Unitech has signed deal with Telenor albeit on reduced valuations.
Telenor's stake in the venture is now at 67%. We believe this extra stake could have been negotiated because of higher debt in the telecom venture. However as regards for Unitech there is no change in terms of cash flows. Unitech mgmt expects to receive first tranche of payment of Rs 400 cr by next week. We think this news item will not have any major impact on stock price.
Drug regulators have banned polio vaccine from Panacea
Drug regulator has banned monovalent Oral Polio Vaccine (mOPV) for one of the batch of Panacea after the vaccine did not meet the required standards of potency in test done by WHO appointed independent bodies.
Our Take: Though it is difficult to ascertain the exact financial impact on the company, but sentimentally it's a big blow on the company. We have yet to get more clarity from the management. Our understanding is that in case if WHO reject the above batch and defer the new supply till the time the quality issues are being sorted out, Panacea Biotec will have minimum impact of 4mn doses of mOPV1 (assuming 10 immunization schedule and each schedule will have 4mn doses requirement) and US$10mn impact in the topline because of deferment of order. Considering 20% net margins on OPV, the EPS impact in FY09E could be Rs1.5. Our EPS estimate for FY09E and FY10E is Rs7.4 and Rs10.2 respectively. We will re-visit our numbers once we get clarity from the management. Till the time we are putting our rating under Hold.
Dishman cuts salaries by 13%
Dishman has announced that it will cut salaries of its staff by around 13% besides following lesser working days. We believe this is a fallout of the fact that company does not expect full up-liftment of stock by one of its key customers namely Solvay in current quarter because of de-stocking of inventory happening at Solvay's US operations. Consequently Dishman has decided to cut down production by following lesser working days. Salary cuts will also be a part of cost saving. However, we have built in the fall in revenues from Solvay in this quarter in our estimates for earnings. The company has already done an EPS of Rs 14.5 in 9months of this fiscal. We have assumed only Rs 3 EPS in Q4FY09. We maintain Buy recommendation on the stock with a target price of Rs 200
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