MARKET WRAP: Sensex slips 394 pts amid weak global cues; RIL declines 1.7%

Topics Markets | sbi | L&T Finance

NSE's Nifty ended at 11,312 levels, up 96 points, or 0.84 per cent. (Photo: Kamlesh Pednekar)
After rallying for three straight days, the domestic stock market came under selling pressure on Thursday amid weak global cues. The S&P BSE Sensex lost 394 points, or 1 per cent to settle at 38,220 while NSE's Nifty ended at 11,312 levels, up 96 points, or 0.84 per cent. India VIX rose over 4 per cent to 20.80 levels. 

HDFC Ltd (down over 2 per cent) ended as the biggest loser on the Sensex while NTPC (up nearly 7 per cent) was the top gainer. 

Of 30 constituents, 25 ended in the red while the other five settled in the green. Reliance Industries (RIL) contributed the most to the Sensex's fall, followed by HDFC, ICICI Bank, and HDFC Bank. 

The broader market, however, ended with decent gains. The S&P BSE MidCap index added 0.87 per cent to settle at 14,869.42 levels while the S&P BSE SmallCap index ended at 14,421.54, up 0.72 per cent. 

Among sectoral indices on the NSE, Nifty Private Bank index slipped over 1 per cent while Nifty Bank index fell 1.3 per cent to 21,999. Nifty Media, on the other hand, rose over 3 per cent to 1,598.65 levels.

Global markets 

Asian and European share markets fell on Thursday after the US Federal Reserve’s latest meeting minutes highlighted doubts about the recovery of the world’s largest economy and knocked Wall Street from recent record highs.

MSCI’s broadest index of Asia-Pacific shares outside Japan had its biggest daily decline in five weeks while the MSCI world equity index, which tracks shares in 49 countries, was down 0.6 per cent at the time of writing of this report. 

The pan-European STOXX 600 was down 0.9 per cent and London’s FTSE 100 fell 0.8 per cent.

In commodities, oil prices fell on demand concerns driven by cautious views from OPEC+ producers and the US Federal Reserve regarding economic recovery from the coronavirus pandemic.

(With inputs from Reuters)

3:40 PM IST COMPANY PRICE(rs) 52 WK HIGH CHG(%) ABB POWER PRODUC 1059.00 1099.35 5.83 ATUL 5750.05 5778.50 2.39 CCL PRODUCTS 266.00 278.95 -2.28 ESSEL PROPACK 291.50 299.70 3.83 J B CHEM & PHARM 787.35 811.50 -1.12 » More on 52 Week High

3:39 PM IST

3:38 PM IST

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3:36 PM IST Sensex ends 394 points, or 1.02 per cent, lower at 38,220, and Nifty closes at 11,312, down 96 points, or 0.84 per cent.

3:28 PM IST

3:27 PM IST >> Unless dues are paid, nobody can start using the spectrum.   >> Can a liability like AGR be wound up in, under the guise of selling spectrum under IBC.

3:26 PM IST With unprecedented amounts of liquidity pumped into markets by the US Federal Reserve and other central banks, investments that would have otherwise been considered risky at a time of an economically-devastating pandemic have turned attractive. READ MORE

3:17 PM IST >> And after sale of spectrum, the new user will have extinguished any pending demand against the spectrum in question.

3:13 PM IST >> License agreement recognises right to use as an asset.    >> I have the right to transfer the right to use the spectrum.

3:09 PM IST >> Claims of DoT for deferred spectrum dues have not been upheld to be current dues.

3:07 PM IST

LIVE UPDATES

Stocks that hit 52-week high on BSE in an otherwise subdued session today

COMPANY PRICE(rs) 52 WK HIGH CHG(%)
ABB POWER PRODUC 1059.00 1099.35 5.83
ATUL 5750.05 5778.50 2.39
CCL PRODUCTS 266.00 278.95 -2.28
ESSEL PROPACK 291.50 299.70 3.83
J B CHEM & PHARM 787.35 811.50 -1.12
» More on 52 Week High

Sensex gainers and losers at close


Nifty sectoral indices at close


Markets at close


Markets at close

Sensex ends 394 points, or 1.02 per cent, lower at 38,220, and Nifty closes at 11,312, down 96 points, or 0.84 per cent.

BUZZING STOCK:: Thirumalai Chemicals up 12%


AGR Case :: Spectrum trading is different from sale of spectrum in IBC, observes SC

>> Unless dues are paid, nobody can start using the spectrum.
 
>> Can a liability like AGR be wound up in, under the guise of selling spectrum under IBC.

Bulls move deeper on most Asian currencies on recovery hopes: Report

With unprecedented amounts of liquidity pumped into markets by the US Federal Reserve and other central banks, investments that would have otherwise been considered risky at a time of an economically-devastating pandemic have turned attractive. READ MORE

AGR Case :: SC says, extremely worried that almost entire AGR dues will be wiped out in the IBC process.

>> And after sale of spectrum, the new user will have extinguished any pending demand against the spectrum in question.

AGR Case :: Right to use spectrum is an intangible good under IBC that can be sold, says Ravi Kadam

>> License agreement recognises right to use as an asset. 
 
>> I have the right to transfer the right to use the spectrum.

AGR Case :: DoT is seeking payment of deferred spectrum dues, as current dues and therefore payable, says Kadam for Aircel

>> Claims of DoT for deferred spectrum dues have not been upheld to be current dues.

MARKET UPDATE:: S&P BSE MidCap index surges 0.9%


ICICI Bank's Rs 15,000 cr equity raise is credit positive: Moody's

It was an important development since the ongoing economic slowdown, exacerbated by the disruptions from the coronavirus outbreak, will have a negative effect on the bank's asset quality and pressure profitability and capital, it added. READ MORE

Hotel re-opening hope post Covid-19 fires up EIH, Lemon Tree, Chalet Hotels

According to reports, the Delhi Disaster Management Authority on Wednesday approved re-opening of all hotels in the capital besides allowing weekly markets on a trial basis. All these will resume with social-distancing guidelines and and preventive measures. READ MORE

Aarti Drugs leaps 15%, hits new high as board approves 3:1 bonus shares

Shares of Aarti Drugs surged as much as 15.73 per cent to a lifetime high of Rs 2,790 on the BSE on Thursday after the company's board approved issuing 3 bonus equity shares for every one fully paid-up equity share held. "The Board of Directors has approved the following subject to approval of the Shareholders: a) Increase in authorized share capital of the Company from Rs. 25,00,00,000/- to Rs. 120,00,00,000/- by creation of additional 9,50,00,000 Equity Shares of Rs. 10/- (Rupees Ten only) each. b) the issuance of fully paid up Bonus Share in the ratio of 3:1," the company said in a filing to exchanges today. READ MORE

AGR Case :: Right to use spectrum is an asset, says Ravi Kadam for Aircel

>> To keep company as a going concern, right to use will be sold on approval of the resolution plan. 
 
>> Resolution applicant is UVARC

AGR Case :: SC observes, want details from DOT of spectrum allocated to R.Comm, Aircel since 1999.

>> Says, We want details of all instances of spectrum sharing.

>> Asks, if Aircel looking to sell spectrum under IBC?

AGR Case :: Has Airtel paid AGR dues for spectrum bought from Aircel?, asks SC

>> Kapil Sibal, appearing for Airtel, says: Have paid all relevant dues wrt to spectrum trading, have paid Rs 18,004 cr of AGR dues.

AGR Case :: Since 8 April 2016, there have been 8 instances of spectrum trading with Bharti, says Ravi Kadam for Aircel Monitoring Committee

>> DoT had approved the sale, had raised demand for dues.

Rupee closing

Rupee ends lower at 75.03/$ vs Wednesday's close of 74.82 against the US dollar

Is India inching closer to inclusion in the Global Bond Index?

Higher than expected domestic inflation is causing a section of the market to believe that we could possibly be at the bottom of the interest rate cycle. The Overnight Index Swap (OIS) markets are beginning to price out any further accommodation. Despite the sentiment in the bond index turning around post the Monetary Policy Committee (MPC) leaving rates unchanged and after partial devolvement of benchmark security on primary dealers (PDs), the Reserve Bank of India (RBI) has refrained from announcing an open market operation (OMO) so far. READ MORE

NEWS ALERT | Aarti Drugs’ board approves issuing 3 bonus equity shares for every 1 fully paid-up equity share held


BUZZING STOCK:: NHPC jumps over 9%


10-year bond yields climb back to 6% as Reserve Bank of India goes silent

A conspicuous silence from the Reserve Bank of India regarding support for the nation’s bonds has left traders wondering whether the recent gains in yields is a new normal. The central bank may be trying to increase the attraction of sovereign debt by letting yields rise, according to PNB Gilts Ltd. The benchmark 10-year bond yield advanced to 5.97% on Wednesday, the highest since May. READ MORE

Top losers on BSE at this hour

COMPANY PRICE(rs) CHG(%)
MUTHOOT FINANCE 1196.55 -4.73
HIND.AERONAUTICS 1215.30 -3.68
INDOSTAR CAPITAL 251.85 -3.49
MOTHERSON SUMI 120.75 -3.40
HERITAGE FOODS 357.30 -3.37
» More on Top Losers

Nifty Metal index trades higher in an otherwise subdued session


BROKERAGE VIEW:: Anand Rathi Shares on Zee Entertainment

Pulled down by a 65% y/y fall in ad revenue to Rs 4.21bn largely due to the pandemic and market-share loss (Q1 FY21 market share: 15.8%, 18.3% the quarter prior) in certain markets, Zee Entertainment’s revenue plunged 34.7% y/y to Rs 13.12bn. Its subscription revenue grew 5% y/y to Rs 7.44bn. EBITDA declined 67% y/y to Rs 2.2bn. The reported margin was 16.8%, vs. 32.9% a year back. No fresh episodes of existing shows were produced in the first two months, leading to a drop in programming cost. This was partially offset by a content shot at homes and the purchase of licensed content for the linear and digital businesses. Besides, amortisation cost of movies and digital shows continues. At the ruling market price, the risk-reward is favourable. We maintain our Buy rating, with an unchanged target price of Rs 220.

NEWS ALERT :: RBL Bank board approves raising Rs 1,556 cr via pref issue

>> To allot 8.8 cr shares at Rs 177/sh

European indices trade lower in opening deals


MARKET CHECK


KNR Constructions soars 17% in 3 days; analysts see 21% upside in stk price

On Tuesday, the company reported consolidated net profit of Rs 46.68 crore for the recently concluded quarter, as against profit of Rs 42.89 crore in the year-ago period. Sequentially, the profit declined from Rs 84.82 crore reported in March quarter of FY20. The profit before tax stood at Rs 59.28 crore, while revenue from operation came in at Rs 522.52 crore. READ MORE

Packaging stocks in focus; Everest Kanto up 10%, Cosmo Films hits new high

Cosmo Films rose 1.82 per cent to its fresh all-time high of Rs 488.95 on the BSE after announcing its June quarter earnings (Q1FY20) yesterday. The company posted a 69.15 per cent year-on-year (YoY) increase in consolidated net profit at Rs 46.99 crore for the first quarter ended June 2020. READ MORE 


BROKERAGE VIEW:: Edelweiss Securities on Tata Power

Tata Power's significant business restructuring plan (including deleveraging) along with rejig of its growth model is likely to have overarching implications from financial and ESG perspective–gradual re-rating will continue and the perception will change to growth orientation. We revise up FY22E EPS by 10 per cent and SOTP by 25 per cent as we factor deleveraging and restructuring benefits. Maintain ‘BUY’ with revised TP of Rs 75 (earlier Rs 60).

RIL, HDFC contribute the most to Sensex's fall today


IndiaMART InterMESH gains 4% after MOFSL initiates coverage with "BUY"

IndiaMART operates in a sweet spot, wherein high-growth SMEs fuel the top line and a subscription-based model limits the risk of default. Margins mirror the positive operating leverage from revenue growth in the business, the brokerage said in its report. READ MORE 


NEWS ALERT :: Govt may invite bid for stake sale in SCI by October 15: Agencies


MARKET CHECK:: Top 5 gainers on the BSE at this hour


BUZZING STOCK:: Essel Propack up 5%


Gift vouchers, trading credits: Brokers scramble to attract clients

With nearly a million accounts being opened every month, brokers are scrambling to attract investors towards their platform. Amazon gift vouchers, trading credits, and bundled offerings are some of the sops being doled out. Besides, many players have sweetened their referral programmes, incentivising their existing clients to bring new customers. READ MORE

Power stks zoom as Cabinet ups lending limits for discoms; Tata Power up 8%

Currently, discoms can borrow only up to 25 per cent of their previous year’s working capital under the limits stipulated in the UDAY scheme. Borrowing were tied to discoms’ operational performance to ensure discipline. The limit, however, has now been relaxed for a one-time lending. This would help those discoms that have exhausted their borrowing limits and will assist power retailers to clear their dues to generation and transmission companies to help reduce stress in the sector. READ MORE

Most sugar stocks rise in trade; Shree Renuka Sugars gains over 3%

Shares of most sugar companies were trading in the positive territory on Thursday even after the government raised the sugar cane floor price by 3.6 per cent. The Union Cabinet has approved raising the price that sugar mills must pay for sugarcane in the next season beginning October 1, to Rs 285 per 100 kg, up from 275 rupees a year earlier, said media reports. READ MORE

Adani Enterprises up 2% as Cabinet clears leasing of 3 AAI airports to Co

Shares of Adani Enterprises gained 2.53 per cent to Rs 245.10 on the BSE on Thursday after the Union government announced the leasing of three Airports Authority of India (AAI)-run airports to the company. Yesterday, Union Environment Minister Prakash Javadekar announced that the government has given its go-ahead to lease out Guwahati, Thiruvananthapuram, and Jaipur airports through public-private partnership (PPP). READ MORE

Muthoot Finance shares slip 5% after June quarter result; brokerages mixed

For the quarter ended June 2020, Muthoot Finance posted a 53.46 per cent rise in its consolidated net profit at Rs 853.51 crore against Rs 556.19 crore in the year-ago period. Sales rose 25.96 per cent to Rs 2,604.48 crore in the quarter ended June 2020 as against Rs 2,067.67 crore in the corresponding quarter of the previous fiscal.  READ MORE

HAL, IRCTC decline up to 4% on report govt mulls stake sale via OFS

Individually, HAL shares slipped 3.7 per cent to quote at Rs 1,215 per share on the BSE in the intra-day trade. At 9:47 am, the stock was 2.5 per cent lower at Rs 1,230 apiece, as against 0.76 per cent decline in the benchmark S&P BSE Sensex. READ MORE

Edelweiss on Infosys

Conference call notes



Edelweiss on Emami

Emami is the flagship company of the Emami Group. It is a leading FMCG player in India, operating in certain attractive segments such as skin care and hair oil. Over the years, Emami has innovated and built blockbuster brands such as Navratna, Boroplus, and Fair & Handsome and acquired ayurvedic brands such as Zandu and Kesh King where turnaround should be expected soon.

As things normalise, we expect revenue growth to improve as the rural business recovers, wholesale dependence recedes and product relaunches gain desired traction. Furthermore, alleviation of promoter-level pledging concern and launches in the health & hygiene space are added positives. We maintain ‘BUY/SO’

Tech View: Here's how to avoid getting caught in a 'Bear Trap' while trading

Simply put, a bear trap is a technical pattern that occurs when the performance of a stock or an index wrongly signals a reversal of a rising price trend. At times, such reversals instead turn into follow-up buying, thus trapping the sellers in their short positions. The psychology behind this whole process is called a “Bear Trap”. READ MORE HERE

stock market, market rebound, banking stocks, markets

Rupee Opening

Rupee opens lower at 74.98 per US dollar vs Wednesday's close of 74.82/$

Anand Rathi on Zee Entertainment

Pulled down by a 65% y/y fall in ad revenue to Rs 4.21bn largely due to the pandemic and market-share loss (Q1 FY21 market share: 15.8%, 18.3% the quarter prior) in certain markets, Zee Entertainment’s revenue plunged 34.7% y/y to Rs 13.12bn. Its subscription revenue grew 5% y/y to Rs 7.44bn. EBITDA declined 67% y/y to Rs 2.2bn.

The reported margin was 16.8%, vs. 32.9% a year back. No fresh episodes of existing shows were produced in the first two months, leading to a drop in programming cost. This was partially offset by content shot at homes and purchase of licensed content for the linear and digital businesses. Besides, amortisation cost of movies and digital shows continues. At the ruling market price, the risk-reward is favourable. We maintain our Buy rating, with an unchanged target price of Rs 220

Anand Rathi on Voltamp Transformers

Impacted by nationwide-lockdown, Voltamp’s Q1 FY21 sales volumes of 892 MVA (down 61% y/y) were in line with our estimate. Its operating performance,though, was better than expected, helped by execution of relatively high-margin orders. The order book was a healthy Rs 4.1bn. Order inflow, however, was affected as finalisation is taking time due the present situation. Given the prevailing uncertain conditions, we are cautious regarding near-term order inflow and execution.

Long-term,however, we are positive on the company for its industry-focus, debt-free status and consistent FCF generation (end-Q4 cash and investments:`4.5bn, 40% of market cap). With the recent run-up in the stock price and consequent limited potential, we lower our rating to Hold

Anand Rathi on TCNS Clothing

Hindered by staggered openings while EBITDA losses were less than anticipated because of better cost controls, TCNS’ Q1 FY21 revenue slipped below our estimates. The past 4-5 months has seen a cash burn of over `500m. However, the company is healthy, with ~Rs 1.25bn cash and significant cash-conservation measures in place (cost reductions, minimal capex, redeploying inventory, reducing purchases, shutting unviable stores), thus placing it in a better position as recovery sets in. We retain our Hold rating with a lower target price of Rs 369 on 10x FY22e EV/EBITDA (earlier 15x) as we shift our model to Ind AS 116

F&O Watch

(Source: SMC Global)

Centrum on India Cements


Nomura downgrades KNR Construction

We value KNR at 10.5x (vs 12.0x earlier on our reduced ROE estimate) FY22F EPS of Rs 23.6 (rolled to Jun-22), and add the book value of investments of BOT/HAM assets to arrive at a target pric of Rs 285. With around 11% implied upside, we downgrade KNR to Neutral, and prefer KEC (KECI IN, Buy) instead.

Most active stocks by volume

COMPANY PRICE(rs) CHG(%)
VODAFONE IDEA 8.71 0.00
FUTURE RETAIL 131.85 10.66
ZEE ENTERTAINMEN 193.40 -1.85
TATA POWER CO. 59.60 5.02
B H E L 39.10 2.76
» More on Most Active Volume

Cipla adds 1%


Tata Power gains 4%


HAL slips 3%


Cosmo Films hits 52-week high

>> The company on Wednesday posted a 69.15 per cent increase in consolidated net profit at Rs 46.99 crore for the first quarter ended June 2020.


Smallcaps gain; S&P BSE SmallCap index up 0.29%


Ruchi Soya slips 3% post Q1 nos

>> The company has reported consolidated net profit of Rs 58.54 crore in Q1 June 2020 as against net loss of Rs 5.62 crore in the year-ago period.


Muthoot Finance declines 5%


CG Power locked in 5% upper circuit


IRCTC extends decline on govt's stake sale plan


IEX trades higher in a weak market

>> Indian Energy Exchange (IEX) will commence trading of green energy on its power trading platform, the first such for the country. IEX has received nod from the Central Electricity Regulatory Commission (CERC) to set up a ‘green term-ahead market’.


Sectoral trends on NSE at Open


Sensex Heatmap at Open


Opening Bell


Opening Bell


Top stocks to watch out for today

SBI: State Bank of India priced the country’s biggest offering of local-currency tier-II bonds yet as the lender boosts its capital buffers amid the worsening financial health of domestic companies.
 
IEX: Indian Energy Exchange (IEX) will commence trading of green energy on its power trading platform, the first such for the country. IEX has received nod from the Central Electricity Regulatory Commission (CERC) to set up a ‘green term-ahead market’.
 
L&T Finance Holdings is exploring a plan to raise around $450 million (Rs 3,367.5 crore) through a rights issue, Bloomberg reported. READ MORE 


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


Markets at Pre-open


Markets at Pre-open


BROKERAGE VIEW :: JPMorgan on ZEEL

CMP: Rs 174 | Revised target price: Rs 190 from Rs 140 | Reco: Upgrade to Neutral from Underweight

>> Incremental disclosures on balance sheet/ZEE5 coupled with management commitment towards improving FCF and further strengthening of the Board are steps in the right direction, implying downside protection from the current depressed levels (share price halved over the past year).

>> Further we believe the stock can re-rate significantly (trading at 10x F22E P/E vs past 1yr median of 15x scenarios) if management delivers on the stated commitments.

>> We will wait to see evidence of sustainable improvement even if we miss the first leg of stock upmove. Zee guided for positive advertising revenue growth in 2H and 50%+ PAT conversion to FCF from F22, noting further significant increase in inventory and receivables is unlikely.

BROKERAGE VIEW :: Morgan Stanley on RIL

Stance: Overweight | Target price: Rs 1,801

>> Risks to upside: 
  1. Further details onforthcoming deleveraging initiatives.
  2. Rising market shareand reduced competitiveintensity inIndiantelecom industry.
  3. Improvement incoreenergy margins.
>> Risks to downside
  1. Potential ban onsingle-use plastic to hurt margins inthe medium term.
  2. Lowerutilization of recently started downstream energy projects.
  3. Delay in monetization of itsenergy and telecom assets.

BROKERAGE VIEW :: Jefferies on Insurance cos

>> The Top-5 private life insurers (ex-HDFC Life) reported near doubling of premiums from guaranteed return plans (non-par savings products). Among listed players, SBI Life and ICICI Pru Life saw higher growth from low base whereas HDFC Life consolidated on a high base. Even insurers like Bajaj Life and Birla Life posted sharp growth.

>> We remain cautious of this segment as an increased share of the guaranteed return businesses can raise risk from volatility in interest rates.


BROKERAGE VIEW :: Kotak Institutional Equities on Tata Power

CMP: Rs 57 | Fair value: Rs 70 | Reco: Buy

>> Tata Power hosted its annual investor meet highlighting its growth aspiration through (1) step-up increase in revenue contribution from the renewable business, (2) deleveraging its balance sheet through divestments, equity raise and proposed InVIT for releasing fresh capital and (3) resolution of Mundra and merger of companies with the parent company to derive maximum fiscal efficiency.

>> We raise our fair value estimate for Tata Power to Rs70/share (from Rs62/share). The revision in fair value estimate is based on a higher multiple of 8X (from 7.5X) assigned to Tata Power Solar as well as the renewable portfolio owing to the ambitious growth targets of the company for these business verticals, as well as lowered holding company discount for the investment portfolio owing to continued progress on asset monetization.

BROKERAGE VIEW :: Kotak Institutional Equities on Muthoot Finance

CMP: Rs 1,256 | Fair Value: Rs 1,100 | Reco: Reduce 

>> Muthoot Finance reported marginal (1% qoq) loan book decline despite sharp rally in gold prices, likely due to funding challenges. Even as we expect growth to
catch up over the next nine months, we find Muthoot’s valuations overheated post the sharp stock rerating, following the rally in gold prices.

>> Muthoot’s business tends to be highly cyclical with linkages to the gold cycle and it would be inaccurate to juxtapose current strong return ratios to arrive at long-term valuation multiples.

Notably, Muthoot reported average RoA of 2.6-6.8% during the recent cycle, i.e. 2014-20 (peak of 6.8% in FY2020) and RoE of 14-28% (peak of 28% in FY2020); the stock currently trades at 3X book FY2022E. At our RGM-based FV of Rs1,100 (from Rs1,025), the stock will trade at 2.5X book June 2022E. In the current environment, we prefer inexpensively valued vehicle finance NBFCs (Cholamandalam, Shriram Transport Finance and SCUF) over Muthoot Finance.

BROKERAGE VIEW :: Motilal Oswal Financial Services on KNR Construction

CMP: Rs 257 | TP: Rs 295 (+15%) | Reco: Buy

>> KNR Construction (KNR) outperformed in terms of execution by reporting revenue growth v/s our expectation of 35% YoY decline. The EBITDA margin expanded YoY on account of the rising share of higher margin irrigation projects, resulting in a strong beat on earnings. Including L1 orders, the order book (OB) stood strong at Rs 7,850 crore, implying OB/rev at 3.5x and providing healthy revenue visibility.

>> KNR continues to surprise with its steady performance. However, the working capital cycle has witnessed marginal deterioration. This is primarily on account of pending dues from the Telangana government, which have been stalled since Feb’20 and currently stand at INR6.8b. The management hopes to receive Rs 440 crore within the next few weeks.

>> Factoring the strong performance in 1QFY21, we increase our FY21/FY22E EPS by 28%/7%. We maintain our Buy rating, with TP of Rs 295 based on: (a) unchanged 12x Mar’22E EPS to the EPC business and (b) the book value of road assets. 

BROKERAGE VIEW :: Motilal Oswal Financial Services on Tata Power

CMP: Rs 57 | TP: Rs 66 (+16% ) | Reco: Buy

>> TPWR has been keen on moving to a more consumer-facing model and leveraging its expertise and brand. In this context, the quantification of its targets provides some growth context. However, we still await visibility on whether the opportunities within T&D and new consumer businesses would pan out. Growth in its in-house Solar EPC business is compelling, but would still depend on overall ordering within Renewables by FY25 and the co.’s ability to maintain market share.

>> Nevertheless, TPWR has walked the talk in recent months through asset monetization and WC management – despite the current Covid-19 environment. Net debt at the end of Jun’20 had reduced to Rs 44,400 crore (from Rs 47,100 crore in FY20).

>> Divestment-related measures (part receipt from International Shipping business, Arutmin, and Tata SED) and the infusion of Rs 2,600 crore from promoters would continue to aid debt reduction. As we build-in the expectations of normalization in its EPC business and some WC by FY22, we see the risk-reward as favorable. 1) the approval of a tariff hike at Mundra, 2) the merger of CGPL & Tata Power Solar with TPWR, and 3) favorable InvIT valuations would provide upsides to our estimates. 

BROKERAGE VIEW :: Motilal Oswal Financial Services on Muthoot Finance

CMP: Rs 1,256 | TP: Rs 1,300 (+4%) | reco: Neutral

>> While AUM growth took a backseat in 1QFY21, we believe this is a one-off given the muted disbursements in Apr-May’20. Demand for gold loans picked up in
Jul-Aug’20, and we expect it to sustain given the tough economic environment. Over the past year, MUTH has increased liquidity on the balance sheet from 3%
of loans to 20% of loans, which is comforting. However, this is likely to be a drag on margins going ahead. While MUTH’s subsidiaries have witnessed improving
collection efficiency, we remain cautious on the asset quality outlook. Maintain Neutral with TP of INR1,300 (3x FY22E BVPS). 

BROKERAGE VIEW :: Motilal Oswal Financial Services on IndiaMART

CMP: Rs 2,990 | TP: Rs 3,550 (+19%) | Reco: Buy

>> We forecast a 9% CAGR in paid suppliers, coupled with a 2% CAGR in ARPU over FY20–23, implying a revenue CAGR of 10% over FY20–23.

>> The recent drop in collections is primarily attributable to: (1) higher churn in monthly subscribers, (2) churn in annual subscribers whose payments are due in the near term, and (3) the extension of payment terms. 1QFY21 saw a 50% drop in collections.

>> We expect customers with multi-year subscription packages to continue on the platform at lower annual fees. Further growth in new suppliers in certain categories would partially offset decline in its stressed counterparts. We forecast 25% decline in collections for FY21, weighed by ~50% decline in 1QFY21 collections. In turn, we expect 7% decline in FY21 revenues, coupled with Vshaped recovery in FY22.

>> We forecast 8pp margin expansion over FY20–23 on account of the better management of cost structure and operative leverage in the business. This implies an EBIT CAGR of 22% and PAT CAGR of 26% over FY20–23. 

Bulk deals on BSE as on Wednesday

Bulk deals on NSE as on Wednesday

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


Rupee check

Source: Bloomberg


Oil eases on demand risks, US stockpile data

>> Oil prices fell on Thursday as major producers warned of a risk to the recovery in demand if the coronavirus crisis is prolonged, while US crude inventories dropped less than expected.

>> Brent crude was down 28 cents, or 0.6%, at $45.09 after slipping 0.2% in the previous session.
 
>> US oil was down 31 cents, or 0.7%, at $42.62 a barrl, after inching higher on Wednesday.

(Source: Reuters)

SGX Nifty hints at a gap-down start

>> At 8:10 am, the index was at 11,266 level, down 157 points or 1.37 per cent.

Asia shares set to dip as Fed's gloom snuffs out Wall Street cheer

Source: Reuters


Wall Street ends lower after Fed minutes highlight tough recovery

Source: Reuters


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