09 March 2014

Subscription Figures - Ongoing Debt Public Issues


IIFCL Tax Free Bonds- Tranche III
Issue Dates: 17-02-2014 to 14-03-2014
Category
Base Issue Size (Rs. In Crores)
Issue Size With Green Shoe Option (Rs. In Crores)
Collection Amount (Rs. in Crs) Approx
Collection
(in %)
Unsubscribed Amount (Rs. in Crs)
Unsubscribed
(in %)
Category I-QIB
112.50
423.57
36.00
8.50
387.57
91.50
Category II-Corporate
150.00
564.76
156.54
27.72
408.22
72.28
Category III-Individual -HNIs (> Rs10 lakh)
187.50
705.95
263.32
37.30
442.63
62.70
 Category IV-Individual -Retail (<= Rs10 lakh)
300.00
1129.52
429.26
38.00
700.26
62.00
Total
750.00
2823.79
885.12
31.35
1938.67
68.65
EPL Tax Free Bonds
Issue Dates: 18-02-2014 to 14-03-2014
Category
Base Issue Size (Rs. In Crores)
Issue Size With Green Shoe Option (Rs. In Crores)
Collection Amount (Rs. in Crs) Approx
Collection
(in %)
Unsubscribed Amount (Rs. in Crs)
Unsubscribed
(in %)
Category I-QIB
25.00
50.00
50.00
100.00
0.00
0.00
Category II-Corporate
50.00
100.00
14.44
14.44
85.56
85.56
Category III-Individual -HNIs (> Rs10 lakh)
75.00
150.00
65.01
43.34
84.99
56.66
 Category IV-Individual -Retail (<= Rs10 lakh)
100.00
200.00
219.86
109.93
(19.86)*
(9.93)*
Total
250.00
500.00
349.31
69.86
150.69
30.14
HUDCO Tax Free Bond- Tranche III
Issue Dates: 28-02-2014 to 19-03-2014
Category
Base Issue Size (Rs. In Crores)
Issue Size With Green Shoe Option (Rs. In Crores)
Collection Amount (Rs. in Crs) Approx
Collection
(in %)
Unsubscribed Amount (Rs. in Crs)
Unsubscribed
(in %)
Category I-QIB
7.50
28.58
0.00
0.00
28.58
100.00
Category II-Corporate
7.50
28.58
7.18
25.12
21.40
74.88
Category III-Individual -HNIs (> Rs10 lakh)
15.00
57.16
16.29
28.50
40.87
71.50
 Category IV-Individual -Retail (<= Rs10 lakh)
45.00
171.48
157.77
92.00
13.71
8.00
Total
75.00
285.80
181.24
63.41
104.56
36.59
*These categories of their respective issue is oversubscribed.

Subscription Figures of NHB Tax Free Bond Tranche II Issue as at 5 pm on 7th March 2014

D
ear All,
Subscription Figures of NHB Tax Free Bond Tranche II  Issue as at 5 pm on 7th March 2014

NHB Tax Free Bond - Subscription Figures with Green Shoe Option
Sr. No
Category
Issue Size
(Rs. In Crs)
No of times subscribed
Total Amt Bided
(Rs. In Crs)
Unsubscribed Amt
(Rs. In Crs)
1
Category I (QIB)
      100.00
1.95
            195.00
                 (95.00)
2
Category II (NII)
      250.00
1.57
             391.59
               (141.59)
3
Category III (HNI)
      250.00
0.94
             235.07
                  14.93
4
Category IV (RII)
      400.00
1.08
             430.34
                 (30.34)

Total
   1,000.00
1.25
          1,252.00
               (252.00)


Updated as on 7th March 14 at 5 pm



Raghuram Rajan on how monetary policy is not irrelevant in curbing food inflation:: J.P. Morgan - India Strategy

Raghuram Rajan on how monetary policy is not irrelevant in curbing food inflation

Dr Raghuram Rajan, Governor, Reserve Bank of India, delivered the inaugural speech at the FIMMDA-PDAI Annual Conference last week. There were some very interesting statements and insights he presented in the speech, which we believe have relevance for monetary policy expectations.
Key highlights:
· ‘We intend to bring CPI Inflation to 8% by January 2015 and to 6% by January 2016’. Note that CPI is currently at 8.8%, and our economists expect two more rate hikes of 25 bps each in the second half.
· ‘Even if we [the RBI] cut rates, we don’t believe banks which are paying high deposit rates will cut their lending rates. The reason is that the depositor, given her high inflationary expectations, will not settle for less than the rates banks are paying her’.
· An important pointer on the need to manage inflation expectations is also to keep the savings cycle going (else how will the required pick-up in the investment cycle be funded).
· The RBI Governor argues very persuasively on the role monetary policy has to play in curbing even food inflation, with some very interesting data and charts.
· The key herein is the influence of wage growth on food prices as also the impact of liquidity flowing into rural areas.
· The analysis also provokes thought on some of the key deficiencies in the agri-sector, including a distortion in cropping patterns towards rice and wheat and why perhaps the rate of price increases herein needs to be moderated.
On balance, it appears that we may have to live with high interest rates for some time to come.
Head of India Research and India Equity Strategist

US growth supported by product pipeline; Domestic market trend improves slowly- J.P. Morgan - Indian Pharmaceuticals

US growth supported by product pipeline; Domestic market trend improves slowly

The Dec quarter results were ahead of estimates for Indian Pharma companies under our coverage driven by higher revenue growth and margins in key markets. However, there have been concerns on the one-off elements benefiting the results in the quarter that partly led to muted stock performance despite earnings beat in the quarter. While we expect these one-off benefits to moderate going forward, the near term trends in key markets and product pipeline should support earnings growth in 1HCY14, in our view. The sector has outperformed the market (BSE Healthcare up +8% since early Dec-13 vs. -1% for Sensex) and while multiples have expanded over last year, we believe valuations remain justifiable (1-yr Fwd P/E at 16-21x) given earnings growth trajectory. DRRD is our top pick with the upside from transitioning to its complex portfolio and continued focus on R&D. GNP, which has underperformed peers last year, is our pick in the mid caps with clear catalysts to drive stock outperformance.
· Domestic market growth improving but still below historical levels. Industry website (PILMAN based on AIOCD data) reported Jan-14 IPM growth of 8.5% (vs. 8.2% in Dec-13), continuing the steady improvement in trend over the last three months. The growth was driven by volume (+3.5% vs. 1.6% in Jan-13) and new product launches (+3.4% with 83 new products/brands launched in the month), while pricing growth was muted at 1.6% due to the impact from DPCO 2013. Growth for SUNP and LPC outperformed the industry aided by the chronic focus, while MNCs and RBXY (NC) growth was weak/lower YoY. Most companies in the conference call highlighted normalization in trend in the domestic market even as trade issues remain unresolved. While we expect FY14E growth trends to improve to ~8% for the domestic market (vs. YTD growth of ~6%, in our view), this remains below the historical growth of 10+%.
Figure 1: IPM YoY Growth Recovered from Sep-Oct-13 lows
Source: Media reports (ET, FE, PILMAN) based on AIOCD data.
· US growth momentum key. The US revenue and margins in the Dec quarter benefitted from key product launches (with exclusivity or niche areas), supply disruption related pricing and market share gain and continued benefit from weak INR. While we expect some of the benefits (inventory building with new launches, pricing benefits, etc) to normalize going forward, we see growth in the US business on a strong footing from the ramp up of recent launches and new product launches (supported by strong ANDA pipeline). However, the uncertainty on the potential impact of channel and industry consolidation in the US is a key risk for the Indian generic players over the medium term. Most large players in India indicated that channel consolidation in the US will increase pricing pressure on the sector. Please see our note on takeaways from Global Healthcare Conference (Link to the report) for more details.
Table 1: Dec-13 Quarter Growth and key drivers

Revenue Growth
US Growth (USD)
Comments
DRRD
23%
49%
Gross margin for generic was 68% due to US
LPC
21%
32%*
US generic growth was better than expected
SUNP
50%
57%
Taro growth was ahead of expectations
GNP
16%
6%
EM growth and operating leverage led to earnings beat
Source: Company reports. Note: Only US generic for Lupin (does not include branded business)
· DRRD and GNP are OW in the sector: DRRD remains our top pick (~14% potential upside from CMP) in the sector; earnings growth will be 15% over FY14-16E with a few key catalysts in the next year including potential USFDA approval of gCopaxone to the early filers (patent expires in May-14), approval for biosimilar launch in EM and continued growth in the US supported by the complex generic pipeline. GNP has underperformed the sector in the last year but we believe that improvement in EM growth as approvals come through in Brazil, EBITDA margins improvement and debt reduction with higher FCF generation should drive stock performance over the next 2 years. LPC’s 19% earnings growth will be supported by US generics, however, we believe there are near term headwinds due to the upcoming biennial price revision in Japan and continued weakness in US branded business. We see limited upside in SUNP given the risk to Taro’s margins (Taro accounts for ~40% of SUNP’s EBITDA, in our view).
· Increasing noise of USFDA scrutiny. There have been several media reports (ET, BS, NYT) on the increased USFDA oversight on India based facilities over the last week, which as highlighted previously is a key regulatory risk for the sector. In our view, companies would likely witness higher cost and investment associated with the USFDA oversight, which is unlikely to be prohibitive. We believe that focus on compliance would be a key variable in an increasingly competitive market with limited opportunities and short product life cycle given the cost and risk of non-compliance is a bigger risk to the sector given significant revenue exposure to the US. Please see our note on USFDA scrutiny (Link to the report) for more details.
Table 2: US FDA Action on India based facilities over the last year
Company
Date
Issue
Hospira Healthcare India
May-13
Warning letter issued to its India plant in Sriperumburdur
RPG Life Sciences
Jun-13
Warning letter for violation of cGMP at its two plants at Ankleshwar and Mumbai
Wockhardt
Jul-13
Warning letter issued to its Waluj plant (2 facilities). UK regulators also issues certificate of non-compliance
Fresenius Kabi Oncology
Jul-13
Warning letter for violation of manufacturing norms at its Kalyani facility, West Bengal
Posh Chemicals
Aug-13
Warning letter to its Hyderabad unit due to deviations from cGMP leading to adulterated API being manufactured
Promed Exports
Aug-13
Warning letter to its Himachal Pradesh unit
Ranbaxy
Sep-13
Import alert to its Mohali unit
Strides Arcolab
Sep-13
Warning letter against sterile manufacturing facility 2 of Agila Specialties at Bangalore
Aarti Drug
Sep-13
Warning letter issues to Maharashtra's facilities
Wockhardt
Nov-13
Import Alert for Chikalthana unit (but excluded 5 products from the import alert). In Oct-13, UK MHRA has withdrawn the GMP certificate for the plant
Ranbaxy
Jan-14
Issues import alert on the Tonsa API plant post observations made in early Jan
Source: USFDA and J.P. Morgan.
Table 3: Indian Pharma: Valuation Summary


Mcap
P/E
EV/EBITDA
P/BV
RoE

CMP
$Mn
CY13/FY14
CY14/FY15
CY13/FY14
CY14/FY15
CY13/FY14
CY14/FY15
CY13/FY14
CY14/FY15
Sun Pharma
605
20,218
23.8
20.9
17.1
14.3
7.4
5.7
37.7
35.0
Dr Reddy's
2,629
7,216
20.5
17.1
13.5
11.4
4.9
4.0
27.0
25.7
Glenmark
534
2,340
20.4
15.6
12.9
10.4
4.3
3.4
22.9
24.5
Lupin
917
6,633
24.7
20.3
14.8
12.1
6.3
5.0
28.7
27.7
Cipla
376
4,868
20.8
18.1
13.6
11.6
2.9
2.6
15.2
15.2
Ranbaxy
345
2,363
27.6
13.1
12.2
7.7
4.0
2.9
15.0
29.3
Cadila Healthcare
940
3,106
25.3
20.1
18.4
14.6
5.4
4.5
23.1
24.3
Source: Company reports, J.P. Morgan estimates Note: Bloomberg consensus for Not covered (NC) stocks Cipla, Ranbaxy and Cadila.


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