Market Outlook
June 26, 2018
Market Cues
Domestic Indices
Chg (%)
(Pts)
(Close)
Indian markets are likely to open negative tracking global indices and SGX Nifty.
BSE Sensex
(0.6)
(219)
35,470
U.S. Stocks showed a substantial move to the downside during trading on Monday.
Nifty
(0.5)
(59)
10,762
With the drop on the day, the Dow closed lower for the ninth time in ten sessions.
Mid Cap
(0.8)
(127)
15,713
The Dow Jones ended down by 1.3% to 24,252 and the Nasdaq slid by 2.1% to
Small Cap
(0.9)
(147)
16,392
7,532.
Bankex
(0.9)
(280)
29,617
U.K. stocks fell sharply on Monday as trade war fears showed no sign of abating.
The benchmark FTSE 100 was down by 0.9% to 7,614.
Global Indices
Chg (%)
(Pts)
(Close)
On domestic front, Indian shares followed global peers lower on Monday as trade
Dow Jones
(1.3)
(328)
24,252
worries persisted and oil prices traded mixed after Friday's strong rally. The BSE
Nasdaq
(2.1)
(161)
7,532
Sensex ended down by 0.6% to 35,470.
FTSE
(0.9)
(68)
7,614
News Analysis
Nikkei
(0.8)
(179)
22,338
Exit from Navkar Corporation (NCL): CMP `133
Hang Seng
(1.3)
(377)
28,961
Shanghai Com
(1.1)
(30)
2,859
Tata Motors-owned JLR rises spending in a bid to offer electric cars
Detailed analysis on Pg2
Advances / Declines
BSE
NSE
Advances
830
824
Investor’s Ready Reckoner
Declines
1,797
938
Key Domestic & Global Indicators
Unchanged
136
104
Stock Watch: Latest investment recommendations on 150+ stocks
Refer Pg5 onwards
Volumes (` Cr)
Top Picks
BSE
2,972
CMP
Target
Upside
Company
Sector
Rating
(`)
(`)
(%)
NSE
24,424
Blue Star
Capital Goods
Buy
643
867
34.9
Dewan Housing Finance
Financials
Accumulate
633
720
13.8
Net Inflows (` Cr)
Net
Mtd
Ytd
Parag Milk Foods
Others
Buy
324
410
26.6
FII
1,241
(3,603)
-5,866
Bata India
Others
Accumulate
825
896
8.6
*MFs
616
5,798
65,170
KEI Industries
Capital Goods
Buy
429
589
37.3
More Top Picks on Pg4
Top Gainers
Price (`)
Chg (%)
Key Upcoming Events
Previous
Consensus
PNBHOUSING
1223
14.2
Date
Region
Event Description
ReadingExpectations
KEC
351
5.1
Jun 26, 2018 US
Initial Jobless claims
218.00
220.00
VAKRANGEE
55
5.0
Jun 28, 2018 US
Consumer Confidence
128.00
128.00
Jun 28, 2018 Euro Zone Euro-Zone Consumer Confidence
(0.50)
(0.50)
PAGEIND
28223
4.6
Jun 28, 2018 UK
GDP (YoY)
1.20
1.20
TTKPRESTIG
5924
3.3
Jun 29, 2018 US
GDP Qoq (Annualised)
2.20
2.20
More Events on Pg7
Top Losers
Price (`)
Chg (%)
ALBK
41
-8.0
IDEA
56
-7.2
TATAMTRDVR
169
-7.1
TATAMOTORS
290
-5.9
HFCL
30
-5.5
As on June 25, 2018
Market Outlook
June 26, 2018
News Analysis
Exit from Navkar Corporation (NCL): CMP `133
In FY18, the company’s volume growth declined by ~5% in Somathane mainly
due to increase in Direct port delivery (DPD
) volume, facilitated by the
government. This restricted the volume growth performance of NCL. Currently,
the DPD volume is ~38% of total JNPT import (last year it was around 28% of total
JNPT import), which is expected to increase further on back of increase in port
efficiency and government focus to reduce logistic cost. Considering the
development, we are advising to client to exit from stock.
Tata Motors-owned JLR rises spending in a bid to offer electric
cars
years as part of a plan by the diesel-dependent automaker to be able to offer
electric versions of all its models. Britain’s biggest carmaker, owned by India’s Tata
Motors Ltd, will invest a total of 13.5 billion pounds ($18 billion) worldwide during
the period, according to a presentation to investors Monday. That’s a 26 per cent
increase from 10.7 billion pounds over the three previous years through March
2018. The higher spending comes even as the automaker said sales and revenue
in the year to March “did not grow as much as we planned” because of customers’
wariness about buying diesel-fueled vehicles in the U.K. and Europe. The company
said margins and profitability were “well below” internal targets and led to
negative cash flow after investment.
Economic and Political News
Corporate News
Market Outlook
June 26, 2018
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
6,178
643
867
34.9
the 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
19,845
633
720
13.8
presence in tier-II & III cities where the growth
opportunity is immense.
Well capitalized with CAR of 18.1% which gives
sufficient room to grow asset base. Faster resolution
ICICI Bank
1,86,150
289
416
43.7
of NPA would reduce provision cost, which would
help to report better ROE.
High order book execution in EPC segment, rising
KEI Industries
3,362
429
589
37.3
B2C sales and higher exports to boost the revenues
and profitability
Expected to benefit from the lower capex
Music Broadcast Limited
1,763
309
475
53.7
requirement and 15 year long radio broadcast
licensing.
Strong brands and distribution network would boost
Siyaram Silk Mills
2,559
546
851
55.9
growth going ahead. Stock currently trades at an
inexpensive valuation.
GST regime and the Gujarat plant are expected to
Maruti
2,65,592
8,792
10,619
20.8
improve the company’s sales volume and margins,
respectively.
We expect loan book to grow at 24.3% over next
GIC Housing
2,006
372
655
75.9
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
1,353
607
720
18.6
distribution network is leading to strong growth in
business. Likely to post robust growth for next 3-4
years
Source: Company, Angel Research
Market Outlook
June 26, 2018
Top Picks
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
We expect financialisation of savings and
Aditya Birla Capital
29,849
136
218
60.8
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
2,725
324
410
26.6
Value Added Products and reduction in interest
cost is likely to boost margins and earnings in next
few years.
We expect MCL to report net revenue CAGR of
~15% to ~`450cr over FY2018-20E mainly due
to strong growth in online matchmaking &
Matrimony.com Ltd
1,636
720
1,016
41.1
marriage related services. On the bottom-line
front, we expect a CAGR of ~28% to `82cr over
the same period on the back margin
improvement.
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
5,45,118
2,094
2,315
10.6
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
1,12,378
904
1,050
15.4
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
3,045
968
1230
25.9
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
10,605
825
896
7.4
~`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
SHTF is in the sweet spot with benefits from
stronger CV volumes, NIMs unaffected by rising
Shriram Transport Finance
33,306
1,468
1,764
18.5
bond yields on the back of stronger pricing power
and an enhancing ROE by 750bps over FY18-
20E, supported by decline in credit cost.
Source: Company, Angel Research
Market Outlook
June 26, 2018
Fundamental Call
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
CCL is likely to maintain the strong growth trajectory
CCL Products
3,509
264
360
36.5
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
2,537
1,700
2,178
28.1
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
1,593
2,010
2,500
24.4
demand from several industries which are expected
to register 10%+ CAGR in demand in the coming
years.
Greenply Industries Ltd (GIL) manufactures plywood
& allied products and medium density fibreboards
(MDF). GIL to report net revenue CAGR of ~14% to
Greenply Industries
2,838
231
395
70.7
~`2,478cr over FY2017-20E mainly due to healthy
growth in plywood & lamination business on the
back of strong brand and distribution network
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
GMM Pfaudler Ltd
1,221
835
920
10.2
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.
L&T Fin’s new management is on track to achieve
L&T Finance Holding
31,273
157
210
34.0
ROE of 18% by 2020 and recent capital infusion of
`3000cr would support advance growth.
