Stocks To Watch: NBCC, Sobha, Sun Pharma, Tata Steel

Asian equities edged higher ahead of the start of the region’s earnings season this week, with investors betting that the outlook for economic growth and profits is strong enough to support record-high stock prices.

The Singapore traded SGX Nifty, an early indicator of Nifty 50 performence in India rose 0.6 percent to 10,643.50 as of 6:50 a.m.

Stocks To Watch Out For In Monday’s Trade

• Aegis’ LPG unit allots 2.39 lakh shares to Itochu for a total consideration of Rs 239.29 crore.
• Force Motors December domestic sales at 1,900 units.
• Venus Remedies to consider details of QIP issue on Jan. 8.
• Lenders invoke SDR in Lanco Kondapalli Power. Lanco Infratech’s stake in the company to fall from 52.2 percent to 28.2 percent after debt recast.
• Reliance Communications says company not to pay NCD interest until completion of the restructuring process.
• Multi Commodity Exchange: India regulator revokes past order in MCX insider trading case
• Tata Steel’s previous quarter India sales at 3.3 million tonnes versus 2.99 million tonnes (YoY).
• Sagar Cements December sales up 65 percent (YoY) at 2,54,348 million tonnes versus 1,54,195 million tonnes.
• Sobha’ previous quarter new sales volumes at 9,33,365 square feet valued at Rs 751 crore; Average realization in the previous quarter at Rs 8,045 per square feet versus Rs 7,840 in quarter-ended September.
• Sathavahana Ispat says banks have classified the debt of the company as NPA.
• Seamec enters into a charter party with GOPL Offshore for charter hire of vessel Seamec III for $2.4 million.
• SBI files insolvency plea against Visa Steel.
• IOB extra-ordinary general meeting to be held on Jan. 30.
• NBCC received a contract worth Rs 2,000 crore from Ecotourism Development Corp of Uttarakhand, Dehradun for a green road project.
• Tata, Lodhas keen to take Jaypee Expressway: (Economic Times).
• USFDA may inspect Sun Pharma’s Halol site in February. (Economic Times).

Offerings

• Life Healthcare said to weigh sale of India hospital China stake

*South African firm owns 49.7 percent on joint venture with Max India

Bulk Deals

Bharat Bijlee

• Birla Sun Life Trustee A/C Equity Plan bought 30,000 shares or 0.5 percent equity at Rs 1,437.17 per share.

Gitanjali Gems

• Morgan Stanley France SAS bought 9.90 lakh shares or 0.8 percent equity at Rs 74.07 per share.
• Macquarie Finance (India) sold 11.66 lakh shares or 1 percent equity at Rs 74.3 per share.

Equitas Holdings

• Credit Access Asia NV sold 22.90 lakh shares or 0.7 percent equity at Rs 153.42 per share.

Snowman Logistics

• Norwest Venture Partners VII-A-Mauritius sold 25.50 lakh shares or 1.5 percent equity at Rs 60.91 per share.

Unitech

HDFC sold 2.25 lakh shares or 0.9 percent equity at Rs 9.89 per share.

Apollo Pipes

• White OAK India Equity Fund bought 1.50 lakh shares or 3 percent equity at Rs 685 per share.
• Meenakshi Gupta sold 1.82 lakh shares or 3.6 percent equity at Rs 685 per share.

Varun Beverages

• Marina III (Singapore) PTE sold 23.92 lakh shares or 1.3 percent equity at Rs 730.1 per share.

LKP Finance

• Promoter Mahendra Doshi bought 1.22 lakh shares or 1 percent equity at Rs 140.8 per share.
• Grovsnor Investment Fund sold 94,638 shares or 0.8 percent equity at Rs 140.8 per share.

Uttam Galva

• Eriska Investment Fund sold 8.90 lakh shares or 0.6 percent equity at Rs 21.6 per share.

Earnings To Watch

• Prakash Industries
• Unichem Laboratories

Earnings Reaction To Watch

Goa Carbon Q3 (YoY)

• Revenue up 160 percent at Rs 187 crore.
• Net profit at Rs 22.5 crore versus net loss of Rs 0.9 crore.
• EBITDA up at Rs 38.3 crore versus Rs 1.9 crore.
• Margin at 20.5 percent versus 2.6 percent.

Uttam Galva Q3 (YoY)

• Revenue down 36 percent at Rs 667 crore.
• Net loss of Rs 180 crore versus net loss of Rs 257 crore.
• EBITDA at Rs -6.5 crore versus Rs 68 crore.
• Margins at -1 percent versus 6.6 percent.

Videocon Industries Q2 (YoY)

• Revenue down 69 percent at Rs 817 crore.
• Net loss at Rs 1,034 crore versus loss of Rs 404 crore.
• Margin at -40 percent versus 9 percent.

F&O Setup

• Nifty January futures trading at 10,573, premium of 14 points versus 22 points.
• January Series: Nifty open interest up 6 percent and Bank Nifty open interest up 8 percent.
• India VIX ended at 13.1, down 2.2 percent.
• Max open interest for January series at 11,000 call, open interest at 43.3 lakh, down 1 percent.
• Max open interest for January series at 10,400 put, open interest at 60.8 lakh, up 13 percent.

F&O Ban

• In ban: Fortis Healthcare, GMR Infra, HDIL, IFCI, Jindal Steel, Jain Irrigation, JP Associates, Reliance Communications and Reliance Power.
• New in ban: Reliance Communications.
• Out of ban: Nil.
• 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.

Brokerage Radar

Kotak Securities on Mahindra Logistics

• Initiated ‘Buy’ with price target of Rs 520.
• Well-placed to leverage unique asset-light model and large client base.
• Most asset-light 3PL service provider among listed logistics companies.
• Shift towards 3PL to drive growth for Mahindra.
• Non-auto sectors to accelerate double-digit growth in 3PL.
• Business scope can expand into other avenues.
• Expect the timely resolution of issue of TDS to normalize working capital.
• Expect revenue, operating income and net profit to grow at a compounded rate of 24 percent, 31 percent and 30 percent over the financial years through March 2020.
• Premium to peers’ justifiable given growth prospects.

Angel Broking on CCL Products

• Initiated ‘Buy’ with price target of Rs 360.
• CCL is largest Indian manufacturer and exporter of instant coffee with 24 percent market share.
• Hedged business model has created healthy moat.
• Ramping up of facilities to foray in newer markets.
• Strong balance sheet and healthy return ratios.
• Vietnam expansion is an excellent strategic move.
• Indian retail business to also be another booster in near term.
• Expect more than 17 percent growth trajectory over the financial years through March 2020.
• B&K Securities on eClerx Services
• Initiated ‘Outperformer’ with price target of Rs 1,780.
• Client concentration easing.
• Strong capital allocation to sustain.
• Acquisitions adding new vertical/capabilities/logos.
• Growth challenges among top 10 clients now behind.
• Expect increase in IT spends in BFSI.
• Expect revenue and earnings to grow at a compounded rate of 8.6 percent and 8 percent respectively over the financial years through March 2020. Expect EBIT margins to stabilise and average around 27 percent during the period.

SMIFS on Raymond

• Initiated ‘Accumulate’ with price target of Rs 1,161.
• Bright growth prospects in branded Apparel segment ahead.
• Positives: strategic plant set-up in Ethiopia and unlocking value in the non-core segments.
• Due to restructuring exercises company is on a high growth path.
• Shifting its focus from non-core businesses to core business.
• Branded apparel segment will give thrust to drive sales.
• Turnaround of Tools and Hardware business to progress well.
• Expect auto component business to continue profitable growth momentum.
• Expect revenue and net profit to grow at double-digit CAGR over the financial years through March 2020.
• Valuations have run up sharply and leave little upside.

CLSA on Cipla

• Maintained ‘Buy’; raised price target to Rs 750 from Rs 730.
• U.S. growth to revive in the next financial year, driven by recent four mid-sized approvals.
• U.S. launches to drive operating leverage benefit.
• Strong play on improving U.S. and growth from stable emerging markets.
• U.S. filings focused on ‘difficult-to-make’ products.
• Targeted 15 launches over the next two years to drive 15-20 percent annual growth.
• Expect earnings to grow at a compounded rate of 30 percent over the financial years through March 2020.

CLSA on Infosys

• Maintained ‘Buy’; Raised price target to Rs 1,230 from Rs 1,140.
• Infosys just saw through one of its worst recent years.
• Has potential of completing strategic retooling and improve capital allocation.
• Key changes to strategy should continue in near to medium term.
• Demand environment supportive of Infosys’ business mix.
• Expect valuation gap with peers to narrow.
• Infosys is top pick for 2018 given reasonable earnings growth and rerating potential.

HSBC on Biocon

• Maintained ‘Hold’; raised price target to Rs 536 from Rs 320.
• Recent FDA approval for Ogivri validates Biocon’s biosimilar development capabilities.
• Biosimilar benefits to play out gradually; Pick-up in adoption is key.
• External factors such as competition and acceptance to determine opportunities.
• Near-term triggers: EMA outcome on trastuzumab, FDA & EMA outcome on pegfilgrastim and insulin glargine.

Stewart & Mackertich on Raymond

• Initiated ‘Accumulate’ with price target of Rs 1,161.
• Bright growth prospects in branded Apparel segment ahead.
• Positives: strategic plant set-up in Ethiopia and unlocking value in the non-core segments.
• Due to restructuring exercises company is on a high growth path.
• Shifting its focus from non-core businesses to core business.
• Branded apparel segment will give thrust to drive sales.
• Turnaround of Tools and Hardware business to progress well.
• Expect auto component business to continue profitable growth momentum.
• Expect revenue and net profit to grow at double-digit CAGR over the financial years through March 2020.
• Valuations have run up sharply and leave little upside.

CLSA on Sobha

• Maintained ‘Buy’; raised price target to Rs 760 from Rs 606.
• Sobha’s Q3 pre-sales at an 11-quarter high.
• Demonstrates improvement in underlying industry trends and ability to tide-over regulatory changes.
• Sobha to maintain its pre-sales momentum in quarters ahead.
• Raise pre-sales estimate for the current financial year to near all-time peak levels of the financial year-ended March 2014.
• Higher pre-sales increases earnings estimates by 4 percent and 5 percent for the next two financial years respectively.

Media Reports

• Indian IT gears up for $50 billion renewals (Times of India).
• Brookfield to buy Essar’s Equinox Office complex for Rs 2450 crore (Economic Times).
• Jaypee Group restructures outstanding FCCBs (Economic Times).