All You Need To Know Going Into Trade On Feb. 1
Asian stocks pushed higher Friday, extending the rally in risk assets into February, though gains were modest following last month’s stellar run. Japanese, Australian and South Korean stocks all edged higher.
Finance Minister, Piyush Goyal will present the budget—a vote on account—tomorrow, highlighting at least its income and expense plan until a new government is formed, or at most some steps to relieve India’s farm distress. (For BloombergQuint’s live coverage of the budget click right here)
The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.43 percent to 10,902 as of 6:35 a.m.
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Here’s a quick look at all that could influence equities today.
U.S. Market Check
- U.S. stocks rallied to cap their biggest monthly gain in three years as better-than-expected corporate earnings and the Federal Reserve’s dovish turn lifted investor sentiment.
- The yield on 10-year Treasuries added one basis point to 2.64 percent.
- The S&P 500 Futures slipped 0.1 percent.
- Japan’s Topix index gained 0.3 percent.
- Australia’s S&P/ASX 200 Index edged up 0.2 percent.
- Hang Seng futures earlier added 0.3 percent.
- The MSCI Emerging Markets Index gained 1.3 percent Thursday.
- West Texas Intermediate crude added 0.3 percent to $53.97 a barrel.
- Brent ended higher for the third day, closed 0.39 percent higher.
- Gold held at $1,321.07 an ounce.
London Metal Exchange
- Aluminium ended higher for the third day, up 0.03 percent.
- Nickel ended higher for the third day, 1.05 percent.
- Tin ended higher for the third day, up 0.24 percent.
- Lead ended higher for the second day, up 1.05 percent.
- Zinc ended higher for the second day, up 1.23 percent.
- Copper ended higher for the third day, up 0.54 percent.
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Stocks To Watch
- The Reserve Bank of India said that Bank of India, Bank of Maharashtra and Oriental Bank of Commerce were allowed to exit the prompt corrective action framework after meeting the regulatory norms.
- DHFL appointed an independent Chartered Accountant firm to verify the allegations made in the complaint and submit a report in a time bound manner.
- Yes Bank received the Reserve Bank of India’s nod for appointment of Ajai Kumar as the Interim managing director and Chief Executive Officer of the bank with effect from Feb. 1 until Ravneet Gill assumes office.
- European Union cleared Sumitomo and Mahindra JV. (Bloomberg News)
- Skipper received observation letters from exchanges regarding the company’s demerger resulting in Skipper Pipes. The company said that it has received No- Objection Certificate from the exchanges and will now file the draft scheme with NCLT.
- Suzlon Energy sold its balance stake in Prathmesh for Rs 57 crore to Ostro Energy.
- SQS India BFSI approved a share buyback of 4.6 lakh shares at a price of Rs 550 per share aggregating to Rs 25.3 crore.
- MOIL: Prices of ferro and chemical grade decreased by about 5 percent on the existing prices prevailing since Jan. 1 and to continue the prevailing prices for the Silico Manganese Grade and Fines.
- Punjab National Bank increased MCLR across various tenors by 5 basis points. One month MCLR at 8.20 percent and one-year MCLR was at 8.55 percent.
- Oriental Bank of Commerce received Rs 1,186 crore capital infusion from government of India. The bank said that the amount was utilized to make loan loss provision in order to bring down the net NPA ration below the threshold under Prompt Corrective framework.
- Adani Ports said it was considering raising Rs 2,000 crores via NCDs on Aug. 6.
- Sun TV Network to start transmission of its Bengali Channel from Feb. 3.
- Mazagon Dock Shipbuilders: India panel approved the construction of six submarines locally for Rs 40,000 crore. (Bloomberg News)
Nifty Earnings To Watch
- Dr. Reddy’s
- State Bank of India
Other Earnings To Watch
- Akzo Nobel
- Astron Paper & Board Mill
- Berger Paints
- Carborundum Universal
- Deepak Nitrite
- Dredging Corporation of India
- EID Parry
- Elgi Equipments
- Equitas Holdings
- Excel Industries
- Galaxy Surfactants
- GIC Housing Finance
- H.G. Infra Engineering
- Hikal , Jagran Prakashan
- Kalpataru Power Transmission
- National Fertilizers
- Sequent Scientific
- Shanthi Gears
- Sheela Foam
- Sterling Biotech
- Sundram Fasteners
- Taj GVK Hotels & Resorts
- Investment Trust Of India
- Unichem Laboratories
- Vardhman Special Steels
- Voltamp Transformers
- Westlife Development
- Capri Global Capital
Earnings Reaction To Watch
Power Grid (Q3, YoY)
- Revenue up 12.8 percent at Rs 8,471.2 crore.
- Net profit up 14.2 percent at Rs 2,331.2 crore.
- Ebitda up 12.3 percent at Rs 7,569.4 crore.
- Margin at 89.4 percent versus 89.8 percent.
Bharti Airtel (Q3, QoQ)
- Revenue up 0.5 percent Rs 20,519 crore.
- Ebitda down 0.4 percent at Rs 6,218 crore.
- Margin at 30.3 percent versus 30.6 percent.
- Net profit down 28 percent Rs 86.2 crore.
- Average revenue per user up 4 percent at Rs 104.
- Exceptional Gain of Rs 1, 414 crore and deferred tax asset of Rs 716 crore.
Vedanta (Q3, YoY)
- Revenue down 3 percent to Rs 23,669 crore.
- Ebitda down 11 percent to Rs 5,953 crore.
- Ebitda margin at 29 percent versus 35 percent.
- Net profit down 21 percent at Rs 1,574 crore.
Hero MotoCorp (Q3, YoY)
- Net revenue up 7.5 percent at Rs 7,865 crore.
- Net profit down 4 percent at Rs 769 crore.
- Ebitda down 4 percent at Rs 1,105 crore.
- Margin at 14 percent versus 15.8 percent.
- Declared dividend of Rs 55 per share.
UPL (Q3, YoY)
- Revenue up 17.3 percent at Rs 4,921 crore.
- Net profit down 19.7 percent at Rs 461 crore.
- Ebitda up 22.6 at Rs 1,016 crore.
- Margin at 20.6 percent versus 19.8 percent.
- Exceptional loss of Rs 91 crore.
Dena Bank (Q3, YoY)
- Net Interest Income down 9.8 percent at Rs 631 crore.
- Net loss at Rs 178.5 crore versus net loss at Rs 380.1 crore.
- Provisions at Rs 519.4 crore versus Rs 1,044.3 crore (QoQ)
- GNPA at 19.77 percent versus 23.64 percent (QoQ)
- NNPA at 10.44 percent versus 11.7 percent (QoQ)
TD Power Systems (Q3, YoY)
- Revenue down 6.5 percent at Rs 87.5 crore.
- Net loss at Rs 3.8 crore versus net loss of Rs 2.3 crore.
- Ebitda loss at Rs 2 crore versus Ebitda profit at Rs 4 crore.
Petronet LNG (Q3, QoQ)
- Revenue down 6 percent at Rs 10,097.7 crore.
- Net profit up 0.4 percent at Rs 565.3 crore.
- Ebitda down 4 percent at Rs 848 crore.
- Margin at 8.4 percent versus 8.2 percent.
Laurus Labs (Q3, YoY)
- Revenue up 10.6 percent at Rs 529.5 crore.
- Net profit down 49 percent at Rs 17.8 crore.
- Ebitda up 0.3 percent at Rs 87.7 crore.
- Margin at 16.6 percent versus 18.3 percent.
NMDC (Q3, YoY)
- Revenue up 47.8 percent at Rs 3,649.4 crore.
- Net profit up 77.9 percent at Rs 1,576.7 crore.
- Ebitda up 78.1 percent at Rs 2,154.3 crore.
- Margin at 59 percent versus 49 percent.
HSIL (Q3, YoY)
- Revenue up 27 percent at Rs 735.7 crore.
- Net profit up 63.5 percent at Rs 25.5 crore.
- Ebitda up 47.8 percent at Rs 107.3 crore.
- Margin at 14.6 percent versus 12.5 percent.
- Exceptional loss of Rs 7 crore in base quarter.
Accelya Kale Solutions Q2 (Year Ends In June) YoY
- Revenue up 17.2 percent at Rs 107.8 crore.
- Net profit up 30.6 percent at Rs 30.3 crore.
- Ebitda up 49.3 percent at Rs 42.7 crore.
- Margin at 39.6 percent versus 31.1 percent.
- Declares Dividend of Rs 17 per share.
Narayana Hrudayalaya (Q3, YoY)
- Revenue up 32.2 percent at Rs 732.1 crore.
- Net profit down 9.9 percent at Rs 12.7 crore.
- Ebitda up 51.6 percent at Rs 77.9 crore.
- Margin at 10.6 percent versus 9.3 percent.
- Depreciation and finance costs rise by 68 percent.
- Setco Automotive: Promoter Setco Engineering Private sold 7 lakh shares or 0.52 percent equity at Rs 30.55 each.
- R System International record date for share buyback.
- PTC India price band revised to 20 percent.
- LKP Finance, PTC India, Linde India, SITI Networks price band revised to 10 precent.
Who’s Meeting Whom
- Crompton Greaves to meet LionRock Capital, Black Rock and other investors from Feb. 11-18.
- Deepak Fertilisers and Petrochem to meet BNP Paribas, Enam Holdings and other investors on Feb. 1.
- Deepak Fertilisers and Petrochem Robust Marketing Services acquired 50,000 shares on Jan. 28.
- Sterlite Technologies promoter group Ankit Agarwal acquired 11,600 shares on Jan. 29.
- GMR Infra promoter GMR Enterprises acquired 3.25 lakh shares on Jan. 28
- L&T Technology Services promoter Larsen & Toubro sold 15.45 lakh shares on Jan. 30.
Money Market Update
- The rupee on Thursday ended at 71.08/$ versus Wednesday’s closing of 71.12/$.
- Nifty February futures closed trading at 10856, premium of 25 points.
- Max open interest for January series at 11,000 Call, (OI at 27.8 lakh shares).
- Max open interest for January series at 10,700 Put, (OI at 30 lakh shares).
Stocks In F&O Ban
- Nifty PCR at 1.65 versus 1.21.
- Nifty Bank PCR at 1.4 versus 0.96.
Macquarie on Petronet LNG
- Maintained ‘outperform’ with target price of Rs 270.
- Petronet LNG’s consistent performance continues.
- Believe capital allocation and competition risks are overblown.
- Expect high payout led by strong FCF and net cash position.
- Maintained ‘Outperform’; cut target price to Rs 223 from Rs 260.
- December quarter’s Ebitda was below expectation led by loss at aluminium division.
- Purchase in economic interest in Anglo American from parent should raise capital allocation risks.
- Vedanta cut 2018-19 volume guidance for oil and zinc international division.
- Downgraded to ‘sell’ from ‘buy’; cut target price to Rs 170 from Rs 230.
- Ebitda was in line, but mark to market gains lead to net profit beat.
- Related-party transaction will de-rate the stock.
- Transaction appears at arm’s length, but the counter party risk is high because parent drives its value from Vedanta and (parent) is highly leveraged.
- Downgraded to ‘sell’ from ‘buy’; cut target price to Rs 170 from Rs 250.
- Ebitda rose sequentially but was a miss mainly led by zinc.
- Related party transaction raises concerns on use of cash.
- Concerns are likely to drag down Vedanta’s valuations as well.
On Hero MotoCorp
- Maintained ‘outperform’ with target price of Rs 3,200.
- Operating profits were in line with expectations.
- Market share declined amidst elevated competition.
- Management expects high single digit growth in FY20.
- Maintained ‘sell’; cut target price to Rs 2,400 from Rs 2,800.
- Margin slipped partly due to higher commodity prices.
- Muted demand outlook as key high-priced-100cc bike segment shrinking.
- Regulatory changes and high competition should keep margins under pressure.
On Bharti Airtel
- Maintained ‘buy’ with target price of Rs 415.
- Mobile business stabilising in India and strong Africa performance continue.
- Customer engagement continues to improve in India mobile business.
- Maintained buy on accelerated investments in 4G and solid market share.
- Maintained ‘buy’ with target price of Rs 425.
- Positive surprise in India mobile revenues led by 4G data subscription additions.
- Consolidated margin decline on increased network costs and high capital expenditure.
- Upcoming Africa IPO will be a stock catalyst.
- Maintained neutral with target price of Rs 412.
- Growth recovered in oral care and foods segments in Q3.
- Margin pressure in Q3 was led by international business and input cost inflation.
- Company saw strong domestic volume growth.
- Maintained ‘buy’; hiked target price to Rs 535 from Rs 500.
- Highlight was annual volume growth which was much ahead of estimates.
- Gross margins were weak but in-line Ebitda margins.
- Q3 saw strong domestic growth with positive outlook.