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Consumer Durables and Realty Stocks Rise
Wed, 21 Sep 01:30 pm

Indian Indices are trading marginally higher during the post-noon trading session amid encouraging global markets. Major sectoral indices are witnessing buying interest with stocks from consumer durables, realty & auto leading the pack of gainers.

The BSE Sensex is trading higher by 90 points (up 0.3%) while the NSE Nifty is trading higher by 29 points (up 0.3%). The BSE Mid Cap index is trading up by 0.4% and BSE Small Cap index is trading higher by 0.7%. Gold prices, per 10 grams, are trading at Rs 31,070 levels. Silver price, per kilogram is trading at Rs 46,640 levels. Crude oil is trading at Rs 3,034 per barrel. The rupee is trading at 67.02 to the US$.

Oil & gas stocks are trading on a positive note with only Oil India Ltd & Chennai Petroleum trading in the red. As per an article in Business Standard, Indian Oil Corporation (IOC) and GAIL (India) have signed a memorandum of understanding (MoU) with the Adani Group's Dhamra LNG Terminal in Odisha.

Reportedly, the proposed terminal is expected to have a 5 million tonnes per year of LNG capacity. While IOC is targeting a 38% stake, GAIL will take over an 11% stake in the project. Moreover, Adani Petroleum Terminal will hold a 49% stake in the Dhamra LNG Terminal and remaing 2% will be owned by financial institutions.

As per MoU, Indian Oil and GAIL would reserve regasification capacity in the terminal to supply regasified LNG in the emerging gas markets in the eastern part of India.

Further, the decision to acquire a stake in the project increases the uncertainty for other liquefied natural gas projects proposed for India's east coast. This is because the project could meet all the demand for natural gas in Odisha and Andhra Pradesh, the reports noted.

While factories and vehicles need more and more natural gas, IOC has been aggressively booking capacities in LNG terminals across the country. The company, which is setting up its own 5 million tonne terminal in the east coast, wants its gas trading business to contribute 15% of revenues by 2021.

Recently, government has proposed a new revenue sharing model (Subscription Required) which will make India more energy independent. Whether the proposal proves positive for gas transmission companies such as GAIL will be the key thing to watch out for going forward.

In another development, it was reported that, GAIL has begun production from a new 400,000 tonnes polyethylene plant, helping double capacity of its Pata petrochemical complex in Uttar Pradesh. In line with its step towards realizing the Make in India initiative of the Government of India it has started the first Unipol PE process line with the capacity to produce 400 Mt per annum of polyethylene (PE).

Reportedly, on the back of surging demand, new process line will give GAIL the platform to expand its PE product capabilities and domestically-produced resin products needed for large-volume markets as well as advanced performance applications.

Moving on to the news from pharma sector. As per an article in a leading financial daily, India's antitrust watchdog Competition Commission of India (CCI) cleared Piramal Enterprises - Pfizer deal where Piramal Enterprises proposed acquisition of four brands from Pfizer.

In May this year, Piramal Enterprises had entered into a deal with Pfizer to acquire Ferradol, Neko, Sloan's and Waterbury's Compound brands for Rs 1.1 billion. The collective market size of these brands is estimated at Rs 70 billion. Moreover, the deal also included trademark rights for Ferradol and Waterbury's Compound in Bangladesh and Sri Lanka, the reports noted.

Further, the brands acquired are well-known in the Indian market. Ferradol is a leading nutritional supplement for children and adults, while Waterbury's Compound is used for building cough and cold immunity. Neko is a medicated soap while Sloan is a muscular pain reliever.

One must note that, the consumer products division of the company currently ranks 7th in India. The deal is seen as a move by the Piramal to strengthen its Over the Counter (OTC) products portfolio. With this acquisition it aims to be a top 3 player in the OTC market by 2020, the company stated.

As the M&A activity has been heating up globally, the M&A activity in the Indian pharma space has been on the rise in recent times. At the end of the day, whether the company is able to derive value from the acquisitions and augment the overall performance will be the key thing to watch out for going forward.

Meanwhile, the initial public offering of ICICI Prudential Life was subscribed 0.52 times on the second day of the issue. The IPO received bids for 68.78 million shares as against the 132.37 on offer.

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