Market Outlook
July 26, 2019
Market Cues
Domestic Indices
Chg (%)
(Pts)
(Close)
Indian markets are likely to open flat tracking global indices and SGX Nifty.
BSE Sensex
(0.1)
(17)
37,830
Nifty
(0.5)
(60)
11,271
The US stocks moved mostly lower during trading on Thursday. With the drop on the
Mid Cap
0.5
73
13,782
day, the tech-heavy Nasdaq and the S&P 500 pulled back off yesterdays record
highs. The Dow slid 0.5 percent to 27,140 and the Nasdaq tumbled 1 percent to
Small Cap
(0.1)
(12)
13,031
8,238.
Bankex
0.3
110
32,780
U.K. stocks eked out modest gains on Thursday as investors digested a mixed bag
of corporate earnings and the news of a massive cabinet reshuffle as Boris Johnson
Global Indices
Chg (%)
(Pts)
(Close)
works to build a government dominated by Brexit loyalists. The FTSE 100 was up by
Dow Jones
(0.5)
(129)
27,140
0.2 percent at 7,518.
Nasdaq
(1.0)
(83)
8,238
On domestic front, Indian shares opened higher on Thursday, but later gave up all
FTSE
0.2
17
7,518
gains to end on a flat note as July derivative contracts expired. The benchmark BSE
Nikkei
0.2
47
21,756
Sensex fell by 0.1 percent to 37,830.
Hang Seng
0.3
70
28,594
Shanghai Com
0.5
14
2,937
News Analysis
World Bank investment arm to channel $200 mn into Shriram Transport
Advances / Declines
BSE
NSE
Finance
Advances
1,070
807
Detailed analysis on Pg2
Declines
1,370
1,015
Investor’s Ready Reckoner
Unchanged
163
106
Key Domestic & Global Indicators
Volumes (` Cr)
Stock Watch: Latest investment recommendations on 150+ stocks
Refer Pg5 onwards
BSE
2,045
NSE
39,451
Top Picks
CMP
Target
Upside
Company
Sector
Rating
(`)
(`)
(%)
Net Inflows (` Cr)
Net
Mtd
Ytd
Blue Star
Capital Goods
Buy
741
867
17.0
FII
(1,402)
(7,143)
74,418
ICICI Bank
Financials
Buy
409
490
19.8
*MFs
202
2,787
10,882
Parag Milk Foods
Others
Buy
261
330
26.3
Bata India
Others
Buy
1,301
1,643
26.3
KEI Industries
Capital Goods
Buy
452
612
35.4
Top Gainers
Price (`)
Chg (%)
More Top Picks on Pg4
986
6.5
1,148
5.6
47
5.2
462
5.1
NAUKRI
2,245
4.7
Top Losers
Price (`)
Chg (%)
29
-12.5
197
-8.3
20
-7.2
761
-6.1
235
-5.3
As on July 25, 2019
Market Outlook
July 26, 2019
News Analysis
World Bank investment arm to channel $200 mn into Shriram
Transport Finance
crore) from International Finance Corporation and other investors through a
securitisation structure. IFC, the World Bank's private-sector investment arm, said
the structure would help mitigate foreign exchange risks and attract patient capital
from pension funds, insurance firms, and foreign institutional investors. Half of the
total amount will come from IFC’s own account and the rest will be mobilised from
like-minded partners. The first tranche of $82 million was disbursed on Thursday.
Half of which is from IFC’s own account. The proceeds will help Shriram Transport
meet its funding requirements and allow it to continue expanding its reach to
micro, small and medium enterprises, IFC said.
Umesh Revankar, MD and CEO, Shriram Transport Finance added that the funds
raised would be used to help the small commercial vehicle operators and MSMEs
in rural and semi urban markets. There is a huge growth opportunity in smaller
towns and the company will unleash the potential of these geographies. The
transaction comes at a time when NBFCs in India have been feeling a liquidity
crunch since September last year due to the Infrastructure Leasing & Financial
Services Ltd (IL&FS) crisis.
Economic and Political News
Bill to fine firms over corporate social responsibility tabled in Lok Sabha
Bond yields surge on buzz that PMO is opposed to sovereign bonds
Arbind Modi panel in 2018 suggested corporation tax cut; govt didn't accept
NCLT stays its own order to prosecute IL&FS auditors for four weeks
Corporate News
SoftBank announces new $108-billion Vision Fund with Apple, Microsoft
NCLT approves Patanjali's revised Rs 4,350-cr bid to take over Ruchi Soya
Monsoon delay hits sales of agri input companies in June quarter
Coal India clears over 44% rake backlog to non-power sector consumers
World Bank investment arm to channel $200 mn into Shriram Transport
Finance
Punjab National Bank plans to raise Rs 5,000-crore equity capital
Market Outlook
July 26, 2019
Quarterly Bloomberg Brokers Consensus Estimate
JSW Steel Ltd - July 26, 2019
Particulars (` cr)
1QFY20E
1QFY19
y-o-y (%)
4QFY19
q-o-q (%)
Sales
19,837
20,519
(3.3)
22,368
(11.3)
EBIDTA
3,793
5,105
(25.7)
4,407
(13.9)
%
19
25
20
PAT
1,150
2,366
(51.4)
1,495
(23.1)
Bajaj Auto Ltd - July 26, 2019
Particulars (` cr)
1QFY20E
1QFY19
y-o-y (%)
4QFY19
q-o-q (%)
Sales
7,792
7,419
5.1
7,395
5.3
EBIDTA
1,377
1,280
7.5
1,162
18.5
%
17
17
16
PAT
1,163
1,042
11.6
1,408
(17.4)
Maruti Suzuki Ltd - July 26, 2019
Particulars (` cr)
1QFY20E
1QFY19
y-o-y (%)
4QFY19
q-o-q (%)
Sales
19,155
22,459
(14.7)
21,459
(10.7)
EBIDTA
1,912
3,351
(42.9)
2,263
(15.5)
%
9
15
11
PAT
1,336
1,975
(32.4)
1,796
(25.6)
Market Outlook
July 26, 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
7,135
741
867
17.0
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
2,63,963
409
490
19.8
resolution of NPA would reduce provision cost,
which would help to report better ROE.
High order book execution in EPC segment, rising
KEI Industries
3,567
452
612
35.4
B2C sales and higher exports to boost the revenues
and profitability
GST regime and the Gujarat plant are expected to
Maruti Suzuki
1,74,009
5,760
8,552
48.5
improve the company’s sales volume and margins,
respectively.
Third largest brand play in luggage segment
Increased product offerings and improving
Safari Industries
1,287
577
1,000
73.4
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
18,888
86
130
51.5
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
2,198
261
330
26.3
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
6,24,999
2,286
2,660
16.4
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
68,115
548
1,050
91.6
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
2,536
807
910
12.8
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
16,718
1,301
1,643
26.3
~`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 26, 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 rising
Shriram Transport Finance
22,373
986
1,470
49.1
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
13,707
135
250
85.7
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
1,865
1,276
1,570
23.0
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
32,439
554
890
60.8
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
19,532
455
650
42.9
(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
8,102
5,845
7,708
31.9
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 26, 2019
Fundamental Call
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
CCL is likely to maintain the strong growth
CCL Products
3,247
244
360
47.5
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
1,486
996
2,178
118.6
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
1,665
2,100
2,500
19.0
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
1,593
130
256
97.1
~`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
20,435
102
210
105.6
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
1,293
240
424
76.6
two year; change in borrowing mix will help in NIM
improvement
Strong brands and distribution network would boost
Siyaram Silk Mills
1,213
259
549
112.1
growth going ahead. Stock currently trades at an
inexpensive valuation.
Expected to benefit from the lower capex
Music Broadcast Limited
1,410
51
95
86.3
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 segment
Inox Winds
1,284
58
120
107.4
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
21,209
72
156
115.9
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
20,326
88
NA
NA
expect YES to grow its advance much higher than
industry and improvement in asset quality to
support profitability.
