04 December 2010

MOIL, Ravi Kumar, RPP , SCI, Claris:: Gray market premium price: Dec 4th, 2010

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Company Name
Offer Price
Premium
Listing
(Rs.)
(Rs.)
Date

RPP Infra Projects
75
Discount
Dec 6
Manganese Ore (MOIL)
375
(+ 5% retail discount)
295 to 305
Dec 15
Claris Life
228-235
4 to 5
Dec 16
Shipping Corp FPO
135- 140
(+ 5% retail discount)
3 to 5
Dec 12
Ravi Kumar Distilleries
56 to 64
 4 to 6

Citi on Fortis Healthcare High Growth Phase

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High Growth Phase
 Business Snapshot – Fortis Healthcare was incorporated in 1996, set up and
owned by the erstwhile founders of India's largest pharmaceutical company,
Ranbaxy Laboratories. It is a professionally-managed company with a broad
management team, headed by Mr. Shivinder Singh (founder shareholder and
Managing Director). The company went public in May 2007. It is one of the
largest hospital chains in India, with a network of 48 hospitals and c8,000
beds under management in the country. The company acquired ten
hospitals from Wockhardt Hospitals (WHL), giving it a pan India presence
and making it one of the largest hospital groups from India.


Citi -- Orchid Chemicals : Expanding Into Regulated Markets

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Expanding Into Regulated Markets
 Business Snapshot – Orchid Chemicals & Pharmaceuticals Ltd was
established in 1992 as a 100% Export Oriented Unit (EOU). Commencing
operations in 1994, Orchid has emerged among the Top-15 companies in
the Indian pharmaceutical industry in a short span of fifteen years of
operations. Orchid employs over 4,000 people, of which over 700 are
scientists, technologists and other professionals. A robust leadership
position in the antibiotics space, a core competence in oral and sterile
manufacturing, a broad-based multi-therapeutic coverage and an end-toend
connectivity over the pharmaceutical value chain, from discovery to
delivery, have positioned Orchid uniquely.


Citi research report on Sun Pharama: High Growth to Continue

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High Growth to Continue
 Business Snapshot – Sun Pharma is one of the fastest-growing companies in
India's pharma market. It has followed a strategy of being the first to enter
niche, high-growth segments (both organic and through acquisitions). It has
a presence in the CNS, pain management, ophthalmology, cardiovascular
and respiratory segments. It is also a leading company in the US generics
space and is now trying to expand in the emerging markets. With the
acquisition of Taro, Sun has consolidated its presence in the US generics
market.


Citi:: Jubilant Life Sciences:: A Leading CRAMS Play

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A Leading CRAMS Play
 Business Snapshot – Jubilant Life Sciences Limited (formerly Jubilant
Organosys Ltd) is an integrated Pharma and Life Sciences Company. It is the
largest Custom Research and Manufacturing Services (CRAMS) player and a
leading Drug Discovery and Development Solution (DDDS) provider out of
India. It provides Life Sciences products and services across the value
chain. With 11 world-class manufacturing facilities and a team of ~ 6000
multicultural people across the globe, the company is committed to deliver
value to its customers across 65 countries. Besides, it also has a small
presence in generic APIs & formulations, radiopharmaceuticals, allergenic
extracts and healthcare delivery in India.


Citi on Dr. Reddy:: Riding the Global Generics Wave

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Riding the Global Generics Wave
 Business Snapshot – DRL is a leading generics company, with a primary
focus on international markets. After starting as a bulk-drugs player in 1984,
it has moved up the value chain into formulations and has built a strong
presence in the US as well as certain key emerging markets. It is one of the
few Indian companies to have a large third-party API business as well as a
reasonable biosimilars pipeline. Besides its own front-end initiatives, it has a
deal with GSK Plc - the latter would distribute DRL’s products in several
emerging markets.


Citi on Aurobindo Pharma:: Partnering for Growth

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Partnering for Growth
 Business Snapshot– Aurobindo Pharma is an Indian pharma company
targeting global generics, primarily through partnerships with global pharma
companies. It has traditionally had a strong presence in the cephalosporin
and ARV segments but has expanded its product basket recently. It is fully
integrated and owns one of largest manufacturing bases (14 plants) and
portfolios of products amongst Indian companies. It has two large licensing
& supply arrangements with Pfizer (multiple markets) & Astra (emerging
markets) & is in negotiations for more such tie ups.


Citi on Lupin -- A Leading Play on Global Generics

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A Leading Play on Global Generics
 Business Snapshot – Lupin is an innovation-led pharma company, producing
a wide range of generic & branded formulations and APIs for the developed
and developing markets. Its products reach over 70 countries in the world.
The company has emerged as one of the leading Indian players in the US
(ranked 5th by prescriptions & growing at 50 %) & Japan (ranked 7th and
growing at 23%) and is among the fastest growing companies in India.


Citi -- Glenmark:Recovery Underway

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Recovery Underway
 Business Snapshot -- Glenmark is a fully integrated research-based pharma
company, with a business model spanning drug discovery research, APIs
and formulations. It has eight molecules in various stages of clinical
development & is primarily focused on the areas of Inflammation
[asthma/COPD, rheumatoid arthritis etc.] and Pain [neuropathic pain and
inflammatory pain]. It has stuck four NCE licensing deals with global pharma
companies, of which one is live currently. Besides, it has generics
operations in over 65 countries, including the regulated markets of the US
and Europe & several emerging markets. Around 60% of its topline comes
from overseas markets.


Bank of America Merrill Lynch :Q&A: with Exide Industries MD & CEO

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Exide
Management Q&A: 
We recently interacted with Mr T V Ramanathan, MD & CEO of Exide Industries.
Following is an excerpt of our discussion.

Q1) Is the slowdown in inverter demand on a y-o-y basis in Sep 2010 quarter
structural? I am keen to understand if the demand is declining because of rising
power supply situation in the country. This is important for us to know as inverter
battery demand is about 25% of your sales.
A) Inverter sales is seasonal and demand will recover from Feb2010. Key
demand driver includes (1) BPO expanding in Tier2/3 cities (2) Rising rural
income (3) Rising aspiration level.

Citi on Biocon: Leading Indian Play on Biosimilars

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Leading Indian Play on Biosimilars
 Business Snapshot– Biocon is an integrated biotechnology company in India
that encompasses all critical stages of drug development – drug discovery,
development, and manufacturing and commercialization of
biopharmaceuticals and enzymes. With more than 25 years of expertise in
fermentation technology, the company has built strong capabilities in highgrowth
segments like statins, immunosuppressants and anti-diabetes. While
statins form the major part of its current business, Biocon is aggressively
pursuing the biosimilars opportunity in regulated markets and is also
investing in drug discovery research to build a future pipeline.


Citi on Ranbaxy:: Resolution of Regulatory Issues the Key

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Resolution of Regulatory Issues the Key
 Business Snapshot – Ranbaxy is a leading Indian pharma company, with a
strong international business complementing its market leadership in India.
It is one of the leading Indian companies in the US (with a combination of
plain vanilla generics and an impressive patent challenge pipeline) besides a
leading presence in emerging markets such as Africa and Latin America.
Recently Daiichi Sankyo bought out the founder shareholders – opening up
options for Ranbaxy to market the former’s products in emerging markets as
well as targeting the attractive generics opportunity in Japan. Its US
business has been affected due to regulatory issues at two of its
manufacturing facilities in India – the company is engaged in addressing
these issues.


Citi:: Apollo Hospitals-Integrated Healthcare Play

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Integrated Healthcare Play
 Business Snapshot– Apollo Hospitals is an integrated healthcare company in
India's private sector, with the largest hospital network in Asia. With over
8,500 beds across 50 hospitals, and a significant presence at every touchpoint
of the medical value chain, Apollo Hospitals is one of Asia’s largest
healthcare groups. It has a network of more than 2,000 doctors (including
more than 1,300 "fee-for-service" doctors), around 2,000 nurses & 1,000
paramedical personnel on its payroll. It also operates a network of primary
care clinics, a medical back-office operation, a health-insurance company
and a healthcare staffing company that provides nurses to the UK, the US
and other countries. Its retail pharmacy business is one of the largest in
India, with a network of 1,150 outlets.


Citi on India Pharam: Multiple Themes; Multiple Growth Drivers

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We remain positive on the Indian pharma & healthcare space and expect
continued outperformance over the medium to long term. With multiple growth
drivers (US generics, Emerging Markets, traction in CRAMS) playing out
simultaneously, we expect the earnings trajectory to be strong over the next
three to four years for most companies. At the same time, we are seeing good
progress on potential longer-term growth engines, such as Biosimilars and the
Japanese generics markets.


Macquarie:: India automobiles November sales - Holding on to growth

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India automobiles
November sales - Holding on to growth


Event
􀂃 Automobile majors Maruti Suzuki, Tata Motors, Hero Honda, M&M, TVS Motors
and Bajaj Auto reported monthly sales for November 2010. In line with
expectations and the seasonal trend, all recorded MoM declines in sales post
the festive season, although YoY growth rates stayed strong for most of them.


UBS on Tube Investments of India:: Growth and diversity:: BUY

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UBS Investment Research
Tube Investments of India
Growth and diversity

􀂄 Market leader in diverse industries, initiate coverage with a Buy rating
We initiate coverage of Tube Investments of India (TI) with a Buy rating and a
price target of Rs197.00. Part of the Murugappa Group, TI is a diversified
company with products in the consumer, auto and infrastructure segments. It is a
market leader in most of its businesses—TI and Hero Cycles dominate the bicycle
market with a combined share of 75%, it has a 50% share of the precision tube
market, and a 64% share of the car doorframe market.


Titan Industries: Glitters all the way…ICICI Sec

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Glitters all the way…
We recently met the management of Titan Industries (Titan) to get an
insight into the company’s business model and growth strategy. Titan,
a joint venture between the Tata Group (currently holding 25.5%) and
the Tamil Nadu Industrial Development Corporation (holding 27.9%),
currently operates four business units viz. – jewellery, watches, eyewear
and precision engineering. The jewellery and watch business together
account for close to 96% of revenues. Titan enjoys a 35-40% market
share in the organised jewellery market and ~45% market share in the
organised watch market. With the increase in discretionary spending,
the long-term outlook for the company looks positive.


Power Finance: Chugging along nicely:: Macquarie

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Power Finance
Chugging along nicely
Event
 We had a discussion with Power Finance management to get an update on
the company. We maintain our OP on the stock with TP of Rs458.


Welspun Corp-Sebi order against promoters…ICICI Sec

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Sebi order against promoters puts question
mark on corporate governance…
The Securities & Exchange Board of India (Sebi) has banned the
promoters and promoter entities of Welspun Corp from trading in their
own and group companies’ shares. The directions were issued under
section 11 of the Sebi Act.


Angel Broking:: Mahindra & Mahindra Nov ’10: Tractors, pick-ups impress again; Buy

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Mahindra & Mahindra
Nov ’10: Tractors, pick-ups impress again; maintain Buy

 Growth on track. M&M’s Nov ’10 volumes grew 26.9% yoy
(lower 24% mom) to 44,661 units (above expectations). Tractors
and pick-ups were the key growth drivers in the month.


Punj Lloyd- Bids for stake in a telecom company- Negative:: JPMorgan

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Punj Lloyd Ltd Neutral
PUJL.BO, PUNJ IN
Bids for stake in a telecom company- Negative


• Submits bid for 30% stake in Bharti Hexacom: Punj Lloyd and Bharti
Airtel (BHARTI IN, covered by India telecom analyst Malvika Gupta)
have submitted bids to buy out govt. owned Telecom Consultants of
India's (TCIL) 30% stake in Bharti Hexacom. Bharti Airtel owns the
balance 70% in Hexacom and has the right of first refusal to TCIL’s
stake, as per Economic Times.


Sesa Goa: Negative news continues…ICICI Sec

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Negative news continues…
The performance of Sesa Goa could be impacted by the closure of its
Thakurani mines in Orissa and regulatory concerns in Karnataka. We
expect a dip in sales volumes for FY11 followed by marginal
improvement in FY12. The management had earlier reduced its volume
growth guidance for FY11 to ~10% from ~25%. However, we believe
volumes will de-grow ~13% with marginal ~4% growth in FY12


Bajaj Hindusthan - 4QSY2010 Result Update-Angel Broking

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Bajaj Hindusthan - 4QSY2010 Result Update

Angel Broking maintains a Neutral on Bajaj Hindusthan.

Bajaj Hindusthan (BJH) reported lower-than-expected performance for SY2010
mainly due to the increase in cane cost and higher contribution from levy sales.
Total sales grew 58% yoy to `3,201cr in SY2010, while it reported losses of
`130cr. We have revised downwards our SY2011 estimates to factor in the new
SAP declared by the UP state government. At current levels, with the BJH stock
trading at fair valuations, we maintain our Neutral view on it.

Weekly Review - Angel Broking, December 4, 2010

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Markets rise spectacularly
The Indian stock market staged a strong comeback during the week, with
the Sensex rising by 4.3% and Nifty ending the week 4.2% higher.
The highlight of the week was the announcement of India's 3QFY2011 GDP
data and the US $111bn bailout of Ireland. The Indian economy posted a
growth rate of 8.9%, compared to the expectations of 8.2%. Global markets
were buoyed by the US $111bn bailout of Ireland. The positive sentiment
because of these two important events was reflected in the growth in the
markets.BSE mid-cap and small-cap indices also rose by 3.6% each, which
was less compared to large-cap indices. On the sectoral front, the BSE
realty index was the biggest gainer, gaining 7.6%, as market sentiment on
the sector improved. It was followed by the BSE Bankex, which rose by 5.9%.
BSE FMCG index lagged the other sectors, gaining only 2.5% during
the week.


MOIL, RPP, Ravi Kumar , SCI, Claris:: Gray market premium price: Dec 4th, 2010

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Company Name
Offer Price
Premium
Listing
(Rs.)
(Rs.)
Date

RPP Infra Projects
75
Discount
Dec 6
Manganese Ore (MOIL)
375
(+ 5% retail discount)
295 to 305
Dec 15
Claris Life
228-235
4 to 5
Dec 16
Shipping Corp FPO
135- 140
(+ 5% retail discount)
3 to 5
Dec 12
Ravi Kumar Distilleries
56 to 64
 4 to 6

Spicejet Ltd:Ready to take off: JPMorgan::Asia Analyst Focus List

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Spicejet Ltd
Initiation
Overweight
SPJT.BO, SJET IN
Ready to take off


• Initiate with Overweight, PT of Rs115: Our PT implies upside of 40%
from the current share price. SJET is a leading LCC in India with 13.6%
market share in Oct-2010. It is well positioned to benefit from strong
growth in passenger traffic demand, in our view, driven by its strong
balance sheet, efficient operations and lean cost structure. We are adding
the stock to our Asia Analyst Focus List.


Cement- Top 5 players report dispatches decline of 3.2% yoy:: Emkay

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Cement Sector
Top 5 players report dispatches decline of 3.2% yoy


n     Unseasonal rains, labor shortage due to festive season impact dispatches in November. Top 5 players report aggregate dispatch decline of 3.2%
n     Cement prices see some softness across regions - cuts of Rs 2-10/bag; across North, central & south. Dealers expect prices to remain sluggish till mid December owing to poor demand
n     Demand growth remains key to sustain prices hikes taken in October. Seasonal logistical bottlenecks (wagons supply to food grains & crop) could provide some support to prices
n     Remain NEUTRAL on sector, positive on ACC, Grasim & Shree, negative on Ultratech, India Cement & Madras Cement

Welspun Corp - SEBI order; event update; Edelweiss

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Welspun Corp (WLCO IN, INR 160, Under Review)

n  SEBI bars Welspun Group companies from trading on the bourses
The Securities and Exchange Board of India (SEBI) has prima facie observed that the Welspun group promoters, while trading in Welspun Corporation’s (WLCO) stock, had violated various norms and regulations. In its recent order, SEBI has, therefore, directed that:
·         Promoters of Welspun Group not deal/sell/buy in securities of their own companies and their listed group entities until it gives further directions
·         The stock exchanges square off the positions in the futures and options segment at the earliest
·         WLCO’s promoters ensure that the shareholding of promoter group companies are not altered in any manner until further directions

WLCO can raise objections to this order within 21 days from the date of the order (December 02, 2010).

Cement — Firming Up After The Rains :: Ambit

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Sector well placed compared with the last downcycle; recovery to be faster in this cycle
We have analysed the performance of the Indian cement industry over the last 10 years a downcycle period (FY01-04) followed by an upcycle period (FY05-10). Our analysis suggests that industry (particularly leading manufacturers) has developed/enhanced strengths that equips it to weather the current headwinds with relatively lower impact.

With the monsoons behind us, we expect cement demand to grow at >10% YoY 2HFY11 onward, aided by a surge in infrastructure activity and increased spending on the housing segment. A slowdown in the pace of cement capacity addition should further boost the sector’s capacity utilisation to >85% from 2HFY12 thereby keeping prices at stable levels and driving the sector’s recovery from the current downcycle.

Bonds break losing streak on optimism of FII demand post auction: Edelweiss

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Bonds break losing streak on optimism of FII demand post auction; ten year benchmark closes at 8.09%.

Government securities
 Sovereign bonds prices broke its losing streak as there was some optimism ahead of the
auction of FII debt limits being held today. The benchmark 10 Yr bond closed 2 basis points
lower at 8.09% with the total volumes on the central banks trading platform at INR 8.25bn.
The 7.99% GOI 2017 bond closed at 7.98%, lower by 5bps.

Commodities: PMIs: Strength in numbers:: Macquarie

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Commodities Comment
PMIs: Strength in numbers
Feature article
 The stronger-than-expected PMIs probably should not be a surprise, given
that they have exceed expectations for the best part of six months. These
data suggest that manufacturing will head into 2011 on a strong footing after
strong growth this year.


Weekly US oil data- Softer demand and no inventory draw: Macquarie

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Weekly US oil data
Softer demand and no inventory draw
Bearish, at least incrementally, best describes this morning’s weekly oil data release
for the US. This is also the third less than bullish weekly batch of numbers in a row.
On the demand front, single week numbers signal a sharp correction down to below
19 million barrels per day.