DOMESTIC:

TPG Capital, Partners Capital remain in race to acquire ICICI Home Finance.

Godrej Consumer Products eyes 10% market share in hand wash, sanitisers segment.

Emcure pharma acquires Canadian company and its marketing arm Marcan.

RJio to raise Rs15,000cr in India's second largest rights issue. Wockhardt unit receives USFDA flak. Suzlon Group bags repeat orders from HPCL and NALCO. BHEL commissions second 660 MW supercritical thermal unit

in Uttar Pradesh. Strides Shasun gets CCI nod to buy 7 brands of Johnson and

Johnson. Tata Motors likely to bag additional order for trucks, taking

total order to Rs1,300crore. GVR Infra Projects gets Sebi clearance for IPO. Cipla, Emcure, Hetero and Natco Pharma join patent pool

for new Hepatitis C drug Daclatavir.

ECONOMY:

Indian economy to grow at 7.9% in FY17: Ind-Ra. With government push, Indian start-ups get a new lease of

life. Government mulling to bring large hydropower units under

renewable energy ambit. Export contraction continues for 13th month, December

exports down 14.75% as trade gap widens. Government lost Rs1,400crore as Cairn India is not allowed to

export oil. IMF cuts global growth forecast as China slows.

INDUSTRY:

Private equity investments in realty tops USD5bn in 2015. Infrastructure status granted to shipyard industry.

TM

THE WEEKLY WRAP-UP 22nd Jan 2016

Coverage Universe Valuations

Company CMP Reco. Tgt price Upside Mcap EV/Sales (x) EV/EBITDA (x) PE(x)

(Rs) (Rs) (%) (Rs bn) FY16E FY17E FY16E FY17E FY16E FY17E

Supreme Petrochem Ltd** 102 BUY 150 47.8 9.8 13.7 9.3 0.2 0.2 5.6 3.6

Indian Hume Pipe Co.Ltd 387 BUY 475 22.8 9.4 17.9 12.5 9.8 8.7 9.0 7.3

Shanthi Gears Ltd 90 BUY 150 66.5 7.4 64.9 51.0 3.9 4.0 26.1 24.0

Hind Rectifiers Ltd 78 BUY 110 41.6 1.2 66.1 15.0 1.2 1.0 24.4 10.4

KCP Limited 69 BUY 105 53.2 8.8 22.3 15.8 1.7 1.5 10.1 8.5

Navneet Education Ltd 87 BUY 130 50.3 20.6 14.0 12.1 2.1 1.9 8.4 7.5

Harita Seating System Ltd 443 BUY 600 35.4 3.4 35.0 25.7 1.2 1.1 22.2 17.4

Camlin Fine Sciences 92 BUY 140 52.7 8.8 11.2 8.6 1.6 1.3 8.5 6.9

GEE Limited 41 BUY 70 72.8 1.0 17.5 12.6 0.7 0.6 6.7 5.9

Hester Biosciences Ltd 496 BUY 750 51.4 4.2 30.4 25.0 4.4 3.5 15.4 12.6

West Coast Paper Mills Ltd 65 BUY 110 70.5 4.3 12.2 3.3 0.6 0.5 3.7 3.0

Rallis India Limited 161 BUY 260 61.1 31.4 20.6 16.1 1.9 1.6 11.6 9.6

The Hitech Gears Limited 278 BUY 450 61.8 5.2 19.5 14.9 1.1 0.9 8.3 7.0

Bharat Bijlee Limited 861 BUY 1100 27.8 4.9 86.0 39.8 0.9 0.7 29.2 25.0

Castrol India Limited* 417 BUY 650 55.8 206.3 31.5 29.4 5.2 5.1 20.1 18.8

Engineers India Limited 213 BUY 325 52.8 71.6 20.3 19.4 2.6 3.5 17.1 23.3

Price Performance (%)

Company 1M 3M 12M

Supreme Petrochem Limited -10.3% -15.3% 48.4%

Indian Hume Pipe Co. Limited -10.3% -8.0% 11.1%

Shanthi Gears Limited -11.7% -17.9% -37.4%

Hind Rectifiers Limited -11.6% -4.4% -14.0%

KCP Limited -19.3% -27.4% -13.2%

Navneet Education Limited 0.9% -8.8% -20.5%

Harita Seating System Limited -4.2% 66.4% 123.5%

Camlin Fine Sciences Limited -9.6% -19.6% -2.2%

GEE Limited -2.9% 19.3% 44.6%

Hester Biosciences Limited -18.4% -24.0% 31.2%

West Coast Paper Mills Ltd -5.2% -1.0% 8.8%

Rallis India Limited -7.7% -23.5% -30.6%

The Hitech Gears Limited -8.6% -5.6% -14.6%

Bharat Bijlee Limited 1.1% 42.0% 23.1%

Castrol India Limited -5.4% -10.0% -15.0%

Engineers India Limited -2.3% 5.0% -5.1%

*Castrol India– December Ending | ** Supreme Petrochem—June Ending

One Year Sensex Performance

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The week that went by: We had started the week with the results seasons and global cues to lead the trend. The investors would monitor the management commentaries for the growth expected going forward. With the China GDP numbers being in line with the expectations, the markets indicated slight strength midweek. There was a sharp selloff witnessed with rupee breaching the 68 per dollar mark. Finally, the week ended with a positive on the bourses due to strength wit-nessed in other Asian markets.

Bharat Bijlee: The company reported strong set of numbers continuing with the turn around since the last quarter. The net sales clocked growth of 20.8% while the net profit stood at Rs89mn as compared to a loss in the same quarter last year. The revenue growth was led by the 34% growth in the power segment.

Our Comments: The turnaround in the company is strongly seen in the results declared for the quarter ended December,2015. The company stands to be one of the strong contenders for the growth being chalked for the power sector. We had initi-ated a BUY on the stock with a target price of Rs1,100 and maintain the same.

Rallis India: It was expected that the company would report weak set of numbers. The net sales dropped by 20.3% with a drop of 20% in the profits as well. With the environmental conditions, it was expected that the demand for Rallis products ought to be under pressure.

Our Comments: We had quite expected that the results for the company would be weak. The domestic and global environment for agrochemicals currently is quite challenging. This is impacting the performance of the company which we expect should turnaround by FY17E. We had initiated a BUY call on the stock with a target price of Rs260 and maintain the same.

Supreme Petrochem Ltd: The company came out with results in line with the expectations. The net income remained flat during the quarter at Rs6,093mn. There was an improvement in the Ebidta margins at 5.6% compared to the same quarter last year. The net profit came in at Rs264mn as against a loss in the comparative quarter. As indicated by the management, Chennai floods impacted the overall performance of the company during the quarter. The company has lodged insurance claims of Rs10.92cr. Our Comments: The company has come out with decent set of numbers inspite of the disruption in the operations due to the Chennai floods. The long term prospects for the company stand strong. We had a BUY call on the stock with a revised target price of Rs150 and maintain the same

TM

KEY NEWS ANALYSIS

Stellar quarter performance by

Bharat Bijlee

Strong hit on the results as was expected

Results very much in line with expectations

Wipro: Wipro released its December quarter results in line with the market expectations. The company reported net profit of Rs2,234cr for the quarter ended December 31, 2015, compared to Rs2,192cr in the same quarter last year, an increase of around 2%. Wipro expects revenues from their IT Services business to be in the range of $ 1,875 million to $1,912 million.

Our Comments: The company indicated that it has delivered revenues in line with its guidance. There was a pick-up seen in large deal closures led by global infrastructure services. It is becoming increasingly clear that customers want to simplify operations and optimize their IT spend while investing in Digital to transform their business and the company is well-positioned to take advantage of this trend as mentioned by the management.

Reliance Industries: The company reported consolidated sales at Rs683bn for quarter ended December 31, 2015, decline of 27%. The net profit grew by 42% at Rs73.6bn as compared to Rs51.9bn in the corresponding quarter last year. Post Minority Interest and Share in profit of Associate, the company reported profit of Rs72.9bn vs Rs52.6bn, growth of 38.7%.

Our Comments: There has been an all-round excellent performance by the company. The company is going to see many of its expansion plans to go on stream in FY16 and with the expanded capacities being expected to be utilized to the maxi-mum we are in for great times for the company and its shareholders. With a stellar performance, it is now ready to set new records on the stock price front as well.

ECONOMY:

Indian economy to grow at 7.9% in FY17: Ind-Ra As per, India Ratings & Research (Ind-Ra), the Indian economy is expected to grow by 7.9% in FY17 and may progress at a similar pace over a couple of years extending beyond 2019. It expects the agriculture sector to grow at 2.2% in 2016-17, services sector at 9.5% and industrial sector at 7.6%.

Our Comments: As indicated in the report we also feel that the GDP growth is likely to hover around the level of sub-8% and can surpass it only if the host of policy initiatives taken by the new government actually show results.

Export contraction continues for 13th month, Dec exports down 14.7% as trade gap widens

As per the data released, India's merchandise exports contracted for the thirteenth consecutive month in December, falling 14.7% from a year ago.

Our Comments: The trend of falling exports is in tandem with other major world economies (the growth in exports have fallen for the US, the European Union, China by 10.30, 10.83, 6.94% respectively for Oct 2015 over the corresponding period previous year as per WTO statistics). Slow global demand and rising volatility in currency markets including the devaluation of the yuan have hit Indian exports.

TM

KEY NEWS ANALYSIS

Range bound growth expected in the

economy

Indian exports continue the down

trend

Thumbs up for the quarter performance

Decent set of numbers with a prior warning of impact of Chennai

floods

Government lost Rs1,400crore as Cairn India is not allowed to export oil A loss of Rs1,400crore has been caused to the government as the company was forced to sell its share of crude from its Rajasthan oil field to private players at prices 20% less than the global rates. Cairn told the court that as per the production sharing contract (PSC) it has with the government; it gets 70% of crude produced from the well while the government gets 30%. Under the PSC, the government or its nominee can pick up the company's share of the crude and what was not picked up, could be sold to private players or exported. However, after the crude is sold, government gets 70% of the profit.

Our Comments: As per the company, while the government was losing around Rs1,400cr, the company's losses would come to about a third of the amount.

IMF cuts global growth forecast as China slows The International Monetary Fund cuts its global growth forecast for the third time in less than a year. The Fund forecast that the world economy would grow at 3.4% in 2016 and 3.6% in 2017, both years down 0.2% from the previous estimates made last October. It said policymakers should consider ways to bolster short-term demand. The IMF maintained its previous China growth fore-casts of 6.3% in 2016 and 6.0% in 2017, which represent sharp slowdowns from 2015.

Our Comments: The cut down in the growth rates is in tandem with the kind of economic picture currently seen, jittered by the China economy, impacting the other economies as well. To back its forecasts, the IMF cited a sharp slowdown in China trade and weak commodity prices that are hammering other emerging markets.

INDUSTRY:

Private equity investments in realty tops USD5bn in 2015

As per market research, Private Equity Real Estate (PERE) firms deployed over USD5bn in Indian real estate companies and projects, the highest since the financial crisis of 2008. Private Equity Real Estate firms made 90 investments in India during 2015 and of these, 85 transactions had an announced value of USD5.06bn.

Our Comments: While the activity level was 20% higher compared to the 75 investments in the previous year, the transaction values spiked significantly compared to 2014 that had witnessed reporting of USD2.2bn across 57 deals with announced value.

Infrastructure status granted to shipyard industry The government has granted infrastructure status to shipyard industry, a move aimed at promoting the 'Make in India' initiative. With the infrastructure status, shipyard industry will be able to avail flexible structuring of long-term project loans, long-term funding from infra funds at lower interest rates and longer tenure equivalent to the economic life of their assets, relaxed ECB norms, issuance of infrastructure bonds for meeting working capital requirements as well as benefits under Income Tax Act, 1961.

Our Comments: With this inclusion, the financial stress which the stand alone shipyards are experiencing will be eased substantially.

TM

KEY NEWS ANALYSIS

Indian realty gets a booster

Shipyard industry under the infra head

Government to loose with Cairn under

restrictions

Global economic forecast cut down due

to China doldrums

COMPANY:

TPG Capital, Partners Capital remain in race to acquire ICICI Home Finance Private equity firms TPG Capital and Partners Capital are the only bidders to buy the mortgage unit of ICICI Bank. The bids at Rs2,700-2,800 crore, though, are much lower than what the bank was expecting for ICICI Home Finance, but there is space for negotiations.

Our Comments: There were five players in the first round - TPG, Partners Capital, Piramal Group, Bajaj Finance and Barings Asia and all had submitted preliminary bids in November.

Godrej Consumer Products eyes 10% market share in hand wash, sanitisers segment Godrej Consumer Products is targeting 10% market share in the hand wash and hand sanitisers segment in the next three years with its Protekt range. The company also plans to extend the Protekt brand to other categories of the health and wellness market.

Our Comments: At present, the combined market size of hand wash and hand sanitisers segment is around Rs500cr and is growing at around 15% every year. With Health and wellness becoming the need of the country, there is huge potential for the company to grow its brand big in the segment. Emcure pharma acquires Canadian company and its marketing arm Marcan Emcure Pharmaceuticals, has acquired Canada's International Pharmaceutical Generics Ltd. and its marketing arm Marcan Pharmaceuticals. Marcan Pharma has over 60 approved products that are mainly available via McKesson and Kohl & Frisch, among other wholesalers.

Our Comments: Canada could be attractive for Emcure, although there could be challenges as the government aggressively implements a reference pricing system. Emcure's entry into Canada is modelled on the strategy it had adopted for the US market with the acquisition of Heritage Pharmaceuticals in 2011.

RJio to raise Rs15,000cr in India's second largest rights issue Reliance Jio Infocomm Ltd (RJIL), the unlisted subsidiary of Reliance Industries Limited (RIL) on Monday announced a plan to issue 15 billion equity shares of Rs10 each to the existing shareholders (to raise Rs15,000 crore) ahead of the launch of the 4G telecom services in April. RJio's shareholders include RIL - which owns close to 99.16 per cent stake while around one per cent is owned by the Nahatas of HFCL in a personal capacity.

Our Comments: This is the second largest rights issue announced after State Bank of India, which had raised Rs16,700crore in January 2008.

TM

KEY NEWS ANALYSIS

ICICI home finance, gets bidders for sale

Health and wellness eyed by Godrej

Consumers

Emcure to tap the Canadian markets

through acquisitions

Rjio on the second position in terms of

Wockhardt unit receives USFDA flak Wockhardt’s plans to revive its business in the US has suffered a setback, with the USFDA raising concerns about manufacturing practices at the company’s Shendra plant in Maharashtra. The company had sought approval from the US FDA for its Shendra plant in order to commence exports to the US and an inspection was carried out last week. The FDA issued adverse observations, known as Form 483, following its inspection.

Our Comments: The management has indicated that all the facilities were inspected in the past six months and none of the USFDA observations are critical in nature and all these observations would be resolved in next 2-3 months.

Suzlon Group bags repeat orders from HPCL and NALCO Suzlon Group has bagged two 50.4 megawatt orders from Hindustan Petroleum Corporation Ltd and Nalco for installation of additional wind power capacity. The Company said that it has won third order from HPCL and the project is scheduled for completion by 2016-17.

Our Comments: Nalco’s cumulative Suzlon powered wind portfolio will increase to 100.80 MW post completion of this project.

BHEL commissions second 660 MW supercritical thermal unit in Uttar Pradesh BHEL has commissioned the second 660 MW supercritical unit of Lalitpur Super Thermal Power Project (STPP) in Uttar Pradesh. Located in Lalitpur in Bundelkhand district of Uttar Pradesh, Lalitpur STPP is being developed by Lalitpur Power Generation Company Limited (LPGCL)-promoted by the Bajaj Hindustan group.

Our Comments: The commencement of generation from the unit will result in a significant improvement of power availability. Extra efforts were put in by BHEL for early readiness of the unit to enable the state to tide over its acute power shortage.

Strides Shasun gets CCI nod to buy 7 brands of Johnson and Johnson

Strides Shasun received CCI's approval to acquire seven brands from Johnson and Johnson. Through the deal, Strides will buy Johnson and Johnson's seven brands in dermatology, anti-emetic and pain management segments. The brands include Otogesic ear drops, Ethnorub ointment and Stugil tablets.

Our Comments: The company has been in an acquisition mode to expand its market presence. In a separate transaction, the company had also acquired a majority stake in domestic branded business of Medispan.

GVR Infra Projects gets Sebi clearance for IPO GVR Infra Projects has obtained clearance from capital markets regulator Sebi to raise at least Rs400 crore through an initial share sale programme. GVR Infra initial public offering comprises fresh issue of equity shares worth Rs400 crore and an offer for sale, whereby IDFC Private Equity Fund would offload 43.22 lakh scrips, as per the draft papers.

Our Comments: The proceeds of the fresh issue would be utilised towards working capital requirements, reduction of outstanding amount under short-term borrowings and for general corporate purposes.

TM

KEY NEWS ANALYSIS

Wockhardt under the USFDA scanner

Suzlon’s wind portfolio gets orders

BHEL contributed to improvement in

power availability

Strides Shasun to add J&J products to its

portfolio

GVR Infra to hit the secondary markets

Tata Motors likely to bag additional order for trucks, taking total order to Rs1,300cr Tata Motors is set to bag an additional order for high mobility military trucks, taking its total order book for the advanced vehicles to Rs1,300cr, the single largest contract to be awarded to an Indian manufacturer by the Army. The Army has formally moved a follow on border to a contract it signed with Tata motors in March last year. The follow on order is to procure 619 new 6X6 High Mobility vehicles that will cost the Army just over Rs350cr. This would add to the earlier order for 1,239 vehicles that was valued at Rs940cr. Designed for extreme missions including carrying heavy loads of road, the Tata 6x6 has been extensively tested at the VRDE (Vehicle Research & Development Establishment) torture track' designed to test military vehicles and will be operated in all terrain - from the deserts of Rajasthan to extreme heights and cold in Ladakh and along the Chinese border.

Our Comments: These type of orders from the military is only the beginning for Tata Motors. Under the Make in India programme, we should expect much more for the defence sector in future. The company however, may face some pressures from its international outfits.

Cipla, Emcure, Hetero and Natco Pharma join patent pool for new Hepatitis C drug Daclatavir Cipla, Emcure, Hetero and Natco Pharma have received the license for Bristol Myers Squibb Hepatitis C drug Daclatavir under the Geneve based Medicines Patent Pool (MPP). Under the royalty free, nonexclusive agreement with BMS, the MPP agreement will allow the companies to market this drug in 112 low and middle income countries.

Our Comments: There might be more companies who might join the patent pool for the drug.

Daclatasvir is known to cure multiple genotypes of the Hep C virus.

TM

KEY NEWS ANALYSIS

TATA motors on defence mode

Companies get licenses for Hep- C drug

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TM