Hi,

May I request you to also consider the following points in your analysis :

1. Tyre imports in India grew 22% to Rs 2360 cr in FY2015. Imported tyres now constitute 10% of replacement market for motorcycles and 20% of passenger car radials (PCR)

2. Truck and Bus Radials (TBR) imports grew 60% in FY2015 to 0.78 mn tyres. Recent data points to 2.5 mn TB tyres imported per month.

3. Imported tyres are sold at a steep discount compared to locally manufactured tyres. For eg: Chinese TBR's are available at 14 to 15000 per set vs locally produced tyres at 21 - 22000 per set. Locally produced bias tyres (TBB) are sold at 17 - 18000 per set.

As a result, capacity utilisation of domestic players is declining as imports garner higher market share.

Anti dumping duty (ADD) process takes 1.5 to 2 years and requires evidence of impact on profitability. Currently Tyre companies are enjoying cycle peak margins and hence ADD may not be applicable

Domestic companies have started passing on benefits of raw material prices to customers. Price reduction rounds have been led by MRF and so far realisations have declined by ~8 - 10% over the past 6 - 8 months.

A bunching up of replacement demand was experienced in FY2015 when the replacement market grew by 17%. ICRA now expects volume growth in replacement market to be 4 to 5% p.a. for the next 2 to 3 years.

Replacement cycle is 3 to 4 years for two wheelers and passenger cars. Currently subdued volumes do not point towards higher replacement demand for the next 2 -3 years.

The only positive factor is softer raw material prices which can allow margins to remain healthy. But lower utilisation and market share losses will cap margins from here on.

Given this, I surmise that the margin cycle for the industry has turned.

Valuations : These sectors typically look cheap at peak of the cycle as profits are high and expensive near bottoms when profits are very low.

Hope this is of help.

Data is from ATMA's publication for FY2015 and could have changed. FY2016 publication is expected in Aug 2016.

https://www.undercurrentnews.com/2015/11/17/commerce-proposes-hike-in-shrimp-duties-for-india-lowers-vietnamese-rates-across-the-board-2-31/

When EHP in an area is left untreated, bad things happen. It has been especially prevalent in China for a number of years. The spores build up in the environment, resulting in slower and slower growth.
If the first year farmers could produce 20-gram shrimp, they might see 15-gram shrimp in year two, and 10-gram shrimp in year three.
This is largely the story of China shrimp culture at the moment. Farmers have been unable to produce large shrimp, and they are turning to antibiotic use to treat disease.
As a result, China exporters have had to import shrimp both to get the size range they needed, and to guarantee antibiotic-free shrimp to ship to the US and elsewhere.
The spike in rejections of shrimp from Malaysia due to high levels of antibiotic residue is also to be traced to this problem. Chinese growers who could not sell to local processors apparently transshipped their shrimp to Malaysia, and the rejections for antibiotics spiked by the FDA.
In recent months Malaysia has cracked down and successfully prevented this practice, and FDA rejections have fallen sharply as well.

Finally, unlike EMS that led to widespread mortality, it appears that the impact of EHP is more akin to that of sea lice on salmon.. it slows their growth and weakens them but is not usually fatal.
As a result, it will be hard to pick the EHP signal out of the normal variation in shrimp farming results based on weather, other diseases, feed and broodstock health.
EHP is not likely to dramatically collapse production the way EMS did, however it is a headwind that will prevent production growth to a greater or lesser extent in various regions.
Because detection has not been perfected it is hard to know for sure the extent to which the spores already have spread.
It does seem clear that the newer production areas where there has been a spectacular growth of output, such as India, will see a leveling off as ponds become less productive in their third or fourth year, leading to lower density, or more failures to grow large shrimp in higher density ponds.

Looking forward to your detailed post on Rain Industries.

Neil..

what r the expectations of EPS for FY16 and FY17..

Per Zauba, India has exported
~997cr of gNexium to US (from Mar 01, 2015 to Nov 12, 2015)
~252cr of gNexium to US (from Oct 21, 2015 to Nov 12, 2015)

Pasted image773x261 5.61 KB

Attached file has the related raw data to chew.
Esomeprazole Magnesium v1.xlsx (30.9 KB)

Note: In addition to Torrent and Hetero, the above numbers would include Cipla's gNexium supply to Teva.