Posts in category All News
Is cellphone tower radiation damaging your health? (26-08-2015)
Seventh pay panel’s term extended till December (26-08-2015)
Political risks might foil China economic reforms (26-08-2015)
September rate increase less compelling: Fed’s Dudley (26-08-2015)
Strides Arcolab looks good ahead: IDFC Institutional Securities (26-08-2015)
Strides Arcolab’s second innings, post the divestment of Agila steriles business to Mylan in 2013, has been catalyzed by its two proposed transactions – the Shasun merger and an opportunistic acquisition of Aspen’s Australian generics (Arrow).
The transactions create a strong platform for sustained medium-term growth. We expect the ~$200m formulations-focused Strides to transform into a geographically diversified and vertically integrated $700m entity by FY17 without over-reliance on US generics (unlike most peers). With 135% CAGR in consolidated PAT (excluding one-offs) over FY15-17E and a reasonably healthy balance sheet (~2x Net Debt/ EBITDA), the stock is a re-rating candidate. At 16.5x FY17E proforma earnings, we maintain Outperformer on Strides with a price target of 1,577. Post Shasun/ Arrow consolidation, Strides would have multiple growth drivers comprising the US, Australia and EU generics, branded formulations across Africa and India, institutional supplies (HIV / Malaria) and CRAMS/ APIs. Except Australia and API, all other segments are scaling up on a low base and we expect 15-20% CAGR across businesses over FY15-17E.
Shasun merger (expected to close by 3QFY16) is set to transform Strides’ formulations-only business model as it adds significant FDA-approved manufacturing (API as well as formulations) capacities and makes it a vertically integrated player.
Not a right time to pick IDFC: Nomura (26-08-2015)
IDFC has underperformed the Bankex by 25-27% over the past 12 months and although its valuations look reasonable at 1.25x FY17F book (BVPS: R113), we believe it is still not the time to get in. While management has been conservative in declaring/providing for its stressed book, we believe the interest reversal impact of higher NPAs will be felt over the next two years and also front-ending of opex will likely be higher vs consensus expectations. We thus maintain our Neutral rating on IDFC with a revised TP of Rs 150.
IDFC’s transition to a bank has too many moving parts, leading to a lot of execution risk. While we/street can take comfort from the +50% cover on its ~15-16% declared stressed asset book, we believe the Street is missing the impact of income de-recognition as NPAs inch-up from just 0.7% in FY15. We believe IDFC’s spreads will be down to just ~100bp. Also, IDFC’s initial opex cost will be disproportionate to its initial branch expansion leading to a higher-than-expected opex spike over the next two years, in our view.
We value IDFC Bank at 1.5x book. We estimate ROA of 1.0-1.1% for IDFC Bank in FY17-18F which is in line with management guidance of 1% bottom ROAs. Given the above interest reversal impact and front-ended opex, 1% ROA may last longer than Street expectations into FY17-18F despite almost no specific credit costs.
China investigates large brokerage firms (26-08-2015)
Power Mech Projects makes shaky debut (26-08-2015)
Power Mech Projects made a shaky debut in the stock markets, with shares losing nearly 9% on listing, as China’s efforts to shore up its economy failed to halt a sell-off in global equities.
Amid volatile markets, shares of Power Mech Projects opened more than 6% lower at a price of R600 per share – against the issue price of Rs 640 per share. Although the shares recovered briefly and touched the daily high of R663.1, the recovery was short-lived.
The shares closed at Rs 585.75 on the BSE – down by 8.48% during the session amid high volumes. More than 51.24 lakh shares traded on the BSE and NSE.
Merchant bankers and primary market observers said that grey market premiums saw a sharp fall on Tuesday and was reflective of the weakness in secondary markets. Power Mech Projects shares declined more than 60% ahead of its listing on Wednesday. The shares of Hyderabad-based power infrastructure company were quoting at a premium of Rs 50-55 per share against Rs 150 levels late last week. The company had set a price band of Rs 615-640 for its IPO.
The Hyderabad-based power infrastructure company had tapped the primary markets during the last month to raise Rs 273.2 crore. The issue received good response from the investors as it was subscribed 38 times due to the overwhelming subscriptions received from the non-institutional category which was subscribed 133.29 times.
The company attracted good premiums in the grey market. The premium for Power Mech Projects in the grey market – which are pseudo over the counter markets where IPO shares are bought and sold before officially listing on a stock exchange – was around 23% of the issue price.
The company had raised R81.96 crore from anchor investors in a pre-IPO placement. The list of anchor investors included DSP Blackrock India Tiger Fund and Morgan Stanley.
The proceeds of the issue would be utilised towards expansion of the company’s presence globally and to meet working capital requirements, the company said.
Navkar clears IPO test, subscribed 2.8 times (26-08-2015)
The Initial Public Offering (IPO) of Navkar Corporation managed to get fully subscribed on the third day despite adverse market conditions. The issue was subscribed 2.84 times, stock exchange data showed.
The news couldn’t have come at a better time for the street as numerous market experts expressed their concerns about the impact of declining secondary markets on the primary markets. Four companies — PEBS Pennar, Prabhat Dairy, Shree Pushkar Chemicals and Fertilisers, and Sadbhav Infrastructure Project — have lined their public issues during the next 10 days. Together, these companies have the potential to raise close to Rs 1,500 crore.
A detailed look at category wise bidding data in the BSE and NSE of Navkar Corporation, suggests that the Qualified institutional buyers bid for more than 5.28 crore shares against 81.63 lakh shares reserved for the category. The non-institutional category comprising of high net-worth individuals (HNIs) was subscribed 0.9 times. HNIs bid about 54.86 lakh shares against 61.22 lakh shares reserved.
The retail book was subscribed close to 1.59 times on day one of the offer. Retail investors, whose investment should not exceed a total R2 lakh as per Sebi rules, bid for 2.27 crore shares as against 1.42 crore on offer.
The total size of the IPO is R600 crore – comprising of fresh issue of equity shares aggregating to R510 crore and offer for sale of R90 crore by the selling shareholder namely Sidhhartha Corporation Pvt Ltd, a member of the promoter group.
Navkar Corporation is an operator of container freight stations (CFSs) in India. The company operates in close proximity to the Jawaharlal Nehru Port (JNP), the largest container port in India.
The response for the other IPOs was however tepid on Wednesday as the issue of Shree Pushkar Chemicals were subscribed 0.46 times while the initial offering of Pebs Pennar was subscribed 0.07 times.