Glenmark Pharma – Licensing validates NCE's potential ::RBS

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Glenmark's GBR 500 licensing deal with Sanofi (we value it at Rs20/share) re-validates its
business model of investing in innovative R&D. Glenmark seems well poised to benefit from the
reviving interest in in-licensing from big pharma as we believe its NCE pipeline is not fully priced
in yet. Buy; TP up to Rs350.

BofA Merrill Lynch, :: BUY Suzlon Energy- Power into profits post 7 Qtrs

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Suzlon Energy Ltd.
Power into profits post 7 Qtrs;
Raise PO; contrarian Buy
􀂄 First rec profit after seven Qtr losses; PO raised; Buy
Suzlon turned the corner in a quarter where losses at Vestas doubled, with its first
rec PAT at Rs1.6bn in 4Q11 (vs loss Rs2bn in 4Q10). This was led by a) rebound
in profitable India volume +15%YoY, b) a strong 4Q at REpower (sales +68%YoY
and 3.2x EBIT) and c) improved turbine availability (>97%) and cost cutting.
Backlog doubled on +134%YoY inflows and net debt cut to 1.36x vs peak 1.7x in
1Q11. We up our PO to Rs75 (Rs70) on roll-forward. Reiterate our Buy on Suzlon,
on a structural turnaround. Risks to our non-consensus Buy call are delivery pushback,
currency and execution.
India MW +15% & REpower sales +68%; On track for FY12 profits
Suzlon’s back-to-basics strategy to survive weakness in US market has paid off,
with FY11 inflows +134%yoy, led by 2.7x growth in India orders. While its
International volume fell 73%YoY, Suzlon’s domestic MW grew 15%YoY in 4Q.
REpower had strong 4Q11 on good execution and consolidation of China and
Portugal JVs (sales +68%YoY) led EBIT 3.2x. Profit turnaround was slower paced
vs MLe as SUEL lost ~160MW (33% of 4Q) to 1Q. Reported PAT was 4.3bn.
Balance sheet improved QoQ (4Q net debt / equity 1.36x v/s 1.5x). Co guided for
FY12 sales at Rs240-260bn vs MLe of Rs235bn and EBIT margin 7-8% vs MLe of
7.8% margin inline with BoFAMLe.
Three catalysts to Buy Suzlon – A turnaround story
􀂄 25% CAGR till FY13E in the Indian wind markets on higher feed-in tariffs (offset
rising interest cost/low wind sites) and new regulation leading to entry of
IPPs. Its back-to-basics strategy has paid-off, with FY11 orders up 2.7x in
India to 2.3GW.
􀂄 33% PAT CAGR in REPower on shift in a) product-mix to high margin
offshore wind and b) production of its largest selling 2MW turbine to low cost
(India/China) and
􀂄 Recovery of Rs10bn (24% of debtors) in 2HFY12 (Edison), to fund growth.

May 20th, 2011:: Buzzing Stocks · Keynote

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Buzzing Stocks

·      Crompton Greaves Buys Sweden-based Emotron Group for Euros57.8mn.

·      Tata Power Okays 10-for1 Stock Split.

·      NorthGate's board approved scheme of arrangement & amalgamation between Northgate Technologies & Northgate com private ltd & Green Fire agri commodities

·      Vakrangee Software has bagged the UID enrollment project from Union Bank of India with approximate revenue to achieve `1500Cr from the UID enrolment.

·      Gammon Infra board has approved the proposal of rights issue up to `200Cr

·      Arvind Ltd board to meet & consider various fund raising options for an amount up to `300Cr.

·      Panel against subsidized gas supply to power companies & fertilizer plants and advised it should be sold at the market rates.

May 20:: Economic and Political News 􀂄 Angel Broking,

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Economic and Political News
􀂄 Food inflation further eases to 7.47%
􀂄 Cabinet kicks off policy shift with Scooters India sale
􀂄 Record expansion of major ports to cost `16,750cr

Crompton Greaves acquires Sweden-based Emotron Group :: Crompton Greaves,

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Continuing with its strategy of inorganic growth, Crompton Greaves (CG) acquired
Sweden-based Emotron Group for €57.8mn. Emotron is a power electronics and
engineering company engaged in the manufacturing of variable speed drives, soft starters,
shaft power monitors and customised products; the company also provides project
solutions. As of December 31, 2010, Emotron posted revenue and EBITDA of €37.3mn
and €4.4mn, respectively.
Emotron pursues latest IGBT technology for variable frequency drives (VFD) with range of
200kV to 690kV and 0.2kW to 300kW, which augurs well for the automation solution
space in CG’s industrial systems segment. The acquisition also offers CG to harness
opportunities in VFD/industrial motors markets globally. CG has sizable presence in
Europe offering a broad array of motors and generators in the industrial markets. We see
this as a positive development for CG. We maintain our Buy view on the stock with a target
price of `300.

May 20, 2011- Dealer’s Diary -Angel Broking

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Dealer’s Diary
The key benchmark indices provisionally closed with decent gains in a volatile
trading session as index heavyweight L&T surged close to 7%. The market pared
gains soon after a firm start triggered by higher Asian equities. In the
mid-morning trade, the market trimmed gains once again to hit fresh intraday
low. A bout of volatility was witnessed in the afternoon trade as the key
benchmark indices regained positive terrain soon after slipping into the red to
hit fresh intraday lows. The market recovered in the last hour of trade, with the
Sensex and Nifty closing up by 0.3% and 0.1% respectively. However mid-cap
and small-cap indices registered loss of 0.7% and 0.5%, respectively. Among
the front liners, L&T, RIL, ONGC, TCS and M&M gained 1–6%, while RCOM,
DLF, Hindalco Inds, Tata Power and Hero Honda lost 2–3%. Among mid caps,
STC, Pantaloon Retail, KGN Inds, HMT and Kirloskar Oil Engines gained
4–11%, while Kwality Dairy, Patni Computer, Voltas, Puravankara Projects and
Orchid Chemicals lost 4–20%.
Markets Today
The trend deciding level for the day is 18,133/5,431 levels. If NIFTY trades
above this level during the first half-an-hour of trade then we may witness a
further rally up to 18,207–18,273/5,450–5,472 levels. However, if NIFTY
trades below 18,133/5,431 levels for the first half-an-hour of trade then it may
correct up to 18,067–17,992/5,409–5,389 levels.

May 20, 2011; Derivative Report India Research --Angel Broking,

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Comments
 The Nifty futures’ open interest increased by 1.37%
while Minifty futures’ open interest decreased by
0.37% as market closed at 5428.10 levels.
 The Nifty May future closed at a discount of 3.30
points, against a premium of 3.45 points in the last
trading session. On the other hand, June future
closed at a premium of 5.00 points.
 The Implied Volatility has decreased from 18.45% to
18.00%.
 The PCR-OI has decreased from 0.89 to 0.88 points.
 The total OI of the market is `1,52,999cr and the
stock futures OI is `35,049cr.
 Few liquid counters where cost of carry is positive
are GTLINFRA, HOTELEELA, TV-18, SREINFRA and
TTML.

20 May; Views on markets today:Keynote

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Views on markets today

·      Indian markets snapped a three-day losing streak to close as positive note yesterday tracking firm global markets and decline in food inflation for the week ended May 7 fuelled the uptrend. Sustained buying in index heavyweight like L&T, Reliance Ind. and Infosys also led the market to close positive. The upward movement was mainly led by gain in capital goods, oil & gas, IT and auto stocks while real estate, metal, power and pharma stocks witnessed some selling pressure. Beaten down auto stocks pulled back and the sector index closed 0.2% above. Larsen & Toubro led the gains adding 5.8% after the engineering and construction conglomerate beat market estimates with a 17% rise in quarterly profit and forecast revenue to grow a quarter in FY12. Reliance Ind. gained 1.5% after UBS upgraded the stock to buy from neutral, citing attractive valuations compared to Asian peers. Lakshmi Vilas Bank rose 5.5% after the bank reported a profit of `273.8mn in the quarter ended March from a loss in the year-ago quarter.

·      Market breadth was however weak at ~0.64x as investors continued selling large cap stocks. FIIs sold equities worth `37.41Cr while domestic institutions bought equities of `1.32bn.

·      Asian markets are mostly up today after yesterday's rally in the US markets. Japanese shares are up in the choppy trade as technology stocks benefitted on weaker yen. The Hang Seng is trading flat in volatile session.

·      We expect a positive opening for the Indian markets today as the cues from the global markets are positive. The markets showed some strength after fall in the inflation yesterday. However, we believe the rally seem unsustainable as the recent fuel price hike yet to show impact.

Economic and Corporate Developments

·      Continuing on its downward trajectory, food inflation slipped further to 7.47% for the week ended May 7 as against 7.70% in the previous week on the back of cheaper pulses, vegetables and wheat price.

Union Bank of India - Healthy performance; slippages trend downwards:: Prabhudas Lilladher

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􀂄 Healthy operating performance; margins remain stable: Union Bank of India
(UBI) reported Q4FY11 PAT of Rs6.0bn, largely flattish both on a YoY (up 0.7%)
as well as on a QoQ (up 3.1%) basis. Net Interest Income (NII) for the quarter
grew by 22.9% YoY and 6.2% QoQ to Rs17.2bn on account of strong 26.2% YoY
and 14.4% QoQ advances growth coupled with sequentially stable margins at
3.44%. The increase in the yield on funds during the quarter (43bps QoQ) was
marginally higher than the 38bps QoQ increase in the cost of funds resulting into
stable margins. However, on adjusting for the interest on IT refund of Rs300mn
in Q4FY11 and Rs2.1bn for full year FY11, the reported margins would have
been lower by ~5bps and ~9bps for the quarter and the full year respectively.
Deposits grew by 19.1% YoY and 8.5% QoQ on the back of 10.9% QoQ increase
in the term deposits. Driven by relatively slower growth in CASA deposits (3.5%
QoQ), the CASA ratio contracted by ~150bps QoQ to 31.8%. Non‐interest
income increased by 21.7% QoQ on account of a strong 58% QoQ increase in the
treasury income coupled with a healthy 17.4% QoQ increase in the core fee
income. Pension liability for the bank towards the serving and retired employees
stood at Rs16.9bn and Rs7.1bn respectively.

USHA MARTIN: Volume delivered, but margin disappoints; Downgrade :PINC

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Volume delivered, but margin disappoints;
Downgrade to ‘HOLD’
Despite 34% YoY growth in consol. revenue to Rs8.7bn on
volume growth and better realisation, Usha Martin's (USM)
EBITDA grew at a subdued 16% YoY to Rs1.6bn as OPM
contracted by 283bps to 18.5%. Net profit declined 48% YoY to
Rs362mn on increased interest, depreciation expenses and
higher tax rate. EPS for FY11 at Rs4.5 declined 18.7% YoY.
Volume delivered: USM’s Q4 sales volume grew 29% YoY to 142kt
(incl. 12kt from Agra) on higher billet output (up 30% YoY to 137kt).
... however, margin disappoints: Despite volume growth, increased
blended realisation (up 7% YoY to Rs51/kg) and captive power &
coal benefits, USM’s standalone OPM contracted 85bps YoY to
17.7%. Sequential expansion of 184bps is also lower than our
estimates on increased RM cost (despite higher usage of captive
coal) & higher other expenses (19.3% of sales vs 16.9% in Q3FY11).
Captive resources: USM mined 108kt of captive coal (120kt in Q1,
60kt in Q3), while shipping to the plant increased to 100kt vs 25kt in
Q3. Iron ore output declined 21% YoY to 420kt.
Performance of overseas subsidiaries: EBITDA of overseas subs.
at Rs326mn declined 22% YoY, but grew 57% QoQ on higher volume
despite lower realisation. OPM expanded 730bps QoQ to 22.9%.
Leverage: USM has net debt of Rs20bn with net D/E of 1.1x.
Capex status: USM is incurring a capex of Rs12bn (financial closure
achieved) over 3yrs for further integration and value-addition.
VALUATIONS AND RECOMMENDATION
Despite integration from captive resources to value-added products,
USM’s OPM has not expanded over years and at 19% for FY11, is
lower than even a few non-integrated steelmakers in India. FY12E
volume guidance of 680kt (68% CU) also leaves a lot to desire on
the asset utilisation front and may surprise on the downside if the
one-offs continue to impact performance. We revise our FY12E to
factor in lower volume and margin & introduce FY13 estimates.
At 4.1x FY12E EV/EBITDA, there is little margin for operational
underperformance to continue. We downgrade the stock to ‘HOLD’
with a revised target price of Rs69 (4.5x FY12E EV/EBITDA)

FII DERIVATIVES STATISTICS FOR 20-May-2011

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FII DERIVATIVES STATISTICS FOR 20-May-2011
	BUY		SELL		OPEN INTEREST AT THE END OF THE DAY
	No. of contracts	Amt in Crores	No. of contracts	Amt in Crores	No. of contracts	Amt in Crores
INDEX FUTURES	106754	2921.86	104117	2855.38	790268	21629.12	66.48
INDEX OPTIONS	345490	9499.28	334401	9138.04	1777246	48749.53	361.24
STOCK FUTURES	127655	3132.12	108569	2680.19	1274580	30799.81	451.93
STOCK OPTIONS	9510	237.07	9936	248.49	26848	673.93	-11.42
						Total	868.23

 

 

-- 

FII & DII trading activity on NSE and BSE as on 20-May-2011

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FII trading activity on NSE and BSE on Capital Market Segment

The following is combined FII trading data across NSE and BSE collated on the basis of trades executed by FIIs on 20-May-2011.

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) Category Date Buy Value Sell Value Net Value FII 20-May-2011 2255.82 2437.37 -181.55

 

Domestic Institutional Investors trading activity on NSE and BSE on Capital Market Segment

The following is combined Domestic Institutional Investors trading data across NSE and BSE collated on the basis of trades executed by Banks, DFIs, Insurance, MFs and New Pension System on 20-May-2011.

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) Category Date Buy Value Sell Value Net Value DII 20-May-2011 1406.18 1007.99 398.19

 

-- 

NSE, Bulk deals, 20-May-2011

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Date	Symbol	Security Name	Client Name	Buy / Sell	Quantity Traded	Trade Price / Wght. Avg. Price	Remarks
20-May-2011	NEHAINT	Neha International Ltd	A3N HOLDINGS	SELL	1,00,000	161.50	-
20-May-2011	PARAPRINT	Paramount Printpack Ltd	CROSSEAS CAPITAL SERVICES PVT. LTD.	BUY	5,64,131	27.11	-
20-May-2011	PARAPRINT	Paramount Printpack Ltd	CROSSEAS CAPITAL SERVICES PVT. LTD.	SELL	5,64,631	27.58	-
20-May-2011	PARAPRINT	Paramount Printpack Ltd	GKN SECURITIES	BUY	2,22,603	26.68	-
20-May-2011	PARAPRINT	Paramount Printpack Ltd	GKN SECURITIES	SELL	2,24,089	27.30	-
20-May-2011	PARAPRINT	Paramount Printpack Ltd	SHETH BROTHERS	BUY	2,55,878	27.96	-
20-May-2011	PARAPRINT	Paramount Printpack Ltd	SHETH BROTHERS	SELL	2,21,988	28.15	-
20-May-2011	PARAPRINT	Paramount Printpack Ltd	TRANSGLOBAL SECURITIES LTD.	BUY	2,65,508	27.67	-
20-May-2011	PARAPRINT	Paramount Printpack Ltd	TRANSGLOBAL SECURITIES LTD.	SELL	2,64,008	27.73	-
20-May-2011	PRITHVI	Prithvi Information Solut	RAJAT GANDHI	BUY	1,52,657	37.39	-
20-May-2011	PRITHVI	Prithvi Information Solut	RAJAT GANDHI	SELL	1,62,557	37.19	-

BSE, Bulk deals, 20/5/2011

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Deal Date	Scrip Code	Company	Client Name	Deal Type *	Quantity	Price **
20/5/2011	512535	Asahi Infra	INDRAVARUN TRADE IMPEX PVT LTD	B	624795	10.26
20/5/2011	512535	Asahi Infra	INDRAVARUN TRADE IMPEX PVT LTD	S	614443	10.10
20/5/2011	512535	Asahi Infra	BASMATI SECURITIES PRIVATE LIMITED	S	282303	10.04
20/5/2011	522005	Austin Engr	SUNIL AMARNATH PURI	S	29930	69.98
20/5/2011	500446	Carol Info	CARTIER LEAFIN PVT LTD	B	250000	150.00
20/5/2011	500446	Carol Info	SATYA SECURITIES LIMITED	S	250000	150.00
20/5/2011	532542	Crew Bos	RELIANCE MUTUAL FUND	B

20-05-2011 Clients, NRI, Proprietary trading activity

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(Rs. crore)	Clients
Trade Date	Buy	Sales	Net
20-05-2011	1,920.10	1,970.61	-50.52
19-05-2011	1,657.09	1,653.74	3.36
18-05-2011	1,675.05	1,650.26	24.79
May , 11	26,379.97	26,183.25	196.71
Since 1/1/11	218,859.10	222,903.94	-4,044.84
(Rs. crore)	NRI
Trade Date	Buy	Sales	Net
20-05-2011	0.79	1.36	-0.57
19-05-2011	0.79	0.95	-0.16
18-05-2011	0.72	1.13	-0.4
May , 11	21.64	15.40	6.23
Since 1/1/11	110.20	95.68	14.51
(Rs. crore)	Proprietary
Trade Date	Buy	Sales	Net
20-05-2011	514.04	496.10	17.93
19-05-2011	488.60	507.40	-18.8
18-05-2011	539.17	529.37	9.8
May , 11	8,375.78	8,397.55	-21.77
Since 1/1/11	60,938.56	60,690.16	248.40