Market Outlook
August 27, 2019
Market Cues
Domestic Indices
Chg (%)
(Pts)
(Close)
Indian markets are likely to open positive tracking global indices and SGX Nifty.
BSE Sensex
2.2
793
37,494
Nifty
2.1
229
11,057
The US stocks showed a strong move to the upside in early trading on Monday and
Mid Cap
1.6
208
13,409
remained firmly positive throughout the session. With the upward move on the day,
the major averages partly offset the steep losses posted last Friday. While the Dow
Small Cap
1.6
201
12,387
jumped 1.1 percent to 25,898 and the Nasdaq soared 1.3 percent to 7,853.
Bankex
1.3
494
30,530
The UK stocks rose notably on Friday as the pound retreated from a three-week high
hit the previous day in reaction to German Chancellor Angela Merkel's comments on
Global Indices
Chg (%)
(Pts)
(Close)
possible Brexit resolution. The FTSE 100 was up by 0.7 per cent to 7,178.
Dow Jones
1.1
270
25,898
Nasdaq
1.3
102
7,853
On domestic front, Indian shares posted strong gains on Monday after the
government announced several measures to revive the slowing economy and oil
FTSE
0.7
50
7,178
prices tumbled, pushing U.S. crude to its lowest in more than two weeks amid
Nikkei
1.2
248
20,509
escalating trade tensions between the U.S. and China. The benchmark BSE Sensex
Hang Seng
0.3
65
25,745
ended up by 2.2 percent to 37,494.
Shanghai Com
1.8
52
2,915
News Analysis
Advances / Declines
BSE
NSE
Infosys board considers closure of Rs 8,260 cr buyback offer
Advances
1,705
1,351
BPCL to invest Rs 1,500-1,700 cr by 2022 in floating LNG terminal in AP
Declines
811
491
Detailed analysis on Pg2
Unchanged
123
113
Investor’s Ready Reckoner
Volumes (` Cr)
Key Domestic & Global Indicators
BSE
2,185
Stock Watch: Latest investment recommendations on 150+ stocks
NSE
35,779
Refer Pg5 onwards
Top Picks
Net Inflows (` Cr)
Net
Mtd
Ytd
CMP
Target
Upside
Company
Sector
Rating
(`)
(`)
(%)
FII
(1,166) -14,464 (2,43,637)
Blue Star
Capital Goods
Buy
726
867
19.4
*MFs
1,628
14,897
34,657
ICICI Bank
Financials
Buy
412
490
18.9
Parag Milk Foods
Others
Buy
140
330
136.1
Top Gainers
Price (`)
Chg (%)
Bata India
Others
Buy
1,476
1,643
11.3
120
19.5
KEI Industries
Capital Goods
Buy
472
612
29.8
More Top Picks on Pg4
IDBI
28
13.7
42
13.5
DISHTV
26
12.6
31
12.3
Top Losers
Price (`)
Chg (%)
8
-9.9
HDIL
5
-8.1
80
-6.7
5
-5.0
16
-4.2
As on Aug 26, 2019
Market Outlook
August 27, 2019
News Analysis
Infosys board considers closure of Rs 8,260 cr buyback offer
IT major Infosys on Monday said a board committee is considering closure of the
Rs 8,260 crore buyback offer with the company utilising almost full size of the issue
approved. The company in January had announced that it would buy back shares
of the company for an amount aggregating up to Rs 8,260 crore (maximum
buyback size) at a price not exceeding Rs 800 per equity share.
BPCL to invest Rs 1,500-1,700 cr by 2022 in floating LNG
terminal in AP
Bharat Petroleum Corp Ltd (BPCL) plans to invest Rs 1,500-1,700 crore in building
a floating liquefied natural gas (LNG) import terminal at Krishnapatnam in Andhra
Pradesh by 2022, its chairman D Rajkumar said on Monday. BPCL, the country's
second-biggest state-owned oil refining and fuel marketing company, is betting
big on gas business in anticipation of energy consumption basket undergoing
change as focus shifts to cleaner sources. The company will hold 74 per cent
interest in the project while the remaining 26 per cent will be with Petronet LNG
Ltd, he said here. "Initially it will be a 1 million tonne per annum FSRU based
terminal which can be scaled up to 3 million tonne or 5 million tonne in future," he
said. The project is likely to be commissioned by 2022. "It (the project) may cost Rs
1,500 crore to Rs 1,700 crore," he said. The global oil and gas market is going
through a transformation as mounting climatic concerns drive changes in the
energy mix in favour of natural gas and renewables. In India, natural gas demand
is slated to grow at a rate much faster than oil as the share of environment-friendly
fuel rises in the energy basket. To tap this opportunity, BPCL has made a foray
into city gas distribution (CGD) and is now looking to set up an LNG import
terminal of its own.
Economic and Political News
Govt offers seven oil and natural gas blocks for bidding under OALP-IV
Panel to take decision within 60-days under tax amnesty scheme: CBIC
Govt may contain fiscal deficit at 3% in FY20 after RBI's surplus transfer
RBI approves a record Rs 1.76 trillion surplus transfer to government
GDP to grow at 6% in Apr-June, more rate cuts by RBI in 2019: Ficci survey
Corporate News
Infosys board considers closure of Rs 8,260 cr buyback offer
IFIN made new investments of Rs 300 crore in Chennai Super Kings: ED
Supreme Court clears way for ED probe in Amrapali group case
Cash-strapped DHFL appoints KK Mankeshwar as new statutory auditor
BPCL to invest Rs 1,500-1,700 cr by 2022 in floating LNG terminal in AP
Market Outlook
August 27, 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
6,994
726
867
19.4
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
2,65,946
412
490
18.9
resolution of NPA would reduce provision cost,
which would help to report better ROE.
High order book execution in EPC segment, rising
KEI Industries
3,722
472
612
29.8
B2C sales and higher exports to boost the revenues
and profitability
GST regime and the Gujarat plant are expected to
Maruti Suzuki
1,88,907
6,254
8,552
36.8
improve the company’s sales volume and margins,
respectively.
Third largest brand play in luggage segment
Increased product offerings and improving
Safari Industries
1,253
561
1,000
78.3
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
19,461
88
130
47.1
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
1,176
140
330
136.1
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 income
HDFC Bank
6,16,838
2,256
2,660
17.9
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
67,667
544
1,050
92.9
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
2,697
858
910
6.1
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
18,968
1,476
1,643
11.3
~`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
August 27, 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
23,124
1,019
1,470
44.2
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
10,317
101
250
147.2
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
2,110
1,444
1,570
8.8
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
Aurobindo Pharmaceuticals
34,644
591
890
50.5
through 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
RBL Bank
16,171
376
650
72.8
level ROA (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
TTK Prestige
8,014
5,782
7,708
33.3
single 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
August 27, 2019
Fundamental Call
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
CCL is likely to maintain the strong growth
CCL Products
3,236
243
360
48.0
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
1,482
993
2,178
119.3
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
1,660
2,094
2,500
19.4
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
1,759
143
256
78.5
~`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
19,195
96
210
118.9
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
950
177
424
140.2
two year; change in borrowing mix will help in NIM
improvement
Strong brands and distribution network would boost
Siyaram Silk Mills
1,025
219
549
151.0
growth going ahead. Stock currently trades at an
inexpensive valuation.
Expected to benefit from the lower capex
Music Broadcast Limited
1,041
38
95
152.3
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
813
37
120
227.4
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
18,567
63
156
146.6
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
16,067
63
NA
NA
expect YES to grow its advance much higher than
industry and improvement in asset quality to
support profitability.
