Market Outlook
May 14, 2019
Market Cues
Domestic Indices
Chg (%)
(Pts)
(Close)
Indian markets are likely to open negative tracking global indices and SGX Nifty.
BSE Sensex
-1.0
-372
37,090
Nifty
-1.2
-131
11,148
US stocks moved sharply lower over the course of the trading session on Monday
Mid Cap
-1.8
-265
14,124
amid concerns about a full-fledged trade war between the U.S. and China. The Dow
tumbled to a three-month closing low, while the Nasdaq and the S&P 500 slumped
Small Cap
-2.1
-304
13,802
to their lowest closing levels in over a month. The Dow plunged 2.4 percent to
Bankex
-1.2
-386
31,999
25,324 and the Nasdaq plummeted 3.4 percent to 7,647.
U.K. stocks were little changed on Monday and the pound slipped against the euro,
Global Indices
Chg (%)
(Pts)
(Close)
as expectations over a deal between Labour and the Conservatives faded, making
Dow Jones
(2.4)
(618)
25,324
Prime Minister Theresa May's position increasingly vulnerable. The benchmark FTSE
Nasdaq
(3.4)
(270)
7,647
100 was down by 0.1 percent at 7,202.
FTSE
(0.1)
(37)
7,202
On domestic front, Indian shares traded flat for most of the day on Monday before
Nikkei
(0.7)
(154)
21,191
succumbing to heavy selling pressure following late selling in pharma, banking and
Hang Seng
0.8
240
28,550
auto stocks. The benchmark BSE Sensex was ended down by 1.0 percent to 37,090.
Shanghai Com
(1.2)
(35)
2,903
News Analysis
Advances / Declines
BSE
NSE
Retail inflation rises to 6-month high, poses uncertainty for rate cut
Advances
671
449
Detailed analysis on Pg2
Declines
1,816
1,309
Investor’s Ready Reckoner
Unchanged
149
344
Key Domestic & Global Indicators
Volumes (` Cr)
Stock Watch: Latest investment recommendations on 150+ stocks
Refer Pg5 onwards
BSE
2,032
NSE
31,602
Top Picks
CMP
Target
Upside
Company
Sector
Rating
(`)
(`)
(%)
Net Inflows (` Cr)
Net
Mtd
Ytd
Blue Star
Capital Goods Accumulate
759
867
14.3
FII
308
764
71,158
ICICI Bank
Financials
Buy
381
460
20.6
*MFs
426
-234
-3,667
Parag Milk Foods
Others
Buy
237
330
39.2
Bata India
Others
Buy
1,351
1,608
19.0
KEI Industries
Capital Goods
Buy
367
486
32.3
Top Gainers
Price (`)
Chg (%)
More Top Picks on Pg4
3,911
5.5
239
5.2
Key Upcoming Events
Previous
Consensus
67
3.4
Date
Region
Event Description
ReadingExpectations
164
3.2
May 13, 2019
TU Central Bank Inflation Report
14
3.2
May 14, 2019
TH Exports YoY
0.06
--
May 16, 2019
TH Exports
$22380m
--
May 17, 2019
TH Imports YoY
0.24
--
Top Losers
Price (`)
Chg (%)
May 17, 2019
TH Imports
$21776m
--
107
-12.8
More Events on Pg7
43
-12.7
186
-12.6
SUZLON
5
-12.5
31
-10.8
As on May 13, 2019
Market Outlook
May 14, 2019
News Analysis
Retail inflation rises to 6-month high, poses uncertainty for rate
cut
The beginning of the financial year 2019-20 saw a bit of rising inflationary
pressures, but the rate of price rise was still below the average of the Reserve Bank
of India’s (RBI’s) mandate of 2-6 per cent. Experts are divided whether the
monetary policy committee (MPC) of the RBI will cut the policy rate in June. The
retail price inflation rose to a six-month high of 2.92 per cent in April, pushed up
by costlier food items. However, food inflation was still 1.1 per cent in the month
against 0.3 per cent in the previous month. It was in March that food inflation
broke the five-month trend of deflation. This may augur well for farmers who faced
rural distress.
Inflation in urban areas rose to 4.64 per cent in April from 3.47 per cent in the
previous month, which may not go down well with the middle class, if the trend
persists. Much of the inflation in food items is generally attributed to the
government’s recent move to give higher minimum support price (MSP) to farmers.
However, the two important items where the support is given — pulses and
cereals — did not see much pressure. Pulses still faced deflation in April at 0.89
per cent, though the rate declined from 2.25 per cent in March. Cereals and
products saw inflation falling to 1.17 per cent from 1.25 per cent over the period.
Economic and Political News
Iran may offer the Farzad-B gas bloc to India on easier terms
Retail inflation rises to 6-month high, poses uncertainty for rate cut
SC suspends Rs 100-cr penalty on Andhra for 'failing' to stop sand mining
With UPI & IMPS services, NPCI leads retail payments space growth in FY19
Corporate News
Jet Airways revival: Etihad offer hinges on Rs 9,000-cr debt write-down
NBCC decides against diluting conditions in revised bid for Jaypee Tech
India's car sales decline 16% in April, the worst in eight years: Siam
Hudco wants Rs 190 cr bite out of McDonalds-Bakshi deal, NCLAT to hear
plea
Relief for TCS as US court rejects CSC's restraining order demand
Market Outlook
May 14, 2019
Top Picks
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
Favorable outlook for the AC industry to augur well
7,309
for Cooling products business which is out pacing
Blue Star
759
867
14.3
the market growth. EMPPAC division's profitability
to improve once operating environment turns
around.
Well capitalized with CAR of 18.1% which gives
sufficient room to grow asset base. Faster
ICICI Bank
2,45,943
381
460
20.6
resolution of NPA would reduce provision cost,
which would help to report better ROE.
High order book execution in EPC segment, rising
KEI Industries
2,899
367
486
32.3
B2C sales and higher exports to boost the revenues
and profitability
Expected to benefit from the lower capex
Music Broadcast Limited
1,579
57
95
66.4
requirement and 15 year long radio broadcast
licensing.
Strong brands and distribution network would
Siyaram Silk Mills
1,524
325
606
86.4
boost growth going ahead. Stock currently trades
at an inexpensive valuation.
GST regime and the Gujarat plant are expected to
Maruti Suzuki
2,00,136
6,625
10,820
63.3
improve the company’s sales volume and margins,
respectively.
We expect loan book to grow at 24.3% over next
GIC Housing
1,301
242
424
75.5
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
1,512
677
1,000
47.7
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
21,310
97
151
56.0
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
1,994
237
330
39.2
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
6,24,362
2,291
2,500
9.1
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.
Market Outlook
May 14, 2019
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 the
M&M
77,799
626
1,050
67.8
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
2,411
767
984
28.3
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
17,363
1,351
1,608
19.0
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 rising
Shriram Transport Finance
23,388
1,031
1,764
71.1
bond yields on the back of stronger 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 bottom
Jindal Steel & Power Limited
15,863
163
327
100.6
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 Pfaudler Ltd
1,681
1,150
1,400
21.8
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
44,272
756
890
17.8
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.
We believe advance to grow at a healthy CAGR
of 35% over FY18-20E. Below peers level ROA
RBL Bank
28,231
662
763
15.3
(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 product
TTK Prestige
9,147
7,918
9,250
16.8
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.
Maintain Hold.
Source: Company, Angel Research
Market Outlook
May 14, 2019
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
1,320
60
120
101.7
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
24,864
85
156
84.2
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
3,518
264
360
36.1
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
1,862
1,248
2,178
74.6
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
1,784
2,250
2,500
11.1
demand from several industries which are expected
to register 10%+ CAGR in demand in the coming
years. We can book out from the stock with 16%
profit at Rs. 2500 TP.
Greenply Industries Ltd (GIL) manufactures plywood
& allied products and medium density fibreboards
(MDF). GIL to report net revenue CAGR of ~14% to
Greenply Industries
1,804
147
256
74.0
~`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
24,164
121
210
73.8
ROE of 18% by 2020 and recent capital infusion of
`3000cr would support advance growth.
Well planned strategy to grow small business loans
and cross-selling would propel fees income. We
Yes Bank
39,449
170
290
70.3
expect YES to grow its advance much higher than
industry and improvement in asset quality to
support profitability.
