Market Outlook
June 29, 2018
Market Cues
Domestic Indices
Chg (%)
(Pts)
(Close)
Indian markets are likely to open positive tracking global indices and SGX Nifty.
BSE Sensex
(0.5)
(179)
35,038
U.S. Stocks showed a notable move to the upside over the course of the trading day.
Nifty
(0.8)
(82)
10,589
The rebound on the day came on the heels of the pullback seen in the previous
Mid Cap
(1.6)
(250)
15,176
session. The Dow Jones ended up by 0.4% to 24,216 and the Nasdaq showed
Small Cap
(1.5)
(240)
15,730
upside move by 0.8% to 7,503.
Bankex
(0.6)
(182)
29,127
U.K. stocks fell slightly as trade worries persisted and Bank of England Deputy
Governor Jon Cunliffe warned about high levels of household debt, saying
Global Indices
Chg (%)
(Pts)
(Close)
households that have high debt could be badly affected in a recession. The
benchmark FTSE 100 was down by 0.2% to 7,606.
Dow Jones
0.4
99
24,216
Nasdaq
0.8
59
7,503
On domestic front, Indian shares closed lower on Thursday and the rupee for the
FTSE
(0.2)
(15)
7,606
first time breached the 69 per dollar mark as escalating trade war concerns coupled
with fresh worries over the impact of high oil prices on inflation, current account
Nikkei
(0.0)
(1)
22,270
deficit, fiscal deficit and capital inflows dented investors' appetite for risk. The BSE
Hang Seng
0.5
141
28,497
Sensex ended down by 0.5% to 35,038.
Shanghai Com
(0.9)
(26)
2,787
News Analysis
Advances / Declines
BSE
NSE
GMM Pfaudler Limited - CMP `775 Target Price - `1020
Advances
771
271
Detailed analysis on Pg2
Declines
1,858
1,570
Unchanged
147
51
Investor’s Ready Reckoner
Key Domestic & Global Indicators
Volumes (` Cr)
Stock Watch: Latest investment recommendations on 150+ stocks
BSE
2,649
Refer Pg5 onwards
NSE
37,876
Top Picks
CMP
Target
Upside
Company
Sector
Rating
(`)
(`)
(%)
Net Inflows (` Cr)
Net
Mtd
Ytd
Blue Star
Capital Goods
Buy
637
867
36.2
FII
(414)
(3,697)
-5,959
Dewan Housing Finance
Financials
Accumulate
636
720
13.2
*MFs
616
5,798
65,170
Parag Milk Foods
Others
Buy
301
410
36.3
Bata India
Others
Accumulate
827
896
8.3
Top Gainers
Price (`)
Chg (%)
KEI Industries
Capital Goods
Buy
405
589
45.3
More Top Picks on Pg4
CGPOWER
56
10.9
JPASSOCIAT
16
5.0
Key Upcoming Events
Previous
Consensus
VAKRANGEE
64
4.9
Date
Region
Event Description
ReadingExpectations
STAR
390
4.8
Jun 29, 2018 Germany Unemployment change (000's)
(12.00)
(8.00)
SHRIRAMCIT
2051
4.6
Jun 29, 2018 Germany PMI Manufacturing
55.90
Jun 30, 2018 UK
GDP (YoY)
1.20
1.20
Top Losers
Price (`)
Chg (%)
Jul 02, 2018
China
PMI Manufacturing
51.90
51.70
Jul 02, 2018
UK
PMI Manufacturing
54.40
54.20
JISLJALEQS
80
-8.0
More Events on Pg7
AVANTI
550
-7.4
TECHM
665
-6.8
NHPC
23
-6.6
TATASPONGE
948
-6.2
As on June 28, 2018
Market Outlook
June 29, 2018
News Analysis
GMM Pfaudler Limited - CMP `775 Target Price - `1020
GMM is the Indian market leader in glass-lined steel equipment used in corrosive
chemical processes of agrochemicals, specialty chemical and pharma sector.
GMM has a strong and sticky clientele comprising global giants in chemicals and
pharma space. Indian agrochemicals and specialty chemicals players are seeing a
buoyant demand due to slowdown in Chinese competition. Most of these
companies are expanding or upgrading their manufacturing facilities which will
augur well for GMM. Strong order inflow from the user industries is likely to
provide 20%+ growth outlook for next couple of years. Hence, we recommend a
Buy on the stock with a target price of `1020 ( 24x FY2020 earnings).
Key Financials
Y/E March (` cr)
FY2016
FY2017
FY2018E
FY2019E
FY2020E
Net Sales
292.1
353.0
405.7
480.8
577.6
% chg
-5.1
20.9
14.9
18.5
20.1
Net Profit
19.9
33.3
42.7
51.7
62.0
% chg
6.4
67.0
28.3
21.1
20.0
EBITDA (%)
12.0
13.5
15.3
15.8
15.8
EPS (`)*
13.6
22.8
29.2
35.4
42.5
P/E (x)
56.7
34.0
26.5
21.9
18.2
P/BV (x)
6.8
5.8
4.9
4.1
3.5
RoE (%)
11.9
17.1
18.5
18.8
19.0
RoCE (%)
16.1
20.3
22.7
23.7
24.0
EV/EBITDA
30.4
22.1
16.7
13.4
10.8
EV/Sales
3.6
3.0
2.6
2.1
1.7
Economic and Political News
Government readies to reduce oil imports from Iran to zero
Corporate News
Market Outlook
June 29, 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
6,123
637
867
36.2
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
19,950
636
720
13.2
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
1,74,391
271
416
53.4
of NPA would reduce provision cost, which would
help to report better ROE.
High order book execution in EPC segment, rising
KEI Industries
3,176
405
589
45.3
B2C sales and higher exports to boost the revenues
and profitability
Expected to benefit from the lower capex
Music Broadcast Limited
1,707
299
475
58.8
requirement and 15 year long radio broadcast
licensing.
Strong brands and distribution network would boost
Siyaram Silk Mills
2,399
512
851
66.3
growth going ahead. Stock currently trades at an
inexpensive valuation.
GST regime and the Gujarat plant are expected to
Maruti
2,65,255
8,781
10,619
20.9
improve the company’s sales volume and margins,
respectively.
We expect loan book to grow at 24.3% over next
GIC Housing
1,893
352
655
86.3
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
1,363
611
720
17.8
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 29, 2018
Top Picks
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
We expect financialisation of savings and
Aditya Birla Capital
28,143
128
218
70.5
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
2,531
301
410
36.3
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
1,637
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
5,55,441
2,133
2,315
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.
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
1,12,788
907
1,050
13.6
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
2,793
888
1,230
38.5
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
10,634
827
896
8.3
~`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
SHTF is in the sweet spot with benefits from
stronger CV volumes, NIMs unaffected by rising
Shriram Transport Finance
29,532
1,302
1,764
35.5
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 29, 2018
Fundamental Call
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
CCL is likely to maintain the strong growth trajectory
CCL Products
3,427
258
360
39.7
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
2,401
1,609
2,178
35.4
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
2,009
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
2,823
230
395
71.6
~`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
1,132
775
1,020
31.6
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
29,607
148
210
41.6
ROE of 18% by 2020 and recent capital infusion of
`3000cr would support advance growth.
Market Outlook
June 29, 2018
Key Upcoming Events
Global economic events release calendar
Bloomberg Data
Date
Time Country
Event Description
Unit
Period
Last Reported
Estimated
Jun 29, 2018
1:25 PMGermany
Unemployment change (000's)
Thousands
Jun
(12.00)
(8.00)
1:25 PMGermany
PMI Manufacturing
Value
Jun F
55.90
Jun 30, 2018
2:00 PMUK
GDP (YoY)
% Change
1Q F
1.20
1.20
Jul 02, 2018
6:30 AMChina
PMI Manufacturing
Value
Jun
51.90
51.70
2:00 PMUK
PMI Manufacturing
Value
Jun
54.40
54.20
Jul 04, 2018
1:25 PMGermany
PMI Services
Value
Jun F
53.90
Jul 06, 2018
6:00 PMUS
Change in Nonfarm payrolls
Thousands
Jun
223.00
198.00
6:00 PMUS
Unnemployment rate
%
Jun
3.80
3.80
Jul 10, 2018
2:00 PMUK
Industrial Production (YoY)
% Change
May
1.80
7:00 AMChina
Consumer Price Index (YoY)
% Change
Jun
1.80
Jul 11, 2018
US
Producer Price Index (mom)
% Change
Jun
1.00
Jul 12, 2018
India
Imports YoY%
% Change
Jun
14.85
India
Exports YoY%
% Change
Jun
20.18
6:00 PMUS
Consumer price index (mom)
% Change
Jun
0.20
0.20
5:30 PMIndia
Industrial Production YoY
% Change
May
4.90
Jul 13, 2018
China
Exports YoY%
% Change
Jun
12.60
Jul 16, 2018
7:30 AMChina
Industrial Production (YoY)
% Change
Jun
6.80
12:00 PMIndia
Monthly Wholesale Prices YoY%
% Change
Jun
4.43
7:30 AMChina
Real GDP (YoY)
% Change
2Q
6.80
Jul 17, 2018
6:45 PMUS
Industrial Production
%
Jun
(0.09)
2:00 PMUK
Jobless claims change
% Change
Jun
(7.70)
Jul 18, 2018
6:00 PMUS
Housing Starts
Thousands
Jun
1,350.00
6:00 PMUS
Building permits
Thousands
Jun
1,301.00
2:00 PMUK
CPI (YoY)
% Change
Jun
2.40
Source: Bloomberg, Angel Research
Market Outlook
June 29, 2018
Macro watch
Exhibit 1: Quarterly GDP trends
Exhibit 2: IIP trends
(%)
(%)
8.5
10.0
9.0
9.1
7.3
7.5
8.0
7.0
9.0
8.0
8.1
7.6
7.6
7.7
7.0
8.0
7.2
7.0
6.0
6.8
4.8
4.6
4.9
7.0
6.3
5.0
4.1
6.1
5.6
4.0
6.0
3.0
1.8
5.0
2.0
1.0
4.0
1.0
-
3.0
(1.0)
(0.3)
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
54.0
5.2
5.1
4.9
4.9
52.0
5.0
4.4
4.6
4.3
50.0
4.0
3.6
3.3
3.3
48.0
3.0
2.4
46.0
2.0
1.5
44.0
1.0
42.0
40.0
-
Source: Market, Angel Research; Note: Level above 50 indicates expansion
Source: MOSPI, Angel Research
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
6.50
30.0
6.00
25.0
5.50
20.0
5.00
15.0
4.50
10.0
4.00
5.0
3.50
0.0
(5.0)
3.00
Source: Bloomberg, Angel Research
Source: RBI, Angel Research
Market Outlook
June 29, 2018
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
2.0
0.7
1.5
0.7
1.0
-
Source: IMF, Angel Research
Exhibit 3: One year forward P-E ratio across select developing and developed countries
(x)
20.0
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
-
Source: IMF, Angel Research As on June 28, 2018
Market Outlook
June 29, 2018
Exhibit 4: Relative performance of indices across globe
Returns (%)
Country
Name of index
Closing price
1M
3M
1YR
Brazil
Bovespa
70,609
(10.5)
(17.0)
16.2
Russia
Micex
4,406
1.4
7.1
11.4
India
Nifty
10,671
(0.4)
4.0
11.3
China
Shanghai Composite
2,813
(11.1)
(11.6)
(11.2)
South Africa
Top 40
49,330
(0.1)
(0.0)
8.9
Mexico
Mexbol
46,874
4.5
0.0
(4.5)
Indonesia
LQ45
901
(5.8)
(16.2)
(7.9)
Malaysia
KLCI
1,666
(6.2)
(10.7)
(7.0)
Thailand
SET 50
1,061
(7.9)
(11.1)
5.6
USA
Dow Jones
24,118
(2.6)
1.1
12.4
UK
FTSE
7,622
(1.4)
10.1
3.7
Japan
Nikkei
22,272
(0.9)
7.3
10.1
Germany
DAX
12,349
(3.9)
3.3
(2.0)
France
CAC
5,327
(2.7)
3.5
2.3
Source: Bloomberg, Angel Research As on June 28, 2018
Market Outlook
June 29, 2018
Exhibit 7: Historical Angel Top Picks/Fundamental Calls
Date Added
Top Picks/Fundamental
Stocks
Reco Price
Target/Revised Price
Current Status
20-06-2018
Top Picks
Shriram Transport Finance Com
1,466
1,764
Open
18-06-2018
Top Picks
Bata India
779
896
Open
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
810
1016
Open
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
29-06-2018
Fundamental
GMM Pfaudler Limited
932
1,020
Open
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
16-04-2018
Top Picks
Safari Industries
651
750
Open
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
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
Fundamental
Endurance 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
Source: Company, Angel Research
Market Outlook
June 29, 2018
Exhibit 8: Historical Angel Top Picks/Fundamental Calls
Date Added
Top Picks/Fundamental
Stocks
Reco Price
Target/Revised Price
Current Status
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
June 29, 2018
Research Team Tel: 022 - 39357800
DISCLAIMER
Angel Broking Private Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India
Limited,Bombay Stock Exchange Limited and Metropolitan Stock Exchange Limited. It is also registered as a Depository Participant with
CDSL and Portfolio Manager with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Private 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.
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