Market Outlook
July 15, 2019
Market Cues
Domestic
Chg (%)
(Pts)
(Close)
Indices
Indian markets are likely to open flat tracking global indices and SGX Nifty.
BSE Sensex
(0.2)
(87)
38,736
The US stock moved mostly higher during the trading day on Friday. With the
Nifty
(0.2)
(30)
11,552
continued upward move, the major averages all ended the session at new record
Mid Cap
0.4
59
14,553
closing highs. The Dow jumped 0.9 percent to 27,332 while Nasdaq climbed 0.6
Small Cap
0.2
22
13,776
percent to 8,244.
Bankex
(0.4)
(123)
34,415
U.K. stocks rose on Friday and remained on track to snap a six-day losing streak
amid bets the U.S. Federal Reserve will start cutting interest rates at a policy
Global Indices
Chg (%)
(Pts)
(Close)
meeting later this month. Reassuring export data out of China also underpinned
Dow Jones
0.9
243
27,332
investor sentiment. The FTSE 100 was down by 0.3 percent to 7,532.
Nasdaq
0.6
49
8,244
On domestic front, Indian shares ended a choppy session lower on Friday, with
FTSE
(0.3)
(23)
7,532
rising oil prices and worries over the impact on earnings from the U.S.-China trade
Nikkei
0.2
43
21,685
dispute denting sentiment. The benchmark BSE Sensex was down by 0.2 percent to
Hang Seng
0.2
40
28,471
38,736.
Shanghai Com
0.4
13
2,930
News Analysis
Religare Enterprises to sell home loan arm, NBFC business to TCG
Advances / Declines
BSE
NSE
Advances
1,190
883
Detailed analysis on Pg2
Declines
1,254
847
Investor’s Ready Reckoner
Unchanged
150
357
Key Domestic & Global Indicators
Stock Watch: Latest investment recommendations on 150+ stocks
Volumes (` Cr)
Refer Pg5 onwards
BSE
1,971
NSE
33,225
Top Picks
CMP
Target
Upside
Company
Sector
Rating
(`)
(`)
(%)
Net Inflows (`
Net
Mtd
Ytd
Blue Star
Capital Goods Accumulate
754
867
15.0
Cr)
ICICI Bank
Financials
Buy
427
490
14.8
FII
(877)
(3,748)
77,813
Parag Milk Foods
Others
Buy
260
330
27.1
*MFs
86
(191)
7,904
Bata India
Others
Buy
1,343
1,643
22.3
KEI Industries
Capital Goods
Buy
466
612
31.4
Top Gainers
Price (`)
Chg (%)
More Top Picks on Pg4
162
9.6
481
9.3
70
7.6
247
6.6
281
5.8
Top Losers
Price (`)
Chg (%)
453
-7.7
22
-4.9
35
-4.8
2,193
-4.7
25
-4.1
As on July 12, 2019
Market Outlook
July 15, 2019
News Analysis
Religare Enterprises to sell home loan arm, NBFC business to
TCG
Purnendu Chatterjee-owned The Chatterjee Group (TCG) Advisory Services has
Religare Finvest (RFL) and housing finance company Religare Housing
Development Finance Corporation (RHDFC). SBI Capital Markets acted as an
advisor in the whole transaction. RFL has liabilities of Rs 5,800 crore, which are
being restructured by a group of lenders, headed by State Bank of India (SBI). In a
stake in RFL to TCG Services or any of its affiliates. This means TCG will gain
control of the housing finance company RHDFC, a subsidiary of RFL. Lenders to
RFL have already signed the inter-creditor agreement under the revised
guidelines of the Reserve Bank of India for stressed assets. Lenders expect the
restructuring of loans to be completed by August 2019. A total of 22 lenders are
part of the group, which had extended credit to the NBFC.
Sanjay Palve, chief executive officer of RFL and RHDFC, said: “This comes as a
significant development for the Religare Group, which not only enhances value
for its shareholders, with improved focus on its other businesses, but also
strengthens RFL and RHDFC’s businesses by aiding implementation of the
ongoing debt resolution process in RFL, and providing necessary support to
boost future growth of the businesses.” RFL has an asset base of Rs 7,000 crore,
which includes Rs 4,500-crore SME loan book. RHDFC has a loan book of Rs 725
crore, with liabilities of Rs 500 crore and capital base of Rs 200 crore. “We are
confident that through this transaction we will be able to capitalise both RFL and
RHDFC to achieve growth in the high-potential SME and affordable housing
sectors,” Palve added.
Economic and Political News
US, India trade talks to restart after Donald Trump's tariff tweets
Telecom operators likely to get 16 years to pay for 5G spectrum
Tamil Nadu will become first state to manufacture electric cars: Minister
Corporate News
Amazon invests Rs 51 crore in Qdigi Services to bolster after-sales
After RInfra, lenders to Reliance Power sign debt-resolution pact
Jet crisis: NCLAT agrees to hear Dutch Court insolvency administrator
Tata Steel plans to make European operations sustainable on its own
Cash-strapped DHFL gets 7 days to finalise and present a resolution plan
Glenmark, Torrent Pharma sign agreement to co-market diabetes drug in
India
Market Outlook
July 15, 2019
Quarterly Bloomberg Brokers Consensus Estimate
Federal Bank Ltd - July 16, 2019
Particulars (` cr)
1QFY20E
1QFY19
y-o-y (%)
4QFY19
q-o-q (%)
PAT
361
263
37.3
382
(5.5)
Yes Bank Ltd - July 17, 2019
Particulars (` cr)
1QFY20E
1QFY19
y-o-y (%)
4QFY19
q-o-q (%)
PAT
432
1,260
(65.7)
(1,507)
Wipro Ltd - July 17, 2019
Particulars (` cr)
1QFY20E
1QFY19
y-o-y (%)
4QFY19
q-o-q (%)
Sales
14,865
14,231
4.4
15,161
(1.9)
EBIDTA
3,007
2,682
12.2
3,258
(7.7)
%
20
19
21
PAT
2,323
2,121
9.5
2,484
(6.5)
Market Outlook
July 15, 2019
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
7,264
754
867
15.0
pacing 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
2,75,343
427
490
14.8
resolution of NPA would reduce provision cost,
which would help to report better ROE.
High order book execution in EPC segment, rising
KEI Industries
3,677
466
612
31.4
B2C sales and higher exports to boost the
revenues and profitability
GST regime and the Gujarat plant are expected to
Maruti Suzuki
1,82,020
6,026
8,552
41.9
improve the company’s sales volume and margins,
respectively.
Third largest brand play in luggage segment
Increased product offerings and improving
Safari Industries
1,400
627
1,000
59.5
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
19,835
90
130
44.3
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
2,184
260
330
27.1
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
HDFC Bank
6,58,007
2,408
2,660
10.5
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.
We expect strong PAT growth on back of healthy
growth in automobile segment (on back of new
launches and facelifts in some of the model ) and
M&M
78,775
634
1,050
65.7
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 solutions
Amber Enterprises
2,656
845
910
7.7
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
Bata India
17,262
1,343
1,643
22.3
~`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
Market Outlook
July 15, 2019
Continued...
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
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
23,665
1,043
1,470
40.9
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
13,636
134
250
86.6
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 Pfaudler Ltd
1,868
1,278
1,570
22.8
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
35,439
605
890
47.1
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
27,168
635
775
22.0
(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
8,760
6,320
7,708
22.0
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.
Maintain Hold.
Source: Company, Angel Research
Market Outlook
July 15, 2019
Fundamental Call
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
CCL is likely to maintain the strong growth
CCL Products
3,169
238
360
51.1
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
1,715
1,149
2,178
89.5
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
1,624
2,048
2,500
22.1
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
Greenply Industries
2,079
170
256
51.0
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 Fin’s new management is on track to achieve
L&T Finance Holding
23,974
120
210
75.1
ROE of 18% by 2020 and recent capital infusion of
`3000cr would support advance growth.
We expect loan book to grow at 24.3% over next
GIC Housing
1,390
258
424
64.3
two year; change in borrowing mix will help in NIM
improvement
Strong brands and distribution network would
Siyaram Silk Mills
1,409
301
549
82.6
boost growth going ahead. Stock currently trades
at an inexpensive valuation.
Expected to benefit from the lower capex
Music Broadcast Limited
1,585
57
95
65.8
requirement and 15 year long radio broadcast
licensing.
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
Inox Winds
1,525
69
120
74.7
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 activities and no
Ashok Leyland
24,996
85
156
83.2
significant impact on industry due to recent axle
load norms, we recommend BUY on Ashok Leyland
at current valuations.
Well planned strategy to grow small business loans
and cross-selling would propel fees income. We
Yes Bank
21,427
92
NA
NA
expect YES to grow its advance much higher than
industry and improvement in asset quality to
support profitability.
