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Market Outlook
December 04, 2019
www.angelbroking.com
Market Cues
Indian markets are likely to open negative tracking global indices and SGX Nifty.
The US markets regained ground over the course of the trading day on Tuesday
after falling sharply early in the session but still closed firmly in the red. The major
averages closed lower for the third straight session, pulling back further off their
record highs. Dow fell 1.0 percent to 27,502 and Nasdaq tumbled 0.6 percent to
8,520.
The UK stocks drifted lower on Tuesday as the pound pushed higher and the wave
of deal making in the gold industry reached the U.K. The FTSE 100 was down by 0.7
per cent to 7,234.
On domestic front, Indian shares ended a choppy session lower on Tuesday in the
wake of weak global sentiment after U.S. President Donald Trump escalated trade
tensions across the globe by imposing tariffs on foreign steel, threatening tariffs on
allies like the European Union and engaging in a tit-for-tat trade war with China
that has hurt American farmers. Weak manufacturing data from the U.S. also kept
investors' risk appetite under check. The benchmark BSE Sensex was down by 0.3per
cent to 40,675.
News Analysis
Wipro Consumer Care forays into South Africa with Canway acquisition
Detailed analysis on Pg2
Investor’s Ready Reckoner
Key Domestic & Global Indicators
Stock Watch: Latest investment recommendations on 150+ stocks
Refer Pg5 onwards
Top Picks
Company
Rating
CMP
(`)
Target
(`)
Upside
(%)
Blue Star
Buy
796
990
24.4
ICICI Bank
Accumulate
509
532
4.5
GMM Pfaudlers
Accumulate
1,620
2,059
27.1
Bata India
Accumulate
1,679
1,865
11.1
HDFC Bank
Accumulate
1,256
1,390
10.7
More Top Picks on Pg4
Domestic Indices
Chg (%)
(Pts)
(Close)
BSE Sensex
(0.3)
(127)
40,675
Nifty
(0.4)
(54)
11,994
Mid Cap
(0.9)
(142)
14,826
Small Cap
(0.7)
(100)
13,408
Bankex
(0.7)
(245)
35,919
Global Indices
Chg (%)
(Pts)
(Close)
Dow Jones
(1.0)
(280)
27,502
Nasdaq
(0.1)
(48)
8,520
FTSE
(0.7)
(52)
7,234
Nikkei
(0.7)
(150)
23,379
Hang Seng
(0.2)
(53)
26,391
Shanghai Com
0.3
9
2,884
Advances / Declines
BSE
NSE
Advances
868
576
Declines
1,603
1,212
Unchanged
203
350
Volumes (` Cr)
BSE
3,542
NSE
33,874
Net Inflows (` Cr)
Net
Mtd
Ytd
FII
1,628
22,591
-2,14,591
*MFs
-136
-3,015
46,694
Top Gainers
Price (
`
)
Chg (%)
JPASSOCIAT
3
9.8
PRESTIGE
352
9.1
INOXWIND
45
7.9
LAKSHVILAS
20
5.0
IBULISL
79
4.9
Top Losers
Price (
`
)
Chg (%)
IDEA
7
-9.5
HFCL
18
-8.9
IIFL
156
-8.1
YESBANK
60
-7.1
INFRATEL
248
-6.3
As on Dec 03, 2019
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Market Outlook
December 04, 2019
www.angelbroking.com
News Analysis
Wipro Consumer Care forays into South Africa with Canway
acquisition
Continuing to ride on an aggressive acquisition strategy, Wipro Consumer Care &
Lighting (WCCL) has made inroads in the South African market, with the buyout of
the country’s flagship personal care company Canway. This is the 12th acquisition
for the Bengaluru-headquartered firm in 16 years. It has spent close to $950
million in acquisitions so far. “For us, it is a good entry as South Africa has the
second largest GDP in Africa and it has the largest personal care market in the
continent,” said Vineet Agrawal, chief executive officer (CEO), WCCL. The
consumer care company so far has had a muted presence in Africa, with its iconic
Santoor brand sparsely available in Egypt and Sudan.
With this acquisition, WCCL gets access to Canway’s brands such as Oh So
Heavenly, present in the bath and hand creams segment, IQ, a derma skin care
brand, Iwori, an organic brand, and Dr Sole, which is into foot care. As part of the
deal, WCCL will also acquire the manufacturing facility of Canway located in
Durban. The Canway brands, valued at $21 million in terms of sales, are exclusive
to a health and beauty chain called Clicks, and constitute 30 per cent of the South
African personal care market. “The Clicks brand is also present in other countries
such as Namibia, Seychelles, and Ghana, and as Clicks expands Canway will also
expand with it,” said Agrawal, adding the acquisition gives the company
advantage to Canway products in other parts of the world. WCCL is also
evaluating to bring the product portfolio to India.
Economic and Political News
Realty firm M3M signs MoU with Swedish firm to develop smart city
Govt may hike tariff on imports that escaped higher duties last year
Link capital infusion to banks' balance-sheet clean-up: Arcil chief
Corporate News
US launch of second oncology biosimilar to boost Biocon's earnings
JSW group plans to tie up with Suraksha Realty for Jaypee real estate
Walmart-owned Flipkart invests Rs 2,839 crore in India wholesale entity
Wipro Consumer Care forays into South Africa with Canway acquisition
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Market Outlook
December 04, 2019
www.angelbroking.com
Top Picks
Company
Market Cap
(` Cr)
CMP
(`)
Target
(`)
Upside
(%)
Rationale
Blue Star
76,671
796
990
24.4
Favorable outlook for the AC industry to augur well
for Cooling products business which is out pacing
the market growth. EMPPAC division's profitability
to improve once operating environment turns
around.
ICICI Bank
32,91,286
509
532
4.5
Well capitalized with CAR of 18.1% which gives
sufficient room to grow asset base. Faster
resolution of NPA would reduce provision cost,
which would help to report better ROE.
Maruti Suzuki
21,57,425
7,142
8,552
19.7
GST regime and the Gujarat plant are expected to
improve the company’s sales volume and margins,
respectively.
Safari Industries
12,941
579
1,000
72.7
Third largest brand play in luggage segment
Increased product offerings and improving
distribution network is leading to strong growth in
business. Likely to post robust growth for next 3-4
years
Parag Milk Foods
12,264
146
200
37.2
One of the leading Indian dairy products
companies in India created strong brands in dairy
products. Rising revenue share of high-margin
Value Added Products and reduction in interest cost
is likely to boost margins and earnings in next few
years.
HDFC Bank
68,75,422
1,256
1,390
10.7
HDFC Bank maintained its steady growth in the
4QFY18. The bank’s net profit grew by 20.3%.
Steady growth in interest income and other income
aided PAT growth. The Strong liability franchise
and healthy capitalisation provides strong earning
visibility. At the current market price, the bank is
trading at 3.2x FY20E ABV.
Amber Enterprises
32,517
1,034
1,100
6.4
Market leader in the room air conditioner (RAC)
outsourced manufacturing space in India with a
market share of 55.4%. It is a one-stop solutions
provider for the major brands in the RAC industry
and currently serves eight out of the 10 top RAC
brands in India
Bata India
2,15,740
1,679
1,865
11.1
BIL is the largest footwear retailer in India, offering
footwear, accessories and bags across brands. We
expect BIL to report net PAT CAGR of ~16% to
~`3115cr over FY2018-20E mainly due to new
product launches, higher number of stores addition
and focus on women’s high growth segment and
margin improvement
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Market Outlook
December 04, 2019
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Continued...
Company
Market Cap
(` Cr)
CMP
(`)
Target
(`)
Upside
(%)
Rationale
Shriram Transport Finance
2,47,458
1,091
1,410
29.3
SHTF is in the sweet spot with benefits from
stronger CV volumes, NIMs unaffected by
rising bond yields on the back of stronger
pricing power and an enhancing ROE by
750bps over FY18-20E, supported by decline
in credit cost.
GMM Pfaudler Ltd
23,679
1,620
2,059
27.1
GMM Pfaudler Limited (GMM) is the Indian
market leader in glass-lined (GL) steel
equipment. GMM is expected to cross CAGR
15%+ in revenue over the next few years
mainly led by uptick in demand from user
industries and it is also expecting to increase
its share of non-GL business to 50% by 2020.
RBL Bank
1,57,629
366
410
12.0
We believe advance to grow at a healthy
CAGR of 35% over FY18-20E. Below peers
level ROA (1.2% FY18) to expand led by
margin expansion and lower credit cost.
Larsen & Toubro
18,43,674
1,314
1,850
40.8
The company has a strong order backlog of
~` 3lakh cr. and a very strong pipeline of `9
lakh cr. for FY2020. We are positive on
the prospects of the Company given the
Government’s thrust on Infrastructure with
over 100lakh cr. of investments lined up over
the next 5 years. Reduction in tax rate
for domestic companies to 22% from 30% will
improve profitability for the company.
Ultratech Cement
12,15,441
4,211
4,982
18.3
Post merger of Century textile’s cement
division of 13.4mn TPA from H2FY20
company will have ~110mn TPA of capacity
with a dominant position in West and central
India. We are positive on the long term
prospects of the Company given ramp up
from acquired capacities and pricing
discipline in the industry. Reduction in tax rate
for domestic companies to 22% from 30% will
improve profitability for the company.
Source: Company, Angel Research
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Market Outlook
December 04, 2019
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Fundamental Call
Company
Market Cap
(` Cr)
CMP
(`)
Target
(`)
Upside
(%)
Rationale
CCL Products
26,586
200
360
80.1
CCL is likely to maintain the strong growth
trajectory over FY18-20 backed by capacity
expansion and new geographical foray
Greenply Industries
20,043
163
256
56.6
Greenply Industries Ltd (GIL) manufactures
plywood & allied products and medium density
fibreboards (MDF). GIL to report net revenue CAGR
of ~14% to ~`2,478cr over FY2017-20E mainly
due to healthy growth in plywood & lamination
business on the back of strong brand and
distribution network
L&T Finance Holding
2,33,959
117
150
28.3
L&T Fin’s new management is on track to achieve
ROE of 18% by 2020 and recent capital infusion of
`3000cr would support advance growth.
Aditya Birla Capital
2,39,976
104
118
13.7
We expect financialisation of savings and
increasing penetration in Insurance & Mutual fund
would ensure steady growth.
KEI Industries
40,913
515
612
18.9
High order book execution in EPC segment, rising
B2C sales and higher exports to boost the revenues
and profitability
Nilkamal
19,098
1,280
NA
NA
We forecast Nilkamal to report top-line CAGR of
~9% to `2,635cr over FY17-20E on the back of
healthy demand growth in plastic division. On the
bottom-line front, we estimate ~10% CAGR to
`162cr owing to improvement in volumes.
Siyaram Silk Mills
10,558
225
NA
NA
Strong brands and distribution network would
boost growth going ahead. Stock currently trades
at an inexpensive valuation.
Music Broadcast Limited
7,937
29
NA
NA
Expected to benefit from the lower capex
requirement and 15 year long radio broadcast
licensing.
Inox Winds
10,131
46
NA
NA
We expect Inox Wind to report exponential growth
in top-line and bottom-line over FY19-20E. The
growth would be led by changing renewable
energy industry dynamics in favor of wind energy
segment viz. changes in auction regime from Feed-
In-Tariff (FIT) to reverse auction regime and
Government’s guidance for 10GW auction in FY19
and FY20 each.
Ashok Leyland
2,27,944
78
NA
NA
Considering the strong CV demand due to change
in BS-VI emission norms (will trigger pre-buying
activities), pick up in construction activities and no
significant impact on industry due to recent axle
load norms, we recommend BUY on Ashok Leyland
at current valuations.
Jindal Steel & Power Limited
1,52,543
150
NA
NA
We expect JSPL’s top line to grow at 27% CAGR
over FY19-FY20 on the back of strong steel
demand and capacity addition. On the bottom line
front, we expect JSPL to turn in to profit by FY19 on
back of strong operating margin improvement.
6
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Market Outlook
December 04, 2019
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Continued...
Company
Market Cap
(` Cr)
CMP
(`)
Target
(`)
Upside
(%)
Rationale
GIC Housing
8,595
160
NA
NA
We expect loan book to grow at 24.3% over
next two year; change in borrowing mix will
help in NIM improvement
Source: Company, Angel Research