Equity Research
Implications of Sun Pharma’s Acquisition of Ranbaxy LabsApril 7, 2014
India’s Leading Generic Drug maker, Sun Pharma announced the $4.0 Bn acquisition of Troubled Ranbaxy Labs from Daiichi Sankyo of Japan. The all share swap merger will give 0.8 Shares of Sun Pharma for 1 Share of Ranbaxy after all the approvals.
Sun’s management has a successful track record of turning around distressed Read More »
Motherson Sumi – Review – Long Term BUY on CorrectionApril 2, 2014
Motherson Sumi Systems Ltd is a a joint venture of Sumitomo Wiring Systems of Japan and Motherson group of India, is a leading manufacturer of electrical and plastic parts for automobiles globally. It is a market leader for wiring harness in India with over65% share. In Europe it is one of the top three manufacturers for external rear view mirrors, car bumpers and dashboard etc. Currently India contributes 17% of revenue and bulk of its profit.
Motherson is expected to register a 20% CAGR in sales through FY20. Key drivers we see are: an increase in the value of plastic and electrical parts per car Read More »
Which Industrial / Cement/ Auto / Financial Stocks to Own to Play Economic Recovery ?April 1, 2014
With cyclical stocks in India having rallied in anticipation of an election induced acceleration in economic momentum and sentiment in the wake of Opinion Polls projecting most progressive Global Politician Narendra Modi Ji as the Prime Minister of India, we look at blue sky valuations for domestic cylicals. We use EV/Sales as our benchmark for manufacturing companies and P/BV for financials, inherently assuming that the profitability cycle mirrors the revenue cycle.
Industrial / Auto / Cement Stocks – Only 4 companies are trading Read More »
Indian Markets / Economy & Macro / Sector Research
RBI Favors Gradual Lifting of Gold Import Curbs on Indian BanksApril 10, 2014
The Reserve Bank of India (RBI) has allowed five more banks to import gold to ease the restrictions that have been imposed on the precious yellow metal last year.
The RBI has permitted gold imports by Axis Bank, HDFC Bank, IndusInd Bank, Kotak Mahindra Bank, and Yes Bank.
The 80:20 rule that was imposed on gold last year states that 20% of all gold imports in India have to be re-exported. Under this rule, only Read More »
Industrial Weakness – 5 Years of Stalled Projects by Congress PoliticiansApril 4, 2014
The Indian Industry went into a prolonged phase of Policy & Project Paralysis as the Congress Government got itself into defensive mood to defend itself against the massive Scams [2G Spectrum Scam, Common Wealth Games, Coal Scam, etc] with absolutely ZERO attentiosn towards Governance and Progressive Reforms. Industrial CAPEX Data released by CMIE March 2014 shows that investment for the quarter was lackluster, with average four quarterly new starts at Rs967bn (-10% qoq / -14% yoy). This capex slowdown is in line with the weakness seen over the past 12 quarters and as we expected given the upcoming national elections. We expect activity to be slow in the quarter ending June 2014 as well and improve only gradually. Government capex fell sequentially (-11%) after increasing over the last two quarters. Private capex showed no signs of revival. The decline was driven off continuing weak activity, particularly in the transport and mining segments.
Stalled projects as a percentage of total outstanding remained at elevated levels of ~5%. Given our expectations of a Read More »
Bajaj Finance Vs IDFC Vs LIC Housing Finance – New Banking LicenseApril 2, 2014
The RBI is likely to issue new bank licence soon. The key question before investors is whether or not to buy the new bank licensees over the existing and well established franchises such as HDFC Bank & Axis Bank. Our fundamental & quantitative analysis shows that significant value could accrue to investors from new bank licensees with a well-executed strategy.
Empirical evidence shows that new bank licensees have potential to deliver high returns during Read More »
Corporate Earnings News
What are the Views of FIIs on Indian Lok Sabha Polls ?April 12, 2014
Every Opinion Poll in the country points towards a change in the leadership of Indian democracy from “The Accidental Puppet Prime Minister of India” towards a business & progressive Shri Narendra Modi. Here are the various Voice of FIIs who have bet heavily in Indian equities on the back of opinion polls,
UBS in a Report said,
Opinion polls have been the key catalyst for markets, as expected, in 2014. The last ones were released at the end of last week and voting Read More »
Why DalalStreet Rejected Corrupt Congress & is Voting for BJP ?
March 16, 2014
Fast economic development is critical to ensure employment for the youth and security of the country. India is currently going through one of the worst phases as far as economic development is concerned. High inflation and low growth have led to stagnation in job creation. The social impact of the economic crisis is frightening – as shown by increasing number of suicides and skyrocketing crime graph.
The present economic crisis in India is due to policy paralysis of the Corrupt Congress led UPA government resulting from high level of corruption and lack of vision for the country. Read More »
IPO Reviews
Subscribe to PowerGrid FPO at Cut-OffDecember 4, 2013
PowerGrid Corporation of India’s FPO is an attractive opportunity to own the fast-growing (19% net profit CAGR in FY13-17) near monopoly regulated power utility with stable RoEs (~16% in FY15/16). Whilst 10% equity dilution at Rs90/share was the ideal scenario, the 13% dilution at Rs85 (the lower band of the FPO) would raise enough equity to meet the equity needs up to FY15E/16E capex. The allowed return on equity in 2001-04 and 2004-09 was 16% and 14%, respectively. The CERC increased the regulated RoE to 15.5% + 0.5% incentive for timely completion of the projects.
After aggressive bidding in the initial eight Read More »
Why Powergrid is going for FPO ?
August 6, 2013
Powergrid Corporation acknowledged that its decision to go in for a 15% follow-on equity offering (FPO) is arguably contrary to its stance in recent investor interactions, wherein it has indicated: 1) the need for fresh equity is not envisaged in its base case business scenario, and 2) a firm decision on the issue would be taken after examining the FY15-19
regulatory returns regime to be finalized by regulator.
Investment opportunities are growing, all of which would cumulatively require a sizeable equity infusion – in the past few weeks PWGR has won a bid-based project Read More »
Mutual Funds in India
Madhusudan Kela – Reliance Mutual Fund, CIO’s messageNovember 15, 2012
We present to you the view of Madhusudhan Kela, Sr. Fund Manager and Chief Investment / strategist Officer with Reliance Capital Asset Management company on the occasion of Diwali.
Once again, as the biggest and the brightest Hindu festival, Diwali, is upon us, it is indeed a time for introspection, celebration of life and its gifts. [Skippng some Paragraphs Related to Religious References..]
Just think, last Dec, investors had started Read More »
HDFC Top 200, Equity Funds – Review + What Next ?November 1, 2012
If you’ve been a reader of our Site, then you all know we first recommended investment in HDFC Mutual Funds way back in 2003 and since then have been advising to stick to SIPs with Top-Ups during Market Crashes. Let us analyze what our SIPs have actually given us in Returns with the market going nowhere in the last 30 Months. [Sensex 17,527 March-2010]
HDFC Top 200 Fund Review
This the Largest Equity Fund in India which has grown organically over 15 years and has Assets Under Management around Rs 11,000 Cr. In the last 10 years / 5 years period, the fund has consistently beaten benchmarks. However, returns in a longer duration i.e since inception has tapered off from 28.33% in March-2010 to just 23.49% in Sept-2012 as shown below. Read More »
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