Nomura, is bullish on the media space, particularly Zee TV and Dish TV. But it leaves out the implications of the charge of extortion Naveen Jindal has brought and its implications
Nomura Equity Research, in a visit note to its clients, is bullish about the media sector, particularly Zee TV and Dish TV. Nomura said that Zee TV would benefit due to lower investment on capex and digitization, while Dish TV would benefit due to the satellite model, which is similar to Direct TV/Dish US, which has done well in the United States. The media sector has been in the news of late. One of the most reported stories is Zee TV and Subhash Chandra whom the Delhi crime branch is investigating on charges of extortion (for more background on this episode, click here and here). While Nomura has put a buy call on Zee TV, it is strange that they have left this out from the overall picture and its potential short-term consequences, should things go wrong for Zee TV. However, from a fundamental standpoint, Nomura expects Zee TV to do well due to the recent digitization mandate. It expects the company to become more consumer-centric as subscription is expected to rise which would mean higher ad revenues. It expects benefits of digitization to accrue in FY16 when EBITDA “can more than triple versus FY12 levels”. Several other reports have said more or less the same thing. But there is hardly any mention of how the recent Jindal expose will affect the share price of Zee TV.
Likewise, Nomura is bullish on Dish TV due to its satellite model (as opposed to cable) and is a cash flow business. But its high intensity of capex, which is high till FY15, is worrying and has kept valuations low. Like Zee TV, Nomura expects it to be more of a consumer play, betting on increased viewership and higher ad rates.
One of the key trends that brokers and investors were looking at was the mandatory digitization in the metros. This meant that consumers had no choice but to switch and buy set-top boxes. This meant that companies like Zee TV, which had already invested in bulk in laying cables and such, will benefit, as subscriber base is expected to increase.
It is interesting to note that mid-cap company Raymond is has been cited as a buy call given that its management quality hasn’t been exemplary and has declined over the years. Nomura cited consumption story in Tier 3-4-5 towns as one of the drivers for Raymond besides its low valuation.
As far as McLeod Russel is concerned, it said, “(there is) strong interest in understanding this name and how it is going to benefit from a tea price up cycle. Investors were interested in it from the structural story with attractive valuations (on most metrics including free cash flow yield). Pushback included impact of production losses and lack of avenues to grow volume” However, the company has a strong regional brand associated with its consumers which helps. But tea is a cyclical commodity and competing with coffee (as the latter has become a popular drink) could be a challenge for the company.
Nomura wasn’t bullish on Pidilite as it had concerns of Pidilite’s elastomer project.
BV Gokhale, who has spoken about chelation therapy, offers an honest and insightful critique on the manner at which TACT trial was conducted and what could have been done, even though results were positive. He also fears possible arm-twisting that might prevent the real truth from being declared
The recent results of Trial to Assess Chelation Therapy (TACT) gave a shock to the cardiology world. They did not expect it. For hundreds of US cardiologists it was so unbearable that some of them, within minutes after the presentation by Dr Gervasio Lamas, started questioning its truth. While the results is a big boost for proponents of low cost medication and chelation therapy in particular, the results could have been better if the manner at which TACT conducted been different.
To read about the overview of the TACT results, click here
Before going ahead with my critique of TACT, I must mention that the whole world should applaud the efforts of Senator Dan Burton in instigating TACT and Dr Gervasio Lama and his team for honest and relentless follow up in search of the truth. Surely everyone will remain indebted to these individuals.
I have seen much better results than those revealed in TACT. When I started thinking about the reasons for such poor success of EDTA Chelation Therapy in TACT, following points came to my notice.
Assessing Chelation Therapy by double blind trials is like testing a car governed to travel at fixed speed where driver can only control steering.
It is worth mentioning that since double blind trials involve giving sham treatment to half of the patients they are considered to be unethical in European countries.
In the double blind trial of Chelation Therapy many patients sit together for three hours in each of the 30 infusions. Obviously after about first seven or eight infusions they correctly assess, if they are getting effective or placebo treatment. Naturally, those patients, who feel that they are getting placebo treatment, discontinue their participation in the trial.
This has happened earlier in at least two double blind trials of Chelation Therapy.
This is what exactly happened in TACT also. About 60 patients in placebo group discontinued their participation in the trial most probably because they came to know that they were getting placebo treatment. Had they continued in the trial they would have been included in the statistics and the gap in end points between Chelation group and placebo would have widened.
Ms Anna Roussell, in 2009, clearly demonstrated that when vitamin C is added to a Chelation drip there is about 25% increase in the oxidative stress that enhances the process of coronary artery disease. Had TACT infusions not used the 7 grams of vitamin C, the effectiveness of infusions would perhaps have been more.
One must understand that TACT protocol was formulated when the research was not known.
Vitamins B1 and B6 are very helpful in diabetic patients. Therefore, for such patients, if their quantity was increased from 100 to 200 mg the efficacy of Chelation Therapy would have been better.
Hospitalization is a subjective end point. It depends upon the mental set up of the patient. For some patients a very mild angina is frightening but for others it is not.
Need for bypass surgery or angioplasty is determined by cardiologists or cardiac surgeons. Several well known cardiologists and even cardiac surgeons have often reiterated that many such procedures are done for no valid reason. Under such circumstances, it can not be considered as an appropriate end point.
Needless to say that TACT will give a boost to the propagation of Chelation Therapy. But this will not be tolerated by the anti-Chelation lobby. Only a part of results are declared. Much more is still hidden. TACT team may want to honestly declare the results, but the very strong anti-Chelation lobby will not allow them do so. There is also a possibility of twisting the results by statistical jargons. The lobby will certainly want another research to be carried out with a hidden objective of proving Chelation Therapy to be ineffective.
American College of Advancement in Medicine (ACAM) and other pro-Chelation organisations should remain very careful while participating in any future research. There is no guarantee that in the next research project the team may be like TACT and the captain will be like Dr Lamas. In fact, the likelihood of their being otherwise is far more.
Click here to read about the workshop conducted by BV Gokhale held at Moneylife Foundation
(The author is a BTech and MTech (IIT Powai) and works with a team of doctors.)
In a bullish note to clients, the Indian equity research arm of Morgan Stanley has cited good fundamentals and low volatility as key for India’s impressive performance. But it cites past performance as an indicator to the future, without the context in which such past performance was achieved, namely low starting valuation and low interest rates
Morgan Stanley Research Asia-Pacific (Morgan Stanley), in its latest report titled “Secret Touch” is bullish and expects Indian markets to perform well, vis-à-vis her peers, on account of “superior macro growth story” and “diversified index in terms of sector concentration”. According to this view, which has come well after the market has rallied strongly against the consensus view of poor macro-economic fundamentals of India, the bottoms-up story is strong and is expected to keep earnings stable. Stability in earnings means reliability in forecasts. It said, “One of the underpinnings of this fundamental story (India’s story) is the relative stability in earnings and high earnings growth over the long term.” India has given an annual Earnings Per Share (EPS) growth return of 14% since 2001, with standard deviation of just 13%, the lowest amongst peers. While this may be impressive, averages are always deceptive. Besides, in the four of those years, the market valuation was low and interest rate were falling, which is the sweet spot for equities.
Read more of our stock market analysis here.
Morgan Stanley argues that India is fairly diversified, vis-à-vis NSE Nifty, when compared to its peers, and makes the market more stable. In Taiwan and Turkey some sectors occupy more than 50% of the weightage.
Read our analysis of Morgan Stanley report on ‘TINA’ for a brief background, especially on the aspects of sector weights and diversification.
One of the interesting observations in this report is that the “beat ratio” (the ratio at which companies beat expectations) of NSE Nifty companies is 63%, which is higher than the MSCI average of 50%. In other words, for every three companies in the Nifty, roughly two beat estimates. The report said, “These statistics just underscore the role of corporate fundamentals in the solid performance of Indian equities over the past decade.” One would be led to thinking that Indian companies are performing well. However, there’s a flip side to this approach; estimates sometimes are generously set low so that estimates can be beaten. “Despite historical low earnings volatility, consensus expectations are usually beaten,” the report said. Very often brokerages do this in order to induce clients to buy shares. For instance, in Morgan Stanley’s report, Axis Bank, Coal India and GAIL—all achieved “100% Beat Ratio” between 2005 and 2012. It is pertinent to note that Axis Bank hasn’t performed that well relative to its peer—HDFC Bank (88% beat ratio)—even though Axis Bank may have ‘beat’ every estimate set by brokers and investment banks alike. Thus, one should be careful in reading such broker reports. It can be misleading sometimes.
Volatility in earnings, apart from beat ratio, was another aspect focused. The less volatility, the more stable the earnings and easier to forecast and set expectations. HDFC Bank, Axis Bank, TCS, Infosys are some companies with low volatility (measured by coefficient of variation). While volatility maybe low future outlook could be different. For instance, Infosys has recently sounded the caution board and cited that 2013 will be a difficult year for them.
Read other reports of Morgan Stanley analysed by Moneylife, here.