Kotak India Daily: Change in Reco - JSW Energy; Updates - Lupin, Energy, NBFCs, Economy

Change in Reco

JSW Energy: Tricky trade; upgrade to ADD from SELL

l Sensitivity to currency and coal prices remains high, stock reaction even sharper l Merchant prices have softened on early onset of monsoons, may revive subsequently l Upgrade to ADD noting sharp correction and favorable risk-reward

Company alerts

Lupin: Growth drivers in place

l Recent launches and visible pipeline offer comfort regarding US growth l Domestic sales likely to be muted in the near term l We maintain ADD, increase target price to Rs800 (from Rs760), raise FY2014E-15E EPS by 1%/4%

Sector alerts

Energy: Like the hike

l CCEA's decision to hike domestic gas prices; we expect US$8-10/mn BTU in medium term l Big boost to earnings of OIL and ONGC l Benefit to RIL could be meaningful, if gas production revives from current levels l Impact on GAIL to depend on subsidy burden l Manageable impact on power sector; higher urea subsidies to be offset by Government collections

NBFCs: Restrictions on private placement will affect financial flexibility

l RBI guidelines for debt private placement by NBFCs l Time gap between issuances is a concern, in our view l Lower yield on bonds than bank loans

Economy

Economy: CAD provides a breather but trend unlikely to continue

l CAD/GDP at 3.6% in 4QFY13; 4.8% in FY2013 l Capital flows have been supportive but downside risks are increasing l External sector vulnerability reflected in the currency

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