Market Outlook
October 08, 2018
Market Cues
Domestic Indices
Chg (%)
(Pts)
(Close)
Indian markets are likely to open negative tracking global indices and SGX Nifty.
BSE Sensex
(2.3)
(792)
34,377
U.S. stocks regained some ground in the afternoon but still ended the day mostly
Nifty
(2.7)
(283)
10,316
lower. With the drop on the day, the major averages added to the notable losses
Mid Cap
(2.7)
(389)
14,004
posted in the previous session. The Dow slid 0.7 percent to 26,447, while the
Small Cap
(2.0)
(286)
13,840
Nasdaq tumbled 1.2 percent to 7,788.
Bankex
(1.9)
(535)
27,227
UK stocks fell on Friday to extend losses from the previous session as upbeat U.S.
data and hawkish comments from Federal Reserve officials boosted expectations for
Global Indices
Chg (%)
(Pts)
(Close)
inflation and continued rate hikes from the Federal Reserve in the coming months.
The FTSE 100 was down by 0.6 percent at 7,372.
Dow Jones
(0.7)
(180)
26,447
Nasdaq
(1.2)
(92)
7,788
On domestic front, Indian shares fell further on Friday to extend recent heavy losses
FTSE
(0.6)
(46)
7,372
as investors fretted about rising bond yields globally and weighed the risks from twin
deficits. The BSE Sensex was down by 2.3% to 34,377.
Nikkei
(0.8)
(192)
23,784
Hang Seng
(0.2)
(51)
26,573
News Analysis
Shanghai Com
1.1
30
2,821
HCL Tech to invest Rs 7.5bn in Andhra Pradesh, create 7,500 jobs in 10 yrs
Detailed analysis on Pg2
Advances / Declines
BSE
NSE
Advances
527
299
Investor’s Ready Reckoner
Declines
2,128
1,480
Key Domestic & Global Indicators
Unchanged
146
278
Stock Watch: Latest investment recommendations on 150+ stocks
Refer Pg5 onwards
Volumes (` Cr)
Top Picks
BSE
1,820
CMP
Target
Upside
Company
Sector
Rating
NSE
853
(`)
(`)
(%)
Blue Star
Capital Goods
Buy
574
867
51.0
Dewan Housing Finance
Financials
Buy
274
555
102.6
Net Inflows (` Cr)
Net
Mtd
Ytd
Parag Milk Foods
Others
Buy
242
410
69.4
FII
(1,077)
(1,418)
(6,857)
Bata India
Others
Buy
861
1,243
44.4
*MFs
1,125
3,967
80,584
KEI Industries
Capital Goods
Buy
304
589
93.8
More Top Picks on Pg4
Top Gainers
Price (`)
Chg (%)
Key Upcoming Events
PCJEWELLER
60
6.0
Previous
Consensus
Date
Region
Event Description
ReadingExpectations
KWALITY
12
5.0
Oct 10, 2018 UK
Industrial Production (YoY)
0.90
NAUKRI
1433
4.6
Oct 10, 2018 US
Consumer price index (mom)
0.20
VAKRANGEE
30
3.6
Oct 11, 2018 India
RBI Cash Reserve ratio
4.00
INFY
722
2.2
Oct 12, 2018 India
Industrial Production YoY
6.60
Oct 12, 2018 China
Exports YoY%
9.80
More Events on Pg7
Top Losers
Price (`)
Chg (%)
HINDPETRO
165
-25.2
BPCL
265
-21.1
IOC
118
-16.2
ONGC
147
-15.9
SHANKARA
1027
-11.3
As on Oct 5, 2018
Market Outlook
October 08, 2018
News Analysis
HCL Tech to invest Rs 7.5bn in Andhra Pradesh, create 7,500 jobs in
10 yrs
IT services major HCL Technologies will invest Rs 7.5 billion to set up two facilities
phases. In the first phase, the Noida-based company will invest Rs 4 billion to
build an R&D centre in Kesarapalli village in Gannavaram. The facility is expected
to accommodate more than 4,000 IT professionals, it said. The phase-I will
commence with the foundation stone laying ceremony on October 8 and is
expected to be completed in seven years' time, employing more than 4,000 IT
professionals, the statement added. Phase II will be taken up later in Amaravati,
this phase is expected to be Rs 3.5 billion and will include about 3,500 IT
professionals in five years' time.
Economic and Political News
Govt mulling more steps to narrow CAD, bolster forex inflows
Corporate News
Zydus Cadila to enter $68-mn market after US FDA nod for breast cancer
Market Outlook
October 08, 2018
Top Picks
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
Favorable outlook for the AC industry to augur
well for Cooling products business which is out
Blue Star
5,533
574
867
51.0
pacing 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
8,608
274
555
102.6
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
ICICI Bank
1,97,301
307
416
35.5
resolution of NPA would reduce provision cost,
which would help to report better ROE.
High order book execution in EPC segment, rising
KEI Industries
2,378
304
589
93.8
B2C sales and higher exports to boost the
revenues and profitability
Expected to benefit from the lower capex
Music Broadcast Limited
1,724
302
475
57.3
requirement and 15 year long radio broadcast
licensing.
Strong brands and distribution network would
Siyaram Silk Mills
1,898
405
752
85.7
boost growth going ahead. Stock currently trades
at an inexpensive valuation.
GST regime and the Gujarat plant are expected to
Maruti Suzuki
2,08,224
6,893
10,820
57.0
improve the company’s sales volume and
margins, respectively.
We expect loan book to grow at 24.3% over next
GIC Housing
1,345
250
486
94.4
two year; change in borrowing mix will help in
NIM improvement
Third largest brand play in luggage segment
Increased product offerings and improving
Safari Industries
1,661
745
1,071
43.8
distribution network is leading to strong growth in
business. Likely to post robust growth for next 3-4
years
We expect financialisation of savings and
Aditya Birla Capital
23,786
108
198
83.3
increasing penetration in Insurance & Mutual fund
would ensure steady growth.
One of the leading Indian dairy products
companies in India created strong brands in dairy
products. Rising revenue share of high-margin
Parag Milk Foods
2,031
242
410
69.4
Value Added Products and reduction in interest
cost is likely to boost margins and earnings in next
few years.
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
HDFC Bank
5,33,341
1,963
2,350
19.7
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.
Source: Company, Angel Research
Market Outlook
October 08, 2018
Continued...
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
We expect strong PAT growth on back of
healthy growth in automobile segment (on
back of new launches and facelifts in some of
M&M
95,552
769
1,050
36.5
the model ) and strong growth in Tractors
segment coupled by its strong brand recall
and improvement in rural sentiment
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
Amber Enterprises
2,850
906
1,230
35.8
solutions provider for the major brands in the
RAC industry and currently serves eight out of
the 10 top RAC brands in India
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
Bata India
11,061
861
1,243
44.4
mainly due to new product launches, higher
number of stores addition and focus on
women’s high growth segment and margin
improvement
SHTF is in the sweet spot with benefits from
stronger CV volumes, NIMs unaffected by
Shriram Transport Finance
rising bond yields on the back of stronger
23,711
1,045
1,764
68.8
pricing power and an enhancing ROE by
750bps over FY18-20E, supported by decline
in credit cost.
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
Jindal Steel & Power Limited
17,079
176
327
85.8
bottom line front, we expect JSPL to turn in to
profit by FY19 on back of strong operating
margin improvement.
GMM Pfaudler Limited (GMM) is the Indian
market leader in glass-lined (GL) steel
equipment. GMM is expected to cross CAGR
GMM Pfaulder
1,392
953
1,287
35.0
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.
Aurobindo Pharmaceuticals, amongst the
Indian Pharmaceutical companies, is well
placed to face the challenging generic markets,
given its focus on achieving growth through
Aurobindo Pharmaceuticals
43,565
744
870
16.9
productivity. Aurobindo will report net revenue
& net profit CAGR of ~13% & ~8% resp.
during FY2018-20E. Valuations are cheap V/s
its peers and own fair multiples of 17-18x.
Well planned strategy to grow small business
loans and cross-selling would propel fees
Yes Bank
47,617
206
365
77.2
income. We expect YES to grow its advance
much higher than industry and improvement in
asset quality to support profitability.
We believe advance to grow at a healthy
CAGR of 35% over FY18-20E. Below peers
RBL Bank
20,710
488
690
41.4
level ROA
(1.2% FY18) to expand led by
margin expansion and lower credit cost.
TTK Prestige has emerged as one of the
leading brands in kitchen appliances in India
after its successful transformation from a single
TTK Prestige
6,839
5,870
8,200
39.7
product company to offering an entire gamut
of home and kitchen appliances. We are
expecting a CAGR of 18% in revenue and 25%
in PAT over FY2018-20.
Source: Company, Angel Research
Market Outlook
October 08, 2018
Continued...
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
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
Inox Winds
1,771
80
127
58.8
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.
Considering the strong CV demand due to
change in BS-VI emission norms (will trigger
pre-buying activities), pick up in construction
Ashok Leyland
31,792
108
156
44.4
activities and no significant impact on industry
due to recent axle load norms, we recommend
BUY on Ashok Leyland at current valuations.
Source: Company, Angel Research
Fundamental Call
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
CCL is likely to maintain the strong growth
CCL Products
3,302
248
360
45.2
trajectory 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
Nilkamal
2,372
1,590
2,178
37.0
healthy demand growth in plastic division. On the
bottom-line front, we estimate
~10% CAGR to
`162cr owing to improvement in volumes.
Elantas Beck India is the Indian market leader in
liquid insulation segment used in electrical
equipments like motors, transformers etc. It derives
Elantas Beck India Ltd
1,498
1,889
2,500
32.3
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
1,745
142
256
80.3
~`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 Fin’s new management is on track to achieve
L&T Finance Holding
23,935
120
210
75.0
ROE of 18% by 2020 and recent capital infusion of
`3000cr would support advance growth.
Market Outlook
October 08, 2018
Key Upcoming Events
Global economic events release calendar
Bloomberg Data
Date
Time Country
Event Description
Unit
Period
Last Reported
Estimated
Oct 05, 2018
6:00 PMUS
Change in Nonfarm payrolls
Thousands
Sep
201.00Oct 05, 2018
6:00 PMUS
Unnemployment rate
%
Sep
3.90
2:30 PMIndia
RBI Reverse Repo rate
%
Oct 5
6.25
2:30 PMIndia
RBI Repo rate
%
Oct 5
6.50
US
Producer Price Index (mom)
% Change
Sep
-
Oct 10, 2018
2:00 PMUK
Industrial Production (YoY)
% Change
Aug
0.90Oct 10, 2018
6:00 PMUS
Consumer price index (mom)
% Change
Sep
0.20
Oct 11, 2018
2:30 PMIndia
RBI Cash Reserve ratio
%
Oct 5
4.00Oct 11, 2018
Oct 12, 2018
5:30 PMIndia
Industrial Production YoY
% Change
Aug
6.60Oct 12, 2018
China
Exports YoY%
% Change
Sep
9.80
Oct 16, 2018
0-Jan-00UK
Jobless claims change
Thousands
Sep
8.70Oct 16, 2018
0-Jan-00China
Consumer Price Index (YoY)
% Change
Sep
2.30
Oct 19, 2018
0-Jan-00China
Real GDP (YoY)
% Change
3Q
6.70Oct 19, 2018
Oct 25, 2018
0-Jan-00Euro Zone ECB announces interest rates
%
Oct 25
-Oct 25, 2018
Oct 30, 2018
0-Jan-00
Euro Zone
Euro-Zone GDP s.a. (QoQ)
% Change
3Q A
0.40Oct 30, 2018
Nov 01, 2018
0-Jan-00
UK
BOE Announces rates
% Ratio
Nov 1
0.75Nov 01, 2018
Nov 14, 2018
0-Jan-00
Germany
GDP nsa (YoY)
% Change
3Q P
2.30Nov 14, 2018
Source: Bloomberg, Angel Research
Market Outlook
October 08, 2018
Macro watch
Exhibit 1: Quarterly GDP trends
Exhibit 2: IIP trends
(%)
(%)
10.0
9.0
8.5
9.1
8.0
7.3
7.5
9.0
8.2
6.9
6.9
8.0
8.1
6.6
7.6
7.7
7.0
8.0
7.2
6.8
7.0
6.0
5.3
7.0
6.3
4.5
6.1
5.0
4.1
5.6
3.9
6.0
4.0
5.0
3.0
1.8
4.0
2.0
1.0
3.0
-
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
4.9
4.9
4.6
52.0
5.0
4.4
4.3
4.2
50.0
3.6
3.7
4.0
3.3
48.0
3.0
46.0
2.0
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
35.0
7.00
30.0
6.50
25.0
6.00
20.0
5.50
15.0
5.00
10.0
4.50
5.0
4.00
0.0
3.50
(5.0)
3.00
Source: Bloomberg, Angel Research
Source: RBI, Angel Research
Market Outlook
October 08, 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
1.5
2.0
0.7
0.7
1.0
-
Source: IMF, Angel Research
Exhibit 3: One year forward P-E ratio across select developing and developed countries
(x)
25.0
20.0
15.0
10.0
5.0
-
Source: IMF, Angel Research As of 25 Sep, 2018
Market Outlook
October 08, 2018
Exhibit 4: Relative performance of indices across globe
Returns (%)
Country
Name of index
Closing price
1M
3M
1YR
Brazil
Bovespa
75,429
(4.0)
5.6
2.7
Russia
Micex
4,327
1.4
7.1
11.4
India
Nifty
11,515
0.7
6.1
14.1
China
Shanghai Composite
2,682
(1.5)
(11.3)
(20.8)
South Africa
Top 40
50,441
1.7
(1.7)
1.9
Mexico
Mexbol
49,612
2.2
6.3
(1.0)
Indonesia
LQ45
937
(2.7)
(2.6)
(4.7)
Malaysia
KLCI
1,804
(0.1)
1.6
1.7
Thailand
SET 50
1,136
2.5
0.7
9.9
USA
Dow Jones
26,155
3.4
3.9
17.5
UK
FTSE
7,304
(4.0)
(4.3)
0.7
Japan
Nikkei
23,095
4.0
1.1
19.8
Germany
DAX
12,124
(0.3)
(5.5)
(3.2)
France
CAC
5,353
0.9
(1.8)
2.1
Source: Bloomberg, Angel Research As of 25 Sep, 2018
Market Outlook
October 08, 2018
Exhibit 7: Historical Angel Top Picks/Fundamental Calls
Date Added
Top Picks/Fundamental
Stocks
Reco Price
Target/Revised Price
Current Status
17-08-2018
Top Picks
Ashok Leyland
128
156
Open
10-08-2018
Top Picks
Inox Wind
107
127
Open
31-08-2018
Top Picks
TTK Prstige
7,235
8,200
Open
09-08-2018
Top Picks
TTK Prstige
6,206
7,500
06-07-2018
Top Picks
Aurobindo Pharma
603
780
Open
30-08-2018
Top Picks
RBL Bank
626
690
Open
06-07-2018
Top Picks
RBL Bank
565
670
06-07-2018
Top Picks
Yes Bank
348
418
Open
30-06-2018
Top Picks
Jindal Steel & Power
222
350
Open
20-06-2018
Top Picks
Shriram Transport Finance Com
1,466
1,764
Open
30-07-2018
Top Picks
Bata India
918
1,007
Open
23-07-2018
Top Picks
Bata India
842
955
01-07-2018
Top Picks
Bata India
862
948
18-06-2018
Top Picks
Bata India
779
896
14-06-2018
Top Picks
Amber Enterprises
1,026
1,230
Open
07-06-2018
Top Picks
M&M
918
1050
Open
04-05-2018
Top Picks
M&M
860
990
03-05-2018
Fundamental
L&T Finance Holding
171
210
Open
02-05-2018
Top Picks
HDFC Bank
1944
2315
Open
04-05-2018
Top Picks
Matrimony.com Ltd
573
1016
Closed(17/08/2018)
20-04-2018
Top Picks
Matrimony.com Ltd
781
984
15-05-2018
Top Picks
Parag Milk Foods Limited
310
410
Open
16-04-2018
Top Picks
Parag Milk Foods Limited
249
333
27-08-2018
Top Picks
GMM Pfaudler Limited
1,170
1,287
Open
18-08-2018
Top Picks
GMM Pfaudler Limited
1,024
1,200
07-08-2018
Top Picks
GMM Pfaudler Limited
984
1,100
29-06-2018
Fundamental
GMM Pfaudler Limited
932
1,020
14-05-2018
Fundamental
GMM Pfaudler Limited
818
900
06-04-2018
Fundamental
GMM Pfaudler Limited
712
861
07-03-2018
Fundamental
Ashok Leyland Ltd
139
163
Closed (26/04/2018)
03-03-2018
Fundamental
Greenply Industries
340
395
Open
27-08-2018
Top Picks
Safari Industries
974
1,071
Open
14-08-2018
Top Picks
Safari Industries
868
1,000
07-08-2018
Top Picks
Safari Industries
788
870
16-07-2018
Top Picks
Safari Industries
693
800
16-04-2018
Top Picks
Safari Industries
651
750
21-02-2018
Top Picks
Safari Industries
532
650
31-05-2018
Top Picks
HSIL Ltd
348
Closed (31/05/2018)
16-02-2018
Top Picks
HSIL Ltd
433
510
07-02-2018
Fundamental
Elantas Beck India Ltd.
2155
2500
Open
01-02-2018
Top Picks
ICICI Bank
352
416
Open
01-02-2018
Top Picks
Aditya Birla Capital
167
218
Open
04-01-2018
Fundamental
CCL Products
278
360
Open
03-01-2018
Fundamental
Nilkamal Ltd
1880
2178
Open
01-01-2018
Fundamental
Capital First Ltd
693
850
Closed (15/01/2018)
30-12-2017
Fundamental
Shreyans Industries Ltd
205
247
Closed
Source: Company, Angel Research
Market Outlook
October 08, 2018
Exhibit 8: Historical Angel Top Picks/Fundamental Calls
Source: Company
Research Team Tel: 022 - 39357800
DISCLAIMER:
Angel Broking Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited, Bombay
Stock Exchange Limited, Metropolitan Stock Exchange Limited, Multi Commodity Exchange of India Ltd and National Commodity &
Derivatives Exchange Ltd It is also registered as a Depository Participant with CDSL and Portfolio Manager and Investment Adviser with
SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Limited is a registered entity with SEBI for Research
Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number INH000000164. Angel or its associates has not
been debarred/ suspended by SEBI or any other regulatory authority for accessing /dealing in securities Market. Angel or its
associates/analyst has not received any compensation / managed or co-managed public offering of securities of the company covered
by Analyst during the past twelve months.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make
such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies
referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and
risks of such an investment.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals. Investors are advised to refer the Fundamental and Technical Research Reports available on our website to evaluate the
contrary view, if any
The information in this document has been printed on the basis of publicly available information, internal data and other reliable
sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
