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Market Outlook
December 04, 2019
www.angelbroking.com
Market Cues
Indian markets are likely to open negative tracking global indices and SGX Nifty.
The US markets regained some ground during trading on Wednesday. The major
averages climbed firmly into positive territory but remained well off the record highs.
Dow climbed 0.5 percent to 27,649 and Nasdaq rose 0.5 percent to 8,566.
The UK stocks reversed early losses to turn higher on Wednesday as encouraging
Chinese data helped investors shrug off concerns surrounding U.S.-China trade
talks. The FTSE 100 was up by 0.2 per cent to 7,174.
On domestic front, Indian shares shrugged off mixed global cues to end higher on
Wednesday, with auto, banking and metal stocks leading the surge after survey
results from IHS Markit showed that India's services sector activity recovered in
November amid a rise in new business intakes and job creation. The benchmark
BSE Sensex was up by 0.4 per cent to 40,850.
News Analysis
Airtel board clears $3-bn fundraising via QIP, other means, to pay AGR dues
Detailed analysis on Pg2
Investor’s Ready Reckoner
Key Domestic & Global Indicators
Stock Watch: Latest investment recommendations on 150+ stocks
Refer Pg5 onwards
Top Picks
Company
Rating
CMP
(`)
Target
(`)
Upside
(%)
Blue Star
Buy
801
990
23.6
ICICI Bank
Accumulate
529
532
0.5
GMM Pfaudlers
Accumulate
1,640
2,059
25.5
Bata India
Accumulate
1,676
1,865
11.3
HDFC Bank
Accumulate
1,252
1,390
11.1
More Top Picks on Pg4
Domestic Indices
Chg (%)
(Pts)
(Close)
BSE Sensex
0.4
175
40,850
Nifty
0.4
43
12,037
Mid Cap
0.5
77
14,903
Small Cap
0.3
44
13,452
Bankex
1.4
504
36,423
Global Indices
Chg (%)
(Pts)
(Close)
Dow Jones
0.5
147
27,649
Nasdaq
0.5
47
8,566
FTSE
0.2
15
7,174
Nikkei
(1.1)
(245)
23,135
Hang Seng
(1.3)
(328)
26,062
Shanghai Com
(0.2)
(7)
2,878
Advances / Declines
BSE
NSE
Advances
1,255
999
Declines
1,214
789
Unchanged
204
352
Volumes (` Cr)
BSE
2,562
NSE
38,165
Net Inflows (` Cr)
Net
Mtd
Ytd
FII
(1,448)
(1,448)
(2,16,790)
*MFs
(123)
(6,582)
43,127
Top Gainers
Price (
`
)
Chg (%)
DISHTV
14
15.8
BLUEDART
2,310
11.6
CORPBANK
26
9.8
IDEA
7
9.7
TATAMOTORS
170
7.1
Top Losers
Price (
`
)
Chg (%)
INOXWIND
43
-6.9
PRESTIGE
332
-5.6
CENTRUM
21
-5.6
JPASSOCIAT
2
-5.0
CGPOWER
12
-4.7
As on Dec 04, 2019
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Market Outlook
December 04, 2019
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News Analysis
Airtel board clears $3-bn fundraising via QIP, other means, to
pay AGR dues
Leading telecom operator Bharti Airtel on Wednesday announced a $3-billion
fund raising, including through qualified institutional placement (QIPs), mainly to
pay dues linked to the adjusted gross revenue (AGR) as directed by the Supreme
Court (SC) recently. The company board has given its approval to raise up to $2
billion through one or more QIP, public or private offerings of equity shares and
compulsory convertible debentures etc. The board has also okayed raising $1
billion through foreign debt instruments and another $1 billion via “issuance of
unsecured and/or secured, listed and/or unlisted, redeemable non-convertible
debentures (NCDs) along with warrants or other similar security denominated in
Indian national rupee or combination thereof in one or more tranches”, according
to a regulatory filing.
The company has clarified that apart from $2 billion through QIP, the overall
issuance (through a combination of foreign debt instruments and redeemable
NCDs and warrants etc) for now shall be up to $1 billion, making it a total of $3-
billion fund raising. The telco’s fund raising plans come at a time when it is staring
at a substantial pay out of around Rs 43,000 crore to the Centre towards AGR
dues. Airtel had reported a net loss of Rs 23,044 crore for the quarter ended
September 30, on the back of an AGR provision of Rs 28,450 crore.
Economic and Political News
RBI likely to cut rates for sixth time this year, try help growth
Kerala threatens to take Centre to SC over delay in payment of GST dues
Govt's ethanol-blending policy needs stimulus to adhere to 2022 timeline
Corporate News
SBI to divest 8.25% in UTI AMC share sale; BoB, LIC and PNB may follow suit
Airtel board clears $3-bn fundraising via QIP, other means, to pay AGR dues
Tata Power-ICICI Bank JV acquires UP based Prayagraj power project
Hindalco boosts presence in logistics, aims to lower India's cost by 15%
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Market Outlook
December 04, 2019
www.angelbroking.com
Top Picks
Company
Market Cap
(` Cr)
CMP
(`)
Target
(`)
Upside
(%)
Rationale
Blue Star
77,128
801
990
23.6
Favorable outlook for the AC industry to augur well
for Cooling products business which is out pacing
the market growth. EMPPAC division's profitability
to improve once operating environment turns
around.
ICICI Bank
34,22,873
529
532
0.5
Well capitalized with CAR of 18.1% which gives
sufficient room to grow asset base. Faster
resolution of NPA would reduce provision cost,
which would help to report better ROE.
Maruti Suzuki
21,37,382
7,076
8,552
20.9
GST regime and the Gujarat plant are expected to
improve the company’s sales volume and margins,
respectively.
Safari Industries
13,026
583
1,000
71.6
Third largest brand play in luggage segment
Increased product offerings and improving
distribution network is leading to strong growth in
business. Likely to post robust growth for next 3-4
years
Parag Milk Foods
12,150
144
200
38.5
One of the leading Indian dairy products
companies in India created strong brands in dairy
products. Rising revenue share of high-margin
Value Added Products and reduction in interest cost
is likely to boost margins and earnings in next few
years.
HDFC Bank
68,53,519
1,252
1,390
11.1
HDFC Bank maintained its steady growth in the
4QFY18. The bank’s net profit grew by 20.3%.
Steady growth in interest income and other income
aided PAT growth. The Strong liability franchise
and healthy capitalisation provides strong earning
visibility. At the current market price, the bank is
trading at 3.2x FY20E ABV.
Amber Enterprises
33,671
1,071
1,100
2.7
Market leader in the room air conditioner (RAC)
outsourced manufacturing space in India with a
market share of 55.4%. It is a one-stop solutions
provider for the major brands in the RAC industry
and currently serves eight out of the 10 top RAC
brands in India
Bata India
2,15,457
1,676
1,865
11.3
BIL is the largest footwear retailer in India, offering
footwear, accessories and bags across brands. We
expect BIL to report net PAT CAGR of ~16% to
~`3115cr over FY2018-20E mainly due to new
product launches, higher number of stores addition
and focus on women’s high growth segment and
margin improvement
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Market Outlook
December 04, 2019
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Continued...
Company
Market Cap
(` Cr)
CMP
(`)
Target
(`)
Upside
(%)
Rationale
Shriram Transport Finance
2,46,732
1,088
1,410
29.7
SHTF is in the sweet spot with benefits from
stronger CV volumes, NIMs unaffected by
rising bond yields on the back of stronger
pricing power and an enhancing ROE by
750bps over FY18-20E, supported by decline
in credit cost.
GMM Pfaudler Ltd
23,978
1,640
2,059
25.5
GMM Pfaudler Limited (GMM) is the Indian
market leader in glass-lined (GL) steel
equipment. GMM is expected to cross CAGR
15%+ in revenue over the next few years
mainly led by uptick in demand from user
industries and it is also expecting to increase
its share of non-GL business to 50% by 2020.
RBL Bank
1,60,515
373
410
10.0
We believe advance to grow at a healthy
CAGR of 35% over FY18-20E. Below peers
level ROA (1.2% FY18) to expand led by
margin expansion and lower credit cost.
Larsen & Toubro
18,03,883
1,285
1,850
43.9
The company has a strong order backlog of
~` 3lakh cr. and a very strong pipeline of `9
lakh cr. for FY2020. We are positive on
the prospects of the Company given the
Government’s thrust on Infrastructure with
over 100lakh cr. of investments lined up over
the next 5 years. Reduction in tax rate
for domestic companies to 22% from 30% will
improve profitability for the company.
Ultratech Cement
12,10,996
4,196
4,982
18.7
Post merger of Century textile’s cement
division of 13.4mn TPA from H2FY20
company will have ~110mn TPA of capacity
with a dominant position in West and central
India. We are positive on the long term
prospects of the Company given ramp up
from acquired capacities and pricing
discipline in the industry. Reduction in tax rate
for domestic companies to 22% from 30% will
improve profitability for the company.
Source: Company, Angel Research
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Market Outlook
December 04, 2019
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Fundamental Call
Company
Market Cap
(` Cr)
CMP
(`)
Target
(`)
Upside
(%)
Rationale
CCL Products
26,399
198
360
81.4
CCL is likely to maintain the strong growth
trajectory over FY18-20 backed by capacity
expansion and new geographical foray
Greenply Industries
19,994
163
256
57.0
Greenply Industries Ltd (GIL) manufactures
plywood & allied products and medium density
fibreboards (MDF). GIL to report net revenue CAGR
of ~14% to ~`2,478cr over FY2017-20E mainly
due to healthy growth in plywood & lamination
business on the back of strong brand and
distribution network
L&T Finance Holding
2,38,261
119
150
25.9
L&T Fin’s new management is on track to achieve
ROE of 18% by 2020 and recent capital infusion of
`3000cr would support advance growth.
Aditya Birla Capital
2,47,378
107
118
10.3
We expect financialisation of savings and
increasing penetration in Insurance & Mutual fund
would ensure steady growth.
KEI Industries
40,647
511
612
19.7
High order book execution in EPC segment, rising
B2C sales and higher exports to boost the revenues
and profitability
Nilkamal
19,234
1,289
NA
NA
We forecast Nilkamal to report top-line CAGR of
~9% to `2,635cr over FY17-20E on the back of
healthy demand growth in plastic division. On the
bottom-line front, we estimate ~10% CAGR to
`162cr owing to improvement in volumes.
Siyaram Silk Mills
10,473
223
NA
NA
Strong brands and distribution network would
boost growth going ahead. Stock currently trades
at an inexpensive valuation.
Music Broadcast Limited
7,840
28
NA
NA
Expected to benefit from the lower capex
requirement and 15 year long radio broadcast
licensing.
Inox Winds
9,554
43
NA
NA
We expect Inox Wind to report exponential growth
in top-line and bottom-line over FY19-20E. The
growth would be led by changing renewable
energy industry dynamics in favor of wind energy
segment viz. changes in auction regime from Feed-
In-Tariff (FIT) to reverse auction regime and
Government’s guidance for 10GW auction in FY19
and FY20 each.
Ashok Leyland
2,27,503
78
NA
NA
Considering the strong CV demand due to change
in BS-VI emission norms (will trigger pre-buying
activities), pick up in construction activities and no
significant impact on industry due to recent axle
load norms, we recommend BUY on Ashok Leyland
at current valuations.
Jindal Steel & Power Limited
1,56,879
154
NA
NA
We expect JSPL’s top line to grow at 27% CAGR
over FY19-FY20 on the back of strong steel
demand and capacity addition. On the bottom line
front, we expect JSPL to turn in to profit by FY19 on
back of strong operating margin improvement.
6
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Market Outlook
December 04, 2019
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Continued...
Company
Market Cap
(` Cr)
CMP
(`)
Target
(`)
Upside
(%)
Rationale
GIC Housing
8,411
156
NA
NA
We expect loan book to grow at 24.3% over
next two year; change in borrowing mix will
help in NIM improvement
Source: Company, Angel Research