[www.niftyviews.com:23517] Fwd: Sun Pharma: Ghosts Of Halol Plant/Ranbaxy & USFDA Is Still There ??

[Asis Ghosh]

 Forwarded Message 
Subject: 	Sun Pharma: Ghosts Of Halol Plant/Ranbaxy & USFDA Is Still 
There ??

Date:   Tue, 10 Nov 2015 08:51:47 +0530
From:   Asis Ghosh 
Reply-To:   asis...@gmail.com



The stock is down by nearly 38% from its April'15 peak & may be 
bottoming out


*For Sun Pharma, 740-725 might be a good buying zone for 875-935 in the 
near term*


Successful Halol Plant compliance resolution and Ranbaxy integration 
holds the key---



*CMP: 757*
*
*
*Buy around 740-725; *
*
*
*TGT: 790-835-875-935 (1-3M)*
*
*
*TGT: 975-1075-1135-1200 (12-24M)*
*
*
*TSL< 715*

*Note:* Consecutive closing below 715 zone for any reason, Sun can fall 
up to 690-675-650 & 619-600-570 area, where it may be again accumulated 
for better investment buying average.


Scrips of both Sun Pharma slumped for the last few days after the 
company missed estimates for Q2FY16 and also cut guidance for the rest 
of the FY-16. In addition to that, market is also concerned over its 
Halol plant compliance issues with USFDA.


Another pharma major DRL got an official warning from USFDA recently and 
analysts are concerned over the similar fate for Sun Pharma also. There 
are market buzz that Sun has already got an OAI (official action 
indicated) and there is higher probability that it will also be issued 
with a warning letter from USFDA.


This Halol plant of ex-Ranbaxy has been under USFDA observation for 
quite a long time and the company is finding great difficulties for 
fresh approvals on product launches from this plant.


Although the management has assured that the company is doing its best 
for "original remediation" of the Halol Plant, keeping the USFDA in loop 
"at great frequency", the market is concerned about its impact on US 
business and profits in FY-16.


But keeping in view the likely benefit of Ranbaxy integration (synergy), 
analysts are giving an average TP of around 900 for the Sun Pharma 
scrip, significantly down from earlier projections.


Q2FY16 result was also below street estimates, although the company has 
already issued "profit warning" in advance.


Q2 consolidated PAT declined by around 46% (YOY) to Rs.1107 cr due to 
lower sales growth, cross currency headwinds/volatility and supply 
constraints.


Another disappointing fact was that its domestic (India) sales, which 
contributes around 26% of its revenue has grown by only 1% in Q2 (YOY). 
The company attributed it to inventory control, withdrawal of product 
bonus offer (to trade), relatively soft season in the acute segment and 
erratic monsoon this year (seasonal ailments).


The US sales, which contributed around 48% of Sun Pharma was also 
declined 28% (YOY) due to competitive pricing pressure, supply 
constraints at Halol Plant and high base for the last year's same quarter.


Looking ahead, the company is confident about prescription sales growth 
in India and resolution of its Halol Plant and fresh product approvals 
from USFDA.


There may be pricing pressure on US market due 2016 presidential 
election year as its inviting lots of criticism for high prices of 
medicines in US from their politicians, but its an industry wide issue.


Looking at the time & price action & the recent correction on the Sun 
Pharma scrip, the above sets of bad news may be already discounted by 
the market to a great extent.


Technically, 740-725 is a strong support zone for Sun and its need to 
sustain over 790 for some meaningful rally up to 875-935 in the near term.


*As par BG metrics & current market parameters:*
(On consolidated TTM & FWD EPS)

Present median valuation of Sun Pharma may be around: 800 (FY:15/TTM)

Projected fair valuations might be around: 855-950-1120 (FY:16-18/FWD)


SCRIP   EPS(TTM)BV(Act) P/E(AVG)Low HighMedian  
200-DEMA10-DEMA
SUNPHARMA   18.14   95.99   40  798.72  781.71  790.22  879.21  842.16


SUNPHARMA   20.85   115.25  40  856.31  838.07  847.19  879.21  842.16


SUNPHARMA   25.75   138.75  40  951.62  931.36  941.49  879.21  842.16

SUNPHARMA   35.95   165.75  40  1124.41 1100.47 1112.44 
879.21  842.16



* Analytical Charts:*














--
Thanks & Regards,

Asis Ghosh
(asisghosh.blogspot.com)
NCFM-TA Certified



--
Kindly email stock reports at 

[www.niftyviews.com:23518] India: 10Y GOI @ 7.78; Rupee @67; Importing Inflation Is Real

[Rajiv Handa]

India imports a lot of goods, but we tend to make it up with two things:
Service exports and inward remittances. (We don’t make all of it up, but
yes, that’s a good chunk)

These make up most of the “invisibles” in India’s trade. Invisible, as in
not visible in ports and trading points, because it’s all virtual. Such as
software – they can’t track when you export software, but you get paid for
it. (Versus if you buy an iPhone, it appears at a port somewhere)

We take the total receipts minus the total payments, to reach a “Net
Invisibles” number – which shows a startling change.

The weird part is that we’ve seen the lowest “invisibles” number since
December 2012 (Which is “Q3 2013”, or the third quarter of the financial
year FY 2013)

[image: image]


The growth in the invisibles number, year on year, is also anaemic:

[image: image]


India’s remittances and software exports make much of the invisible number
each quarter:

[image: image]


The reason “Interest/Dividends” is negative, is that we pay out interest on
ECB/FCCBs and dividends to foreign investors.

See the lack of anything “green” this time? That means the “Everything
Else” part which was a positive number is now not acting in our favour at
all.
Why does this matter?

Remember last year (Q2) when the rupee fell from Rs. 55 to Rs. 68 to a
dollar? And for the most of the recent quarter (Q2 2015) we saw it between
60 and 62.

Essentially, our currency weakened a lot since last year but we still saw
net imports grow and net exports reduce. The rupee has been weakening for
most of Q2 and then on.

[image: image]


That doesn’t augur well – we should technically have been exporting more
and importing less, because of a weaker rupee. Apparently, that’s not the
case. Software exports grew just 4.6% and remittances, 2.1%.

This means the rupee has to weaken a lot more for things to really improve.
Already, we are at 66.26, and the rupee could go a little while further.

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Disclaimer :-
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their individual experience and perceptions and to share information
with other members with the best of intentions to help fellow members
in investment decisions as equity investment is a risky venture.The 
administrator of www.Niftyviews.com just provide a platform for the authors to 
express their opinion and take no guarantee for the genuineness of the 
same."ANY member of this forum doesnt prepare or publish any research report; 
or ii. provide research report; or iii. make 'buy/sell/hold' recommendation; or 
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[www.niftyviews.com:23511] IDFC And IDFC Bank Will Seek Much Lower Levels

[Rajiv Handa]

IDFC’s earnings continue to be tepid as balance sheet contraction persists
while  spreads  remain  under  pressure  (20bp  QoQ  decline).  Asset
quality  deteriorated  sharply with GNPLs increasing by 81% QoQ however
hefty one‐time provisioning of  Rs25bn resulted in a decline in net
stressed assets. Other income stood stable on  YoY basis led by pick‐up in
fixed income fees and further 2% stake sale in NSE  leaving behind a
residual 2% stake now. IDFC has now increased its provisioning to  Rs46bn
 (~10%  of  total  loans)  and  has  identified  Rs88bn  of  assets  which
 can  potentially turn stressful. IDFC has spent heavily in its transition
to a bank and  orderly execution will be critical for stock performance as
challenges still remain  especially fallout from legacy book and building
retail franchise. We maintain BUY  with PT of Rs77 for IDFC and value IDFC
Bank at Rs68per share.   Total revenues decline 4% YoY: Core performance
remained weak on muted NII  growth as IDFC continued to focus on
low‐yielding quality corporate (12M rolling  spread  declined  20bp  QoQ).
Other  income  though  remained  relatively  flat  helped by 2% stake sale
in NSE and sequential pick‐up in fixed income fees.  Profitability was also
affected by high opex as IDFC continues to spend on  capacity  building
 for  transformation  to  a  bank  and  cost‐income  ratio  thus  remains
high at 28% (~18% in Q2FY15).    Balance sheet continues to contract;
treasury book now accounts for 33% of  balance sheet: IDFC’s balance sheet
contracted by 3% YoY (12% YoY decline in  gross loan portfolio) impacted by
high prepayments in telecom sector as the  borrower migrated to cheaper
money market borrowing. The share of treasury  portfolio thus accounts for
33% of IDFC’s balance sheet and we believe that the  focus on this should
subside now going ahead.   Asset quality deteriorated sharply; we
value IDFC at Rs77 per share: Asset  quality deteriorated sharply with
GNPLs increasing by 81% QoQ however hefty  one‐time provisioning of Rs25bn
resulted in a decline in net stressed assets.  IDFC now has provisions
amounting to ~10% of total loans on its balance sheet.  We maintain BUY
with revise PT of Rs77 for IDFC and maintain BUY rating. We  further value
IDFC Bank at Rs68per share.

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Disclaimer :-
"The opinions expressed by the members on this board are based on
their individual experience and perceptions and to share information
with other members with the best of intentions to help fellow members
in investment decisions as equity investment is a risky venture.The 
administrator of www.Niftyviews.com just provide a platform for the authors to 
express their opinion and take no guarantee for the genuineness of the 
same."ANY member of this forum doesnt prepare or publish any research report; 
or ii. provide research report; or iii. make 'buy/sell/hold' recommendation; or 
iv. give price target;
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