Market Outlook
June 28, 2018
Market Cues
Domestic Indices
Chg (%)
(Pts)
(Close)
Indian markets are likely to open flat tracking global indices and SGX Nifty.
BSE Sensex
(0.8)
(273)
35,217
U.S. Stocks turned lower over the course of the trading session on Wednesday. The
Nifty
(0.9)
(98)
10,671
major averages all pulled back off their best levels of the day and into negative
Mid Cap
(1.5)
(235)
15,426
territory. The Dow Jones ended down by 0.7% to 24,117 and the Nasdaq plunged
Small Cap
(2.0)
(326)
15,970
by 1.5% to 7,445.
Bankex
(1.0)
(307)
29,309
U.K. stocks gave up initial gains to turn lower during the last trading session after a
report showed that U.K. house prices increased at a slower pace in June. The
Global Indices
Chg (%)
(Pts)
(Close)
benchmark FTSE 100 was down by 0.2% to 7,521.
Dow Jones
(0.7)
(166)
24,117
On domestic front, Indian shares fell on Wednesday and the rupee hit a 19-month
Nasdaq
(1.5)
(117)
7,445
low as rising oil prices and signs of escalating trade tensions between the U.S. and
FTSE
(0.2)
(16)
7,521
other world economies dented risk appetite. The BSE Sensex ended down by 0.8% to
35,217.
Nikkei
(0.3)
(70)
22,272
Hang Seng
(1.8)
(525)
28,356
News Analysis
Shanghai Com
(1.1)
(31)
2,813
HCL Tech to acquire German IT firm H&D International for EUR 30 million
Detailed analysis on Pg2
Advances / Declines
BSE
NSE
Advances
473
552
Investor’s Ready Reckoner
Declines
2,219
1,237
Key Domestic & Global Indicators
Unchanged
114
85
Stock Watch: Latest investment recommendations on 150+ stocks
Refer Pg5 onwards
Volumes (` Cr)
Top Picks
BSE
2,443
CMP
Target
Upside
Company
Sector
Rating
NSE
28,946
(`)
(`)
(%)
Blue Star
Capital Goods
Buy
645
867
34.4
Dewan Housing Finance
Financials
Accumulate
643
720
12.0
Net Inflows (` Cr)
Net
Mtd
Ytd
Parag Milk Foods
Others
Buy
308
410
33.0
FII
320
(3,284)
-5,546
Bata India
Others
Accumulate
835
896
7.3
*MFs
616
5,798
65,170
KEI Industries
Capital Goods
Buy
418
589
41.0
More Top Picks on Pg4
Top Gainers
Price (`)
Chg (%)
Key Upcoming Events
EIDPARRY
220
7.4
Previous
Consensus
Date
Region
Event Description
ReadingExpectations
VAKRANGEE
61
4.9
Jun 28, 2018 US
Initial Jobless claims
218.00
220.00
MPHASIS
1122
4.4
Jun 28, 2018 US
GDP Qoq (Annualised)
2.20
2.20
CYIENT
743
4.0
Jun 28, 2018 Euro Zone Euro-Zone Consumer Confidence
(0.50)
(0.50)
NAVKARCORP
133
3.9
Jun 29, 2018 Germany Unemployment change (000's)
(12.00)
(8.00)
Jun 29, 2018 Germany PMI Manufacturing
55.90
More Events on Pg7
Top Losers
Price (`)
Chg (%)
JPASSOCIAT
15
-11.0
ADANIENT
115
-10.7
CGPOWER
50
-8.4
BPCL
384
-8.0
NBCC
74
-7.6
As on June 27, 2018
Market Outlook
June 28, 2018
News Analysis
HCL Tech to acquire German IT firm H&D International for EUR
30 million
Euro 30 million, as it looks to expand presence in the European market. This will
be the third acquisition for HCL this year. The country’s fourth-largest software
services firm operates out of 39 countries. The acquisition of H&D for Euro 30
million (including earnouts) cash deal is part of HCL's long-term growth plan in
Germany. The deal, likely to be completed by August 2018, will help HCL attain
significant in-country front office and delivery capabilities and will further enhance
the company’s domain expertise in the global automotive sector.
H&D, one of the largest IT service providers in the German automotive industry,
operates in over 20 locations globally including Germany, the US, Czech Republic
and Poland. Its revenue for 2017 was Euro 74.1 million. H&D’s existing delivery
centre in Gifhorn, Germany, will become part of HCL’s global delivery footprint
and will focus on IT and engineering services both in Germany and globally.
“Germany is a critical market for HCL. We feel the German market is at an
inflection point and it is the right time for HCL to expand and make significant
investments here”.
Economic and Political News
Government hikes ethanol price by Rs 3 per litre, move to boost sugar
Corporate News
Government plans to sell Air India's iconic Mumbai building to JNPT to raise
Market Outlook
June 28, 2018
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
6,205
645
867
34.4
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
20,171
643
720
12.0
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 resolution
ICICI Bank
1,79,365
279
416
49.2
of NPA would reduce provision cost, which would
help to report better ROE.
High order book execution in EPC segment, rising
KEI Industries
3,274
418
589
41.0
B2C sales and higher exports to boost the revenues
and profitability
Expected to benefit from the lower capex
Music Broadcast Limited
1,744
306
475
55.4
requirement and 15 year long radio broadcast
licensing.
Strong brands and distribution network would boost
Siyaram Silk Mills
2,500
533
851
59.6
growth going ahead. Stock currently trades at an
inexpensive valuation.
GST regime and the Gujarat plant are expected to
Maruti
2,68,872
8,901
10,619
19.3
improve the company’s sales volume and margins,
respectively.
We expect loan book to grow at 24.3% over next
GIC Housing
1,954
363
655
80.5
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
1,357
609
720
18.3
distribution network is leading to strong growth in
business. Likely to post robust growth for next 3-4
years
Source: Company, Angel Research
Market Outlook
June 28, 2018
Top Picks
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
We expect financialisation of savings and
Aditya Birla Capital
27,911
127
218
71.9
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
2,592
308
410
33.0
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 &
Matrimony.com Ltd
1,628
716
1,016
41.8
marriage 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
5,49,726
2,112
2,315
9.6
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
1,10,812
891
1,050
17.8
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
2,871
913
1230
34.7
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
10,733
835
896
7.3
~`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
SHTF is in the sweet spot with benefits from
stronger CV volumes, NIMs unaffected by rising
Shriram Transport Finance
31,256
1,378
1,764
28.0
bond yields on the back of stronger pricing power
and an enhancing ROE by 750bps over FY18-
20E, supported by decline in credit cost.
Source: Company, Angel Research
Market Outlook
June 28, 2018
Fundamental Call
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
CCL is likely to maintain the strong growth trajectory
CCL Products
3,455
260
360
38.6
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
2,430
1,629
2,178
33.7
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
1,596
2,014
2,500
24.2
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
2,836
231
395
70.8
~`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
1,178
806
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
30,395
152
210
37.9
ROE of 18% by 2020 and recent capital infusion of
`3000cr would support advance growth.
Market Outlook
June 28, 2018
Key Upcoming Events
Global economic events release calendar
Bloomberg Data
Date
Time Country
Event Description
Unit
Period
Last Reported
Estimated
Jun 28, 2018
6:00 PMUS
Initial Jobless claims
Thousands
Jun 23
218.00
220.00
6:00 PMUS
GDP Qoq (Annualised)
% Change
1Q T
2.20
2.20
2:30 PMEuro Zone
Euro-Zone Consumer Confidence
Value
Jun F
(0.50)
(0.50)
Jun 29, 2018
1:25 PMGermany
Unemployment change (000's)
Thousands
Jun
(12.00)
(8.00)
1:25 PMGermany
PMI Manufacturing
Value
Jun F
55.90
Jun 30, 2018
2:00 PMUK
GDP (YoY)
% Change
1Q F
1.20
1.20
Jul 02, 2018
6:30 AMChina
PMI Manufacturing
Value
Jun
51.90
51.70
2:00 PMUK
PMI Manufacturing
Value
Jun
54.40
Jul 04, 2018
1:25 PMGermany
PMI Services
Value
Jun F
53.90
Jul 06, 2018
6:00 PMUS
Change in Nonfarm payrolls
Thousands
Jun
223.00
195.00
6:00 PMUS
Unnemployment rate
%
Jun
3.80
3.80
Jul 10, 2018
2:00 PMUK
Industrial Production (YoY)
% Change
May
1.80
7:00 AMChina
Consumer Price Index (YoY)
% Change
Jun
1.80
Jul 11, 2018
US
Producer Price Index (mom)
% Change
Jun
1.00
Jul 12, 2018
India
Imports YoY%
% Change
Jun
14.85
India
Exports YoY%
% Change
Jun
20.18
6:00 PMUS
Consumer price index (mom)
% Change
Jun
0.20
0.20
5:30 PMIndia
Industrial Production YoY
% Change
May
4.90
Jul 13, 2018
China
Exports YoY%
% Change
Jun
12.60
Jul 16, 2018
7:30 AMChina
Industrial Production (YoY)
% Change
Jun
6.80
12:00 PMIndia
Monthly Wholesale Prices YoY%
% Change
Jun
4.43
7:30 AMChina
Real GDP (YoY)
% Change
2Q
6.80
Jul 17, 2018
6:45 PMUS
Industrial Production
%
Jun
(0.09)
2:00 PMUK
Jobless claims change
% Change
Jun
(7.70)
Source: Bloomberg, Angel Research
Market Outlook
June 28, 2018
Macro watch
Exhibit 1: Quarterly GDP trends
Exhibit 2: IIP trends
(%)
(%)
8.5
10.0
9.0
9.1
7.3
7.5
8.0
7.0
9.0
8.0
8.1
7.6
7.6
7.7
7.0
8.0
7.2
7.0
6.0
6.8
4.8
4.6
4.9
7.0
6.3
5.0
4.1
6.1
5.6
4.0
6.0
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
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
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
3.50
0.0
(5.0)
3.00
Source: Bloomberg, Angel Research
Source: RBI, Angel Research
Market Outlook
June 28, 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)
25.0
20.0
15.0
10.0
5.0
-
Source: IMF, Angel Research As on June 27, 2018
Market Outlook
June 28, 2018
Exhibit 4: Relative performance of indices across globe
Returns (%)
Country
Name of index
Closing price
1M
3M
1YR
Brazil
Bovespa
71,405
(10.9)
(15.4)
17.5
Russia
Micex
4,407
1.4
7.1
11.4
India
Nifty
10,769
(0.2)
5.3
11.5
China
Shanghai Composite
2,845
(10.4)
(13.8)
(10.5)
South Africa
Top 40
49,139
(3.7)
(2.2)
7.5
Mexico
Mexbol
46,909
4.0
0.8
(4.6)
Indonesia
LQ45
911
(3.7)
(14.8)
(6.5)
Malaysia
KLCI
1,676
(7.1)
(9.7)
(6.1)
Thailand
SET 50
1,065
(7.6)
(10.3)
6.5
USA
Dow Jones
24,283
(2.1)
0.3
13.9
UK
FTSE
7,538
(2.3)
8.4
2.0
Japan
Nikkei
22,342
(0.5)
8.4
11.3
Germany
DAX
12,234
(4.9)
3.0
(3.2)
France
CAC
5,281
(4.0)
4.4
1.8
Source: Bloomberg, Angel Research As on June 27, 2018
Market Outlook
June 28, 2018
Exhibit 7: Historical Angel Top Picks/Fundamental Calls
Date Added
Top Picks/Fundamental
Stocks
Reco Price
Target/Revised Price
Current Status
20-06-2018
Top Picks
Shriram Transport Finance Com
1,466
1,764
Open
18-06-2018
Top Picks
Bata India
779
896
Open
14-06-2018
Top Picks
Amber Enterprises
1,026
1,230
Open
07-06-2018
Top Picks
M&M
918
1050
Open
04-05-2018
Top Picks
M&M
860
990
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
29-05-2018
Fundamental
GMM Pfaudler Limited
932
1,020
Open
14-05-2018
Fundamental
GMM Pfaudler Limited
818
900
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
31-05-2018
Top Picks
HSIL Ltd
348
Closed (31/05/2018)
16-02-2018
Top Picks
HSIL Ltd
433
510
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
Closed(18/06/2018)
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
Source: Company, Angel Research
Market Outlook
June 28, 2018
Exhibit 8: Historical Angel Top Picks/Fundamental Calls
Date Added
Top Picks/Fundamental
Stocks
Reco Price
Target/Revised Price
Current Status
04-01-2017
Top Picks
KEI Industries
125
485
31-05-2018
Top Picks
Alkem Lab
1978
Closed (31/05/2018)
01-12-2016
Top Picks
Alkem Lab
1700
2441
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
25-06-2018
Top Picks
Navkar Corporation
207
Closed(25/06/2018)
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
Market Outlook
June 28, 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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