M&M (up over 4 per cent) ended as the top Sensex gainer, followed by Bajaj Auto (up 3.4 per cent). (Photo: Kamlesh Pednekar)
The domestic stock market ended in the positive territory for the second straight day on Wednesday, thanks to buying in blue-chip counters such as HDFC Bank, Infosys, Mahindra & Mahindra (M&M), and ICICI Bank.
The S&P BSE Sensex gained 258.5 points or 0.66 per cent to settle at 39,303 levels while the Nifty50 index surpassed the 11,600-mark to end at 11,605, up 83 points, or 0.72 per cent. India VIX fell nearly 5 per cent to 19.6 levels.
M&M (up over 4 per cent) ended as the top Sensex gainer, followed by Bajaj Auto (up 3.4 per cent). On the other hand, IndusInd Bank (down nearly 2 per cent) was the biggest loser.
Shares of Dr. Reddy's ended over 4 per cent higher at Rs 4,631.55 on the BSE after the company said it has agreed to cooperate with Russia’s sovereign wealth fund RDIF on clinical trials and distribution of Sputnik V vaccine in India. Upon regulatory approval in India, RDIF shall supply to Dr. Reddy’s 100 million doses of the vaccine. READ MORE
The trend among Nifty sectoral indices was largely positive. The Nifty Pharma index gained over 2 per cent while the Nifty Auto ended over 1.5 per cent higher at 8,156 levels. Nifty Realty index also ended over 2 per cent higher at 226 levels.
In the broader market, the S&P BSE MidCap index ended 0.21 per cent higher at 15,046 levels while the S&P BSE SmallCap index settled at 15,431, up 0.44 per cent.
Global markets
European shares were mixed at the opening, but then rose, with the Stoxx 600 up around 0.3 per cent, pushed up by gains in retail stocks.
The MSCI world equity index, which tracks shares in 49 countries, was up 0.2 per cent at the time of writing of this report, while MSCI’s main European Index was up 0.3 per cent.
In commodities, oil rose for a second day on Wednesday, gaining more than 2 per cent, as a hurricane closed US offshore oil and gas production and an industry report showed US crude inventories decreased.
(With inputs from Reuters)
4:13 PM IST "Benchmark indices ended the day with gains, with most sectoral indices contributing to the gains. However, the continued border tensions and unabated virus infections limited the gains. Global cues were also positive as participants awaited policy statements from the US FOMC meeting. Any indication of increased bond-buying will be a positive trigger for the markets. Markets are expected to be in sync with global cues tomorrow. Upsides seem to be limited, considering the lack of fresh domestic triggers for the market"
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The S&P BSE Sensex ended 258.5 points, or 0.66 per cent higher at 39,303 levels while NSE's Nifty ended at 11,604.5, up 83 points, or 0.72 per cent.
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3:10 PM IST Shares of Dr Reddy jumped up to 4.4 per cent to Rs 4,639 on the BSE on Wednesday after the firm said it has been roped-in by Russia-based Russian Direct Investment Fund (RDIF) to distribute 100 million Covid-19 vaccine doses in India. READ MORE
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2:46 PM IST Shares of JB Chemicals & Pharmaceuticals (JB Chemicals) moved higher by 10 per cent to Rs 985 on Wednesday, thereby surging 19 per cent in the past two trading days after the company reported strong earnings driven by growth in exports, API, and chronic therapies in the domestic market, along with lower sales and marketing costs during the lockdown. READ MORE
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The revenue of Indian airlines fell by 85.7 per cent to Rs 3,651 crore during the first quarter of 2020-21 in comparison to the corresponding period a year ago due to COVID-19, said Civil Aviation Minister Hardeep Singh Puri on Wednesday.
Moreover, employee count at the Indian carriers went down from 74,887 on March 31 to 69,589 on July 31, a decrease of 7.07 per cent, Puri stated in a written reply to a question in Rajya Sabha. READ MORE
MARKET COMMENT | Vinod Nair, Head of Research at Geojit Financial Services
"Benchmark indices ended the day with gains, with most sectoral indices contributing to the gains. However, the continued border tensions and unabated virus infections limited the gains. Global cues were also positive as participants awaited policy statements from the US FOMC meeting. Any indication of increased bond-buying will be a positive trigger for the markets. Markets are expected to be in sync with global cues tomorrow. Upsides seem to be limited, considering the lack of fresh domestic triggers for the market"
SECTOR WATCH | Nifty Pharma index gains over 2%
MARKET AT CLOSE | Gainers and losers on the S&P BSE Sensex
CLOSING BELL
The S&P BSE Sensex ended 258.5 points, or 0.66 per cent higher at 39,303 levels while NSE's Nifty ended at 11,604.5, up 83 points, or 0.72 per cent.
MARKET CHECK
INDEX GAINER | HDFC Bank up over 2%
Russia ropes in Dr Reddy's to sell 100 mn Covid-19 vaccine doses; stk up 4%
Shares of Dr Reddy jumped up to 4.4 per cent to Rs 4,639 on the BSE on Wednesday after the firm said it has been roped-in by Russia-based Russian Direct Investment Fund (RDIF) to distribute 100 million Covid-19 vaccine doses in India. READ MORE
Heatmap: S&P BSE Sensex gainers and losers at this hour
MARKET CHECK:: Top 5 losers on the BSE at this hour
JB Chemicals rallies 19% in two days on strong June quarter numbers
Shares of JB Chemicals & Pharmaceuticals (JB Chemicals) moved higher by 10 per cent to Rs 985 on Wednesday, thereby surging 19 per cent in the past two trading days after the company reported strong earnings driven by growth in exports, API, and chronic therapies in the domestic market, along with lower sales and marketing costs during the lockdown. READ MORE
NEWS ALERT | RDIF- Dr Reddy's tie up to manufacture Sputnik V vaccine for India: Report
Revenues of Indian airlines fell 85.7% in April-June due to Covid-19: Puri
The revenue of Indian airlines fell by 85.7 per cent to Rs 3,651 crore during the first quarter of 2020-21 in comparison to the corresponding period a year ago due to COVID-19, said Civil Aviation Minister Hardeep Singh Puri on Wednesday.
Moreover, employee count at the Indian carriers went down from 74,887 on March 31 to 69,589 on July 31, a decrease of 7.07 per cent, Puri stated in a written reply to a question in Rajya Sabha. READ MORE
INDEX LOSER | NTPC drops over 1.5%
P&G Health declines 6% on profit booking post June quarter results
Shares of Procter & Gamble (P&G) Health slipped 6 per cent to Rs 5,330 on the BSE in the intra-day trade on Wednesday on profit booking. The company reported 10.8 per cent year on year (YoY) growth in net profit at Rs 48.90 crore for June quarter. READ MORE
NEWS ALERT :: Russia based-RDIF likely to supply 10 cr Covid-19 vaccine doses to India, reports Reuters
Rupee closing
Rupee ends higher at 73.52/$ vs Tuesday's close of 73.65 against the US dollar
MARKET CHECK:: Top 5 gainers on the BSE at this hour
MARKET UPDATE:: Sensex at day's high
BROKERAGE VIEW:: Prabhudas Lilladher on PVR
Rating: ACCUMULATE | TP: Rs 1,435
We continue to maintain our positive stance on the multiplex space and retain our ACCUMULATE rating on PVR by raising our target EV/EBITDA multiple to 12x (earlier 10x; LPA is 12x) as 1) recent rights issue of Rs3bn evades near term liquidity concerns and 2) reduction in fixed opex burn to Rs220-250mn per month indicates that cash drain will be lower till the time multiplexes are shut. Further, Tenet’s collection of US$200mn so far and PVR Lanka’s SPH/ATP ratio of 60% odd does not indicate any structural behavioral changes in content or F&B consumption pattern, reducing the skepticism on valuation. Maintain ACCUMULATE, with a revised TP of Rs 1,435.
More concerned for depositors, financial stability than borrowers: RBI Guv
“The primary concern in the banking system is the protection of depositors’ money. Ultimately, it is the depositors’ money that is being lent out,” governor Das said in an interaction with the governing council of the industry lobby group Federation of Indian Chambers of Commerce & Industry (FICCI). READ MORE
European indices open mixed
Aug Aviation Data :: Domestic air traffic down 76% YoY at 2.8 mn
Auto stocks rally; M&M surges 5%, TVS Motor, Bajaj Auto gain 3%
Shares of automobiles companies were in focus at the bourses on Wednesday, with the Nifty Auto index, the top gainer among sectoral indices, rising 2 per cent on the National Stock Exchange (NSE) on expectation of higher demand in festival season. Among individual stocks, Mahindra & Mahindra (M&M) surged as high as 5 per cent, while TVS Motor Company, Bajaj Auto and Tata Motors up 3 per cent each. Ashok Leyland, Hero MotoCorp and Eicher Motors also gained in the range of 1 per cent to 2 per cent on the NSE. READ MORE
BofA Securities, Credit Suisse, Goldman Sachs see more upside for equities
224 panelists with $646 billion worth of assets under management (AUM) participated in the survey conducted between September 3 and September 10. 199 participants with $601 billion AUM responded to the Global FMS questions and 90 participants with $181 billion AUM responded to the Regional FMS questions, BofA Securities said. READ MORE
Covid-19 hits IPO filings, only 11 offer documents filed with Sebi this yr
“When the economy is not doing that well, you do not need that much of growth capital. Quite a few sectors have been badly hit. Even those companies which want to do purely secondary sales will find merit in waiting if their sectors are badly impacted due to the pandemic,” said V Jayasankar, head of equity capital markets, Kotak Investment Banking. READ MORE
Reliance Ind's partly paid shares rally over 100% since listing on June 15
Shares of Reliance Industries (RIL), along with its partly paid (RIL PP) shares continued their upward movement with the market price of both these stocks hitting a fresh record high on the BSE on Wednesday. RIL's PP shares hit a new high of Rs 1,469.95, and has more-than-doubled from its closing price of Rs 689 on listing day (June 15, 2020). READ MORE
BROKERAGE VIEW:: Centrum Broking on Cement sector
Cement companies in the Centrum (CBL) coverage universe reported an average EBITDA margin of 25.2% in 1QFY21 versus nearly 23.8 per cent in 1QFY20. The higher margins were backed majorly by steady realisation gains of nearly 4% YoY (despite steep fall in demand) and cost savings. Energy cost (higher base) and postponement of expenses to be booked to the latter quarters (other expenses) aided cost control. The average fall in volume was nearly 32 per cent due to the Covid impact. Effectively EBITDA on an aggregate basis fell by 28 per cent however EBITDA/tn for the coverage companies jumped 6 per cent YoY. This implies a volume decline in FY21. Volume pressure following the expected revival in 2HFY21 will imply additional supply and hence we believe it will be challenging to sustain the elevated pricing in 1QFY21. This will keep FY21 earnings muted but recovery is expected in FY22 backed by a steady revival in cement demand.
Dalmia Bharat: Charting higher growth via expansions, acquisition
Investors have given a thumbs up after Dalmia Bharat announced the completion of the much awaited acquisition of Murli Industries on September 10, post market hours. Over three days, the stock is up 10 per cent and there could be more gains ahead. Dalmia Bharat had submitted a resolution/revival plan for Murli Industries' 3 million tonnes per annum (MTPA) plants under NCLT during 2017 and 2019, which has only fructified now. READ MORE
Indoco Remedies surges 28% in 4 days post USFDA nod for Apixaban tablets
Shares of Indoco Remedies gained 5 per cent to Rs 282 on the BSE in the morning trade on Wednesday, thereby surging 28 per cent in the past four trading days after getting approval from the US health regulator for blood-thinning drug Apixaban tablets. The stock of the pharmaceutical company was trading close to its 52-week high level of Rs 285, touched on April 13, 2020. READ MORE
NEWS ALERT | India is on the threshold of a big opportunity to break into global supply chains: RBI Governor Shaktikanta Das
-- Covid will leave long lasting scars on productivity levels around the world
-- Impediments to global value chain were identified post global finance crisis
-- India has tremendous scope to capitalise new opportunities which current opportunity has opened up
-- India's participation in global value chain is quite low and has scope for improvement
NEWS ALERT | Recovery is not yet fully entrenched: RBI Governor at FICCI NECM
-- Uptick noticed in June and July seems to have levelled off now for some sectors
-- Despite substantial increase in govt borrowing programme, surplus liquidity conditions have facilitated non-disruptive mobilisation of resources
NEWS ALERT | High-frequency indicators point to a trough in economic indicators. RBI Governor Shaktikanta Das
-- RBI stands battle ready and whatever measures are required will be taken up
BROKERAGE VIEW:: Prabhudas Lilladher on SpiceJet
Rating: HOLD | TARGET PRICE: Rs 53
Although the limited scale of operations remains insufficient to cover all costs thereby putting further pressure on the finances, SJET continues to look at new revenue streams like increasing cargo operations and charter operations (including wide-body long haul charters). Also, SJET continues to negotiate with Boeing regarding compensation for the grounded Boeing 737 Max. We shall keep a close eye on payment terms and the actual flow of compensation. We expect FY21 capacity to decline by 51% YoY while FY22/FY23 capacity is likely to be 86%/91% of FY20 capacity. We value the stock at 7x FY23 adj. EV/EBITDAR (earlier Sept-22) and arrive at a target price of Rs 53. Upgrade to Hold from Sell.
BROKERAGE VIEW:: Edelweiss Securities on Solar Industries
RATING: HOLD | TARGET PRICE: Rs 1,026
Covid-19 impacted Solar Industries’ (SOIL) Q1FY21 performance as lockdown and labour availability took a heavy toll on construction activities in the country. Though offtake from Coal India (CIL) and international operations supported volumes, housing & infra and institutional sales dipped 30-50% YoY. Factoring pick up in construction & infra activity and significant potential in SOIL’s defence business (which continues to lag due to delay in order inflow), we have revised up FY22E EPS by 4% while maintaining ‘HOLD’. The revised target price is Rs 1,026 (30x FY22E EPS; Rs 984 earlier).
BROKERAGE VIEW:: Edelweiss Securities on Jindal Stainless
RATING: BUY | TARGET PRICE: Rs 55
We remain upbeat on JSL’s prospects on likely improvement in operating performance and firm balance sheet. Taking cognisance of volume growth, we have revised up FY22E EBITDA 10%. Hence, we revise our TP to Rs 55 (earlier Rs 45). The stock is trading at an undemanding 4.1x FY22E EBITDA. We maintain ‘BUY/SO’.
BROKERAGE VIEW:: ICICI Securities on Apollo Hospitals
RATING: BUY | TARGET PRICE: Rs 1,936
We remain positive on AHEL’s long-term outlook considering its strong brand and pan-India presence in the hospital segment, margin expansion also supported by cost control, and 13.5% EBITDA CAGR over FY20-FY23E. Maintain BUY.
BROKERAGE VIEW:: ICICI Securities on Shree Cement
RATING: BUY | TARGET PRICE: Rs 25,800
With likely demand recovery post monsoons, SRCM may continue to gain market share backed by non-trade volume push in the North, strong demand in the East, and higher YoY utilisation in the South. This may offset the impact of the recent seasonal price fall and costs increases on overall EBITDA. Risk-reward is favorable post the recent stock price correction, in our view. We maintain our FY21E-FY22E EBITDA (~15% ahead of consensus) with an unchanged target price at Rs 25,800/share (17x FY22E EV/E). Maintain BUY.
RIL: Street's extreme reliance on single stock a cause for concern
The Indian stock market’s extreme reliance on just a single stock almost makes top-heavy US equities look healthy. A 164 per cent surge in Reliance Industries (RIL) — India’s largest stock by market capitalisation — accounted for about 43 per cent of the benchmark Sensex’s rally since equities bottomed on March 23. In comparison, the so-called FAANG stocks in the US made up 22 per cent of the S&P 500’s surge during the same period, according to the data compiled by Bloomberg. READ MORE
Adani Ent up 6% on report it shows interest in rebuilding New Delhi rly stn
The Rail Land Development Authority (RLDA) has invited online bids from private players to redevelop the station into an integrated commercial, retail, and hospitality hub. RLDA is currently working on 62 stations in a phased manner, while its subsidiary, Indian Railway Stations Development Corporation, has taken up another 61 stations. In the first phase, RLDA has prioritised prominent stations like New Delhi, Tirupati, Dehradun, Nellore, and Puducherry for redevelopment. READ MORE
Stuck with an investment in ITC? Here's how the stock looks on the charts
At ITC’s annual general meeting recently, Chairman Sanjiv Puri admitted that the focus on ESG (environmental, social and governance) investing had created headwinds for tobacco stocks globally. The stock of the company that projects itself as a diversified conglomerate with a portfolio of cigarettes, hotels, agri-commodities, paperboards and specialty paper, and fast moving consumer goods, has been a massive underperformer at the bourses thus far in calendar year 2020 (CY20). READ MORE
MARKET UPDATE:: Sensex inches higher
SpiceJet dips 2% after reporting Rs 593 crore loss in June quarter
Shares of SpiceJet dipped 2 per cent to Rs 52.40 on the BSE on Wednesday after the company reported a consolidated net loss of Rs 593 crore in the April-June quarter (Q1FY21), with air travel segment reporting loss of Rs 642 crore for the quarter. It had posted a net profit of Rs 261.7 crore in the same quarter of the previous year. READ MORE
Lakshmi Vilas Bank soars 10% on completion of due diligence with Clix Group
Shares of Lakshmi Vilas Bank zoomed 10 per cent to hit an intra-day high of Rs 22.35 per share after the bank said the mutual due diligence process between the lender and Clix Group was nearly complete. "The mutual due diligence is substantially complete, and the parties are in discussions on the next steps," the lender informed the exchanges. READ MORE
Sterlite Tech gains 5% as Co partners with Airtel to build digital network
This modern optical network, Sterlite Technologies said, will enable Airtel to deliver world-class customer experience through enhanced scalability, reduced latency, and improved bandwidth. The densely fiberised, future-ready network, will also form the foundation for many next-gen services such as 5G, fibre-to-the-home (FTTH), Internet of Things (IoT), enterprise networks, and Industry 4.0. READ MORE
Rupee opening
Rupee opens lower at 73.70/$ vs Tuesday's close of 73.65 against the US dollar
Nifty Auto index trades 2% higher in an otherwise flat market
BUZZING STOCK:: Mahindra & Mahindra top Sensex gainer at this hour
Indiabulls Housing Fin trades in the green post ratings update
>> Indiabulls Housing Finance on Tuesday said Brickwork Ratings has assigned a short-term rating of A1 plus to the company, signifying adequate degree of safety and low credit risk. and the long-term rating has been reaffirmed at AA plus.
Piramal Enterprises up over 2%
>> Blackstone Group and Partners Group Holding AG are the two remaining bidders vying for a controlling stake in Piramal Enterprises Ltd’s glass unit, Bloomberg reported
IRB Infra gains around a per cent
>> IRB Infrastructure on Tuesday said its arm has entered into a pact with NHAI for executing a stretch of Vadodara-Mumbai Expressway in Gujarat at a cost of Rs 1,755 crore. The project falls under Bharatmala Pariyojna Phase 1.
Lakshmi Vilas Bank zooms 10%
>> Lakshmi Vilas Bank (LVB), which had signed a preliminary, non-binding letter of intent with Clix Capital Services Private Limited and Clix Finance India Private Limited (collectively, Clix Group) in relation to the proposed amalgamation of Clix Group with the bank, informed on Tuesday that the mutual due diligence process was nearly complete.
SpiceJet trades marginally lower
>> Low-cost airline SpiceJet reported a pre-tax loss of Rs 593.4 crore in the first quarter of the current financial year, against a profit of Rs 261.6 crore in the same quarter of the previous year.
Hexaware Tech hits fresh 52-week high
>> IT firm Hexaware Technologies on Tuesday said market regulator Sebi has allowed the extension of closure of its delisting offer to September 16. The voluntary delisting process of Hexaware Technologies from the BSE and the NSE had started on September 9. The delisting offer with a floor price of Rs 264.97 per share was slated to close on September 15.
Aurobindo Pharma gains 3% on inking pact for Covid-19 vaccine development
>> The Council of Scientific and Industrial Research (CSIR) and Aurobindo Pharma Limited on Tuesday announced a collaboration to develop vaccines for Covid-19.
Sectoral trends at Open
Sensex Heatmap at Open
Opening Bell
Opening Bell
Top gainers and losers on S&P BSE Sensex at Pre-Open
Markets at Pre-Open
Markets at Pre-Open
BROKERAGE VIEW :: Kotak Institutional Equities on YES Bank
Fair value: Rs 10 | Reco: Sell
>> We reinstate coverage on Yes Bank with a SELL rating and Fair Value of Rs10. The bank has stabilized its key business operations and is on the path to recovery. However, this recovery is unlikely to be easy as the bank has the challenging task of rebuilding confidence and deliver RoE through an asset mix where
competence is untested. Execution risk leading to delayed recovery in return ratios is high while valuations leave limited room for disappointment.
BROKERAGE VIEW :: HDFC Securities on DR Reddy's Labs
Target price: Rs 4,670 | Reco: Add
We upgrade Dr Reddy’s to ADD (from REDUCE) and increase TP to Rs4,670. The growth visibility of the US business has improved with the strong momentum of new launches (12 launches in YTD FY21) including niche ones such as gCiprodex (first to market). The dependence of gCopaxone and gNuvaring on FY22 earnings reduces with the new product flow and favourable ruling of gVascepa (now in our estimates). Structural tailwinds in the API business (15% of revenues) will lead to double digit growth over the next few years. We increase our EPS forecast by 7-8% for FY21/22 to factor gVascepa launch and our target multiple to 22x (from 20x earlier) to factor improved visibility in the US and API business.
BROKERAGE VIEW :: Angel Broking on SpiceJet
Spicejet reported a net loss for Q1FY21 of Rs. 593.4 crore as compared to a profit of Rs. 261.7 crore in Q1FY20. During the quarter revenues were down sharply by 83% YoY to Rs. 514.7 crore. Company posted an EBITDAR loss of Rs. 166.5 crore for the quarter as compared to profit of 684.2 crore in Q1FY20 despite cost control. Total operating costs for the quarter excluding lease rentals were down by 70.6% YoY to Rs. 681.2 crore. During the quarter the company maintained its 16% market share with a load factor of 66% despite the Covid-19 impact which resulted in 90% YoY contraction in ASKM. During the quarter the company increased its focus on cargo as a result of which revenues from cargo increased by 144% YoY to Rs. 165.9 crore while air transport service registered a degrowth of 88% YoY to Rs. 348.8 crore. The numbers were along expected lines as it was expected that the company would post a loss in Q1FY21 given sharp fall in air traffic.
BROKERAGE VIEW :: MOFSL on PVR
CMP: Rs 1,265 | TP: Rs 1,460 (+15%) | Reco: Buy
>> PVR’s near-term profitability and business scale would be affected as cinemas would be the last to open and would operate with a much reduced capacity and limited timings.
>> Rental waivers come as a great relief for the company; however, other operational charges, such as sanitization costs, would increase post the reopening of the cinemas, along with expected decline in revenues in the highmargin F&B category.
>> PVR’s remains comfortable in terms of liquidity, with INR5.5b in cash (INR3b proceeds from rightsissue) and INR1.6b in undrawn credit lines available from
banks.
>> The recent shift in movies to OTT platforms and increased viewership raises concerns regarding increased competition from the OTT medium. However, once the multiplexes resume operations, a fixed exclusive window of movie viewing in cinemas and healthy flow of movie content, coupled with PVR’s scale and execution, should bode well for the company. Also, sharp cost reduction measures could aid the business in the long term.
>> We expect a revenue/EBITDA CAGR of 5%/3% for PVR over FY21–22E and value the company at 14x FY22E EBITDA to arrive at target price of INR1,460. Maintain Buy.
Top stocks to watch out for today
Hexaware Technologies: IT firm Hexaware Technologies on Tuesday said market regulator Sebi has allowed the extension of closure of its delisting offer to September 16. The voluntary delisting process of Hexaware Technologies from the BSE and the NSE had started on September 9. The delisting offer with a floor price of Rs 264.97 per share was slated to close on September 15.
SpiceJet: Low-cost airline SpiceJet reported a pre-tax loss of Rs 593.4 crore in the first quarter of the current financial year, against a profit of Rs 261.6 crore in the same quarter of the previous year.
Lakshmi Vilas Bank (LVB), which had signed a preliminary, non-binding letter of intent with Clix Capital Services Private Limited and Clix Finance India Private Limited (collectively, Clix Group) in relation to the proposed amalgamation of Clix Group with the bank, informed on Tuesday that the mutual due diligence process was nearly complete. READ MORE
>> Faster growth in the ‘Growth’ and ‘Pioneer’ categories would lead to contribution from these categories increasing from around one-third of sales combined to
around half of sales over the next three to four years. This would provide significant impetus to the topline over the medium term, something that has been lacking in recent years.
>> Technology implementation in distribution in recent years is boosting efficiency and elevating distributor ROI, enabling the company to retain channel loyalty in
the current uncertain times.
>> We maintain a Neutral rating on the stock from a one-year perspective on account of fair valuations (58.5x FY22 EPS) and uncertain near-term recovery, especially in the B2B part of the business (~15% of sales). However, initiatives to grow the Growth and Pioneer categories could go a long way in revitalizing medium-term sales and earnings growth, which have dropped significantly in the past four years. These metrics reported an 8–10% CAGR over the past four years v/s ~16% and ~20%, respectively, in the first six years of the decade.
BROKERAGE VIEW :: MOFSL on Indraprastha Gas
CMP: Rs 420 | TP: Rs 470 (+12%) | Reco: Neutral
>> IGL has ~75% of its volumes coming from CNG. This segment led growth for the last couple of years, led by the proliferation of CNG stations and higher conversions. However, opening up of schools and normalization of public transportation (for CNG) and commercial space like malls/restaurants (for PNG) may take more time.
>> Nevertheless, we reiterate our belief in the company’s volume trajectory (in line with management guidance), led by growth in NCR, intercity travel on CNG, higher conversions to CNG due to the BS6 implementation, and contributions from newer GAs.
>> Over the short-to-medium term, IGL could increase its sales volumes from new areas such as Rewari, Karnal, and Muzaffarnagar; Gurugram; and the newly
awarded (3) GAs in the 10th round – (a) Kaithal (Haryana), (b) Ajmer, Pali, and Rajsamand (Rajasthan), and (c) Kanpur, Fatehpur, and Hamirpur (Uttar Pradesh).
>> The stock trades at around 24.4x FY22 EPS of INR17.2 and EV/EBITDA of 15.1x in FY22. We value the company at 24x FY22 adj. EPS of INR17 and add value from JV to arrive at target price of INR470. Maintain Neutral.
Two pharma stocks that Ajit Mishra of Religare Broking is bullish on
Buy Aurobindo Pharma Limited
Last Close: Rs 818.80
Stop loss: Rs 775
We’re seeing noticeable traction in the defensive pack and Aurobindo Pharma is also trading in line with the move. After making a new record high in August 2020, it retraced to the support zone of the medium-term moving average(100 EMA) on the daily chart and formed a base. All indications are in the favor of a gradual rise from hereon. We advise accumulating in the mentioned zone. READ MORE
'Nifty needs to close above 11,585 to negate short-term bearish trend'
Nifty index closed at the highest level in the last 5 sessions. The index has retraced 61.8% of the entire down move seen from 11,794 to 11,185. Any level above 11,585 will also surpass the previous top resistance on the daily chart. Close above 11,585 would negate the bearish setup on the short term charts and in that case Nifty could move towards the recent high of 11,794. The way sectors are getting rotated. It seems that the chances of Nifty going up are higher than going down. Support for Nifty is seen at 11,383 and with that stop loss Nifty should be held long. READ MORE
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