MARKET WRAP: Indices rise for 3rd day, Sensex up 113 pts; IT stocks advance

Among Nifty sectoral indices, Nifty IT gained nearly 1.5 per cent while Nifty PSU Bank slipped around 1.5 per cent.
The domestic stock market ended in the green for the third straight session on Tuesday, led by gains in HDFC Bank, and information technology (IT) stocks. 

The S&P BSE Sensex settled 113 points, or 0.28 per cent higher at 40,544 levels and the Nifty50 gained 24 points, or 0.2 per cent at 11,897 levels. India Vix rallied 4 per cent to 22.69 levels. 

HCL Tech (up 4 per cent), Tech Mahindra (up 3 per cent), and Asian Paints (up over 2 per cent) were the top Sensex gainers.

Among Nifty sectoral indices, Nifty IT gained nearly 1.5 per cent while Nifty PSU Bank slipped around 1.5 per cent. 

In the broader market, the S&P BSE MidCap index ended 0.47 per cent higher at 14,775 levels while the S&P BSE SmallCap index ended at 14,896, up 0.3 per cent. 

Global markets

European stocks recovered from early losses on Friday, following a bearish Asian session where investors adjusted their risk exposure before the US elections two weeks away. Record Covid-19 cases in Europe also weighed on sentiment.

MSCI world equity index, which tracks shares in 49 countries, slipped as much as 0.2 per cent. 

In commodities, gold edged down while oil prices were little changed after three days of declines on fears that a resurgence of Covid-19 infections would stifle the recovery in fuel demand.

(With inputs from Reuters)

3:44 PM IST

3:42 PM IST

3:36 PM IST The S&P BSE Sensex gained 113 points, or 0.28 per cent to settle at 40,544 levels while NSE's Nifty ended at 11,897, up 24 points, or 0.20 per cent.

3:28 PM IST

3:20 PM IST

3:10 PM IST Shares of sugar companies rallied by up to 7 per cent on the BSE on Tuesday after the industry body, ISMA, raised its sugar production estimate to 31.0 million tonnes (MT) from earlier 30.5 MT in the 2020-21 marketing season starting this month. It has also increased its sugar sacrifice estimate from 1.5 MT to 2.0 MT. Among the individual stocks, Balrampur Chini Mills, Avadh Sugar & Energy and Dhampur Sugar Mills were up 5 per cent to 7 per cent on the BSE. EID Parry and Dwarikesh Sugar Industries were up in the range of 2 per cent to 3 per cent, as compared to 0.3 per cent gain in the S&P BSE Sensex. READ MORE

3:04 PM IST

2:56 PM IST

2:50 PM IST COMPANY PRICE(rs) 52 WK HIGH CHG(%) ACC 1571.20 1622.00 0.54 AMBUJA CEMENTS 249.50 254.85 0.77 J K CEMENTS 1836.00 1858.90 2.20 JSW STEEL 317.30 319.65 1.20 SRF 4485.70 4524.00 0.81 » More on 52 Week High

2:46 PM IST Reco: Subscribe While ESFB will see its profitability erode in FY21 on account of significant increase in credit cost and deceleration in growth, recovery in return ratios will ensue from FY22 as return to normalization begins. Strong capital buffer lends comfort on liquidity and growth fronts, and represents a substantial cushion to absorb even a worst-case credit shock. On post-money basis, the IPO has been priced at 1.2x current P/BV which we believe is attractive considering the long-term growth and profitability potential of the SFB. 

2:37 PM IST Hindustan Unilever (HUL) on Tuesday reported an 8.7 per cent year-on-year (YoY) rise in its net profit at Rs 2,009 crore for the second quarter of the current fiscal year (Q2FY21). The company had logged a profit of Rs 1,848 crore in the year-ago period. On a sequential basis, numbers grew 6.8 per cent. Revenue for the quarter under review came in at Rs 11,276 crore, up 16.1 per cent YoY. On a quarter-on-quarter (QoQ) basis, revenue increased by 8.3 per cent. READ MORE

2:28 PM IST Drug firm Strides Pharma Science on Tuesday said its step down subsidiary has received approval from the US health regulator for Ethacrynic Acid tablets, used to treat fluid retention (edema). READ MORE

LIVE UPDATES

SECTOR WATCH | Nifty IT gains nearly 1.5%


MARKET AT CLOSE | Gainers and losers on the S&P BSE Sensex


CLOSING BELL

The S&P BSE Sensex gained 113 points, or 0.28 per cent to settle at 40,544 levels while NSE's Nifty ended at 11,897, up 24 points, or 0.20 per cent.

MARKET CHECK


Tech Mahindra trades 3% higher


Sugar stocks in focus; Balrampur Chini, Avadh Sugar up over 5%

Shares of sugar companies rallied by up to 7 per cent on the BSE on Tuesday after the industry body, ISMA, raised its sugar production estimate to 31.0 million tonnes (MT) from earlier 30.5 MT in the 2020-21 marketing season starting this month. It has also increased its sugar sacrifice estimate from 1.5 MT to 2.0 MT. Among the individual stocks, Balrampur Chini Mills, Avadh Sugar & Energy and Dhampur Sugar Mills were up 5 per cent to 7 per cent on the BSE. EID Parry and Dwarikesh Sugar Industries were up in the range of 2 per cent to 3 per cent, as compared to 0.3 per cent gain in the S&P BSE Sensex. READ MORE

PSU Bank stocks slide in a strong market


IPO ALERT :: Equitas Small Fin Bank IPO subscribed 28% till 2:30 pm on Day 1


Stocks that hit 52-week high on BSE today

COMPANY PRICE(rs) 52 WK HIGH CHG(%)
ACC 1571.20 1622.00 0.54
AMBUJA CEMENTS 249.50 254.85 0.77
J K CEMENTS 1836.00 1858.90 2.20
JSW STEEL 317.30 319.65 1.20
SRF 4485.70 4524.00 0.81
» More on 52 Week High

Equitas SFB IPO: YES Securities

Reco: Subscribe

While ESFB will see its profitability erode in FY21 on account of significant increase in credit cost and deceleration in growth, recovery in return ratios will ensue from FY22 as return to normalization begins. Strong capital buffer lends comfort on liquidity and growth fronts, and represents a substantial cushion to absorb even a worst-case credit shock. On post-money basis, the IPO has been priced at 1.2x current P/BV which we believe is attractive considering the long-term growth and profitability potential of the SFB. 

HUL Q2 net up 9% YoY to Rs 2,009 crore; announces interim dividend of Rs 14

Hindustan Unilever (HUL) on Tuesday reported an 8.7 per cent year-on-year (YoY) rise in its net profit at Rs 2,009 crore for the second quarter of the current fiscal year (Q2FY21). The company had logged a profit of Rs 1,848 crore in the year-ago period. On a sequential basis, numbers grew 6.8 per cent. Revenue for the quarter under review came in at Rs 11,276 crore, up 16.1 per cent YoY. On a quarter-on-quarter (QoQ) basis, revenue increased by 8.3 per cent. READ MORE

Strides Pharma Science arm gets USFDA nod for Ethacrynic Acid tablets

Drug firm Strides Pharma Science on Tuesday said its step down subsidiary has received approval from the US health regulator for Ethacrynic Acid tablets, used to treat fluid retention (edema). READ MORE

Sept Quarter Result | Hindustan Unilever reports profit of Rs 2,009 crore

>> Revenue at Rs 11,442 crore

>> EBITDA at Rs 2,869 crore


Heatmap: S&P BSE Sensex gainers and losers at this hour


Verdict on Amazon arbitration plea over Future-RIL deal expected soon

A hearing of the arbitration took place at the Singapore International Arbitration Centre on October 16 after Amazon had slapped a legal notice on Future Group, alleging that the retailer's Rs 24,713 crore asset sale to Reliance Industries (RIL) violated an agreement with the e-commerce giant. READ MORE

Rupee Closing

Rupee ends weaker at 73.46 per US dollar vs Monday's close of 73.37/$

Sept Quarter Result | Kajaria Ceramics

>> Net profit comes in at Rs 89.6 cr vs Rs 93.1 cr YoY

>> Consolidated revenue at Rs 712.5 cr vs Rs 714 cr YoY

Just Dial surges 67% in 17 days after promoter buys shares via open market

Between September 25 and September 30, 2020, Anita Mani purchased 679,677 equity shares of Just Dial for Rs 25.33 crore, according to disclosure made by the company to the stock exchange. The names of sellers were not ascertained immediately. READ MORE

Modi govt to ask Coal India, NTPC among others for cash via buybacks

Coal India Ltd., NTPC Ltd., NMDC Ltd., MOIL Ltd., KIOCL Ltd, and Engineers India Ltd. are among the eight companies that might be asked to buy back shares this year, the person said, asking not to be identified as the information is not public. The government, being the largest shareholder in these companies, will benefit from the transactions by tendering the equity it holds in return for cash. READ MORE


HDFC Bank has sufficient financial heft to withstand economic shocks: S&P

“HDFC Bank’s result for the first half of 2020-21 (the financial year that will end on March 31, 2021) are resilient and in line with our expectations,” S&P said in a statement.
 
HDFC Bank has ample capital buffers, as reflected in its Tier-I capital ratio of 17.7 per cent as on September 30, 2020. The bank's S&P Global Ratings risk-adjusted capital ratio will be 8.5-9 per cent over next two years, compared with 9.4 per cent as on March 31, 2020. READ MORE

European indices start weak

(Source: Reuters)

HDFC Securities on L&T Tech

We maintain REDUCE on L&T Tech (LTTS), as valuations more than adequately factor in the recovery curve. 2Q print was slightly ahead of estimates, and the growth rebound (despite 3Q furlough uncertainty) is supported by a pick-up in deal activity (deal pipeline and wins higher by ~16% over the previous quarter). While LTTS has a strong pedigree in ER&D with a well-diversified service portfolio, factors such as business cyclicality, higher discretionary nature, and slower pace of large deal conversion result in sequential volatility.

The revised USD revenue guidance of -7% to -8% (-9% to -10% organic earlier) in FY21 implies +3.4 to 4.9% QoQ over 3Q-4Q and includes consolidation of Orchestra Tech (~2% QoQ in 3Q). Improvement in cash generation with a reduction in DSO (including unbilled) is positive. Our target price of Rs 1,585, is based on 18x Sep-22E EPS (DCF-implied at 18x and historical average at 19x).

NEWS ALERT | PM Narendra Modi to address the nation at 6 pm today

Tech, healthcare firms seen to be attractive IPO investments going ahead

Going ahead, companies in technology, healthcare and industrials segments are likely to attract investors. Further, companies which show resilience and adapt to the post-pandemic situation would also witness investor flocking towards them if they go public, said a report by EY. READ MORE

Oberoi Realty rallies 15%, records sharpest intra-day gain in 6 months

While announcing the September quarter results, on Saturday, the management said that Oberoi Realty was seeing a consolidation of demand in its favour from customers who seek quality projects and value the financial stability of the developer when buying their dream home, especially in the Covid-19 pandemic times. READ MORE

Kajaria Ceramics gains for third straight day ahead of Q2 results

The board of directors of Kajaria Ceramics is scheduled to meet today to, consider and approve the unaudited financial results of the company for the quarter ended September 30, 2020.
 
The nationwide lockdown and supply chain restrictions impacted the April-June quarter (Q1FY21) performance of tiles manufacturers. READ MORE

Stocks that hit 52-week high on BSE today

COMPANY PRICE(rs) 52 WK HIGH CHG(%)
ACC 1578.00 1622.00 0.97
AMBUJA CEMENTS 252.10 254.85 1.82
J K CEMENTS 1832.00 1858.90 1.98
TATA COMM 962.00 964.00 4.40
» More on 52 Week High

Q2 RESULTS | Granules India's Q2 net profit rises 71% YoY at Rs 163.6 crore

-- The company says saw no material impact of the Covid-19 outbreak on Q2, H2 results

-- Revenue rises 22.7% YoY at Rs 858.1 crore

-- Ebitda up 78.6% YoY at Rs 256.4 crore

Bata India, Relaxo, Khadim India: Time to step into footwear stocks?

Footwear stocks were trading mixed in the morning deals on Tuesday. While Khadim India, Mirza International, and Relaxo Footwears advanced, Bata India, and Liberty Shoes traded in the red. In comparison, the benchmark S&P BSE Sensex was quoting 0.55 per cent higher at 40,656 levels. In an interview to a television channel on Tuesday, Sandeep Kataria, CEO of Bata India said that most of their stores are now open. The company, according to Kataria, has opened 15 new stores after unlock has started and is planning to open 30 more by the end of the year. READ MORE

MARKET UPDATE:: Broader indices underperform benchmarks


IDBI Capital on HCL Technologies

RATING: BUY | TARGET PRICE: Rs 984

We factor the Q2FY21 beat, FY21 guidance and increase our FY21/22 revenue (US$) forecast by 2.5%/2.8% and EPS forecast by 8.9%/9.7%. We introduce FY23 financials and now forecast revenue/EPS CAGR of 9.4%/10.1% over FY21-23E. We upgraded the stock to BUY (vs. REDUCE) with a new TP of Rs 984 based on PER of 18x FY23E which is at the top-end of the 1-yr forward PER range of 9x-18.2x in the last five years.

Equitas SFB IPO: Geojit Financial Services

Reco: Subscribe with a long-term perspective

>> Deposit/AUM ratio of bank stands at 76% with CASA (Current Account Savings Account) ratio at 20%. 2nd highest CASA ratio and 3rd highest proportion of retail deposits to total deposits among peers.

>> ESFBL has significantly reduced its exposure in Micro Finance lending (MFI) to 23% from 46% in FY17, given risks and volatility associated with this business.

>> Bank has a diversified portfolio mix with Security based lending (SBL) at 42%, MFI at 23%, Vehicle Finance at 24% to drive expansion of customer base and focus on higher ticket size loans.

>> Bank is well capitalized with capital adequacy ratio of 22% (as per June 2020) wherein minimum requirement is 15%.

>> At the upper price band of Rs. 33, ESFBL is available at a P/BV of 1.4x based on its book value of Rs. 24.1. Based on FY20 P/BV the issue seems fully priced while the outlook for FY21 is slightly weak given the ongoing interest waiver litigation filed in Supreme Court. In spite of short to medium term concerns, we expect these concerns to normalize by FY22E and so recommend Subscribe with a long-term perspective.

NEWS ALERT :: Pratibha Advani resigns as CFO of Tata Comm

>> Cosays,  Kabir Ahmed Shakir appointed new CFO with effect from October 21, 2020


After muted Q2 show, DMart's sales may gain traction in third quarter

Aided by a gradual recovery following the easing of lockdown restrictions, retail chain Avenue Supermarts (DMart) reported a sequential uptick in the second-quarter performance. Sales in the quarter were up 37 per cent over the June quarter, though they were down 12 per cent from the year-ago levels. READ MORE

Result Today :: HUL Q2 revenue may rise up to 19% YoY on GSK Consumer acquisition

In the FMCG sector, analysts expect a strong recovery in both essentials and discretionary categories. However, products focused on premium price and out-of-home consumption will continue to face growth headwinds, they say. READ MORE

NEWS ALERT :: SpiceJet launches 62 new domestic, international flights

>> Says, it's seeing continued demand improvement on return to normalcy

Centre's PSU disinvestment drive gets a helping hand from LIC, SBI

The government’s 2020-21 disinvestment drive would have been off to a rocky start if not for the helping hand from state-owned institutions, such as Life Insurance Corporation (LIC) and State Bank of India (SBI). The Centre kicked off this fiscal year's disinvestment programme with a Rs 4,900-crore offer for sale (OFS) from Hindustan Aeronautics (HAL) and followed it up with the Rs 770-crore OFS from Bharat Dynamics (BDL). READ MORE

Top gainers on BSE at this hour

COMPANY PRICE(rs) CHG(%)
HINDUSTAN COPPER 36.10 10.06
SOMANY CERAMICS 228.00 8.13
OBEROI REALTY 410.95 5.52
IRCON INTL. 79.30 5.17
THYROCARE TECH. 1088.30 4.96
» More on Top Gainers

BROKERAGE VIEW | Anand Rathi Shares on Karnataka Bank

RATING: BUY | TARGET PRICE: Rs 60

Higher margins and lower opex led to sharp, ~21% y/y, PPOP growth for Karnataka Bank. The standstill on NPA recognition led to asset quality and PCR improving. With earnings expected to pick up in FY22 and limited downside from current levels, we maintain a Buy, at a TP of Rs60 valuing it at 0.3x P/ABV on its FY22e book.

Rallis India declines 5% as revenue slip 3% in September quarter

Shares of Rallis India were down 5 per cent at Rs 258.70 on the BSE in the intra-day trade on Tuesday after reported the company reported a disappointing July-September quarter (Q2FY21) result. The agrochemicals company reported 3 per cent year on year (YoY) decline in consolidated revenue at Rs 725 crore owing to poor sales from international market. READ MORE

Multiple growth catalysts falling in place for Natco Pharma: Analysts

Natco Pharma, which has seen its stock almost double from March lows, could see more gains. The patent settlement by Dr Reddy’s Laboratories for a mega generic launch of multiple myeloma drug Revlimid in the US recently is positive for Natco, too. The company had a first-to-file status for the drug in four strengths (5, 10, 15, 25 mg) and was also the first to settle with the innovator in 2015, and enjoyed better deal terms, too. READ MORE 

BUZZING STOCK | Tata Metaliks surges over 4%


Equitas SFB IPO: Attractive play on diversification and valuation

Considering the pent up expectation around the initial public offering (IPO) of Equitas Small Finance Bank (Equitas SFB) and the manner in which foreign and domestic investors have lapped up banking stocks since July, the issue holds promise. What makes it attractive is its pricing of Rs 32 – 33 a share, which works to 1.2x FY21 estimates book, a discount to Ujjivan SFB (1.8x FY21 estimated book, its immediate peer) and AU SFB (5.1x). READ MORE

ACC rises 4% post September quarter results; other cement stocks rally too

Shares of cement companies were in focus at the bourses on Tuesday, gaining up to 4 per cent, after ACC managed to improve its sales volumes to pre-Covid levels along with expansion in margins during the July-September quarter (Q3CY20) despite localised lockdowns and monsoon impact. ACC hit a 52-week high of Rs 1,622, up 4 per cent on the BSE on the back of heavy volumes. READ MORE

Britannia declines 5% as Q2 revenue slightly misses analysts' expectations

According to analysts, Britannia's revenue growth moderation for the quarter under review was a shade higher than expectations. However, its margins remained strong from continuing cost efficiency and low input prices. The company's earnings before interest, tax, depreciation, and amortisation (EBITDA) margin expanded 360 bps year-on-year (YoY) to 19.8 per cent. READ MORE  


Rupee opening

Rupee opens unchanged at 73.37/$ vs Monday's close

Time to invest in cyclicals as economic recovery gathers steam: Analysts

After a 52 per cent rally in the benchmark indices – the S&P BSE Sensex and the Nifty 50 – form their respective March 2020 lows led by pharmaceutical, automobiles, information technology (IT) sectors and index heavyweight Reliance Industries (RIL), analysts now suggest investors should now rotate money to cyclical plays like banks and cement as the economic activity picks up pace. READ MORE

Larsen & Toubro gains 2% on hopes of contract win for bullet train project

Shares of Larsen & Toubro (L&T) gained 2 per cent at Rs 922 on the BSE on Tuesday on report that the company has emerged as the lowest bidder in the financial bids for the design and construction of civil works for 47 per cent of the alignment of the Mumbai-Ahmedabad High-Speed Rail corridor. Three bidders, involving seven major infrastructural companies, had participated in competitive bidding. READ MORE

SECTOR WATCH:: Tech stocks advance


MARKET CHECK :: Indices reverse losses


HDFC Life gains post Q2 nos

>> Private sector life insurer HDFC Life’s standalone profit after tax rose 5.6 per cent in the quarter ending September (Q2FY21) to Rs 326 crore, compared to Rs 308.69 crore in the same period last year. Net premium income of the insurer in the second quarter rose 35 per cent to Rs 10,045 crore, compared to Rs 7,453.68 crore in the year ago period


L&T gains 1.5%

>> Larsen & Toubro (L&T) is set to win one of the largest infrastructure tenders the country has seen. It is likely to be the lowest bidder for the design and construction of civil works for 47 per cent of the alignment of the Mumbai-Ahmedabad High-Speed Rail corridor.


Wipro gains around 1% on 5-yr contract from Fortum

>> Wipro on Tuesday announced that it has won a five-year Application Management (AMS) and Services Integration & Management (SIAM) contract from Fortum, one of the leading clean-energy companies headquartered in Espoo, Finland.


Sunteck Realty dips marginally

>> The company has entered into an agreement to acquire approx 50-acre land parcel in Vasind (District Thane).


HUL trades weak ahead of Q2 nos


Britannia Industries declines 4.6% on below par Q2 results


Result Reaction :: ACC rises over 2.5%

>> The cement major's consolidated net profit rose 20.26 per cent to Rs 363.85 crore on 0.26 per cent increase in net sales to Rs 3,537.31 crore in Q3 September 2020 over Q3 September 2019.


Sectoral trends at Open


Sensex Heatmap at Open


Opening Bell


Opening Bell


NEWS ALERT :: Moderna CEO expects Covid 19 vaccine interim results in November: Report

Top gainers and losers on the S&P BSE Sensex at Pre-open


Markets at Pre-open


Markets at Pre-open


NEWS ALERT :: Wipro bags 5-yr contract from Finland-based firm Fortum

Stocks to watch out for

Wipro on Tuesday announced that it has won a five-year Application Management (AMS) and Services Integration & Management (SIAM) contract from Fortum, one of the leading clean-energy companies headquartered in Espoo, Finland.
 
L&T: Larsen & Toubro (L&T) is set to win one of the largest infrastructure tenders the country has seen. It is likely to be the lowest bidder for the design and construction of civil works for 47 per cent of the alignment of the Mumbai-Ahmedabad High-Speed Rail corridor.
 
HUL: The FMCG major is expected to announce its Q2 numbers today. Emkay Global estimates HUL's organic sales to grow 5 per cent year-on-year (YoY) whereas, including GlaxoSmithKline Consumer Healthcare (GSK) sales, revenue is expected to grow 19 per cent YoY at Rs 11,713.3 crore. READ MORE  


BROKERAGE VIEW :: Axis Securities on ACC

CMP: Rs 1,563 | Target price: Rs 1,850 | Reco: Buy

>> Q3CY20 Adj. EBITDA at Rs 6.7 bn (up 21% YoY, 28% QoQ) was 10%/15% higher than our/consensus estimate of Rs 6.1/ 5.8 bn. Beat was primarily on better-than-expected realization due to better volume mix in South region (with high realization) and lower growth vs industry in East region (with weakest realization).

>> Cement realization decline contained due to ACC’s strong presence in retail market and 25% exposure to south region where cement prices held up strongly QoQ. Cost declined on operating leverage although variable cost rise was visible and to further increase in Q4.

>> We increase our CY20E/21E EPS to Rs 67/ 86 from Rs 65/75 on strong Q2 performance/comfort on structural saving in cost. Revise TP to Rs 1,850 (10x CY21E EV/EBITDA) from Rs 1,600.

BROKERAGE VIEW :: Kotak Institutional Equities on HDFC Life

CMP: Rs 571 | Fair value: Rs 615 | Reco: Add

>> HDFC Life reported impressive 22% VNB growth, backed by similar APE growth, in a quarter when most competition will likely struggle to deliver in single digits. Superior execution and product leadership have helped maintain business momentum and high VNB margins. With expectations of a strong 2H and convictions of superior medium-term performance, we upgrade our rating to ADD from REDUCE with Fair Value of Rs615 (from Rs560 earlier).

BROKERAGE VIEW :: Kotak Institutional Equities on Bajaj Consumer Care

CMP: Rs 190 | Fair value: Rs 230 | Reco: Add

>> BAJAJCON reported 4% yoy growth (KIE flat) in revenues led by 2% growth in ADHO, a decent recovery after 23% yoy decline in ADHO in 1Q. Hair oil category growth has nearly normalized led by rural demand and gradual recovery in urban demand. This, coupled with the new CEO’s single-minded focus on reviving growth augurs well. The management indicated that investments in new growth engines (adjacencies) would be calibrated with primary focus on earnings growth. We increase FY2021-23E EPS by 10-17%, roll-over and raise DCF-based FV to Rs230 (Rs200) implying 15X Dec-22E earnings.

BROKERAGE VIEW :: Kotak Institutional Equities on Oberoi Realty

CMP: Rs 390 | Fair value: Rs 450 | Reco: Add

>> Oberoi Realty’s 2QFY21 displayed a marked improvement from the slump seen in 1QFY21 with the company reporting better residential sales at Rs3.3 bn (+1.4% yoy) augmented by the sale of three units at TSW, recovery in earnings in rental business and minimal losses in hospitality business at Rs2 mn (compared to Rs44 mn in 1QFY21). Proposed divestment of stake to a strategic investor in commercial assets is likely to unlock capital for the company to propel future growth. Maintain ADD with unchanged fair value of Rs450/share.

BROKERAGE VIEW :: Kotak Institutional Equities on Tata Communications

CMP: Rs 921 | Fair value: Rs 1,075 | Reco: Buy

>> TCOM’s EBITDA and PAT print were stellar again on the back of cost optimization and lockdown-related cost savings. Revenue print (flat qoq, up 3% yoy overall; +7.2% yoy for the data segment) was soft once again. We expect margins to normalize to a lower 24-25% level from the 26.3% 2Q print. Further rerating demand growth acceleration. We expect the same to show up in a couple of quarters. Retain BUY. FV revised up to Rs1,075/share (from Rs975).

BROKERAGE VIEW :: Kotak Institutional Equities on ACC

CMP: Rs 1,563 | Fair value: Rs 1,800 | Reco: Buy

>> ACC’s 3QCY20 EBITDA was ahead of estimates led by higher volumes and better realizations. Volumes increased by 1% yoy despite a weak South whereas blended prices increased 1% qoq with recovery in the RMC segment. Upcoming expansions, cost-saving projects and recovery in RMC give visibility of earnings growth and margin expansion. We upgrade our EBITDA by 19%/12%/18% for CY2020/21/22E and Fair Value to Rs1,800/share (from Rs1,550).

BROKERAGE VIEW :: MOFSL on Tata Communications

CMP: Rs 921 | TP: Rs 900 (-2% ) | Reco: Neutral

>> TCOM’s cumulative EBITDA growth of 52% over the last three quarters led by the stellar data margin improvement of 960bp has exceeded our expectations. However, this may not be a recurring phenomenon as management has guided for 22-25% EBITDA margin against prevailing EBITDA margin of 26%. Data revenue growth despite the WFH model has been a modest 1% due to some COVID-19 impact and delay in execution of some deals. Incremental earnings growth necessitates healthy data revenue growth.

>> We have assigned EV/EBITDA multiple of 7x/2x to data/voice business on FY22E EBITDA to arrive at a TP of INR900 (earlier INR790). The increase in TP is
primarily on earnings revision owing to its improving margins and management’s focus on profitable growth. Further, improvement in FCF generation led by EBITDA growth has seen some deleveraging. However, the stock’s sharp rally from INR230 in Apr’20 to INR920 currently (3x growth), leaves limited upside. Maintain Neutra

BROKERAGE VIEW :: MOFSL on Petronet LNG

CMP: Rs 223 | TP: Rs 335 (+50%) | Reco: Buy

>> The Dahej and Kochi terminals are operating at pre-COVID levels since the first week of Jun’20. This is due to higher gas offtake from sectors like fertilizers and
power, which are the clear leaders, while city gas distribution (CGD) is a laggard.

>> Domestic gas production is down 10% YoY in Aug’20 and 13% YoY for YTD FY21; with total gas consumption down 8% YoY in Aug’20 and 3% YoY for YTD FY21.

>> All of these have resulted in LNG imports forming ~58-59% of the total gas consumption (much higher v/s last five year average of ~52%). We expect imports to increase further as demand from refining and other segments normalize in the coming months, aided by new fertilizer plants.

>> Further, on the MoU with Tellurian (final decision is expected in FY21), PLNG continues to reiterate that it is non-binding in nature and the IRR benchmark for the company stands at 16%. However, the bigger question is whether the investment is required at all. The market has changed considerably now and people are not keen on investments in such projects because there is no dearth of gas right now. 

BROKERAGE VIEW :: MOFSL on Britannia

CMP: Rs 3,774 | Reco: Neutral

>> BRIT’s consol. sales increased 12.1% YoY to INR34.2b (v/s est. INR36.3b) in 2QFY21. Standalone sales grew 11.4% YoY to INR32.3b. We believe base business volume increased ~10% (our est. +15.5%). Consol. EBITDA grew 37.2% YoY to INR6.8b (v/s est. INR6.9b) while consol. PBT grew 34.3% YoY to INR6.7b (v/s est. INR6.9b). Consol. adj. PAT grew 22.7% YoY to INR5b (v/s est. INR5.2b).

>> Consol. gross margin expanded by 240bp YoY to 42.5%. Management has mentioned that moderate inflation was witnessed in prices of key raw materials.

>> As % of sales, lower staff cost (-10bp YoY) and lower other expenses (-110bp YoY) meant that EBITDA margin expanded 360bp YoY to 19.8%. 2QFY21 standalone sales, EBITDA and adj. PAT grew 11.4%, 32% and 1% YoY, respectively. EBITDA margin was up 300bp YoY to 19.2%.  

BROKERAGE VIEW :: MOFSL on HDFC Life

CMP: Rs 571 | TP: Rs 625 (+10%) | Reco: Neutral

>> HDFC Life (HDFCLIFE) reported improvement in new business APE, led by Individual Protection/PAR and Group savings business while the trend in ULIPs remained weak in 2QFY21. VNB margins improved to 25.6% led by rise in retail Protection/Annuity business and cost control. Thus, Absolute VNB grew 22% YoY during 2QFY21. On the persistency front, better trends were witnessed in the PAR/Protection business, and thus, 13th/25th month persistency improved by 200bp/400bp. Overall, shareholders’ PAT grew ~6% YoY to INR3.3b during 2QFY21.

>> Overall, we expect HDFCLIFE to reflect 17% VNB growth over FY20-23E. By FY23E, we expect margins to improve to ~26.4% and operating RoEV to remain steady at ~18%. Maintain Neutral.

BROKERAGE VIEW :: MOFSL on ACC

CMP: Rs 1,563 | TP: Rs 1,805 (+15%) | Reco: Buy

>> ACC trades at a 35–60% valuation discount to peers Shree, UltraTech, and Ramco. We believe such a large discount is excessive as: (a) ACC has arrested its market share losses since CY17, (b) its net cash balance sheet (~18% of market cap) renders it well-placed to withstand any extended disruption from COVID-19, and (c) with planned capacity expansions in CY22, the proportion of inefficient assets would decline, improving profitability.

>> We value ACC at 9x CY22E EV/EBITDA (~20% discount to the past five-year average of 11.4x) to arrive at Target Price of INR1,805; this implies target EV/t of USD74 and target P/E of 21x on CY22E. Maintain Buy

Bank Nifty likely to outperform Nifty in the coming days

The Bank Nifty index outperformed in the previous trading session and formed a bullish candle on the daily chart. It has surpassed its previous double top pattern at 24,200 levels which hints of a fresh momentum on the higher side. A fresh put writing at 24,000 strike indicates that put writers are shifting the base higher and we might see further upside move on the back of a short-covering rally in the coming days. The momentum indicators and oscillators are also very much in the buy mode on the daily as well weekly scale. So, based on the above rationale we can expect the Bank Nifty index to outperform compared to Nifty. READ MORE

Bulk deals on BSE as on Monday

Bulk deals on NSE as on Monday

FII/FPI & DII trading activity on NSE, BSE and MSEI


Oil prices drop for fourth day

>> Oil prices slipped for a fourth straight day on Tuesday on worries about a resurgence of coronavirus cases globally stifling a promising recovery in fuel demand, while growing output from Libya adds to plentiful supply in the market.

>> Brent crude LCOc1 futures fell 30 cents, or 0.7%, to $42.32 a barrel, after falling 31 cents on Monday.
 
>> US West Texas Intermediate (WTI) crude CLc1 futures slid 26 cents, or 0.6%, to $40.57 a barrel, after losing 5 cents on Monday.

(Source: Reuters)

SGX Nifty update

>> At 8:16 am, the index was at 11,857 level, down 40.30 points or 0.34 per cent.

Asian markets check

Source: Reuters


Wall Street closes lower as stimulus deadline nears without deal

Source: Reuters


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