level in Nifty we may see more selling pressure.

Nifty Spot Levels

Support 8060 – 7992 – 7940
Resistance 8125 – 8165 - 8220

Today's Corporate Action 27th June  Ex Date

FCH Final Dividend - Rs. - 2.4000
PFIZER Dividend - Rs. - 15.0000


• The S&P 500 turned negative for the year-to-date on Friday as Wall Street suffered its largest selloff in 10 months after Britain's decision to leave the European Union caught traders wrong-footed.
• Equity futures neared an 11-month high to start the overnight session as markets wrongly bet that the "Remain" camp would prevail in Britain's referendum, but sold off sharply as the results showed otherwise - even triggering a market stop put in place to curtail volatility.
• The Dow Jones industrial average fell 611.21 points, or 3.39 percent, to 17,399.86. Currency Subject Forecast Previous


Brexit Impact on Sectors:
·         Autos: Tata Motors (JLR) is likely to be impacted as it will have to renegotiate terms of trade with European Union which forms about 25% of revenues for the company. (company has indicated revised terms may lead to increased duty of 10% on exports to EU and inbound tariff of 4% on components). The impact of currency movements is not significant on Tata Motors as the benefits from GBP depreciation against the USD and Euro is likely to be offset by impact of GBP depreciation against the INR.  Also, post the Britian exit, Euro has depreciated against the INR, thus the following companies which export to the European Union are likely to have impact:  Motherson Sumi (55% of the revenues), Apollo Tyres (27% revenues), Bharat Forge (40% revenues) and Balkrishna Industries (55% revenues).
·         Pharma sector: Brexit is likely to have limited impact on the pharma space, companies which have sizeable revenues coming from the region, like Aurobindo (22% sales from EU), Dr Reddy, Natco , Torrent, IPCA which get 8-12% sales from this region, while others have lower than 5%.
·         IT sector:  We believe, there could be some impact on the earnings for FY17/18E from the event, largely owing to currency and not on account of business. We will wait for more clarity from the management to gauge the business impact of Brexit.(Details in investment calls)
·         Brexit impact on Thomas Cook: The company hedges at all times and Brexit is unlikely to have any impact on the earnings of the company. The tourism business is unlikely to be impacted as an Indian anyway requires two visas to travel to UK and Europe.

Bajaj Finserv likely to buy out Allianz’s stake in insurance joint ventures – Positive read through
Bajaj Finserv Ltd is likely to buy out its partner Allianz SE’s stakes in two insurance units, Bajaj Allianz Life Insurance (BAL) and Bajaj Allianz General Insurance (BAGIF), in a deal estimated at as much as Rs.10,000 crore, Bajaj Finserv Ltd, owns 74% and Allianz SE holds 26% in both the ventures. Earlier, Allianz had been in discussions to increase its stake in the two insurance firms to 49% after the government raised the foreign investment limit in Indian insurers to 49% from 26% in March 2015. To increase the stake by 23% in the two firms, Allianz will be required to spend a much larger amount as per the fair-valuation method as a RBI ruling has mandated that all insurance deals are to be done at fair value method, superseding earlier call-option clauses. As per the fair-valuation method, Bajaj will have to invest around Rs.10,000 crore to buy Allianz’s stakes in the two insurance companies, thereby valuing the Bajaj Allianz Life Insurance at Rs.20,000-25,000 crore and Bajaj Allianz General Insurance at about Rs.20,000 crore.

Glenmark Pharmaceuticals: Company has received tentative ANDA approval for Olmesartan Medoxomil Tablets, used to treat high blood pressure. Also it has received ANDA approval for Nystatin & Triamcinolone Acetonide Ointment, an anti-fungal ointment – Positive for Glenmark.

Alkem Labs: Clarification on European Medicines Agency’s (EMA) inspection in Taloja Facility: Issues with Ibuprofen & Sclerosis Drugs (Company considering to provide alternate studies to support authorization) Europe contributes less than 1% to total sales – Sentimentally negative for Alkem

Zuari Agro avails unsecured inter corporate deposit of Rs100 Cr from Adventz finance for 1 year
Crompton Greaves Consumer Electricals board approves raising NCDs worth Rs650 Cr
Uniparts: Uniparts a Noida based company and a major supplier to off-highway vehicles, construction and agriculture equipment manufacturers is planning to raise Rs 300 crore via IPO in a year to fund its organic and inorganic expansion.

Vijaya Bank gets shareholder nod to raise up to Rs900 Cr equity

KDDL Brexit impact: KDDL’s manufacturing arm manufactures dials and hands for European luxury brands, which constitutes around 30% of its consolidated revenue that would witness some impact

J B Chemical: As per media reports J B Chemical’s tablet manufacturing facility at Panoli completes successful USFDA audit, without any 483 observations – Positive for J B Chemical.

Aban Offshore has received a Letter of Award from ONGC for the deployment of the Drillship ‘Aban Abraham’ for a period of 2 years. The expected revenues from this deployment is estimated at around to INR 592 Crores. The deployment is expected to commence during the fourth quarter of calendar year 2016.- Positive for Aban Offshore

Parag Milk Foods strong result: Parag Milk Foods registered strong operating performance in Q4FY2016 with revenues growing by 17% and the PAT growing by 50%. The operating margins of the company improved to 10.5% in Q4FY16 from 7.7% corresponding quarters last year
Kesar Terminals board approves bonus of 1 Share for 25 Shares of Company

Automobiles: Truck and bus Tyre imports surge 57% in April-May 2016 on China-led dumping

The import of truck and bus radial tyres (TBR) during April and May 2016 grew to 2.8 lakh units, an increase of 57% over the 1.8 lakh TBR tyres imported in the corresponding months of last financial year. TBR imports have gone up by 60% in 2014-15 and 64% in 2015-16 and have continued to maintain these growth levels. China dominates as the source country for import of TBR in India having 95% share of the imported tyres. A Chinese truck or bus radial costs $140-150 (Rs 9,400-10,000) in India, around 30% lower than an Indian tyre costing Rs 15,000.

Automobiles: New bus body code to be implemented from October 1, 2016
Government has prepared a new bus body code to be implemented from October 1,2016.The new bus body code includes features like more cabin space for drivers, emergency exits, fire extinguishers, proper illumination and ventilation, more space between two rows of seats and insulation of doors and windows to avoid rain water and dust. These features will be applicable for the new private luxury buses, tourist buses, city buses and state run corporation buses, nearly two lakh of which are produced every year by automobile manufacturers or bus body builders.


SBI’s Arundhati Bhattacharya may get 1-year extension
Fairfax Financial Holdings seeks RBI approval for 10% stake in Kerala’s Catholic Syrian Bank
Unlike 2008, Indian firms well hedged now for Brexit
Banks set to lobby RBI for liberal loan recast norms
Reliance Jio’s Amitabh Jaipuria steps down ahead of companies’s big 4G launch
Discoms stuck in slow lane on revising power tariffs
Coal India asks subsidiary Central Coalfields Limited to clarify share valuation norm
Russia’s giant Vankor oilfield reaches peak production level: ONGC
Indian Motorcycle eyes volume ramp-up with 'Scout 60'
Maruti Suzuki's compact SUV Vitara Brezza, Toyota's Innova make it to top passenger vehicle list in May
It is business as usual: Jaguar Land Rover on Brexit
Two UVs in top 10 passenger vehicles list in May
Tepid response to auction for solar projects in Gujarat
Asian Paints to invest Rs 4,000 crore in new units at Karnataka, AP
Dr Lal PathLabs eyeing 18 per cent growth in FY17
We are staying true to our $5-b investment plan: Venkatesh Kini
No impact of Brexit on tourism, says Thomas Cook chief
Emerging markets like India will be at advantage after Brexit: Gopichand Hinduja
Suzlon commissions 4.2 MW wind project in Gujarat
1-MW power plant at Chennai Metro
Adani Enterprises raises Rs. 150 cr via NCDs
CII, Hind Unilever join hands for food safety
Leather exports may take a beating
Nestle does exclusive sale of Maggi Hot Heads on Snapdeal
Maruti announces week-long free service camp
New spectrum pill for data scarcity
Audit giants see dominance waning
Videocon goes for asset sale to tide over debt levels
With 31% jump, HDFC Bank's Aditya Puri top gainer in salary hike
Bank mergers likely to happen after SBI consolidation, says finance ministry official
TVS Electronics expects POS business to grow at 12-15%
 V-Guard looks at powerless homes in UP, Eastern India for its solar solution
Radial tyre imports surge
Aban's subsidiary bags order worth Rs 592 crore from ONGC
Essar Energy sells 50% stake in KPRL to Kenyan Government
Brexit impact: Indian tea export realisation from UK to fall 7-8%
Are shareholders getting raw deal in Strides UK arm sale?
BSNL to install 2,000 new mobile towers in Chhattisgarh: Prasad
UDAY bonds find flavour with life insurers
Bajaj Finserv likely to buy out Allianz’s stake in insurance joint ventures
Sebi set to allow e-commerce firms to sell mutual funds
Reliance’s game plan for Jio
Titan is slowly reinventing itself to keep up with the times
IIFL looks to raise Rs750 crore realty debt fund
Mahindra and Mahindra bounce back may be priced in
Bank of Baroda will sell non-core assets gradually: chairman Ravi Venkatesan
Rapid growth of MFIs’ gross loan portfolio sets alarm bells ringing
Bajaj Finserv likely to buy out Allianz’s stake in insurance joint ventures
The metamorphosis of ITC under Y.C. Deveshwar
Mahanagar Gas IPO does not move the needle much for GAIL


1. Imports of truck and bus radials surged 57 per cent in the first two months (April-May) of this financial year.
2. Brexit impact could push Tata Steel out of Europe
3. Coca Cola to set up plant in Uttarakhand's Sitarganj
4. Bank of Baroda has undertaken a comprehensive review of its business and has finalised a detailed set of plans to fundamentally reposition it for future
5. TVS Electronics expects POS business to grow at 12-15%
6. Reliance Power eyes Rs 714 cr from Tilaiya procurers
7. NHPC plans 600-MW solar project at Koyna dam in Maharashtra
8. Dr Lal PathLabs eyeing 18% growth in FY17
9. JSW Steel gets green nod for Rs 35k-cr Jharkhand plant
10. Nippon Paints plans to get into retail business
11. Vedanta's Sesa Iron Ore to make all mines operational in Goa
12. Wipro Ventures invests in Israel VC firm TLV Partners
13. Tata Tele subsidiary to raise Rs 3,000 crore from promoter
14. Suzlon commissions 4.2 MW wind project in Gujarat


Supreme Industries - Growth outlook intact: Price target revised to Rs 908
• Capitalising on opportunities in pipe sector - In its latest annual report (FY2016), Supreme Industries’ (Supreme) management sounded very upbeat on the emerging growth opportunities in the construction sector, particularly in housing. This would augur well for its plastics pipes business (53% of total revenue). To capitalise on these opportunities, the company has envisaged a capex plan of over Rs150 crore in FY2017 (Rs148 crore in FY2016) for the introduction of new products/product line (such as fire sprinkler system), and expansion of its geographical reach. We expect the pipe segment to grow by over 17% annually over the next few years. 
• Going aggressive on furniture business– In FY2016, the furniture business’ operating margins improved by 220BPS to 17%, mainly led by a better marketing strategy and greater focus on premium products (grew by 23% YoY in volume terms). Supreme aspires to be the largest manufacturer of plastic furniture in India by 2020 (industry size currently pegged at Rs3100 crore). In FY2017, the company is setting up a new furniture manufacturing facility at Kharagpur, where it sees a lot of scope for exports as well.
• Return ratios to further improve with low gearing levels – The company repaid ~Rs279 crore of borrowings in M9FY2016*, taking the debt-to-equity (DE) ratio to an all-time low of 0.17x. This debt reduction (in spite of Rs234 crore capex) was supported by healthy cash flow generation, decline in raw material prices and better working capital management. While Supreme is likely to incur a capex of Rs250 crore every year for the next 2-3 years, it is likely to fund it through internal accruals and suppliers’ credit. As a result, the company is likely to become debt-free in the next few years, which would further boost its return ratios.
• Robust growth trajectory, PT revised to Rs908- Supreme has emerged as one of the best proxy play on the growing plastic consumption on the back of its diversified presence, extensive distribution network, improved capital structure and government’s thrust’s on infrastructure development. The company is also expected to monetise ~Rs125-150 crore in the near future from the unsold area of its commercial complex. We have finetuned our estimates mainly to incorporate the annual report details. We expect an adjusted CAGR of 24% in revenue and 36.6% in earnings over M9FY2016-FY2018 on a low base. Supported by its robust growth trajectory, we are revising our target multiple to 22x on its FY2018E earnings (trading in range of 23-30x in last one year). Accordingly, we are revising the price target to Rs908. We have not considered the value of the company’s 29.9% stake in Supreme Petrochem, as it is a strategic investment. Valuation wise, the current valuations of 21.2x FY2018 earnings look fair and hence we maintain a hold rating.

IT Sector update: Britain says Adieu to EU, currencies headwinds to play spoil sport in near term
• ‘Brexit’, Indian IT sector to get impact from cross currencies headwinds:  UK has voted to leave the European union in a referendum held on 24th June 2016, and bitter nightmare of Brexit turned true for the currency market, which has resulted in GBP touched a low of 1.32 vis-à-vis USD and Euro at 1.09/USD after the verdict, though recovered to 1.39 and 1.11 respectively.  Overall, as compared to FY16 average, GBP was lower by 8%, while Euro remains flat. Top five Indian IT company has exposure to Europe 23-29%, on a reported basis specifically to UK, TCS has 15.8%, Infosys 6.6%, Wipro 11% and Tech Mahindra at 10.8%. Taking the current depreciation of GBP at 8% against USD will translate broadly into (1.1%) revenues impact on TCS, Infosys (0.55%), Wipro (1%), HCL Tech (1.2%) and Tech Mahindra (1%). Additionally, any further depreciation of Euro will also have impact on USD revenues. On our midcap coverage, First source solution (FSL) have 37% revenues coming from UK, which will have cross currencies impact of close to 3.5%.
• Margins also to get impact, though will negate by INR depreciation: On the back of GBP depreciation against USD, there will also have negative impact on the operating margins around 30-60bps; TCS will have highest impact of around 60bps. Although, INR depreciation at 3.8% as compared to FY16 average will offset the impact.
• Business impact seems to be minimal in the near term, but could result in decision delay: IT sector has exposure in UK in key verticals like, BFSI, Telecom, and Utilities among others. We believe, there could be some impact on decision cycle in the new deals, but the extent of overall business impact will not felt in the near term and it will take some years to gauge the impact.
• Valuation: The Brexit has resulted in stock correction across the IT counters, owing to fear of earnings downgrade and business impact. We believe, there could be some impact on the earnings for FY17/18E from the event, largely owing to currency and not on account of business. We will wait for more clarity from the management to gauge the business impact of Brexit.

Cox & Kings: Management view on Brexit
– No negative impact, management sees positives for traveler from pound depreciation 

• In our interaction with management, the company has stated that, the pound has depreciated against the rupee. This would mean that travel to the UK will be cheaper for Indian travellers. This will aid Cox & Kings outbound business in the near term. Cox & Kings operations in the UK in both Leisure – International and Education enjoy both revenues and costs in the same currency and hence there won’t be any impact from the currency movement.
• Its Meininger hostel business is based in Europe and has both its revenues and its costs based in Euros. Hence, there is no material impact from the currency movements. The euro is stronger against the rupee on a y-o-y basis anyway. Some portion of the company’s debt is denominated in GBP; the amount of debt will naturally reduce in rupee terms as a translational effect of the depreciation of the GBP against the rupee. So the leverage on the balance sheet will reduce.

• View:  Cox & Kings management is seeing no impact of Brexit on its business performance in the coming years. However more clarities would emerge in the coming days as Britain will negotiate with EU for better travel and tourism policy.

KDDL Brexit impact: KDDL’s manufacturing arm manufactures dials and hands for European luxury brands, which constitutes around 30% of its consolidated revenue that would witness some impact J B Chemical: As per media reports J B Chemical’s tablet manufacturing facility at Panoli completes successful USFDA audit, without any 483 observations – Positive for J B Chemical.