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UNNATI

Investment Management
and Research Group
MDI, Gurgaon
Monthly News Letter
October 1 October 31, 2015

UNNATI Investment Management and Research Group

Memo from the UC


Dear Investors,
The market remained range bound in the month of October, falling as much as 0.7% and rising to the tune of 2.1% during the month, as there was no major
trigger to boost investor confidence. The CPI and the WPI inflation increased during the month of October with CPI reaching 5% and WPI at (3.81%).
The PMI declined to 50.7 in October 2015, compared to 51.2 in the previous month owing to softening domestic demand. The Q2 corporate earnings
remained a mixed bag and failed to uplift the mood of the investors. On the global front, Chinese Central Bank reduced rates in a bid to support growth,
ECB hinted towards providing more stimulus and the Fed maintained the rates. Going forward, the market will await the outcome of elections in Bihar as it
may affect the fiscal reforms pace and direction. Also the passage of GST and other legislations in the upcoming winter session would definitely boost the
investor and corporate sentiment.
In this edition of our newsletter, we provide an update on our two funds and an analysis of the recent happenings in eleven major sectors in the month of
October, presented in an aesthetic and easy-to-read format. We would be glad to hear your feedback/suggestions at amc@mdi.ac.in.
On behalf of Team Unnati,
Warm Regards,
Rachit Garg
Coordinator
Unnati Investment Management and Research Group

CONTENTS
Fund Performance

Auto & Auto Ancillaries

Banking, Financial Services & Insurance

Chemicals, Fertilizers, Agriculture, Sugar

FMCG, Consumer Goods, Retail & Breweries

IT & ITES, Telecom, Media

Metals, Cement, Paper

Oil & Gas

10

Pharmaceutical & Healthcare

11

Power & Capital Goods

12

Real Estate, Infrastructure & Construction

13

Shipping, Logistics, Aviation, Tourism

14

Trading Multiples

15

Analyst Coverage

27

A NOTE FROM THE INVESTMENT COORDINATORS


Manish Agrawal

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
(%)

Axis Bank Ltd.

Banking, Financial Services & Insurance

6.18

Divi's Laboratories

Pharmaceuticals & Healthcare

5.25

Bharti Infratel

IT, ITES, Telecom and Media

5.06

Lupin
Tata Consultancy Services
Ltd.

Pharmaceuticals & Healthcare

5.02

IT, ITES, Telecom and Media

4.87

Shree Cement Ltd.

Metals, Cement, Paper & Commodities

4.79

Larsen & Toubro Ltd.

Power & Capital Goods

4.49

Kotak Mahindra Bank


Godrej Consumer
Products Ltd.

Banking, Financial Services & Insurance


FMCG, Consumer Products, Retail &
Breweries

4.20

Yes Bank Ltd.

Banking, Financial Services & Insurance

3.90

H D F C Bank Ltd.

Banking, Financial Services & Insurance

3.72

Pidilite Industries
Motherson Sumi Systems
Ltd.
Housing Development
Finance Corpn. Ltd.(HDFC)
Sun Pharmaceutical Inds.
Ltd.

Chemicals, Fertilizers, Agriculture & Sugar

3.65

Auto & Auto Ancilliaries

3.44

Ultra Tech Cem

--0.215

-1.00

-0.80

-0.60

-0.40

Advances/Declines

-0.20

0.00

72%

28%

4.10

Unnati Diversified Sector Allocation (%)


26.92
14.85

13.94

9.97

10.51

5.18

Banking, Financial Services & Insurance

3.27

Pharmaceuticals & Healthcare

2.83
2.63

I T C Ltd.

Metals, Cement, Paper & Commodities


FMCG, Consumer Products, Retail &
Breweries

IndusInd Bank

Banking, Financial Services & Insurance

2.49

105

HCL Technologies Ltd

IT, ITES, Telecom and Media

2.38

104

N T P C Ltd.

Power & Capital Goods

2.37

G A I L (India) Ltd.
Mahindra & Mahindra
Ltd.

Power & Capital Goods

1.92

Auto & Auto Ancilliaries

1.92

101

ONGC

Oil & Gas

1.54

100

Tata Motors Ltd.

Auto & Auto Ancilliaries

1.25

99

Tata Steel Ltd.

Metals, Cement, Paper & Commodities

1.04

Oil India Ltd.

Oil & Gas

0.98

Asian Paints Ltd.

Chemicals, Fertilizers, Agriculture & Sugar

0.92

Hindustan Zinc

Metals, Cement, Paper & Commodities

0.82

Cairn India

Oil & Gas

0.60

7.61

7.49
3.06

2.61

Relative Share Performance

103
102

Diversified
Normalised
CNX Nifty
Normalised

98

Thirty Day (99.9%)VAR = 11.8%

Latest Portfolio Changes:


Reduced allocation in Motherson Sumi
*Sharpe Ratio indicates excess returns generated per unit of risk for LTM ending at Oct 30, 2015
*VaR indicated maximum value at Risk in a month with 99.9% confidence and is calculated for LTM ending at Oct 30, 2015
2

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

Amara Raja Batteries Ltd.

Auto & Auto Ancilliaries

8.90

Aurobindo Pharma Ltd.

Pharmaceuticals & Healthcare

8.23

Adani Ports and SEZ

6.62

Emami

Shipping, Logistics, Tourism, Aviation


FMCG, Consumer Products, Retail &
Breweries

Thomas Cook (India) Ltd.

Shipping, Logistics, Tourism, Aviation

5.22

Tech Mahindra

4.90

Bajaj Corp

IT, ITES, Telecom and Media


FMCG, Consumer Products, Retail &
Breweries

Indraprastha Gas Ltd

Oil & Gas

3.56

CESC

Power & Capital Goods

3.52

Blue Dart Express Ltd.

Shipping, Logistics, Tourism, Aviation

3.46

VA Tech Wabag

Infra, Construction, Real Estate

3.40

N I I T Technologies Ltd.

IT, ITES, Telecom and Media

3.21

Info Edge (India) Ltd.

IT, ITES, Telecom and Media

3.03

Dhanuka Agritech Ltd.

Chemicals, Fertilizers, Agriculture & Sugar

2.97

Petronet LNG

Oil & Gas

2.87

Piramal Healthcare Ltd.

Pharmaceuticals & Healthcare

2.62

Wabco India
Container Corpn. Of India
Ltd.

Auto & Auto Ancilliaries

2.51

Shipping, Logistics, Tourism, Aviation

2.51

Allcargo Logistics Ltd.

Logistics

2.36

AIA Engineering

Power & Capital Goods

2.18

Can Fin Homes

Banking, Financial Services & Insurance

2.17

Gateway Distripacks

Shipping, Logistics, Tourism, Aviation

1.52

Apollo Hospitals
Power Grid Corpn. Of
India Ltd.

Pharmaceuticals & Healthcare

1.49

Power & Capital Goods

1.46

Poly Medicure Ltd.


I R B Infrastructure
Developers Ltd.

Pharmaceuticals & Healthcare

1.45

Infra, Construction, Real Estate

1.40

104

Dewan Housing Finance

Banking, Financial Services & Insurance

1.36

103

PI Industries

Chemicals, Fertilizers, Agriculture & Sugar

1.01

102

Tata Motors DVR

Auto & Auto Ancilliaries

0.99

101

Gujarat State Petronet

Oil & Gas

0.98

100

Persistent Systems

IT, ITES, Telecom and Media

0.98

99

PVR Ltd

IT, ITES, Telecom and Media

0.94

98

Apollo Tyres Ltd.

Auto & Auto Ancilliaries

0.65

97

IDFC Bank Ltd

Banking, Financial Services & Insurance

0.64

96

I D F C Ltd.

Banking, Financial Services & Insurance

0.54

Amtek Auto

Auto & Auto Ancilliaries

0.30

-0.224

5.68
-1.00

-0.80

-0.60

-0.40

-0.20

0.00

4.03

Advances/Declines

58%

42%

Unnati Midcap Sector Allocation


21.69
13.35

13.07
9.82
5.01

4.71

7.40

7.17
3.98
0.00

Relative Share Performance


105

Unnati Midcap
Normalised
CNX Midcap
Normalised

Thirty Day (99.9%)VAR = 10.12%

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.

Unnati Monthly Newsletter | October 2015

AUTO & AUTO ANCILLARIES


Selva Kumar S
Senior Security Analyst Auto & Auto ancillaries, UIMRG
Email: pg14selva_k@mdi.ac.in
Mobile: +91-8130630894

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

%), Apollo tyres (-5.99 %)

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

Mahindra & Mahindra, Maruti Suzuki India, MothersonSumi systems, Tata

94

Motors, TVS Motor Company.

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

government support on tax concessions


Mercedes-Benz India is looking at expanding local manufacturing, a plan
that though depends on getting support such as tax concessions from
Maharashtra, the state where its factory is located, new managing director
and chief executive Roland Folger said. GLE-Class, is also the first model
that the company is making locally from day one. Local production allows
the company to make its vehicles more affordable vehicles imported as
fully built attract between 60% and 100% import duty thereby helping
sell more here. Currently, 80% of the cars sold in India by Mercedes are
produced locally. It has four local suppliers who supply engines, gear box,
axle, cockpit, flooring and wiring harness. Among Mercedes' 22 product
offerings, eight are locally produced.

Maruti wage deal: Workers to get Rs 16,800 per month

Amtek Auto looks to sell Italian coffee chain Barista


Barely a year after it acquired Barista Coffee, debt-laden auto component maker
Amtek Group is looking to sell off the loss-making Italian coffee chain Barista.
Amtek may bring in consultancy firm Grant Thornton to look for potential buyers
for Barista, one of the officials said. Dham the promoter of Amtek Auto had
recently announced the group's decision to offload non-core assets and exit nonauto businesses, after the firm defaulted on repayment of Rs 800 crore.

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.

average salary hike


The country's largest carmaker, Maruti Suzuki India, has reached a wage
settlement agreement with workers at its Gurgaon and Manesar plants,
under which employees will get an average salary hike of around Rs 16,800
per month spread over three years. Under the 3-year agreement, to be
implemented with retrospective effect from April this year, the workers will
receive 50 per cent of the increased salary in the first year and the 25 per
cent each in the remaining two years. For the first time, the unions of both
Gurgaon and Manesar plants, including those of Maruti Suzuki Powertrain
have reached an amicable agreement with the management.

Apollo Tyres buys out Germany's Reifencom for euro 45.6


million
Apollo Tyres has acquired German tyre distribution firm Reifencom GmbH
for 45.6 million euros, or about Rs 324 crore, in a move that will take its
brand closer to customers in Europe. It will enable Apollo to improve its
mix of distribution channels in Germany and Europe and aid in increasing
the visibility of Apollo and Vredestein tyres in offline and especially in the
fast growing online retail space.

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.

Unnati Monthly Newsletter | October 2015

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

Major Gainers:CanFin Housing (8.6%), Kotak Mahindra Bank (7.3%)

109%
107%

Major Losers: IndusInd Bank (-4.77%), Axis Bank (-4.2%)

105%

102.0%

101%

Unnati BFSI

Nifty

Bank Nifty

28-Oct-15

25-Oct-15

22-Oct-15

State Bank of India, Union Bank of India, Yes Bank

19-Oct-15

95%
16-Oct-15

Mahindra Bank, LIC Housing Finance, Punjab National Bank, Reliance Capital,

13-Oct-15

97%
10-Oct-15

Corporation, ICICI Bank, IDBI Bank, IDFC, IndusInd Bank, Kotak

101.2%

7-Oct-15

99%

1-Oct-15

Canara Bank, Federal Bank, HDFC Bank, Housing Development Finance

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

RBI allows 90% LTV ratio on home loans up to Rs30 lakh

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

weights attached to some categories of home loans in a move that will


likely make more credit available to borrowers and improve sentiment in a
struggling real estate market In a notification, RBI allowed a loan-to-value
ratio (LTV) of up to 90% for home loans of Rs.30 lakh or less. Earlier, 90%
LTV was allowed only for loans up to Rs.20 lakh.

housing finance segment and are likely to cater the housing loan needs of the

Govt infuses Rs13, 955 crore into eight PSU banks

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

Center moots conversion of 75% of loans to discoms to govt bonds

shares on preferential basis to the government against capital infusion


of Rs.13,955 crore. Bank of India, Canara Bank, Dena Bank, Corporation

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

from the government.

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.

Indias unbanked population halves to 233 million


Indias unbanked population has more than halved to 233 million in 2015
from

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

Unnati Monthly Newsletter |October 2015

Chemicals, Fertilizers, Agriculture, Sugar


Ashish Mahapatra
Senior Security Analyst CFAS, UIMRG
Email: pg14ashish_m@mdi.ac.in
Mobile: +91-9611123695

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

Cotton output estimated at 370.50 lakh bales in 2015-16: CAI

Asian Paints (International) Limited, Mauritius, a wholly owned subsidiary of the

According to Cotton Association of India (CAI), country's total cotton

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

International Limited, Singapore, a wholly owned subsidiary of APIL. The transfer

drawn by the CAI estimated total cotton supply for the season 2015-16 at

of stake to Berger International is part of Asian Paints' plans to consolidate its

463.15 lakh bales while the consumption is estimated at 325.00 lakh bales

investment in the overseas subsidiaries.

thus leaving a surplus of 138.15 lakh bales.

India's urea production estimated to rise by 6 per cent to 240 LT

Mills exporting sugar but struggling to meet target

Due to government initiatives like gas pooling and incentivizing the energy

Indian mills have contracted exports of almost 100,000 tonnes of home-

efficiency measures under the new urea policy, the domestic urea production is

grown white sugar, but will likely struggle to meet an ambitious

expected to increase by around 6 percent from 226 lakh tones to 240 lakh tones.

government target of exporting at least 4 million tonnes in the present

The country's urea production had been stagnant at around 220-225 lakh tonnes

crushing season to reduce stockpiles. Producing at a loss, the country's

from last few years, whereas the demand is about 300 lakh tonnes.

sugar mills have received a contract to export 90,000 tonnes of white

CCEA approves Rs 7,000-crore loan from banks to clear urea subsidy

sugar to various Asian countries at $390-410 a tonne.

The Cabinet Committee on Economic Affairs (CCEA) approved Rs 7,000 crore loan

DAP imports more than double to 48.54 lakh tones

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

urea subsidy bill during the last fiscal.

tonnes in the first six months of the current financial year.

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.

Unnati Monthly Newsletter | October 2015

FMCG, RETAIL, CONSUMER DURABLES AND BREWERIES


Harish R
Senior Security Analyst FMCG, Retail, Consumer Durables and Breweries,
UIMRG
Email: pg14harish_v@mdi.ac.in
Mobile: +91-8130683675

SECTORAL PERFORMANCE

SECTOR HAPPENINGS
Major Gainers:

Advances/Decli
nes

Titan Company (10.1%), TTK Prestige (17.2%), United

Breweries (6.5%)

109.0
107.0

Major Losers: Kitex Garments (-15.3%), Bajaj Corp. (-8.8%), Jubilant Foodworks

105.0

(-8.5%), Emami Ltd. (-7.0%), Bata India (-6.7%)

103.0

102.0

101.0
Sector Constituents: Aditya Birla Nuvo, Arvind, Bajaj Corp, Bata India, Britannia

99.0

Industries, Colgate-Palmolive, Dabur India, Emami, Future Retail, GSK

97.0

Consumer

Healthcare,

GCPL,

HUL,

ITC,

Jubilant

FoodWorks,

97.9

95.0

Jyothy

Laboratories, Kewal Kiran Clothing, Kitex Garments, Marico, Nestle India,


Relaxo Footwears, Shoppers Stop, Tata Global Beverages, Titan Company,
Unnati FMCG

Trent, TTK Prestige, United Breweries, United Spirits, Videocon Industries

CNX FMCG

Nifty

SECTOR NEWS
ITC set to launch its first dairy product 'Aashirvaad ghee'

Parle Products launches Mexitos, a new brand in nacho chips

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.

cigarette brand, the company is looking to replicate the success it achieved

Though nacho chips are a product of the Western markets, the company has

in the unorganised segment with the Aashirvaad brand. Aashirvaad is a Rs.

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

be available in all leading outlets across India at price points of Rs 20 and Rs

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

production in 2013 of 45,343,600 tonnes harvested on 1,992,200 hectares

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

billion in FY14. Indias food processing industry accounts for 32 percent of

production comes from the organized sector comprising co-operatives and

the Indian food market. It is expected to touch US $ 194 billion by 2017. The

private dairies.

sector registered a CAGR of 15.6 percent during FY 07-14.

Patanjali enters big retail with Future Group tie-up

Herman Miller opens new facility in Bengaluru

Baba Ramdev's Patanjali Ayurved has entered into an exclusive partnership

US-based furniture firm Herman Miller today inaugurated its production

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

subsequently sell Patanjali products, making them available in more than

facility will cater to nearby cities as well as neighboring countries namely

240 cities and towns in the country.

Srilanka and Middle East countries.

FMCG growth revival only in Nielsen Data: FMCG Cos CEOs

Aditya Birla Group launches fashion portal abof.com

CEOs of FMCG companies are at loggerheads with Nielsen research

Aditya Birla Group launched its e-commerce portal for apparel - abof.com, as

indicating revival in FMCG demand. Nielsen estimates that FMCG sector

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

and women. abof.com is equipped with Indias first-of-its-kind 3D virtual trial

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

Unnati Monthly Newsletter | October 2015

IT, TELECOM, MEDIA AND EDUCATION


Ram Narayan
Senior Security Analyst IT, Telecom, Media and Education
E-mail: pg14ram_n@mdi.ac.in
Mobile: +91-7042741499

Advances/Declines

SECTOR HAPPENINGS

SECTORAL PERFORMANCE

Major Gainers:

Intellect Design Arena Ltd (35.91%), KPIT Technologies (28.63%),


Cigniti Technologies (19.27%), Zensar Technologies (16.57%), eClerx (15.27%)

104.00

Major Losers: RS Software (-7.63%), Idea Cellular (-6.86%), Info Edge (India) Ltd (-

102.00

101.45

100.00

99.45

5.34%), TCS Ltd (-5.11%), Wipro (-4.34%)


Sector Constituents: Infosys, TCS, HCL Technologies, Wipro Ltd, Tech Mahindra Ltd,

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

statistics to the fans.

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

Volvo inks LoI to sell external IT business to HCL Tech

locations including airports and leading quick service restaurants. According to


its website, the venture works with companies such as Starbucks, McDonald's

The Swedish company said that the deal would affect 2600 Volvo staff and

and KFC, among others.

would be offered employment at HCL. The deal is a part of applying


efficiency measures aimed at cutting $1.2bn of structural costs and is seen
to be boosting operating earnings by $108.5 mn.

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.

Unnati Monthly Newsletter | October 2015

Metals, Cement and Paper


Monish Banerjee
Senior Security Analyst Metals, Cement and Paper, UIMRG
Email: pg14monish_b@mdi.ac.in
Mobile: +91-9943179091

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

India, NMDC, Vedanta, NALCO, HINDALCO, Hindustan Zinc, SAIL

13-Oct-15

Chettinad Cement, J.K. Lakshmi Cement, Shree Cement, Tata Steel, JSWL, Coal

11-Oct-15

Ambuja Cement, Heidelberg Cement, Mangalam Cement, Orient Cement,

9-Oct-15

Sector Constituents: ACC, Ultratech Cement, Ramco Cements, J.K. Cement,

7-Oct-15

Major Losers: Coal India(-2.7%)

116
114
112
110
108
106
104
102
100
98
5-Oct-15

Major Gainers: HINDALCO(20.1%), Tata Steel(15.4%)

3-Oct-15

SECTOR HAPPENINGS

CNX NIFTY

SECTOR NEWS
CREDAI moves CCI against cement firms for price cartelization

Govt. permits CIL to explore natural gas in coal seams

Realty

Developer's

The government has allowed Coal India to produce natural gas (CBM) from

Associations of India (CREDAI), has moved the competition watchdog Competition

coal seams in mining leases it already holds. Until now, Coal India was

Commission of India (CCI) against cement manufacturers, accusing them of

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

subsidiaries will be allowed to explore coal-bed methane (CBM) gas in

January and September this year, but cement companies never passed on this

mining leases they possess. Coal India Ltd (CIL), however, will not be

benefit to their customers. Instead, they appeared to be working together in

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.

Jaypee Group in talks with JSW to sell its 20 MT cement portfolio

CIL enters into JV agreement with 3 firms for Talcher complex

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

for a complete sellout of its cement portfolio.

feasibility report.

Ballarpur Industries Limited (BILT), the flagship company of the Avantha Group,

Coal India's subsidiary Western Coalfields is on track to open 36 mines in

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.

Unnati Monthly Newsletter | October 2015

Oil and Gas


Aditya Menon
Senior Security Analyst Oil and Gas, UIMRG
Email: pg14aditya_m@mdi.ac.in
Mobile: +91-9899053078

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%

IGL (4.62%), Cairn (0.13%)


Major Losers: OIL (-5.88%)
Sector Constituents: IOCL, BPCL, HPCL, ONGC, OIL, GAIL, Petronet LNG Ltd, IGL,
Reliance India Ltd, Cairn India Ltd, GSPL

105.89
105.22

101.44

Unnati

CNX Nifty

CNX Energy

SECTOR NEWS
Govt fixes domestic gas price at $3.82 per mmBtu

GAIL to take 10% stake in TAPI pipeline

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)

the US-based $10 billion Turkmenistan- Afghanistan-Pakistan-India

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

input costs for power and fertilizer companies in India.

years and is planned to become operational in 2018. India and Pakistan

Saudi Aramco cuts crude oil price to Asian buyers

would get 38 mmscmd each while Afghanistan will get 14mmscmd.

Indias pitch for price and terms correction with the OPEC by leveraging the

OMCs to cut share of foreign currency loans

subdued global crude oil price scenario seems to have gained traction with Saudi

Indian Oil Marketing Companies (OMCs) seek to reduce the proportion of

Aramco reducing prices for November oil sales to Asia, the main market for Saudi

their foreign currency borrowings as domestic interest rates have started to

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

Unnati Monthly Newsletter | October 2015

PHARMACEUTICAL AND HEALTHCARE


Arushi Jain
Senior Security Analyst Pharmaceutical and Healthcare, UIMRG
Email: pg14arushi_j@mdi.ac.in
Mobile: +91-9999693941

Advances/Declines

SECTORAL PERFORMANCE

SECTOR HAPPENINGS
Major Gainers: Jubilant (12.57%), Sanofi (10.76%), Aurobindo Pharma (10.70%),

105

PEL (10.47%)
101.4

Major Losers: Sequent Scientific (-10.78%), Marksans (-5.01%), Lupin (-4.54%)

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

Government plans mandatory marketing code for pharma firms

Leaders of India's $15 billion pharmaceuticals industry, a major supplier of

Drugmakers may soon be prohibited from offering gifts to doctors to

affordable generics to the world, have joined public health activists in criticising a

prescribe their products, with the government finding that an existing

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

impact of the Trans-Pacific Partnership (TPP) struck between 12 nations, which

mandatory code will replace the voluntary Uniform Code of Pharmaceutical

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

pharmaceuticals in January. The government will consult stakeholders,

that shield new drug data from competitors would hurt their business in those

such as the Medical Council of India (MCI), Drugs Controller General of

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

code, which is expected in six months. In 2011, the ministry of chemicals

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

representatives as well, prohibiting them from employing any inducement

New Pharma City to come up in Hyderabad

or payment to gain access to a healthcare practitioner.

The Telangana Government has announced a plan to develop an exclusive

FICCI recommends 16-point agenda to position India as most

pharma zone on about 11,000 acres near Mucherla in the neighbouring

preferred healthcare destination

Rangareddy district with an in-house pharmaceutical university and research


facility. The new city will have a separate drug control unit for speedy clearance

In a bid to position India as the most preferred healthcare destination, the

of regulatory requirements. The unit will be headed by an officer of joint director

FICCI

cadre and work along with manufacturers to make it more industry friendly.

opportunities in the Medical Value Travel (MVT) market. These include

Hyderabad has about 500 pharma and biotech companies, including majors like

simplified and relaxed medical visa regulations for patients including visa

Dr Reddys Laboratories and Aurobindo Pharmaceuticals. The Department of

on arrival; multiple entry medical visa to facilitate follow-up treatments;

Industries, Telangana, is expecting to see significant investment in the new city

promotion of MVT by Indian embassies; medical facilitation desk at Indian

by the existing companies as well as new investors. The city will be developed on

airports; faster immigration facilities at Indian airports; and an advisory or

the lines of Chinas pharma city.

checklist at the time of grant of medical visa.

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

Unnati Monthly Newsletter | October 2015

Power & Capital Goods


Harish Ramesh Balani
Senior Security Analyst Power & Capital Goods, UIMRG
Email: pg14harish_balani@mdi.ac.in
Mobile: +91-8130636034

Advances/Declines

SECTORAL PERFORMANCE

Unnati - P&CG

CNX Energy

29-Oct-15

1-Oct-15

Power, Man Industries, Maharashtra Seamless, Piapavav Defense, Praj Industries

25-Oct-15

Energy, Crompton Greaves, Thermax, Havells, Jaiprakash Power Ventures, Adani

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

Major Losers: Larsen & Tourbo (-5.33%)

110
108
106
104
102
100
98
96
94
9-Oct-15

Major Gainers: CESC (12.14%), NTPC (7.53%)

5-Oct-15

SECTOR HAPPENINGS

CNX Nifty

SECTOR NEWS
Rooftop solar panels policy to be before Cabinet soon

Power Grid wins Rs 7000-cr transmission project

As per Minister of Power, Coal, New and Renewable Energy, Piyush Goyal a policy

Of the two key power transmission projects put up for tariff-based

to encourage rooftop solar power panels will soon be placed before the Union

competitive bidding (TBCB), state-owned Power Grid Corporation of India

Cabinet for approval. The policy will have detailed guidelines about installing

(PGCIL) won the Rs 7,032-crore Vemagiri-II transmission project, one of

rooftop solar panels on various buildings including government schools, colleges

the costliest projects to come under the bidding route this year. Kalpataru

and other intuitions. The focus is on structural improvement rather than

Power Transmission bagged the second project the Rs 2,240-crore

providing quick fix or bandage solutions.

Bhutan inter-link.

ADB, India sign $200mn Loan to support Renewable Energy Projects

Global slowdown to hurt capital goods companies

The loan is the first tranche of a $500 million multitranche financing facility to

Engineering goods exports fell by 22.8% year-on-year (y-o-y), the second

IREDA for the Clean Energy Finance Investment Program. The Program aims to

steepest fall after petroleum products. Importantly, machinery exports

leverage public sector resources to catalyze private sector investments in

have been declining since February. This is likely to be mirrored in the

renewable energy subprojects including wind, biomass, hydropower, solar, and

revenue accretion of capital goods firms for the September quarter. Those

cogeneration technologies. This will enable the government scale-up renewable

with higher exposure to exports may post lower than expected revenue

energy infrastructure by facilitating investments in projects.

accretion.

Renewable capacity addition jumps 49% in H1

EPC firms awarded projects worth over $5 billion in Kuwait

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

Petroleum Corporation to replace an old power substation at Al-Ahmadi

about 49 per cent. Wind sector contributed about 933 MW (865 MW in H1 of last

Refinery in Kuwait. Essar Projects Limited, in a joint venture with Italy's

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

New and Renewable Energy (MNRE).

Al-Zour Refinery Project (ZOR) Package-4.

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

Unnati Monthly Newsletter | October 2015

Real Estate, Infrastructure and Construction


Ankit Maheshwari
Senior Security Analyst Real Estate, Infrastructure & Construction, UIMRG
Email: pg14ankit_m@mdi.ac.in
Mobile: +91-9910205571

Advances/Declines

SECTORAL PERFORMANCE

SECTOR HAPPENINGS
Major Gainers: Sobha Ltd (19.35%), Phoenix Mills (4.29%), Oberoi Realty (6.8%)

109
107

Major Losers: DLF (-12.6%), NBCC (-6.51%), HDIL(-8.65%)

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

RBI eases mortgage rules for home loans

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

on China, which is bidding for other projects on the world's fourth-largest

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

contract to assess the feasibility of a high-speed train between Delhi and

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

is part of its broader push back against China's involvement in infrastructure

housing for the economically weaker section as the largest beneficiary will

development in South Asia over the past several years.

be this section, thus giving a fillip to governments Housing for all by 2022.

LIC develops bonds worth 2,000Cr. with Indian Railways

FDI in Construction development sector sees a decline

Life Insurance Corporation (LIC) is in the process of providing Rs 2,000 crore to

Data released by DIPP shows a sharp decline in FDI in the Construction

Indian Railway Finance Corporation (IRFC), the first tranche of its financial

development segment, which includes Townships, housing and Built up

assistance, for investment in capacity augmentation projects. Railways had

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

is available from the current fiscal, there would be a five-year moratorium on

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.

opportunity but FDI is not going to come in a hurry.

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

Unnati Monthly Newsletter | October 2015

SHIPPING, AVIATION, LOGISTICS AND


TOURISM

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

Major Losers: Global Offshore (-40.7%), Gujarat Pipavav ports (-12.7%)

102.5

101.4

100.5

99.7

98.5

97.6

Sector Constituents: Shipping Corporation of India, Great Eastern Shipping


Company, ABG Shipyard, Essar Ports, Adani Ports and SEZ, Global Offshore,
Gujarat Pipavav, Jet Airways, SpiceJet, Container Corporation of India Ltd.,

96.5

Transport Corporation of India, Allcargo Logistics, Gati, Gateway Distriparks,

94.5

Aegis Logistics, Indian Hotels, EIH, Mahindra Holidays, Cox & Kings, Thomas
Cook, Taj GVK Hotels, Blue Dart Express

Unnati SATL Index

NSE SATL Index

CNX Nifty

SECTOR NEWS
New civil aviation policy announced

Foreign Tourist Arrivals (FTAs) on rise

GOI announced its new aviation policy on 30 October, aimed at making flying

According to Ministry of Tourisms latest data FTAs in September, 2015

affordable to masses. Major announcements include viable gap funding and

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

than 18% followed by USA (10.99%). Foreign Exchange Earnings (FEE)

rights, allowing airlines to handle ground handling services and issuance of

registered a growth of 5% and reached to Rs 9512 crore.

regional connectivity scheme. Although policy also included 2% cess on national

At Commerce Ministry-FICCI event on Advantage Healthcare India 2015,

and international routes and contrary to expectations no clarity on 5/20 rule with

commerce secretary Rita Teaotia indicated governments inclination

three alternatives proposed.

towards boosting medical tourism by easing visa norms and improving


quality standards.
The new law on surrogacy that's currently being drafted, will bar

Indias west coast excluded from high piracy zone

foreigners, NRIs and Persons of Indian Origin as well from availing

Contact Group of Piracy off the Coast of Somalia (CGPCS) has redrawn the eastern

surrogacy facilities in India.

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.

New funding in Tech-logistics firms on rise


Hyperlocal delivery startup Opinio has raised $7 million (Rs 45 crore), in a
funding round led by logistics company Delhivery, with the participation of
Sands Capital Ventures and existing investor Accel Partners.
The Indian Angel Network has made an investment of Rs 2 crore in Quifers,
a tech-driven logistics company focusing on the light commercial vehicle
segment. Asper Infotech Pvt Ltd, which runs online e-com marketplace
Snapdeal, has invested $20 million more in logistics firm QuickDel
Logistics Pvt Ltd.

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

UNNATI Investment Management and Research Group

Unnati Monthly Newsletter | October 2015

AUTO & AUTO ANCILLARIES

16

Unnati Monthly Newsletter | October 2015

BFSI

17

Unnati Monthly Newsletter | October 2015

Chemical, Fertilizers, Agricultural & Sugar

18

Unnati Monthly Newsletter | September 2015

Chemical, Fertilizers, Agricultural & Sugar

18

Unnati Monthly Newsletter | October 2015

FMCG, Retail, Consumer Durables and Breweries

19

Unnati Monthly Newsletter | October 2015

IT, TELECOM, MEDIA AND EDUCATION

20

Unnati Monthly Newsletter | October 2015

METAL CEMENT AND PAPER

21

Unnati Monthly Newsletter | October 2015

OIL AND GAS

22

Unnati Monthly Newsletter | October 2015

PHARMACEUTICALS AND HEALTHCARE

23

Unnati Monthly Newsletter | October 2015

POWER AND CAPITAL GOODS

24

Unnati Monthly Newsletter | October 2015

REAL ESTATE, INFRASTRUCTURE & CONSTRUCTION

25

Unnati Monthly Newsletter | October 2015

SHIPPING, AVIATION, LOGISTICS AND TOURISM

26

Unnati Monthly Newsletter | September 2015

SHIPPING, AVIATION, LOGISTICS AND TOURISM

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

Surana Anish Prakash


Varun Baxi

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

IT, ITES, Telecom and Media


Ram Narayan C

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

Pharmaceuticals & HealthCare


Arushi Jain

Senior Analyst

Ivneet Singh Makkar

Junior Analyst

Jalaj Manocha

Junior Analyst

pg14arushi_j@ mdi.ac.in
pg15ivneet_s@mdi.ac.in
pg15jalaj_m@mdi.ac.in

Infrastructure, Constructions, Real Estate


Ankit Maheshwari

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

Oil & Gas


Aditya Menon

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

Power and Capital Goods


Harish Balani

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

Metals, Cement, Paper


Monish Banerjee

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

Shipping, Logistics, Aviation, Tourism

Chemicals, Agriculture, Fertilizers & Sugar


Ashish Mahapatra

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

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