CP | Dalal Street

Changing Growth Engine – CS

November 25, 20082 min read

India’s economic growth engine has not stayed the same for long in the past. Credit Suisse expects investments to no longer be the growth engine from now on. Exports, somewhat surprisingly, could be relatively the fastest growing economic sector for the next few quarters. But why does this Change frequently ? The cyclicality in the savings rate and the frequently recurring twin deficits and profit-oriented private sector are key reasons why India’s growth characteristics change constantly.

Because of the ongoing crisis and wealth destruction, investment-driven growth has been derailed, at least for the time being. (more…)

Equity Research

Fortis Healthcare – Turning Around for Healthy Bottomline

November 25, 20081 min read

Fortis Healthcare has been able to operationally turnaround its largest hospital – Escorts Heart Institute and Surgery Hospital. The management is now focused on steering other newer group hospitals to a steady state performance. Escorts acquisition also helped the management gain the required experience and they are now focused on smaller-scale acquisitions with a bed size of
around 100-150 beds, which in our view is a better strategy. (more…)

Breaking Corporate India Earnings News

Dr Reddys Imitrex Launch to boost Growth

November 25, 20081 min read

Dr. Reddy’s Labs announced that it has launched the authorized generic version of GlaxoSmithKline’s Imitrex (Sumatriptan Succinate) tablets in the United States. Dr. Reddy’s is the first company to launch an authorized generic version of Imitrex tablets in the US market.

Imitrex, prescribed for migraine attacks, had U.S. sales of $1.3 bn in 2007 as per IMS. This launch is expected to drive 25% sales growth for Dr Reddy’s for FY09E. This would help Dr Reddy’s to at least maintain the trend sales growth rate that we have seen in the first half of this year.

Sales from Imitrex could contribute around 3.2% of the 25% sales growth and any delay by Ranbaxy to launch the drug will drive Dr. Reddy’s sales higher.

Economy, Markets and Macro Views

Dabur + Fem Care Acquistion – Synergic Fit but Expensive Pricing

November 24, 20081 min read

Dabur India acquired a 72.15% stake in Fem Care Pharma from the existing promoters for Rs2.04bn in an all cash deal. Overall contribution of skin care products to Dabur’s sales is less than 4% and this acquisition would help in nearly doubling it. Besides the well entrenched Fem brand this acquisition provides manufacturing base in Nasik and Baddi (enjoying tax benefits). It also has presence in GCC/Middle East markets which could be expanded. FEMC’s direct reach of 25,000 parlors will provide Dabur with a new distribution channel for its own products – the other channels should have some degree of overlap. (more…)

Equity Research

MIC Electronics – Review

November 24, 20082 min read

MIC Electronics is the only listed / organized player in the LED segment with capabilities in multi color display boards and LED based lighting solutions. MIC has competencies in the design, development and manufacture of LED Video Displays, high-end Electronic and Telecommunication equipment and development of Telecom software since 1988. The company is a technology driven design-to-manufacture player with an early mover advantage and an established clientele. MIC offers a cost effective means of communicating with a longer shelf life than the traditional means of advertising through billboards. (more…)

Breaking Corporate India Earnings News

Real Estate – The Picture on the Street

November 24, 20081 min read

Real estate demand in the residential vertical has been badly hit due to high prices and poor affordability.

Buyers Sentiment in Realty:
Buyers are shying away from new projects or under construction projects, where project delivery is more than a year away. This is because – buyers are optimistic that prices have to correct further in the near term, and they lack confidence in the developers and the developers’ ability / intention to construct and deliver the project on time.

Reality of Indian Realty List Prices:
The list prices quoted by developers for under construction projects have little meaning today as no few deals are concluded at the official list prices. Deals are happening at 30-50% discount to list prices. However, developers are not officially lowering list prices, as they believe that taking such measures may not necessarily result in any incremental demand from home buyers, but developer himself will be impacted due to the negative outlook on prices and weak sentiments.

Standard Chartered – BKC Deal which happened at a 30% discount to the last deal reported in Bandra Kurla complex has led to re-negotiation of lease rentals / rates in the Commercial property segment across India.

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