All You Need To Know Going Into Trade On May 29

Stocks To Watch

• Vodafone Idea: Financial Times has reported that Google is considering buying a 5% stake in the telecom company. Talks are in a very early stage.
• Rain Industries' Covid-19 Update: Group’s plants in Europe and North America continued to operate, without any break during the second quarter of calendar year 2020. Commercial operations of hydrogenated hydrocarbon resins plant in Germany resumed on May 18.
• Bajaj Electricals’ Covid-19 Update: Supply chains have been put under stress, resulting in loss of business. There is temporary pressure on cash flow, liquidity and resultant pressure on profitability and margins due to lower collection of receivables. Most of the vendors of the company have also resumed operations with 30-35% capacity. The company will reduce the capital it employees in its EPC business.
• Cadila Healthcare: Formulation manufacturing facility in Baddi has received an Establishment Inspection Report (EIR) with classification as No Action Initiated (NAI) from U.S. FDA. Inspection has been closed with zero observations.
• Pharma Stocks: Bloomberg News reports that the Government of India has freed export curbs on Paracetamol API with immediate effect.
• NHPC: Board approved proposal regarding diversification of business, by development of solar power projects as an intermediary procurer through solar power developers.
• Sandur Manganese’s Covid-19 Update: Earnings are expected to be severely impacted for the quarter ending June 2020. Demand conditions in the domestic steel industry are tepid. The company has requested term lenders to defer interest payable for March-May 2020. The repayment of monthly installments for the Rs 400 crore term-loan starts from March 31, 2021.
• Narayana Hrudayalaya’s Covid-19 Update: The present situation has impacted the financials of the company with consolidated operational revenue for the month of April 2020 registering around 35% of pre-Covid period. This has resulted in negative profitability and consequently negative cash flows during this period.
• Pidilite Industries: Completed acquisition of 70% stake in Tenax India Stone Products.
• Bank of India & Karnataka Bank: Reserve Bank of India imposes a penalty of Rs 5 crore and Rs 1.2 crore respectively for not following asset classification norms.
• Astron Paper’s Covid-19 Update: Production has been gradually stepped up and currently operating at around 70% of installed capacity at both plants. First half of financial year 2021 will bear the full brunt of Covid-19. Indian Kraft paper prices which broadly track global prices, have also remained muted. The supply chain disruption and rupee depreciation has resulted in higher costs in importing waste paper.
• Texmaco Infra On Cyclone AMPHAN: Adverse impact on workings of plant at Kolkata for next 5-7 days. Main facility is protected and safe.
• Greenply Industries On Cyclone AMPHAN: Factory shed and building, machinery including chimney and some materials at the Kriparampur unit in West Bengal have been damaged. Plant is adequately covered under insurance and overall impact is not expected to be material.
• A2Z Infra’s Covid-19 Update: Unable to resume execution of most EPC projects. Staff, working labour moved away from sites as they aer mostly in remote areas. Do not foresee restart of EPC operations. Will require special concession from lenders during the short, medium-term till the revenue starts normalising. As of now, all company accounts are NPAs with all the lenders and the company has entered into settlement with various banks and financial institutions.
• LT Foods: Procurement is complete to meet demand for FY21.
• Tata Teleservices (Maharashtra): Board to consider raising Rs 5,000 crore on June 2, via debt and preference shares.
• Raymond: To consider raising Rs 80 crore via NCDs on May 31.
• Non-Nifty Earnings Today: P&G Health, Voltas, Equitas Holdings, RCF, V-Mart Retail, Dilip Buildcon, KEC International, Metropolis Healthcare, Lemon Tree, NCC, Shipping Corporation, Symphony, Welspun Enterprises.

Earnings Reported After Market Hours

Lupin Q4FY20

• Revenue down 1.1% to Rs 3,846 crore
• Ebitda down 32.5% to Rs 525 crore
• Ebitda margin narrows to 13.7% from 20%
• Net profit up 34.5% to Rs 390 crore
• Other income up 185% to Rs 209 crore
• Exceptional gain of Rs 83 crore
• Exceptional gain due to profit on sale of stake in Kyowa Pharmaceutical Industry
• All numbers are consolidated and compared on a year-on-year basis

CEAT Q4FY20

• Revenue down 10.6% to Rs 1,573.4 crore
• Net profit down 19.3% to Rs 51.9 crore
• Ebitda up 23.4% to Rs 200.4 crore
• Ebitda margin expands to 12.7% from 9.2%
• Other income of Rs 30.6 crore in the base quarter
• Exceptional item of Rs 28 crore relating to VRS for employees and Covid-19 impact
• All numbers are consolidated and compared on a year-on-year basis

Rain Industries Q1CY20

• Revenue down 9.3% to Rs 2,897.7 crore
• Net profit up 54.8% to Rs 106.5 crore
• Ebitda up 22.6% to Rs 431.4 crore
• Ebitda margin widens to 14.9% from 11%
• Profitability aided by tax reversal
• Inventory related write-down of Rs 900 crore for FY20
• Lower raw material costs and weak rupee aid margins
• All numbers are consolidated and compared on a year-on-year basis

Heidelberg Cement India Q4FY20

• Revenue down 6.1% to Rs 509.8 crore
• Net profit up 8.9% to Rs 66.3 crore
• Ebitda up 2% to Rs 127.4 crore
• Ebitda margin at 25% from 23%
• Lower power, fuel and freight expenses aid margins
• Sales volume down 10% to 1,090 KT
• Ebitda per tonne up 13.2% to Rs 1,168
• All numbers are standalone and compared on a year-on-year basis

IIFL Finance Q4FY20

• Revenue down 8% to Rs 1,287 crore
• Interest Income down 15% to Rs 500 crore
• Net profit down 81% to Rs 59 crore
• Provisions worth Rs 282 crore related to Covid-19
• Loan assets under management up 9% year-on-year to Rs 37,951 crore
• All numbers are consolidated and compared on a year-on-year basis

Brokerage Radar

HSBC On Two-Wheelers

• Demand normalisation may be quicker than expected
• Rural demand and shift to personal mobility should help near-term
• Replacement demand likely to be strong in the next two years
• Bulk of regulatory changes behind
• Upgrade Eicher Motors to buy from hold; cut price target to Rs 18,000 from Rs 20,000
• Upgrade Hero MotoCorp to buy from hold; cut price target to Rs 2,600 from Rs 2,800

Emkay On TVS Motor

• Sell rating maintained
• Price target raised to Rs 296 from Rs 291
• Q4 above estimates due to higher margin, other income and lower taxes
• Demand prospects remain subdued for both overseas and domestic markets
• Trades at expensive valuation compared to larger peers

Emkay On Prism Johnson

• Downgrade to hold from buy
• Price target cut to Rs 39 from Rs 44
• Sales volume under pressure
• Cement segment opex declines
• Debt rises in FY20
• Upside triggers lacking

Morgan Stanley On Sobha

• Overweight rating maintained
• Price target of Rs 361
• Pre-sales momentum and cash collections may improve post lockdown
• Positives: New launch pipeline, sufficient inventory, large exposure to mid-affordable category, paid land bank and steady contractual business
• Trades at 65% discount to forward net asset value

Morgan Stanley On Oberoi Realty

• Equalweight rating maintained
• Price target of Rs 360
• Positive: Strong brand, execution capability, balance sheet strength, potential beneficiary of industry consolidation
• Upcoming pipeline of residential projects and annuity assets provide mid-term growth visibility
• Trades at 45% discount to forward net asset value

Nomura On TVS Motor

• Neutral rating maintained
• Price target raised to Rs 319 from Rs 305
• Q4 largely in-line with estimates
• Risk higher for smaller OEMs
• Increase in competition can lead to margin pressure
• Management expects margin expansion; banking on no discounting in the entry segment

Morgan Stanley On Federal Bank

• Underweight rating maintained
• Price target of Rs 40
• Q4 missed estimates mainly due to higher-than-expected expenses & provisions
• Medium-term challenges around improvement in PPoP margins continue
• Relatively lower margin of safety amid uncertain times drives underweight rating

Goldman Sachs On Vodafone Idea

• Strategically positive if Google buys stake in Vodafone Idea
• Google's potential stake buy an incremental marginal negative for Bharti Airtel
• Google investment will make it easier for Vodafone Idea to raise capital in the future
• Ability to generate investor interest unclear due to AGR overhang
• Will need at least $10 billion of incremental capital for leverage to fall to 3 times by FY23

Credit Suisse On Indian Telecom

• Google's potential investment into Vodafone Idea can be incrementally positive
• If the 5% investment materialises, it will be inadequate to solve debt problems
• Acquisition of a controlling stake by an outsider or a sizable equity infusion by current promoters remains the need of the hour
• Bharti Airtel remains the preferred pick in the sector

Bulk Deals

• KPIT Technologies: CLS Investments acquired 20 lakh shares (0.72% ) at Rs 46.91 per share
• Sequent Scientific: Satpal Khattar sold 42.53 lakh shares (1.7%) at Rs 84.26 per share

Pledged Share Details

• Bodal Chemicals: Promoter Bhavin Patel created pledge of 24.75 lakh shares on May 26
• UFLEX: Promoter group Flex International revoked pledge of 2.25 lakh shares on May 27.
• Max India: Promoter group Max venture Investment Holdings created pledge of 12 lakh shares on May 21

(As Reported On May 28)

Trading Tweaks

• Price Band Revised From 10% To 5%: Aries Agro, Hindustan Oil Exploration
• Price Band Revised From No Band To 20%: CESC, Yes Bank
• Move Into Short-Term ASM Framework: OCL Iron and Steel
• Move Out Of Short-Term ASM Framework: Shree Digvijay Cement, Orient Green Power, Rushil Decor