Monday, 9 October 2017

Granules India Gains 4% as Motilal Oswal expects over 50% return on strong Financials

Granules India share price rallied nearly 4 percent intraday Monday as Motilal Oswal believes the stock has the potential to deliver more than 50 percent return in the next 12-18 months on the back of multiple re rating and strong EPS CAGR of around 30 percent till FY20.

The research house has a buy call on the stock with a target price of Rs 200 per share as it expects 35 percent profit CAGR over FY17-20.
 
It said this strong growth will be driven primarily by ramp-up of the base business (led by capacity expansion), shift in product mix, Omnichem JV, and OTC business expansion.

Although FY19 will be the first year of US business sales, the full impact of investments in the US business will be visible from FY20, it added.


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Currently, its API plant is running at 100 percent capacity and pharmaceutical formulation intermediates (PFI) at 75-80 percent utilisation.

The company had planned to increase its API capacity by around 40 percent and PFI capacity by more than 20 percent (expansion plan to get over in FY18), which will help fuel growth in formulations (as Granules is dependent on backward integration). This will help grow the base business at mid-to-high teens until at least FY20 (around 27 percent CAGR over FY17-20 versus around 7 percent in FY17), Motilal Oswal said.

Granules plans to file around 25 ANDAs in the US by FY19. Of this, around 12-15 complex ANDAs will be filed from its US-based Virginia facility and rest from the India facility in Gagilapur. The company has already filed two complex generic ANDAs from its Virginia facility in March/April-17 (market size of USD 500 million).

Of these, in 1 product, the company could be the only generic player in the near term, the research house said.

It expects the 50:50 joint venture between Granules and Ajinomotos subsidiary Omnichem to record revenue of around Rs 450 crore, with EBITDA margin of more than 30 percent in FY20.

Sobha Surges 9% as CLSA Maintains buy after Strong Pre-Sales Data

Sobha share price rallied nearly 9 percent intraday Monday as global brokerage house CLSA has maintained its buy rating on the stock with a target price of Rs 525 after strong pre-sales data.

The Bangalore-based real estate company during the second quarter achieved new sales volume of 8.61 lakh square feet total valued at Rs 675.1 crore with an average realisation of Rs 7,840 per square feet.

The company has achieved this growth without launching any new projects during the quarter.

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This showed the growth of 5.6 percent and 8.3 percent in sales volume and total sales value compared with previous quarter, respectively while on year-on-year basis, sales volume was marginally higher and total sales value increased by 22.5 percent in Q2FY18.

Sobha said its share of sales value stood at Rs 592.7 crore (out of Rs 675.1 crore) with an average realisation of Rs 6,883 per square feet, up 5.3 percent QoQ and 14.4 percent YoY.
"The new sales value of Rs 592.7 crore achieved during the second quarter of 2017-18 is highest in past 10 quarters," it said.

The growth was supported adequately by an improved performance in the Kochi market followed with a consistent traction in other markets.

CLSA said steady execution & good portfolio helped the company to perform well. It expects pre-sales to do well for the next few quarters.

At 10:34 hours IST, the stock price Sobha was quoting at Rs 416.95, up Rs 25.70, or 6.57 percent.


Gitanjali, Titan, TBZ rally 4-6% as jewellery purchases above Rs 50,000 won't need PAN

Jewellery stocks rallied 2-20 percent on Monday after the Government withdrew its GST notification on gems and jewellery.

Gitanjali Gems, PC Jeweller, Titan Company, Tara Jewels and TBZ gained 4-7 percent as Permanent Account Number (PAN) card and Aadhaar card will no longer be mandatory on the purchase of jewellery for over Rs 50,000.

This raised hopes for likely increase in demand for jewellery in Diwali festival (especially Dhanteras day).


Dhanteras is considered to be an auspicious day for buying gold, silver and other valuables and is largely celebrated in North and West India.

The government has taken this decision at its 22nd GST Council meeting on Friday.

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During last Dhanteras, gold and jewellery sales had risen by up to 25 percent on higher demand in view of good monsoon and favourable price levels, as per the industry body data.

CLSA said the government deferring PMLA for the sector came at the right time, given the ensuing festive season.

Titan remained its preferred pick. It has a buy call on the stock with a target price of Rs 700 per share.

In a notification issued on August 23, the government had brought jewellery dealers under the purview of the Prevention of Money Laundering Act 2002 (PMLA) and were told to report on buyers making purchases over Rs 50,000. Therefore, PAN and Aadhaar cards were made mandatory as part of 'Know your customer (KYC)' rule.

India is the world's largest gold consumer and imports a sizeable chunk of its total annual consumption of around 900-1,000 tonne.


No firecrackers for Delhi-NCR: SC

The Supreme Court on Monday ruled that there will be no sale of firecrackers during Diwali, as it restored a November 2016 order banning the sale and stocking of firecrackers in Delhi and National Capital Region.


A bench headed by Justice A.K. Sikri, while restoring the order, said: "We should see at least in one Diwali the impact of a cracker-free festivity."

However, the court said that the September 12, 2017 order lifting the ban on the sale and stocking of firecrackers in Delhi NCR will be back into effect from November 1.

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Friday, 29 September 2017

Gold Steady, on Track for First Monthly loss in Three

Gold prices held steady early on Friday just above the previous session's six-week low, supported by a weaker dollar, but remained on course for their biggest monthly fall this year.

FUNDAMENTALS

* Spot gold was nearly unchanged at $1,286.86 per ounce at 0044 GMT, on track for a monthly drop of about 2.7 percent. That would mark its largest monthly decline so far in 2017 and the first such fall in three months.

*The metal was also on track for a third straight weekly decline, although it looks set to end the quarter up around 3.7 percent.

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*U.S. gold futures for December delivery edged up 0.1 percent to $1,289.80 per ounce.

*The dollar slipped against a basket of currencies on Thursday, snapping a three-day winning streak, as investors looked to take profits on the greenback's rally this week ahead of the end of the quarter. [USD/]

*Stocks globally rose modestly as investors digested U.S. economic data and the prospects for a U.S. tax reform plan proposed by President Donald Trump. [MKTS/GLOB]

*The U.S. economy expanded a bit faster than previously estimated in the second quarter, recording its quickest rate of growth in more than two years, but the momentum likely slowed in the third quarter due to the impact of Hurricanes Harvey and Irma.

* The White House struggled on Thursday to defend its new tax plan against criticism that it would help the rich at the expense of lower classes, as Republicans in Congress prepared to move ahead with actual legislation.

Indian Oil Corp Creating Artificial scarcity of LPG cylinders: Manipur Minister

Manipur's Consumer Affairs and Public Distribution Minister Karam Shyam on Thursday accused Indian Oil Corporation of creating an artificial scarcity of LPG cylinders in the state.
"The government has initiated steps to monitor the functionings of the IOC in this regard," he said, noting that while the monthly allotment of LPG cylinders to Manipur is 5,000 metric tonnes, the IOC has been bringing just 2,000 metric tonnes.

The northeastern state has 3,60,413 consumers and 88 distributors. Consumers have been complaining that they get hardly two cylinders in a year, and Shyam admitted that consumers are forced to buy cylinders on the blackmarket at Rs 1,800 each or more.

Officials said that those who cannot afford this exorbitant prices are using firewood and charcoal.

Stressing that the consumer subsidy is also lost, Shyam said: "This is unacceptable and the government shall not remain silent."

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Will GDP Growth at 3-year low be Enough for RBI to Cut Rates?

Four weeks since official data showed the shocking deceleration in gross domestic product (GDP) in the first quarter of fiscal year 2018, demands for a rate cut haven’t been as vociferous as one would expect.

Bond yields have risen, stock indices have slipped and the rupee has depreciated. Of course, a lot of it was due to the US Federal Reserve’s indication that it would begin its unwinding in October. But most economists are not confident of a second rate reduction in a row by the Reserve Bank of India (RBI) after the rate cut in August.

The key reasons are that inflation has rebounded sharply as was forecast by the central bank in August. Oil prices globally are on the rise, the monsoon rainfall hasn’t lived up to the temporal distribution crucial for a good agricultural output and the government could overshoot its fiscal deficit target of 3.2%.

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However, all of this was anticipated by RBI when it slashed its repo rate by 25 basis points to 6% in August. A basis point is one-hundredth of a percentage point.

For the central bank, it is an “I told you so” moment.

But an even more important development has been the surge in imports at a time when manufacturing growth is tepid in the country, as a Mint article on Thursday says.

What this means is that domestic supply chains have been disrupted and imports are driving whatever little growth manufacturers have shown. Any stimulus, monetary or fiscal, during such times would willy-nilly leak towards more imports. No policymaker would want that. With this, indeed, all conducive factors for a rate cut seem to have evaporated.

Rajiv Sabharwal to become Tata Capital`s new CEO and MD

Financial services provider Tata Capital on Thursday announced the appointment of banking industry veteran Rajiv Sabharwal as its CEO and Managing Director-designate.

According to the company, Sabharwal will join Tata Capital from January 2018 and would take over from the firm's current Managing Director and CEO Praveen P. Kadle.

Subsequently, Kadle will assume other responsibilities in the Tata Group effective from April 1, 2018.

Sabharwal is currently a partner at True North Managers LLP, formerly India Value Fund Advisors.

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Nissan Motor India launches Pre-owned car Business

Nissan Motor India on Thursday launched its pre-owned car business -- Nissan Intelligent Choice -- in India.

According to the company, the newly launched pre-owned car business is designed for customers looking for quality tested and certified pre-owned cars with optimum value.

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"Nissan Intelligent Choice also offers a platform for customers owning multi-brand cars to exchange it with a new Nissan and Datsun car," the company said in a statement.

Commenting on the new initiative, Satinder Singh Bajwa, Director for Sales, Network, CQ (Customer Quality) and POC (Pre-Owned Car), Nissan Motor India said: "Pre-owned car market in India is growing at an exponential rate. And, we see a huge potential in this emerging business."

"Nissan Intelligent Choice is our global business model for pre-owned cars and after its success in Brazil and South Africa, we are excited to introduce it in India," Bajwa was quoted as saying in the statement.

Bank of Baroda cuts Base Rate by 0.15% to 9.15% from Oct 1

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Bank of Baroda said it has cut the base rate by 0.35 per cent to 9.15 per cent with effect from October 1, reported PTI. The bank has revised base rate and BPLR, Bank of Baroda said in a regulatory filing. 

The base rate, minimum rate below which a bank cannot lend, has been revised downward from existing 9.50 per cent per annum to 9.15 per cent per annum from October 1, 2017, the bank said.

The benchmark prime lending rate (BPLR), the method which charges interest on credit worthiness of customers, has also been cut to 13.45 per cent per annum from next month. The BPLR is 13.80 per cent per annum currently.