‘Buy’ This Pharma Stock For 17% Returns: ICICI Direct

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Target Price

The Current Market Price (CMP) of Divi’s Laboratories is Rs. 4716 The brokerage firm, ICICI Direct has estimated a Target Price for the stock at Rs. 5600. Hence the stock is expected to give a 17% return, in a Target Period of 1 year.

Stock Outlook
Current Market Price (CMP) Rs. 4716
Target Price Rs. 5600
1 year returns 17.00%

Company performance

Company performance

The pharma sector overall has performed quite well during the pandemic. The brokerage firms stated that Divi’s Laboratories had lower than estimated results in Q2FY22 as higher CS nullified by muted generics. The company’s sales were up 13.6% YoY to Rs. 1987.5 crore, while EBITDA in Q2FY22 was at Rs. 818 crore, up 10% YoY with margins at 41%. Consequent adjusted PAT was at Rs. 606.5 crore (up 16.7% YoY). ICICI Direct commented, “The company has been building capacities in a few more niche APIs as per the evolving demand scenario in the backdrop of ‘China plus one’ opportunities.”

Comments by ICICI Direct

Comments by ICICI Direct

According to ICICI Direct, “Divi’s share price has grown by ~3.9x over the past five years (from ~Rs. 1198 in June 2016 to ~Rs. 4716 levels in November 2021). Maintain BUY on the back of strong outlook both in CS and generics based on significantly high visibility CAPEX and customer stickiness.”

About the company

About the company

Divi’s is engaged in manufacturing generic APIs and intermediates, custom synthesis (CS) of active ingredients and advanced intermediates for pharma MNCs, other specialty chemicals like Carotenoids, and complex compounds like peptides and Nucleotide revenues. The company is progressing on the Kakinada greenfield project (planned outlay Rs. 1000-2000 crore).

Disclaimer

Disclaimer

The above stock was picked from the brokerage report of ICICI Direct. 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.



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ESAF Bank launches electric vehicle loan scheme ‘Go green’

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The Thrissur-based ESAF Small Finance Bank Limited has announced the latest “ESAF Go Green” range of electric vehicle loan schemes. The launch coincides with COP26.

“ESAF Go green” loans validate ESAF Small Finance Bank’s social business strategy seeking a triple bottom line impact; people; planet; and prosperity. We believe that these products will help the customers discover the eco-friendly electric vehicles at low-interest rate, zero foreclosure charges, minimal processing fee and zero documentation charges.” ESAF Small Finance bank said in a statement.

Also read: ESAF Bank join hands with Nabard for local economic development

The government and local bodies have introduced concessions and incentives to increase the use of electric vehicles which are beneficial to consumers and the environment. The government had also given special consideration in the budget to promote the use of electric vehicles. ESAF Small Finance Bank caters to more than 46 lakhs customers through its 550 banking outlets across 21 States and two UTs.

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BNP Paribas, Societe Generale trim stake in Indiabulls Housing, BFSI News, ET BFSI

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NEW DELHI: Societe Generale and BNP Paribas Arbitrage on Thursday offloaded 51 lakh shares of Indiabulls Housing Finance for about Rs 113 crore through open market transactions.

According to bulk deal data available with the NSE, Societe Generale sold 27.40 lakh shares of Indiabulls Housing Finance while BNP Paribas Arbitrage divested 23.59 lakh shares of the company.

The shares were offloaded in the range of Rs 221.34-221.75 apiece, valuing the transaction size to Rs 113 crore.

As of September 2021, Societe Generale held 58.77 lakh shares, amounting to 1.27 per cent stake in the company, and BNP Paribas Arbitrage owned 71.82 lakh shares or 1.56 per cent stake in the firm.

On Thursday, Indiabulls Housing Finance shares ended 6.82 per cent higher at Rs 229.45 apiece on the NSE.

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Sebi levies Rs 1.15 cr fine on Voltaire Leasing and Finance, others for fraudulent trading, BFSI News, ET BFSI

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Markets regulator Sebi has imposed total fine of Rs 1.15 crore on Voltaire Leasing and Finance Ltd, its officials, one entity and eleven individuals for fraudulent trading in the shares of the firm. They violated Prohibition of Fraudulent and Unfair Trade Practices norms.

The investigation period was between August 2014-July 2015. They had manipulated the price of the scrip and the company and its directors-Dilip Rajkumar Patodia, Amlesh Sadhu and Harivallabh Mundra – were also part of the scheme for manipulating the price in the scrip.

“By executing manipulative trades, as has been executed by these noticees in the instant matter, the price discovery system itself is affected. It also has an adverse impact on the fairness, integrity and transparency of the stock market,” Sebi said.

All the entities forming the group of off-market transferors, the group of sellers and the company and its directors in charge of its affairs at the time of the violations, have manipulated the scrip price.

The firm is facing a fine of Rs 10 lakh and the three directors are facing fine of Rs 15 lakh each.

Besides, Sebi has imposed fine of Rs 5 lakh each on others.

In another order, Sebi levied total fine of Rs 88 lakh on 12 entities for violation of several market norms.

These include Nikita Forex Pvt Ltd, Nature Infosoft, Topline Fabrics and Tushar Commodities, apart from eight individuals.

The fine has been levied in the range of Rs 6-11 lakh.

It was found that they acted as a group, orchestrated a fraudulent scheme where a false and misleading information was circulated through bulk SMSes to create artificial demand, in order to offload large number of shares of Kalpa Commercial to gullible investors.

Besides, the transactions were not in conformity with the provisions relating to spot delivery contract which require that actual delivery/ transfer of shares and the payment should be on the same day as date of contract or the next day.



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Centre to amend banking laws to facilitate privatisation of two PSU banks, BFSI News, ET BFSI

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To facilitate privatisation of two public sector banks (PSBs), the government is all set to introduce a banking laws amendment bill in the upcoming winter session starting Monday. Finance Minister Nirmala Sitharaman while presenting Budget 2021-22 earlier this year had announced the privatisation of PSBs as part of disinvestment drive to garner Rs 1.75 lakh crore.

The Banking Laws (Amendment) Bill, 2021, to be introduced during the session is expected to bring down the minimum government holding in the PSBs from 51 percent to 26 percent, sources said.

However, sources said a final call in this respect would be taken by the Union Cabinet when it would vet the proposed legislation.

“To effect amendments in Banking Companies (Acquisition and Transfer of Undertakings) Acts, 1970 and 1980 and incidental amendments to Banking Regulation Act, 1949 in the context of Union Budget announcement 2021 regarding privatisation of two Public Sector Banks,” according to the list of legislative business for the Winter Session.

These Acts led to the nationalisation of banks in two phases and provisions of these laws have to be changed for the privatisation of banks, sources said.

In the last concluded session, Parliament passed a bill to allow privatisation of state-run general insurance companies.

The General Insurance Business (Nationalisation) Amendment Bill, 2021, removed the requirement of the central government to hold at least 51 per cent of the equity capital in a specified insurer.

The Act, which came into force in 1972, provided for the acquisition and transfer of shares of Indian insurance companies and undertakings of other existing insurers in order to better serve the needs of the economy by securing the development of general insurance business.

Government think-tank NITI Aayog has already suggested two banks and one insurance company to Core Group of Secretaries on Disinvestment for privatisation.

According to sources, Central Bank of India and Indian Overseas Bank are likely candidates for the privatisation.

As per the process, the Core Group of Secretaries, headed by the Cabinet Secretary, will send its recommendation to Alternative Mechanism (AM) for its approval and eventually to the Cabinet headed by the Prime Minister for the final nod.

The members of the Core Group of Secretaries include economic affairs secretary, revenue secretary, expenditure secretary, corporate affairs secretary, legal affairs secretary, Department of Public Enterprises secretary, Department of Investment and Public Asset Management (DIPAM) secretary and an administrative department secretary.



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Jim Rogers, BFSI News, ET BFSI

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NEW DELHI: Investment guru Jim Rogers says central banks globally would come to the market rescue if things go downhill from here on.

Rogers said when things start shaking for a while, central bankers panic and they would do anything they can to save the bubble, the bull market and prosperity.

“If something causes the markets to go down, whether there is a new virus or whatever, central bankers would get scared and they would do something to save us all,” Rogers said while answering a question.

In an interview with ET NOW, Rogers said stocks like Amazon and Google are wildly expensive in the US market. He said stocks such as Samsung and certain Japanese stocks go up every day and could be in a bubble, but not everything.

“I am not selling yet because I can see there are a lot of stocks that have still not skyrocketed. When everything skyrockets, then you know we are very close to the top and then maybe I should get out,” Rogers said.

Rogers said when things get overpriced, inexperienced people enter the market, leading to a bubble.

Lastly, he said the best trade for next year could be agriculture.

“Sugar is still down 70 per from its all time high, that is not a bubble. When anything is down 70 per cent from its all time high, that is certainly not overpriced. Now maybe my timing is wrong, but I still prefer agriculture to nearly anything.,” he said.



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Jim Rogers, BFSI News, ET BFSI

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NEW DELHI: Investment guru Jim Rogers says central banks globally would come to the market rescue if things go downhill from here on.

Rogers said when things start shaking for a while, central bankers panic and they would do anything they can to save the bubble, the bull market and prosperity.

“If something causes the markets to go down, whether there is a new virus or whatever, central bankers would get scared and they would do something to save us all,” Rogers said while answering a question.

In an interview with ET NOW, Rogers said stocks like Amazon and Google are wildly expensive in the US market. He said stocks such as Samsung and certain Japanese stocks go up every day and could be in a bubble, but not everything.

“I am not selling yet because I can see there are a lot of stocks that have still not skyrocketed. When everything skyrockets, then you know we are very close to the top and then maybe I should get out,” Rogers said.

Rogers said when things get overpriced, inexperienced people enter the market, leading to a bubble.

Lastly, he said the best trade for next year could be agriculture.

“Sugar is still down 70 per from its all time high, that is not a bubble. When anything is down 70 per cent from its all time high, that is certainly not overpriced. Now maybe my timing is wrong, but I still prefer agriculture to nearly anything.,” he said.



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“BUY” This Large Cap Maharatna Stock With A Target Price of INR 200: Motilal Oswal

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Motilal Oswal’s take on Coal India Ltd

According to the brokerage, the company’s “dispatch guidance for FY22 has been increased to 660-670mt compared to its previous guidance of ~640mt. This is in light of a recovery in demand, especially from the Power sector, driven by higher international coal prices, leading to higher demand from COAL. With a recovery in demand from the Power sector, supplies to non-regulated sectors have been squeezed. The same has now begun to recover as both production and dispatches have improved post-monsoon. Our FY22 e-auction ASP at INR1650 is conservative, considering 2Q e-auction ASP of INR1,594/t (a 15.3% premium over FSA prices), while the current premium over FSA is ~50%. We see scope for an upward revision to our FY22 estimate, if current e-auction premiums sustain, provided volumes pick up.”

Motilal Oswal in its research report has commented that “COAL last raised prices in FY18. With wage negotiations underway, we expect COAL to immediately announce a price hike, which should cover the increased wage bill and leave room for a margin improvement. Receivables have improved significantly to INR120b from INR180b at the end of FY21, thus improving its liquidity position. COAL now carries a cash balance of ~INR300b. The stock is attractively available at 3.4x/3x FY22E/FY23E EV/EBITDA. While demand is likely to improve post-monsoon, the second half of the fiscal is generally stronger compared to the first half for COAL. The strong dividend yield of ~11% supports the downside.”

Key takeaways from the management conference call according to Motilal Oswal

Key takeaways from the management conference call according to Motilal Oswal

  • CAPEX for FY22 is pegged ~INR170b, of which COAL has so far spent INR70b. It is still sitting on a liquidity of ~INR300b.
  • The company has fixed 7th Dec’21 as the record date for declaring dividends.
  • COAL is likely to sell about 95mt in the e-auction (similar to FY21), provided demand from the Power sector is not as overwhelming as it was in Sep-Oct’21. Sales to the Power sector is at a 20% discount to the non-Power sector, so any significant uptick to the Power sector at the cost of sales to the non-Power sector dampens COAL’s profitability
  • The company is still working on a plan for achieving a production capacity of 1b tonne. While it had planned to previously reach the target by FY23-end, the revised target now stands at FY24-end. This plan could be further delayed as first-mile connectivity is the most challenging part of any mine’s evacuation plan.
  • India imports about 70mt of thermal coal of a grade that can be replaced by COAL. This is equivalent to about 100mt for COAL. The management highlighted that it has been able to supply about 60-60mt.

Buy Coal India Ltd. with a target price of Rs. 200

Buy Coal India Ltd. with a target price of Rs. 200

According to the brokerage’s call “We value the stock at 4x FY23E EV/EBITDA with a TP of INR200. We maintain our Buy rating, with a revised TP of INR200/share (from INR185 earlier). A surge in coal demand from the Power sector, which could squeeze supplies to non-regulated sectors through e-auctions, remains a key risk as it could hurt profitability.”

Disclaimer

Disclaimer

The stock has been picked from the brokerage report of Motilal Oswal Financial Services 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.



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‘The insurance sector and governments need to coordinate to hedge natural disaster risks’

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A public-private solution in the form of a National Disaster Pool, for hedging natural disaster risks, in close coordination with the insurance sector might offer many benefits over government-induced crisis loans and grants, according to Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India.

“If we consider 2020 floods in India, the total economic loss was of $7.5 billion (₹52,500 crore) but insurance available was only to the magnitude of 11%. If the government had insured it, then the premium for the sum assurance of ₹60,000 crore would have been only in the range of ₹13,000 to ₹15,000 crore,” Ghosh said in the latest edition of Ecowrap.

India recorded 756 instances of natural disasters (landslide, storm, earthquake, flood, drought, etc.) since 1900 with 402 events occurring during 1900-2000 and 354 during 2001-2021, indicating the preponderance of tail events off late. Since 2001, a total of 100 crore people have been impacted and nearly 83,000 people have lost lives due to these disasters. If the losses are adjusted with current prices, the losses comes out to a staggering ₹13 lakh crore i.e. 6% of India’s GDP. Also, there is huge gap in reporting of losses (loss data of only 193 events are available for India) and there are problems in existing estimation methodologies too.

Protection gap

Recently, the intensity and frequency of natural calamities, especially cyclones, have increased manifold in India. “In India, only around 8% of the total losses are covered, so, there is around 92% protection gap during the period 1991 to 2021. So, early intervention is needed to close the protection gap, which is in all lines (life & non-life) of insurance,” the report said.

Also read: SBI Ecowrap proposes 5 key agricultural reforms

Going by the 92% protection gap in India, an average Indian is only insured of roughly 8% of what may be required to protect a family from a financial shock following the death of the breadwinner. This means having savings and insurance of just ₹8 for every ₹100 needed for protection. Lack of awareness of what is an adequate life insurance cover for an individual increases the mortality protection gap.

“The insurance sector and governments need to actively engage and discuss how best to address the potential contingent liabilities from pandemic risk. This would also imply relooking at credit underwriting standards by incorporating outlier observations often ignored by modelling data. Meanwhile, we notice with elation that the level of insurance has indeed jumped post-pandemic indicating that the understanding of obtaining insurance cover is now increasing across the typical Indian households and we believe this percolates at the government level too,” Ghosh added.

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Reserve Bank of India – Press Releases

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(Amount in ₹ crore, Rate in Per cent)
  Volume
(One Leg)		 Weighted
Average Rate 		Range
A. Overnight Segment (I+II+III+IV) 5,33,643.07 3.27 1.00-5.20
     I. Call Money 6,898.92 3.21 2.00-3.50
     II. Triparty Repo 3,94,694.05 3.25 3.11-3.34
     III. Market Repo 1,30,965.10 3.31 1.00-3.45
     IV. Repo in Corporate Bond 1,085.00 3.59 3.45-5.20
B. Term Segment      
     I. Notice Money** 463.15 3.29 2.75-3.45
     II. Term Money@@ 229.00 – 3.20-4.00
     III. Triparty Repo 2,800.00 3.31 3.30-3.33
     IV. Market Repo 100.00 2.80 2.80-2.80
     V. Repo in Corporate Bond 70.00 5.60 5.00-6.20
  Auction Date Tenor (Days) Maturity Date Amount Current Rate /
Cut off Rate
C. Liquidity Adjustment Facility (LAF) & Marginal Standing Facility (MSF)
I. Today’s Operations
1. Fixed Rate          
     (i) Repo          
    (ii) Reverse Repo Thu, 25/11/2021 1 Fri, 26/11/2021 1,91,837.00 3.35
    (iii) Special Reverse Repo~          
    (iv) Special Reverse Repoψ          
2. Variable Rate&          
  (I) Main Operation          
     (a) Reverse Repo          
  (II) Fine Tuning Operations          
     (a) Repo          
     (b) Reverse Repo          
3. MSF Thu, 25/11/2021 1 Fri, 26/11/2021 0.00 4.25
4. Special Long-Term Repo Operations (SLTRO) for Small Finance Banks (SFBs)£          
5. Net liquidity injected from today’s operations
[injection (+)/absorption (-)]*		       -1,91,837.00  
II. Outstanding Operations
1. Fixed Rate          
    (i) Repo          
    (ii) Reverse Repo          
    (iii) Special Reverse Repo~          
    (iv) Special Reverse Repoψ          
2. Variable Rate&          
  (I) Main Operation          
     (a) Reverse Repo Thu, 18/11/2021 15 Fri, 03/12/2021 4,45,742.00 3.99
  (II) Fine Tuning Operations          
     (a) Repo          
     (b) Reverse Repo Tue, 23/11/2021 7 Tue, 30/11/2021 1,48,073.00 3.99
  Tue, 02/11/2021 28 Tue, 30/11/2021 50,007.00 3.97
3. MSF          
4. Long-Term Repo Operations# Mon, 17/02/2020 1095 Thu, 16/02/2023 499.00 5.15
  Mon, 02/03/2020 1094 Wed, 01/03/2023 253.00 5.15
  Mon, 09/03/2020 1093 Tue, 07/03/2023 484.00 5.15
  Wed, 18/03/2020 1094 Fri, 17/03/2023 294.00 5.15
5. Targeted Long Term Repo Operations^ Fri, 27/03/2020 1092 Fri, 24/03/2023 12,236.00 4.40
  Fri, 03/04/2020 1095 Mon, 03/04/2023 16,925.00 4.40
  Thu, 09/04/2020 1093 Fri, 07/04/2023 18,042.00 4.40
  Fri, 17/04/2020 1091 Thu, 13/04/2023 20,399.00 4.40
6. Targeted Long Term Repo Operations 2.0^ Thu, 23/04/2020 1093 Fri, 21/04/2023 7,950.00 4.40
7. On Tap Targeted Long Term Repo Operations€ Mon, 22/03/2021 1095 Thu, 21/03/2024 5,000.00 4.00
  Mon, 14/06/2021 1096 Fri, 14/06/2024 320.00 4.00
  Mon, 30/08/2021 1095 Thu, 29/08/2024 50.00 4.00
  Mon, 13/09/2021 1095 Thu, 12/09/2024 200.00 4.00
  Mon, 27/09/2021 1095 Thu, 26/09/2024 600.00 4.00
  Mon, 04/10/2021 1095 Thu, 03/10/2024 350.00 4.00
  Mon, 15/11/2021 1095 Thu, 14/11/2024 250.00 4.00
8. Special Long-Term Repo Operations (SLTRO) for Small Finance Banks (SFBs)£ Mon, 17/05/2021 1095 Thu, 16/05/2024 400.00 4.00
Tue, 15/06/2021 1095 Fri, 14/06/2024 490.00 4.00
Thu, 15/07/2021 1093 Fri, 12/07/2024 750.00 4.00
Tue, 17/08/2021 1095 Fri, 16/08/2024 250.00 4.00
Wed, 15/09/2021 1094 Fri, 13/09/2024 150.00 4.00
Mon, 15/11/2021 1095 Thu, 14/11/2024 105.00 4.00
Mon, 22/11/2021 1095 Thu, 21/11/2024 100.00 4.00
D. Standing Liquidity Facility (SLF) Availed from RBI$       20,001.80  
E. Net liquidity injected from outstanding operations [injection (+)/absorption (-)]*     -5,37,723.2  
F. Net liquidity injected (outstanding including today’s operations) [injection (+)/absorption (-)]*     -7,29,560.2  
G. Cash Reserves Position of Scheduled Commercial Banks
     (i) Cash balances with RBI as on 25/11/2021 6,41,235.30  
     (ii) Average daily cash reserve requirement for the fortnight ending 03/12/2021 6,50,308.00  
H. Government of India Surplus Cash Balance Reckoned for Auction as on¥ 25/11/2021 0.00  
I. Net durable liquidity [surplus (+)/deficit (-)] as on 05/11/2021 11,23,716.00  
@ Based on Reserve Bank of India (RBI) / Clearing Corporation of India Limited (CCIL).
– Not Applicable / No Transaction.
** Relates to uncollateralized transactions of 2 to 14 days tenor.
@@ Relates to uncollateralized transactions of 15 days to one year tenor.
$ Includes refinance facilities extended by RBI.
& As per the Press Release No. 2019-2020/1900 dated February 06, 2020.
* Net liquidity is calculated as Repo+MSF+SLF-Reverse Repo.
# As per the Press Release No. 2020-2021/287 dated September 04, 2020.
^ As per the Press Release No. 2020-2021/605 dated November 06, 2020.
€ As per the Press Release No. 2020-2021/520 dated October 21, 2020, Press Release No. 2020-2021/763 dated December 11, 2020, Press Release No. 2020-2021/1057 dated February 05, 2021 and Press Release No. 2021-2022/695 dated August 13, 2021.
¥ As per the Press Release No. 2014-2015/1971 dated March 19, 2015.
£ As per the Press Release No. 2021-2022/181 dated May 07, 2021 and Press Release No. 2021-2022/1023 dated October 11, 2021.
~ As per the Press Release No. 2021-2022/177 dated May 07, 2021.
ψ As per the Press Release No. 2021-2022/323 dated June 04, 2021.
Ajit Prasad            
Director (Communications)
Press Release: 2021-2022/1250

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