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Market Outlook
January 13, 2021
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Market Cues
Indian markets are likely to open flat tracking global indices and SGX Nifty.
US stocks ended slightly up on Tuesday after a somewhat lackluster session, as
investors largely refrained from making significant moves. The Dow ended up 0.3
percent at 31,069 and the Nasdaq rose by 0.3 percent 13,072.
U.K. stocks fell on Tuesday as investors largely stayed cautious and refrained from
making significant moves amid persisting worries about rising coronavirus casesThe
benchmark FTSE 100 fell by 0.7 per cent to 6,754.
Indian shares hit fresh record highs on Tuesday, led by gains in Reliance Industries
and rate-sensitive auto, banking and realty stocks. The benchmark S&P BSE Sensex
rallied by 0.5 per cent to 49,517.
News Analysis
Retail inflation eases to 4.59% in December; IIP contracts 1.9% in Nov
Detailed analysis on Pg2
Investor’s Ready Reckoner
Key Domestic & Global Indicators
Stock Watch: Latest investment recommendations on 150+ stocks
Refer Pg7 onwards
Top Picks
Company
Rating
CMP
(`)
Target
(`)
Upside
(%)
Swaraj Engines
Buy
1,412
1,891
33.9
IDFC First Bank
Buy
47
55
16.6
Persistent Systems
Buy
1,626
1,776
9.2
JK Lakshmi Cement
Buy
353
422
19.6
More Top Picks on Pg3
Domestic Indices
Chg (%)
(Pts)
(Close)
BSE Sensex
0.5
248
49,517
Nifty
0.5
79
14,563
Mid Cap
0.4
84
19,209
Small Cap
0.2
46
18,923
Bankex
0.6
228
36,751
Global Indices
Chg (%)
(Pts)
(Close)
Dow Jones
0.2
60
31,069
Nasdaq
0.3
36
13,072
FTSE
-0.7
-44
6,754
Nikkei
0.1
25
28,164
Hang Seng
1.3
369
28,277
Shanghai Com
2.2
77
3,608
Advances / Declines
BSE
NSE
Advances
1664
1,035
Declines
1435
911
Unchanged
154
69
Volumes (` Cr)
BSE
4,854
NSE
81,906
Net Inflows (` Cr)
(Dec’20)
Net
Mtd
Ytd
FII
617
53,500
1,67,252
*MFs
-1,156
-17,396
-49,505
Top Gainers
Price (₹)
Chg (%)
CHENNPETRO
127
8.2
KENNAMET
974
9.3
MAGMA
48
11.5
NEULANDLAB
1,235
11.2
BANKBARODA
71
10.2
Top Losers
Price (
`
)
Chg (%)
RVNL
33
-5.7
ADANIGREEN
925
-4.4
BANDHANBNK
392
-4.2
ASIANPAINT
2,737
-3.9
HIMATSEIDE
149
-3.7
As on Jan 12, 2020
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Market Outlook
January 13, 2021
www.angelbroking.com
News Analysis:
Retail inflation eases to 4.59% in December; IIP contracts 1.9% in Nov
India’s factory output shrank in November after registering two straight months of
growth, signalling that the nascent recovery in Asia’s third-largest economy is yet
to take deep roots.
This is likely to add pressure on finance minister Nirmala Sitharaman to announce
more measures to support growth in the economy in her third Budget that is
scheduled to be presented on 1 February.
However, in a relief to the government and the central bank, retail inflation sharply
slowed to a 14-month low in December, returning to the comfort zone of the
Reserve Bank of India as food inflation subsided.
Data released by the National Statistical Office on Tuesday showed the Index of
Industrial Production (IIP) declined by 1.9% in November as manufacturing (-1.7%)
and mining (-7.3%) contracted. Electricity output, however, grew by 3.5%. Support
from a low base available till October vanished beginning November, which could
adversely impact factory output growth for the rest of the fiscal to March.
Separately, retail inflation decelerated to 4.59% in December from 6.93% a month
ago, as vegetable prices fell 10.4% from a year ago with prices of onion easing
substantially.x`
Economic and Political News
Commodity inflation for auto sector to be offset by price hikes
SC stays implementation of three farm laws
Corporate News
DGGI issues show-cause notice to Amazon India over Rs 175 cr tax demand
Bharti Airtel initiates process to revise foreign investment limit to 100%
Tech Mahindra to acquire Payments Technology Services for Rs 66 cr
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Market Outlook
January 13, 2021
www.angelbroking.com
Quarterly Bloomberg Brokers Consensus Estimate
Infosys Ltd – January 13, 2021
Particulars (` cr)
2QFY21E
2QFY20
y-o-y (%)
1QFY21
q-o-q (%)
Sales
25,170
23,092
9.0
24,570
2.4
EBIDTA
7,154
5,801
23.3
7,083
1.0
%
28.4
25.1
28.8
PAT
5,068
4,457
13.7
4,845
4.6
Wipro Ltd – January 13, 2021
Particulars (` cr)
2QFY21E
2QFY20
y-o-y (%)
1QFY21
q-o-q (%)
Sales
15,491
15,470
0.1
15,097
2.6
EBIDTA
3,503
3,180
10.1
3,437
1.9
%
22.6
20.6
22.8
PAT
2,552
2,456
3.9
2,466
3.5
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Market Outlook
January 13, 2021
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Top Picks
Company
Market Cap
(` Cr)
CMP
(`)
Target
(`)
Upside
(%)
Rationale
Swaraj Engine
1,714
1,412
1,891
33.9
Swaraj Engines is engaged in the business of
manufacturing diesel engines and hi-tech engine
components. Diesel Engines are specifically
designed for tractor application. Going forward,
we expect recovery in the tractor industry (due to
robust Rabi crop production, hike in MSP & the
forecast of a normal monsoon) will benefit players
like Swaraj Engines.
IDFC First Bank
26,748
47
55
16.6
We believe efforts to built liability franchise, fresh
capital infusion and provision taken on wholesale
book will help to tide over this difficult time. The
IDFC First Bank is trading ( 0.7 x FY22ABV) at a
significant discount to historical average
valuations.
Persistent Systems
12,427
1,626
1,776
9.2
Company has won a large deal during the quarter
which will ramp up over the next few quarters. We
expect the company to post revenue/EBITDA/PAT
growth of 11.6%/21.4%/19.7% between FY20-
FY22 given negligible impact of Covid-19 on FY21
numbers strong deal wins, ramp up of existing
projects along with margins expansion.
JK Lakshmi Cement
4,151
353
422
19.6
JK Lakshmi is predominantly a north India cement
company with capacity of 13.3 Mn Mt. Currently,
north India is favorable location for the cement
industry as it is consolidated to a large extent as
well as demand and supply outlook is better
compared to other locations. It is also trading at a
significant discount compared to other north based
cement companies
Hawkins Cooker
3,101
5,861
6,776
15.6
Gaining market share with peer, strong demand
post Covid-19 and increase in penetration of
cooking gas to drive higher growth.
Metropolis
Healthcare
11,174
2,186
2,593
18.6
We are positive on the company given expected
long term growth rates of ~15% CAGR. Stable
margins profile and moderating competitive
intensity
Atul Ltd
19,550
6,591
7,339
11.3
Atul Ltd is one of India’s oldest and largest
specialty chemical companies with diversified
presence across various industries The company
has got one of the strongest chemistry skillets in the
Indian chemical space and has got a very strong
relationship with global chemical companies with
exports accounting for 55-60% of the company’s
revenues. The company's business has almost
normalized in Q2FY2021 with the company
posting 4.2% degrowth in revenues to Rs. `1,002
crore as compared to our expectation of a 10%
degrowth.. We expect the company to post
Revenue/EBIDTA/PAT growth of
10.3%/14.8%/11.8% between FY2020-2022 led
by growth in the life science division.
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Market Outlook
January 13, 2021
www.angelbroking.com
Continued....
Company
Market Cap
(` Cr)
CMP
(`)
Target
(`)
Upside
(%)
Rationale
Galaxy Surfactants
7,911
2,231
2,569
15.1
Galaxy Surfactants is a market leader in oleochemical-
based surfactants, which is used in personal and home
care products. The company has been increasing its share
of high margin specialty care products in it’s portfolio
which now accounts for ~ 40% of it’s revenues while the
balance is accounted for by the performance surfactant
business. The company has a very strong relationship with
MNC clients like Unilever, P&G, Henkel, Colgate-Palmolive
and supplies raw materials to them not only in India but
also in US, EU and MENA region.
Gujarat Gas
26,462
384
450
17.1
Strong Volume Growth – In Q2FY21 Volume stood at 9.85
MMSCMD, which is the highest volume by company in any
quarter, Volumes are even better than pre Covid levels. In
last 2 years strong volume CAGR of 20%. Industrial
Growth in Gujarat – 80% of overall volumes comes from
the Industrial sector. Industrial demand is very strong in
Morbi. Morbi ceramic to get further boost as strong
demand from USA as they have imposed 200%-300% of
import duty on Chinese ceramic. Company also ramping
up its capacity at Morbi to enable it to handle 8 MMSCMD
against current capacity of 5.9 MMSCMD. Margin to
sustain – Gujarat gas margins are highest in Q2FY21 at
29%.
Bhandan Bank
63,071
392
525
34.0
Bandhan bank is one of India’s leading east based micro
finance lending led bank. This places the bank at a
significant advantage over other MFIs in the form of very
low cost of funds. While Bandhan Bank started off as a MFI
it is diversifying its loan book. With the takeover of Gruh
Finance mortgages account for ~ 26% of the banks
lending books while commercial banking accounts for
~6.5% of the company's loan book. The company is
looking to diversify its loan book and geographical spread
over the next 5 years.
Whirlpool India
31,834
2,509
3,032
20.8
Whirlpool of India (WIL) is engaged in manufacturing and
selling of Refrigerators, Washing Machines, Air
Conditioners, Microwave Ovens, built in and Small
appliances and caters to both domestic and international
markets. WIL’s product portfolios presence in the lower
penetration category, which would lead to higher growth.
Going forward, we expect healthy profitability on the back
of a strong brand, wide distribution network, capacity
expansion & strengthening product portfolio.
Narayana
Hrudayalaya
9,675
473
500
5.6
Narayana Hrudayalaya is engaged in providing
economical healthcare services, specifically surgery related
to cardiac. Company having 21 hospitals with Operational
beds of 5920. Company major revenue comes from
Bangalore and Kolkata region with 38% and 28%
respectively.
NRB Bearings
1,071
110
135
22.2
NRB is one of the leading suppliers of bearings to Auto
companies. The company supplies bearings to two
wheelers, PV, CV, Three wheelers and tractors OEMs and
has a wide customer base. The company has also been
focusing on exports markets in order to diversify its
revenue base.
Ashok Leyland
35,696
122
140
14.8
Ashok Leyland Ltd (ALL) is one of the leading player in
India CV industry with a 32% market share in the MHCV
segment. The company also has a strong presence in the
fast growing LCV segment.