Trendlyne Marketwatch    
21 Aug 2019
LIVE: Markets lower, Gati sees credit downgraded

Markets are volatile in trading, with the Sensex marginally higher and the Nifty50 flat as of 10 am.
The market breadth is tilted in favour of sellers. About 882 stocks declined and 608 shares advanced on National Stock Exchange.

  • Despite market volatility, some stocks like Kotak Mahindra Bank and ACC Limited are still getting broker target price or recommendation upgrades.
  • The Sensex is sharply down as the day nears market close, 0.73% lower as of 315 pm. Nifty50 is down 0.91% at 10,916.
  • Nomura expects India GDP growth to slow further in the April-June quarter of this year to 5.7 per cent. Slowdown drivers according to analysts are falling consumer spend, weak investments and service sector. 
  • Logistics company Gati is trading lower on downward rating for its long term and short term banking facilities. 
  • Navin Flourine, Coffee Day among the top gainers in markets today.
  • Dr. Reddy fell sharply after the company received eight Form 483 observations by U.S. FDA in the audit of formulations manufacturing plant at Duvvada, Vishakapatnam.


 

Riding High:

Largecap and midcap gainers today include Biocon Ltd. (223.25 2.31%), Eicher Motors Ltd. (16185.95 1.83%) and Future Retail Ltd. (420.80 1.83%).

Downers:

Largecap and midcap losers today include Edelweiss Financial Services Ltd. (112.50 -5.78%), Oberoi Realty Ltd. (506.70 -3.60%) and Vodafone Idea Ltd. (5.65 -3.42%).

BSE 500: highs, lows and moving averages

2 stocks took off, crossing 52 week highs, while 31 stocks hit their 52 week lows.

Stocks touching their year highs included - GlaxoSmithKline Consumer Healthcare Ltd. (7959.00 -0.10%) and Trent Ltd. (478.00 0.48%).

Stocks making new 52 weeks lows included - Bharat Heavy Electricals Ltd. (48.30 -3.30%) and Britannia Industries Ltd. (2336.00 -2.40%).

3 stocks climbed above their 200 day SMA including Bharat Electronics Ltd. (94.65 1.39%) and Max Financial Services Ltd. (437.40 -0.64%). 11 stocks slipped below their 200 SMA including IDFC First Bank Ltd. (44.10 -1.78%) and JSW Holdings Ltd. (2635.00 -1.28%).

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Trendlyne Marketwatch    
20 Aug 2019

Markets closed lower today. The Sensex fell 0.2 percent to close at 37,328.01 and the Nifty50 declined as much as 0.33 percent to 11,017. The broader Nifty 500 Index fell as much as 0.45 percent. The day's updates are here. Eight out of 11 sectors compiled by NSE traded lower, while the NSE Nifty IT Index was the top sectoral gainer, up 1.2 percent.
 

Riding High:

Largecap and midcap gainers today include Max Financial Services Ltd. (440.20 5.07%), Rajesh Exports Ltd. (727.25 4.33%) and Maruti Suzuki India Ltd. (6190.95 3.48%).

Downers:

Largecap and midcap losers today include NMDC Ltd. (90.15 -11.53%), Edelweiss Financial Services Ltd. (119.40 -8.68%) and YES Bank Ltd. (71.20 -7.11%).

Movers and Shakers

20 stocks in BSE 500 are trading on high volumes today.

Top high volume gainers on BSE included Venky's (India) Ltd. (1486.70 9.92%), Mahanagar Gas Ltd. (848.60 7.83%) and Himachal Futuristic Communications Ltd. (19.80 5.04%).

Top high volume losers on BSE were NMDC Ltd. (90.15 -11.53%), Inox Wind Ltd. (36.00 -8.28%) and Oberoi Realty Ltd. (525.60 -3.65%).

JSW Holdings Ltd. (2669.10 -1.11%) was trading at 15.7 times of weekly average. Varroc Engineering Ltd. (426.50 -2.76%) and Apar Industries Ltd. (553.75 0.67%) were trading with volumes 12.2 and 10.1 times weekly average respectively on BSE at the time of posting this article.

BSE 500: highs, lows and moving averages

4 stocks overperformed with 52 week highs, while 36 stocks hit their 52 week lows.

Stocks touching their year highs included - Berger Paints (India) Ltd. (366.70 0.98%), GlaxoSmithKline Consumer Healthcare Ltd. (7967.00 1.60%) and Trent Ltd. (475.70 0.85%).

Stocks making new 52 weeks lows included - Asahi India Glass Ltd. (185.10 -3.24%) and Bank of India (66.55 -3.55%).

6 stocks climbed above their 200 day SMA including Max Financial Services Ltd. (440.20 5.07%) and KNR Constructions Ltd. (246.80 0.53%). 18 stocks slipped below their 200 SMA including NMDC Ltd. (90.15 -11.53%) and Bharat Electronics Ltd. (93.35 -4.60%).

Aurobindo Pharma Ltd.    
20 Aug 2019
598.25
1.26%
USFDA warning letter to Aurobindo Pharma Srikakulam facility casts a shadow on Q1FY20

by Sandhya Krishnan

The USFDA warning letter is a major adverse regulatory hurdle faced by Aurobindo Pharma. Nonetheless, company officials have put up a brave face, and have committed to completing the required CAPAs by the end of this calendar year to allow re-inspection of units XI, I and IX by the FDA.

Quick Takes

  • Delay in clearance on issues raised by the FDA warning letter would impact not FY20, but launches for FYE 2021.
  • For Q1FY20, the formulations business captured the lion’s share, contributing Rs. 4,712 crores, i.e. 86.6% to the total revenue, and clocking a growth of 35% YoY.
  • As part of its deleveraging strategy, the net debt for Aurobindo declined by $131 million QoQ to US$593 million in Q1FY20.

FDA issues will not impact exising business, says management

“We believe the existing business from this facility will not be impacted,' Managing Director N Govindarajan said. 'We will be engaging with the regulator and are fully committed in resolving this issue at the earliest. The firm is committed to maintaining the highest quality manufacturing standards at all of its facilities.’’

While there is no immediate material impact, given that negligible products manufactured by this facility were awaiting approval, the public perception and investor sentiment might take a hit. There is also the anticipated risk of similar regulatory action from other sites, pending inspection. Aurobindo Pharma will have to take remedial steps involving a prolonged process with resultant site costs to comply with the USFDA’s CGMP standards on product quality.

All of these developments have been reflected in the share prices that slumped over 7% to a low of Rs 578.75 on the BSE. The silver lining is that around 15 products with API source are expected to be derived from all the three facilities spread over 2-3 years.

In the event of delays in clearance, the fallout of future product launches - estimated at 25% of new drug applications connected to these sites - would not be felt in the near term, but on launches for FYE 2021. Currently, a large portion of these products are channeled towards captive consumption. In spite of an export ban from these units, existing products will be allowed to be sold in the U.S.

Q1 performance: Along expected lines with headroom for more growth, Regulatory risk continues to cast a shadow

Revenue grew 28% YoY to Rs. 5,445 crores supported by growth in formulations business across markets. The operating income, which stood at Rs 1146 crores, registered a 47% Y-o-Y jump compared to the previous year. EBITDA margins were a robust 21.1%, with bottom-line growth of 40% to Rs.636 crores.

In terms of result breakdown by business verticals, the formulations business captured the lion’s share, contributing Rs. 4,712 crores, i.e. 86.6% to the total revenue, clocking a growth of 35% YoY. This was attributable to the increase in revenues realized from US markets i.e. a 42% YoY jump to Rs 2688 crores owing to new product launches and higher volumes of existing products. API business came a distant second with revenues of Rs.732 crores, a decline of 2% YoY.

This is aligned to Aurobindo’s strategy of vertical integration, with considerable internal API sales. As part of its deleveraging strategy, the net debt declined by $131 million QoQ to US$593 million in Q1FY20, largely due to robust topline growth, with resultant reduction in working capital requirement. 

For the quarter ended 30th June 2019, out of 551 ANDAs filed, cumulatively, 386 obtained final approval with 26 attaining tentative approvals and 139 ANDAs to be reviewed.

Future outlook includes a deep product pipeline

While regulatory concerns continues to remain a downside risk, Aurobindo’s focus on a robust product pipeline with continuous launches (40 incremental launches expected in 9MFY20, in addition to the 15 launches in Q1FY19-20 in the US markets) and the ramping up of the injectables business could boost growth prospects. Additionally, the enhanced R&D investment, slated to be 5-5.5% of revenue in FY19-20 (4.5% of revenue in Q1FY19-20) could keep Aurobindo in good stead. Any adverse regulatory outcome however, could negatively affect the earnings estimates.

About the company

Aurobindo Pharma, engaged in the manufacture of generic formulations and active pharmaceutical ingredients (APIs), derives over 90% of revenues from global markets and enjoys a strong brand positioning in the US. With a diversified product portfolio and significant backward linkages, the company derives about 70% of its API from in-house facilities.

As part of its inorganic growth strategy in the US markets, Aurobindo acquired Sandoz’s dermatology and oral solid business. Upon deal completion, this would establish Aurobindo as the #2 generics player in the US by subscriptions volume.

Aurbindo Pharma is currently in 14 stock screeners

Aurobindo Pharma Ltd. is trading below it's 100 day SMA of 661.54
9.65
-9.81%
CG Power falls sharply on news of fraudulent transactions

CG Power fell sharply in share price today on news of fraudulent employee transactions. YES Bank, which owns 12.79 per cent stake in the company, also declined on investor worries of exposure.  The board published comments to exchanges after a 13 hour long meeting which included discussions with the risk and audit committees. The board members emerged bleary-eyed at 4 am with key disclosures to the Exchanges. CG Power noted, "The total liabilities of the Company and the Group may have been potentially understated by approximately Rs 1053.54 crores and Rs 1,608.17 crores respectively as at 31 March 2018; and by INR 601.83 crores and INR 401.83 crores respectively as at 1 April 2017."

The company added, "Advances to related and unrelated parties of the Company and the Group may have been potentially understated by INR 1,990.36 crores and INR 2,806.63 crores respectively as at March 31, 2018; and by INR 1,479.34 crores and INR 1,331.47 crores respectively as at April 1, 2017."

CG Power said the fraud came about when company assets "were purportedly provided as collateral without due authority; and the Company was made a co-borrower and/or guarantor for enabling ostensibly unrelated third parties to obtain loans without due authorisation. The moneys so obtained were immediately and without due authorisation routed out of the firm".

CG Power is identified as a "weak stock" on trendlyne, with low durability, valuation and momentum scores. The CFO of the company had resigned on March 8, but was asked to continue in light of the revelations. 

 

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Promoters released all pledges in Jun 2019 qtr.
Trendlyne Marketwatch    
20 Aug 2019
LIVE: Markets close lower, Gautam Thapar in focus

Markets are volatile in trading.  Seven out of 11 sectoral gauges compiled by NSE are lower, with NIfty Metal the top loser and Nifty IT the top gainer.

Riding High:

Largecap and midcap gainers today include Havells India Ltd. (682.35 2.81%), MindTree Ltd. (717.75 2.21%) and Infosys Ltd. (794.00 2.10%).

Downers:

Largecap and midcap losers today include Vodafone Idea Ltd. (5.65 -5.83%), YES Bank Ltd. (73.50 -4.11%) and IDBI Bank Ltd. (27.10 -3.04%).

BSE 500: highs, lows and moving averages

1 stock made 52 week highs, while 13 stocks tanked below their 52 week lows.

Stock touching their year highs included - Trent Ltd. (474.30 0.55%).

Stocks making new 52 weeks lows included - Biocon Ltd. (219.90 1.69%) and Britannia Industries Ltd. (2440.50 -1.53%).

9 stocks climbed above their 200 day SMA including Intellect Design Arena Ltd. (230.05 2.45%) and JSW Energy Ltd. (69.95 0.07%). 4 stocks slipped below their 200 SMA including Gulf Oil Lubricants India Ltd. (830.05 -1.02%) and Cholamandalam Investment & Finance Company Ltd. (263.25 -0.34%).

Sanghi Industries Ltd.    
19 Aug 2019
48.75
-2.60%
Rakesh Jhunjhunwala's RARE Enterprises meets with Sanghi Industries

Rakesh and Rekha Jhunjhunwala's investment company RARE Enterprises will be meeting with senior management of cement firm Sanghi Industries on August 20th. Sanghi Industries according to management comments, is looking to increase its cement grinding capacity from 4.1 mt in the current scenario to 8.2 mt by FY21, by adding one addiitonal line of clinker unit, as well as split grinding units of 2 mt each in Kutch and Surat.

The company saw a reasonably strong June quarter performance, but volumes declined 12% YoY in the quarter due to what it said was demand pressure in Gujarat (Gujarat accounts for over 85% of the company's sales mix), driven by water shortage issues, elections and labor shortages. 

Find information like this via Discover, which searches realtime inside corporate filings. 

Sanghi Industries Ltd. has lost -21.56% in the last 1 Month
Trendlyne Marketwatch    
19 Aug 2019
LIVE: Markets close with marginal gains, as investors wait for news

Markets didn't hold on to early gains, as investors are likely to only improve sentiment with concrete actions from the government towards economic recovery. The Sensex rose 0.19 percent and the Nifty 50 closed 0.1 percent higher. The broader Nifty 500 Index ended the day 0.1 percent higher. While talks are on between the government and various private sector players, no announcements have happened as yet. 

  • DHFL is gaining among news of banks agreeing to a resolution plan for the beleagured lender. 
  • Godfrey Philips, Hathway Cable are among the top gainers in markets today.
  • Sun Pharmaceutica is among the top gainers in share price today after it struck a deal with China System Holdings to sell generics in the Chinese market. This opens up a large and significant space for Sun Pharma in Asia.
Riding High:

Largecap and midcap gainers today include Sun Pharmaceutical Industries Ltd. (427.30 3.04%), RBL Bank Ltd. (408.70 2.97%) and SBI Life Insurance Company Ltd. (857.15 2.61%).

Downers:

Largecap and midcap losers today include Vodafone Idea Ltd. (6.30 -2.33%), Edelweiss Financial Services Ltd. (131.50 -1.68%) and Aditya Birla Fashion and Retail Ltd. (186.00 -1.61%).

BSE 500: highs, lows and moving averages

7 stocks overperformed with 52 week highs, while 4 stocks tanked below their 52 week lows.

Stocks touching their year highs included - Apollo Hospitals Enterprise Ltd. (1500.35 2.02%), Asian Paints Ltd. (1599.00 0.10%) and Bata India Ltd. (1481.70 0.55%).

Stocks making new 52 weeks lows included - GIC Housing Finance Ltd. (189.05 -3.45%) and Reliance Communications Ltd. (1.20 0.00%).

8 stocks climbed above their 200 day SMA including Godfrey Philips India Ltd. (1033.00 3.89%) and KNR Constructions Ltd. (239.50 2.61%). 3 stocks slipped below their 200 SMA including Atul Ltd. (3568.50 -0.24%) and United Breweries Ltd. (1342.55 0.30%).

Photo by Appaiah

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19 Aug 2019  Like
Varun Beverages Ltd.    
16 Aug 2019
640.45
-0.10%
As summers heat up, PepsiCo bottler Varun Beverages sees double digit growth

by Suhani Adilabadkar

The bottler for PepsiCo, Varun Beverages, is among the best proxy plays on the Indian soft drink industry and continued with its CY18 growth momentum with robust June quarter results. Strong organic growth both domestically and internationalally, faster consolidation of acquired south and west sub-territories and extended summers all led to double-digit growth across major financial parameters. Varun Beverages' share price has been on the upswing, and it managed to double investor wealth over the past three years as the company has been aggressively expanding its reach across India, acquiring Pepsi’s sub territories since 2015.

Quick Takes:

  • VBL, is the largest bottler for PepsiCo in South Asia and the second largest globally behind Tingyi Holdings Corp of China.
  • CSDs (Carbonated Soft Drinks) constitute 75% of revenue mix followed by packaged drinking water at 18% and juice-based drink forming 6%.
  • The company has acquired Pepsi franchise rights of south and western regions in seven states and five union territories in February 2019.
  •  PepsiCo has renewed its license with VBL till 2039.

VBL Story

Varun Beverages, as a major PepsiCo franchisee possesses rights to manufacture, distribute and sell CSDs (carbonated soft drinks), fruit juice-based drinks, packaged drinking water, sports drinks and energy drinks. In other words, VBL has manufacturing, selling and distribution rights to PepsiCo’s several popular brands, Pepsi, Mountain Dew, Mirinda, 7UP, Tropicana, Aquafina(packaged drinking water), Slice, Evervess, and Gatorade. The company has presence across 6 countries, 3 in the Indian Subcontinent, India, Sri Lanka, Nepal contributing approx. 80% revenues followed by African countries, Morocco, Zambia and Zimbabwe constituting the remaining 20%.

As on December 31, 2018, VBL has a total of 26 plants with CSDs constituting 75% of revenue mix followed by packaged drinking water at 18% and juice-based drink forming 6%.

Robust June quarter Performance

The June quarter is the strongest performing period or the peak season for the soft drink industry, and VBL reported robust financial performance on the back of strong volume growth of 43%, sturdy international operations, and consolidation of its recently acquired south and west territories. Climate change resulted in extremely hot summers across the Indian sub-continent, and thirstier people meant sales strength for the bottler. Consequently, all is well into double digits, Revenue grew 36.5% YoY at Rs. 2810 cr against Rs. 2059 cr same period previous year. Operating profit also moved on a similar plane and jumped 37% YoY from Rs. 575 cr to Rs. 788 cr in Q2 CY19 with margin expansion of just 11 bps as higher expenditure cost, 36% rise YoY curtailed operating margins to 28.03% against 27.92% in Q2 CY18. Net Profit grew 32% YoY on the back of robust volume growth from Rs. 306 cr in Q2 CY18 to Rs. 404 cr in June quarter ended CY19.  

Total sales volumes for the quarter was up 43% YoY at 195.5 mn cases compared to 136 mn cases in Q2 CY18. Robust volume growth was supported by strong seasonal domestic organic growth of 18.5% along with international organic growth of 34%. Morocco and Zimbabwe were the major growth drivers for international business along with Sri Lanka which came back to growth plane after sugar tax abolition by the end of last year. South and West India sub-territories have been consolidated from 1st May 2019, adding strong volume growth and balancing the seasonality factor in the overall VBL’s revenue equation.   

Future Growth Fizz

In layman terms, VBL is the contract manufacturer and the largest bottler for PepsiCo. in South Asia and the second largest globally behind Tingyi Holdings Corp of China. The company procures raw material (concentrate), undertakes manufacturing, bottling and packaging at its production facilities and through its extensive distribution network transports finished goods to retail outlets whereas brand development and consumer marketing is undertaken by PepsiCo. This being its basic fundamental operational premise, VBL has strengthened its symbiotic relationship with Pepsi Co over the past 27 years evident from the later divesting its sub territories in favour of VBL in the past few years. Starting with acquisition of Delhi sub-territory in 2013 followed by parts of Uttar Pradesh, Uttarakhand, Himachal Pradesh, parts of Haryana, Punjab and the union Territory of Chandigarh in 2015. Madhya Pradesh and Orissa came in 2017 and then 2018 brought in acquisition of sub-territories of Jharkhand, Chhattisgarh and Bihar. This being mainly North and Eastern goblets, coming to about 51% of total Pepsi volumes.

Though the stock has moved in conjunction with VBL’s aggressive expansion exercise over the past three years, there has been 20% upswing since February 2019. The reason being acquisition of franchise rights in underpenetrated south and western regions in seven states – Gujarat, Maharashtra, Karnataka, Telangana, Andhra Pradesh, Kerala and Tamil Nadu and five union territories. With this, VBL now accounts roughly 83% of PepsiCo India’s beverage sale volume from 51% earlier and expanding its footprint across 27 states and 7 union territories.

Clarifying with respect to VBL’s latest acquisition, Mr. Ravi Jaipuria, Chairman, Varun Beverages said, “Seasonality in the North and East is 17 – 18%, whereas in South and West it would be 12 - 12.5%. So, seasonality wise, new regions are much better and the utilization of manufacturing plants would be much better in the South and West”. The company has spent Rs. 1850 cr for south and west rights to ease out this seasonal impact from its business model as sales drop significantly after June in north and eastern markets, thus ingraining relatively stable south and west regions in its revenue mix.  

In addition to this outlined trajectory, there are other ingredients adding to its long term growth fizz. International operations namely Morocco got profitable within 10 months of commencement and has grown  during the quarter with the commissioning of second line of water unit, Zimbabwe is growing in double digits and Srilanka moving back to growth plane after the abolition of sugar tax. International operations also provide seasonal respite as unlike India, third quarter is peak season for Morocco and overall second half of the year is volume heavy for Africa whereas Srilanka and Nepal follow Indian seasonal patterns.

Apart from accretive acquisitions and strengthening international operations, VBL initiated product portfolio enhancement by launching Fizzy drink in seven flavors, and expanding flavors  in Gatorade, Quaker Value-Added Dairy, Slice and undertook green field expansion at Pathankot for manufacturing Tropicana, (which was earlier a supply and distribution arrangement), commencing operations from June and would be adding to the revenue stream from next quarter.  On the juice front, VBL management indicated that Juice as a category has been growing at a rapid pace with the company accounting for about 100% of Tropicana volumes from April 2019. Thus, higher proportion of Juice and NCD segment will boost long term profitability by reducing seasonality and improving realizations. Last but not the least VBL is looking to manufacture value added dairy products under its brand which would be reflected in revenues by Q3CY19.

Moving on to future capex plan for VBL, Mr Jaipuria said, “For the next two years, we are not looking at any greenfield expansion”. After attaining 83% of Pepsi’s India volumes and renewing its license with the global giant for 20 years, till 2039, the longest pact with any company. 

 

    Varun Beverages Ltd. has gained 20.70% in the last 6 Months