09 January 2012

Cadila Healthcare - Inks pact to commercialise Urokinase; event update; Hold :: Edelweiss

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Cadila Healthcare (CDH IN, INR 680, Hold)

Cadila Healthcare (Cadila) has entered into a partnership with Microbix Biosystems (Microbix) to recommercialise and market Urokinase, a thrombolytic drug, for the North American market. Under this agreement Microbix will provide manufacturing infrastructure, raw material and technical expertise, while Cadila will be the commercial partner to market the product. Cadila will make initial milestone payment to Microbix which is undisclosed. We view this deal as positive over the long term; however, due to lack of financial details, we maintain our estimates and ‘HOLD’ recommendation.

Strong market potential for Urokinase
Urokinase was approved by FDA in 1978 and was primarily used for treatment of blockage in arteries and vessels. It had been a popular therapy among physicians and was first-in-class treatment for catheter clearance up till 1998. However, the drug was later withdrawn form market in 1999 due to GMP issues at Abbott. Microbix along with Cadila plans to re-establish the franchise which has significant potential in the US. Moreover, the drug can also be utilized for oncology and ophthalmology therapy. Overall, the market potential is estimated at USD400mn by 2020.

Front-end financial funding by Cadila
As per the agreement, Cadila will provide entire funding needed to relaunch the drug including an initial commitment and milestone based payments for clinical trials to Microbix. Post launch (expected in late 2014) Microbix will receive milestone for certain sales target and will receive fixed margin and royalty on sales. Further, Cadila will receive an option on rights to all future indications including oncology and ophthalmology.

Outlook and valuations: Long-term positive; maintain ‘HOLD’
We believe this partnership is positive over the long term; however, it could lead to higher front-end costs initially. We have not factored in financial impact of the same, pending clarity. We maintain ‘HOLD’ with target price of INR800/ share.


BSE, Bulk deals, 09-Jan-2012

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Deal DateScrip CodeCompanyClient NameDeal Type *QuantityPrice **
9/1/2012532435Asia HR TechKHYATI ATULBHAI PATELB550005.74
9/1/2012532435Asia HR TechMEENAKSHI MALAYANDIS500005.75
9/1/2012509053Banas FinanceMADHAVI MUNDHRAS76200053.00
9/1/2012533270Bedmutha IndsNITIN BABAJI PALANDES12113825.52
9/1/2012533469Birla Pacific MedspaBATTLE VYAPAAR PRIVATE LIMITEDB9500006.02
9/1/2012533469Birla Pacific MedspaRUPAK TRADING PRIVATE LIMITEDS11041356.02
9/1/2012502219Borosil GlassBOROSIL GLASS WORKS LIMITED BUY BACKB21000850.00
9/1/2012531695Dhvanil ChemDHARMISTHA SHARAD SHAHS8810029.92
9/1/2012530701Gomti FinleaseKHALIL MOHAMEDALI BHARWANIB4970050.55
9/1/2012530701Gomti FinleaseTRADING LLP CHIRANIAS5000050.55
9/1/2012522259Kalindi Rail-$CROSSEAS CAPITAL SERVICES PRIVATE LIMITEDB102926108.40
9/1/2012522259Kalindi Rail-$CROSSEAS CAPITAL SERVICES PRIVATE LIMITEDS102926108.11
9/1/2012530165Kanchan IntlSLP TRADERS (SATISH VASANT GHONE )B1820061.00
9/1/2012512585Karma IndSANJAY SINGAL HUFB20000045.45
9/1/2012531401Khodiyar IndsASHOK RAMJI MAJETHIAB500005.46
9/1/2012531401Khodiyar IndsJITENDRA RAMJI MAJETHIAS499905.46
9/1/2012519560Neha IntlPAM PHARMACEUTICAL AND AL LIED MACHINERY CO PVT LT DS15317536.90
9/1/2012511734Pasupati FinAMIT KRISHNAKANT THAKKERB2500024.65
9/1/2012511734Pasupati FinHITESH JAYANTILAL SHAHS2500024.65
9/1/2012590077Ranklin Sol-$GOPALA KRISHNA BONAMB4510112.50
9/1/2012590077Ranklin Sol-$VIMLA M KOTHARIS3750012.14
9/1/2012590077Ranklin Sol-$AMBARKAR SURESHS4500012.50
9/1/2012531207Raymed LabsRAKESH KUMAR SHARMAB5500028.75
9/1/2012531207Raymed LabsSARITA MAKHIJAS3500028.75
9/1/2012531447ROCKON FINKEMFIN SERVICES PVT LTDB15000003.55
9/1/2012531447ROCKON FINNARESH RAVJI CHANDANS15250003.55
9/1/2012531886SCOPE INDSRINIVAS KARROTHIB16531311.94
9/1/2012531886SCOPE INDAMIT SURYAKANTBHAI SONIS16465111.52
9/1/2012512531STCCROSSEAS CAPITAL SERVICES PRIVATE LIMITEDB306243226.14
9/1/2012512531STCCROSSEAS CAPITAL SERVICES PRIVATE LIMITEDS306243226.27
9/1/2012531295Sunlake ResortsARCHANA VIPUL SHAHB12000032.47
9/1/2012531295Sunlake ResortsVIPUL AMRUTLAL SHAHB12000031.80
9/1/2012531295Sunlake ResortsNIRAV NIMISH THAKKARS17050031.80
9/1/2012531295Sunlake ResortsNIMISH ANILKUMAR THAKKARS4350032.07
9/1/2012590091TRINETHRA INT RAM PRASADB2000001.69
9/1/2012590091TRINETHRA INSUBRAHMANYAM B BB2500001.69
9/1/2012590111VAISHNAVIGUMMADI SESHAGIRI RAOS864008.40
9/1/2012590111VAISHNAVISUDHIR GUPTA HUFS834598.36
* B - Buy, S - Sell
** = Weighted Average Trade Price / Trade Price

NSE, Bulk deals, 09-Jan-2012

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DateSymbolSecurity NameClient NameBuy / SellQuantity TradedTrade Price /
Wght. Avg.
Price
Remarks
09-Jan-2012BEDMUTHABedmutha Indust LtdNITIN BABAJI PALANDEBUY1,36,96226.65-
09-Jan-2012BEDMUTHABedmutha Indust LtdNITIN BABAJI PALANDESELL2,06,75525.52-
09-Jan-2012EVERONNEveronn Education LimitedBP FINTRADE PRIVATE LIMITEDBUY1,35,602391.79-
09-Jan-2012EVERONNEveronn Education LimitedBP FINTRADE PRIVATE LIMITEDSELL1,30,052390.95-
09-Jan-2012HEIDELBERGHeidelbergCement (I) LtdSBI MUTUAL FUND AC A MASTERBUY18,50,00027.95-
09-Jan-2012HEIDELBERGHeidelbergCement (I) LtdSBI MUTUAL FUND AC A MASTERSELL18,50,00027.95-
09-Jan-2012ITIITI Ltd.SHREE NAMAN SECURITIES & FINANCE PVT. LTDBUY1,23,42724.64-
09-Jan-2012ITIITI Ltd.SHREE NAMAN SECURITIES & FINANCE PVT. LTDSELL1,61,18524.43-
09-Jan-2012KALINDEEKalindee Rail Nirman (EngBERKELEY SECURITIES LIMITEDBUY66,021106.76-
09-Jan-2012KALINDEEKalindee Rail Nirman (EngBERKELEY SECURITIES LIMITEDSELL66,021106.99-
09-Jan-2012KALINDEEKalindee Rail Nirman (EngCROSSEAS CAPITAL SERVICES PVT. LTD.BUY1,03,263107.89-
09-Jan-2012KALINDEEKalindee Rail Nirman (EngCROSSEAS CAPITAL SERVICES PVT. LTD.SELL1,03,263108.32-
09-Jan-2012KALINDEEKalindee Rail Nirman (EngQUADEYE SECURITIES PRIVATE LIMITEDBUY80,837107.41-
09-Jan-2012KALINDEEKalindee Rail Nirman (EngQUADEYE SECURITIES PRIVATE LIMITEDSELL80,837107.62-
09-Jan-2012 KALINDEEKalindee Rail Nirman (EngSHREE NAMAN SECURITIES & FINANCE PVT. LTDBUY1,19,726108.62-
09-Jan-2012KALINDEEKalindee Rail Nirman (EngSHREE NAMAN SECURITIES & FINANCE PVT. LTDSELL1,13,592108.78-
09-Jan-2012RANKLINRanklin Solutions LimitedGOPALA KRISHNA BONAMSELL50,00011.61-
09-Jan-2012RANKLINRanklin Solutions LimitedMADHAVI LATHA ALLURIBUY43,00011.60-
09-Jan-2012RANKLINRanklin Solutions LimitedMADHAVI LATHA ALLURISELL22,50011.62-
09-Jan-2012STCINDIAThe State Trading CorpnCROSSEAS CAPITAL SERVICES PVT. LTD.BUY3,14,752226.23-
09-Jan-2012STCINDIAThe State Trading CorpnCROSSEAS CAPITAL SERVICES PVT. LTD.SELL3,14,717226.28-
09-Jan-2012THEBYKEThe Byke Hospitality LtdSUNITA MODISELL1,00,000101.42-

9/1/12: Categories Turnover (Rs. crore) Clients NRI Proprietary Trade Data

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 Categories Turnover
(Rs. crore)
ClientsNRIProprietary
Trade DateBuySalesNetBuySalesNetBuySalesNet
9/1/121,334.261,310.5423.720.530.280.24465.14457.567.57
7/1/12309.43304.554.890.030.05-0.0256.3359.39-3.06
6/1/121,284.761,275.129.640.350.270.08484.26464.7419.52
Jan , 127,806.877,843.49-36.612.391.870.512,711.962,682.3629.59
Since 1/1/127,806.877,843.49-36.612.391.870.512,711.962,682.3629.59

9/1/12: FII & DII Turnover (BSE + NSE) (Rs. crore)

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FII & DII Turnover (BSE + NSE)
(Rs. crore)
FIIDII
Trade DateBuySalesNetBuySalesNet
9/1/121,790.951,827.41-36.46583.75554.4929.26
7/1/123.6532.28-28.631.797.88-6.09
6/1/121,852.481,842.0410.44618.95817.83-198.88
Jan , 129,546.978,919.72627.254,423.474,680.96-257.49
Since 1/1/12   *9,546.978,919.72627.254,423.474,680.96-257.49

Metals & Mining: 3QFY12 preview - Rupee to the rescue :: Kotak Securities

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Metals & Mining
India
3QFY12 preview—Rupee to the rescue. We expect qoq and yoy decline in earnings
for the Indian metal companies, except JSPL, driven primarily by decline in metal prices
(11-19% qoq decline in US$ terms) and mark-to-market losses on unhedged Fx loans.
Decline in earnings could have been higher but for sharp qoq depreciation of 8.4% of
Rupee against US$, which helped protect realization. Select metal stocks are now
trading at attractive valuations and present a good buying opportunity. Tata Steel and
Hindustan Zinc are our top picks in the sector.

Coal India: New year, new beginnings :: Kotak Securities

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Coal India (COAL)
Metals & Mining
New year, new beginnings. Coal India has transitioned to the international grosscalorific
value (GCV) based pricing mechanism—adopting a uniform pricing structure
across all subsidiaries for 17 categories of steam coal (seven previously). The revised
pricing is likely to help to improve realizations, specifically for low realization subsidiaries
such as MCL and SECL, which are expected to contribute ~52% of incremental volume
targets. Maintain ADD with a target price of Rs380.

ITC :: Gold Flake price hike sensible, attractive valuation 􀀗 HSBC Securities

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ITC
OW: Gold Flake price hike sensible, attractive valuation
􀀗 15% price increase in Gold Flake Kings sets the direction of
potential price increases in the near term
􀀗 Selective price hikes are sensible and we see no significant
impact on volumes; we estimate FY11-15 EPS CAGR of 16%
􀀗 Valuation is attractive at 22x FY13e PE. Reiterate OW with TP
of INR242

Elder Pharmaceuticals Buy Target Price: Rs462 ::Centrum

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Elder Pharmaceuticals
Buy
Target Price: Rs462
CMP: Rs346
Upside: 34%

Niche brands to drive growth
We expect EPL to report 24%CAGR in net sales and 28% CAGR in net profit over the next three years. With its presence in high growth niche therapeutic segments and excellent brand recall, the company is likely to derive higher than market growth. EPL has plans to add over 1,000 MRs in the domestic market in the next two years to cover additional geographies and doctors.  It has plans to enter into CVS and anti-diabetic segments. EPL has established a manufacturing facility in Bulgaria to cater to European, CIS and Russian markets. We initiate coverage on the company with a Buy rating and Target price of Rs462 with 34% upside from the current level.
m  Strong brands: EPL markets some of the well-known brands in the domestic market, Shelcal, Chymoral, Eldervit, Formic-O, Somazina etc. These brands are market leaders in their respective segments and are likely to drive future growth.
m  Margins to improve from FY13 onwards: The company’s EBIDTA margin is expected to decline in FY12 due to the integration of low margin business of its subsidiaries Neutra Health, UK and Biomeda, Bulgaria. We expect the margin to improve from FY13 onwards following the breakeven of these subsidiaries.
m  New products to drive growth: We expect EPL to benefit from new product introductions in the domestic market. The company has a pipeline of 36 new products across various therapeutic segments. These are likely to drive future growth.
m  In-licensing deals: EPL has over 25 in-licensing deals and derives 6% of its revenues from in-licensing product sales. The company’s patent non-infringing strategy makes it the most preferred partner with MNC pharma companies.
m  Strong financials: We expect EPL to report 24% CAGR in revenues, 23% CAGR in EBIDTA and 28% CAGR in net profit over next three years.
m  Valuation: At the CMP of Rs346, the stock trades at 8.4x FY12E EPS of Rs41.1and 6.7x FY13E EPS of Rs51.3. We initiate coverage on the company with a Buy rating for the scrip with a target price of Rs462 based on 9x FY13 EPS with an upside of 34% over CMP.


Buy Cheviot Company :: “Value Play on Jute ”:: LKP

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Investment Rationale
 Cheviot has been around for a number of years now and contrary to market apprehensions about the Jute business, the Kolkata based company has in fact shown a credible performance over the years.
 Cheviot in our view can easily maintain a 50:50 sales mix between domestic and export business and has the flexibility to shift products between the two depending on the demand situation.
 Our belief that the government shall not implement any measures to jeopardise the labour intensive jute industry in Eastern India stands vindicated by the fact that market fears on Jute being a dying product seem unfounded since Jute continues to be an eco friendly product compared to plastic or polyethylene having demand for specific applications.
 This debt free company with a book value of `600 is valued at cash and we believe that given the fact that there is no major capital expenditure needed going forward we expect a minimum 25% dividend payout going forward and this would imply a dividend yield of 6%. Cheviot in our view deserves to trade at 0.75 times book and we recommend a BUY with a one year price target of `450.
 FY"11 was exceptionally good for Cheviot and the company posted an EPS of `63 and even enjoyed pricing power with good demand locally for sacking products as well as robust export demand. While this is not sustainable during the current fiscal, we believe that with the market valuing Cheviot at cash, there is ample upside potential once the management spells out a dividend policy for returning surplus cash to its stakeholders.
Valuation
Cheviot which operates in a highly labour intensive industry like Jute has been able to hold its fort well over the last many years and the stock trading at 0.4x book has cash and cash equivalent of over Rs1bn which is `220 per share even at current market levels. Further, the company has successfully introduced value-added jute products in its portfolio which enabled them to compete in a very competitive market scenario.
The debt free Cheviot trading at 4x earnings and 0.4x book is valued at cash and we recommend a BUY with a one year price target of `450.

Accumulate VOLTAS :: TARGET PRICE: RS.91 ::Kotak Sec

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VOLTAS LTD
PRICE: RS.79 RECOMMENDATION: ACCUMULATE
TARGET PRICE: RS.91 FY13E P/E: 11.1X
q Voltas' Central Airconditioning projects business would continue to witness
diminished margins in the near future due to higher cost involved
in expediting the execution of Sidra Medical project in Qatar.
q The central Air conditioning projects industry (MEP) continues to witness
difficult market conditions due to dull commercial real estate activity
both in india and abroad. Material cost pressure have also remained at
elevated levels.
q We maintain ACCUMULATE with a revised target price of Rs.91 based on
DCF.
Key highlights
Electromechanical Projects Segment (59% of revenues)
n The order intake (Central Airconditioning projects) in the domestic market has
been healthy and the current order book also provides a revenue visibility of 14
months. However, the company indicated that since the past two months, enquiries
for orders have shrunk appreciably. This may signal that order intake from
indian geography could potentially slacken in the coming months.
n Given the slack enquiry levels combined with the general oversupply in commercial
real estate, outlook for domestic orders is likely to remain subdued for
atleast the next six months.
n The company's project business in the Middle East continues to witness diminished
profitability due to the Sidra Medical and Reseach Center. This is a large
project for a 700 bed hospital and research center from the government of
Qatar.
n Voltas won this project in early 2010, however, the project activity remained
sluggish in the initial months. Subsequently, Voltas was asked to expedite this
project for which it had to employ additional resources in terms of manpower
and materials. That it had exhausted its quota for indian labour also worked
against the company as it had to recruit local labour to complete the project.
This imposed additional cost burden on the company.
n The company also indicated that this was a design and build job and it had to
make frequent modifications to its designs (the mgmt. indicated that a project of
such magnitude has several drawings/designs running into thousands), which also
added to the cost incurred.
n So far as the execution of this order is concerned, the initial order value stood at
Rs 9000 mn (dynamic figure depending on costs fluctuation). Out of which, the
company has executed 40% of the work even as the balance job is planned to
be executed over the next three quarters.
n The management expects that continuing mismatch between costs incurred vs
anticipated would weigh upon the profitability of this segment in the coming
quarters.