Strategy - At the limits of realism: Edelweiss, PDF Link

Global Economy: Synchronised downturn

·       US, Europe, China & Asia are facing an economic downturn, with Europe being the worst  hit. However, latest steps initiated in the EU Summit  have reduced the financial risks in the near term.

·       It is a mixed blessing for India: Growth & INR to be adversely impacted, but fall in commodities & oil a big positive

Yes Bank Ltd.: Performance across the segments to continue going forward: BP Equities

Company Background
Yes Bank is the one of the youngest new generation private sector banks with an assets size of more
than ~Rs 70 bn. At present, the bank caters to its client base with a branch network of 356 and more
than 600 ATM across the country. The bank has a very ambitious plan with a strategic roadmap to
achieve the balance sheet size of Rs 1,500 bn with a pan India branch network of 900 and employee
base of 12,750 by 2015.

Hindalco Industries: The Devil Is In The Details, We retain Sell : Nirmal Bang

The Devil Is In The Details, We retain Sell Hindalco’s FY12 consolidated EBITDA was 4.6% above our expectation at Rs81,894mn, while PAT was 23.8% above our estimate largely due to lower tax rate and higher EBITDA. PBT was 12% higher than our estimate, while the effective tax rate for the year stood at 18.1% as compared to our estimate of 20.8% and last year’s tax rate of 25.1%. Besides this, there was a substantial increase in the leverage, with consolidated net debt/equity jumping from 0.73x to 1.02x due to increased capex as well as rupee transactions of foreign subsidiaries in a falling currency environment. A detailed analysis reveals that FY12 PAT and EBITDA has been overstated by Rs12,775mn and Rs15,512mn with the company routing certain expenses through reserves and surplus and booking some prior period income during the year. We continue to retain our Sell rating with a target price of Rs107 on Hindalco

Torrent Pharma: Staging for a Comeback: Karvy

Staging for a Comeback
With the company addressing key concerns on the domestic formulations
front and better traction in US and Brazil, the company is all set to
achieve 18.9 % CAGR revenue growth for the period FY 12‐14E and an
earnings CAGR of 39 %, we upgrade our rating on the stock to BUY.
Domestic Formulations – Back on Track: The primary reason for the
underperformance can be attributed due to cluttering of brands in the antiinfective
and the pain management segment which led to inadequate
promotion of brands and hence the Company lost ground in these
segments. The company has recruited 200 additional MRs so as to impart
more focus. With the measures in place we believe the company would be
able to achieve the 12% and 14% growth factored by us for FY13E and
FY14E, respectively

Dishman Pharma & Chemicals:Treading Cautiously :Karvy

Treading Cautiously
Dishman Pharmaceuticals & Chemicals (Dishman Pharma) is quite upbeat
for FY13E with several of the Company’s business engines gradually
falling in place. The commencement of Vitamin D3, Disinfectants and
Oncology unit would add to the additional revenues streams. Renewed
traction in Dishman Pharma would also aid the profitability. We upgrade
our EPS estimates and reiterate our “BUY” recommendation on the stock.

Cadila Healthcare: Momentum to improve :Karvy

Momentum to improve
Cadila Healthcare (Cadila) is awaiting clean chit from the US FDA for its
Moraiya facility, which will trigger new launches in the US market, while
the full impact of its acquisitions (Biochem & Nesher) will be reflected in
the current year. We believe multiple revenue streams, contract
manufacturing and diversified geographical reach will aid in sustaining its
revenues going forward. We downgrade our earnings (on account of lower
traction in Nesher) and price target and maintain our “BUY” rating on the
stock.

Pharmaceuticals: Ahmedabad Visit Note: Karvy

Ahmedabad Visit Note
In our recent trip to Ahmedabad, we visited three pharmaceutical
companies under our coverage i.e. Cadila Healthcare (Cadila), Torrent
Pharmaceuticals (Torrent Pharma) & Dishman Pharmaceuticals &
Chemicals (Dishman Pharma).
Previous vs. Current Recommendation
Earlier we recommended “BUY” on Cadila & Dishman, and “HOLD” on
Torrent. However, as we believe that most of the positives are captured amid
the price performance of Cadila, we change our rating to a “HOLD” with
marginally reduced target price. Meanwhile, we upgrade Torrent Pharma to a
“BUY” as the stock is quoting at reasonable valuations on FY14E basis, while
we maintain our “BUY” recommendation on Dishman Pharma on the back of
better revenue visibility.

Dena Bank – BUY ‘Inexpensive valuation’: IIFL

Well-diversified loan book; Mid-corporate & MSME to drive growth
Dena Bank has a well-diversified loan book spread across multiple
segments like Corporate & SME (40% of total advances), MSME (15%),
Agriculture (15%) and Retail (12%). Loan book witnessed a robust
growth over FY09-12, reporting a CAGR of ~25%, with Corporate and
MSME lending being prime focus areas. Despite strong growth, the bank
has not compromised over asset quality as reflected in the Gross NPA
ratio. Management has targeted a credit growth of ~22% in FY13.
According to the trend in past two years, Dena Bank has posted strong
growth in H2 compared to H1. We build in a 22.5% CAGR in loan book
over FY12-14E, backed by an impending improvement in macroeconomic
conditions and better liquidity situation.

Axis Bank : TP: INR1,250 Buy :: Motilal Oswal

Share of retail business to rise; balance sheet to diversify
Asset quality manageable - credit cost guidance of 85bp
We recently met the management of Axis Bank (AXSB) for its perspective on growth,
profitability and asset quality. Key takeaways:
 AXSB will continue to focus on retail assets as a key growth driver, by leveraging its
retail liability customer base. It targets to increase the proportion of retail loan portfolio
to 30% of overall loans by FY15/16 (22% in FY12) led by auto and CV loans.
 In the near term, asset quality trends on a gross level are likely to be similar to that of
2HFY12. AXSB has guided for FY13 credit cost of 85bp.
 Loan growth is expected to be marginally higher than industry and will be calibrated
to CASA growth.
 We believe AXSB's strong liability franchise and fee income growth should help it
maintain healthy return ratios. Buy for 25% upside.