Larsen & Toubro :Integrated player in power segment value chain:: Motilal oswal

Integrated player in power value chain
L&T Power offers turnkey solutions for up to 1GW super critical coal-based
power plants, and has also demonstrated capability of executing BOP packages
for both subcritical and supercritical thermal projects on EPC basis. We believe
that integration in the value chain is the key competitive advantage; also given
the increasing trend of a large number of projects being awarded on EPC basis.

Maruti Suzuki : Silver Linings in a Cloudy Outlook : Morgan Stanley

Our deep dive into the upcoming model cycle and
dealer mapping across OEMs in potentially higher
growth states raises our confidence on MSIL’s
outlook. Furthermore, taking into account the
strong performance of TTMT, we now move MSIL
above TTMT in our OW pecking order.
India’s passenger vehicle market has been flat from
FY11-14e; this is one of the deepest down cycles in the
past 20 years and we see no signs of a turnaround. In
such an environment model cycles and dealership
networks are the silver spots for OEMs amidst a cloudy
macro outlook. Based on our analysis we note:
a) The pan-India car recovery outlook remains bleak, but
as we dive deeper we identify states that have higher
GDP growth and low car penetration; this subset will
drive future growth and MSIL has a substantial
dealership network lead compared to the competition in
these states and thus should gain market share.
b) Our Alpha Wise dealer survey points to retail demand
remaining weak and the new model cycle is one of the
key volume drivers. At last week’s Tokyo Auto Show,
Suzuki highlighted 14 planned launches for MSIL over
the next five years and we believe these include entry
into new high margin segments such as SUVs and LCVs,
which will support volume and earnings growth.
Reiterate OW: We raise our price target as we expect
multiples to expand as new model cycle details emerge
at the 2014 Delhi Auto Expo, and reiterate OW on MSIL.

Pharma Update: Centrum

Domestic market slows down



We expect the domestic pharma industry to grow at 8-10% in FY14
compared to 12% in FY13 due to the negative impact of National
Pharmaceutical Pricing Policy (NPPP) and trade related issues. We
expect improvement in market share of leader brands due to substantial
pick up in volumes following price reduction. The 10 pharma companies
under our coverage which have exposure to the domestic market
generated ~31% of total revenues. The domestic industry is likely to
normalize to 12-14% growth in FY15. The global pharma market is
expected to grow at 2% in 2013 due to 1% decline in the US market and
flat growth in Europe.



$ Domestic revenues drop: We expect 8-12% revenue growth for the
domestic pharma industry for FY14 due to negative impact of NPPP and
trade related issues. As per AIOCD AWCS-October’13 MAT data, the
domestic market grew at 5.2%. The 10 companies under our coverage
generated 31% of the total revenues. Five of these companies grew
faster than the market. These were: Sun Pharma (SPIL) 16.6%, Cipla
7.2%, Lupin 6.2%, Dr. Reddy’s Labs (DRL) 8.1% and Merck 6.1%.



$ EBITDA margin declines: We expect EBITDA margin for most pharma
companies to get impacted by 100-200bps in FY14. This is due to the
rise in imported material cost with sharp depreciation of rupee
against the dollar, impact of price cuts under NPPP and trade related
issues. We expect a rise in price of APIs due to their exemption from
price control. However, if rupee starts appreciating margins could
improve.



$ Prices revised upward: Most pharma companies have raised prices in
the range of 3-10% for products currently outside price control to
nullify the effect of NPPP. As the percentage of price controlled
products is much lower than products outside it we expect overall
revenues to improve.  We expect good volume growth for the products
that have gone under price control. Moreover, for controlled products,
companies will be eligible to increase prices based on the Wholesale
Price Index (WPI) in April’14.



$ Sun Pharma and Lupin remain preferred picks in the space: SPIL and
Lupin continue to be our best picks in the sector on account of SPIL’s
acquisition of Dusa and URL’s generic business in the US and strong
sale of generic Doxil in the US. Lupin’s strong presence in the US and
Japan will generate good revenue growth. Both companies have reported
excellent results for Q2FY14 and are expected to give over 25% returns
over CMP.



Thanks & Regards,

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Strides Arcolab Still steam left :: IDFC sec

Strides Arcolab (Strides) has concluded sale of its Agila specialties division
(transacted on 28 February 2013) to Mylan for a total consideration of US $1.75bn.
The board of Strides has approved a special dividend of Rs500/share, resulting in
total distribution of $526m pre-tax and of $477m post-tax payout to shareholders.
The transaction is closed at INR/USD of 62 and the distributed amount is 88% of
the free cash available (first tranche) to Strides.
Key highlights
™ According to the revised terms, Strides will receive $1.75bn consideration from
Mylan. It has already received $1.5bn; the remaining $250m “hold back” will
be received upon successful closure of the Bangalore facility warning letter.
™ After provisioning for various expenses, repaying bulk of the outstanding debt
and retaining $75m of growth capital, Strides has announced distribution of
$525m (Rs500/share) in the form of dividend to shareholders. The record date
for the same will be 20 December 2013.
™ Strides remains optimistic of resolving the FDA issues on the Bangalore
facility, and receiving the “hold back” ($250m) and regulatory escrow ($40m)
by H2CY14. Post the $50m tax payment liability, Strides will have another
$240m to potentially distribute to shareholders if the FDA issues are resolved.
™ Combined with the $525m dividend payout, the shareholder distribution will
be in line with Strides’ initial guidance of $700m-800m pre-tax distribution.
™ We estimate the pharma business to generate EPS of ~Rs30/share in CY14.
Additionally, Strides has put another $100m in a tax escrow account, which
can be received after 4 years. Assuming 85% distribution from hold back
receipts, 12x CY14E EPS for pharma business and NPV of the $100m tax
escrow, our fair value for Strides (ex-dividend) works out to Rs612/share.

Oracle Financial Services: religare research,

Pipeline improving but little clarity on cash usage
We met Oracle Financial Services (OFSS) CFO Makrand Padalkar recently.
Key takeaways of our meeting: 1) demand is looking up in terms of pipeline,
which should help drive some pickup in license sales; 2) the new Banking
Platform should drive traction in large complex transformational deals; and 3)
margins are a key management focus. Additionally, we don’t see any concrete
steps for cash utilization toward the business or in terms of shareholder
returns in the near-term. Valuations are expensive at 20x FY15E PE; SELL.
 Focus on driving new license growth, pipeline improving:While OFSS has seen
sluggish new license sales in 1HFY14, management did indicate that new license sales
remains their top focus. The company’s pipeline is improving, although Europe
remains sluggish. Further they remain confident of the new Oracle Banking Platform,
a comprehensive suite that integrates Oracle’s other enterprise software offerings
including CRM, ERP, HRM etc. As such this platform significantly enhances the
capability of Flexcube and should enable OFSS to addressthe large global banks which
have highly complex legacy systems.
 Margins a key focus for management: Blended EBIT margins have been in a healthy
range of 35-36% for 1HFY14, aided by the INR depreciation. Management continues
to keep a sharp focus on maintaining the margin profile, including keepingmargins
in the services business at current levels (c.20%). On cash usage(Rs59bn in 2QFY14),
management indicated acquisitions to strengthen their platform, but we see
nothing executable near-term. As such, appropriate cash usage is a concern for us.
 Expensive – SELL:OFSS is trading at 20x FY15E (Mar ended) PE, a premium to its
large-cap peers in India. While initial feedback suggests some improvement in the
deal pipeline, we do not see any significant upgrades to our current 12% license
growth for FY15 yet. We value OFSS at 16x fwd PE to arrive at our Dec’14 TP of
Rs2,600. Maintain SELL given expensive valuations and a weak growth outlook

Thermax: Multiple growth drivers :Motilal oswal

Beneficiary offew structural trends
TMX is benefiting from few structural trends: (1) increased energy pricing
(electricity prices up 15-20% over last 18 months) driving demand for energy
efficiency products (2) Hunt for alternative energy and TMX derives ~30% of
revenues from Green products (3) stringent government regulations and
increased environmental concerns (4) currency depreciation is also leading to
increased possibilities of exports (currently at 19% of revenues), etc.

Strides Arcolab: Grab it for dividend + cash + pharma…: ICICI Sec

According to the modified Agila deal, Strides has received US$1.5 billion
from Mylan Inc while the latter has opted to hold back the remaining
US$250 million subject to fulfilment of certain conditions in the backdrop
of the warning letter to Agila’s Bangalore facility. The company has
announced a special dividend of | 500/share. The detailed financials
incorporating the remaining pharma business and Mylan receipts will be
made available post December quarter numbers. Our valuation is based
on deal numbers and earlier pharma guidance.