1
1
www.angelbroking.com
Market Outlook
December 06, 2019
www.angelbroking.com
Market Cues
Indian markets are likely to open positive tracking global indices and SGX Nifty.
The US markets showed a lack of direction over the course of the trading day on
Thursday. The major averages spent the day bouncing back and forth across the
unchanged line. Dow inched up 0.1 percent to 27,677 and Nasdaq crept up 0.1
percent to 8,570.
The UK stocks edged lower on Thursday, with exporters suffering losses as the
pound continued to rise on expectations that next week's general election will not
result in a hung parliament. The FTSE 100 was down by 0.2 per cent to 7,175.
On domestic front, Indian shares fell on Thursday, with rate-sensitive banking and
auto stocks pacing the decliners, after the Reserve Bank of India (RBI) kept its policy
rate unchanged, surprising market participants who were expecting at least a 25-
basis points rate cut. The benchmark BSE Sensex was down by 0.2 per cent to
40,779.
News Analysis
Mankind Pharma eyes acquisition of biotech firms, plans new launches
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
814
990
21.6
ICICI Bank
Accumulate
528
532
0.8
GMM Pfaudlers
Accumulate
1,646
2,059
25.1
Bata India
Accumulate
1,707
1,865
9.3
HDFC Bank
Accumulate
1,245
1,390
11.6
More Top Picks on Pg4
Domestic Indices
Chg (%)
(Pts)
(Close)
BSE Sensex
(0.2)
(71)
40,779
Nifty
(0.2)
(25)
12,018
Mid Cap
(0.3)
(49)
14,855
Small Cap
0.01
2
13,455
Bankex
(0.8)
(276)
36,147
Global Indices
Chg (%)
(Pts)
(Close)
Dow Jones
0.1
28
27,677
Nasdaq
0.1
5
8,570
FTSE
(0.2)
(13)
7,175
Nikkei
0.7
167
23,300
Hang Seng
0.6
155
26,217
Shanghai Com
0.7
21
2,899
Advances / Declines
BSE
NSE
Advances
1,129
778
Declines
1,351
992
Unchanged
193
370
Volumes (` Cr)
BSE
2,073
NSE
34,088
Net Inflows (` Cr)
Net
Mtd
Ytd
FII
(1,448)
(1,448)
(2,16,790)
*MFs
(123)
(6,582)
43,127
Top Gainers
Price (
`
)
Chg (%)
TATAELXSI
862
6.8
EQUITAS
112
6.8
ZEEL
300
6.7
JKTYRE
77
6.1
JUBILANT
533
5.9
Top Losers
Price (
`
)
Chg (%)
JINDALSTEL
141
-8.4
INDIGO
1,320
-6.1
HUDCO
38
-5.8
IDEA
7
-5.6
JPASSOCIAT
2
-4.8
As on Dec 05, 2019
2
www.angelbroking.com
Market Outlook
December 06, 2019
www.angelbroking.com
News Analysis
Mankind Pharma eyes acquisition of biotech firms, plans new
launches
Mankind Pharma is looking for buyouts in the biotechnology space after talks with
Bharat Serums and Vaccines fell through. The firm feels a manufacturing site
would be crucial for its biotechnology business and is open to inorganic acquisition
in this space. It is also all set to launch a synthetic female hormone product — the
first Indian firm and the second globally, after Abbott. The acute therapy-focused
company has recently shifted its focus to chronic therapy areas like diabetes and
cardiac ailments. It is also driving 5 per cent of its turnover towards research and
development (R&D). The bulk of the R&D cost is towards biosimilars.
However, Mankind, a Rs 5,600-crore firm, is also keen to launch products in
the biotechnology space and is open to inorganic acquisition in the segment. “For
the biotechnology segment, we are open to inorganic growth. We are looking to
acquire a suitable target that would bring in brands, as well as manufacturing
sites. We plan to launch biotech products in the infertility segment. We were in
talks with Bharat Serums, but the talks fell through,” said R C Juneja, founder and
chairman of Mankind Pharma.
Economic and Political News
RBI's policy surprise: Pause on rate cuts may hit real estate, auto sectors
India's manufacturing capacity utilisation declines to the lowest ever
RBI keeps repo rate unchanged at 5.15%, stance stays accommodative
Corporate News
Fixed deposit holders of debt-laden DHFL asked to submit claims by Dec 17
Tata Motors to set up regional stockyards to ensure car delivery in 3 days
Mankind Pharma eyes acquisition of biotech firms, plans new launches
Govt moves NCLAT against NCLT order making MCA party in all IBC cases
3
www.angelbroking.com
Market Outlook
December 06, 2019
www.angelbroking.com
Top Picks
Company
Market Cap
(` Cr)
CMP
(`)
Target
(`)
Upside
(%)
Rationale
Blue Star
78,395
814
990
21.6
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
34,13,497
528
532
0.8
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
21,16,252
7,006
8,552
22.1
GST regime and the Gujarat plant are expected to
improve the company’s sales volume and margins,
respectively.
Safari Industries
13,052
584
1,000
71.3
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
12,100
144
200
39.0
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
68,19,571
1,245
1,390
11.6
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
33,437
1,063
1,100
3.5
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
2,19,377
1,707
1,865
9.3
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
4
www.angelbroking.com
Market Outlook
December 06, 2019
www.angelbroking.com
Continued...
Company
Market Cap
(` Cr)
CMP
(`)
Target
(`)
Upside
(%)
Rationale
Shriram Transport Finance
2,51,383
1,108
1,410
27.3
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
24,055
1,646
2,059
25.1
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
1,57,392
365
410
12.2
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
18,26,972
1,302
1,850
42.1
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
12,00,721
4,160
4,982
19.8
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
5
www.angelbroking.com
Market Outlook
December 06, 2019
www.angelbroking.com
Fundamental Call
Company
Market Cap
(` Cr)
CMP
(`)
Target
(`)
Upside
(%)
Rationale
CCL Products
26,586
200
360
80.1
CCL is likely to maintain the strong growth
trajectory over FY18-20 backed by capacity
expansion and new geographical foray
Greenply Industries
19,657
160
256
59.7
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
2,31,459
116
150
29.6
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
2,47,147
107
118
10.4
We expect financialisation of savings and
increasing penetration in Insurance & Mutual fund
would ensure steady growth.
KEI Industries
40,011
503
612
21.6
High order book execution in EPC segment, rising
B2C sales and higher exports to boost the revenues
and profitability
Nilkamal
19,204
1,287
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
10,483
224
NA
NA
Strong brands and distribution network would
boost growth going ahead. Stock currently trades
at an inexpensive valuation.
Music Broadcast Limited
7,854
28
NA
NA
Expected to benefit from the lower capex
requirement and 15 year long radio broadcast
licensing.
Inox Winds
9,576
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
2,24,274
76
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
1,43,720
141
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
www.angelbroking.com
Market Outlook
December 06, 2019
www.angelbroking.com
Continued...
Company
Market Cap
(` Cr)
CMP
(`)
Target
(`)
Upside
(%)
Rationale
GIC Housing
8,331
155
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