Market Outlook
March 25, 2019
Domestic Indices
Chg (%)
(Pts)
(Close)
Market Cues
BSE Sensex
(0.6)
(223)
38,164
Indian markets are likely to open negative tracking global indices and SGX Nifty.
Nifty
(0.6)
(64)
11,456
US Stocks moved sharply lower over the course of the trading session on Friday,
Mid Cap
(0.6)
(89)
15,076
more than offsetting the rally seen in the previous session. The Nasdaq and the S&P
Small Cap
(0.4)
(66)
14,758
500 pulled back well off Thursday's five-month closing highs. The Dow tumbled 1.8
Bankex
(0.8)
(250)
33,150
percent to 25,502 and the Nasdaq plummeted 2.5 percent to 7,642.
U.K. Market fell notably on Friday as the British pound rebounded on news of a
Global Indices
Chg (%)
(Pts)
(Close)
Brexit extension agreed by the EU. The FTSE 100 was down by 0.7% to 7,307.
Dow Jones
(1.8)
(460)
25,502
On domestic front, Indian shares closed lower on Friday as worries over economic
Nasdaq
(2.5)
(197)
7,642
growth and trade uncertainty prompted traders to book some profits after recent
FTSE
(0.7)
(48)
7,307
string of gains. The benchmark BSE Sensex was ended down by 0.6% to 38,164 at
Nikkei
(3.3)
(698)
20,929
the end of trading session.
Hang Seng
(1.6)
(450)
28,662
Shanghai Com
(0.6)
(19)
3,085
News Analysis
Automobile production, domestic sales decline marginally in February
Advances / Declines
BSE
NSE
1,195
768
Advances
Detailed analysis on Pg2
1,495
1,062
Declines
Investor’s Ready Reckoner
170
107
Unchanged
Key Domestic & Global Indicators
Stock Watch: Latest investment recommendations on 150+ stocks
Volumes (` Cr)
Refer Pg5 onwards
BSE
3,171
NSE
47,548
Top Picks
CMP
Target
Upside
Company
Sector
Rating
(`)
(`)
(%)
Net Inflows (` Cr)
Net
Mtd
Ytd
Blue Star
Capital Goods
Buy
673
867
28.9
FII
(895)
822
(199)
ICICI Bank
Financials
Buy
392
460
17.5
Parag Milk Foods
Others
Buy
256
330
29.0
*MFs
(518)
5,097
6,274
Bata India
Others
Accumulate
1,360
1,479
8.7
KEI Industries
Capital Goods
Buy
403
486
20.6
Top Gainers
Price (`)
Chg (%)
More Top Picks on Pg4
6
9.9
Key Upcoming Events
99
7.1
Previous
Consensus
Date
Region
Event Description
269
6.4
ReadingExpectations
200
4.5
Mar 16, 2019
TU Central Bank Inflation Report
844
4.1
Mar 17, 2019
TH Exports YoY
0.06
--
Mar 17, 2019
TH Exports
$22380m
--
Mar 20, 2019
TH Imports YoY
0.24
--
Top Losers
Price (`)
Chg (%)
Mar 20, 2019
TH Imports
$21776m
--
More Events on Pg7
146
-9.3
333
-5.6
90
-5.4
635
-5.1
33
-4.9
As on Mar 22, 2019
Market Outlook
March 25, 2019
News Analysis
Automobile production, domestic sales decline marginally in
February
Production of automobiles, excluding commercial vehicles and three wheelers, has
seen a marginal decline of 2.2 per cent to 2.27 million units during February
compared to 2.32 million during the same month of last year. While sales during
the month also saw a decline of 3.6 per cent to 1.89 million units in February this
year compared to 1.96 million units in the same month a year ago, cumulative
production and sales during April to February of 2018-19 has seen a growth
compared to the same period last year. During the 11 months ended February 28,
2019, total passenger vehicle production grew 7.7 per cent to 26.6 million units
compared to 24.7 million units during the same period of the previous financial
year.
Cumulative domestic sales also saw a growth of 6.5 per cent to 22.8 million units
compared to 21.4 million units in the corresponding period last year, according to
latest data from Society of Indian Automobile Manufacturers (Siam), the apex body
representing all major vehicle and vehicular engine manufacturers in India.
Growth in sales during the 11 months was evident, though marginally, across
passenger cars, utility vehicles, scooter and motorcycle segments and the mopeds
segment in the domestic market. However, on a year-on-year monthly volume,
domestic sales declined marginally in passenger cars (from 179,122 units in
February 2018 to 171,372 units in February 2019), scooters and scooterettes
(560,653 to 492,584) and motorcycles (1.05 million to 1.04 million) while
volumes increased in utility vehicles (80,271 to 83,245 units) and mopeds (71,931
to 75,001 units) during the period.
Economic and Political News
Domestic coastal shipping sees more competition, rise in tonnage
Centre to save Rs 10,600 crore on PM-Kisan scheme this fiscal year
Sebi seeks more powers to inspect books of listed firms, thwart frauds
PM-Kisan: About 4.74 cr farmers to get second installment from next month
Govt crosses divestment target for 2nd year in a row; rakes in Rs 85,000 cr
Corporate News
Uber could seal $3 bn deal to buy Dubai rival Careem this week
Logistics firm Delhivery turns unicorn as SoftBank couriers $413 million
Rs 3 trn-worth investment in pvt power plants at risk of turning into NPA
Shell out up to Rs 25,000 more for Tata Motors cars from April 1
DCM Shriram to raise $35 mn from IFC to support $86 mn capex plan
L&T expects Mindtree investment to generate above-average returns
Market Outlook
March 25, 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 pacing
Blue Star
6,478
673
867
28.9
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
2,52,395
392
460
17.5
resolution of NPA would reduce provision cost,
which would help to report better ROE.
High order book execution in EPC segment, rising
KEI Industries
3,181
403
486
20.6
B2C sales and higher exports to boost the revenues
and profitability
Expected to benefit from the lower capex
Music Broadcast Limited
1,704
60
95
57.4
requirement and 15 year long radio broadcast
licensing.
Strong brands and distribution network would
Siyaram Silk Mills
1,922
410
606
47.8
boost growth going ahead. Stock currently trades
at an inexpensive valuation.
GST regime and the Gujarat plant are expected to
Maruti Suzuki
1,98,104
6,558
10,820
65.0
improve the company’s sales volume and margins,
respectively.
We expect loan book to grow at 24.3% over next
GIC Housing
1,369
254
424
66.8
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
1,632
731
1,000
36.8
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
22,575
103
151
47.2
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
2,151
256
330
29.0
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
6,19,511
2,275
2,500
9.9
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.
Market Outlook
March 25, 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
84,369
679
1,050
54.7
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
2,475
787
984
25.0
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
17,484
1,360
1,479
8.7
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
27,196
1,199
1,764
47.2
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
16,097
166
327
96.6
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
1,730
1,184
1,400
18.3
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
45,065
769
890
15.7
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
27,188
638
690
8.2
(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
8,994
7,786
9,250
18.8
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
March 25, 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
1,538
69
120
73.2
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
26,244
89
156
74.5
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
3,758
283
360
27.4
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
2,112
1,415
2,178
53.9
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
1,796
2,265
2,500
10.4
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
1,894
154
256
65.7
~`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
29,173
146
210
43.9
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
58,455
253
290
14.9
expect YES to grow its advance much higher than
industry and improvement in asset quality to
support profitability.
