All You Need To Know Going Into Trade On June 24

Earnings Fineprint: Asian Paints Q4FY20

• Revenue down 7% to Rs 4,636 crore
• Net profit down 2% to Rs 462 crore
• Ebitda down 3% to Rs 860.5 crore
• Ebitda margin at 18.6% from 17.8%
• Raw Material cost as a percentage to sales down 140 basis points to 52.1%
• Gross margin expanded 400 basis points to 45.8% aided by lower input costs and higher inventory gains
• Weak topline and other expenses impact profit
• Volume growth for the decorative business ended in low single-digit during the quarter
• All numbers are compared on a year-on-year basis

Brokerages On Asian Paints

CLSA

• Outperform rating maintained
• Price target of Rs 1,710
• Expect demand to see a boost in H2FY21
• Volume growth tepid in Q4 but margins intact
• Build in a 6% decline in revenue for FY20
• Management has stated that it will pass on the low raw material price benefit
• Valuations leave little room for upside
• Diversified portfolio, strong brands place it in a formidable position to gain market share

UBS

• Buy rating maintained
• Price target of Rs 2,000
• Operating at 60-70% capacity utilisation with normalised inventory levels
• Safe painting offering making a difference at consumer end
• Rural areas outperformed due to lesser disruption of Covid-19
• Confident of company's ability to deliver higher than market growth in both top end and bottom-end of the market.
• Strong volume growth visibility, distribution strength and emerging competitive advantage justify premium valuation

Emkay

• Hold rating maintained
• Price target of Rs 1,625
• Earnings were below expectations
• Weak product mix and extended lockdown weighs on earnings
• Margin gains partially offset by lower sales
• At 46x FY22 earnings, valuations remain unattractive

Goldman Sachs

• Sell rating maintained
• Price target of Rs 1,064 per share
• Sales miss driven by weaker domestic volume growth and realisations
• Operating at 60-70% utilisation and sees near-term demand disruption
• Recently downgraded to sell as risks were not factored in consensus estimates

Credit Suisse

• Outperform rating maintained
• Price target of Rs 1,850
• Recovery in May and June encouraging in smaller towns and rural areas
• Strong gross margin tailwinds due to fall in crude prices
• Has highest visibility of FY22 earnings within consumer discretionary stocks

Stocks To Watch

• Vedanta: Bloomberg News reports that banks led by JPMorgan Chase are in advanced talks for a loan of as much as $2.5 billion to finance the company's proposed de-listing. The syndicate of banks may include Barclays, Citigroup, Deutsche Bank and Credit Suisse. An informal agreement may be reached as early as next week. Funding largely relies on tapping dividends from Vedanta's cash rich zinc unit - Hindustan Zinc.
• Embassy Office Parks REIT: Blackstone Sponsor Group to sell 5.59 crore units or a 7.2% stake in the company via secondary placement of units. Selling price ranges from Rs 340-350 per unit, implying a discount of 6.5-3.7% from Tuesday's closing price. The total sale aggregates to Rs 1,901.5 - 1,957.5 crore. Blackstone Sponsor Group's holding to come down to 48.1% from 55.3%. Trade date for the offer is June 24 while settlement to take place on June 26.
• Adani Power: Enters into an agreement to acquire 49% stake in Odisha Power Generation from AES group for $135 million. Balance 51% stake will remain with the Odisha government. Odisha Power Generation operates a 1,740 mega-watt thermal plant.
• Balrampur Chini: Board approves buyback of 1 crore shares or 4.55% of total equity. Buyback price is set at Rs 180 per share, implying a 33% premium to Tuesday's closing price. Record date for the Rs 180 crore buyback is set at July 3.
• Wipro: Awarded strategic, multi-year infrastructure modernization and digital transformation services engagement by Germany-based energy company E.ON.
• Metropolis Healthcare: Promoter group to sell 23.4 lakh shares or 4.59% stake through secondary placement of shares. Floor price of Rs 1,300 is a 10.5% discount to Tuesday's closing price. The total issue is worth Rs 304.2 crore with an option to upsize. The trade date for the offer is June 24. Post the sale, promoter stake to reduce to 52.31% from 56.9%.
• Tinplate, Nalco, JSW Steel, Tata Steel: Government imposes anti-dumping duty on import of flat rolled products of steel, plated or coated with alloy of aluminium and zinc, exported from China, Vietnam and Korea. Duty amounts to $173.1 per MT for five years.
• CARE Ratings: Bajaj Holdings and Investment and Bajaj Life Insurance increased their stake from 4.84% to 5.47% between May 1-June 17.
• Shriram Transport Finance: CARE Ratings reaffrms its ratings with regards to its NCDs, subordinate debentures and commercial papers. Outlook revised to negative from stable. Revision in outlook due to adverse impact on the CV business and challenges in maintaining normal level of collections in the near-term due to Covid-19, resulting in an impact on its asset quality parameters.
• Vardhman Textiles: The company in its March quarter business update has informed of Yarn sales falling 2% to 53,155 metric tonnes while grey fabric sales fell 4% to 487 lakh meters. Processed fabric sales fell 9% to 325 lakh meters.
• Piramal Enterprises: Board approved issuance of NCDs worth Rs 2,590 crore.
• JMC Projects: Gets new orders worth Rs 938 crore. Orders include water supply projects in Uttar Pradesh worth Rs 841 crore and building projects in South India worth Rs 97 crore.
• Bharat Road Networks: Will not extend the share purchase agreement for its stake sale in Ghaziabad-Aligarh Expressway with Cube Highways.
• CG Power and Industrial Solutions: Aditya Birla Sun Life Mutual Fund decreased stake to 3.45% from 5.46% on June 19.
• Greenply Industries' Covid-19 Impact: Operations in Gujarat and Nagaland were suspended till the first week of May. West Bengal facility suspended operations till June 7. Dispatches that could not take place in March and April were deferred to May. All plants have now begun operations albeit at 50-70% capacity utilisations. Gabon operations resumed with lower capacity utilisation and is being increased in a phased manner.
• Sudarshan Chemical: To issue a corporate guarantee worth Rs 60 crore to Bank of Maharashtra, for securing capital facilities to wholly-owned arm. Corporate guarantee in lieu of existing guarantee of Rs 100 crore.
• Equitas Holdings: DSP Group increased stake to 7.14% from 6.9% on June 19.
• Yes Bank: Sold 2.84% stake in Sical Logistics in various tranches. Bank’s stake has reduced to 2.65% from 5.49%.
• Nifty Earnings Today: GAIL, Indian Oil Corporation
• Non-Nifty Earnings Today: United Breweries, Power Finance Corporation, Prestige Estates, Sobha, India Cements, General Insurance Corporation, Canara Bank, PNC Infratech, Karur Vysya Bank.

Earnings Reported After Market Hours

Berger Paints Q4FY20

• Revenue down 8% to Rs 1,354.8 crore
• Net profit down 6.4% to Rs 03.7 crore
• Ebitda down 7.6% to Rs 208.4 crore
• Ebitda margin flat at 15.4% from 15.3%
• All numbers are consolidated and compared on a year-on-year basis

Union Bank of India Q4FY20

• Net Interest Income up 10.6% to Rs 2,878.1 crore
• Net loss narrows to Rs 2,713 crore from Rs 3,331.5 crore
• Provisions at Rs 3,501.7 crore from Rs 5,766.2 crore
• Gross NPA at 14.15% from 14.98%
• Net NPA at 5.49% from 6.85%
• Exceptional harmonisation provision of Rs 2,510 crore due to amalgamation of Andhra Bank and Corporation Bank
• NII and Net Loss numbers compared on a year-on-year basis
• Asset quality numbers compared on a quarter-on-quarter basis

Bank Of Baroda Q4FY20

• Net Interest Income up 40% to Rs 6,798 crore
• Net profit at Rs 506 crore from net loss of Rs 991.4 crore
• Provisions at Rs 6,844 crore from Rs 5,399 crore
• Gross NPA at 9.4% from 10.43%
• Net NPA at 3.13% from 4.05%
• Tax write-back of Rs 2,230 crore this quarter
• Fresh slippages this quarter at Rs 3,050 crore from over Rs 10,000 crore last year
• Loans worth Rs 4,053 crore not classified as NPA owing to standstill on asset classification. Provided 20% against loans under standstill.
• 65% of loan book continues to be under moratorium
• Moratorium portfolio should come down to 35% by August
• NII and Net profit numbers compared on a year-on-year basis
• Asset quality numbers compared on a quarter-on-quarter basis

Brokerage Radar

Morgan Stanley On Avenue Supermarts

• Initiate coverage with Overweight rating
• Price target of Rs 2,758
• Cost efficiencies, economies of scale, balance sheet strength are the company's moat
• Likely to get more aggressive on store additions starting FY22
• Likely to see 21% revenue CAGR over next 10 years as store count may rise 3.7 times during that period
• Better than peers on most parameters like balance sheet strength, promoter position and market share dynamics
• Rising per capita income, formalisation of highly unorganised grocery market paint a favourable picture
• On residual income model, stock is about 13% below fair value implying that RoC and prospective growth is not priced in
• Covid-19, slowdown in consumption and failure to find the right expansion strategy for DMart ready in large cities some key risks

Macquarie On Page Industries

• Underperform rating maintained
• Price target raised to Rs 16,821 from Rs 15,037
• Significant pressure on volumes in FY20 due to higher competitive intensity
• Athleisure and kidswear may be growth drivers in FY21
• Building in flattish revenue for FY21
• See continued pressure in men's and women's innerwear segments
• Do not see any structural change in competitive scenario in medium to long-term
• Cut FY21/22 EPS by 7% and 9% respectively on lowered revenue assumption

Axis Capital On Page Industries

• Downgrades to reduce from add
• Price target of Rs 18,000
• Earnings disappointing though commentary bullish
• Difficult to take constructive view on recovery
• Lack of clarity on pent-up and sustainable demand

Axis Capital On SRF

• Add rating maintained
• Price target of Rs 4,000
• Expect 25% earnings CAGR going ahead
• Management reiterated Specialty Chemicals (SPCM) revenue growth guidance of 20-25% in FY21
• Favourable business mix and operating leverage to aid margins
• Packaging film growth to be driven by new capacity additions

Bulk Deals

• Mahindra CIE Automotive: Promoter Participaciones Internacionales Autometal acquired 52.32 lakh shares (1.38%) at Rs 120.01 per share and Sundaram Mutual Fund sold 43 lakh shares (1.13%) at Rs 120 per share.
• Strides Pharma Science: Promoter Lifecell International sold 9.6 lakh shares (1.07%) at Rs 450.08 per share.

Pledged Share Details

• Adani Green Energy: Promoter Adani Trading Services released pledge of 1.51 crore shares on June 19
• JSW Energy: Promoter Danta Enterprises revoked pledge of 15 lakh shares on June 19

(As Reported On June 23)

Who’s Meeting Whom

• Mahindra & Mahindra: To meet First State Investments, Eastspring Investments and other investors between June 24-26
• Greenlam Industries: To meet Equirus Securities on June 25
• CARE Ratings: To meet Franklin Templeton on June 25
• Manappuram Finance: To meet Kriis Portfolio on June 24
• Cipla: To meet HSBC AMC, Premji Invest and other investors on June 24
• Balaji Amines: To meet Equirus Securities on June 25
• Pidilite Industries: To meet Axis Mutual Fund, Genesis Investment U.K. and other investors between June 25-29

Trading Tweaks

• Price Band Revised From 10% To 5%: Greenpanel Industries, Jay Bharat Maruti, Magadh Sugar & Energy, Sical Logistics, Websol Energy System.
• Price Band Revised From 20% To 10%: Kirloskar Industries, NACL Industries, Nitin Spinners, Skipper.
• Move Into ASM Framework: Saregama India, Hathway Cable & Datacom, Premier Explosives, Uttam Galva Steels, RSWM, Sicagen India, Jayshree Tea & Industries, ADF Foods.
• Move Into Short-Term ASM Framework: Suven Pharmaceuticals, Sterling Tools, Quess Corp, Reliance Infra.
• Move Out Of Short-Term ASM Framework: Seshasayee Paper and Boards, Kilpest

Insider Trades

• Aarti Industries: Promoters sold 35,000 shares on June 22
• Tourism Finance Corporation of India: Promoter Koppara Thomas acquired 12 lakh shares between June 19-23
• Bajaj Auto: Promoter Deepa Bajaj acquired 40,000 shares between June 17-19
• Dr Lal Pathlabs: Promoter Dr. Archana Erdmann sold 1.14 lakh shares on June 19
• Quess Corp: Promoter Ajit Isaac acquired 15,000 shares on June 22

(As Reported On June 23)

Money Market Update

• The rupee gained for the second straight day on Tuesday, ending at 75.65 against the U.S. Dollar, as compared to Monday's close of 76.02.
• Rupee was the second best performing currency in Asia on Tuesday, after the South Korean Won.

F&O Cues

• Nifty June futures closed at 10,468; discount narrows to 4 points from 9 points
• Nifty June futures shed 9.7% and 8 lakh shares in Open Interest
• Nifty Rollovers at 39%
• Nifty Bank June futures closed at 22,292, discount widens to 35 points from 11 points
• Nifty Bank June futures shed 20% and 3.2 lakh shares in Open Interest
• Nifty Bank rollovers at 29%
• Nifty Put-Call Ratio at 1.63 from 1.53 across all series

Nifty Monthly Expiry: June 25

• Maximum Open Interest on Call side at 10,500 strike (36.2 lakh shares)
• Maximum Open Interest on Put side at 10,000 strike (46.4 lakh shares)
• Active Options: 10,400 Put (+17.4 lakh shares), 10,700 Call (+2.2 lakh shares)