All You Need To Know Going Into Trade On May 21
Police officers patrol inside the departures terminal at Madrid Barajas airport, operated by Aena SA, in Madrid, Spain. (Photographer: Paul Hanna/Bloomberg)

All You Need To Know Going Into Trade On May 21

Asian markets have opened with modest gains this morning as more economies continue to open from the Covid-19 lockdown.

U.S.-China tensions remain on a high after the senate passed a bill that can bar some Chinese companies from listing on American exchanges.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 index's performance in India was flat at 9,071, as of 7:00 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, South Korea and Australia have opened higher with gains being shallower than those on Wall Street.
  • Futures on the Dow Jones are trading lower by 75 points after the benchmark ended with gains of 1.5 percent overnight.
  • Minutes of the Federal Open Markets Committee showed that the U.S. central bankers saw the pandemic posing a severe economic threat and were also concerned by the risks to financial stability.
  • Yield on the 10-year treasury stood at 0.68 percent.
  • West Texas Intermediate Crude was 0.6 percent higher at $33.69 per barrel.

Get your daily fix of the global markets here.

All You Need To Know Going Into Trade On May 21

Earnings Fineprint: Bajaj Auto Q4FY20

  • Revenue down 8.2 percent to Rs 6,816 crore
  • Net profit flat to Rs 1,310 crore
  • Ebitda up 2.1 percent to Rs 1,253 crore
  • Ebitda margin expands to 18.4 percent from 16.5 percent
  • Realisations up 11 percent to Rs 68,711 per unit
  • Higher realisations aid margin expansion
  • Overall Domestic Sales down 33 percent to 4,78,160 units
  • Overall exports up 7 percent to 5,13,801 units
  • Two-wheeler exports up 15 percent to 4,50,456 units
  • All numbers are standalone and compared on a year-on-year basis
The nationwide lockdown due to Covid-19 has effectively wiped out 40 days out of which 32 have been in FY21. With the partial ease on the lockdown, our manufacturing facilities in Chakan, Pantnagar and Walunj have opened but are not working at full pace. We expect to continue to witness the impact of this lockdown in the near future.
Statement From Bajaj Auto

Brokerages On Bajaj Auto

Emkay

  • Hold rating maintained
  • Price target cut to Rs 2,629 from Rs 2,708
  • Q4 margins above estimates but not sustainable
  • Demand prospects remain subdued for high margin segments
  • Demand in overseas markets likely to be impacted adversely due to fall in global commodity prices and adverse currency trends

CLSA

  • Buy rating maintained
  • Price target raised to Rs 3,000 from Rs 2,800
  • Stronger mix drives earnings beat
  • Management says near-term demand outlook is weak
  • Derive comfort from margin resilience and strong cash flow generation in an uncertain time

Stocks To Watch

  • InterGlobe Aviation & SpiceJet: Aviation Minister Hardeep Singh Puri stated that domestic civil aviation operations will recommence in a calibrated manner from May 25. All airports & air carriers are being informed to be ready for operations. SOPs for passenger movement are also being separately issued by the ministry.
  • Monsanto India: Delhi High Court has dismissed a plea by Monsanto to quash the investigation initiated by the Competition Commission of India against the company in February 2016. The investigation against Monsanto was initiated by the CCI over a complaint which alleged abuse of dominant position by Monsanto in manufacture and sale of BT Cotton seeds in India.
  • Tata Motors: Board approves offering subscription of NCDs aggregating to Rs 1,000 crore, on a private placement basis.
  • Blue Star: CARE Ratings re-affirms credit rating for long-term and short-term credit facilities at AA+. The outlook has been revised to negative due to temporary shutdown of facilities. Lower demand of consumer durables in the near to medium-term is another factor behind the downgrade. The outlook may be revised to stable again in case of faster than anticipated recovery in demand, resulting in sustained improvement in the company's business and financial risk profile.
  • Dr Reddy’s Laboratories: Board re-appoints G V Prasad as co-chairman and Managing Director of the company till January 2026.
  • Adani Enterprises: Has raised Rs 400 crore via NCDs.
  • Kalpataru Power: Board approves buyback of up to 72.72 lakh shares (4.7 percent of paid up equity capital) at a maximum price of Rs 275 per share, aggregating to Rs 200 crore. Buyback price is at a 43 percent premium to Wednesday’s closing price.
  • Deepak Ferilisers & Chemicals: To consider rights issue on May 25.
  • Allcargo Logistics: To meet Edelweiss Securities today.
  • Companies That Resumed Operations: Atul Auto, Shalimar Paints, LGB Forge, Mishra Dhatu Nigam.
  • Bajaj Finserv: Only Nifty company reporting earnings today.
  • Non-Nifty Earnings Today: Hindustan Zinc, Bajaj Holdings, Birla Corp, Colgate Palmolive, Hawkins Cooker, Tata Metaliks, VST Industries, Quickheal Technologies, BSE

Earnings Reported After Market Hours

Jubilant Foodworks Q4FY20

  • Revenue up 3.8 percent to Rs 897.9 crore
  • Net profit down 71.6 percent to Rs 21 crore
  • Ebitda up 14.8 percent to Rs 169.5 crore
  • Ebitda margin expands to 18.9 percent from 17.1 percent
  • Same-Store-Sales-Growth sees a contraction of 3.4 percent
  • Impact of Ind-AS 116 on rent and depreciation which aided margin expansion
  • One-time provision of Rs 32.3 crore for Sri Lankan arm, impact of Covid-19 and for investments made in corporate bonds of DHFL, Reliance Capital and IL&FS
  • All numbers are standalone and compared on a year-on-year basis
The company has a strong cash position, strong balance sheet and it continues to generate healthy free cash flow. The company does not have any debt. This has enhanced the company’s ability to meet any liquidity needs in the foreseeable future.
Statement From Jubilant Foodworks

Ajanta Pharma Q4FY20

  • Revenue up 32.4 percent to Rs 682 crore
  • Net profit up 45.3 percent to Rs 129.2 crore
  • Net profit aided by other income of Rs 53 crore
  • Ebitda up 18.9 percent to Rs 151.3 crore
  • Ebitda margins narrow to 22.2 percent from 24.7 percent
  • High raw material and employee expenses impact margins
  • Global exports up 43 percent to Rs 490 crore
  • Sales in India up 11 percent to Rs 177 crore
  • All numbers are consolidated and compared on a year-on-year basis

Mahindra Logistics Q4FY20

  • Revenue down 20 percent to Rs 811.8 crore
  • Net profit down 59 percent to 9.8 crore
  • Ebitda down 6.8 percent to Rs 38.1 crore
  • Ebitda margin widens to 4.7 percent from 4 percent
  • Lower operating expenses aid margin expansion
  • All numbers are consolidated and compared on a year-on-year basis

JK Lakshmi Cement Q4FY20

  • Revenue down 9.5 percent to Rs 1,061.2 crore
  • Net profit up 2.3 times to Rs 100.8 crore
  • Ebitda up 54 percent to Rs 202.1 crore
  • Ebitda margin expands to 19 percent from 11.2 percent
  • Low fuel and transportation costs, softening of pet petcoke prices aid margin expansion
  • All numbers are standalone and compared on a year-on-year basis

Kalpataru Power Q4FY20

  • Revenue down 7.5 percent to Rs 2,303 crore
  • Net profit down 21.9 percent to Rs 107 crore
  • Ebitda down 4.9 percent to Rs 253 crore
  • Ebitda margins flat at 11 percent from 10.7 percent
  • Lower raw material cost helps margin expansion
  • Gets orders worth Rs 405 crore this quarter
  • Gets new orders worth Rs 909 crore in the new fiscal till date
  • Approves proposal to raise Rs 300 crore via NCDs
  • All numbers are standalone and compared on a year-on-year basis

Strides Pharma Q4FY20

  • Revenue flat at Rs 618.6 crore
  • Net loss of Rs 203.9 crore from net profit of Rs 47.5 crore
  • Exceptional loss of Rs 170 crore on account of forex loss, inventory write-down and other expenses on account of Ranitidine withdrawal
  • Ebitda down 9.6 percent to Rs 83.6 crore
  • Ebitda margin narrows to 13.5 percent from 15 percent
  • All numbers are consolidated and compared on a year-on-year basis

Birlasoft Q4FY20

  • Revenue in dollar terms up 7.5 percent to $125.6 million
  • Revenue in rupee terms up 8.9 percent to Rs 907 crore
  • Net profit down 5.1 percent to Rs 69 crore
  • Ebitda up 8.8 percent to Rs 116.7 crore
  • Ebitda margin flat at 12.9 percent
  • Higher tax rate impacts net profit
  • Signed Total Contract Value (TCV) deals of $125 million this quarter
  • All numbers are consolidated and compared on a quarter-on-quarter basis

Grindwell Norton Q4FY20

  • Revenue down 9.7 percent to Rs 365.9 crore
  • Net profit down 2.4 percent to Rs 41.4 crore
  • Ebitda down 10.9 percent to Rs 60.3 crore
  • Ebitda margin at 16.5 percent from 16.7 percent
  • Abrasives segment revenue down 13 percent to Rs 219.4 crore
  • Ceramics & Plastics segment revenue down 6 percent to Rs 114.6 crore
  • All numbers are consolidated and compared on a year-on-year basis

Brokerage Radar

Morgan Stanley On UltraTech

  • Equalweight rating maintained
  • Price target of Rs 3,425
  • Ebitda performance good in Q4 despite revenue miss
  • Ebitda beat due to strong performance on costs
  • Century integration is seeing good progress and utilisation rate was 80 percent in Q4

Morgan Stanley On L&T Infotech

  • Overweight rating maintained
  • Price target raised to Rs 2,050 from Rs 1,850
  • Q4 results stronger than expected
  • FY20 revenue growth in double-digits for fourth straight year
  • Results showcase company's ability to deliver numbers even in a challenging environment
  • Offers strong fundamentals as a company
  • Remains the top midcap pick

Morgan Stanley On Jubilant Foodworks

  • Overweight rating maintained
  • Price target of Rs 1,900
  • Q4 earnings a beat
  • Capitalising on advantages
  • Advantages - strong brand perception, value proposition, higher proportion of delivery, lower competitive intensity, preparedness for new normal and cost control
  • Advantages should drive speedy recovery
  • Management sounded extremely focussed on execution

Nomura On Ports

  • May traffic weakens further
  • Congestion is easing
  • Probable cause of decline in import volumes at CFS is due to evacuation issues in April that led to congestion
  • Mundra has started on a growth trajectory again from the second week of May
  • Situation at JNPT does not appear to be improving at present

Jefferies On Indian Midcap Raw Material Prices

  • Most key raw materials for midcaps are global commodities like Copper (Electricals), PVC (Plastic Pipes), Natural Gas (Ceramic Tiles) and Polymers / Plastic (Durables)
  • Copper prices have gained 8 percent between April-May
  • PVC prices have dipped 20 percent which may lead to inventory losses for PVC pipe companies in Q1FY21
  • Steep correction in crude prices can support margins for tiles and durable players over the near-term

Morgan Stanley On UPL

  • Equalweight rating maintained
  • Price target of Rs 429
  • Has exposure in 11 out of the 27 ingredients in the proposed list that the Indian government is looking to ban
  • Await management clarity but estimate direct revenue contribution of 2 percent
  • Clarity on exports needed; can act as an overhang for the company amid an already tough macro environment

Prabhudas Lilladher On Jubilant Foodworks

  • Downgrade to hold from accumulate
  • Price target cut to Rs 1,392 from Rs 1,490
  • See near-term pain while long-term story remains intact
  • Dine-in stores would require capex; recovery would be delayed
  • Cut FY21/22 EPS estimates by 2.7 and 6.6 percent respectively

Emkay On L&T Infotech

  • Downgrade to sell from hold
  • Price target raised to Rs 1,430 from Rs 1,390
  • Strong performance but downgrade on expensive valuations
  • Remains stronger tier-II player backed by strong and stable leadership and execution track record

CLSA On Ultratech

  • Outperform rating maintained
  • Price target of Rs 3,925
  • Deleveraging in focus
  • Weak volumes drive earnings miss
  • Cash conservation takes centrestage
  • Debt reduction allays leverage concern
  • Current utilisation at 65-70 percent
  • Circumspect of near-term demand

CLSA On Dr Reddy's

  • Buy rating maintained
  • Price target raised to Rs 4,450 from Rs 4,250
  • Strong finish to FY20 with beat across geographies
  • Investment phase may return
  • U.S. growth to be boosted by 25 new launches
  • Believe growth momentum in branded generics market should remain strong

Reliance Industries Rights Entitlement

  • Societe Generale acquired 32.58 lakh shares at Rs 182.06 per share
  • Bank of New York sold 1.03 crore shares at Rs 187.31 per share

Pledged Share Details

  • Amara Raja Batteries: Promoter Ringalla Family revoked pledge of 28.4 lakh shares between May 15-19
  • Sun Pharma: Promoter Shanghvi Finance created pledge of 31 lakh shares on May 18

(As Reported On May 20)

Trading Tweaks

  • Move Into ASM Framework: Shoppers Stop, RattanIndia Power
  • Move Out Of Short-Term ASM Framework: Uniply Industries, Ashapura Minechem, Shilpa Medicare, Century Extrusions

Insider Trading

  • TV Today Network: Promoter Aroon Purie acquired 1.15 lakh shares on May 19
  • Mindtree: Promoter Subroto Bagchi sold 7,000 shares on May 19

(As Reported On May 20)

Money Market Update

  • The currency ended weak at 75.8 against the U.S. Dollar as compared to Tuesday's close of 75.64.
  • The rupee was the second worst performing currency among emerging market peers after the South Korean Won.

F&O Cues

  • Nifty May futures closed at 9,067; premium narrows to 0.1 point from 5 points
  • Nifty May futures shed 1.6 percent in Open Interest and 1.2 lakh shares
  • Nifty Bank May futures closed at 17,837; discount narrows to 4 points from 48 points
  • Nifty Bank May futures shed 7.7 percent in Open Interest and 1 lakh shares
  • Nifty Put-Call Ratio at 1.18 from 1.02 across all series

Nifty Weekly Expiry: May 21

  • Maximum Open Interest on Call side at 9,200 strike (16.4 lakh shares)
  • Maximum Open Interest on Put side at 8,800 strike (16.9 lakh shares)
  • Active Options: 8,900 Put (+6.6 lakh shares), 9,100 Call (+5.9 lakh shares)

Nifty Monthly Expiry: May 28

  • Maximum Open Interest on Call side at 10,000 strike (24.5 lakh shares)
  • Maximum Open Interest on Put side at 9,000 strike (25.6 lakh shares)
All You Need To Know Going Into Trade On May 21
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