Market Outlook
May 6, 2016
Market Cues
Domestic Indices
Chg (%)
(Pts)
(Cl ose)
BSE Sensex
0.6
160
25,262
Indian markets are expected to open on a negative note tracking the SGX Nifty.
Nifty
0.4
29
7,736
US markets ended little changed in a relatively lackluster performance over the
Mid Cap
(0.1)
(9)
10,925
course of the trading session. The tech-heavy Nasdaq saw a modest drop on the
Small Cap
(0.0)
(4)
10,921
day, falling to its lowest closing level in almost two months. The choppy trading seen
throughout much of the session came as traders seemed reluctant to make
Bankex
0.0
5
18,510
significant moves ahead of the monthly jobs report on Friday.
The European markets ended session with mixed results in light holiday trading
Global Indices
Chg (%)
(Pts)
(Cl ose)
action. Several markets were closed today for the Ascension Day holiday, including
Dow Jones
0.1
9
17,661
Switzerland, Denmark and Austria.
Nasdaq
(0.2)
(9)
4,717
Indian shares ended in green for the first time in four days as oil prices jumped on
FTSE
0.1
5
6,117
concerns about production cuts in Canada's oil sands region and a rally in bond
Nikkei
(3.1)
(519)
16,147
markets fizzled out ahead of the all-important U.S. jobs report due today. Investors
Hang Seng
(0.4)
(76)
20,450
also cheered comments by Finance Minister Arun Jaitley that the Indian economy
Shanghai Com
0.2
7
2,998
can grow even faster pace this year if predictions of good monsoon hold up.
News & Result Analysis
A dvances / Declines
BSE
NSE
Lok Sabha passes bankruptcy bill
Advances
1,228
732
RBI releases Draft Guidelines for ‘on tap’ Licensing of Universal Banks in the
Private Sector
Declines
1,320
799
Result Review: Proctor & Gamble
Unchanged
156
91
Detailed analysis on Pg2
Volumes (` Cr)
Investor’s Ready Reckoner
BSE
2,336
Key Domestic & Global Indicators
NSE
16,298
Stock Watch: Latest investment recommendations on 150+ stocks
Refer Pg6 onwards
Net Inflows (` Cr)
Ne t
Mtd
Ytd
Top Picks
FII
(31)
(430)
11,361
C MP
Target
Upside
C ompany
Sector
R ating
MFs
82
98
2,693
(`)
(`)
(%)
Amara Raj a
Auto & Auto Ancillary
Buy
931
1,076
15.6
HCL Tech
IT
Buy
734
1,038
41.5
Top Gainers
Price (`)
Chg (%)
LIC Housing
Financials
Buy
450
592
31.5
Castrolind
412
5.9
Bharat Electronics
Capital Goods
Buy
1,147
1,414
23.3
Ibrealest
72
5.7
Navkar Corporation Others
Buy
174
265
51.9
Unitdspr
2,595
5.0
More Top Picks on Pg4
Atul
1,875
4.3
Key Upcoming Events
Crompgreav
59
4.1
Previous
C onsensus
D ate
Region
Event Description
Reading
Expectations
Top Losers
Price (`)
Chg (%)
May 6 US
Change in N onfarm payrolls (thousands)
215
200
May 8 China
Exports YoY%
11.5
1.3
Balkri sind
648
(6.4)
May 10 India
Exports YoY%
(5.47)
--
Geship
308
(5.4)
May 10 India
Imports YoY%
(21.56)
--
Amtekauto
34
(5.3)
6. (
More Events on Pg5
Idea
114
(5.0)
Redington
100
(4.8)
As on May 5, 2016
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Market Outlook
May 6, 2016
Lok Sabha passes bankruptcy bill
Bankruptcy bill has been passed by Lok Sabha. The bill will now go to the Rajya
Sabha for its consent. The government expects the bill to pass through the Rajya
Sabha as well, since members from that house were also a part of the joint
committee.
This code will replace the existing obsolete bankruptcy laws and provide a time-
bound process for resolving insolvency issues. It will cover individuals, companies,
limited liability partnerships and partnership firms. It will also amend laws
including the Companies Act to become the overarching legislation to deal with
corporate insolvency. It will help in faster debt recovery for creditors.
The bill proposes a new class of insolvency professionals who will specialize in
helping sick companies. It also provides for information utilities that will collate all
information about debtors to prevent serial defaulters from misusing the system.
The bill proposes to set up the Insolvency and Bankruptcy Board of India to act as
a regulator for these utilities and professionals.
RBI releases Draft Guidelines for ‘on tap’ Licensing of Universal
Banks in the Private Sector
The Reserve Bank of India (RBI) proposed granting on-tap universal banking
licences to individuals, groups or entities and companies. The proposed licensing
policy is a change from the current policy where RBI opens the window for bank
licences only for a certain period. Existing NBFCs that are controlled by residents
and have a successful track record for at least 10 years are among those that can
apply for on-tap licences. In addition, individuals and professionals, who are
residents and have 10 years of banking experience, can also now apply for a
licence. As per the draft guidelines, the initial minimum paid-up voting equity
capital required is `500cr, and thereafter the bank should maintain a minimum
net worth of `500cr at all times.
Result Review
Proctor & Gamble (CMP: `6,404/ TP: `7,369/Upside:15.1%)
Procter & Gamble Hygiene and Health Care (P&G)’s 3QFY2016 results are
broadly in-line with our estimates. The company’s top-line grew by ~11% YoY to
~`614cr (against our estimate of ~ `624cr), mainly due to growth in female
hygiene segment. On the operating front, the company reported margin
contraction (down by 41bp YoY to 21.7%), primarily on account of higher other
expenses. The reported net profit grew by ~12% YoY to ~`97cr (our estimate was
of ~`98cr) on account of healthy sales growth.
On the top-line front, we expect the company to report ~13% CAGR and on the
bottom-line front, we expect ~15% CAGR over FY2015-18E on the back of strong
brands and distribution network. We have buy rating on the stock with a target
price of `7,369.
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Market Outlook
May 6, 2016
Economic and Political News
FM Jaitley rules out rollback of excise duty on jewellery
Clean energy projects get `86,000cr investment: Piyush Goyal
Delhi-NCR stuck with highest unsold housing inventory: Report
Corporate News
ITC shuts down cigarette factories again
Reliance Defence receives
16 new industrial licenses for
equipment
manufacture
SBI launches card-less payment solution for offline transactions
Quarterly Bloomberg Brokers Consensus Estimate
Reliance Capital Ltd. - May 6, 2016
Particulars (` cr)
4QFY16E
4QFY15
y-o-y (%)
3QFY15
q-o- q (%)
Net sales
1,940
2,469
(21.4)
2,315
(16.2)
EBITDA
243
1,125
(78.4)
1,091
(77.7)
EBITDA margin (%)
12.5
45.6
47.1
Net profit
360
407
(11.5)
235
53.2
Siemens Ltd. - May 6, 2016
Particulars (` cr)
2QSY15E
2QSY14
y-o-y (%)
1QSY15
q-o- q (%)
Net sales
2,793
2589
7.9
2265
23.3
EBITDA
260
294
(11.4)
235
10.6
EBITDA margin (%)
9.3
11.3
10.4
Net profit
159
162
(1.8)
114
39.5
Titan company Ltd. - May 6, 2016
Particulars (` cr)
4QFY16E
4QFY15
y-o-y (%)
3QFY15
q-o- q (%)
Net sales
2,823
2,474
14.1
3,398
(16.9)
EBITDA
294
270
8.8
324
(9.2)
EBITDA margin (%)
10.4
10.9
9.5
Net profit
215
215
0.0
225
(4.5)
Grasim Industries Ltd. - May 7, 2016
Particulars (` cr)
4QFY16E
4QFY15
y-o-y (%)
3QFY15
q-o- q (%)
Net sales
9,452
8,706
8.6
8,924
5.9
EBITDA
1,676
1,549
8.2
1,718
(2.4)
EBITDA margin (%)
17.7
17.8
19.2
Net profit
640
507
26.3
650
(1.5)
Hindustan Unilever Ltd. - May 9, 2016
Particulars (` cr)
4QFY16E
4QFY15
y-o-y (%)
3QFY15
q-o- q (%)
Net sales
7,977
7,555
5.6
7823
2
EBITDA
1,425
1,318
8.1
1,491
(4.4)
EBITDA margin (%)
17.9
17.4
19.1
Net profit
1,010
1,018
(0.8)
971
4
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Market Outlook
May 6, 2016
Top Picks
Large Cap
Market Cap
C MP
Target
Upside
C ompany
R ationale
(` Cr)
(`)
(`)
(%)
To outpace battery industry growth due to better technological
Amara Raj a Batteries
15,905
931
1,076
15.6
products leading to market share gains in both the automotive
OEM and replacement segments.
Uptick in defense capex by government whe n coupled with
Bharat Electronics
27,516
1,147
1,414
23.3
BELs strong market positioning, indicate that good times are
ahead for BEL.
The stock i s trading at attractive valuations and is factoring all
HCL Tech
1,03,465
734
1,038
41.5
the bad news.
Strong visibility for a robust 20% earnings trajectory, coupled
HDFC Bank
2,86,550
1,133
1,262
11.4
with high quality of earnings on account of high quality retail
busine ss and strate gic focus on highly rated corporates.
Back on the growth trend, expect a long term growth of 14%
Infosys
2,74,794
1,192
1,374
15.2
to be a US $20bn in FY2020.
LICHF continues to grow its retail loan book at a healthy pace
with improvement in asset quality. We expect the company to
LIC Housing Finance
22,712
450
592
31.5
post a healthy loan book which is likely to reflect in a strong
earnings growth.
Huge bid pi peline of re-development works at Delhi and other
NBCC
11,746
979
1,089
11.3
State Governments and opportunity from Smart City, positions
NBCC to report strong growth, going forward.
Source: Company, Angel Research
Mid Cap
Market Cap
C MP
Target
Upside
C ompany
R ationale
(` Cr)
(`)
(`)
(%)
Favorable outlook for the AC industry to augur well for
Cooling products business which is out paci ng the market
Blue Star
3,724
414
481
16.2
growth. EMPPAC division' s profitability to i mprove once
operating environme nt turns around.
With a focus on the low and medium income (LMI) consumer
Dewan Housi ng
5,872
201
270
34.2
segment, the company has incre ase d its prese nce in tier-II &
III cities where the growth opportunity is immense.
Commence ment of new projects, downtrend in the interest
IL&FS Transport
2,441
74
93
25.3
rate cycle, to lead to stock re-rating
Economic recovery to have favourable impact on advertising
& circulation revenue growth. Further, the acquisition of a
Jagran Prakashan
5,420
166
205
23.6
radio business (Radi o City) would also boost the company' s
revenue growth.
Speedier execution and speedier sales, strong revenue vi sibilty
Mahindra Lifespace
1,747
426
554
30.1
in short-to-l ong run, attractive valuations
Massive capacity expansi on along with rail advantage at ICD
Navkar Corporation
2,487
174
265
51.9
as well CFS augurs well for the company
Earnings boost on back of stable material prices and
Radico Khaitan
1,188
89
156
74.7
favourable pricing e nvironment. Valuation di scount to peers
provide s additional comfort
Strong brands and distribution network would boost growth
Siyaram Silk Mills
1,013
1,080
1,354
25.3
going ahead. Stock currently trades at an inexpe nsive
valuation.
Source: Company, Angel Research
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Market Outlook
May 6, 2016
Key Upcoming Events
Result Calendar
D ate
C ompany
May 06, 2016
Siemens, KEC International, Reliance Capital
May 07, 2016
Andhra Bank
May 09, 2016
HUL, MM Forging
May 10, 2016
Automotive Axle, NIIT, Visaka Industries, Radico Khaitan
Apollo Tyres, Kotak Mah. Bank, Indian Bank, Oriental Bank, South Ind.Bank, Asian Paints, TVS Srichakra,
May 11, 2016
Quick Heal
May 12, 2016
Vijaya Bank, Bank of Maharashtra, Nestle, ITD Cementation, Dr Reddy's, Glenmark Pharma.
May 13, 2016
Central Bank, Indraprasth Gas, Cadila Healthcare
May 14, 2016
Electrosteel Castings, Relaxo
Source: Bloomberg, Angel Research
Global economic events release calendar
Bloomberg Data
Date
Time
Country Event Description
Unit
Period
Last Reported Estimated
May 06, 2016
6:00 PM
US
Change in Nonfarm payrolls
Thousands
Apr
215.00
200.00
China
Exports YoY%
% Change Apr
11.50
(0.50)
May 08, 2016
6:00 PM
US
Unnemployment rate
% Apr
5.00
4.90
May 10, 2016
India
Imports YoY%
% Change Apr
(21.56)
2:00 PM
UK
Industrial Production (YoY)
% Change Mar
(0.50)
India
Exports YoY%
% Change Apr
(5.47)
May 11, 2016
7:00 AM
China
Consumer Price Index (YoY)
% Change Apr
2.30
2.30
May 12, 2016
5:30 PM
India
Industrial Production YoY
% Change Mar
2.00
4:30 PM
UK
BOE Announces rates
% RatioMay 12
0.50
0.50
May 13, 2016
2:30 PM Euro Zone
Euro-Zone GDP s.a. (QoQ)
% Change 1Q P
0.60
0.60
US
Producer Price Index (mom)
% Change Apr
0.20
11:30 AM Germany
GDP nsa (YoY)
% Change 1Q P
2.10
May 14, 2016
11:00 AM
China
Industrial Production (YoY)
% Change Apr
6.80
6.50
May 16, 2016
12:00 PM
India Monthly Wholesale Prices YoY%
% Change Apr
(0.85)
May 17, 2016
2:00 PM
UK
CPI (YoY)
% Change Apr
0.50
Source: Bloomberg, Angel Research
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Market Outlook
May 6, 2016
Macro watch
Exhibit 1: Quarterly GDP trends
Exhibit 2: IIP trends
(%)
(%)
9.0
8.3
12.0
9.9
7.8
7.7
10.0
8.0
7.5
7.6
7.3
8.0
6.3
6.7
6.6
6.7
7.0
6.4
6.0
4.2
4.3
3.7
5.8
3.0
2.5
6.0
4.0
2.0
2.0
5.0
4.5
-
4.0
(2.0)
(1.2)
(1.5)
(4.0)
3.0
(3.4)
(6.0)
Source: CSO, Angel Research
Source: MOSPI, Angel Research
Exhibit 3: Monthly CPI inflation trends
Exhibit 4: Manufacturing and services PMI
Mfg. PMI
Services PMI
(%)
56.0
5.6
5.7
6.0
5.4
5.4
5.3
4.9
5.0
5.0
4.8
54.0
5.0
4.4
3.7
3.7
52.0
4.0
50.0
3.0
48.0
2.0
1.0
46.0
-
44.0
Source: MOSPI, Angel Research
Source: Market, Angel Research; Note: Level above 50 indicates expansion
Exhibit 5: Exports and imports growth trends
Exhibit 6: Key policy rates
(%)
Exports yoy growth
Imports yoy growth
(%)
Repo rate
Reverse Repo rate
CRR
0.0
8.00
(5.0)
7.00
(10.0)
(15.0)
6.00
(20.0)
5.00
(25.0)
4.00
(30.0)
(35.0)
3.00
Source: Bloomberg, Angel Research
Source: RBI, Angel Research
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Market Outlook
May 6, 2016
Research Team Tel: 022 - 39357800
E-mail: [email protected]
Website: www.angelbroking.com
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