All You Need To Know Going Into Trade On July 20

Earnings Fineprint: HDFC Bank Q1FY21

• Net Interest Income up 17.8% to Rs 15,665 crore
• Net profit up 19.5% to Rs 6,658.6 crore
• Gross NPA at 1.36% from 1.26% in the previous quarter
• Net NPA at 0.33% from 0.36% in the previous quarter
• Provisions at Rs 3,891.5 crore from Rs 3,784.4 crore in the previous quarter

Management Commentary:

• Bank asked to return funds debited from Altico account.
• Enquiry into vehicle loan brought out personal misconduct issues.
• Potential successor has been with the bank for 25 years.
• 9% of customers in number and value are under moratorium.

Stocks To Watch

• Yes Bank: FPO subscribed 95% on day 3. QIB portion subscribed 1.9 times, HNI portion subscribed 0.63 times while retail portion subscribed 0.47 times. The bank has raised Rs 14,267 crore through the FPO.
• Muthoot Finance: Board unanimously decided to defer the proposal to sub-divide the equity shares to a future date despite the share price movement over the last few months and financial indicators were found to be ideal for a stock split.
• M&M Financial: The board approves a rights issue for an amount not exceeding Rs 3,500 crore. The issue price for the same has been set at Rs 50 per share. Record date for the same has been fixed at July 23, 2020. The rights issue opens on July 28 and will close on August 11, 2020. The entitlement ratio for the rights issue has been set at one fully paid-up equity share for every one fully-paid up equity share held by the shareholder as on the record date. The board has also appointed Vivek Karve as the company's new CFO.
• Embassy Office Parks REIT: The company in its first quarter business update informed of rental collections from office occupiers to be at 98% during the April-June period. It also reported a rental increase of 14% on 1.8 million square feet across 22 office leases. Strong liquidity position with low leverage of 16% net debt to Total Enterprise Value (TEV) as on June 30, 2020, the exchange filing said.
• Vodafone Idea: The company has paid a further sum of Rs 1,000 crore towards the AGR dues. The company had so far deposited Rs 6,854 crore in three tranches. TDSAT has also stayed TRAI's order which had asked the company to put on hold its premium offering RedX.
• Reliance Industries: To shut down one of the crude distillation units at its refinery at Jamnagar for planned routine maintenance and inspection activities for 3-4 weeks starting the fourth week of July. Other refinery units are expected to operate normally during the period.
• Cadila Healthcare: Zydus gets final approval from the U.S. FDA to market Butalbital, Acetaminophen and Caffeine tablets. The drug is used to treat symptom complex of tension headache. The drug will be manufactured at Nesher Pharma's manufacturing facility at St. Louis.
• L&T Finance Holdings: Board approval to wind up offshore wealth management arm in the United Arab Emirates.
• HUDCO: Achieved loan sanctions of Rs 1,172 crore and loan releases of Rs 2,284.76 crore as on June 30.
• GMR Infra: JV gets original proponent status for developing the Ninoy Aquino International Airport by Manila International Airport Authority.
• IndiaMART InterMESH: Accion Frontier Inclusion Mauritius sold 3.7 lakh or 1.28% stake at Rs 2,077.53 per share.
• Non-Nifty Earnings Today: ACC, SBI Cards and Payment Services, Bombay Dyeing, Den Networks, NRB Bearings, Swaraj Engines, State Trading Corporation.

Earnings Reported After Market Hours

ICICI Lombard General Insurance Q1FY21

• Gross premium down 5% at Rs 3,394 crore
• Net income up 28% to Rs 398 crore
• Solvency at 2.5 times from 2.17 times in the previous quarter
• Combined ratio at 99.7% from 100.4%
• Net earned premium from health insurance up 10% to Rs 588 crore
• Net earned premium from motor insurance down 2% to Rs 1,452 crore
• All numbers are standalone and compared on a year-on-year basis

Hathway Cable and Datacom Q1FY21

• Revenue down 6.7% to Rs 419.6 crore
• Net profit of Rs 65.9 crore from net loss of Rs 9.7 crore
• Ebitda up 26.9% to Rs 118.3 crore
• Ebitda margin at 28.2% from 20.7%
• Higher finance costs in the base quarter impacted the bottomline
• Broadband revenue up 9% to Rs 146.5 crore
• Cable television revenue down 14% to Rs 273 crore
• All numbers are consolidated and compared on a year-on-year basis

M&M Financial Q1FY21

• Total income up 8% to Rs 3,056.6 crore
• Net profit up more than four times to Rs 431.7 crore
• AUM up 14% to Rs 81,000 crore
• Exceptional gain of Rs 229 crore post dilution of 49% stake in JV agreement with Manulife Asset Management
• Gross Stage 3 assets at 9.19% from 8.17% last year
• Net stage 3 assets at 5.72% from 6.27% last year
• Provision Coverage Ratio at 40.1% from 24.9%
• Provisions for Covid-19 at Rs 664 crore
• Total value of assets financed during the quarter at Rs 3,489 crore
• 40% of moratorium availed customers repaying installments
• All numbers are consolidated and compared on a year-on-year basis

Companies With Covid-19 Updates

Coal India

• Produced 121.01 MT of coal during the period as compared to 136.94 MT during the same period last year.
• Lockdown had an adverse impact on coal dispatch.
• Offtake decreased to 120.62 MT from 153.49 MT.
• Stock at power plant end also remained high during the period.
• Reserve price of coal offered under all schemes of e-auction has been reduced in order to reduce the financial stress to consumers
• To help improve PLF of power plants, minimum assured level of supply under FSAs increased to 80% from 75% of ACQ.

IOL Chemicals And Pharma

• All manufacturing facilities are operating normally.
• Business has not been significantly affected by Covid-19
• Future impact is not possible to ascertain reasonably
• Have sufficient capital and financial resources to support business
• Profitability not significantly impacted.

Shipping Corporation Of India

• Business is not significantly impacted as there has been a rise in tanker rates in the backdrop of sharp drop in oil prices and demand for floating storage. This may not sustain in the future.
• Shipping business and markets have been adversely impacted as the cascading effect of the lockdown.
• Invocation of Force Majeure clauses by the charters due to the declaration of Force Majeure by the ports to avoid their liabilities.
• Overseas and domestic container trade is witnessing a slowdown translating into a downward pressure on freight rates.

Steel Authority of India

• Impact of the pandemic on Q4 results is Rs 771.76 crore, on account of fall in the net realisable value of inventory.
• Production levels in producing units have been raised
• Slowdown in sales and cash realisations has put a strain on the company's financial resources
• Realisation from debtors has been low
• Total borrowings increased by around Rs 500 crore during Q1FY21
• No threat to service debt obligations on time

Brokerage Radar

Jefferies On HDFC Bank

• Buy rating maintained
• Price target raised to Rs 1,350 from Rs 1,280
• Pushing growth in corporate segment with high quality
• Expect NIMs to see pressure from a rise in share of corporate loans
• Among the best asset quality in the sector
• Will benefit from polarisation of deposits on strong retail asset portfolio and solid deposit franchise
• Asset quality in unsecured portfolio holding up better than expected
• Expect loan CAGR of 19% during FY20-23E

ICICI Securities On HDFC Bank

• Buy rating maintained
• Price target of Rs 1,470
• Moratorium lowest in the industry
• Contingency buffers sufficient enough
• Pressure on NIMs should be imminent in coming quarters if not now
• Build in elevated credit cost of 2% given challenging macros

CLSA On HCL Tech

• Buy rating maintained
• Price target raised to Rs 740 from Rs 650
• High exposure to run-the-business spend is helping in a faster recovery
• Margin resilience a positive surprise
• Impressive cash management, healthy deal wins and optimistic outlook
• Raise FY21/22 EPS estimates by 4-6%
• Expect consensus EPS upgrades on the improved margin outlook

Kotak Securities On ICICI Lombard

• Sell rating maintained
• Price target of Rs 950
• Mid-teen earnings growth may be considered as a defensive in the current environment although valuations are too pricy for the same
• Risk management practices are undoubtedly among the best in the industry
• Raising estimates by 7-9% to reflect a better combined ratio, partially offset by a lower investment income
• Expect the company to deliver about 20% RoE and mid-teens growth in earnings
• Find better risk-return tradeoff elsewhere in the sector
• Prefer ICICI Bank and ICICI Prudential Life over Lombard

Jefferies On Britannia

• Hold rating maintained
• Price target raised to Rs 3,900 from Rs 3,450
• Strong revenue growth and margin expansion
• Better margins in cheese and international portfolio
• Management expects current momentum to sustain in the next 2-3 quarters
• Strong growth rates are likely to drive operating leverage benefits
• Raise FY21-22 EPS by 16-26%
• Forecast 13% annual growth in revenue over FY20-23E
• Forecast EPS to rise at 17% CAGR over FY20-23E
• Growth may moderate at a high base in FY22 over a high base

JPMorgan On Britannia

• Overweight rating maintained
• Price target raised to Rs 4,300 from Rs 3,950
• Nimble execution aids Q1 results
• Though high growth rates of this quarter will fade going ahead, they will be ahead of other staple peers
• To benefit from sustained cost optimisation initiatives and better mix
• Expect faster scale up of adjacencies once situation normalises
• Raise FY21/22E EPS by 21% and 5%

Pledged Share Details

• Dish TV: Promoter Direct Media Distribution invoked pledge of 1.09 crore shares on July 9.
• JSW Steel: Promoters revoked pledge of 17.54 lakh shares on July 13.
• JSPL: Promotes revoked pledge of 16.5 lakh shares on July 13.
• Future Consumer: Promoter Future Capital Investment invoked pledge of 1.8 crore shares on July 15.
• Future Retail: Promoter Future Corporate Resources invoked pledge of 17.32 lakh shares on July 15.

As reported on July 17

Trading Tweaks

• AGM Date: CSB Bank, Maharashtra Scooters, Security & Intelligence Services, Swaraj Engines, Tejas Networks, Graphite India, Newgen Software Tech, L&T Finance Holdings
• Price Band Revised From 20% To 10%: Ksolves
• Price Band Revised From 10% To 5%: BF Utilities, Eveready Industries
• Move Into ASM Framework: Kuantum Papers, Swelect Energy Systems
• Move Out Of ASM Framework: BGR Energy Systems, Sadbhav Engineering, Shree Rama Newsprint, TCI Developers, AU Small Finance Bank, DB Realty
• Move Into Short-Term ASM Framework: Future Consumer
• Move Out Of Short-Term ASM Framework: IG Petrochemicals, Ujjivan Small Finance Bank, Indiabulls Real Estate, Asian Granito

Money Market Update

• The currency ended stronger at 75.02 against the U.S. DOllar as compared to Thursday's close of 75.19.
• The rupee ended as the best performing currency in Asia for the week.

F&O Cues

• Nifty July futures end at 10,905; Premium narrows to 3 points from 26 points
• Nifty July futures shed 0.3% and 35,000 shares in Open Interest
• Nifty Bank July futures end at 21,971; Premium narrows to 5 points from 26 points
• Nifty Bank July futures shed 2.2% and 33,000 shares in Open Interest
• Enter F&O Ban: BHEL, Glenmark, Nalco
• Stocks In F&O Ban: BHEL, Canara Bank, Century Textiles, Glenmark, Vodafone Idea, L&T Finance, Nalco, PNB, Sun TV

Nifty: July 23 Expiry

• Maximum Open Interest on Call side at 11,200 strike (21.8 lakh shares)
• Maximum Open Interest on Put side at 10,000 strike (21 lakh shares)
• Active Options: 10,700 Put (18.9 lakh shares) and 11,200 Call (12.5 lakh shares)

Nifty: July 30 Expiry

• Maximum Open Interest on Call side at 11,500 strike (25.3 lakh shares)
• Maximum Open Interest on Put side at 10,000 strike (34.4 lakh shares)

F&O Buzzers & Fund Flows