23 September 2014

Cipla - Combination inhalers to drive growth :: Centrum

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Rating: Buy; Target Price: Rs730; CMP: Rs613; Upside: 19.1%



Combination inhalers to drive growth



We reiterate Buy rating on Cipla with a revised target price of Rs730
(earlier Rs540) based on 24xSept’16E EPS of Rs30.3. The launch of
combination inhalers in various global markets is a positive step. The
licensing agreement with Gilead, US for its Hepatitis C drug for 91
countries will drive growth. Acquisition of two manufacturing
facilities will yield operational synergies. All these initiatives are
likely to bear fruit. We have revised the earning multiple from 22x to
24x based on these developments. Key risks to our assumptions include
slowdown in global generic business and regulatory risks for its
manufacturing facilities.

$ Combination inhalers to drive growth: Cipla has recently launched
its salmeterol/ fluticasone combination inhaler under the brand name
‘Serroflo’ in Germany and salmeterol/fluticasone Cipla in Sweden. The
inhaler is available in Croatia under the brand name Duohal. The
company has entered into commercial collaboration with S & D pharma
for inhalers under the brand name Fulhale in Czech Republic and
Slovakia. We expect the inhalers to generate revenues of $27mn in
FY15, $45mn in FY16 and $62mn in FY17 from these four countries
namely, Germany, Sweden, Czech Republic and Slovakia. Cipla will have
its own field force in Czech Republic and Slovakia. We expect the
company to benefit immensely from these launches.

$ Agreement with Gilead, US for Hepatitis C drugs: Cipla has entered
into non-exclusive licensing agreement with Gilead, US for the
manufacture and distribution of its Hepatitis C drugs Sofosbuvir and
Ledipasvir in 91 countries under its own brand. The agreement covers
over 100mn patients out of a global population of 130-150mn patients.
India has over 10-20mn Hepatitis C patients, more than HIV/AIDS
patients. Cipla will receive technology transfer and manufacturing
processes from Gilead and will market the drugs at competitive prices
globally. We expect Cipla to generate revenues of $5mn in FY15, $7mn
in FY16 and $10mn in FY17 from the manufacture and marketing of these
drugs.

$ Acquisition of manufacturing facilities to yield synergies: Cipla’s
100% subsidiary Medispray Labs Pvt. Ltd. has acquired two
manufacturing facilities from Osaka Pharma Pvt. Ltd., which were
dedicated to Cipla’s products. These facilities located at Goa and
Sangli were acquired for Rs290mn and Rs719mn respectively. The
acquisition is likely to lead to better control and yield operational
synergies. Cipla has entered into agreement with Salix Pharma, US for
granting exclusive rights for “Rifaximin complexes’ patent
applications. We expect Cipla to receive $5mn upfront payment in FY15
and $2mn and $3mn as royalties on sales in FY16 and FY17 respectively.

$ Recommendation and key risks: We maintain Buy rating for Cipla with
revised target price of Rs730 based on 24x Sept’16E EPS of Rs30.3 with
an upside of 19.1% from CMP. Cipla has launched its combination
inhalers in various global markets. It has tied up with Gilead, US for
the manufacture and marketing of its Hepatitis C drug in 91 countries.
With a strong product pipeline for the global market and good growth
in the domestic market, we expect the company to perform well from
FY16 onwards. We have revised our FY15 and FY16 EPS estimates upwards
by 15% and 17% respectively. Key risks to our assumptions include
slowdown in global generic business and regulatory risks for its
manufacturing facilities catering to global markets.



Thanks & Regards

--



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Shemaroo allotment detail expected Friday, 26 Sep. Link

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Shemaroo allotment detail expected Friday, 26 Sep.

Link to check allotment

Details will be available in IPO Allotment Status page of

LINK INTIME INDIA PRIVATE LIMITED

http://linkintime.co.in/newsite/ipoInformation.jsp

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Maruti Suzuki - Company Update - In a sweet spot; retain Buy :: Centrum

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Rating: Buy; Target Price: Rs3,580; CMP: Rs3,066; Upside: 16.8%



In a sweet spot; retain Buy



We re-iterate Buy on MSIL with a revised TP of Rs3,580. Recent
interaction with dealers signals continued recovery in urban demand
and traction in rural demand. While the industry has seen YoY growth
of 5% YTDFY15, MSIL has grown by 14%, improving its market share by
220bps due to the success of new launches, deeper rural penetration
and recovery in urban markets. Market share gains will continue as it
is entering a very strong product cycle 1) new sedan “Ciaz” to replace
SX4, will be available shortly 2) more models are due in the UV space
starting with the Sx4 Cross, 3) it is set to enter the small LCV
segment and 4) face-lifted Swift is expected soon (last facelift was
in 2011).

$ Discounts to trend lower: Analysis of model wise discounts for MSIL
indicates that the company has reduced discounts across models for
September’14. Discounts on Alto and Wagon-R (36% of domestic sales)
have dropped by Rs 3,000/vehicle to Rs32k from Rs35k while that on
Ertiga was down by Rs2k per vehicle and Omni by Rs 5k per vehicle.
With no discount on Celerio (unlikely in the near term as waiting
period is 2-3 months) and likely launch of Ciaz coupled with
traditionally lower discounts during festive period, we expect blended
discounts to trend lower from 3QFY15 onwards (Rs21k in 1QFY15).

$ YTDFY15 market share gains by 220bps, entering into strong product
cycle: YTDFY15 market share gains by 220bps to 52% (vs.  49% in FY14)
in domestic passenger car industry reflect better than industry growth
for MSIL. The company is entering a very strong product cycle (India
is Suzuki’s key market – there are plans to launch 14 new models
/refreshes in India over FY13-FY17E). Post the successful launch of
Celerio, the Ciaz will be shortly available in showrooms this festive
season (the company has already received bookings of 5,250 units).
This will be followed by entry into new segments like SUV/MUVs with
the launch of Sx4 Cross and XA Alpha. The company is also open to
leveraging opportunities in the LCV space and compact diesel engines.
Further, dealers indicated that a face-lifted Swift is expected soon.

$ Volume and earnings upside remains: We are upgrading our earnings
for FY15E/FY16E each by 3.9%/3.3% respectively to factor in better
than expected volume growth for the company. Also the Fx remains
favourable (Yen/INR rate has depreciated from 0.60 to 0.57 over the
past month. For MSIL, costs equivalent to 22% of sales, including
royalty to Suzuki, are Yen-linked; 1% depreciation in Yen can lead to
~2% EPS increase) and discounts are likely to trend lower from current
levels.

$ Valuation and risks: We expect MSIL to deliver strong 31% EPS CAGR
over FY14-16E led by gradual demand recovery, market share gains,
rising exports and improving margins. We also see the potential for
earnings upgrades as industry demand and margins could surprise on the
upside in the first year or two of recovery. Retain Buy with revised
TP of Rs3,580 (20x September’16E EPS, 1-sd above historical average).
Key risks are, 1) Unfavourable Fx and 3) Failure of new launches to
gain expected market share.



Thanks & Regards


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Pioneer Distilleries OFS (offer for sale) opens tomorrow

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 United Spirits Ltd will sell 11.35 per cent stake in Pioneer Distilleries Ltd to comply with regulatory requirements of having 25 per cent public shareholding.

In a filing to the BSE, USL said: "The promoter and holding company of Pioneer Distilleries Ltd propose to sell 15,20,067 equity shares of Rs 10 each representing 11.35 per cent of the equity shares of the company (Pioneer) on September 24..."



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NSE, Block deals, 23-Sep-2014

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DateSymbolSecurity NameClient NameBuy / SellQuantity TradedTrade Price /
Wght. Avg.
Price

23-Sep-2014DHANUKADhanuka Agritech LtdA M BROS FINTRADE PRIVATE LIMITEDBUY2,05,600530.00-
23-Sep-2014DHANUKADhanuka Agritech LtdDHANUKA MANISHSELL2,05,600530.00-



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NSE, Bulk deals, 23-Sep-2014

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DateSymbolSecurity NameClient NameBuy / SellQuantity TradedTrade Price /
Wght. Avg.
Price

23-Sep-2014BGLOBALBharatiya Global Info LtdSHAH HARSH DINESHBUY1,50,0004.30-
23-Sep-2014DECOLIGHTDecolight Ceramics LimiteANKITKUMAR DINESHKUMAR RAVALBUY2,45,0002.40-
23-Sep-2014DECOLIGHTDecolight Ceramics LimiteSOWMYA DESHPANDESELL2,44,7602.40-
23-Sep-2014ISFTIntrasoft Tech. LtdGOVERDHAN EXPORTS LTD.SELL1,47,00054.83-
23-Sep-2014ISFTIntrasoft Tech. LtdSSL CONSOLIDATED LTDBUY92,00054.75-
23-Sep-2014ISFTIntrasoft Tech. LtdSSL CONSOLIDATED LTDSELL29,52655.57-
23-Sep-2014MASTEKMastek LtdASHISH DHAWANSELL1,91,888318.62-
23-Sep-2014PHILIPCARBPhillips Carbon BlackDOTEX MERCHANDISE PRIVATE LIMITEDBUY11,20,000120.78-
23-Sep-2014PHILIPCARBPhillips Carbon BlackOFFSHORE INDIA LTD.SELL11,20,000120.57-
23-Sep-2014RSSOFTWARER. S. Software (I) Ltd.N.K. SECURITIESBUY73,221793.89-
23-Sep-2014RSSOFTWARER. S. Software (I) Ltd.N.K. SECURITIESSELL73,221794.29-
23-Sep-2014SHALPAINTSShalimar Paints LtdMATTHEWS INTERNATIONAL FUNDS A/C MATTHEWS INDIA FUNDBUY1,64,134169.80-
23-Sep-2014SHARDACROPSharda Cropchem LimitedGENUINE STOCK BROKERS PVT LTDBUY6,13,230244.87-
23-Sep-2014SHARDACROPSharda Cropchem LimitedGENUINE STOCK BROKERS PVT LTDSELL6,13,230244.81-
23-Sep-2014SHARDACROPSharda Cropchem LimitedMARWADI SHARES AND FINANCE LIMITEDBUY10,44,941246.74-
23-Sep-2014SHARDACROPSharda Cropchem LimitedMARWADI SHARES AND FINANCE LIMITEDSELL10,44,941245.28-
23-Sep-2014SHARDACROPSharda Cropchem LimitedVIJETA BROKING INDIA PRIVATE LIMITEDBUY5,66,669239.88-
23-Sep-2014SHARDACROPSharda Cropchem LimitedVIJETA BROKING INDIA PRIVATE LIMITEDSELL5,67,669240.09-
23-Sep-2014TECHNOTechno Elt & Eng Co. LtdAARKAY INVESTMENT PVT. LTD.SELL11,00,000275.01-
23-Sep-2014TECHNOTechno Elt & Eng Co. LtdSBI MUTUAL FUND - SBI EMERGING BUSINESSES FUNDBUY10,86,672275.00-
23-Sep-2014VKSPLVKS Projects LimitedGREEN VENTURE SECURITIES MANAGEMENT PVT LTDSELL32,00,0000.40-
23-Sep-2014VKSPLVKS Projects LimitedSHREE GANESH TRADERS (MUKESH KUMAR)BUY25,00,3200.45-
23-Sep-2014VKSPLVKS Projects LimitedSHREE GANESH TRADERS (MUKESH KUMAR)SELL33,35,0000.40-


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