All You Need To Know Going Into Trade On June 4

Stocks To Watch

• Reliance Industries: Rights issue subscribed 1.59 times, amounting to an overall commitment of Rs 84,000 crore for the Rs 53,124.2 crore issue. Public portion subscribed 1.22 times. Allotment of equity shares will take place on or about June 10. Rights shares expected to be listed on BSE & NSE on or around June 12.
• GAIL: Signs an accord for tri-generation projects with EESL. The 50-50 venture will involve natural gas-fired generators to produce electricity.
• HDFC Life: Standard Life Insurance is offering 4 crore shares of the company in a block trade. Price is set between Rs 490-501.35 per share, which is a 0-2.3% discount to Wednesday's closing price. The total sale may fetch $266 million, as per data accessed by Bloomberg News.
• VST Tillers and Tractors: Power Tillers sales up 24% in May to 1,750 units while Tractors sales rise 20% to 633 units.
• DB Corp: CARE Ratings has downgraded long-term and short-term bank facilities worth Rs 320 crore, from CARE AAA to CARE AA+ with outlook remaining stable. The revision in the rating factors in CARE’s belief that advertisement income, which constituted around 70% of company’s total operating income in FY20, would be to be notably weaker in Q1FY21, and is expected to remain muted for rest of the year as well.
• Jindal Steel and Power: May steel sales up 26% to 7.97 lakh tons, on a consolidated basis, driven by exports.
• Oil India: Clarified on the blowout at Baghjan well, stating that the company is currently engaged in the blowout control process and the wells are self-insured.
• JK Cement: To consider raising capital via NCDs on June 17.
• Persistent Systems: To accelerate and develop cloud solutions to customers along with IBM.
• Arvind: Raised Rs 75 crore via issue of NCDs.
• NLC India: Raised Rs 1,200 crore by issuing commercial paper.
• Chennai Petrochem: Board has recommended a proposal to Indian Oil Corporation for implementing the 9 MMTPA refinery project at Cauvery basin refinery through a joint venture at an estimated cost of Rs 28,983 crore. Board has given in-principle approval for incorporation of a joint venture with the company and Indian Oil Corporation holding 25% stake each while balance to be held by financial/strategic/public investors. Company will invest up to Rs 2,500 crore in the venture. LPG division of company is working partially, while cylinder manufacturing is working at 10% capacity.
• Shree Renuka Sugars: Board approved proposal of raising funds via external commercial borrowings from its holding company Wilmar Sugar Holdings to refinance company’s existing debt. Board also increased borrowing limit from Rs 6,000 crore to Rs 10,000 crore.
• Non-Nifty Earnings Today: DLF, NIIT, PI Industries, SRF.

Companies With Covid-19 Updates

BPCL

• Demand for petroleum products fell 55% in April compared to last year.
• Demand in May increased 67% as compared to April but was down 30% compared to the previous year.
• Refineries operated at 77% capacity in May.
• Managing crude inventory by deferring or delaying some cargoes and by diverting some to the strategic petroleum reserves of the Government of India.

Berger Paints

• Sales in April was extremely low.
• There were signs of recovery in May.
• Ramp-up of production levels will be done gradually.
• Managed the sharp drop in business and the consequent lower sales by accessing the market for commercial paper at competitive rates.
• International operations in Poland are less impacted.
• Plant in Nepal is yet to resume operations.

Tata Consumer Products

• Almost all tea packaging units, salt / pulses packing centers and 3P spices units are operational with prescribed operating norms.
• Finished goods stock holding across depots are at a healthy level.
• 40% of Starbucks outlets open for delivery and takeaway.
• Tea and coffee sales to international retail customers have increased due to higher in-home consumption.
• Out-of-home business in the U.S. and Australia has seen a sharp decline.
• There could be impact of increased input costs due to commodity price volatility and supply constraints.

Heidelberg Cement

• Sourcing fly ash from other power plants as availability is impacted.
• Expect some constraints in dispatches due to the reduced availability of truck drivers.
• Some dealers are facing a liquidity crunch and would want to liquidate their existing inventories before placing fresh orders.
• Cement demand may remain sluggish due to shortage of labour in urban areas.
• Areas where government spending is good will see better demand.

Mishra Dhatu Nigam

• Disruption in production activity for 45 days.
• Normal production activity resumed from May 20.
• Had sales turnover of Rs 50 crore in May.

Earnings Reported After Market Hours

Aurobindo Pharma Q4FY20

• Revenue up 16.4% to Rs 6,158 crore
• Net profit up 45.2% to Rs 849.8 crore
• Ebitda up 26.6% to Rs 1,342.3 crore
• Ebitda Margin widens to 21.8% from 20%
• Deferred tax reversal of Rs 101 crore in the current quarter
• Board approved the transfer of the biosimilars business to wholly-owned arm CuraTeq for Rs 361.5 crore
• API sales down 17.6% to Rs 755.6 crore
• Formulations sales up 23.5% to Rs 5,401.2 crore
• Formulation sales in U.S., Europe and ARV markets show 20% growth
• Lower input costs aid margin expansion

Cholamandalam Investment & Finance Q4FY20

• Net Interest Income up 13% to Rs 1,015.4 crore
• Net profit down 85.4% to Rs 42.7 crore
• One-time provision of Rs 504 crore for Covid-19 impact
• Moratorium extended to 76% of the customers
• Disbursements down 36% to Rs 5,663 crore
• Assets Under Management up 16% to Rs 66,943 crore
• Moratorium not availed from banks or other lenders
• Cashflow position strong and adequate to cover up to September
• Board approves raising funds up to Rs 30,000 crore via NCDs
• All numbers are standalone and compared on a year-on-year basis.

Brokerage Radar

CLSA On Britannia

• Downgrade to outperform from buy
• Price target raised to Rs 3,900 from Rs 3,700
• Performance improvement in Q4 offsets Covid-19 impact
• Earnings momentum likely to continue
• Valuations offer limited room for upside

CLSA On ONGC

• Sell rating maintained
• Price target of Rs 55
• Weak core outlook, expensive valuations and share supply overhang
• Domestic gas prices to fall 50% in next 12 months
• Stock pricing in over $50 per barrel of crude which may take four or more years
• Stock may be devoid of a positive trigger
• Perfect sell candidate

Investec On Britannia

• Buy rating maintained
• Price target raised to Rs 3,906 from Rs 3,306
• Beat on topline and a bigger beat on outlook
• Margin concerns abated given fall in palm oil and milk prices
• Healthy product mix and operating leverage
• Balance sheet and ICDs stable
• Upgrade earnings by 8-14%

Morgan Stanley On JSPL

• Overweight rating maintained
• Price target of Rs 140
• Good volumes in May
• Exports continue to be a strong driver of sales volumes
• High export volumes may support good production rates for the next few months

CLSA On Vodafone Idea

• Buy rating maintained
• Price target of Rs 12
• Mobile ARPU to grow 30% till FY22
• Expect subscriber loss to decelerate
• With revenue growth, Ebitda should jump 67% by FY22, boosted by operating leverage

Goldman Sachs On Banks

• Largest deferred book globally to drive more earnings cuts
• Higher proportion of deferred loans a risk to retail portfolio
• Expect increased provisions on deferred loans and sharp falls in operating profit
• Downgrade Axis Bank to sell from neutral
• Downgrade HDFC to neutral from buy
• Remove ICICI Bank from conviction list but remain positive and maintain buy
• Like HDFC Bank, Kotak Bank and Bandhan Bank
• Prefer Bajaj Finance, Aavas Financiers, Shriram Transport and L&T Finance among NBFCs
• Sell recommendation on IDFC First Bank, PNB, M&M Financial, PNB Housing & LIC Housing given weak fundamentals

Bulk Deals

• HDFC Life Insurance: Promoter HDFC sold 2.6 crore shares (1.29%) at Rs 490.22 per share
• Neogen Chemicals: Promoters Haridas Kanani and Beena Kanani sold 11.26 lakh shares (4.82%) at Rs 473.53 per share and Malabar India Group acquired 10.47 lakh shares (4.49%) at Rs 473.32 per share.
• SH Kelkar: Kotak Mahindra International acquired 31.52 lakh shares (2.23%) at Rs 62 per share. Fidelity Group sold 34.53 lakh shares (2.44%) at Rs 64.15 per share and HDFC Mutual Fund sold 40 lakh shares (2.83%) at Rs 62.03 per share.

Who’s Meeting Whom

• Marico: To meet ICICI Pru Life Insurance and Bajaj Allianz Life Insurance on June 4
• Dr Lal Pathlabs: To meet Baillie Gifford on June 5.

Trading Tweaks

• Price Band Revised From 10% to 5%: Arvind Fashions, Cholamandalam Financial Holdings, GVK Power & Infrastructure, Marksans Pharma, Prince Pipes And Fittings, Shoppers Stop, TCNS Clothing, Tube Investments of India
• Price Band Revised From 20% to 10%: Chalet Hotels, Electrotherm (India), IL&FS Investment Managers, Nandan Denim, Trident.
• Move Into Short-Term ASM Framework: Genus Paper & Boards

Insider Trading

• Alembic: Promoter Nirayu acquired 10.48 lakh shares between June 1-2
• Sagar Cements: Promoter RV Consulting Services acquired 25,000 shares on June 1
• Vaibhav Global: Promoter Rahim Ullah sold 1 lakh shares on June 1
• Mindtree: Promoter NS Parthasarathy sold 1.43 lakh shares on June 2

(As Reported On June 3)

F&O Cues

• Nifty June futures closed at 10,036; discount widens to 25 points from 17 points
• Nifty June futures add 6.2% and 6 lakh shares in Open Interest
• Nifty Bank June futures closed at 20,739; discount widens to 200 points from 64 points
• Nifty Bank June futures shed 2% and 32,000 shares in Open Interest
• Nifty Put-Call Ratio at 1.58 from 1.59 across all series

Nifty Weekly Expiry: June 4

• Maximum Open Interest on Call side at 10,200 strike (21.1 lakh shares)
• Maximum Open Interest on Put side at 10,000 strike (24.9 lakh shares)
• Active Options: 10,000 Put (+18.5 lakh shares), 10,200 Call (+7.9 lakh shares)

Nifty Monthly Expiry: June 25

• Maximum Open Interest on Call side at 10,500 strike (13.9 lakh shares)
• Maximum Open Interest on Put side at 9,000 strike (32.3 lakh shares)

F&O Buzzers & Fund Flows