Vol.

: 317
24th Oct,2016

Index
Market View

1
M AR K ET VIEW

Company Update

2
T H E E AR N IN G SE ASO N H AS ST AR T ED W IT H PO SIT IVE N OT E

Around the
Economy

Knowledge Corner

3 ings. So far, earnings are either in line with expectations or have beaten

Mutual Fund

Commodity Corner

5 market that healthy trend in earnings has started. The only risk the In-

Forex Corner

Report Card

7 rise in Fed rate will not impact EM lik e India. A very healthy trend in

Short Term Call Status

In absence of any big trigger, the market was waiting for Q2 earnthe expectations of the market. The results of Reliance Industries, Infosys, Tcs, Hcl Technology and Yes Bank have given the confidence to the
dian market is exposed to is continuous rise in oil and commodity prices.
The consensus amongst the analysts is being built that any moderate
automobile sector

Editor & Contributor

Darshana Mishra

is also noteworthy. An auto sale is an important eco-

nomic indicator of the economy. Commercial auto makers like Ashok

Leyland, SML Isuzu and Eicher Motors are also beaming with confidence. Ashok Leyland has recently introduced circuit electric bus for the
first time in the Indian market. Defense and Infra sector are also getting

Special Contributors
Kunal Shah
Dhaval Ghodasara

real push from .The fire sale by debt heavy companies just shows how
fast the world is changing. Reliance ADAG, Ruias, JP Group, GMR
Group, Lanco Group, Videocon Group, GVR Group, SAHARA Group, Jindal Group have already started searching buyers on back of pressure
mounted by the banks on the basis of policy frame work by RBI. At the
end the process will really clean up the finance sector.
Considering the improving macros and the falling yields in debt
market, the equity market will get maximum flow in search of higher re-

For suggestions, feedback

and queries
jstreet@jhaveritrade.com

turns. Technically, the market has a firm bottom in the range of 8500 8540 and rise above 8700 will take the market to the recent high of
8970.
Kamal Jhaveri
MD- Jhaveri Securities

-1-

Vol.: 317
24th Oct,2016

Company Update : Alembic Pharmaceuticals Limited.

Company Basics
BSE Code
NSE Symbol

Financial Basics

APLLTD

FV (`)
EPS (`) (TTM)
P/E (x) (TTM)

2.00
38.02
16.4

37.7

P/BV (x) (TTM)

7.3

BETA
RONW (%)

0.7
57.9

533573

EQUITY (` in Cr.)
MKT.CAP (` in Cr.)

11818

Share Holding Pattern

Holder's Name
Foreign
Institutions
Promoters
Non. Promoters
Public & Others

% Holding
11.10
3.5
74.10
0.00
11.30

Outlook

and valuation : We expect revenues to post 4% CAGR growth over FY16-18E on a high base of FY16 with EBITDA
margins set to decline post robust planned R&D investments and elevated capex plan from a high of 32% in FY16 to 21% in
FY18E. At CMP of INR 676, the stock is trading at 21.5x FY18E EPS. We maintain our earnings estimates and rate the stock BUY valuing it (at a higher multiple given the enhanced potential of its pipeline) at 22x of FY18E EPS of INR 29.1 (earlier FY18E EPS of INR
28.3), to arrive at a revised Target Price of 732 .
Company Overview :
Alembic Pharmaceuticals is a leading pharmaceutical company in India. The company is vertically integrated to develop pharmaceutical substances and intermediates. The company is a market leader in the
Macrolides segment of anti-infective drugs in India. Its manufacturing facilities are located in Vadodara and in
Baddi (Himachal Pradesh; for the domestic and non-regulated export market). The Panelav facility houses the
API and formulation manufacturing (both USFDA approved) plants.
Investment rational :
Focus on chronic segment to drive domestic formulation growth :
Alembic Pharma has been restructuring its business portfolio, which would aid in improving its growth and operating performance. The companys domestic formulation business contributed 44% to its total sales in FY2016. The company has a
strong field force of ~3,600 medical representatives. Going forward, the company expects its domestic formulation business to at least grow in line with the industry growth rate, before it sees an improvement in the share of the high growth
chronic segment. For FY2016-18E, we expect the domestic formulation business to grow at a CAGR of 15.0%.
Exports- US the key growth driver:
On the exports front, the formulation business contributed by 30% to the total turnover, with majority of the contribution coming from Europe and the US. In the US, the company has filed for ~76 ANDAs till date and received
47 approvals. The company, going forward, expects to keep its momentum high in terms of number of filings,
by filing around 10-12 ANDAs per annum. For FY2016-18E, we expect exports to register a CAGR of 13.6%, mainly
on back of base effect impact of FY2016 (sales grew by 46% due to launch of Abilify).
Outlook and valuation :
Over FY2016-18E, we expect the company to post a CAGR of 13.9% in sales, while profitability will be under pressure
on back of higher R&D spend, which is likely to reach 13-14% of sales in FY2017-FY2018E. We recommend a Neutral rating
on the stock.
- 2-

Vol.: 317
24th Oct,2016

Around The World

Weekly Market Recap :
On the macro front, the Goods and Services Tax (GST) Council will meet again on 3-4 November 2016 to take decision on the GST
rates. The GST Council that kicked off its three-day meeting on Tuesday, 18 October 2016, reached a consensus on state compensation
and the base year will be 2015-2016. The meeting reached at a consensus on the way states would be compensated for any loss of
revenue from implementation of the new indirect tax regime from 1 April 2017.
Banking, IT and metal sector stocks and index heavyweights HDFC, Reliance Industries and ITC led strong gains for key benchmark indices on Tuesday, 18 October 2016. The Sensex jumped 520.91 points or 1.89% to settle at 28,050.88, its highest closing level since 10
October 2016.

Market Eye Week ahead :

PNB Housing Finance's Rs 3000 crore initial public offering (IPO) will open for subscription on Tuesday, 25 October 2016 and close on
Thursday, 27 October 2016. Next batch of Q2 results of India Inc, global macroeconomic data, trend in global markets, investment by foreign portfolio investors (FPIs) and domestic institutional investors (DIIs), the movement of rupee against the dollar and crude oil price
movement will dictate market trend in the near term.

Among global market news, the German Manufacturing Purchasing Managers' Index (PMI) data for October 2016 will be unveiled on Monday, 24 October 2016. US CB Consumer Confidence data for October 2016 will be unveiled on Tuesday, 25 October 2016. UK Q3 Gross
Domestic Product (GDP) data will be unveiled on Thursday, 27 October 2016.

Key Events / Factors to Watch

1. Mon : Results: Adani Enter, Adani Power, Axis Bank, Infratel, Greenply Industries.
2. Tue : - Results: Alembic pharma, Asian Paints, Arvind ltd, IDBI Bank, Symphony Ltd.
3. Wed : Results : Ajanta Pharma, Canara Bank, Dabur India ,HUL, JK Cement ltd.
4. Thu: Results: Bajaj Finserv, Force Motors, JSW Steel, Jubilant life sciences, Torrent Power ltd.
5. Fri : Results: Eicher motors, Vedanta , SPARC ltd, Grasim Industries, Dish TV.

Knowledge Corner :
Qualified institutional placement (QIP)

These Qualified institutional placement (QIP) is a capital-raising tool, primarily used in India and other parts of southern
Asia, whereby a listed company can issue equity shares, fully and partly convertible debentures, or any securities other
than warrants which are convertible to equity shares to a qualified institutional buyer (QIB).

How much can companies raise via QIP : In a single financial year a company can raise not more than 5 times its net
worth based on the audited financial statements of the previous financial year.
- 3-

Vol.: 317
24th Oct,2016

Mutual Fund Corner

Top 10 Sector Break-Ups

Fund Name
Scheme Name

Financial
Automobile

23.62
7.23

Energy

7.96

Healthcare

9.22

Open-ended

Engineering

5.32

Feburary 2011

Technology

13.01

Services

5.61

Construction

6.88

Diversified

5.55

Chemicals

2.36

AMC

ICICI Prudential Asset Management Company

Type

Equity-oriented

Category
Launch Date
Fund Manager
Net Assets
In crore )

History

Mrinal Singh since Feb 2011

(`

Rs. 14460.6 crore as on Sep 30,2016

2014

2015

62.15

107.99

113.86

126.86

Total Return (%)

8.31

73.76

5.44

11.42

Rank (Fund/Category)

9/47

25/78

37/187

119/155

52 Week High (Rs)

62.15

108.70

120.07

128.60

52 Week Low (Rs)

47.85

58.56

106.67

97.50

NAV (Rs)

Fund (%)

Sector Weights

ICICI PRUDENTIAL VALUE DISCOVERY FUND

2013

Risk Analysis

2016

Volatility Measures
Standard Deviation

17.13

Sharpe Ratio

1.49

Beta

1.02

R-Squared
Alpha

0.78
15.62

Composition (%)
91.36

Equity
Net Assets (Rs.Cr)
Expense Ratio (%)

2830.81

7367.40

2.33

2.26

10664.05
2.24

14044.28
-

Debt

8.07

Cash

0.57

Fund Performance v/s S&P BSE 100

Fund Style
Investment Style
Growth

Blend

Value

Medium
Small

Fund
S&P BSE 100
(Rebased to 10,000)
- 4-

Capitalization

Large

Source : - www.valueresearchonline.com

Vol.: 317
24th Oct,2016

Commodity Corner
BULLION
FUNDAMENTAL: Bullion prices last week ended with gains where gold prices gained by around one percent fol-

lowed by gains in silver prices as seasonal demand from Asia kicked in. Demand from Asia, including China, India
and exchange-traded funds (ETF), has helped prop up prices. Bullion has been hurt in recent weeks by the strength
of the dollar, which has been helped by a slew of data indicating an improvement in the U.S. economy that
could justify an interest rate rise later this year. The precious metal had briefly strengthened after ECB President Mario Draghi said that an adjustment to the banks stimulus program could come in December, saying its assessment would benefit from new economic projections to be drawn up by ECB forecasters. The comments came after the ECB left interest rates unchanged at record lows of zero earlier Thursday and kept the deposit facility rate at -0.4%. Physical gold demand in Asia firmed up this week on strong buying by leading consumer China while prices in India were at a premium for the first time in several months ahead of the festive season. Spot gold was set to end the week up 1 percent on steady physical buying from China and exchange-traded
funds. Gold prices in India, the world's second-largest consumer, were at a premium for the first time in nine
months as a drop in prices prompted jewellers and dealers to step up purchases for upcoming festivals. Premiums in China were quoted around $4-$5 an ounce against the international benchmark, indicating strong demand. .
RECOMMENDATION : SELL GOLD @ 30000 SL 30250 TGT 29650-29300 SELL SILVER @ 42500 SL 43500 TGT 41850-41500.

BASE METALS
FUNDAMENTAL: Base metals prices ended mixed to weak node where nickel prices dropped the most followed by

losses in aluminium and copper while zinc and lead ended with small gains. Nickel prices extended its weak trend as
industrial production in the Asian nation fell short of estimates. Aluminium ended with its biggest weekly drop
in at least two months on worries about oversupply. Prices remained on track to fall more than 2.25 percent for
the week as China producers ramped up supply. Copper has been trading close to its lowest in a month amid percolating concerns that steps by China to douse its hot housing market, a key consumer of copper in white goods
and power, could dampen metals demand. Nickel ore inventories at seven major Chinese ports kept falling this
past week. Over this past week, about 60,000 tonnes of nickel ore arrived at the Port of Lianyungang. According to data, nickel ore inventories were down 220,000 tonnes on a weekly basis.
RECOMMENDATION : SELL ALUMINIUM @ 110 SL 113 TGT 105. SELL COPPER @ 315 SL 324 TGT 302 SELL ZINC @ 154 SL 157 TGT
149-146 SELL NICKEL @ 685 SL 700 TGT 660-640.

ENERGY
FUNDAMENTAL : Crude oil prices ended with over half percent gains as Russia reiterated its commitment to joining a

producers' output freeze to stem a two-year slide in prices but a strong dollar capped gains. Russian Energy Minister Alexander Novak said an oil output freeze agreement was necessary to prop up prices and that he
would make proposals to his Saudi Arabian counterpart this weekend. The Organization of the Petroleum Exporting Countries will hold a meeting on Nov. 30 to find common ground on capping oil production. This is
expected to work out how each member country will contribute to a freeze. The World Bank raised its 2017 forecast for crude oil prices to $55 per barrel from $53 per barrel, citing the decision by members of the Organization of the Petroleum Exporting Countries (OPEC) to limit production after a long period of unrestrained output. Oil prices are expected to average $43 per barrel this year, unchanged from the July report. The World
Bank has projected modest recovery for most commodities in 2017 as demand strengthens and supplies tighten.
Higher-than- expected storage data has weighed on natural gas, adding to speculation that stockpiles could hit a
new record ahead of the winter season.
RECOMMENDATION : BUY CRUDE @ 3250 SL 3120 TGT 3400-3500. BUY NAT.GAS @ 190 SL 176 TGT 204-218.

- 5-

Vol.: 317
24th Oct,2016

Commodity Corner

Forex Corner

Market Recap :

The Indian rupee on Monday erased all the

losses and strengthened marginally against the
US dollar, after local equity markets gained over
140 points. Gains in the Asian currencies markets
also helped the rupee.

Most Asian currencies rebounded with the won

and the Australian dollar leading gains as the US
dollar lost ground against major counterparts. Offshore yuan pared losses after threatening to near
a low.

Market Eye Week ahead :

The USDINR On daily chart pair has been trading below all short term, medium term, and long term moving average which is 20, 100 and 200.Whereas on weekly chart pair has continually taking support at 50DMA. Which
suggest short term trend is bullish. So for trading perspective, one could buy up to the level 66.80-66.95 with SL
of 66.60 for target of 67.03-67.15.

USD/INR
Level

S2

S1

CP

R1

R2

High

Low

Close

USD/INR

66.57

66.74

66.86

67.03

67.15

66.99

66.70

66.90

Level

S2

S1

CP

R1

R2

High

Low

Close

EUR/INR

72.24

72.57

73.16

73.49

74.08

73.75

72.83

72.90

Level

S2

S1

CP

R1

R2

High

Low

Close

GBP/INR

80.81

81.28

81.83

82.30

82.85

82.37

81.35

81.76

Level

S2

S1

CP

R1

R2

High

Low

Close

JPY/INR

63.91

64.20

64.42

64.71

64.49

64.64

64.13

64.49

EUR/INR

GBP/INR

JPY/INR

-- 46--

Vol.: 317
24th Oct,2016

J Street Recommendations Report Card

Nifty last week opened at 8612.95, attained a low at 8506.15 and moved to a high of 8727. Nifty finally
closed the week at 8693.05 thereby showed a net rise of 1.28%. Cover short position at 8693 or below as the
opportunity arises. Weaker opening and correction first to 8642-8557 can be used for buying with a stop loss of
8476. Sell is below 8476 with high of the week as the stop loss or 8693 as the opportunity arises. Resistance is
at 8745-8778. Further rise can be witnessed on breakout and close above 8778.
Top Fundamental Stocks
Rec. Date

CMP on Rec.

CMP

Target

Absolute
Return @
CMP

Alembic Pharmaceuticals

30/08/2016

630

675

732

7%

Buy

Coromandel

25/07/2016

235

277

308

18%

Buy

Capital First

06/06/2016

552

766

660

39%

Profit book

Wonderla Holidays

25/04/2016

387

407

498

5%

Accumulate

Mold-Tek Packaging

04/04/2016

138

51

179

-63%

Buy

Jamna Auto

22/02/2016

133

223

181

68%

Buy

MT Educare

01/02/2016

164

136

230

-17%

Buy

Garware-Wall Ropes

28/12/2015

425

528

550

24%

Buy

AYM Syntax

23/11/2015

121

87

223

-28%

Buy

Natco Parma

02/11/2015

509

596

636

17%

Buy

SRF

21/09/2015

1140

1908

1374

67%

Buy

Ahluwalia contracts

24/08/2015

235

292

368

24%

Buy

20/07/2015

190

235

255

24%

Buy

04/05/2015

298

278

430

-7%

Buy

Omkar speciality

16/03/2015

152

173

251

14%

Buy

DHFL

16/02/2015

252

331

368

31%

Accumulate

TV Today Network

27/01/2015

222

330

337

49%

Buy

M&M

12/01/2015

1238

1327

1452

7%

Buy

Havells India

27/10/2014

274

412

346

50%

Buy

PTC India Fin. Ser.

07/07/2014

39

39

45

0%

Profit book

Adani Port

05/07/2014

280

285

347

2%

Accumulate

Stocks

Infinite Computer
Sol.
Sadbhav
Engineering Ltd.

Status

It's not important whether you are right or wrong, Its about how much money you make when you're right and how
much you lose when you're wrong.
- 7-

Vol.: 317
24th Oct,2016

J Street Short Term Call Status

SL

STATUS

%
RETURN

276.50 290.00

265

EXPIRE

642

636.00 667.00

610

TA

4.60

1480

1500

1490.00 1560.00

1440

SL

-3.30

BUY

3100

3150

3125.00 3270.00

3020

OPEN

SUNPHARMA BUY

800

816

808.00 851.00

780

SL

-3.50

BUY

1070

1080

1075.00 1020.00

1110

TA

4.60

STAR

BUY

990

1010

1000.00 1060.00

960

TA

5.80

15-Sep-16

UPL

BUY

695

700

697.50 730.00

675

EXPIRE

16-Sep-16

BRITTANIA

BUY

3510

3540

3525.00 3690.00

3390

EXPIRE

10

19-Sep-16

ITC

BUY

260

264

262.00 275.00

252

SL

-3.60

11

20-Sep-16

BIOCON

BUY

925

935

930.00 972.00

900

TA

4.50

12

21-Sep-16

HDFC

BUY

1385

1395

1390.00 1450.00

1355

EXPIRE

13

22-Sep-16

INFRATEL

BUY

370

375

372.50 391.00

358

OPEN

14

23-Sep-16

TVSMOTOR

BUY

347

353

350.00 367.00

337

TA

4.80

15

26-Sep-16

HDFC

BUY

1405

1435

1420.00 1492.00

1365

SL

-3.80

16

27-Sep-16

JUBLFOOD

SELL

960

950

955.00 912.00

985

TA

4.50

17

28-Sep-16

ITC

SELL

248

245

246.50 235.00

254

TA

4.40

18

29-Sep-16

TATAGLOBAL BUY

143

147

145.00 153.00

139

TA

5.50

19

3-Oct-16

BUY

1395

1415

1405.00 1476.00

1355

EXPIRE

20

4-Oct-16

MOTHERSUMI BUY

325

330

327.50 342.00

315

SL

21

5-Oct-16

LICHSGFIN

BUY

596

606

601.00 630.00

576

OPEN

22

6-Oct-16

ASIANPAINT

BUY

1190

1210

1200.00 1258.00

1156

OPEN

23

7-Oct-16

TATASTEEL

BUY

402

410

406.00 429.00

386

OPEN

Sr.
No.

DATE

2-Sep-16

6-Sep-16

UPL

7-Sep-16

8-Sep-16

9-Sep-16

12-Sep-16

JUBLFOOD

14-Sep-16

- 7-

STOCK

BUY/
SELL

RANGE

RANGE

275

278

BUY

630

M&M

BUY

DRREDDY

AMBUJACEM BUY

M&M

TRIGGER
PRICE

TGT

-3.50

Vol.: 317
24th Oct 2016

J Street Short Term Call Status

Sr. No.

DATE

STOCK

BUY/
SELL

RANGE

RANGE

TRIGGER
PRICE

TGT

SL

STATUS

24

13-Oct-16

NTPC

SELL

148

146

147.00

140.00

152

OPEN

25

14-Oct-16

BATAINDIA

SELL

498

492

495.00

480.00

509

TA

26

17-Oct-16

NBCC

SELL

257

255

256.00

245.00

265

OPEN

27

18-Oct-16

ZEEL

SELL

508

498

503.00

478.00

520

OPEN

28

19-Oct-16

YESBANK

BUY

1285

1296

1290.50

1348.00

1249

OPEN

29

20-Oct-16

WIPRO

BUY

490

498

494.00

518.00

475

OPEN

30

21-Oct-16

HINDALCO

BUY

154

156

155.00

163.00

150

OPEN

STATUS

CALLS

RATIO

TA+PB

09

64.28

SL+EXIT

05

35.71

TOTAL

14

100.00

%
RETURN

3.20

One call on daily basis is given keeping view of short term trading on closing basis.
Time frame and expected % of return is also mentioned with the suggested call.
This call are purely given on technical trading system generated by the Technical Research Desk.
Generally Expected Return on investment is 5-6 % with time horizon of 6-7 days.
Profit Booking update is considered if on an average expected return exceed 3.50-4.00 % against the
Expected return of 5-6%
Risk- Reward ratio percentage wise depends on the volatility of stock Normally it stands ( 3 : 9)

- 7-

Vol.: 317
24th Oct,2016