Professional Documents
Culture Documents
Investment Management
and Research Group
MDI, Gurgaon
Monthly News Letter
October 1 October 31, 2015
CONTENTS
Fund Performance
10
11
12
13
14
Trading Multiples
15
Analyst Coverage
27
Utkarsh Patel
pg14manish_a@mdi.ac.in
pg14utkarsh_patel@mdi.ac.in
+91 9033164319
+91 8527099159
FUND PERFORMANCE
Diversified: The Unnati diversified portfolio increased by 1.46% for the period of October. The CNX Nifty Index was up by 1.47% for the period.
The major gainers were Tata Motors (31.04%), Hind Zinc (11.32%) and Tata Steel (9.37%). The major losers were HCL Tech (-10.89%) Lupin
(5.59%) and Axis Bank (5.39%).
Sharpe Ratio
Weightage
(%)
6.18
Divi's Laboratories
5.25
Bharti Infratel
5.06
Lupin
Tata Consultancy Services
Ltd.
5.02
4.87
4.79
4.49
4.20
3.90
H D F C Bank Ltd.
3.72
Pidilite Industries
Motherson Sumi Systems
Ltd.
Housing Development
Finance Corpn. Ltd.(HDFC)
Sun Pharmaceutical Inds.
Ltd.
3.65
3.44
--0.215
-1.00
-0.80
-0.60
-0.40
Advances/Declines
-0.20
0.00
72%
28%
4.10
13.94
9.97
10.51
5.18
3.27
2.83
2.63
I T C Ltd.
IndusInd Bank
2.49
105
2.38
104
N T P C Ltd.
2.37
G A I L (India) Ltd.
Mahindra & Mahindra
Ltd.
1.92
1.92
101
ONGC
1.54
100
1.25
99
1.04
0.98
0.92
Hindustan Zinc
0.82
Cairn India
0.60
7.61
7.49
3.06
2.61
103
102
Diversified
Normalised
CNX Nifty
Normalised
98
30-Oct
28-Oct
26-Oct
24-Oct
22-Oct
20-Oct
18-Oct
16-Oct
14-Oct
12-Oct
10-Oct
4-Oct
2-Oct
30-Sep
97
8-Oct
Sector
6-Oct
Stock
Midcap: Unnati Midcap fund lost around 1.07% for the period while CNX Midcap index was up by around 1.96%. The major gainers were Tata
Motors DVR (20.47%), NIIT Tech(19.81%) and CESC (12.28%). The major losers were Kitex Garments (-15.52%) IDFC (-14.67%) and Amara Raja
(-12.25%).
Stock
Weightage
(%)
Sector
Sharpe Ratio
8.90
8.23
6.62
Emami
5.22
Tech Mahindra
4.90
Bajaj Corp
3.56
CESC
3.52
3.46
VA Tech Wabag
3.40
N I I T Technologies Ltd.
3.21
3.03
2.97
Petronet LNG
2.87
2.62
Wabco India
Container Corpn. Of India
Ltd.
2.51
2.51
Logistics
2.36
AIA Engineering
2.18
2.17
Gateway Distripacks
1.52
Apollo Hospitals
Power Grid Corpn. Of
India Ltd.
1.49
1.46
1.45
1.40
104
1.36
103
PI Industries
1.01
102
0.99
101
0.98
100
Persistent Systems
0.98
99
PVR Ltd
0.94
98
0.65
97
0.64
96
I D F C Ltd.
0.54
Amtek Auto
0.30
-0.224
5.68
-1.00
-0.80
-0.60
-0.40
-0.20
0.00
4.03
Advances/Declines
58%
42%
13.07
9.82
5.01
4.71
7.40
7.17
3.98
0.00
Unnati Midcap
Normalised
CNX Midcap
Normalised
MARKET OUTLOOK
During October, equity markets worldwide recovered after falling for two consecutive months. The Indian equity markets were buoyed by the 50 bps rate cut by RBI.
Inflation level declined due to continuous fall in crude prices. The overhang of Fed rate hike however was present with many FIIs selling out. In the coming months
key regulations like GST and Fed rate hike would be triggers till then market is expected to be range bound.
SECTOR HAPPENINGS
SECTORAL PERFORMANCE
Major Gainers: Tata Motors (+29.28 %), Bajaj Auto (+10.16 %), Motherson Sumi
(+8.82%), Hero Motorcorp (+7.02 %), Bosch (+5.96%)
108
Major Losers: Amara Raja (-12.69%), Bharat forge (-7.26 %), Amtek Auto (-7.05
104
102
106
100
CNX Auto Constituents: Amara Raja Batteries, Apollo Tyres, Ashok Leyland, Bajaj
98
Auto, Bharat Forge, Bosch, Eicher Motors, Exide Industries, Hero Motocorp, MRF,
96
94
92
Unnati auto
CNX auto
CNX Nifty
SECTOR NEWS
Car sales rise fastest in four-and-half years in October
Domestic passenger car sales rose at the fastest pace in four-and-half years in
October, which industry executives and market experts interpreted as a clear
signal of activity returning to sector that has been in doldrums for several years.
Manufacturers dispatched 1,94,158 cars to showrooms in the past month, up
21.8% from a year earlier, data from the Society of Indian Automobile
Manufacturers Association (SIAM) showed. Total sales were still lower compared
with the record of 2,33,151 units achieved in March 2012. Overall passenger
vehicle sales, including those of utility vehicles and vans, rose 21.5% in October,
the quickest since October 2013, to 2,68,629 units. The strong performance
wasn't limited to the passenger vehicle segment. In the light commercial vehicle
segment, sales grew 6.8% in October. The segment had reported growth only
once in the past 29 months. Scooter sales at 5,25,138 units in October were the
highest ever and nearly 37% up from a year earlier.
Mercedes-Benz
to
expand
manufacturing
in
India;
seeks
Bharat Stage-V emission norms for vehicles across India from 2019
India will implement the Bharat Stage-V, or BS-V, emission norms for vehicles
across the country from 2019, the government said in a statement. This ends the
debate around the oil ministry's push to directly progress from the current BS-IV
to BS-VI norms to speed up the green initiative. Bharat stage norms, based on
European regulations, are emission standards decided by the government to
regulate the amount of air pollutants from vehicles. Following a rapid rise in air
pollution that's choking cities and fuelling green activism, there has been
pressure on the government to speed up efforts at improving the fuel quality.
SECTOR OUTLOOK
After an impressive festive season where overall auto market got the boost except for Tractor segment, the coming months are expected to post the
sluggish growth. Passenger segment is expected to remain on the growth track owing to the launch of new models, especially small economy segment is
expected to post positive numbers boosted by the models like Renault Kwid, Revived Nano and Alto. Motorcycles are expected to remain flat due to
subdued rural growth while scooters will continue its growth momentum. In commercial vehicle segment, growth in M&HCV segment is expected to slow
down owing to subsiding of the replacement demand. The growth is expected to pick up later during the end of fiscal on the back up revived emission
norms. The light commercial vehicle segment after a momentary pickup in October does not look impressive. Tractors will continue negative trajectory.
ster execution of infrastructure projects. The domestic tractor sales volumes are expected to remain subdued due to poor monsoon.
BFSI
Anil Anto
Senior Security Analyst Banking, Financial Services and Insurance, UIMRG
Email: pg14anil_a@mdi.ac.in
Mobile: +91-9739187371
Advances/Declines
SECTOR HAPPENINGS
SECTORALPERFORMANCE
109%
107%
105%
102.0%
101%
Unnati BFSI
Nifty
Bank Nifty
28-Oct-15
25-Oct-15
22-Oct-15
19-Oct-15
95%
16-Oct-15
Mahindra Bank, LIC Housing Finance, Punjab National Bank, Reliance Capital,
13-Oct-15
97%
10-Oct-15
101.2%
7-Oct-15
99%
1-Oct-15
4-Oct-15
Sector Constituents: Allahabad Bank, Axis Bank, Bank of Baroda, Bank of India,
102.9%
103%
CNX Finance
SECTOR NEWS
NHB gives nod to six new entities to become HFC
The National Housing Bank (NHB) has granted permission to six new entities to
The Reserve Bank of India (RBI) on Thursday increased the amount banks
become housing finance companies. These six companies are Supreme Housing
can advance for a property purchase and also reduced the so-called risk
Finance, Nivara Home Finance, Khush Housing Finance, Bajaj Housing Finance
Capri, Global Housing Finance Pvt. Ltd and Hinduja Housing Finance Ltd, NHB
said in a release on Saturday.Thus, as on date, the total number of HFCs
registered with NHB is 72. New HFCs aim to focus mainly on the affordable
housing finance segment and are likely to cater the housing loan needs of the
EWS/LIG segment, contributing to achieving the goal of housing for all by 2022,
Eight public sector banks, including State Bank of India, Punjab National
it said.
Bank and Bank of Baroda, on Wednesday said they have allotted equity
The Centre is likely to put on states the onus of restructuring the debt of power
Bank and Andhra Bank are among the lenders that received capital infusion
distribution companies. The plan would, in fact, bail out banks, whose debt
exposure of Rs 3.17 lakh crore (as of June 2015) was feared to turn into nonperforming assets (NPAs). To enable states to take over the entire debt, the
Centre will also relax the borrowing limit for state governments.
557
million
in
2011,
according
to
report
prepared
PricewaterhouseCoopers India.
SECTOR OUTLOOK
Over the long term we are still positive on private sector banks, but we are still wary of public sector banks because of their high exposure to sectors
especially hit because of slow growth, poor credit quality and corporate governance issues. Moreover banks with strong retail presence will be more
attractive as future credit growth will be higher in the retail segment as solid data on economic growth still remains elusive to say whether the rate of
industry credit off-take will increase anytime soon. We are also optimistic about the financial services sector, especially housing finance, with the NDA
governments motto of housing for all expected to create favorable conditions for these HFCs in the near to long term. As the US Fed rate hike decision
inches closer, we expect more volatility in the Indian banking sector; whereas confidence building measures by the government such as infusing capital
and buying out the debt of power discoms will go long way in solving the inherent problems in the banking sector.
by
Advances/Declines
SECTORAL PERFORMANCE
SECTOR HAPPENINGS
Major Gainers: EID Parry (32.6%), Jindal Poly Films (23.8%), Kaveri Seeds (18.1%),
PI Industries (5.3%), Dhanuka Agritech (0.8%)
Major Losers: Avanti Feeds (-13.8%), BASF India (-13.4%), Monsanto India (11.2%), Pidilite Industries (-3.2%), Asian Paints (-1.1%)
Sector Constituents: Pidilite Industries, United Phosphorus, Tata Chemicals,
Asian Paints, Berger Paints; Coromandel International, Rashtriya Chemicals and
105
104
103
102
101
100
99
98
97
96
101.45
99.35
Fertilizers, Gujarat State Fertilizer & Chemicals; PI Industries, Bayer Crop Science,
Monsanto India, Rallis India, Dhanuka Agritech, Kaveri Seed Company, EID Parry,
Balrampur Chini, Bajaj Hindustan
Unnati CFAS
NIFTY
SECTOR NEWS
Asian Paints consolidates investments in overseas units
Company has transferred its entire holding of 80 per cent held in the subsidiary
output would be around 370.50 lakh bales for the season 2015-16
Company viz., Samoa Paints Limited, Samoa and 75 per cent holding in the
beginning October 1, lower by 12.25 lakh bales than the crop of 382.75
subsidiary Company viz., Asian Paints (SI) Limited, Solomon Islands, to Berger
lakh bales for the cotton season 2014-15. The projected balance sheet
drawn by the CAI estimated total cotton supply for the season 2015-16 at
463.15 lakh bales while the consumption is estimated at 325.00 lakh bales
Due to government initiatives like gas pooling and incentivizing the energy
efficiency measures under the new urea policy, the domestic urea production is
expected to increase by around 6 percent from 226 lakh tones to 240 lakh tones.
The country's urea production had been stagnant at around 220-225 lakh tonnes
from last few years, whereas the demand is about 300 lakh tonnes.
The Cabinet Committee on Economic Affairs (CCEA) approved Rs 7,000 crore loan
that was taken by the government from public sector banks to clear outstanding
The country's imports of DAP have more than doubled to 48.54 lakh
SECTOR OUTLOOK
Low crude oil price is a positive for the Chemicals companies in terms of realizations. The new sugar season started with carryover stocks of 9.6 million
tonnes, up from 7.5 million last year. Despite a downward revision in production estimate, the sugar supply would continue to remain higher than the
demand. Governments idea of forcing sugar exports by mandate doesnt seem to be getting successful and many state governments are working out
packages to help the stressed mills. Agro-chemicals and seeds have a positive outlook owing to increasing end user demand. The Fertilizers sector
continues to face challenges in the form of insufficient subsidy allocation and unfavorable policies on new investments. However, there are signs of
improvement with the gas price pooling and the new urea policy which target to reduce governments subsidy bill and raise production.
SECTORAL PERFORMANCE
SECTOR HAPPENINGS
Major Gainers:
Advances/Decli
nes
Breweries (6.5%)
109.0
107.0
Major Losers: Kitex Garments (-15.3%), Bajaj Corp. (-8.8%), Jubilant Foodworks
105.0
103.0
102.0
101.0
Sector Constituents: Aditya Birla Nuvo, Arvind, Bajaj Corp, Bata India, Britannia
99.0
97.0
Consumer
Healthcare,
GCPL,
HUL,
ITC,
Jubilant
FoodWorks,
97.9
95.0
Jyothy
CNX FMCG
Nifty
SECTOR NEWS
ITC set to launch its first dairy product 'Aashirvaad ghee'
Aashirvaad ghee will make its debut this Diwali as ITC plans to enter into
Parle Products, has announced the launch of Mexitos a new brand in the
the dairy segment. Extending the product range of its biggest non-
nacho chips segment and has entered the premium snacking category.
Though nacho chips are a product of the Western markets, the company has
launched flavours which suit the Indian palate very well; the chips are
2,600-crore brand and controls 74% share of the country's packaged atta
available in two varieties - Classic Salted & Salsa Tomatino. The product will
market. India being the largest producer and consumer of dairy products is
expected to see 15 -16% growth with its expansion in the value added
50.
products. The Indian dairy industry is all set to experience high growth
rates in the next eight years with demand likely to reach 200 million tonnes
areas.
by 2022 from 132 million tonnes in 2013. Presently, only 20% of the milk
the Indian food market. It is expected to touch US $ 194 billion by 2017. The
private dairies.
with Future Group to make its entire range of products available in Big
facility at Bidadi near here and said it plans to double sales in India to around
Bazaar outlets across the country. Other food-based chains of the country's
$60 million in the next four years. The company aims to reach sales of around
largest retailer such as Easyday, KB's Aadhaar and Nilgiris too will
$55-60 million in next four years from $30 million currently. The Bidadi
Aditya Birla Group launched its e-commerce portal for apparel - abof.com, as
the company remained bullish on the e-commerce sector. The new portal aims
grew at around 12% for the first 9 months in 2015 compared to 6.8% in
to be one-stop fashion portal for apparel, footwear and accessories for men
2014. But, CEOs of various companies feel that Nielsen is over reporting
growth and that revival is a few quarters away. Many FMCG companies have
room, that allows one to layer various garments to check out looks. The ABG
reported sales growth that was much lower than last years growth.
owns Madura Fashion and Pantaloons and is Indias largest fashion player.
India is the second largest potato producer in the world, with the
The Food Processing Industry had an estimated value of US $ 170
SECTOR OUTLOOK
Though data indicates there is revival in demand, but there isnt any valuable uptick in consumption, leading to major FMCG players
reporting poor results. Companies as well as sector trackers feel that the revival is still some quarters away and near term struggles will
continue. GST continues to be uncertain with the monsoon session of the parliament holding any key. Sector continues to be benefitted
due to low inflation and RBI rate cuts, but the players continue to take price cuts to boost business and will do so over the near term.
7
Advances/Declines
SECTOR HAPPENINGS
SECTORAL PERFORMANCE
Major Gainers:
104.00
Major Losers: RS Software (-7.63%), Idea Cellular (-6.86%), Info Edge (India) Ltd (-
102.00
101.45
100.00
99.45
MindTree, CMC Ltd, Hexaware Ltd, Accelya Kale Solutions, Core Education &
Technologies Ltd ,Bharti Airtel Ltd., Idea Cellular Ltd, Tata Communication Ltd, Reliance
98.00
96.00
96.79
Communications Ltd, Tulip Telecom Ltd, Onmobile Global Ltd, Zee Entertainment
Enterprises Ltd, Sun Tv Network Ltd, Info Edge (India) Ltd., Persistent Systems Ltd
94.00
1-Oct
5-Oct
9-Oct
Unnati Tech K
13-Oct
17-Oct
CNX Nifty
21-Oct
25-Oct
29-Oct
CNX IT
SECTOR NEWS
Telecom companies can trade spectrum after two years
Eros International Media hits 11-month low, falls 30% in one week
The government said frequencies in 800 MHz, 900 MHz, 1800 MHz, 2100 MHz,
Eros is under pressure falling 30% during current week after a global
2300 MHz and 2500 MHz bands can be traded between two telecom operators
only two years after they have been assigned, won in an auction or received
through a deal. Spectrum leasing is not allowed. It will provide incentives for
better services and innovation.
banking and financial services company cut the stock rating of the US-listed
parent firm, Eros International, on last Friday. The company is set to
announce its June-September quarter results in first half of November
which will be helpful in determining the growth in revenues, net income and
Slow fiber rollout hurting telecom health; experts blame India's low cash flow from operations.
investment in optic fiber cable
SAP betting big on business opportunities around global sports and
entertainment industry
Telecom experts have attributed poor quality of services and low mobile internet
speeds to India's low investment in fiber optics for telecom backhaul
deployments. In India, less than 20% of the towers are back hauled on fiber
compared with an average of nearly 80% in countries such as USA, China and
Korea.
After unveiling its next-gen HANA platform for the cricket world cup, SAP is
now betting on huge business opportunity in sports and entertainment
industry, Fuelled by the advent of new sensor and video collection
technologies coupled with huge database on various sports, the software
Digital Advertising Network Fork Media acquires Spid Info Media to widen maker is offering real-time data-driven services to various stakeholders players, teams and league, and venue owners. For the first time in the
offerings across platforms
history, SAP provided over 40 years of ICC Cricket World Cup historical
It has shelved out between $3mn and $5mn for the acquisition. Spid Info Media
helps clients to reach out to audiences using Wi-Fi networks at airports, cafes,
hotels, stadiums, malls and other public spaces. It has a presence in over 1,200
The Swedish company said that the deal would affect 2600 Volvo staff and
SECTOR OUTLOOK
The top IT pack appears to be going to growing through a patch of deceleration following the September results. Though the results have been positive
but were more driven by the currency depreciation. The factors that explain this discrepancy are client-specific issues, currency fluctuations, global
economic uncertainties and changing nature of services contracts by IT firms which is shifting more towards multiyear transformational deals. The
quarterly results of the telecom companies have given mixed responses. Idea and Reliance's results were tepid while Airtel's results beat the estimates.
This shows that there is no calm before the Reliance Jio's buzz. The media industry posted some strong Q2 results and is poised towards a consistent
growth as Indian economy unfolds its growth path.
Advances/Declines
SECTORAL PERFORMANCE
Unnati MCP
CNX METAL
31-Oct-15
29-Oct-15
27-Oct-15
25-Oct-15
23-Oct-15
21-Oct-15
19-Oct-15
17-Oct-15
15-Oct-15
1-Oct-15
13-Oct-15
Chettinad Cement, J.K. Lakshmi Cement, Shree Cement, Tata Steel, JSWL, Coal
11-Oct-15
9-Oct-15
7-Oct-15
116
114
112
110
108
106
104
102
100
98
5-Oct-15
3-Oct-15
SECTOR HAPPENINGS
CNX NIFTY
SECTOR NEWS
CREDAI moves CCI against cement firms for price cartelization
Realty
Developer's
The government has allowed Coal India to produce natural gas (CBM) from
coal seams in mining leases it already holds. Until now, Coal India was
allowed to mine only coal from its mines or leases. The Ministry of
cartelization. In its submission to the Commission, CREDAI has pointed out that
Petroleum and Natural Gas in a November 3 order said Coal India and its
the cost of raw materials used in manufacturing cement has come down between
January and September this year, but cement companies never passed on this
mining leases they possess. Coal India Ltd (CIL), however, will not be
allowed to "alienate CBM lease rights". It can also not involve a third party
controlling supply and prices. Despite the low demand, prices of cement have
for CBM exploitation except Central or State PSUs with experience in CBM
jumped 20-40% in top cities across India in the past couple of months.
mining lease.
developers'
body,
the
Confederation
of
Real
Estate
Jaypee Group has revived its negotiations with Sajjan Jindal's JSW to sell its entire
20-22 million tonne cement portfolio in a bid to significantly improve its financial
health. Jaypee Group, one of the most debt-laden conglomerates with estimated
outstanding dues of Rs 75,000 crore at the end of FY15, had earlier this year
approached JSW Cement, a private company of the diversified JSW Group, and
some other potential buyers with an exploratory offer to sell a controlling 51 per
cent stake in a joint venture. Now, Jaypee has gone back to JSW with a proposal
Coal India Ltd has entered into a joint venture agreement with GAIL and
fertiliser majors RCF and FCIL to incorporate a firm for setting up and
operating new Ammonia Urea Complex in Talcher, Odisha. A consortium of
RCF, GAIL, CIL and FCIL had agreed to invest Rs 8,000cr for the revival of
this urea plant with a production capacity of 1.2 million tonnes per
annum. Coal Ministry, has agreed to allot a coal block to the proposed JV
company on formation of the same and finalization of techno-economic
feasibility report.
Ballarpur Industries Limited (BILT), the flagship company of the Avantha Group,
Ballarpur Industries Ltd to sell Malaysian subsidiary for $500 million Western Coalfields to open 36 mines in 36 months
announced the sale of its indirectly owned subsidiary in Malaysia Sabah Forest
Industries Sdn. Bhd for an enterprise value of $500 million to Pandawta Sakti.
BILT will use the proceeds from the proposed transaction to reduce its overall
debt of about Rs 7,000 crore. Sabah Forest is 98.08% owned by Ballarpur Paper
Holdings BV, a Netherlands-based investment firm in which BILT owns a 69%
equity stake.
36 months by 2018, having opened eight mines in the past eight months
as part of a plan to contribute its bit to helping the state-run monopoly
miner meet its output target of 1 billion tonnes by 2020. Western
Coalfields has drawn up the expansion plan which entails a total
production of 60 million tonnes including an incremental growth of 15
million tonnes over the next five years.
SECTOR OUTLOOK
Negative investor sentiments coupled with slowing growth in China and Brazil, muted conditions in Europe and a weak recovery in US will continue to
pressure global metal prices. On the domestic front, Prime Minister Narendra Modi's ambitious Housing for All (HFA) project is likely to benefit sectors
providing critical inputs to the construction industry like, cement and iron & steel. However, much would depend on ability of domestic industry to meet
the huge incremental demand for cement and steel due to be generated by HFA project. Additional annual steel demand, mainly bars and rods for HFA is
estimated to be 24.6% of FY14 production levels. Similarly, additional cement demand is estimated to be 13.2% of FY15 cement production. Cement
capacity utilization is expected to improve to 73-75 percent but demand growth is still expected to outpace supply additions in FY16.
Advances/Declines
SECTOR HAPPENINGS
SECTORAL PERFORMANCE
Major Gainers: GSPL (10.69%), Petronet LNG (10 %), ONGC (6.28%), GAIL (5.18%),
109%
108%
107%
106%
105%
104%
103%
102%
101%
100%
99%
98%
97%
96%
105.89
105.22
101.44
Unnati
CNX Nifty
CNX Energy
SECTOR NEWS
Govt fixes domestic gas price at $3.82 per mmBtu
The price of domestically produced natural gas has been fixed at $3.82 per
representing India, has said that it will take no more than 10% stake in
million metric British thermal units (mmBtu), on a gross calorific value (GCV)
basis, from October 2015 till March 2016, 18% lower than the price being offered
until now. On a net calorific value (NCV) basis, the price applicable will be
approximately 10% higher at $4.2 per mmBtu. The price cut augurs well for City
Gas Distribution companies as natural gas becomes more price competitive in
GAIL,
(TAPI) natural gas pipeline, because of the risk in the project. The four
nations to the pipeline had in August agreed to co-own the project and a
joint venture company with participation of each country is to be set up
to build and operate the 1,800-km line. Considering $10 billion as the
approximate project cost, the host countries need to put in $3 billion as
comparison with petrol, diesel and LPG. However, it is a negative for gas
equity. GAILs 10% stake will translate into an investment of $300 million.
producers such as ONGC and OIL. The price cut will also lead to a reduction in
The TAPI pipeline will have a capacity to carry 90 mmscmd gas for 30
Indias pitch for price and terms correction with the OPEC by leveraging the
subdued global crude oil price scenario seems to have gained traction with Saudi
Aramco reducing prices for November oil sales to Asia, the main market for Saudi
Arabia. The company has cut the Official Selling Price(OSP) of Medium Grade
come down, making rupee loans attractive again. The move was also aimed
Crude to Asia for November delivery by $3.2 per barrel below the regional
benchmark, compared with a $1.30 discount for October delivery. The discount
for the Medium grade to Asia widened by the most since the state- owned
company made a $2 a barrel cut in February 2012. The company widened the
discount for Arab Light crude to Asia by $1.70 a barrel to $1.60 a barrel less than
at avoiding the risks of servicing foreign currency debt if the rupee were to
go into a free fall. Also, since the OMCs are earning in rupees, a highly
skewed loan book towards foreign currency is very risky. At the end of
FY15, the proportion of foreign currency borrowings stood at 65%, 85% and
80% for IOCL, BPCL and HPCL respectively. The companies are looking at
55:45 dollar-rupee loan ratio over the next three years,
the benchmark.
SECTOR OUTLOOK
Uncertainty and volatility in the price of crude oil is expected to continue thereby putting upstream companies under pressure. Oil producing companies
globally are struggling to cope with the current uncertainty in the price of oil thereby cutting spending, making thousands of job cuts and scrapping
projects. However, ONGC is expected to increase its upstream capex by 10% and intensify its exploration activities, taking advantage of the current
depressed global energy market. With the price of domestically produced natural gas falling, companies operating in the City Gas Distribution (CGD)
space such as IGL and GGL, are expected to gain as the cost competitiveness of Piped Natural Gas (PNG) and Compressed Natural Gas (CNG) vis-a-vis
petrol, diesel and LPG improves significantly leading to a surge in sales volume. OMCs continue to be benefitted from increasing marketing and refining
margins. However, possible inventory and foreign exchange losses could be a dent on the financials of these companies.
10
Advances/Declines
SECTORAL PERFORMANCE
SECTOR HAPPENINGS
Major Gainers: Jubilant (12.57%), Sanofi (10.76%), Aurobindo Pharma (10.70%),
105
PEL (10.47%)
101.4
100.2
Sector Constituents: Abott India, Ajanta Pharma, Alembic Pharmaceuticals, Apollo
100
100.2
Hospitals, Aurobindo Pharma, Biocon Ltd., Cadila Healthcare, Cipla, Divis Lab,
Dr. Reddys Labs, Fortis Healthcare, Glenmark Pharma, Granules India, GSK
Pharma, IPCA Labs, Jubilant Life Sciences, Lupin Ltd, Natco Pharma, Pfizer,
Piramal Enterprises, Ranbaxy, Sanofi India, Shilpa Medicare, Strides Acrolab, Sun
Pharma, Suven Life Sciences, Torrent Pharma, Unichem Laboratories, Wockhardt
95
1-Oct-15
8-Oct-15
15-Oct-15
Unnati Pharma
22-Oct-15
CNX Pharma
29-Oct-15
CNX Nifty
SECTOR NEWS
Indian drug industry protests against the Trans-Pacific Partenership
affordable generics to the world, have joined public health activists in criticising a
new U.S.-led trade deal they say will delay the arrival of new cheap drugs. The
voluntary code discouraging the practice has made little impact. The
include the United States but not India, is still being studied by Indian drug
Marketing
makers. But in initial comments, industry executives said provisions in the deal
that shield new drug data from competitors would hurt their business in those
nations. Countries from the United States to Africa rely on India as a supplier of
India (DCGI), industry bodies and consumer groups before finalizing the
cheap medicines, earning it the "pharmacy to the world" nickname. Other critics
of the TPP deal, including advocacy groups such as Medecins Sans Frontieres, say
and fertilizers had backed away from making such a mandatory code after
it will drive up the price of medicines around the world in the long term.
protests from the industry. The new code is likely to be strict on medical
Practices
(UCPMP)
released
by
the
department
of
FICCI
cadre and work along with manufacturers to make it more industry friendly.
Hyderabad has about 500 pharma and biotech companies, including majors like
simplified and relaxed medical visa regulations for patients including visa
by the existing companies as well as new investors. The city will be developed on
has
made
recommendations
to
capitalise
on
the
available
SECTOR OUTLOOK
Unnati Pharma gave returns close to the sector, though the sector has underperformed the market as such in October. Growth in the sector is
expected to continue to be healthy, as the momentum continues and improving economic growth allows more spending on healthcare. Though the US
market remains the largest market for generic exports, it is witnessing slowdown in product approvals and channel consolidation, impacting the
overall pricing and margins of the industry. Under the Make in India program, it is expected that the government will introduce many industry
friendly policies and incentives to give a major thrust to the growth of Indian bulk drug industry to make it a formidable force globally.
10
Advances/Declines
SECTORAL PERFORMANCE
Unnati - P&CG
CNX Energy
29-Oct-15
1-Oct-15
25-Oct-15
21-Oct-15
Power, ABB, Suzlon Energy, Reliance Power, Siemens, Powergrid Corp, BGR
17-Oct-15
Sector Constituents: Larsen & Toubro, BHEL, NTPC, CESC, AIA Engineering, Tata
13-Oct-15
110
108
106
104
102
100
98
96
94
9-Oct-15
5-Oct-15
SECTOR HAPPENINGS
CNX Nifty
SECTOR NEWS
Rooftop solar panels policy to be before Cabinet soon
As per Minister of Power, Coal, New and Renewable Energy, Piyush Goyal a policy
to encourage rooftop solar power panels will soon be placed before the Union
Cabinet for approval. The policy will have detailed guidelines about installing
the costliest projects to come under the bidding route this year. Kalpataru
Bhutan inter-link.
The loan is the first tranche of a $500 million multitranche financing facility to
IREDA for the Clean Energy Finance Investment Program. The Program aims to
revenue accretion of capital goods firms for the September quarter. Those
with higher exposure to exports may post lower than expected revenue
accretion.
The sector added 1,629 MW of new capacity from various sources during H1
Larsen & Toubro signed a contract worth $77 million with Kuwait National
2015 as against 1,094 MW in the same period previous year, posting a rise of
about 49 per cent. Wind sector contributed about 933 MW (865 MW in H1 of last
year) and solar sector added 593 MW (135 MW), according to Union Ministry of
Saipem SpA, won a contract worth $1.57 billion from KNPC for setting up
SECTOR OUTLOOK
Renewable energy is expected to be the future of Power sector, solar power becoming more viable for distribution companies with Rs.5 per unit
becoming the new norm, at-least for the medium term. However, in the longer term, sustainability of the rates and operational viability are to be seen.
At the distribution side, the government is yet to make up its mind about how it plans to rescue the debt-laden discoms. The financial viability of the
entire sector will remain under question till the discoms are revived. The Government of India released a Draft National Capital Goods Policy for the
country which, among other things, outlines the issues stunting the industry such as technology and IPR, as well as the policy actions that can be taken
to fix these issues and encourage growth such as SME development.
11
Advances/Declines
SECTORAL PERFORMANCE
SECTOR HAPPENINGS
Major Gainers: Sobha Ltd (19.35%), Phoenix Mills (4.29%), Oberoi Realty (6.8%)
109
107
105
Sector Constituents: Hubtown, DLF, Era Infra Engg., GMR, GVK, Gammon, HCC,
103
101
HDIL, IRB, IVRCL, Indiabulls Real Estate, Lanco Infratech, JP Associates, Sobha
99
Dev., Mahindra Lifespace, NCC, Noida Toll Bridge, Phoenix Mills, Patel Engg.,
97
Punj Lloyd, RIIL, Unitech, kolte Patil, Brigade Enterprises, Sadbhav Engg., KNR,
Ashoka Buildcon, Century Plywood, Greenply, Kajaria, Cera, HSIL
95
93
Unnati ICRE
CNX Nifty
BSE Realty
29-Oct-15
27-Oct-15
25-Oct-15
23-Oct-15
21-Oct-15
19-Oct-15
17-Oct-15
15-Oct-15
13-Oct-15
11-Oct-15
9-Oct-15
7-Oct-15
5-Oct-15
3-Oct-15
1-Oct-15
91
CNX Infra
SECTOR NEWS
Japan offers $15 billion soft loan for bullet train project
Japan has offered to finance India's first bullet train, estimated to cost $15
After slashing the repo rate by 50 basis points, RBI also eased mortgage
billion, at an interest rate of less than 1 per cent, officials said, stealing a march
rules, allowing lenders to set aside less capital to cover home-loan default
risks. According to a CRISIL report this move to higher loan to value ratio
network. The project to build and supply the route will be put out to tender, but
and lower risk weights for individual housing loans will help bring down
offering finance makes Japan the clear frontrunner. Last month China won the
interest rates on home loans by another 25-30 basis points over the next
few months. The central bank measures will make more credit available to
Mumbai, a 1,200-km route estimated to cost twice as much. No loan has yet
borrowers and thus improve the current market sentiment especially in the
been offered. Japan's decision to give virtually free finance for PMs pet program
upcoming festive season. This will help improve the affordability of low cost
housing for the economically weaker section as the largest beneficiary will
be this section, thus giving a fillip to governments Housing for all by 2022.
Indian Railway Finance Corporation (IRFC), the first tranche of its financial
Infrastructure. This is not in line with the general trend as total FDI is on the
signed MoU with LIC in March this year for financial assistance of Rs 1.5 lakh
rise by 28% in 2014-15 over the last year. After slowing down considerably
crore over the next five years for implementing railway projects. IRFC will issue
in the last two years, activity within the sector is looking to pick up now but
bonds to be subscribed by LIC for the purpose. Though the financial assistance
it will take some time before investors are enthused about the sector. Several
issues such as clearances and land acquisition are yet to be sorted out.
interest and loan repayment. As per the announcement the Rs 2,000 crore LIC
Though under the present govt. Road and Port sector present a big
fund will be utilized for laying new lines to decongest busiest rail corridors.
SECTOR OUTLOOK
Real estate sector, one of the most globally recognized sectors, is facing various problems since last few years. Declining sales and mounting debts play
havoc for the sector. Though there have been many policy push by the present government to boost investor confidence like ease in FDI norms, pass
through for REIT, ease of loan norms especially for affordable housing etc. but still due to high cost of residential apartments, developers are still facing
huge inventories being piled up on their balanced sheet. Government is focusing on the infrastructural development of India and specifically on road
and rail sector. There is impetus for stalled projects and government has announced to give one time fund to clear those projects. There is investment in
railways, which is expected to fuel the projects announced during the budget.
13
Advances/Declines
Abhas Sharma
Senior Security Analyst Shipping, Aviation, Logistics and Tourism, UIMRG
Email: pg14abhas_s@mdi.ac.in
Mobile: +91-8010471256
SECTORAL PERFORMANCE
SECTOR HAPPENINGS
Major Gainers: Spicejet (61.8%), Jet Airways (36.1%), Cox & Kings (30.9%)
Mahindra Holidays and Resorts (30.3%)
104.5
102.5
101.4
100.5
99.7
98.5
97.6
96.5
94.5
Aegis Logistics, Indian Hotels, EIH, Mahindra Holidays, Cox & Kings, Thomas
Cook, Taj GVK Hotels, Blue Dart Express
CNX Nifty
SECTOR NEWS
New civil aviation policy announced
GOI announced its new aviation policy on 30 October, aimed at making flying
rose by 6.1% over the same period in 2014. FTAs in September reached to
exemption from service tax for regional flights, making MRO service services tax
5.4 lakhs with highest tourists from Bangladesh which accounted for more
and customs duty free, Infrastructure status to air cargo, liberal bilateral traffic
and international routes and contrary to expectations no clarity on 5/20 rule with
Contact Group of Piracy off the Coast of Somalia (CGPCS) has redrawn the eastern
limit of High Risk Area (HRA) which now excludes Indian west coast. This move
will bring significant reduction in insurance and associated operating costs to
ship owners in the tune of $25 million annually according to Shipping ministry of
India. These new boundaries will be effective from December 1, 2015.
In order to promote cargo movement through coastal waters, customs and excise
duty is removed from bunker fuels used by Indian ships. Cabinet has also
proposed a bill making it mandatory for state owned oil, steel, coal and fertiliser
importers to route at least half of their cargoes through local shippers with
proposal of introducing 5 year contracts.
SECTOR OUTLOOK
The Aviation sector stocks buzzed in October month in anticipation of supportive and reforming aviation policy and listing of InterGlobe aviation.
Increasing business activities and tourism opportunities should boost this sector further in coming months and slowdown in price wars may lead to
improved margins. Tax exemption on bunker fuel is expected to reduce freight rates by 12-15 percent according to estimates of Indian National
Shipowners Association (INSA) and increase container ship utilization by upto 20 percent providing some relief to ailing Indian ship operators. With
fresh round of funding from VCs and increased focus of Ecommerce firms on logistics and operation, Indian logistics sector is poised to see high growth
in coming years as evident by aggressive expansion plans of major players. Several key initiatives by GOI to boost rail, road and waterway infrastructure
and proposed implementation of GST will further help logistics sector to grow.
14
Trading Multiples
Sectoral Reporting
16
BFSI
17
18
18
19
20
21
22
23
24
25
26
26
ANALYST COVERAGE
Auto and Auto Ancilliaries
Selva Kumar S
Senior Analyst
Junior Analyst
Junior Analyst
pg14selva_k@mdi.ac.in
pg15surana_p@mdi.ac.in
pg15varun_b@mdi.ac.in
Anil Anto
Senior Analyst
Karan Mangla
Junior Analyst
pg14anil_a@mdi.ac.in
pg15karan_m@mdi.ac.in
Banking,
(BFSI)
Financial
FMCG,
Consumer
Breweries
Services,
Products,
Insurance
Retail,
Harish R
Senior Analyst
Kashish Singhal
Junior Analyst
Shrey Bhat
Junior Analyst
pg14harish_v@mdi.ac.in
pg15kashish_s@mdi.ac.in
pg15shrey_b@mdi.ac.in
Senior Analyst
Aayush Chelawat
Junior Analyst
Himanshu Jhamb
Junior Analyst
pg14ram_n@mdi.ac.in
pg15aayush_c@mdi.ac.in
pg15himanshu_j@mdi.ac.in
Senior Analyst
Junior Analyst
Jalaj Manocha
Junior Analyst
pg14arushi_j@ mdi.ac.in
pg15ivneet_s@mdi.ac.in
pg15jalaj_m@mdi.ac.in
Senior Analyst
Anuj Garg
Junior Analyst
Devyash Jain
Junior Analyst
pg14ankit_m@mdi.ac.in
pg15anuj_g@mdi.ac.in
pg15devyash_j@mdi.ac.in
Senior Analyst
Shanmuganandam T
Junior Analyst
Varun Mittal
Junior Analyst
pg14aditya_m@mdi.ac.in
pg15shanmuganandam_t@mdi.ac.in
pg15varun_m@mdi.ac.in
Senior Analyst
Akash Gupta
Junior Analyst
Chandan Papneja
Junior Analyst
pg14harish_balani@mdi.ac.in
pg15akash_g@mdi.ac.in
pg15chandan_p@mdi.ac.in
Senior Analyst
Abhay Mittal
Junior Analyst
pg14monish_b@ mdi.ac.in
pg15abhay_m@mdi.ac.in
Aditya Bansal
Junior Analyst
pg15aditya_b@mdi.ac.in
Abhas Sharma
Senior Analyst
Kanishk Khanna
Junior Analyst
Puneet Jain
Junior Analyst
pg14abhas_s@mdi.ac.in
pg15kanishk_k@mdi.ac.in
pg15puneet_j@mdi.ac.in
Senior Analyst
Mridul Bhansali
Junior Analyst
Vipul Gupta
Junior Analyst
pg14ashish_m@ mdi.ac.in
pg15mridul_b@mdi.ac.in
pg15vipul_g@mdi.ac.in
27