Schaeffler did not move out of China but out of Europe.
In general, yes the China+1 theme seems to play out in some sectors, such as Pharma, Specialty chemicals, etc., sometimes structurally, sometimes occasionally.
Also depends on whether the given co. has a niche of some sort when it comes to their specific LOB.
Gland is a classic case of degrowth and margins compression, thus significant derating in last 2 -3 Qtrs.
Given core thesis of Gland is Injectable manufacturing, what good is a strong manufacturer vs average without better hold on supply chain.one would expect a solid procurement capability and risk Mitigation in place. Given they are still scouting and qualifying suppliers for emerging countries after having to air lift syringes in last many qtrs says somewhere there are inefficiencies.
While they did get away with logical arguments of not many syringes supplier out there which are approved for developed countries, thus a clear crtical path item.
Of some misses in q1 - some will come back shortly, for e.g. insulin shutdown for maintenance and freight cost. However do not foresee supply glut of syringes or price correction given limited suppliers for regulated markets, their best bet is to find a solution for emerging matkets syringe suppliers rather then letting biz go - but doesn’t look like without sizable scale of orders they are getting prices good enough to cater demand profitably, shows competetitive intensity for other Injectable players with better supply chain management.
Given a huge cash pile - it may be interesting to see if they do look at inorganic options to solve above issues for once and all - may sound offbeat to have captive syringes arrangement( even partly) but thats a choice that need to be made.
Another point to note is biosimilar/biologics foray, as well as china supplies via fosun - the answers from management are not affirmative and time bound. Doesn’t generate a confidence.
Its still an exciting and high growth area, they have inorganic growth options and capital in hand, however there is a clear lack of aggression ( likely to do with ownership and board construct/permissions etc).
Exited post Q1 nos and better opportunities.
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I think homes loans woud have driven NIM down.
Also, I dont think 14% of tier 1 cap is an issue. It is still sufficienty higher than the reg requirments. So at least not req for a year until when the valuation improves.
They said the capacity will be ramped up from Q3 onwards.?
Sorry but I beg to differ, NIM movements of 40-50bps for the entire book are huge especially on a QoQ basis. Also they have increased FD rates for all maturities so NIM’s might continue to be under pressure.
VV said no plan in FY23 in last call.
They have reduced saving account interest rates recently. It will mitigate the impact and NIM will grow again. In banks NIM fluctuations of 0.50 % are acceptable and is norm because they have to adjust their book to the RBI policy rates. Once the adjustment done NIM will return to the bank’s targeted levels.
Do you think this is a structural trend of companies moving out of China and expanding their manufacturing in India or just temporary tailwind driven by strong infrastructure push world wide ?
Rerating time, Mr Market
