A trader works at the office of Motilal Oswal Financial Services Ltd. in Mumbai, India (Photographer: Vivek Prakash/Bloomberg)

Stocks Radar: GAIL, Idea Cellular, Motherson Sumi, Punjab National Bank

Indian equity benchmarks were off to a shaky start on Wednesday after returning from a holiday. The benchmarks had rebounded on Monday after two back-to-back weekly declines, the first in more than four months, as stocks gained across Asia.

The S&P BSE Sensex Index rose as much as 0.5 percent in early trade to 34,473, while the NSE Nifty 50 Index was higher by 0.5 percent at 10,590.55. The mid-cap and small-cap shares outperformed their large-cap counterparts as the S&P BSE MidCap and S&P BSE SmallCap indices rose a percent each.

Seven out of 11 sector gauges compiled by the National Stock Exchange were trading higher, with the Nifty Realty Index the top gainer at 1.5 percent. On the other hand, the Nifty PSU Bank Index was the top sectoral loser, down 1.4 percent.

Here Are The Stocks Moving The Market This Morning

PSU Banks Slump After RBI Revises Norms For Bad Loans Resolution

Shares of state-owned banks declined after the Reserve Bank of India released a new overarching framework for bad loan resolution, to be used across the Indian banking sector. The new rules put an end to a series of stressed asset schemes which were introduced over the past few years.

The gauge of PSU banks compiled by the NSE–Nifty PSU Bank Index–fell as much as 2.4 percent. Bank of India and Punjab National Bank were the biggest losers, falling over 5 percent each.

The RBI’s decision to revise the bad loan resolution framework could result in a short-term spike in bad loans in the corporate sector.

"The move by the central bank is a short-term negative for the corporate lenders, as it would sharply increase NPA provisions and constrain profitability", homegrown research firm BOB Capital Markets said in a research report.

Most private lenders were also trading weak. HDFC Bank, the outlier, with gains of as much as 0.6 percent, has lost over 6 percent so far this month.

Punjab National Bank: Slumps After Detecting $1.8 Billion Fraud

Shares of the country’s second-largest state-run lender fell as much as 5.9 percent, the most in over five sessions, to Rs 152.15.

Punjab National Bank has detected fraudulent transactions worth $1.8 billion (or over Rs 11,500 crore), the company said in an exchange notification. The transactions took place at one of the bank’s branches in Mumbai.

“Based on these transactions other banks appear to have advanced money to these customers abroad”, the statement read. It added that the matter had already been referred to law enforcement agencies.

At current levels, the stock is testing support at its 200-day moving average, Bloomberg data showed. It is now 14 percent below the Bloomberg consensus one-year target price and has declined 7.3 percent since the start of 2018.

Indoco Remedies: Regulatory Concerns Prevail

Shares of the pharmaceutical company fell nearly 4 percent to Rs 264.40 after it received eight Form 483 observations from the U.S. drug regulator.

A Form 483 is used by the U.S. Food and Drug Administration to document and communicate concerns discovered during plant inspections.

Indoco Remedies trades at 28.2 times its estimated forward earnings per share, higher than the average for the last two years, which stood at 21.8, Bloomberg data showed. The stock has fallen 5.7 percent over the past 30 days, compared to a 0.6 percent decline in the Sensex.

Idea Cellular: Gains After Raising Funds

Shares of the telecom operator extended gains for the second day and rose nearly 3 percent to Rs 86.95.

Idea Cellular raised Rs 3,250 crore through a preferential allotment of shares to promoters, according to a statement sent to the exchanges.

The consensus price target of analysts tracked by Bloomberg was 98.20, implying a potential upside of 13.4 percent from the current market price.

Precision Camshafts: Wins Order

Shares of the auto ancillary manufacturer extended gains for a second day and rising as much as 4.3 percent in early trade to Rs 122.85. The company bagged orders from Ford, Genaral Motors, and M&M worth Rs 275 crore, according to its stock exchange notification.

Volume was higher than usual at 26.6 times its 20-day average. Precision Camshafts trades at nearly 17 times its trailing 12-month earnings per share.

Stocks Reacting To Earnings

Britannia Industries Q3 (YoY)

  • Stock rose as much as 2.2 percent to Rs 4,875.80.
  • Revenue up 12.5 percent at Rs 25,67.5 crore.
  • Net profit up 20 percent at Rs 264 crore.
  • EBITDA up 27 percent at Rs 399 crore.
  • Margin at 15.5 percent versus 13.8 percent.

Lumax Auto Q3 (YoY)

  • Stock rose as much as 6.1 percent to Rs 931.85.
  • Revenue up 26 percent at Rs 277 crore.
  • Net profit up 225 percent at Rs 13 crore.
  • EBITDA up 65 percent at Rs 28 crore.
  • Margin at 10.1 percent versus 7.7 percent.

GAIL Q3 (QoQ)

  • Stock rose as much as 1.9 percent to Rs 474.20.
  • Revenue up 16 percent at Rs 14,414 crore.
  • Net profit down 4 percent at Rs 1262 crore.
  • EBITDA down 5 percent at Rs 1970 crore.
  • Margin at 13.7 percent versus 16.7 percent.

Motherson Sumi Q3 (YoY)

  • Stock fell as much as 3 percent to Rs 353.50.
  • Revenue up 35.9 percent at Rs 14,398 crore.
  • Net profit down 12.4 percent at Rs 364.5 crore.
  • EBITDA up 14.9 percent at Rs 1259.6 crore.
  • Margin at 8.7 percent versus 10.4 percent.

Bank of India Q3 (YoY)

  • Stock fell as much as 4.7 percent to Rs 138.05.
  • Net Interest Income down 12.6 percent at Rs 2,501 crore.
  • Net loss of Rs 2341 crore versus net profit of Rs 102 crore.
  • Provisions for NPA up 134 percent at Rs 4373 crore.
  • GNPA at 16.93 percent versus 12.62 percent (QoQ).
  • NPA at 10.29 percent versus 6.47 percent (QoQ).

Hathway Cables Q3 (YoY)

  • Stock rose as much as 3.7 percent to Rs 41.05.
  • Revenue down 58.6 percent at Rs 139 crore.
  • Net profit of Rs 24 crore versus net loss of Rs -44.4 crore.
  • EBITDA down 5.5 percent at Rs 60.5 crore.
  • Margin at 43.5 percent versus 19 percent.

Welspun India Q3 (YoY)

  • Stock fell as much as 5.9 percent to Rs 67.65.
  • Revenue down 6.9 percent at Rs 1398 crore.
  • Net Profit down 48.2 percent at Rs 77.4 crore.
  • EBITDA down 27.1 percent at Rs 252.4 crore.
  • Margin at 18.1 percent versus 23.1 percent.
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