All You Need To Know Going Into Trade On June 29
A pedestrian crosses the road at an empty Marine Drive during a lockdown imposed due to the coronavirus in Mumbai, India, on Monday, June 1, 2020. (Photographer: Dhiraj Singh/Bloomberg)

All You Need To Know Going Into Trade On June 29

Asian markets have opened the new trading week with losses as concerns mount over rising Coronavirus cases across the United States.

Treasuries edged higher while oil prices are retreating.

Chinese markets reopened after a two-day break. Data over the weekend suggested that the country's economy is recovering from its shutdown.

The Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, fell 0.9% to 10,249 as of 6:40 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.

Let’s take a look at the factors that can influence equities in today’s session:

  • Markets in Japan and Australia have declined in early trade.
  • South Korean shares and the Won is underperforming after the country's finance minister ruled out another budget for this year.
  • Futures on the Dow Jones have pared losses and are trading higher by 60 points, as of 7:10 a.m. The benchmark index fell over 730 points on Friday to post losses for the week.
  • Covid-19 cases across the world have crossed the 10 million mark with states like Texas, Arizona and Florida being the worst affected.
  • "Markets are priced for a much sharper V-shaped recovery, which we don't think is likely," David Hunt, the CEO of PGIM Inc. told Bloomberg TV in an interview.
  • China's Central Bank said it will implement new monetary tools to make sure liquidity reaches the real economy.
  • Fed Chair Jerome Powell and Treasury Secretary Steven Mnuchin to testify before tha House Financial Services Committee on Tuesday.
  • Yield on the 10-year treasury stood at 0.63%.
  • West Texas Intermediate Crude fell 1.8% to $37.81 per barrel.

Get your daily fix of the global markets here.

All You Need To Know Going Into Trade On June 29

Earnings Fineprint: ITC Q4FY20

  • Net sales down 6.4% to Rs 11,420 crore
  • Ebitda down 8.9% to Rs 4,163 crore
  • Ebitda margin at 36.5% from 37.5%
  • Net profit up 9.1% to Rs 3,798 crore
  • Gross margins rise 220 basis points to 64.4%
  • Inventory gains aid expansion in gross margins
  • Higher excise weighs on operating margins
  • Net profit boosted by lower corporate taxes

ITC’s Segmental Performance:

  • Cigarette business revenue down 6.5% to Rs 5,130 crore
  • Cigarette business margins down to 66.3% from 70.3%
  • FMCG business revenue down 2.7% to Rs 3,184 crore
  • FMCG business margins at 4.6% from 4%
  • Hotels business revenue down 8.6% to Rs 466 crore
  • Hotels business margins down to 9.2% from 17.3%
  • Agri business revenue down 10.2% to Rs 1,887 crore
  • Agri business margins at 6.5% from 7%
  • Paperboards business revenue down 5.1% to Rs 1,459 crore
  • Paperboards business margins flat at 19.6%
  • Declares dividend of Rs 10.5 per share
  • All numbers are standalone and compared on a year-on-year basis

Earnings Fineprint: Coal India Q4FY20

  • Revenue down 3.55% to Rs 27,568.2 crore
  • Net profit down 23% to Rs 4,638 crore
  • Ebitda down 18.3% to Rs 6,728.8 crore
  • Ebitda margin down 24.4% from 28.8%
  • Profit impacted by decline in e-auction realisations
  • FSA realisation down 1% to Rs 1,445.7
  • E-Auction realisation down 23.6% to Rs 2,105.7
  • Total realisation down 4.5% to Rs 1,560.2
  • FSA Volumes down 2.3% to 139.17 MT
  • E-Auction volumes up 25.8% to 21.02 MT
  • Total volumes flat at 164.06 MT
  • Volumes impacted by lower demand from power sector
  • All numbers are consolidated and compared on a year-on-year basis

Earnings Fineprint: NTPC Q4FY20

  • Revenue up 28.4% to Rs 27,426 crore
  • Net profit down 71.2% to Rs 1,252.4 crore
  • Ebitda up 57.6% to Rs 7,317.8 crore
  • Ebitda margin at 26.9% from 21.9%
  • Adjusted net profit flat at Rs 3,401.2 crore
  • Reported net profit impacted due to additional tax provisions worth Rs 2,660 crore as the company decided to settle pending income tax disputes through the Vivad Se Vishwas Scheme.
  • Deferred tax reversal of Rs 8,086.3 crore in the base quarter
  • Core generation revenue up 26% to Rs 27,079 crore
  • Gross generation up 1.34% to 68.27 billion units
  • Coal Plant Load Factor up 6% sequentially to 69.52%
  • All numbers are standalone and compared on a year-on-year basis

Stocks To Watch

  • Piramal Enterprises: Approves divesting 20% stake in Piramal Pharma to the Carlyle Group for an equity investment of $490 million. The proposed transaction values the pharma business at an Enterprise Value of $2,775 million. The Enterprise Value will have an upside component of $360 million based on its FY21 performance. The final amount of the equity investment will depend upon net debt, exchange rate and performance. Separately, one of the company's affiliates has acquired 100% stake in G&W PA lab for a consideration of $17.5 million, in an all cash deal.
  • IDBI Bank: Board approves selling stake in IDBI Federal Life Insurance. Bank to sell 23% stake to Ageas and 4% to Federal Bank for a total sum of Rs 595 crore. Deal subject to regulatory approvals to be taken by all related parties.
  • Axis Bank: S&P Global Ratings lowered the lender's credit rating to below investment grade, on expectations of a looming recession in India due to Covid-19. Rating cut to BB+ from BBB- while the outlook has been retained as stable. The ratings agency expects the asset quality of Indian banks to deteriorate, credit costs to rise and profitability to decline over the next 12 months.
  • Mahindra Logistics: The Board of Directors have approved further investment in Lords Freight (India). The company will purchase 3.8 lakh shares of Lords from the existing promoter shareholders. Post the acquisition, Mahindra Logistics will now hold 99% shares of the company. The consideration worth Rs 4 crore will be done in cash. The company expects the acquisition to be completed by September 2020.
  • Power Finance Corporation On S&P's Rating Downgrade: Downgrade done after the withdrawl of S&P rating mandate by the company. Will manage to sail through this slowdown with strong government support. Change in credit rating does not reflect any change in the company's financial position.
  • Adani Transmission: To acquire 100% stake in Kharghar Vikhroli Transmission. Project comprises of nearly 34 km of 400 kV and 220 kV transmission lines along with 1,500 MVA 400 kV GIS substation in Vikhroli. The company shall build, own, operate and maintain the transmission project in the state of Maharashtra for 35 years.
  • BHEL: CARE Ratings downgrades the company's long-term bank facilities to CARE AA from CARE AA+ while the outlook has been maintained as stable. Decline in execution of orders, further aggravated by Covid-19, high concentration of orders in the thermal power segment which is beset with overcapacity, declining competitiveness are some of the reasons mentioned for the downgrade.
  • Investment Trust of India: NCLT approves merger of company's reinsurance arm with itself.
  • Phoenix Mills: To consider raising equity on June 29.
  • ITI: Signs accord with Tech Mahindra for wireles technology in the areas of 4G and 5G smart networks, smart cities and healthcare services.
  • Jay Bharat Maruti: Board approved proposal to issue securities up to Rs 150 crore.
  • Andhra Paper: SBI Mutual Fund acquired 7.88% stake in the company's OFS on June 25.
  • Nifty Earnings Today: Tata Steel
  • Non-Nifty Earnings Today: Phoenix Mills, Raymond, MRF, CESC, Petronet LNG, MIDHANI, Lux Industries, Central Bank of India, Bharat Forge, Hindustan Copper, Minda Industries, Parag Milk Foods, Rail Vikas Nigam, Spencer's Retail, Venky's, Welspun India.

Companies With Covid-19 Update

ITC

  • Scaled up manufacturing manifold in hygiene products like sanitisers.
  • Manufacturing has been substantially scaled up in areas like staples.
  • All cigarette units are fully operational with sales and distribution infrastructure progressively normalising.
  • Paperboards and packaging are operating at 80-85% of normal levels.
  • Well poised to addres the growing demand for products and servies.
  • Future impact on the business is difficult to assess.
  • Company is debt-free, has a strong balance sheet and liquidity position.

NTPC

  • Board defer capacity charges of Rs 2,064 to Discoms, to be payable without interest after the end of the lockdown period in three equal monthly installments.
  • Rebate of Rs 1,363 crore on the capacity charge billed during the lockdown period in FY21.

Bajaj Auto

  • Reported first positive case at Waluj plant on June 6.
  • Normal business operations to continue while taking necessary safety precautions.
  • Current cases at 140 represents 2% of the total strength of the plant.
  • Two of the employees have died.

Tata Elxsi

  • Revenue in Q1FY21 to decline sequentially up to low double-digit percentage.
  • Margin to consequently decline as well on a sequential basis.

Apex Frozen Foods

  • Markets in U.S. and Europe have seen a decline in demand due to shutting down of restaurants and catering services.
  • China has begun to increase shrimp purchases from India over the past month.
  • Shrimp farmers began early harvest to sell their stock citing concerns on demand from processors.
  • Farm gate prices corrected for a brief period which began to pick up from the second half of April.

Sagar Cements

  • Business operations significantly impacted during the lockdown
  • Facilities operating from the first week of May at minimal levels
  • Non-availability fo workers, logistic challenges aggravated the situation.
  • Completion of captive power plant and expansion of Bayyavaram unit are helping lower fuel and freight costs.
  • Expected completion of ongoing projects of subsidiaries should help improve efficiency.
  • Do not foresee any challenge in managing supply of raw material and fuel.
  • Opted to avail the moratorium in repayment of loans.
  • Foresee considerable impact on the short-term, minimal impact on the medium-term and no impact on the long-term.

Earnings Reported After Market Hours

Sun TV Q4FY20

  • Revenue down 17.3% to Rs 735.2 crore
  • Net profit down 11.7% to Rs 250 crore
  • Ebitda down 17.2% to Rs 503.6 crore
  • Ebitda margin flat at 68.5%
  • Subscription revenue up 25% to Rs 398.8 crore
  • All numbers are standalone and compared on a year-on-year basis

Avanti Feeds Q4FY20

  • Revenue up 21% to Rs 1,034 crore
  • Net profit up 28% to Rs 67 crore
  • Ebitda up 34% to Rs 124.6 crore
  • Ebitda margin at 12% from 10.9%
  • Shrimp feed business revenue up 14.7% to Rs 764.59 crore
  • Processed Shrimp business revenue up 38% to Rs 270.64 crore
  • Final dividend of Rs 0.10 per share
  • Impact of Covid-19 on the future is premature since virus is still aggressive in India
  • All numbers are consolidated and compared on a year-on-year basis

Glenmark Pharma Q4FY20

  • Revenue up 8% to Rs 2,767.1 crore
  • Net profit up 36% to Rs 220 crore
  • Ebitda up 28% to Rs 465.2 crore
  • Ebitda margin at 16.8% from 14.2%
  • India business revenue up 14.5% to Rs 764 crore
  • North America business revenue flat at Rs 761 crore
  • Rest of the World revenue down 12.6% to Rs 336 crore
  • European revenue up 29.2% to Rs 411.5 crore
  • Latin America revenue up 46.9% to Rs 176.8 crore
  • API revenue up 5% at Rs 261 crore
  • Board recommends dividend of Rs 2.5 per share
  • All numbers are consolidated and compared on a year-on-year basis

Oil India Q4FY20

  • Revenue down 16% to Rs 2,589.5 crore
  • Net profit of Rs 925.6 crore from net loss of Rs 208.54 crore
  • Ebitda loss of Rs 1,101.4 crore from Ebitda positive of Rs 1,079.3 crore
  • Higher expenses impact operational performances
  • Expenses up 60% to Rs 4,076.5 crore
  • Exceptional item of Rs 1,026 crore in the base quarter
  • Tax write-back of Rs 1,418.4 crore this quarter
  • Adoption of lower tax rate resulted in reversal of deferred tax liability of Rs 821.01 crore during the quarter
  • Crude oil segment revenue down 16.2% to Rs 2,011 crore
  • Natural Gas segment revenue down 17.2% to Rs 447.6 crore
  • LPG segment revenue up 9.5% to Rs 35.7 crore
  • Pipeline Transportation revenue down 13.6% to Rs 64.62 crore
  • Renewable Energy segment revenue down 20.7% to Rs 26.44 crore
  • All numbers are standalone and compared on a year-on-year basis

NALCO Q4FY20

  • Revenue down 30% to Rs 1,935.9 crore
  • Net profit down 56% to Rs 102.7 crore
  • Ebitda down 60% to Rs 208.3 crore
  • Ebitda margin down to 10.8% from 18.7%
  • Chemicals segment revenue down 15% to Rs 1,171 crore
  • Aluminium segment revenue down 32% to Rs 1,132 crore
  • All numbers are consolidated and compared on a year-on-year basis

Rupa & Company Q4FY20

  • Revenue down 55.4% to Rs 178.8 crore
  • Net loss of Rs 4.3 crore from net profit of Rs 27.4 crore
  • Ebitda down 85.7% to Rs 7.4 crore
  • Ebitda margin at 4.1% from 12.9%
  • Declares dividend of Rs 3 per share
  • All numbers are consolidated and compared on a year-on-year basis

BEML Q4FY20

  • Revenue down 22% to Rs 1,066.4 crore
  • Net profit up 15% to Rs 186.3 crore
  • Ebitda down 43% to Rs 143.7 crore
  • Ebitda margin at 13.5% from 18.5%
  • Tax write-back of Rs 44.3 crore this quarter
  • Declares dividend of Rs 2.50 per share
  • All numbers are compared on a year-on-year basis

West Coast Paper Q4FY20

  • Revenue up 28% to Rs 742.8 crore
  • Net profit more than doubles to Rs 119.9 crore
  • Ebitda up 18% to Rs 175.66 crore
  • Ebitda margin at 23.6% from 25.7%
  • Higher finance costs impact margins
  • Higher other income contributes to rise in profit
  • Other income nearly triples to Rs 10.91 crore
  • Tax credit of Rs 47.84 crore this quarter
  • Paper and Paper Board revenue up 38% to Rs 726 crore
  • Telecommunication cables revenue down 69% to Rs 16.87 crore
  • All numbers are consolidated and compared on a year-on-year basis

HUDCO Q4FY20

  • Revenue up 28% to Rs 1,888.5 crore
  • Net profit up 87% to Rs 440.9 crore
  • Ebitda up 31% to Rs 1,724.9 crore
  • Ebitda margin at 91.3% from 89.1%
  • Declares revenue of Rs 2.35 per share
  • All numbers are consolidated and compared on a year-on-year basis

Brokerage Radar

UBS On Indian Banks

  • NPA risks from corporate loans have risen again
  • Portion of BBB- rated corporates and loans with lower ICR seem vulnerable
  • Cut FY21-22 earnings estimates by 2-31%
  • IndusInd Bank, Kotak Mahindra Bank least preferred among private players
  • Maintain sell rating on IndusInd and Kotak Bank
  • Buy rating maintained on Axis Bank and ICICI Bank
  • ICICI Bank's price target raised to Rs 450 from Rs 430 due to increase in the value of subsidiaries

Jefferies On ITC

  • Buy rating maintained
  • Price target of Rs 240 per share
  • Cigarette volume decline of 10% appears good as compared to personal care peers
  • Cigarette business on-course to hit pre-Covid-19 levels, although Q1FY21 can be a washout
  • Hotels, paperboard and agri business would be under severe pressure
  • Expect FMCG business to do well as compared to other businesses

Motilal Oswal On ITC

  • Neutral rating maintained
  • Price target of Rs 190
  • Q4FY20 Earnings disappointing
  • Medium-term outlook is hazy
  • Likely low double-digit volume decline in cigarettes
  • Cut FY21/22E EPS by 11.1% and 5.7% respectively due to weak earnings
  • Expect sharp impact on Q1FY21 due to the lockdown

Motilal Oswal On Container Corporation

  • Buy rating maintained
  • Price target of Rs 434
  • Ebitda beats estimates on lower costs
  • Margins surprise positively
  • Direct play on upcoming rail freight infrastructure
  • FY21 to be weak due to Covid-19
  • Expect 18% Ebitda CAGR in FY20-25E, led by healthy volume and margin growth

Emkay On NTPC

  • Buy rating maintained
  • Price target raised to Rs 122 from Rs 120
  • Trades at valuation of 0.8 times FY22E price-to book
  • Offering dividend yield of nearly 4.5%
  • Cut earnings estimates for FY21/22 to factor in a one-time discount offered to discoms and lower capacity addition
  • Expect strong capacity addition during FY22/23

ICICI Securities On Piramal Enterprises

  • Add rating maintained
  • Price target raised to Rs 1,420 from Rs 1,050
  • Carlyle has deep understanding of global pharma
  • Carlyle will add value by bringing in operational expertise
  • Proceeds from stake sale to further improve liquidity position and help deleverage
  • Expect company to continue derisking its financial services business
  • Remain positive on unique positioning in pharma business

Kotak Securities On Coal India

  • Buy rating maintained
  • Price target cut to Rs 215 from Rs 230
  • Weak end to FY20 with flat sales
  • See 15% fall in e-auction revenue and lower demand due to Covid-19
  • Lower revenue, demand to weigh on FY21 earnings
  • Remains attractively valued

Investec On Paints

  • Retain cautious stance on the sector
  • Gross margin expansion in Q4FY20 offsets weak revenue
  • Benign commodity cost scenario bodes well for gross margins
  • Sales subdued but valuations are rich
  • Raise Asian Paints' price target to Rs 1,650 from Rs 1,580
  • Raise Berger Paints' price target to Rs 410 from Rs 390
  • Raise Kansai Nerolac's price target to Rs 460 from Rs 430

Bulk Deals

  • Andhra Paper: Bright Star Investment acquired 5 lakh shares (1.26%) at Rs 206.23 per share
  • Eveready Industries: Dovetail India Fund acquired 4.8 lakh shares (0.66%) at Rs 79.05 per share
  • Mangalore Chemicals and Fertilizers: Recovery Officer DRT sold 5.95 lakh shares (0.50%) at Rs 40.92 per share
  • Varun Beverages: Promoter Ravi Jaipuria sold 15 lakh shares (0.52%) at Rs 685.01 per share
  • Wheels India: Promoter Titan Europe sold 1.76 lakh shares (0.73%) at Rs 431.2 per share
  • Gujarat Pipavav Ports: Promoter APM Terminals Mauritius acquired 48.35 lakh shares (1%) at Rs 89.99 per share

Who’s Meeting Whom

  • Tata Consumer Products: To meet Axis AMC, Baillie Gifford and other investors on June 29
  • Mahindra & Mahindra: To meet Lazard Asset Management, DSP Mutual Fund and other investors between June 29 to July 3.
  • Dr Lal Pathlabs: To meet Ambit Capital on June 29.
  • Cipla: To meet Nomura AMC and Capital Research Global Investors between June 29-30
  • Prince Pipes and Fittings: To meet TATA Mutual Fund and HDFC Mutual Fund between June 29-30
  • Akzo Nobel: To meet UTI Mutual Fund, Tata Mutual Fund and other investors on June 29.

Trading Tweaks

  • Price Band Revised From 10% To 5%: Indian Overseas Bank, Megasoft, Oswal Agro Mills, Hilton Metal Forging
  • Price Band Revised From 20% To 10%: BLS International Services, Elgi Rubber
  • Move Into ASM Framework: Ester Industries, Ashapura Minechem, Bhagyanagar India, Lyka Labs, CG Power and Industrial Solutions
  • Move Out of ASM Framework: Future Lifestyle Fashions, Titagarh Wagons, NACL Industries, Reliance Power, Welspun Corp, V2 Retail, VA Tech Wabag, TCI Finance, Jaiprakash Associates, Punj Lloyd, Jet Airways, Videocon Industries
  • Move Into Short-Term ASM Framework: Surya Roshni, Trent, Greenlam Industries, Texmo Pipes and Products, Adani Transmission, A2Z Infra Engineering.
  • Move Out Of Short-Term ASM Framework: GTPL Hathway

Insider Trades

  • Mangalam Cement: Promoter acquired 3.32 lakh shares on June 24
  • IOL Chemical and Pharma: Promoter NCVI Enterprises acquired 4 lakh shares on June 25
  • IndusInd Bank: Promoter IndusInd International Holdings acquired 1.66 lakh shares between June 24-25
  • Granules India: Promoters sold 50 lakh shares on June 25
  • Dr Lal Pathlabs: Promoter Dr Vandana Lal sold 2 lakh shares on June 23

Money Market Update

  • Rupee ended little changed at 75.65 against the U.S. Dollar as compared to Thursday's close of 75.67.
  • Currency snapped two-week losing streak, posted a weekly gain.
  • Rupee ended as the second best performing currency in Asia on a weekly basis.

F&O Cues

  • Nifty July futures ended at 10,318; discount widens to 65 points from 57 points
  • Nifty July futures add 9.4% and 9.9 lakh shares in Open Interest
  • Nifty Bank July futures end at 21,462; discount widens to 130 points from 80 points
  • Nifty Bank July futures shed 6.2% and 78,000 shares in Open Interest
  • Nifty Put-Call Ratio at 1.33 from 1.27 across all series

Nifty: July 2 Expiry

  • Maximum Open Interest on Call side at 11,000 strike (27.2 lakh shares)
  • Maximum Open Interest on Put side at 10,000 strike (20.1 lakh shares)
  • Active Options: 10,000 Put (+6.3 lakh shares) and 11,000 Call (+14.4 lakh shares)

Nifty: July 30 Expiry

  • Maximum Open Interest on Call side at 11,500 strike (18.9 lakh shares)
  • Maximum Open Interest on Put side at 9,000 strike (21 lakh shares)

F&O Buzzers & Fund Flows

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