India Two-Wheelers Scooter Mania :: JPMorgan

 India has amongst the lowest proportion of scooters in two-wheeler sales:
While scooters comprise 84% of industry sales in the ASEAN region, Europe is
at 63% while India lags at 21%. What is changing in India: As urbanization
levels increase, more women take to driving, fuel efficiency of scooters increase
and the per capital income rises, the penetration of scooters will increase in the
overall product mix, in our view. Negative for incumbents: Hero Motocorp
and Bajaj Auto are market leaders in the motorbike segment, while Honda is
dominant in the scooter segment. As the proportion of scooters increases in the
overall mix, the local OEMs will likely cede share.
 Scooters – global trends: In the ASEAN markets, scooters / step-throughs are
priced lower than motorbikes; further within scooters, the automatic range now
constitutes 60% of overall sales (compared to 8% in 2006). In Europe, scooters
form a majority proportion of less than 150cc two-wheeler segment. In India, the
scooter segment primarily consists of the gearless / automatic range – a large
proportion of users are women, with OEMs launching models specific to that
category.
 Reasons for low scooter penetration in India: The lower price points of entry
level bikes, higher fuel efficiency of motorbikes as well as higher ground
clearance, which makes it easier to navigate rough roads (particularly in rural
belts) are the key reasons for the dominance of motorbikes.
 What is changing: As urbanization levels increase, more women take to
driving, fuel efficiency of scooters increase and per capita income rises, the
penetration of scooters will increase in the overall product mix, in our view. As
Hero and Bajaj Auto have a limited presence in this segment, we believe the
Japanese OEMs will benefit. We expect scooters to gain share from executive
segment motorbikes. While Hero Motocorp has overall market share of ~43%, it
has a limited market share of 19% in the scooter segment. Similarly, Bajaj Auto
has an overall market share of 18% with its dominant presence in the motorbike
segment (the OEM is not present in the scooter segment). While Honda has an
overall two-wheeler market share of 19%, it commands a share of 49% in the
scooter segment

KNR Constructions Execution to pick up in FY14; Buy :::Anand Rathi

Key takeaways from management meet
Order book visibility low. KNR Constructions’ (KNR) has an order book
of `20bn (2.9x TTM revenue), after deducting `6.8bn order from GVK. In
FY13, it bagged orders of `10bn, and is aiming at another `13bn in FY14.
Management is geared up to bid for upcoming EPC contracts from NHAI
and is currently negotiating with private developers for orders. Apart from
roads, it is also focused on diversifying into urban infra, irrigation and bridges.
Revenues likely to improve. For FY13, the company’s revenue declined 8%
yoy, despite receiving `480m early-completion bonus (Bijapur-Hungund tollroad).
Most of the benefit of the bonus was lost as a lot of equipment was idle
during the year. In 4QFY13, however, revenue grew 41% yoy, higher than we
estimated, following strong project execution in Karnataka and Nagpur. With
execution now picking up at its Kerela project (own BOT), management is
aiming at revenue of `9bn for FY14.
EBITDA margin to stabilise. For FY13, KNR clocked EBITDA margin of
16.4% (vs 17.7% in FY12). We estimate margins to be maintained at ~16.5%
over the next two years, backed by strong revenue growth.
Update on BOT projects. In May’13, KNR completed financial closure on
the Kerala project. So far, it has invested equity of `700m (of the total
`1.36bn committed), funded through internal accruals (`300m) and loans
(`400m). Moreover, the company has obtained all environmental and forest
clearances and work on the project has begun in 4QFY13. Further, it is
working on issuing NCDs to raise ~`400m from its BOT project in AP,
slated to be used to fund the remaining equity requirement for Kerala project.
Our take. Strong revenue growth is likely in FY14 with significant
contribution of its own BOT projects. We retain Buy with TP of `115. Our
SOTP target is based on 5x FY14e earnings, a 33% discount to other midcap
construction companies (`105) and 1x BV of investments (`10). Risks. Slow
road awards, high input costs, delay in obtaining clearances by clients.

Margin under pressure Elder Pharma :Centrum

Margin under pressure
Elder Pharma’s (EPL) results for Q4FY13 were below our expectations. The company reported 7%YoY decline in revenues, 210bps drop in EBIDTA margin and 3%YoY decline in net profit before EO items. EPL’s top three products account for 35% of revenues. The company is unlikely to get impacted by the New Pharmaceutical Pricing Policy (NPPP). The company has extended the year end from March’13 to June’13. The EO item of Rs52.5mn was forex gain on currency fluctuation on foreign loans. We have revised our rating from Buy to Neutral for the scrip and revised the target price downward from Rs427 to Rs307 (based on 7x Dec’14 EPS of Rs43.9).

Lower sales growth: EPL reported 7%YoY decline in revenues from Rs3.46bn to Rs3.23bn in Q4FY13. The domestic business revenues (71% of total) declined by 6%YoY from Rs2.45bn to Rs2.31bn. Pharma growth was much lower than the industry growth of ~11%. Its NeutraHealth & Biomeda business (29% of revenues) declined by 9%YoY from Rs1.01bn to Rs927mn.

Margin under pressure: EPL’s EBIDTA margin for Q4FY13 dropped by 210bps from 14.6% to 12.5% of total revenues due to the increase in material cost and personnel expenses. Its material cost jumped sharply by 990bps from 49.8% to 59.7% of net sales due to the change in product mix. Personnel cost increased by 130bps from 13.6% to 14.9% due to an increase in manpower and annual increments. Other expenses declined by 930bps from 22.1% to 12.8% due to rationalisation measures.

UTI Opportunities Fund: INVEST :: Business Line

Indoco Remedies Ltd. Good prospects… BUY :IDBI cap

Indoco Remedies Ltd.
Good prospects… BUY
Summary
Indoco Remedies (Indoco’s) growth outperformance during FY13 in the domestic business
(15% YoY) despite an acute heavy portfolio inspires confidence on the strength of the franchise
(albeit on a lower base). Supplies of high margin ophthalmic products (~5 products) of market size
US$638 mn in FY14 and similar number of launches in FY15 will be the next growth engine. We
believe continued momentum in domestic business and beginning of supplies to the US,
will address investor concerns on margins. We initiate coverage with BUY.

Crafting short-term pre-retirement goals for later needs :: Business Line

In this column dated June 2, 2013, we discussed about how you should motivate yourself to save for retirement. One suggestion we offered was to break your long-term retirement goal into several short-term goals. In this article, we discuss about how you can create such short-term goals. We call this approach as oblique strategy, because the portfolio is tilted towards one asset during each stage of your working life.

Oblique strategy

It is easier to save and invest if you keep your goal in mind. And your goal during your working life is to accumulate money to spend during your retired years when your active income stops. In keeping with the spirit of mapping investments with expenses, the oblique strategy works as follows:

First, break-down your post-retirement expenses into four categories- medical, leisure, living expenses and gifting. Then, estimate how much money you want to accumulate at retirement for each category of expense. Remember, this is only an estimate. So, you do not have to be precise in your calculation. Your objective is to accumulate wealth at retirement to meet these expenses in your retired years.

Second, map various assets to these expenses. You should map equity investments to the estimated medical and living expenses, bonds investments to estimated leisure expenses and gold investments to estimated gifting.

Third, break your working life into three stages. Stage one is between 25 and 35. Stage two is between 35 and 50 and stage three is between 50 and 60.

Fourth, because equity is risky and because you can assume risk in your early career, you should concentrate on building your retirement portfolio with equity during stage one. This means your first short-term goal will be to build wealth to meet living and medical expenses for post-retirement needs. Your objective would be to carry the equity investments mapped to medical expenses till you are 65. You can gradually shift towards bank fixed deposits as you near 70. On the other hand, the equity investment mapped for your living expenses should be substantially reduced when you are within 10 years of your retirement. At that time, you should either prefer to use the wealth accumulated through your equity investment to buy immediate annuity or gradually move into bank fixed deposits.

Fifth, stage two is when you can invest in real estate using mortgage that you should close before you retire. This real estate investment can fetch you rental income to supplement your living expenses in your retired years. Or you can invest in a bungalow that you can later convert into apartments fetching rental income. During stage two, you should continue to build wealth with your equity portfolio.

Sixth, also called the retirement risk zone, the last stage of your working life is when you should increase your investments in bank fixed deposits. This is also the time to concentrate on building wealth to spend on leisure activity- expenses that you will incur immediately after retirement.

Seventh, gold forms part of gifting in both your working and your retired years. Therefore, you can invest in gold during all stages of your life. Remember, however, to have not more than 10 per cent of your total investments in gold.

Conclusion

You should slice your retirement goal into smaller short-term goals. Remember this, if nothing else: You will have to concentrate on an expense-goal during each of the three stages of your working life. This does not mean that you will only invest in one asset class at each stage. It, does, however, mean that one asset class will dominate your portfolio during each stage- equity in stage one, real estate in stage two and bonds in stage three. The oblique strategy should offer you a more focused approach to save for your retirement.

E-filing of tax returns made simple ::ET

As July 31 - the last date for filing your income tax returns - approaches, it's time to brace yourself for the annual ritual. However, this year, you will not have the luxury of simply gathering all the relevant documents and handing them over to your tax consultant. You will have to adopt a more proactive approach this year, as all tax-payers with a taxable income of over Rs 5 lakh are now required to file their return online.

Naturally, this development could unnerve many tax-payers, particularly those who are not conversant with the computer and the Internet.

However, the process is not as cumbersome as it is assumed to be. If you are a salaried individual not liable to pay any additional taxes and are not expecting any refund from the income tax department, you can follow these simple steps to complete the process within an hour:

Step 1: Log on to www.incometaxindiaefiling.gov.inand register yourself, if you haven't done so already. Your PAN will act as your user ID.

Step 2: The next step is to download the ITR form applicable to you. You will find the forms in 'Downloads' menu. This year, most tax-payers will have to download Form ITR 2 as those with tax-exempt income of over Rs 5,000 cannot file their tax return using Form Sahaj (ITR 1). In simple terms, if your salary includes components like conveyance allowance, house rent allowance (HRA), leave travel allowance, etc, which collectively exceed Rs 5,000 in a year, you will have to opt for ITR-2.

Step 3: Once you download the Return Form's excel utility, you need to enter all the details asked for by referring to the Form 16 issued by your employer.

Step 4: Now, validate the information by clicking the 'Validate' key. An XML sheet will be generated and saved on your computer.

Step 5: Upload the XML file on to the I-T e-filing website after selecting AY 2013-2014 and the applicable ITR form. You will be asked whether you wish to digitally sign the file. If you have obtained the DS (digital signature), select 'Yes'. Otherwise, choose 'No' and proceed further.

Step 6: If the process is completed as per the requirements, the site will flash a message indicating the success of your e-filing process. You can check your mailbox to ascertain whether your ITR-Verification form has been mailed to your registered e-mail ID.

Step 7: Next, get a print-out of your ITR-V, sign the form (in blue ink) and send it by ordinary post to the Income Tax Department-CPC, Post Bag No-1, Electronic City Post Office, Bangalore - 560 100, Karnataka within 120 days of filing your returns electronically.

Step 8: If you do not receive any acknowledgement from the I-T Department, you should send the form again. However, avoid enlisting the services of courier companies, as your form will not be accepted. Forms sent through Speed Post, though, will be accepted.