All You Need To Know Going Into Trade On Nov. 14
Stocks in Asia had a muted open and U.S. equity futures rose ahead of key data on China’s economy, following a topsy-turvy session for U.S. shares that saw tech shares rally and energy shares slide.
Japanese stocks climbed and shares in Hong Kong were indicated higher. Shares in Australia and South Korea opened little changed. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.3 percent to 10,641 as of 7:15 a.m.
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Here’s a quick look at all that could influence equities today.
U.S. Market Check
- U.S. stocks finished the session lower as a surge in optimism over trade talks with China was offset by a plunge in crude prices.
- The yield on 10-year Treasuries rose one basis point to 3.15 percent.
Europe Market Check
European shares rallied late in the session on a report that U.K. and EU negotiators have agreed on a text to manage the Irish border after Brexit, though any wording would still require approval by Prime Minister Theresa May’s cabinet.
- Japan’s Topix index added 0.6 percent.
- FTSE China A50 futures slid 0.2 percent.
- Hang Seng Index futures climbed 0.5 percent.
- Australia’s S&P/ASX 200 Index fell 0.3 percent.
- Futures on the S&P 500 gained 0.4 percent.
- West Texas Intermediate crude held at $55.71 a barrel, after sliding 7.1 percent to an 11-month low.
- Brent crude holds losses after declining the most in three years yesterday. It is currently trading aroung $65.82 a barrel.
- Gold futures were little changed at $1,202.32 an ounce.
- The Bloomberg Commodity Index fell 0.7 percent to an eight-week low on Tuesday.
London Metal Exchange:
- Aluminium traded lower for the third day, down 0.3 percent.
- Copper snapped a two-day decline, up 0.4 percent.
- Zinc traded lower for the second day, down 0.3 percent.
- Nickel traded lower for the fourth dat, down 0.5 percent.
- Lead traded lower for the third day, down 0.19 percent.
- Tin traded a little changed.
Stocks To Watch
- Zee Entertainment Enterprises promoters plan to sell 50 percent stake in the company to a strategic partner. Promoters have a combined holding stake of around 41.62 percent stake in the media company as reported on Sept. 30 to the exchanges. The promoters will be divesting around 20.8 percent stake in the company, which will be around 20 crore shares aggregating to Rs 17,513.5 crore. Essel Group has appointed Goldman Sachs Securities India as their investment banker and LionTree as an international strategic adviser. The company expects outcome of the strategic review to be concluded by March-April 2019. (Press Release and Bloomberg News)
- Ashok Leyland’s MD & CEO Vinod K.Dasari to resign from company effective Mar.31 2019. Dheeraj Hinduja will step in as executive chairman with immediate effect. The company's Nominations and Remuneration Committee of the Board will meet shortly to decide the future course of action in identifying the next CEO and MD for the company.
- PNB Housing Finance: QIH withdrew from the joint sale process in which the company along with Punjab National Bank were proposing to sell 51 percent stake in the housing finance entity. In the joint communication received from both the interested parties stating that QIH will consider all options with respect to decreasing or increasing stake in the company depending upon the market conditions.
- Jet Airways CFO Amit Agarwal declined to comment on reports that Tata Group was eyeing stake in the company. He also added that the company is trying to sell Boeing 777 jets which would help clear almost entire aircraft debt. Vinod Dubey, CEO of Jet Airways stated that 15 percent of employees are not getting salary on time and the staff is not happy about the situation, he also hinted that current fare environment is not sustainable and it is imperative that fares rise. The company will take delivery of 15 737 Max planes in financial year 2020. Eventually the aviation company clarifies to exchanges that on Tata’s stake buy news is speculative in nature.
- Hindalco said Novelis will invest $175 million to expand aluminium production and recycling capabilities in Brazil. This investment will add 100 KT of rolling production and 60 KT of additional recycling, along with a new water sourcing system and 90 acre land.
- NCLAT to give verdict on Binani Cements insolvency case on Nov. 14 (Bloomberg News)
- Bharat Petroleum Corporation Ltd. appointed executive director, N Vijayagopal as the Chief Financial Officer of the company with effect from Nov. 13.
- Sasken Technologies received assessment order from the IT department under section 143(3) of the Income Tax Act, 1961 with a Rs 68 crore has been raised as a tax demand. The company stated that they are in the process of filing an appeal against the said order.
- 12pm: India Oct. Wholesale Prices Inflation YoY. Estimate 4.93 percent, prior 5.13 percent.
Nifty Earnings To Watch
- Mahindra & Mahindra
Other Earnings To Watch
- Motherson Sumi Systems
- Page Industries
- Rain Industries
- United Breweries
- Apollo Hospitals
- Future Retail
- Gujarat Fluorochemicals
- IPCA Laboratories
- Indian Hotels
- Ujjivan Financial Services
Earnings Reactions To Watch
Tata Steel (Q2, YoY)
- Revenue up 34.1 percent at Rs 43,544.1 crore.
- Net profit up 4 times at Rs 3604.2 crore versus Rs 975.9 crore.
- Ebitda up 88.9 percent at Rs 8919.5 crore.
- Margin at 20.5 percent versus 14.5 percent.
- Exceptional gain of Rs 163.7 crore versus exceptional loss at Rs 44.65 crore.
- Consolidated deliveries up 15 percent at 7.42 MT versus 6.45 MT.
Sun Pharma (Q2, YoY)
- Revenue up 4 percent at Rs 6938 crore.
- Net loss at Rs 219 crore versus profit of Rs 912 crore.
- Ebitda up 11 percent at Rs 1531 crore.
- Margin at 22.5 percent versus 20.7 percent.
- Exceptional loss of Rs 1,214 crore due to antitrust litigation.
- Other income higher by 38 percent at Rs 351 crore.
Ashok Leyland (Q2, YoY)
- Revenue up 25.2 percent at Rs 7,608 crore.
- Net profit up 37.5 percent at Rs 459.6 crore.
- Ebitda up 31.7 percent at Rs 805.9 crore.
- Margin at 10.6 percent versus 10.1 percent.
Jindal Steel & Power (Q2, YoY)
- Revenue up 63 percent at Rs 9982.3 crore.
- Net profit at Rs 343.7 crore versus net loss at Rs 447.9 crore.
- Ebitda up 60.7 percent at Rs 2,207.4 crore.
- Margin at 22.1 percent versus 22.4 percent.
- Exceptional gain of Rs 255.5crore versus exceptional loss of Rs 149.7 crore.
- Steel Sales at 1.75MT versus 1.27MT (Consolidated)
Dilip Buildcon (Q2, YoY)
- Revenue up 2.6 percent at Rs 1623.7 crore.
- Net profit down 28 percent at Rs 83.2 crore.
- Ebitda down 1.3 percent at Rs 281.5 crore.
- Margin at 17.3 percent versus 18 percent.
- Finance Cost up 9.5 percent at Rs 121.6 crore.
Glenmark Pharma (Q2, YoY)
- Revenue up 14.4 percent at Rs 2581.3 crore.
- Net profit up 98.2 percent at Rs 404.9 crore.
- Ebitda up 13.3 percent at Rs 440 crore.
- Margin at 17 percent versus 17.2 percent.
- Other Income of Rs 139.9 crore in current quarter.
Corporation Bank (Q2, YoY)
- Net Interest Income up 17.6 percent at Rs 1457.6 crore.
- Net profit at Rs 103 crore versus net loss at Rs 1035.2 crore.
- Provisions at Rs 728.6 crore versus Rs 1,508.4 crore (QoQ)
- GNPA at 17.46 percent versus 17.44 percent (QoQ)
- NNPA at 11.65 percent versus 11.46 percent (QoQ)
Mahanagar Gas (Q2, QoQ)
- Revenue up 12.8 percent at Rs 762.9 crore.
- Net profit up 6.2 percent at Rs 136.3 crore.
- Ebitda up 4.9 percent at Rs 221.4 crore.
- Margin at 29 percent versus 31.2 percent.
- Volume up 3.03 percent at 2.96 MMSCMD.
Deepak Fertilisers & Chemicals (Q2, YoY)
- Revenue up 43.6 percent at Rs 1768.7 crore.
- Net profit down 58.2 percent at Rs 17.8 crore.
- Ebitda down 20.9 percent at Rs 115 crore.
- Margin at 6.5 percent versus 11.8 percent.
- Negative change in inventories of Rs 205.2 crore in current quarter.
Novartis (Q2, YoY)
- Revenue down 36.4 percent at Rs 106.6 crore.
- Net profit down 64 percent at Rs 9.4 crore.
- Ebitda loss at Rs 17.6 crore versus Ebitda profit at Rs 16 crore.
Engineers India (Q2, YoY)
- Revenue up 58.8 percent at Rs 681.4 crore.
- Net profit down 18 percent at Rs 97.8 crore.
- Ebitda down 34.2 percent at Rs 91.5 crore.
- Margin at 13.4 percent versus 32.4 percent.
Dalmia Bharat Sugar & Industries (Q2, YoY)
- Revenue down 28.6 percent at Rs 372 crore.
- Net profit down 4 percent at Rs 35.8 crore.
- Ebitda down 23.1 percent at Rs 49 crore.
- Margin at 13.2 percent versus 12.2 percent.
AstraZeneca Pharma (Q2, YoY)
- Revenue down 1.8 percent at Rs 161.4 crore.
- Net profit down 66.8 percent at Rs 9.1 crore.
- Ebitda down 58.4 percent at Rs 14.8 crore.
- Margin at 9.2 percent versus 21.7 percent.
- Finished Goods Purchases at Rs 27.4 crore versus Rs 47.8 crore.
Abbott India (Q2, YoY)
- Revenue up 5.2 percent at Rs 979.7 crore.
- Net profit flat at Rs 137.7 crore.
- Ebitda down 3.6 percent at Rs 194 crore.
- Margin at 19.8 percent versus 21.6 percent.
- Raw Material Cost at Rs 86.8 crore versus Rs 64 crore.
- IndusInd Bank promoter IndusInd International Holding acquired 97,000 shares between Nov. 9-12.
- Axis Bank promoter United India Insurance sold 40,000 shares and promoter LIC sold 15.8 lakh shares from Nov. 5-11.
- Mangalore Chemicals & Fertilizers promoter Mc Dowell Holdings sold 1.4 lakh shares on Nov. 9.
(As reported on Nov. 13)
- Arfin India record date for 1:5 bonus issue.
- Oriental Carbon & Chemicals buy-back window opens.
Who’s Meeting Whom
- Pidlite Industries to meet Wasatch Advisors on Nov. 14.
- Just Dial to meet Helios CM, Taiyo Pacific Partners and Prusik IM on Nov. 14.
- Bharat Forge to meet Farley Capital on Nov. 14.
- Inox Leisure to meet Capital Investment on Nov. 14.
- Matrimony.com to meet Kotak MF, TCG and other investors on Nov. 14.
- Mahindra Logistics to meet Axis Capital on Nov. 14.
Money Market Update
- Rupee on Tuesday closed at 72.67/$ versus 72.90/$ on Monday.
- Nifty November open interest down 0.8 percent; Nifty Bank November open interest up 3 percent.
- Max open interest for November series at 11,000 call option (Open interest at 32.4 lakh shares).
- Max open interest for November series at 10,200 put option (Open interest at 34.1 lakh shares).
Put Call Ratio
- Nifty PCR at 1.60 from 1.51.
- Nifty Bank PCR at 1.14 from 0.85.
On Sun Pharma
- Maintained ‘Buy’; cut price target to Rs 700 from Rs 800.
- Adjusted net profit missed estimates by 10 percent.
- Planned inventory reduction in India resulted in revenue decline.
- Retain rating due to U.S. specialty portfolio potential.
- Downgraded to ‘Neutral’ from ‘Outperform’; cut price target to Rs 557 from Rs 619.
- Weak quarter; sharp QoQ drop in the U.S. sales.
- Significant fluctuations in the U.S. sales and overall profitability underlines near-term challenges.
- See limited upsides given the volatility in base business.
On Tata Steel
- Maintained ‘Buy’ with a price target of Rs 855.
- Q2 Ebitda above estimates led by higher contribution of non-Europe/Bhushan subsidiaries.
- Like Tata Steel given a decent India margin outlook and tightening steel demand-supply in India.
- Aggressive bidding for Bhushan Power or other steel assets is a risk.
- Maintained ‘Outperform’; cut price target to Rs 730 from Rs 820.
- Q2 EBITDA led by strong India margins partially offset by weak margins in Europe.
- Q2 India spreads at peak; H2 to see pressure from higher coal and correction in steel prices.
- Key positive triggers is clarity on Bhushan Power bids and progress on EU JV.
On Zee Entertainment
- Maintained ‘Outperform’ with a price target of Rs 556.
- Expect a large global strategic partner to enter India media/content opportunity.
- Deal could help plug gaps w.r.t ZEE’s media-tech prowess.
- Deal raises concerns on promoters’ view on longevity of company’s business model.
- Maintained ‘Neutral’ with a price target of Rs 530.
- Strategically positive development.
- Will allow Zee to leverage its content strength to transform into a Tech-Media company.
- Induction of global partner to address investor concerns of Zee’s ability to be well positioned in changing media landscape.
- Maintained ‘Underweight’ with a price target of Rs 410.
- Any strategic partner that will invest would like to have significant control.
- Possibility of an open offer cannot be completely ruled out.
- Right strategic partner could help Zee to achieve leadership.
- Path to leadership is long and time consuming and requires significant investments.
On Ashok Leyland
- Maintained ‘Sell’ with a price target of Rs 100.
- Good growth, but gross margins slipped in Q2.
- Concerned on commercial vehicles demand with industry already in late part of upcycle.
- Competitive intensity likely to rise, which would have an impact on margins.
- Maintained ‘Neutral’; cut price target to Rs 123 from Rs 125.
- Q2 Ebitda lower than estimates on weak product mix and higher discounting pressures.
- Management indicated demand has slowed in the past few weeks.
- Resignation of Vinod Dasari may cause some short-term concerns.
IDFC Securities on Shankara Building
- Downgraded to ‘Neutral’ from ‘Outperform’; cut price target to Rs 1,065 from Rs 1,825.
- Cost pressures and transitionary challenges impact earnings.
- Focus on cash sales and improving balance sheet to curtail growth in channel and enterprise business.
- Recovery in processing margins likely to be gradual, consolidated margin expansion is unlikely.
- Opportunity size is huge, but earnings visibility is expected to be weak.
Citi on Eicher Motors
- Maintained ‘Buy’ with a price target of Rs 27,300.
- Surprised by the sudden turn in the situation.
- Expect plant-level inventory to be exhausted over the strike period of the strike.
- Weak festive season would have lead to 1-2 weeks of inventory at dealer level.
Citi on Jindal Steel & Power
- Maintained ‘Buy’; cut price target to Rs 333 from Rs 400.
- Strong September quarter despite weak season.
- Continued to suffer from coal shortages; overseas mines turned positive.
- Strong ramp-up ahead; deleveraging to lead to equity value accretion.
Citi on Mahanagar Gas
- Maintained ‘Buy’ with a price target of Rs 1,000.
- September quarter was inline; volume growth below Q1, but still robust.
- Ebitda margins steady at Rs 8.1/standard cubic metre.
- Raigarh issue unlikely to be a concern.
Citi on Voltas
- Maintained ‘Buy’; cut price target to Rs 615 from Rs 724.
- Don’t extrapolate September quarter UCP EBIT margins to FY19.
- Expect 11.5 percent EBIT margins for the UCP business in FY19.
- Cut price target to factor in EPS cut and lower valuation multiple.
Citi on Indian Steel
- India has been a balanced steel producer so far this year.
- Weaker Indian rupee raising concerns of increased net exports from India.
- Indian domestic prices in local currency have been relatively more resilient than global.
- Indian exports not enough capacity to overwhelm the market like China.
IDFC Securities on Engineers India
- Maintained ‘Outperform’; cut price target to Rs 150 from Rs 160.
- September quarter’s net profit fell on high base, but execution remains strong.
- Order outlook remains strong for FY20.
- Expect robust execution to continue.
IDFC Securities on NMDC
- Maintained ‘Outperform’ with a price target of Rs 172.
- Q2 Ebitda lower due to higher cost and adverse sales mix.
- Expect Karnataka mine issue to be solved within months.
- Do not see any distortion to FY20 volumes but FY19 volumes will be affected.
Nomura on KNR Construction
- Maintained ‘Buy’ with a price target of Rs 283.
- Execution was slower, but margin momentum continues to be strong.
- Continuing margin momentum and start of execution of new orders to drive growth in FY20.
- Believe KNR is well placed as all its hybrid annuity model projects have financial agreements executed with banks.
PhillipCapital on NCC
- Maintained ‘Buy’; raised price target to Rs 145 from Rs 135.
- Strong all-round performance; handsomely beating estimates.
- Expect momentum to continue in H2FY19 and FY20.
- Remain positive on NCC's strong earnings growth.