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Specialty Steel PLI to Move India Up in the Steel Value Chain

What’s Buzzing :

The Indian government has recently approved Specialty Steel PLI (Production linked incentive) scheme for overall growth in infra space. The length of the scheme might be five years, from 2023-24 to 2027-28. With a budgetary outlay of ₹ 63,220 million, the scheme will bring in investment of nearly ₹4,00,000 million and result in capacity addition of 25 Million tonnes (MT) for speciality steel. Hopefully, this scheme will anchor India in moving up the steel value chain at par with advanced steelmaking countries.

Context :

In FY21, India produced 102 MT of steel. However, of this only 18 MT was value-added steel or specialty steel. Moreover, of the 6.7 MT of steel imports in FY’21, nearly 4 MT import was of speciality steel alone. As value-added steel grades are presently largely imported in India, a speciality steel PLI scheme has been introduced with an objective to enhance the production of high-grade speciality steel domestically.

Perspective view:

The Specialty steel PLI scheme will incentivize domestic steel manufacturers to invest in speciality steel. The scheme will include coated/plated steel products, high strength/wear-resistant steel, speciality rails, alloy steel products, steel wires and electrical steel. The focus of the scheme is towards increasing exports and minimize the dependence of imports for high-end steel. After completion of the scheme, India will start manufacturing products like API grade pipes, Head Hardened Rails, electrical steel (needed in transformers and electrical appliances) which are currently manufactured in very small amounts or not produced at all. It is anticipated that the speciality steel production in India will touch the 42 MT mark by the end of 2026-27. This implies that approximately ₹ 2.5 trillion worth of speciality steel will be produced and consumed in the country which would otherwise have been imported. Similarly, the export of speciality steel is also likely to become around 5.5 million tonnes as against 1.7 million tonnes at present. Overall the speciality steel PLI scheme is likely to catapult India into the league of advanced steel producers like Korea and Japan. An added advantage would be the lesser volatility in earnings and probably better valuation multiples.

Jindal Stainless Ltd.
Sector: Steel – Medium & Small

Following the news, Jindal Steel stock saw a phenomenal jump of over 18% intraday! That is August 24, 2021. Just 5 hours prior to the time of writing this post.

Specialty Steel PLI
Open 128.85
Previous Close 128.85
Intraday High 153.95
Intraday Low 128.85
UC Limit 154.60
LC Limit 103.10
52 Week High 168.40

The buzz among excited investors had been like:

  • Rs 200 is the minimum target expected for the month of August.
  • No matter how hard you try, you just cant stop this stock from growing. Good level to enter now, dont miss this opportunity
  • Buy, buy at CMP for an immediate short term target of Rs 155.
  • The share price will shoot like a rocket and hit the roof.

This sums up the excellent growth in metal and infra space.

Also Read: Tata steel share price takes an exciting take-off attracting investors

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Facebook Issues For Individuals, Small and Big Businesses

Facebook is the second most used social networking website in the world. The huge amount of people that use this website every day makes it one of the most popular sites for business purposes. Unfortunately, Facebook has a number of issues that many business owners are not aware of.

facebook issues
Masked faces

One of Facebook issues that many people have is the fact that they may think that there is too much information being posted on the site. There is a limit on how much information can be posted on the site because of a copyright law called the “copyright clause” which states that any person who posts information on the site must do so with their permission. Although this does not necessarily prevent people from posting information on the site, there are still a number of people who try to do so without permission. This is why many of the problems that some businesses encounter when they are using the site are actually due to people posting their personal information, which is not allowed by Facebook’s terms and conditions.

Also Read: More than 1,000 companies have boycotted Facebook

Other facebook issues that some businesses face when they are using Facebook is the fact that people post advertisements without their permission. This is one of the biggest causes of Facebook’s financial struggles as well. Many businesses post advertisements on the site and then wait to see what happens with them. One of the worst things that you could have happened would be that they get pulled off of the site. However, there are some advertisers that are willing to put their advertisements on the site if they get the proper amount of exposure.

Another issue that many companies have with Facebook is the fact that their business pages are not always properly maintained. Business owners have become quite frustrated by the fact that they may only post one status update on their page every single day. Many of the other posts that they have made may have been lost, deleted, or moved to another section of the site. Many of these companies have spent a lot of money just trying to figure out how to make their pages look good.

Another issue that many businesses find with Facebook is that they cannot afford to pay for advertising costs every month. They pay a monthly fee to Facebook for their advertising privileges, but when the advertisements that are placed on their pages are not effective, they are required to pay the amount for the entire month. This has caused many businesses to cut back on their advertising budgets, which may even lead to losing the accounts of those that they had paid up front for advertising services.

If you want to be successful with your business using Facebook, it is important that you are able to have the right strategies in place. for getting your brand out there in the online marketplace. You need to make sure that all of the different aspects of your business are set up correctly so that the results that you achieve are the ones that you expect to have.




Amarin Corp. shares crash 67% to $4.47 after a court ruling

Amarin Corp – a pharmaceutical company developing and commercializing therapeutics to improve cardiovascular health – recently has been jolted by a court’s ruling. Amarin Corp was founded in 1993 and is headquartered in Dublin, Ireland for the purpose of taxes. Traded at ‎NASDAQ as AMRN.

Benchmark indices ended almost flat after a volatile session on Tuesday. As per provisional closing data, the S&P BSE Sensex fell 8.41 points at 37,973.63. The Nifty 50 index lost 5.15 points at 11,222.25.

Indices Date Change % Change
Nikkei 30-09-2020 -82.3 -0.35
Straits Times 30-09-2020 3.75 0.15
DOW Jones 29-09-2020 -131.4 -0.48
Shanghai 29-09-2020 6.83 0.21
Hang Seng 29-09-2020 0 0
Nasdaq 29-09-2020 -32.25 -0.29
DAX 29-09-2020 -45.05 -0.35
CAC 40 29-09-2020 -11.2 -0.23
FTSE 29-09-2020 -30.43 -0.51
World Indices today

There were more sellers than buyers. On the BSE, 1178 shares rose and 1436 shares fell.

Amarin Corp
In corona age, pharma companies have more work to do

The rating agency, Icra, after market hours on Monday, revised its forecast for contraction in GDP for FY21 to -11% from -9.5% as fresh Covid-19 infections remaining elevated at the end of the second quarter. The agency, however, retained its earlier forecast of a 12.4% contraction in GDP in the second quarter.

Notable scrips which declined appreciably:

  • Radico Khaitan (down 3.9%),
  • Globus Spirits (down 3.28%),
  • Advanced Enzyme (down 3.22%),
  • Dhampur Sugar (down 3.05%),
  • Tata Consumer (down 3%),
  • Kaveri Seed (down 2.46%),
  • ADF Foods (down 2.39%),
  • Triveni Engineering (down 2.35%),
  • Shree Renuka Sugars (down 2.31%) and
  • ITC (down 2.25%)

While some scrips rose:

  • SBI Card up 1.11%.
  • Shree Cement up 1.63%.
  • Shalby up 6.68%.
  • Zydus Wellness up 0.24%.

Amarin Corp News Highlights.

Amarin Corp. shares were recently down 67% after hours to $4.47 after an unfavourable ruling from a Nevada court in patent litigation related to potential generic versions of Vascepa.

Amarin Corp stated: “It strongly disagrees with the ruling and will vigorously pursue all available remedies. The company does not believe there is an impending generic launch by the litigants” that would compete with Vascepa at this time.”

Others:

  • US House of Representatives Speaker Nancy Pelosi reportedly said that stimulus talks with Treasury Secretary Steven Mnuchin are due to continue, suggesting possible progress to end the stalemate.
  • The US Presidential election is scheduled for Tuesday, November 3, 2020. The present incumbent US President Donald Trump and the main opposition contender Joe Biden, the Democratic nominee, will face off in their first Presidential debate on Tuesday night. Three debates between the presidential candidates are scheduled to take place on September 29, October 15, and October 22, 2020.

Corona Impact

  • Total Covid-19 confirmed cases worldwide were at 33,353,615 with 10,01,646 deaths. India reported 9,47,576 active cases of Covid-19 infection and 96,318 deaths while 51,01,397 patients have been discharged, data showed.
  • Media reports said that restaurants, bars and eatery outlets in Maharashtra will be allowed to re-start operations from the first week of October. It seems that the fear of contagion has dampened consumer demand, and has affected the hospitality industry, tourism, travel, trade and services in affected countries. Hotels, bars and restaurants have been surviving on home deliveries due to the Covid-19 lockdown.
  • Stocks of some travel companies, alongside casino and hotel operators, have been brutally hit, and more businesses are expected to see a severe financial impact should the virus keep spreading.

Also Read: IPO in long-term strategy, currently focused on e-commerce growth in India: Flipkart

Also Read: Caplin Point Laboratories to replicate the success




Cadila Healthcare: Strongest rally in 3 years signifies a turnaround

Cadila Healthcare has been seeing the strongest rally in recent times which clearly indicates a structural transformation. Time to enter!

Stable earnings visibility, least stressed balance sheets, healthy free cash flows and ability to deliver products at the time of crisis are some key attributes of Indian pharma.

Cadila Healthcare

Over the last few quarters, most players are recalibrating CAPEX and R&D spend in order to optimise capital utilisation. The current situation, underpinned by Covid-19 pandemic and its negative impact on most sectors, further strengthens the argument for investment in pharma.

While the Q1 performances of most pharma companies have been skewed, H2 should reflect the normalised trend.

Technically, the Pharma index has registered a structural turnaround on long term charts. At the current juncture, Cadila Healthcare and Caplin Point Laboratories seem to be well placed in terms of a favourable risk-reward set-up from a medium-term perspective.

The pharma sector has been relatively outperforming over the past couple of months after witnessing a structural turnaround off March 2020 lows, signalling a reversal of five-year-long downtrend.

o In the pharma space, Cadila Healthcare has been relatively underperforming. However, currently, it has been seeing a faster pace of retracement as it retraced past five week’s decline (Rs 412-358) in just a single week, signalling an acceleration of upward momentum, auguring well for the next leg of up. Structurally, the stock has witnessed strongest up move since CY17 as a current up move off March low of Rs 202 (108%) is stronger than CY16-17 rally (90%). The elongated rally signifies structural
turnaround.

o It appears the stock has strong support at Rs 372 as it is 80% retracement of ongoing up move (Rs 420-358), at Rs 370. Hence, after a faster retracement, temporary breather from here on should be used as incremental buying opportunity.

o The stock may form a higher base and gradually head towards Rs 485 levels in coming months as it the 80% retracement of 2017-19 decline (Rs 560-206) placed at Rs 488.

Cadila Healthcare is one of the old generation family-owned pedigree companies which, after establishing a strong base in domestic formulations, shifted focus to the exports markets

• US (44% of FY20 revenues) grew at ~12% CAGR in FY16-20 backed by aggressive filings, product launches. Launch of authorised generics also contributed to overall growth. US pipeline (cumulative) consists of 390+ filed ANDAs, 95 pending final approvals. However, resurfacing of cGMP issues at Moraiya, an imminent slowdown in the base are main near term headwinds. We expect US sales to grow at ~9% CAGR in FY20-22E to Rs 7426 crore

• With a market share of 4.1%, Cadila Healthcare is the fifth-largest player in the domestic formulations market, as per AIOCD June 2020. The acute: chronic: subchronic ratio for the company is 53:31:16. Domestic formulation grew at a CAGR of 5.7% in FY16-20 backed by new launches and acquisition of Biochem. Recently, the company optically initiated a restructuring of business by rationalising slow-moving SKUs. We expect Indian formulations to grow at a CAGR of ~9% in FY20-22E to Rs 4432 crore.

• On the US front, the company plans to venture into complex injectables (45 filed ANDAs + 14 in-licensed products), which is likely to provide meaningful traction from FY23-24 onwards. Similarly, the addition of biosimilars (like Trastuzumab, Adalimumab, Pegfilgrastim, Bevacizumab, etc.) for Emerging markets (like LatAm, MENA markets and South East Asia) are expected to provide growth impetus, going ahead. The wellness segment performance hinges upon the company’s marketing & distribution prowess besides effective product positioning. India formulations business, after recent restructuring, is likely to stabilise. Both wellness, India formulations are likely to deliver steady growth in FY22. Overall, balance sheet reduction, Moraiya warning letter resolution, US base business performance in tough times are some important aspects to watch.

Also Read: IPO in long-term strategy, currently focused on e-commerce growth in India: Flipkart

Also Read: Bhuiyan canal as impressive as the Taj or the Pyramids: Mahindra




India’s $22 billion bond market


The bond market also drives India’s economy which is otherwise slowing, inflation is sputtering and the central bank is cutting interest rates. But the cost of long-term money is refusing to budge. The reason, in a single word: upcoming elections. Polls are scheduled in states. Prime Minister Narendra Modi probably would have liked to make NDA’s reelection endorsement with less distress in the farm economy and a better jobs track record. If he hadn’t scored an own goal by banning 86 per cent of the country’s cash overnight, he might even have succeeded. Team Modi will end the fiscal year on March 31 with a huge deficit of roughly $190 billion, a pre-poll bump that doesn’t appear to have helped in pump-priming the economy.

bond market

The Gross Domestic Product (GDP) in India grew 0.70 per cent in the first quarter of 2020 over the previous quarter. It comes as little surprise that the country recorded its slowest GDP growth rate recently. More weakness is expected in the coming three months ending December 2020. That can only mean more disinflation and deeper interest-rate cuts. Why, then, is the 10-year Indian government bond yield doing very well, more than double the expected inflation rate for the year?

For both NBFC and corporate categories of bonds, the ranges grew by nearly 30-40 basis points between February 2020 and April 2020. For both, the credit spreads attained their peak in the first half of May, close to 180 basis points for NBFCs and 170 basis points for the corporate bonds.

What’s troubling the market – beyond the known $100 billion deficit for the next fiscal year – is the additional, below-the-radar government funding it’s being asked to provide. India Ratings & Research Pvt., a unit of Fitch Ratings Inc., calls it “extra-budgetary resource,” a euphemism for public spending via borrowings that are, for all practical purposes, sovereign liabilities (though not counted as such).

Consider the top 10 public enterprises that borrow either to create economic infrastructure, such as the National Highways Authority of India or distribute state subsidies, such as the Food Corporation of India. While the liabilities sit on their balance sheets, their ability to repay comes from the government. A Food Corp. bond flopped after India introduced a clause diluting the agency’s sovereign backing, Cogencis reported.

It is the Indian households whose savings are being cornered by the government. For this to pay off, public spending has to make businesses and families more optimistic about investing and consuming. That could have happened a lot sooner were it not for the 2016 demonetization, or the spotty implementation of a badly designed goods and services tax. The bond market does provide an alternative.

But more worryingly, and to Team Modi’s disappointment, animal spirits aren’t reviving quickly enough – despite simultaneous fiscal and monetary stimulus, as well as regulatory easing and $39 billion in central bank liquidity infusions since May.

The bond market is holding this campaign hostage.

If the 10-year yield stays elevated despite slowing growth and inflation, high real long-term interest rates will further depress private borrowers’ sentiment. And this when nonbank lenders’ moods are already sullen. The sudden bankruptcy of an infrastructure financier last September has raised their funding costs; a housing glut is adding to the nervousness around builders’ debt. With credit-risk premiums unlikely to narrow any time soon, it’s all the more important that India’s risk-free rate should fall.

Also Read: Global Markets come under the grip of coronavirus




Time to Buy Infosys is Now

In the current market scenario, we have seen stocks from underperforming sectors witnessing sharp upsides while performing spaces like technology took a breather. We believe that after a round of profit booking, technology stocks will resume their uptrend. Infosys has been hovering around Rs 900 levels for a while. Now, it is likely to witness upsides on the back of fresh formation of long positions

Buy Infosys in range of Rs 915-935, Target: Rs 1090; Stop Loss: Rs 840; Time frame: Three months

Last closing price – Rs 925.00
Beta – 0.65
12M Avg Price – Rs 753.0
3M Avg Roll (%) – 87.0%
HV 30 Day (% Annualised) – 25.40

buy-infosys
Price vs. open interest pattern. Fresh accumulation is likely to take stock higher

 The open interest in Infosys has been gradually declining in the last couple of weeks as the stock surpassed its major resistance of Rs 840 in July lost its quarterly results. Since then, the short covering has propelled the stock towards Rs 975. The stock started the September series with almost six month’s low open interest. We believe it will attract fresh long additions from here onwards and is well placed to move above Rs 1000

 In the options space, the stock had the highest Put OI base at the 900 strikes in August as well September series. Despite continued strength in the rupee, the stock was able to hold these levels amid profit booking and has started moving up. While the major Call OI base is placed at Rs 1000, we believe current levels provide a good entry opportunity from a risk-reward perspective

 The rupee has seen strengthening on the back of a weakening dollar and has breached its major support level of 74.50. In the recent move, it has even moved below 73 levels while a round of upsides cannot be ruled out after continued weakness seen in the dollar for the last five months. Moreover, technology stocks have shown significant resilience to the appreciating currency. Any rebound will help the space to move out of the range

 Infosys has also shown a tendency of finding directional trends after breaching its long term mean levels in either direction. It has even surpassed its mean+2*sigma levels post the recent results. We believe these levels should act as major support. In such a scenario, the stock remains a buying opportunity till it sustains above Rs 860 levels.