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Panacea Biotec share price jumps 20% on COVID-19 vaccine collaboration, just inches away from 52-week high

Panacea Biotec share price hits 20 per cent upper circuit at Rs 202.80 apiece on BSE after the biotechnology company announced a collaboration with US-based Refana for coronavirus vaccine on Tuesday. The stock is just 3.7 per cent away from its 52-week high level of Rs 210.60 hit in April this year. “Panacea Biotec Ltd is delighted to announce the landmark collaboration with Refana Inc. USA for Covid-19 vaccine which will enable global development, manufacturing and distribution of the Covid-19 vaccine,” the company said in a press release. With today’s rally in the stock, the market capitalisation of Panacea Biotec stands at Rs 1,242.17 crore, according to BSE.

Panacea Biotec shares had hit a 52-week low of Rs 90 in March this year. The company informed that under the collaboration, Panacea Biotec will be responsible for product development and commercial manufacturing, with the joint venture company undertaking clinical development and regulatory submissions across the World. “Both Panacea and Refana will undertake sales and distribution of the vaccine in their respective territories,” Panacea Biotec said in a release.

The collaboration aims to manufacture over 500 million doses of the Covid-19 candidate vaccine, with over 40 million doses expected to be available for delivery early next year. “This vaccine has the potential to become the Vaccine of Choice for the global fight against Covid-19. We believe and hope that our vaccine will enable the world to get back to work fearlessly as soon as possible,” said Rajesh Jain, Managing Director, Panacea Biotec.

Panacea Biotec focuses on the discovery, development, and commercialisation of prescription medicines. “Refana and its international network of scientific researchers and practitioners are dedicated to finding practical solutions to complex and urgent global medical problems,” said Phillip Schwartz, Chief Scientific and Medical advisor to Refana Inc.

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5 blue-chip shares available at throw-away prices; coronavirus lockdown puts stocks on fire sale

Even as the government started gradually easing the coronavirus-induced lockdown restrictions, the Indian share market has been witnessing huge volatility. From an all-time high of 42,273, BSE Sensex plunged to a 52-week low of 25, 638 only to march northward to reclaim its crucial level of 34,000. These tumultuous times in the stock market have proved to be an opportunity for the investors to bet on blue-chips companies which are available at throw-out prices. Research and brokerage firm Geojit Financial Services has listed five such stocks which have the ability to stay safe and flourish during and after the challenging situation.

The brokerage firm sees an upside of over 30 per cent in these blue-chip stock prices.”The market had assumed that the economy would not be able to reopen soon, leading to a huge correction. Currently, it offers an opportunity to buy blue-chips which are undervalued, overlooking their sheer cash-rich, brand value and leadership qualities,” said research and brokerage firm.

ITC: Brokerage firm has recommended to ‘buy’ ITC stock with a 12-month target of Rs 260, which an upside of 31.50 per cent from Monday’s close. ITC has negligible debt and good cash position of nearly Rs 16,000 crore including short-term investments of Rs 12,500 crore as of FY19. Geojit Financial Services believes that the acquisition of Sunrise Foods and tie-up with Amway will support revenue growth. “Attractive valuation, hike in cigarette price and gradual removal of lockdown will help the stock,” the brokerage firm said.

State Bank of India: SBI shares were trading at 187.65 apiece on BSE in today’s session. It will take an upside of 28 per cent for the SBI stock to reach the price target of Rs 240 predicted by the brokerage firm. Core fundamentals, cut in deposit rates, stable asset quality post moratorium and better NIM are among few factors which are expected to drive profitability going ahead. “Capital adequacy rate stands at 10.2% and further capital buffer can be easily managed by diluting stakes in subsidiaries,” said Geojit Financial Services.

Bajaj Finance: On the back of a liquidity surplus of Rs 15,725 crore to meet its obligations and grow its AUM, Bajaj Finance stock will have to jump over 17 per cent from Monday’s close to hit the 12 months target price of Rs 2,940. “Capital adequacy ratio declined to 25% vs 26.8% in Q3 FY20 but still remains very high compared to the regulatory requirement of 15% and can raise funds easily, going forward,” the brokerage firm said.

HDFC: Brokerage firm is upbeat on the stock with a ‘buy’ rating and target price of Rs 2,166 for 12 months, which translates to an upside of 23 per cent from Monday’s close. The mortgage market in India is still at its infant stage with penetration of 10% in nominal GDP, implying huge growth potential over long term aided by fiscal incentives and Interest subvention scheme, the brokerage firm said in its report.

ICICI Bank: India’s second-largest private sector bank has created higher provision beyond the Central bank guidelines at Rs 5,700 crore to cover moratorium impact and stressed assets for the quarter. Geojit Financial Services has recommended to ‘buy’ the stock with a 16 per cent upside from yesterday’s close. The stock was trading flat at Rs 361 apiece on BSE in late afternoon deals.

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Asian shares advance on Wall St jobs rally, OPEC plus deal

Shares advanced Monday in Asia, buoyed by surprisingly strong U.S. jobs figures that helped power a surge on Wall Street on Friday. Crude oil prices rose after major oil producing nations agreed to extend a production cut of nearly 10 million barrels of oil a day through the end of July to counter the blow to demand from the coronavirus pandemic.
U.S. crude for July delivery added 27 cents to $39.82 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, gained 54 cents to $42.84 per barrel.

Japan’s Nikkei 225 index rose 0.9% to 23,075.73 as the government reported the economy contracted at a 2.2% annual rate in the January-March quarter, better than the initially estimated minus 3.4%. Private sector spending was better than earlier reported, the Cabinet Office said. However, the first quarter came before Japan felt the full impact of partial shutdowns at home due to a nationwide state of emergency that has since been lifted.

Elsewhere in Asia, Hong Kong’s Hang Seng climbed 0.4% to 24,871.34 and the Shanghai Composite index also gained 0.4%, to 2,941.92. In South Korea, the Kospi edged 0.2% higher to 2,186.11. Australia’s markets were closed for a holiday. Shares rallied on Wall Street on Friday, with the S&P 500 gaining another 2.6% to 3,193.93, its eighth gain in 10 trading sessions, after a report said more American jobs were added than expected in May.

That raised hopes that the worst of the recession may have already passed. But economists cautioned that many risks still loom on the long road to a full recovery. Amid the recent wave of May data releases, however, one should nevertheless be cautioned against reading too much into any single month-on-month change, particularly during such times of uncertainty,” Jingyi Pan of IG said in a commentary.

Employers added 2.5 million workers to their payrolls, when economists were expecting them instead to slash another 8 million jobs. That news gave investors some welcome validation for the S&P 500’s rally of more than 40% since late March.

The U.S. benchmark is now down just 5.7% from its record set in February after plunging nearly 34% earlier this year when recession worries were peaking. The Dow Jones Industrial Average gained 3.2% to 27,110.98, and the Nasdaq composite rose 2.1%, to 9,814.08. The Russell 2000 of small-cap stocks jumped 3.8%.

The yield on the 10-year Treasury rose to 0.90% on Monday from 0.88% late Friday. Moving largely in tandem with expectations for economic growth and inflation, it is seen as a harbinger of risk and has shown much more caution than stocks recently.

Promises of immense aid from Congress and the Federal Reserve have helped convince investors that the worst-case scenario of a major financial crisis is unlikely, touching off the rally that began in late March. More recently, buying has been driven by hopes that economies will swiftly recover from the worst downturn in decades as governments relax lockdowns.

Analysts and economists warn a full recovery for the U.S. economy is still far ahead, with the unemployment rate above 13%, nearly quadruple where it was at the start of the year, and on par with its level during the the Great Depression.

The biggest uncertainty is whether major virus outbreaks will return, leading to further shutdowns. And after an initial burst of hiring as businesses reopen, the recovery could slow in the fall or early next year unless most Americans grow confident they can safely shop, travel, eat out and fully return to their other spending habits, economists say.

Tensions between the United States and China are also raising worries the world’s two largest economies might resume their trade war. Some investors are also worried about volatility that could be created by this fall’s U.S. elections. Ahead of the weekend video conferencing meeting of OPEC and other major oil producers, benchmark U.S. crude oil for July delivery rose $2.14 to settle at $39.55 a barrel Friday. Brent crude oil rose $2.31 to $42.30 a barrel. In April, it plunged to near $20 a barrel as the pandemic clobbered demand.

OPEC and its allies chose to extend their production cut of about 10% of global output through the end of July to curb excess production that has been depressing prices as global aviation remains largely grounded due to the pandemic. OPEC has 13 member states and is largely dominated by oil-rich Saudi Arabia.

The additional countries involved part in the so-called OPEC Plus accord have been led by Russia, with Mexico under President Andrés Manuel López Obrador playing a considerable role at the last minute in the initial agreement.
In currency dealings, the dollar fetched 109.48 Japanese yen, down from 109.59 yen on Friday. The euro rose to $1.1294 from $1.1288.

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Aurobindo Pharma share price surges 159% since March; does it have more upside left? Check target price

Pharmaceutical giant Aurobindo Pharma might have posted a strong January-March quarter with profits after tax surging 29.7% on-year basis and gross margins going up 2.9% from a year-ago period, but the stock has little steam left now after jumping over 159% since its March lows. Trading at Rs 761 per share on Friday morning, the stock has helped investors pocket mammoth gains even during a time when the overall equity market sentiment was weak globally. However, now the rally has almost reached its peak. While some brokerage firms are revising their calls, some retail their previous analysis but the target price set by all is almost close to where the stock price is now.

Aurobindo Pharma has been gradually treading up the complexity curve for sterile products, with a range of approvals, including colored products, PFS products, large volume lyophilized products, and complex API products. For sterile sales in the USA to reach US$400-500 million, analysts say the firm will need progress in other complex filings such as triamcinolone injectable, iron products, peptides, and depot injections. “ However, progress in these areas has been understandably slow, while its inhalation (pMDI’s as well as Advair, though none in clinics) and biosimilars (Avastin filing for the EU in 1QFY22) products are yet to be filed, with meaningful profit contribution unlikely before FY2024,” said analysts at Kotak Securities. The brokerage has downgraded the stock from ADD to REDUCE with a fair value of Rs 730.

Shares of Aurobindo Pharma after seeing a strong rally in the previous months are now among some of the stocks on the bourses that are positive year-to-date. The stock price is up 67% since the beginning of the year. Aurobindo Pharma also maintains a strong cash balance on account of anticipation of the Sandoz deal, which will be deployed back in business, according to the company. With strong focus on the future, management expects the firm to file 50-60 products over the coming few years. With this increase in R&D cost is also expected to shoot up.

“Over FY20–22E, Aurobindo Pharma’s R&D is likely to increase, EBITDA margin would remain flat, and earnings would rise at a 6% CAGR. With the OAI status at four facilities and a warning letter at a fifth one, execution risks persist.,” said Edelweiss Securities. The brokerage said the stock is trading at 15x FY22E earnings as it maintains the HOLD call with a target price of Rs 825 per share. Interestingly when foreign investors were leaving the Indian markets, FII investment in Aurobindo Pharma went from 21.4% at the end of December 2019 to 22.3% at the end of the March quarter. Although the stock has a BUY rating from Motilal Oswal the target price is at Rs 880 per share. The brokerage firm said it remains positive on Aurobindo Pharma on account of a robust ANDA pipeline, pending approval, as well as a niche product pipeline build-up for the developed markets.

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