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Market Outlook
November 20, 2019
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Market Cues
Indian markets are likely to open flat tracking global indices and SGX Nifty.
The US stocks showed a lack of direction during trading on Tuesday. The major
averages spent most of the day bouncing back and forth across the unchanged line.
The Dow fell 0.4 percent to 27,934 while Nasdaq rose 0.2 percent to a new record
closing high of 8,570.
The UK stocks are gaining in strength after a steady start Tuesday morning, with
investors doing some brisk buying at several counters from across various sectors.
The FTSE 100 was up by 0.8 percent to 7,366.
On domestic front, Indian shares opened on a positive note on Tuesday and stayed
firm right through the session to eventually close with strong gains thanks to hectic
buying in telecom and energy sectors. The benchmark BSE Sensex was up by 0.5 per
cent to 40,469.
News Analysis
Mukesh Ambani's RIL beats BP to make elite club of 6 global energy giants
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
795
990
24.6
ICICI Bank
Accumulate
493
532
7.9
GMM Pfaudlers
Accumulate
1,690
2,059
21.8
Bata India
Accumulate
1,686
1,865
10.6
HDFC Bank
Accumulate
1,272
1,390
9.2
More Top Picks on Pg4
Domestic Indices
Chg (%)
(Pts)
(Close)
BSE Sensex
0.5
186
40,469
Nifty
0.5
56
11,940
Mid Cap
(0.1)
(8)
14,830
Small Cap
0.3
42
13,404
Bankex
0.6
192
35,349
Global Indices
Chg (%)
(Pts)
(Close)
Dow Jones
(0.4)
(102)
27,934
Nasdaq
0.2
21
8,570
FTSE
0.8
58
7,366
Nikkei
(0.6)
(125)
23,292
Hang Seng
1.6
413
27,093
Shanghai Com
0.8
25
2,933
Advances / Declines
BSE
NSE
Advances
1,151
855
Declines
1,387
928
Unchanged
194
361
Volumes (` Cr)
BSE
3,341
NSE
42,379
Net Inflows (` Cr)
Net
Mtd
Ytd
FII
1,580
10,709
-2,26,474
*MFs
-1,425
-2,187
47,522
Top Gainers
Price (
`
)
Chg (%)
IDEA
7
38.5
ORIENTBANK
62
20.0
TEJASNET
81
19.9
CORPBANK
26
19.9
UCOBANK
16
19.9
Top Losers
Price (
`
)
Chg (%)
TIMETECHNO
57
-6.8
SBILIFE
936
-6.3
RELCAPITAL
19
-5.0
RPOWER
4
-4.9
DHFL
20
-4.9
As on Nov 19, 2019
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Market Outlook
November 20, 2019
www.angelbroking.com
News Analysis
Mukesh Ambani's RIL beats BP to make elite club of 6 global
energy giants
Reliance Industries Ltd., run by Asia’s richest man Mukesh Ambani, has eclipsed BP
Plc to break into an elite club of energy supermajors. The Indian conglomerate’s
market capitalization was about $133 billion, overtaking the British energy giant’s
$132 billion value at the close of trading on Tuesday. Reliance’s shares have
increased at three times the pace of India’s benchmark index this year after its
billionaire owner in August announced plans to cut the company’s net debt to zero
in 18 months through measures including a stake sale in the oil-to-chemicals
business to Saudi Aramco. The surge in shares gives Ambani a net worth of $56
billion, making him Asia’s richest person, above Alibaba Group’s Jack Ma,
according to the Bloomberg Billionaires Index.
Reliance’s market value briefly surpassed BP for the first time at the end of last
month, and it has now regained the lead over the British company after its shares
ended at a record high in Mumbai. It also narrowing the gap with PetroChina Co.,
currently Asia’s biggest oil company by market cap. Reliance has increased 35%
this year, compared with BP’s 1.2% gain as it works on cutting high debt levels.
Oil companies have struggled because of swings in crude prices and as
uncertainty persists over future energy demand.
Economic and Political News
IRCTC inks MoU with Karnataka tourism to market, run Golden Chariot train
Kashmir shutdown caused $1-bn losses, will sue govt, says trade body
PSBs have reported Rs 95,700-crore frauds in first 6 months of FY20: FM
Corporate News
Synergy group gets a month to submit resolution plan for Jet Airways
Mukesh Ambani's RIL beats BP to make elite club of 6 global energy giants
DHFL default cases land in Supreme Court as fixed-deposit holder files plea
Infosys tops Rs 10,000-crore exports, becomes IT Ratna of Karnataka
NCLAT gives Sterling promoters 30 more days to settle creditors' dues
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Market Outlook
November 20, 2019
www.angelbroking.com
Top Picks
Company
Market Cap
(` Cr)
CMP
(`)
Target
(`)
Upside
(%)
Rationale
Blue Star
76,555
795
990
24.6
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
31,87,508
493
532
7.9
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
21,27,852
7,044
8,552
21.4
GST regime and the Gujarat plant are expected to
improve the company’s sales volume and margins,
respectively.
Safari Industries
12,846
575
1,000
73.9
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
12,996
155
200
29.4
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
69,64,754
1,272
1,390
9.2
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
31,043
987
1,100
11.4
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
2,16,755
1,686
1,865
10.6
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
November 20, 2019
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Continued...
Company
Market Cap
(` Cr)
CMP
(`)
Target
(`)
Upside
(%)
Rationale
Shriram Transport Finance
2,55,614
1,127
1,410
25.1
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
24,702
1,690
2,059
21.8
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
1,38,865
323
410
27.1
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
19,16,380
1,365
1,850
35.5
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
11,83,304
4,100
4,982
21.5
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
November 20, 2019
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Fundamental Call
Company
Market Cap
(` Cr)
CMP
(`)
Target
(`)
Upside
(%)
Rationale
CCL Products
28,009
211
360
71.0
CCL is likely to maintain the strong growth
trajectory over FY18-20 backed by capacity
expansion and new geographical foray
Greenply Industries
19,627
160
256
60.0
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
1,99,851
100
150
50.2
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
1,93,330
84
118
41.1
We expect financialisation of savings and
increasing penetration in Insurance & Mutual fund
would ensure steady growth.
KEI Industries
42,181
531
612
15.4
High order book execution in EPC segment, rising
B2C sales and higher exports to boost the revenues
and profitability
Nilkamal
19,527
1,309
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
10,977
234
NA
NA
Strong brands and distribution network would
boost growth going ahead. Stock currently trades
at an inexpensive valuation.
Music Broadcast Limited
8,158
30
NA
NA
Expected to benefit from the lower capex
requirement and 15 year long radio broadcast
licensing.
Inox Winds
7,279
33
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
2,40,713
82
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
1,41,884
139
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
November 20, 2019
www.angelbroking.com
Continued...
Company
Market Cap
(` Cr)
CMP
(`)
Target
(`)
Upside
(%)
Rationale
Yes Bank
1,63,604
64
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
8,212
153
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