Indian Equity Research and Investment Strategy
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 (more…)
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 (more…)
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 (more…)
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 (more…)
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 (more…)