All You Need To Know Going Into Trade On May 21

Stocks in the news, big brokerage calls of the day, complete trade setup and much more!

BQ Research @bqprime

21 May 2020, 07:43 AM IST

Police officers patrol inside the departures terminal at Madrid Barajas airport, operated by Aena SA, in Madrid, Spain. (Photographer: Paul Hanna/Bloomberg)

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.

BloombergQuint Â· All You Need To Know On May 21, 2020

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