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Monday, 20 February 2017

20 February 2017 - Views & News

MARKET INSIGHT

Nifty is likely to open on a flattish note based on the global cues. Bias remains positive as long as nifty holding 8780 levels for the day

Nifty Spot Levels

Support 8783 – 8712
Resistance 8856 - 8900

GLOBAL MARKET

 • The Dow Jones Industrial Average barely reached a seventh straight record high on Friday and the S&P 500 and Nasdaq also closed at a record as gains in Kraft Heinz helped offset selling in energy stocks.
• After suffering losses for most of the session, the Dow and S&P 500 turned positive in the final minutes of a week fuelled by the "Trump Rally" that has seen stocks surge since the November presidential election.
• Asian markets opened mostly lower on Monday, as investors await further details 

TOP NEWS

Alert: Havell’s TO acquire consumer biz of Lloyd Electric for Rs 1600 crore – Positive in terms of usage of close to Rs1350 cr of free cash on books for growth of business and the acquisition done at reasonable valuations (15x EV/EBIT); It is also positive for Lloyd Electric which can repay its debt (close to Rs800 cr)

Sugar -  India's sugar deficit widens to 15% from 10% as on February 15, 2017; this will further firm up the sugar prices along with drivers such increase in global sugar prices – positive for UP based sugar companies (maintain positive view on Balrampur chini and KM Sugar Mills)
According to Indian Sugar Mills Association (ISMA), India's sugar deficit increased to 15% as on February 15 from 10% on January 31, 2017 as sugarcane crushing season in Karnataka has almost come to an end, while that of Maharashtra is at its fag end.  As on February 15, 2017, sugar mills in the country have produced 146.72 lakh tonnes of sugar, as compared to 173.34 lakh tonnes produced as on 15 th February 2016. Sugar production in this season till 15th February 2017 is 26.62 lakh tonnes lower than the sugar produced upto the corresponding date last year. ISMA has also claimed that current global prices are higher to the domestic prices which will make imports unviable at current levels.

Hindustan Unilever - Kraft withdrew its offer of $143 billion merger with Unilever because it felt it was too difficult to negotiate a deal following the public disclosure of its bid (UK government scrutiny as well as differences between the companies' cultures and business models were some key concerns about the deal); Unilever had already rejected the proposal as it sees no merit, either financial or strategic, for Unilever's shareholders – neutral for HUL

Mangalam Drugs Unit-2 audited by WHO & is issued few procedural observations; Company will respond to observations after receipt of audit report – Sentimentally negative; stock to remain in focus till the time there is clarity on response submitted and its outcome.

IRB InvIT Fund gets Sebi's approval to launch IPO, positive read-thru
IRB InvIT Fund, an investment trust sponsored by IRB Infrastructure Developers, has received markets regulator Sebi's approval to raise Rs 4,300 crore through initial public offering (IPO). However, Securities and Exchange Board of India (Sebi) has asked for clarification from India Grid Trust and Reliance Infra InvIT Fund regarding their proposed IPOs. IRB InvIT Fund had filed its draft papers in September 2016 and got 'observation' from Sebi on February 9, which is necessary for any entity to launch public offer

JP Associates: JPA, JPPower allot Rs3058 crore worth debt  to lenders, financial institutions hold 51% stake, positive read-thru (both stock has already rallied significantly in the last two months)  
Jaiprakash Associates has informed BSE that the Stakeholders Relationship Committee of Jaiprakash Power Ventures Limited (JPVL), a subsidiary of the Company, in its meeting held February 18, 2017, has allotted 305,80,00,000 Equity Shares of Rs. 10/- each at a price of Rs. 10/- per share to its various lenders, upon approval of allocation of conversion of part of their outstanding debt amount into Equity Shares, pursuant to implementation of SDR.

As per media flash, Idea, Vodafone, to seal merger within a month, Idea stock to be focus (we do not see much upside in Idea based on the merger ratio and valuation stated in the media reports)

Dilip Buildcon gets LoA from NHAI for Mah project under HAM, cost at Rs911 crore

 OTHER NEWS

GSK Pharma gets USFDA nod for Mepolizumab Injectable; used to treat Eosinophilic Asthma [increased levels of eosinophils (a type of white blood cell) in the airways]  - Positive for GSK Pharma.

Eicher Motors-Polaris review JV, may look at local assembly to cut costs; aims for breakeven by 2020; positive read thru

US based all-terrain vehicle specialist Polaris, which entered into a joint venture with Eicher Motors for a personal vehicle Multix, is relooking at its India strategy with the venture failing to take off as planned. Amongst the series of measures planned to revive the initiative, Eicher Polaris has upgraded the product by packing more power with the BS IV offering and the company will be more than doubling the network to 150 within next six months. It is also exploring the possibility of assembling its ATV at the JV’s Jaipur facility for a quicker breakeven and has set a clear breakeven plan for the venture by 2020.

M&M plans to launch petrol variants of XUV5oo and Scorpio amid consumer shift from the diesel variants; positive
Mahindra & Mahindra plans to launch a petrol variant of its flagship Sports Utility Vehicle XUV500 in Q1FY18 in the wake of customer preference shifting away from diesel vehicles in the segment. The company is also mulling launching a petrol variant of its popular Scorpio model depending on the demand for the same in XUV500. Launching petrol variants will enable the company to tap the demand and help it regain market share in utility vehicle space.

M&M’s arm (Mahindra Electric) is looking at cab operators and e-commerce companies that thrive on logistics support in its bid to rejuvenate sales and has decided to increase the production capacity to 5,000 units per annum this year, from the present capacity of 2,000 units. It is also anticipating a surge in demand for its products due to the Centre’s incentives and other programmes offered by states such as Rajasthan, Chandigarh and Delhi. Positive

NTPC scouts for partners to set up cement plants near its coal-based power stations to utilise fly ash.

TCS, Board meet to  consider a proposal for buyback of equity shares, stock to be focus.

Vedanta to invest $10 bn on expanding business

SREI Infra, Bharat Road Networks files  for IPO; issue size estimate to be around Rs1,200 crore, stock to be focus

NMDC: In talks to buy stake in  Vietnam mine, stock be in focus
As per media news, NMDC is in discussions with Vietnam-based Masan Resources to acquire a "considerable stake" in its Nui Phao polymetallic mine. The mine, which has rich reserves of tungsten mineral, is located in Thai Nguyen province in Northern Vietnam. At present, India mostly imports tungsten for its domestic requirements due to high production cost of the metal.Recently a team from NMDC visited the plant and held initial discussions with Masan Resources. NMDC is interested in acquiring a considerable stake in the mine as Ministry of Defence has also expressed interest to buy the metal from NMDC. A decision will be arrived only after a due diligence.

Infosys: An whistle-blower questioned why Infosys paid $200 million for Panaya when the company had been valued at $162 million by Israel Growth Partners
As per media report, an email purportedly written by an anonymous whistle-blower questioned why Infosys paid $200 million in February 2015 for Panaya when, in the previous month, the company had been valued at $162 million by Israel Growth Partners, which made a $20 million investment to pick up a 12.31% stake. Infosys has publicly disclosed that SAP’s co-founder Hasso Plattner held about a 6% stake in Panaya. The email states that the Panaya acquisition made Plattner richer by $17 million.

IOCL plans to invest around Rs15,750 crore over next few years to increase its pipeline length by 7,550kms from currently around 11,746kms currently.  Pipeline segment contributed 26% to IOCL’s standalone EBITDA in FY16 – long term positive for IOCL.

BPCL plans to set-up 1.5mtpa naphtha cracker at its JV Bina refinery (BPCL stake at 49%) at an estimates cost of Rs6,000-7,000 crore.

Banking Sector: Jaiprakash Power Ventures Ltd (JPVL) has alloted 305.80 crore equity shares to its lenders as part of debt restructuring scheme, which would reduce the debt of Rs3,058 crore. The major lenders include - ICICI Bank, IDBI Bank, Punjab National Bank, Central Bank of India, SBI, United Bank of India, Canara Bank, Oriental Bank of Commerce, UCO Bank, IDFC, LIC, Syndicate Bank, Corporation Bank, Indian Overseas Bank, Allahabad Bank, and Bank of India etc. – Positive read thru for lender banks as this would be the initial step towards resolution of this NPA

 MORE NEWS

31 out of 34 oil & gas field auctioned sold
Tax benefit of Rs 2.4 lakh to first-time home buyers
ARCs may get a push as bad bank put on hold
Tata Steel's UK unions approve new turnaround plan
Exports rise for fifth month in a row, up 4.3% in January
USFDA warns Resonance Labs of mfg violations
Bankers seek dispensation to recast of bad loans
Trade deficit narrows to $9.8 bn in January
Cabinet clears merger of 5 associate banks with SBI
39% comply with I-T's online verification
Record wheat, foodgrain output likely in 2016-17
I-T Dept to scrutinise tax relief claims by sick companies
Novelis to lay off employees in Korea, US to curtail costs
Piramal lends Rs 2K cr under lease rental discounting scheme
SBI plans Korea-Nepal, Korea-India remittance corridors
India, Croatia ink pact to boost economic ties
‘Cash-backs won’t get you customer loyalty’
Claris Lifesciences net jumps 233%
SoftBank to buy Fortress Investment for $3.3 billion
Nestle India profit down 9% in fourth quarter
Govt to list all profit making PSUs in 2-3 years
Paytm claims Rs5,000 crore worth transactions in January
Tata Motors shares fall 10.3%, biggest decline in five years
Sun Pharma’s Q3 results leave investors underwhelmed
BlackBerry files patent infringement suit against Nokia
Vodafone-Idea merger: BofA, UBS, StanChart vying for $40 mn advisory fee
Tata Steel unveils UK's biggest robotic welding line
DLF promoters in last leg of talks for Rs 12-14k crore sale deal
Govt taps newcomers to unlock $7 billion oil and gas assets
Oil slips further below $56 on report of US inventory jump
Foodgrain output may touch record 272 mt this year
BookMyShow acquires 75 per cent stake in Townscript
BSE Q3 net profit drops 17% to Rs 64-cr
Centre whittles down wheat purchase target
Nasscom defers annual growth forecast to May

STOCK IN NEWS

1. Havells to buy Lloyd Consumer for Rs 1,600 crore
2. Paytm to invest Rs 600 crore to expand network
3. US firm & Sun Apollo in talks to sell Chandigarh mall
4. Amazon plans to bring audio books service to India
5. Vodafone, Idea likely to seal merger pact within a month
6. Tech Mahindra sees bigger business from Vodafone-Idea merger
7. Mahindra plans to launch petrol SUV XUV500 in Q1 of financial year 2018
8. Tata Steel eyes retail in Myanmar and Bangladesh
9. Mahindra Electric expects to reach capacity in 2017
10. Nalco to buy 80% power from proposed JV plant
11. SAIL targets highest ever iron ore production in FY17
12. Ruchi Soya-Adani Wilmar JV in limbo

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