DON'T WORRY: YOU can still file your income tax returns! :Rediff

Surprised? Don't be for you still have time till March 31, 2014 to file your income tax return for the financial year 2012-13.

Sunidhi Gupta has still not got her Form 16.

Form 16, for the uninitiated, is a piece of paper that lists your income earned under heads like basic salary, conveyance, special allowance etc in a financial year (which starts April 1 of every year and ends on March 31 of the succeeding year), taxes deducted directly by your company after every three months and paid to the IT department, investments made by you under Section 80C to claim tax deductions up to Rs 1 lakh and either a listing of tax amount you still need to pay to the IT department or refund from the them to you in case you have paid more tax than was due to you.

Scared? Then count Sunidhi as one of you because since she hasn't got her Form 16 yet she hasn't filed her tax return and the last day for filing tax returns, July 31, 2013, has all but passed almost 12 days ago. All right, the government did extend the last date of filing returns to August 5, 2013 but then Sunidhi still couldn't make it.

Are you sailing in Sunidhi's boat too?

For whatever reasons, you too, have not yet filed your tax returns for the financial year 2012-13 which ended on March 31, 2013?

Scared? Don't be, for there is still hope, guys. Here is what you must know.

Mahindra & Mahindra - Change of intersegmental fortunes!!! :LKP

Inline set of numbers

M&M’s Q1 FY14 revenues came in at Rs 99bn, a growth of 7.1% yoy, and a dip of 4.3% qoq on the back of weak UV volumes. Volumes in the quarter remained flat yoy while declining by 6% qoq. Auto volumes have declined by 2.4% yoy and 17.4% yoy in the quarter, while FES volumes have shown a remarkable turnaround by posting growth of 25% yoy and 50% qoq. M&M’s realizations grew by 6% yoy and 1% qoq, on product mix tilting in favor of tractors. The growth in realizations was also in line with the price hikes of 0.5% taken this quarter in both the segments. On profitability front, EBITDA margins went up to 12.8% from 12.1% qoq and 11.8% yoy as the high margin tractors accounted for a good chunk of the volumes this quarter. RM to sales fell to 72.9% from 74.8% qoq and 75.1% yoy.  Other expenses however have grown this quarter to 9.2% from 8.8% qoq as the company focused on marketing expenses on the SUV as well as the tractors side. Depreciation expenses fell by 10% yoy and grew by 2% qoq at Rs1.8 bn. Tax rate came at 23%, while interest costs grew by 7% yoy. Other income came in above our expectations at Rs1.64 bn as dividend from its subsidiaries increased significantly both on qoq as well as yoy basis. PAT increased 29% yoy to Rs9.4 bn, a growth of 29% yoy and 17% qoq mainly on the back of higher other income and better FES business performance. The company also announced its merger with Mahindra Trucks and Buses Ltd (MTBL) which will be completing in FY 15. This business has accumulated losses of Rs8.4 bn and would impact the company’s business in the short to medium term.

Outlook and Valuation

On the SUV side, in the absence of any new model from M&M’s stable in the coming two years, competitors like Renault, Maruti and Ford will be able to steal M&M’s market share in an environment which is getting difficult for UV industry tarnished by higher diesel prices and higher excise duties.  On one hand where SUVs are struggling, there has been an interchange of fortunes which we can relate with the FES segment which is growing leaps and bounds. With good monsoon, higher MSPs and overall strength in the agri sector, FES segment is on a very strong footing. We therefore have increased the FES segment volume estimates, while reduced those of the UV and LCV segments. We also believe the merger of MTBL to have a negative impact on profitability in short to medium term.  Softening of RM costs and stable ad spend will result in better margins though.  In line with this, we have pruned down our FY14E/15E earnings estimates from Rs60/74 to Rs 54/62 and a standalone business value at Rs799 and subsidiaries value of 235 from its various subsidiaries. We maintain our BUY rating on the stock with a reduced target price of Rs 1034 and an upside of 18% from current levels.

LKP Research

India Macro View Revising Our GDP Estimate to 5.4%YoY; External Imbalances Take a Toll :: Citi Research

India Macro View
 Revising Our GDP Estimate to 5.4%YoY; External Imbalances
Take a Toll
 We Revise Our FY14 GDP Estimate Down to 5.4%YoY from 5.7% — For as long as
monetary policy is geared towards managing external risks while putting domestic
growth inflation dynamics on the sidelines, the economic recovery is likely to remain
tentative at best. Since risks on the external front are far from over – the RBI macro
review report aptly sums it up as “overall situation remains in flux”- we reassess our
growth estimate in light of following developments:
– Focus of Monetary Policy Has Shifted towards Managing External Risks- A
sharp and swift depreciation in INR on fears of Fed tapering led to RBI hiking MSF
rates by 200bps on 15 July. Subsequently, in its quarterly policy, RBI adjusted the
stance of monetary policy to assign highest priority to management of external risks.
This shift in policy stance (see RBI Policy), albeit time-bound, imposes additional
costs for the real economy through tightening of the credit channel.
– Investment Demand Remains Lackluster – Several factors, such as structural
bottlenecks in the core sector, slowing consumption, weak export demand, and
policy uncertainty have kept investment demand in the slow lane. The sluggish
investment activity can be seen in recent project data with new project
announcements down by 18%QoQ in 1QFY14 (see Report). While the government
continues to take steps to address supply-side concerns, a revival in investments
rests on effective implementation, which is a challenge in the run-up to the general
elections.
 However, Some Bright Spots Have Also Emerged —
– Southwest Monsoon and Improved Agricultural Outlook – The monsoon season
has been progressing extremely well this year with rainfall higher by 16%YoY and a
corresponding increase in sowing areas by 18%YoY for the kharif season so far.
With kharif crops contributing close to half of total grain production, we have
upgraded our estimate of agriculture output. Robust agriculture production is also
expected to support a pick-up in rural consumption demand.
– Core Inflation has Moderated; Could Provide Space for Monetary Easing – The
headline WPI has averaged at 4.8% in 1QFY14 vs 7.4% last year. Core WPI
inflation is down to a 42 month low of 2.1%. Improved kharif outlook and a lower
hike in minimum support prices augurs well on price front going forward. Slowing
inflation is likely to provide necessary space for the monetary policy to stimulate the
economy once normalcy returns on the external front.
 On balance, we estimate GDP at factor cost to grow at 5.4% - Agriculture growth is
now estimated at 4.8%, industry at 2.3% and the services sector at 7%

The cash flow conundrum for India Inc :: Ambit

The cash flow conundrum for India Inc
Management decisions, more than external factors, drive RoCE (which,
in turn, appears to be the primary fundamental driver of share prices).
Our analysis shows that returning cash to shareholders is the most
powerful driver of RoCE. Unfortunately, we also find that Indian
corporates are amongst the most reluctant in the world to return cash.
In this note, we highlight 30 BSE200 firms that have consistently
delivered high RoCEs over the last ten years. We reiterate our BUY
stance on HCL Tech, Bajaj Auto, Sun Pharma, Asian Paints and
Cummins India. Also, CRISIL, Nestle, Lupin, Ipca Labs and GSK
Consumer find a place in this year’s iteration of our ten-baggers note.
Firms respond differently to the same external environment
We often find that within the same sector, some firms rise and others fall even
though they are subject to the same economic and regulatory forces. This is
exemplified by TVS’s fall as compared to Bajaj Auto’s rise or HCL Tech’s rise vs
Infosys’ fall. Moreover, we find that the dispersion in firm-level performance
over time is lower than the dispersion in performance across firms at a point
in time (see page 4). This suggests that business cycles or other externalities in
themselves do not produce as much variation in corporate performance as
company-level decisions for a universe of firms.
RoCE measures firm-level performance the best
Whilst management teams have a natural desire for growth and scale, growth
creates shareholder value only until the returns on capital exceed the cost of
capital. RoCE, therefore, is of utmost importance in assessing a firm’s
performance. Empirically, share price performance also supports the primacy
of RoCE as a share price driver (Exhibit A).
Capital allocation is the key to superior RoCEs
Each of the following capital allocation choices impact RoCE (Exhibit B):
 Business expansion (organic - capex; inorganic - acquisitions),
 Returning cash to stakeholders (dividends, share buybacks and debt
repayments), and
 Doing nothing (letting cash build up on the balance sheet).
Whilst, on one hand, unbridled expansion hurts RoCE, hoarding cash
compresses RoCE (Exhibit C). We find that returning cash to shareholders is
often the best way to improve RoCE. Unfortunately, we also find that Indian
firms are amongst the most reluctant in the world to return cash to
shareholders.
Investment implications: Focus on the kings of capital allocation
Sustaining superior RoCEs over long periods is not easy, but we highlight 30
BSE200 firms that have consistently delivered high RoCEs over the last ten
years. Of these, we have bottom-up BUYs on HCL Tech, Bajaj Auto, Sun
Pharma, Asian Paints and Cummins India whilst CRISIL, Nestle, Lupin,
Ipca Labs and GSK Consumer find a place in this year’s iteration of our tenbaggers note.

Bajaj Auto Strong quarter, but challenging outlook Standard Chartered Research,

Bajaj Auto
Strong quarter, but challenging outlook
 Bajaj Auto‟s (BAL) 1QFY14 earnings at INR 8.1bn were
ahead of our estimates, led by better-than-expected
margins.
 Operating performance was aided by favourable currency
movement in 1QFY14.
 Favourable currency hedges are likely to further improve
margins in subsequent quarters, in our view.
 However, the volume outlook continues to remain
uncertain in both domestic and export markets.
 The stock appears fairly priced at current valuations. We
maintain our In-Line rating with a revised price target of
INR 1,952 (versus INR 1,910 earlier).

Goldman Sachs, Federal Bank (FED.BO)err group Below expectations on higher provisions and lower top line

Federal Bank (FED.BO)
Buy Equity Research
Below expectations on higher provisions and lower top line
What surprised us
FED reported 1QFY14 PAT of Rs1.1bn, -44% yoy and 56%/50% below
Gse/Bloomberg on higher loan loss provisioning and lower top line,
although asset quality showed an improvement. Key highlights: 1) Asset
quality improved as GNPLs declined 5% qoq on fresh slippages that
moderated to 3.2% from 3.8% in 4QFY13. Even the fresh stress loan
formation (fresh slippages + fresh restructuring – slippages from
restructuring) was much lower at 2.5%; 2) Credit costs came in much
higher at 2.3% vs GSe 0.6%, as the bank chose to fully provide against one
large account, NAFED, an Indian govt. entity; 3) Coverage ratio improved
c.200bps to 83%, though the bank aggressively wrote off NPLs during the
quarter; 4) NIM expansion of 6bps qoq was limited as credit-deposit (CD)
ratio dropped to 72.4%, 414bps lower sequentially; 5) The drop in CD ratio
was triggered by strong growth in NRE deposits (13% qoq vs -1% qoq for
total deposits) and moderation in loan growth across all segments as the
bank turned cautious due to a challenging macro environment; 6) Savings
deposits grew 8% qoq, primarily led by higher growth in NRE savings
deposits (+14% qoq). The SA ratio moved up to 24.2%, +210bps vs
4QFY13; 7) Growth in mortgage continued (+5% yoy and 2% qoq), though
the volatility in gold loan prices has led to a sequential contraction in the
bank’s gold loan book.
What to do with the stock
We lower our FY14-16E EPS by 3-13% to factor in higher provisions and
lower NII. Consequently, we lower our 12-m RIM-based TP to Rs510 (from
Rs530), but maintain Buy. Key risks: Higher slippages, lower loan growth,
and missteps in execution of strategy.

ACC benefits, Ambuja loses out, Holcim is the clear winner :Credit Suisse

● Holcim has announced restructuring of its ownership structure in
ACC and Ambuja, and in our view, Holcim, is the clear winner.
ACC minority shareholders benefit at the margin, while the
reorganisation is negative for Ambuja’s minority shareholders.
● Holcim pockets US$600 mn cash in the transaction which helps it
reduce leverage and maintain its investment grade rating. Holcim
also benefits from merger synergies (management forecast of
US$150 mn vs. CS's forecast of US$75 mn annually).
● Ambuja’s minorities are impacted by: (1) Holcim restricting use of
Ambuja’s existing cash to buy ACC; (2) committing future cash
flows to buy 10% of ACC over two years; and (3) the market may
apply a holding company discount to ACC’s stake which more
than offsets merger synergies.
● ACC minorities benefit from: (1) merger synergies; (2) a creeping
acquisition by Ambuja for a 10% stake in ACC could support ACC
prices; and (3) Holcim’s direct stake of 50% in ACC reduced to an
indirect stake of 30% . However, given high leverage at Holcim,
the overhang on existing cash of ACC will remain (US$600 mn
plus).

PERSISTENT SYSTEMS :: BNP Paribas

Positive catalysts lined up

RESULTS REVIEW
In-line 1Q operationally, EPS beat on higher other income
Persistent’s 4Q USD revenue (1.5% q-q) and INR EBITDA were in line with
our view, but the latter missed Street forecasts. EBITDA margin fell 310bp
q-q on onsite wage hikes, visa costs, conservative provision of doubtful
debts (+1.2 ppt q-q) and HPCA-related expenses, which came in ahead of
revenue from the deal. EPS beat our estimate by 29% on other income.
SUMMARY
IP revenue should recover from 2Q from HPCA contribution
IP contribution was down 12.7% q-q (+24.1% y-y) as revenue from the
recently acquired HPCA product was pushed into 2Q on renewal
paperwork delays. IP revenue has stabilized in the USD9m-11m range
over the past four quarters, but PES and platforms grew a healthy 4.5% qq (1.5% from pricing), signalling a recovery in the traditional business.
VALUATION
High-margin growth drivers for rest of FY14; attractive valuations
Despite its lumpiness, we believe IP is the key driver for Persistent. The
HPCA licenses, TNPM deal, and Doyenz (SMB platform) and Novaquest
(PLM) acquisitions continue a strategy of capability building. We expect IP
revenue to increase from the current 15% of sales to over 25% by FY16.
We see growth drivers for the rest of FY14 in HPCA renewals and client
investments in cloud, analytics, mobility and collaboration (c.50% of
revenue). Other positives include a revival in the services business,
continued sales hires (+20 in 1Q) and falling attrition (14.2% vs 18.9% yy). We believe the current valuations of 5x FY14E EV/EBITDA and 10x P/E
are attractive given Persistent’s unique growth drivers.

Goldman Sachs, ACC (ACC.BO) err group 2QCY13 earnings in line; overshadowed by group restructuring

ACC (ACC.BO)
Neutral Equity Research
2QCY13 earnings in line; overshadowed by group restructuring
What surprised us
ACC reported 2QCY13 pre-exceptionals PAT of Rs2.62bn (-6% qoq, -37%
yoy), largely in line with GSe of Rs2.65bn. Key takeaways: 1) EBITDA at
Rs4.34bn (-5% qoq,-33% yoy) was largely in line with GSe of Rs4.27bn; 2)
net sales declined 4% qoq/yoy to Rs27.95bn (GSe Rs27.79bn; 3) cement
volumes increased 1%yoy to 6.12mt (-5% qoq) while cement ASP
increased 1% qoq to Rs4,298/t (-4% yoy). 4) Cement EBITDA/T remained
flat qoq at Rs703/t (-34% yoy); 4) overall EBITDA margin remained flat qoq
at 16%; 5) cement EBITDA declined 5% qoq to Rs4.3bn (-33%yoy) while
RMC EBITDA declined 20% qoq to Rs40mn (-33% yoy).
We believe the group restructuring announced yesterday is likely to
overshadow the 2QCY13 results.
What to do with the stock
We remain Neutral on ACC with a 12-month Director's Cut-based target
price of Rs1,250. Holcim plans to sell its 50.03% stake in ACC to Ambuja at
approx. US112/t – see ‘Ambuja to acquire 50% stake in ACC from Holcim’
dated July 25, 2013. We see limited upside for ACC as it is trading at 9.2X
FY14E EV/EBITDA (at higher end of historical range). We reiterate our
cautious view on large cap cement stocks due to expensive valuations.
ACC’s capacity expansion of 5mt is back-ended and scheduled to come onstream only by CY15. We believe cement demand and prices are likely to
remain weak in the near term, which could be an overhang on cement
stocks. Key risks – Upside: Cement demand and prices rising significantly;
Downside: Margins declining due to continued weak cement demand.
ACC’s 2QCY13 earnings were largely in line with our estimates

FDA recommends Wockhardt to hire data integrity consultant :: Credit Suisse,

● Wockhardt’s warning letter details are now disclosed. Overall, the
FDA has cited six observations and even suggested Wockhardt
hire a third-party auditor with experience in detecting data integrity
problems. It is unusual for the FDA to suggest hiring a CGMP
expert and data integrity consultant in a warning letter.
● The FDA has cited several instances where the investigators were
not given complete information or late information. The FDA has
questioned Wockhardt’s practice of performing undocumented
trial runs and noted instances where content of unofficial batch
records and official batch records did not match.
● The investigators found that some of the instruments had the audit
trail functions disabled and noted that “The lack of reliability and
accuracy of data generated by your firm’s laboratory is a serious
CGMP deficiency that raises concerns with all data generated by
your firm”…“These findings include repeat citations from the
January 2012 inspection…”.
● Wockhardt has earlier mentioned that import alert on Waluj facility
impacts sales by $100 mn and half of the pending applications.
Inspection of second US facility is scheduled in July-13 or Aug-13.
FDA released Wockhardt’s warning letter details
We provide key takeaways from FDA’s warning letter on Wockhardt’s
Waluj facility. Overall, the FDA has cited six observations and even
suggested Wockhardt hire a third-party auditor with experience in
detecting data integrity problems. It is unusual for the FDA to suggest
the hiring of a CGMP expert and data integrity consultant.
The FDA has mentioned that the data integrity consultant should
“Identify any historical period(s) during which inaccurate data occurred
at your facilities”….”Use organisational charts and SOPs to identify
the specific managers in place when the inaccurate data reporting
was occurring and determine the extent of top and middle
management involvement in or awareness of data manipulation”.
Observation #1: “Wockhardt repeatedly delayed, denied, limited
an inspection or refused to permit the FDA inspection”
The FDA has cited several instances in the warning letter where the
FDA investigator was not given complete information or the
information provided was late which impacted the inspection. In one of
the instances FDA mentions that “The Production Head
acknowledged that he had provided inaccurate information in the
previous instances”.
Observation #2: “Wockhardt failed to prepare batch production
and control records for each batch of drug product that include
documentation of the accomplishment of each significant step in
the manufacture, processing, packing, or holding of the batch”
The FDA investigators found unofficial batch records torn in half in a
waste area. These records contained data indicating that some
batches failed to meet the in-process visual inspection specifications
while the official batch records for these batches state that these
batches had met the specifications. The FDA further states that
“Wockhardt’s affidavit confirms that your firm uses unofficial visual
inspection to remove the defective units from the production line
without appropriate documentation and investigation”. “This raises
serious concerns regarding the integrity, reliability and accuracy of the
data generated and available at your facility”.
Observation #3: “Wockhardt failed to ensure that laboratory
records included complete data derived from all tests necessary
to assure compliance with established specifications and
standards”
The FDA investigators identified the practice of performing trial
sample analysis prior to collecting the official analytical data. These
trial runs were not recorded in the equipment use log, and sample
preparation data associated with these analyses was destroyed,
preventing any calculation or analysis of the resulting data. The FDA
has questioned this practice “…unacceptable practice of performing
undocumented “trial” runs at your facility…”.
Observation #4: “Wockhardt failed to record and justify any
deviations from required laboratory control mechanisms”
FDA investigators found that some of the instruments had the audit
trail functions disabled and noted that “there is no assurance that the
data generated using these instruments is accurate”. The FDA further
noted that “The lack of reliability and accuracy of data generated by
your firm’s laboratory is a serious CGMP deficiency that raises
concerns with all data generated by your firm….These findings include
repeat citations from the January 2012 inspection and indicate that
your quality control unit is not exercising its responsibilities and may
not have the appropriate authority or ability to carry out its
responsibilities…”
Observation #5: “Wockhardt failed to ensure that each person
engaged in the manufacture, processing, packing, or holding of a
drug product has the education, training, and/or experience, to
enable that person to perform the assigned functions”
The FDA authorities found a few incomplete training questionnaire
records where the trainee and trainer names were left blank on the
questionnaires, but were pre-filled with the answers.
Observation #6: “Wockhardt failed to provide adequate washing
and toilet facilities to working areas”
“..We are concerned that your firm has been cited for inadequate
cleaning and sanitary conditions during previous inspections, and that
your responses to these citations promised corrective actions;
however, our inspections continue to reveal problems in this area of
CGMP”.