DOMESTIC:

Alembic Pharma gets 4 USFDA observations for Panelav plant

JK Tyres acquires Cavendish Industries for Rs2,200cr Dr Reddy's migraine injection enters US market BEML ventures into dredging business HDFC Standard Life announces IPO; Parent HDFC to

sell 10% stake Glenmark receives 3 observations from USFDA RPP Infra inks pact with Siemens to bid for a power

project Biocon Inc recalls 5,505 bottles of Simvastatin tablets in

US Bharti Airtel plans to sell 5% in tower arm Bharti

Infratel Essar Steel bags letter of intent to develop iron ore

block in Odisha

ECONOMY:

Companies garner Rs20K crore via OFS in FY'16 India's services export down 13% in February at

USD12.3bn WPI inflation stays negative for 17th month India replaces China as top FDI destination in 2015 Govt sets FY17 deadline for energy efficiency norms for

vehicles

INDUSTRY:

US court slapping nearly USD1bn penalty on TCS could impact entire Indian IT sector

Banking stocks rally as RBI move seen boosting Q4 numbers

Anti-dumping duty likely on a chemical used by pharma industry

ATMA seeks anti-dumping duty on Chinese tyres

TM

One Year Sensex Performance

Price Performance (%)

Company 1M 3M 12M

Supreme Petrochem Ltd 29% 43% 103%

Indian Hume Pipe Co.Ltd 5% -12% 14%

Shanthi Gears Ltd 19.2% 6% -20%

Hind Rectifiers Ltd 11% -12% 0%

KCP Limited -3% 21% 30%

Navneet Education Ltd 8% 3% -12%

Harita Seating System Ltd 16% 15% 190%

Camlin Fine Sciences 16% 15% 19%

GEE Limited 1% -4% 45%

Hester Biosciences Ltd 20% 8% -17%

West Coast Paper Mills Ltd 18% 22% 44%

Rallis India Limited 13% 20% -13%

The Hitech Gears Limited 8% -2% -6%

Bharat Bijlee Limited 6% 10% 48%

Castrol India Limited 4% -6% -16%

Engineers India Limited 8% -15% -8%

TNPL 10% -1% 79%

Triveni Turbines Limited -3% -3% -19%

Rajoo Engineers Limited 11.7% -9% 11%

Siemens Limited 9% 17% -9%

Hikal Limited 9.6% -1% -1%

TRIL 36% 31% 22%

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 144 BUY 200 38.9 13.9 19.4 13.2 0.4 0.3 8.8 6.0

Indian Hume Pipe Co. Ltd 340 BUY 475 39.7 8.2 15.7 11.0 8.9 7.9 8.2 6.7

Shanthi Gears Ltd 95 BUY 150 57.3 7.8 68.6 54.0 4.1 4.2 27.8 25.4

Hind Rectifiers Ltd 68 BUY 110 61.8 1.0 56.5 12.9 1.1 0.9 21.6 9.2

KCP Limited 83 BUY 105 26.5 10.7 26.9 19.2 2.0 1.8 11.6 9.8

Navneet Education Ltd 89 BUY 130 46.6 21.1 14.3 12.4 2.1 1.9 8.6 7.7

Harita Seating System Ltd 510 BUY 600 17.6 4.0 40.4 29.6 1.4 1.3 25.4 19.8

Camlin Fine Sciences 106 BUY 140 32.5 10.1 13.0 9.9 1.8 1.5 9.6 7.8

GEE Limited 38 BUY 70 84.2 0.9 16.5 11.9 0.7 0.6 6.4 5.7

Hester Biosciences Ltd 536 BUY 750 39.9 4.6 32.9 27.0 4.7 3.8 16.5 13.5

West Coast Paper Mills Ltd 78 BUY 110 41.6 5.1 14.7 4.0 0.6 0.6 4.0 3.3

Rallis India Limited 194 BUY 260 34.1 37.7 24.7 19.4 2.2 1.9 13.9 11.4

The Hitech Gears Limited 271 BUY 450 65.9 5.1 19.0 14.5 1.1 0.9 8.1 6.8

Bharat Bijlee Limited 948 BUY 1100 16.1 5.4 94.7 43.8 0.9 0.8 31.6 27.1

Castrol India Limited 393 BUY 650 65.3 194.5 29.7 27.7 4.9 4.8 19.0 17.7

Engineers India Limited 182 BUY 325 79.1 61.2 17.3 16.6 2.0 3.0 13.3 19.8

TNPL 231 BUY 350 51.7 16.0 7.4 6.3 1.5 1.4 5.8 5.2

Triveni Turbines Limited 97 BUY 135 39.9 31.8 31.2 26.2 0.4 0.4 2.0 1.7

Rajoo Engineers Limited 17 BUY 24 39.5 1.0 13.5 9.7 0.8 0.7 7.1 5.4

Siemens Limited 1173 BUY 1500 27.9 417.5 44.6 38.4 3.5 3.1 26.0 22.1

Hikal Limited 142 BUY 200 40.7 11.7 33.4 23.6 1.9 1.8 9.3 8.2

TRIL 317 BUY 450 42.2 4.2 -14.4 23.4 9.0 6.5 400 72.0

15000

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The week that went by: The week started on a positive note, after impact of good set of results posted by Infosys. The markets held strong further based on the WPI declared that fell for 17th straight month. With a holiday in between the markets remained range bound for the week. There was slight impact seen as The India VIX (Volatility) index was down 3.29% to 16.5125.

Result Update: Supreme Petrochem Limited: The company posted Net Sales of Rs8,124mn as compared to Rs6,610mn in the corresponding quarter last year, clocking growth of 23%. The Ebidta margins came in strong at 10.8% compared to 4.2% in the comparative quarter. The net profit came in at Rs544mn as compared to Rs205mn in the same quarter last year, clocking growth of 165%. During the quarter the volume growth of 14% was clocked by the company and is expected to be on similar lines in FY17 as well. Minimal capex of Rs230mn for FY17 is indicated by the management and would be funded by internal accruals. In the December quarter the operations were disrupted due to floods in Chennai. The company has filed the initial insurance claim of Rs1,092lacs. The interim claim of Rs449.81 lacs is approved. The company has announced interim dividend of Rs1.5 per equity share.

Recommendation: The company reported excellent set of numbers with strong operational performance for the quarter. In spite of the tax payment at 33% the company has clocked profits almost doubling from the comparative quarter last year. We still maintain our conviction in the stock and revise our target price to Rs200 for a 12 months’ perspective. We had initiated report on the stock with the initial target of Rs120 and revised to Rs150. Note: The company has changed the financial year to March ending. Hence the results declared are for 9 months.

TCS Limited: Total income came in at Rs284,486mn as against Rs273,640mn in quarter ending December 2015, an increase of 3.96%. For the full year, the total income grew from Rs9,46,884mn to Rs1,086,484mn on comparative basis. Net profit clocked a growth of 5.25% to Rs64,232mn as against Rs60,834mn when compared to the last quarter. A growth of 21.5% is witnessed on y-o-y basis from Rs200,597mn to Rs243,749mn in FY16. Net profit after minority interest clocked a growth of 5.42% to Rs64,131mn as against Rs60,834mn when compared to the last quarter. A growth of 22.36% is witnessed on y-o-y basis from Rs198,522mn to Rs242,918mn in FY16. Ebitda margins came in at 27.7% for the quarter under review. For the full year, the Ebitda margins grew from 25.9% to 28.2% in FY16. EPS came in at Rs32.5 as compared to Rs30.9 for the quarter ending December 2015. For the full year, the EPS came in at Rs123.3 in FY16 as compared to Rs101.4 in FY15. The core portfolio performed strongly driven by strong volumes in BFSI, retail and manufacturing sectors. Revenues from digital segment grew by 52.2%. The Board of Directors have recommended a Dividend of Rs27 per equity share of Rs1 which will be paid on seventh day after AGM and is subject to approvals. Total dividend for the year was Rs43.5 (including Rs27). Recommendation: Results are better than expectations. One should stay invested in this stock.

TM

Excellent set of numbers

Better than expected results

COVERAGE STOCK NEWS

Initiating coverage on Hikal Limited and Transformers and Rectifiers Limited HIKAL LIMITED: Hikal Limited (Hikal) was incorporated in 1988 as a private limited company by the Hiremath family and Surajmukhi Investments & Finance Limited, a wholly owned subsidiary of Kalyani Steels Limited as the shareholders. Hikal being the preferred partner of choice of leading pharmaceutical and agrochemical companies is engaged in R&D, manufacturing and marketing of fine chemicals for different customers across the above industries. It collaborates with innovator companies and offers solutions in Contract Research, Custom Synthesis and Custom Manufacturing. It has the edge of being one of the few companies globally that have a hybrid model catering to diversified industries.

Recommendation: Being one of the apt players in the agrochemical space to benefit from good rains expected this year, we recommend a BUY on the stock with a target price of Rs200. TRANSFORMERS AND RECTIFIERS LIMITED Transformers and Rectifiers (India) Ltd, more commonly known as TRIL, is one of the leading manufacturers of wide range of power, distribution, furnace and rectifier transformers in the country. The company is promoted by Mr. Jitendra U Mamtora and family. In the last thirty years of its existence, TRIL has successfully installed more than 7,000 transformers both locally and globally thus making a reputed national and international presence in this transformer industry. Recommendation: TRIL is definitely a long term story which is just about to unfold. We initiate a BUY on the stock with a target price of Rs450 from a 12-month perspective. IPO Recommendation: Thyrocare Technologies Limited Thyrocare Technologies Limited (TTL) is an advanced diagnostics company which runs diagnostics laboratory chain across the country. TTL is certified by the College of American Pathologists (CAP), ISO and National Accreditation Board for Testing and Calibration Laboratories (NABL). TTL has a nation-wide network of 1,041 Authorized Service Providers (ASP), with a spread across 466 cities and 24 states and 1 union territory. As on November 30, 2015, the company offered 192 tests and 54 profiles of tests to detect a number of disorders. TTL is reputed with the tag of India’s first largest and longest automated system. The company has fully automated Central Processing Laboratory (CPL) located in Navi Mumbai. Issue Details: Issue Open: Apr 27, 2016 Issue Closes: Apr 29, 2016 Price Band: Rs420 to Rs446 Bid Lot: 33 shares and multiples. Listing at: BSE and NSE Issue Size: 10,744,708 Equity Shares of Rs10 TTL is present in an absolutely niche segment. As of now there is only one listed entity in this segment which has a PE of around 60-62, while TTL is at a PE of 35-37 or so. The business model of the company looks attractive in the long run. We recommend a SUBSCRIBE on the IPO

TM

STOCKS NEWS ANALYSIS

Fundamental pick for the month

Fundamental pick for the month

Subscribe for Thyrocare

Companies garner Rs20K crore via OFS in FY'16 Indian companies raised nearly Rs20,000cr by selling shares through the offer for sale (OFS) mechanism in 2015-16, with PSUs accounting for most of the fund mop-up. They had mobilised Rs26,935cr through this route in the 2014-15 fiscal. The largest OFS was that of Indian Oil (Rs9,396cr) followed by NTPC (Rs5,032cr). OFS accounted for as much as 40% of the total fiscal year's public equity markets amount of Rs48,952cr.

Our Comments: This mechanism has significantly helped the government's disinvestment drive on account of greater transparency and wider market participation.

India's services export down 13% in February at USD12.3bn India's services export fell by 12.6% in February to USD12.33bn over the same month a year ago, as per the Reserve Bank data. In February 2015, the services export was at USD14.09bn. Import of services too fell by 8.9% to USD7.19bn during the month, as compared with USD7.89bn in February 2015, as per the RBI data on International Trade in Services.

Our Comments: The services sector contributes about 55% to country's gross domestic product.

WPI inflation at (-)0.85% in March, stays negative for 17th month India's wholesale prices fell for the 17th straight month in March, with the Wholesale Price Index (WPI) based inflation declining 0.85% from a year ago on the back of falling prices of manufactured products. In February, the index was down 0.91%, while in March 2015 it had fallen 2.33%. The WPI figure for January has been revised to -1.07% from -0.90%.

Our Comments: As per the data released by the commerce and industry ministry, inflation in primary articles was 2.13% compared with 1.58% in February, while manufacturing products' inflation was -0.13 % compared with -0.58% a month ago.

India replaces China as top FDI destination in 2015 India has replaced China as top destination for foreign direct investment by attracting USD63bn worth FDI projects in 2015. Also there was an 8% increase in projected numbers to 697. India replaced China as the top destination for FDI by capital investment following a year of high-value project announcements specifically across the coal, oil and natural gas and renewable energy sectors

Our Comments: The report said in 2015, greenfield FDI continued to show signs of recovery, with capital investment increasing by nearly 9% to USD713bn, alongside an increase in job creation by 1% to 1.89mn. However, the number of FDI projects declined 7% to 11,930.

Govt. sets FY17 deadline for energy efficiency norms for vehicles The 'Transforming India' agenda of the National Democratic Alliance (NDA) government has set the current financial year as the deadline for energy efficiency norms for vehicles. The government also wants to offer incentives for construction of energy efficient buildings.

Our Comments: This would be a great initiative but one needs to wait and watch for the developments.

TM

KEY NEWS ANALYSIS

Funds raised through OFS route

Service exports on the downturn

WPI in the negative zone

India tops FDI destination

Deadline for energy efficiency

US court slapping nearly USD1bn penalty on TCS could impact entire Indian IT sector A US court slapping nearly USD1bn penalty on Tata Consultancy Services in a trade secrets theft case could impact the entire Indian IT industry at a time when growth is slowing. While TCS has denied any infringement of US healthcare software firm Epic System's intellectual property and said it will appeal against the US jury award, experts feel that the case will cause significant reputation damage to TCS in the tight-knit healthcare market where Indian IT firms have been trying to build their brand and trust.

Our Comments: In an environment where growth is increasingly hard to find for TCS and other Indian firms, this will come as a setback to TCS and is likely to have a knock on effect on other Indian firms wanting to go after this market which could be tarred with the same brush.

Banking stocks rally as RBI move seen boosting Q4 numbers Banking stocks rally after the Reserve Bank of India shortened the list of companies whose loans need to be provided for against the risk of default. RBI issued a letter stating that a banker who did not want to be identified. Some of the companies are removed from the list and no new names have been added as yet.

Our Comments: The immediate outcome of the latest decision will be better-than-anticipated results at banks in the quarter just ended, especially state-owned ones that have heavy exposure to highly indebted corporate houses.

Anti-dumping duty likely on a chemical used by pharma industry India is likely to impose anti-dumping duty of up to $279.78 per tonne on imports of a chemical used by pharma, agro and fragrance industries from China and Russia to protect domestic manufacturers. DGAD has recommended to the revenue department to impose the levy ranging between $122.14 and $279.78 per tonne on the imports of 'Methylene Chloride'.

Our Comments: The purpose of anti-dumping duties is to eliminate injury caused to the domestic industry by unfair trade practices like dumping - pricing goods below their cost for export markets. The step is intended to re-establish open and fair competition in the market.

ATMA seeks anti-dumping duty on Chinese tyres With Truck & Bus Radial (TBR) tyre imports increasing in FY16, the Automotive Tyre Manufacturers Association (ATMA) has asked the Centre to take urgent measures to halt the sharp surge in imports and dumping. ATMA said that TBR tyre imports went up from 7.8 lakh units in FY15 to 12.8 lakh units in FY16, registering an increase of 64%. In the last two years, TBR tyre imports went up by 2.5 times. From an average per month import of about 40,000 units in FY14 and 65,000 units in FY15, imports crossed the one lakh units per month mark in FY16.

Our Comments: The Indian tyre industry’s position is further vulnerable with the US imposing severe dumping and anti-subsidy duties against Chinese imports to the US. Slowdown in the domestic Chinese economy and demand for automobiles and tyres is said to be cause for dumping of tyres in India as it offers a ready and growing market with very low import duties in products such as tyres.

TM

KEY NEWS ANALYSIS

TCS in for some stress

Booster for quarter results of banks

Anti dumping on Chinese tyres

Anti dumping on Methylene chloride

Alembic Pharma gets 4 USFDA observations for Panelav plant The formulations facility of Alembic Pharma at Panelav, Halol was inspected by the USFDA from March 21 to 25. The company had received four observations which are being addressed by its regulator and quality team. According to the company's website, formulations accounts for around 65% of the total business for Alembic Pharmaceuticals. It has three manufacturing facility for formulations in Vadodara and Panelav at Gujarat and Baddi in Himachal Pradesh.

Our Comments: The company did not provide any details about the observations it has received from the USFDA.

JK Tyres acquires Cavendish Industries for Rs2200cr JK Tyre & Industries has completed acquisition of Cavendish Industries which houses three tyre business undertakings of Birla Tyres at an enterprise value of Rs2,200cr. The plants are located at Laksar (Haridwar), which manufactures a range of tyre, tubes and flaps. The acquisition has been funded through a combination of internal accruals and debt.

Our Comments: With this acquisition JK Tyres will have 12 manufacturing units across India and Mexico.

Dr Reddy's migraine injection enters US market Promius Pharma LLC, a subsidiary of DRL announced that ZembraceSymTouch injection is now commercially available in the US. The company received an approval from the USFDA for ZembraceSymTouch injection in January this year. ZembraceSymTouch is available as a prefilled, ready to use, single dose disposable injector. At the time of USFDA approval, DRL had said the new product will be marketed in the US by Promius Pharma.

Our Comments: ZembraceSymTouch is the first branded product in the company's neurology portfolio.

BEML ventures into dredging business BEML Ltd has signed a memorandum of understanding (MoU) with Dredging Corporation of India Ltd (DCI) for indigenous design, development and manufacture of spares for dredgers, with an objective of strengthening the government’s Make in India initiative.

Our Comments: As per the agreement, BEML will supply various types of spares for the existing dredgers and also supply of backhoe excavators for new dredgers.

HDFC Standard Life announces IPO; Parent HDFC to sell 10% stake HDFC Ltd announced the much awaited initial public offering of its insurance arm HDFC Standard Life. The mortgage lender will dilute 10% of its 61.63% stake in the insurance arm, making it India's first insurance IPO. The IPO is subject to regulatory approvals including those from market regulator Sebi and the insurance regulator IRDA. India's second largest private insurer by new business is valued at nearly Rs25,000cr.

Our Comments: The IPO will be the first from an insurer to hit the Indian market since the government allowed private participation in insurance in 2000 with a cap of 26% for overseas investors.

TM

STOCKS NEWS ANALYSIS

USFDA scanner on Alembic

Acquisition by JK Tyres

DRL injection into US markets

BEML into dredging

HDFC insurance arm announces IPO

RPP Infra inks pact with Siemens to bid for a power project RPP Infra Projects Ltd said it has entered into a consortium agreement with Siemens for submitting a joint bid to Power Grid company of Bangladesh to install substations. The companies are submitting a joint bid to Power Grid Company of Bangladesh in respect of design, supply, erection, testing and commissioning of 400 KV, 230 KV and 132 KV substations.

Our Comments: This is step in right direction for RPP Infra Projects Ltd to go overseas in the International markets for executing projects.

Glenmark receives 3 observations from USFDA Glenmark Pharmaceuticals Ltd said it received three observations from USFDA for its formulations facility at Pithampur, near Indore. The company didn’t specify the nature of the observations made in Form 483.

Our Comments: The Pithampur plant was inspected by USFDA in February 2016 and the company received three observations from them which were responded to in March 2016. Subsequently, glenmark received two product approvals from this plant and have no outstanding items with the USFDA regarding this plant.

Biocon Inc recalls 5,505 bottles of Simvastatin tablets in US Biocon Inc, part of biotechnology major Biocon, is recalling in the US 5,505 bottles of cholesterol lowering Simvastatin tablets for being sub-potent, according to the USFDA. The tablets are manufactured by Blu Caribe Dorado for Blu Pharmaceuticals Franklin.

Our Comments: The Class III recall for 5 mg tablets of simvastatin pertains to a specific lot manufactured by Blu Caribe (Puerto Rico, USA) for Blu Pharmaceuticals (Kentucky, USA) long before Biocon acquired the simvastatin ANDA from Blu. The FDA notified Biocon as they are the current holders of the ANDA.

TM

STOCKS NEWS ANALYSIS

Glenmark on USFDA observations

RPP infra pact with Siemens

Recall by Biocon

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TM