All You Need To Know Going Into Trade On July 29

Earnings Fineprint: IndusInd Bank Q1FY21

• Net Interest Income up 16.4% to Rs 3,309.2 crore
• Net profit down 67.8% to Rs 460.6 crore
• Provisions at Rs 2,258.9 crore from Rs 430.6 crore
• Gross NPA at 2.53% from 2.45% last quarter
• Net NPA at 0.86% from 0.91% last quarter
• Made additional floating provisions worth Rs 500 crore during the quarter with regards to Covid-19
• Recognised a fraud of Rs 960 crore and has fully provided for the same
• Moratorium numbers down to 16% of loan book as against 50% in April
• All numbers are standalone and compared on a year-on-year basis

Earnings Fineprint: Nestle India Q2CY20

• Revenue up 1.7% to Rs 3,050 crore
• Ebitda up 4.9% to Rs 747 crore
• Ebitda margin at 24.5% from 23.7%
• Net profit up 11.2% to Rs 487 crore
• Earnings were below Bloomberg consensus estimates
• Domestic sales up 2.6% to Rs 2,908 crore
• Domestic sales form 95% of total revenue
• Exports down 8.8% to Rs 134 crore
• All numbers are standalone and compared on a year-on-year basis

Stocks To Watch

• IndusInd Bank: Board has approved preferential issue of up to Rs 3,288 crore. Promoters of bank will also participate in the fund raise. To issue 4.76 crore equity shares at an issue price of Rs 524 to qualified institutional buyers like Route One Offshore Master Fund, Route One Fund, ICICI Prudential Life Insurance, Tata Investment Corporation and AIA. To issue over 1.51 crore equity shares at an issue price of Rs 524 to Hindu Capital Ltd. and IndusInd International Holdings. One-year lock-in for QIB investors and 3-year lock in for promoters and Hinduja Capital. Post fund raising CET-1 Ratio will rise to 14.4%.
• IDBI Bank: MD & CEO Rakesh Sharma said that 56% of loan book is currently under moratorium from 66% in the first phase. 61% corporates on an average availed moratorium while the number for retail borrowers stood at 55%. IDBI Mutual Fund stake sale awaiting regulatory approval.
• Future Retail: Group companies seek extension for filing results due to continuous lockdown. Future Retail & Future enterprises to file earnings by August 31 for the March quarter. To submit June quarter results by September 15, 2020. Corporate office in Mumbai falls under a containment zone and isn't operative since the lockdown.
• Godrej Properties: Approved allotment NCDs worth Rs 1,000 crore on a private placement basis.
• SH Kelkar: Increased its stake in Creative Flavours and Fragrances S.p.A. to 100% from 51% for 16 million euros. The target company is a fragrance company in Italy.
• Future Retail: CARE Ratings has downgraded the long-term banking facilities, NCDs and long-term loans to CARE BB from CARE A-, due to weakening of business and financial risk profile on account of extended lockdown due to Covid-19.
• Info Edge: Stake in Ustraa to fall from 42.3% to up to 30%, after Ustraa raised Rs 50 crore from IIFL Private Equity Fund. Shareholders approved issuing equity shares via qualified institutional placement.
• CDSL: Arm received approval from UIDAI to act as a local authentication user agency / e-KYC user agency.
• Raymond: To consider raising funds via NCDs on July 31.
• Mindspace Business Parks REIT: IPO subscribed 1.21 times on Day 2. Institutional subscription at 0.83 times. Retail subscription at 1.65 times. Institutional category doesn’t include anchor portion.
• Nifty Earnings Today: Bharti Airtel, Dr Reddy's Laboratories, Maruti Suzuki
• Non-Nifty Earnings Today: TVS Motor, InterGlobe Aviation, GSK Pharma, Manappuram Finance, Union Bank of India, Carborundum Universal, CEAT, Colgate-Palmolive, Rail Vikas Nigam, GMM Pfaudler

Earnings Reported After Market Hours

Yes Bank Q1FY21

• Net Interest Income down 16.3% to Rs 1,908.2 crore
• Net profit down 60.1% to Rs 45.4 crore
• Provisions at Rs 1,086.6 crore from Rs 1,784.1 crore
• Gross NPA at 17.3% from 16.8% last quarter
• Net NPA at 4.96% from 5.03% last quarter
• Higher other income in base quarter impacts profit
• Numbers not comparable as bank went through restructuring
• Overall Covid-19 related provisions by the bank at Rs 880 crore
• Covid-19 provisions made in current quarter at Rs 642 crore
• Collections in retail book have reached 70%
• 91% of retail customers under moratorium have not remained in delinquency for more than 30 days in the last 12 months.
• All numbers are standalone and compared on a year-on-year basis

RBL Bank Q1FY21

• Net Interest Income up 27.5% to Rs 1,041.3 crore
• Net profit down 47.5% to Rs 141 crore
• Provisions at Rs 500.2 crore from Rs 196.7 crore
• Gross NPA at 3.45% from 3.62% last quarter
• Net NPA at 1.65% from 2.05% last quarter
• Provisions for Covid-19 at Rs 240 crore this quarter
• Total provisions for Covid-19 at Rs 350 crore
• Majority of Covid-19 provisions towards credit card portfolio
• Moratorium down to 13.7% of loan book from 33% last quarter
• Collections in microfinance book was at 77% in July, as compared to the whole book being under moratorium in April.
• All numbers are standalone and compared on a year-on-year basis

Hexaware Technologies Q2CY20

• Revenue in U.S. Dollar terms at $208 million
• Revenue up 19.9% to Rs 1,569.1 crore
• Net profit up 1% to Rs 152.4 crore
• Ebitda up 28.1% to Rs 271.3 crore
• Ebitda margin at 17.3% from 16.2%
• Exceptional loss of Rs 17 crore in the base quarter
• All numbers are consolidated and compared on a year-on-year basis

Castrol India Q2CY20

• Revenue down 52.8% to Rs 490.6 crore
• Net profit down 64.2% to Rs 65.4 crore
• Ebitda down 66.5% to Rs 95.3 crore
• Ebitda margins at 19.4% from 27.3%
• All numbers are standalone and compared on a year-on-year basis

NIIT Tech (Coforge) Q1FY21

• Revenue up 9.8% to Rs 1,057 crore
• Net profit down 8.8% to Rs 79.9 crore
• Ebitda up 22.4% to Rs 169.5 crore
• Ebitda margin at 16% from 14%
• Higher employee expenses and exceptional loss of Rs 18 crore impact profit
• Order intake of $186 million with three significant deals
• Revenue impacted sequentially due to sharp decline in travel and transport vertical
• Order book for next 12 months up 18% to $465 million
• All numbers are consolidated and compared on a year-on-year basis

Max Ventures Q1FY21

• Revenue down 39.2% to Rs 258.6 crore
• Net profit down 47.2% to Rs 13.1 crore
• Ebitda down 8.3% to Rs 52 crore
• Ebitda margin at 20.1% from 13.3%
• Margins rise due to lower raw material costs and other expenses
• Specialty films segment revenue flat at Rs 251.2 crore
• All numbers are consolidated and compared on a year-on-year basis

Welspun Corp Q1FY21

• Revenue up 1% to Rs 2,069 crore
• Net profit down 56% to Rs 51.9 crore
• Ebitda down 9.8% to Rs 180.3 crore
• Ebitda margin at 8.7% from 9.8%
• Higher taxes impact profit
• Higher raw material costs impact margins
• All numbers are consolidated and compared on a year-on-year basis

Quess Corp Q1FY21

• Revenue flat at Rs 2,409.4 crore
• Net profit down 28% to Rs 33.8 crore
• Ebitda down 12% to Rs 129.6 crore
• Ebitda margin at 5.4% from 6.2%
• Higher employee costs impact margins
• Exceptional gain of Rs 25 crore due to fair value gain on acquisition in Terrier Security Services
• Reduced net debt by Rs 100 crore to Rs 354 crore
• Added 200 new customers this quarter
• All numbers are consolidated and compared on a year-on-year basis

Brokerage Radar

CLSA On IndusInd Bank

• Buy rating maintained
• Price target raised to Rs 665 from Rs 600
• Capital raise, disclosure on its BBB and moratorium book among positives
• Results address concerns on bank's stability
• Prevented from reducing credit cost estimates materially due to high exposure to business owners, continued stress in corporate book
• Expect RoE of 14%
• Current valuations are demanding

CLSA On Nestle India

• Downgrade to sell from underperform
• Price target cut to Rs 16,000 from Rs 16,500
• Disappointing show in what could have been an opportune quarter
• Concentrated production, supply constraints, high urban exposure impact results
• Expect double-digit growth momentum to resume in the third quarter
• Lower earnings estimates by 5% and 2% respectively for CY20 and CY21
• See top-line and earnings CAGR of 13% and 17% over CY19-22
• Valuations are expensive

CLSA On UltraTech

• Upgrade to buy from outperform
• Price target raised to Rs 5,000 from Rs 4,160
• Results ticked all the right boxes
• Deleveraging and cost control will remain the key with sustained volume growth
• Risk-reward most attractive among growth leaders in the sector
• Raise FY21-23 Ebitda by 10-13%

UBS On LIC Housing

• Neutral rating maintained
• Price target cut to Rs 280 from Rs 300
• Remain neutral on growth and margin headwinds
• Margins to remain under pressure owing to rising competitive intensity
• Expect loan growth to range between 3-7% over FY21-23E
• Gross NPLs may increase further post Covid-19
• Expect RoE to range between 10-12% over FY21-23E
• Valuations are cheap
• Cut EPS estimates by 16-19%

IIFL Securities On Hexaware

• Add rating maintained
• Price target raised to Rs 400
• Deserves re-rating after four quarters of decelerating growth
• Remains a good long-term story
• Ongoing de-listing may drive stock price in near-term instead of fundamentals
• Raise CY20-22E EPS estimates by 9-11%

Macquarie On Yes Bank

• Underperform rating maintained
• Price target of Rs 8
• Retail deposit growth still a concern
• Management did not share any number on moratorium
• Remain concerned on the transparency of the book

JPMorgan On RBL Bank

• Underweight rating maintained
• Price target raised to Rs 150 from Rs 120
• Retail deposits improve but marginally
• Asset quality in unsecured business key to watch
• Cards, microfinance book can be prone to asset quality risks
• Increase credit cost assumptions to 4% for FY21 and cut them to 2.6% for FY22

Pledged Share Details

• Max Financial Services: Promoter Max Ventures and Investment Holdings created pledge of 15.1 lakh shares between July 21-22.
• Emami: Promoters released pledge of 2.5 crore shares between July 24-28
• Jindal Steel & Power: Promoter Danta Enterprises revoked pledge of 26 lakh shares on July 23
• Omaxe: Promoter Guild Builders created pledge of 1.1 lakh shares on July 24
• GTPL Hathway: Promoters released pledge of 5.65 lakh shares on July 22

(As Reported On July 28)

Trading Tweaks

• AGM Date: Alembic, Bata, UltraTech Cement, Deepak Nitrite, GM Breweries, Jyothy Labs, Colgate Palmolive, Carborundum Universal, Info Edge, Indiabulls Housing Finance, TVS Motor, VST Industries
• Record Date For Rights Issue: Spencer’s Retail (2:15, at a premium of Rs 70 per share)
• Fund Raising: Bharat Forge
• Price Band Revised From 10% To 5%: IVP, Shree Pushkar Chemicals & Fertilisers
• Move Into ASM Framework: 5Paisa Capital
• Move Into Short-Term ASM Framework: INEOS Styrolution, Future Enterprises, Paushak, Shivalik Rasayan, Medicamen Biotech

Money Market Update

• The rupee remained flat for the third straight day, ending little changed at 74.84 against the U.S. Dollar as compared to Monday's close of 74.83.

F&O Cues

• Nifty July futures closed at 11,306; premium of 6 points from discount of 10 points
• Nifty July futures shed 13% and 10.7 lakh shares in Open Interest
• Nifty Rollovers across all series at 46%
• Nifty Bank July futures closed at 22,177; premium widens to 72 points from 10 points
• Nifty Bank July futures shed 18% and 2.4 lakh shares in Open Interest
• Nifty Bank Rollovers across all series at 37%
• In F&O Ban: Canara Bank, IndiaBulls Housing Finance, Vodafone Idea, IndusInd Bank
• Out of F&O Ban: Adani Enterprises, BHEL, GMR Infra, RBL Bank, SAIL

Nifty Monthly Expiry: July 30

• Maximum Open Interest on Call side at 11,500 strike (43 lakh shares)
• Maximum Open Interest on Put side at 11,000 strike (50.3 lakh shares)
• Active Options: 11,200 Put (+22 lakh shares) and 11,700 Call (-15 lakh shares)