Stocks To Watch: Asian Paints, Indiabulls Housing Finance, Rallis India, RBL Bank

Asian stocks extended the strong start to the year, heading for fresh all-time highs, as investors turn with optimism toward the earnings season after the U.S. government shutdown moved toward an end.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.3 percent to 10,999 as of 7 a.m.

Here Are The Stocks To Watch Out For In Tuesday’s Trade

• Indian Oil Corporation board to consider bonus issue on Jan. 30.
• Kalpataru Power gets multiple orders worth Rs 871 crore.
• Torrent Pharma to consider fund raising via bonds, share placement on Jan. 25.
• Om Metals reached an agreement with a Jaipur-based developer to withdraw claim on 56,000 square metre land.
• Bajaj Corp. introduced new Coco Jasmine hair oil.
• Swaraj Engines buyback to open on Jan. 31.
• HSIL commissions pipe manufacturing plant in Telangana.

F&O Setup

• Nifty January futures trading at 10,968, premium of 1.8 points versus discount of 6.2 points.
• January Series: Nifty open interest down 9 percent; Bank Nifty open interest down 3 percent.
• Across series: Nifty open interest up 2 percent; Bank Nifty open interest up 5 percent.
• India VIX ended at 15.3, up 10 percent.
• Rollover: Nifty at 20 percent, Bank Nifty at 23.5 percent.
• Max open interest for January series at 11,000 Call (open interest at 51.1 lakh, down 5 percent).
• Max open interest for January series at 10,500 Put (open interest at 70.6 lakh, down 5 percent).

F&O Ban

• In ban: Balrampur Chini, Dewan Housing, DLF, Fortis, HCC, HDIL, IFCI, JP Associates, Just Dial, Kaveri Seed
• New in ban: Dewan Housing, JP Associates, Just Dial
• Out of ban: Dish TV, GMR Infra, Jain Irrigation

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

Bulk Deals

• Lux Industries: Kotak Mahindra AMC bought 1.68 lakh shares or 0.7 percent equity at Rs 1525.2 each.
• Indoco Remedies: Reliance Growth Fund bought 12.11 lakh shares or 1.3 percent equity at Rs 275 each.
• IRB Invit: Prusik Umbrella UCITS Fund PLC - Prusik Asian Equity Income Fund bought 28.25 lakh units at Rs 87.17 each.
• Videocon: Yes Bank sold 17.39 lakh shares or 0.6 percent equity at Rs 21.27 each.
• Religare Enterprises: IDBI Trusteeship services sold 22.55 lakh shares or 1.3 percent equity at Rs 50.26 each.

8K Miles

• DSP Blackrock MF bought 4.26 lakh shares or 1.4 percent equity at Rs 748 each.
• Promoter R S Ramani sold 6.82 lakh shares or 2.2 percent equity at an average of Rs 749.32 each.

MCX

• SBI MF bought 8.19 lakh shares or 1.6 percent equity at Rs 840.5 each.
• Baron International Growth Fund sold 11.3 lakh shares or 2.2 percent equity at Rs 840.5 each.

Earnings Reactions To Watch

Asian Paints Q3 (YoY)

• Net sales up 10.5 percent at Rs 4,260.5 crore
• Net profit up 19 percent at Rs 555 crore
• EBITDA up 18 percent at Rs 891.5 crore
• Margin at 20.9 percent

Rallis India Q3 (YoY)

• Revenue up 18.5 percent at Rs 390 crore
• Net profit down 1 percent at Rs 25.1 crore
• EBITDA down 14 percent at Rs 37 crore
• Margins at 9.5 percent versus 13.1 percent

Sasken Tech Q3 (QoQ)

• Revenue up 5.6 percent at Rs 132 crore
• Net profit up 8.5 percent at Rs 20.4 crore
• EBITD down 11.7 percent at Rs 15 crore
• Margin at 11.4 percent versus 13.6 percent

Tinplate Q3 (YoY)

• Revenues up 146 percent at Rs 547 crore
• Net profit up 189 percent at Rs 13 crore
• EBITDA up 89.5 percent at Rs 36 crore
• Margins at 6.6 percent versus 8.6 percent

Just Dial Q3 (QoQ)

• Revenue up 1 percent at Rs 197 crore
• Net profit down 24 percent at Rs 28.6 crore
• EBIT up 25 percent at Rs 38 crore
• Margin at 19.3 percent versus 15.7 percent

MPS Ltd Q3 (YoY)

• Revenue down 15 percent at Rs 68 crore
• Net profit down 2 percent at Rs 17.6 crore
• EBITDA down 5 percent at Rs 25.1 crore
• Margin at 36.4 percent versus 32.8 percent

Nifty Earnings Today

Indiabulls Housing Finance

Other Earnings Today

• Alembic
• Can Fin Homes
• Crompton Greaves Consumer Electricals
• Edelweiss Financial Services
• Force Motors
• Indiabulls Real Estate
• L&T Technology Services
• NIIT
• PNB Housing Finance
• RBL Bank
• Symphony
• Syngene International
• United Spirits
• Wabco India

Brokerage Radar

Elara Capital on L&T Technology Services

• Initiated ‘Accumulate’ with price target of Rs 1,170.
• Broad portfolio, deep expertise driving growth.
• Expect new client relationships to scale up gradually.
• Lower client concentration than domestic peers.
• L&T helping in domain expertise, client access.
• Expect revenue, operating income and net profit compounding at 17.4 percent, 25.2 percent and 22.5 percent respectively over the financial years through March 2020.
• Faster growth to lead to earnings upgrade.
• Bull case price target of Rs 1,560.

Credit Suisse on Havells India

• Maintained Outperform; raised price target to Rs 635 from Rs 600.
• December quarter was a strong broad-based quarter.
• Consumer durables and lighting drove growth.
• Switchgears saw modest pick-up; B2B initiatives seeing traction.
• Margins very strong; Cables have set new normal of profitability.
• Lloyd growth aided by some pre-buying before new energy norms.

Edelweiss on Havells India

• Maintained ‘Buy’ with price target of Rs 640.
• Favorable base leads to in-line quarter; Growth profile intact.
• Impressive growth in lighting/consumer durable on low base.
• Havells well placed to benefit with demonetization and GST mostly behind.
• Positives: shift to organized, rising premiumisation and ramp up in Lloyds’ profitability.

IDFC Securities on Asian Paints

• Maintained ‘Outperform’; cut price target to Rs 1,262.
• Volume miss; lower costs drive earnings growth.
• Volume growth of 6 percent for the quarter is disappointing.
• Cost management initiatives and better mix resulted in strong margin improvement.
• Expect uptick in volumes driven by favourable base and improving demand.
• Expect price hikes to mitigate input cost pressure.
• Market share loss over last three quarters is a concern.

Morgan Stanley on Dr. Reddy’s

• Maintained ‘Overweight’ with price target of Rs 3,133.
• Raised prices by 5 percent for Sernivo spray and Zembrace in January 2018.
• Small brands with gross sales of $20/25 million.
• Price hike to have small impact but shows confidence in the ramp-up ahead.
• March 2018 important month with three upcoming Target Action Dates.

Credit Suisse on Asian Paints

• Maintained ‘Underperform’; raised price target to Rs 1,100 from Rs 1,060.
• Volume growth significantly below expectations.
• Competitors continue to grow volumes faster.
• Management cautiously optimistic as December growth had been good.
• EBITDA growth driven by tightening fixed costs, lowering marketing spends and GST savings.
• Raw material costs firming up; Needs to take a price hike to stem gross margin decline.

Brokerages On Axis Bank

JP Morgan

• Maintained ‘Overweight’, raised price target to Rs 700 from Rs 650.
• Guidance of 220 -260 basis points with normalized credit costs expected.
• See the next 2-3 quarters as challenging given the uncertainty over timing and quantum of back-book provisioning.
• At about 2 times price-to-book and a FY20 return on equity estimate of 19.5 percent, Axis is our top value pick.

Morgan Stanley

• Maintained ‘Overweight’; price target Rs 770
• Impaired loans at Axis showed good trends after a weak December quarter.
• Expect asset quality and core PPoP trends to be volatile over the next four quarters.
• Expect continued improvement in impaired loans over the next four quarters.
• This should drive strong stock performance over the next 12 months.

Credit Suisse

• Maintained ‘Neutral’, raised price target to Rs 595 from Rs 525.
• Asset quality stabilises, operating profitability yet to improve.
• Expect credit costs to normalise from 2.7 percent in current fiscal to 1.2 percent in Fiscal 2020.

CLSA

• Maintained ‘Buy’, raised price target to Rs 730 from Rs 650.
• Key positive in the result was improvement in asset quality.
• Expect earnings to normalise from the next fiscal.

Media Reports

• Siemens Gamesa wins 326-Mw wind power orders (Businesss Standard).
• Edelweiss ARC, SREI Arm among bidders for Adhunik Group (Financial Express).
• Carlyle leads race for 15 percent in Mankind; deal size pegged at up to $500 million (Economic Times).
• Biyani keen to lift R-Day sales, takes a cue from Alibaba (Future Retail) (Economic Times).
• Tata Steel keen to buy stressed assets: MD (Economic Times).
• KKR to back Analjit Singh to the Max; set to write Rs 2,000 crore cheque; deal to provide growth capital; US buyout fund already an investor in the life insurance JV (Max India in focus) (Economic Times).
• Amtek subsidiaries’ RP sets norms for potential bidders; bids invited for Castex Technologies, Metalyst Forging (Economic Times).