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All You Need To Know Going Into Trade On May 13
Stocks in the news, big brokerage calls of the day, complete trade setup and much more!
13 May 2020, 11:14 AM IST 
Traffic travels westbound on the Oakland-San Francisco Bay Bridge in San Francisco, California, U.S. (Photographer: David Paul Morris/Bloomberg)
Risk off sentiment returned to Asian markets on Wednesday after a weak session overnight on Wall Street. Warnings of a fragile economic recovery and lack of clarity on reopening of economies kept investors on the edge.
The treasury yields along with the Yen are holding on to their overnight gains while oil prices fell but stayed in a range.
The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 2.5 percent to 9,402 as of 7:05 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.
Here’s a look at all that can influence equities in today’s trading session:
- Markets in Japan, Australia and South Korea are retreating, although the losses are modest as compared to their peers on Wall Street.
- Futures on the Dow Jones are trading lower by 100 points after the benchmark index ended 1.9 percent lower on Tuesday.
- Anthony Fauci, the top infectious disease official in the U.S. said that states that reopen too quickly can setback the recovery process.
- St. Louis Fed President James Bullard warned of the risk of a depression if the shutdown persists, in a video speech.
- Dallas Fed President Robert Kaplan said that the economy will need more fiscal stimulus is the rate of joblessness continues to rise.
- Veteran investor Stan Druckenmiller said that the prospects of a V-shaped recovery in the U.S. is a 'fantasy' and that the risk-reward for stocks is the worst he has seen in his career.
- Yield on the 10-year treasury remained at 0.67 percent
- West Texas Intermediate crude fell 1.7 percent to $25.34 per barrel.
- In India, Prime Minister Narendra Modi announced a relief package of Rs 20 Lakh Crore to make India 'self-reliant' and emerge from the Covid-19 disruption.
Get your daily fix of the global markets here.
Earnings Fineprint: Nestle India Q1CY20
- Net sales rise 10.7 percent to Rs 3,325 crore
- Ebitda up 3.5 percent to Rs 793 crore
- Ebitda margins contract to 23.8 percent from 25.1 percent
- Net profit rises 13.4 percent to Rs 525 crore
- Higher sales, lower taxes aid profitability
- Gross margins fall 230 basis points to 56.3 percent
- Higher input costs, led by dairy, impact gross margins
- Lower gross margins weigh on operating margins
- Raw Material costs rise 22.8 percent to Rs 1,484 crore
- Raw Material cost as a percentage to sales rises to 44.6 percent from 40.2 percent
Opinion
Nestle India Q1 Results: Profit Rises On Lower Taxes, Sales Growth
Brokerages On Nestle India
UBS
- Buy rating maintained
- Price target raised to Rs 21,000 from Rs 19,250
- Results again justify premium valuation
- Strong volume-led growth even in a tough quarter
- New product innovation and operating leverage ahead
- Distribution-led growth to continue
CLSA
- Underperform rating maintained
- Price target of Rs 16,500
- Valuations leave little room for upside despite strong Q1
- Strong revenue growth aided by pantry loading by customers
- Firm commodity prices hurt margins
- Poised to benefit from health and hygiene waves
HSBC
- Buy rating maintained
- Price target raised to Rs 20,000 from Rs 16,450
- Standout performance in challenging times
- 10.7 percent domestic sales growth beats street expectations by a wide margin
- Aggressive innovation-led growth strategy, inclined towards health and nutrition is a winner in a post Covid-19 era
- Valuations still builds in reasonable growth expectations
Stocks To Watch
Vedanta’s De-Listing Plan:
- Promoter Vedanta Resources to meet on May 18 to decide on de-listing of the company
- Vedanta Resources has expressed its intention to acquire all public shareholding of the company
- As on date, public shareholders hold 169.1 crore equity shares, aggregating to 48.94 percent of the paid-up equity share capital
- The company will also voluntary delist shares from BSE and NSE.
- It will also de-list the American Depository Reciept (ADR) from the New York Stock Exchange.
- Promoters will accept equity shares tendered by the public at a price of Rs 87.5 per share, implying a discount of 2 percent from the closing price of May 12.
- Jubilant Lifesciences: Enters into a non-exclusive licensing agreement with Gilead Sciences, that will grant the company the right to register, manufacture and sell Gilead’s investigational drug, Remdesivir, a potential therapy for Covid-19 in 127 countries including India. Under the licensing agreement, the company will have the right to receive a technology transfer of the Gilead manufacturing process to scale up production to enable expedited access of the medicine to Covid-19 patients upon approvals by regulatory authorities in their respective countries.
- Hindustan Zinc: Announces interim dividend of Rs 16.5 per share, implying a dividend yield of 9.2 percent.
- Indo Amines: NCLT approved amalgamation of Core Chemicals and Key Organics with the company
- Apollo Microsystems: Has extended the timeline for making investment in Ananya SIP RF Technologies for a further period of 90 days (total 180 days), as the investment gets delayed due to the prevailing Covid-19 pandemic.
- JK Paper: Has temporarily suspended operations at its manufacturing facility - Unit CPM at Fort Songadh in Gujarat for about a week due to lower market demand and extended lockdown in the Western Region.
- Healthcare Global Enterprises: Buena Vista Fund sold 5.64 lakh shares (0.64 percent) at Rs 85.41 per share
- Apollo Tricoat Tubes: Promoter Lakshmi Metal Udyog acquired 14.7 lakh shares on May 11
- Companies That Resumed Operations: Borosil Renewables, TTK Prestige, DCM Shriram, Tata Metaliks, HPL Electric & Power, Kokuyo Camlin.
- Non-Nifty Earnings Today: ABB India, Godrej Consumer, Mphasis, Schaeffler India, Siemens.
Earnings Reported After Market Hours
Syngene International Q4FY20
- Revenue rises 13.7 percent to Rs 607 crore
- Ebitda rises 22 percent to Rs 204 crore
- Ebitda margins expand to 33.5 percent from 31.3 percent
- Net profit rises 20 percent to Rs 120 crore from Rs 100 crore
- All numbers are standalone and compared on a year-on-year basis
Havells India Q4FY20
- Revenue down 19.5 percent to Rs 2,216.1 crore
- Net profit falls 11.7 percent to Rs 177.2 crore
- Ebitda falls 22.1 percent to Rs 245.3 crore
- Ebitda margins flat at 11.1 percent from 11.4 percent
- Lower employee and ad spends ensure margins remain flat despite contraction in topline
- All segments show de-growth; dragged mainly by cables and lighting segment
- Switchgear segment revenue down 14 percent to Rs 351.1 crore
- Cables segment revenue down 24 percent to Rs 682.3 crore
- Lighting segment revenue down 31 percent to Rs 264.6 crore
- ECD segment revenue down 14 percent to Rs 460.63 crore
- Lloyd Consumer revenue down 14 percent to Rs 457.9 crore
- All numbers are standalone and compared on a year-on-year basis
IndiaMART InterMESH Q4FY20
- Revenue rises 23.3 percent to Rs 170.1 crore
- Net profit rises 57.1 percent to Rs 44.3 crore
- Ebitda up 2.6 times to Rs 52.3 crore
- Ebitda margins expand to 30.7 percent from 14.6 percent
- Lower employee expenses, higher depreciation aid margins
- Revenue growth led by an increase in the number of paid subscribers as well as higher realisation from existing ones
- All numbers are consolidated and compared on a year-on-year basis
SeQuent Scientific Q4FY20
- Revenue up 6.6 percent to Rs 300.6 crore
- Net profit falls 1.6 percent to Rs 16.9 crore
- Ebitda up 27 percent to Rs 51.1 crore
- Ebitda margin expands to 17 percent from 14.3 percent
JK Paper Q4FY20
- Revenue down 8.8 percent to Rs 735.9 crore
- Net profit down 17.5 percent to Rs 92.7 crore
- Ebitda down 19.1 percent to Rs 176.6 crore
- Ebitda margins down to 24 percent from 27 percent
Earnings Estimates: Maruti Suzuki Q4FY20
- Revenue seen 15 percent lower at Rs 18,335 crore
- Net profit seen 29 percent lower at Rs 1,273 crore
- Ebitda seen 21 percent lower at Rs 1,779 crore
- Ebitda margin may decline to 9.7 percent from 10.5 percent
- All numbers are standalone and compared on a year-on-year basis
Key Factors At Play For Maruti:
- 16 percent year-on-year decline in volumes to impact revenue
- Average selling price may rise due to BS-VI transition
- Higher operating expenses may weigh on margins
- Negative operating leverage to offset benefits of softer commodity prices
- Demand outlook in the current backdrop a key factor to watch
Brokerage Radar
Jefferies On Havells India
- Buy rating maintained
- Price target of Rs 660
- Covid-19 pain visible in a weak fourth quarter
- Ex-Covid-19, sales growth in Q4 could have been 9 percent year-on-year
- Lloyd saw good traction till operations ceased in mid-March
Credit Suisse On Vedanta
- Offer price unlikely to find takers but does provide a temporary floor
- De-listing offer alludes to promoter's confidence in a pick-up in commodity prices going ahead
- Rationale behind de-listing would be to plug dividend leakage to minority shareholders
CLSA On Vedanta
- Underperform rating maintained
- Price target of Rs 80
- Believe key developments will be Vedanta Resources' funding sources and price discovered via book building
- Believe discovered price may be much higher than the indicative price
- When Vedanta Resources was taken private in LSE, it was at a 27 percent premium to prior closing
Investec On Bandhan Bank
- Hold rating maintained
- Price target of Rs 280
- Strong results on the operational front
- Lower net profit due to Covid-19 provisions
- Well positioned on capital and liquidity
- Can easily absorb credit costs without eroding capital
- Political intervention over the next few quarters is a key risk
UBS On Indian Energy Exchange
- Buy rating maintained
- Price target raised to Rs 205 from Rs 190
- Likely to launch India's first gas exchange (IGX) in the upcoming weeks
- IGX may gain some market share from the LNG spot market
- Key Issues: Government Interventions, Weak Infrastructure, Multi-Layered Taxes and Weak Open Access Policy.
Pledged Share Details
- Uflex: Promoters released pledge of 2.5 lakh shares on May 11
- Emami: Promoters created pledge of 23.7 lakh shares on May 11
- Sun Pharma Advanced Research: Promoters released pledge of 24 lakh shares on May 8
(As Reported On May 12)
Trading Tweaks
- Ex-Date For Rights Issue: Reliance Industries (Rights at 1:15 at Rs 1,247 per share)
- Price Band Revised From 20 Percent To 10 Percent: Hathway Cable & Datacom, NDTV
- Move Into ASM Framework: DB Realty, AU Small Finance Bank
- Move Into Short-Term ASM Framework: Infibeam Avenues, Alok Industries
- Move Out Of Short-Term ASM Framework: Advanced Enzyme Technologies, GATI, LT Foods
Money Market Update
- The rupee ended stronger at 75.51 against the U.S. Dollar on Tuesday as compared to Monday’s closing of 75.73.
F&O Cues
- Nifty May futures closed at 9,212; premium at 15 points from 14 points.
- Nifty May futures shed 0.4 percent in Open Interest and 29,000 shares.
- Nifty Bank May futures closed at 18,839; discount narrows to 22 points from 35 points
- Nifty Bank May futures add 3.5 percent in Open Interest and 49,000 shares
- Nifty Put-Call Ratio at 1.28 from 1.26 across all series
Nifty Weekly Expiry: May 14
- Maximum Open Interest on Call side at 9,500 strike (20.1 lakh shares)
- Maximum Open Interest on Put side at 9,000 strike (17.4 lakh shares)
- Active Options: 9,100 Put (+3.9 lakh shares), 9,200 Call (+5.8 lakh shares)
Nifty Monthly Expiry: May 28
- Maximum Open Interest on Call side at 10,000 strike (23.4 lakh shares)
- Maximum Open Interest on Put side at 9,000 strike (24.8 lakh shares)
