A trader speaks on a fixed line telephone as he monitors financial data on computer screens on the trading floor. (Photographer: Chris Ratcliffe/Bloomberg)

Stocks To Watch: Bank Of Baroda, Dena Bank, Gujarat Gas, Vijaya Bank

Asian stocks had a mixed open even as U.S. stock futures declined after the Trump administration’s latest barrage of tariffs against China.

Equity benchmarks in Japan were flat-to-higher, while stocks in Australia and South Korea edged lower. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded 0.2 percent lower at 11,376 as of 7:20 a.m.

Short on time? Well, then listen to this podcast for a quick summary before the opening bell.

Here Are The Stocks To Watch In Tuesday’s Trade

  • Government announced the merger of Bank of Baroda, Dena Bank and Vijaya Bank. The proposal will now need to be passed by the boards of the individual banks. The combined bank will be the third largest in India.
  • Tata Motors-owned Jaguar Land Rover confirmed a cut in its production schedule at the Castle Bromwich plant in the West Midlands region of England due to “continuing headwinds” impacting the British automobile industry.
  • Gujarat Gas received authorisation for local natural gas distribution for the Narmada district in Gujarat from PNGRB. The company has been granted infrastructure exclusivity till 2043 and marketing exclusivity till 2026. The proposed gas distribution network will cover a geographical area of 2,817 square kilometers.
  • SEBI rejects Bank of Maharashtra’s request to set-off accumulated losses worth Rs 2,543.7 crore from its share premium account.
  • Mcleod Russel to dispose its Assam’s Bargang tea estate to Amgoorie India for Rs 59.65 crore and Harchurah estate to Goodricke group for Rs 31.64 crore.
  • Aurionpro Solutions to provide its cash management platform to Sudan based Bank of Khartoum’s UAE and Bahrain’s branches.

Also read: Government Announces Merger Of Bank of Baroda, Dena Bank And Vijaya Bank

Bulk Deals

Cigniti Technologies

  • Promoter Sapna Pennam sold 2.56 lakh shares or 0.93 percent equity at Rs 390.01 each.
  • Infina Finance Private Limited acquired 2.55 lakh shares or 0.93 percent equity at Rs 390 each.

Also read: Supreme Court Allows Sale Of Saridon, Three Other Drugs

Who’s Meeting Whom

  • Shriram City Union Finance to meet JM Financial Services on Sept. 18.
  • Tata Steel to meet Abu Dhabi Investment Authority, Pureheart Asset Management and other investors from Sept. 18-20.
  • DCM Shriram to meet DSP Blackrock Mutual Fund, HDFC Life and other investors from Sept. 18-19.
  • Narayan Hrudayalaya to meet Armor Capital, Toro Capital and other investors from Sept. 18-21.

Insider Trades

  • Waterbase promoter acquired 37,800 shares on Sept. 12.
  • Panama Petrochem Industries promoter group acquired 11,200 shares from Sept. 5-12.
  • Confidence Petroleum promoters acquired 21,000 shares on Sept. 14.
  • Ashoka Buildcon promoter Ashok Motilal Katariya acquired 69,600 shares on Sept. 14.

Trading Tweaks

  • HCL Tech buyback from Sept. 18 to Oct. 3.

Money Market Update

  • Rupee weakens against dollar as government measures disappoint. The home unit snaps two-day winning streak; ends 0.9 percent lower at 72.51 against the U.S. dollar.
  • Sovereign bond gains, as yield dropped three basis points to 8.1 percent.

Also read: Rupee Weakens As Government’s Measures To Curb Fall Seen Inadequate

F&O Setup

  • Nifty Sept. futures closed trading at 11,408, premium of 30 points
  • Nifty September open interest down 0.9 percent; Nifty Bank September open interest up 4.5 percent
  • Max open interest for September series at 11,800 Call (open interest at 41 lakh shares)
  • Max open interest for September series at 11,400 Put (open interest at 36.8 lakh shares)

F&O Ban

  • In ban: Adani Enterprise
  • Out of ban: Balrampur Chini

Brokerage Radar

Kotak on Bajaj Auto

  • Maintained ‘Sell’; raised price target to Rs 2,700 from Rs 2,500, implying a potential downside of 5.5 percent from the last regular trade.
  • Rupee depreciation to aid margins but medium-term concerns stay.
  • Rupee depreciation to improve operating margin as well as competitiveness in export markets.
  • Retain Sell due to deterioration in profitability and absence of scooters in portfolio.

HSBC on Titan

  • Maintained ‘Buy’; cut price target to Rs 1,050 from Rs 1,100, implying a potential upside of 27 percent from the last regular trade.
  • Correction due to wavering revenue growth guidance and fear of regulations amid growing CAD.
  • Positives: good studded jewellery promotion, low base in the third quarter and own scheme to spur growth.
  • Valuation remains compelling post current sell-off.

PhillipCapital on Jubilant Foodworks

  • Maintained ‘Buy’ with a price target of Rs 1780, implying a potential upside of 31.5 percent from the last regular trade.
  • Believe Jubilant is poised to deliver strong second quarter.
  • Channel checks suggest more than 18 percent SSSG in July-August 2018.
  • Expect 44 percent and 59 percent in operating income and net profit respectively in the second quarter.

UBS on Indian Pharma

  • Pharma stock valuations towards the high end of 10-year average.
  • Rupee weakening likely to translate to earnings upgrades.
  • Emerging Market exposure is a negative.
  • Cipla remains top pick; Also like Sun Pharma.

Macquarie on YES Bank

  • Maintained ‘Outperform’ with a price target of Rs 425, implying a potential upside of 33 percent from the last regular trade.
  • Management expects divergence to be benign.
  • Not alarmed about pace of growth; Lending done to quality customers.
  • The growth of 25 percent is sustainable without equity capital raising.

Brokerages On Hindustan Unilever

CLSA

  • Maintained ‘Outperform’ with a price target of Rs 1,950, implying a potential upside of 22 percent from the last regular trade.
  • Management commentary pre-quarter close remains positive.
  • Increase in crude and rupee depreciation to be offset by lower palm oil prices and price hikes.
  • Outlook for demand remains fairly positive; May get further fillip from pre-election spending.

Macquarie

  • Maintained ‘Outperform’ with a price target of Rs 1,870, implying a potential upside of 17 percent from the last regular trade.
  • Price increases to offset margin pressure due to rupee depreciation.
  • No incremental competitive intensity in Laundry care.
  • GST-related rationalization and cost savings continue to boost margin.

BofAML

  • Maintained ‘Buy’ with a price target of Rs 1,900, implying a potential upside of 18.5 percent from the last regular trade.
  • Healthy volumes and better profitability to mark stable second quarter.
  • Steady compounder with strong execution capability.
  • Expect healthy earnings per share with a compounded annual growth rate of 18 percent to back premium valuations.
  • Recent correction offers attractive buying opportunity.

Brokerages On PSU Banks Merger

IDFC Securities on Bank of Baroda

  • Downgraded to ‘Neutral’ from ‘Outperform’; cut price target to Rs 130 from Rs 180, implying a potential downside of 4 percent from the last regular trade.
  • Believe BoB is in for a de-rating with merger announcement.
  • Integration issues and higher NPLs post-merger are key concerns.
  • Proforma numbers of merged entity indicate no material change in financial parameters.
  • Based on CMP, post-merger shares will be 19 percent higher than BoB’s current shares.

JP Morgan

  • Merger of Bank of Baroda, Dena and Vijaya Bank an incremental positive for the sector.
  • Immediate share price action should be negative for BoB, given further integration risks.
  • Additional provisioning requirements is likely negative for BoB’s incremental earnings outlook.

CLSA

  • Bank of Baroda to acquire to smaller PSUs; Not a material dilution of the franchise.
  • Deal valuation may be at a tad discount to BoB.
  • Risk from clean-up post-merger announcement; Synergy could take 1-2 years.
  • PSU consolidation is a long-term positive but a near-term overhang.

UBS

  • Big overhang is behind; See no major impact over medium term.
  • Believe this merger would be different from a SBI merger.
  • Tier-1 of merged entity similar to BOB, while Provision Coverage Ratio bit lower.
  • Believe merger would offer operating cost and cross sell synergies over medium term.

Citi

  • Merger neutral for Bank of Baroda.
  • Strong financials of Vijaya Bank could offset weak financials of Dena.
  • Cultural issues significant, technology not as much.