Market Outlook
August 23, 2019
Market Cues
Domestic Indices
Chg (%)
(Pts)
(Close)
Indian markets are likely to open flat tracking global indices and SGX Nifty.
BSE Sensex
-1.6
-587
36,473
Nifty
-1.6
-177
10,741
The US stocks showed a lack of direction over the course of the trading session on
Mid Cap
-1.4
-179
13,081
Thursday. The major averages spent the day bouncing back and forth across the
unchanged line before closing mixed. While the Dow moved up by 0.2 per cent to
Small Cap
-2.2
-271
12,119
26,252, the Nasdaq fell by 0.4 percent to 7,991.
Bankex
-2.5
-788
30,538
The UK stocks fell on Thursday after minutes from the Federal Reserve's most recent
meeting failed to provide clarity about further U.S. interest rate cuts. The FTSE 100
Global Indices
Chg (%)
(Pts)
(Close)
fell by 0.7 per cent to 7,156.
Dow Jones
0.2
50
26,252
Nasdaq
-0.4
-29
7,991
On domestic front, Indian shares fell heavily on Thursday amid growth concerns
after minutes of the Monetary Policy Committee (MPC) meeting held on August 7
FTSE
-0.7
-48
7,156
highlighted several indicators of a slowdown in the economy. The benchmark BSE
Nikkei
0
9
20,628
Sensex slumped by 1.6 percent to 36,473.
Hang Seng
-0.8
-221
26,049
Shanghai Com
0.1
3
2,883
News Analysis
Lenders of DHFL set to declare 65% of its debt as unsustainable
Advances / Declines
BSE
NSE
Detailed analysis on Pg2
Advances
511
348
Declines
1,975
1,518
Investor’s Ready Reckoner
Unchanged
111
78
Key Domestic & Global Indicators
Stock Watch: Latest investment recommendations on 150+ stocks
Volumes (` Cr)
Refer Pg5 onwards
BSE
3,916
Top Picks
NSE
32,956
CMP
Target
Upside
Company
Sector
Rating
(`)
(`)
(%)
Blue Star
Capital Goods
Buy
709
867
22.3
Net Inflows (` Cr)
Net
Mtd
Ytd
ICICI Bank
Financials
Buy
399
490
22.8
FII
-1,339 -10,290
-2,39,463
Parag Milk Foods
Others
Buy
136
330
141.9
*MFs
601
7,616
27,377
Bata India
Others
Accumulate
1,458
1,643
12.7
KEI Industries
Capital Goods
Buy
414
612
47.9
More Top Picks on Pg4
Top Gainers
Price (`)
Chg (%)
SHRIRAMCIT
1387
5.7
COFFEEDAY
76
5.0
PERSISTENT
569
4.7
TATAPOWER
53
4.6
BALRAMCHIN
125
3.3
Top Losers
Price (`)
Chg (%)
RELCAPITAL
32
-20.0
RELINFRA
36
-13.6
THOMASCOOK
129
-20.0
DHFL
40
-12.9
ITI
60
-11.7
As on Aug 22, 2019
Market Outlook
August 23, 2019
News Analysis
Lenders of DHFL set to declare 65% of its debt as unsustainable
Lenders to Dewan Housing Finance Corp. Ltd (DHFL) are set to declare 65% of
loans outstanding to the stressed mortgage lender as unsustainable, as part of a
debt settlement plan.
Of the total ₹24,700 crore of unsustainable debt, or the portion of loans that
DHFL can’t service through its cash flows, ₹760 crore will be converted into equity
at ₹54 per share, while₹8,740 crore will be recast into unsecured debt that won’t
generate any interest payments. The remaining ₹15,200 crore of unsustainable
debt will be converted into 10-year non-convertible debentures with a coupon rate
of 6% and will be allocated to its lenders. The resolution plan for the mortgage
lender is being prepared based on the 7 June circular of the Reserve Bank of India
(RBI).
The ₹13,300 crore so-called sustainable component of bank loans will receive an
annual interest of 8.5% and has to be repaid over eight years. The mortgage
lender has a total bank debt of ₹38,000 crore as on 31 December.
DHFL was one of the worst-hit by the crisis faced by non-bank lenders after
Infrastructure Leasing and Financial Services Ltd defaulted on payments last year.
The defaults increased the cost of funds and made it tougher for the shadow
lender to borrow from banks and the bond market. Without access to fresh funds,
DHFL’s lending business ground to a halt with no fresh disbursements.
Economic and Political News
Corporate News
Enforcement Directorate examines Edelweiss ARC investment in Kohinoor
Lenders of DHFL set to declare 65% of its debt as unsustainable
Market Outlook
August 23, 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
6,829
709
867
22.3
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
2,57,680
399
490
22.8
resolution of NPA would reduce provision cost,
which would help to report better ROE.
High order book execution in EPC segment, rising
KEI Industries
3,266
414
612
47.9
B2C sales and higher exports to boost the revenues
and profitability
GST regime and the Gujarat plant are expected to
Maruti Suzuki
1,87,500
6,207
8,552
37.8
improve the company’s sales volume and margins,
respectively.
Third largest brand play in luggage segment
Increased product offerings and improving
Safari Industries
1,241
555
1,000
80.1
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
19,383
88
130
47.6
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
1,147
136
330
141.9
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
5,94,362
2,174
2,660
22.4
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.
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
M&M
63,670
512
1,050
105.0
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 solutions
Amber Enterprises
2,576
819
910
11.1
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
Bata India
18,734
1,458
1,643
12.7
~`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
Market Outlook
August 23, 2019
Continued...
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
SHTF is in the sweet spot with benefits from
stronger CV volumes, NIMs unaffected by
Shriram Transport Finance
rising bond yields on the back of stronger
22,392
987
1,470
48.9
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
Jindal Steel & Power Limited
9,879
97
250
158.1
bottom 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
2,029
1,388
1,570
13.1
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
Aurobindo Pharmaceuticals
34,620
591
890
50.6
through 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
RBL Bank
14,971
348
650
86.7
level ROA (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
TTK Prestige
8,030
5,793
7,708
33.0
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.
Source: Company, Angel Research
Market Outlook
August 23, 2019
Fundamental Call
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
CCL is likely to maintain the strong growth
CCL Products
3,247
244
360
47.5
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
1,482
993
2,178
119.3
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
1,606
2,025
2,500
23.5
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
1,774
145
256
76.9
~`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
18,624
93
210
125.6
ROE of 18% by 2020 and recent capital infusion of
`3000cr would support advance growth.
We expect loan book to grow at 24.3% over next
GIC Housing
869
161
424
162.6
two year; change in borrowing mix will help in NIM
improvement
Strong brands and distribution network would boost
Siyaram Silk Mills
1,041
222
549
147.1
growth going ahead. Stock currently trades at an
inexpensive valuation.
Expected to benefit from the lower capex
Music Broadcast Limited
1,001
36
95
162.4
requirement and 15 year long radio broadcast
licensing.
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
Inox Winds
747
34
120
256.6
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 activities and no
Ashok Leyland
17,011
58
156
169.2
significant impact on industry due to recent axle
load norms, we recommend BUY on Ashok Leyland
at current valuations.
Well planned strategy to grow small business loans
and cross-selling would propel fees income. We
Yes Bank
14,358
56
NA
NA
expect YES to grow its advance much higher than
industry and improvement in asset quality to
support profitability.
Market Outlook
August 23, 2019
Macro watch
Exhibit 1: Quarterly GDP trends
Exhibit 2: IIP trends
(%)
(%)
10.0
8.5
8.4
9.1
9.0
8.0
7.3
7.5
9.0
7.0
7.0
8.1
8.0
7.6
7.7
7.0
6.5
8.0
6.8
7.0
7.0
6.0
7.0
6.3
6.6
4.8
6.1
4.6
4.5
4.6
5.0
5.6
3.8
6.0
4.0
2.6
5.0
3.0
1.7
4.0
2.0
1.0
0.3
3.0
-
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
5.2
5.07
54.0
4.9
4.9
5.0
4.4
4.6
4.3
4.2
52.0
3.7
3.7
4.0
3.4
50.0
3.0
2.6
2.3
2.1
2.0
48.0
2.0
1.0
46.0
-
44.0
Source: MOSPI, Angel Research
Source: Market, Angel Research; Note: Level above 50 indicates expansion
Exhibit 5: Exports and imports growth trends
Exhibit 6: Key policy rates
(%)
Exports yoy growth
Imports yoy growth
(%)
Repo rate
Reverse Repo rate
CRR
35.0
7.00
30.0
6.50
25.0
6.00
20.0
5.50
15.0
5.00
10.0
4.50
5.0
4.00
0.0
3.50
(5.0)
3.00
Source: Bloomberg, Angel Research As of 15 April, 2019
Source: RBI, Angel Research
Market Outlook
August 23, 2019
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
1.5
2.0
0.7
0.7
1.0
-
Source: IMF, Angel Research
Exhibit 3: One year forward P-E ratio across select developing and developed countries
(x)
25.0
20.0
15.0
10.0
5.0
-
Source: IMF, Angel Research As of 25 Sep, 2018
Market Outlook
August 23, 2019
Exhibit 4: Relative performance of indices across globe
Returns (%)
Country
Name of index
Closing price
1M
3M
1YR
Brazil
Bovespa
1,00,995
4.1
5.8
38.8
Russia
Micex
2,559
0.0
1.5
10.9
India
Nifty
11,789
-1.1
1.4
10.0
China
Shanghai Composite
2,979
2.8
-3.6
4.6
South Africa
Top 40
51,925
3.8
9.7
3.7
Mexico
Mexbol
44,686
-11.2
-15.1
-11.3
Indonesia
LQ45
1,006
-3.2
4.1
-8.5
Malaysia
KLCI
1,708
1.4
1.7
-8.0
Thailand
SET 50
1,099
0.2
0.6
-8.9
USA
Dow Jones
26,600
7.2
2.6
9.6
UK
FTSE
7,426
3.7
2.0
-2.8
Japan
Nikkei
21,276
3.3
0.3
-4.6
Germany
DAX
12,399
5.7
7.6
0.8
France
CAC
5,539
6.4
3.5
4.0
Source: Bloomberg, Angel Research As of 06 July, 2019
Market Outlook
August 23, 2019
Exhibit 7: Historical Angel Top Picks/Fundamental Calls
Date Added
Top Picks/Fundamental
Stocks
Reco Price
Target/Revised Price
Current Status
17-08-2018
Top Picks
Ashok Leyland
128
156
Open
10-08-2018
Top Picks
Inox Wind
107
127
Open
30-11-2018
Top Picks
TTK Prstige
7,206
8,200
Open
09-08-2018
Top Picks
TTK Prstige
6,206
7,500
06-07-2018
Top Picks
Aurobindo Pharma
603
780
Open
30-08-2018
Top Picks
RBL Bank
626
690
Open
06-07-2018
Top Picks
RBL Bank
565
670
06-07-2018
Top Picks
Yes Bank
348
418
Open
30-06-2018
Top Picks
Jindal Steel & Power
222
350
Open
20-06-2018
Top Picks
Shriram Transport Finance Com
1,466
1,764
Open
30-07-2018
Top Picks
Bata India
918
1,007
Open
23-07-2018
Top Picks
Bata India
842
955
01-07-2018
Top Picks
Bata India
862
948
18-06-2018
Top Picks
Bata India
779
896
14-06-2018
Top Picks
Amber Enterprises
1,026
1,230
Open
07-06-2018
Top Picks
M&M
918
1050
Open
04-05-2018
Top Picks
M&M
860
990
03-05-2018
Fundamental
L&T Finance Holding
171
210
Open
02-05-2018
Top Picks
HDFC Bank
1944
2315
Open
04-05-2018
Top Picks
Matrimony.com Ltd
573
1016
Closed(17/08/2018)
20-04-2018
Top Picks
Matrimony.com Ltd
781
984
15-05-2018
Top Picks
Parag Milk Foods Limited
310
410
Open
16-04-2018
Top Picks
Parag Milk Foods Limited
249
333
27-08-2018
Top Picks
GMM Pfaudler Limited
1,170
1,287
Open
18-08-2018
Top Picks
GMM Pfaudler Limited
1,024
1,200
07-08-2018
Top Picks
GMM Pfaudler Limited
984
1,100
29-06-2018
Fundamental
GMM Pfaudler Limited
932
1,020
14-05-2018
Fundamental
GMM Pfaudler Limited
818
900
06-04-2018
Fundamental
GMM Pfaudler Limited
712
861
07-03-2018
Fundamental
Ashok Leyland Ltd
139
163
Closed (26/04/2018)
03-03-2018
Fundamental
Greenply Industries
340
395
Open
27-08-2018
Top Picks
Safari Industries
974
1,071
Open
14-08-2018
Top Picks
Safari Industries
868
1,000
07-08-2018
Top Picks
Safari Industries
788
870
16-07-2018
Top Picks
Safari Industries
693
800
16-04-2018
Top Picks
Safari Industries
651
750
21-02-2018
Top Picks
Safari Industries
532
650
31-05-2018
Top Picks
HSIL Ltd
348
Closed (31/05/2018)
16-02-2018
Top Picks
HSIL Ltd
433
510
07-02-2018
Fundamental
Elantas Beck India Ltd.
2155
2500
Open
01-02-2018
Top Picks
ICICI Bank
352
416
Open
01-02-2018
Top Picks
Aditya Birla Capital
167
218
Open
04-01-2018
Fundamental
CCL Products
278
360
Open
03-01-2018
Fundamental
Nilkamal Ltd
1880
2178
Open
01-01-2018
Fundamental
Capital First Ltd
693
850
Closed (15/01/2018)
30-12-2017
Fundamental
Shreyans Industries Ltd
205
247
Closed
Source: Company, Angel Research
Market Outlook
August 23, 2019
Exhibit 8: Historical Angel Top Picks/Fundamental Calls
Date Added
Top Picks/Fundamental
Stocks
Reco Price
Target/Revised Price
Current Status
Fundamental
Prism Cement Ltd
160
Closed (09/05/2018)
21-12-2017
Fundamental
Prism Cement Ltd
118
131
18-12-2017
Fundamental Menon Bearings Limited
92
114
Closed (17/01/2018)
14-12-2017
Top Picks
Ruchira Papers Ltd.
188
244
Closed (09/02/2018)
17-05-2018
Top Picks
Century Plyboards India
280
Closed(17/05/2018)
28-11-2017
Top Picks
Century Plyboards India
317
400
19-12-2017
Top Picks
LT Foods
85
Closed(18/06/2018)
06-11-2017
Top Picks
LT Foods
74
96
16-10-2017
FundamentalEndurance Technologies Ltd
1111
1277
Closed (01/12/2017)
11-09-2017
Top Picks
GIC Housing
533
655
Open
10-10-2017
Top Picks
Music Broadcast Limited
404
475
Open
20-07-2017
Top Picks
Music Broadcast Limited
368
434
07-07-2017
Fundamental L&T Finance Holdings Ltd
149
179
Closed (28/8/2017)
06-07-2017
Fundamental
Syngene International
478
564
Closed (1/3/2018)
05-07-2017
Top Picks
Maruti
7371
10619
Open
05-06-2017
Top Picks
Karur Vysya Bank
127
100
Closed (12/03/2018)
23-05-2018
Top Picks
KEI Industries
481
589
Open
04-01-2017
Top Picks
KEI Industries
125
485
31-05-2018
Top Picks
Alkem Lab
1978
Closed (31/05/2018)
01-12-2016
Top Picks
Alkem Lab
1700
2441
17-10-2016
Top Picks
Asian Granito
267
534
Closed (18/02/2018)
17-05-2018
Top Picks
TV Today Network
460
Closed (17/05/2018)
04-08-2016
Top Picks
TV Today Network
297
603
05-04-2016
Top Picks
DHFL
189
720
Open
25-06-2018
Top Picks
Navkar Corporation
207
Closed(25/06/2018)
05-01-2016
Top Picks
Navkar Corporation
207
265
Open
08-12-2015
Top Picks
Blue Star
357
867
Open
30-10-2015
Top Picks
Siyaram Silk Mills
186
851
Open
Source: Company
Market Outlook
August 23, 2019
Research Team Tel: 022 - 39357800
DISCLAIMER:
Angel Broking Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited, Bombay
Stock Exchange Limited, Metropolitan Stock Exchange Limited, Multi Commodity Exchange of India Ltd and National Commodity &
Derivatives Exchange Ltd It is also registered as a Depository Participant with CDSL and Portfolio Manager and Investment Adviser with
SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Limited is a registered entity with SEBI for Research
Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number INH000000164. Angel or its associates has not
been debarred/ suspended by SEBI or any other regulatory authority for accessing /dealing in securities Market. Angel or its
associates/analyst has not received any compensation / managed or co-managed public offering of securities of the company covered
by Analyst during the past twelve months.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make
such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies
referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and
risks of such an investment.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals. Investors are advised to refer the Fundamental and Technical Research Reports available on our website to evaluate the
contrary view, if any
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