All You Need To Know Going Into Trade On Oct. 22

Stocks in Asia gained Tuesday after U.S. equities advanced as positive signs emerged on trade talks and ahead of earnings from some of the world’s biggest companies.

South Korean and Australian shares were higher and futures pointed to gains in Hong Kong. Volumes were below their 30-day averages with Japan closed for a holiday. S&P 500 futures rose suggesting there is scope for the underlying gauge to extend gains after it surpassed 3,000.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.38 percent to 11,656 as of 7 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.

Here’s a quick look at all that could influence equities today.

• U.S. stocks advanced amid positive signs on trade talks and as investors awaited earnings from some of the world’s biggest companies.
• Oil was little changed in Asian trading on Tuesday after falling for two days amid ongoing concern that a fragile economic outlook will weigh on fuel demand.
• Pound traded near a five-month high amid speculation Prime Minister Boris Johnson will eventually be able to win parliamentary backing for his Brexit deal.

Get your daily fix of global markets here.

Earnings Reaction To Watch

Bharti Infratel (Q2, QoQ)

• Revenue down 2 percent to Rs 3637.6 crore (estimate Rs 3680 crore)
• Net profit up 8.6 percent to Rs 963.5 crore (estimate Rs 753 crore)
• Ebitda down 0.9 percent to Rs 1878.3 crore (estimate Rs 1761 crore)
• Margin at 51.6 percent versus 51 percent (estimate 48 percent)

AU Small Finance Bank (Q2, YoY)

• Net interest income up 40.6 percent to Rs 451.6 crore.
• Net profit up 88.1 percent to Rs 171.9 crore
• Provisions to Rs 61 crore versus Rs 35 crore (Rs 31.5 crore QoQ)
• GNPA to 2.01 percent versus 2.08 percent QoQ
• NNPA to 1.14 percent versus 1.25 percent QoQ

UltraTech Cement (Q2, YoY)

• Revenue up 4.3 percent to Rs 9,253.8 crore (estimate Rs 8750.5 crore)
• Net profit up 72.3 percent to Rs 639.2 crore (estimate Rs 805.1 crore)
• Ebitda up 29.2 percent to Rs 1,812.6 crore (estimate Rs 1887 crore)
• Margin at 19.6 percent versus 15.8 percent (estimate 21.6 percent)
• Domestic volumes down 1 percent to 17.2 million tonne (BQ Estimates of 16.6 million tonne)

Piramal Enterprises (Q2, YoY)

• Revenue up 14.6 percent to Rs 3,603.6 crore.
• Net profit up 15.3 percent to Rs 554.7 crore.
• Ebitda up 36.3 percent to Rs 2,253.9 crore.
• Margin at 62.5 percent versus 52.6 percent.
• Pharma segment revenue up 17 percent to Rs 1,316.4 crore.
• Financial services revenue up 13 percent to Rs 1,954 crore.
• Healthcare insights & analytics revenue up 14 percent to Rs 333.2 crore.
• Other expenses down 46 percent to Rs 325.5 crore.

Ujjivan Financial Services (Q2, YoY)

• Net interest income up 44.7 percent to Rs 407 crore.
• Net profit up 2.2 times to Rs 63.2 crore.
• Numbers not comparable, as details of Ujjivan Small Finance Bank also included in the current quarter.

Tata Elxsi (Q2, QoQ)

• Revenue up 6.7 percent to Rs 385.8 crore.
• Net profit up 2 percent to Rs 49.8 crore.
• EBIT flat to Rs 58 crore versus Rs 58.1 crore.
• Margin at 15 percent versus 16.1 percent.

Avanti Feeds (Q2, YoY)

• Revenue rose 41 percent to Rs 1,064 crore.
• Net profit rose 156 percent to Rs 119 crore.
• Ebitda rose 79 percent to Rs 129 crore.
• Ebitda margin stood at 12.1 percent versus 9.6 percent.

Dalmia Bharat (Q2, YoY)

• Revenue rose 6.5 percent to Rs 2236 crore.
• Net profit Rs 27 crore versus net loss of Rs 1 crore.
• Ebitda rose 35 percent to Rs 471 crore.
• Ebitda margin stood at 21 percent versus 16.6 percent.

BEPL (Q2, YoY)

• Revenue fell 20 percent to Rs 280 crore.
• Net profit rose by 18 percent.
• Ebitda fell 28 percent to Rs 20 crore.
• Ebitda margin stood at 7.1 percent versus 7.9 percent.

Oberoi Realty (Q2, YoY)

• Revenue dropped 17 percent to Rs 491 crore
• Net profit down 35 percent to Rs 138 crore.
• Ebitda fell 28 percent to Rs 213 crore.
• Ebitda margin stood at 43 percent versus 50 percent.
• Finance cost rose 4.2 times to Rs 25 crore.

Reliance Industries (Q2, QoQ)

• Revenue down 1.3 percent to Rs 87,137 crore.
• Net profit up 7.4 percent to Rs 9,702 crore.
• Ebitda up 0.2 percent to Rs 13,666 crore.
• Margins at 15.7 percent versus 15.5 percent.
• GRM up 16 percent to $9.4/bbl versus $8.1/bbl.

Reliance Jio (Q2, QoQ)

• Revenue up 5.8 percent to Rs 12,354 crore.
• Net profit up 11.1 percent to Rs 990 crore.
• Ebitda rose 10 percent to Rs 5,139 crore.
• Margin at 41.6 percent versus 40 percent.
• ARPU down 2 percent to Rs 120 versus Rs 122.

Ambuja Cements (Q3. YoY)

• Revenue up 0.5 percent to Rs 2,626.1 crore.
• Net profit up 31.4 percent to Rs 234.6 crore.
• Ebitda up 22.8 percent to Rs 439.9 crore.
• Margin at 16.8 percent versus 13.7 percent.
• Volume at 5.23 MT vs 5.46 MT

L&T Technology Services (Q2, YoY)

• Dollar revenue up 12 percent to $198 million.
• Revenue up 10.7 percent to Rs 1402.1 crore.
• Net profit up 7.7 percent to Rs 205.8 crore.
• Ebitda up 23.8 percent to Rs 283.2 crore.
• Margins at 20.2 percent versus 18.1 percent.
• Declared dividend of Rs 7.5 per share

L&T Finance Holdings (Q2, YoY)

• Net Interest income up 19.1 percent to Rs 1,396.4 crore.
• Net profit down 68.9 percent to Rs 174.2 crore.
• One-time charge of Rs 473.4 crore in current quarter as impact of change in the rate on opening of deferred tax.
• Company will use the option to pay tax of 22 percent, as per the recent changes.

ICICI Lombard General Insurance (Q2 ,YoY)

• Gross direct premium down 16.4 percent to Rs 2,953 crore.
• Net Profit up 5 percent to Rs 308 crore.
• Combined ratio at 102.6 percent versus 101.1 percent.
• Solvency ratio at 2.26 times versus 2.2 times.
• Net premium from motor segment increased by 25 percent to Rs 1520 crore.

Kirloskar Ferrous Industries (Q2, YoY)

• Revenue down 14.1 percent to Rs 464.2 crore.
• Net profit down 51.3 percent to Rs 13.2 crore.
• Ebitda down 28.5 percent to Rs 41.8 crore.
• Margin at 9 percent versus 10.8 percent.

Sasken Technologies (Q2, QoQ)

• Revenue down 6.7 percent to Rs 125.7 crore.
• Net profit down 2.2 percent to Rs 22.7 crore.
• Ebitda down 35 percent to Rs 14.3 crore.
• Margin at 11.4 percent versus 16.3 percent.
• Other Income up 25 percent to Rs 14.4 crore.

Mahindra Lifespace (Q2, YoY)

• Revenue up four times to Rs 324.5 crore.
• Ebitda profit of Rs 14 crore vs Ebitda loss of Rs 2 crore
• Margin at 4.4 percent
• Net profit down 63 percent to Rs 15 crore.
• Base quarter had higher share of profits from JV and associates and higher other income.
• Other income down 61 percent to Rs 5.4 crore vs Rs 13.7 crore.
• Profit from JV and associates down 99 percent to Rs 0.4 crore.

IIFL Wealth Management (Q2, YoY)

• Revenue down 13 percent to Rs 369 crore.
• Net profit down 32 percent to Rs 68.4 crore.
• Calculated NII down 17 percent to Rs 50 crore.
• Net fees and commission down 28 percent to Rs 157 crore.

HFCL (Q2, YoY)

• Revenue down 19 percent to Rs 980 crore.
• Ebtida up 47.5 percent to Rs 138 crore.
• Margin at 14.1 percent versus 7.7 percent.
• Net profit up 49 percent to Rs 65 crore.
• Lower cost of material aided numbers.

Just Dial (Q2 YoY)

• Revenue up 10 percent to Rs 242.6 crore.
• Ebtida up 17 percent to Rs 67.3 crore.
• Margin at 27.7 percent versus 26 percent.
• Net profit up 59 percent to Rs 77 crore.
• Higher other income and lower costs aided financials.
• Other income up 2.4 times to Rs 44 crore.

Nifty Earnings To Watch

• Asian Paints
• Axis Bank
• Bajaj Finance
• Bajaj Finserv
• Kotak Mahindra Bank

Other Earnings To Watch

• RBL Bank
• GlaxoSmithKline Pharmaceuticals
• Granules India
• Oriental Bank of Commerce
• Jubilant FoodWorks
• Jyothy Labs
• Reliance Home Finance
• Solara Active Pharma Sciences
• Subros
• Hatsun Agro Product
• Rallis India
• ICICI Prudential Life Insurance
• Mahindra & Mahindra Financial Services
• ICICI Securities
• IIFL Securities
• Indiabulls Ventures
• Welspun Corp
• Welspun India
• Indiamart Intermesh
• Mangalore Chemicals & Fertilizers
• Muthoot Capital Services
• JK Agri Genetics
• Bank of Maharashtra
• CCL Products
• CEAT
• Coromandel International
• Elecon Engineering
• DIC India
• Kewal Kiran Clothing
• NR Agarwal Industries
• Newgen Software Technologies
• Wendt
• Orient Electric
• PPAP Automotive
• PSP Projects
• Rane Brake Lining
• Shanthi Gears
• Sharda Cropchem
• Simplex Projects
• Supreme Petrochem
• Swaraj Engines
• Syngene International
• TV Today Network

Indian ADRs

Stocks To Watch

• Infosys: An anonymous whistleblower letter has alleged that the company’s Chief Executive Officer Salil Parekh dressed up the company’s books—accusations that could plunge the software services provider into its second leadership-related crisis in a little over two years.
• Adani Green Energy has commissioned 50MW wind generation capacity in Gujarat having PPA with SECI for 25 years. Company has planned further 225MW wind capacity in the Bhuj Area by the second half of 2020.
• UltraTech Cement: Board approved capex of Rs 940 crore for premium products with an increase in grinding capacities in Bihar and West Bengal by 0.6MTPA each and a grinding unit of 2.2 million tons in Odisha. All plants to be commissioned by Jan-March 2021.
• Chalet Hotels clarified that the news of the company in talks to buy Accor’s Novotel is speculative in nature.
• REC: Board approved sale of two SPVs to bidders.
• MSTC: HPCL and Mittal Group JVs appointed company as the selling agent. MSTC will levy a service charge of 2.7 percent and incase of pre-bid forfeiture MSTC will get 50 percent of the amount.
• ITI: To meet investors from October 22 to October 25 in Mumbai, Pune and Chennai.
• DHFL: Company clarified that the enforcement directorate visited one of the offices and had raised certain queries to the senior officials. The company has provided the necessary documents and clarifications as required by the department.
• Granules India: U.S. FDA approved the Abbreviated New Drug Application (ANDA) for Fexofenadine Hydrochloride tablets. It is bioequivalent to Allegra allergy tablets of Sanofi-Aventis U.S. LLC.
• Tata Steel clarified that news concerning security threats to its Jamshedpur steel plant is incorrect and there is no information of any specific threat to the plant’s security.
• Vinati Organics to consider share split from one equity share into two equity shares on Nov. 12.
• Berger Paints to acquire 95.53 percent stake in STP Limited at Rs 167.5 crore. The target company manufactures and supplies construction chemicals and building materials.
• Somany Ceramics: NCLT Kolkata gave approval for the amalgamation of company’s three arms with self.
• NBCC said that revised Resolution Plan given by the Supreme Court to complete stalled Jaypee projects has been given in a sealed cover to the company,and the daily order is still awaited from the Supreme Court.
• DHFL clarified that the amount of Rs 2,186 crore were never lent to Sunblink, as alleged in the media. The corporate actions have been only done to enhance the company’s security cover and cash flow receivables on the lending. Catalyst Trusteeship said in its press release that DHFL has defaulted in payment of interest for NCDs which were due on Oct. 16.
• Jet Airways: Resolution Professional has extended the last date for submission of Resolution Plan to Nov. 15.
• Indiabulls Housing Finance: Brickwork Ratings revised company’s long-term rating to BWR AA+ from BWR AAA.
• Ambuja Cements: Board approved merger of wholly-owned arm Dirk India with self. The target company is in the business of processing of Fly ash into "Pozzocrete" and is also engaged in a job work for Ambuja Cements by manufacturing cement at its Nasik facility.
• Inox Wind clarified that its three manufacturing plants located in Gujarat, Madhya Pradesh and Himachal Pradesh are fully operational and there is no lock out.
• South Indian Bank revised MCLR across various tenors with effect from Oct. 20. One-Month MCLR stands at 8.55 percent and one-year MCLR stands at 9.2 percent.
• Future Lifestyle Fashions: Debenture Trustee Vistra ITCL increased its stake via encumbrance to 45.77 percent from 38.55 percent on Oct. 17.
• Cian Healthcare: Brickwork Ratings has downgraded the credit rating for loan facilities to “BWR D” (default).
• Balmer Lawrie to consider bonus issue of shares on Nov. 11.
• Tata Motors to consider raising funds on Oct. 25
• Reliance Communications: Creditors Panel to meet on Oct. 22.

Brokerage Radar

UBS on Torrent Pharma

• Downgraded to ‘Sell’ from ‘Neutral’; cut price target to Rs 1,500 from Rs 1,800.
• Downgrade on regulatory headwinds in the U.S.
• Domestic business growth story already priced in.
• Revenue streams from other geographies exhibit volatility.

BofAML on DLF

• Upgraded to ‘Buy’ from ‘Underperform’; hiked price target to Rs 196 from Rs 179.
• Improved residential outlook on strong response to Ultima.
• Expect leasing business to be strong; to register 11 percent CAGR over four years.
• Buy on attractive and compelling valuations.

Goldman Sachs on Ashok Leyland

• Downgraded to ‘Neutral’ from ‘Buy’; cut price target to Rs 84 from Rs 87.
• Near to medium term environment challenging.
• Mix of macro and micro factors have triggered the down-cycle for the CV.
• Negatives: weak economic growth, weak growth in cargo volumes and decline in industrial activities.

Morgan Stanley on Bharti Infratel

• Maintained ‘Overweight’ with a price target of Rs 323.
• Gross tenancy additions lower this quarter with higher tenancy deletion.
• Ebitda surprised positively with lower cost even though energy margins were negative.

On Reliance Industries

Credit Suisse

• Maintained ‘Neutral’ with a price target of Rs 1,210.
• Retail - Consumer Electronics had an exceptional quarter.
• Petrochemical was a beat due to higher volumes.
• Refining Ebitda was a miss due to very high conversion cost.

Centrum

• Maintained ‘Buy’; hiked price target to Rs 1,650 from Rs 1,495.
• September quarter’s performance was lower than expected impacted by refining segment.
• Expect strength in earnings to sustain over the next 2-3 years.
• Continuing the transition to a balanced conglomerate with material consumer portfolio.

On LIC Housing Finance

Ambit

• Maintained ‘Sell’; cut price target to Rs 373 from Rs 390.
• Asset quality woes continue; deteriorating at a steep pace.
• Defocus on non-home loan books pushes disbursements in the negative zone.
• Deteriorating sector fundamentals to keep loan growth and asset quality under pressure.

Jefferies

• Maintained ‘Buy’; cut price target to Rs 450 from Rs 490
• September quarter review: Margins ahead; but asset quality disappoints.
• Asset quality disappointed likely led by rise in both developer and retail GNPA.
• Higher developer GNPA is not surprising, but rise in retail GNPA is a concern.

IDFC Securities

• Maintained ‘Neutral’; cut price target to Rs 411 from Rs 475.
• Q2 – Asset quality deteriorates again.
• Beat largely on account of lower taxation; operating performance was weak on many counts.
• Believe asset quality concerns will overpower the AAA rating and strong liquidity profile.

On HDFC Bank

Edelweiss

• Maintained ‘Buy’; hiked price target to Rs 1,456 from Rs 1,393.
• Gaining market share, but slower underlying trend keeps retail soft.
• Asset quality steady; credit cost elevated on contingent provisions.
• Best-in-class franchise, marginal stress and strong capital place HDFC Bank in a sweet spot.

IDFC Securities

• Maintained ‘Outperform’; hiked price target to Rs 1,450 from Rs 1,350.
• September quarter review - Good numbers in a bad environment.
• Positives: lower taxation, strong loan growth and higher profit on sale of investments.
• Negatives: slower NII growth and slower balance sheet growth.

On Shree Cement

Ambit

• Maintained ‘Sell’ with a price target of Rs 14,640.
• All round beat; this is the best cement franchise.
• Better-than-expected volumes led to higher fixed cost absorption.
• Will review estimates post concall after seeking the use of proceeds from equity raise.

Morgan Stanley

• Upgraded to ‘Overweight’ from ‘Equal-weight’; hiked price target to Rs 22,000 from Rs 19,270.
• Strong profitability in weak volume growth environment.
• Expect H2 performance to be resilient.
• Capital raising dilutive in near term but value accretive in medium term.

On L&T Infotech

Investec

• Maintained ‘Hold’; hiked price target to Rs 1,710 from Rs 1,645.
• Lower revenue headwinds to drive a stronger H2FY20.
• Margins to be lower than 2018-19.
• Best quality on superior return ratios; weakening macro is a concern.

Citi

• Maintained ‘Buy’; hiked price target to Rs 1,855 from Rs 1,810.
• Good Q2; Remains top-pick in IT mid-cap space.
• Consistent large deal wins over many quarters and strong execution provides visibility for double-digit revenue growth.

On Ambuja Cements

HSBC

• Maintained ‘Buy’ with a price target of Rs 230.
• Q3CY19 results were strong but missed estimates due to higher-than-expected costs.
• Despite volume declining for 2nd successive quarter, higher realisations aided Ebitda.
• Maintain buy on lower valuations.

Citi

• Maintained ‘Buy’; cut price target to Rs 270 from Rs 290.
• Q3CY19 costs disappoint; north realizations resilient.
• Would buy into weakness as we expect demand/price improvement post Diwali.

On Infosys

Credit Suisse

• Resignation of deputy CFO will raise questions around the timing.
• Whether proven or not, these allegations will lead to lot of uncertainty.
• Such issues eat significantly into mgmt bandwidth which may have bearing in growth and execution.

Macquarie

• Investors should watch critically for the outcome of the investigations.
• Any significant change in sales strategy, top management could increase uncertainty around growth.
• Not changing estimates; 100 bps change in EBIT margin impacts EPS by around 4 percent.

Morgan Stanley

• Setback for the company; could de-rate multiples until clarity emerges.
• Stock corrected to 11.6 times PE in July 2013 when Narayana Murthy led restructuring.
• Stock derated from 20 times to 13 times in 2017 surrounding the Panaya acquisition.

Bulk Deals

Eveready Industries

• Goldman Sachs India sold 18.75 lakh shares or 2.58 percent equity to Rs 38.8 each.
• Monet Securities acquired 7 lakh shares or 0.96 percent equity at Rs 38.8 each

Indiabulls Housing Finance:

• Wisdomtree Emerging Markets Smallcap Dividend Fund acquired 25.89 lakh shares or 0.61 percent equity at Rs 225.19 each.

Trading Tweaks

• Sintex Industries to move into ASM Framework
• NRB Industrial Bearings, Simplex Infrastructures to move out of ASM Framework
• Ind-Swift, Taj GVK Hotels & Resorts, Hindusthan National Glass & Industries,
• Religare Enterprises, Shriram EPC to move out of short term ASM Framework
• New India Assurance, Venus Remedies price band revised to 10 percent.
• Shriram EPC, Aurionpro Solutions price band revised to 5 percent.

Who’s Meeting Whom

• Affle to meet Aberdeen Standard Investments on Oct. 23

Money Market Update

• The Indian rupee strengthened for third-straight session on Friday. The home currency ended at 71.15 against the greenback compared with Thursday’s close of 71.17.

F&O Cues

Futures

• Nifty October futures closed at 11,670, premium of 8.2 points versus 14.3 points.
• Nifty October futures down 3 percent, sheds 4 lakh shares in open interest.
• Nifty Bank October futures closed at 29,152.3, the premium of 32 points versus 90.2pts
• Nifty Bank October futures open interest down 9 percent, sheds 1.2lakh shares in open interest.

Options

• Nifty put-call ratio at 1.43 versus 1.40 (across all series)

Nifty Weekly Expiry: Oct 24

• Max open interest on call side at 11,700 (10.8 lakh shares)
• Max open interest on put side at 11,500 (15.9 lakh shares)
• Open interest addition seen at 11600P (+10 lakh shares), 12,000C (6.5 lakh shares)

Nifty Monthly Expiry: Oct 31

• Max open interest on call side at 11,700 (19.2 lakh shares)
• Max open interest on put side at 11,000 (29 lakh shares)