It is difficult to quantify the impact of demonetisation on media stocks as the current situation is fluid and commentary from most players is diplomatic, guiding for short-term pain with long-term gains. Demonetisation and GST should lead to shift in business from unorganised to organised and it is the organised players who are the advertisers. We buy into the commentary and factor in lower ad
Regulator (TRAI) released monthly subscriber and MNP (mobile number portability) data, including Reliance Jio (RJIO), for Sep-16. Industry active (VLR) net adds rose to 18.6mn, led by 16mn net adds by RJIO; while net adds for top-3 were stable at 1.9mn. Average industry net adds for past six month were 0.9mn subs. RJIO captured active subscriber market share of 1.7%. We believe net adds for RJI
India Automobiles - Demonetization hazes the performance windshield; to likely demystify by FY18 - Emkay Global
The recent demonetization of Rs500/1000 currency notes is likely to affect discretionary spending, thus impacting both 4W as well as 2W sales. We believe the impact on 2Ws could be severe for Q3FY17 as a majority of 2W buying is cash denominated; while in case of 4Ws the proportion stands at 30-40% with the remaining purchases being through
The Indian Pharmaceutical Market (IPM) grew at a healthy 15.3% YoY in Nov’16, backed by a low base and strong anti-diabetic/cardiac sales (+12.6% excluding these two segments). Volume growth rebounded to 9.6% YoY, but pricing remained weak. The NLEM and FDC segments saw some improvement but remained in negative territory, in contrast to a recovery in other segments. Therapy-wise, anti-dia
NIFTY PHARMA Current Close: 10929.45 Trend : Negative
* NIFTY PHARMA is the only underperforming sectoral indices, as it closed down by around 0.98% at 10929.45, as against an up move of 2.16% in benchmark NIFTY 50.
* The Sector had made a recent swing high @ 12011.80 in the mon
NIFTY METAL Current Close: 2865.25 Trend : Positive
* NIFTY METAL is one of the most outperforming sector amongst all the indices last week. It moved up a good 5.43%, as against an up move of 2.16% in benchmark NIFTY 50.
* In the month of November, the Sector created a Fresh 52
The 0.75% discount introduced by the government on fuel bought via digital methods at state-run pumps is more marketing strategy than masked subsidy. Assuming 70% of transactions at OMC outlets go digital, IOCL, BPCL and HPCL could see a worst-case earnings hit of 8-14% in FY18 if they are unable to pass on these costs (which is unlikely). There are additional benefits of improved transparency
As per RBI data, deposit growth for the fortnight ended 25 November increased to 15.9% YoY, largely due to the sharp increase in deposits collected via demonetisation. The RBI in its recent monetary policy stated that banks have collected old currency worth Rs 11.6tn during the demonetisation drive up to 7 December. Credit growth weakened further to 6.6% while investment growth surged to 20.8%
Agri Input & Chemical Sector - Gujarat Visit - Agri-input demand resilient despite demonetization call - Emkay Global
Key highlights of our Gujarat visit
* Demand in the cash market had fallen by ~50% during the first 4-5 days post the demonetization call while demand in the credit market did not witness any significant impact. Expect demand to normalize by end of December as money circulation improves.
* Purchasing on credit and by cheques has increased wh
Upstream Oil & Gas - OPEC agrees to output cut; raise FY17E-FY18E Brent to US$48-52.5/bbl - ICICI Securities
Organisation of Petroleum Exporting Countries (OPEC) at its November 30 meeting agreed on cutting output to 32.5m b/d (numbers in OPEC press release add up to 32.7m b/d) from Jan’17. The output cut agreement is valid for six months with an option to extend for another six months. Non-OPEC members may also cut output by 0.6m b/d, including 0.3m b/d cut by Russia. The focus would now shift
* Crude oil declines:
Brent Crude oil closed lower by 9.8% MoM to $45/bbl for the month of November’16 as doubts emerged on the confirmation of production cut at the month end summit of OPEC. Also increase in US inventory with sluggish product demand and certain geo-political factors contributed to the fall in crude oil prices. Light-Heavy (L-H)
* ICRA places three MFIs under negative watch:
As per media reports, rating agency ICRA has put three small microfinance institutions (MFI) – Cashpor Micro Credit, Sambandh Finserve Private and S V Creditline – on watch with negative implications. ICRA stated that the rating downgrade follows the likely adverse impact of demonetisation on
Demonetization presents good buying opportunity; Reiterating our top picks
Demonetization – Benefits to accrue in the medium term
Following the Indian government’s demonetization announcement on 8th November 2016, NBFC sector stocks have corrected in the range of 10-30%. While demonetization could
An abrupt decline in trade segment’s sales volume (down by ~20-50% m-o-m) in the backdrop of demonetization of Rs500 & Rs1,000 notes led to postponement of demand as less availability of cash in circulation brought the construction activities to standstill. However, the prices appear to be resilient with moderate correction in some of pockets, as all-India average cement prices correc
Our Q2 revenue market share (RMS) analysis for the telecom sector reveals: (1) hyper competition amid weak growth across circles (4.3% YoY), (2) Bharti executing well with widespread RMS gains, and (3) Idea’s tariff hike strategy backfiring into RMS losses. While the recent correction in telco stocks factors in elevated competitive pressures, recovery in industry growth to 8-10% is the ke
The auto sales were expected to remain subdued in Nov’16 due to seasonality considering decline in retail demand post festive season. However, the demonetization of high-value currencies and limited availability of newly introduced notes has affected the retail demand to a considerable extent.
* CV Segment –
Non-food credit growth declined to 6.7% YoY in Oct’16 (vs. 10.8% in Sep’16) as growth across segments and especially services moderated. Industry credit stayed weak, declining by 1.7%. The services/agriculture sectors grew at 9.3%/13% vs. 18.4%/15.9% in Sep’16. In addition, retail credit increased at a slower pace of 17% vs. 19.7% in the preceding month. Infrastructure loans d
* Robust gas consumption:
India’s gas consumption sustained at 140mmscmd in Oct’16. Decline in consumption from power and fertiliser sectors was made up by some improvement in other industrials. Consumption continues to be aided by LNG imports, surging to 2.3mmt (+18.6% YoY, ~51% of total net consumption). Key drivers are a) Dabhol LNG term
Our channel checks indicate that November sales for the Indian Pharma Market (IPM) have been subdued due to demonetisation. An AIOCD study also expects sales for the month to be 8-10% lower vs. the normal run-rate. As per the study, chronic sales have been resilient post demonetisation with prebuying of medicines due to acceptance of Rs 500 and Rs 1,000 denomination notes. However, the acute se
* Steel prices across the globe surged further in November’16 led by cost push. China meanwhile achieved its monthly capacity cut target. Steel raw material prices too continued to rally.
* Hard coking coal added another 19.5% on a MoM basis to reach to US$309/tn. CIS (FoB Black Sea) HRC prices rose 13.5% MoM to US$482
The paper industry of the country witnessed huge surge on Wednesday. By the end of the day, the sector closed up by 2.59 per cent.
Pulp is one of the major raw materials used by the paper mill. This is where it gets interesting. Paper pulp price has dropped since June 2015. At the moment it is trading at its 7 ye
The RCML RM index inched up 1.4% MoM in Oct’16, as lower prices of crude-related commodities were offset by inflation in the agri basket. There was no material pricing action across categories though promotional intensity remained elevated. Overall, we remain cautious on the consumer sector given that topline growth is likely to remain tepid in FY17 and margins are at peak levels. ITC is
Growth of the Logistics business is directly correlated with economic activity. Empirical evidence suggests that the Indian logistics industry grows at 1.5-2x the GDP. With the Indian economy estimated to grow at 6.5% to 7% in FY17 (revised consensus estimates) and at 7.5% to 8% in FY18 (RBI estimates), we believe that India's Logistics sector is poised for a healthy growth in medium term.
The building material space has seen significant re-rating over the last six years, initially led by a) impressive volume growth (FY11-FY15) aided by strong demand levers; b) superior operating performance (FY16-H1FY17), despite volume pressures, led by lower input costs and increasing premiumisation; and c) consequent debt reduction and rising return ratios. However , with the recent demonetis
The comments from industry participants on the new tariff order clearly indicate negative stance by broadcasting networks and few DTH operators. Commentaries by broadcasters like Star, Sony and Zee have highlighted the tariff order is against the provisions of The Copyright Act, the regulator has not heeded to industry feedback, and calculations have not been supported by research/statistics, a