Category: Economy, Markets and Macro Views

Templeton’s [largest minority shareholder (c10% stake) in Taro] decision to switch sides and support Sun’s stance on the Taro impasse significantly boosts Sun’s chances of closing the Taro acquisition, in our view. While there are legal issues still pending in Israel & New York, with the largest minority shareholder on its side, Sun is likely to be able to go ahead even if a special tender offer is required.

Taro will help Sun Pharma gain scale & reach in the US market much faster than it would have been able to on its own – especially important given the disruption in its (more…)

The finance ministry’s refusal to extend the 7-year tax holiday to gas production, as reported in media [Yet to be confirmed], to be negative for RIL’s earnings and valuations. Fair valuation for RIL will also decline by Rs45/share due to removal of tax holiday.

Kotak Sec in a somewhat Bold move maintains SELL rating on RIL in view of (1) a weak business environment, (2) several potential negative developments (more…)

India’s July-September 2009 real GDP growth came in at 7.9% yoy, much higher than the 6.1% yoy growth in the previous quarter and overshooting consensus expectations of 6.3% yoy and our estimate of 6.4% yoy by a big margin. The sequential momentum leaped 13.1% qoq s.a. annualized, from 8.3% qoq in the previous quarter.

While trends in industry (8.3%) and services (9.3%) were broadly in line, (more…)

Tata Steel announced its results for Q2 FY2010.Both Corus and Tata Steel consolidated reported EBITDA and PAT were in red for the Sep qtr as losses at Teesside (TCP), and restructuring charges of Rs9.1B (some related to contract cancellations) hit earnings.

Corus reported EBITDA loss of $375MM (including TCP loss of $170MM) vs the 1Q loss of $387MM. Realizations fell q/q across segments in Europe. Tata reported consolidated PAT loss of Rs28B, 35% higher than 1Q loss of Rs20.2B. Tata Steel plans to reduce debt by $2B in the (more…)

After Merrill unveiled its investment outlook for 2010, Morgan Stanley has pushed the button forward on what it looks in the Indian markets for 2010. Here is an excerpt from the same,

1. Value in PSU Banks – The Central Bank is likely to start raising rates in January 2010. Rising rates favor Indian banks as they run a maturity mismatch on their balance sheets (liabilities have a longer maturity). Thus NIMs will rise; coupled with acceleration in loan growth (which trails IIP growth), this will help earnings. PSU Banks trade at better (more…)

The Indian Telecom industry is now dominated by Wireless vertical and going forward, even the Data / Broadband market will go the unwired way. Here is an overlook at the industry at macro level with forthcoming developments – Spectrum and Fees, 3G Auction and finally Consolidation.

Industry is still growing (23% in FY11 and 15% in FY12), spectrum constraints and tariff pressures are likely to limit the upside. More importantly, prices should decline further (25% in FY11e) due to increased competitive intensity, which will weigh on margins and earnings. (more…)