Maintaining a Buy rating for Aurobindo Pharma (ARV), with a Target Price of Rs. 875, Sharekhan estimates an upside of 33%. However, Sharekhan revised earnings estimates for ARV down by around 5% for both FY22E and FY23E.
Cipla
Maintaining a Buy rating for Cipla, with a Target Price of Rs. 1,150, Sharekhan estimates an upside of 28%. the company reported a strong Q2FY22 report, and the brokerage firm is expecting healthy results for FY2022E and FY2023E.
Cadila Healthcare
Maintaining a Buy rating for Cadila Healthcare, with a Target Price of Rs. 720, Sharekhan estimates an upside of 57%. the company also reported a healthy report for the Q2FY22, and Sharekhan is estimating a similar growth in the upcoming days.
Ipca Laboratories
Maintaining a Buy rating for Ipca Laboratories, with a Target Price of Rs. 2,675, Sharekhan estimates an upside of 30%. However, the management is expecting near-term challenges for the company’s API business, along with possibilities of a rise in raw material and logistics prices. Sharekhan has downgraded the company’s estimates for FY22E to FY24E by 4%-7%.
Lupin
Maintaining a Buy rating for Lupin, with a Target Price of Rs. 1,210, Sharekhan estimates an upside of 35%. The Q2FY22 results of the company have fallen marginally due to escalating raw material prices. The brokerage firm has revised down the company’s estimates by 8-10% for FY22E/FY23E.
According to the brokerage the company’s “Revenue from operations grew by 33.0% YoY in Q3CY21 to Rs. 2398 Cr led by 28.4% volume growth & 3.6% realisation increase. Volumes stood at 153.3 million cases in Q3CY21 as compared to 119.5 million cases in Q3CY20. Carbonated Soft Drinks (CSD) constituted 70%, Juice 5% and Packaged Drinking water 25% of total sales volumes in Q3CY21. On a two year CAGR basis, organic volumes grew at 11% CAGR. Realisation increase was largely driven by increasing realisation in international territories (~10%) despite a high proportion of water in the product mix. Gross margins contracted 278 bps mainly on account of higher PET & sugar prices, which have gone up by 18% & 2% YoY respectively.”
The brokerage has also said in its research report that “The company was able to save 163 bps in employee spends (percentage to sales) & 65 bps in overhead spend due to the operating leverage. EBITDA grew 30% to Rs 494.7 Cr. EBIDTA margins contracted 50 bps to 20.6%. Led by higher operating profit and a 26% dip in interest expense, PAT grew at a splendid 59.8% to Rs 257.9 Cr. The company has repaid Rs 600 Cr of debt in the last six months while current debt levels are Rs 2400 Cr. The average cost of debt for the company has come down by 100 bps in the last one year to 5.5%.”
According to the brokerage’s research report “VBL has planned to set up a new plant in the state of Bihar as it was unable to service the market in the region, leading to lower market share. Earlier, products were transported to Bihar from neighboring states to meet the requirement. With Bihar being one of the most populous states in India, VBL aims to capitalize on the growing demand in the region. The new plant is expected to be commercialized over the next 6-8 months (in CY22) at a CAPEX cost of Rs 285 Cr. Furthermore, VBL is setting up a new plant in Kutwa (close to the Pathankot facility) to manufacture PET bottles and closures. The new capacity is expected to be operational by Mar’22.”
Buy Varun Beverages Limited with a target price of Rs. 1073
HDFC Securities in its research report has claimed that “VBL has delivered a healthy revenue CAGR of ~22% over CY12-19 (pre-Covid), with 21% CAGR in domestic revenue growth, aided by 20% volume CAGR which again is driven by the acquisition of territories. The international business (~23% of CY20 revs.) has witnessed a strong growth of 23% CAGR over CY12-19, on a low base and with the entry in newer international markets. Likewise, it has delivered 36% PAT CAGR over the last 10 years. Going ahead, we expect VBL to report strong Revenue/EBIDTA/PAT CAGR of 24%/28%/51% over CY20-23E, driven by a) continuous focus on distribution expansion and sustained share gains from the consolidation of South and West territories, b) focus on expanding fast-growing NCBs through constant product innovation and new launches and c) healthy growth momentum in International business.”
The brokerage has also commented that “The company had been on an acquisition spree for last few years, which impacted its Free Cash Flow (FCF). However, with already 90% volumes of PepsiCo’s India beverage under VBL, the growth for VBL in the future would be largely led by the organic route in India. Improvement in capacity utilisation, margin expansion and consolidation of operations will lead to improvement in FCF going forward. It has repaid debt to the extent of Rs. ~2200 Cr over the past 2 years and with strong FCF generation, we expect a sharp reduction in debt over the next 2-3 years. Reduced CAPEX intensity and focus on debt reduction, better margins and improved asset turnover would lead to a steady improvement of ratios.”
According to the brokerage’s call “Improving financial strength, solid business model with well-established brand portfolio, along with robust growth prospects (low per capita consumption, favourable demographics, increasing penetration with rising electrification) makes VBL an attractive investment bet, in our view. We think the base case fair value of the stock is Rs 999 (32x CY23E EPS) and the bull case fair value is Rs 1,073 (34x CY23E EPS). Investors can buy the in stock Rs 908-916 band (29x CY23E EPS) and add more on dips to Rs 817-823 band (26x CY23E EPS). At LTP of Rs 912, it quotes at ~31x CY23E EPS.”
Disclaimer
The stock has been picked from the brokerage report of HDFC Securities Limited. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.
One of the extremely bold and positive initiatives by the Union Government – the Model Tenancy Act, 2021 has potential to bring about a change in the real estate scenario. The step among other things seeks to regulate the vast but scattered rental market in the country. It also encourages the landlords to rent out vacant premises thereby increasing the supply of residential units.
The explicit purpose of the model law is to regulate business of renting of premises, protect the interests of landlords as well as tenants and provide a credible mechanism for speedy resolution of disputes between the two parties. The objective is to be achieved by mandatory signing of rent agreement between landlords and tenants, and setting up of Rent Authorities, Rent Courts and Rent Tribunals for expeditious resolution of disputes. In addition, the model law also clearly spells out the rights and obligations of landlords and tenants.
What is the Model Tenancy Act?
After the passage of the law by the state or the UT, it would be mandatory for landlords and tenants to sign a Tenancy Agreement.
It would be obligatory on the part of the landlord and tenant to jointly deposit this agreement with the Rent Authority within two months of the signing from both parties involved. In case they fail to jointly inform the Rent Authority about the execution of the tenancy with the stipulated time, both parties will be required to do it separately within a month after expiry of the two-month period.
The mandatory signing of the Tenancy Agreement will make the relationship between landlord and tenant more structured, enforceable by the law and thus helpful for both the parties. Besides other things, the agreement will have to specify rent, period of tenancy and details about renewal and extension of tenancy as well as rent. The agreement itself is introduced to reduce the scope of unnecessary disputes between landlord and tenant.
Disputes, however, can still arise over the terms of the agreement and its implementation. The model law provides quite an elaborate mechanism for speedy resolution of the disputes.
Security deposit under the Model Tenancy Act
The model law also seeks to do away with the arbitrary practice of asking exorbitant security deposits by landlords from tenants, especially in large cities. Under the model law, the security deposit being sought by the landlord cannot exceed two month’s rent in case of residential premises and six months in case of non-residential property.
As the security deposit will be mentioned in the Tenancy Agreement, there is no way that landlords will be able to extract large security deposits from tenants who are often desperately looking for a place to live outside their hometown.
The security deposit, it has been specified, will have to be refunded to the tenant on the date of taking over vacant possession of the premises from the tenant, after making due deduction of any liability of the tenant.
It is to be noted here that Act will not apply to premises owned or promoted by the Central or State government, local authority, government undertaking, enterprise, a statutory body or Cantonment Board.
Premises owned by a company, University or organisation given on rent to its employees, premises owned by religious or charitable institutions or auqaf registered, too does not fall under the purview of the Act.
Conclusion
The Model Tenancy Act is a well thought out legislation which will encourage landlords to rent out vacant premises without any fear of losing control of them and on the other hand increase the stock of residential premises. It will also help the tenants to find suitable premises at reasonable rent.
However, everything would depend on how soon the state governments/UTs enact their own laws to implement the Model Tenancy Act, benefitting the landlords as well as prospective tenants. It is, in fact, going to be a win-win situation for landlords as well as tenants.
Vikas Wadhawan, the author of this article is the Group CFO, Housing.com, Makaan.com and Proptiger.com. The opnions mentioned above are that of the author and do not reflect the opinion of Greynium Information Technologies Pvt Ltd.
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Story first published: Saturday, November 27, 2021, 8:43 [IST]
LONDON -Bitcoin tumbled over 9% on Friday, dragging smaller tokens down, after the discovery of a new, potentially vaccine-resistant coronavirus variant saw investors dump riskier assets for the perceived safety of bonds, the yen and the dollar.
Bitcoin, the largest digital currency, fell as much as 9.2% to $53,551, its lowest since Oct. 10. The second largest cryptocurrency ether fell over 13% to its lowest in a month as investors ditched cryptocurrencies.
Bitcoin, whose 13-year life has been peppered by bouts of extreme volatility, was on track for its biggest one-day drop since Sept. 20. It has slumped by more than a fifth since hitting a record high of almost $70,000 earlier this month.
Scientists said the coronavirus variant, detected in South Africa, Botswana and Hong Kong, has an unusual combination of mutations and may be able to evade immune responses or make it more transmissible.
“The spread of (the variant), especially to other countries, could wither investor appetite further,” said Yuya Hasegawa at Tokyo-based exchange Bitbank. “BTC’s upside will likely be limited and the market should brace for further loss.”
Bitcoin hit an all-time high of $69,000 earlier this month as more large investors embraced cryptocurrencies, with many drawn to its purported inflation-resistant qualities.
Others have piled into the digital token on the promise of quick gains, a draw that has been heightened by record low or negative interest rates. Yet bitcoin’s volatility has lingered, drawing questions over its suitability as a stable store of value.
Ether was last at $3,924. It is down almost 20% from its record high hit on Nov. 10.
(Reporting by Tom Wilson; editing by Carolyn Cohn, Kim Coghill, William Maclean)
There is much debate and speculation around the upcoming Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 that is one of the 26 new bills on the agenda of the Union government for the upcoming winter session of the Parliament that begins from November 29. Media reports say that the legislation will try to define cryptocurrency and any information like number, code, token that promises a price will be considered cryptocurrency. As per the reports, the Central government is also considering a ban on all private cryptocurrencies in the proposed bill. ETCISO spoke to a range of stakeholders, including the security agencies and cybersecurity leaders about the Crypto Regulatory Framework, the pros, cons, opportunities and risks.
“I feel a regulatory framework is a must, including the KYC of each investor, properly licensed exchanges that follow transparency, and a database of all credit and debit activities of crypto, otherwise this entire crypto currency world will be hacked and it will evaporate. This is a big grey area operation that provides anonymity and which is leading to the misuse of this beautiful product and technology. For the police, it is a big headache. Whom do we go to in case some heist occurs? There are currently fake exchanges, fake mining , fake wallets, etc. How to we authenticate and enforce?” says Professor Triveni Singh, SP, Cybercrime, Uttar Pradesh Police.
“The biggest issue with crypto is its misuse by criminals, nation-states and speculators. Any digital currency must be designed to be traceable, and remove risks from paper currency while replacing it. One physical rupee should be the same as one crypto rupee. If crypto currency is controlled, a major portion of the incentive to hack companies would go. Today, my guess is that criminals invest a lot of money in vulnerability and exploit research and may be more adept than even security firms,” says Lucius Lobo, Chief Information Security Officer at Tech Mahindra.
“Addition of a regulatory framework and tying it back to the financial transactions lifecycle to check for terror financing or illegal transactions should also be one of the vectors to bring in governance for crypto. And a common framework on minimum security controls and assurance framework for organizations in setting up such environment, complimented with required education and awareness for end users of the system on how to secure their crypto assets and credentials would be helpful,” adds Dilip Panjwani, Senior Director – Chief Information Security Officer (CISO) & IT Controller at Larsen & Toubro Infotech Ltd.
Money laundering using fiat money far exceeds misuse via crypto
There is a counterview to the opinion that cryptocurrencies have aided money laundering.
“I will disagree with this. Money Laundering using fiat money far far far exceeds misuse via crypto. But agree that KYC will help. But database of all transactions is already online and public on the blockchain,” counters a senior infosec leader.
Moreover, there are voices against such regulation as well.
“If we break its anonymity and control international transfers, as recommended by the RBI governor, It’ll just become another Paytm wallet. Here’s the problem. There’s no point of a distributed/ decentralised cryptosystem being controlled by one entity, for example, the RBI.
The entire reason for its immense popularity is “no control by any central authority” via it’s technical construct,” says another top cybersecurity expert on condition of anonymity.
Hyderabad: The Export-Import Bank of India (Exim Bank) has committed a credit line of $100 million for domestic manufacturers of Covid-19 vaccines as well as supporting players, including manufacturers of raw materials, said N Ramesh, deputy managing director, Exim Bank, here on Friday.
“These loans are expected to be sanctioned by the end of this financial year to seven companies, of which two are from Hyderabad,” he said, adding that the credit line is expected to be used to boost manufacturing capabilities as well as for exports.
Two Hyderabad-based players — Bharat Biotech and Biological E Ltd — are involved in the development of Covid-19 vaccines. While Bharat Biotech has developed Covaxin, Bio E has developed Corbevax that is currently undergoing Phase-3 trials.
He pointed out the country is on track to achieve its exports target of $400 billion of merchandise goods this fiscal year and the pharma sector is expected to be a major contributor.
Meanwhile, he said the bank is targeting financing of $7 billion of project exports over the next five years through the funds received from the central government in the National Export Insurance Account (NEIA).
“The opportunity for Indian exporters remains significant given the fact that the project exporters have already developed substantial competitiveness in several sectors and the financing options provided by Exim Bank are well recognised,” he said.
Exim Bank had organized an interactive session with infra players in Hyderabad on Friday to discuss the opportunities and challenges in this area and over 50 companies from the region had participated.
The rise in credit growth during the current financial year has been led by gradual revival of lending by bank branches in metropolitan centres, while private sector banks raised their market share further, Reserve Bank of India said Friday.
Banks’ deposit growth, however, moderated a bit to 10.1 per cent in September from 11 per cent a year ago. The share of current account and savings account (CASA) deposits in total deposits has been gradually rising and it stood at 44.3 per cent in September 2021.
Private sector banks recorded 10.9 per cent and 16 per cent year-on-year growth in credit and deposit respectively in September. Correspondingly, growth in public sector banks stood much lower at 3.7 per cent and 7.4 per cent, respectively.
The Reserve Bank of India’s decision to keep corporates away from bank licences will help the government sidestep allegations that it is selling banks to big business. However, the number of prospective buyers for public sector banks (PSBs) will shrink.
In the absence of any deep-pocketed corporate house, the bidders for PSU banks would have to be either private or multinational banks, or private equity investors who would be in a position to come up with a couple of billion dollars to buy a bank. The challenge in the case of private equity investors is that they would look for an exit after a few years, while multinational banks are increasingly reducing their retail exposure as retail banking is becoming a domestic activity because of compliance costs.
Private players like HDFC Bank, Kotak, ICICI and Axis have the equity-raising capacity, but the pension liabilities would be a deterrent. In March this year, finance minister Nirmala Sitharaman had said that the salary and pension of bank employees will be protected in the case of privatisation. “The deal-breaker would be the pension liabilities of these banks,” said a private banker. The fact that the pension is inflation-linked makes it worse for any buyer.
The source added that this is the reason why the banks are trading at low valuations despite having cleaned up their loan books.
For private banks, a bank licence or a branch network does have the same appeal that it would have for a corporate house. More so given the disruption that digital is causing. “Unlike in the past when a domestic bank licence would draw a lot of interest, there was only one serious bidder for Lakshmi Vilas Bank — DBS. When the RBI was looking for someone to take over PMC Bank, despite the lure of a licence of a Mumbai-headquartered bank, there was again only one bidder,” pointed out a banker.
While the PSBs are in better financial shape, a buyer would need to put in more capital and probably see a hike in the cost of funds as the government ownership, which provides a cushion to depositors, will no longer be there. Since liberalisation, the central bank has taken the safe route of issuing bank licences to financial institutions. The first round of banks that got their licence was largely sponsored by financial institutions, including HDFC, ICICI, UTI, IDBI and some non-banking finance companies such as Centurion, Kotak Mahindra and Bandhan. The experience in granting licences to professionals has not been good (Global Trust Bank and Yes Bank). The absence of private non-bank financial institutions makes the divestment more challenging.
New Delhi, Nov 26 (PTI) HDFC Bank on Friday said its board has approved the appointment of former RBI executive director Lily Vadera as independent director. The board of directors of the bank approved the appointment of Lily Vadera as an additional independent director of the bank for a period of five years effective from November 26, 2021, subject to the approval of the shareholders, HDFC Bank said in a regulatory filing.
Vadera, 61, has 33 years of experience in central banking. She retired as Executive Director from the Reserve Bank of India in October 2020.
As an ED of the RBI, she was in-charge of the Department of Regulation (DoR) where she dealt with the regulatory framework for various entities in the financial sector, covering all categories of banks and non-banking finance companies.
She was instrumental in putting in place a framework for a regulatory Sandbox to provide an enabling environment for fintech players to foster innovation in financial services and played a significant role in the amalgamation of banks in stress, the bank said.
She also represented RBI and played an important role as a member of the Insolvency Law Committee set up by the Ministry of Corporate Affairs. PTI KPM MR MR
New Delhi, The Reserve Bank of India has accepted 21 out of the 33 recommendations submitted by an internal working group on the ownership and corporate structure of India’s private sector banks.
The internal group was constituted by the central bank on June 12, 2020 to review the extant guidelines on ownership and corporate structure for Indian private sector banks.
“After examining the comments and suggestions received from the stakeholders and members of the public, it has been decided to accept 21 recommendations (some with partial modifications, where considered necessary). The remaining recommendations are under examination,” the RBI said.
Among the recommendations that were accepted by the central bank was that the cap on promoters’ stake in the long run of 15 years may be raised from the current levels of 15 per cent to 26 per cent of the paid-up voting equity share capital of the bank.
“This stipulation should be uniform for all types of promoters and would not mean that promoters, who have already diluted their holdings to below 26 per cent, will not be permitted to raise it to 26 per cent of the paid-up voting equity share capital of the bank,” the RBI said.
The working group had also recommended a monitoring mechanism that may be devised to ensure that control of promoting the entity or major shareholder of the bank, does not fall in the hands of persons who are not found to be fit and proper. This recommendation was also accepted by the RBI.
