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NCLT approves Vedanta bid for Electrosteel Steels

Vedanta has got NCLT approval for its resolution plan for Electrosteel Steels. Vedanta was the winning bidder with a bid of Rs5, 000cr. This implies that lenders would have to take a ~55% haircut to existing debt. This is a positive development for Vedanta, which was searching ways to forward integrate its existing iron ore mines into steel making. Vedanta’s iron ore mines are ideally located to supply the newly acquired steel business with cheap and high quality iron ore.

Electrosteel Steels was in the process of expanding the production of its plant to 2.5mtpa. The product range for Electrosteel Steels includes Pig Iron, Billets, TMT Bars, Wire Rods and Ductile Iron Pipes. Due to significant equity dilution under the resolution plan, existing shareholders of Elelctrosteel Steels would not benefit from the implementation of the resolution plan.

Tata Sponge Q4FY18E Result Expectation

Expectations for Q4FY18E:

Revenue – Rs219cr, up by 18.4% yoy, due to ~10% yoy rise in sponge iron prices

EBITDA – Rs58cr, up by 126% yoy

EBITDA Margin – 26.6%, a rise of 412bps qoq supported by lower raw material prices

PAT – Rs47cr, up by 123% yoy

Q3FY18 performance highlights:

Revenue – Rs214cr, up by 36% yoy, due to ~16% yoy rise in realisations and 18% yoy increase in sponge iron sales volumes

EBITDA – Rs48cr

EBITDA Margin – 22.4%

PAT – Rs36cr


The stock would react positively over the medium term, though near term reaction may be subdued as the stock has already rallied about 11% over the past five sessions.

We see sponge iron prices and volumes remaining firm over the medium term, as domestic steel production is expected to grow at over 5% over the next few years.

However, as Tata Sponge is already operating at over 95% utilization, there is limited room for volume growth.

Bajaj Electricals strengthens its E&P order book

BJE has won orders for rural/urban electrification work on turnkey basis under its engineering and projects (E&P) solutions. The company would be executing these projects in different villages/town of Uttar Pradesh. The timeline for the project is about 15 months from the date of issue of Letter of Intent (LOI).

The company had earlier announced that it has bagged orders for six Rural Electrification projects aggregating to Rs2, 389.03cr from Purvanchal Vidyut Vitaran Nigam Limited ( PuVVNL) under the Saubhagya Yojna, which is also expected to be completed in 15 months.

In 9MFY18, BJE derived ~51% of revenue from consumer durables (CD) and ~49% from E&P solutions.

Glenmark initiates phase 2b clinical trial of GBR 830

Glenmark Pharmaceuticals has announced initiation of a Phase 2b clinical trial of GBR 830, its novel, investigational drug candidate to treat moderate-to-severe atopic dermatitis. The trial’s primary endpoint will assess the efficacy of GBR 830, compared to placebo. Trial enrolment is expected to begin in June 2018.

This is a double-blind, placebo-controlled multi-center trial which will will randomize approximately 392 patients across four dosing arms of GBR 830 and placebo. This trial will also assess safety, and biomarkers relevant to the disease and unique mechanism of GBR 830.

Cipla says Indore plant received observations, no data integrity issues

Cipla has clarified that the USFDA conducted a routine cGMP audit at its Indore formulations facility from 2-13 April 2018. According to Cipla, this was a normal course of business. At the end of the inspection, USFDA has issued form 483 observations. The company has also said that there were no data integrity and/or repeat observations. We had reported of USFDA inspection at Indore on April 05, 2018.

The company believes that the observations are unlikely to have any material adverse impact and will submit the response within the stipulated timeframe.

Indore is a formulations manufacturing facility. The Indore SEZ facility had received nine USFDA observations in 2015 and was cleared in 2016. As per one of the earlier management comments, Indore is not a very significant plant at the moment as it is a newer plant.

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