Market Outlook
February 15, 2018
Market Cues
Domestic Indices
Chg (%)
(Pts)
(Close)
Indian markets are likely to open positive tracking global indices and SGX Nifty.
BSE Sensex
(0.4)
(145)
34,156
US stocks moved sharply higher over the course of the trading session. With the
Nifty
(0.4)
(39)
10,501
strong upward move on the day, the major averages added to the gains posted in
Mid Cap
0.2
29
16,881
the three previous sessions. The Dow Jones ended up 1.0% to close at 24,893 and
Small Cap
0.2
29
18,493
the Nasdaq Composite edged advanced to 1.9%, to 7,144.
Bankex
(1.6)
(471)
28,609
U.K. shares were trading notably higher after Sky Plc and BT Group had agreed to
pay £4.464bn to secure the broadcast rights for the bulk of Premier League football
Global Indices
Chg (%)
(Pts)
(Close)
games from the 2019/20 season. The FTSE 100 was up by 0.6% to close at 7,214.
Dow Jones
1.0
253
24,893
Nasdaq
1.9
130
7,144
On domestic front, Indian shares were little changed, giving up earlier gains after
factory output and retail inflation data painted a positive picture of the economy.
FTSE
0.6
46
7,214
The Sensex ended on a downside note of 0.4% at 34,156 while the Nifty ended at
Nikkei
1.3
280
21,435
10,501 with a downside of 0.4%.
Hang Seng
1.5
464
30,979
Shanghai Com
0.4
14
3,199
News Analysis
Booked the profit: - Asian Granito - CMP -`528 (Generated ~91% returns)
Advances / Declines
BSE
NSE
Detailed analysis on Pg2
Advances
1,384
848
Investor’s Ready Reckoner
Declines
1,476
959
Unchanged
122
49
Key Domestic & Global Indicators
Stock Watch: Latest investment recommendations on 150+ stocks
Refer Pg5 onwards
Volumes (` Cr)
BSE
4,615
Top Picks
NSE
34,738
CMP
Target
Upside
Company
Sector
Rating
(`)
(`)
(%)
Blue Star
Capital Goods
Buy
733
867
18.3
Net Inflows (` Cr)
Net
Mtd
Ytd
Dewan Housing Finance
Financials
Buy
552
712
29.0
FII
(879)
(5,846)
7,138
Asian Granito
Other
Buy
527
651
23.6
Navkar Corporation
Other
Buy
177
265
49.8
*MFs
826
4,611
13,634
KEI Industries
Capital Goods Accumulate
386
436
12.9
More Top Picks on Pg4
Top Gainers
Price (`)
Chg (%)
Key Upcoming Events
HCL-INSYS
68
11.9
Previous
Consensus
Date
Region
Event Description
RCOM
30
9.0
Reading
Expectations
Feb15
Germany GDP nsa (YoY)
2.30
2.20
KEC
390
7.8
Feb15
US
Initial Jobless claims
221.00
228.00
GSKCONS
6421
7.4
Feb15
India
Exports YoY%
12.40
NCC
127
6.8
Feb15
US
Industrial Production
0.89
0.20
Feb15
India
Imports YoY%
21.10
Top Losers
Price (`)
Chg (%)
More Events on Pg7
PNB
146
-9.8
JKTYRE
175
-7.9
BANKINDIA
133
-7.9
ALBK
56
-7.8
ORIENTBANK
104
-7.4
As on February 14 2018
Market Outlook
February 15, 2018
News Analysis
Booked the profit: - Asian Granito - CMP -`528 (Generated ~91%
returns)
3QFY17 Result Performance Update: For 3QFY2018, Asian Granito (AGL) posted
results in line with our expectations on top-line basis, however bottom-line
disappointed. Revenue grew by ~6% yoy (after adjusting exercise duty top-line
growth grew ~13.8% ) to `264cr, driven by strong volume growth of ~25%. On
the operating front, margins contracted by 10bps yoy due to higher power (gas
price rose more than 10% during the quarter) and employee costs. This led to PAT
de-growth of ~8% yoy to `12cr.
Outlook and Valuation: We expect various initiatives taken by the government like
smart cities, housing for all by 2022, and push towards providing sanitation, to
further lead to creation of new demand avenues for entry level or lower priced tiles
(ceramic tiles). We expect AGIL to report net revenue CAGR of ~8% to ~`1,253cr
over FY2017-19E. On bottom-line front, we expect CAGR of ~18% to `55cr over
FY2017-19E owing to better product mix, higher B2C sales and amalgamation
synergy. Currently we have neutral rating on stock.
Economic and Political News
Modi to open Maharashtra investment summit, Branson and Ambani to
attend
Centre likely to woo farmers with easier credit ahead of poll season
India emerges largest shrimp exporter to USA, exports increase 32%
Corporate News
PNB's Rs 110-bn fraud case isn't out-of-control,
Idea Cellular board approves equity issue of up to Rs 35-bn through QIP
Chinese smartphone makers grab 53% market share in India, Xiaomi leads
race
DLF's cuts debt to Rs 55.13bn on fund infusion, targets zero debt by FY19
Market Outlook
February 15, 2018
Top Picks
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
Strong growth in domestic business due to its leade`hip
in acute therapeutic segment. Alkem expects to launch
Alkem Laboratories
25,752
2,154
2,441
13.3
more products in USA, which bodes for its international
business.
Favorable outlook for the AC industry to augur well for
Cooling products business which is out pacing the
Blue Star
7,033
733
867
18.3
market growth. EMPPAC division's profitability to
improve once operating environment turns around.
With a focus on the low and medium income (LMI)
consumer segment, the company has increased its
Dewan Housing Finance
17,314
552
712
29.0
presence in tier-II & III cities where the growth
opportunity is immense.
Loan growth is likely to pick up after a sluggish FY17.
Lower credit cost will help in strong bottom-line growth.
Karur Vysya Bank
8,217
113
160
41.5
Increasing share of CASA will help in NIM
improvement.
High order book execution in EPC segment, rising B2C
KEI Industries
3,025
386
436
12.9
sales and higher exports to boost the revenues and
profitability
Expected to benefit from the lower capex requirement
Music Broadcast
2,053
360
475
32.0
and 15 year long radio broadcast licensing.
Massive capacity expansion along with rail advantage
Navkar Corporation
2,662
177
265
49.8
at ICD as well CFS augur well for the company
Strong brands and distribution network would boost
Siyaram Silk Mills
3,150
672
851
26.6
growth going ahead. Stock currently trades at an
inexpensive valuation.
Market leadership in Hindi news genre and no.
2
viewership ranking in English news genre, exit from the
TV Today Network
2,896
486
560
15.3
radio business, and anticipated growth in ad spends by
corporate to benefit the stock.
After GST, the company is expected to see higher
volumes along with improving product mix. The Gujarat
Maruti Suzuki
2,72,174
9,010
10,619
17.9
plant will also enable higher operating leverage which
will be margin accretive.
We expect loan book to grow at 24.3% over next two
GIC Housing
2,219
412
655
59.0
year; change in borrowing mix will help in NIM
improvement
We expect CPIL to report net Revenue/PAT CAGR of
~17%/16% over FY2017-20E mainly due to healthy
7,308
329
400
21.6
growth in plywood & lamination business, forayed into
Century Plyboards India
MDF & Particle boards on back of strong brand &
distribution network.
We expect sales/PAT to grow at 13.5%/20% over next
LT Foods
3,126
98
128
30.9
two years on the back of strong distribution network &
addition of new products in portfolio.
We expect financialisation of savings and increasing
Aditya Birla Capital
36931
168
230
36.9
penetration in Insurance & Mutual fund would ensure
steady growth.
Source: Company, Angel Research
Market Outlook
February 15, 2018
Fundamental Call
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
CCL is likely to maintain the strong growth trajectory
CCL Products
3,870
291
360
23.8
over FY18-20 backed by capacity expansion and new
geographical foray
We forecast Nilkamal to report top-line CAGR of ~9%
to `2,635cr over FY17-20E on the back of healthy
Nilkamal
2,717
1,820
2,178
19.6
demand growth in plastic division. On the bottom-line
front, we estimate ~10% CAGR to `162cr owing to
improvement in volumes.
We expect sales/PAT to grow at 9%/14% over next two
years on the back of healthy demand growth in
Shreyans Industries
228
165
247
49.9
printing. Further, China had banned making paper
from waste pulp which would benefit Indian paper
companies.
The prism has diversified exposure in the different
segment such as Cement, Tile & ready mix concrete.
Prism Cement
6,961
138
160
15.7
Thus we believe, PCL is in the right place to capture
ongoing government spending on affordable housing
and infrastructure projects.
Source: Company, Angel Research
Market Outlook
February 15, 2018
Key Upcoming Events
Global economic events release calendar
Bloomberg Data
Date
Time Country
Event Description
Unit
Period
Last Reported
Estimated
Feb 15, 2018
12:30 PMGermany
GDP nsa (YoY)
% Change
4Q P
2.30
2.20
7:00 PMUS
Initial Jobless claims
Thousands
Feb 10
221.00
228.00
India
Exports YoY%
% Change
Jan
12.40
7:45 PMUS
Industrial Production
%
Jan
0.89
0.20
India
Imports YoY%
% Change
Jan
21.10
US
Producer Price Index (mom)
% Change
Jan
-
Feb 16, 2018
7:00 PMUS
Housing Starts
Thousands
Jan
1,192.00
1,235.00
7:00 PMUS
Building permits
Thousands
Jan
1,300.00
1,300.00
Feb 20, 2018
8:30 PMEuro Zone
Euro-Zone Consumer Confidence
Value
Feb A
1.30
Feb 21, 2018
2:00 PMGermany
PMI Services
Value
Feb P
57.30
2:00 PMGermany
PMI Manufacturing
Value
Feb P
61.10
8:30 PMUS
Existing home sales
Million
Jan
5.57
5.60
3:00 PMUK
Jobless claims change
% Change
Jan
8.60
Feb 22, 2018
3:00 PMUK
GDP (YoY)
% Change
4Q P
1.50
Feb 23, 2018
8:30 PMUS
New home sales
Thousands
Jan
625.00
641.50
Feb 26, 2018
3:30 PMEuro Zone
Euro-Zone CPI (YoY)
%
Jan F
1.30
Feb 27, 2018
8:30 PMUS
Consumer Confidence
S.A./ 1985=100
Feb
125.40
124.00
Feb 28, 2018
2:25 PMGermany
Unemployment change (000's)
Thousands
Feb
(24.00)
6:30 AMChina
PMI Manufacturing
Value
Feb
51.30
7:00 PMUS
GDP Qoq (Annualised)
% Change
4Q S
2.60
2.60
Mar 01, 2018
3:00 PMUK
PMI Manufacturing
Value
Feb
55.30
Mar 08, 2018
China
Exports YoY%
% Change
Feb
11.10
6:15 PMEuro Zone
ECB announces interest rates
%
Mar 8
-
Mar 09, 2018
3:00 PMUK
Industrial Production (YoY)
% Change
Jan
-
Source: Bloomberg, Angel Research
Market Outlook
February 15, 2018
Macro watch
Exhibit 1: Quarterly GDP trends
Exhibit 2: IIP trends
(%)
(%)
10.0
9.0
8.4
9.1
9.0
8.0
8.0
7.9
7.0
7.6
7.5
8.0
7.3
7.2
7.0
6.0
4.8
7.0
6.3
5.0
4.4
4.1
6.1
6.1
5.7
3.5
3.2
6.0
4.0
2.9
3.0
2.0
5.0
2.0
1.2
1.0
4.0
1.0
-
3.0
(1.0)
(0.3)
Source: CSO, Angel Research
Source: MOSPI, Angel Research
Exhibit 3: Monthly CPI inflation trends
Exhibit 4: Manufacturing and services PMI
56.0
Mfg. PMI
Services PMI
(%)
6.0
54.0
5.2
4.9
52.0
5.0
3.9
50.0
3.7
3.6
4.0
3.3
3.3
3.2
3.0
48.0
3.0
2.4
2.2
46.0
2.0
1.5
44.0
1.0
42.0
40.0
-
Source: Market, Angel Research; Note: Level above 50 indicates expansion
Source: MOSPI, Angel Research
Exhibit 5: Exports and imports growth trends
Exhibit 6: Key policy rates
(%)
Exports yoy growth
Imports yoy growth
(%)
Repo rate
Reverse Repo rate
CRR
60.0
6.50
50.0
6.00
40.0
5.50
30.0
5.00
20.0
4.50
10.0
4.00
0.0
3.50
(10.0)
3.00
Source: Bloomberg, Angel Research
Source: RBI, Angel Research
Market Outlook
February 15, 2018
Global watch
Exhibit 1: Latest quarterly GDP Growth (%, yoy) across select developing and developed countries
(%)
8.0
6.9
7.0
5.8
6.0
5.3
5.0
5.0
1.1
3.7
4.0
2.5
3.0
2.2
1.8
2.0
1.5
1.4
0.8
1.0
0.3
-
Source: Bloomberg, Angel Research
Exhibit 2: 2017 GDP Growth projection by IMF (%, yoy) across select developing and developed countries
(%)
6.7
6.8
7.0
6.0
5.4
5.2
5.0
3.7
4.0
3.0
1.8
2.2
2.0
1.7
1.6
2.0
0.7
1.5
0.7
1.0
-
Source: IMF, Angel Research
Exhibit 3: One year forward P-E ratio across select developing and developed countries
(x)
20.0
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
-
Source: IMF, Angel Research
Market Outlook
February 15, 2018
Exhibit 4: Relative performance of indices across globe
Returns (%)
Country
Name of index
Closing price
1M
3M
1YR
Brazil
Bovespa
83,543
6.8
12.4
28.6
Russia
Micex
2,258
(0.2)
4.2
5.4
India
Nifty
10,501
(1.4)
2.7
19.6
China
Shanghai Composite
3,199
(6.2)
(6.0)
(0.5)
South Africa
Top 40
50,556
(5.4)
(5.6)
10.0
Mexico
Mexbol
48,401
(1.5)
(0.6)
2.1
Indonesia
LQ45
1,111
1.7
11.1
26.0
Malaysia
KLCI
1,835
1.0
5.0
8.5
Thailand
SET 50
1,160
(2.4)
8.1
16.4
USA
Dow Jones
24,893
(3.5)
6.3
20.8
UK
FTSE
7,214
(7.1)
(2.7)
(0.9)
Japan
Nikkei
21,154
(10.6)
(7.7)
11.9
Germany
DAX
12,339
(6.5)
(5.6)
4.6
France
CAC
5,165
(6.3)
(3.3)
6.2
Source: Bloomberg, Angel Research p68in4
Market Outlook
February 15, 2018
Research Team Tel: 022 - 39357800
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