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India Equity Research Reports, IPO and Stock News
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Ranbaxy: Poor 4Q raises concerns on upsides from one-offs [Abhay
Shanbhag]
Revenues at INR 20.7bn (USD 463m, -9% yoy, DBe USD 540m) were below DBe
driven by (a) lackluster US revenues (USD 117m, -26%, USD 200m) despite launch
of generic Aricept, (b) robust growth in India (USD 81m, +15%, USD 88m), Africa
(USD 41m, +46%yoy, USD 32m) and APIs (USD 40m, +43%, USD 25m) (c)
stabilising Europe (USD 76m, -5%, USD 72m). Despite commencement of highmargin API supplies of Nexium, weaker-than-expected Aricept constrained EBITDA
at INR 1.7bn (-61% yoy, DBe INR 6.3bn). Forex loss fell 22% to INR 2.2bn
(expected INR 1bn) with PAT down 51% to INR 1.3bn (INR 5.1bn). We estimate
recurring PAT (excluding one-offs) at INR -238m (-126%yoy, DBe INR -723m).
Suzlon: Slowly emerging out of the woods [Manish Saxena]
We find Suzlon's restructuring initiative beginning to show through as gross
debt:equity looks to be tapering off in FY12E. Also, thanks to a strong pickup in
wind power demand in India, Suzlon could see a turnaround. A positive operating
profit in FY12E and return to black after three years in FY13E are key positives
although recent data suggesting an industrial slowdown could create a sector
overhang, holding back the stock. We are also concerned about the FCCB
conversion. We reiterate Hold with a revised target price of INR51/share.
India Equity Strategy: FY12 Union Budget expectations [Abhay Laijawala]
Fiscal consolidation: We expect the Finance Minister to raise excise duties by
200bps to 12%, and also raise service tax rate by 200bps to 12%; One-off windfall
gains (akin to 3G/BWA auctions) is likely in form of announcement on transparent
coal block auctions. Unfortunately, we do not envisage any material tax incentive
for corporate sector except likely lowering of corporate tax surcharge by 250bps
to 5%.
Construction Materials: Cement companies could attempt pass-through of
cost push [Chockalingam Narayanan]
Our interactions with cement traders and retailers suggest that cement companies
could attempt another round of price increase of c2-5%, following cost inflation
pressures and not an encouraging demand growth outlook. Barring Eastern India,
where cement companies have comparatively higher stocks, the probability of
price increases coming through and sustaining in other regions look higher. 1) We
continue to prefer diversified players like Grasim (Buy, Target price INR 2,730) as it
(a) benefits from the supercycle in VSF (contributes to c45% of consolidated
profits).
US Daily Economic Notes: Upstream inflation pressures fueled by more than
oil prices [Joseph LaVorgna]
Geopolitical concerns in the Middle East are once again impacting
financial/commodity markets. If the recent jump in crude oil prices is sustained,
this will translate into higher retail gas prices in the near term-beyond the usual
seasonal increases. Even if the situation calms and oil prices retreat back to their
year-to-date average of roughly $88.50 per barrel, the broad increase in
commodity prices in general poses a significant risk to consumer inflation. The
current stance of monetary policy is extraordinarily accommodative, and inflation
pressures are rapidly rising in the factory sector.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Ranbaxy: Poor 4Q raises concerns on upsides from one-offs [Abhay
Shanbhag]
Revenues at INR 20.7bn (USD 463m, -9% yoy, DBe USD 540m) were below DBe
driven by (a) lackluster US revenues (USD 117m, -26%, USD 200m) despite launch
of generic Aricept, (b) robust growth in India (USD 81m, +15%, USD 88m), Africa
(USD 41m, +46%yoy, USD 32m) and APIs (USD 40m, +43%, USD 25m) (c)
stabilising Europe (USD 76m, -5%, USD 72m). Despite commencement of highmargin API supplies of Nexium, weaker-than-expected Aricept constrained EBITDA
at INR 1.7bn (-61% yoy, DBe INR 6.3bn). Forex loss fell 22% to INR 2.2bn
(expected INR 1bn) with PAT down 51% to INR 1.3bn (INR 5.1bn). We estimate
recurring PAT (excluding one-offs) at INR -238m (-126%yoy, DBe INR -723m).
Suzlon: Slowly emerging out of the woods [Manish Saxena]
We find Suzlon's restructuring initiative beginning to show through as gross
debt:equity looks to be tapering off in FY12E. Also, thanks to a strong pickup in
wind power demand in India, Suzlon could see a turnaround. A positive operating
profit in FY12E and return to black after three years in FY13E are key positives
although recent data suggesting an industrial slowdown could create a sector
overhang, holding back the stock. We are also concerned about the FCCB
conversion. We reiterate Hold with a revised target price of INR51/share.
India Equity Strategy: FY12 Union Budget expectations [Abhay Laijawala]
Fiscal consolidation: We expect the Finance Minister to raise excise duties by
200bps to 12%, and also raise service tax rate by 200bps to 12%; One-off windfall
gains (akin to 3G/BWA auctions) is likely in form of announcement on transparent
coal block auctions. Unfortunately, we do not envisage any material tax incentive
for corporate sector except likely lowering of corporate tax surcharge by 250bps
to 5%.
Construction Materials: Cement companies could attempt pass-through of
cost push [Chockalingam Narayanan]
Our interactions with cement traders and retailers suggest that cement companies
could attempt another round of price increase of c2-5%, following cost inflation
pressures and not an encouraging demand growth outlook. Barring Eastern India,
where cement companies have comparatively higher stocks, the probability of
price increases coming through and sustaining in other regions look higher. 1) We
continue to prefer diversified players like Grasim (Buy, Target price INR 2,730) as it
(a) benefits from the supercycle in VSF (contributes to c45% of consolidated
profits).
US Daily Economic Notes: Upstream inflation pressures fueled by more than
oil prices [Joseph LaVorgna]
Geopolitical concerns in the Middle East are once again impacting
financial/commodity markets. If the recent jump in crude oil prices is sustained,
this will translate into higher retail gas prices in the near term-beyond the usual
seasonal increases. Even if the situation calms and oil prices retreat back to their
year-to-date average of roughly $88.50 per barrel, the broad increase in
commodity prices in general poses a significant risk to consumer inflation. The
current stance of monetary policy is extraordinarily accommodative, and inflation
pressures are rapidly rising in the factory sector.
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