Market Outlook
May 24, 2018
Market Cues
Domestic Indices
Chg (%)
(Pts)
(Close)
Indian markets are likely to open positive tracking global indices and SGX Nifty.
BSE Sensex
(0.9)
(306)
34,344
U.S. Stocks showed a notable turnaround over the course of the trading day on
Nifty
(1.2)
(106)
10,430
Wednesday after coming under pressure early in the session. The major averages
Mid Cap
(1.6)
(260)
15,636
climbed into positive territory following the release of the minutes of the latest
Small Cap
(2.2)
(380)
16,946
Federal Reserve meeting. The Dow Jones increased by 0.2% to 24,886 and the
Nasdaq climbed up by 0.6% to 7,426.
Bankex
(0.3)
(94)
28,851
U.K. stocks fell from a record high reached on Tuesday as a drop in oil prices pulled
Global Indices
Chg (%)
(Pts)
(Close)
down energy stocks and investors weighed U.S. President Donald Trump's comments
on China and North Korea. Meanwhile, U.K. inflation slowed slightly in April, data
Dow Jones
0.2
52
24,886
from the Office for National Statistics revealed. The benchmark FTSE 100 was down
Nasdaq
0.6
48
7,426
by 1% at 7,788.
FTSE
(1.1)
(89)
7,788
On domestic front, Indian shares tumbled on Wednesday amid continued selling by
Nikkei
0.3
72
23,002
foreign funds as oil stayed at multi-year peaks and the rupee traded near 17-month
Hang Seng
0.6
186
31,234
low against the dollar ahead of minutes of the Federal Reserve's early-May policy
Shanghai Com
0.6
21
3,214
meeting due later in the day. Tepid global cues also weighed on markets after U.S.
President Donald Trump said he was "not really" pleased with the U.S.-China trade
Advances / Declines
BSE
NSE
talks so far. The BSE Sensex closed down by 0.9% at 34,344.
Advances
664
467
News Analysis
Declines
2,029
1,335
KEI industries (Revised Target Price): CMP - `481 TP- `589 Upside -22%
Unchanged
130
69
Lower agriculture input costs to contain food inflation
Volumes (` Cr)
Detailed analysis on Pg2
BSE
3,328
Investor’s Ready Reckoner
NSE
29,838
Key Domestic & Global Indicators
Net Inflows (` Cr)
Net
Mtd
Ytd
Stock Watch: Latest investment recommendations on 150+ stocks
Refer Pg5 onwards
FII
(412)
(3,914)
3,483
*MFs
693
5,830
51,583
Top Picks
CMP
Target
Upside
Company
Sector
Rating
(`)
(`)
(%)
Top Gainers
Price (`)
Chg (%)
Blue Star
Capital Goods
Buy
713
867
21.5
MARKSANS
28
10.4
Dewan Housing Finance
Financials
Buy
600
720
20.0
Parag Milk Foods
Others
Buy
323
410
26.9
SHRIRAMCIT
2340
8.1
Navkar Corporation
Others
Buy
151
265
75.4
LTI
1609
6.7
KEI Industries
Capital Goods Accumulate
481
589
22.5
IDBI
66
6.0
More Top Picks on Pg4
ANDHARABANK
36
5.2
Key Upcoming Events
Previous
Consensus
Top Losers
Price (`)
Chg (%)
Date
Region
Event Description
ReadingExpectations
TATASTEELPP
142
-9.9
May 24, 2018 UK
CPI (YoY)
2.50
2.50
May 24, 2018 US
Initial Jobless claims
222.00
220.00
HINDPETRO
286
-8.1
May 24, 2018 US
Existing home sales
5.60
5.55
BALRAMCHIN
68
-7.5
May 25, 2018 UK
GDP (YoY)
1.20
1.20
TATASTEEL
539
-6.6
May 29, 2018 US
Consumer Confidence
128.70
128.00
CENTURYTEX
934
-6.4
More Events on Pg7
As on May 23, 2018
Market Outlook
May 24, 2018
News Analysis
Upgraded Target Price - Kei Industries: CMP -`481 Target- `589
Upside -22%
We expect KEI to report net revenue CAGR of ~16% to ~`4,646cr over FY2018-
19E mainly due to (a) higher order book execution in EPC segment; (b) growth in
EHV business; (c) higher B2C sales; and (d) higher exports. On the bottom-line
front, we expect a CAGR of ~19% to `207cr over the same period on the back
strong revenue and lower interest costs. At the CMP of `481, the stock trades at
18.0x its FY2020E EPS of `26.8. Thus, we maintain our Buy rating with the revised
Target Price of `589.
Lower agriculture input costs to contain food inflation
The government’s annual budget for fiscal year 2019 provides for support prices
for agricultural produce to be increased to 50% mark-up over costs. That’s made
the Reserve Bank of India and other market participants wary about the risks to
food inflation.
The latest value for the month of April shows that agriculture input cost inflation
Was a negative -0.25%, marginally higher than -0.71% in March. The average
agriculture input cost inflation over the past year has been -1.4%. This has helped
bring down food inflation. Food inflation that has a 46% weight in the CPI basket
averaged 2.4% over the last year.
Economic and Political News
Lower agriculture input costs to contain food inflation
Indian Retail sector attracts Rs 9.5 bn PE investment in 2018, up 35% y-o-y
India's net direct tax collection rises 18% to Rs 10.03 trillion
FinMin ties up with Ola, other e-commerce firms to give loans under PMMY
Corporate News
Essel Green Energy, IBC Solar Ventures to install solar plants in Odisha
Cabinet approves restructuring of Scooters India balance sheet
Carmakers face bumpy ride to BS-VI roll-out
YES Bank recovers Rs 1.84 bn, or 66% of original claim, from Bhushan Steel
Market Outlook
May 24, 2018
Top Picks
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
Strong growth in domestic business due to its
leadership in acute therapeutic segment. Alkem
Alkem Laboratories
23,052
1,951
2,441
25.1
expects to launch more products in USA, which
bodes for its international business.
Favorable outlook for the AC industry to augur well
for Cooling products business which is out pacing
Blue Star
6,753
713
867
21.5
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
19,277
600
720
20.0
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
186,219
290
416
43.6
resolution of NPA would reduce provision cost,
which would help to report better ROE.
High order book execution in EPC segment, rising
KEI Industries
3,523
481
589
22.5
B2C sales and higher exports to boost the revenues
and profitability
Expected to benefit from the lower capex
Music Broadcast Limited
1,911
342
475
38.8
requirement and 15 year long radio broadcast
licensing.
Massive capacity expansion along with rail
Navkar Corporation
2,263
151
265
75.5
advantage at ICD as well CFS augur well for the
company
Strong brands and distribution network would
Siyaram Silk Mills
2,955
611
851
39.3
boost growth going ahead. Stock currently trades at
an inexpensive valuation.
GST regime and the Gujarat plant are expected to
Maruti
2,681
8500
10,619
24.9
improve the company’s sales volume and margins,
respectively.
We expect loan book to grow at 24.3% over next
GIC Housing
254,598
384
655
75.5
two year; change in borrowing mix will help in NIM
improvement
We expect sales/PAT to grow at 13.5%/20% over
LT Foods
2,026
83
128
54.1
next two years on the back of strong distribution
network & addition of new products in portfolio.
Third largest brand play in luggage segment
Increased product offerings and improving
Safari Industries
5,894
625
750
20.0
distribution network is leading to strong growth in
business. Likely to post robust growth for next 3-4
years
We expect HSIL to report PAT CAGR of ~15% over
FY2017-20E owing to better improvement in
HSIL Ltd
2,669
361
510
41.3
operating margin due price hike in container glass
segment, turnaround in consumer business.
Source: Company, Angel Research
Market Outlook
May 24, 2018
Top Picks
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
We expect financialisation of savings and
Aditya Birla Capital
31,662
141
218
54.5
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
2,773
323
410
26.4
Value Added Products and reduction in interest cost
is likely to boost margins and earnings in next few
years.
We expect MCL to report net revenue CAGR of
~15% to ~`450cr over FY2018-20E mainly due to
strong growth in online matchmaking & marriage
Matrimony.com Ltd
1,772
767
1,016
32.3
related services. On the bottom-line front, we
expect a CAGR of ~28% to `82cr over the same
period on the back margin improvement.
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
517,292
1,996
2,315
15.9
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
102638
831
990
19.2
strong growth in Tractors segment coupled by its
strong brand recall and improvement in rural
sentiment
Source: Company, Angel Research
Market Outlook
May 24, 2018
Fundamental Call
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
CCL is likely to maintain the strong growth trajectory
CCL Products
3,974
299
360
20.5
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
2,468
1,664
2,178
30.9
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
1,631
2,035
2,500
22.9
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
3,433
275
395
43.6
~`2,478cr over FY2017-20E mainly due to healthy
growth in plywood & lamination business on the
back of strong brand and distribution network
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
GMM Pfaudler Ltd
1,213
801
920
14.2
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.
L&T Fin’s new management is on track to achieve
L&T Finance Holding
33,319
162
210
25.8
ROE of 18% by 2020 and recent capital infusion of
`3000cr would support advance growth.
Market Outlook
May 24, 2018
Key Upcoming Events
Result Calendar
Date
Company
May 24, 2018
Pidilite Industries, GAIL India
May 25, 2018
Pidilite Industries, GAIL India
Source: Bloomberg, Angel Research
Global economic events release calendar
Bloomberg Data
Date
Time
Country
Event Description
Unit
Period
Last Reported
Estimated
May 24, 2018
2:00 PMUK
CPI (YoY)
% Change
Apr
2.50
2.50
6:00 PMUS
Initial Jobless claims
Thousands
May 19
222.00
220.00
7:30 PMUS
Existing home sales
Million
Apr
5.60
5.55
May 25, 2018
2:00 PMUK
GDP (YoY)
% Change
1Q P
1.20
1.20
May 29, 2018
7:30 PMUS
Consumer Confidence
S.A./ 1985=100 May
128.70
128.00
May 30, 2018
6:00 PMUS
GDP Qoq (Annualised)
% Change
1Q S
2.30
2.30
1:25 PMGermany Unemployment change (000's)
Thousands
May
(7.00)
May 31, 2018
6:30 AMChina
PMI Manufacturing
Value
May
51.40
Jun 01, 2018
6:00 PMUS
Change in Nonfarm payrolls
Thousands
May
164.00
195.00
6:00 PMUS
Unnemployment rate
%
May
3.90
3.90
2:00 PMUK
PMI Manufacturing
Value
May
53.90
Jun 06, 2018
2:30 PMIndia
RBI Repo rate
%
Jun 6
6.00
2:30 PMIndia
RBI Reverse Repo rate
%
Jun 6
5.75
2:30 PMIndia
RBI Cash Reserve ratio
%
Jun 6
4.00
Jun 07, 2018
2:30 PMEuro Zone Euro-Zone GDP s.a. (QoQ)
% Change
1Q F
0.40
Source: Bloomberg, Angel Research
Market Outlook
May 24, 2018
Macro watch
Exhibit 1: Quarterly GDP trends
Exhibit 2: IIP trends
(%)
(%)
8.5
10.0
9.0
9.1
7.3
7.4
9.0
8.0
7.0
8.0
8.1
7.0
7.6
7.6
8.0
7.3
7.2
7.2
6.0
6.8
4.8
6.5
4.4
7.0
5.0
4.1
6.1
5.7
4.0
6.0
2.9
3.0
1.8
5.0
2.0
1.0
4.0
1.0
-
3.0
(1.0)
(0.3)
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
52.0
5.0
4.4
4.6
4.3
50.0
4.0
3.6
3.3
3.3
48.0
3.0
2.4
2.2
46.0
2.0
1.5
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
6.50
30.0
6.00
25.0
5.50
20.0
5.00
15.0
4.50
10.0
4.00
5.0
0.0
3.50
(5.0)
3.00
Source: Bloomberg, Angel Research
Source: RBI, Angel Research
Market Outlook
May 24, 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
2.0
0.7
1.5
0.7
1.0
-
Source: IMF, Angel Research
Exhibit 3: One year forward P-E ratio across select developing and developed countries
(x)
20.0
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
-
Source: IMF, Angel Research as on 22 May,2018
Market Outlook
May 24, 2018
Exhibit 4: Relative performance of indices across globe
Returns (%)
Country
Name of index
Closing price
1M
3M
1YR
Brazil
Bovespa
83,082
(1.2)
(1.4)
21.8
Russia
Micex
4,517
1.4
7.1
11.4
India
Nifty
10,596
(0.1)
0.2
10.4
China
Shanghai Composite
3,193
4.8
(2.9)
5.3
South Africa
Top 40
51,292
2.6
2.1
7.7
Mexico
Mexbol
45,667
(6.7)
(4.7)
(5.5)
Indonesia
LQ45
919
(11.7)
(18.4)
(4.1)
Malaysia
KLCI
1,855
(1.0)
1.3
5.2
Thailand
SET 50
1,161
0.1
0.5
19.1
USA
Dow Jones
24,715
(0.1)
(1.9)
18.8
UK
FTSE
7,779
7.6
7.8
3.8
Japan
Nikkei
22,930
5.3
7.9
14.9
Germany
DAX
13,078
3.9
6.0
3.5
France
CAC
5,615
5.1
8.3
6.0
Source: Bloomberg, Angel Research s on 22 May,20188in4
Market Outlook
May 24, 2018
Exhibit 7: Historical Angel Top Picks/Fundamental Calls
Date Added
Top Picks/Fundamental
Stocks
Reco Price
Target/Revised Price
Current Status
04-05-2018
Top Picks
M&M
860
990
Open
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
810
1016
Open
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
14-05-2018
Fundamental
GMM Pfaudler Limited
818
900
Open
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
16-04-2018
Top Picks
Safari Industries
651
750
Open
21-02-2018
Top Picks
Safari Industries
532
650
16-02-2018
Top Picks
HSIL Ltd
433
510
Open
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
Fundamental
Prism Cement Ltd
160
Closed (09/05/2018)
21-12-2017
Fundamental
Prism Cement Ltd
118
131
18-12-2017
Fundamental
Menon Bearings Limited
92
114
Closed (17/01/2018)
14-12-2017
Top Picks
Ruchira Papers Ltd.
188
244
Closed (09/02/2018)
17-05-2018
Top Picks
Century Plyboards India
280
Closed(17/05/2018)
28-11-2017
Top Picks
Century Plyboards India
317
400
19-12-2017
Top Picks
LT Foods
85
128
Open
06-11-2017
Top Picks
LT Foods
74
96
16-10-2017
Fundamental
Endurance Technologies Ltd
1111
1277
Closed (01/12/2017)
11-09-2017
Top Picks
GIC Housing
533
655
Open
10-10-2017
Top Picks
Music Broadcast Limited
404
475
Open
20-07-2017
Top Picks
Music Broadcast Limited
368
434
07-07-2017
Fundamental
L&T Finance Holdings Ltd
149
179
Closed (28/8/2017)
06-07-2017
Fundamental
Syngene International
478
564
Closed (1/3/2018)
05-07-2017
Top Picks
Maruti
7371
10619
Open
05-06-2017
Top Picks
Karur Vysya Bank
127
100
Closed (12/03/2018)
23-05-2018
Top Picks
KEI Industries
481
589
Open
04-01-2017
Top Picks
KEI Industries
125
485
01-12-2016
Top Picks
Alkem Lab
1700
2441
Open
17-10-2016
Top Picks
Asian Granito
267
534
Closed (18/02/2018)
17-05-2018
Top Picks
TV Today Network
460
Closed (17/05/2018)
04-08-2016
Top Picks
TV Today Network
297
603
05-04-2016
Top Picks
DHFL
189
720
Open
05-01-2016
Top Picks
Navkar Corporation
207
265
Open
08-12-2015
Top Picks
Blue Star
357
867
Open
30-10-2015
Top Picks
Siyaram Silk Mills
186
851
Open
Source: Company, Angel Research
Market Outlook
May 24, 2018
Research Team Tel: 022 - 39357800
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offering of securities of the company covered by Analyst during the past twelve months.
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decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should
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companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine
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