Employees walk past an electronic board at the National Stock Exchange (NSE) in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Stocks To Watch: GAIL, Union Bank, TVS Motor, Federal Bank

Indian equity benchmark rebounded after form a six-week low in Thursday’s trading session, led by Bharti Airtel and Asian Paints.

The S&P BSE Sensex Index closed 1.1 percent higher at 32,949 as 26 of its 31 members advanced. The Sensex erased losses from Wednesday, when the central bank left rates unchanged, as predicted by most economists and tweaked inflation forecasts higher.

The NSE Nifty 50 Index closed 1.2 percent higher at 10,166. The market breadth was tilted in the favour of buyers.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.2 percent at 10,216.50 as of 7:20 a.m.

Here Are The Stocks To Watch Out For In Friday’s Session

  • GAIL awards contracts for laying 520 km pipelines from Dobhi to Durgapur.
  • NCL Industries’ QIP opens at floor price of Rs 249.63 per share.
  • Union Bank QIP opens at a floor price of Rs 162.79 per share.
  • TVS Motor bought 14.8 percent stake in electric two-wheeler company Ultraviolette.
  • Federal Bank gives in principal approval for investment to be done by a strategic investor in its wholly owned subsidiary FedBank Financial Services.
  • Emami to acquire 30 percent stake in Helios Lifestyle Pvt. Ltd. for an undisclosed consideration.
  • Tube Investments to acquire controlling stake in Creative Cycles & Great Cycles, Sri Lanka.

Bulk Deals

  • Axiscades Engineering: Master Portfolio Services - Valum India Discovery Scheme bought 1.95 lakh shares or 0.5 percent equity at Rs 153.22 each.
  • LT Foods: India Agri Business Fund sold 20 lakh shares or 0.7 percent equity at Rs 84.19 each.
  • Ruchi Soya: Cresta Fund sold 42.50 lakh shares or 1.3 percent equity at Rs 20.48 each.
  • Asian Oil Fields: Religare Finvest sold 1.79 lakh shares or 0.6 percent equity at Rs 217.75 each.

Himatsingka Seide

  • Merrill Lynch India Equities Fund bought 13.76 lakh shares or 1.4 percent equity at Rs 332 each.
  • Promoter Leela Devi Himatsingka sold 11.55 lakh shares or 1.2 percent equity at Rs 332 each.

Blue Star

  • SAIF India IV FII Holdings sold 7.57 lakh shares or 0.8 percent equity at Rs 800 each.

Kohinoor Foods

  • Equity Intelligence India sold 2 lakh shares or 0.6 percent equity at Rs 77.04 each.

Religare Enterprises

  • Resilient India Growth Fund bought 1.76 crore shares or 9.9 percent equity at Rs 56.7 each.
  • IDBI Trusteeship sold 1.78 Crore shares or 10 percent equity at Rs 56.7 each.

F&O Setup

  • Nifty Dec. Futures trading at 10,202.9, premium of 37 points versus 24.6 points
  • Dec. Futures: Nifty open interest down 1 percent; Bank Nifty open interest up 2 percent
  • India VIX closed at 14.2, down 5.4 percent
  • Max open interest for Dec. series at 10,500 Call (open interest at 61.9 lakh, down 7 percent)
  • Max open interest for Dec. series at 10,000 Put (open interest at 85.9 lakh, up 7 percent)

F&O Ban

  • In ban: HDIL, IRB Infra, Jet Airways, Jain Irrigation
  • New in ban: HDIL, IRB Infra, Jet Airways

Only intraday positions can be taken in stocks which are in F&O ban. In case of a rollover of these intraday positions, there is a penalty.

Active Stock Futures

Stocks To Watch: GAIL, Union Bank, TVS Motor, Federal Bank

Earnings Reactions To Watch

Jet Airways (Q2, YoY)

  • Revenue up 3 percent at Rs 5,627 crore
  • Net Profit down 91 percent to Rs 50 crore
  • EBITDAR down 31 percent at Rs 837 crore
  • EBITDAR margin at 14.9 percent versus 22.1 percent

Indian Hume Pipe (Q2, YoY)

  • Revenue down 52 percent at Rs 214 crore
  • Net profit down 63 percent at Rs 8 crore
  • EBITDA down 49 percent at Rs 25 crore
  • Margin at 11.7 percent versus 11.3 percent

Fortune Financial (Q2, YoY)

  • Revenue up 36 percent at Rs 60 crore
  • Net profit down 33 percent at Rs 8 crore
  • EBITDA up 33 percent at Rs 20 crore
  • Margin at 33.3 percent versus 34.1 percent

BPL (Q2, YoY)

  • Revenue up 23 percent at Rs 43 crore
  • Net profit at Rs 16 crore
  • EBITDA up 260 percent at Rs 3.6 crore
  • Margin at 8.4 percent versus 2.9 percent

Earnings To Watch

  • Aegis Logistics
  • Ajmera Realty
  • Federal Mogul
  • Global Vectra Helicorp
  • HDFC Standard Life Insurance
  • Jayshree Tea
  • KDDL
  • Omax Autos

Brokerage Radar

HSBC on Escorts

  • Initiated ‘Buy’ rating with price target of Rs 835, implying a potential upside of 26 percent from yesterday’s close.
  • Brand and profit growth back on track.
  • New products to boost market share, margins, and profits.
  • Expect Tractor volumes, revenue, EBIT and net profit to grow at a compounded rate of 10 percent, 13 percent, 33 percent and 45 percent respectively by March 2020.
  • Cost cutting, improved product mix and increased capacity utilization to drive profits.
  • Construction equipment to break even in the current financial year.
  • Return on capital employed to improve to 23 percent by March 2020, compared to 11 percent, clocked in previous financial year.
  • Positives: improved demand, favourable monsoons, increasing farm mechanisation and improving farming income.

Credit Suisse on HDFC Bank

  • Maintained ‘Outperform’; raised price target to Rs 2,075 from Rs 1,955.
  • Bank's CET1 at 12.2 percent, similar to the levels seen in the financial year-ended March 2015.
  • Expects bank to undertake next capital raise in in the next financial year.
  • If $3 billion raised, then expect 4 percent dilution and increase in capital base by 20 percent.
  • $3 billion enough to support growth for next 3-4 years, if loan growth at 23-25 percent.
  • Stock does well around capital raise as P/B premium moderates.
  • An equity raise can equalise P/B multiples of HDFC Bank and Kotak.

Citi on JSW Energy

  • Maintained ‘Buy’; raised price target to Rs 93 from Rs 75.
  • Signing of new power purchase agreements increases comfort.
  • Strong cash flows despite untied capacity.
  • Low visibility on PPA for Vijaynagar, but several other potential positives in making.
  • Raised price target on the back of new PPA, improvement in cash flow and decline in net debt.

Morgan Stanley on Cyient

  • Maintained ‘Overweight’ with price target of Rs 620.
  • Potential hiccups in communication vertical, but company reiterates outlook for the current financial year.
  • Any delays in fibre rollout in Australia to have an impact on Cyient's business.
  • Worst case impact to be 5-6 percent on the next financial year’s earnings estimates.
  • Still believes Cyient is cheap relative to many mid-cap peers.

Morgan Stanley on Indian Telecom

  • Smaller operators’ merger or exit mean top incumbents/Jio could gain 10 percent market share in next 12 months.
  • Tower companies to see near-term headwinds on consolidation, but rising data usage augers well.
  • Remain constructive on tower companies over the medium term.
  • TRAI’s recommendation to raise limit for overall spectrum holdings could be favorable for the top incumbent operators/Jio to augment their holdings if the spectrum is sold or auctioned.

Jefferies on Bharat Petroleum

  • Maintained ‘Underperform’ with price target of Rs 425.
  • Fuel margins should rebound but refining headwinds loom.
  • Less confident of margin momentum into the busy election calendar in the next financial year.
  • Current quarter tracking to be a weak quarter with core earning per share down 25 percent on a sequential basis.
  • Expect refining margins to rise to $8.5/bbl once Kochi stabilises by the second half of next financial year.

Morgan Stanley on Future Consumer

  • Initiated ‘Overweight’ rating with price target of Rs 95; implying a potential upside of 61 percent form yesterday’s close.
  • Expect Future Consumer to be India's fifth-largest FMCG company by March 2021.
  • Future Group’s retail ecosystem yields a unique competitive advantage.
  • FCL can launch innovative products with a disruptive go-to-market strategy.
  • Expect Future Retail to contribute over 90 percent of financial year-ending March 2020’s revenues, compared to 74 percent in the next financial year.
  • Expect revenues to jump 3.2 times by March 2020; margins to expand by 470 basis points by March 2020.
  • Scale-driven efficiencies, better fixed-cost absorption and product mix improvement to drive margin expansion.
  • Bull Case price target Rs 194: Faster ramp-up of small format stores by FRL, and higher contribution of FCL brands.

IIFL on Vardhman Textiles

  • Maintained ‘Buy’; raised price target to Rs 1,480 from Rs 1,400.
  • Expect yarn spreads to remain healthy.
  • Expect global cotton prices to remain healthy.
  • Erratic weather increased share of low quality U.S. cotton.
  • Expect margins to benefit in second half of the current financial year as yarn spreads expand.
  • Margins in the first half of next financial year to benefit from low-cost cotton inventory.
  • Raised earnings per share estimates by 4 percent till March 2020.

Media Reports

  • HUL slipping market share in some segments of personal care (Economic Times).
  • ICICI Bank to raise $500 million by selling Dollar bonds (Economic Times).
  • SAIL Board may clear JV with ArcelorMittal next week (Economic Times).
  • Foreign banks closing down many ATMs (Economic Times).
  • AB Finance aims at 40% credit growth (Economic Times).
  • Commerce Ministry Seeks Lower Tax On Diamond Miners (Financial Express).
  • Ethanol Supply To Touch Record High In 2017-18; ISMA (Financial Express).
  • SAIL’s Mining Plans In Lush Forest May be Nixed By Govt (Financial Express).
  • JSPL submits plans for debt resolution, eyeing equity issue (Financial Express).
  • SpiceJet’s Ajay Singh pledges more shares amid dispute with Kalanithi Maran (Mint).