Bull-run enters 6th day; Sensex soars 617 pts, Nifty ends above 15,100

Stock market updates: Winning streak extended at the bourses into sixth straight day on Monday as investor optimism stayed elevated. An across-the-board buying helped frontline indices scale fresh record highs in the intra-day trade, before settling at new closing peaks. M-cap of all the listed firms on the BSE also hit record Rs 203 trillion in value.

Among key indices, the benchmark S&P BSE Sensex settled tad below the 51,350-mark, at 51,349 levels today, up 617 points or 1.22 per cent, aided by buying in M&M (up 7.4 per cent), Bajaj Finserv, Infosys, Tech M, and Bharti Airtel. On the downside, however, HUL (down 1.5 per cent), Bajaj Finance (down 0.7 per cent), and ITC (down 0.5 per cent) remained top laggards.

Weightage-wise, Infosys (up 3 per cent), Reliance Industries, ICICI Bank, M&M, and TCS contributed around 408-points towards overall gains on the index.

It's NSE counterpart Nifty50, meawhile, clinched the 15,100-mark on the closing basis and settled at 15,116 levels, up 191.5 points or 1.28 per cent. M&M, Hindalco, Shree Cement, JSW Steel, and Bharti Airtel were among the 40 of the 50 constituents that ended the day in the green. 

The Sensex and the Nifty indices hit record peaks of 51,523 and 15,160, respectively.

In the broader markets, small-caps outran their mid and large-cap peers today. The S&P BSE SmallCap index ended 1.53 per cent higher, while MidCap index was up 1.5 per cent at close.

Meanwhile, largely all the Nifty sectoral indices ended the day in the green, barring the Nifty FMCG index (down 0.4 per cent), and the Nifty PSU Bank index (down 1 per cent). On the upside, the Nifty Auto and the Nifty Metal indices were the top gainers (up 3 per cent each).

Global markets
European shares rose on Monday, after their best weekly gain in nearly three months. The pan-European STOXX 600 index rose 0.4 per cent. Frankfurt shares rose 0.6 per cent, outperforming European peers in early trading.

In Asia, shares hovered near record highs on Monday while oil surpassed $60 a barrel on hopes a $1.9 trillion Covid-19 aid package will be passed by U.S. lawmakers as soon as this month just as coronavirus vaccines are being rolled out globally.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.5 per cent. Japan's Nikkei jumped about 2 per cent while Australian shares ended 0.6 per cent higher. Chinese shares advanced with the blue-chip CSI300 index up 1.3 per cent.


LIVE UPDATES

MARKET CLOSING COMMENT :: Anand James, Chief Market Strategist at Geojit Financial Services

Brent scaled the $60 per barrel mark while global equities continued to rally. India also tagged along, leaving only FMCG and PSU indices in the red among the sectoral indices, while the metal index gained the most, with a 3% jump. US stimulus expectations continue to be the major driver

MARKET CLOSING COMMENT :: Ajit Mishra, VP - Research, Religare Broking

The bulls continued to dominate the benchmark indices following supportive global cues. The Nifty index ended higher by 1.3% to close above the 15,100 levels. The broader markets too participated as both Midcap and Smallcap ended higher by 1.5% each. On the sector front, except FMCG, all the other indices ended in green wherein Auto, Metal and Consumer Durables were the top gainers.
 
We are eyeing 15,200 in Nifty and Goingd, earnings and global cues will dictate the market trend.On the dom, market participants would actively track key macro data like IIP, CPI and WPI data.

TECH VIEW :: Nagaraj Shetti, Technical Research Analyst, HDFC Securities

After showing high wave type confusing candle pattern at the highs on Friday, Nifty continued with sharp trended upmove on Monday and closed the day higher by 191 points. After opening on an upside gap of 140 points, the market has shifted into further upside amidst a range movement. Minor intraday weakness in between was used as a buy on dips for the day. A new all time high was formed at 15159 and Nifty closed near the highs. The opening upside gap remains unfilled.
 
A reasonable positive candle was formed on the daily chart with gap up opening. This is second unfilled gap in a span of five sessions. The formation of previous gap of 2nd Feb could be considered as a bullish breakaway gap and present gap (of Monday) is expected to be a bullish runaway gap, provided this gap remains unfilled for the next couple of sessions. On the occurrence of such action, the market could show more upside in the near term.

Conclusion: The underlying trend of Nifty continues to be positive and one may expect further upside in the short term. the next upside levels to be watched around 15500, which is at 1.618% fibonacci extension (connected from Jan 20 top to March 20 bottom). This could be achieved in the next one week. Immediate support is placed at 14960.

MARKET CLOSING COMMENT :: Deepak Jasani, Head of Research, HDFC Securities

Indian benchmark equity indices ended higher for the sixth consecutive day on Feb 08. The Nifty opened gap up and then remained sideways through the day. At close the NSE Nifty 50 gained 1.3% to close at 15,115.
 
Volumes on the NSE were lower than the past 6 days average but in line with the last month’s average. Among sectors, Banks, Auto, Metals did well, while PSU Bank and FMCG index underperformed. Broad market indices outperformed suggesting return of interest in the small and midcaps.
 
Nifty marches ahead day after day with minimal intra day correction. Going by volume numbers it seems that FPIs interest has dipped on Feb 08, the ongoing results season is leading to rotational buying across stocks and sectors which incidentally pulls up the Nifty. On a channel line basis, the next resistance for the Nifty is around 15200 while the support is at 14870-14914.

MARKET CLOSING COMMENT :: Vinod Nair, Head of Research at Geojit Financial Services

Strong global cues supported the domestic rally. PSU Banks, which was on a bull run paused today with some correction noticeable in FMCGs. The overall market is maintaining its buoyancy with rally in all sectors especially auto, IT and metals. Improved domestic outlook is encouraging  sustained FPI inflows

Market stats :: Market breadth favours bulls


Index contributors :: Infy, RIL, ICICI Bank top contributors


STOCK OF THE DAY :: Bajaj Finserv ends above Rs 10,000-mark


STOCK OF THE DAY :: M&M ends 7% higher post Q3 results


Sectoral trends on NSE


Sensex Heatmap at Close


CLOSING BELL

The benchmark S&P BSE Sensex settled tad below the 51,350-mark, at 51,349 levels today, up 617 points or 1.22 per cent, aided by buying in M&M (up 7.4 per cent), Bajaj Finserv, Infosys, Tech M, and Bharti Airtel.
 
It's NSE counterpart, meawhile, clinched the 15,100-mark on the closing basis and settled at 15,116 levels, up 191.5 points or 1.28 per cent. M&M, Hindalco, Shree Cement, JSW Steel, and Bharti Airtel were among the 40 of the 50 constituents that ended the day in the green. 

Bajaj Finserv nears record high; stock rallies 16% in 6 days post Budget

In the past six trading days, the stock has rallied 16 per cent after the government proposed to increase foreign direct investment in the insurance sector to 74 per cent, a move aimed at attracting overseas players. In comparison, the S&P BSE Sensex was up 11 per cent during the same period. READ MORE

RBI tightening oversight of big NBFCs to avoid systemic spillovers: Moody's

The guidelines will apply to all deposit-taking NBFCs or NBFCs with assets of more than Rs 500 billion as of March 31, 2022. The framework's application to the largest NBFCs reflects the RBI's ongoing efforts to strengthen and harmonise regulatory norms between NBFCs and banks. The NBFC sector has been increasingly important to credit growth in India. READ MORE

Anand Shah joins ICICI Prudential AMC

Prior to this stint, he was Deputy CEO and Head of Investments at BNP Paribas Asset Management Company, responsible for Investments and overseeing both onshore and offshore mandates sub-advised and Sales.

JSW Steel to raise $1 bn via dollar bonds for Bhushan acquisition, capex

A banking source said talks with the company are currently focused on the structure of the offering and seeking necessary approvals from the Reserve Bank of India (RBI). "The issue will be launched as early as this month," said a banker. READ MORE

Stocks that hit 52-week high on BSE today

Company PRICE(rs) 52 WK HIGH CHG(%)
Adani Enterp. 627.45 638.05 5.36
Adani Ports 580.65 594.00 2.46
Adani Transmissi 549.95 550.00 3.84
Aegis Logistics 306.00 320.00 3.89
Affle India 4320.00 4582.80 3.52
» More on 52 Week High

BUZZING :: NCC soars 17.5%, hits 52-week high


Buzzing Stock :: Birlasoft shares witness profit taking after hitting 52-week high

>> Shares of Birlasoft were trading 5 per cent lower as investors booked profit
>> The company on Friday reported a 32.6 per cent YoY rise in consolidated net profit at Rs 96.3 crore for December quarter of the ongoing financial year.

Century Plyboards arm's new unit in Africa begins commercial production

Century Plyboards (India) on Monday said its subsidiary's newly set up veneer manufacturing unit in Africa has started commercial production. "The newly set up veneer manufacturing unit of the company's wholly-owned subsidiary Century Gabon SUARL at Gabon in Africa, has successfully started its commercial production today, i.e. February 8, 2021," Century Plyboards said in a regulatory filing. 

(Text Source: PTI)
 

Sales recovery, margin expansion mark Q3 revival for retail major Trent

The pace of recovery and margin expansion for retail major Trent in the December quarter got a thumbs up from the Street. The Trent stock was up 3 per cent in trade on Friday on expectations that Q3 performance will gather momentum in the March quarter leading to lower losses for FY21 than predicted earlier.
 
The key takeaway was the sharp recovery in revenues driven by both physical retail as well as digital format. READ MORE

FMCG index down half a per cent; Britannia, HUL top losers


SECTOR WATCH:: Cement stocks gain

Company LATEST(rs) CHG(%)
Ambuja Cements 277.05 2.14
JK Lakshmi Cem. 370.20 5.71
India Cements 172.20 0.53
The Ramco Cement 925.90 6.29
UltraTech Cem. 6425.00 1.15
» More

Higher non-interest income, low rates keep lenders buoyant in Q3

The Nifty Bank index, with gains of over 12 per cent in a month, is the clear outperformer among sector indices. On an average, bank stocks have rallied by 8-20 per cent in this period, with State Bank of India (SBI) (38 per cent gains during this period) leading the table.
 
Much of the stock price movement is in reaction to the better- than-expected results for the December 2020 quarter (Q3). READ MORE

MARKET UPDATE:: Sensex at day's high


Why bonds dealers chose to ignore Shaktikanta Das' nationalist call

The Reserve Bank of India (RBI), the merchant banker to the government, is required to borrow Rs 2.16 trillion from the market in February and March by auctioning government securities. The number goes up to Rs 4.5 trillion if state development loans are also included. READ MORE

European markets check

(Source: Reuters)

Shree Cement crosses Rs 1 trillion in market capitalisation

Shree Cement has joined the elite club of companies with Rs 1-trillion market capitalization (market-cap) on the BSE, after its share price hit a new high of Rs 28,059, rallying 5 per cent in intra-day trade on Monday. The company engaged in the manufacture and sale of cement and cement related products surpassed its previous high of Rs 27,356, touched on February 4, 2021. READ MORE

Sensex scales fresh record high, tops 51,500


BUZZING STOCK :: SCI shares tank over 3% post Q3 numbers

The Shipping Corporation of India reported a 55.4 per cent YoY decline in consolidated profit at Rs 131.57 crore for the quarter ended December 31, 2020.

Nifty PSU Bank index slips into red


RBI plans Rs 3 trillion in sovereign bond purchases to cap yield at 6%

The Reserve Bank of India has so far bought about Rs 2.5 trillion of net debt in the current financial year. The figure will be as high as Rs 3 trillion by end-March as authorities are keen to shrink the spread between the 10-year bond yield and repo rate to around 150 basis points from more than 200 basis points, the person said, asking not to be identified discussing private deliberations. READ MORE

BHEL slips 9% on posting Rs 231 crore loss in December quarter

Shares of Bharat Heavy Electricals Limited (BHEL) slipped 9 per cent to Rs 39.55 on the BSE in Monday's intra-day trade, in an otherwise strong market, after the company reported a loss of Rs 231 crore in the December quarter (Q3FY21) due to poor operational performance. The state-owned heavy equipment company had posted a profit after tax of Rs 159 crore in Q3FY20. READ MORE

Q&A | Easy money is not going away: Ashmore Group head of research Jan Dehn

Market participants heaved a sigh of relief after the government presented a pro-growth Budget that did not have any major tax implication for investment in the capital markets.
 
London-based JAN DEHN, head of research at Ashmore Group, which has nearly $100 billion worth of assets under management, tells Puneet Wadhwa in an interview that if the finance minister and her team do not deliver on any of what they have proposed, the market can come off hard. READ FULL INTERVIEW HERE
JAN DEHN Head of research, Ashmore Group

India VIX jumps 3%, tops 24 level

>> VIX is a measure of volatility in the market

MARKET UPDATE:: Broader indices outrun benchmarks


Buzzing Stock :: BHEL tanks 8% post Q3 numbers

>> The company reported a consolidated net loss of Rs 217.86 crore for the October-December quarter.

A good time to buy real estate and related stocks, say analysts

With the economic recovery picking up pace and attractive home prices, analysts say it is a good time for investors to put in money in stocks of real estate companies. Those who have spare funds and are looking to invest, buying a residential property now can is also be a good option from a long-term perspective. However, the return expectation of investors from these two asset classes should be realistic, especially from the stock market perspective, given the sharp run up in these counters since their March 2020 low. READ MORE
 

Top Sensex contributors at this hour


Nifty Bank index climbs off day's high


Bajaj Electricals zooms 50% in three days post December quarter results

Bajaj Electricals shares zoomed 20 per cent to hit a new high of Rs 1,106 in intra-day trade on the BSE on Monday. The stock has now rallied 50 per cent in three days after the company reported robust consolidated net profit of Rs 98 crore in the December quarter (Q3FY21), on strong performance by consumer products (CP) business. The household appliances maker had recorded a profit of Rs 9 crore in the year-ago quarter. READ MORE
 

Small-caps may outrun mid-caps in near-term, charts show

In the previous week, the frontline indices surged over 9 per cent, clocking their best-ever weekly gains (in percentage terms) in 10 months. In absolute terms, gains of nearly 1,300 points in Nifty and 4,446 points in S&P BSE Sensex were the best-ever the markets have seen. The broader markets, however, didn't replicate the rally to exact extent with the Nifty MidCap 100 index surging 7.2 per cent on the NSE while the Nifty SmallCap 100 index leaped 6.4 per cent, ACE Equity data show. READ MORE


Alembic Pharma gets five observations from USFDA for Gujarat facility

Alembic Pharmaceuticals on Monday said the US health regulator has made five observations after inspection at its facility at Karkhadi, Gujarat. The United States Food and Drug Administration (USFDA) has conducted an inspection at Alembic Pharmaceuticals' New Injectable Facility (F-3) located at Karkhadi from January 29-February 5, 2021. This was a scheduled inspection and at the end of the inspection, the USFDA issued a form 483 with 5 observations, the company said in a regulatory filing.

(Text Source: PTI)
 

Project pipeline, ongoing expansion offer revenue visibility for Divi's

Divi’s Laboratories quarter results: After a 49 per cent y-o-y growth in the June quarter and a 21 per cent uptick in the September quarter, Divi’s Laboratories continued its strong growth run in the December quarter.
 
The country’s second largest pharma company by market capitalisation posted a 22 per cent growth in Q3 led by the generics segment which accounts for 60 per cent of its revenues. READ MORE

MARKET UPDATE:: Sensex holds on to early gains


Affle India surges 21% in 2 days, hits new high post Dec quarter results

Shares of Affle India hit a new high of Rs 4,582, up 10 per cent, on the BSE in Monday's intra-day trade after the company reported a strong performance for the quarter ended December 2020 (Q3FY21) with consolidated revenue from operations grew 59 per cent year-on-year (YoY) at Rs 150.50 crore. In the past two days, the stock has surged 21 per cent. READ MORE

NEWS FLASH :: RBI announces Rs 20,000 crore OMOs on Feb 10

>> 10-year bond yield at 6.01% vs 6.0715% on Friday

BROKERAGE VIEW:: UBS on Tata Motors

Rating: Neutral | TP: Rs 360

-- We upgrade Tata Motors (TTMT) to Neutral from 'Sell' as management has continued to demonstrate much stronger-than-expected cost controls and margin improvements at Jaguar Land Rover (JLR), despite low volumes. We believe strong FCF generation at JLR will lead to significant balance sheet deleveraging. We now expect JLR to be in a £500m net cash position by FY23, compared with £1.8bn net debt previously.

-- We significantly upgrade our domestic business forecasts on the back of a faster-than-expected truck recovery and further upgrades in our India truck forecasts as a result of government's infra spending push. We are however Neutral on the stock – given the lack of a strong electric vehicle (EV) pipeline at JLR and rising competitive intensity in the space. JLR's volume growth continues to underperform its German peers. TTMT's P/B valuation is now back above its long-term mean, at levels seen prior to the start of balance sheet concerns for the company. Our forecasts are in line with upper end of consensus estimates.
 
-- We significantly upgrade our FY21/22/23 domestic truck volume forecasts from -40%/+80%/+30% to -30%/+100%/+30%. We now expect the industry to return to 10-year average vols in FY22 and close to the FY19 peak by FY23. Tata Motors PV business has clearly recovered much more strongly with Q2/Q3 vols up 112%/89% YoY. Driven by strong operating leverage, we raise our FY22/23 EBITDA margin estimates from 6.5%/8.2% to 8.7%/10.1%. 


RBI plans Rs 3 trillion in sovereign bond purchases to cap yield at 6%

India’s central bank will target to buy more than Rs 3 trillion ($41 billion) of sovereign bonds in the year starting April 1 to cap benchmark yields at about 6 per cent, according to a person familiar with the matter. The Reserve Bank of India has so far bought about Rs 2.5 trillion of net debt in the current financial year. The figure will be as high as Rs 3 trillion by end-March as authorities are keen to shrink the spread between the 10-year bond yield and repo rate to around 150 basis points from more than 200 basis points, the person said, asking not to be identified discussing private deliberations. READ MORE

Top gainers on the BSE at this hour

Company PRICE(rs) CHG(%)
Bajaj Electrical 1065.90 15.68
Graphite India 408.25 14.81
HEG 1192.40 11.83
VRL Logistics 228.40 11.47
Gujarat Gas 419.10 10.36
» More on Top Gainers

Adani Enterprises hits 52-week high as arm acquires 23.5% stake in MIAL

Shares of Adani Enterprises hit a fresh 52-week high of Rs 683, up 7 per cent on the BSE, in the intra-day trade on Monday after Adani Airports completed acquisition of 23.5 per cent stake in Mumbai Airport. READ MORE


NTPC on loss caused to power project at Tapovan Vishnugad

An avalanche near Tapovan in Uttarakhand has damaged a part of our under construction hydropower project Tapovan Vishnugad (520 MW) in the region. While rescue operations are on, damage caused is being assessed. Appropriate insurance cover is available for the loss/damage caused. 

(Source: BSE filing)

NEWS FLASH :: Brent oil climbs above $60/bbl for first time in a year

>> Prices touch intraday high of $60.05/bbl

Sector Watch :: BSE Auto jumps 2.5%, best sectoral gainer

>> M&M, Tata Motors, Maruti top index contributors

Blackstone in the final leg of talks to buy out Embassy Industrial Parks

US-based private equity (PE) giant Blackstone is in the final leg of talks to buy out PE major Warburg Pincus and Bengaluru-based property developer Embassy from their warehousing joint venture (JV), known as Embassy Industrial Parks, said sources in the know.
 
Though the JV was looking to monetise the business at an enterprise value of Rs 1,700-1,900 crore in an earlier round of talks with investors last year, the deal could happen close to the price range, said sources. READ MORE

SECTOR WATCH:: Auto stocks outperform


Gujarat Gas shares surge 14% on strong December quarter results

Revenues increased 12.9 per cent year-on-year (YoY) to Rs 2,829 crore as sales volume jumped 22.9 per cent YoY. Gross margins improved Rs 1.2/scm YoY to Rs 7.8/scm. Ebitda (earnings before interest, taxes, depreciation, and amortisation) was at Rs 614.8 crore, up 65.9 per cent YoY. READ MORE

M&M rallies 10%, nears record high on strong operational performance in Q3

In Q3FY21, the company said its consolidated profit after tax or PAT (after EI & NCI) was at Rs 704 crore, an increase of 252 per cent year on year (YoY). The key drivers were capital allocation actions, a 220 bps increase in standalone operating margins on the back of a 20 per cent growth in tractor volumes and a 12 per cent revenue increase in the auto business. READ MORE

Oil will return to a starring role in India

Oil’s importance to India’s needs is not necessarily a risk since energy security goes both ways. India is unabashedly reliant on oil and is a key buyer of crude from big suppliers like Saudi Arabia and Iraq, while the OPEC producers equally depend on India’s appetite for Middle East grades. The relationship is mutually beneficial and the ties between India and top producers are only getting closer. READ MORE

Rupee Opening

Rupee opens higher at 72.86 per US dollar vs Friday's close of 72.92/$

Nine of 10 stocks in BSE 500 universe gained during Budget-fuelled rally

Nearly 90 per cent of the stocks in the BSE 500 index — accounting for 94 per cent of India’s total market cap — gained in the Budget-fueled rally last week. Of the 441 stocks that gained, only 147 outperformed the BSE 500 index, which has risen 8.6 per cent in the past five trading sessions. READ MORE

Most active stocks by volume

Company PRICE(rs) CHG(%)
Vodafone Idea 12.08 0.75
B H E L 40.60 -6.77
Punjab Natl.Bank 40.15 0.12
Suzlon Energy 6.70 1.98
GAIL (India) 133.30 4.02
» More on Most Active Volume

HCL Tech announces one-time special bonus worth Rs 650 crore for employees

HCL Technologies on Monday announced a one-time special bonus to employees around the world as it crossed the $10 billion revenue mark. The special bonus will be paid to employees in February 2021 and will amount to approximately $90 million (around Rs 650 crore). READ MORE

Nifty clocks new high of 15,119


NEW RECORD HIGH :: Sensex hits 51,409 in intra-day trade


JK Cement advances 4% on 75% YoY jump in Q3 PAT

>> The company reported an increase of 74.82 per cent YoY in its consolidated net profit to Rs 217.28 crore for the third quarter ended December 2020.


Maruti Suzuki up 1%


Mrs Bectors Food gains over 1%

>> The firm's Q3 profit nearly doubled to Rs 20.67 crore from Rs 11.14 crore posted in the same period last year.


Divi's Labs trades marginally lower on profit booking

>> The firm, on Saturday, reported a 31.05 YoY jump net profit at Rs 470.62 crore for the quarter ended December 2020, on account of robust sales.


Britannia Industries slips 1% on in-line Q3 results


Buzzing :: AU Small Finance Bank zooms 5%


Result Reaction :: Affle India hits 52-week high

>> Digital advertising firm Affle posted a 42.9 per cent rise in net profit at Rs 30.6 crore in the December 2020 quarter against a net profit of Rs 21.4 crore posted in the year-ago period.


Result reaction :: M&M leaps 6% as analysts remain bullish post Q3 nos

>> Nomura has new TP of over Rs 1,100, JP Morgan sees TP at Rs 1,030


Sectoral trends on NSE :: Realty, PSB stocks charge ahead


Sensex Heatmap :: M&M surges 6%, NTPC slips 2%


Opening Bell :: Nifty hits new lifetime high at open


Opening Bell :: Sensex hits fresh record high of 51,226


Commodity Heatmap


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


Markets at Pre-open


Markets at Pre-open


BROKERAGE VIEW :: Prabhudas Lilladher on Hero MotoCorp

Rating: ACCUMULATE | CMP: Rs 3,429 | TP: Rs 3,753

>> HMCL’s Q3FY21 was operationally better with beat at EBITDA/PAT by ~10/13% respectively led by higher gross margins at 29.5% (PLe 28.7%) and lower other expenses at Rs9.5bn (PLe Rs9.9bn). Market share expansion continues with ~190bp gains in domestic markets and ~90bp gains in exports. While soft retails and RM pressures are near term headwinds, increased focus on cost control measures such as LEAP 2 (savings of 100bp v/s LEAP 1 savings of 50bp) will help sustain margins.

>> We increase FY22/23 EPS by 5-7% to factor in for LEAP 2 and higher spare sales. We build in revenue/EBITDA/PAT CAGR of 8.4%/10.7%/11% and maintain ‘Accumulate’ with a TP of Rs3,753 (earlier Rs3,344) roll forwarded to Mar-23 EPS (v/s Sep-22 earlier) based on 17x (unchanged) and Rs174 value for Hero FinCorp at 20% Holdco.

BROKERAGE VIEW :: Prabhudas Lilladher on M&M

Rating: BUY | CMP: Rs 866 | TP: Rs 1,011

>> M&M’s 3QFY21 results were operationally better with a record EBITDA of Rs23.9bn (PLe Rs22.7bn). EBIT margins for FES were at 23.4% (+400bp YoY) led by operating leverage and cost controls. Challenges related to semi conductors shortage to impact LCV and UV volumes till 1QFY22. Strict focus on capital allocation and international subs is now visible as 1) international subs (FES and Auto) loss declined significantly to Rs0.9bn (from Rs4.65bn), 2) MANA PBT loss expected to declined to Rs1.3bn in FY21 (v/s Rs4.8bn in FY20) and 3) Peugeot PBT declined to Rs0.2bn (v/s loss of Rs2.2bn in CY19).

>> We reiterate buy on MM as 1) sharp focus and execution on capital allocation to help prioritise investments and returns, 2) focus beyond tractors resulted in farm machinery revenues growth of 48% YoY in YTDFY21 to Rs3.8bn and 3) strong product pipeline in UVs and tractors to help industry outperformance. We increase FY22/23 EPS by 13%/ 6% and built in EBITDA/PAT CAGR of 10.1%/15% over FY20-23E. We maintain BUY with revised SoTP based price target of Rs1,011 (v/s Rs851), as we raise target multiple of core business to 18x (from 16x) to factor in faster than expected turnaround in subs.

BROKERAGE VIEW :: Elara Capital on Chambal Fertilisers

CMP: Rs 247 | TP: Rs 404 | Reco: Buy

>> Chambal Fertilisers (CHMB IN) reported a 17% YoY increase in EBITDA at INR 8bn, above our estimates by 10%, on account of lower other expenses (power & fuel cost) improved margin in traded fertilisers and operating leverage. EBITDA margin expanded 280bp YoY to 20.6%. Blended EBITDA per tonne increased to INR 5,436 vs INR 4,940 in Q3FY20. Total revenue remains flat YoY at INR 38.7bn.

>> Traded fertiliser revenue was up 15.9% YoY to INR 18.3bn while urea revenue dropped 9% YoY to INR 20.4bn. Interest expenses reduced 52% YoY and 35% QoQ to INR 525mn. PBT increased 31% YoY to INR 6.5bn while APAT dropped 6% YoY to INR 4.5bn, due to a higher tax rate.


BROKERAGE VIEW :: IDBI Capital on Hero MotoCorp

CMP: Rs 3,428 | TP: Rs 3,140 | Reco: Reduce

>> Hero MotoCorp (HMCL) Q3FY21 result was above our and consensus estimates on all parameters. Revenue was higher than our and consensus estimates mainly on account of higher realization, favorable product mix and higher spare part revenue. We believe positive macro factors, vaccination program in place, more cities opening up are improving sentiments for good retail demand. We expect domestic 2W industry to see a double growth for FY22 on a low base.

>> We do not expect any significant improvement in export sales for HMCL and wait for turnaround. We build our volume growth estimates for FY21/FY22/FY23 by -10%/+15%/+12% factoring the strong recovery in 2W domestic market. We expect revenue/earnings to grow at 5% each respectively CAGR over FY20-FY23E with EBITDA margin of ~13%.

>> Due to recent increase in share price we maintain REDUCE rating and arrive at a TP of Rs3,140 (earlier Rs2,540) based on PER of 16x FY23E EPS.

BROKERAGE VIEW :: IDBI Capital on PNC Infratech

CMP: Rs 245 | TP: Rs 331| Reco: Buy

>> PNC Infratech (PNCL) Q3FY21 PAT came in-line with our & consensus estimate. Labor availability at the site has reached 100%. Toll volume has gained traction and is up 22% YoY. After gaining experience in executing road assets, PNC is venturing in the execution of irrigation and water supply projects. Order from non-road portfolio is 25%.

>> On execution front, PNCL has re-iterated to match FY21E revenue with FY20 and target FY22E revenue growth at 20%. We have increased execution run rate for FY22E, 23E and thus EPS for FY22E/23E is revised up by 4%/6% (exhibit 8). In SOTP based TP, we now value EPC/construction business at 12x FY23E EPS (10x earlier) and investment in various road assets at FY20 BV.

>> At our revised TP Rs331 (earlier Rs266), implied valuation is 13x FY23E EPS and last 5 years average PER is 12x. Maintain BUY.

Top stocks to watch today

Q3 earnings: BPCL, NMDC, Bombay Dyeing, Godrej Consumer Products and Vakrangee are among 140 companies to post their December quarter numbers today.
 
Realty stocks: Shares of real estate firms would be in focus after the Delhi government decided to reduce circle rates of residential, commercial, industrial properties in Delhi by 20 per cent across all categories for the next six months. READ MORE

BROKERAGE VIEW :: MOFSL on Hero MotoCorp

CMP: Rs 3,428 | TP: Rs 4,000 (+17%) | Reco: Buy

>> Hero MotoCorp (HMCL)’s strong performance was driven by cost management and price increases to offset cost inflation. Domestic demand recovery and continued traction in weak areas (Scooter, Premium Motorcycle, and exports) are key monitorables.

>> We have raised our EPS estimate for FY21/FY22E by 5%/7%, factoring in price increases and cost savings. We maintain our Buy rating, with TP of INR4,000 (~18x Mar’23 S/A EPS + INR154/share for Hero FinCorp).

>> The stock trades at ~18.2x/16.1x FY22/FY23E EPS. We value HMCL at 18x Mar’23E EPS, factoring in improved volume visibility and lower risk of value outflow from HMCL’s areas of strength.

BROKERAGE VIEW :: MOFSL on Britannia

CMP: Rs 3,541 | Reco: Neutral

>> Consolidated sales increased 6.1% YoY to INR31.7b (v/s our estimate of INR32.8b) in 3QFY21. Standalone sales grew 5.7% YoY to INR29.8b. We peg base business volume growth to be 3-4% (there is no mention of volume growth in the press release, v/s our estimate of +7%). Consolidated EBITDA/ PBT/adjusted PAT
grew 21.8%/23.5%/22.5% YoY to INR6.1b/INR6.1b/INR4.5b (in line).

>> Consolidated gross margin expanded 220bp YoY to 43.1%. The management said BRIT witnessed moderate inflation in material prices, except Palm Oil where they witnessed a significant increase.

>> The company has gained market share over the last several quarters.
 
>> Modern Trade, Institutional business, etc. continue to face challenges with lower footfalls.

>> Essentials were at elevated demand levels at the beginning of the year due to pantry up-stocking, which has started to normalize with the diversification of the purchase basket of consumers

BROKERAGE VIEW :: MOFSL on Divi's Labs

CMP: Rs 3,820 | TP: Rs 4,530 (+19%) | Reco: Buy

>> Divi’s Labs (DIVI) reported in-line 3QFY21 earnings. This was led by healthy traction in Generics / Custom Synthesis (CS), coupled with lower raw material cost, driven by process improvements. Meaningful benefit is yet to accrue from the major capex phase. 10 new molecules under development in generic APIs and contrast media APIs would provide a fillip going forward.

>> We maintain our EPS estimates for FY21/FY22/FY23.

>> We expect a 38% earnings CAGR over FY20–23E, led by increased business prospects from CS and Generics, new product additions in the near term, and ~930bp margin expansion on better operating leverage.

>> We continue to value DIVI at 36x 12M forward earnings to arrive at TP of INR4,530. We reiterate Buy, supported by promising demand prospects and multiple growth levers – a) new product additions, b) strong chemistry skill sets, c) efficient manufacturing capabilities, d) scale-led advantage in legacy molecules, e) minimal financial leverage, and f) sufficient cash available for new projects.

BROKERAGE VIEW :: MOFSL on M&M

CMP: Rs 866 | TP: Rs 1,040 (+20%) | Reco: Buy

>> Mahindra & Mahindra (MM)’s 3QFY21 performance was driven by good performance in both the Tractors (FES) and Autos businesses. Furthermore, it has guided for an almost 90% reduction in international subsidiary losses in FY22E, driven by the completion of phase-1 of the capital allocation exercise. MM has twin levers of core business recovery as well as benefits of tightening capital allocation for EPS growth and re-rating.

>> Valuations for MM are still at a substantial discount to its five-year average (which captures both the pain points of deterioration in UV market share and subsidiaries' performances).

>> Implied core P/E for MM stands at 14.4x/111.7x FY22/FY23E EPS. This implies an over 25% discount (on an FY23E basis) to five-year average P/E and P/B. We have lowered our holding-company discount from 40% to 20%, factoring in an improvement in capital allocation and expected reduction in subsidiary loss.

Trading ideas by Vaishali Parekh

BUY HIND UNILEVER | CMP: Rs 2,269.50 | Target: Rs 2,450-2,480 | Stop Loss: Rs 2,170
 
The stock has corrected well from the peak made near 2,445 and has shown signs of bottoming out near 2,220 level with a momentum pick up expected going-forward. The RSI has also indicated a trend reversal near the oversold zone to signal a buy and is well placed for an upward move. We suggest to buy and accumulate this stock for an upside target of 2,420-2,450, keeping the stop loss of 2,170. READ MORE

Nifty outlook and stock picks by Sameet Chavan

Although, the banking stocks saw rarest weekly spurt last week, some profit booking was witnessed on Friday after a marathon rally. This led to a formation of ‘Gravestone Doji’ pattern on the daily chart of BANKNIFTY. The said pattern needs confirmation of price trading below the low of the candle i.e. 35,545 in this case. If this happens then we would probably see some profit booking in this week. Traders should take a note of this and ideally it’s advisable to follow stock centric approach. READ MORE

Bulk deals on the NSE as on Friday

Bulk deals on the BSE as on Friday

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


Rupee check

Source: Bloomberg


Brent approaches $60/bbl as supply cuts, stimulus hopes lift prices

Oil prices rose on Monday, with Brent futures nearing $60 a barrel, boosted by supply cuts among key producers and hopes for further US economic stimulus measures to boost demand.
 
Brent crude for April touched a high of $59.95 a barrel and was at $59.85 by 0041 GMT, up 51 cents, or 0.9%. Front-month prices last hit $60 on Feb. 20, 2020.

(Source: Reuters)

SGX Nifty Update

>> At 8:20 am, the index was at 15,031 levels, up 89 points

Asian market check

Asian shares hovered near record highs on hopes a $1.9 trillion Covid-19 aid package will be passed by US lawmakers as soon as this month just as coronavirus vaccines are being rolled out globally.
 
MSCI’s broadest index of Asia-Pacific shares outside Japan was last up 0.2% at 717.2, not far from last week’s record high of 730.6. Japan’s Nikkei climbed 0.3% while Australian shares advanced 0.5% led by technology and mining shares.

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