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Dr. Reddy's Labs (DRRD) today received final approval from the USFDA to launch Buprenorphine and Naloxone Sublingual Film, a generic version of Suboxone, in the the US market. Although the product is covered by seven patents until 2023, DRRD has got favorable ruling from the district court for four main patents. Indivior has challenged this ruling in the higher court and the decision is still pending. DRRD is doing an at risk' launch of gSuboxone based on the comfort it has on the patent litigation. The drug is indicated for the treatment of opioid addiction. Competitive dynamics of gSuboxone: Apart from DRRD, Mylan has received...
Transmission spend driven by SEBs and TBCB projects Maintains FY19 margin guidance of 10% We met KEC International's (KECI) management. Key takeaways:...
The buyback should result in 2% accretion to EPS from a reduction in the share count. However, the cash reduction would result in a decline in other income, which is dominated by a yield of 8% on a pre-tax basis on the cash. Other income foregone would be to the tune of INR12-13b, which would result in an adverse EPS impact of ~2.5%, implying net EPS decline of ~50bp. However, given the reduction in networth, the RoE is likely to improve by 2pp....
Strong focus on PCR, 2W and OHT bodes well for margins We met CEAT's MD Mr Anant Vardhan Goenka and CFO Mr Kumar Subbiah at the RPG Annual Investor Conference 2018. Key takeaways: CEAT plans to invest INR35-40b over the next 3-5 years to expand its capacity. This would lead to its capacity increasing by ~50% post full ramp-up in FY21. Majority of this capex is directed toward its focus areas of passenger car radial tyres...
As Digital scales up, profitability should follow suit Approach to Digital reaping dividends: Digital has been growing at more than 30% and now contributes 41% of ZENT's total revenue. More than 80% of the business has been home-grown; the company will continue developing new solutions to further strengthen this segment. Marked by Return on Digital' proposition: ZENT's Return on Digital (ROD) framework is now part of every deal, with everything being native digital, mobile and cloud. The suite has various platforms that are made for distinct...
We believe FY19 may see a gradual comeback for large cap pharma companies, driven by (1) Actual and likely regulatory resolutions, (2) Moderating price erosion and (3) Several product launches across generic and specialty categories in 2HFY19. We believe earnings have bottomed out, while the base is favourable. Upgrade Sun Pharma to BUY. Beleaguered by regulatory clampdowns, channel consolidation in the US and increased competition, earnings of US-focused Indian pharma companies dropped 30% over FY18. Despite the all-too-visible business challenges, they persisted with higher R&D; activity (related to complex generics and specialty business), which aggravated the pain. As a result, the NIFTY Pharma index has corrected ~30% over three years (after 30% CAGR over FY11-15).
13 June 2018 TCS has announced that its board will meet on 15 June 2018 to consider a proposal for buyback of shares. In February 2017, TCS had announced a buyback offer of INR160b at a price of INR2,850 per share (adjusted price of INR1,425), which was at a 16% premium to CMP. Also, this was The promoters had also tendered their shares the last time, but that was 2.5% of their holding (and not the prescribed maximum of 2.85%). As a result, their holding had increased to 73.57% from 73.31%. As a consequence, tendering accepted from non-promoter holders was 3.8%. However, the acceptance ratio for small retail investors was 100% due to the SEBIs mandate that companies reserve 15% of buyback for small shareholders with holdings worth less than INR200,000. This implies a lesser acceptance ratio for institutional holding closer to the 2.85% of equity bought back.
Essel Propack (Essel) in 4QFY18 posted revenues of Rs 628 Cr. due to continued GST related impact on Indian operations; however Europe showed signs of recovery led by Germany.
The company mentioned that Carvaan has been positioned as a gift product' with target audience of 40+ age group. It further said the device has achieved immense success in a short duration due to its correct market positioning. The company sold 387,000 Carvaan devices in FY18 even before commercial advertisement started and guided for 750,000+ device sale in FY19 including all its variants. It is also looking to tap international markets on domestic success of the device and launched the device in the UK at a price point of 120, followed by its launch in US...
Source: Bloomberg, Centrum Research, *as on 8th June 2018 Recommendation and key risks: We have revised our FY19E and FY20E EPS downwards by 41% and 43% respectively. We downgrade MPL to Hold from Buy rating, with a TP of Rs31 based on 18x March'20E EPS of Rs1.7, and a 10.2%% upside from CMP. Key positive upsides would be additional ANDA approvals from US FDA...
We recently met the CEO of Federal Bank (FBL), Mr Shyam Srinivasan and gleaned incremental insight into the performance and outlook for FBL. (Also, see Detailed Management Meeting Takeways on page 2). Given its outlook and FY19E/20E RoE profile of 11%/12.8%, FBL is a prime re-rating candidate, currently trading at 1.1x FY20E P/BV. It may, also, be noted that 4QFY18 results were mispriced by the market (See results note). Also, see our Initiating Coverage Report. We retain Buy rating on FBL with a target price to Rs116, valuing the stock at 1.5x FY20E P/BV. The CEO explained that the pensioning cost of Federal Bank is on the higher side since most of their employees are still on Defined Benefit Plan. The impact of this will not fade off till FY22/FY23. From 1st...
Proxy to the MHCV cycle, Jamna to participate in the up move MHCV cycle has turned positive since Q2 FY18 and has grown at 19% for Q4 FY18, which has driven sales for Jamna. Also the higher tonnage industry has grown at 26%, higher than the overall MHCV industry. Jamna having a 72% OEM market share and being a significant vendor...
Spike in execution from 2HFY19E post dip in 1HFY19E KNR's revenue grew 29.5% YoY in Q4FY18 to `6.2bn (19.2% above estimates) led by better execution. The EBITDA margin expanded 435bps YoY to 22.3% (135bps above estimates) due to lower subcontracting costs and few projects nearing completion having better margins. Depreciation has increased sharply by 152% YoY (up 32.2% QoQ) to `491mn due to higher asset utilization for couple of irrigation projects with shorter execution period. Adj. PAT grew sharply by 52.1% YoY to `797mn (81.7% above...
