Stocks To Watch: Bharat Forge, Eris LifeSciences, Indiabulls Real Estate
Indian equity benchmarks halted a four-day decline, its longest losing streak in more than two months as Infosys Ltd. led a slight advance, after the software company appointed a new chief executive officer.
The S&P BSE Sensex rose 0.11 percent to 32,869.72 and the NSE Nifty 50 Index was little changed at 10,127.75. The small cap shares underperformed their larger peers. The S&P BSE SmallCap Index fell 0.52 percent.
The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.4 percent to 10,120 as of 7:10 a.m.
Here Are The Stocks To Watch Out For In Tuesday’s Session
- Bharat Forge and Ramkrishna Forgings in focus after North America Class 8 trucks sales in November rose 68 percent year-on-year at 32,387 units. (down 9 percent on a monthly basis).
- Eris Lifesciences completed acquisition of Strides Shasun’s India brand business.
- Bank of Maharashtra QIP issue opens at a floor price of Rs 26.89 per share.
- Eros International Media’s parent Eros International Plc Announces $100 Million equity-linked financing.
- Indiabulls Real Estate says IPIT became a wholly owned unit. IPIT to get delisted from Singapore exchange.
- Balaji Amines’ expansion project at Solapur conferred ‘Mega Project’ status.
- Colgate India to consider second interim dividend on Dec. 11.
- Nifty December Futures trading at 10,159, premium of 31.5 points from 32 points.
- December Futures: Nifty open interest up 4 percent; Bank Nifty open interest up 12 percent.
- India VIX closed 0.4 percent higher at 14.8.
- Max open interest for Dec. series at 10,500 Call (open interest at 61.7 lakh, up 7 percent).
- Max open interest for Dec. series at 10,000 Put (open interest at 80 lakh, up 1 percent).
- No securities in ban.
Active Stock Futures
- HDFC MF bought 9 lakh shares, or 1.3 percent equity at Rs 500 each.
- SCI Growth Investments II sold 5.74 lakh shares, or 0.9 percent equity at Rs 501.54 each.
- Sequoia capital sold 4.54 lakh shares, or 0.7 percent equity at Rs 500.05 each.
Earnings Reaction To Watch
Alphageo India (Q2 YoY)
- Revenue up 249 percent at Rs 21.3 crore.
- Net loss of Rs 3.4 crore versus net loss of Rs 3.6 crore.
- Ebitda at Rs 4.7 crore versus Ebitda loss of Rs 0.1 crore.
- Margins at 22.1 percent versus -1.6 percent.
- Depreciation up 115 percent. at Rs 8.6 crore.
GOCL Corp (Q2 YoY)
- Revenue up 1 percent at Rs 102 crore.
- Net profit down 42 percent at Rs 6 crore.
- Ebitda down 28.6 percent at Rs 5 crore.
- Margins at 4.9 percent versus vs 6.9 percent.
FIEM Industries (Q2 YoY)
- Revenue up 12 percent at Rs 326.5 crore.
- Net profit up 1.4 percent at Rs 14.3 crore.
- Ebitda up 4 percent at Rs 37.5 crore.
- Margins at 11.5 percent versus 12.4 percent.
GPT Infraprojects (Q2 YoY)
- Revenue down 19 percent at Rs 98 crore.
- Net profit up 23 percent at Rs 3.8 crore.
- Ebitda down 3 percent at Rs 17.5 crore.
- Margins at 17.9 percent versus 15 percent.
Shree Pushkar Chemicals and Fertilisers (Q2 YoY)
- Revenue up 21.5 percent at Rs 96 crore.
- Net profit up 16 percent at Rs 10.4 crore.
- Ebitda up 14 percent at Rs 17.1 crore.
- Margins at 17.8 percent versus 19 percent.
Lumax Auto Technologies (Q2 YoY)
- Revenue up 4 percent at Rs 268 crore.
- Net profit up 14 percent at Rs 13.3 crore.
- Ebitda up 16 percent at Rs 25.6 crore.
- Margins at 9.6 percent versus 8.5 percent.
Sandur Manganese and Iron Ores (Q2 YoY)
- Revenue up 88 percent at Rs 144 crore.
- Net profit up 211 percent at Rs 28 crore.
- Ebitda up 258 percent at Rs 43 crore.
- Margins at 29.9 percent versus 15.7 percent.
- Dish TV
- Harrisons Malayalam
- Lux Industries
- Manali Petro
- Orient Bell
- Rane Holdings
- Byke Hospitality
HSBC on Indian Aviation Sector
- Airline industry on the cusp of a strong recovery.
- Future looks highly profitable, particularly for the low-cost carriers.
- Positives: Favourable government policies, FX rates, and modern fleets to offset the impact of rise in fuel prices.
- International market fragmented; Privatisation of Air India to create structural benefits.
- Market to consolidated further, led by Air India.
HSBC on Indigo
- Initiated ‘Buy’ with price target of Rs 1,500.
- Positives: best balance of market positioning, comparatively high FCF and dividend yield, and the strongest balance sheet.
- Expect market share to increase by another 5 percent points by March 2021.
- Costs are 15-30 percent below peers; Fleet modernisation to reduce this further.
- Strong free cash flow generation to continue.
- Expect net profit to grow at a compound annual growth rate of 37 percent by March 2020.
HSBC on SpiceJet
- Initiated ‘Buy’ with price target of Rs 180.
- Traffic to grow at a compound annual growth rate of 18.5 percent by March 2020.
- Bulk order for 200 aircraft to help regain market share.
- Expect the company to be debt free by March 2019.
- SpiceJet set to grow much faster led by new aircraft addition and as regional operations mature
- Expect net profit to grow at compound annual growth rate of 45 percent by March 2020.
HSBC on Jet Airways
- Initiated ‘Hold’ with price target of Rs 600.
- Highly leveraged and faces a tough debt repayment schedule.
- Weaker Gulf demand is hurting profitability; Expansion on other international routes to help.
- Fall in domestic market share to continue.
- Margin to increase as it shifts focus away from the Gulf.
- Hold due to the growth potential at its international operations.
- Expect net profit to grow at a compound annual growth rate of 9 percent by March 2019.
Citi on Hindustan Petroleum
- Maintained ‘Buy’ with price target of 564; implying a potential upside of 37 percent form yesterday’s close.
- Remain upbeat on third quarter.
- ONGC-HPCL deal to gather pace as we approach fourth quarter.
- Risk-reward for Hindustan Petroleum minorities remains meaningfully skewed to upside.
- Any correction in crude could trigger a relief rally.
- Post-election marketing margins have recovered.
- Positive: Sing. GRMs holding up well, a likely increase in inventory gains, and a boost from expansion of Bhatinda refinery.
Edelweiss on Parag Milk Foods
- Initiated ‘Buy’ with price target of Rs 340.
- Value added products revenue share to increase to 70 percent by March 2020.
- Parag is fortifying its profitable value‐added share by investing and expanding capacity.
- Aggressive ad spends to strengthen brand equity.
- Expect revenue, operating income and net profit to grow at a compound annual growth rate of 14 percent, 32 percent and 49 percent by March 2020.
- Expect margins to expand by 335 basis points to 9.6 percent by March 2020, led by improving utilisations.
- RoCE to expand by 1064 basis points to 19 percent by March 2020.
- Improving cash flow to lower debt/equity to 0.1 times by March 2020.
Edelweiss on Heritage Foods
- Initiated ‘Buy’ with price target of Rs 976.
- Expect milk procurement with compound annual growth rate of 21 percent by March 2020 led by investments in procurement network.
- Acquisition of Reliance Dairy to boost geographical reach; Further inorganic expansion on cards
- Expect return on capital equity to expand 230 basis points to 42 percent by March 2020.
- Focus on right product mix to help maintain high return on capital equity.
- Expect acceleration in fresh dairy and value-added products which are high growth and margin
- Expect value added products revenue share to grow to 28 percent by March 2020.
- Expect revenue, EBIT and net profit to grow at a compound annual growth rate of 23 percent, 21 percent and 18 percent by March 2020.
IIFL on SIS (India)
- Initiated ‘Buy’ with price target of Rs 1,300.
- Strong growth outlook for India security services.
- Rapid growth in facility management services off a low base.
- SIS is poised for strong earnings growth in coming years.
- Expect revenue and earnings per share to grow at a compound annual growth of 21 percent and 44 percent respectively by March 2020.
- Margin expansion of 160 basis points to 6.6 percent by March 2020.
- Expect improvement in operating efficiencies and shift in revenue mix towards high-margin India business.
- Tax benefits under Sec 80JJAA are an added boost.
Goldman Sachs on Fortis
- Maintained ‘Buy’ with price target of Rs 186; implying a potential upside of 25 percent from yesterday’s close.
- Fortis to continue pursuit of clinical excellence, publish clinical outcomes and managing cost with quality
- Fortis said they have mitigated 70 percent of the headwinds emanating from medical implants price caps and higher costs due to GST implementation.
- Fortis working with equipment manufacturers to produce lower cost in-house cheaper alternatives.
- Kirloskar Group in talks for majority stake sale in diesel generator unit (Mint).
- Ruias want to pay up, bid for Essar Steel (Business Standard).
- FTP review today, may address exporters’ woes (Business Standard).
- NSE may refile IPO papers after getting clarity on co-location (Financial Express).
- Basmati prices rise on higher demand from west Asia (Business Line).
- Tata Communications to invest upto Rs 160 cr in cloud business (Economic Times).
- Another insolvency plea against Reliance COmmunications (Economic Times).
- ONGC partners in 6 pre-NELP blocks may have to share cess (Economic Times).
- PSBs look to frame common rules to value stressed assets (Economic Times).
- Indian Oil to take Rs 4,200 crore hit under GST regime (Times of India).