Dr. Reddy`s Lab signs agreement with CHD Bioscience

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Dr. Reddy’s Laboratories Ltd. has said that it has signed a global licensing agreement with CHD Bioscience Inc., a privately-held biopharmaceutical company for the clinical development and commercialization of Dr. Reddy’s Phase III clinical trial candidate, DFA-02. It is intended to be used for the prevention of surgical site infections, following non-emergency, elective colorectal surgery.

Phase II studies for DFA-02 have been successfully completed, and the product will be transitioning to pivotal Phase III registration studies. “Under the terms of the agreement, Dr. Reddy’s would receive equity in CHD valued at $30 million upon an IPO of CHD or a minimum of $30 million in cash within 18 months of execution of the agreement. Dr. Reddy’s will also receive additional milestone payments of $40 million upon USFDA approval.

ICICI Bank Quarterly Result net rises 25% QoQ to Rs 2,605 cr

ICICI Bank, the country’s largest private sector lender, on Thursday reported a higher-than-expected 25 per cent quarter-on-quarter growth in its consolidated net profit at Rs 2,605 crore for the first quarter ended June 30, 2017. “The bank had reported consolidated net profit of Rs 2,083 crore in January-March period,” said ICICI Bank in a filing to the Bombay Stock Exchange.

On the standalone basis, the bank has posted net profit of Rs 2,049 crore compared to Rs 2,232 crore in the same period a year ago. NII, the difference between interest earned on loans and interest paid on deposits, increased by 8 per cent at Rs 5,590 crore versus Rs 5,159 crore in the year ago period. Non-interest income rose by 25.30 per cent to Rs 3,388 crore versus Rs 3,429 crore in June 16. Fee income increased by 10 per cent on a year-on-year basis to Rs 2,377 crore in Q1-2018 from Rs 2,156 crore in Q1-2017.

The bank reported 19 per cent year-on-year growth in retail portfolio, which constituted 53 per cent of the total portfolio at June 30, 2017. Total advances increased by 3 per cent year-on-year to Rs 464,075 crore at June 30, 2017 from Rs 449,427 crore at June 30, 2016. CASA deposits increased by 24 per cent year-on-year to Rs 238,024 crore at June 30, 2017.

On the asset side, Net non-performing assets (NPAs) decreased from Rs 25,451 crore at March 31, 2017 to Rs 25,306 crore at June 30, 2017. The Bank’s net non-performing asset ratio declined from 4.89 per cent at March 31, 2017 to 4.86 per cent at June 30, 2017. During the quarter, the Bank launched a new website and mobile application for Money2India (M2I), its online money transfer service for NRIs.

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Dr. Reddy`s Lab signs agreement with CHD Bioscience

Dr. Reddy’s Laboratories Ltd. has said that it has signed a global licensing agreement with CHD Bioscience Inc., a privately-held biopharmaceutical company for the clinical development and commercialization of Dr. Reddy’s Phase III clinical trial candidate, DFA-02. It is intended to be used for the prevention of surgical site infections, following non-emergency, elective colorectal surgery.

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Phase II studies for DFA-02 have been successfully completed, and the product will be transitioning to pivotal Phase III registration studies. “Under the terms of the agreement, Dr. Reddy’s would receive equity in CHD valued at $30 million upon an IPO of CHD or a minimum of $30 million in cash within 18 months of execution of the agreement. Dr. Reddy’s will also receive additional milestone payments of $40 million upon USFDA approval.

In addition, CHD will pay Dr. Reddy’s double-digit royalties on sales and commercial milestones,” the company said in a filing to the Bombay Stock Exchange. Meanwhile, shares of the company were trading at Rs 2487.95 apiece, down 5.09 per cent from the previous close at 09:25 hours on BSE.

Buy Cineline India: SP Tulsian

Q: You are recommending a stock called Cineline India; tell us about the company and why you like it?

A: This company belongs to Kanakia Group and they are the leading real estate developer in Mumbai. In fact you see many of their projects, commercial and residential, and some of them are in the high-end also. This company, promoters are Kanakia Group and the company owns nine multiplexes and all those nine multiplexes have been leased out to PVR on which regular rental income is earned by the company along with the other parking charges and all those things are accruing to the company.

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Now those nine multiplexes are situated or located in the prime location of Mumbai, maybe Eastern and Western suburbs like Andheri, Sion, Goregaon, Kandivali, Thane, or Navi Mumbai. Many of these properties are seen to be of depleting condition which may require redevelopment and all that, and that is what we have gathered that even if out of nine properties, even if they take couple of properties for development, that can give them huge value unlocking going forward.

Apart from that, the company is also owning Nagpur Eternity Mall; that is a mall in Nagpur which is 90 percent occupied and the company has given the statement that they intend to monetise this property. The net present value is seen anywhere at about Rs 200 crore. Just to retire the debt which the company has in its book.

Thirdly, company has booked about 84,000 square feet of sellable area or 50,000 square feet of carpet area in the new Kanakia project coming up that is called Kanakia Wall Street at Andheri East. The company intends to lease that out also because Kanakia Wall Street is a themed commercial space where the financial intermediaries, brokers, merchant bankers, and this property is developed on the theme of a Wall Street where the development work which is going on and will get completed in next one year.

Steel Stocks at Highest in Years

Steel stocks are trading at the highest since 2011 and it’s mostly thanks to the industry’s biggest menace in recent years: China.

Demand in China, which produces half the world’s steel, has been surprisingly strong this year and the country closed some plants to ease a glut that had spread across the globe.

That’s led to a steep drop in exports, helping steel prices extend a recovery and pushing a Bloomberg gauge of global steel stocks up 45% in the past year.

Less supply coming out of China has helped prices in Europe and the US jump about 75% in the past 18 months.Bloomberg

Monetary easing not a silver bullet

Expectations that the Reserve Bank of India will cut its benchmark rate at its forthcoming policy meet in August are getting cemented everyday with incremental inflation data tipping the scales for a cut.

However, such a reduction is unlikely to make a material impact on growth, according to DBS Bank Ltd.

In a research note the bank said that what makes an impact is transmission.

Further transmission of policy rate reductions onto bank lending rates depends squarely on how bad loans are resolved.

Since this is a long-drawn process, immediate transmission should not be expected. Nevertheless, the abundant liquidity will maintain short-term rates low, said the note.

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Strong growth prospects for consumer durables

Quite predictably, a surge in middle-class households will imply higher consumption and discretionary spends.

A report by Edelweiss Research forecasts a rise in penetration levels for consumer durable goods like air conditioners (ACs), washing machines and refrigerators.

 From 27.3% of the middle-class market, the penetration of refrigerators is likely to be the highest among durables, by calendar year 2026 at 47.5%.

Reasons that may fuel growth are improving income, need for comfort among working class and easy financing schemes.

According to the report, this has led to truncated product replacement cycles and evolving lifestyles where consumer durables like ACs and refrigerators are perceived as utilities.

The projections, of course, hinge on the forecasts made by the National Council of Applied Economic Research, that India’s middle-class population will double between FY16 and FY26 to 547 million.

ONGC-HPCL deal: A Marriage of Convenience

The government is moving ahead with its proposal to create an integrated public sector ‘oil major’ but in the process, is also filling its own coffers. It is, however, denying minority shareholders that opportunity.

A merger of Hindustan Petroleum Corp. Ltd (HPCL) with Oil and Natural Gas Corp. Ltd (ONGC) would have been a neat structure, combining both businesses with the full benefits of integration available to claim. There would be no cash to be paid or debt to be raised. Instead, ONGC plans to acquire the government’s 51% stake in HPCL.

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Whether this will be followed by a merger is not known, but is not on the cards yet.

The Street is rather unimpressed, with HPCL’s shares falling by 4.3% while ONGC’s share rose by 1.8% on Thursday. ONGC’s shareholders would have preferred a merger.

HPCL’s shareholders would be disappointed that the acquisition is unlikely to be accompanied by an open offer. That would be unfair as they too should get a chance to exit at the same price as the government.

A BloombergQuint article dated 20 July cites a precedent of Indian Oil Corp. Ltd (IOC) acquiring public sector IBP Co. Ltd, and then making an open offer. There have been instances where promoters have made an inter-se transfer and also sought exemption from making an open offer.

Kotak Mahindra Bank’s loan Growth takes the Sting out of Profit Miss

A look at Kotak Mahindra Bank’s rising loan growth should be enough for investors to forgive the lender for missing Street estimates of net profit for the quarter ended June.

Kotak Mahindra Bank posted a net profit of Rs912.73 crore, a 23% growth from a year-ago period.

Six analysts polled by Bloomberg forecast a net profit of Rs963.40 crore. The miss caused the stock to close 1.44% down for the day. The private lender’s net interest income, or the core income a bank earns, grew at a sedate pace of 17% to Rs2,246 crore.

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But the growth in its loan book was 18%, higher for a second consecutive quarter. This comes on the back of a strong growth of 21% in the corporate loan book, unlike most peer banks running after retail business. Not that the lender’s retail loan book growth is to be scoffed at.

At 20%, Kotak Mahindra Bank’s retail loans that consist of home loans, loan against property, loans to small businesses and other unsecured credit card and personal lending, too matched the speed of corporate disbursals.

The management’s comments on the outlook for loan growth and asset quality for the financial year are reassuring as well.

With its loan book expansion inching back to early 2016-17 levels, coupled with an enviable asset quality, picking out sore spots would be like splitting hairs for investors.

Jet Airways in talks with airlines, PE Players to Raise Funds

Jet Airways is in discussions with a few foreign airlines and private equity players for raising funds by selling stake, investment banking sources said as per the PTI report. The leading full service airline, where Abu Dhabi-based Etihad Airways already has 24 per cent strategic stake, has been looking to raise funds for expanding operations. 

The airline has already appointed an investment banker to explore various options for raising fresh funds, including through possible stake sale, the sources said, requesting anonymity as discussions are at an exploratory stage.

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The sources also said that initial discussions are going on with a few foreign carriers apart from some private equity firms. Queries sent to a Jet Airways spokesperson remained unanswered. Earlier this month, the airline neither confirmed nor denied reports that it was in exploratory talks with US-based Delta Air Lines to sell stake. 

"We are committed to make appropriate disclosures in accordance with applicable regulations to avoid any speculative activities and state that there is no discussion or decision in the board which would require disclosure under Regulation 30 of Sebi (Listing Obligations and Listing Requirements) Regulations, 2015," Jet Airways had said in a filing to the stock exchanges on July 3. 

Last week, Etihad Airways had told PTI that it is committed to the strategic partnership with Jet Airways that continues to be strong and healthy. "We remain committed to our strategic partnership which has grown to become the largest carriers of international traffic to and from India with one in five passengers flying with Etihad Airways and Jet Airways.

Union Bank appoints Kewal Handa as Chairman

Union Bank of India said Kewal Handa, former Managing Director of pharma major Pfizer India, has been appointed as its Chairman for three years. Handa has been appointed non-executive chairman and part-time non-official director as per a notification of the finance ministry, the lender said in a BSE filing.

He was MD of Pfizer India from 2005-2012 and prior to that had served as Executive Director - Finance in the company. 

Handa has worked in domestic and global generic business and has experience in markets like the US, South East Asia, Africa, Bangladesh and Sri Lanka, the filing added.

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Tata Motors extends Ace family of small commercial vehicles

Automobile major Tata Motors on Tuesday extended its Ace vehicles with the introduction of the new XL range of small commercial cargo vehicles.

"Being the market leader in this segment, we understand our customer requirements very well and the new XL range emerges out of this in-depth knowledge and consumer insight," said R.T. Wasan, Head for Sales and Marketing, Commercial Vehicles, Tata Motors.

"With the introduction of BS-IV compliant XL range of SCV, we are offering a complete portfolio of last mile delivery solutions and addressing the emerging needs for a safer, economical, and more reliable business transport solutions."

According to the company, the vehicle is strategically designed to perform all tasks for the last mile cargo movement.

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