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17 Jul 2017
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India Policy and Reforms
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Edelweiss
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Economy Update
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Trade deficit continues to remain benign at $13 billion in June as against $13.8 billion in May. Exports have slowed to 4.4% (y-o-y) in June compared to 7.2% (y-o-y) in May and 17.9% (y-o-y) in June.
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13 Jul 2017
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India Policy and Reforms
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HDFC Securities
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Top Picks
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Top picks: CDH, LPC, GNP and GRAN While the 4QFY17 performance of the Pharma sector was impacted by a sudden drop in US sales, 1QFY18 is likely to be adversely affected by GST-related channel de-stocking. Overall, we expect a single-digit top-line decline YoY for our coverage universe. The drop in profitability is likely to be influenced by both lower sales of exclusive products (gGleevec, gGlumetza and gAbilify), and compensation for lost tax credits offered to dealers in the face of GST implementation. However, we believe that the operating performance is likely to have bottomed out in 4QFY17 and companies like LPC, CDH, GNP and ARBP are now receiving a higher number of product approvals, leading to stronger base businesses in the US.
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12 Jul 2017
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India Policy and Reforms
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HDFC Securities
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Top Picks
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In our coverage universe, Maruti Suzuki, M&M are our top picks. This is because they have an extensive distribution network and strong rural franchise, and would be major beneficiaries of demand revival in the next two years. We also prefer Eicher and Force Motors, given the increasing preference for premium, stylish and differentiated vehicles. We continue to maintain our positive stance on Tata Motors, as JLR's volume growth momentum is likely to continue with its healthy new product cycle and margin trajectory. 1QFY18 is expected to be a muted quarter for auto companies. PV/2W wholesale dispatches were strong in first two months of the quarter, but June sales were impacted by uncertainty ahead of GST. OEMs reduced their shipments to help dealers liquidate their stock. Customers postponed purchases, owing to expectations of price cuts post GST implementation.
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07 Jul 2017
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India Policy and Reforms
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ICICI Securities Limited
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Economy Update
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Q1FY18E earnings and possibly the next quarter is likely to be a nonevent as the economy gears up for GST challenge. We believe that market is likely to focus on the long term benefits that would accrue from this structural change. We note that with most of items' rate being closer to the existing rates and more importantly ~ 81% of items are to be taxed below the 18% standard rate, we believe implementation of...
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05 Jul 2017
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India Policy and Reforms
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IDBI Capital
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Sector Update
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The investment outlook is too early to write off: As CMIE Capex releases Q1FY18 numbers, at a cursory glance, the data may not cheer. Yet we remain positive. Barring Q4FY17, over the last ten quarters, the trend in net investment addition eked out a weaker trend. This quarter was no different. Adding to that, the proportion of change in outstanding investments is actually contributed by variation in cost. (Refer Exhibit 1 and Exhibit 2). Further, the aggregate value of projects scrapped in the June 2017 quarter, CMIE opines, was Rs.2.4tn. Here, 52 projects were scrapped between April and June 2017, as per CMIE. And the prominent projects among them include: (a) Mithi Vardi Automic Power Plant worth Rs.600bn; and...
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04 Aug 2016
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India Policy and Reforms
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Phillip Capital
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After many years of debate and consultations between political parties, the GST bill has finally been clearedbytheupperhouse(RajyaSabha).Whilethebillhasbeenconstitutionallyclearedandwillbe implemented sometime in FY18 (central government's guideline is April 2017), its actual impact on corporates,consumers,andtheeconomycannotbegaugeduntilthecentralgovernmentfinalisesthe GST rate. Assuming a revenueneutral GST rate of 18% (as recommended by the Chief Economic Advisor), the GST implementation would result in higher services inflation (CPI) and would have no impactonGDPandfiscaldeficitinFY18.However,itcouldhaveapositiveimpactonGDPandfiscalin thenext34years.CompanieswilltakeafewquarterstounderstandtheGSTmechanismandevaluate...
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15 Jul 2016
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India Policy and Reforms
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IDBI Capital
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GST brief: The much awaited Goods and Service Tax (GST) subsumes multiple indirect taxes such as excise duty, service tax (central level), Value Added Tax (VAT) along with local taxes (eg. octroi). Under the old regime, companies were subject to a maze of taxes at the central, state & city level that varied substantially from state to state and at different stages of the product cycle (production, distribution, sales). The sheer complexity involved in ascertaining different taxable values/classification standards etc has resulted in large compliance costs, high consumption...
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02 Feb 2016
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India Policy and Reforms
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ICICI Securities Limited
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01 Dec 2015
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India Policy and Reforms
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Angel Broking
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The Reserve Bank of India (RBI) maintained status quo on key policy rates in its Monetary Policy review today, which is along expected lines. The central bank has however stated that it would continue to maintain an accommodative policy stance while being cautious on inflation. It targets to contain Consumer Price Index (CPI) based inflation below the 5% mark by March 2017. The central bank also said that it will shortly finalize the methodology for determining the base rate which would be based on marginal cost of funds, which all banks will have to comply with. This could have a short-term negative impact on the net interest margins of banks in the coming quarters.
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02 Mar 2015
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India Policy and Reforms
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HDFC Securities
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Buy
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In Budget 2015-16, the Finance Minister announced the merger of the Securities Exchange Board of India (SEBI) and the Forward Markets Commission (FMC). As highlighted earlier, this move clearly shows that that the government intends to develop the commodity derivatives market in keeping with global standards.
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