Market Outlook
April 03, 2018
Market Cues
Domestic Indices
Chg (%)
(Pts)
(Close)
Indian markets are likely to open negative tracking global indices and SGX Nifty.
BSE Sensex
0.9
287
33,255
U.S. stocks moved sharply lower over the course of the trading session as traders
Nifty
1.0
98
10,212
returned to their desks following the long holiday weekend. The major averages all
Mid Cap
1.4
224
16,186
showed notable moves to the downside, with the Nasdaq and the S&P 500 falling to
Small Cap
2.4
400
17,394
their lowest closing levels in almost two months. The Dow Jones closes down to 1.9%
to close at 23,644. The NASDAQ ended down by 2.7% to close at 6,870.
Bankex
(0.4)
(100)
27,098
U.K. stocks rallied amid improved risk appetite after the Dow Jones Industrial
Global Indices
Chg (%)
(Pts)
(Close)
Average posted its third-biggest point gain ever overnight on hopes that a trade war
between the U.S. and China is avoidable. The FTSE 100 was up by 0.2% to end at
Dow Jones
(1.9)
(459)
23,644
7,057.
Nasdaq
(2.7)
(193)
6,870
FTSE
0.2
12
7,057
On domestic front, Indian shares ended notably higher as trading resumed after a
four-day holiday weekend. The BSE Sensex ended up by 0.9% at 33,255.
Nikkei
(0.8)
(169)
21,220
Hang Seng
(0.8)
(247)
29,846
News Analysis
Shanghai Com
(1.1)
(34)
3,129
Profit Booking: Bandhan Bank IPO
Detailed analysis on Pg2
Advances / Declines
BSE
NSE
Advances
2,129
1,493
Investor’s Ready Reckoner
Declines
562
312
Key Domestic & Global Indicators
Unchanged
143
55
Stock Watch: Latest investment recommendations on 150+ stocks
Refer Pg5 onwards
Volumes (` Cr)
Top Picks
BSE
2,711
CMP
Target
Upside
Company
Sector
Rating
(`)
(`)
(%)
NSE
26,681
Blue Star
Capital Goods Accumulate
777
867
11.6
Dewan Housing Finance
Financials
Buy
523
720
37.7
Net Inflows (` Cr)
Net
Mtd
Ytd
Century Plyboards
Forest Product
Buy
331
400
20.8
FII
1,094
13,372
13,865
Navkar Corporation
Others
Buy
171
265
55.3
*MFs
2,235
7,538
32,742
KEI Industries
Capital Goods Accumulate
401
436
8.8
More Top Picks on Pg4
Top Gainers
Price (`)
Chg (%)
Key Upcoming Events
Previous
Consensus
NAVKARCORP
172
13.5
Date
Region
Event Description
Reading
Expectations
DBL
1,109
10.8
Apr 03, 2018 Germany PMI Manufacturing
58.40
58.40
ICIL
94
10.3
UK
PMI Manufacturing
55.20
54.70
HEXAWARE
414
10.2
Apr 05, 2018 Germany PMI Services
54.20
54.20
US
Initial Jobless claims
215.00
JAICORPLTD
147
10.0
India
RBI Reverse Repo rate
5.75
5.75
More Events on Pg7
Top Losers
Price (`)
Chg (%)
CANFINHOME
431
-11.1
KWALITY
54
-9.9
ICICIBANK
262
-5.9
VAKRANGEE
210
-5.0
VIDEOIND
12
-5.0
As on April 02, 2018
Market Outlook
April 03, 2018
News Analysis
Profit Booking: Bandhan Bank IPO
We had recommended SUBSCRIBE rating for Bandhan Bank Limited IPO which
successfully raised `4,473cr at `375.Though the company is valued at a high
valuation of PBv of 8.3x (upper price) for 3QFY18 but due to Strong asset quality
which gives the strong internal capital generation ability and healthy return ratios
as Bandhan Bank reported ROE/ROA of 26.8%/4.2% for 9MFY2018 which are
largely driven by lower Cost to Income and higher net interest margin. Going
forward company is expected to report PBv of 4.2x in FY20E. At yesterday’s closing
price, it is trading at 27% premium on IPO price. Hence we recommend to book
profit in Bandhan Bank Limited at the Current price.
Economic and Political News
EESL to invest Rs 24bn to buy 20,000 electric vehicles by March 2019
Government levies 10% import duty on key smartphone parts to push Make
in India
Infrastructure output grows 5.3% in Feb as cement, refinery output pick up
Corporate News
Dr Reddy's files new drug application for migraine spray with USFDA
India's largest dairy outfit GCMMF turnover grows 8% in FY18 to Rs 292bn
M&M sales shoot up 10% in March, FY18 sales rise 8% at 549,154 units
SoftBank, Alibaba invest Rs 29bn in Paytm Mall; latest valuation $1.6-2bn
Market Outlook
April 03, 2018
Top Picks
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
Strong growth in domestic business due to its
leadership in acute therapeutic segment. Alkem
Alkem Laboratories
22,950
1,919
2,441
27.2
expects to launch more products in USA, which
bodes for its international business.
Favorable outlook for the AC industry to augur well
for Cooling products business which is out pacing
Blue Star
7,456
777
867
11.6
the market growth. EMPPAC division's profitability to
improve once operating environment turns around.
With a focus on the low and medium income (LMI)
consumer segment, the company has increased its
Dewan Housing Finance
16,406
523
720
37.7
presence in tier-II & III cities where the growth
opportunity is immense.
Well capitalized with CAR of 18.1% which gives
sufficient room to grow asset base. Faster resolution
ICICI Bank
1,68,337
262
416
58.8
of NPA would reduce provision cost, which would
help to report better ROE.
High order book execution in EPC segment, rising
KEI Industries
3,142
401
436
8.8
B2C sales and higher exports to boost the revenues
and profitability
Expected to benefit from the lower capex
Music Broadcast Limited
2,282
400
475
18.8
requirement and
15 year long radio broadcast
licensing.
Massive capacity expansion along with rail
Navkar Corporation
2,568
171
265
55.3
advantage at ICD as well CFS augur well for the
company
Strong brands and distribution network would boost
Siyaram Silk Mills
2,881
615
851
38.4
growth going ahead. Stock currently trades at an
inexpensive valuation.
Market leadership in Hindi news genre and no. 2
viewership ranking in English news genre, exit from
TV Today Network
2,914
488
603
23.5
the radio business, and anticipated growth in ad
spends by corporate to benefit the stock.
After GST, the company is expected to see higher
volumes along with improving product mix. The
Maruti
2,72,145
9,009
10,619
17.9
Gujarat plant will also enable higher operating
leverage which will be margin accretive.
We expect loan book to grow at 24.3% over next two
GIC Housing
2,025
376
655
74.2
year; change in borrowing mix will help in NIM
improvement
We expect CPIL to report net Revenue/PAT CAGR of
~17%/16% over FY2017-20E mainly due to healthy
Century Plyboards
7,359
331
400
20.8
growth in plywood & lamination business, forayed
into MDF & Particle boards on back of strong brand
& distribution network.
We expect sales/PAT to grow at 13.5%/20% over
LT Foods
2,853
89
128
43.5
next two years on the back of strong distribution
network & addition of new products in portfolio.
Third largest brand play in luggage segment
Increased product offerings and improving
Safari Industries
1,233
554
650
17.3
distribution network is leading to strong growth in
business. Likely to post robust growth for next 3-4
years
We expect HSIL to report PAT CAGR of ~15% over
FY2017-20E owing to better improvement in
HSIL Ltd
2,757
381
510
33.7
operating margin due price hike in container glass
segment, turnaround in consumer business.
We expect financialisation of savings and increasing
Aditya Birla Capital
32,144
152
230
33.9
penetration in Insurance & Mutual fund would
ensure steady growth.
Source: Company, Angel Research
Market Outlook
April 03, 2018
Fundamental Call
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
CCL is likely to maintain the strong growth trajectory
CCL Products
3,705
279
360
29.3
over FY18-20 backed by capacity expansion and new
geographical foray
We forecast Nilkamal to report top-line CAGR of ~9%
to `2,635cr over FY17-20E on the back of healthy
Nilkamal
2,357
1,579
2,178
37.9
demand growth in plastic division. On the bottom-line
front, we estimate ~10% CAGR to `162cr owing to
improvement in volumes.
The prism has diversified exposure in the different
segment such as Cement, Tile & ready mix concrete.
Prism Cement
5,751
114
160
40.0
Thus we believe, PCL is in the right place to capture
ongoing government spending on affordable housing
and infrastructure projects.
Elantas Beck India is the Indian market leader in liquid
insulation segment used in electrical equipments like
Elantas Beck India Ltd
1,688
2,129
2,500
17.4
motors, transformers etc. It derives demand from
several industries which are expected to register 10%+
CAGR in demand in the coming years.
Greenply Industries Ltd (GIL) manufactures plywood &
allied products and medium density fibreboards
(MDF). GIL to report net revenue CAGR of ~14% to
Greenply Industries
3,849
314
395
25.9
~`2,478cr over FY2017-20E mainly due to healthy
growth in plywood & lamination business on the back
of strong brand and distribution network
Source: Company, Angel Research
Market Outlook
April 03, 2018
Key Upcoming Events
Global economic events release calendar
Bloomberg Data
Date
Time Country
Event Description
Unit
Period
Last Reported
Estimated
Apr 03, 2018
1:25 PMGermany
PMI Services
Value
Mar F
54.20
54.20
1:25 PMGermany
PMI Manufacturing
Value
Mar F
58.40
58.40
Apr 05, 2018
2:00 PMUK
PMI Manufacturing
Value
Mar
55.20
55.00
2:30 PMIndia
RBI Reverse Repo rate
%
Apr 5
5.75
2:30 PMIndia
RBI Repo rate
%
Apr 5
6.00
2:30 PMIndia
RBI Cash Reserve ratio
%
Apr 5
4.00
Apr 06, 2018
6:00 PMUS
Change in Nonfarm payrolls
Thousands
Mar
313.00
189.00
6:00 PMUS
Unnemployment rate
%
Mar
4.10
4.00
Apr 10, 2018
US
Producer Price Index (mom)
% Change
Mar
(0.30)
Apr 11, 2018
6:00 PMUS
Consumer price index (mom)
% Change
Mar
0.20
2:00 PMUK
Industrial Production (YoY)
% Change
Feb
1.60
7:00 AMChina
Consumer Price Index (YoY)
% Change
Mar
2.90
Apr 12, 2018
India
Exports YoY%
% Change
Mar
4.48
India
Imports YoY%
% Change
Mar
10.41
5:30 PMIndia
Industrial Production YoY
% Change
Feb
7.50
Apr 13, 2018
China
Exports YoY%
% Change
Mar
44.50
Apr 16, 2018
12:00 PMIndia
Monthly Wholesale Prices YoY%
% Change
Mar
2.48
Apr 17, 2018
2:00 PMUK
Jobless claims change
% Change
Mar
9.20
6:45 PMUS
Industrial Production
%
Mar
0.95
6:00 PMUS
Housing Starts
Thousands
Mar
1,236.00
6:00 PMUS
Building permits
Thousands
Mar
1,321.00
7:30 AMChina
Industrial Production (YoY)
% Change
Mar
6.20
0-Jan-00UK
CPI (YoY)
% Change
Mar
2.70
Apr 18, 2018
0-Jan-00Euro Zone Euro-Zone CPI (YoY)
%
Mar F
1.10
Source: Bloomberg, Angel Research
Market Outlook
April 03, 2018
Macro watch
Exhibit 1: Quarterly GDP trends
Exhibit 2: IIP trends
(%)
(%)
10.0
10.0
9.1
8.8
9.0
7.5
8.0
8.1
8.0
7.1
7.6
7.6
8.0
7.3
7.2
7.2
6.8
6.0
4.8
7.0
6.5
4.4
6.1
4.1
5.7
4.0
3.2
2.9
6.0
1.8
5.0
2.0
1.0
4.0
-
3.0
(0.3)
(2.0)
Source: CSO, Angel Research
Source: MOSPI, Angel Research
Exhibit 3: Monthly CPI inflation trends
Exhibit 4: Manufacturing and services PMI
56.0
Mfg. PMI
Services PMI
(%)
6.0
54.0
5.2
5.1
4.9
52.0
5.0
4.4
3.9
50.0
4.0
3.6
3.3
3.3
3.0
48.0
3.0
2.4
2.2
46.0
2.0
1.5
44.0
1.0
42.0
40.0
-
Source: Market, Angel Research; Note: Level above 50 indicates expansion
Source: MOSPI, Angel Research
Exhibit 5: Exports and imports growth trends
Exhibit 6: Key policy rates
(%)
Exports yoy growth
Imports yoy growth
(%)
Repo rate
Reverse Repo rate
CRR
60.0
6.50
50.0
6.00
40.0
5.50
30.0
5.00
20.0
4.50
10.0
4.00
0.0
3.50
(10.0)
3.00
Source: Bloomberg, Angel Research
Source: RBI, Angel Research
Market Outlook
April 03, 2018
Global watch
Exhibit 1: Latest quarterly GDP Growth (%, yoy) across select developing and developed countries
(%)
8.0
6.9
7.0
5.8
6.0
5.3
5.0
5.0
1.1
3.7
4.0
2.5
3.0
2.2
1.8
2.0
1.5
1.4
0.8
1.0
0.3
-
Source: Bloomberg, Angel Research
Exhibit 2: 2017 GDP Growth projection by IMF (%, yoy) across select developing and developed countries
(%)
6.7
6.8
7.0
6.0
5.4
5.2
5.0
3.7
4.0
3.0
1.8
2.2
2.0
1.7
1.6
2.0
0.7
1.5
0.7
1.0
-
Source: IMF, Angel Research
Exhibit 3: One year forward P-E ratio across select developing and developed countries
(x)
20.0
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
-
Source: IMF, Angel Research
Market Outlook
April 03, 2018
Exhibit 4: Relative performance of indices across globe
Returns (%)
Country
Name of index
Closing price
1M
3M
1YR
Brazil
Bovespa
84,666
(0.8)
12.6
33.3
Russia
Micex
4,401
1.4
7.1
11.4
India
Nifty
10,212
(3.5)
(3.0)
12.9
China
Shanghai Composite
3,163
(3.8)
(5.3)
(4.3)
South Africa
Top 40
48,795
(5.9)
(6.1)
7.9
Mexico
Mexbol
45,827
(5.4)
(5.4)
(6.5)
Indonesia
LQ45
1,019
(7.9)
(5.9)
13.0
Malaysia
KLCI
1,858
(0.1)
4.9
6.4
Thailand
SET 50
1,175
(2.5)
4.1
18.3
USA
Dow Jones
23,644
(5.5)
(4.6)
14.4
UK
FTSE
7,057
(3.1)
(7.4)
(3.6)
Japan
Nikkei
21,389
(3.1)
(6.8)
11.0
Germany
DAX
12,097
(3.2)
(6.8)
(1.3)
France
CAC
5,167
(3.3)
(3.2)
1.3
Source: Bloomberg, Angel Research p68in4
