JP Morgan - Torrent Pharma, Centurion Bank of Punjab

Torrent Pharmaceuticals Ltd, Overweight

Torrent has delivered 63% profit growth in FY07 and will double profits over next two years on the back of strong domestic and Brazilian branded business. We reiterate that this leverage will continue to drive growth even beyond FY09, as besides these markets, Torrent will drive growth even from other markets.

We increase our FY08 and FY09 estimates 8% and 5% respectively and set a new Mar-08 target price of Rs330, based on 15x FY09E EPS. The key risk to our call is if Heumann or domestic operations perform worse than our expectations.

Centurion Bank of Punjab, Overweight

Provisions more than doubled sequentially to Rs 563 mn .About Rs 132 mn was due to one time catch up impact of RBI's requirement for additional standard provisioning on certain categories of loans which pulled down pre-tax profit growth to 74% yoy. High effective tax rate of 40% resulted in 8% yoy growth in net profit.

Near term catalyst for the stock is lower foreign holding after RBI approves the LKB merger.

We are reviewing our numbers.


Consumer
India Consumer: Off the Shelf
Key highlights of our fourth edition of the consumer fortnightly:

Domestic : 1) HLL extends its premium soap brand 'Dove' into hair care segment with the launch of shampoos, conditioners and treatments under this brand to counter rising competition from L'Oreal in premium segment, 2) Godrej Consumer is planning to enter the shampoo segment with the launch of a mass market brand in near future. This is likely to intensify competition in this space which is currently dominated by HLL and Procter & Gamble, and 3) Diageo-Radico JV launches Masterstroke whisky targeting mid-premium segment in Maharashtra.

Key commodity trends: Palm oil prices continued their uptrend rising almost 5% over the fortnight. Expected tightness in soyabean (closest substitute) supply and increased demand for bio-diesel is leading to new highs for palm oil (now at over M$2500/tonne). On the other hand prices for wheat softened by 2% over the past fortnight on the back of steady crop arrivals.

International: 1) Luxury brand Christian Dior Couture is planning to set up its subsidiary in India and expand its operations, reflecting confidence of foreign luxury brands in India's fast growing luxury retailing market (35-40% growth p.a.), 2) UK based Cobra beer has announced plans to set up two Greenfield breweries in India.