Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S.(Photographer: Michael Nagle/Bloomberg)

Stocks To Watch: HDFC Bank, Quess Corp, L&T, Tata Motors

Indian equity benchmarks rose in a volatile trading session ahead of the Gujarat and Himachal Pradesh exit polls which were declared later in the day.

The S&P BSE Sensex rose 0.59 percent or 194 points to 33,246.70 and the NSE Nifty 50 Index advanced 0.58 percent or 59 points to 10,252.10.

Back home yesterday, exit polls predicted a victory for the Narendra Modi-led Bharatiya Janata Party in Gujarat, giving it a clear majority in the keenly-contested assembly polls in the state. The polls also showed that the party is set to reclaim Himachal Pradesh.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.5 percent to 10,335.50 as of 6:55 a.m.

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

  • HDFC Bank to consider fund raising proposal on Dec. 20.
  • HDFC to consider fund raising on Dec. 19; to subscribe securities of HDFC Bank on preferential basis.
  • Unichem Laboratories completes sale and transfer of its domestic formulations business to Torrent Pharmaceuticals.
  • L&T commissions 225 MW Sikalbaha combined cycle power plant in Bangladesh
  • NLC India raises Rs 201.8 crore via QIP.
  • Gulf Oil starts commercial production at Chennai plant.
  • AstraZeneca to launch XIGDUO XE tablets in India in Q4FY18. The drug is used for the treatment of Type 2 diabetes in adults.
  • Mahindra and Mahindra Ltd. to hike prices by up to 3 percent from January 2018.
  • McDowell Holdings qualifies as NBFC-CIC, says RBI. Its existing NBFC-ND certificate gets cancelled.
  • IDBI Bank brought under rating watch by Fitch saying that an upward viability rating is more likely than a downgrade.
  • Union Bank to raise Rs 2,000 crore via QIP by allotting 12.93 crore shares at Rs 514.65.
  • Godrej Industries approves merger of promoter group company Vora Soaps with itself.
  • Quess Corp acquires 45 percent stake in Simpliance Technologies.
  • GE, Tata in a strategic tie up to make aircraft engine components in India.
  • Tata Motors to supply 250 Tigor EVs to EESL.
  • GMR Group-Megawide consortium emerges as preffered bidder for Clark Airport project in Philippines.

IPO Watch

  • Astron Paper & Board Mill IPO at Rs 45-50 a share opens. Bid closes on Dec. 20.
  • Shalby Ltd. to start trading on BSE/NSE after selling shares at Rs 248 each in IPO that got 2.82 times demand.

Data Watch

  • India November trade balance; estimates -$13.25 billion (prior -$14.02 billion).
  • Exports; no estimate (prior -1.1 percent).
  • Imports; no estimate (prior +7.6 percent).

Bulk Deals

Religare Enterprises

  • IDBI Trusteeship sold 1.1crore shares or 6.3 percent stake at Rs 58.5 each.
  • India Horizon Fund bought 71.50 lakh shares or 4 percent stake at Rs 58.5 each.
  • Bay Capital Advisors bought 21.25 lakh shares or 1.2 percent stake at Rs 58.5 each.

F&O Setup

  • Nifty December Futures closed trade at 10,276, premium of 24 points versus 22 points.
  • December Futures: Nifty open interest down 2 percent; Bank Nifty open interest down 9 percent.
  • India VIX closed up 2.9 percent at 16.4.
  • Max open interest for Dec. series at 10,500 Call (open interest at 69.5 lakh, up 10 percent).
  • Max open interest for Dec. series at 10,000 Put (open interest at 96 lakh, up 12 percent).

F&O Ban

  • In ban: Fortis, HDIL, Jain Irrigation, JP Associates, JSW Energy and TV18 Broadcast.
  • New in ban: TV18 Broadcast.
  • Out of ban: IRB Infrastructure, Jet Airways.

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

Active Stock Futures

Earnings Reactions To Watch

Goodluck India (Q2, YoY)

  • Revenue up 23 percent at Rs 312.5 crore.
  • Net profit up 39 percent at Rs 5 crore.
  • Ebitda up 24 percent at Rs 26 crore.
  • Margin unchanged at 8.3 percent.

Sree Rayalaseema Hi-Strength Hypo (Q2, YoY)

  • Revenue up 21 percent at Rs 126 crore.
  • Net profit up 24 percent at Rs 5.2 crore.
  • Ebitda up 4 percent at Rs 12 crore.
  • Margin at 9.5 percent from 11.1 percent.

Linc Pens and Plastics (Q2, YoY)

  • Revenue down 6 percent at Rs 79 crore.
  • Net profit down 62 percent at Rs 1.6 crore.
  • Ebitda down 10 percent at Rs 7.8 crore.
  • Margin at 9.9 percent from 10.4 percent.

Lovable Lingerie (Q2, YoY)

  • Revenue down 11 percent at Rs 47 crore.
  • Net profit down 24 percent at Rs 3.2 crore.
  • Ebitda down 31 percent at Rs 3.1 crore.
  • Margin at 6.6 percent from 8.5 percent.

Kopran (Q2, YoY)

  • Revenue down 7.6 percent at Rs 73 crore.
  • Net profit unchanged at Rs 4.5 crore.
  • Ebitda up 8 percent at Rs 7 crore.
  • Margin at 9.6 percent from 8.2 percent.

Veto Switchgears and Cables (Q2 YoY)

  • Revenue up 9 percent to Rs 64 crore.
  • Net profit up 58 percent to Rs 8 crore.
  • Ebitda up 76 percent to Rs 12 crore.
  • Margins at 19 percent versus versus 12 percent.

Renaissance Jewellery (Q2 YoY)

  • Revenue up 2.5 percent to Rs 272 crore.
  • Net profit up 23 percent to Rs 9.6 crore.
  • Ebitda up 19 percent to Rs 16.5 crore.
  • Margins at 6.1 percent versus 5.2 percent.

Rollatainer (Q2 YoY)

  • Revenue up 10 percent to Rs 35.2 crore.
  • Net profit of Rs 18.4 crore versus net loss of Rs 4.4 crore.
  • Ebitda loss of Rs 0.33 crore versus Ebitda loss of Rs 0.93 crore.
  • Margins at -0.9 percent versus -2.4 percent.
  • Exceptional gain of Rs 33.5 crore in previous quarter.

Earnings To Watch

  • Patel Engineering

Brokerage Radar

Axis Capital on JSW Energy

  • Initiated ‘Buy’ with price target of Rs 100.
  • Lowest capital as well as current replacement cost.
  • Strategically located assets result in high plant load factor.
  • Declining share of merchant volumes and higher share of PPA to increase earnings visibility.
  • To substitute 50 percent of imported coal with cheaper domestic coal.
  • Under leveraged balance sheet to aid inorganic growth.
  • Balance sheet has capacity to acquire up to 3 GW capacity.
  • Electric Vehicle foray – too early to evaluate.

Axis Capital on Mahindra Logistics

  • Initiated ‘Buy’ with price target of Rs 525.
  • Focus on non-automotive and reducing dependence on M&M group to aid margin.
  • M&M group contribution to reduce to 38 percent by March 2020, compared to 54 percent clocked in the previous financial year.
  • Better client mining and new client additions to drive growth.
  • Gross margin to remain largely stable across SCM and PTS business.
  • GST to drive clients’ focus on improving supply chain efficiency.
  • Expect 28% earnings CAGR and firm return ratios given limited capex.
  • Expect premium valuations to sustain on MLL’s strong positioning.

Jefferies on Voltas

  • Maintained ‘Buy’ with price target of Rs 660.
  • Current quarter likely to see 10-15 percent year-on-year sales growth given demonetisation impact last year.
  • Dealers indicated trends should normalize after January.
  • Products with new energy rating changes could normalize trend.
  • Expect 25 percent year-on-year profit growth for Voltas in the current quarter.
  • Any near-term stock price weakness should be a buying opportunity.

Motilal Oswal on Zee Entertainment

  • Maintained ‘Buy’; raised price target to Rs 690 from Rs 630.
  • Expect higher-than-industry ad revenue growth.
  • Subscription revenue growth to remain in healthy mid-teens.
  • Strong viewership to steer ad revenue growth.
  • Positives: recovery in ad market and improved BARC rating.
  • New ventures to begin adding to overall growth by three years.
  • Expect compounded annual growth rate of 32-34 percent operating margin and 16 percent in earnings per share by March 2020.
  • Zee remains the best play in the media industry.

HDFC Securities on Dr. Reddy’s

  • Upgraded to ‘Neutral’ from ‘Sell’; raised price target to Rs 2,400 from Rs 2,220.
  • EIR for Bachupally is positive, recovery hinges on clearance of Duvvada.
  • Bachupally crucial for existing business, Duvvada key to the future.
  • Degree of dependence on Duvvada prompts us to maintain a Neutral stance.
  • Good product opportunities in the near to medium term - Nuvaring, Suboxone and Copaxone.
  • Expect revenue and net profit to grow at a compounded rate of 10 percent and 30 percent respectively on annual basis by March 2020 on these opportunities and Duvvada clearance.

Motilal Oswal India Strategy

  • Sensex reconstitution to marginally up Sensex earnings per share for the current and next financial year.
  • Sensex earnings per share upgrade by 0.2 percent and 0.4 percent for the current and next financial year respectively.
  • Now estimate Sensex earnings per share at Rs 1,498 and Rs 1,891 for the current and next financial year respectively.
  • Weightage of financials at all-time high; capital goods and telecom at new lows.
  • 58 percent of Sensex constituents unchanged over 10 years.

Nomura on Indian Rupee

  • Exit polls to improve sentiment towards India and Indian Rupee.
  • Exit polls to be viewed as positive for BJP ahead of the 2019 Lok Sabha elections.
  • Oil prices pose a risk to Indian Rupee, and should be closely monitored.

Macquarie on Walt Disney - Fox Deal

  • Star to provide Disney a significant India market opportunity.
  • Zee, Viacom 18 and Sony will benefit if there is slip in India focus by Disney.
  • Star's key strengths in India is its senior management team.
  • Management churn in the near to medium term should be monitored.
  • Need to see impact on Hotstar and minority stake in Tata Sky.

Credit Suisse on Vedanta

  • Initiated ‘Outperform’ with price target of Rs 345.
  • Aluminium business is most important for incremental profits.
  • Global supply-demand and surging raw material prices bodes well for Aluminium.
  • Zinc prices have peaked and despite planned volume growth, Hindustan Zinc is fully valued.
  • Much of the ex-HZL upside is purely execution-dependent.
  • Vedanta not expensive even after adjusting for Hindustan Zinc.
  • Volume projections are below company guidance, and remains risk to rating.

Credit Suisse on Hindustan Zinc

  • Initiated ‘Neutral’ with price target of Rs 325.
  • Hindustan Zinc to expand volume to 1.2mt mined metal production by March 2020.
  • Expect cost moderation as it shifts to 100 percent underground mining.
  • Ebitda/tonne likely to stay healthy; Expect decent free cash flow generation.
  • Silver prices have and output is expected to grow.
  • Zinc prices have peaked and despite planned volume growth, Hindustan Zinc is fully valued.
  • Even after recent decline in stock price, Hindustan Zinc trades significantly higher.
  • Bull case price target of Rs 380 assuming higher commodity prices.

Media Reports

  • Allahabad Bank to sell idle land in Bareilly, Jhansi (Economic Times).
  • Cairn India rejigs top deck to drive $1 bn plan (Economic Times).
  • Group led by Netmagic founder sole bidder fot Jyoti Structures (Economic Times).
  • Mid sized construction firms race ahead in road sector (Mint).
  • IPOs so high but fresh capital so low (Mint).
  • Gujarat NRE coke RP invites fresh EoI (Financial Express).
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