Key benchmark indices edged higher in choppy initial trade. The barometer index, the S&P BSE Sensex, was up 43.10 points or 0.19%, off close to 15 points from the day's high and up about 80 points from the day's low. The market breadth, indicating the overall health of the market, was positive.
Bharat Heavy Electricals (Bhel) dropped after the company reported weak results on provisional basis for the year ended 31 March 2014. Tata Steel rose after the company said its hot metal production rose 11.74% to 9.90 million tonnes per annum (MTPA) in the year ended 31 March 2014 (FY 2014) over the year ended 31 March 2013 (FY 2013). Sun Pharmaceutical Industries rose while Ranbaxy Laboratories dropped after the two companies in a joint statement issued on Sunday, 6 April 2014 announced that they have entered into definitive agreements pursuant to which Sun Pharma will acquire 100% of Ranbaxy in an all-stock transaction.
Foreign Institutional Investors (FIIs) bought shares worth a net Rs 232.46 crore on Friday, 4 April 2014, as per provisional data from the stock exchanges.
At 9:37 IST, the S&P BSE Sensex was up 43.10 points or 0.19% to 22,402.60. The index rose 57.08 points at the day's high of 22,416.58 in early trade. The index declined 39.77 points at the day's low of 22,319.73 in early trade.
The CNX Nifty was up 18.80 points or 0.28% to 6,713.15. The index hit a high of 6,725.15 in intraday trade. The index hit a low of 6,690.85 in intraday trade.
The BSE Mid-Cap index rose 20.54 points or 0.29% to 7,218.16. The BSE Small-Cap index rose 19.34 points or 0.27% to 7,284.39. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, was positive. On BSE, 315 shares gained and 105 shares fell. A total of 20 shares were unchanged.
Index heavyweight Reliance Industries (RIL) rose 0.87%, The company said before market hours that IndiaWin Sports, which owns the IPL franchise Mumbai Indians, has not bid for a franchise in the upcoming Indian Super League. The company added Indian Super League provides a promising opportunity for a sports brand to unique connect, brand extension and value creation. However adhering to the highest standard of corporate governance and transparency, and in the larger interest of the sport, the management at IndiaWin Sports had taken a conscious decision not to participate in the bidding process.
Sun Pharmaceutical Industries rose 1.57% while Ranbaxy Laboratories dropped 3.34%. after the two companies in a joint statement issued on Sunday, 6 April 2014 announced that they have entered into definitive agreements pursuant to which Sun Pharma will acquire 100% of Ranbaxy in an all-stock transaction. Under these agreements, Ranbaxy shareholders will receive 0.8 share of Sun Pharma for each share of Ranbaxy. This exchange ratio represents an implied value of Rs 457 for each Ranbaxy share, a premium of 18% to Ranbaxy's 30-day volume-weighted average share price and a premium of 24.3% to Ranbaxy's 60-day volume-weighted average share price, in each case, as of the close of business on 4 April 2014.
The combination of Sun Pharma and Ranbaxy creates the fifth-largest specialty generics company inthe world and the largest pharmaceutical company in India. The combined entity will have operations in 65 countries, 47 manufacturing facilities across 5 continents, and a significant platform of specialty and generic products marketed globally, including 629 ANDAs. On a pro forma basis, the combined entity's revenues are estimated at $ 4.2 billion with EBITDA of $ 1.2 billion for the twelve month period ended December 31, 2013. The transaction value implies a revenue multiple of 2.2 based on 12 months ended 31 December 2013.
Dilip Shanghvi, Managing Director of Sun Pharma said, "Ranbaxy has a significant presence in the Indian pharma market and in the US where it offers a broad portfolio of ANDAs and first-to-file opportunities. In high-growth emerging markets, it provides a strong platform which is highly complementary to Sun Pharma's strengths. We see tremendous growth opportunities and are excited with the prospects to create lasting value for both our shareholders through a successful combination of our franchises."
"We believe this transaction brings significant value to all Ranbaxy shareholders. Sun Pharma has a proven track record of creating significant long-term shareholder value and successfully integrating acquisitions into its growing portfolio of assets. We are confident that Sun Pharma is the ideal partner to help us realize our full potential and are excited to participate in future value creation opportunities," stated Arun Sahwney, Managing Director and Chief Executive Officer of Ranbaxy.
The proposed transaction has been unanimously approved by the Boards of Directors of Sun Pharma, Ranbaxy, and Ranbaxy's controlling shareholder, Daiichi Sankyo. Ranbaxy's board and Sun Pharma's board have recommended approval of the transaction to their respective shareholders.
The combination will create a large specialty pharmaceutical company with strong capabilities in developing complex products and exploiting first to file opportunities. A combined Sun Pharma and Ranbaxy will have a diverse, highly complementary portfolio of specialty and generic products targeting a spectrum of chronic and acute treatments. The combined business will have a strong portfolio of specialty and generic products marketed globally, including 445 ANDAs. Additionally, the combination will create one of the leading dermatology platforms in the United States.
The combination creates the fifth-largest generic company in the world and the largest pharmaceutical entity in India. The combined entity will have 47 manufacturing facilities across 5 continents. The transaction will combine Sun Pharma's proven complex product capabilities with Ranbaxy's strong global footprint, leading to significant value creation opportunities. Additionally, the combined entity will have increased exposure to emerging economies while also bolstering Sun Pharma's commercial and manufacturing presence in the United States and India. It will have an established presence in key high-growth emerging markets. In India, it will be ranked No. 1 by prescriptions amongst 13 different classes of specialist doctors.
The acquisition is expected to be accretive to Sun Pharma's cash earnings per share in the first full year. Additionally, Ranbaxy's shareholders will participate in the value creation of the combined company through their ownership of Sun Pharma shares. Sun Pharma expects to realize revenue and operating synergies of $ 250 million by third year post closing of the transaction. These synergies are expected to result primarily from topline growth, efficient procurement and supply chain efficiencies. As part of the transaction, Sun Pharma intends to leverage the human capital that has supported both companies, in order to drive future growth.
Under the agreements, Ranbaxy shareholders will receive 0.8 shares of Sun Pharma for each share of Ranbaxy. This exchange ratio represents an implied value of Rs 457 for each Ranbaxy share, apremium of 18% to Ranbaxy's 30-day volume-weighted average share price and a premium of 24.3% to Ranbaxy's 60-day volume-weighted average share price, in each case, as of the close of business on 4 April 2014. The transaction has a total equity value of approximately $ 3.2 billion. The transaction is expected to represent a tax-free exchange to Ranbaxy shareholders, who are expected to own approximately 14% of the combined company on a pro forma basis. Upon closing, 3 Daiichi Sankyo will become a significant shareholder of Sun Pharma and will have the right to nominate one director to Sun Pharma's Board of Directors. Ranbaxy has recently received a subpoena from the United States Attorney for the District of New Jersey requesting that Ranbaxy produce certain documents relating to issues previously raised by the FDA with respect to Ranbaxy's Toansa facility. In connection with the transaction, Daiichi Sankyo has agreed to indemnify Sun Pharma and Ranbaxy for, among other things, certain costs and expenses that may arise from the subpoena.
The transaction will need approval by majority in number representing 75% in value of the shares present and voting at the shareholder meetings of each of Sun Pharma and Ranbaxy. Both Daiichi Sankyo (which holds approximately 63.4% of the outstanding shares of Ranbaxy) and promoters of Sun Pharma (who hold approximately 63.7% of the outstanding shares thereof), have irrevocably agreed to vote in favor of the transaction.
Additionally, the closing of the transaction will be subject to customary closing conditions, including approval by the Indian Central Government, approval by the High Courts of Gujarat and Punjab and Haryana, approval by the Competition Commission of India and expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act in the United States. Pending approvals, Sun Pharma anticipates that the transaction will close by the end of calendar year 2014.
Maruti Suzuki India declined 0.37%. The company's production rose 6.61% to 1.0p8 lakh units in March 2014 over March 2013. The company announced this before market hours. The company on 1 April 2014 said its total vehicle sales declined 5.5% to 1.13 lakh units in March 2014 over March 2013.
Tata Steel rose 0.87% after the company after market hours on Friday, 4 April 2014 said its hot metal production rose 11.74% to 9.90 million tonnes per annum (MTPA) in the year ended 31 March 2014 (FY 2014) over the year ended 31 March 2013 (FY 2013). Crude steel production rose 12.55% to 9.15 MTPA in FY 2014 over FY 2013. Saleable steel production rose 12.72% to 8.95 MTPA in FY 2014 over FY 2013.
Bharat Heavy Electricals (Bhel) dropped 2.23% after the company reported weak results on provisional basis for the year ended 31 March 2014. The company's net profit on provisional basis fell 51.2% to Rs 3228 crore on 19.51% decline in turnover to Rs 40366 crore in the year ended 31 March 2014 (FY 2014) over the year ended 31 March 2013 (FY 2013). The orders inflow declined 11.51% to Rs 28007 crore in FY 2014 over FY 2013. The provisional result was announced on Saturday, 5 April 2014.
Bhel has retained its market leadership position during FY 2014 even while operating in a difficult business environment. Improved focus on project execution enabled the company record highest ever commissionin &/synchronization of 13,452 megawatts (MW) of power plants in domestic and international markets in FY 2014.
Both power & industrial market segments in which the company operates continued to witness fewer project finalizations. BHEL secured orders worth Rs 28007 crore from its diversified business segments covering both domestic and international markets. Orders in jndustrial segment at Rs 5007 crore witnessed a 23% jump; Spares & Services at Rs 3433 crore saw a jump of 19% and lnternational segment at Rs 2567 crore witnessed a jump ot 28% in 20I3-I4. The company ended the year with an orderbook of Rs 101538 crore.
BHEL bagged a mega EPC order worth Rs 7900 crore for 3x660 MW Supercritical units from NTPC for North Karanpura project against stiff lnternational competition. With this, the company's market share in Power Sector in the country was 72% during 2013-14, further strengthening its leadership position.
BHEL recorded a turnover of Rs 40,365 crore (prov,) and a Net profit of Rs 3,228 crores (prov.) during FY 2014. Profit impact is due to low volumes, certain ongoing projects have got impacted as the lndian Power Sector continues to be besieged with issues relating to fund constraints, land acquisition, clearances and coal linkages. Focus on cost optimization through increased localization of super critical technologies, higher value additions; increased vendor base and design optimization efforts aided the company in its margins.
Company's focus on cash realization during the year has resulted in coming back to cash surplus situation after a gap of four years. The rising trend of debtors has also been arrested.
BHEL'S commissioning/svnchronization of 13,452 MW included 11,266 MW in the utility segment; 1,698 MW Captive/lndustrial sets in the country and 488 MW in overseas market. The significant among them was the commissioning of first BHEL manufactured 660 MW Super-critical unit for NTPC at Barh and the first 800 MW Boiler for APPDCL at Krishnapatnam.
ln addition, company commissioned the first indigenously built 765 kV substation at PGcIL-Raichur, six months ahead of schedule, enabling Southern grid getting connected to National grid system - a long cherished dream of having One Natignone Grid-One Frequency' realized successfully.
The company successfully manufactured, tested and supplied new generation Ac-Acvariable frequency drive (VFD) 2000 HP Oil Rig to ONGC.
The plant load factor of all BHEL supplied sets in the country was 1.6% more than that of all lndia average. 35 BHEL supplied sets achieved a PLF of over 90% while 79 sets achieved a PLF of 80-90% during 2013-14 - a testimony of better performance from BHEL supplied sets.
BHEL which ranks among the highest R&D spenders in the country in the engineering and manufacturing segment spent 2.78% of turnover on R&D in 2013-14 compared to 2.49% in 2012-13. lncreased R&D efforts have led to filing of nearly two patents/copyrights every working day. 434 patents / copyrights filed during 2013-14 were an increase of 13% over 2012-13. The company's R&D efforts are being directed towards developing new products using state-of-the-art technologies and processes, relevant to the needs of the country to remain current both in terms of technology and features vis-i-vis global benchmarks.
Fiscal 2013-14 was a year in which BHEL has made significant progress in consolidating its strengths and value propositions to emerge even more competitive for tapping opportunities in the next phase of economic growth of the country.
The next major trigger for the stock market is Q4 March 2014 and year ended 31 March 2014 (FY 2014) corporate earnings. Investors and analysts will closely watch the management commentary that would accompany the results to see if there is any revision in their future earnings forecast of the company for the year ending 31 March 2015 (FY 2015) and/or for the year ending 31 March 2016 (FY 2016). Indian companies will start reporting their Q4 and full year results from mid-April 2014. The result season will conclude in end-May 2014.
The Reserve Bank of India (RBI) next undertakes monetary policy review on 3 June 2014. The RBI left its main lending rate viz. the repo rate unchanged at 8% after a monetary policy review on 1 April 2014.
On the political front, the Bharatiya Janata Party (BJP) will release its poll manifesto today, 7 April 2014, the day the 9-phase Lok Sabha election begins. The party on Thursday, 3 April 2014, issued its manifesto for the North East region, wherein it stated that it will develop the area as a BPO hub if voted to power. The BJP has already released a Delhi-specific manifesto wherein it has made an array of promises like granting full statehood, reducing power tariff by 30% and controlling price rise within one month if BJP is voted to power. The party, which had lost all the seats in the national capital to Congress in 2009 Lok Sabha polls, said it will set up a helpline for the national capital to receive complaints of corruption. It also promised to bring police, DDA and other land-owning agencies under one roof to streamline governance in the national capital.
A major near term trigger for the stock market is the outcome of the upcoming Lok Sabha elections. Lok Sabha elections will be held between 7 April 2014 and 12 May 2014 in nine phases. The counting of votes will take place on 16 May 2014. Five seats in Assam and one seat in Tripura will go to polls today with over 76 lakh voters expected to cast their ballot. The term of the current Lok Sabha expires on June 1 and the new House has to be constituted by May 31. Along with the Lok Sabha election, Andhra Pradesh (AP), including the regions comprising Telangana, Odisha and Sikkim will go to polls to elect new assemblies. AP, Odisha and Sikkim assemblies come to end on June 2, June 7 and May 7 respectively.
The Reserve Bank on Friday,, 4 April 2014 released a monthly series on consumer price inflation (CPI) based real effective exchange rate (REER) for both 6 and 36 currency baskets for the period April 2004 to March 2014. The CPI based REER is computed by adjusting the base to 2004-05 as 100 for the back-casted series of new CPI data as provided in the Report of the Expert Committee to Revise and Strengthen the Monetary Policy Framework released by the Reserve Bank in January 2014. This article briefly discusses the methodology along with the rationale for computing the CPI based REER. The WPI based series is also provided alongside for smooth transition to the revised series. Henceforth, starting from the financial year 2014-15, only the CPI based REER would be compiled and released by the Reserve Bank.
The World Bank trimmed its 2014 growth forecast for developing East Asia but said the region's economies were likely to see steady growth in the next couple of years, helped by a pick-up in global growth and trade. The Washington-based development bank expects the developing East Asia and Pacific (EAP) region to grow 7.1% in 2014 and 2015, down from the 7.2% rate it had previously forecast for both years. Growth in 2016 is also seen at 7.1%, staying slightly below the 2013 growth rate of 7.2%.
Asian stocks fell for the first time in nine days on Monday with telecommunication and technology shares leading declines. Key benchmark indices in South Korea, Hong Kong, Singapore and Japan were down 0.22% to 1.34%. Indonesia's Jakarta Composite rose 1.22%. Markets in mainland China and Thailand are closed for a holiday.
Fitch Ratings has affirmed China's Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at 'A+'. The issue ratings on China's senior unsecured foreign and local currency bonds are also affirmed at 'A+'. The Outlooks on the Long-Term IDRs are Stable. The Country Ceiling is affirmed at 'A+' and the Short-Term Foreign Currency IDR at 'F1'.
US stocks fell on Friday, with the Nasdaq Composite Index sliding the most in two months, after large technology stocks from Google Inc. to Yahoo Inc. plunged as investors sold the bull market's biggest winners.
Companies led the US job market past a milestone in March as private employment exceeded its pre-recession peak for the first time, progress that will allow the Federal Reserve to stick to its policy course. Payrolls excluding government agencies rose 192,000 after a 188,000 gain in February that was larger than first estimated, the Labor Department reported in Washington. That brought the job count to 116.1 million, beating the January 2008 high of 116 million. The jobless rate held at 6.7% even as half a million Americans entered the workforce.
The Federal Open Market Committee (FOMC) next undertakes monetary policy review at a two-day meeting on 29-30 April 2014. The Federal Reserve on 19 March 2014 said after the conclusion of a monetary policy review that it will trim its monthly bond purchases by $10 billion to $55 billion. The Federal Reserve will end its bond-buying program before the end of the year with an interest-rate increase likely to follow in "around six months," Chair Janet Yellen said on 19 March 2014. Quarterly Fed forecasts on 19 March 2014 showed more officials predicting that the benchmark interest rate, now close to zero, will rise to at least 1% by the end of 2015 and 2.25% a year later.
In Europe, a monthly meeting of the Monetary Policy Committee of the Bank of England's (BoE) for monetary policy review is scheduled on Thursday, 10 April 2014.
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