All You Need To Know Going Into Trade On May 13
Stocks in Asia fell with U.S. equity futures, while the yen and Treasuries climbed, after trade talks ended without a resolution and China said the U.S. must remove all extra tariffs.
Shares in Japan and South Korea opened lower and S&P 500 Index futures dropped 1.1 percent. Hong Kong is closed Monday for a holiday. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.35 percent to 11,244.50 as of 7 a.m.
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Here’s a quick look at all that could influence equities today.
U.S. Markets Check
- Stocks closed higher for the first time in five days on renewed optimism that an all-out trade war can be averted even after the U.S. decision to slap fresh tariffs on Chinese goods overnight.
- The yield on 10-year Treasuries dropped four basis points to 2.43 percent.
- Japan’s Topix index dropped 0.7 percent.
- South Korea’s Kospi index lost 0.9 percent.
- Australia’s S&P/ASX 200 Index declined 0.4 percent.
- Futures on the S&P 500 Index fell 1.1 percent.
- Brent crude traded 0.14 percent lower at $70.52 a barrel.
- West Texas Intermediate fell 0.6 percent to $61.27 a barrel.
- Gold gained 0.1 percent to $1,287.80 an ounce.
London Metal Exchange
- Copper halted a three-day fall, ended 0.39 percent higher.
- Aluminium ended higher for the second day, up 0.5 percent.
- Nickel halted a three-day decline, ended 1.2 percent higher.
- Lead ended lower for the second day, down 0.7 percent.
- Tin resumed gains after a one-day decline, ended 1.9 percent higher.
- Zinc halted a three-day fall, closed 0.77 percent higher.
Key Events To Watch This Week
- 5:30 p.m.: India April consumer price inflation YoY; Bloomberg estimates at 2.98 percent (prior 2.86 percent).
- Japan balance of payments is due Tuesday.
- China industrial production and retail sales are slated for Wednesday, same day as U.S. retail sales and industrial production.
- Bank of Indonesia has an interest rate decision on Thursday. It has kept rates on hold this year after six hikes last year and economists are projecting it will join Asia’s shift to dovish monetary policy.
- Australian unemployment is out on Thursday.
- A slew of Federal Reserve policy makers speak: Boston Fed President Eric Rosengren and Fed Vice Chairman Richard Clarida speak at a “Fed Listens” event hosted by the Boston Fed. New York Fed President John Williams speaks at an event in Zurich. Kansas City Fed President Esther George and Richmond Fed President Thomas Barkin also make appearances.
- U.S. Secretary of State Michael Pompeo travels to Russia where he’ll meet with his counterpart Sergei Lavrov.
Stocks To Watch
- SRF: Signed a business transfer agreement with DSM India Pvt. Ltd. for divestment of their engineering plastics business.
- Captain Polyplast: Inaugurated new manufacturing plant at Kurnool, Andhra Pradesh.
- Larsen & Toubro: Board approved merger with L&T Shipbuilding Ltd. (a wholly-owned subsidiary).
- L&T Financial Services: Board approved the offer and issuance of cumulative compulsorily redeemable non-convertible preference shares for an amount of up to Rs. 195 crore on a private placement basis.
- Welspun India: Order sanctioning the scheme of amalgamation of Prasert Multiventure Pvt. Ltd. with company was pronounced by NCLT Ahmedabad Bench.
- Texmaco Rail & Engineering: allotted 47.85 lakh equity shares shareholders of Bright Power Projects in the ratio of 818:100 i.e. 818 fully paid-up equity shares of the Company against every 100 fully paid-up equity shares of Bright Power.
- Adani Green Energy’s arm commissioned 50 MwAC Solar Power Project in UP, whose PPA is for 25 years. Another arm of Adani Green Energy won bid of setting 250 Mwac wind power project issued by Solar Energy Corporation of India, whose PPA is for 25 years.
- Tata Steel: European Commission’s feedback on JV with Thyssenkrupp said that it is not intending to clear the proposed JV. The company said that it is remain committed to its strategy in Europe and the Indian operations are well positioned to enhance earnings and will continue to pursue deleveraging.
- Reliance Industries intended to close a 330,000 b/d crude unit in India’s Gujarat state for maintenance for two-to-four weeks, Reuters reported, citing two unidentified people in the industry. The Company will also close some secondary units for maintenance. (Bloomberg News).
- Gail said that it has accelerated work for Jagdishpur-Haldia & Bokaro—Dhamra Pipeline project and completed awards worth Rs 10,500 crore for line pipe supply and laying.
- HCL Technologies: Board approved amalgamation of three arms into the company.
- Edelweiss Financial Services: Arm ECL Finance received Rs 1,040 crore from pension fund manager ‘CDPQ’ as investment in form of compulsory convertible debentures and equity shares.
- UPL acquired 26.75 percent stake in ‘Allfresh’ for Rs 9.24 crore. The target company is engaged in procuring and supplying fresh produce.
- SBI Capital Markets confirmed Etihad bid for Jet Airways (Bloomberg News)
- DHFL March Data: Collection Efficiency at 99.3 percent , ECS Return Rate for Housing Loan at 5 percent, Non-Housing Loan at 8 percent and SME Loan at 11 percent. The company said that it has made more than Rs. 30,000 crore of principal and interest payments to its creditors including its fixed deposit holders from Sept. 24 till date.
- PC Jeweller: Company to demerge its export division to separate company – PCJ Gems & Jewellery Ltd. Export division contributed nearly 28.4 percent (Rs 2,690.4 crore) of the revenue in 2017-18. The new company will be listed on the exchanges. The shareholding structure will be the exact replica of the current company. Proposed demerger will enhance value for shareholders.
- SRF: Company to sell its engineering plastics division to DSM India (wholly-owned subsidiary of Royal DSM Netherlands) for Rs 320 crore. Sale is expected to complete within six months. The division contributed Rs 209 crore (4.5 percent) to the total revenue of the company in 2017-18.
- Welspun Corp: NCLT sanctioned the scheme of arrangement between Welspun Pipes and Welspun Corp.
- Shankara Building Products: Company started one new retail store in Bangalore measuring 5,000 square feet. Further, it has decided to close retail stores in Rajkot, Surat, Baroda, Nizamabad, Anakapalli and Sindhanoor. Some of these stores are not a part of company’s immediate geographic focus. These stores contributed only 1.32 percent of retail sales for March quarter. The net store count after this will stand at 129 stores spread over 5.5 lakh square feet.
Nifty Earnings To Watch
Other Earnings To Watch
- Vodafone Idea
- Godrej Industries
- Andhra Bank
- IDBI Bank
- INOX Leisure
- Just Dial
- Karnataka Bank
- Linde India
- Mangalore Refinery and Petrochemicals
- Metropolis Healthcare
- Muthoot Finance
- Oriental Bank of Commerce
- Pioneer Distilleries
- Texmaco Rail & Engineering,
- The New India Assurance Company
- United Bank of India
- Automotive Axles
- Avadh Sugar & Energy
- Balkrishna Paper Mills
- Borosil Glass Works
- Capacit'e Infraprojects
- CCL Products (India)
- Ester Industries
- Future Supply Chain Solutions, Honeywell Automation India
- Bombay Burmah Trading
- Shemaroo Entertainment
Nifty Earnings Reaction To Watch
Larsen & Toubro (Q4, YoY)
- Revenue up 10 percent to Rs 44,934 crore.
- Net profit up 8 percent to Rs 3,418 crore.
- Ebitda up 3 percent to Rs 5,599 crore.
- Margin at 12.5 percent versus 13.3 percent.
- FY19 revenue guidance of 12 -15 percent met.
- Bagged orders worth Rs 56,538 crore.
- International orders were 31 percent of the order inflow.
Eicher Motors (Q4, YoY)
- Revenue down 1.1 percent to Rs 2,500.1 crore.
- Net profit up 18 percent to Rs 544.8 crore.
- Ebitda down 14.1 percent to Rs 684.6 crore.
- Margin at 27.4 percent versus 31.5 percent.
- Other Income up 68 percent at Rs 142.7 crore.
- Declares dividend of Rs 125 per share.
Other Earnings Reaction To Watch
Syndicate Bank (Q4, YoY)
- Net interest income up 16.3 percent to Rs 1,952.3 crore.
- Net profit at Rs 128 crore versus Net loss at Rs 2,195.1 crore.
- Provisions up 3 percent to Rs 5,288.4 crore. (Rs 5,444.1 crore QoQ)
- Gross NPA at 11.37 percent versus 12.54 percent (QoQ)
- Net NPA at 6.16 percent versus 6.75 percent (QoQ)
GSK Consumer Healthcare (Q4, YoY)
- Revenue up 9 percent at Rs 1,286.1 crore.
- Net profit up 34.9 percent to Rs 285.8 crore.
- Ebitda up 27.4 percent at Rs 318.5 crore.
- Margin at 24.8 percent versus 21.2 percent.
- Declared dividend of Rs 105 per share
Relaxo Footwears (Q4, YoY)
- Revenue up 15.5 percent to Rs 635.7 crore.
- Net profit up 1.7 percent to Rs 54.4 crore.
- Ebitda down 2.8 percent to Rs 95.2 crore.
- Margin at 15 percent versus 17.8 percent.
- Raw Material as percent of sales at 39 percent versus 33 percent.
- Board approves issue of bonus shares at 1:1
GNA Axles (Q4, YoY)
- Stock rose as much as 8.8 percent to Rs 295.
- Revenue up 18.4 percent to Rs 242.19 crore.
- Net Profit down 15 percent to Rs 293.83 crore.
- Ebitda up 31 percent to Rs 38.65 crore.
- Margin 16 percent versus 14.4 percent.
V2 Retail (Q4, YoY)
- Revenue up 29.5 percent to Rs 163.9 crore.
- Net profit up 13.5 percent to Rs 4.2 crore.
- Ebitda up 38.7 percent to Rs 4.3 crore.
- Margin at 2.6 percent versus 2.4 percent.
Merck (Q1, YoY)
- Revenue up 16.5 percent to Rs 231 crore.
- Net profit up 79.3 percent to Rs 40.7 crore.
- Ebitda up 2.1 times at Rs 50.1 crore.
- Margin at 21.7 percent versus 12 percent.
- Other Income up 3.3 percent to Rs 17.7 crore.
- Exceptional gain of Rs 6.6 crore in base quarter.
Chalet Hotels Q4*
- Revenue at Rs 269.9 crore.
- Net Income at Rs 133.1 crore.
Avenue Supermarts (Q4, YoY)
- Revenue up 32 percent to Rs 5,033 crore.
- Net profit up 21.5 percent to Rs 203 crore.
- Ebitda up 27.4 percent to Rs 376 crore.
- Margin at 7.4 percent versus 7.7 percent.
Nilkamal (Q4, YoY)
- Revenue down 6.8 percent to Rs 555 crore.
- Net profit down 17.6 percent to Rs 28 crore.
- Ebitda down 18.4 percent to Rs 53 crore.
- Margin at 9.5 percent versus 10.9 percent.
Vinati Organics (Q4, YoY)
- Revenue up 39 percent to Rs 297 crore.
- Net profit up 60 percent to Rs 83 crore.
- Ebitda up 86 percent to Rs 120.2 crore.
- Margin at 40.5 percent versus 30.3 percent.
La 0pala RG (Q4, YoY)
- Revenue up 5.8 percent to Rs 72 crore.
- Net profit up 14% at Rs 16 crore.
- Ebitda up 1.6 percent to Rs 24.1 crore.
- Margin at 33.4 percent versus 34.8 percent.
Motilal Oswal Financial Services (Q4, YoY)
- Revenue down 0.9 percent to Rs 656.6 crore.
- Net profit up 10.5 times to Rs 146.1 crore.
- Net profit aided by lower other expenses and lower investment losses.
- Other expenses lower due to lower bad debts write-off related to Aspire Home Finance.
*Numbers are not comparable
(Corrects GNA Axles’ Ebitda and Margin details.)
Pledge Share Details
- Bajaj Consumer Care promoter Bajaj Resources revoked pledge of 21.94 lakh shares on May 8.
- Adani Transmission promoter group Gautam Adani revoked pledge of 21.49 lakh shares on May 8.
- Future Retail promoter Future Corporate Resources created pledge of 1.25 lakh shares on May 8.
- Indiabulls Real Estate: Promoter released pledge of 3.75 crore equity shares or 8.32 percent equity.
- Eveready Industries, Mcleod Russel, Williamson Magor & Company to move out of short term ASM Framework.
- Williamson Magor & Company, Kellton Tech Solutions price band revised to 5 percent.
Who’s Meeting Whom
- Shriram Transport Finance to meet Myraid Asset Management on May 15.
- RPG Life Sciences promoter Ektara Enterprises LLP acquired 25,000 shares from May 7-8.
Money Market Update
- The rupee ended at 69.90/$ versus 69.95/$ on Thursday, snapping its four-day losing streak.
Futures –May series
- Nifty futures closed trading at 11,307, premium of 28 points versus 33 points.
- Nifty open interest down 6 percent, sheds 9.9 lakh shares in open interest.
- Bank Nifty futures closed trading at 29,088, premium of 47.6 points versus 110 points
- Bank Nifty open interest down 9 percent sheds 1.5 lakh shares in open interest.
- Nifty PCR at 1.29 versus 1.02 (across all series)
Nifty Weekly Expiry 16 May
- Max open interest on call side at 11,500 (20.6 lakh shares)
- Max open interest at put side at 11,000 (11.9 lakh shares)
- Max open interest addition seen at 11,300 Call (+6 lakh shares), 11,200 Put (+4.9 lakh shares)
Nifty Monthly Expiry 30 May
- Max open interest on call side at 12,000 (21.5 lakh shares)
- Max open interest on Put side at 11,000 (26.6 lakh shares)
- Max open interest addition seen at 12,000 Call (+3.9 lakh shares)
- Maintained ‘Buy’; hiked price target to Rs 375 from Rs 365.
- March quarter was operationally weak; 2019-20 should be better.
- Net stress trending lower; recovery pipeline strong.
- Growth improving; profitability stable.
- Maintained ‘Buy’ with a price target of Rs 410.
- Strong overall earnings; higher provisioning dents profitability.
- Balance sheet recovery accelerating with sharp improvement in asset quality.
- Focus firmly shifts to recovery of return ratios.
- Maintained ‘Buy’; hiked price target to Rs 400 from Rs 375.
- Pre-provisioning operating profit performance to improve going forward.
- Asset quality – well recognised and provided.
- See visibility of 14 percent ROEs; valuations undemanding.
- Maintained ‘Buy’; cut price target to Rs 670 from Rs 690.
- Disappointing 2018-19; cautiously optimistic about summer.
- June quarter started well; price hike difficult to come by.
- Cut EPS estimates by 6-11 percent to factor in latest trends.
- Maintained ‘Sell’; cut price target to Rs 480 from Rs 500.
- Disappointing performance amid weak demand scenario and high channel inventory.
- EMP segment profitability impacted due to its lumpy nature.
- Beko business: focus on expansion of distribution reach and strengthen product portfolio.
Citi on Dalmia Bharat
- Maintained ‘Buy’; hiked price target to Rs 1,450 from Rs 1,350.
- March quarter’s Ebitda was in line.
- Positive on cement.
- Cash management worries priced in.
Nomura on Gujarat State Petronet
- Maintained ‘Buy’; hiked price target to Rs 240 from Rs 200.
- March quarter volumes further moderated but June quarter should see sharp jump.
- With reorganization of GSPC, concerns on weak parent abate.
- Hike earnings estimate by 30 percent for the current and the next financial year; valuations attractive.
Kotak Securities on Canara Bank
- Maintained ‘Add’ with a price target of Rs 315.
- High provisions dent earnings primarily to improve the strength of balance sheet.
- Slippages at a four-year low; gross NPLs continue to improve.
- Would be beneficiary of entire corporate NPL recovery cycle.
Kotak Securities on Eicher Motors
- Maintained ‘Sell’; cut price target to Rs 16,200 from Rs 18,400.
- March quarter’s margin deteriorated as volume pressure mounts.
- Performance of VECV weak due to volume decline and higher discount.
- Believe margin will continue downward trajectory with slowdown in volume growth.
Nomura on Kajaria Ceramics
- Maintained ‘Buy’ with a price target of Rs 635.
- Weak March quarter; both volume growth and margins miss estimates.
- Management guides strong 15 percent volume growth for 2019-20.
- Management indicated 3-4 percent price hike; expect improvement in profitability in June quarter.
CLSA on Cadila Healthcare
- Downgraded to ‘Sell’ from ‘Buy’; cut price target to Rs 250 from Rs 430.
- Moraiya plant received 14 observations; plant is critical for Cadila.
- Observations for sterile products are worrying.
- Expect approval delays, cut FY20-21 EPS by 19-24 percent.
Investec on Prism Johnson
- Maintained ‘Hold’ with a price target of Rs 113.
- Cement division reported strong operational metrics led by favourable regional exposure and cost initiatives.
- Working capital has been kept under control.
- With new Tiles CEO appointed, keep a watch on impending turnaround.
Investec on L&T
- Maintained ‘Buy’ with a price target of Rs 1,805.
- An in-line quarter; guidance exudes confidence.
- Revenue/order inflows may be slightly weaker.
- Continue to see L&T as a beneficiary of pick-up in govt capex.