Market Outlook
April 18, 2019
Market Cues
Domestic Indices
Chg (%)
(Pts)
(Close)
Indian markets are likely to open flat tracking global indices and SGX Nifty.
BSE Sensex
0.9
370
39,276
Nifty
0.8
97
11,787
US Stocks showed a lack of direction over the course of the trading day on
Mid Cap
0.1
19
15,521
Wednesday, extending the volatility seen late in the previous session. Eventually, the
major averages ended the session slightly lower. The Dow edged down 3.12 points
Small Cap
0.4
57
15,172
or less than a tenth of a percent to 26,449.54, the Nasdaq slipped 4.15 points or
Bankex
1.6
546
34,357
0.1 percent to 7,996.08 and the S&P 500 dipped 6.61 points or 0.2 percent to
2,900.45.
Global Indices
Chg (%)
(Pts)
(Close)
U.K. markets ended mostly higher on Wednesday, with investors reacting positively
Dow Jones
(0.1)
(28)
26,450
to Eurozone and Chinese economic data. Investors were also looking for news on
Nasdaq
(0.1)
(8)
7,996
Brexit and trade talks front. Among the major markets in Europe, the U.K. ended just
FTSE
0.0
0
7,471
marginally up. Germany and France closed on a firm note, with their benchmarks
Nikkei
1.4
299
22,169
DAX and CAC 40 rising 0.43% and 0.62%, respectively. Switzerland's SMI ended up
0.17%
Hang Seng
(0.3)
(99)
29,811
Shanghai Com
(0.3)
(11)
3,178
On domestic front, Indian Indian financial markets remained closed yesterday on
account of Mahavir Jayanti. On Tuesday, benchmark indexes Sensex and the Nifty
jumped around 1 percent to hit fresh record highs after the India Meteorological
Advances / Declines
BSE
NSE
1,277
894
Department (IMD) forecast near normal south-west monsoon this season, with a
Advances
well-distributed rainfall.
1,298
889
Declines
149
129
Unchanged
News Analysis
Polycab India Ltd-IPO Update (Book Profit)
Volumes (` Cr)
MSTC Ltd - IPO Update
BSE
3,645
led analysis on Pg2
NSE
35,902
Investor’s Ready Reckoner
Net Inflows (` Cr)
Net
Mtd
Ytd
Key Domestic & Global Indicators
FII
713
14,919
65,211
Stock Watch: Latest investment recommendations on 150+ stocks
*MFs
164
(1,869)
(332)
Refer Pg5 onwards
Top Picks
Top Gainers
Price (`)
Chg (%)
CMP
Target
Upside
Company
Sector
Rating
ADANIGREEN
45
19
(`)
(`)
(%)
Blue Star
Capital Goods
Buy
675
867
28.4
PCJEWELLER
146
16
ICICI Bank
Financials
Buy
407
460
13.1
DEEPAKFERT
157
14
Parag Milk Foods
Others
Buy
248
330
33.1
SPICEJET
133
11
Bata India
Others
Accumulate
1,430
1,479
3.4
TATASTEELPP
96
9
KEI Industries
Capital Goods
Buy
422
486
15.2
More Top Picks on Pg4
Top Losers
Price (`)
Chg (%)
Key Upcoming Events
JETAIRWAYS
242
-8
Previous
Consensus
Date
Region
Event Description
ReadingExpectations
RELCAPITAL
173
-6
Mar 26, 2019
TU Central Bank Inflation Report
RCOM
2
-5
Mar 27, 2019
TH Exports YoY
0.06
--
RAIN
133
-4
Mar 27, 2019
TH Exports
$22380m
--
ALBK
52
-3
Mar 30, 2019
TH Imports YoY
0.24
--
As on Apr 16, 2019
Mar 30, 2019
TH Imports
$21776m
--
More Events on Pg7
Market Outlook
April 18, 2019
News Analysis
Polycab India Ltd-IPO Update (Book Profit)
Company background: Polycab India Ltd (PIL) manufactures and sells a diverse
range of wires & cables. The company’s key products in the wires & cables
segment include power cables, control cables, instrumentation cables, solar
cables, building wires and flexible cables. In the year 2009, the company
diversified into engineering, procurement and construction (EPC) business. Further,
it also ventured into fast moving electrical goods (FMEG) segment in 2014 and
started offering products such as electric fans, LED lighting & luminaires, switches
& switchgears, solar products & conduits and accessories. The company has 24
manufacturing facilities, including two joint ventures.
Polycab is market leadership position in wires & cables segment, diversified
product portfolio, strong distribution network & brand recall and proven financial
track record are the key positives. Today Polycab has shown strong listing gain of
~22% and we recommend booked the profit.
MSTC Ltd - IPO Update
Company background : MSTC was incorporated in 1964 as a trading company
to deal in the export of scrap and since than it has grown into a large diversified,
multi-product services and trading company. It was a canalizing agency for import
of ferrous scrap until 1992, however after de-canalization, MSTC has established
itself as one of the leading e-commerce service providers in the country. MSTC is
one of the major players in trading of bulk raw material. It has entered the
recycling business through a 50:50 joint venture with MIL for setting up a
shredding plant and collection centres across the country. The company has three
main business verticals viz., (i) E-commerce, (ii) Trading, and (iii) Recycling through
MMRPL
Considering the company’s business segments like Ecommerce, Trading &
Recycling through MMRP, which mainly cater to the commodity sectors (not very
attractive). Moreover, given the instability on the topline front coupled with losses
on bottom-line front, we have recommended NEUTRAL rating on the issue and
stock price has corrected ~16% from listing date.
Quarterly Bloomberg Brokers Consensus Estimate
Reliance Industries Ltd - April 18, 2019
Particulars (` cr)
4QFY19E
4QFY18
y-o-y (%)
3QFY19
q-o-q (%)
Sales
1,48,900
1,16,915
27.3
1,56,397
(4.8)
EBIDTA
20,092
18,461
8.8
21,317
(5.7)
%
13.5
16
14
PAT
9,797
9,435
3.8
10,251
(4.4)
Market Outlook
April 18, 2019
Top Picks
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
Favorable outlook for the AC industry to augur well
for Cooling products business which is out pacing
Blue Star
6,502
675
867
28.4
the market growth. EMPPAC division's profitability
to improve once operating environment turns
around.
Well capitalized with CAR of 18.1% which gives
sufficient room to grow asset base. Faster
ICICI Bank
2,62,243
407
460
13.1
resolution of NPA would reduce provision cost,
which would help to report better ROE.
High order book execution in EPC segment, rising
KEI Industries
3,331
422
486
15.2
B2C sales and higher exports to boost the revenues
and profitability
Expected to benefit from the lower capex
Music Broadcast Limited
1,576
57
95
66.7
requirement and 15 year long radio broadcast
licensing.
Strong brands and distribution network would
Siyaram Silk Mills
2,024
432
606
40.3
boost growth going ahead. Stock currently trades
at an inexpensive valuation.
GST regime and the Gujarat plant are expected to
Maruti Suzuki
2,25,483
7,464
10,820
45.0
improve the company’s sales volume and margins,
respectively.
We expect loan book to grow at 24.3% over next
GIC Housing
1,400
260
424
63.1
two year; change in borrowing mix will help in NIM
improvement
Third largest brand play in luggage segment
Increased product offerings and improving
Safari Industries
1,625
728
1,000
37.4
distribution network is leading to strong growth in
business. Likely to post robust growth for next 3-4
years
We expect financialisation of savings and
Aditya Birla Capital
22,278
101
151
49.2
increasing penetration in Insurance & Mutual fund
would ensure steady growth.
One of the leading Indian dairy products
companies in India created strong brands in dairy
products. Rising revenue share of high-margin
Parag Milk Foods
2,086
248
330
33.1
Value Added Products and reduction in interest cost
is likely to boost margins and earnings in next few
years.
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
HDFC Bank
6,27,654
2,305
2,500
8.5
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.
Market Outlook
April 18, 2019
Continued...
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
We expect strong PAT growth on back of
healthy growth in automobile segment (on back
of new launches and facelifts in some of the
M&M
85,780
690
1,050
52.2
model ) and strong growth in Tractors segment
coupled by its strong brand recall and
improvement in rural sentiment
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
Amber Enterprises
2,635
838
984
17.4
solutions provider for the major brands in the
RAC industry and currently serves eight out of
the 10 top RAC brands in India
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
Bata India
18,383
1,430
1,479
3.4
mainly due to new product launches, higher
number of stores addition and focus on
women’s high growth segment and margin
improvement
SHTF is in the sweet spot with benefits from
stronger CV volumes, NIMs unaffected by rising
Shriram Transport Finance
27,894
1,229
1,764
43.5
bond yields on the back of stronger pricing
power and an enhancing ROE by 750bps over
FY18-20E, supported by decline in credit cost.
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
Jindal Steel & Power Limited
18,294
189
327
73.0
line front, we expect JSPL to turn in to profit by
FY19 on back of strong operating margin
improvement.
GMM Pfaudler Limited (GMM) is the Indian
market leader in glass-lined (GL) steel
equipment. GMM is expected to cross CAGR
GMM Pfaudler Ltd
1,783
1,220
1,400
14.8
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.
Aurobindo Pharmaceuticals, amongst the
Indian Pharmaceutical companies, is well
placed to face the challenging generic markets,
given its focus on achieving growth through
Aurobindo Pharmaceuticals
45,819
782
890
13.8
productivity. Aurobindo will report net revenue
& net profit CAGR of ~13% & ~8% resp.
during FY2018-20E. Valuations are cheap V/s
its peers and own fair multiples of 17-18x.
We believe advance to grow at a healthy CAGR
of 35% over FY18-20E. Below peers level ROA
RBL Bank
29,030
681
763
12.0
(1.2% FY18) to expand led by margin
expansion and lower credit cost.
TTK Prestige has emerged as one of the leading
brands in kitchen appliances in India after its
successful transformation from a single product
TTK Prestige
9,764
8,380
9,250
10.4
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.
Source: Company, Angel Research
Market Outlook
April 18, 2019
Continued...
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
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
Inox Winds
1,536
69
120
73.4
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.
Considering the strong CV demand due to
change in BS-VI emission norms (will trigger
pre-buying activities), pick up in construction
Ashok Leyland
28,284
96
156
61.9
activities and no significant impact on industry
due to recent axle load norms, we recommend
BUY on Ashok Leyland at current valuations.
Source: Company, Angel Research
Fundamental Call
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
CCL is likely to maintain the strong growth
CCL Products
3,591
270
360
33.4
trajectory 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
Nilkamal
2,141
1,435
2,178
51.8
healthy demand growth in plastic division. On the
bottom-line front, we estimate
~10% CAGR to
`162cr owing to improvement in volumes.
Elantas Beck India is the Indian market leader in
liquid insulation segment used in electrical
equipments like motors, transformers etc. It derives
Elantas Beck India Ltd
1,871
2,360
2,500
5.9
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 Ltd (GIL) manufactures plywood
& allied products and medium density fibreboards
(MDF). GIL to report net revenue CAGR of ~14% to
Greenply Industries
2,078
169
256
51.1
~`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 Fin’s new management is on track to achieve
L&T Finance Holding
29,812
149
210
40.8
ROE of 18% by 2020 and recent capital infusion of
`3000cr would support advance growth.
Well planned strategy to grow small business loans
and cross-selling would propel fees income. We
Yes Bank
61,684
266
290
8.8
expect YES to grow its advance much higher than
industry and improvement in asset quality to
support profitability.
