DOMESTIC:

Half of Container Corp staff buy shares in stake-sale L&T bags orders worth Rs6,024cr Aurobindo Pharma bids for Israeli generic company Teva's

Irish & UK portfolio Intas buys Teva assets for Rs5,100cr Jubilant Life arm gets Australia TGA nod for lung scan drug ICICI Bank acquires 11% stake in ABG Shipyard, all lenders

own 49% TRIL gains on signing JV agreement with Chinese firm Jingke Tata Teleservices to shell out Rs4,500cr for spectrum Pfizer to sell infusion business to ICU Medical, take stake Lupin, MonoSol Rx sign pact for multiple pediatric products FACT to resume production of fertilisers to full capacity Orient may buy Jaypee's 74% stake in Bhillai Cement Edelweiss, CDPQ tie up to buy stressed debt Mahindra CIE interested in Amtek Auto's asset Ashok Leyland lines up 8-10 new LCVs, to invest upto Rs400cr

ECONOMY:

Highest-ever Apr to Sept divestment proceeds at Rs21Kcr India’s manufacturing PMI slows in September India Inc cheers RBI Rate cut, urges banks to follow suit US oil prices top $50 a barrel for 1st time since June Govt readies plan for big-ticket stake sale in 22 PSUs

INDUSTRY:

UDAY a success: India's power distribution system shows clear signs of revival

Gas price cut by 18%, to hit upstream oil & gas firms Real estate sector expects buyer sentiment to improve

TM

Price Performance (%)

Company 1M 3M 12M

Supreme Petrochem Ltd 7.3% 26% 102% Indian Hume Pipe Co. Ltd 5% 81% 65% Shanthi Gears Ltd 2.4% 10% 35% Hind Rectifiers Ltd 4% 34% 5% KCP Limited 15.3% 19.8% 29.7% Navneet Education Ltd -4.7% 0% 5% Harita Seating System Ltd 2% -1% 127% Camlin Fine Sciences -4% -8% -18% GEE Limited -1% -10% 32% Hester Biosciences Ltd -3% 1% 11% West Coast Paper Mills Ltd 2% 22% 90% Rallis India Ltd 3% 8% 7% The Hitech Gears Ltd 22% 33% 30% Bharat Bijlee Ltd -3% -19% 26% Castrol India Ltd 3.0% 19% 7% Engineers India Ltd 0% 28% 34% TNPL 5% 4% 93% Triveni Turbines Ltd 1% 2% 10% Rajoo Engineers Ltd 3.1% -4% 24% Siemens Ltd -4% -3% -9% Hikal Ltd 18.0% 22% 79% TRIL 4.3% 1% 93% KEC International Ltd -6.7% -14% -14% Aksh Optifibre Ltd 23.8% 25% 23% GMM Pfaudler Ltd 16.2% 20% 65% Alicon Castalloy Ltd 15.1% 17% -4% Omkar Speciality Chemicals Ltd 9.1% 17% -5%

One Year Sensex Performance

Coverage Universe Valuations

Company Reco at CMP Tgt price Upside Mcap EV/Sales (x) EV/EBITDA (x) PE(x) Reco

(Rs) (Rs) (Rs) (%) (Rs bn) FY16E FY17E FY16E FY17E FY16E FY17E

Supreme Petrochem Ltd 77 235 275 16.8 22.7 31.7 21.6 0.7 0.6 15.7 11.0 BUY Indian Hume Pipe Co. Ltd 341 694 800 15.4 16.8 32.1 22.5 15.5 13.5 14.3 11.3 BUY Shanthi Gears Ltd 107 129 150 16.0 10.6 93.1 73.3 5.8 5.8 39.0 34.4 BUY Hind Rectifiers Ltd 69 90 110 22.2 1.4 74.8 17.0 1.3 1.1 26.9 11.4 BUY KCP Limited 71 110 150 36.5 14.2 35.7 25.4 2.5 2.2 14.5 12.2 BUY Navneet Education Ltd 96 101 130 28.7 24.1 16.3 14.2 2.4 2.2 9.7 8.6 BUY Harita Seating System Ltd 266 558 750 34.4 4.3 44.1 32.4 1.5 1.4 27.6 21.5 BUY Camlin Fine Sciences 111 87 140 61.0 8.3 10.7 8.2 1.5 1.3 8.1 6.6 BUY GEE Limited 33 41 70 72.2 1.0 17.6 12.7 0.7 0.6 6.7 5.9 BUY Hester Biosciences Ltd 565 736 875 18.9 6.3 45.2 37.1 6.3 5.0 22.1 17.8 BUY West Coast Paper Mills Ltd 67 124 150 20.7 8.2 23.4 6.4 0.8 0.7 5.1 4.2 BUY Rallis India Ltd 181 232 260 12.2 45.1 29.5 23.1 2.6 2.3 16.5 13.6 BUY The Hitech Gears Ltd 298 379 450 18.7 7.1 26.6 20.3 1.4 1.2 11.1 9.3 BUY Bharat Bijlee Ltd 787 763 1500 96.5 4.3 76.2 35.3 0.8 0.7 26.5 22.6 BUY Castrol India Ltd 447 481 650 35.0 238.1 36.4 34.0 6.1 5.8 23.3 21.6 BUY Engineers India Ltd 211 267 325 21.6 90.0 25.5 24.4 3.5 4.4 23.6 29.2 BUY Tamil Nadu Newsprint & Papers Ltd 224 365 450 23.3 25.3 11.7 10.0 1.8 1.8 7.4 6.3 BUY Triveni Turbines Ltd 92 124 175 41.6 40.8 40.0 33.6 0.5 0.5 2.6 2.2 BUY Rajoo Engineers Ltd 15 19 24 29.7 1.1 14.6 10.5 0.9 0.7 7.7 5.8 BUY Siemens Ltd 1128 1245 1500 20.5 443.1 47.4 40.7 3.7 3.3 27.7 23.5 BUY Hikal Ltd 143 214 250 16.8 17.6 50.3 35.5 2.6 2.5 12.8 11.3 BUY Transformers and Rectifiers (India) Ltd 300 346 450 30.1 4.6 -15.8 25.7 9.9 7.1 438.1 78.8 BUY KEC International Ltd 140 124 200 60.8 32.0 15.7 10.9 0.6 0.6 7.9 6.3 BUY Aksh Optifibre Ltd 15 22 24 7.4 3.6 10.8 6.6 0.8 0.7 4.5 3.3 BUY GMM Pfaudler Ltd 332 411 500 21.7 6.0 32.6 31.5 2.4 2.2 17.0 15.8 BUY Alicon Castalloy Ltd 288 350 450 28.6 4.3 19.3 15.2 0.8 0.7 7.5 6.8 BUY Omkar Speciality Chemicals Ltd BUY 162 189 240 27.3 3.9 12.7 8.1 1.2 1.0 5.9 4.9

15000

20000

25000

30000

35000

40000

The week that went by: The week started on a decent note for the Asian markets, backed by the statement that the Pakistan PM Advisor confirmed saying India and Pakistan has decided to reduce tensions. The gains were further extended with optimistic buying ahead of the RBI policy review and firming rupee. With the surprise rate cut, the markets cheered across boosting the optimism further. The markets remained volatile midweek swing from strong openings to weak closings. The Domestic benchmark indices BSE Sensex and NSE Nifty opened on a flat note to end the week tracking mixed global cues. Investors were cautious before an impending US jobs report, a crucial data point that could influence the timing of the Federal Reserve’s next rate hike and underpin near-term direction for risk asset markets.

COVERAGE NEWS:

Indian Hume Pipe Company Ltd to develop Vadgaon land Indian Hume Pipe Company Ltd is having its erstwhile pipe manufacturing factory on land admeasuring about 14.77 Acres at Vadgaon, Pune Sinhgad Road, Pune since closed with effect from November 01, 2015. The Board of Directors vide Circular Resolution dated September 29, 2016 passed on October 01, 2016 have accorded in-principal approval for exploring the possibility of development of Vadgaon land, Pune and authorised Mr. Rajas R. Doshi, Chairman & Managing Director and Mr. Mayur R. Doshi, Executive Director of the Company severally to explore the possibility of monetising the Vadgaon land, Pune and appoint reputed Property Consultant for identifying a Developer. Our comments: This would be a encouraging business step by the company. We maintain our positive stance on the company for a recently revised target of Rs800 over a 12 months horizon.

TM

Coverage Performance Sheet

Company CLS( Rs) Appreciation (%) Target Price (Rs) Reco at (Rs)

Target 1 Target 2 Target 3 Target 4

Supreme Petrochem Ltd 235 120 200 275 206% - 77 Indian Hume Pipe Co. Ltd 694 475 650 800 103% - 341 Shanthi Gears Ltd 129 150 - - 21% - 107 Hind Rectifiers Ltd 90 110 - - 30% - 69 KCP Limited 110 105 150 - 55% - 71 Navneet Education Ltd 101 130 - - 5% - 96 Harita Seating System Ltd 558 400 600 750 110% - 266 Camlin Fine Sciences 87 140 - - -22% - 111 GEE Limited 41 50 70 - 23% - 33 Hester Biosciences Ltd 736 750 875 - 30% - 565 West Coast Paper Mills Ltd 124 110 150 - 86% - 67 Rallis India Ltd 232 260 - - 28% - 181 The Hitech Gears Ltd 379 450 - - 27% - 298 Bharat Bijlee Ltd 763 1100 1500 - -3% - 787 Castrol India Ltd 481 650 - - 8% - 447 Engineers India Ltd 267 325 - - 27% - 211 Tamil Nadu Newsprint & Papers Ltd 365 350 450 - 63% - 224 Triveni Turbines Ltd 124 135 175 - 34% - 92 Rajoo Engineers Ltd 19 24 - - 23% - 15 Siemens Ltd 1245 1500 - - 10% - 1128 Hikal Ltd 214 200 250 - 50% - 143 Transformers and Rectifiers (India) Ltd 346 450 - - 15% - 300 KEC International Ltd 124 200 - - -11% - 140 Aksh Optifibre Ltd 22 24 - - 49% - 15 GMM Pfaudler Ltd 411 500 - - 24% - 332 Alicon Castalloy Ltd 350 450 - - 22% - 288 Omkar Speciality Chemicals Ltd 189 240 - - 16% - 162

Business development for IHP

COVERAGE NEWS:

TRIL gains on signing JV agreement with Chinese firm Jingke Transformers and Rectifiers (India) Ltd (TRIL) said it has entered into a joint venture agreement with Chinese firm Jiangsu Jingke Smart Electric Company Limited (Jingke). The joint venture will be set up to manufacturing and marketing of GIS/HGIS/TGIS systems and products for 220kV and below and distribution products of 40.5 kV and below in India. TRIL will hold majority of 60% of share of JV and balance by Jingke. The company neither has any interest in Jingke nor fall within related party transactions. TRIL will be providing the infrastructure that is the plant facility for manufacturing and the critical components would come from China. Therefore, the initial investment will be very less. Our comments: This is logical foray for a TRIL for diversification in T&D Segment. As indicated by the management the JV is likely to bring in around Rs200cr revenues in FY18. We maintain our long term positive view on the company as one of our recommendations and indicate to stay put in the stock.

Ballarpur’s woes a gain for its rivals Ballarpur Industries, India’s biggest paper company with two-thirds share of the market, is shutting down plants owing to its financial situation, leading to a shortage in paper supplies and driving up the prices. Paper across major categories have become 6-10% costlier in the past one month alone. Our comments: This development, however, is a positive for companies under our coverage like West Coast Paper Mills and Tamil Nadu Newsprint and Papers, as well as others like Orient Paper Products, JK Paper and Ruchira Papers.

Target revision: Tamil Nadu Newsprint and Papers Limited: We had initiated Buy on the stock with a target price of Rs350 which has been achieved. We further revise the target to Rs450 based on the optimism on the working of the company as well as industry on the whole. For those invested in the stock, 25% of profit booking is advised while the remaining inventory can be kept for further target.

ECONOMY:

India Inc cheers RBI Rate cut, urges banks to follow suit Commending the newly-formed Monetary Policy Committee's move to slash key policy rate by 0.25%, India Inc said it will boost sentiment and reinvigorate growth impulses and hoped that banks will transmit the benefit to borrowers. In the first monetary policy review under new RBI Governor Urjit Patel, the interest rate was earlier on cut to a six-year low of 6.25% in a unanimous decision by the new rate-setting panel. Our comments: The maiden policy decision taken by RBI's MPC is completely justified by the ongoing disinflation in the economy. The rate cut will boost sentiments and contribute towards reinvigorating growth impulses in the infra, construction and manufacturing sectors.

India’s manufacturing PMI slows in September India’s factory activity expanded for the ninth straight month in September, helped by new orders and surge in buying levels. However, the rate of expansion was slower than in August and there is an intensification of inflationary pressures. The Nikkei India Manufacturing Purchasing Managers’ Indices (PMI) reported a 52.1 reading in September from 52.6 in August indicating that growth lost some momentum Our comments: These new numbers will be additional fodder for the new monetary policy committee as it sits to meet for the first time to review interest rates.

TM

Slowdown in PMI for Sept

Positive scenario for WCPL and TNPL

TRIL enters into JV

RBI Rate cut welcomed

Target revision for TNPL

ECONOMY: Highest-ever Apr to Sept divestment proceeds at Rs21Kcr The government has managed to rake in Rs21,000cr through stake sales and buybacks in April-September this year, the highest-ever first half disinvestment revenue for any year by a good margin, thus, raising expectations for the rest of 2016-17. Of this, Rs16,500cr is said to have come from buybacks initiated by five public-sector undertakings (PSUs), while the rest has come from five PSU stake sales through the offer-for-sale (OFS) route. Our comments: Senior finance ministry officials have expressed confidence that this could be a bumper year for disinvestment and that the Centre could come the closest it ever has to the budgeted targets.

INDUSTRY: UDAY a success: India's power distribution system shows clear signs of revival India’s power distribution system is showing concrete signs of revival and lower operational losses as chronically inefficient states have significantly narrowed the gap between cost and revenue, reduced unmetered supply and are planning large bond issues in 10 days. Officials say of the 16 states part of the Centre’s distribution utility revival scheme Ujwal Discom Assurance Yojna (UDAY) at least eight have a lower gap between their average cost of electricity supply and average. Our comments: As per provisional data available with the power ministry, Haryana, Gujarat, Bihar, Punjab and Rajasthan, have fulfilled 30-45% of the commitments made under UDAY. Uttar Pradesh, Bihar, Jharkhand need improvement with below 30% progress while Jammu & Kashmir lags far behind delivering just 15% of the promises made under UDAY.

Gas price cut by 18%, to hit upstream oil & gas firms The government has slashed natural gas price by 18% to USD2.5 per million British thermal unit (mmBtu) for October-March period. As per the new gas pricing formula approved by the NDA government in October 2014, gas prices are to be revised every six months and the next change is due on April 1. The reduction in natural gas prices would mean lower raw material cost for compressed natural gas (CNG) and natural gas piped to households (PNG) and would translate into reduction in retail prices. It would also mean lower feedstock cost for power generation and manufacturing of fertilisers. Our comments: The move that will impact revenue of upstream oil and gas companies but would help bulk consumers from fertiliser and power sectors. The reduction will hit producers like state-owned ONGC as well as central government whose earnings from royalty and income tax will dip by about Rs800cr during the remainder of the fiscal, according to industry estimates. Every dollar dip in gas price results in Rs4,000cr hit in revenue of ONGC on an annual basis. The current price reduction would hit its revenue by about Rs1,000cr.

TM

Highest ever divestment proceeds

Success for UDAY

Slash in Gas prices

COMPANY:

Half of Container Corp staff buy shares in stake-sale About 50% of Container Corporation of India (Concor) employees picked up shares worth Rs9.76cr in the public sector undertaking’s offer-for-sale, it is learnt. But in value terms, this works out to about a third of the value of shares reserved for employees. Recently, Concor employees were given the option to buy shares at Rs1,135.25 apiece. This was the value offered in the market during the divestment process. Each employee could buy a maximum of 176 shares, effectively, totalling up to Rs26.59cr. Our comments: The last time such an offer was made to Concor employees was in 1995. This is the proof for the conviction of the employees in the working of the company and overall growth scenario going forward.

L&T bags orders worth Rs6,024cr Larsen and Toubro (L&T) has bagged orders worth Rs6,024cr across various business segments. The company said that its power transmission and distribution business has received orders worth Rs1,721cr while the water and effluent treatment business vertical has secured orders worth Rs1,497cr. The building and factories business also bagged orders worth Rs1,131cr in various sectors and the transport infrastructure unit bagged Rs780cr orders. The company's heavy civil infrastructure business received orders worth Rs630cr while the metallurgical and material handling business secured orders worth Rs265cr. Our comments: The orders would further enhance the order book of the company.

Reliance Infrastructure to sell power transmission business to Adani for Rs2,000cr Reliance Infrastructure is in pact to sell its power transmission assets to Adani Transmission (ATL), to raise funds to pare debt. While the two companies did not disclose the deal size, Reliance Infrastructure’s website states that its portfolio of transmission projects has an asset base of Rs7,000cr. Our comments: With this acquisition, ATL will enjoy substantial benefit of scale driving and is in sync with the deep-rooted strategy of ATL to enhance the value for the stakeholders through both organic as well as inorganic growth. With the acquisition of Reliance Infrastructure’s assets, Adani Transmission will own and operate 10,000 circuit km of power transmission projects.

Alembic Pharma receives EIR report from USFDA Alembic Pharmaceuticals has received the Establishment Inspection Report from the US health regulator for its formulation facility located at Panelav in Gujarat. USFDA releases a copy of the EIR to the establishment that was the subject of an FDA or FDA-contracted inspection when the agency determines the inspection to be closed. In March this year, the company received four observations from the US health regulator after the inspection of Panelav facility. Our comments: The company, however, did not provide any details about the observations it has received from USFDA.

TM

Stake sale of Concor

Orders for L&T

ATL to acquire transmission business

EIR for Alembic Pharma

COMPANY:

Jubilant Life arm gets Australia TGA nod for lung scan drug Jubilant Life Sciences said its wholly-owned subsidiary has received approval from the Australian health regulator Therapeutic Goods Administration (TGA) for Lyophilized kit for preparation of injection used for lungs scan. It further said that MAA provides accurate scans to assess lung perfusion and rule out pulmonary embolism with low radiation exposure. JDI is the leading supplier of MAA in the US and has approval in four other countries, including Canada, Columbia, Hong Kong and Israel. Our comments: The Australian MAA product is expected to be launched as part of JDI's larger commitment to investing in the growth and robust sustainability of Nuclear Medicine globally and cater to the needs of suspected pulmonary embolism patients.

ICICI Bank acquires 11% stake in ABG Shipyard, all lenders own 49% ICICI Bank, acquired 11% stake in the company by converting its debt into equity. Lenders now have 49% stake in the company and are actively scouting for an investor to sell their stake. Other lenders such as State Bank of India and Punjab National Bank have 7% stake each by converting debt into equity. After the company failed to repay their dues and infuse capital into the company to sustain its operations, lenders appointed investment banker Rothschild to find a buyer for their 49% stake. The company has outstanding loans of Rs16400cr. Our comments: Lenders had initiated SDR or Strategic Debt restructuring which involves conversion of debt into equity. However, shareholders were unable to pass the resolution at an annual general meeting since the 210 days within which the shares had to convert into equity had lapsed.

Lupin, MonoSol Rx sign pact for multiple paediatric products Lupin Pharmaceutical Inc, the company's US subsidiary, and MonoSol Rx have entered into a licensing agreement wherein Lupin would develop multiple pediatric products utilising MonoSol Rx's PharmFilm drug delivery technology. The agreement would be in line with focus on expanding into the specialty pharmaceutical market, and specifically paediatric needs such as attention-deficit/hyperactivity disorder (ADHD). Our comments: The alliance with MonoSol Rx will enable Lupin to expand its family of paediatric products to help meet the needs of children for a variety of indications.

TM

TGA nod for Jubilant Life

ICICI bank picks stake in ABG

Lupin signs pact for paediatric products

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TM