The government finally announced the operating guidelines for the Credit Linked Subsidy Scheme for Middle Income Group (CLSS for MIG), in which the eligibility criteria for borrowers is surprisingly quite inclusive than anticipated. However, despite the inclusion of higher income groups and substantially increasing the eligible dwelling carpet area the scheme appears more lucrative for borrower
* We recently interacted with battery dealers, Exide and Amara Raja. We understand Exide has garnered market share with its renewed strategy, and this momentum is expected to continue in the short to medium term.
* We believe the battery industry is expected to grow with the ever-increasing vehicle population due to rising incom
Transition to inverters gathers pace
LG a key beneficiary; Voltas takes share in fixed-speed 3-star range We highlight below feedback from one of the largest retail chains for consumer durables in North and West India on air conditioner (AC) sales and the impact of LG’s exit from fixed-speed ACs. North and West India together account for 55-60% o
Exports offsetting poor domestic demand
As per the JPC provisional data, finished steel production grew significantly by 13% in the month of Feb’17 to 8.8 mt, an all-time high growth, whereas consumption remained tepid and grew by only 3% YoY to 7.3 mt. Production from ESSAR+JSW+JSPL has increased significantly by 5 mt (+22% YTDFY17) to 28 mt fol
* The Indian property market is currently in the midst of a perfect storm with twin impact of demonetization and imminent introduction of the Real Estate Regulator (RERA) leading to falling demand on the back of an expected price correction in residential property prices, deferment of supply by developers and residential inventory levels of 30-48 months across Tier I cities.
Media & Entertainment Sector - Tariff order: Execution challenges and legal battle to delay implementation - Emkay
* After go ahead from the Supreme Court, Trai recently released new tariff order, interconnection regulation and define quality of services that needs to be implemented within 180 days. Premise of final order is largely similar to draft but with few changes.
* Regulations are focused towards transparency, non-discrimination, non-exclusivity of content contracts between the stakeholder
NIFTY PSU BANK Current Close: 3223.95 Trend : Negative
* NIFTY PSU BANK is the most underperforming sectoral indices, as it closed down by around 2.23% at 3223.95, as against a down move of 0.47% in benchmark NIFTY 50.
* The Sector made a recent swing high @ 3503.90 a few weeks back,
NIFTY METAL Current Close: 3187.10 Trend : Positive
* NIFTY METAL is the most outperforming sectors amongst all the indices last week. It moved up by 2.14%, as against a down move of 0.47% in benchmark NIFTY 50.
* The Sector is in long term Bullish Trend with the formation of
* Jaishankar discusses counter‐terrorism, bilateral relations with McMaster
In order to take forward partnership defined with Barack Obama administration, post the Trump government taking over Indian Foreign Secretary Subrahmanyam Jaishankar met US National Security Adviser Lt. Gen H
Prices Inch-Up on Moderate Demand Recovery
Demand environment witnessed a mild recovery in Feb’17 on Month-on-Month (MoM) basis on the back of visible pick-up in construction activities after being marred in Jan’17 due to festivals and wedding season. Barring Southern markets, all regions witnessed an improvement in demand in Feb’17.
Agri Input & Chemicals - Agri Digest – RM tailwind drives Q3 profitability despite muted volumes - Emkay
Agri Input & Chemicals
Agri Digest – RM tailwind drives Q3 profitability despite muted volumes
* Q3FY17 revenue growth of agri-input companies was fairly muted due to (i) delayed start to the rabi season, (ii) deficient monsoon in South India resulting in lower sowing, especially of paddy, which cons
Consumption blip, outlook robust
* Consumption declines on surge in spot LNG prices: India’s gas consumption declined to 134mmscmd in Jan’17 (-1.5% YoY, -4.6% MoM), led by lower offtake from the power generation, fertiliser and city gas distribution (CGD) segments. LNG consumption was
Metal Price move slowing down!!
* Iron ore prices continued to rise sharply despite being in oversupplied market and concern over Chinese steel capacity cuts. Coking coal prices however fell further, though with a lesser intensity
* Globally steel prices remained broadly stable witho
SECTOR – REAL ESTATE
* The Real Estate sector witnessed slowdown during Q3FY17 owing to negative effect of demonetization. The residential space witnessed severe slowdown as customers adopted a wait‐n‐watch mode as demonetization impacted their decision making. However the commercial sp
SECTOR – CAPITAL GOODS
* EPC companies in the T&D sector continued to enjoy double digit revenue growth with stable margins amidst a steady order inflow position (KEC/Kalpataru). Whereas for the companies involved in the project business, execution continued to be at a cyclical low with
* The power sector continued to witness weak demand growth during Q3FY17 with YoY growth remaining at 1% same as it was in Q2FY17. This was despite power generation showing an improvement in YoY growth to 5.1% in Q3FY17 against 1.4% YoY growth in Q2FY17.
* The quarter saw subdued merchant power prices at ~Rs 2.5 per unit with Yo
Telecom Sector MoUs growth led by high incoming termination minutes at much lower yields - India Nivesh Sec
MoUs growth led by high incoming termination minutes at much lower yields
* The incumbents felt the full quarter impact of the launch of services by Jio in Q3FY17 with voice segment taking a beating as ARPMs fell on account of high volume‐low yielding terminating minutes on their network. Jio has reached surpassed 100 mn subscriber mark within 170 da
We are suspending coverage on the Pharmaceutical sector for the time being. We will re-instate coverage on the same in due course. In the meantime, please treat all our existing recommendations (given in the table below) as closed.
A brief write-up on our covered stocks is as under:
Alembic Pharma Ltd (ALPM)
Q3FY2017 results review
Steady quarter in a challenging environment:
In Q3FY2017, the top five Indian IT companies surprised positively in terms of their operating performance despite furloughs (less number of working days), continued pricing pressure, cross-currency headwinds (especially GBP depreciation) and
Automobile sector witnessed decent volumes in UV, 2W and Tractor segment
* Auto companies registered stressed performance in sales volumes during Q3FY17. Except for Eicher’s Royal Enfield, Tata’s Tiago and few models of Maruti (Breeza, S‐Cross & Baleno)which have long waiting periods, all the companies suffered the continuing short te
NIFTY ENERGY holds strong Bullish momentum
* NIFTY ENERGY is the most outperforming sector amongst all the indices last week. It moved up a good 4.29%, as against an up move of 1.34% in benchmark NIFTY 50.
* The Sector came into Bull
Pharmaceuticals Q3FY17 Review- Weakening structural dynamics; valuations factor in negatives for time being - Emkay
* Our Emkay Pharma universe saw revenue growth of 11% YoY and 2% QoQ, EBITDA growth was 11% YoY and 3% QoQ whereas APAT remained flat on YoY basis and declined by 2% sequentially. The key underlying thread in Q3 was the higher than expected pricing pressure as well as increasing R&D spend rate by Indian pharma companies as they
*Our Auto OEM universe saw a revenue decline of 1% YoY, while ex-Tata Motors, it’s a growth of 3% YoY.
* Eicher Motors, MSIL and AL saw the highest revenue growth in our OEM universe at 43%, 12% and 8% respectively. Amongst ancillaries, Apollo and Motherson saw 17% & 12% YoY growth in topline respectively.
Our pharma universe posted in-line aggregate revenue growth of 13% YoY in Q3FY17, while the sector’s operating margin came in 120bps ahead of our estimate. Core EBITDA (ex-exclusivity sales) remained weak given the combined impact of price erosion in the US market and demonetisation headwinds in the domestic business. We remain selective on the sector and reiterate CDH, ARBP and SUNP as t
Our metals and mining coverage delivered in-line Q3FY17 earnings on an aggregate basis. Company-wise, JSTL, NMDC, AIAE and JSP beat street estimates by over 10%, while SAIL underperformed. TATA’s in-line performance despite an earnings beat in its Indian operations was due to weakness in the overseas business. We expect a stronger Q4 across the sector as higher metal prices outweigh the r