23rd February 2015

Sector Updates 16th February – 22nd February

Finnacle Investments

23rd February 2015

23rd February 2015

IT Sector Update

(Sector Analysis: Bharat Dasaka, Melvin Matthew, Arpita Verma)

Infosys to acquire automation technology provider Panaya : In line with the strategy laid out by its Chief Executive and Managing Director Vishal

Sikka, Infosys will buy Panaya, which provides automation technology, in an all-cash deal of $200 million (about Rs 1,244 crore).

The valuation is six times Panaya’s revenues, it is a good buy considering the “tremendous piece of technology” Panaya brought to the table as said by Infosys. Subject to customary conditions, the transaction is likely to close before March 31.

Founded in 2006, the California, US-headquartered Panaya provides cloud-based services for large-scale enterprise software management.

The company, with a little over 400 active accounts from clients such as GE, Coca-Cola, Mercedes-Benz, Apple and Johnson & Johnson, has so far raised about $59 million from private equity players such as Benchmark Capital, Hasso Plattner Ventures, Battery Ventures and Israel Growth Partners. Most of its 156 employees are in Israel.

TCS ties up with Startup Boot-camp FinTech: Tata Consultancy Services (TCS), India's largest information technology services provider

partnered with Startupbootcamp FinTech, an accelerator, to host Pitch Days in India.

The Pitch Days will be on the TCS campuses on Tuesday in Mumbai and next Thursday in Bengaluru. The one-day events will be open to early-stage start-ups in the financial technology sector. Ten start-ups will be chosen. These will be offered an opportunity to participate in the 13-week Startupbootcamp FinTech accelerator programme in London or Singapore.

The shortlisted start-ups from the Pitch Day could be selected for mentorship from 100-plus entrepreneurs, investors, and partners. These will get access to top markets in London, the US, and the Asia-Pacific, and three months of free office space, €15,000 in cash per team, €450,000 in partner services, and exposure to 200 angel investors and venture capital funds.

Zen Tech, Rockwell enter military flight simulation market: Zen Technologies Limited, a Hyderabad-based company that develops training equipment

and simulators for weapons and allied defence equipment, and US-headquartered communications and avionics firm Rockwell Collins entered the Indian military flight simulation market by unveiling a next-generation rotary wing simulator at the ongoing Aero India 2015.

The rotary wing simulator launched by Zen-Rockwell alliance is housed in an ergonomically-designed cockpit. It is configurable and addresses the flight and mission aspects of rotary wing aircraft.

23rd February 2015

Infosys secured a multi-year, multi-million dollar deal with ABN AMRO : Country's second largest software services firm Infosys today said it has secured a multi-

year, multi-million dollar deal with ABN AMRO to provide IT services to the retail and commercial bank.

Infosys, a strategic partner of ABN AMRO, will deliver services across application development and maintenance, testing and product implementation.

It will also enable greater operational efficiency, employee satisfaction and agility.

23rd February 2015

Telecom Sector Update

(Sector Analysis: Bharat Dasaka, Melvin Matthew, Arpita Verma)

Airtel and BSNL - likely to sign a pan-India roaming pact :

BSNL is soon going to sign a pan-India intra-circle roaming agreement with Airtel with a

focus to strengthen coverage in rural areas.

BSNL Chairman and Managing Director Anupam Shrivastava said that the deal is a part of

the BSNL strategy to spend carefully on building infrastructure and use sharing rules to

bring down operational cost besides providing good network to consumers.

They have made 'co-opetition' (co-operative competition) as one of the key strategies.

Under this they are looking at opportunity where we can co-operate with other players to

expand their business.

Ericsson to ink deals with India's top telecom operators for operations and

business support systems :

Swedish telecom gear maker Ericsson is set to ink a clutch of deals with India's top

telecom operators for operations and business support systems (OSS and BSS) in the six

months to June, to consolidate its position in these segments.

Nishant Batra, vice president, engagement practices at Ericsson India said that Indian

operators are increasingly adopting evolved OSS and BSS solutions as consumers

demand personalised and customised services, especially in the backdrop of rapid data

adoption.

The company had last year clinched a $10 million (about Rs 62 crore) three-year OSS

deal with Mukesh Ambani-headed Reliance Jio Infocomm. Also, it had received four

software solutions deals from the top three operators Bharti Airtel, Vodafone India and

Idea Cellular.

Nokia Networks in talks with carriers for deals to roll out networks on 4G

technology

Nokia Networks is talking to carriers including Vodafone, Idea Cellular and Uninor for

possible deals to roll out networks on fourth-generation technology as the Finnish telecom

equipment maker looks to build on a strong 2014, when it signed nearly three dozen

contracts in India.

Nokia can offer them the Single-RAN technology which will help them transition from one

technology to another with lowest operating expenditure.

The technology, single radio access network, allows an operator to use a single network to

provide multiple mobile communication standards, such as 3G and 4G.

23rd February 2015 The company is also exploring opportunities related to the government's Smart City and

Digital India initiatives, and plans to partner with the government and telecom clients to

deploy services and create broadband highways.

The company's mapping business, HERE, along with its research work on sensors can be

useful for the smart city project.

References:

http://economictimes.indiatimes.com/articleshow/46330364.cms?utm_source=contentofinterest&utm_mediu

m=text&utm_campaign=cppst

http://economictimes.indiatimes.com/articleshow/46306920.cms?utm_source=contentofinterest&utm_mediu

m=text&utm_campaign=cppst

http://economictimes.indiatimes.com/articleshow/46294509.cms?utm_source=contentofinterest&utm_mediu

m=text&utm_campaign=cppst

23rd February 2015

Pharma Sector Update

(Sector Analysis: Kanika Singh, Neha Kumar, Ravi Karanam)

Change in stock prices of various Pharma stocks

Stock Last week price (in INR)

CMP(INR) % Change

Sun Pharmaceuticals

913.5 911 -0.27%

Dr. Reddy's Laboratories

3374.85 3390 0.45%

Cipla 676.95 677 0.01%

Lupin 1670.9 1689 1.08%

Aurobindo Pharma 1138.85 1057 -7.19%

Indoco Remedies 318.2 314 -1.32%

Alembic Pharma 420.7 423.45 0.65%

India’s Drug Controller General to bridge swine-flu drug shortage The government tries to close the gaps in the country's fragmented drug distribution system,

which is being largely blamed for the shortage of swine-flu drug Oseltamivir in some regions

despite there being sufficient stock with drug makers.

All India Organization of Chemists and Druggists (AIOCD) is now advising chemists who hold a

license to stock the tightly regulated swine-flu drug and procure directly from company-appointed

distributors and agents to save time. Pioneer domestic pharma companies including Cipla,

Hetero, and Strides Arcolabs make Oseltamivir in sufficient quantities. As per latest government

data cited by agencies, there have been over 10,000 confirmed swine-flu cases in the country this

year, resulting in about 663 deaths, the highest in the last five years.

Ireland invites Indian pharma manufacturing units, offers sops Ireland is trying to draw more Indian pharmaceutical firms such as Dr Reddy's and Lupin to locate

up manufacturing plants through offering tax incentives, having already persuaded some of them

to do so. The European country, which has emerged as the world's largest net exporter of

medicines worth 55 billion euros, has already fascinated Indian pharmaceutical companies such

as Ranbaxy, Wockhardt and Reliance Life Sciences among others.

Ireland has been encouraging global pharmaceutical firms to set up their manufacturing base in

the country and medicines account for nearly half the country's total exports. In the last three

years alone, the country managed to attract $3 billion of foreign direct investment into the

biopharmaceuticals sector.

Lupin forms a pact with Poland-based firm for generic asthama drug Pharma giant Lupin ties up with Poland-based Celon Pharma to jointly develop and market a

generic version GlaxoSmithKline's Advair Diskus, a drug used to treat asthama, in global markets.

23rd February 2015 Lupin and Celon Pharma SA have entered into a definitive agreement under which the companies

will jointly develop dry powder inhaler (DPI) product which is a generic version of

GlaxoSmithKline's Advair Diskus. Lupin's expertise in inhalation product development and

commercialization in the US and other markets will accelerate the development of generic Advair

Diskus for global markets.

Lupin has been ramping up investments in niche and specialty therapies like inhalation and

complex injectables as it gears up to grow as a specialty pharmaceutical player in the US and

other key markets.

References:

http://articles.economictimes.indiatimes.com/2015-02-17/news/59232566_1_india-ratings-reliance-life-

sciences-tata-consultancy-services

http://articles.economictimes.indiatimes.com/2015-02-17/news/59232633_1_advair-diskus-global-

markets-inhalation

http://economictimes.indiatimes.com/industry/healthcare/biotech/pharmaceuticals/drug-controller-

general-of-india-takes-steps-to-plug-swine-flu-drug-shortage/articleshow/46306872.cms

23rd February 2015

Power Sector Update

(Sector Analysis: Anshu Mishra and Ankit Bacchuka)

Change in stock prices of various Power stocks

Company Price on 13th Feb Price on 20 Feb % Change

NTPC 142.25 145.4 2.21%

TaTa Power 84.6 85.95 1.60%

NHPC 20.9 20.85 -0.24%

Power Grid 151.7 153.3 1.05%

JSW Energy 112.9 116.05 2.79%

Suzlon 19.25 25.6 32.99%

Reliance Power 59.9 63.35 5.76%

SBI to soon take call on Adani’s $1 bn loan for Australian project State Bank of India (SBI) is in the process of completing the due diligence for the controversial $1

billion (Rs.6,200 crore) loan to the Adani Group for its Australian mining project and take a final

call on it soon.

Adani Mining is building a 300-km rail line for its about $16 billion Carmichael coal mine project in

Australia. The development of the coal mine located at Queensland in Australia and required

infrastructure including railways is estimated to cost $7.6 billion. Queensland state’s coordinator

general has approved $2 billion (2.2 billion Australian dollars) rail line project called the North

Galilee Basin Rail (NGBR) that would link Adani’s Carmichael Coal Mine with the Abbot point coal

terminal. The Indian opposition party, the Congress had raised concerns over SBI’s $1 billion loan

pact with Adani Group signed during PM Narendra Modi’s visit to Australia.

AAP plans project for providing cheap power in Delhi Electricity charges in Delhi may drop to as low as Rs.1.50 per unit, according to plans unveiled on

Monday by the new Aam Aadmi Party (AAP) government, which wants to set up a coal-fuelled

power project dedicated to meet the demands of consumers in the national capital. The plans

involve securing a coal block from the coal ministry and then setting up a 4,000 megawatts (MW)

plant in the fuel bearing state, said Delhi’s power minister Satyendra Jain.

JSPL stock surges most in over 7 years after winning Gare Palma coal blocks Shares of Jindal Steel and Power Ltd (JSPL) rose as much as 29.13% to Rs.200.80 on

Thursday—its sharpest gain since 31 October 2007—after the company won the Gare Palma IV-2

and IV-3 coal mines in an auction.

Coal Auctions On Tuesday total 11 blocks have been auctioned till fourth day of coal auction. Bharat Aluminium

Co. Ltd (Balco), Jaiprakash Power Ventures Ltd and OCL Iron and Steel Ltd bagged one mine

each .

Vedanta group company Balco quoted Rs.3,025, the highest bid, for Chotia block. Balco beat

Godawari Power and Ispat Ltd, Hindalco Industries, Prakash Industries, Rungta Mines and

23rd February 2015 Ultratech Cement for the mine in Chhattisgarh. Jaiprakash Power bagged the Amelia North mine

in Madhya Pradesh quoting Rs.712 per tonne, while OCL Iron and Steel won the Ardhagram mine

in West Bengal at Rs.2,302 per tonne.

The government is auctioning the blocks after the Supreme Court cancelled allocation of 204

mines in September last year. It has put 19 mines on the block in the first tranche.

New Projects

Real estate developer Hallmark has made a foray into the renewable energy sector and plans to set up a 50MW solar power plant in Tamil Nadu.

Renewable energy player ACME Group will invest Rs 600 crore to develop 74 MW of solar PV power projects in Punjab.

Cash-starved Lanco Group has approached lenders to reschedule Rs 1,000 crore debt of two of its gas-based power plants in Andhra Pradesh till January 2018.

References:

http://economictimes.indiatimes.com/articleshow/46302741.cms?utm_source=contentofinterest&utm_m

edium=text&utm_campaign=cppst

http://www.livemint.com/Industry/vWiHa3cpST6AlAWiGTdXPM/Coal-auctions-Balco-Jaiprakash-Power-

OCL-Iron--Steel-bag.html?utm_source=copy

http://www.livemint.com/Money/93XRN3tZGZnuYTYXzYXoIO/JSPL-stock-surges-most-in-over-7-years-

after-winning-Gare-Pa.html?utm_source=copy

http://www.livemint.com/Industry/FXtfSd1YmGjZNPYCOyjXZP/SBI-to-soon-take-call-on-Adanis-1-billion-

loan-for-Austral.html?utm_source=copy

http://www.livemint.com/Industry/RfKn3zK0pnK9CE4d4of1nK/AAP-plans-project-for-providing-cheap-

power-in-national-capi.html?utm_source=copy

23rd February 2015

FMCG Sector Update

(Sector Analysts: Amrit Pal Singh, Jyoti Gupta)

Current market price of key companies

STOCK Previous Week CMP(in INR) % Change

ITC 389.60 397 +1.79%

Dabur 266.85 266.10 -0.25%

Marico 353.25 353.85 +0.14%

Colgate 1918.05 1920 +0.10%

Nestle 7147.35 7181.45 +0.50%

HUL 907 900 -0.77%

ITC rallies on hope of moderate excise hike on cigarette Shares of ITC touched its 52 wk high of 402 this week on the hopes of low to moderate excise

duty hike in the upcoming Budget. Bank of America Merrill Lynch in a note said that moderate

hike in excise duty won't have a material impact on ITC's cigarette volumes. "A less than 10

per cent increase in cigarette excise can be absorbed by ITC without a material impact on

volumes, albeit with a lag. However a hike over 10 per cent can accelerate the decline in

cigarette volumes and pose downside risk to ITC estimates," BoAML said in a note.

Any announcement on implementation of GST would also have a positive impact on the

sentiment towards consumer-oriented stock like ITC.

Budget 2015: Industry hopes for clear GST roadmap

Budget 2015 is likely to introduce changes that will pave the way for GST. Among the

expectations on changes, the biggest bet is that Finance Minister Arun Jaitley is expected to

prune the excise exemptions and lower the threshold for registration under central excise, to

bring in more parity between the taxation of goods under the Central Excise and the State

VAT laws.

Within the central taxes, the budget may propose to align taxation of goods at a uniform rate

as against the multiple excise duty rates that are currently levied on goods. As a related point,

there is also an expectation on increase in service tax rate as the overall service tax incidence

is likely to go up significantly under the GST regime from the present level of 12 percent and

the government would want to prepare the service sector for a higher tax burden.

References:

http://profit.ndtv.com/news/market/article-why-itc-shares-are-up-nearly-9-in-3-days-740437

http://www.firstpost.com/business/budget-2015-industry-hopes-clear-gst-roadmap-politics-may-

stumbling-block-2108703.html

23rd February 2015

Banking and Financial Services Sector Update

(Sector Analysts: Ankita Kumar, Akshat Kulshrestha)

STOCK PRICE % CHANGE

ICICI Bank 331.15 -2.20%

HDFC Bank 1072.55 -0.64%

Axis Bank 560.9 -0.78%

Kotak Bank 1297.45 -0.57%

SBI Bank 302.3 -0.02%

Bank of India likely to defer $750 million bond sale plan A slow growth in liquidity has led to enough liquidity; as a result BOI has decided to defer its plans

of raising $750 million in foreign currency loan under its medium term notes program during this

financial year. The bank has a board approval to raise $5 billion through MTN beginning 2005 and

has so far raised $2.5 billion. More…

RBI warns banks against making mockery of its lending operations The RBI is getting tougher on extending unlimited credit to the banks to try to ensure they push interest rate cuts through the financial system and to stop them from making what one official called a mockery of its operations. India’ commercial banks readily borrow from the central bank at the policy rate but then lend that money out at a high rate, in what RBI governor Raghuram Rajan describes as a culture of “lazy banking”. More…

IndusInd Bank to raise up to Rs 2000 crores through issue of bonds, NCDs

IndusInd Bank, the private sector lender on Thursday said it will raise up to Rs 2000 crore through

issuance of long term infrastructure bonds and subordinated non-convertible debentures/ bonds

on a private placement basis. The lender will seek approval of its shareholders through a postal

ballot. More…