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Market Outlook
October 14, 2019
www.angelbroking.com
Market Cues
Indian markets are likely to open flat tracking global indices and SGX Nifty.
The US stocks moved sharply higher over the course of the trading session on
Friday, extending the strong upward move seen over the two previous sessions. Dow
and the Nasdaq jumped by climbed 1.2 percent to 26,817 and 1.3 percent to
8,057, respectively.
The UK stock had a pretty strong outing on Friday as investors kept buying at several
counters amid rising optimism about a resolution to U.S.-China trade deal and
easing worries about Brexit. The FTSE 100 rose by 0.8 percent to 7,247.
On domestic front, Indian shares followed global markets higher on Friday as Brexit
worries eased and optimism prevailed for some sort of a partial trade deal between
the United States and China. The benchmark BSE Sensex went up by 0.7 percent to
38,127.
News Analysis
India and China to work on reducing trade deficit, improving investment
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
Accumulate
808
867
7.3
ICICI Bank
Accumulate
428
490
14.4
Parag Milk Foods
Buy
155
200
28.8
Bata India
Accumulate
1,709
1,865
9.1
KEI Industries
Accumulate
535
612
14.4
More Top Picks on Pg4
Domestic Indices
Chg (%)
(Pts)
(Close)
BSE Sensex
0.7
247
38,127
Nifty
0.6
67
11,301
Mid Cap
0.2
33
13,780
Small Cap
0.4
49
12,772
Bankex
0.1
45
31,732
Global Indices
Chg (%)
(Pts)
(Close)
Dow Jones
1.2
320
26,817
Nasdaq
1.3
106
8,057
FTSE
0.8
60
7,247
Nikkei
1.2
247
21,798
Hang Seng
2.3
600
26,308
Shanghai Com
0.9
25
2,973
Advances / Declines
BSE
NSE
Advances
1,107
864
Declines
1,360
902
Unchanged
161
361
Volumes (` Cr)
BSE
2,368
NSE
37,369
Net Inflows (` Cr)
Net
Mtd
Ytd
FII
(683)
(9,033)
(2,56,416)
*MFs
884
10,762
48,313
Top Gainers
Price (
`
)
Chg (%)
GRUH
302
11.1
TATAMETALI
563
7.1
ZYDUSWELL
1,655
5.3
CIPLA
441
4.5
MINDAIND
355
4.4
Top Losers
Price (
`
)
Chg (%)
RELCAPITAL
17
-12.3
DHFL
21
-9.8
RBLBANK
266
-7.5
RELINFRA
22
-6.3
IRB
61
-6.1
As on Oct 11, 2019
2
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Market Outlook
October 14, 2019
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News Analysis
India and China to work on reducing trade deficit, improving
investment
Prime Minister Narendra Modi and Chinese President Xi Jinping agreed to set up a
new “high-level economic and trade dialogue mechanism” to enhance trade and
commercial ties. Chinese Vice Premier Hu Chunhua and Finance Minister Nirmala
Sitharaman will head the mechanism, which will also identify sectors for mutual
investments for joint manufacturing partnerships.
India’s trade deficit with China stood at $53 billion at the end of 2018-19.
The Chinese president told Modi that Beijing was “ready to take sincere action in
this regard and discuss in a very concrete way how to reduce the trade deficit”. Xi
welcomed Indian investments into China in IT and pharmaceutical sectors.
The two also discussed the ongoing RCEP negotiations in Bangkok, with Modi
“specifically” stating that while India looked forward to the free trade pact, it was
important that it was balanced, and that balance was maintained between trade in
goods, trade in services and investments.
Economic and Political News
World Bank says slowdown in India is severe, cuts GDP forecast to 6%
UP sugar mills demand Rs 1,000 crore power dues to pay cane farmers
BPCL privatisation likely to clear the decks for strategic partner in HPCL
New registration norms by Saudi add to Morbi tile cluster's woes
Corporate News
GNPA for PSBs in agriculture sector crosses Rs 1-trillion mark: RBI data
IL&FS Group puts 485,000 sq. ft of commercial, residential spaces on sale
ED attaches Bhushan Steel assets worth Rs 4,000 cr in bank fraud probe
LIC Housing Finance raises Rs 19,000-crore through commercial papers,
NCDs
NCLT initiates insolvency proceedings against Nirav Modi's entity
3
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Market Outlook
October 14, 2019
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Quarterly Bloomberg Brokers Consensus Estimate
Hindustan Unilever Ltd – October 14, 2019
Particulars (` cr)
2QFY20E
2QFY19
y-o-y (%)
1QFY19
q-o-q (%)
Sales
9,732
9,778
(0.4)
10,364
(6.1)
EBIDTA
2,340
2,319
0.9
2,724
(14.1)
%
24
24
26
PAT
1,797
1,565
14.8
1,792
0.2
ACC Ltd – October 15, 2019
Particulars (` cr)
2QFY20E
2QFY19
y-o-y (%)
1QFY19
q-o-q (%)
Sales
3,552
3,433
3.4
4,150
(14.4)
EBIDTA
492
444
10.8
783
(37.2)
%
13
13
19
PAT
295
209
41.2
456
(35.3)
Wipro Ltd – October 15, 2019
Particulars (` cr)
2QFY20E
2QFY19
y-o-y (%)
1QFY19
q-o-q (%)
Sales
14,890
14,568
2.2
14,786
0.7
EBIDTA
2,910
2,377
22.4
2,945
(1.1)
%
19
16
20
PAT
2,280
1,889
20.7
2,388
(4.5)
4
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Market Outlook
October 14, 2019
www.angelbroking.com
Top Picks
Company
Market Cap
(` Cr)
CMP
(`)
Target
(`)
Upside
(%)
Rationale
Blue Star
77,802
808
867
7.3
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
27,67,372
428
490
14.4
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.
KEI Industries
42,515
535
612
14.4
High order book execution in EPC segment, rising
B2C sales and higher exports to boost the revenues
and profitability
Maruti Suzuki
20,23,981
6,700
8,552
27.6
GST regime and the Gujarat plant are expected to
improve the company’s sales volume and margins,
respectively.
Safari Industries
12,880
576
1,000
73.5
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
13,059
155
200
28.8
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
65,56,984
1,199
1,310
9.3
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.
M&M
6,95,939
560
724
29.3
We expect strong PAT growth on back of healthy
growth in automobile segment (on back of new
launches and facelifts in some of the model ) and
strong growth in Tractors segment coupled by its
strong brand recall and improvement in rural
sentiment
Amber Enterprises
29,198
929
1,003
8.0
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
2,19,615
1,709
1,865
9.1
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
5
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Market Outlook
October 14, 2019
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Continued...
Company
Market Cap
(` Cr)
CMP
(`)
Target
(`)
Upside
(%)
Rationale
Shriram Transport Finance
2,40,459
1,060
1,385
30.7
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
21,692
1,484
1,740
17.3
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
1,14,860
267
540
102.4
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.
TTK Prestige
82,343
5,940
7,708
29.8
TTK Prestige has emerged as one of the
leading brands in kitchen appliances in India
after its successful transformation from a
single product company to offering an entire
gamut of home and kitchen appliances. We
are expecting a CAGR of 18% in revenue and
25% in PAT over FY2018-20. Maintain Hold.
Larsen & Toubro
20,03,092
1,427
1,850
29.6
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
11,19,425
4,076
4,982
22.2
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
6
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Market Outlook
October 14, 2019
www.angelbroking.com
Fundamental Call
Company
Market Cap
(` Cr)
CMP
(`)
Target
(`)
Upside
(%)
Rationale
CCL Products
31,634
238
360
51.4
CCL is likely to maintain the strong growth
trajectory over FY18-20 backed by capacity
expansion and new geographical foray
Elantas Beck India Ltd
19,084
2,407
2,500
3.9
Elantas Beck India is the Indian market leader in
liquid insulation segment used in electrical
equipments like motors, transformers etc. It derives
demand from several industries which are expected
to register 10%+ CAGR in demand in the coming
years. We can book out from the stock with 16%
profit at Rs. 2500 TP.
Greenply Industries
19,026
155
256
65.0
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
1,61,139
81
150
86.2
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
1,73,231
79
118
50.0
We expect financialisation of savings and
increasing penetration in Insurance & Mutual fund
would ensure steady growth.
Nilkamal
17,522
1,174
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
10,269
219
NA
NA
Strong brands and distribution network would
boost growth going ahead. Stock currently trades
at an inexpensive valuation.
Music Broadcast Limited
9,679
35
NA
NA
Expected to benefit from the lower capex
requirement and 15 year long radio broadcast
licensing.
Inox Winds
7,157
32
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
2,01,377
69
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
99,401
97
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.
7
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Market Outlook
October 14, 2019
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Continued...
Company
Market Cap
(` Cr)
CMP
(`)
Target
(`)
Upside
(%)
Rationale
Yes Bank
1,00,993
40
NA
NA
Well planned strategy to grow small business
loans and cross-selling would propel fees
income. We expect YES to grow its advance
much higher than industry and improvement
in asset quality to support profitability.
GIC Housing
7,232
134
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