All You Need To Know Going Into Trade On Oct. 25

Stocks in Asia were mixed as weakness from Amazon.com Inc. earnings kept a lid on positive sentiment, even as equities remained on course for a third week of gains.

Shares dipped in Shanghai and Hong Kong, while equity gauges were flat in Seoul and Tokyo. Earlier, the S&P 500 Index traded above the 3,000 level, approaching its all-time high as technology shares led gains. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.26 percent to 11,585.50 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.

• Technology shares led gains in U.S. stocks as investors assessed a raft of corporate earnings against the backdrop of a global economic slowdown.
• Pound held losses as U.K. Prime Minister Boris Johnson’s bid for a snap election on Dec. 12 was up in the air after his opponents said they want to rule out a no-deal Brexit first.
• The European Central Bank kept monetary stimulus unchanged in the final meeting of Mario Draghi’s presidency.

Get your daily fix of global markets here.

Earnings Reaction To Watch

ITC (Q2, YoY)

• Revenue up 5.3 percent to Rs 11,871.5 crore (Estimate: Rs 11,910 crore)
• Net profit up 36.2 percent to Rs 4,023.1 crore (Estimate: Rs 3,642 crore)
• Ebitda up 8.5 percent to Rs 4,562.4 crore (Estimate: Rs 4,602.4 crore)
• Margin at 38.4 percent versus 37.3 percent (Estimate: 38.6 percent)
• Tax expense down 45 percent to Rs 784.6 crore
• Other income up 30 percent to Rs 654.3 crore

InterGlobe Aviation (Q2, YoY)

• Revenue up 31 percent to Rs 8,105 crore
• Ebitdar profit of Rs 97 crore versus Ebitdar loss of Rs 116 crore
• Net loss of Rs 1,062 crore versus Rs 652 crore
• Cuts capacity growth guidance for FY20 to 25 percent from 30 percent.

Raymond (Q2, YoY)

• Revenue up 1.9 percent to Rs 1,883.2 crore
• Net profit up 33.5 percent at Rs 84 crore
• Ebitda up 11 percent to Rs 207.1 crore
• Margin at 11 percent versus 10.1 percent
• Branded textiles revenue down 2 percent to Rs 869 crore
• Branded apparels revenue up 9 percent to Rs 529 crore

Sterlite Tech (Q2, YoY)

• Revenue up 25.4 percent to Rs 1,359.7 crore (Estimate: Rs 1,453 crore)
• Net profit up 21.6 percent to Rs 159.6 crore (Estimate: Rs 143 crore)
• Ebitda up 5.6 percent to Rs 288.5 crore (Estimate: Rs 305 crore)
• Margin at 21.2 percent versus 25.2 percent (Estimate: 21 percent)
• Management gives cautious outlook
• Expects H2 profitability to be lower than H1

Colgate Palmolive (Q2, YoY)

• Revenue up 4.6 percent to Rs 1,221.8 crore (Estimate: Rs 1,221 crore)
• Net profit up 24.3 percent to Rs 244.1 crore (Estimate: Rs 235 crore)
• Ebitda down 2 percent at Rs 322.9 crore (Estimate: Rs 347 crore)
• Margin at 26.4 percent versus 28.2 percent (Estimate: 28.4 percent)
• Advertising expenses up 27 percent to Rs 175.8 crore
• Volume growth at 4 percent (Estimate: 4 percent)
• Declared dividend of Rs 12 per share

Westlife Development (Q2, YoY)

• Revenue up 13.2 percent to Rs 396.5 crore
• Net profit up 14.6 percent at Rs 4.7 crore
• Ebitda up 2.2 times at Rs 58 crore
• Margin at 14.6 percent versus 7.7 percent
• Depreciation up 75 percent to Rs 34.4 crore
• Finance cost up 4.9 times to Rs 20 crore
• Opens 5 new restaurants this quarter
• Gross margins at 65.3 percent
• Same store sales growth at 7 percent

PNB Housing Finance (Q2, YoY)

• Net interest income up 29.1 percent to Rs 494.6 crore
• Net profit up 45 percent at Rs 366.8 crore
• NIM at 3.19 percent versus 2.72 percent (3.14 percent QoQ)
• GNPA at 0.84 percent versus 0.85 percent (QoQ)

Astral Poly Technik (Q2, YoY)

• Revenue up 8.5 percent to Rs 678.3 crore
• Net profit up 84.5 percent at Rs 82.1 crore
• Ebitda up 26.2 percent at Rs 119 crore
• Margin at 17.5 percent versus 15.1 percent
• Tax expense down 82 percent at Rs 3.4 crore
• Plastic segment revenue up 15 percent at Rs 528.4 crore
• Adhesive segment revenue down 9 percent at Rs 149.9 crore

United Spirits (Q2, YoY)

• Revenue up 3.4 percent to Rs 2,314.2 crore
• Net profit down 27.8 percent at Rs 163.1 crore
• Ebitda down 4.9 percent at Rs 408.1 crore
• Margin at 17.6 percent versus 19.2 percent
• Raw material costs as percentage of sales at 55 percent versus 49.6 percent

IDFC First Bank (Q2, YoY)

• Net interest income up 3 times to Rs 1,363.1 crore
• Net loss at Rs 679.5 crore versus net loss at Rs 369.7 crore
• Provisions at Rs 317.4 crore versus Rs 601.4 crore (Rs 1,280.8 crore QoQ)
• GNPA at 2.62 percent versus 2.66 percent (QoQ)
• NNPA at 1.17 percent versus 1.35 percent (QoQ)
• Figure not comparable due to merger of IDFC with Capital First

Shriram Transport Finance (Q2, YoY)

• Net interest income down 3.2 percent to Rs 1,996.6 crore
• Net profit up 25.5 percent to Rs 765.1 crore
• Declared dividend of Rs 5 per share
• Gain on income tax of Rs 179.8 crore on account of reduction in the corporate tax rate
• Assets under management up 3.58 percent to Rs 1.08 lakh crore
• Net interest margin at 7.19 percent versus 7.52 percent (7.16 percent QoQ)

Nifty Earnings To Watch

• State Bank of India
• Tata Motors

Other Earnings To Watch

• Arvind
• Astec LifeSciences
• Hikal
• Infibeam Avenues
• Jubilant Life Sciences
• NRB Bearing
• Reliance Capital
• S H Kelkar
• Strides Pharma Science
• HDFC Asset Management Company
• Marico
• Aavas Financiers
• Atul
• Carborundum Universal
• Tata Coffee
• Timken India
• V2 Retail
• Zuari Agro Chemicals
• HeidelbergCement
• Honeywell Automation
• Huhtamaki PPL
• Kirloskar Industries
• Mahindra EPC Irrigation
• Ratnamani Metals & Tubes
• Shriram City Union Finance
• Supreme Industries

Indian ADRs

Stocks To Watch

• Hexaware Technologies, Tata Elxsi, and Union Bank of India to be removed from F&O segment with effect from Dec. 27.
• InterGlobe Aviation: IndiGo lowered its capacity growth guidance for 2019-20 to 25 percent from 30 percent. For Q3 it expects capacity to grow by 22 percent. Capacity during Q2 increased by only 24 percent as against company guidance of 28 percent.
• Chalet Hotels has issued Letters of Award for works contract aggregating to Rs 319.5 crore to Larsen & Toubro for construction of Hotel and Commercial Building in Powai, Mumbai.
• Security and Intelligence Services: Board approved share split of one equity shares into two shares.
• Bandhan Bank: Board approved increasing shareholding limits for the foreign portfolio investors to 49 percent from 24 percent. This would provide further dilution of the shareholding of the promoter Bandhan Bank Financial Holdings to 40 percent from 60.96 percent to comply with RBI guidelines for new banks in the private sector. Board to seek approval from shareholders to reduce authorised share capital to Rs 3,200 crore from Rs 5,200 crore.
• Tata Steel clarified that its arm has participated in the e-auction for tendering by Odisha Government for the Misrilall Chrome Mine and is awaiting the outcome of the auction in the form of formal communication from the Odisha Government.
• Vodafone Idea said in a statement that it is extremely disappointed by the Supreme Court judgment on the Adjusted Gross Revenue case. The matter has already been through several rounds of litigation, which have been largely in favour of the operators until now. The company will study the ruling and determine the next steps, including a review application.
• Cochin Shipyard: Nippon Mutual Fund increased the stake to 7.4 percent on Oct. 22. from 6.4 percent.
• Zuari Global: Board approved issuance of NCDs up to Rs 150 crore.
• Patel Engineering promoters increased their stake to 59.84 percent from 8.24 percent via rights share issue on Oct. 18.

Brokerage Radar

On Maruti Suzuki

CLSA

• Maintain Buy; hike price target to Rs 9000 from Rs 7950
• Weak 2Q results but signs of demand improvement
• Demand recovery should lift margins
• Commodity prices tailwind, but see forex risk

Nomura

• Maintain Reduce; hike price target to Rs 6322 from Rs 6202
• Q2 beat estimates; valuations are expensive
• Retail sales were slightly positive during festive period, which is a good sign
• Expect competitive intensity in the small SUV/MPV segment to increase

On InterGlobe Aviation

SBICAP

• Downgrade to Hold from Buy; Cut price target to Rs 1450 from Rs 1775
• Higher costs for ageing fleet and MTM on forex liability mask yield and fuel CASK improvement
• Impact on slowing economy shows up in domestic market
• Deteriorating cost structure, though not structural, will cap near-term earnings

Axis Capital

• Downgrade to Reduce from Add; Cut price target to Rs 1617 from Rs 1912
• Miss on slow growth, high cost
• Maintenance cost to remain high for the next two quarters
• Lowered growth guidance due to slowdown in growth and delay in aircraft delivery

On ITC

Credit Suisse

• Maintain Outperform; Hike price target to Rs 330 from Rs 320
• Q2: Steady quarter, broad-based EBIT growth
• ITC staying away from large price hikes to give more room for cigarette volumes to recover
• FMCG growth impacted by slowdown, but strong margin expansion continues to play out

UBS

• Maintain Buy with a price target of Rs 350
• Cigarettes steady; rural slowdown hurts FMCG
• ITC cigarettes: volume and margins improve
• Margin outlook, ESG concerns have kept stock range bound

On Colgate

Morgan Stanley

• Maintain Equal-weight with a price target of Rs 1370
• Q2: Earnings miss, but strategy a step in the right direction
• Domestic net sales grew 5 percent, led by volume growth of 4 percent
• Sharp increase in advertisement expenses is indicative of renewed focus on accelerating volume growth

Emkay on Colgate

• Maintain Overweight; hiked price target to Rs 1720 from Rs 1610
• Volume growth stable at 4 percent versus Q1
• Step-up in aggression; market share recovery awaited
• Seems to be better placed due to reducing competitive threat and increased aggression

More Calls

Morgan Stanley on Bharti Infratel

• Downgrade to Underweight from Overweight; Cut price target to Rs 213 from Rs 298
• Tenancy growth stunted over the past two years; existing tenancies at risk
• Supreme Court ruling further weakens the balance sheets of telco operators
• With telco balance sheets to be further weakened, existing tenancies and future growth could be at risk

UBS on United Spirits

• Maintain Sell with a price target of Rs 650
• Demand slowdown and high base impact liquor sales
• Gross margin declines 494 basis points YoY; unlikely to recover soon
• Sectoral risks and unfavourable upside-downside keep us at Sell

Bulk Deals

• Varun Beverages: Marina III (Singapore) sold 15.56 lakh shares (0.54 percent) at Rs 630.02 each

Apollo Tricoat Tubes

• Promoter Saket Agrawal sold 3 lakh shares (0.99 percent) at Rs 280.34 each
• Fidelity Group acquired 10.17 lakh shares (3.35 percent) at Rs 280 each

Trading Tweaks

• India Motor Parts & Accessories ex-date for share bonus at 1:2
• VIP Clothing to move into ASM Framework
• Camlin Fine Sciences, Man Infra to move into short term ASM Framework
• GATI, Themis Medicare, Winsome Yarns, Jaiprakash Power Ventures to move out of short term ASM Framework
• Newgen Software Technologies, Zee Learn, Sharda Motor Industries price band revised to 10 percent
• Venus Remedies, GVK Power & Infrastructure price band revised to 5 percent

Insider Trading

• Zee Entertainment Enterprises promoter Essel International sold 2.68 lakh shares on Oct. 22.

Money Market Update

• The rupee strengthened to Rs 71.03/$ on Thursday versus Rs 70.91/$ on Wednesday.

F&O Cues

Futures

• Nifty October futures closed at 11611, premium of 28.5 points versus 20.6 points
• Nifty Oct futures down 1.4 percent, sheds 1.9 lakh shares in OI
• Nifty Bank Oct futures closed at 29,180.5, premium of 72.6 points versus 34.9 points
• Nifty Bank Oct futures OI up 11 percent, adds 1.2 lakh shares in OI

Options

• Nifty PCR at 1.25 versus 1.18 (across all series)

Nifty Monthly Expiry: Oct 31

• Max OI on call side at 12,000 (30.9 lakh shares)
• Max OI on put side at 11,000 (28.2 lakh shares)
• OI addition seen at 10,700P (+7 lakh shares), 11,600C (4.9 lakh shares)