>UNITECH(BNP Paribas)

Leverage remains uncomfortably high
Unitech has one of the highest debt-equity ratio among Indian real
estate developers. Even adjusting telecom-related debt, gross debt of
property business is approximately INR80b. The company’s interest
coverage ratio (EBITDA/Gross interest) remains dangerously high at
2.2x declining to 1.9x by FY10. We believe that weak pricing and slow
execution are likely to stretch Unitech’s balance sheet. The company
has launched only about five new projects (6m sqft) this year. We are
still skeptical about the company’s ability to drive volumes in the
residential segment in FY09 due to weak market sentiment.

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>Daring derivatives(Sharekhan)

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Daring Derivatives

>ITC(HSBC)

With the introduction of VAT, an increase in excise duty for
non-filtered cigarettes and a recent smoking ban in public
places (2 October), the tobacco sector is getting hit hard and
fast. These measures are part of an overall global plan to
reduce tobacco consumption, spearheaded by the WHO.
While it is true that, in India, the vigour of implementation
may change depending on political or other factors, we
believe the tobacco sector is in for a tough time in the long
term. The halcyon days of FY05-07 averaging 7.5% volume
growth pa may be over.

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>Dr Reddy (JP Morgan)

We recently hosted the management of Dr Reddy’s as part of our India
Conference 2008. Key takeaways from the various investor meetings are
as follows:
• Generics pipeline remains strong; CIS business robust: Dr Reddy’s
reiterated a strong growth pipeline in the US as demonstrated by the
ANDA pipeline. The company had 66 ANDAs waiting approval from
the US FDA as of October 2008. The company maintained that the CIS
business remains robust with receivables under control from that
particular region.
• AOK tender results expected some time in November end; market
to become more competitive: The company expects the AOK tender
results to come out some time in November end. The AOK tender
addresses around 60 molecules and approximately 40% of the German
market. While management remains hopeful of some wins in the AOK
tender, the company expects price competition to remain severe in
Germany. The company did not give any guidance for Betapharm
profitability for next year.

Read the full report here Dr Reddy (JP Morgan)