All You Need To Know Going Into Trade On May 4

Brokerages On Reliance Industries

IDBI Capital

• Downgrade to hold from buy
• Price target cut to Rs 1,528 from Rs 1,586
• Refinery and Jio shine while Petrochemical business disappoints
• Near-term headwinds persist
• Cut EPS estimates by 13 percent and 5 percent for FY21/22
• Aiming at zero net debt by CY20

BofA Securities

• Buy rating maintained
• Price target of Rs 1,700
• Covid-19 impact results in soft numbers sequentially
• Rights offer and stake sale commentary overshadow Q4 results
• Retain buy rating on favourable risk-reward

Bernstein

• Outperform rating maintained
• Price target raised to Rs 1,720 from Rs 1,530
• Downstream margins weakened in Q4FY20 due to oversupply
• Jio continues strong growth while retail remains resilient
• Cut FY21/22 EPS estimates by 9 percent and 1 percent
• Sight of net cash by FY22

Jefferies On Jio

• ARPU growth despite steep tariff hike was lackluster
• Increase in data and voice usage implies limited down-trading
• Strong subscriber addition should allay concern over sustainability of tariff discipline
• Profit driven by lower interest costs
• Improving cashflow conversion and RoIC but cash burn persists

Brokerages On Hindustan Unilever

HSBC

• Buy rating maintained
• Price target raised to Rs 2,650 from Rs 2,350
• Uncertainty in demand persists
• Will spring back to growth once conditions normalise
• One-off quarter does not reduce structural appeal
• Long-term valuations are reasonable

PhillipCapital

• Buy rating maintained
• Price target raised to Rs 2,450 from Rs 2,300
• Short-term blip in a structural story
• Ebitda Margin expansion to continue
• Unabated focus on driving cost efficiencies
• Market share gains likely as position of peers weakens

Macquarie

• Outperform rating maintained
• Price target cut to Rs 2,500 from Rs 2,563
• Lower sales primarily impacted by lockdown
• Beauty and personal care segment impacted the most
• Margin impacted due to operating deleverage and cost inflation

Brokerages On Tech Mahindra

Investec

• Buy rating maintained
• Price target of Rs 630
• Covid-19 strikes hard and earlier than expected
• Expect recovery to come through in the long-term
• Provisions made unlikely to recur in subsequent quarters
• Cut FY21 EPS by 4.3 percent but retain FY22 EPS projection

Morgan Stanley

• Overweight rating maintained
• Price target of Rs 680
• Q4 performance was weaker than expected as Covid-19 impaired growth and margins
• Telcos to keep investing in networks
• Work from Home enablement improving in BPO business
• Margin improvement plan may get pushed out a year

Stocks To Watch

• Reliance Industries : To raise Rs 53,125 crore via rights issue at Rs 1,257 per share which is a discount of 14 percent to the closing price on April 30. Rights entitlement ratio will be 1 equity share for every 15 equity shares held by eligible shareholders as on the record date. Promoter and promoter group of the company have confirmed they will subscribe to the full extent of their aggregate rights entitlement. In addition, they will also subscribe to all the unsubscribed shares in the issue. The company will also separate out its oil to chemicals business, via slump sale to Reliance O2C.
• Reliance Nippon Life Insurance: The company has shared an update for FY20 where Total Individual Premium collection rose 4 percent to Rs 4,375 Crore. Embedded Value rose 20.4 percent to Rs 4,314 Crore. Net Profit was up 37.2 percent to Rs 35 crore. 13th Month Persistency stood 77.03 percent while AUMs were Rs 19,837 crore. Growth in embedded value on the back of sustained new business contribution and value of new business, healthy persistency levels and customer retention, better mortality experience, favourable product and asset mix and contained opex ratios.
• State Bank of India: Fitch Ratings downgrades the viability rating by one notch to BB, citing the impact of Covid-19 on operating environment. The agency said that the downgrade reflects the heightened risks that weakening asset quality will post to its less-than-satisfactory loss-absorption buffers.
• ICICI Bank, Axis Bank, Bank Of Baroda: Fitch Ratings downgrades the viability rating by one notch to BB for ICICI and Axis while for Bank of Baroda, it is downgraded to BB-.
• IDFC First Bank: Approves capital raise of Rs 2,000 crore via preferential issue. Shares will be issued to IDFC, ICICI Prudential, HDFC Life, Bajaj Allianz Life and Dayside Investment which belongs to the Warbug Pincus group. IDFC Financial Holding has infused Rs 800 crore as part of the issue. Capital Adequacy Ratio to rise to 15.5 percent while CET-1 ratio will rise to 15.3 percent post the infusion.
• Central Bank of India: Has launched a scheme to assist all borrowing accounts availing fund-based working capital limits. Accounts which are classified as standard assets can avail emergency line of credit up to 10 percent of existing fund-based working capital limits, subject to a maximum of Rs 50 crore. The same is repayable in 18 EMIs with a moratorium of 6 months. This provision of additional credit facility is available to MSME borrowers as well. The scheme is valid up to June 30. Bank has also launched schemes for agricultural borrowers and self-help groups.
• Tata Motors: Fitch Ratings downgrades JLR's long-term issuer default rating and senior unsecured rating to B from B+. Both ratings have been removed from Rating Watch Negative. Outlook on the issuer default rating is negative.
• PNB Housing Finance: CRISIL re-affirms credit rating on borrowings and NCDs at AA and fixed deposits at AA+. Outlook has been revised to negative from stable. Rating on short-term NCDs is reaffirmed at A1+. The outlook reflects the delay in capital raise. The company also faces high risk of slippages in wholesale book due to the Covid-19 linked lockdown, weak economic activity and implications on real estate.
• Coal India: Coal production in April down 10.9 percent to 40.38 million tonnes while offtake falls 25.5 percent to 39.06 million tons.
• MOIL: The prices of all grades of Ferro, SMGR, fines and chemicals have been raised by 45 percent in May as compared to those in April 2020.
• NMDC: Iron Ore sales down 49 percent in April to 1.38 million tonnes while production falls 38 percent to 1.8 million tonnes.
• Westlife Development: ICICI Prudential Life Insurance increased its stake to 5.06 percent.
• CG Consumer Electricals: Has resumed operations at its Ahmednagar plant.
• Shriram City: The Board of Directors will meet on May 4 to consider raising funds through debt on a private placement basis for the purpose of business of the company.
• Healthcare Global: To consider fund raising by issue of equity shares or other equity linked securities on a preferential basis on May 7.
• Adani Enterprises: To consider raising funds via issue of equity shares or convertible bonds through QIP and via issuance of NCDs on a private placement basis on May 6.
• Asian Paints: Has forayed into the hand and surface sanitizer category.
• IIFL Finance: To approve offer document to raise Rs 1,000 crore via NCDs on May 6.
• Prataap Snacks: Has started operations at its Indore plant.
• NACL Industries: Has started operations at its two plants in Andhra Pradesh.
• Polycab: Has started operations at its Nashik plant.
• Indostar Capital Finance: RBI has given nod for allotment of equity shares and compulsorily convertible preference shares to BCP V Multiple Holdings.
• Genus Power Infra: Resumes partial operations at its Haridwar plant.
• NHPC: Board to consider raising debt amounting to Rs 2,000 crore on May 6.
• Gujarat Alkalies & Chemicals: Has started production at its Dahej complex.
• Lakshmi Vilas Bank: RBI has approved extension of tenure of interim CEO and Managing Director, Subramanian Sundar till May 31.
• Sobha: Manufacturing units of the company have started their operations.
• Blue Star: Board approved raising up to Rs 500 crore via NCDs. Company said that it plans to raise Rs 300 crore via issue of NCDs in the near-term to primarily finance working capital and capital expenditure.
• Laurus Labs: Board approved share split of one share into five shares and approved merger of two foreign arms with itself.
• Minda Corporation: Has partially resumed operations at its plants in Madhya Pradesh, Uttarakhand and Maharashtra.
• PNB Gilts: Board passed an enabling resolution for raising of funds through issue of commercial papers for an amount not exceeding up to Rs 1,000 crore.
• Gujarat Gas: India Ratings and Research upgraded company’s long term issuer rating worth Rs 3,200 crore to IND AA+ from IND AA. The outlook is stable.
• Century Enka: Has started operations at its Gujarat plant.
• Motillal Oswal: Case against MCX has been deferred to June, as reported by Bloomberg News.
• SBI Life Insurance: F&O contracts to be introduced with effect from May 4.
• Marico: To report Q4 earnings today.
• Manappuram Finance: To meet GIC Singapore today.

Other Earnings After Market Hours

AU Small Finance Bank: Q4FY20

• Net Interest Income up 43 percent to Rs 555 crore
• Net profit up 3.4 percent to Rs 122 crore
• Provisions rise three times sequentially to Rs 150 crore Vs 40 crore
• Gross NPA at 1.68 percent from 1.88 percent in Q3FY20
• Net NPA at 0.81 percent from 1.01 percent in Q3FY20
• Net profit and Net Interest Income numbers are compared on a year-on-year basis

ICICI Lombard General Insurance Q4FY20

• Gross Direct Premium down 8.7 percent to Rs 3,181 crore
• Net profit up 23.8 percent to Rs 282 crore
• Combined ratio at 100.1 percent from 99 percent
• Solvency in FY20 at 2.17 times from 2.24 times in FY19
• Profits aided by 162 percent rise in motor segment and 171 percent rise in retail health segment
• All numbers are standalone and compared on a year-on-year basis

Security and Intelligence Services Q4FY20

• Revenue up 13 percent to Rs 2,209.7 crore
• Net loss of Rs 3.9 crore from Net profit of Rs 72.4 crore
• Ebitda up 20.7 percent to Rs 138.4 crore
• Ebitda margin expands to 6.3 percent from 5.9 percent
• Deferred tax payment of Rs 92.2 crore this quarter. This compares to a deferred tax reversal of Rs 53 crore in the base quarter
• All numbers are consolidated and compared on a year-on-year basis

April Auto Sales

• Maruti Suzuki: Reports zero domestic sales. Exports down 93 percent to 632 units.
• Mahindra & Mahindra: Reports zero domestic sales. Exports down 65 percent to 733 units. Tractor sales down 83 percent to 4,772 units.
• Eicher Motors: Reports sales of 91 units. VE Commercial Vehicles sold 85 units.
• Escorts: Total sales down 86.6 percent to 705 units. Exports down 67 percent to 92 units.
• Atul Auto: Sold 23 three-wheeler automobiles.
• SML Isuzu: reported zero sales.

Brokerage Radar

Nomura On Hexaware

• Neutral rating maintained
• Price target cut to Rs 300 from Rs 380
• Deal win numbers are healthy
• FY20 outlook suspended; management sees recovery in 3-4 quarters
• Cut EPS estimates by 11-21 percent to factor in Covid-19 impact

Nomura On Indian Autos

• Sector going through deep distress
• GST cut could revive fortunes
• Revenue loss by 10 percent GST cut can easily be recovered over time via higher volumes and taxes on oil
• Rural markets opening up but sentiment remains weak
• See risks to MHCV demand
• Prefer leaders with strong balance sheets and valuations significantly below mean

Nomura On Lupin

• Buy rating maintained
• Price target raised to Rs 1,049 from Rs 913
• India business to support valuations
• India business to contribute 60 percent of FY22 net earnings
• Market expectation on U.S. growth remains muted
• Expect Ebitda Margin to bottom out in FY20
• See rise of 410 basis points in margins over FY20-22

IDFC Securities On Strides Pharma

• Outperformer rating maintained
• Price target of Rs 673
• Begins export of gFavipiravir which is a significant positive
• Favipiravir is one of the drugs evaluated for treatment of Covid-19
• Remain positive on the base business outlook

IDFC Securities On Redington India

• Outperformer rating maintained
• Price target cut to Rs 104 from Rs 144
• Revenue may fall 15-20 percent in H1FY21E
• Cash cover of two quarters on hand
• Inventory lower than normal; vendors ready to move-in post lockdown
• No hiccups in collections as of April-end
• Work from home can drive business in the near-term

Centrum's Cement Channel Check

• All India cement prices shot up by 9 percent Month-on-Month to Rs 351 per bag; contributed by a spike in prices in the south
• Complete lull in activity; pricing not indicative
• Demand as well as supply was impacted in April 2020 despite some concessions in last 8-10 days
• Overall pick-up in activity is likely to be gradual and clarity may emerge in next 4-6 weeks
• Expect prices to soften as construction and infrastructure activity picks up

Goldman Sachs On Cement

• Preparing to exit lockdown at higher prices
• Expect weakness in volumes to continue
• Dealer checks indicate partial despatches of cement started post April 20; though quantum is miniscule
• Checks suggest that price per bag of cement has risen anywhere between Rs 5 to Rs 40
• Highest price increase witnessed in Andhra Pradesh, Telangana and Rajasthan while price hikes have been soft in the east
• Dealers have seen indication of further price hikes in the next few weeks
• Top Picks: ACC, Ambuja and Dalmia on attractive valuations

Ambit On Laurus Labs

• Buy rating maintained
• Price target raised to Rs 634 from Rs 623
• Results beat due to higher-than-expected synthesis growth and sequential growth rebound in ARV APIs
• No pause in growth momentum
• Global fund tender for TLD continues to support FDF sales

Investec On Essel Propack

• Initiate coverage with buy rating
• Price target of Rs 218
• On course to improve its global competitive positioning
• Expect to hold/gain share in all its key segments and regions over the next few years
• Cost and productivity programs will lead to accelerated profit growth

Haitong On Rallis India

• Initiate coverage with buy rating
• Price target of Rs 282
• Mega capex to drive growth
• Formulation business to benefit from rising coverage and expansion strategy
• Ingredients business growing on the back of China supply disruption

Pledged Share Details

• Strides Pharma Sciences: Promoters released pledge of 4 lakh shares on April 30
• GTPL Hathway: Promoters released pledge of 28 lakh shares on April 29

(As Reported On April 30)

Trading Tweaks

• Price Band Revised To 5 Percent From 10 Percent: Nocil, TCPL Packaging
• Price Band Revised To 10 Percent From 5 Percent: Bharat Road Networks
• Price Band Revised To 20 Percent From No Band: Oil India
• Move Into Short-Term ASM Framework: SMS Pharmaceuticals, Hester Biosciences
• Move Out Of Short-Term ASM Framework: Jay Bharat Maruti, GMM Pfaudler, Alok Industries

Insider Trading

• Birlasoft: Promoter SB Pandit sold 2.08 lakh shares on April 27
• Mindtree: Promoters sold 80,085 shares from April 28-29

(As Reported On April 30)

F&O Cues

• Nifty May futures end at 9,815; a discount of 30 points as compared to a premium of 4 points
• Nifty May futures add 46 percent in Open Interest and 29 lakh shares
• Nifty Bank May futures end at 20,676; Premium widens to 38 points from 5 points
• Nifty Bank May futures add 34 percent in Open Interest and 2.5 lakh shares
• Nifty Put-Call Ratio at 1.78 Vs 1.61 across all series

Nifty: May 7 Expiry

• Maximum Open Interest on Call side at 10,000 strike (10.9 lakh shares)
• Maximum Open Interest on Put side at 9,500 strike (10.2 lakh shares)
• Open Interest addition seen in 10,000 Call (1.4 lakh shares) and 9,700 Put (7.6 lakh shares)

Nifty: May 28 Expiry

• Maximum Open Interest on Call side at 10,000 strike (9 Lakh Shares)
• Maximum Open Interest on Put side at 9,000 strike (25.2 lakh shares)