1
1
www.angelbroking.com
Market Outlook
November 19, 2019
www.angelbroking.com
Market Cues
Indian markets are likely to open flat tracking global indices and SGX Nifty.
The US stocks recovered over the course of the trading day on Monday. The major
averages climbed well off their lows of the session and managed to end the day
modestly higher. The Dow edged up 0.1 percent to 28,036 and Nasdaq inched up
0.1 percent to 8,549.
The UK stocks are turning in a lackluster performance Monday morning with
investors largely staying cautious and refraining from making significant moves
amid a lack of triggers. The FTSE 100 was up by 0.2 percent to 7,303.
On domestic front, Indian shares ended lower on Monday after a somewhat
lackluster session as investors largely stayed cautious and refrained from making
significant moves. The benchmark BSE Sensex was down by 0.2 per cent to 40,284.
News Analysis
ArcelorMittal hopes to complete Essar acquisition by December end
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
797
990
24.2
ICICI Bank
Accumulate
498
532
6.8
GMM Pfaudlers
Accumulate
1,732
2,059
18.9
Bata India
Accumulate
1,702
1,865
9.6
HDFC Bank
Accumulate
1,262
1,390
10.1
More Top Picks on Pg4
Domestic Indices
Chg (%)
(Pts)
(Close)
BSE Sensex
(0.2)
(73)
40,284
Nifty
(0.01)
(1)
11,894
Mid Cap
0.5
65
14,837
Small Cap
0.3
36
13,362
Bankex
0.1
16
35,158
Global Indices
Chg (%)
(Pts)
(Close)
Dow Jones
0.1
32
28,036
Nasdaq
0.1
10
8,549
FTSE
0.2
15
7,303
Nikkei
0.5
114
23,416
Hang Seng
1.4
355
26,681
Shanghai Com
0.6
18
2,909
Advances / Declines
BSE
NSE
Advances
1,169
843
Declines
1,397
1,013
Unchanged
205
104
Volumes (` Cr)
BSE
2,448
NSE
33,619
Net Inflows (` Cr)
Net
Mtd
Ytd
FII
1,580
10,709
-2,26,474
*MFs
-1,425
-2,187
47,522
Top Gainers
Price (
`
)
Chg (%)
CORPBANK
22
19.9
LINDEINDIA
659
11.1
CENTURYTEX
449
7.7
DEEPAKFERT
103
7.6
BAYERCROP
3,593
6.5
Top Losers
Price (
`
)
Chg (%)
AVANTI
509
-5.7
JAGRAN
49
-5.6
RELCAPITAL
20
-4.9
IBULISL
73
-4.9
DHFL
22
-4.9
As on Nov 18, 2019
2
www.angelbroking.com
Market Outlook
November 19, 2019
www.angelbroking.com
News Analysis
ArcelorMittal hopes to complete Essar acquisition by December
end
The ArcelorMittal is expecting to complete the transaction for Essar Steel before the
end of December. ArcelorMittal India Private Limited’s (AMIPL) resolution plan
for Essar Steel India Limited (ESIL) has been unconditionally approved by the
Indian Supreme Court, the company announced. "Supreme Court approval of
AMIPL’s resolution plan is the final procedural step in ESIL’s corporate insolvency
process. Completion of the transaction is now expected before the end of the
year," it said. After completion, ArcelorMittal will jointly own and operate ESIL in
partnership with Nippon Steel Corporation (Nippon Steel), Japan’s largest steel
producer and the third largest steel producer in the world, in-line with the joint
venture formation agreement signed by the two companies.
Arcelor has a 60:40 joint venture with Nippon Steel. Nippon Steel said in its
statement, "AM (ArcelorMittal) and Nippon Steel have agreed that the share capital
ratio will be 60 per cent for ArcelorMittal and 40 per cent for Nippon Steel and
that both companies will have equal representation and voting rights on its board
of directors. The joint venture will be jointly controlled and be accounted for based
on the equity method by both companies." The acquisition of ESIL would make its
owners the fourth largest player in the second biggest market for steel. The Rs
42,000 crore bid gives the steel makers an effective steelmaking capacity of 9.6
million and pellet making capacity of 20 million tonnes.
Economic and Political News
HC issues notice to Centre over input tax credit denial to restaurants
Major reforms during Modi regime aimed at achieving Rs 5 trn economy: FM
India exported 6.39 MT steel in 2018-19, down 34% from last year
Trade deficit narrows to $11.01 billion in October on lower oil imports
Corporate News
Airlines prevail over sagging demand, maintain capacity in October
Jio, BSNL undecided on tariff hike, taking stock of evolving scenario
Air India extends bridge-loan bid deadline for Boeing purchase to Nov 22
ArcelorMittal hopes to complete Essar acquisition by December end
Jaypee Infra lenders discuss NBCC, Suraksha bids; to meet again by Nov-end
3
www.angelbroking.com
Market Outlook
November 19, 2019
www.angelbroking.com
Top Picks
Company
Market Cap
(` Cr)
CMP
(`)
Target
(`)
Upside
(%)
Rationale
Blue Star
76,791
797
990
24.2
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
32,20,472
498
532
6.8
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
21,44,647
7,100
8,552
20.5
GST regime and the Gujarat plant are expected to
improve the company’s sales volume and margins,
respectively.
Safari Industries
12,785
572
1,000
74.8
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
12,272
146
200
37.1
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
69,07,828
1,262
1,390
10.1
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
31,442
1,000
1,100
10.0
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
2,18,780
1,702
1,865
9.6
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
November 19, 2019
www.angelbroking.com
Continued...
Company
Market Cap
(` Cr)
CMP
(`)
Target
(`)
Upside
(%)
Rationale
Shriram Transport Finance
2,55,376
1,126
1,410
25.3
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
25,310
1,732
2,059
18.9
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
1,39,382
324
410
26.7
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
19,18,064
1,367
1,850
35.4
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
11,90,418
4,125
4,982
20.8
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
November 19, 2019
www.angelbroking.com
Fundamental Call
Company
Market Cap
(` Cr)
CMP
(`)
Target
(`)
Upside
(%)
Rationale
CCL Products
27,331
205
360
75.2
CCL is likely to maintain the strong growth
trajectory over FY18-20 backed by capacity
expansion and new geographical foray
Greenply Industries
19,620
160
256
60.0
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
1,95,350
98
150
53.6
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
1,88,705
82
118
44.6
We expect financialisation of savings and
increasing penetration in Insurance & Mutual fund
would ensure steady growth.
KEI Industries
41,835
526
612
16.3
High order book execution in EPC segment, rising
B2C sales and higher exports to boost the revenues
and profitability
Nilkamal
19,602
1,314
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
11,022
235
NA
NA
Strong brands and distribution network would
boost growth going ahead. Stock currently trades
at an inexpensive valuation.
Music Broadcast Limited
8,297
30
NA
NA
Expected to benefit from the lower capex
requirement and 15 year long radio broadcast
licensing.
Inox Winds
7,312
33
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
2,41,300
82
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
1,48,310
145
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
November 19, 2019
www.angelbroking.com
Continued...
Company
Market Cap
(` Cr)
CMP
(`)
Target
(`)
Upside
(%)
Rationale
Yes Bank
1,68,067
66
NA
NA
Well planned strategy to grow small business
loans and cross-selling would propel fees
income. We expect YES to grow its advance
much higher than industry and improvement
in asset quality to support profitability.
GIC Housing
7,916
147
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