Sun Pharma’s FY15 annual report analysis highlights 71% YoY increase in revenue to Rs 274 billion while EBITDA margins declined to 28.7%, led by Ranbaxy’s merger and Halol issues. Legal and consultancy charges increased to Rs 14.2 billion  (21.4% of PBT) v/s Rs 4.8 billion in FY14 while, additional provisioning of Rs 1.0 billion (1.5% of PBT) was recognized toward $ 400m deal.

Unrealised forex gains increased to Rs 7.8b (12% of PBT) v/s Rs 0.1b in FY14. Tax rate remained low at 14.2% on account of (a) SPLL structuring leading to tax savings of R3.2b, (b) recognition of DTA of Rs 7.3b and (c) no taxation in the Dubai entity.

Contingent liabilities for tax disputes increased to Rs 26.7 billion. Goodwill stood at Rs 50 b (20% of net worth); of which, Rs 13.6 billion pertains to acquisition (part of which represents brands /products in pipeline); which in our view should be amortised.

Revenue jumps 71% YoY to Rs 274 billion; EBITDA margins decline 1480bp to 28.7% due to (a) Ranbaxy’s merger related cost and relatively low-margin business and (b) Halol issues.

Operating cash flow increased 34% YoY to R53 billion in FY15.  Tax rates remained low at 14.2%; contingent liabilities for tax dispute rise to Rs 26.7 billion v/s R12.1 billion in FY14.

Downgrade Bank of Baroda (BoB) to neutral (earlier outperformer) following the recent negative events – that is alleged forex scam of Rs 6,200 crore. We believe with these series of negative events, the new CEO will have to spend a lot of time correcting past errors especially cleaning up international operations and the SME book, both of which have grown strongly for BoB in the last few years. As such we expect a huge jump in provisioning in the next few quarters starting 3QFY16.

We cut our target multiple on BoB from 1.0x to 0.8x P/BV FY17e. Our new target price is R165 against R215 earlier. We are not revising our earnings yet as we will wait for the new CEO to articulate his new policy on accelerated provisioning.

We believe the alleged scandal is negative for BoB and the entire state owned banking pack. For BoB, this comes on the back of three recent negative events – 1) a recent bill discounting scam in Gujarat by a textile borrower involving Rs 3.5 billion. 2) non-payment of dues by Atlas Group, an Indian jeweller with its main jewellery operations in the UAE. BoB has an exposure of 70 million dirhams or Rs 120 crore through its Dubai branch. The Atlas group owes 20 banks a total sum of Rs 1,000 crore according to press reports. 3) The recent transfer of BoB’s Executive Director KV Ramamoorthy to United Bank due to certain transactions made by the Dubai branch which were allegedly not in compliance with existing rules.

The operator of the popular Coffee Day Enterprises chain started receiving orders on Wednesday for its up to Rs 11.5 billion ($176.75 million) listing. (Reuters)

Two high-profile market debuts in India this month, by Coffee Day Enterprises and Interglobe (Indigo) could raise up to $500 million, the biggest since Bharti Airtel floated its telecoms tower arm in 2012, masking a thin pipeline in a market that is struggling to attract high profile listings.

Bankers say volatile global markets and a tepid performance at home are scaring off potential candidates. Worse, few obvious big names remain after a wave of listings in 2010, when Indian markets were riding high.

“September filings are likely to get pushed to February. There are no big tickets in sight,” one investment banker said.

The operator of the popular Cafe Coffee Day chain started receiving orders on Wednesday for its up to 11.5 billion rupees ($176.75 million) listing. But even for this keenly awaited offer have been lukewarm: just three percent of its book was covered by the early afternoon.

Books will close on Friday, with the listing due on Nov. 2.

That is expected to be followed by the launch of an up to $400 million listing from Interglobe, the owner of India’s biggest airline Indigo, later this month.

Among likely candidates after Cafe Coffee Day and Indigo, bankers point only to drugmaker Alkem Labs and software firm L&T Infotech, both of which could be delayed to next year.

“Apart from L&T Infotech and Alkem, the pipeline doesn’t have something that will rival Interglobe or Coffee Day in size for the remaining year,” said a second Mumbai-based banker.

India’s economy has been more resilient than some of its neighbours, but a slower than expected recovery has still weighed. India’s NSE share index is down 11 percent since its record high in March 4.

“Subdued movement in secondary shares and lack of big new themes are to be blamed for the absence of big IPOs in the pipeline,” said G Chokkalingam, founder of Equinomics, a Mumbai-based research and fund advisory firm.

Indian companies have raised $1 billion so far this year — almost four times what they raised last year, and the biggest IPO volumes since 2012. But it is far from the record $8.5 billion in 2010, when India saw high profile fundraisings including a $3.5 billion listing from Coal India.

Meanwhile, the average size for listings has gone from $132.3 million in 2010 to $19 million last year, with no sector emerging as a key driver. The average was less than $10 million in each of two previous years.

Many are placing their hopes with India’s flourishing tech sector, where companies like online marketplace Flipkart are widely thought to be considering eventual listings.

But with funding still plentiful for the largest players, few listings are on the cards for now, at home or abroad.

($1 = 65.0650 Indian rupees)

Vodafone is positively inclined for an IPO, has initiated preparatory works, says CEO Vittorio Colao.

Vodafone Group Plc, the world’s largest mobile operator by revenues is preparing for an initial public offering of its India unit, Vodafone India, global CEO V Vittorio Colao told a select Editor’s round table meet on Wednesday.

“We have done preparatory work on the IPO so that we can take a decision,” Colao said. He, however declined to give an exact timeline stating that there are many factors that influence the IPO one way or the other but the company was positive.

Vodafone has been toying with the idea of coming out with an IPO for its India unit for quite sometime now for but the over Rs 12,000 crore capital gains tax dispute with the Indian government has been acting as an obstacle. The matter is currently under arbitration.

The company has recently won two transfer pricing case in the Bombay High Court out of which in one the government has decided not to appeal in the Supreme Court. As regards other which came only last week a final decision has not been taken but the likelihood of the government appealing against it is very remote.

Vodafone India, which is the second largest mobile operator in the country by revenues and subscriber, has invested so far around Rs 83,000 crore towards capex and spectrum and plans to start its 4G services by December this year.

Its capex in FY15 was Rs 8,500 crore which was 37% higher than a year before. Close to 60% of its capex was spent on data and the company would spend a similar amount in the current fiscal also.

Bharat Forge shares slid as much as 6 per cent intraday on Wednesday after a global brokerage house CLSA downgraded the stock from ‘buy’ to ‘sell’. ( Express photo)

Bharat Forge shares slid as much as 6 per cent intraday on Wednesday after a global brokerage house CLSA downgraded the stock from ‘buy’ to ‘sell’.

At 12.25 pm, Bharat Forge shrares were down 3.72 per cent at Rs 898.50 apiece. The scrip opened at Rs 886 and had touched a high and low of Rs 905.60 and Rs 876.55, respectively, in trade so far. Sensex was down 29 points at 26,816.

Shares of Bharat Forge are heading towards biggest single day fall since August 24. The share price of the company declined 5.94 per cent on the day.

According to CLSA, operational outlook has weakened significantly on a worsening industrial exports, continued decline in new truck orders in the US, and slow recovery in its domestic industrial business.

CLSA has also cut Bharat Forge’s earnings per share (EPS) target for FY16-18 by 7-26 per cent, factoring in a slower growth across businesses.

In the past one year, the share price of Bharat Forge jumped 21.20 per cent to Rs 933.25 on October 13. Sensex gained 1.75 per cent during the same period.

For the quarter ended June 2015, the company posted net profit of Rs 195.32 crore, up 34.73 per cent, against Rs 144.97 crore in the corresponding quarter a year ago.

According to Eikon data, the scrip has 24 buy, 5 hold and 3 sell ratings.

(With inputs from Reuters)