Discounts, festive push not helping mini segment much We analyzed brand-wise data for the domestic PV industry to understand the nitty-gritty of 9.2% YoY growth in the domestic PV industry in 1HFY18. The first half of this fiscal witnessed continuance of some bigger trends: (i) preference for SUVs (~17% YoY growth in UVs), (ii) first-time buyers directly purchasing compact/compact sedan (reflec
Volumes recovery led by no further market share loss and a favorable base
* We believe the Indian Railways is unlikely to increase haulage charges for container rail in the medium term due to a loss of market share to road over the past five years.
* Container rail is likely to retain its market share in the medium term due to the abse
Reason for report: Initiating coverage
Research Analyst: Ansuman Deb firstname.lastname@example.org +91 22 6637 7312 The consumer electricals (CE) sector in India is on a strong growth footing driven by better outlook of housing, electrification and economic affordability. Housing schemes and energy efficiency drives by the government and reforms like
All-India power demand rose by 5.3% YoY to 303bn units in 2QFY18 compared to 287bn units and 307bn units in 2QFY17 and 1QFY18, respectively led by 6.1% YoY rise in thermal generation. Coalbased generation grew at an improved pace of 6.1% YoY, while hydro generation dipped by 3.7% YoY to 45bn units. All-India PLF of thermal sector stood at 57.6% in 2QFY18 vs. 54.4% in 2QFY17 due to improved syst
The pharmaceutical companies under our coverage universe are expected to report a muted performance on YoY basis in 2QFY18 due to multiple headwinds in the US led by increasing pricing pressure, lack of niche opportunities and channel consolidation. However, we see sequential improvement on account of lower base and rebound in domestic formulation business. We expect sales, EBITDA and PAT of th
* WSA has raised its global steel demand forecast to 2.8%/1.6% for CY17/CY18 as against its previous forecast of 1.3%/0.9% respectively. India continues to top the growth chart albiet at a lesser rate. In short term, economic momentum bodes well for steel demand.
* China’s capacity cut to control pollution has lead to shift of production from unorganized to organized players. Th
* Indian Major Ports handled 52.4MT of cargo in September 2017, up 3.1% yoy (+0.8% mom). The major growth drivers were Containers (+8% yoy) and Coal (+7% yoy) while Iron Ore (-4% yoy) and Fertilizer (-4% yoy) witnessed a decline in September 2017
* Kolkata (+14.5% yoy), Kandla (+6% yoy), Paradip (+6% yoy) and Cochin (+18% yoy) witnessed healthy growth in volume, whereas volume a
* US president again rakes up high prescription drug prices in the US but in our opinion more of a political threat against US branded companies than generic industry
* US political environment against pharma price hikes continues to turn adverse; note the laws passed by US states Maryland and California against any predatory pricing
* Generic sector though should worry abou
Real estate sector will bounce back soon: Housing minister
According to the state minister of Ministry of Housing and Urban Affairs, Hardeep Singh Puri announced that the Indian real-estate sector is likely to bounce back soon from its present state of slump. The real estate sector has run into some problems for various reasons, but I have reasons to b
India’s wind power tariff falls to a record low of INR 2.64 per unit
India’s wind power tariff falls to a record low of INR 2.64 per unit India’s wind power tariff fell to a record low of INR 2.64 per unitin an auction conducted by state-run Solar Energy Corp. of India (SECI) for 1 gigawatt (GW) of wind power contracts.
Expect tier-I’s to report decent constant currency growth in a seasonally strong quarter:
● 2QFY18 constant currency (CC) revenue growth could be ‘decent’ in a seasonally strong quarter led by softness in key verticals (BFSI, retail), while reported US$ growth could be ‘reasonable’ driven by cross currency tailwinds (~1
● Indian chemical companies continue to maintain their bullish stance in terms of prospects over the next 2-3 years given the issues in China related to pollution control norms not showing any impending signs of slowing down
● Prices of raw materials like Toluene, Sulphuric Acid, Phenol had been on an upward trend, in respon
Northern region drives power demand in August
Conventional generation growth moderates to 4.6% in September
* Conventional electricity generation increased 4.6% YoY in September 2017, slowing from 7.9% growth in August. Hydro and nuclear generation remained weak, but the growth run-rate was b
Select large players drive growth. Business momentum in September 2017 remained robust with 23% growth in private sector’s overall APE and 19% at LIC translating into 21% growth for overall industry. Within private sector, growth was driven by select large players, viz. Bajaj Allianz, HDFC Life and PNB Metlife, while Max Life and ICICI Life witnessed moder
2QFY18E preview—strong quarter across the board.
We expect energy sector companies to report robust profits in 2QFY18—(1) OMCs are expected to benefit from higher refining margins, increase in ‘implied’ marketing margins and adventitious gains, (2) RIL’s standalone performance will be boosted by strong refining and petchem
2QFY18 preview—good for all. Domestic metal companies will report strong sequential improvement in earnings led by higher prices and volume. We expect earnings of large cap. steel companies to increase by 5-19% qoq led by improved realizations and higher steel volumes from project ramp-ups. The earnings of nonferrous names will improve on the back of highe
Moving into fast lane backed by rural catalysts
The Indian automobile industry is in a sweet spot on the back of a cyclical recovery across segments. Rural India is turning out to be the growth frontier for the automobile industry, as near-normal monsoon for 2 years and receding effect of demonetiza
Cement prices—on a weak footing.
All-India cement prices declined by ₹8/bag mom in October 2017, maintaining the weak trend seen through the monsoon period. Price changes were marginal in North and West markets while South and East saw a sharp fall of ₹16-18/bag mom. Weak price trends threaten another year of earnings downgrades on the back
Strong volume performance
Post revised emission norms and GST rollout, Indian auto sector reported a strong volume performance. Advent of festive season and lower interest rates further buyed demand, particularly for passenger cars and two wheelers, backed by neew model launches, enthused rural buyers and high pent up demand in the system (as prices we
Favourable Cross Currency Movements to Aid Growth
We expect the IT firms under our coverage universe to post a combined 3.3% QoQ rise in USD revenue in 2QFY18. We expect the Top-5 IT firms to post 2-4% QoQ USD revenue growth in reported terms (1-3% in CC terms), with TCS and HCL Technologies (HCLT) to lead the
India steel exports rise 71% YoY to 1.1mt in September
* Indian steel: Long product (TMT Mumbai) prices were down ~2% WoW. Sponge iron prices were down ~2% WoW, while domestic scrap prices were unchanged. NMDC cut iron ore fines/lump prices by INR100/t. Pellet prices were unchanged. Domestic HRC prices were unchanged.
* Raw materials: Iron or
Regulatory impact waning – retail improving gradually
Strengthening commodity prices could exert pressure on margins in 2HFY18
* Regulatory actions had materially influenced auto volumes since 3QFY17. However, given the waning regulatory impact, the automobile sector has witnessed gradual volume growth August onward, s
GRMs up YoY/QoQ; crude prices up YoY/QoQ
Inventory gains to boost refiners’ earnings
* Singapore complex GRM was USD8.3/bbl in 2QFY18 v/s USD6.4/bbl in 1QFY18 and USD5.1/bbl in 2QFY17. Inventory gains are likely to boost earnings further.
* Average Brent crude price was up 13% YoY and 3% QoQ to USD51.5/bbl. W
Merchant rate surges due to poor hydro generation and high demand
* Power generation increased by 7.8% yoy in Aug’17 (excluding Renewables), driven by a strong 16.5% yoy rise in generation across the Coal space, which was partially offset by low generation across Hydro (-12.1% yoy) and Nuclear (-36.0% yoy) segments.
* The overall indust
E-way bill to change pricing dynamics and formalize logistics ecosystem.
The recently notified e-way bill can bring down road freight pricing meaningfully. This will coincide with the benefits of double stacking peaking at Concor, leading to volatility in its margin till the commissioning of DFC. Seen differently, the e-way bill will also set the stage