All You Need To Know Going Into Trade On June 3

Stocks To Watch

• Reliance Industries: Bloomberg News reports that Abu Dhabi’s Mubadala Investment is nearing a deal to invest about $1 billion into Jio Platforms. An announcement could come as soon as this week. The company is also in discussions with Abu Dhabi Investment Authority & Saudi Arabia’s The Public Investment Fund.
• ICICI Bank: The lender cuts interest rates by 25 basis points for savings bank accounts. For accounts with balance below Rs 50 lakh will fetch interest of 3% per annum while for those with balance above 50 lakh will fetch 3.75%.
• Moody's Investors Service has downgraded the long-term issuer ratings of ONGC, HPCL, Oil India, Indian Oil, BPCL, Petronet LNG, TCS and Infosys. The outlook on all these ratings is negative. The outlook for Reliance Industries has been revised to negative from stable while the outlook for UPL remains stable. Rating actions follow the downgrade of India's sovereign rating to Baa3 from Baa2 on June 1.
• Lupin: Gets U.S. FDA approval for its Meloxicam capsules. The company will market the generic equivalent of Vivlodex capsules of U.S. based Zyla Life Sciences, which are used for treatment of osteoarthritis pain.
• Jubilant Lifesciences: Allotted NCDs worth Rs 100 crore.
• Pharma Stocks: The Government has approved emergency use of Remdesivir, according to the Press Information Bureau.
• Polycab India: The company's CFO in an interaction with BloombergQuint said that Covid-19 impacted top-line numbers by Rs 600 crore and that they are cautious on domestic growth for the next two quarters. The company's cable and wire business saw a growth in market share despite the industry witnessing a 14% de-growth. It also expects the EPC segment to grow due to increase in demand of the optical fibre. The CFO also said that it has no significant exposure to China and that it has alternative arrangements with domestic suppliers.
• Syngene International: Enters into a collaboration with HiMedia Laboratories to manufacture and distribute its ELISA kits. HiMedia will manufacture the kits at its facility in Mumbai and distribute it across India. This test identifies the presence of SARS-COV-2 antibodies in blood samples and confirms if a patient has been exposed to Covid-19. It has a capacity to test samples together in a single run and generates results within 3 hours.
• Transport Corporation of India: Board approved raising Rs 200 crore via NCDs.
• Companies That Resumed Operations: Minda Corp, Himadri Speciality Chemicals.
• Non-Nifty Earnings Today: Aurobindo Pharma, Cholamandalam Investment.

Covid-19 Updates Of Companies

Hindustan Unilever

• Witnessed fractured supply lines and lower demand from Mid-March.
• Able to ramp up production to 80-90% of normative level.
• All factories and warehouses except one in Assam are open.
• Out of home business comprising of ice cream, food solutions and consumer durables business of water have been severely impacted.
• Pandemic has imposed incremental operating costs on the business.
• Seeing heightened consumer focus on health, hygiene and nutritional needs.
• There will be some impact on profitability in the near-term.
• Will provide detailed updates on the GSK Consumer Health merger and potential synergies from the same in July.

Colgate-Palmolive

• Impact on business on an annual basis may not be material.
• Operations at all manufacturing facilities have resumed.
• Do not foresee any specific challenges in terms of profitability, capital or financial resources.
• Comfortable liquidity position to meet its commitments.

Balaji Amines

• Kept all plants partially running despite lockdown.
• Not availed any moratorium and paying lenders as per due date.
• Proposed new project of Unit-IV coming up at MIDC, Chincholi is under progress.
• Some suppliers of equipment have intimated that they may need further time for delivery.
• Timelines of trial production may be impacted.

Quick Heal Technologies

• Expect normalcy to return in 6-9 months
• Resources will get stretched due to increased working capital requirement and severe impact on profitability this year.
• Demand for products on e-commerce platforms has marginally increased.
• Facing a lot of challenges in supplying products to its channel partners.
• Impact on supply chain is directly impacting revenue.

DB Corp

• Advertising revenue impacted due to reduction in economic activity.
• Relaxations in non-metro areas may lead to pick-up in advertising revenue as they are the core markets for the company.

Havells India

• Significant loss in production and sales in March and April.
• Recovery in revenue has been encouraging in the last few weeks, especially in non-metro towns.

Jubilant Foodworks

• Will launch contactless dine-in as soon as dine-in is permitted.
• Dine-in has remained shut all through April and May.
• Seeing some encouraging signs in delivery.
• Some stores in smaller towns now back to Pre-Covid-19 delivery sales.

Earnings Reported After Market Hours

InterGlobe Aviation Q4FY20

• Revenue up 5.3% to Rs 8,299 crore - slowest growth since listing
• Net loss of Rs 873 crore from net profit of Rs 590 crore
• Ebitdar loss of Rs 13 crore from Ebitdar of Rs 2,056 crore
• Deferred tax credit of Rs 420 crore lowered the loss
• Net loss before tax of Rs 1,293 crore from net profit before tax of Rs 617 crore
• Lower passenger growth, passenger load factor, higher costs due to lockdown, weak rupee and high maintenance costs impacted earnings
• Forex loss of Rs 1,014 crore this quarter
• All numbers are standalone and compared on a year-on-year basis

Granules India Q4FY20

• Revenue down 2.2% to Rs 600 crore
• Net profit up 44.2% to Rs 92.3 crore
• Ebitda up 2.6% to Rs 100 crore
• Ebitda margin at 16.7% from 15.9%
• Net profit aided by other income of Rs 22.5 crore this quarter
• Lower raw material costs aid margin expansion
• Net profit also aided by exceptional item of Rs 59.8 crore due to divestment of its entire stake in its JV Granules Omnichem.
• All numbers are consolidated and compared on a year-on-year basis

SPARC Q4FY20

• Revenue down 73.2% to Rs 22.7 crore
• Net loss widens to Rs 99.5 crore from Rs 9.4 crore
• Ebitda loss also widens to Rs 98.4 crore from Rs 12 crore
• All numbers are standalone and compared on a year-on-year basis

Spandana Sphoorty Q4FY20

• Calculated Interest Income up 28.4% to Rs 208.5 crore
• Net profit up 9.1% to Rs 77.5 crore
• Impairment on financial instruments rises to Rs 188 crore from Rs 21 crore
• All numbers are standalone and compared on a year-on-year basis

Brokerage Radar

Credit Suisse On Britannia

• Neutral rating maintained
• Price target of Rs 2,900
• 20% growth in April and May a big positive
• Lower input costs and cost reduction measures bode well for FY21 margins
• Management estimates a 7-10% impact on revenues due to Covid-19

JM Financial On Britannia

• Buy rating maintained
• Price target of Rs 3,500
• Cost savings continue to play a positive role in profitability
• Stock may do well on such performances but valuations are no longer comfortable
• Small, nagging balance-sheet issues continue but may get overlooked for now

Edelweiss On InterGlobe Aviation

• Hold rating maintained
• Price target of Rs 961
• Bleak demand outlook
• Likely tailwind from yields/fuel prices
• Expect huge losses in FY21 due to lower PLFs and negative operating leverage
• Banking on recovery in operations in FY22

JM Financial On InterGlobe Aviation

• Sell rating maintained
• Price target of Rs 700
• Long road to recovery after Q4 was in-line
• Cost and liquidity initiatives will help tide over a challenging year
• Significant rupee movement and crude prices remain key monitorable

Credit Suisse On Eris Lifesciences

• Outperform rating maintained
• Price target of Rs 500
• Q4 had multiple one-offs
• Some normalcy likely in Q2FY21
• 16% growth in Q4 due to low base and forward purchasing benefit
• Ebitda margins currently low due to significant expansion in field force

Emkay On Motherson Sumi

• Buy rating maintained
• Price target raised to Rs 115 from Rs 87
• Margins above estimate due to better scale, higher share of India business and cost-reduction initiatives
• Expect China and Europe to recover sooner than India
• Expect recovery from H2FY21

CLSA On Motherson Sumi

• Outperform rating maintained
• Price target cut to Rs 110 from Rs 125
• Strong results in a tough quarter
• Margin improvement in the global business led to earnings beat
• Cut FY21/22 EPS estimates by 74% and 30% respectively to incorporate Covid-19 disruptions

Morgan Stanley On Motherson Sumi

• Overweight rating maintained
• Price target of Rs 103
• India and SMR outgrow underlying market
• Near-term visibility is low
• Remain overweight as it should see strong earnings growth driven by BS-VI transition, electrification and new plant ramp-up

Morgan Stanley On InterGlobe Aviation

• Overweight rating maintained
• Price target of Rs 1,701
• Focus on conserving cash and improving efficiency
• Passenger traffic will be slow to recover
• Cost structure and competitive position may improve in the downturn
• Valuation in the context of earnings potential is attractive

ICICI Securities On Cement

• Consensus upgrades likely with volumes surprise in May
• Pre-monsoon pent-up demand from rural / semi-urban housing and government spend on infrastructure driving growth
• Seasonal price hikes of up to Rs 10-25 per bag (Except Gujarat) in May 2020

Axis Capital On Eris Lifesciences

• Buy rating maintained
• Price target cut to Rs 610 from Rs 630
• Better placed on chronic, brand focus
• Outlook remains uncertain due to Covid-19
• Cut FY21/22 EPS estimates by 7% and 3% respectively
• Incremental growth recovery on better execution can lead to re-rating

Credit Suisse On InterGlobe Aviation

• Outperform rating maintained on likely resumption of profitability in FY22
• Price target cut to Rs 1,300 from Rs 1,500
• Q4 performance and NEO induction positive
• Large losses on the way
• Cut FY21/22 earnings estimate by 56% and 33% respectively on slower ramp-up

Earnings Expectations: BPCL Q4FY20

• Revenue seen 16.5% lower at Rs 62,345 crore
• May report net loss of Rs 373 crore from net profit of Rs 1,261 crore
• Ebitda seen 93% lower at Rs 183 crore
• Ebitda margin may narrow to 0.3% from 3.6%
• GRMs seen at negative $0.56 per barrel from $3.23 per barrel
• All estimates are Bloomberg estimates, standalone and compared on a quarter-on-quarter basis.

Key Factors At Play For BPCL:

• Likely to be a weak quarter due to weak refining and marketing environment and inventory losses
• Higher marketing margins to offset the negatives
• Singapore GRM averaged around $1.2 per barrel
• Inventory losses may lead to negative GRMs
• Sales volume likely to be lower due to the lockdown
• Crude throughput seen 6.1% lower at 7.9 MMT
• Sales seen 11.6% lower at 10.91 MMT
• Forex losses likely amid adverse movement in exchange rates
• Likely to report forex loss between Rs 900 crore - Rs 1,240 crore

Bulk Deals

• Kotak Mahindra Bank: Promoter Uday Kotak sold 5.6 crore shares (2.83%) at Rs 1,240 per share. Key buyers in this deal are University of California Endowment Fund, Societe General, Norges Bank, Fidelity Group, JP Morgan Securities, Oppenheimer Fund and domestic institutions like SBI Mutual Fund, ICICI Prudential Life Insurance, Axis Mutual Fund, HDFC Life Insurance.
• Just Dial: BNP Paribas Arbitrage acquired 3.57 lakh shares (0.55%) at Rs 407.44 per share.
• ADF Foods: Abakkus Emerging Opportunities Fund acquired 5 lakh shares (2.5%) at Rs 274 per share and Authum Investment and Infra sold 4.59 lakh shares (2.3%) at Rs 274 per share.
• Coromandel: Promoter EID Parry sold 58.5 lakh shares (2%) at Rs 629.19 per share.

Who’s Meeting Whom

• SH Kelkar: To meet Quest Investment Advisors, Abbakus AMC and other investors on June 4.
• M&M Financial Services: to meet Franklin Templeton, Nomura and other investors between June 3-15.

Trading Tweaks

• Closing Date: Reliance Industries rights issue
• Price Band Revised From 10% to 5%: Entertainment Network (ENIL), Tourism Finance Corporation of India
• Price Band Revised From 20% to 10%: Arvind, Genus Paper & Boards, IDBI Bank, IFCI, Shoppers Stop
• Move Into Short-Term ASM Framework: Swaraj Engines, Hindustan Motors.
• Move Into ASM Framework: JBF Industries, GTL Infrastructure, Andhra Cements

Insider Trading

• Aarti Drugs: Promoter Safechem Enterprises sold 10,000 shares on May 26
• Apollo Pipes: Promoter Meenakshi Gupta acquired 50,022 shares between May 7-June 1
• SH Kelkar: Promoter Kedar Vaze acquired 12.8 lakh shares between May 29-June 1

(As Reported On June 2)

F&O Cues

• Nifty June futures closed at 9,963; discount narrows to 17 points from 35 points
• Nifty June futures add 7.3% and 7.3 lakh shares in Open Interest
• Nifty Bank June futures closed at 20,466; discount of 65 points from 64 points
• Nifty Bank June futures add 10% and 1.4 lakh shares in Open Interest
• Nifty Put-Call Ratio at 1.59 from 1.53 across all series

Nifty Weekly Expiry: June 4

• Maximum Open Interest on Call side at 10,000 strike (24.3 lakh shares)
• Maximum Open Interest on Put side at 9,800 strike (21.2 lakh shares)
• Active Options: 9,900 Put (+10 lakh shares) and 9,800 Put (+10 lakh shares)

Nifty Monthly Expiry: June 25

• Maximum Open Interest on Call side at 10,000 strike (18.4 lakh shares)
• Maximum Open Interest on Put side at 9,000 strike (29.3 lakh shares)