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India Equity Research Reports, IPO and Stock News
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Ranbaxy: Risk of Comprehensive plan becoming a Consent Decree [Abhay Shanbhag]
Complex regulatory process, few precedents and limited guidance in addressing GMP issues force us to analyse Comprehensive Settlements (CS). In last 1 year 2 CS have been converted into CDs - with long, unpredictable timelines. Of 17 CDs in 20 years, only 5 were resolved over 4-7 years & 3 plants have been permanently shut. Compared to peers, Ranbaxy is yet to show any formal progress over 2.5 years from getting ensnarled. While recent CDs do not carry fines; the long, unpredictable timelines will aggravate its operating leverage. Maintain SELL.
Zee Entertainment: No aftershocks post Q3 sports losses [Harrish Zaveri]
The drivers of stable revenue visibility remain 30% growth in DTH subscription revenues led by fixed fee deals with DTH service providers, 12-13% advertising revenues led by relatively stable consumer staples and discretionary ad spends. We factor in 18% higher content costs, driving sports losses of INR 1 bn in FY12. We do not assume any differential pricing on sports, despite there being 30 mn DTH homes, till FY12. Maintaining Buy with a revised target price of INR 160. It remains tough for Indian broadcasters to drive margins equivalent to their general entertainment business in sports broadcasting.
Mahindra & Mahindra: New tractor plant will increase capacity by 43% [Srinivas Rao]
Mahindra has announced the setting up of a new tractor plant in South India located near Hyderabad. It will have an installed capacity of 100,000 p.a and it will be set up at an investment of Rs 3bn. The plant is expected to commence production in 2012 and will manufacture tractors in 30-90HP range for both domestic and export markets. The plant will be co-located in the same parcel of land which houses Mahindra’s existing 3-wheeler plant. We note that Mahindra had purchased 64.4% stake in Punjab Tractors, which had a capacity of 60K p.a, for Rs 14bn in July-07. Mahindra’s total tractor capacity currently stands at 233,000 which we estimate is approximately split in the following manner: Mohali (60K), Rudrapur (45-50K), Mumbai (40K), Nagpur (60K) and Jaipur (10K). In addition it has a capacity of 10K at Rajkot to manufacture its Yuvraj brand of tractors.
India Equity Strategy: Indian market reaching an inflection point? [Abhay Laijawala]
Barring oil prices and any systemic risk arising from the fallout of the nuclear accident in Japan, we believe that the sharp underperformance of the Indian equity market (YTD Sensex has underperformed MSCI Asia by 700bps) may be bottoming. We see the markets reaching an inflection point in April-May and a directional shift upwards setting in, during 2H2011. Apr-May are likely to be important for the Indian equity markets on account of (1) release of Indian monsoon forecast by Meteorological Department.
FX Strategy Weekly [Mirza Baig]
Last week’s coordinated intervention in USD/JPY has put a floor into the cross for now, however we continue to look for an eventual move to 75 as US rates remain too low to support a major turn. The US rate outlook has also helped support the EUR/USD rally, and unless peripheral risks spill over to affect ECB tightening expectations the pair looks well supported for now. We do not expect rate differentials to widen much further from here though and hence do not expect EUR/USD to move much higher (1.45 looks a possible stretch level).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Ranbaxy: Risk of Comprehensive plan becoming a Consent Decree [Abhay Shanbhag]
Complex regulatory process, few precedents and limited guidance in addressing GMP issues force us to analyse Comprehensive Settlements (CS). In last 1 year 2 CS have been converted into CDs - with long, unpredictable timelines. Of 17 CDs in 20 years, only 5 were resolved over 4-7 years & 3 plants have been permanently shut. Compared to peers, Ranbaxy is yet to show any formal progress over 2.5 years from getting ensnarled. While recent CDs do not carry fines; the long, unpredictable timelines will aggravate its operating leverage. Maintain SELL.
Zee Entertainment: No aftershocks post Q3 sports losses [Harrish Zaveri]
The drivers of stable revenue visibility remain 30% growth in DTH subscription revenues led by fixed fee deals with DTH service providers, 12-13% advertising revenues led by relatively stable consumer staples and discretionary ad spends. We factor in 18% higher content costs, driving sports losses of INR 1 bn in FY12. We do not assume any differential pricing on sports, despite there being 30 mn DTH homes, till FY12. Maintaining Buy with a revised target price of INR 160. It remains tough for Indian broadcasters to drive margins equivalent to their general entertainment business in sports broadcasting.
Mahindra & Mahindra: New tractor plant will increase capacity by 43% [Srinivas Rao]
Mahindra has announced the setting up of a new tractor plant in South India located near Hyderabad. It will have an installed capacity of 100,000 p.a and it will be set up at an investment of Rs 3bn. The plant is expected to commence production in 2012 and will manufacture tractors in 30-90HP range for both domestic and export markets. The plant will be co-located in the same parcel of land which houses Mahindra’s existing 3-wheeler plant. We note that Mahindra had purchased 64.4% stake in Punjab Tractors, which had a capacity of 60K p.a, for Rs 14bn in July-07. Mahindra’s total tractor capacity currently stands at 233,000 which we estimate is approximately split in the following manner: Mohali (60K), Rudrapur (45-50K), Mumbai (40K), Nagpur (60K) and Jaipur (10K). In addition it has a capacity of 10K at Rajkot to manufacture its Yuvraj brand of tractors.
India Equity Strategy: Indian market reaching an inflection point? [Abhay Laijawala]
Barring oil prices and any systemic risk arising from the fallout of the nuclear accident in Japan, we believe that the sharp underperformance of the Indian equity market (YTD Sensex has underperformed MSCI Asia by 700bps) may be bottoming. We see the markets reaching an inflection point in April-May and a directional shift upwards setting in, during 2H2011. Apr-May are likely to be important for the Indian equity markets on account of (1) release of Indian monsoon forecast by Meteorological Department.
FX Strategy Weekly [Mirza Baig]
Last week’s coordinated intervention in USD/JPY has put a floor into the cross for now, however we continue to look for an eventual move to 75 as US rates remain too low to support a major turn. The US rate outlook has also helped support the EUR/USD rally, and unless peripheral risks spill over to affect ECB tightening expectations the pair looks well supported for now. We do not expect rate differentials to widen much further from here though and hence do not expect EUR/USD to move much higher (1.45 looks a possible stretch level).
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