DOMESTIC: Sun Pharma receives eight observations on conclusion of USFDA inspection of Halol facility Granules India to sell a stake in China JV to Hubei Biocause for 109 million Japanese yen Reliance arm buys 51.78% stake in Asteria Aerospace Adani Transmission receives LoI for transmission project in the state of Maharashtra UPL gets green nod for Rs353cr pesticide unit expansion project in Gujarat PFS gets Rs145cr from resolution of stressed account Prayagraj Power Generation Company RIL arm inks pact to get over Rs25,000cr investments from Canada’s Brookfield Cipla acquires brand, trademark for anti-diabetic drug Vysov in India Reliance Industries ends IOC's 10-year reign to become India's largest company ELGI Equipments Ltd board acquisition of Michigan Air Solutions LLC Glenmark's Baddi manufacturing unit receives GMP certificate from European regulator Tata Motors in alliance talks with Chinese firms Petco selects TCS Optumera to drive its intelligent merchandising strategy NMDC gets 20-year extension for four iron ore mines Nestle examining show-cause notice on GST benefits SPARC acquires Bioprojet's rights for SCD-044 Lemon Tree Hotels signed a new property licence agreement Natco launches cut price versions of cancer drug Ibrutinib in India Panacea Biotec bags orders worth USD24mn from UN agencies NBCC bags Rs1,393cr project from DDA to develop 'East Delhi Hub' IL&FS Group gets court's approval for sale of its education business L&T Technology Services opens design centre in United States Lupin receives approval for Betamethasone Dipropionate Ointment USP ECONOMY: Moody’s keeps India GDP growth forecast at 5.6% Wholesale price inflation rises to 0.58% in November India, Germany ink pact for Rs1,958cr finance to develop energy-efficient housing programme RBI announces OMO on Dec 23 to bridge liquidity gap INDUSTRY: Drug cos under NPPA lens for self-exemption from price cap Housing sales may rise marginally by 4% in 2019: Report India cannot achieve USD5tn economy with slowing automotive industry Pharma sector likely to grow at 10-12% during FY19-22, outlook stable: ICRA Investment in real estate up 9% at Rs44,000cr in 2019 The week that went by: The week started on a strong note with the IT stocks taking the lead with the strong USDINR. Following the strong global cues, Indian markets commenced trade on a steady note. After the strong performance in the previous session, new record highs were seen at 12,200 on the Sensex in the midweek trade. Some cool off was seen post the new highs ending the day however at new highs. Last trading day of the week opened flat with a positive bias. Price Performance Company 1M 3M 12M Supreme Petrochem Ltd -6.5% -10.4% -26.0% Shanthi Gears Ltd -2.2% 8.6% -23.9% Hind Rectifiers Ltd -8.7% 39.8% 68.9% KCP Ltd -11.4% -22.5% -40.4% The Hi-Tech Gears Ltd -6.2% -10.8% -51.1% Bharat Bijlee Ltd -5.2% -13.4% -33.7% Triveni Turbines Ltd -4.0% 1.9% -22.8% Siemens Ltd -0.3% 16.0% 54.4% GMM Pfaudler Ltd 8.0% 15.8% 47.9% Alicon Castalloy Ltd -5.1% -5.8% -43.9% Gufic Biosciences Ltd -8.9% -11.2% -37.6% Excel Industries Ltd 1.1% -8.8% -43.0% Vesuvius India Ltd 13.1% 12.6% -1.4% Munjal Showa Ltd -4.2% -7.0% -34.1% Bharat Rasayan Ltd -0.9% 16.0% 13.5% Alkyl Amines Chemicals Ltd 7.9% 38.0% 75.4% Grauer and Weil (India) Ltd 0.0% 0.4% -8.8% Texmaco Rail & Engineering Ltd -22.0% -33.4% -44.4% Nagarjuna Agrichem Ltd -4.6% -6.7% -9.4% ITD Cementation India Ltd -19.0% -23.2% -58.8% Westlife Development Ltd -2.8% 10.0% -6.2% Dynamatic Technologies Ltd -10.7% -24.7% -38.0% Hitech Corporation Ltd -47.5% 1.7% -26.4% NRB Bearings Ltd -3.3% -6.4% -53.4% Kokuyo Camlin Ltd -0.3% 1.2% -32.7% Timken India Ltd 1.0% 16.1% 47.0% Morganite Crucible (India) Ltd -2.6% -5.0% -6.9% Vardhman Special Steels Ltd -6.8% -16.7% -39.3% Zen Technologies Ltd -9.7% -14.9% -27.6% KSB Ltd -4.2% 0.4% -13.8% Thermax Ltd 3.3% -3.5% -5.0% Transpek Industry Ltd -9.2% -5.6% -17.7% BASF India Ltd 1.4% -6.3% -39.4% Artson Engineering Ltd -9.7% -22.4% -46.6% Remsons Industries Ltd -2.5% -20.5% -32.2% Snowman Logistics Ltd -2.8% 41.4% 12.9% Alembic Pharmaceuticals Ltd -0.5% 5.3% -8.65% SKF India Ltd -2.3% 1.2% 13.6% HFCL Ltd -0.9% -10.4% -20.4% Sudarshan Chemical Industries Ltd 2.2% 21.4% 13.8% Huhtamaki PPL Ltd 7.0% 7.9% 26.5% Mishra Dhatu Nigam Ltd -11.1% 17.6% 22.8% Anuh Pharma Ltd -2.7% -14.9% -23.9% Kirloskar Pneumatic Co. Ltd -12.1% -24.5% -32.4% Integra Engineering Ltd 10.0% -3.6% -30.2% ICICI Bank Ltd 10.3% 30.8% 50.7% Indian Hume Pipe Co. Ltd -4.8% -27.1% 18.7% Engineers India Ltd 0.0% -8.7% 67.7% Gulshan Polyols Ltd -1.2% -23.8% -42.4% Nesco Ltd 0.9% 18.3% 41.8% Castrol India Ltd -15.8% -1.1% 65.8% Hikal Ltd -2.0% -30.4% 1.4% Please Turn Over 20 Dec 2019 Page No: 1
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DOMESTIC:
Sun Pharma receives eight observations on conclusion of USFDA inspection of Halol facility
Granules India to sell a stake in China JV to Hubei Biocause for 109 million Japanese yen
Reliance arm buys 51.78% stake in Asteria Aerospace
Adani Transmission receives LoI for transmission project in the state of Maharashtra
UPL gets green nod for Rs353cr pesticide unit expansion project in Gujarat
PFS gets Rs145cr from resolution of stressed account Prayagraj Power Generation Company
RIL arm inks pact to get over Rs25,000cr investments from Canada’s Brookfield
Cipla acquires brand, trademark for anti-diabetic drug Vysov in India
Reliance Industries ends IOC's 10-year reign to become India's largest company
ELGI Equipments Ltd board acquisition of Michigan Air Solutions LLC
Glenmark's Baddi manufacturing unit receives GMP certificate from European regulator
Tata Motors in alliance talks with Chinese firms
Petco selects TCS Optumera to drive its intelligent merchandising strategy
NMDC gets 20-year extension for four iron ore mines
Nestle examining show-cause notice on GST benefits
SPARC acquires Bioprojet's rights for SCD-044
Lemon Tree Hotels signed a new property licence agreement
Natco launches cut price versions of cancer drug Ibrutinib in India
Panacea Biotec bags orders worth USD24mn from UN agencies
NBCC bags Rs1,393cr project from DDA to develop 'East Delhi Hub'
IL&FS Group gets court's approval for sale of its education business
L&T Technology Services opens design centre in United States
Lupin receives approval for Betamethasone Dipropionate Ointment USP
ECONOMY:
Moody’s keeps India GDP growth forecast at 5.6%
Wholesale price inflation rises to 0.58% in November
India, Germany ink pact for Rs1,958cr finance to develop energy-efficient housing programme
RBI announces OMO on Dec 23 to bridge liquidity gap
INDUSTRY:
Drug cos under NPPA lens for self-exemption from price cap
Housing sales may rise marginally by 4% in 2019: Report
India cannot achieve USD5tn economy with slowing automotive industry
Pharma sector likely to grow at 10-12% during FY19-22, outlook stable: ICRA
Investment in real estate up 9% at Rs44,000cr in 2019
The week that went by: The week started on a strong note with the IT stocks taking the lead with the strong USDINR. Following the strong global cues, Indian markets commenced trade on a steady note. After the strong performance in the previous session, new record highs were seen at 12,200 on the Sensex in the midweek trade. Some cool off was seen post the new highs ending the day however at new highs. Last trading day of the week opened flat with a positive bias.
Financial Leverage: Financial leverage is the use of borrowed money (debt) to finance the purchase of assets with the expectation that the income or capital gain from the new asset will exceed the cost of borrowing. This generally magnifies the increase in EPS during periods of rising operating income but adds significant risks for stockholders and creditors because of the interest obligations.
COVERAGE NEWS:
Texmaco Rail & Engineering Limited: NCLT has admitted an insolvency petition of Veekay General Industries, an operational creditor of Bright Power Projects (India) Ltd u/s 9 of IBC against Texmaco for an alleged operational debt of ~Rs63 lakhs. Pursuant to the petition, Texmaco has filed an appeal before the National Company Law Appellate Tribunal.
HFCL Limited: The company has completed the acquisition of the balance 50.10% equity shares held in DragonWave HFCL India Private Limited through DragonWave Pte. Ltd for total consideration of Rs2.25cr; thereby making it a wholly owned subsidiary of HFCL.
Castrol India Limited: The company has entered into a strategic partnership with Renault India Private Ltd, under which Castrol will be aftersales engine oil lubricants supplier effective 1st January, 2020.
Alembic Pharmaceuticals Limited: The company’s joint venture, Aleor Dermaceuticals Ltd., has received EIR from USFDA for inspection at JV’s formulation facility at Karakhadi, Gujarat from 16th-20th September, 2019.
Anuh Pharma Limited: The company has received consent to operate for expansion with Amalgamation of existing consent to operate.
ECONOMY:
Moody’s keeps India GDP growth forecast at 5.6% Moody’s has reiterated India’s GDP growth forecast for 2019 at 5.6%, which it had lowered from 5.8% in October, 2019. This expected growth at 5.6% is lower than 7.4% growth in 2018. The forecast is affected by demand that has cooled down and also slower employment growth that is impacting consumption. Economic growth started decelerating since mid-2018, with real GDP slipping to approx. 5% from nearly 8% then. Moody’s is of the view that boosters by the government have not directly attacked the main pain point, consumption demand. Also, rate cuts by RBI have not been effectively transmitted to lending rates due to the existing credit crunch caused by the NBFC sector meltdown. Our comments: Though growth is expected to be subdued this 2019, Moody’s expects economic growth to pick up in 2020 at 6.6% and 2021 at 6.7%.
Wholesale price inflation rises to 0.58% in November Wholesale price inflation rose to 0.58% in November, while that of October was 0.16%. This was attributable to a sharp increase in food prices. Spike in the inflation for primary food articles to a 71 month high 11.1%, drove up the WPI inflation in November 2019. Inflation in manufactured products remained unchanged at -0.84 % in November, while that in fuel and power was -7.32%. Retail inflation rose to over a 3 year high of 5.54% in November due to costlier food products like vegetables, pulses and protein-rich items. However, Core-WPI displayed a y-o-y disinflation for the fourth consecutive month indicating that the demand in the economy is still low. Our comments: These indicators need to be monitored to understand whether or not India is facing stagflation, as current economic trends suggest fast decelerating economic growth and sharply rising inflation.
INDUSTRY:
Drug cos under NPPA lens for self-exemption from price cap Various Pharmaceutical Companies have come under the scanner of the National Pharmaceutical Pricing Authority (NPPA) for excluding products from the price control regime without first applying for the exemption. Companies such as Sun Pharmaceutical Industries, Abbott, AstraZeneca, Lupin, and Boehringer Ingelheim have launched products by bypassing the regulatory framework as they are violating the Drug Price Control Order (DPCO). Para 32 of DPCO gives powers to NPPA to exempt certain classes of drugs from price control for a period of 5 years with a prerequisite that the companies have developed the drug with proper unique and indigenous process. However, some of the companies mentioned above have launched anti-diabetes drugs under Para 32 of DPCO without submission of the requisite documents and if the drug company fixes the price via a self-exemption mode, the NPPA can direct them to get the prices either fixed or recover it in case the drug is overpriced. Our comments: The companies have been asked to provide data on manufacturing, import and sales since the launch of the products. The NPPA shall take further necessary action as applicable. COMPANY:
RIL arm inks pact to get over Rs25,000cr investments from Canada’s Brookfield Reliance Industrial Investments and Holdings Limited (RIIHL), a wholly-owned subsidiary of Reliance Industries Limited (RIL), has entered into binding agreements with Brookfield Infrastructure Partners LP, and its institutional partners, for an investment of Rs25,215cr in the units to be issued by the Tower Infrastructure Trust. This transaction demonstrates the belief of global investors in the potential of India’s digital opportunity. Our comments: After the closure of the transaction, the Trust will own 100% of the issued and paid up equity share capital of Reliance Jio Infratel Private Limited (RJIPL). RJIPL has a portfolio of approximately 130,000 telecom towers that form the backbone of Reliance Jio Infocomm Limited’s network. The company plans to scale up to 175,000 towers eventually. UPL gets green nod for Rs353cr pesticide unit expansion project in Gujarat The company has received an environmental clearance from the government for its Rs353.43cr pesticide unit expansion project in Bharuch district of Gujarat. This approval has been granted subject to certain conditions which includes that the company shouldn’t produce banned pesticides/chemicals nor use any prohibited raw material that goes into the production of pesticides. The proposed projects aim at expansion of the manufacturing capacities of existing pesticide products of technical grade, intermediate products and solid/liquid formulations, also for adding new products. Our comments: The company plans to increase the pesticide capacity from 1520 Tonne Per Month (TPM) to 4720TPM and pesticide specific intermediate from 1120TPM to 2100TPM at Ankleshwar.
Reliance arm buys 51.78% stake in Asteria Aerospace Reliance Strategic Business Ventures Ltd (RSBVL), a subsidiary of Reliance Industries has acquired over 51% stake in Asteria Aerospace for Rs23.12cr. RSBVL proposes to make further investments of upto Rs125cr, subject to Asteria achieving the agreed milestones and is expected to be completed by December 2021. Post this further investment, RSBVL’s stake would increase to 87.3% in Asteria. Our comments: The investment will further enable the group's initiatives in emerging technology. Sun Pharma receives eight observations on conclusion of USFDA inspection of Halol facility The USFDA has conducted a Good Manufacturing Practices inspection at the company’s Halol facility at Gujarat from 03-13th December, 2019. At the conclusion of the inspection, the agency issued a Form 483, with 8 observations. The company is committed to addressing these observations promptly and remains committed to working closely with the regulator thereby continuing to enhance its GMP compliance on an ongoing basis. Our comments: Sun Pharma is preparing the response to the observations, which will be submitted to the USFDA within 15 business days. Tata Motors: JLR acquired performance vehicles maker, Bowler Jaguar Land Rover Automobile has acquired a UK based company, Bowler. Bowler is a manufacturer of all terrain cars and parts also rally raid vehicles. Bowler would continue operations from its Belper premise and would now be a part of JLR's Special Vehicle Operations business. The amount spent by JLR for this acquisition is undisclosed. JLR looks to add new and innovative products to its Special Vehicle line and Bowler team's skills and experience to those of SV will pave the way for the same. Our comments: The main focus of JLR now is to foresee smooth transition of Bowler’s employees and customers. Piramal enterprises looks to sell 20% equity in healthcare business The company has put up 20% equity in its healthcare vertical for sale, seeking to expand the business. To realise this plan, the group is looking to raise funds or bring in a financial partner. The funds will be raised through the issue of a minority stake of up to 20% in the pharma business, which will be purely growth capital and infused into the pharma subsidiary. Our comments: PEL wants to accelerate growth for its healthcare division through acquisitions that will expand its portfolio of products, offer opportunities to buy brands or leverage its distribution network across the US, Europe and Asia.
20 Dec 2019
Page No: 6
JLR-Bowler Acquisition
RSBVL-Asteria Acquisition
USFDA Observations
Minority Stake Sale
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