Market Outlook
June 26, 2019
Market Cues
Domestic
Chg (%) (Pts)
(Close)
Indices
Indian markets are likely to open negative tracking global indices and SGX Nifty.
BSE Sensex
0.8
312
39,434
US stocks remain mostly negative in mid-day trading on Tuesday following the
Nifty
0.8
97
11,796
downward move seen earlier in the session. Selling pressure has remained
Mid Cap
0.7
97
14,674
somewhat subdued, however, limiting the downside for the major averages. The
Small Cap
0.3
46
14,108
Dow is down 0.2 percent at 26,679 and the Nasdaq is down 0.7 percent at 7,949.
Bankex
0.8
298
34,700
U.K. stocks fell on Tuesday after the United States slapped sanctions on Tehran and
the Iranian government said the measures spell the "permanent closure" for
Global Indices
Chg (%) (Pts)
(Close)
diplomacy between the two nations. The FTSE 100 was down by 0.2 percent to
Dow Jones
-0.2
-47
26,679
7,406.
Nasdaq
-0.7
-56
7,949
On domestic front, Indian rose notably on Tuesday to snap a two-day losing streak,
FTSE
-0.2
-12
7,406
as oil prices edged lower on concerns over declining crude demand and the rupee
Nikkei
-0.4
-93
21,193
held firm on the back of broad weakness in the dollar in the global
Hang Seng
-1.2
-327
28,185
currency markets. The benchmark BSE Sensex was up by 0.8 percent to 39,434.
Shanghai Com
-0.8
-27
2,982
News Analysis
NCLT approves okays Dhanuka Laboratories' resolution plan for Orchid Pharma
Advances / Declines
BSE
NSE
Advances
1,034
760
Detailed analysis on Pg2
Declines
1,483
1,057
Investor’s Ready Reckoner
Unchanged
186
98
Key Domestic & Global Indicators
Stock Watch: Latest investment recommendations on 150+ stocks
Volumes (` Cr)
Refer Pg5 onwards
BSE
3,355
NSE
26,915
Top Picks
CMP
Target
Upside
Company
Sector
Rating
(`)
(`)
(%)
Net Inflows (`
Net
Mtd
Ytd
Blue Star
Capital Goods Accumulate
748
867
15.9
Cr)
ICICI Bank
Financials
Buy
434
490
12.9
FII
-184
340
80,868
Parag Milk Foods
Others
Buy
256
330
28.9
*MFs
88
259
1,530
Bata India
Others
Buy
1,413
1,643
16.3
KEI Industries
Capital Goods
Buy
472
612
29.7
Top Gainers
Price (`)
Chg (%)
More Top Picks on Pg4
10
17.8
Key Upcoming Events
272
12.2
Previous
Consensus
Date
Region Event Description
106
10.7
ReadingExpectations
290
8.8
June 10, 2019
TU Central Bank Inflation Report
141
7.5
June 11, 2019
TH Exports YoY
0.06
--
June 13, 2019
TH Exports
$22380m
--
June 15, 2019
TH Imports YoY
0.24
--
Top Losers
Price (`)
Chg (%)
June 18, 2019
TH Imports
$21776m
--
4
-13.1
More Events on Pg7
52
-8.1
1,102
-6.4
64
-5.8
560
-5.1
As on June 25, 2019
Market Outlook
June 26, 2019
News Analysis
NCLT approves okays Dhanuka Laboratories' resolution plan
for Orchid Pharma
The National Company Law Tribunal (NCLT), Chennai Bench, has approved the
tribunal rejected the application filed by Accord Life Spec, another resolution
applicant. Creditors would get Rs 1,116 crore, including the Rs 570 crore quoted
crore. The earlier resolution plan by Ingen, which was approved by the NCLT in
the first attempt, was for a total of Rs 1,490 crore. The selection of a prospective
plan by the committee of creditors (CoC) had met with trouble with one of the
seeking to change its e-voting to dissent before the voting period was over.
Dhanuka’s reolution plan, which initially got 67.07 per cent votes against the
regulatory requirement of 66 per cent, would have gone down to 65.53 per cent if
the change was considered. It would thus fall short of the regulatory requirement.
The NCLT bench, comprising B S V Prakash Kumar, member (juducial), and S
Bank (International) has sent an email, it has not placed any grievance before
the NCLT. Simply sending an email against the voting need not be taken into
consideration, it added. Around 1,400 employees are making their livelihood from
the company, and if there is no solution, the immediate effect will be on the
employees. Besides, if the company is revived and generates revenue, it will also
be beneficial to the state, observed the Bench.
Economic and Political News
Govt sets 1-yr deadline for e-commerce policy, says won't change FDI rules
Bank NPAs likely to drop to 8% by March 2020, says CRISIL report
Govt plans common platform for RERA of all states, UTs; move to help buyers
Centre resolves 615 infrastructure projects worth Rs 22.35 trillion
Corporate News
Madras HC dismisses Cognizant's plea over Rs 2,800 crore tax demand
IL&FS case: Court extends ED custody of two former officials by 3 days
L&T-Mindtree takeover battle: Subroto Bagchi may offload stake this week
SBI-led group of lenders approves Adani Power's bid for GMR Chhattisgarh
NCLT approves okays Dhanuka Laboratories' resolution plan for Orchid
Pharma
Market Outlook
June 26, 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
Blue Star
7,635
748
867
15.9
pacing 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
279,580
434
490
12.9
resolution of NPA would reduce provision cost,
which would help to report better ROE.
High order book execution in EPC segment, rising
KEI Industries
3,515
472
612
29.7
B2C sales and higher exports to boost the
revenues and profitability
GST regime and the Gujarat plant are expected to
Maruti Suzuki
200,497
6,521
8,552
31.1
improve the company’s sales volume and margins,
respectively.
Third largest brand play in luggage segment
Increased product offerings and improving
Safari Industries
1,463
660
1,000
51.5
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
20,264
92
130
41.2
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
2,042
256
330
28.9
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
HDFC Bank
662,994
2,428
2,660
9.6
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.
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
78,091
642
1,050
63.6
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
2,558
827
910
10.0
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
18,023
1,413
1,643
16.3
~`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
June 26, 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
24,833
1,118
1,470
31.5
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
15,122
143
250
74.8
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
1,972
1,312
1,570
19.7
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
36,731
599
890
48.6
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
26,692
623
775
24.4
(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
TTK Prestige
9,015
6,796
7,708
13.4
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
June 26, 2019
Fundamental Call
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
CCL is likely to maintain the strong growth
CCL Products
3,408
252
360
42.9
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
1,788
1,171
2,178
86.0
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
1,665
2,050
2,500
22.0
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
Greenply Industries
2,013
162
256
58.0
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 Fin’s new management is on track to achieve
L&T Finance Holding
22,685
114
210
84.2
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
26,548
112
290
158.9
expect YES to grow its advance much higher than
industry and improvement in asset quality to
support profitability.
We expect loan book to grow at 24.3% over next
GIC Housing
1,321
242
424
75.2
two year; change in borrowing mix will help in NIM
improvement
Strong brands and distribution network would
Siyaram Silk Mills
1,386
284
549
93.3
boost growth going ahead. Stock currently trades
at an inexpensive valuation.
Expected to benefit from the lower capex
Music Broadcast Limited
1,582
58
95
63.8
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
Inox Winds
1,516
70
120
71.4
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 activities and no
Ashok Leyland
25,745
86
156
81.4
significant impact on industry due to recent axle
load norms, we recommend BUY on Ashok Leyland
at current valuations.
