All You Need To Know Going Into Trade On Oct. 17

Earnings Reaction To Watch

Mindtree (Q2, QoQ)

• Revenue rose 2.7 percent to $271 million.
• Revenue rose 4.4 percent to Rs 1,914 crore.
• Net profit rose 45.6 percent to Rs 135 crore.
• EBIT rose 34.8 percent to Rs 248 crore.
• Margin stood at 13 percent versus 10 percent.
• Operating margins higher owing to low base.

Hathway Cable & Datacom (Q2, YoY)

• Revenue rose 13 percent to Rs 442.1 crore.
• Net loss stood at Rs 2.6 crore versus Net loss of Rs 84.7 crore.
• Ebitda rose 2 times at Rs 102.5 crore.
• Margin stood at 23.2 percent versus 13.2 percent.
• Other Income rose 12.2 times to Rs 68.7 crore.
• Broadband Business Revenue rose 7 percent to Rs 139.4 crore.
• Cable TV revenue rose 16 percent to Rs 302.8 crore.

Nifty Earnings To Watch

• Zee Entertainment Enterprises

Other Earnings To Watch

• TVS Motor
• Larsen & Toubro Infotech
• Dewan Housing Finance Corporation
• Jay Bharat Maruti
• South Indian Bank
• PVR
• Shemaroo Entertainment
• Mastek
• Cyient
• Chennai Petroleum Corporation
•   Automotive Stampings and Assemblies
• 3i Infotech

Indian ADRs

Stocks To Watch

• PNB Housing Finance Q2 Update: Disbursements fell 35 percent on a sequential basis to Rs 4,970 crore. The company also securitised loans amounting to Rs 3,580 crore through direct assignment. AUM was at Rs 89,471 crore and Loan Assets at Rs 74,353 crore. Gross non-performing asset were at 0.84 percent versus 0.85 percent quarter-on-quarter.
• NALCO said coal shortages have severely impacted its aluminium production. “Short supply of coal has severely impacted Aluminium production of NALCO and also the cost of power, as the power purchased from the grid is costly as compared to the power produced by NALCO at its CPP,” the state-run unit said in a statement. Presently, three units of Nalco’s Captive Power Plant, each of 120 megawatt capacity, are under shutdown and further one more unit will be shut due to coal shortage, it said.
• Edelweiss Financial Services: The Competition Commission of India has approved Kora Master Fund LP’s investment if up to 10 percent stake in the company’s arm Edelweiss Securities for $75 million, according to its media stateent.
• HDFC to issue debentures worth Rs 500 crore, with an oversubscription option of Rs 5,500 crore.
• KNR Constructions: The National Highways Authority of India Has terminated the agreement for the company’s arm KNR Chidambaram Infra. The agreement is deemed terminated with effect from April 11, 2019.
• Bajaj Consumer Care: HDFC MF increased its stake to 6.48 percent from 1.23 percent on Oct. 15.
• Future Consumer Care promoters have a stake of 46.29 percent in the company, out of which 81.26 percent of promoter shareholding is encumbered shares.
• Suven Life Sciences: Crisil has revoked the suspension of the long-term and short-term banking facilities and placed both the facilities on ratings watch with positive implication. Long-term banking facilities assigned as Crisil A and short-term banking facilities at Crisil A1.
• Muthoot Finance: Board meeting may be held on after Oct. 21 to consider and approve the pricing, terms and conditions, issuance and allotment of Notes proposed to be issued under the GMTN Program for $2 billion.
• CG Power & Industrial Solutions said that its forensic audit has commenced from Oct. 15. BSE had appointed MSA Probe Consulting for conduct of forensic audit from fiscal year 2016 onwards on Sept. 18.
• Deepak Fertilizers & Chemicals to consider allotment of FCCB’s aggregating to $15 million to IFC on Oct. 19.
• Shoppers Stop opened a new store in Gurugram, taking the total to 85 stores under its operations.
• Zuari Agro Chemicals has shut down its NPK plant due to non-availability of raw materials.
• Cox & Kings defaulted on payment of non-convertible debenture’s interest worth Rs 41.1 lakh which was due on Oct. 15.
• Rane (Madras) to consider fund raising on Oct. 21.
• Shree Cement to consider fund raising via shares on Oct. 18.
• Indiabulls Housing: CRISIL has reaffirmed the long-term rating of the company at “CRISIL AA+”. Short-term rating has been reaffirmed at “CRISIL A1+”

Brokerage Radar

Macquarie on Bandhan Bank

• Maintained ‘Underperform’ with a price target of Rs 425.
• Material bump-up in ticket sizes in some geographies is an area of concern.
• Markets have not factored in difference in states’ economic profiles.
• Credit demand agnostic to economic slowdown.

Macquarie on BPCL

• Maintained ‘Neutral’; hiked price target to Rs 500 from Rs 425.
• Entity control and ability to rebrand would be important driver and key differentiating feature.
• All considered, probable buying price for BPCL should be Rs 500.
• Would be interesting to see if global major would be interested in refining capacity given the energy transition.

CLSA on DB Corp

• Maintained ‘Buy’; cut price target to Rs 185 from Rs 220.
• All round miss, but tax cut drive earnings beat.
• Lacklustre ad revenues despite market share gains.
• Lower raw material cost boost margins.

Morgan Stanley on Federal Bank

• Maintained ‘Underweight’; cut price target to Rs 80 from Rs 90.
• Q2FY20: another weak quarter.
• Asset quality weak; slippages moved up led by lumpy account.
• Expect earnings to remain under pressure.
• Valuation inexpensive but lacks catalyst.

HSBC on Info Edge

• Maintained ‘Buy’; hiked price target to Rs 2,479 from Rs 2,309.
• Zomato H1FY20 strikes all the right chords; ready to take on competition.
• Lower employee costs seem to have led to lower monthly burn rate.
• 50% share from unorganised sector and standalone organised restaurant, plus share of home cooked food can lead to a current total addressable market of $40 billion.

UBS on Eicher Motors

• Upgraded to ‘Buy’ from ‘Sell’; hiked price target to Rs 23,000 from Rs 18,000.
• De-rating and downgrade cycle coming to an end.
• Outlook improving; expect product cycle to turn with BS-VI.
• Volume growth to recover in 2020-21 with a major product refresh.
• Margin concerns are overdone; declining commodity prices to support H2FY20 and FY21 margins.

On Mindtree

Citi

• Maintained ‘Neutral’; hiked price target to Rs 765 from Rs 760.
• Decent Q2 with revenue ahead and margins lower than expectation.
• Should continue to improve constant currency margins in the third quarter.
• Valuations not cheap in context of macro concerns, client concentration and increased attrition.

Macquarie

• Maintained ‘Underperform’; cut price target to Rs 620 from Rs 660.
• Growth on expected lines; deal wins need to improve.
• Margins continue to disappoint.
• Attrition levels increased significantly which needs to be watched going forward.

Morgan Stanley

• Maintained ‘Underweight’; hiked price target to Rs 725 from Rs 705.
• September quarter’s revenue growth was better, but margins soft which led to weaker earnings.
• Mgmt. did not comment on future growth outlook.
• Deal pipeline healthy and no client specific issues.

Trading Tweaks

• NIIT ex-date for share buyback.
• Gruh Finance record date for amalgamation.
• Bandhan Bank, California Software , Aurionpro Solutions to move into short term ASM Framework.
• Genus Paper & Boards, Pudumjee Paper Products to move out of short term ASM Framework.
• Coastal Corporation, Autoline Industries, GVK Power & Infrastructure price band revised to 10 percent.
• Zee Media Corporation, Indiabulls Ventures, SMS Lifesciences, Reliance Capital, Mirc Electronics, Chromatic price band revised to 5 percent.

Insider Trading

• Bajaj Consumer Care promoters sold 3.24 crore shares on Oct. 15.

Money Market Update

• The rupee closed at 71.44/$ versus 71.54/$ on Tuesday.

F&O Cues

Futures

• Nifty October futures closed at 11475.5, premium unchanged at 11 points.
• Nifty October futures down 3 percent, sheds 4.5 lakh shares in open interest.
• Nifty Bank futures closed at 28,604, premium 65.9 points versus 63.6 points.
• Nifty Bank October futures open interest down 5 percent, sheds 70,000 shares in open interest.

Options

• Nifty PCR at 1.31 (across all series).

Nifty Weekly Expiry: Oct. 17

• Max open interest on call side at 11,500 (21.1 lakh shares).
• Max open interest on put side at 11,400 (25.2 lakh shares).
• open interest addition seen at 11400P (+8 lakh shares), 11,450P (7.6 lakh shares), 11,500C (+4.9 lakh shares).

Nifty Monthly Expiry: Oct. 31

• Max open interest on call side at 12,000 (23.8 lakh shares).
• Max open interest on put side at 11,000 (29.5 lakh shares).