Cadila Healthcare and Zydus Pharmaceuticals (USA) Inc. have entered into an agreement in principle with Warner Chilcott Company LLC to settle all outstanding patent litigation related to Asacol delayed-release tablets.
Under the terms of the agreement in principle, Warner Chilcott Company will grant Zydus a royalty-bearing license to market its generic Asacol HD beginning on November 15, 2015 or earlier under certain circumstances, following receipt by Zydus of final approval from the U.S. Food and Drug Administration (FDA) on its Abbreviated New Drug Application (ANDA) for generic Asacol HD.
Alternatively, if Zydus does not receive USFDA approval of its generic Asacol HD by July 1, 2016, Zydus will be permitted to launch an authorized generic version of Actavis’ product beginning on July 1, 2016. Other terms of the settlement were not disclosed. Asacol HD had sales of US $122mn during the quarter that ended on June 30, according to Warner Chilcott. We maintain our buy, on the stock with a target price of `894.
Lupin today received final approval for its Abacavir Sulfate, Lamivudine, and Zidovudine Tablets, 300 mg (base) / 150 mg / 300 mg from the United States Food and Drugs Administration (FDA) to market a generic version of ViiV Healthcare’s (ViiV)Trizivir Tablets, 300 mg (base) / 150 mg / 300mg. Lupin’s Abacavir Sulfate, Lamivudine, and Zidovudine Tablets, 300 mg (base) / 150 mg/ 300 mg is indicated in combination with other antiretrovirals or alone for the treatment of HIV‐1 infection. Lupin was the first applicant to file an ANDA for Trizivir® Tablets and as such will be entitled to 180 days of marketing exclusivity. Trizivir® Tablets, 300 mg (base) / 150 mg / 300mg had annual U.S sales of approximately $US111.6mn (IMS MAT Sep, 2013). Hence the product will contribute almost US $20-25mn during the exclusivity period. We maintain our accumulate with a target of `904.
PSU stocks gain across the board
State Trading Corporation of India (up 1.67%), Hindustan Copper (up 1.14%), Andrew Yule & Company (up 10.79%), Power Grid Corporation of India (up 1.72%), MMTC (up 0.47%), Bhel (up 1.03%), BEML (up 5.79%), Engineers India (up 5.69%), ITI (up 1.25%), Shipping Corporation of India (up 2.76%), HMT (up 2.24%), ONGC (up 1.36%), Oil India (up 0.37%), Coal India (up 1.93%), NHPC (up 0.28%), NTPC (up 2.05%), Neyveli Lignite Corporation (up 0.74%) and SJVN (up 0.72%) edged higher.
The BSE PSU index was up 1.07% at 5,931.75. It outperformed the Sensex, which was up 0.18% at 20,995.93.
The BSE PSU index underperformed the market over the past one month till 5 December 2013, falling 0.83% compared with the Sensexs 0.08% fall. The index, however, outperformed the market in past one quarter, gaining 10.87% as against Sensexs 10.42% rise.
Nifty December 2013 futures above 6200
Nifty December 2013 futures were at 6273, at a premium of 31.90 points over spot closing of 6241.10. Turnover on NSEs futures & options (F&O) segment surged to Rs 118966.76 crore from Rs 98999.80 crore on Wednesday, 4 December 2013.
State Bank of India December 2013 futures were at 1860.15, at a premium over spot closing of 1851.
ICICI Bank December 2013 futures were at 1141.05, at a premium over spot closing of 1136.90.
L&T December 2013 futures were at 1092, at a premium over spot closing of 1087.10.
In the spot market, the 50-unit CNX Nifty jumped 80.15 points or 1.3% to settle at 6,241.10, its highest closing level since 5 November 2013.
The December 2013 derivatives contracts expire on 26 December 2013.
Bajaj Auto, Hero MotoCorp in demand after brokerage upgrade
Bajaj Auto (up 1.36% to Rs 1,966) and Hero MotoCorp (up 2.79% to Rs 2,108.20) edged higher.
Meanwhile, the S&P BSE Sensex was up 33.57 points or 0.16% at 20,991.38
Bajaj Auto had underperformed the market over the past one month till 5 December 2013, falling 7.45% compared with the Sensexs 0.08% fall. The scrip also underperformed the market in past one quarter, rising 2.2% as against Sensexs 10.42% rise.
Hero MotoCorp had underperformed the market over the past one month till 5 December 2013, falling 1.96% compared with the Sensexs 0.08% fall. The scrip also underperformed the market in past one quarter, rising 5.51% as against Sensexs 10.42% rise.
A foreign brokerage upgraded Hero MotoCorp to outperform from sell. The brokerage also upgraded Bajaj Auto to underperform from sell.
Global Manufacturing PMI at 53.2 in November, highest level since May 2011
J.P.Morgan Global Manufacturing PMI at 53.2 in November, up from 52.1 in October registered its highest level since May 2011. The headline PMI, a composite index produced by JPMorgan and Markit in association with ISM and IFPSM has signalled expansion for 11 successive months.
The faster improvement in overall operating conditions was underpinned by stronger expansions of production, new orders and further job creation.
Among the largest industrial regions covered by the survey, the PMI for the US bounced back to reach a ten-month high, after slowing sharply to a one-year low in October. Growth meanwhile remained solid in Japan and the UK, with the PMI in each of these nations at their highest levels since July 2006 and February 2011 respectively. The modest and fragile recovery in the euro area continued, while the China PMI also posted slightly above the 50.0 mark.
Infrastructure, banking need Rs 10.4 trillion bond funding in the next 5 years : CRISIL
Indias infrastructure and banking sectors will require Rs 10.4 trillion from the bond market over the next 5 years, said CRISIL. To facilitate this, greater regulatory focus is required in three areas – deepening of the bond market, developing innovative credit-enhancement mechanisms for infrastructure projects, and building investor appetite for banks non-equity capital.
It is imperative to build on this foundation of growth and innovation to meet the sizeable funding requirements of the countrys infrastructure and banking sectors. Roopa Kudva, Managing Director and CEO, CRISIL, said, The Rs 10.4 trillion bond funding required for these two sectors translates to an average issuance of Rs 2.1 trillion annually in each of the next five years. This is nearly 60% higher than the average annual issuances made by these sectors in the last three years.
Iran deal big positive for India, says ASSOCHAM
The Associated Chamber of Commerce and Industry of India (ASSOCHAM) says the deal between Iran and six major powers of the world is a big positive for most of the developing nations, especially those importing crude oil like India. It would not only reduce Indias import bill as energy prices ease, but also make a big difference to inflation, which has remained bane of the Indian economy for the last six years, more so at the retail level.
For now, since the UN sanctions on oil stay intact, the deal would not make a major difference in Indias crude oil imports from the Persian nation. However, it has come as a major boost to the sentiment reflected in a sharp drop in the crude oil prices today itself – a development of significant gain to India. The deal also marks return of political stability in the Middle -East,ï¿½ says Mr. Rana Kapoor, President ASSOCHAM.
International prices of food Decline but Remain High as Weather Concerns Increase-World Bank
Global food prices declined by 6 percent over the last quarter, but are still not far from their historical peaks, according to the World Bank Groups latest Food Price Watch report. Wheat markets remain tight; and weather-related concerns in Brazil, Paraguay, Argentina, Ukraine, and the Russian Federation may further drive up wheat prices over the next few months.
Domestic prices showed typically large variations across countries, mainly attributable to seasonal trends but also due to a combination of factors including bad weather, public procurement policies, local supply shortfalls and currency devaluations.
Banks borrowed Rs 4490 crore from the central bank’s MSF as on 26 November 2013
Banks borrowed Rs 4490 crore ($718.85 million) from the central banks marginal standing facility (MSF) window on 26 November 2013, sharply lower than the Rs 13550 crore borrowed on 25 November 2013.
The Reserve Bank of India (RBI) cut the MSF rate by 25 basis points (bps) on 29 October 2013 in the Second Quarter Monetary Policy Review to 8.75 percent after raising the rate by 200 bps to 10.25 percent in mid-July. Banks usually tap the MSF rate during acute cash tightness. In the month of November 2013 till 26 November, on an average banks borrowed Rs 13062.47 crore. The highest borrowing till date in the month of November 2013 was recorded at Rs 28975 crore on 18 November 2013 and lowest at Rs 560 crore on 5 November 2013.
International Finance Corporation (IFC) Issues the first Tranche of US $ 161 Million Under its US $1 Billion Global Rupee Bond Program
International Finance Corporation (IFC) recently launched a $1 billion offshore bond program-the largest of its kind in the offshore rupee marketï¿½to strengthen India’s capital markets. Under the program, IFC will issue rupee-linked bonds and use the proceeds to finance private sector investment in the country. It may be noted that the exchange rate risk on the bond is borne by the investor.
Government in consultation with RBI and SEBI has been making concerted efforts to strengthen Indias capital market and open-up the economy in a calibrated and careful manner to attract greater foreign capital flows and investment keeping in view the evolving macroeconomic scenario and financing needs of the economy.
RBI receives US$ 22.7 billion under Forex Swap Window
The Reserve Bank of India (RBI) has received till date USD 22.7 billion under the special concessional window for swapping Foreign Currency Non-Resident (Banks) Deposits and Overseas Foreign Currency Borrowings. The RBI had announced these schemes on September 4, 2013.
Recovery in IIP encouraging: PHD Chamber
The recovery in IIP growth in the month of September 2013 is inspiring as it has geared to 2% from 0.4% in August 2013. However, the IIP has been witnessing sharp fluctuations since April 2013 as growth in IIP was recorded at 1.5% which decelerated to -2.5%. In the month of June 2013, the growth in IIP was recorded at -1.8% which increased to 2.8% in July 2013.
With positive developments at agriculture front such as good kharif crops production and inspiring rabi crops sowing, domestic demand conditions are expected to improve in the ensuing months and industry sector is expected to continue in the positive growth trajectory, going forward, said Mr. Suman Jyoti Khaitan, President, PHD Chamber of Commerce & Industry.
Ind-Ra: Capital Challenges Mount for Government Banks as Performance Deteriorates
India Ratings & Research (Ind-Ra) says that public sector banks would depend more on equity injections from the government, as their capital ratios could be impacted by falling internal accruals together with pressure to grow the loan portfolio. The government has been very supportive so far, which provides a strong support floor to the Long-Term Issuer Ratings of government banks. Any dilution in the government’s stance due to fiscal pressures could have an immediate impact on the ratings of weak banks.
Banks deteriorating performance also brings the role of hybrid debt capital in absorbing losses under focus. The market for Basel III Tier 2 instrument is fledging in India and investors will benefit if the Reserve Bank of India (RBI) articulates a framework for invoking losses on the holders of this instrument.
WPI inflation rises to eight-month high of 7% in October 2013
Indias Wholesale Price Index (WPI) based inflation increased to 7% in October 2013 from 6.46% in September 2013. Meanwhile, the inflation figure for August 2013 was revised slightly upward to 6.99% from 6.10% reported earlier. Onions prices pushed the Wholesale Price Index (WPI) as its prices rose by 278%, although a bit down from previous months inflation of 323%. The vegetable inflation, as a result of higher onion prices, stood at 78.4% in October against 89.4% in the previous month.
India gold demand falls 32% in September quarter-World Gold Council
Total gold consumption in India fell significantly to 148 tonne in the quarter ended September 2013, compared to 310 tonne in Q2 of 2013 or June quarter of this year, showed the latest World Gold Council Gold Demand Trends report. Indias contribution to demand in Q3 was affected as government measures to reduce gold imports, in an effort to control the current account deficit, began to take effect.
In the quarter ended September 2012, Indias gold demand was 210.1 tonne.
Indias gold market has been subject to much scrutiny in recent months, as the government has implemented a string of measures intended to deliver on its firm commitment to reduce gold imports, pointed the report.
RBI estimates CAD for this year to be about $ 56 billion
The Reserve Bank of India (RBI) governor, Mr Raghuram Rajan, said that there is no fundamental reason for rupee volatility. There has been some turmoil in financial markets across the world as fears of a sooner-than-anticipated Fed tapering have grown. However, domestically, the market is facing additional volatility as it has become concerned about policy rates and about oil marketing company demand for dollars. The RBI governor spoke after seeing the rupee fall for five straight sessions, and stepped in to steady frazzled nerves.
NLC to invest 29,239 crore in coal and power sector during 12th plan
Neyveli Lignite Corporation Limited (NLC) will invest Rs. 29,239 crore in coal and power sectors during 12th plan. Out of this, it will invest Rs. 26,728.40 crore for development of power projects and Rs. 2,510.70 crore for coal projects. During the period, NLC has planned expansion of a number of its ongoing projects also which include mines at Neyveli and Barsingsar (Rajashtan) and power plant at Tuticorin (Tamilnadu). NLC has also planned to setup wind farm with the investment of Rs. 364.75 crore and Solar Power Project with the cost of Rs. 13,319 crore. By the 2016-17, lignite production in the country is expected to reach 290.16MT.
Prakash Industries net profit disappoints
Prakash Industries 2QFY2014 Result Review (CMP: `37/ Target Price: Under Review/ Recommendation: Under review)
Prakash Industries’ (Prakash) reported disappointing results for 2QFY2014. Its net sales decreased by 9.9% yoy to `569cr (due to lower product prices in our view). However, raw material costs fell 14.9% yoy which resulted in EBITDA growing by 2.8% yoy to `80cr. The depreciation expenses of the company increased by 18.6% yoy to `30cr and interest costs also increased 14.5% yoy to `15cr. Hence, the PAT declined by 25.7% yoy to `33cr. We keep our rating and target price under review.
IRB Infrastructure Results were above estimates
IRB Infrastructure stocks up 6.32% post results
IRB Infrastructure 2QFY2014 Result Review (CMP:Rs88/ Target Price: under review/ Recommendation: Buy)
For 2QFY2014, IRB Infrastructure (IRB) reported a healthy set of numbers and was above our expectations. The company’s revenue came in above our expectation owing to healthy execution pace from its under-construction projects which led to higher-than-expected bottom-line. The company’s top line witnessed a strong growth of 11.1% yoy to Rs939cr in 2QFY2014 and was above our estimate of Rs857cr. The growth was mainly due to (a) healthy execution pace in the under-construction BOT projects and (b) increase in BOT toll revenue due to operation of some BOT projects. The E&C segment’s revenue grew by 11.0% yoy to Rs690cr (our estimate was Rs556cr) while the BOT segment witnessed 8.0% yoy growth to Rs277cr (our estimate was Rs300cr). On the EBITDAM front, IRB’s margin came in at 44.9% in 2QFY2014, indicating a decline of 13bp on a yoy basis and was higher than our estimate of 44.5%. Strong execution of its under construction BOT projects led to EBITDAM of 30.6% (including other income) for E&C segment. Interest cost grew by 19.0% yoy to Rs176cr during the quarter came. At the earnings front, IRB reported PAT of Rs107cr (our estimate was Rs86cr), a decline of 11.7% yoy. The better-than-expecetd earning performance was due to healthy execution pace from its under-construction projects and lower tax expense during the quarter. IRB is looking at both organic and inorganic options for growth with a threshold of 18% equity IRR and intends to allot 20% of consolidated cash flow post debt repayment towards acquisitions. IRB has a robust order book of Rs5,053cr (1.8x trailing E&C revenue, excluding O&M orders), which lends revenue visibility. Although a slowdown in order awarding by NHAI in road sector has been witnessed in 1HFY2014, IRB expects ordering activity to improve going ahead. We continue to remain positive on the stock and maintain our Buy rating. However our target price is under review.
Coal India’s adjusted net profit slightly below expectations
Coal India 2QFY2014 Result Review (CMP: `285/ Target Price: -/ Recommendation: Neutral)
Coal India (CIL) 2QFY2014 top-line was above our estimate; however, its bottom-line was slightly below our estimates. The company’s net sales grew by 5.8% yoy to `15,411cr (above our estimate of `15,083cr) due to increase in sales volumes which increased by 7.3% yoy to 109mn tonnes. Average availability of railway rakes stood at 186/day in 1HFY2014, compared to 171/day in 1HFY2013. However, realizations declined by 1.4% yoy to 1,414/tonne despite price hikes (this can be probably due to lower realizations/e-auction volumes). Despite 5.8% yoy growth in top-line, EBITDA decreased by 8.2% yoy to `3,176cr due to higher raw material costs (+18.1% yoy to `2,251cr) and contractual expenses (+27.6% yoy to `1,394cr). The depreciation expenses increased by 27.8% yoy to `495cr; hence, adjusted net profit was flat yoy at `3,043cr (below our estimate of `3,178cr). We maintain our Neutral rating on the stock.
Stocks down by 0.7%
Results below expectations
Cipla – (CMP: `413 /TP: -504 /Upside: -22.0)
Cipla posted results below expectations, except the sales which were slightly higher than expectations. On net sales front the company posted sales of `2,463.2cr V/s `2,413cr expected, a yoy growth of 13.7%. The sales growth was on account of the exports, which grew by yoy 15.2%, while domestic sales grew by11.6% yoy. On the operating front, the OPM (excluding technical know-how fees) is expected to come in at 20.9% V/s expectation of 24.1%. The margins were mainly under pressure on back of the higher staff cost during the period, which rose by 38.6% yoy. Consequently, the net profit came in at `358.1cr V/s expected `423.1cr, yoy dip of 26.6%. We maintain our buy recommendation on the stock with a price target of `504.