20 April 2014

Pharma - Sector Update - Domestic market on revival path :: Centrum

Anti-infective to lead domestic market



We expect the domestic pharma market to grow at 12-14% in FY15
compared to 6.2% in FY14. We expect anti-infective to lead the
domestic pharma market with ~17%MS. We expect lifestyle segments –
CVS, CNS, anti-diabetic and gastro intestinal – to drive future
growth. The domestic market is characterized by brands with top 100
brands commanding ~15%MS. MNC pharma companies have been able to
create and nurture brands in the domestic market. Notable among them
are Glaxo SmithKline Pharma (GSK), Sanofi India, Abbott India, Pfizer
and Wyeth.

$ Anti-infective to lead domestic market:  As per AIOCD AWACS
MAT-Feb’14 data, the domestic pharma market was placed at Rs751.5bn
and grew at 5.9%. Anti-infective emerged as the top segment with ~17%
MS in the domestic market. Anti-cancer was the fastest growing segment
which grew at 24.9%. Some other fast growing segments were respiratory
9.3%, anti-diabetic at 14.6% and dermatology 10.6%. The top five
therapeutic segments contributed ~57% to total domestic revenues.

$ Top 100 brands generated ~15% revenues: As per our analysis of the
domestic pharma market data, top 100 brands generated ~15% of revenues
in the Rs751.5bn domestic pharma market. Anti-infective and
anti-diabetes segments had 16 brands each in the top 100 brands
followed by gastro intestinal with 14 brands.  On an average, vitamin
segment generated the highest revenues of Rs1.58bn per brand followed
by anti-infective with Rs1.31bn of revenues.

$ MNC pharma - pioneers in brand building: Our analysis reveals that
10 MNC pharma companies had 42 brands in the list of top 100 brands.
Glaxo SmithKline Pharma had nine brands followed by Abbott India and
Sanofi India with seven brands each. This indicates that MNC pharma
companies have been highly successful in brand building and nurturing
in the domestic pharma market. Human Mixtard of Novo Nordisk is the
largest selling product in the domestic market with revenues of
Rs3.49bn per annum.

$ Positive outlook for the pharma sector: We continue our positive
outlook for the pharma sector due to expected improvement in
performance in FY15.  Our top picks for the pharma sector includes
Lupin, Aurobindo Pharma (APL) and Pfizer. Lupin’s strong presence in
the US and Japanese markets will generate good revenue growth. APL is
likely to report strong growth in the US and European markets due to
the acquisition of Actavis generic business. Pfizer is likely to
benefit from the merger with Wyeth and field force rationalization.
These companies are expected to give over 30% returns over CMP in one
year.

Wim Plast :: ICICI Securities

Betting on expansion for growth….
We met the management of Wim Plast (WPL), mainly engaged in the
manufacture of plastic moulded furniture, which uses the established ‘Cello’
brand to promote its products. The company derives ~75-80% of its
business from plastic moulded furniture while 20-25% comes from bubble
guard extrusion sheets. Initially, WPL started its operation in the northern
and western regions. WPL has now expanded to the southern and eastern
regions (with upcoming plants in Chennai and Kolkata). The company has a
strong dealer network (~10,000 across India) and has been targeting the
higher middle class. However, the management has guided that WPL would
be expanding its dealer network in rural India (by adding 1000 dealers in
future). In addition, the company is also looking for opportunities to expand
in new geographies like Andhra Pradesh and Tamil Nadu (wherein it
recently acquired an acre of land). With the addition of new facilities, we
have modelled revenue, PAT CAGR of 20%, 21%, respectively, led by
volume CAGR of 16% and margin expansion of ~40 bps for FY13-16E.

19 April 2014

REC-1&2/HUDCO-1&2&3/IIFCL-1&2&3/PFC/NTPC/NHPC/NHB/IRFC-1&2/NHAI - IREDA-ENNORE

Dear All,


Please find  the respective IP dates & Deemed date of allotment :-

Sno.
Name of Issuer
Issue Size (Rs in cr)
Amount Allotted (Rs in cr)
Date of Launch
Date of Allotment
Interest Payment Date
Listing date
1
Rural Electrification Corporation Limited (Tranche I)
3500.00
3440.60
August 30, 2013
24-Sep-13
December 1, every year
30-Sep-13
2
Housing & Urban Development Corporation Ltd (Tranche I)
4809.20
2370.00
September 17, 2013
25-Oct-13
October 25, every year
29-Oct-13
3
India Infrastructure Finance Company Limited (Tranche I)
2500.00
1213.01
October 3, 2013
12-Nov-13
November 12, every year
14-Nov-13
4
Power Finance Corporation Limited
3875.90
3875.90
October 14, 2013
16-Nov-13
November 16, every year
20-Nov-13
5
NHPC Limited
1000.00
1000.00
October 18, 2013
02-Nov-13
April 1, every year
07-Nov-13
6
Housing & Urban Development Corporation Ltd (Tranche II)
2439.20
2153.39
December 2, 2013
13-Jan-14
January 13, every year
17-Jan-14
7
NTPC Limited
1750.00
1750.00
December 3, 2013
16-Dec-13
December 16, every year
19-Dec-13
8
India Infrastructure Finance Company Limited (Tranche II)
3000.00
3000.00
December 9, 2013
22-Jan-14
January 22, every year
24-Jan-14
9
National Housing Bank (Tranche I)
2100.00
2100.00
December 30, 2013
13-Jan-14
January 13, every year
16-Jan-14
10
Indian Railway Finance Corporation Limited (Tranche I)
10000.00
4083.12
January 6, 2014
18-Feb-14
April 15, every year
21-Feb-14
11
National Highway Authority of India
3698.40
3698.40
January 15, 2014
05-Feb-14
March 15, every year
10-Feb-14
12
Rural Electrification Corporation Limited (Tranche II)
1059.40
1059.40
February 28, 2014
24-Mar-14
December 1, every year
27-Mar-14
13
Housing & Urban Development Corporation Ltd (Tranche III)
285.81
272.92
February 28, 2014
24-Mar-14
December 1, every year
28-Mar-14
14
Indian Railway Finance Corporation Limited (Tranche II)
2916.88
1745.22
February 28, 2014
26-Mar-14
April 15, every year
28-Mar-14
15
National Housing Bank (Tranche II)
1000.00
1000.00
March 7, 2014
24-Mar-14
March 24, every year
26-Mar-14
16
India Infrastructure Finance Company Limited (Tranche III)
2823.79
2664.54
February 17, 2014
27-Mar-14
March 27, every year
31-Mar-14
17
IREDA - INDIAN RENEWABLE ENERGY DEVELOPMENT AGENCY LIMITED
1000
721.65
17-Feb-14
10-03-14
13-03-14
19-Mar-14
18
Ennore Port Ltd - (KAMARAJAR PORT LIMITED)
500
365.47
18-Feb-14
14-03-14
25-03-14
27-Mar-14











-- 

Cement - Sector Update - Rich valuations in a challenging environment :Centrum

Rich valuations in a challenging environment



We assert that cement stocks post recent rally do not offer favorable
risk-reward and maintain negative stance on the sector. However,
cement prices have sustained at higher levels due to supply
constraints and we believe improved supply will soften prices,
especially in North and West regions. Cement dealers confirmed our
view that prices will drop when production resumes at Binani’s Cement
plants. On the other hand, cement prices at higher levels in North and
West regions will help improve profitability of Shree Cement, JK
Lakshmi Cement, JK Cement (60% capacity in North) and pan-India
players Ambuja and UltraTech Cement (higher presence in the West and
North regions).

$ Price remains at higher levels: Average pan-India price increased
1.5% MoM to Rs320/bag in Apr ’14 led by price hikes in West (Gujarat),
South and Central regions. In South, price continues to remain
volatile, but in the West region prices have been supported by
slightly improved demand and low supply. We believe elevated cement
prices in North and West regions (up 16-17% YoY) are largely due to
tightening supply but resumption of operations at Binani Cement’s
plants will lead to softening of prices.

$ Delay in some capacity addition in FY14; higher capacities expected
in FY15E: Some capacities got delayed in commissioning in FY14 which
are expected to come on stream in Q1FY15E. We believe that capacity
addition in FY14 was 15.8mt against our initial estimate of 21.3mt due
to delays in commissioning (Reliance Cementation plant in the Central
region and ABG Cement plant in the West). Our interaction with
industry participants suggest that delayed capacities will be
commissioned in Q1FY15E. We believe the commissioning of these
capacities will impact the pricing power of manufacturers adversely if
demand does not pick up.

$ Demand-supply situation yet not favorable: We expect effective
capacity utilization rate of the industry to be at 72.9%/75.3% in
FY15E/FY16E against 73.4% in FY14. Though the street expects sharp
recovery in cement consumption post favorable elections, we will be
surprised if volume growth surpasses our expectation in FY15E. Even
ex-South region, utilization rate is expected to be at 79.9%/81.9% in
FY15E/FY16E against 81.7% in FY14.  Subdued utilization rates will
continue to lead to volatility in cement prices as in FY14. However,
factors beyond our analysis (closure of Binani Cement’s operations)
and pricing discipline may help sharp hike in prices.

$ Outlook & Valuation: We believe that post recent run-up in cement
stocks, valuations (large cap companies trading at near to or above
mean+sd1 EV/EBITDA) are at elevated levels and risk-reward seems
unfavorable. Cement prices may come under pressure (Rs20-25/bag) if
production resumes at Binani Cement plants in the North region. Also,
Lafarge has commissioned its 2.6mt capacity in the North region
(Chittor, Rajasthan) which may put pressure on cement prices in the
region if demand does not improve. Cement companies’ earnings were
revised downwards sharply in FY14 and we expect the same scenario in
FY15E if demand does not improve. We prefer to wait for signs of
demand revival and pricing stability before turning positive on the
sector.





Thanks & Regards

DCB Bank Ltd - Results Update - Results vindicate our positive stance

Rating: Hold; Target Price: Rs75; CMP: Rs65; Upside: 14%



Broader picture intact, but valuations stretched



DCB Bank’s Q4FY14 results were in line with our estimates and
re-iterates our belief on cost controls with adequate balance growth.
As operating levers continue to play, return ratios will see further
improvement. Our preference for the bank has seen the stock outperform
its peers and currently trades at 1.2x FY16ABV of Rs54.2. Though we
continue to prefer DCB Bank, dilution risk and overhang on tax related
provisioning could see return ratios moderate in the near term. We
thereby downgrade the stock to HOLD but retain our TP at Rs75.

$ Q4FY14 in-line results: DCB Bank’s Q4FY14 results were in-line with
our estimates – NII at Rs1bn (+24% yoy) and net profit at Rs391mn
(+14% yoy). NIM (calc) at 3.2% declined 4bps qoq. Cost rationalisation
measures have seen the ratio of cost/ average assets moderate to 2.6%.
Asset quality improved with GNPA at Rs1.3bn (-33% qoq) and was
primarily led by write-off of the legacy portfolio. Slippages could
have remained higher at Rs300mn (1.5% of loans). However, with lower
provisioning (PCR stood at 46.5%) NNPA at Rs740mn grew 30% qoq. The
bank saw fresh restructuring of Rs350mn for Q4 and cumulative
portfolio is at 0.9% of loans.

$ Operating levers playing out well; non-interest income to be the
next trigger: Cost rationalisation measures have seen the ratio of
cost / average assets decline from 3.03% in FY12 to 2.64% in FY14.
With improved revenue line and increasing penetration into smaller
cities, we expect the ratio to further decline to 2.5% by end-FY16.
Share of non-interest income (11% of total) has remained on the lower
side and will be the next trigger for overall RoA improvement.

$ Loan growth driven by non-SME segment; 77% of deposits are retail in
nature: Concerns over asset quality have forced DCB Bank to cautiously
lower its exposure towards SME segment. This was also reflected in Q4
results that saw 9% yoy decline in credit growth to this segment
vis-à-vis 23.6% yoy growth in loan portfolio. GNPA from this segment
stood at 6.5% of loans. Given the relatively small nature of balance
sheet and branch presence (130 branches), we continue to remain
impressed by DCB Bank’s strategy on deposit profile. 77% of deposits
are retail in nature and provide comfort on the stickiness of deposit
profile and cost controls.

$ Downgrade to HOLD: Our preference for DCB Bank given improved
operating levers, adequate control over asset quality and balance
sheet growth has seen the stock outperform its peers in the recent
past. However, giving impending risk to return ratios following
capital dilution, impact of tax liability beginning FY16 and any
sudden asset quality shocks given increased level of stress in SME and
large corporate segment, we believe valuations at 1.2x FY16ABV of
Rs54.2 are on the higher side. We thereby downgrade the stock to HOLD
with target price of Rs75. DCB Bank however remains our preferred pick
in the mid-cap banking space.