All You Need To Know Going Into Trade On June 8

Brokerages On L&T

Jefferies

• Buy rating maintained
• Price target of Rs 1,218
• Good performance in Q4 in a tough environment
• Cost containment is the focus and revival in H2FY21 is expected
• Management to wait for some time on giving guidance

JPMorgan

• Overweight rating maintained
• Price target of Rs 1,135
• Management calls gives the impression that it is making rapid progress towards normalcy
• Current order book is executable
• Keen focus on working capital management
• Uncontrollable macro uncertainties around fiscal constraints and weak oil prices

Centrum

• Buy rating maintained
• Price target raised to Rs 1,094 from Rs 1,010
• Robust Q4 inflows to help strengthen order backlog position
• Execution disrupted amid lockdown but is improving
• Focus on containing working capital at current levels
• E&A proceeds to be partially used for recapitalising Hyderabad Metro

Stocks To Watch

• Reliance Industries: Silver Lake and its co-investors will invest an additional Rs 4,547 crore in Jio Platforms, increasing its total stake in the company to 2.08% of the total equity or Rs 10,202 crore. Abu Dhabi Investment Authority will also be investing a sum of Rs 5,683.5 crore into Jio Platforms for a 1.16% stake through its wholly-owned subsidiary. Jio Platforms has now raised Rs 97,885.65 crore from various global investors.
• IndusInd Bank: Promoters to now acquire shares from the secondary market, within the overall regulatory prescribed manner.
• Tata Group Companies: N Chandrasekaran, Chairman of Tata Sons has stated in a press release that the Tata group companies are facing both challenges and opportunities arising out of the pandemic and the resulting economic situation, based on the industries and markets they operate in. All group companies are progressing well in responding to these challenges and opportunities. Tata Sons is in a strong financial position with adequate cash flows to support the group companies and new growth initiatives. Tata Sons is not looking to monetise its investments to raise capital.
• Tata Motors: Bloomberg News reports that Jaguar Land Rover has raised a loan of $705 million from Chinese Banks. JLR has also told its suppliers that its Castle Bromwich site in the Midlands will not resume production until August 10 at the earliest and the Halewood SUV plant will re-open on June 8.
• Gateway Distriparks: To consider a proposal to raise equity shares on June 10.
• Karnataka Bank: Reports of various frauds to the Reserve Bank of India. It has pegged the fraud from DHFL to be Rs 180.13 crore, for misappropriation and criminal breach of trust and diverion of funds in the credit facilities earlier extended. The fraud from Religare Finvest is Rs 43.4 crore and Leel Electricals is Rs 20.65 crore. The bank has also fully provided for frauds amounting to Rs 41.3 crore for Feeders Electric Engineering.
• Shriram Transport Finance: T Rowe Price increases the stake to 5.36% from 4.77% on June 3.
• Capri Global: Raises Rs 50 crore via NCDs.
• Brigade Enterprises: To re-open three hotels in Bengaluru from June 8.
• Power Grid: Approves one-time consolidated rebate of Rs 1,075 crore to discoms and power departments of states and union territories.
• Birla Corp: Resumes operations at the Jute mill from June 5. The company says it expects three months to restore to normal production levels.
• Taj GVK Hotels: Expects demand to pick up at a slower pace once the lockdown is lifted.
• Non-Nifty Earnings Today: Inox Leisure, PVR, Abbott India, Chalet Hotels, Coromandel Engineering, Gujarat State Petronet.

Companies With Covid-19 Updates

Marico

• May saw a near-normal throughput in all categories except the premium personal care business.
• Intermittent challenges on labour availability.
• Countering disruption in supply chain by adopting newer and alternate models like direct supply to distributors and large modern trade stores.
• Robust growth continues in Saffola Edible oils and foods business.
• Parachute coconut oil has also shown resilience and clocking in average sales of FY20.
• Value added hair oils witnessed a gradual pickup towards end of April.
• Although operations have been affected in Bangladesh, business remains resilient.
• Business in Vietnam gradually getting back to normal.
• Business in Middle East, Africa and Egypt continues to be affected due to the pandemic. However, its impact on the overall business is low to moderate.
• No major impact on its liquidity position.

Moldtek Packaging

• March quarter sales impacted by Rs 15 crore.
• Sales for ice-cream packs were badly impacted.
• Prime season for the industry saw an impact.
• Negative impact on sales is likely to continue in FY21.
• Expect total sales in FY21 to be 80% of FY20's sales.

Chennai Petroleum

• Fall in crude prices has resulted in a significant inventory write-down of Rs 1,456 crore
• Operating at 60% of total capacity
• Lower demand and resultant inventory build-up has resulted in an increase in short-term borrowings.
• Borrowings to get normalised based on turnaround in the demand situation and stabilisation in the international prices of crude.

Lux Industries

• Operations at various facilities are not running at full capacity.
• Operations will be ramped up in a phased manner.
• Anticipate some pressure on cash flows in the coming quarter.
• Debtors may get stretched as well.

Eveready Industries

• Pandemic has imposed incremental operating costs on the business.
• Will see impact on the company's profitability in the short-term.
• Engaged with the lenders to infuse additional funds to bridge the working capital gap.
• Approached all term lenders to extend moratorium as per the RBI's regulatory package. Some of the requests have been granted by the lenders.
• Trade collections for batteries have been satisfactory as supply chain opened up for the same due to its classification as an essential commodity.

Torrent Power

• Demand in licensed and franchised distribution areas was down 49% from March 25-April 30.
• Demand in May 2020 was down 36% compared to the previous year.
• Expect overall electricity demand in FY21 to be lower than FY20.

Earnings Reported After Market Hours

Exide Industries Q4FY20

• Revenue down 21% to Rs 2,055 crore
• Net profit down 20.3% to Rs 168 crore
• Ebitda down 27.6% to Rs 270.3 crore
• Ebitda margin narrows to 13.2% from 14.4%
• De-growth seen in both storage batteries and life insurance business due to slowdown in auto segment and Covid-19 impact
• Operational numbers impacted by IND-AS 116
• All numbers are standalone and compared on a year-on-year basis

Jyothy Laboratories Q4FY20

• Revenue down 23.8% to Rs 393 crore
• Net profit down 58.3% to Rs 28.8 crore
• Ebitda down 50.1% to Rs 40.6 crore
• Ebitda margin narrows to 10.3% from 15.8%
• Lower sales and higher adversiting expenses impact margins
• All the segments - fabric care, dishwashing, household insecticides, personal care and laundry service see a de-growth in revenue.
• Volume contraction of 22.1%
• Gross margins at 45.7% from 45.2%
• All numbers are consolidated and compared on a year-on-year basis

Aditya Birla Capital Q4FY20

• Revenue up 2.4% to Rs 4,844.9 crore
• Net profit down 44.4% to Rs 143.7 crore
• Additional provisions with respect to Covid-19 at Rs 163 crore
• 33% of Assets Under Management (AUMs) under moratorium
• All numbers are consolidated and compared on a year-on-year basis

Relaxo Footwear Q4FY20

• Revenue down 15% to Rs 541 crore
• Net profit down 4% to Rs 52 crore
• Ebitda flat at Rs 97 crore
• Ebitda margin at 17.9% from 15.1%
• All numbers are consolidated and compared on a year-on-year basis

Divis Laboratories Q4FY20

• Revenue up 10% to Rs 1,390 crore
• Net profit up 33% to Rs 388 crore
• Ebitda up 7% to Rs 444.5 crore
• Ebitda margin at 32% from 32.8%
• Forex gain of Rs 57 crore this quarter
• All numbers are compared on a year-on-year basis

Karnataka Bank Q4FY20

• Net profit down 56% to Rs 27.3 crore
• Net Interest Income up 29% to Rs 529.3 crore
• Gross NPA at 4.82% from 4.99% in the previous quarter
• Net NPA at 3.08% from 3.75% in the previous quarter
• Provisions at Rs 356.5 crore from Rs 314.7 crore in the previous quarter
• Covid-19 related provisions worth Rs 24.08 crore
• Provision Coverage Ratio at 64.7%
• Net profit and Net Interest Income is compared on a year-on-year basis

Earnings Estimates: Titan Q4FY20

• Net sales seen 6.1% lower at Rs 4,338 crore
• Ebitda seen 2.8% lower at Rs 443 crore
• Ebitda margin seen at 10.1% at 9.8%
• Net profit seen 3.4% lower at Rs 285 crore
• All estimates are Bloomberg estimates, standalone and compared on a year-on-year basis

Key Factors At Play For Titan:

• Jewellery sales which form 80% of the total revenue may decline 5%
• High prices of gold, Covid-19 lockdown may impact Jewellery sales
• Growth in January, February adversely countered by sharp drop in March
• Watches aided by online sales
• Eyewear sales may decline 13%

Brokerage Radar

Morgan Stanley On DLF

• Overweight rating maintained
• Price target of Rs 211
• Earnings beat in Q4
• Re-modelling the business model for the better
• Strategy to focus on mid-income housing, monetise projects during development phase and not wait for completion
• New strategy should help augment mid-term cash flows and strengthen the business model

Morgan Stanley On SBI

• Equalweight rating maintained
• Price target of Rs 205
• Profit miss in Q4 driven mainly by lower core pre-provisioning operating profit and higher provisions
• Moratorium take-up was 23% of the term loans in value terms which lower than that for many private banks

Investec On SBI

• Buy rating maintained
• Price target cut to Rs 245 from Rs 290
• Results a positive surprise on both slippages and moratorium disclosures
• Asset quality disclosures are near-term positives
• Weaker Net Interest Margin outcome and guidance can be a longer-term negative
• Valuation normalisation to provide near-term upside

ICICI Securities On SBI

• Add rating maintained
• Price target raised to Rs 206 from Rs 185
• Moratorium percentage reaffirms better profile than peers
• Strongest and superior franchise on deposits, underwriting, digitisation and huge potential to unlock value some key positives
• Alluring valuation; economic/social costs a risk

ICICI Securities On Alkem Labs

• Upgrade to buy from Add
• Price target cut to Rs 2,882 from Rs 3,008
• Q4 performance in-line with estimates
• Outlook remains strong
• Adjusted India growth remains strong
• Ebitda margin continues to improve

ICICI Securities On DLF

• Buy rating maintained
• Price target cut to Rs 233 from Rs 250
• Sales momentum weak
• Shift in sales strategy to enable faster monetisation
• Resilient in tough times
• Rental business collection steady
• Net debt rises sequentially
• Liquidity position comfortable

ICICI Securities On Gujarat Gas

• Hold rating maintained
• Price target cut to Rs 268 from Rs 280
• Covid-19 hits volumes, impacts a good fourth quarter
• ADD on ceramic producers for five years by GCC countries puts Morbi volumes at risk
• Cut FY21 EPS estimates by 53% to factor lockdown impact

CLSA On Gujarat Gas

• Buy rating maintained
• Price target cut to Rs 345 from Rs 360
• Robust performance in Q4
• Q1FY21 likely to be very weak on both volumes and margins
• Subdued gas price environment a tailwind

Jefferies On SBI

• Hold rating maintained
• Price target raised to Rs 205 from Rs 200
• Fourth quarter results good but not great
• Core slippages are manageable
• Moratorium book is not fully comparable as it does not include agri-loans
• Deposit franchise is key strength to grow loans and derisk

HSBC On SBI

• Buy rating maintained
• Price target of Rs 285
• NPAs continue downward journey even as bank navigates Covid-19 challenges
• Share of loans under moratorium not alarming yet
• Provisioning, liquidity and capital buffers appear adequate
• Undemanding valuation for a healthy franchise

Jefferies On DLF

• Buy rating maintained
• Price target raised to Rs 202 from Rs 186
• Shift back to residential launches during early stages of construction is a welcome change
• Expect residential sales to rise to a 20% CAGR over FY20-22
• Management confident of demand and balance sheet is strong

CIMB On Jyothy Labs

• Upgrade to add from hold
• Price target cut to Rs 140 from Rs 185
• Sales impacted by household insecticides and soaps
• 85% of sales come from essential products, which should navigate near-term slowdown
• Trades at an inexpensive valuation
• Price target cut given the current economic slowdown

Haitong On Exide Industries

• Neutral rating maintained
• Price target cut to Rs 168 from Rs 202
• Net profit higher due to better than expected Ebitda margin and low tax rate
• OEM slowdown and invertor season miss to hurt FY21 growth

CIMB On Hexaware Technologies

• Add rating maintained
• Price target of Rs 335
• Promoter group intends to delist the company
• Delisting can be a long-drawn-out process as ambiguities exist
• Such events may result in distractions in the ongoing operations of the company or transition related issues within senior employees / management

Haitong On Alkem Labs

• Buy rating maintained
• Price target cut to Rs 3,020 from Rs 3,050
• Delivered a strong performance during a seasonally weak quarter
• One of the most reliable companies which consistently outperforms the Indian Pharma Market
• U.S. generics and chronic India segment expected to achieve scale in the next two years
• Margin expansion will be the major earnings driver

Bulk Deals

• Alembic: Promoter Nirayu acquired 39.26 lakh shares or 1.53% stake at Rs 174 per share.
• PVR: Sylebra Capital Partners Master Fund acquired 6 lakh shares or 1.17% stake at Rs 1,167.5 per share.
• Pennar Industries: DSP Mutual Fund sold 7.53 lakh shares or 0.52% stake at Rs 16.17 per share.
• SH Kelkar: Promoter Kedar Vaze acquired 15.54 lakh shares or 1.1% stake at Rs 65 per share.
• Sequent Scientific: Promoter Agnus Holdings acquired 1.28 crore share or 5.16% stake at Rs 86.95 per share.

Pledged Share Details

• TCPL Packaging: Promoters released pledge of 38.26 lakh shares on June 5
• JSPL: Promoters released pledge of 89.6 lakh shares between June 1-2

As Reported On June 5.

Who's Meeting Whom

• Mahindra Logistics: To meet Ashmore Investment, Bajaj Allianz and other investors between June 8-11.
• BSE: To meet Acelansdowne Partners on June 9.

Trading Tweaks

• Price Band Revised From 10% To 5%: HFCL, IDBI Bank
• Price Band Revised From 20% To 10%: Indian Overseas Bank
• Move Into ASM Framework: Sastasundar Ventures, OCL Iron and Steel, Indisolar, Jet Airways
• Move Out Of ASM Framework: Suven Life Sciences, Olectra Greentech, Edelweiss Financial Services , Triveni Engineering & Industries, Bajaj Hindusthan Sugar, Parag Milk Foods, Sintex Industries, Shyam Century Ferrous, Subex.
• Move Into Short-Term ASM Framework: Aditya Birla Money, Jindal Worldwide, Onward Technologies, Reliance Naval and Engineering, Saregama, Sicagen, Wendt, Wheels India

Insider Trades

• Great Eastern Shipping: Promoter Ravi Seth acquired 21,000 shares on June 2.
• Quess Corp: Promoter Ajit Issac acquired 18,500 shares on June 4.
• SBI Cards: Promoter SBI Life Insurance sold 25,000 shares on June 4.

As Reported On June 5.

Money Market Update

• The rupee ended little changed at 75.58 against the U.S. Dollar as compared to Thursday's close of 75.57.
• The currency ended little changed for the week but with a positive bias.
• On a weekly basis - the currency was the third worst performing currency behind the Japanese Yen and the Hong Kong Dollar among its EM peers.