Category: Healthcare

Q4 earnings to be boosted on low base of Demonetisation and GST

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Fourth quarter earnings in most of the sectors will be better-than-expected, helped by a demonetization and Goods and Services Tax (GST) – hit low base, CLSA said in a note.

The brokerage said that the earnings growth will be at 17%. Domestic revenue growth will be at 10% year-on-year, which is expected to be a six-month high.

The auto sector is expected to report 18% growth in the quarterly earnings. CLSA added that, Tata Motors’ earnings might be hurt following a weak trend as the Jaguar Land Rover’s retail volumes fell by 8% year-on-year to 83,732 units in March 2018.

The auto makers performance lagged the most in the UK and Europe as a steep decline was seen in the diesel vehicle sales.

The consumer or FMCG sector will also post a 18% rise in the fourth quarter, after being worst hit by demonetisation and GST related hiccups. The key expectation from this quarter, is sustained recovery and positive management commentary.

CLSA added that domestic sectors like real estate is expected to post 63% of earnings growth as various real estate companies are encouraging pre-sales of properties like Sobha Ltd.

The banks will report a 46% decline in the quarter, hurt by higher non-performing assets (NPA) provisioning, CLSA said. Corporate banks are expected to witness higher provisioning, driving potential earnings downgrades.

Also Read: Eye on Q4 earnings: Experts discuss what to expect from Pharma, FMCG & other sectors

Earnings will decline 20% in the pharma sector for companies like Sun Pharma and Lupin, as they face the brunt of the pricing pressure in the U.S as well as outstanding regulatory issues, especially by The Food and Drug Administration (US FDA) on plants.

“Analysts expect low single digit revenue growth, with revenues from the US – a vital market – likely to decline for the fifth consecutive quarter due to faster drug approvals resulting in more competition and consequently pressure on price margins,” a report said.

However, 10% rise will be seen in the domestic markets for the drug companies as operations normalises post GST and demonetisation.

The intense competition faced from Reliance Jio’s entry into the market has caused Bharti Airtel to report its first ever quarterly loss in over 15 years and Idea to post its sixth consecutive loss, CLSA said.

The average revenue per user (ARPU) will continue to slip in the upcoming quarter, despite strong subscriber addition on account of migration of Aircel and Reliance Communications’ (RCOM) subscribers, Edelweiss said in a note.

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Manipal Hospitals raises bid for Fortis hospital business

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Manipal Hospitals Enterprises Private Ltd raised its offer to buy rival Fortis Healthcare Ltd’s hospital business by about a fifth in an attempt to win over minority shareholders opposed to the deal.

The new offer values Fortis’ hospital business about 21 percent higher at 60.61 billion rupees ($933.3 million), or 116 rupees per share, Manipal Hospitals said in a statement late on Tuesday.

Manipal first offered to buy Fortis last month in a deal that would combine its 14 hospitals with Fortis’s portfolio of 34 hospitals, creating a 150 billion rupees company and formidable rival to Apollo Hospitals Enterprise Ltd.

But the previous bid, which offered shareholders 10.83 shares in the combined company for every 100 Fortis shares held, was panned by investors. It knocked Fortis stock down 14 percent on the day the deal was announced and prompted Chief Executive Bhavdeep Singh to make conciliatory comments about keeping minority shareholders’ concerns in mind.

The old offer met with disapproval from shareholders including major Indian equity investor, Rakesh Jhunjhunwala, the Economic Times newspaper reported.

Manipal said as per the new offer, existing Fortis shareholders will roughly own half of the new company.

Under the previous terms, Manipal Chief Executive Ranjan Pai would have owned about 38 percent of the new company, which would be listed on Indian stock exchanges. U.S. buyout firm TPG was expected to hold 20.7 percent.

Manipal‘s statement on Tuesday did not mention how much of the new company Pai or TPG would own.

“We hope that our revised offer addresses the concerns certain Fortis shareholders had raised and believe this offer is in the interests of all stakeholders, including Fortis’ shareholders,” Pai said.

Fortis shares were trading down 0.2 percent as of 0437 GMT after having risen as much as 3.6 percent early in the session.

Also Read: Manipal hospital chief looks to shore up shareholder support for Fortis deal

A deal will take some pressure off Fortis, which has been under a cloud as authorities investigate whether its founders, brothers Malvinder Singh and Shivinder Singh, who are no relation to the CEO, took funds from the company. The brothers have denied the allegations.

For Manipal, a deal would mean greater access to India’s burgeoning healthcare market, estimated by Deloitte to grow three-fold to $372 billion by 2022.

Private Indian healthcare companies have grown rapidly in recent years, boosted by increasing demand for better healthcare in an under-resourced public health system.

Manipal also said on Tuesday it expects to buy a 30.9 percent stake in Indian diagnostics chain SRL Ltd, which is partly owned by Fortis. Manipal plans to fold SRL into the new company.

($1 = 64.9400 Indian rupees)

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Eye on Q4 earnings: Experts discuss what to expect from Pharma, FMCG & other sectors

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The fourth quarter results season will begin in a few days. It has an advantage of the low base of the demonetisation quarter but it also has the disadvantage of some continued GST adjustment and weakness in corporate banks.

To discuss what should one expect from different sectors like IT, FMCG, autos, capital goods, oil & gas, pharma, cement, metals, realty, power, telecom etc., CNBC-TV18 spoke to their in house research team and market experts Nischal Maheshwari, Head – Instl Equities, Edelweiss Securities Gautam Duggad, Head-Institutional Equities, MOSL and Sanjiv Bhasin, Executive VP-Markets, IIFL who know the numbers like the back of their hand.

Cement Sector: 

The fourth quarter of FY 18 has traditionally been ideal for cement companies, but this time around cement prices failed to rise in the busy season, despite rising cost pressures, Edelweiss said in a note, expecting that the cement industry will be a disappointment in the quarter.

Also Read: Cement has had its challenges in the fourth quarter

Metal Sector:

In terms of the fourth quarter of 2018, the ferrous stocks may report a better-than-expected quarter owing to the sharp price increase, while from non-ferrous space, Nalco is likely to deliver strong results owing to the surge in alumina prices.

Also Read: Metal sector may report better results owing to surge in prices

Power Sector:

Fuel wise, while the coal-fired plants reported a moderate growth given the shortage of coal supply, hydro generation was a bit weak given lower snowfall. While the early onset of summer might create challenges for distribution companies, it augurs well for consumer durable players like Voltas, Havells etc.

Also Read: Early onset of summer: Someone’s pain is someone else’s gain

Industrial and Infrastructure Sector:

Fourth quarter is seasonally strong for industrial and infrastructure companies. Margins are expected to remain stable while order-books are expected to burgeon given the flush of order inflows especially for roads and transmission and distribution space.

Also Read: Execution ramp up to drive Q4 earnings in the infra sector

Pharmaceutical Sector:

For pharma companies, domestic markets should perform better though. Expect up to 10% growth due to normalising of operations post GST and a favourable year-on-year base due to demonetisation.

Also Read: Pharma poised for another painful quarter

Fast Moving Consumer Goods (FMCG) Sector:

FMCG sector earnings were most impacted by demonetisation & Goods and Services Tax (GST) related hiccups last year. GST rates for a large swathe of daily consumption items were revised lower in November 2017, so Q4 FY 18 will have the first full quarter impact of lowered prices and higher off-take.

Also Read: FMCG Q4 FY18: Sector Expectations – The Hope Of Sustained Recovery

Telecom Sector: 

The average revenue per user (ARPU) will continue to slip in the upcoming quarter, despite strong subscriber addition on account of migration of Aircel and Reliance Communications’ (RCOM) subscribers, Edelweiss said in a note. Jio has signalled cut throat competition will continue, with the company providing free prime services for its subscribers for another year, contrary to market expectations that it will start monetising its users.

Also Read: In telecom sector, ARPU to continue to slip in Q4 FY18, says Edelweiss

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Pharma poised for another painful quarter

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Pharma companies are expected to post another set of subdued earnings in the quarter ended March because of severe price pressure in the US and outstanding regulatory issues, especially by The Food and Drug Administration (USFDA) on plants.

Analysts expect low single digit revenue growth, with revenues from the US – a vital market – likely to decline for the fifth consecutive quarter due to faster drug approvals resulting in more competition and consequently pressure on price margins.

Analysts are factoring in a 2-5% decline in the US revenues on a constant currency basis (exchange rates that eliminate the effects of exchange rate fluctuations when calculating financial performance numbers).

According to them, companies such as Sun, Lupin and Glenmark could face tough competition in the US this quarter. Others such as Cadila and Natco are likely to perform relatively better because these companies sell the generic version of an antiviral drug named Tamiflu and the US has experienced a bad flu season.

For pharma companies, domestic markets should perform better though. Expect up to 10% growth due to normalising of operations post GST and a favourable year-on-year base due to demonetisation.

Margins for most companies are expected to stay flat or decline. The pressure on margins will be due to pricing pressure in the US along with remediation costs for some companies. On remediation, commentary on the status of outstanding regulatory issues will be key.

The focus will be on Sun Pharma’s Halol, Dr Reddy’s’ Srikakulam API, Aurobindo’s injectables and Alkem’s Daman plant. The street will also await commentary on whether the pricing pressure has bottomed out and what FY19 has in store for these companies.

Overall, don’t be surprised if it turns out to be another sedate quarter.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Novartis to buy AveXis for $8.7 billion

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Pharma major Novartis said it has entered into an agreement to acquire Nasdaq-listed clinical stage gene therapy company AveXis Inc for $8.7 billion in cash.

The transaction, which translated to $218 a share, was unanimously approved by the boards of both companies.

AveXis has several ongoing clinical studies for the treatment of SMA, an inherited neurodegenerative disease caused by a defect in a single gene, Novartis said in a statement.

The Novartis offer represents a premium of 88 percent to AveXis’ closing price on April 6, 2018, and a 72 percent premium to the company’s 30-day volume-weighted average stock price.

The US Food and Drug Administration (FDA) has granted AVXS-101 Orphan Drug designation for the treatment of SMA as well as Breakthrough Therapy designation for SMA Type 1. A BLA filing with the FDA for AVXS-101 is expected in the second half of 2018 and approval and launch in the US is expected in 2019.

The FDA encourages drugmakers to develop treatments for rare diseases that affect 200,000 patients or fewer, by granting drugs “orphan” status. The designation provides drug developers with special development and market exclusivity incentives.

The lead AveXis gene therapy candidate, AVXS-101, has highly compelling clinical data in treating SMA Type 1, which is the number one genetic cause of death in infants, where nine out of ten infants do not live to their second birthday or are permanently ventilator dependent, the Novartis statement said.

It is estimated that one out of every 6,000-10,000 children born is affected by some form of SMA, added the statement.

Novartis CEO Vas Narasimhan said the proposed acquisition of AveXis offers an extraordinary opportunity to transform the care of SMA.

“We believe AVXS-101 could create a lifetime of possibilities for the children and families impacted by this devastating condition. The acquisition would also accelerate our strategy to pursue high-efficacy, first-in-class therapies and broaden our leadership in neuroscience,” he said, adding that Novartis stands to gain another gene therapy platform besides its own CAR-T platform for cancer, to advance a growing pipeline of gene therapies across therapeutic areas.

The transaction is expected to close in mid 2018, pending the fulfillment of the tender offer and all other closing conditions.

This is a developing story and will be updated. 

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Centrum Capital mulls health insurance foray

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Just days after hiving off its forex business, Centrum Capital is gearing up to add another financial services vertical to its portfolio. The group, which is already into investment banking, corporate finance and wealth management is now looking to make an entry into the insurance space, say sources.

Centrum Group is likely to have initiated preliminary discussions with Aspire Health Insurance to make a brownfield entry into the standalone health insurance space.

Aspire Health Insurance, on its part, is currently in the process of seeking approvals from Insurance Regulatory and Development Authority of India (IRDAI) to start its operations.

Centrum Capital is a three-way joint venture between Hong Kong-based Macquarie Investment Fund, domestic private equity player, Arth Capital and former PNB MetLife MD, Rajesh Relan.

Sources add that if the discussions between Centrum Capital and Aspire Health Insurance materialise, then the deal is likely to move towards an arrangement where Aspire Health Insurance will issue fresh equity to Centrum Capital making it the fourth partner in the existing joint venture.

There are only six standalone health insurance companies operating in the country and Centrum Capital intends to take a slice of this growing market. Standalone health insurance segment is the fastest growing segment of the industry recording a CAGR of 35% in the past five years, though pricing discipline remains to be a challenge here.

However, Centrum Capital said the company is not in discussion and does not intend to partially or fully acquire Aspire Health Insurance.

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3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow