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Bayer to acquire Monsanto in all cash transaction

Bayer to acquire Monsanto in all cash transaction

Sep 14,2016

Monsanto India announced that Bayer and Monsanto signed definitive agreement under which Bayer will acquire Monsanto for USD 128 per share in an all cash transaction.

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Tickets booked across reserved ticket booking window can be cancelled through IRCTC website or through 139
Apr 18,2017

In an endeavor to provide smooth travel experience to the railway travelers, Indian Railways have taken various initiatives for improved passenger experience. Considering the peak season during summers, Indian Railways is poised to offer convenient travel to the passengers without upsetting their plans. To ensure optimal utilization of available accommodation, following initiatives have been undertaken by Indian Railways:-

i) Finalization of first reservation chart at least 4 hours before the scheduled departure of the train.

ii) After preparation of first reservation chart, current ticket booking facility provided through any reserved ticket booking window as well as on internet till preparation of second reservation chart.

iii) Transfer of vacant available accommodation after preparation of second reservation chart to next remote location.

iv) Following facilities are also provided online through IRCTC website:

a) Waitlisted passengers given the option of accommodation in any other train without payment of any difference of fare or grant of refund thereon under VIKALP scheme. This facility can also be availed for e tickets booked prior to 01.04.2017

b) Tickets booked across reserved ticket booking window can be cancelled through IRCTC website or through 139.

c) In case of e tickets, boarding points can be changed through IRCTC website at least 24 hours before the scheduled departure of the train.

d) The facility of online booking of wheel chair provided free of cost to passengers.

e) The facility of online booking of retiring rooms through IRCTC website has been introduced.

f) Disposable bedrolls can be purchased through IRCTC website.

g) E Catering introduced to increase food options available with passengers.

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Cybermate Infotek to hold EGM
Apr 18,2017

Cybermate Infotek announced that an Extra Ordinary General Meeting (EGM) of the Company will be held on 18 May 2017 .

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Board of GRUH Finance recommends final dividend
Apr 18,2017

GRUH Finance announced that the Board of Directors of the Company at its meeting held on 17 April 2017, inter alia, have recommended the final dividend of Rs 2.8 per equity Share (i.e. 140%) , subject to the approval of the shareholders.

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GRUH Finance to hold AGM
Apr 18,2017

GRUH Finance announced that the 31st Annual General Meeting (AGM) of the company will be held on 15 June 2017.

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Indiabulls Real Estate drops on profit booking
Apr 18,2017

Meanwhile, the S&P BSE Sensex was up 210.87 points or 0.72% at 29,624.53. The S&P BSE Mid-Cap index was up 137.86 points or 0.96% at 14,524.93.

On the BSE, 59.21 lakh shares were traded on the counter so far as against the average daily volumes of 47.38 lakh shares in the past two weeks. The stock had hit a high of Rs 155 so far during the day, which is a 52-week high for the counter. The stock hit a low of Rs 143.05 so far during the day. The stock had hit a 52-week low of Rs 54.10 on 18 April 2016.

Shares of Indiabulls Real Estate had rallied 66.74% in the preceding five trading sessions to settle at Rs 148.15 yesterday, 17 April 2017, from its closing of Rs 88.85 on 7 April 2017.

The stock had jumped 39.96% in a single trading session yesterday, 17 April 2017 to settle at Rs 148.15, after the company during market hours on that day said its board considered various proposals for restructuring the business.

Indiabulls Real Estates board considered the possibility of streamlining its existing residential, commercial and leasing businesses by segregating commercial & leasing business carried on by itself and/or through its special purpose vehicles (SPVs) and vesting the same into Indiabulls Commercial Assets (ICAL) and restructuring/reorganizing its businesses.

Among other recent developments, Indiabulls Real Estate announced an early closure of share buyback offer on 10 April 2017. The company bought back 3.40 crore equity shares utilizing a total of Rs 272.05 crore (excluding transaction costs), which represents 50.38% of the maximum buyback size.

The equity shares were bought back at an average price of Rs 79.91 a share. Post buyback offer, the promoters stake in Indiabulls Real Estate increased to 50.92% from 47.5% earlier. While, public shareholding declined to 49.08% from 52.5%.

On consolidated basis, Indiabulls Real Estates net profit fell 13.7% to Rs 58.58 crore on 58.8% decline in net sales to Rs 291.21 crore in Q3 December 2016 over Q3 December 2015.

Indiabulls Real Estate is a real estate development company with development projects spread across office and commercial complexes, premium residential developments, mega townships, retail spaces, hotel and resorts, special economic zones and infrastructure development.

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Fitch Assigns HPCL-Mittal Energy BB IDR, Rates Proposed USD Notes
Apr 18,2017

Fitch Ratings has assigned India-based HPCL-Mittal Energy Limited (HMEL) a Long-Term Issuer Default Rating (IDR) of BB. The Outlook is Stable. The agency has also assigned HMELs proposed senior unsecured US dollar notes an expected rating of BB-(EXP).

The final ratings on the notes are contingent upon the receipt of documents conforming to information already received.

Fitch assesses HMELs standalone credit profile at BB-, reflecting its robust refining operations supported by its highly complex refinery, strong profitability and expectations of high leverage on account of the large capex plans for its proposed petrochemical expansion. The IDR of BB benefits from a one-notch uplift for its parent - Hindustan Petroleum Corporation Limited (HPCL, BBB-/Stable) - given the moderate linkages. HMELs IDR will benefit from an additional notch uplift in the case of any weakening of its standalone credit profile below the current level of BB-, provided its linkages with HPCL remain intact.

KEY RATING DRIVERS

Strong Refining Operations: HMELs refining operations are supported by its robust asset quality. Its refinery is highly complex (Nelson Complexity Index of 12.6), which enables the company to optimise its crude diet and supports strong margins. HMELs utilisation rate has also been high (year ending March 2016 (FY16): 119%) with a throughput of 10.7 million metric tonnes per annum (mmtpa) - given the strong demand-supply dynamics in north India, where the refinery is located.

HMEL expects to complete its refinery expansion to 11.3 mmtpa (from 9 mmtpa) during 1HFY18. We expect margins to benefit from higher volumes, an improved product slate, ability to process acidic crude oils, and cheaper fuel alternatives in the near to medium term. HMEL also benefits from its take-or-pay agreement with HPCL for its liquid hydrocarbon production (about 75% of total), and also incentives from the state of Punjab.

Locational Benefit, Strong Profitability: HMELs refinery-utilisation rate benefits from the strong demand for petroleum products in India - and particularly in the north. HMELs land-locked refinery benefits from the favourable demand-supply dynamics in the region and minimal competition. This is likely to result in utilisation rates remaining high (FY16: 119%) over the medium term. The off-take agreement with HPCL for its liquid hydrocarbon further minimises the off-take risk and supports the high utilisation rates. The company also has a strong marketing infrastructure for its solid products, including polypropylene, which is likely to support its enhanced downstream operations following completion of its planned petrochemical expansion.

Large Capex Plans: HMEL plans to improve its downstream integration by setting up a petrochemical plant. The company estimates to spend around INR215 billion over the next five years starting in FY18. Increasing downstream integration should benefit HMEL in the long-term as a result of the petrochemical expansion. However, we expect HMELs FCF to be negative over the medium term on account of the high capex; HMEL is likely to fund its capex partly from its operating cash flows and balance with debt.

Leverage to Rise: FCF turning negative after FY18 and the long lead time to revenue generation (after FY22) leads us to expect net leverage (net adjusted debt/ operating EBITDAR) to rise and remain between 4x-5x over the medium term. This may stay temporarily above our downward net leverage guideline of 5x over FY21-FY22 just before the completion of the petrochemical capex. Fitch takes a positive view of the take-or-pay off-take agreement with HPCL, which provides minimum payments to cover HMELs debt obligations and ensures that the debt service coverage ratio (DSCR) is always maintained at or above 1.0x. However, net leverage is likely to improve once the petrochemical project starts operations, expected in FY23.

Uplift for Parent Support: HMEL benefits from a two-notch uplift from its standalone credit profile, to reflect moderate linkages with its 49% parent - HPCL - as assessed under Fitchs Parent Subsidiary Rating Linkage Criteria. HMELs IDR of BB includes a one-notch uplift, while its IDR will benefit from one more notch in the case of any weakening of its standalone credit profile below the current level of BB- - provided these linkages with HPCL remain intact. Similarly, HMELs IDR will also benefit from one more notch in the case of any improvement in HPCLs standalone profile - again, provided the linkages with HPCL remain intact.

These linkages factor in HMELs strategic importance and operational linkages with HPCL. HPCL has a product off-take agreement with HMEL (valid until 2026) to buy all liquid products of HMEL, which also supports its debt-servicing capacity. Liquid products constituted over 75% of HMEL total output and about 80% of HMELs revenues in FY16. HMELs capacity will constitute over 40% of HPCLs total refining capacity, after expansion, to 11.3 mtpa. HMEL is also accorded first priority by HPCL for sourcing its product requirement in north India - where it is its only refinery.

Notching for Secured Debt: Fitch has rated HMELs proposed senior unsecured debt one notch below its IDR, due to the high proportion of secured debt in its capital structure. Secured debt comprised nearly 88% of HMELs total consolidated debt as of FYE16. The proportion of HMELs secured debt is likely to come down after the proposed US dollar note issuance. However, we expect HMELs secured debt/EBITDA to remain above 2.5x over the medium term, resulting in the notching.

DERIVATION SUMMARY

[HMELs IDR of BB includes one notch uplift for linkages with its parent - Hindustan Petroleum Corporation Limited (HPCL, BBB-/ Stable). HMEL ratings will benefit from one more notch in the case of any weakening in its standalone credit profile - provided the linkages with HPCL remain intact. HMELs standalone credit profile of BB- reflects its strong refining asset quality which is likely to drive its strong cash flows and expectations of high leverage, in light of its large capex. HMELs standalone credit profile of BB- is one notch higher than that of Swedens Corral Petroleum Holdings AB (CPH, B+/ Stable), due to HMELs better asset quality, stronger profitability and presence in the high-growth Indian market. CPH has larger scale and some integration into fuel retailing, while its ratings are constrained by its presence in the mature European market with expected excess refining capacity, a structural decline in fuel consumption, stiff competition and high leverage despite manageable capex. Indian Oil Corporation Ltds (IOC, BBB-/ Stable) large scale, dominant position as the largest refiner and fuel retailer in India, integration into fuel-retailing and petrochemicals, average asset quality and relatively better financial profile explain the two-notch differential with IOCs standalone credit profile of BB+. IOCs IDR is equalised with that of the sovereign (BBB-/ Stable), die to the strong linkages.]

KEY ASSUMPTIONS

Fitchs key assumptions within our rating case for the issuer include:

- Crude oil price (Brent) of USD52.5 per barrel (bbl) in FY18, USD55/ bbl in FY19 and USD60/ bbl in FY20, in line with Fitchs crude oil price deck

- Moderation in the industry-wide gross refining margins, though remaining strong.

- Refinery throughput of 11 mmtpa in FY18, 12.3 mmtpa in FY19 and 11.7 mmtpa in FY20.

- Capex of over INR80 billion during the next three years starting FY18.

RATING SENSITIVITIES

Future Developments That May, Individually or Collectively, Lead to Positive Rating Action

- Any improvement in HPCLs standalone credit profile, provided the linkages remain intact

- We do not expect any positive action on HMELs standalone rating over the next medium term, given the expectations of increasing leverage on account of the large capex.

Future Developments That May, Individually or Collectively, Lead toNeg

Muthoot Capital Services gains ahead of board meeting
Apr 18,2017

Meanwhile, the S&P BSE Sensex was up 226.58 points, or 0.77% to 29,640.24.

On the BSE, 14,000 shares were traded in the counter so far, compared with average daily volumes of 8,022 shares in the past one quarter. The stock had hit a high of Rs 410 and a low of Rs 402.60 so far during the day. The stock hit a record high of Rs 429 on 12 April 2017. The stock hit a 52-week low of Rs 154 on 18 April 2016.

The stock had outperformed the market over the past one month till 17 April 2017, rising 49.22% compared with 0.79% decline in the Sensex. The scrip had also outperformed the market in past one quarter, rising 45.47% as against Sensexs 8% rise.

The small-cap company has equity capital of Rs 12.47 crore. Face value per share is Rs 10.

Muthoot Capital Services announced on 12 April 2017 that its board will meet on 18 April 2017, to consider issue of shares by way of bonus shares.

Shares of Muthoot Capital Services surged 9.59% to Rs settle at Rs 399.80 on 12 April 2017. The stock has risen 11.05% in three trading sessions from its close of Rs 364.80 on 11 April 2017.

Muthoot Capital Services net profit rose 6.3% to Rs 6.44 crore on 20.9% increase in operating income of Rs 70.06 crore in Q3 December 2016 over Q3 December 2015.

Muthoot Capital Services is a non-banking financial company (NBFC). Its portfolio includes commercial and consumer finance products like vehicle loans, gold loans, loans against property, bonds, deposits, investment products and advisory services among others. Apart from these, the company also disburses loans against property, shares, gold ETFs, SME loans, mortgage loans, leasing & hire purchase loans and bill discounting.

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DCB Bank moves north on reports of brokerage rating
Apr 18,2017

Meanwhile, the S&P BSE Sensex was up 243.84 points or 0.83% at 29,657.50. The S&P BSE Mid-Cap index was up 147.64 points or 1.03% at 14,534.71.

On the BSE, 4.06 lakh shares were traded on the counter so far as against the average daily volumes of 3 lakh shares in the past one quarter. The stock had hit a high of Rs 184.65 so far during the day, which is a record high. The stock hit a low of Rs 174.30 so far during the day.

The stock had hit a 52-week low of Rs 87.40 on 24 May 2016. It had outperformed the market over the past one month till 17 April 2017, advancing 6.13% compared with the Sensexs 0.79% fall. The scrip had also outperformed the market over the past one quarter, advancing 47.64% as against the Sensexs 8% rise.

The mid-cap bank has equity capital of Rs 285.36 crore. Face value per share is Rs 10.

Shares of DCB Bank had declined 3.56% to settle at Rs 173.25 yesterday, 17 April 2017, after the bank reported weak Q4 March 2017 results on Friday, 14 April 2017. The stock market was shut on that day for a holiday.

DCB Banks net profit declined 24% to Rs 52.86 crore on 20.2% increase in total income to Rs 612.64 crore in Q4 March 2017 over Q4 March 2016.The banks provisions and contingencies rose 24.5% to Rs 33.93 crore in Q4 March 2017 over Q4 March 2016.

DCB Bank is a new generation private sector bank with 262 branches across 18 states and 2 union territories.

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Metal shares jump on bargain hunting
Apr 18,2017

Hindalco Industries (up 3.94%), Vedanta (up 3.37%), National Aluminium Company (up 3.26%), Jindal Steel & Power (up 2.48%), NMDC (up 2.27%), Hindustan Copper (up 1.82%), Tata Steel (up 1.68%), Bhushan Steel (up 1.06%), Hindustan Zinc (up 0.68%), Steel Authority of India (up 0.65%) and JSW Steel (up 0.46%), edged higher.

The S&P BSE Metal index was up 172.66 points, or 1.54% at 11,415.25. It outperformed the S&P BSE Sensex, which was up 252.41 points, or 0.86% at 29,666.07.

The S&P BSE Metal index fell 6.02% in four trading sessions to settle at 11,242.59 yesterday, 17 April 2017, from its close of 11,962.89 on 10 April 2017.

The S&P BSE Metal index underperformed the market over the past one month till 17 April 2017, falling 5.33% compared with 0.79% decline in the Sensex. The index also underperformed the market in past one quarter, rising 0.75% as against Sensexs 8% rise.

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Fitch: Waiver Scheme May Raise Indian Tractor Loan Delinquencies
Apr 18,2017

Delinquencies on tractor loans could rise in several Indian states as a result of political pressure for farmers to be granted waivers on agricultural loans, says Fitch Ratings. Media reports that farmers loans may be waived are likely to create moral hazard and credit discipline issues, given that there will be an incentive for farmers to skip loan repayments pending greater clarity on the potential policy. However, the negative impact of any potential rise in tractor loan delinquencies on Fitch-rated ABS transactions is likely to be minimal, given the low exposure.

The newly elected Uttar Pradesh (UP) state government has already announced farm loan waivers, with a cap of INR100,000 per farmer, for small and marginal farmers. Tractor loans were not included, but farmers may expect this position to change in future announcements. Moreover, there is a lack of clarity over whether tractor loans will be included in potential loan-waiver programmes in Maharashtra, Punjab and Haryana. These four states account for around 30% of Indias population.

We would expect the delinquency rate on agricultural loans to take several months to return to normal following the announcement of policy details. The crop season is currently in its harvesting period in most parts of India, a time when most farmers earn the bulk of their income. If the farmers postpone loan repayments and use the money earned elsewhere, it could take at least until the next harvest in six months time to cure delinquencies.

The introduction of government support might help cure delinquencies faster, but only if state governments compensate lenders quickly - which is unlikely, given the usually slow workings of state bureaucracy. A compensation timeline for UP states farm loan-waiver programme is yet to be announced. Servicers effective collection practices and customer-education programmes could, however, help to contain the potential rise in delinquencies.

Indian ABS transactions are unlikely to be significantly affected, even if tractor loan delinquencies do rise. We do not expect any significant stress or rating impact and we have a stable rating outlook on these transactions.

Tractor loans accounted for a relatively significant 10%-21% of the securitised pool in six of the 21 Fitch-rated ABS transactions, as per their original pool characteristics. They accounted for 5%-10% in another 11 transactions. However, the maximum exposure to tractor loans from these four states was 3% among the securitised pools.

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Vakrangee jumps after board OKs providing GST services
Apr 18,2017

The announcement was made after market hours yesterday, 17 April 2017.

Meanwhile, the S&P BSE Sensex was up 260.25 points, or 0.88% to 29,673.91.

On the BSE, 1.58 lakh shares were traded in the counter so far, compared with average daily volumes of 1.20 lakh shares in the past one quarter. The stock had hit a high of Rs 354.45 and a low of Rs 341.95 so far during the day. The stock hit a record high of Rs 354.45 on 18 April 2017. The stock hit a 52-week low of Rs 160.10 on 9 June 2016.

The stock had outperformed the market over the past one month till 17 April 2017, rising 5.43% compared with 0.79% decline in the Sensex. The scrip had also outperformed the market in past one quarter, rising 15.16% as against Sensexs 8% rise.

The large-cap company has equity capital of Rs 52.92 crore. Face value per share is Re 1.

The board of directors of Vakrangee yesterday, 17 April 2017, approved to provide the services of GST registration, filing of returns, payment and other value added services thereunder through Vakrangee Kendra Outlets.

Currently the company is operating more than 35,000 Vakrangee Kendra outlets across 16 States and presence in more than 5,000 postal codes across the country. The company now plans to setup and manage a total of 75,000 n++Vakrangee Kendran++ outlets across India by 2020, covering the presence in all postal codes across the country. It has now decided to provide the services of GST registration, filing of returns, payment and other value added services under the same through Vakrangee Kendra outlets which would further enhance the existing bouquet of services provided by the company. This will be done by acting as an Application Service Provider (ASP).

On a consolidated basis, Vakrangees net profit rose 27.87% to Rs 131.55 crore on 19.54% growth in net sales to Rs 978.86 crore in Q3 December 2016 over Q3 December 2015.

Vakrangee is the unique technology driven company focused on building Indias largest network of last-mile retail touch points to deliver real-time banking, insurance, e-governance, ecommerce and logistics services to the unserved rural, semi-urban and urban markets.

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Manaksia Inds extends losses after weak Q4 results
Apr 18,2017

Meanwhile, the S&P BSE Sensex was up 265.43 points or 0.9% at 29,679.09. The S&P BSE Small-Cap index was up 173.52 points or 1.16% at 15,127.68.

On the BSE, 7,219 shares were traded on the counter so far as against the average daily volumes of 25,205 shares in the past one quarter. The stock opened with a downward gap and remained locked at 5% lower circuit level at Rs 35.20 so far during the day.

The stock had hit a record high of Rs 40.95 on 17 April 2017 and a 52-week low of Rs 3.20 on 9 May 2016. It had outperformed the market over the past one month till 17 April 2017, surging 33.27% compared with the Sensexs 0.79% fall. The scrip had also outperformed the market over the past one quarter, advancing 76.85% as against the Sensexs 8% rise.

The small-cap company has equity capital of Rs 6.55 crore. Face value per share is Rs 1.

Shares of Manaksia Industries have fallen 9.74% in two trading sessions from its closing of Rs 39 on 13 April 2017, after the company reported weak Q4 March 2017 results on Saturday, 15 April 2017. The stock had declined by 5% to settle at Rs 37.05 yesterday, 17 April 2017.

Manaksia Industries consolidated net profit declined 55.8% to Rs 6.30 crore on 80.9% rise in net sales to Rs 60.81 crore in Q4 March 2017 over Q4 March 2016.

Manaksia Industries is engaged in the business of metal packaging products and aluminum semi rigid containers.

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Berger Paints gains after inking pact with NBCC
Apr 18,2017

The announcement was made after market hours yesterday, 17 April 2017.

Meanwhile, the S&P BSE Sensex was up 262.62 points, or 0.89% to 29,676.28.

On the BSE, 24,000 shares were traded in the counter so far, compared with average daily volumes of 3.20 lakh shares in the past one quarter. The stock had hit a high of Rs 247.50 and a low of Rs 242.90 so far during the day. The stock hit a record high of Rs 276.80 on 12 September 2016. The stock hit a 52-week low of Rs 174.22 on 24 June 2016.

The stock had outperformed the market over the past one month till 17 April 2017, rising 4.08% compared with 0.79% decline in the Sensex. The scrip had also outperformed the market in past one quarter, rising 12.07% as against Sensexs 8% rise.

The large-cap company has equity capital of Rs 97.10 crore. Face value per share is Re 1.

Berger Paints India said that its wholly-owned subsidiary, Bolix, S.A. Poland and NBCC signed a memorandum of business exploration yesterday, 17 April 2017, in furtherance of a joint initiative to bring to India External Thermal Insulation and Composite Systems (ETICS), a proven solution for improving energy performance of temperature controlled buildings.

ETICS is a very cost effective and efficient solution and much used in Europe. Germany and Poland are the pioneers in this technology though ETICS is now in use in over 15 countries in Europe.

NBCC and Bolix will jointly promote, develop and facilitate the use of ETICS solutions n++n building projects in India with the principal objective of reducing significantly the energy requirements for cooling or heating in these buildings which is expected to result in gains in environmental sustainability.

On consolidated basis, Berger Paints Indias net profit fell 2% to Rs 109.12 crore on 5.2% growth in net sales to Rs 1170.20 crore in Q3 December 2016 over Q3 December 2015.

Berger Paints India manufactures and markets a range of decorative and industrial paint products and has operations throughout India.

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CMI moves higher on allotment of shares to promoter group
Apr 18,2017

The announcement was made after market hours yesterday, 17 April 2017.

Meanwhile, the S&P BSE Sensex was up 269.19 points, or 0.92% at 29,682.85. The S&P BSE Small-cap index was up 163.65 points, 1.09% at 15,117.81.

On the BSE, 17,000 shares were traded on the counter so far as against the average daily volumes of 50,501 shares in the past one quarter. The stock had hit a high of Rs 186 and a low of Rs 182.10 so far during the day.

The stock had hit a 52-week high of Rs 269 on 20 April 2016 and a 52-week low of Rs 118.10 on 9 November 2016. The stock had outperformed the market over the past one month till 17 April 2017, advancing 2.28% compared with the Sensexs 0.79% decline. The scrip had, however, underperformed the market over the past one quarter declining 10.51% as against the Sensexs 8% rise.

The small-cap company has equity capital of Rs 14.78 crore. Face value per share is Rs 10.

CMI said that its board of directors on 17 April 2017 approved the allotment of 2.5 lakh equity shares having face value Rs 10 each at a premium of Rs 290 per equity share to promoter/promoter group.

Total promoter holding stood at 42.59% as per shareholding pattern as on 31 December 2016.

CMIs consolidated net profit fell 57.6% to Rs 2.04 crore on 12.5% increase in net sales to Rs 74.72 crore in Q3 December 2016 over Q3 December 2015.

CMI is in the business of manufacturing Jelly Filled Telecom Cables (JFTC).

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Ind-Ra: Fall in Operating Performance of Weak Entities to Drag Down Overall EBITDA Recovery in FY18
Apr 18,2017

India Ratings and Research (Ind-Ra) does not expect a broad-based recovery in FY18, given decelerating EBITDA growth of corporates with weak operating performance. Corporates with strong financial profiles are likely to witness a marginal positive EBITDA growth in FY18 (9MFY17: 6%; FY16: 8%) compared with corporates with weak financial profiles (EBITDA growth: 9MFY17: negative 19%; FY16: negative 22%), which are likely to witness a significant decline in EBITDA growth in FY18.

EBITDA Growth of Top 365 Corporate Borrowers in FY18

Ind-Ra expects FY18 earnings (EBITDA) growth of the top 365 corporate borrowers (excluding public sector units and banking and financial services providers) to be 9%-12%, driven by a slow but improving consumption and a recovery in exports. The level would be the highest since FY15 (8%). Therefore, the number of corporates showing an improvement in operating performance is likely to be higher than that in FY17. Ind-Ra expects FY17 EBITDA growth to be lower than the previously estimated 5%-6% owing to demonetisation in 4QFY17. However, the impact of demonetisation is likely to be transitory on the FY18 corporate performance.

Sectoral Outlook Indicates Divergent EBITDA Growth

Ind-Ras expectation for FY18 remains in line with the FY17 trend. The agency expects the EBITDA growth of capital-intensive- and commodity-linked sectors, including infrastructure and power, to decelerate in FY18.

The steel sector registered positive EBITDA growth for 9MFY17, driven by an increase in commodity prices and base effect. Ind-Ra expects the steel sectors profitability in FY18 to remain under pressure, as companies ability to fully pass input prices to customers would be limited owing to muted demand and overcapacity.

Meanwhile, the telecom sector registered flat EBITDA growth for 9MFY17. Ind-Ra expects the sectors EBITDA growth to decelerate in FY18. Ind-Ra has a negative outlook for the telecom, steel, power and infrastructure sectors for FY18.

In the oil and gas sector, downstream companies could witness a moderation in EBITDA margin in FY18 on an increase in crude prices. On the other hand, upstream companies are likely to benefit from benign prices. However, the agency expects consumption- and export-driven sectors such as pharmaceutical to register positive EBITDA growth for FY18.

The auto sectors EBITDA growth in FY18 is likely to moderate. Meanwhile, automotive suppliers are likely to benefit from an increase in commodity prices and an improvement in exports. Ind-Ra has a stable outlook for the auto and automotive supplier, oil and gas, and pharmaceutical sectors for FY18.

Divergent EBITDA Growth Trend Reflected in Rating Categories

EBITDA growth decelerated across the rating categories. However, it remained positive for the majority of investment-grade issuers (rating scale of IND BBB- and above) in 9MFY17. Nearly 70% of the total number of investment-grade registered positive EBITDA growth over FY14-9MFY17. On the other hand, a large number of non-investment grade issuers (rating scale of IND BB+ and below) registered negative EBITDA growth in at least three of the last six years. Nearly 60% of the total number of non-investment grade issuers recorded a negative EBITDA growth over FY14-9MFY17. Thus, any meaningful recovery would be conditional on a strong economic recovery or structural changes such as consolidation, deleveraging and non-performing asset resolution.

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