All You Need To Know Going Into Trade On July 28

Earnings Fineprint: Bharti Infratel Q1FY21

• Revenue down 3.3% to Rs 3,505 crore
• Net profit up 8.4% to Rs 704 crore
• Ebitda up 6.4% to Rs 1,807 crore
• Ebitda margin at 51.6% from 46.9%
• Tenancy ratio at 1.82 times from 1.84 times
• Profit rises despite lower rentals and modest tenancy additions
• Long stop date for merger with Indus Towers extended till August 31
• All numbers are consolidated and compared on a quarter-on-quarter basis

Earnings Fineprint: Tech Mahindra Q1FY21

• Revenue in U.S. Dollar terms down 6.7% to $1,208 million
• Revenue down 4% to Rs 9,106 crore
• Net profit up 20.9% to Rs 972 crore
• Ebit up 25.3% to Rs 917 crore
• Ebit margin at 10.1% from 7.7%
• I.T. segment revenue down 3% to Rs 8,366.7 crore
• Revenue from the BPO segment was down 10% to Rs 739.6 crore
• Margins expand due to one-off expenses in the base quarter
• All numbers are consolidated and compared on a quarter-on-quarter basis

Stocks To Watch

• Yes Bank: State Bank of India’s stake falls to 30% from 48.21%, post the follow-on-public offer.
• Indian Oil Corporation: Indian Oil Corporation: Announces formation of 50:50 JV with Total (France) to manufacture and market high-quality bitumen derivatives and specialty products for India's road-building industry. The two companies already have a business relationship in India in LPG and fuel additives business. The JV will set-up manufacturing units across the country with cost-effective logistics solutions.
• InterGlobe Aviation: Announces another round of steeper pay cuts starting September. CEO Ronojoy Dutta in an email to employees said that the company is taking deeper pay cuts to adjust the cost structure down in-line with the reduced revenue. Ronojoy Dutta will take a 35% paycut. All executives at the level of Senior Vice President and above to take a pay cut of 30%. Vice Presidents and Associate Vice Presidents to face a 15% cut in their salary. Dutta said it intends to gradually reduce the number of days without pay as it adds back more flights.
• Adani Enterprises: Signed a non-binding Memorandum of Understanding with the Government of Tamil Nadu for exploring possibilities of setting up hyperscale data center facility.
• NBCC: Received projects work in Seychelles worth Rs 204.5 crore.
• Bharti Airtel: Hughes Network Systems, led by the U.K. Government and Bharti Enterprises, will acquire OneWeb out of bankruptcy. Hughes has agreed in-principle to invest $50 million in the consortium. Additionally, Hughes will continue as a trusted technology and distribution partner to OneWeb, the Low Earth Orbit satellite operator.
• MT Educare: Promoter Mahesh Shetty to sell 17.83 lakh shares (2.47% equity) at a floor price of Rs 13 per share, aggregating to Rs 3.2 crore. The OFS opens for non-retail investors on July 28 and for retail investors on July 29. His stake as on June 30, as per the latest shareholding pattern stood at 18.35%.
• Bharti Infratel: Board has accepted resignation of DS Rawat as Managing Director & CEO effective August 3.
• HDFC: To consider raising funds on July 30.
• KPI Global Infra: Commissioned additional 615 KW solar power project under captive power producer category with two industrial customers.
• Eclerx Services: Post buyback offer, SBI Mutual Funds has increased its stake to 4.99% from 4.72% in the company.
• United Spirits: To subscribe 19.5 lakh compulsory convertible preference share in Hip Bar for Rs 1.95 crore. Revised shareholding in Hip Bar is expected to be 26%.
• Mindspace Business Parks REIT IPO subscribed 38% on Day 1. Institutional subscription at 0.37 times. Retail subscription at 0.40 times. Institutional category doesn’t include anchor portion.
• Nifty Earnings Today: Nestle India, UltraTech Cement, IndusInd Bank
• Non-Nifty Earnings Today: Yes Bank, Coforge, Castrol India, Sanofi India, Tata Coffee, Orient Cement, Quess Corp, Sunteck Realty, RBL Bank, Hexaware Tech, IDBI Bank, IDFC First Bank

Earnings Reported After Market Hours

Bharat Electronics Q1FY21

• Revenue down 20.5% to Rs 1,670.6 crore
• Net profit down 73.6% to Rs 54.1 crore
• Ebitda down 57.8% to Rs 146.7 crore
• Ebitda margin at 8.8% from 16.6%
• Order book at Rs 53,752 crore
• All numbers are standalone and compared on a year-on-year basis

United Spirits Q1FY21

• Revenue down 53.6% to Rs 1,030.2 crore
• Net loss of Rs 215.3 crore from net profit of Rs 197.4 crore
• Ebitda loss of Rs 77.6 crore from Ebitda gain of Rs 395.1 crore
• Exceptional loss of Rs 75 crore due to Covid-19 related promotional program
• Weak operating performance due to contraction in gross margin, negative operating leverage and Covid-19 induced ageing related provisions
• Volumes decline 49% during the quarter
• All numbers are standalone and compared on a year-on-year basis

Nippon Life India AMC Q1FY21

• Revenue down 30% to Rs 215.4 crore
• Net profit up 22% to Rs 149.6 crore
• Other income up 2.8 times to Rs 98.8 crore
• Net income higher due to strength in retail segment in cost efficiencies
• All numbers are standalone and compared on a year-on-year basis

Pfizer Q2CY20

• Revenue down 5.4% to Rs 514.9 crore
• Net profit up 10.4% to Rs 124.5 crore
• Ebitda up 12% to Rs 186.2 crore
• Ebitda margin at 36.2% from 30.5%
• Lower other expenses aid margin expansion
• Raw Material costs as a % of sales at 34.5% from 32.1%
• Hospitals and vaccines business have seen a higher impact as compared to established products business
• All numbers are standalone and compared on a year-on-year basis

Brokerage Radar

CLSA On Reliance Industries

• Downgrade to outperform from buy
• Price target raised to Rs 2,250 from Rs 1,753
• Factor in a street-high valuation for Jio and Retail
• Project market cap to rise to $220 billion by March 2022
• Long-term promise and underweight position in many portfolios may support prices
• Large valuation surprises may be difficult in the near-term
• Value Reliance Retail at over $70 billion
• Price target implies only 4% upside

CLSA On Tech Mahindra

• Outperform rating maintained
• Price target raised to Rs 700 from Rs 570
• Deal wins were relatively subdued
• Historical volatility in margins limits confidence in quantum of expansion
• Incremental moves post 30% rally in the last three months may be constrained
• Adjust FY21/22 EPS estimates by 12% and 4% respectively

CLSA On Kotak Mahindra Bank

• Outperform rating maintained
• Price target of Rs 1,400
• Delivered on PPoP growth despite contraction in loan book
• Low, single-digit moratorium in corporate book highlights superior underwriting
• Can gain market share in low yield segments
• Risk threshold for management to start growing again remains high
• Continues to choose balance sheet safety over growth
• Valuations remain expensive in our view

UBS On Havells India

• Neutral rating maintained
• Price target of Rs 565
• Consumer facing business holds up but outlook uncertain
• Agile cost cutting helps maintain profitability
• Working capital stress seen in Q1FY21 may normalise going forward
• Do not expect cost cuts to sustain once normalcy returns
• Risk reward unfavourable as demand recovery will be delayed
• Remain neutral despite improving visibility of potential market share gains

JPMorgan On United Spirits

• Neutral rating maintained
• Price target of Rs 600
• Weak quarter with uncertain pace of revenue recovery
• Adjusting for one-offs related to inventory write-off and provisions, Ebitda was marginally positive
• Update on working capital, likely capex investments, non-core asset divestment plans to be in focus during management call

Morgan Stanley On Bharti Infratel

• Underweight rating maintained
• Price target of Rs 175
• Gross tenancy additions lower in the quarter
• Lower exit penalties, past tenancy deletions and negative energy margins pressured Ebitda
• Receivables increased quarter-on-quarter

Pledged Share Details

• Adani Enterprises: Promoter SB Adani Family Trust released pledge of 1.11 crore shares on July 24
• Adani Ports & SEZ: Promoters revoked pledge of 1.9 crore shares on July 24
• Adani Transmission: Promoter SB Adani Family Trust revoked pledge of 16.15 lakh shares on July 24

(As Reported On July 27)

Bulk Deals

• Best Agrolife: Resonance Opportunities Fund acquired 1.12 lakh shares (0.51%) at Rs 610.35 per share
• Infibeam Avenues: Ravi Omprakash Agrawal acquired 34.69 lakh shares (0.52%) at Rs 74.85 per share

Who’s Meeting Whom

• Meghmani Organics: To meet Abakkus Asset Managers on July 28
• Tata Steel: To meet Kotak Securities, JP Asset Management and Systematix Shares and Stocks between July 28-29
• MCX: to meet ICICI Pru Life Insurance, Premji Investment and other investors between July 28 - August 3

Trading Tweaks

• AGM Date: VIP Industries, Punjab National Bank, Union Bank of India, Bayer Cropscience, PNB Housing Finance, ADF Foods, Mahindra EPC Irrigation
• Rights Issue Opens: M&M Financial Services
• Ex-date For Rights Issue: Spencer’s Retail (2:15, at a premium of Rs 70 per share)
• Fund Raising: Godrej Properties, Havells
• Price Band Revised From 10% To 5%: Hindustan Foods
• Price Band Revised From 20% To 10%: INEOS Styrolution
• Move Into ASM Framework: Indo Count Industries
• Move Into Short-Term ASM Framework: Tanla Solutions, VA Tech Wabag, Majesco, Pricol

Money Market Update

• The rupee ended unchanged on Monday against the U.S. Dollar, ending at 74.83 - the same level that it closed on Friday.
• Despite the flat close, the currency was the worst performer in Asia.

F&O Cues

• Nifty July futures closed at 11,122; discount narrows to 10 points from 14 points
• Nifty July futures shed 15% and 14.5 lakh shares in Open Interest
• Nifty Rollovers across all series at 37%
• Nifty Bank July futures closed at 22,859; premium of 10 points from 11 points
• Nifty Bank July futures shed 9% and add 1.2 lakh shares in Open Interest
• Nifty Bank Rollovers across all series at 29%

Nifty Monthly Expiry: July 30

• Maximum Open Interest on Call side at 11,500 strike (45.2 lakh shares)
• Maximum Open Interest on Put side at 11,000 strike (41 lakh shares)
• Active Options: 11,000 Put (+5.6 lakh shares) and 11,200 Call (+6.9 lakh shares)