All You Need To Know Going Into Trade On Jan. 20
Stocks in Asia saw a modest rise at the open Monday, building on seven straight weeks of gains.
Stocks in Japan, South Korea and Australia edged higher. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.12 pecent to 12,397 as of 6:57 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.
Here’s a quick look at all that could influence equities today.
- The benchmark S&P 500 Index, along with the tech-heavy Nasdaq Composite, set record highs for an eighth consecutive trading session on Friday.
- Oil jumped as rising tension in the Middle East and North Africa halted output and exports from key OPEC producers Iraq and Libya.
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Earnings Reaction To Watch
Reliance Industries (Q3, QoQ)
- Revenue down 1 percent to Rs 86,289 crore (Estimate: Rs 92803 crore)
- Net profit down 1.2 percent to Rs 9585 crore (Estimate: Rs 9706 crore)
- Ebitda down 5.8 percent to Rs 12871 crore (Estimate: Rs 14608 crore)
- Margin at 14.9 percent versus 15.7 percent (Estimate: 15.7 percent)
- GRM down 2.1 percent to $9.2/barrel versus $9.4/barrel
Reliance Jio (Q3, QoQ)
- Revenue up 6.4 percent to Rs 13,968 crore (Estimate: Rs 13722 crore)
- Net profit up 36.4 percent to Rs 1,350 crore (Estimate: Rs 1419 crore)
- Ebitda up 8.6 percent to Rs 5,583 crore (Estimate: Rs 5978 crore)
- Margin at 40 percent versus 39.1 percent (Estimate: 43.6 percent)
- Adjusted ARPU up 0.7 percent to Rs 128.4 versus Rs 127.5
TCS (Q3, QoQ)
- Dollar revenue up 1.3 percent to $5,586 million (Estimate: $5600 million)
- Revenue up 2.3 percent to Rs 39,854 crore (Estimate: Rs 39836 crore)
- Net profit up 0.9 percent to Rs 8,118 crore (Estimate: Rs 8189 crore)
- EBIT up 6.5 percent to Rs 9,974 crore (Estimate: Rs 9760 crore)
- Margin at 25 percent versus 24 percent (Estimate: 24.5 percent)
- Management remains optimistic about 8 percent revenue growth in FY20
HCL Tech (Q3, QoQ)
- $ Revenue up 2.3 percent to $2,543 million (Estimate: Rs 2551 crore)
- Revenue up 3.5 percent to Rs 18,135 crore (Estimate: Rs 18155 crore)
- Net profit up 14.6 percent to Rs 3,037 crore (Estimate: Rs 2758 crore)
- EBIT up 5 percent to Rs 3,670 crore (Estimate: Rs 3542 crore)
- Margin at 20.2 percent versus 20 percent (Estimate: 19.5 percent)
HDFC Bank (Q3, YoY)
- Net interest income up 12.7 percent to Rs 14,172.9 crore
- Net profit up 32.8 percent to Rs 7,416.48 crore
- Gross NPAs at 1.42 percent versus 1.38 percent (QoQ)
- Net NPAs at 0.48 percent versus 0.42 percent (QoQ)
- Provisions up 12.7 percent to Rs 3,043.56 crore (QoQ)
ICICI Lombard General Insurance (Q3, YoY)
- Gross written premium flat to Rs 3,769.46 crore.
- Net earned premium from the motor up 23 percent to Rs 1,583 crore
- Net earned premium from health up 17 percent to Rs 599 crore
- Net profit up 23 percent to Rs 294 crore
- Combined ratio at 98.7 percent versus 95.9 percent
L&T Technology Services (Q3, YoY)
- Dollar revenue up 7 percent to $199 million
- Revenue up 8 percent to Rs 1,422.9 crore
- Net profit up 10 percent to Rs 204.1 crore
- EBIT up 9.8 percent to Rs 239.1 crore
- Margin at 16.8 percent versus 16.5 percent
L&T Finance Holdings (Q3, YoY)
- Net Interest Income up 20 percent to Rs 1,467.9 crore
- Net profit up 1.9 percent to Rs 591 crore
- Lending book growth up 5 percent to 99,453 crore
- Provision coverage at 57 percent versus 62 percent
Blue Dart Express (Q3, YoY)
- Revenue flat at Rs 857.9 crore
- Net loss at Rs 32 crore versus net profit to Rs 32 crore
- Ebitda up 59 percent to Rs 142 crore
- Margin at 16.6 percent versus 10.4 percent
Jindal Steel and Power (Q3, YoY)
- Revenue down 2.8 percent to Rs 9,299.78 crore
- Net loss at Rs 218.57 crore versus loss of Rs 87.24 crore
- Ebitda down 12.4 percent to Rs 1819.52 crore
- Margin at 19.6 percent versus 21.7 percent
Chennai Petroleum Corporation (Q3, YoY)
- Revenue down 7.14 percent at Rs 9,170.72 crore
- Net profit at Rs 11.29 crore versus loss of Rs 362.99 crore
- Ebitda at Rs 227.21 crore versus Ebitda loss of Rs 335.49 crore
Goa Carbon (Q3, YoY)
- Revenue up 13.47 percent to Rs 106.96 crore
- Net loss at Rs 4.12 crore versus loss of Rs 4.9 crore
- Ebitda loss at Rs 0.99 crore versus Ebitda loss of Rs 6.32 crore
GNA Axles (Q3, YoY)
- Revenue down 13 percent to Rs 214.14 crore
- Net profit down 57.5 percent to Rs 7.63 crore
- Ebitda down 38.6 percent to Rs 23.89 crore
- Margin at 11.16 percent versus 15.8 percent
Nifty Earnings To Watch
- Kotak Mahindra Bank
Other Earnings To Watch
- Federal Bank
- Apollo Tricoat Tubes
- Bank of Maharashtra
- Can Fin Homes
- Deccan Gold Mines
- Hindustan Zinc
- ICICI Securities
- Just Dial
- KEI Industries
- Monnet Ispat & Energy.
Stocks To Watch
- Reliance Industries-Saudi Aramco deal not expected to be closed by March 31.
- Indostar Capital Finance: Everstone Capital is exploring options including a partial stake sale as it looks to fund expansion. Everstone Capital holds a 60 percent stake in the company. The options include bringing in a strategic partner or selling shares to investors through the via qualified institutional placement and to raise funds before the end of this year.
- Quick Heal Technologies: Tribunal has set aside service tax demand for Rs 56.1 crore
- Mahindra & Mahindra’s arm has signed an agreement to acquire a 100 percent stake in Fifth Gear Ventures for Rs 30.45 crore. The company is in the business of operating an e-commerce platform.
- Ruchi Soya Industries: Board has approved long term agreement with Patanjali Ayurved for utilisation of production capacities of the company and to issue 1.86 crore shares to Ashav Advisory on a private placement basis at Rs 7 per share.
- Embassy Office Parks REIT: SEBI said REITs and InvITs rights issue in-line with regulatory norms.
- UCO Bank to consider shareholder’s nod for preference issue of Rs 2,142 crore to the Government on Feb. 14.
- GHCL to consider share buyback on Jan. 23.
- Indian Oil has signed an agreement with Cummins Technologies for bulk dispensing of the company’s diesel exhaust fluid in their advanced engines with selective catalytic reduction systems.
- Power Finance Corporation raised $750 million through overseas bonds.
- Power Grid Corporation’s arm has commissioned its Tamil Nadu unit.
- Mercator sold its offloading ship for Rs 49.54 crore.
- Lupin says U.S. FDA has completed inspection of its’s Vizag API facility with five 483 observations
- Chalet Hotels signed a share purchase agreement for the purchase of Belaire Hotels Private Ltd., owner of Novotel Pune Nagar Road Hotel and its affiliated entity Seapearl Hotels Private Ltd. For aggregate enterprise value of about Rs.290 crore.
- RBL Bank said rating agency ICRA has reaffirmed rating for Basel Ill Compliant Tier II Bond Programme at AA- (stable). The ratings for medium-term fixed deposits has been reaffirmed at MAA (stable). The short-term rating for the certificate of deposit Programme and Short Term Fixed Deposit Programme has been reaffirmed at A1+.
- Godawari Power says Chhattisgarh Environment Conservation Board has granted its consent to the Company, to operate the Rolling Mill with a capacity of 4,00,000 tonnes per annum and iron ore beneficiation plant with capacity of 10,00,000 tonne per annum. The company expects to start commercial operations in these facilities during the current quarter.
- Reliance Capital says Axis Trustee Services Ltd has invoked 2.18 percent stake pledged with it, balance stake left with Axis Trustee is 16.51 percent
- Reliance Home Finance says Axis Trustee Services Ltd has invoked 2.37 percent stake pledged with it, balance stake left with Axis Trustee is 7.57 percent
- HSIL: HDFC MF sold 5 lakh shares (0.69 percent) at Rs 59.31 each
- Spencer's Retail: Canara Robeco MF sold 5.2 lakh shares (0.65 percent) at Rs 75.58 each
Kotak Securities on Reliance Jio
- Surprisingly weak revenue print; IUC tariff drives a sharp jump in churn.
- Ebitda below expectations despite the IUC delta and further decline in staff costs.
- Net debt rises further, traffic growth weak; fairly weak underlying print.
BofAML on Nestle India
- Downgraded to ‘Neutral’ from ‘Buy’; hiked price target to Rs 16,500 from Rs 14,700.
- Valuations leave minimal room for error.
- Strong volume trajectory to continue led by new products.
- Rising agri-commodity prices may cap margin gains.
UBS on Jubilant FoodWorks
- Upgraded to ‘Buy’ from ‘Neutral’; hiked price target to Rs 2,100 from Rs 1,600.
- Poised to benefit most from growth in quick-service restaurants.
- Competition waning in the downturn.
- Poised to deliver market-leading growth versus peers, despite a slowdown in consumption
UBS on United Breweries
- Maintained ‘Sell’ with a price target of Rs 1,300.
- Potential price increases in large states should allay margin concerns.
- Benefitting from improving consumer preference for beer.
- Regulatory hurdles likely to keep stock range-bound in the near term.
HSBC on Insurance and AMC
- Life new business value outlook remains strong given improving business mix.
- NBV should continue to outpace annual premium equivalent growth.
- Valuation remains a concern
- General Insurance Corp: Maintained ‘Hold’; cut price target to Rs 280 from Rs 285.
- ICICI Lombard: Maintained ‘Reduce’; hiked price target to Rs 1045 from Rs 940
- HDFC Life: Maintained ‘Hold’; hiked price target to Rs 600 from Rs 540
- ICICI Prudential: Maintained ‘Buy’; hiked price target to Rs 550 from Rs 540
- SBI Life: Maintained ‘Hold’; hiked price target to Rs 1054 from Rs 1005
- HDFC AMC: Maintained ‘Hold’; hiked price target to Rs 2950 from Rs 2682
- RNAM: Downgraded to ‘Hold’ from ‘Buy’; hiked price target to Rs 325 from Rs 285
On HDFC Bank
- Maintained ‘Buy’ with a price target of Rs 1,400.
- Beat on P&L, strong core performance.
- Adjusted for one-offs, core operating profit growth was higher than expected.
- Bank has utilized all of the one-off gains to make additional provisions on the corporate accounts.
- Maintained ‘Add’ with a price target of Rs 1,350.
- Would see this result as a less-than-positive one.
- Loan growth was strong but internals show that growth is dependent on corporate and unsecured book.
- Revenue growth contribution was from several line items that have volatile trends.
- Commentary remains positive on retail asset quality in most segments.
- Maintained ‘Buy’ with a price target of Rs 1,520.
- Slippages disappoint amidst otherwise strong earnings.
- Softness in retail was due to slower vehicle growth; unsecured segment sustained steady growth.
- Best-in-class franchise, marginal stress and strong capital place HDFC Bank in sweet spot.
On Reliance Industries
- Maintained ‘Buy’ with a price target of Rs 1,750.
- Robust consumer business performance led to another strong quarter.
- Jio adopted lower corporate tax rates driving net profit higher.
- Strong retail revenue and Ebitda performance were driven by rapid store expansion, operating leverage and efficiency.
- Maintained ‘Buy’; cut price target to Rs 1,705 from Rs 1,793.
- Weak refining and petrochemicals profitability drag performance.
- Weak spreads hit profits; E&P performance remains muted.
- Jio and retail profitability continue to remain strong.
- Maintained ‘Sell’ with a price target of Rs 1,975.
- Weak December quarter results.
- BFSI and U.K. were particularly sluggish with declines sequentially.
- Impacted by challenges in BFS/retail and expectations still remain elevated.
- Maintained ‘Neutral’; hiked [price target to Rs 1,950 from Rs 1,892.
- Third successive quarterly revenue miss.
- BFSI & retail-led growth moderation continues; EBIT margins at 25 percent surprised positively.
- Do not expect a pick anytime soon with persistent BFSI headwinds.
- Valuations remain steep at 24 times and are concerning.
- Maintained ‘Neutral’; cut price target to Rs 2,063 from Rs 2,076.
- Expected to face cyclical demand downturn in its key industry verticals over the next few quarters.
- Stock is currently trading at 23.7 times FY21E EPS versus Indian IT sector at 16.5 times.
On HCL Tech
- Maintained ‘Sell’; hiked price target to Rs 496 from Rs 493.
- Above expectations on margins, IMS and IBM growth risks remain.
- IMS business-facing pricing pressure and seeing tepid growth without lack of large deal.
- Significant investments may be required for product refresh in IBM business.
- Maintained ‘Add’; hiked price target to Rs 650 from Rs 615.
- Products-led outperformance while services business growth moderates.
- Increase EPS estimate by 3-6 percent on lower ETR and higher margin.
- HCL trades at inexpensive valuation of 14 times FY2021E earnings and is attractive.
- Maintained ‘Outperform’; hiked price target to Rs 690 from Rs 670.
- Guidance lifts for revenue and EBIT margin levels for 2019-20 reflect underlying business momentum.
- Strong deal pipeline and ramp-ups lead to revenue guidance raise.
- Further improvement possible in margins.
- HCL Tech is our top large-cap pick in the Indian IT space.
- AGC Networks, Electrosteel Castings, Shyam Century Ferrous, Vipul, Kirloskar Electric to move into short term ASM Framework.
- 3i Infotech, FCS Software Solutions, Indowind Energy, Lasa Supergenerics to move out of short term ASM Framework
Who’s Meeting Whom
- Inox Leisure to meet Birla Sunlife Insurance on Jan. 23
Money Market Update
- Rupee closed at 71.08/$ on Friday from 70.93/$ on Thursday
- Nifty January futures closed at 12,384.6, premium of 32 points versus 18.8 points
- Nifty January futures open interest up 1.6 percent, adds 2 lakh shares in open interest
- Nifty Bank January futures closed at 31,723.7, premium of 133pts Vs 81.8pts
- Nifty Bank January futures open interest down 0.2 percent, sheds 2.2k shares in open interest
- Nifty PCR at 1.45 versus 1.51 (across all series)
Nifty Weekly Expiry: Jan. 23
- Max open interest on call side at 12,400 (19.3 lakh shares)
- Max open interest on put side at 12,300 (19.7 lakh shares)
- Open interest addition seen at 12,400C (+7.6 lakh shares), 12,500C (+5.4 lakh shares), 12,350P (+5 lakh shares)
Nifty Monthly Expiry: Jan 30
- Max open interest on call side at 12,500 (28.2 lakh shares)
- Max open interest on put side at 12,000 (37.1 lakh shares)