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All You Need To Know Going Into Trade On August 19

Stocks in the news, big brokerage calls of the day, complete trade setup and much more!  

Buildings on the skyline in Hong Kong. (Photographer: Justin Chin/Bloomberg)
Buildings on the skyline in Hong Kong. (Photographer: Justin Chin/Bloomberg)

Asian markets are showing divergent trends at the start of the mid-week trade despite a record close for U.S. equities.

The U.S. Dollar fell to its lowest level in over two years while treasuries edged higher.

The Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, rose 0.25% to 11,439 as of 7:10 a.m.

Short on time? Well, then listen to this podcast for a quick summary of All You Need To Know before the opening bell.

Let's take a look at the factors that may influence equities in today's session:

  • Markets in Japan are flat, while those in Australia are edging higher. Benchmarks in South Korea are rebounding after Tuesday's slide.
  • Markets in Hong Kong are facing delays as a Typhoon warning prevented pre-market trading from taking place.
  • Futures on the Dow Jones are trading higher by 40 points. The index ended 0.2% lower on Tuesday. The S&P 500 eked out gains to end at an all-time high.
  • Although stimulus talks in the U.S. have stalled, better-than-feared economic data and corporate earnings have instilled optimism of a recovery taking place.
  • Minutes of the latest FOMC meeting, EIA's crude oil inventory report are due today.
  • Yield on the 10-year treasuries stood at 0.66%
  • West Texas Intermediate crude fell 0.7% to $42.61 per barrel while Gold prices were little changed at $1,999/Oz.

Get your daily fix of the global markets here.

All You Need To Know Going Into Trade On August 19

Earnings Fineprint: Zee Entertainment Q1FY21

  • Revenue down 35% to Rs 1,312 crore
  • Net profit down 94% to Rs 29.2 crore
  • Ebitda down 85% to Rs 108 crore
  • Ebitda margin at 8% from 36%
  • Advertising revenue down 65% to Rs 421 crore
  • Subscription revenue up 5% to Rs 744 crore
  • Rise in subscription revenue led mainly by Zee5
  • Fair value loss pertaining to group's overseas investments in mutual fund amounting to Rs 112 crore recognised during the quarter
  • All numbers are consolidated and compared on a year-on-year basis

Management Commentary:

  • Will deliver more than 50% profit to free cash flow conversion from FY22
  • FY21 will see significant reduction of working capital and movie buying
  • Receivables will reduce in the coming quarters
  • Margins will go back to 30% or more in FY22
  • Expect ad-revenue to grow starting Q3FY21

Stocks To Watch

  • Indiabulls Real Estate: Board has approved merger of two Embassy Group entities with self. Proposed amalgamation is for NAM Estates and NAM Opco into the company. Proposed swap ratio to be 6.619 shares of Indiabulls Real Estates for every 10 shares of NAM Estates and 5.406 shares of Indiabulls Real Estates for every 10 shares of NAM Opco. Indiabulls Real Estate is valued at Rs 92.5 per share, which is at a premium of 26% to Tuesday’s closing prices. Combined entity to be renamed Embassy Developments having a mix of residential and commercial properties with a total launch / planned area of 80.8 million square feet. Amalgamation procedure expected to be completed by the second quarter of FY22.
  • Phoenix Mills: Looks to raise as much as Rs 1,100 crore through a sale of shares. Indicative price of Rs 605 per share is a 6.5% discount to Tuesday's closing price. Floor price is Rs 611.3 per share which is a 5.4% discount to Tuesday's closing. Funds will be used to invest in existing and proposed business ventures, acquisitions and debt servicing. UBS Securities India, CLSA India, HSBC Securities & Capital Markets (India), Kotak Mahindra Capital are among the lead managers for the same, as per the terms of the deal accessed by Bloomberg.
  • Reliance Industries: Reliance Retail acquires majority stake in digital pharma market place Netmeds for a cash consideration of nearly Rs 620 crore.
  • Yes Bank: Repaid additional Rs 10,000 crore owed to the Reserve Bank of India under the special liquidity facility. The Bank had borrowed Rs 50,000 crore under the special liquidity facility. It said on July 28 that it had repaid Rs 25,000 crore to the RBI. As per the Bank’s annual report it will repay remaining dues within the timelines set by RBI.
  • AstraZeneca Pharma: Gets import and market permission from the DGCI for Olaparib Film-coated tablets 100 mg and 150 mg for additional indication. The drug is used as a monotherapy for treatment of adult patients with prostrate cancer.
  • IRB Infra: Gets arbitral award worth Rs 73.86 crore for one of its earlier projects in Punjab.
  • Emami: Bombay High Court has temporarily restrained the company from using the mark ‘Glow and Handsome’ till further orders. Hindustan Unilever is prima facie, a prior adopter of the mark, according to the court.
  • Vedanta: To approach Supreme Court and appeal against the order of Madras High Court which dismissed the plea challenging closure of the company's Thoothukudi plant.
  • Zee Entertainment: Subhash Chandra appointed Chairman Emeritus. Ro Gopalan appointed chairman of the board with immediate effect. Approved proposal to sell 100% stake in its four wholly-owned arms - Zee Digital Convergence, Zee Unimedia, Zee Network Distribution and India Web Portal.
  • Dilip Buildcon: JV with HCC wins construction order in Uttarakhand worth Rs 1,335 crore from Rail Vikas Nigam.
  • Dixon Tech: To consider raising funds via debt / equity on August 21.
  • NIIT: Nippon India Mutual Fund increased stake to 7.38% from 6.55% on August 14.
  • SMS Pharma: Promoter Potluri Labs increased stake to 0.77% from 0.27% on August 17.
  • Sundaram Clayton: Approved allotment of NCDs worth Rs 100 crore.
  • Centum Electronics: Sold the energy division of its French subsidiary for a total consideration of 9.8 million Euros to Chauntie Electric (Tianjin).
  • SML Isuzu: ICRA downgrades long-term banking facilities to ICRA A+ from ICRA AA-. Outlook has been retained at negative.
  • Non-Nifty Earnings Today: Muthoot Finance, Asian Granito, Balmer Lawrie, CSB Bank, Globus Spirits, Ruchi Soya, V2 Retail

Earnings Reported After Market Hours

Hindustan Aeronautics Q1FY21

  • Revenue up 1% to Rs 10,239.3 crore
  • Net profit down 1% to Rs 1,226.1 crore
  • Ebitda down 5% to Rs 2,470.8 crore
  • Ebitda margin at 24.1% from 25.6%
  • Higher provisions impact margins
  • All numbers are consolidated and compared on a year-on-year basis

Uflex Q1FY21

  • Revenue up 1% to Rs 1,992.7 crore
  • Net profit up 2.2 times to Rs 196.5 crore
  • Ebitda up 52.1% to Rs 416.3 crore
  • Ebitda margin at 20.9% from 13.8%
  • Lower raw material and power costs along with employee expenses aid margin expansion
  • All numbers are consolidated and compared on a year-on-year basis

Brokerage Radar

Macquarie On Petronet LNG

  • Outperform rating maintained
  • Price target of Rs 325
  • Lower utilisation driven by lockdowns
  • Transitory gains support June quarter results
  • Assume zero trading profits in our outlook
  • Value the stock at 10x FY22E price-to-earnings

CLSA On Zee Entertainment

  • Buy rating maintained
  • Price target of Rs 255
  • Improved disclosures and should emerge stronger post Covid-19
  • Stock hit hard by promoter pledging crisis
  • Advertising growth set to return rapidly in H2FY21
  • Stock at 10x PE for FY22CL offers deep value

BofA Securities On Zee Entertainment

  • Underperform rating maintained
  • Price target of Rs 138
  • Margins disappointed in Q1
  • Expect revenue to show year-on-year growth in H2FY21
  • FY21 to see decline in cash tied-up for movie buying
  • Zee5 will not need much further capex
  • Cut FY21-23 EPS estimates by 8% / 2% led by weaker Ebitda
  • Execution and governance key for re-rating

CLSA On Abbott India

  • Buy rating maintained
  • Price target of Rs 20,000
  • Power brands to drive new growth
  • New launch momentum remains strong
  • Continues to strengthen brand equity with patients and doctors
  • Increasing patient awareness, pharmacy engagement programs and focus on therapy leadership should aid strong revenue growth
  • Expect 17% earnings CAGR over FY20-23CL

Credit Suisse On Reliance Industries

  • Neutral rating maintained
  • Price target of Rs 1,690
  • Netmeds acquisition gives RIL an entry into online Pharmacy
  • Margins in online pharmacy are low
  • Should be able to reduce delivery timeline with significant physical retail presence.
  • May go for aggregator model for mom-and-pop pharmacy stores

Pledged Share Details

  • Ajanta Pharma: Promoter Ravi Agrawal released pledge of 2.4 lakh shares on August 17.
  • Adani Transmission: Promoter SB Adani Family Trust released pledge of 53.5 lakh shares on August 17.
  • GMR Infra: Promoters released pledge of 4.48 crore shares from August 14-17.
  • Apollo Tyres: Promoters Sunray Properties revoked pledge of 1.25 lakh shares on August 14.

(As Reported On August 18)

Bulk Deals

  • Satin Creditcare: Promoter Trishashna Holdings acquired 11.41 lakh rights shares at Rs 20.45 per rights share.
  • Som Distilleries and Breweries: Karst Peak Asia Master Fund sold 1.77 lakh shares (0.54%) at Rs 46.96 per share.
  • CG Power & Industrial Solutions: Yes Bank sold 5.18 crore shares (8.28%) at Rs 14.66 per share and GDN Investments acquired 46 lakh shares (0.73%) at Rs 14.66 per share.

Block Deals

  • Embassy Office Parks REIT: BofA Securities acquired 6.25 lakh units at Rs 370.15 per unit and Morgan Stanley Asia sold 6.25 lakh units at Rs 370.15 per unit.
  • Muthoot Finance: BofA Securities acquired 1.55 lakh shares (0.04%) at Rs 1,242.75 per share and Morgan Stanley Asia sold 1.55 lakh shares (0.04%) at Rs 1,242.75 per share.
  • SBI Cards and Payment Services: BofA Securities acquired 2.53 lakh shares (0.03%) at Rs 814.35 per share and Morgan Stanley Asia sold 2.53 lakh shares (0.03%) at Rs 814.35 per share.
  • Yes Bank: BofA Securities acquired 1.89 crore shares (0.15%) at Rs 15 per share and Morgan Stanley Asia sold 1.89 crore shares (0.15%) at Rs 15 per share

Trading Tweaks

  • AGM Date: Sun Pharma, RITES, Nocil, Kirloskar Industries, Orient Paper, GTPL Hathway, GMM Pfaudler, 3M India, Automotive Axles, Shriram Transport Finance.
  • Fund Raising: PNB Housing Finance.
  • Price Band Revised From 10% To 5%: Aries Agro, Mindteck, KIOCL, Entertainment Network, Trigyn Technologies.
  • Price Band Revised From 20% To 10%: Indbank Merchant Banking Services.
  • Move Into ASM Framework: Uttam Value Steels, Reliance Naval and Engineering, Eveready Industries, Mukand, Rolta, Mindteck, Vivmed Labs, S Chand.
  • Move Into Short Term ASM Framework: Jamna Auto Industries, Nandan Denim, Hind Rectifiers, Shriram City Union Finance, Sanco Industries, Mangalam Drugs And Organics, V2 Retail, Ramkrishna Forgings, TCPL Packaging.
  • Move Out Of Short Term ASM Framework: Suven Life Sciences, Anant Raj, Xchanging Solutions, Jubilant Industries, Hi-Tech Gears.

Insider Trades

  • Nava Bharat Ventures: Promoter A9 Homes acquired 1 lakh on August 14.
  • Jamna Auto: Promoter Pradeep Singh acquired 77,599 shares on August 17.
  • Aarti Industries: Promoters sold 36,440 shares between August 14-17.

(As Reported On August 18)

Money Market Update

  • The currency ended at 74.76 against the U.S. Dollar on Tuesday as compared to Monday's close of 74.89.
  • The rupee ended as the third best performer in Asia on Tuesday.
All You Need To Know Going Into Trade On August 19

F&O Cues

  • Nifty August futures closed at 11,405; premium of 20 points from 34 points
  • Nifty August futures add 3.4% and 3.4 lakh shares in Open Interest
  • Nifty Bank August futures closed at 22,200; premium of 29 points from 84 points
  • Nifty Bank August futures shed 5% and 64,000 shares in Open Interest
  • Nifty Put-Call Ratio at 1.57
  • Enter F&O Ban: Adani Enterprises, Bank of Baroda, Indiabulls Housing Finance, Zee Entertainment
  • Out of F&O Ban: Ashok Leyland, Bata, Glenmark
  • Stocks In F&O Ban: Adani Enterprises, Aurobindo, Bank of Baroda, BHEL, Indiabulls Housing, JSPL, Manappuram Finance, SAIL, Sun TV, Vedanta, Vodafone Idea, Zee Entertainment

Nifty Weekly Expiry: Aug 20

  • Maximum Open Interest on Call side at 11,400 strike (29.3 lakh shares)
  • Maximum Open Interest on Put side at 11,300 strike (30 lakh shares)
  • Active Options: 11,300 Put (20.7 lakh shares) and 11,300 Call (-9.6 lakh shares)

Nifty Monthly Expiry: Aug 27

  • Maximum Open Interest on Call side at 11,500 strike (22.6 lakh shares)
  • Maximum Open Interest on Put side at 11,000 strike (36.9 lakh shares)
All You Need To Know Going Into Trade On August 19