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Dr Reddys Labs (Acquires GSK's US penicillin business, BUY):
Dr Reddy’s announced it will acquire GSK’s oral-penicillin production facility and product portfolio in the US. The companies did not disclose any financial details.
- Facility is in Bristol, Tennessee; products include the Augmentin and Amoxil brands of antibiotic products
- The portfolio is already generic; we estimate ~US$40m annual revenue run rate with EBITDA margin in the mid-teens
- We do not view the deal positively, as it dilutes the growth prospects of the overall portfolio, in our view
- That said, it does not affect our broader thesis; we retain BUY with a price target of Rs1,957
Autos (Margin pangs): With auto companies’ volume growth likely to moderate on a high base, margins would be the key for companies to maintain healthy growth in profits. We expect an increase in OEMs’ raw-material costs on account of rising commodity prices and wage inflation for vendors (whose pricing power has increased, thanks to strong demand). We reckon margins for most OEMs would come under stress and would prefer to own companies with an ability to pass on cost increases. On balance, we remain positive on the sector; our top picks are Bajaj Auto and Mahindra & Mahindra.
Corporate Front Page:
- The Central Bureau of Investigation has arrested eight people, including senior executives of banks and housing finance companies likeLIC Housing Finance, LIC, Central Bank of India, Bank of India and Punjab National Bank for giving loans to private builders after taking bribes. (BS)
- Sebi has barred Sahara Group’s Chairman and some of its directors from raising money by issuing securities. (ET)
- Reliance Industries and NTPC may settle out of court their five-year-old legal battle over a contract to supply gas from Reliance’s field in KG basin. (ET)
- NTPC has set up a JV with the Asian Development Bank and Japan’s Kyuden International Corporation to develop renewable energy projects with a capacity of 500 MW over the next three years. (BS)
- Dr Reddy’s Laboratories has signed an agreement with GlaxoSmithKline, to buy the latter’s oral penicillin manufacturing facility at Tennessee in the US. (BS)
- The Mumbai Income Tax Appelate Tribunal has held that income tax paid by Tata Sons abroad cannot be claimed as deduction in India. (DNA)
- Maruti Suzuki is not contemplating any price raise, despite a 20-30 % surge in raw material prices in recent months. (BS)
- Punj Lloyd has won ~Rs16bn domestic and overseas contracts. (BL)
- Cairn Energy Plc may soon seek government’s approval to sell three blocks to Vedanta Resources. (DNA)
- JSW Steel seeks new coking coal mine in Jharkhand. (DNA)
- Power Grid is likely to sign MoU with Sri Lanka for developing of high capacity power transmission link between the India and Sri Lanka from the Indian side. (BS)
- 50 Kingfisher Airlines pilots quit to join rival Jet Airways. (ET)
- Tata Power to invest Rs8.5bn in two years to beef up generation, transmission and distribution. (ET)
- Yes Bank inks pact with Shinsei Bank for M&A’s. (ET)
Economy Front Page:
- Government is unlikely to decontrol retail prices of diesel anytime soon. (DNA)
- Long-term finance to farmers through RRB has turned costly with the Nabard raising interest rate on refinance by 50 bps. (BS)
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