Month: January 2021

Top Pharma Picks From Large, Mid-cap Space By Brokerages For 2021

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Investment

oi-Roshni Agarwal

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In last several years, we have seen Nifty Pharma index outperforming Nifty by a significant quantum of 45% in 2020. And now as prospects for the sector continue to be positive with production of complex products as well as stable pricing scenario, but what remains as key concerns as per Jefferies is the emergence and prominence of e-pharmacies in the landscape as well as the increasing pricing role in driving the sector in the Indian market.

Top Pharma Picks From Large, Mid-cap Space By Brokerages For 2021

Top Pharma Picks From Large, Mid-cap Space By Brokerages For 2021

Pharma Picks by Jefferies from large-cap space include

1. Dr. Reddy’s

2. Cipla

Jefferies is of the view that counters picked by it have witnessed lower price erosion over the last several quarters. And this is well below the average seen in between FY2017-18. Also, the number of ANDA filings has continuously edged lower in the last 4 years. This suggests that the competition has now come down with USFDA backlog levels back to 2012 levels. And growth in the companies picked by the brokerage shall be driven by new product launches including gRevlimid, gNuvaring, gVascepa, gAdvair.

Jefferies roll over their estimates to FY23 for all companies. Jefferies have added Revlimid to Cipla FY23 estimates and increased margin and revenue estimates for Divi’s due to improving visibility. Jefferies expects Dr. Reddy’s/Cipla to report FY21-23 EPS CAGR of 20%/19% led by US constant currency growth of 10%/8%, ex-Revlimid. Revlimid is expected to add Rs 29/4 EPS from FY23 to Dr. Reddy’s/ Cipla and will improve through FY26

Axis Capital on the other hand has picked Cadila and Dr. Reddy’s as its pick from the large-cap pharma space:

In the views of Prakash Agarwal of Axis Capital, the sector did extremely well amid the pandemic both in terms of cost management as well as on sales front. He further says that now cost shall increase given the inputs and as tailwinds are set to normalize, there shall be normalization witnessed on the valuation front too. And now stock picks from the space need to be judiciously done basis the appropriate valuations as well as considering companies’ product pipeline or brands that are functional in India.

Axis Capital Mid-cap Pharma picks are:

Axis Capital has selected Divi’s and in the domestic space, the choice has been Eris Life.

Now as per the views of expert while raw material cost begun to see a surge and there shall be no export incentives at least for one quarter. So, given the momentum and liquidity gush, what holds importance while considering investment in pharma pick is that such companies should not be confronting any margin hiccups or other performance related issues. And definitely you can go in for pharma scrips with visible strong earnings.

GoodReturns.in



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RBI imposes ₹2-cr penalty on Deutsche Bank

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The Reserve Bank of India (RBI) has imposed ₹2-crore monetary penalty on Deutsche Bank for non-compliance with certain provisions of directions relating to ‘Reserve Bank of India (Interest Rate on Deposits) Directions, 2016’.

The central bank, in a statement, said this action is based on the deficiencies in regulatory compliance, and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

“The penalty has been imposed in exercise of powers vested in RBI under the provisions of …the Banking Regulation Act, 1949,” the statement said.

The RBI observed that the statutory inspection of the bank with reference to its financial position as on March 31, 2019, and the Risk Assessment Report pertaining thereto revealed, inter-alia, non-compliance with above-mentioned directions issued by the RBI.

“In furtherance to the same, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for non-compliance with the directions.

“After considering the bank’s reply to the notice, oral submissions made in the personal hearing and examination of additional submissions, the RBI concluded that the charge of non-compliance with aforesaid RBI directions was substantiated and warranted imposition of monetary penalty,” the central bank said.

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Reserve Bank of India – Tenders

Tenders

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Tender No: RBI/KANPUR/DIT/11/20-21/ET/427

Regional Director, Reserve Bank of India, Kanpur invites e-Tender through MSTC for Supply and Installation of Laptops at RBI, Kanpur. The e-Tender along with the detailed tender notice is available at MSTC website https://www.mstcecommerce.com/eprochome/rbi and the website of the RBI at https://www.rbi.org.in under the menu “Tenders”.

2. All interested bidders must register themselves with MSTC through the above referred website to participate in the e-Tendering process.

3. The estimated cost of the purchase is ₹6.15 lakh (approx.), however the actual amount may vary.

4. The schedule for the e-Tendering process is as under:

a. Name of Work Supply and installation of Laptops at Reserve Bank of India, Kanpur.
b. E-Tender No. RBI/KANPUR/DIT/11/20-21/ET/427
c. Mode of tender e-Procurement System
(Online Part I – Techno-Commercial Bid and Part II – Price Bid through www.mstcecommerce.com/eprochome/rbi)
d. Date of NIT available to parties to download (Notice for Inviting Tender) January 12, 2021 after 17.30 Hrs.
e. Clarification, if any, may be sent to ditkanpur@rbi.org.in Last date of receipt – January 22, 2021 upto 17.00
h. Date of Starting of e-Tender for submission of on line Techno-Commercial Bid and price Bid at www.mstcecommerce.com/eprochome/rbi January 12, 2021 after 17.30 Hrs.
i. Date of closing of online e-tender for submission of Techno-Commercial Bid & Price Bid January 27, 2021 up to 17.00 Hrs.
j. Date & time of opening of Part-I (i.e. Technical Bid)

Part-II Price Bid: Date of opening of Part II i.e. price bid

January 28, 2021 at 11.00 Hrs.

January 28, 2021 at 11.30 Hrs.
k. Transaction Fee Payment of transaction fees will be paid online through MSTC payment gateway.

5. The Part-II i.e. price bid will be opened on the same day or at a later date as intimated by the Bank in respect of only those contractors/bidders who satisfies all criteria stipulated in Part-I. The Bank reserves the right to accept or reject any or all e-Tenders without assigning any reasons thereof.

Note: All the tenderers may please note that any amendments / corrigendum to the e-Tender, if issued in future, will only be notified on the RBI and MSTC Website as given above and will not be published in the newspaper

Regional Director
Reserve Bank of India
Kanpur
Date: January 12, 2021

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Bitcoin snaps slide while leaving everyone in dark on true worth, BFSI News, ET BFSI

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By Eric Lam

Bitcoin steadied Tuesday after flirting with a bear market in a plunge that left investors grasping for clues about what lies ahead for the world’s largest cryptocurrency.

The digital coin rose as much as 8% to about $36,600, but the move higher pales compared to the gyrations that took Bitcoin to an all-time high of nearly $42,000 on Jan. 8 before a precipitous slump over Sunday and Monday.

The latest bout of roller-coaster volatility recalls past boom and bust cycles including the 2017 bubble, and has investors debating whether this is a healthy correction or the end of the latest bull run for cryptocurrencies.

“We think a pull back is healthy,” said David Grider, lead digital strategist with Fundstrat Global Advisors LLC, who added he doesn’t think the recent price action indicates that Bitcoin has already topped out.

Investors who bought the digital coin a year ago are still sitting on gains exceeding 300%. Pinpointing who is mainly responsible for the rally is one of the many crypto mysteries — Bitcoin funds, momentum chasers, billionaires, day traders, companies and even institutional investors have all been cited.
Just as hard is working out what caused the recent two-day drop of as much as 26%. For some, a bounce in the dollar may be among the reasons. The greenback has snapped a prolonged losing streak after rising U.S. government bond yields bolstered its allure.

“The dollar is showing strength,” said Vijay Ayyar, head of business development with crypto exchange Luno in Singapore.

Ayyar is monitoring what happens if the U.S. Dollar Index climbs to 92 from the current level of about 90. “If the dollar powers through that level then we may have seen a Bitcoin top at $40,000,” he said.

At the same time, the world remains awash with monetary and fiscal stimulus, and some of that wall of money could yet gravitate to crypto assets.

Bitcoin believers continue to tout the digital currency as a viable hedge for inflation risk and the potential debasement of fiat currencies. Some forecasts for its long-term price range from $146,000 to $400,000.

“As long as the world is flooded with money and safe assets offer poor compensation, Bitcoin will be relevant,” Howard Wang, co-founder of Convoy Investments LLC, wrote in a Jan. 10 note. “Volatility and asset bubbles will be a fact of life.”



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FPI holding in Axis Bank hit record high in December quarter, BFSI News, ET BFSI

Banking & Finance

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NEW DELHI: Foreign portfolio investors’ stake in Axis Bank hit an all-time high of 51.02 per cent in the December quarter, according to shareholding data released on Tuesday.

FPI holding in the private lender stood at 49.24 per cent in the September quarter, and had last hit a high of 50.75 per cent in the quarter ended September 2016.

As per the data, Axis Bank had 991 FPIs as of December 31, including Europacific Growth Fund, which owned a 1.9 per cent stake in the bank, Government of Singapore (1.06 per cent), Fidelity Investment Trust (Fidelity Series Emerging, 1.12 per cent), Oakmark International Fund (1.70 per cent), Dodge and Cox International Stock Fund (2.78 per cent), Vanguard Total International Stock Index Fund (1.10 per cent), Government Pension Fund Global ( 1.21 per cent) and BNP Paribas Arbitrage (1.16 per cent).

On Tuesday, shares of Axis Bank were trading 0.4 per cent higher at Rs 669.85 on BSE.

The scrip has rallied 135 per cent over its 52-week low of Rs 285.

Emkay Global said in its results preview that Axis Bank’s growth remains moderate, but an already high provisioning buffer should lead to reasonable profitability in the third quarter.

Slippages could remain elevated including proforma for Q2, it said, suggesting that one should watch out for corporate stress.

The bank is seen reporting a 7.1 per cent rise in net profit to Rs 18,82 crore, compared with Rs 1,757 crore in the year-ago period. Net interest income (NII) is seen growing 16.5 per cent YoY to Rs 7,515 crore from Rs 6,453 crore in the corresponding quarter last year. Net interest margin is seen flat at 3.6 per cent.

YES Securities said it expects the bank’s provisioning to be lower in Q3 than Q2, given the substantial buffer held by the bank. It expects growth on the back of retail and SME segments.

Motilal Oswal expects credit cost to stay elevated for the lender. Restructuring, and the BB and below pool will remain under watch, it said.

The bank will announce its third quarter results on January 27.



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Reserve Bank of India – Press Releases

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The Reserve Bank of India (RBI) has, by an order dated January 12, 2021, imposed a monetary penalty of ₹2 crore (Rupees Two Crore only) on Deutsche Bank AG (the bank) for non-compliance with certain provisions of directions issued by RBI contained in the “Reserve Bank of India (Interest Rate on Deposits) Directions, 2016”. The penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) of the Banking Regulation Act, 1949.

This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

Background

The statutory inspection of the bank with reference to its financial position as on March 31, 2019 and the Risk Assessment Report pertaining thereto revealed, inter-alia, non-compliance with above-mentioned directions issued by RBI. In furtherance to the same, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for non-compliance with the directions. After considering the bank’s reply to the notice, oral submissions made in the personal hearing and examination of additional submissions, RBI concluded that the charge of non-compliance with aforesaid RBI directions was substantiated and warranted imposition of monetary penalty.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2020-2021/930

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Corrigendum – Request for Proposal (RFP) for RBI Website & Mobile App – Redesign and Development

Tenders

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E-tender No. – RBI/Central Office/DOC/7/20-21/ET/337

Please refer to the RFP notice for the captioned RFP published on the RBI Website on December 03, 2020 inviting application from bidders shortlisted during EOI stage, through e-tender on MSTC Portal (https://www.mstcecommerce.com/eprochome/rbi/).

2. The following sections have been revised and the modified provisions are tabled below:

Sr. No. Section Existing Provision Modified Provision
1 Warranty Pay-outs (8.3 Page 112) Amount payable during the warranty period, following successful implementation of application, will be paid on completion of warranty period of three (3) years. Amount payable during the warranty period, following successful implementation of application, will be paid at the end of every quarter for three years, subject to meeting expected service levels during the quarter.
2 AMC Pay-outs (8.4 Page 112) The annual amount payable towards AMC would be paid at the end of every year following successful implementation of the application and delivery of satisfactory services. The amount payable towards AMC would be paid at the end of each quarter for four years after the warranty period following successful implementation of the application and delivery of satisfactory services.
3 Software Cost (8.1 Page 110) Reads as ‘8.1 Software Cost – Payment Milestones’ ‘Software Cost’ heading is deleted and to be read as ‘8.1 Payment Milestones’.
4 Schedule (page 10) Date & Time of Final Submission of Technical & Commercial Bids on the MSTC Portal: January 15, 2021; 15:00 hours.

Date and Time of Technical Bid Opening: January 18, 2021; 15:00 hours.

 Date and Time of Final Submission of Technical and Commercial Bids on MSTC Portal: January 28, 2021; 1500 hrs

Date and Time of Technical Bid Opening: January 29, 2021; 1500 hrs

Note: All other provisions and terms and conditions of the RFP remain unchanged.

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DHFL resolution: FD holders may vote against distribution mechanism

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Concerned about the low recovery prospects, a large section of fixed deposit holders, especially those in the retail category, are likely to vote against the distribution mechanism in the resolution plans for Dewan Housing Finance Corporation Ltd (DHFL).

“We will vote against the plans and we hope that the stance helps to strengthen our case in the court,” said Vinay Kumar Mittal, a lead petitioner in the court on behalf of the FD holders of DHFL.

“We will not support the plan,” he further said.

FD holders are keen to be repaid in full for their investments in DHFL, while under the distribution mechanism, they will get much lesser, and for many, it would be a negligible amount.

FD holders have admitted claims of about ₹5,500 crore in DHFL.

Four categories

As part of the resolution on distribution mechanism for DHFL, FD holders and non-convertible debenture holders will be divided into four categories based on the value of their admitted claims.

The first category of up to ₹2 lakh will get 100 per cent repayment of the principal under the resolution mechanism.

The second category is between ₹2 lakh and ₹5 lakh, followed by the third category of ₹5 lakh to ₹10 lakh, and the fourth category would be of over ₹10 lakh.

According to Mittal, the recovery for the remaining three categories will be negligible.

Both Piramal and Oaktree have set aside funds for the FD holders in the resolution plans. Voting on the resolution plans is on till January 14.

While the voting share of FD holders, especially retail FD holders, is low in the resolution plan, Mittal is hopeful that it will strengthen their case in court.

The NCLT is hearing a petition of FD holders on DHFL dues and the next hearing is scheduled on January 20.

“We will continue our legal fight,” Mittal stressed.

FD holders are, however, unlikely to join NCD holders after 63 Moons Technologies invited them as well as other NCD holders to join with them in the NCLT Mumbai by filing separate applications for recovery from fraudulent transactions.

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10 Things To Consider Before Investing In Tax Saving FDs

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Key takeaways of tax saving fixed deposits

  • One of the most common investment vehicles to reap tax benefits under section 80C of the Income Tax Act.
  • Along with tax benefits one can also get assured returns
  • One can start investing by making a minimum deposit of Rs 1000 up to a limit of Rs. 1,50,000 (The minimum deposit cap may vary from bank to bank).
  • Tax saving FDs comes with a tenure of 5 to 10 years
  • One can also make use of a nomination facility available under tax saving FD schemes.

All you need to know about tax saving fixed deposits

All you need to know about tax saving fixed deposits

Here are a couple of facts to remember before you plan to make a tax-saving FD investment:

1. Only individuals and HUFs are entitled to invest in fixed deposit(FD) plans for tax benefits. A minor can, however, jointly invest with an adult as well.

2. It is possible to open tax-saving fixed deposits with a minimum deposit amount that ranges from bank to bank. In a financial year, which is also the ceiling for tax-saving investments under section 80C of the Income Tax Act, the maximum amount is set at Rs. 1.5 lakh.

3. Tax saving fixed deposits comes with a minimum lock-in period of 5 years and does not allow premature withdrawal and loan facilities.

4. Investment in tax saving FDs can be made online and offline at any public or private sector bank, except cooperative and rural banks.

5. Interest on tax-saving deposits is payable on a monthly or quarterly basis. If the investor decides to, the interest amount received can also be reinvested.

6. In the case of joint accounts, only the first holder is entitled under Section 80C of the Income Tax Act for tax deduction.

7. As per the investor’s tax bracket, the interest received is subject to TDS. By submitting Form 15G (or Form 15H for senior citizens) to the bank, TDS can be avoided. For individuals, if the gross interest received crosses Rs 40,000 in a financial year with no adjustment in the taxation of interest income, TDS is applicable. A deduction of up to Rs 50,000 on the interest received from deposits under section 80TTB can be claimed by senior citizens.

8. Tax saving FDs also comes with a nomination facility as we talked above. However, in the event of a deposit being submitted and maintained by or on behalf of a minor, the nomination facility is not available.

9. Almost all the banks provide senior citizens with a significantly higher interest rate on fixed deposits relative to the interest rate provided to the general public on the same FD scheme. For tax saving FDs, this interest rate gap even exists.

10. One of the key distinctions between regular fixed deposits (FDs) and tax-saving deposits is that it is possible to redeem the former before maturity, although the latter can not be withdrawn before five years of lock-in period.

Cons of investing in tax saving fixed deposits

Cons of investing in tax saving fixed deposits

Apart from considering the benefits of investing in tax saving FDs one must also look at the cons too which are as follows:

1. The fact that the interest is completely taxable is one of the main drawbacks of the tax saver FD. Thus, the PPF, government bonds, and ELSS do not trigger tax on returns as the tax saving FDs do.

2. As opposed to the Equity Linked Saving Scheme and various post office tax saving schemes such as Post Office Time Deposit where the lock-in period is less i.e. 1,2,3 and 5 years, tax saving fixed deposits comes with a lock-in period of 5 years which is another downside.

3. These fixed deposits do not fall with the strongest interest rates available. Various post office tax saving schemes such as the Public Provident Fund, for example, offer an interest rate of 7.1 percent, SSY with an interest rate of 7.6 percent and SCSS with an interest rate of 7.4 percent, whereas just only 6.3 percent of the highest interest rates on tax saver FD is currently provided by ICICI Bank.



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Karnataka Bank Q3 net profit rises to ₹135 cr

Banking & Finance

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Karnataka Bank recorded a net profit of ₹135.38 crore in the third quarter of 2020-21 against a profit of ₹123.14 crore in the corresponding period of 2019-20, registering a growth of 9.94 per cent.

Speaking to BusinessLine after the meeting of the board of directors to consider the unaudited results of the bank for Q3 on Tuesday, Mahabaleshwara MS, Managing Director and Chief Executive Officer of the bank, said factors such as realignment of advances portfolio, growth in the net interest income, and reduction in expenses helped the bank register growth during the tough times affected by Covid pandemic.

The realignment of advances portfolio towards retail and mid-corporate segments – that is up to ₹5 crore and up to ₹100 crore – has helped it grow by 9.75 per cent during the quarter. Though there was a de-growth of around 40 per cent in the above ₹100-crore advances portfolio, the retail and mid-corporate showed a growth of 9.75 per cent. He said retail and the mid-corporate segment was where it got a better yield on advances.

Net interest income

Following this, net interest income (NII) recorded a growth of 20.94 per cent during the quarter. The NII of the bank stood at ₹614.05 crore during Q3 of 2020-21 against ₹507.75 crore in the corresponding period of 2019-20.

He said CASA (current account savings account) deposits of the bank reached 30.07 per cent during the quarter.

During Q3,the net interest margin of the bank stood at an all-time high of 3.26 per cent, and the provision coverage ratio at 80.51 per cent. He said the capital adequacy ratio was at an all-time high of 13.83 per cent during the quarter. The total expenses were reduced by 4.10 per cent during the period.

Terming it as an encouraging result, Mahabaleshwara said the bank has consistently delivered good result in spite of the tough times. The bank had taken some precautionary and corrective measures such as focussing on the bottom line, realignment of the advances portfolio, and cost reduction measures in March itself, he said.

The gross and net NPA (non-performing assets) of the bank stood at 3.16 per cent (4.99 per cent) and 1.74 per cent (3.75 per cent), respectively, during the quarter.

Stating that there has been good recovery in the technically written-off accounts also, he said the bank recorded a recovery of ₹26.86 crore in the technically written-off accounts during the Q3 of 2020-21 against ₹9.43 crore in the corresponding period of the previous fiscal.

Asked about the future outlook, he said the provision requirement would come down, going forward. “So, definitely we should be able to show a very consistent performance going forward,” he added.

On Tuesday, the scrip of Karnataka Bank closed at ₹67.70 on the BSE, up 5.62 per cent, against the previous close of ₹64.10.

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