The IIP numbers were below analysts' forecast of 9.6 per cent, and, as a result, stock markets closed lower. The Sensex declined over 150 points from its day's high, and 0.25 per cent lower than Tuesday. The manufacturing sector, which has been in a high growth phase thus far, declined 7.2 per cent y-o-y in July 2007 compared with 14.3 per cent a year earlier. However, the growth rates in the earlier months of this financial year have still kept manufacturing growth at 10.3 per cent in the April-to-July period. |
The growth rate in mining at 4.9 per cent in July was better than the growth of 3.1 per cent so far this year. Electricity too slowed down a little at 7.5 per cent compared with 8.9 per cent in July 2006. |
As many as four industry indices out of 17 posted a decline in July 2007, which includes the heavyweight food products, paper, metal products and transport equipment. Basic chemicals, except petroleum ""which too is a heavyweight component, posted an 11.7 per cent growth, aiding the overall growth rate. |
In use-based classification, the growth rate in capital goods slowed down to 12.9 per cent against 18.3 per cent a year ago and 19.5 per cent so far this year. The impact of higher interest rates is being felt in this segment. |
Growth in consumer goods was also slow at 5.3 per cent in July 2007 compared with 7.9 per cent so far this year, with the consumer durable sub-segment declining 3.2 per cent. |
The RBI has increased its repo rate from 6.5 per cent in June 2006 to 7.75 per cent to bring inflation under control. Now that inflation is under control, IIP is dropping and so is bank credit growth, the central bank may go slow on interest rate hikes at least over the near term. It is unlikely that we are going to see the double-digit growth rates in IIP going forward. |
Glenmark: Heart of the matter |
However, it is understood that Glenmark, along with several other pharmaceutical players from across the globe, has received the US FDA approval for this product. The size of market for Carvedilol was estimated at $1.6 billion, for the 12-month ending March 2007. The company has already launched this product in the US, but senior company officials declined to comment on their projected market share over the next few months. However, as several players are also entering this fast growing product segment, Glenmark's margins are expected to be low, say analysts. |
In addition, Glenmark's Swiss subsidiary had recently purchased two new biological entities""CHR-1103 and CHR-1201""from the Canada-based Chromos, for an undisclosed amount. Glenmark would hold the worldwide rights for further development, registration and commercialisation of these products. |
Meanwhile, in the June 2007 quarter, Glenmark's consolidated operating profit grew an impressive 219.3 per cent y-o-y to Rs 102.5 crore, while its net sales expanded 92.1 per cent to Rs 351.35 crore. |
An improved performance for the company in Q1 FY08 was thanks to its US sales surging 258 per cent y-o-y $20 million (Rs 81 crore), coupled with a 173 per cent growth in revenues from the Latin American markets to $13.4 million. |
Its operating profit margin also expanded 1165 basis points y-o-y to 29.2 per cent in the last quarter. The stock has gained 6 per cent over the past two months compared with a 3 per cent rise in the Sensex. |
At Rs 379, the stock gets a discounting of 20 times estimated FY08 earnings. |