In the broader market, the S&P BSE MidCap index gained over 1 per cent to 14,656.68 levels.
An across-the-board buying helped the benchmark indices settle with over a per cent gains on Tuesday. The S&P BSE Sensex rallied 478 points or 1.26 per cent to settle at 38,528 levels while NSE's Nifty closed the session at 11,385 levels, up 138 points or 1.23 per cent. India VIX declined over 4 per cent to 20.43 levels.
HDFC Bank, Reliance Industries (RIL), ICICI Bank, and Infosys contributed the most to the Sensex's gains. UltraTech Cement (up over 3 per cent) was the top gainer on the index while Tech Mahindra (down over 1 per cent) was the biggest loser.
In the broader market, the S&P BSE MidCap index gained over 1 per cent to 14,656.68 levels while the S&P BSE SmallCap index gained 1.3 per cent to 14,154 points.
European shares slipped on Tuesday as simmering political tensions between the United States and China escalated, while concerns over a deadlock on further US fiscal stimulus drove the dollar towards a two-year low against its rivals.
US stock futures were down 0.2 per cent, pointing to a weaker start on Wall Street and inching back slightly after tech stocks had pushed sister index the Nasdaq to a record high on Monday.
In commodities, oil prices steadied, hanging on to gains from the previous session thanks to high compliance with production cuts from members of the OPEC+ producer group.
Sensex ends 478 points, or 1.26 per cent, higher at 38,528, and the Nifty50 index ends at 11,385, up 138 points, or 1.23 per cent.
DLF, Sunteck: Realty stocks up on hope of improvement in consumer sentiment
A common theme among the brokerages regarding realty companies is the possible consolidation where bigger companies will be able to ride the storm and gain market share at the expense of smaller players. HDFC Securities, for instance, sees DLF, Prestige Estate, and Brigade Enterprises doing well in the residential segment. READ MORE
AGR Case :: By recognizing spectrum as security, DoT has acknowledged that spectrum can be assigned, says Salve
>> PSBs would only be lend if security is allowed that can be monetised
Peoples Bank of China among 357 investors to acquire stake in ICICI Bank
The government had in April notified new norms for FDI investments by neighbouring countries which would require approvals. It is not clear if portfolio investments need to go through some vetting process or the government will continue with this open route till the time no FDI approval is required. READ MORE
Gujarat aims for the skies, approves 70+ floor buildings in 5 cities
The government said skyscrapers would show the state’s mettle in infrastructure. With the construction of the skyscrapers, the state’s urban infrastructure will be able to accommodate the rising population and generate more employment for the dwellers. READ MORE
AGR Case :: Jio was looking to buy R.Comm spectrum, prior to insolvency proceedings, subject to DoT approving the spectrum sale, says Salve
>> Spectrum sharing took place between various operators after DOT allowed sharing under 2015 guidelines.
AGR Case :: These proceedings before SC are not apt for deciding claims of Govt as a creditor in the R.Comm insolvency, argues Salve
>> There is not even a well crystalized policy on the issue of sale of spectrum ubdrr IBC at this stage
AGR Case :: Would be premature to decide if spectrum can be sold or not under IBC, says Harish Salve for RComm
>> Only when the R.Comm resolution applicant moves DoT for spectrum sale, should the issue be decided at that stage.
>> UVARC, the top bidder for R.Comm, is not fronting for anyone. Infact, Jio has submitted that they are not interested in bidding for R.Comm.
>> UVARC's equity comes from public sector banks and public sector insurance cos.
AGR Case :: R.Comm insolvency was triggered by Ericsson, could not have been withdrawn even if Ericsson has paid, says Salve
>> CoC has accepted a resolution plan, resolution plan envisages auction of R.Comm spectrum subject to DoT nod
Alert: CoC is Committee of Creditors
AGR Case :: In 20 years, all kinds of manipulation and legal filings can take place, we can't allow like this, says SC
>> Harish Salve, you may raise technical points, but not technicalities will come in our way in enforcing recovery of AGR dues.
Alert: Harish Salve represents Reliance Communication
AGR Case :: There are huge dues payable, how can we let it go?, observes SC
>> We had directed payment within a certain period, Govt is seeking 20 years, what if cos go into insolvency.
>> We are fully conscious of the scope of proceedings, we will not exceed our power.
United Breweries: Re-opening of bars, cash reserves augur well for the stk
Emkay Global Financial Services, in a report dated August 17, noted that while the company's Q1FY21 performance was weak, it was largely in-line with expectations. "Q1 operational performance was largely in line, with sales falling 75 per cent and an EBITDA loss of Rs 9.6 crore. Volumes fell 77 per cent due to the loss of a peak period during the lockdown, coupled with continued shutdown of on-premise channels and increase in taxes... But these should reverse as volumes/utilisations improve. Input outlook remains benign, while the cost reduction has been strong," it noted. READ MORE
Rupee ends higher at 74.76 per US dollar vs Monday's close of 74.89/$
Berger Paints: Weaker Q1 show indicates premium valuation unjustifiable
Berger Paints’ (Berger’s) June 2020 quarter (Q1) profit performance, announced last Friday, was not only weaker than the Street’s expectation, but also worse than the numbers of market leader Asian Paints. This hurt sentiment towards Berger’s stock, which, at 60 times its FY22 estimated earnings, is currently trading around 16 per cent premium to Asian Paints, which is also three times in size. READ MORE
Consumer durable stocks rally in trade; Butterfly Gandhimathi zooms 15%
Shares of consumer durable companies, including household appliance manufacturers, witnessed sharp rally on Tuesday. The S&P BSE Consumer Durables index surged as much as 2.23 per cent during the trade. Among individual stocks, Butterfly Gandhimathi Appliances zoomed 15 per cent to Rs 157.90 on the BSE during the day. At 01:15 PM, the stock was trading 12 per cent higher at Rs 153.85. In comparison, the benchmark S&P BSE Sensex was ruling 0.64 per cent higher at 38,293.77 levels. READ MORE
Indigo, SpiceJet are on a breakout and ready to fly higher, charts suggest
Shares of Interglobe Aviation, the paremt company of IndiGo gained over 5 per cent in noon deals on Tuesday, a day before the airline starts operating its Hyderabad-Aurangabad flight. The coronavirus-enforced lockdown in late March had led to the suspension of domestic as well as international flights and services were partially restored only in May-end. READ MORE
MARKET CHECK:: Top 5 gainers on the BSE at this hour
Birlasoft leaps 18%, hits 52-week high as it inks pact with Microsoft
Birlasoft helps customers in manufacturing to accelerate their Industry 4.0 adoption; in BFSI to leverage Open APIs and automate both front-office and backoffice transformation; in Energy & Utilities sector to enhance field collaboration and real-time service excellence, optimize operations and improve asset performance; and in Life Sciences vertical to innovate faster, provide rich insights to achieve commercial excellence, and automate drug discovery and pharmacovigilance processes. READ MORE
Mukesh Ambani is on a shopping spree in race against Amazon
The Indian billionaire is looking to acquire several local online retailers to help expand product offerings, people familiar with the matter said, as he races to build his e-commerce platform and compete against Amazon.com Inc. Reliance Industries Ltd, Ambani’s oil, retail and telecommunications conglomerate, is in various stages of negotiations to either buy out or purchase stakes in Urban Ladder, an online furniture seller, Zivame, a lingerie maker, and Netmeds, which delivers medicine, the people said, asking not to be identified as the talks are confidential. There’s no certainty the deliberations may result in a deal, they added. READ MORE
BUZZING STOCK:: Grasim Industries surges over 8%
'Bond market investors are likely to chase yields in the coming months'
Bond markets have remained incredibly stable despite the record size of weekly borrowings. I do see market appetite waning in the second half of this fiscal. The RBI may need to step in with larger purchases soon to keep yields from rising. This size of weekly auction can be absorbed in the market only if there is confidence on low yields, else negative sentiments become self-fulfilling. I don’t think the RBI will let that happen – they have enough tools to anchor expectations and hold yields at, or near, current range. READ FULL INTERVIEW HERE
Despite 58% rally from March low, analysts still upbeat on this stock
For the quarter ended June 2020, the company reported around 50 per cent decline in its net profit at Rs 320.06 crore due to disruptions caused by the Covid-19 pandemic. Its total income increased by just 2.8 per cent to Rs 4,144.70 crore during the period. Still, most brokerages are optimistic on the stock and have raised their target prices by up to 40 per cent. Reason - adequate capital, diversified liabilities, cash buffers, and attractive valuations. READ MORE
Nifty Realty index in focus, up 3%
SBI Cards hits 52-week high as it raises Rs 500 crore via debt instruments
"The company has approved the allotment of 5,000 Fixed Rate, Unsecured, Rated, Taxable, Redeemable, Senior, Non-Convertible Debentures ("NCDs") of the face value of Rs 1,000,000 each, at par, under Series 21, aggregating to Rs 500 crores on private placement basis," it said in a regulatory filing. READ MORE
Vedanta falls 6% as HC refuses to allow reopening of Sterlite copper plant
Shares of Vedanta Limited dipped 6 per cent to Rs 120.20 on the BSE after the Madras High Court refuesd to allow reopening of Sterlite copper smelting plant in Tamil Nadu's Thoothukudi. A division bench of Justices T S Sivagnanam and V Bhavani Subbaroyan pronounced the verdict, seven months after reserving orders in the case. The court refused to stay the Tamil Nadu government's order shutting down Sterlite Copper plant in Thoothukudi. READ MORE
BROKERAGE VIEW:: YES Securities on Cochin Shipyard
RATING: BUY | TARGET PRICE: Rs 429
Given a healthy order backlog, CSL has shipbuilding revenue growth visibility till FY23 with planned execution of Rs 65bn from IAC. It stands to benefit from indigenous defence manufacturing, which would result in faster clearances & timely executions of new projects. The government’s focus on development of inland and coastal waterways infra is expected to spur the demand of ships for CSL over the long term. Expect EBITDA growth of 18% in FY21E-23E, however higher depreciation & lower other income would lead to 7% EPS CAGR. We expect CSL to yield benefits in the long term from ongoing investments of ~Rs28bn. Our estimates remain unchanged. Retain BUY with DCF based TP of Rs429 (Assumptions: Sales CAGR of 4.5% over FY20-FY30E, NOPAT margin: 9.3%, CoE: 12%, Invested capital turns: 2x).
BROKERAGE VIEW:: ICICI Securities on Greaves Cotton
Overall auto engine volumes may remain sluggish in the medium term due to BS-VI transition and economic slowdown amid Covid-19. While Bestway acquisition would expand E-3W base, new product launches in high-speed E-2W vehicles at Ampere and new business initiatives (CNG engines, aftermarket, B2C business) may provide much-needed growth uptick in the long term. We build revenue, PAT CAGR of -4.6%, -7.4%, respectively in FY20-22E. We value GCL (base business at 12.5x on FY22E, Ampere at 1.5x P/sales on FY22E) at Rs 80/share and maintain the HOLD rating.
BROKERAGE VIEW:: Emkay Global on United Breweries
RATING: BUY | TARGET PRICE: Rs 1,225
We cut FY21E earnings but retain FY22/23 estimates. UBL is well-placed to emerge stronger and gain share from the competition. Cost reduction and reduced competition along with volume recovery can drive strong margin gains. We maintain Buy with a TP of Rs 1,225.
BROKERAGE VIEW:: Emkay Global on Berger Paints
RATING: SELL | TARGET PRICE: Rs 450
Berger Paints has a strong track record with consistent performance. However, a 20% valuation premium to APNT with a similar growth outlook appears unjustified. We maintain Sell with a revised TP of Rs 450 (from Rs 430), rolling forwards to Sept’22E EPS.
BROKERAGE VIEW:: HDFC Securities on Dilip Buildcon
RATING: BUY | TARGET PRICE: Rs 466
We maintain BUY on Dilip Buildcon, with a target price of Rs 466/sh, given its strong and diversified order book of Rs 261 bn and continued focus on asset recycling. We have valued EPC business at 8x FY22E EPS and HAM at 1x P/BV.
Feel good investment: Social, sustainability bonds surge in Covid-19 world
According to a Moody's Investor Service report, record quarterly issuance of both social bonds at $33 billion and sustainability bonds at $19.1 billion drove the strong combined total. Though cumulatively, it is still modest compared to the last year. Green bond issuance, on the other hand, was $47.8 billion, a 26 per cent increase over the first quarter, but still modest compared with last year. “Combined social and sustainability bond volumes could now total $150 billion in 2020 as coronavirus (Covid-19) pandemic response efforts and heightened awareness of social issues related to healthcare and inequality continue to support issuance,” said the report. READ MORE
CG Power: Investors should keep an eye on progress in deal completion
The news of Tube Investments of India (TII) acquiring a controlling stake in CG Power boosted sentiment. CG Power has gained 30 per cent, while TII shares are up over 16 per cent since the announcement, with the Street viewing it as a win-win deal. CG Power gets a stronger parent, while TII gets a larger business and growth opportunity, albeit with its share of risk. CG Power, which provides power and industrial system-related services, has struggled largely with stress in its European operations. READ MORE
"...the anti-dumping duty imposed under this notification, with respect to China and Korea, shall remain in force up to and inclusive of the 17th November, 2020, unless revoked, superseded or amended earlier," the department of revenue said in a notification issued on Monday. Directorate General of Trade Remedies (DGTR) had requested for extension of the existing anti-dumping duty on the chemical imported from China and Korea. READ MORE
Balaji Amnies, Alkyl Amines: Specialty chemical stocks have more steam left
Balaji Amines Limited (BALAMINES): Since the counter hit a new all-time high, the rally has got even stronger. The price is not showing any weakness despite the Relative Strength Index (RSI) being in an overbought condition. The trend looks positive and even volumes support this movement. The immediate support comes at Rs 780 and then Rs 740 levels. The chart suggests Rs 1,000 levels could be scaled in the sessions ahead. READ MORE
PNB Housing Finance leaps 11% as board to consider fund raising tomorrow
Shares of PNB Housing Finance zoomed as much as 11.7 per cent to Rs 268.85 on the BSE on Tuesday as the company's board is set to meet tomorrow to consider fund raising. At 10:15 AM, the stock was trading 10.45 per cent higher at Rs 265.80 as compared to 0.57 per cent gain in the S&P BSE Sensex. Around 18.52 lakh shares have changed hands on the NSE and BSE, combined, so far. READ MORE
25% equity plans make less than 5% allocation to Reliance Industries
The Mukesh Ambani-led firm’s stock has more than doubled from its March lows and quadrupled since December 2016. It had a weighting of 14 per cent on the Nifty50 index as of July 31, and its market capitalisation was close to a tenth of the market cap of India’s listed universe. READ MORE
Bandhan Bank gains over 2% as RBI lifts restrictions on CEO's remuneration
At 9:34 am, the stock was trading 1.8 per cent higher at Rs 292.6 apiece on the BSE as against 205 points, or 0.54 per cent, rise in the benchmark S&P BSE Sensex. A combined 4.12 million shares had changed hands on the counter on the NSE and BSE till the time of writing of this report. READ MORE
Rupee opens higher at 74.78 per US dollar vs Monday's close of 74.89/$
Petronet LNG gains 5% after June quarter earnings, pares gain later
Shares of Petronet LNG gained as much as 5 per cent to Rs 267.70 apiece on the BSE on Tuesday after the company posted an 11 per cent decline in its consolidated net profit at Rs 499.79 crore for the quarter ended June 2020 (Q1FY21). The company had posted a profit of Rs 561.94 crore in the year-ago period. At 09:24 AM, the stock was trading over 2.5 per cent higher at Rs 261 on the BSE. In comparison, the benchmark S&P BSE Sensex was trading 0.5 per cent higher at 38,237.10 levels. READ MORE
RIL gains over 1% in early deals
BUZZING STOCK:: Zee Entertainment surges 5% ahead of Q1 results announcement later in the day
Despite a struggling economy, what is drawing people to the stock markets?
New account openings have been underpinned by a sharp rally in the stock markets. From March lows, the benchmark Sensex and the Nifty have rebounded more than 40 per cent. Several stocks in the broader markets are doubling in a matter of weeks. After the March sell-off, the market direction has largely been upwards, thanks to the aggressive stimulus measures taken by global central banks, especially the US Federal Reserve. This means, a majority of people who entered the market after March, may have made handsome gains. And this has prompted them to invest more and nudge others also to open trading accounts. READ MORE
MARKET CHECK :: Nifty tops 11,300
GPT Infraprojects bags order worth Rs 196 cr from RVNL
Spencers Retail's rights issue closes today
Orient Paper and Ind reports loss in Q1 vs profit last year
>> Net loss of the company reported at Rs 17.44 crore for the quarter ended June 2020 as against net profit of Rs 8.02 crore during the previous quarter ended June 2019.
Bandhan Bank advances 2%
>> The Reserve Bank of India (RBI) has lifted the restrictions imposed on the remuneration of private lender Bandhan Bank’s managing director and chief executive officer (MD&CEO) – Chandra Shekhar Ghosh, after the bank's promoter, Bandhan Financial Holdings, reduced its stake in the bank to 40 per cent.
HDFC Bank trades mildly lower
>> US-based Rosen Law Firm on Monday said it plans to investigate potential securities claims against HDFC Bank following allegations of sharing "materially misleading business information" with investors.
Result Impact | Petronet LNG gains 4%
>> The company has reported a net profit of Rs 499.79 crore, down 11 per cent against Rs 561.94 crore in the year-ago period.
Sectoral trends on NSE at Open
Sensex Heatmap at Open
Top gainers and losers on the S&P BSE Sensex at Pre-open
Markets at Pre-open
Markets at Pre-open
Top stocks to watch out for today
Bandhan Bank: The Reserve Bank of India (RBI) has lifted the restrictions imposed on the remuneration of private lender Bandhan Bank’s managing director and chief executive officer (MD&CEO) – Chandra Shekhar Ghosh, after the bank's promoter, Bandhan Financial Holdings, reduced its stake in the bank to 40 per cent.
HDFC Bank: US-based Rosen Law Firm on Monday said it plans to investigate potential securities claims against HDFC Bank following allegations of sharing "materially misleading business information" with investors.
Earnings today: A total of 36 companies including Hindustan Aeronautics, KNR Construction, and Zee Entertainment Enterprises are scheduled to report their June quarter earnings. READ MORE
BROKERAGE VIEW :: Kotak Institutional Equities on United Breweries
CMP: Rs 972 | Fair value: Rs 1,120 | Reco: Add
>> UBBL’s 1Q print was expectedly weak with volumes down 77%. GMs were impacted by inferior state mix and low plant utilization while sharp overhead cuts helped contain EBITDA loss. Resumption of normal growth trends could take a while as selective lockdowns continue and the on-premise channel remains shut. We do believe that the LT volume growth potential of the category remains intact.
>> We cut our FY2021-23E revenue estimates by 3-4% given the continued demand challenges. Our FY2022-23E EPS is cut by 6-7%; FY2021E sees an increase as we bake in the sharp cost cuts of 1Q. We model 29% volume decline for FY2021E followed by a swift recovery (+35% yoy) in FY2022E. Our estimates could be at risk if there are (1) further challenges with unlocking and continued on-trade restrictions and (2) irrational tax increases by states. Nevertheless, the LT story of low category penetration remains
BROKERAGE VIEW :: Kotak Institutional Equities on Berger Paints
CMP: Rs 542 | Fair value: Rs 430 | Reco: Sell
>> Berger reported 46% yoy decline in revenues, 70% decline in EBITDA and 91% decline in net profit. We increase our FY2021E EPS by 8% as we incorporate better-than-estimated recovery of revenues but broadly maintain FY2022-23E EPS. We rollover and revise FV to Rs430 (Rs410 earlier) valuing Berger at 42X Sep-22E earnings.
>> The stock is trading at 56X FY2022E earnings that factor in 8.3% revenue CAGR and 245 bps EBITDA margin expansion over FY2020-22E; valuations are a tad rich on absolute as well as relative basis.
>> We increase FY2021E EPS by 8% and broadly maintain FY2022-23E earnings. We now model 8.3% revenue CAGR and 245 bps margin expansion over FY2020-22E. Berger has delivered an impressive well-rounded performance over the past few years and emerged as a credible #2 player in decorative paints. The story is good but the stock is trading at about 56X PE (FY2022E); about 10% premium to APNT
BROKERAGE VIEW :: Kotak Institutional Equities on NTPC
CMP: Rs 95 | Fair value: Rs 130 | Reco: Buy
>> NTPC reported a comprehensive earnings performance, with growth in adjusted PAT of Rs31.4 bn (+20% yoy) aligned to the growth in underlying regulated equity. Lower-than-estimated rebate of Rs8 bn recorded as extraordinary, in comparison Rs13.6 bn factored by us through revenues, resulted in a sharp earnings beat. NTPC remains confident of a scheduled commissioning of 10 GW of capacities under construction that will help the company report 14% CAGR in earnings between FY2020 and FY2023E.
>> Maintain BUY rating with revised fair value of Rs130/share (from Rs140/share), noting inexpensive valuations at 0.7X P/B and 6X on P/E on FY2022E earnings. We have revised our earnings downwards by 1% for FY2021E factoring lower generation in FY2021E that has a larger impact on the revenues than on the PAT.
BROKERAGE VIEW :: Antique Stock Broking on VRL Logistics
CMP: Rs 151 | Target price: Rs 175 | Reco: Hold
>> VRL Logistics (VRLL) reported weak 1Q with a topline decline of 70% YoY with Goods/Passenger segment decline of 65%/95% YoY. Company reported EBITDA loss of INR339mn in 1Q (Antique est: loss of INR116mn) and PAT loss of INR627mn (Antique est: loss of INR491mn). Management highlighted 1) GT segment has reached 75-80% normalcy levels in 2Q and has turned PAT positive in July. It expects flat YoY revenue run-rate only by Dec-20; 2) Tonnage in segments like pharma, Agri, construction/building material (like paints etc) are showing steady improvement; 3) No further capacity related capex to be incurred due to excess capacity; 4) Focus on cost reduction to continue to manage liquidity; management targets PAT positive for FY21 despite sharp loss in 1Q; 5) DFC rollout to not impact VRL's business due to its presence in to small parcels business segment.
>> Post 1Q, we maintain our estimates and fair value target for the stock at INR175, at 20x P/E. Asset heavy and high fixed cost model to weigh on financial performance in FY21, FY22 performance could track macro recovery.
BROKERAGE VIEW :: Antique Stock Broking on Voltas
CMP: Rs 629 | Target price: Rs 690 | Reco: Buy
>> Voltas' outperformance with respect to both industry and our expectation was a result of its undisputed leadership in the Room AC (RAC) industry with ever growing moats. As the RAC market share surpasses quarter of the overall industry, the company is well geared to capture incremental value in the promising and high growth AC industry. While EMP continues to drag revenue, a stuffed up order book provides respite in the current scenario.
>> The company has ramped up investments and its efforts to drive next leg of growth through the Voltbek JV where the focus lies on localization and a subsequent ramp up in distribution to support the increased domestic manufacturing. We remain positive on the given leadership position in the fast growing AC industry while identifying a clear strategy for the next lap through Voltbek. We have maintained BUY with a revised target price of INR 690 (INR 600 earlier) based on SOTP valuation.
BROKERAGE VIEW :: Antique Stock Broking on NTPC
CMP: Rs 95 | Target price: Rs 130 | Reco: Buy
>> In the quarter under review, NTPC had a Coal/Gas/Hydro PAF of 96%, 93.26%, 109% respectively. With 50.3GW under standalone operations, which is up by 3.8GW annually, the company reported a net profit of INR24bn, up 26% annually (against our estimate of INR19bn). In 1QFY21, the company has written off INR8bn (our estimate: INR13.63bn) rebate, in-line with lockdown related policy.
>> We believe re-rating drivers of operational efficiency improvements; capacity additions and coal mining profits are in place for NTPC. However, in the near-term scenario-with stretched receivables, rebates and other policy hurdles, the regulated equity multiple will not be higher. We continue to value the company at a TP of INR130, while valuing 1.3xPB FY22E for regulated asset base and subs/CWIP at 0.7x, we maintain BUY. Risks: 1) coal supply shortage impacting PAF and policy changes on receivables.
BROKERAGE VIEW :: Motilal Oswal Financial Services on Petronet LNG
CMP: Rs 254 | Reco: Buy
>> 1QFY21 EBITDA stood at INR9b (v/s est. +5%; -11% YoY and +30% QoQ). The lower interest cost was offset by lower other income.
>> Reported PAT stood at INR5.2b (v/s est. +4%; -7% YoY and +45% QoQ).
>> Post lifting of the lockdown, RLNG demand recovered gradually. Since the first week of Jun’20. Dahej terminal is operating at 100% capacity of 17.5MMTPA (63MMSCMD) v/s Jan-Feb’20 average 92% capacity of ~58MMSCMD, and Kochi terminal is operating at 20% capacity of ~3.57MMSCMD.
BROKERAGE VIEW :: Motilal Oswal Financial Services on IIFL Wealth
CMP: Rs 1,065 | TP: Rs 1,240 (+16%) | Reco: Buy
>> Over the past decade, IIFLWAM has evolved into one of the best wealth management franchises in the country, giving tough competition to the private sector and foreign banks. Over the past five years, it has become the alternate asset manager in India with unique product offerings. With IIFL ONE, the company is looking to revolutionize the way wealth management is offered in India. Traction on IIFL ONE remains healthy; however, improving the retention ratio remains the moot point. While in the near term, net inflows could be modest, we expect it to improve over the medium term. While there could be some pressure on profitability due to migration to IIFL ONE (net yields of 40bp in IIFL ONE v/s 50-60bp for other distribution assets), it would make revenues more stable and less susceptible to regulatory pressures. We largely maintain our FY21/22E EPS estimates. Buy with TP of Rs 1,240 (25x FY22E EPS).
BROKERAGE VIEW :: Motilal Oswal Financial Services on Glenmark Pharma
CMP: Rs 481 | TP: Rs 495 (+3%) | Reco: Neutral
>> Despite reduced sales in India (DF)/the US/ROW/LATAM, Glenmark Pharma (GNP) delivered better-than-expected 1QFY21 performance led by product mix change and sharp reduction in other opex.
>> We have raised our EPS estimate by 19%/14% for FY21/FY22E to factor in the cost savings and better traction in DF/Europe/ROW/LATAM with ease of the lockdown. We expect 17% earnings CAGR over FY20-22E, led by sales CAGR of 7%/5% in India/Europe and margin expansion of 380bp. We value GNP at 14x 12M forward earnings to arrive at a price target of INR495/share. While earnings trajectory is improving, we are yet see any meaningful improvement in return ratios
BROKERAGE VIEW :: Motilal Oswal Financial Services on Voltas
CMP: Rs 629 | TP: Rs 700 (+11%) | Reco: Buy
>> We expect system-level inventory to normalize by Nov–Dec’20; hence, FY22E should turn out to be a normal year. We cut our FY22 EBITDA estimates by 5% as we lower our margin estimate in the Projects business to model-in some conservatism. We increase our multiple for the UCP segment to 40x from 35x earlier owing to its relative outperformance v/s white goods companies. Voltas remains our preferred play in the underpenetrated AC industry in India. Maintain Buy, with TP of INR700 (prior: INR600) as we roll over to Sep’22E
BROKERAGE VIEW :: Motilal Oswal Financial Services on United Breweries
CMP: Rs 973 | TP: Rs 820 (-16% ) | Reco: Sell
>> The Alcohol segment is being affected by a series of events, such as: (a) weak demand, (b) very sharp excise increases by state governments, (c) the unlikelihood of bars and restaurants re-opening anytime soon, and (d) worsening state finances potentially pressuring working capital.
>> The capital-intensive nature of the business (depreciation at ~23% of EBITDA even in FY20) implies the PAT impact would be even sharper than the sales and EBITDA impact.
>> Steep ROCE decline from already unimpressive levels of 12.8% in FY20 and a weak earnings outlook, combined with expensive valuations of 82x FY22 EPS and 32.7x EV/EBITDA, have led us to maintain a Sell rating on the stock, with TP of Rs 820 (targeting 24x Sep’22 EV/EBITDA, a 20% discount to peers).
BROKERAGE VIEW :: Motilal Oswal Financial Services on Eicher Motors
CMP: Rs 21,124 | TP: Rs 24,750 (+17%) | Reco: Buy
>> FY21 would be another challenging year for the domestic 2W industry as well as for EIM due to the COVID-19 pandemic and its impact. As a result, along with volume pressure, RE production will also be at higher risk due to its singular location unlike other OEMs, which have plants located in multiple locations. We estimate volumes to decline ~10.4% in FY21 and grow 18.4% in FY22E.
>> Technical parity with other high-end motorcycles, strong product pipeline and network expansion in both domestic and export market has equipped RE to capture the benefit of the upcoming favorable product cycle.
>> The stock trades at ~41.4x/25.7x FY21E/FY22E consol. EPS. We believe BS6 transition would be an inflection point for RE as a completely new improved platform could drive revival of the brand.
BROKERAGE VIEW :: Motilal Oswal Financial Services on NTPC
CMP: Rs 95 | TP: Rs 139 (+46%) | Reco: Buy
>> NTPC reported strong underlying numbers. This was highlighted by the high plant load factor (PLF) incentives for the co. despite lower power demand. Adj. PAT (excl. fixed charge under-recoveries) was up 23% YoY to Rs 3320 crore.
>> Commercialization at 5.3GW in FY20 was at an all-time high. With the addition of THDC and NEEPCO, and continued pickup in capitalization, we expect a 9% earnings CAGR over FY20–23.
>> NTPC commercialized 5.3GW of capacities for FY20 – the highest ever in a single fiscal year – and is guiding for 5–6GW p.a. to be capitalized for the next three to four years. Capitalization has picked up pace, and we expect it to drive a regulated equity CAGR of 11% over FY20–23E and boost RoE (+120bps accretion). Furthermore, muted power demand, coupled with production ramp-up at Coal India’s mines, has led to an increase in coal stocks at power plants and improved plant availability factors. Thus, we expect overall FC u/r to remain low – albeit some machine-related u/r may occur from time to time. The stock trades attractively at a FY22 P/BV of 0.7x and div. yield of ~7%
Trading strategies by Nilesh Jain of Anand Rathi
BUY NIFTY | TARGET: 11,400 | STOP LOSS: 11,140
The Nifty index is consolidating from the past couple of sessions and also finding support near 11,100 zones. The nifty index also formed a dragonfly Doji candlestick pattern on the daily chart which is considered as a bullish reversal candle. The momentum indicators and oscillators on the weekly scales are still in buy mode which hints of some buying at lower levels. READ MORE
FII/FPI & DII trading activity on NSE, BSE and MSEI
Oil edges lower as suppliers try to hold line on output cuts
>> Oil prices edged lower on Tuesday, mostly holding onto overnight gains after OPEC+ said the producer grouping is almost fully complying with output cuts to support prices amid a drop in demand for fuels due to the coronavirus pandemic.
>> Brent crude was down 6 cents, or 0.1%, at $45.31 a barrel, after gaining 1.3% on Monday.
>> US crude was down 8 cents, or 0.2%, at $42.81 a barrel, having risen 2.1% in the previous session.
SGX Nifty update
>> At 8:12 am, the index was at 11,283 level, down 5 points or 0.04 per cent.