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All You Need To Know Going Into Trade On Oct. 26 

Stocks in the news, earnings to watch, big brokerage calls of the day, complete trade setup and much more!

Women exercising are reflected in a window at a securities exchange firm in Shanghai, China. (Photographer: Qilai Shen/Bloomberg)
Women exercising are reflected in a window at a securities exchange firm in Shanghai, China. (Photographer: Qilai Shen/Bloomberg)

Asian stocks began Friday mixed at the end of a torrid week that dragged the region’s equities deeper into a bear market.

Japan’s Topix index climbed, though it’s still on track for a slide of almost 5 percent this week. South Korean shares slipped and in Australia, stocks were flat. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.1 percent to 10,172.50 as of 7:10 a.m.

Short on time? Well, then listen to this podcast for a quick summary of the article!

BQ Live

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

U.S. Market Check

  • U.S. stocks surged back into positive territory, with the Nasdaq Composite Index registering its biggest increase since March, a day after a broad-based rout sent equities negative for the year.
  • The yield on 10-year Treasuries slid two basis points to 3.10 percent.
Opinion
Stocks Roar Back, Erasing Most of Yesterday’s Loss: Markets Wrap

Europe Market Check

  • European stocks ended higher, as U.S. stocks rebounded after a sharp sell-off on Wednesday.
All You Need To Know Going Into Trade On Oct. 26 
Opinion
Brexit No Deal Seen Shaving 1.6 Points Off U.K. Growth Next Year

Asian Cues

  • Japan’s Topix index rose 0.6 percent.
  • FTSE China A50 index futures added 0.8 percent.
  • Australia’s S&P/ASX 200 Index gained less than 0.1 percent.
  • Futures on Hong Kong’s Hang Seng rose 1 percent.
  • Futures on the S&P 500 fell 0.7 percent. Futures on the Nasdaq 100 lost 0.9 percent.
Opinion
Asia Bulls Are Unbowed With Stock Signal on Economy Seen Shaky

Commodity Cues

  • West Texas Intermediate crude slid 0.7 percent to $66.89 a barrel.
  • Brent crude traded 0.5 percent lower at $76.50 per barrel.
  • Gold was steady at $1,231.84 an ounce.

Shanghai Exchange:

  • Copper snapped a two-day decline, up 0.5 percent.
  • Zinc snapped a three-day winning streak, down 0.9 percent.
  • Steel traded higher for the second day, up 1 percent.
  • Aluminium traded lower for the second day, down 0.2 percent.
  • Rubber snapped a three-day losing streak, up 0.6 percent.
Opinion
Oil Traders Who Expect Iran Waivers Are in for a Shock: Hedgeye

Indian ADRs

All You Need To Know Going Into Trade On Oct. 26 

Stocks To Watch

  • RBI clarified that Ujjivan Financial and Equitas Holdings must list small finance bank separately.
  • Ruia family offered to pay all creditors to retain ownership of Essar Steel.
  • Shalimar Paints to issue 3.37 crore equity shares via rights issue at a price of Rs 64.50 per share. Rights entitlement ratio fixed at 3:2.
  • ArcelorMittal said that the law did not permit Ruia’s offer to withdraw Essar Steel from insolvency.
  • Kridhan Infra arm received construction order worth Rs 167 crore.
  • Tata Teleservices Board said it was considering an extension of redeemable preference shares on Nov. 15.
  • JSW Steel’s board approved raising Rs 5,000 crore through a rights issue. Also, it will merge four subsidiaries with itself.
  • IDFC Bank said that only NCLT approval pending for Capital First merger.
  • Jubilant Industries said it will offer up to 18 lakh equity share and up to 13 lakh convertible warrants to the promoters/ members of promoter group on a preferential basis.
  • IL&FS Transportation said it was considering selling some road projects stakes: Bloomberg News.
Opinion
Essar Steel Insolvency: Ruias’ Proposal To Retain Essar Steel Unlikely To Succeed, Say Lawyers

Nifty Earnings To Watch

  • ICICI Bank
  • ITC
  • UPL
  • Dr. Reddy’s Lab

Other Earnings To Watch

  • Bharat Electronics
  • Capital First
  • Kokuyo Camlin
  • Mahindra Lifespace Developers
  • Nestle India
  • Nucleus Software Exports
  • PI Industries
  • Shoppers Stop
  • Shriram Asset Management

Earnings Reactions To Watch

Yes Bank (YoY)

  • Net Interest Income up 27 percent at Rs 2,407 crore.
  • Net profit down 4 percent at Rs 965 crore.
  • Provisions up 50 percent at Rs 940 crore.
  • GNPA at 1.60 percent versus 1.31 percent (QoQ).
  • NNPA at 0.84 percent versus 0.59 percent (QoQ).
Opinion
Q2 Results: Yes Bank’s Profit Misses Estimates On Higher Provisions

Bharti Airtel (QoQ)

  • Revenue up 2 percent at Rs 20,423 crore.
  • Net Profit up 22 percent at Rs 119 crore.
  • Ebitda down 7 percent at Rs 6,244 crore.
  • Margin at 30.6 percent versus 33.5 percent.
  • India ARPU at Rs 101 versus Rs 105.
Opinion
Q2 Results: Bharti Airtel Posts Surprise Profit On Deferred Tax Gain

Biocon (YoY)

  • Revenue up 36 percent at Rs 1,321 crore.
  • Net profit up 5.1 times at Rs 355 crore.
  • Ebitda up 86 percent at Rs 340 crore.
  • Margin at 25.7 percent versus 18.9 percent.
  • Exceptional gain of Rs 189 crore.

Liberty Shoes (YoY)

  • Revenue up 32.6 percent to Rs 166.9 crore.
  • Ebitda up 17.8 percent to Rs 10.9 crore.
  • Margin at 6.5 percent versus 7.3 percent.
  • Profit at Rs 2.02 crore versus Rs 1.2 crore.

L&T Technologies (YoY)

  • Revenue up 40.6 percent at Rs 1,226.1 crore.
  • Ebitda up 66.5 percent at Rs 228.8 crore.
  • Ebitda Margin at 18.1 percent.
  • Profit up 55.7 percent at Rs 191 crore.

Tata Coffee (YoY)

  • Revenue up 19.3 percent at Rs 455.9 crore.
  • Net profit up 11.4 percent at Rs 25.4 crore.
  • Ebitda down by 18 percent at Rs 58.8 crore.
  • Margin at 12.8 percent versus 18.7 percent.

Ceat (YoY)

  • Revenue up 15 percent to Rs 1,755 crore.
  • Ebitda down 9 percent to Rs 159 crore.
  • Ebitda Margin at 9.1 percent versus 11.5 percent.
  • Net profit down 18 percent to Rs 63.2 crore.

Gujarat Mineral Development Corporation (YoY)

  • Revenue down 12 percent to Rs 332 crore.
  • Ebitda down 14 percent to Rs 114 crore.
  • Margin at 34.2 percent versus 35 percent.
  • Net Loss of Rs 222 crore.

JM Financial (YoY)

  • Revenue up 27 percent to Rs 960 crore.
  • Net profit up 14 percent to Rs 240 crore.
  • GNPA at 0.5 percent versus 0.6 percent (QoQ).
  • NNPA at 0.4 percent versus 0.5 percent (QoQ).

Kewal Kiran Clothing (Standalone; YoY)

  • Revenue down 9 percent to Rs 152 crore.
  • Ebitda down 2 percent to Rs 48 crore.
  • Margin at 31.4 percent versus 29.2 percent.
  • Net Profit down 4.6 percent to Rs 34 crore.

Crompton Greaves Consumer Electricals (YoY)

  • Revenue up 8 percent at Rs 1,038 crore.
  • Net profit up 8.5 percent at Rs 77 crore.
  • Ebitda up 2.5 percent at Rs 124 crore.
  • Margin at 11.9 percent versus 12.6 percent.

Shriram City Union Finance (YoY)

  • Net Interest Income up 17 percent at Rs 1,020 crore.
  • Net profit up 6 percent at Rs 249 crore.

Raymond (YoY)

  • Revenue up 16 percent at Rs 1,848 crore.
  • Net profit up 5 percent at Rs 63 crore.
  • Ebitda up 35 percent at Rs 186 crore.
  • Margin at 10.1 percent versus 8.6 percent.

Shriram Transport Finance (Q2, YoY)

  • NII up 24.6 percent at Rs 2,055 crore.
  • Net profit up 22.6 percent at Rs 609 crore.
  • NIM on AUM at 7.52 percent versus 7.44 percent.
  • Core operating profit was above 23.5 percent.
  • Provisions at Rs 683 crore versus Rs 523 crore (QoQ).

Insider Trades

  • Electrosteel Castings Ltd promoters acquired 3.14 lakh shares from Oct. 19 – 24.
  • Centrum Capital Ltd promoter BG Advisory Services LLP acquired 1.13 lakh shares from Oct. 19 – 22.
  • Mayur Uniquoters Ltd promoter kiran poddar acquired 200 shares on Oct. 24.
  • Dhunseri Petrochem Ltd promoter Dhunseri Investments Ltd acquired 13,967 shares from Oct. 22 – 23.
  • NRB Bearings promoter Harshbeena Sahney Zaveri acquired 10,034 shares on Oct. 24.
  • Axis Bank promoter Life Insurance Corporation Of India sold 18.65 lakh shares on Oct. 24.
  • RPG Life Sciences Ltd promoter Ektara Enterprises LLP acquired 23,671 shares on Oct. 23.
  • Cox & Kings promoter Sneh Sadan Traders & Agents Ltd. acquired 49,144 shares on Oct. 23.
  • PSP Projects promoter Prahaladbhai Patel acquired 5,010 shares from Oct. 23 – 24.

(As reported on Oct. 25)

Bulk Deals

  • Bharat Financial Inclusion: Route One Fund buys 8 lakh shares or 0.6 percent equity at Rs 914.17 each.
  • Mastek Ltd: KIFS Enterprises sold 2 lakh shares or 0.8 percent equity at Rs 405.25 each.

Money Market Update

  • Rupee closed at 73.28/$ on Thursday from 73.16/$ on Wednesday.
Opinion
Rupee Slumping Most in Asia Boost Inbound Remittances to Record

F&O Cues

  • Nifty November futures closed trading at 10174, premium of 50 points.
  • Nifty November open interest up 28 percent; Nifty Bank October open interest up 68 percent.
  • Max open interest for October series at 11,000 Call (open interest at 19.9 lakh shares).
  • Max open interest for October series at 10,000 Put (open interest at 30.7 lakh shares).

Put Call Ratio

  • Nifty PCR at 0.97 from 1.1.
  • Nifty Bank PCR at 0.85 from 0.82.
All You Need To Know Going Into Trade On Oct. 26 

Brokerage Radar

On Yes Bank

CLSA

  • Maintained ‘Buy’; cut price target to Rs 300 from Rs 450, implying a potential upside of 51 percent from the last regular trade.
  • Earnings miss on higher provisioning.
  • Cut earnings estimates to build-in higher credit costs and slower top-line.
  • Succession clarity key; Capital will force consolidation near term.

Macquarie

  • Maintained ‘Outperform’; cut price target to Rs 310 from Rs 416, implying a potential upside of 56 percent from the last regular trade.
  • GNPA rose led by lumpy slippages.
  • Cut estimates largely due to cut in growth and an increase in credit costs.
  • Ruling out chances of near term capital raise.

JPMorgan

  • Maintained ‘Neutral’; cut price target to Rs 225 from Rs 260, implying a potential upside of 13 percent from the last regular trade.
  • September quarter review: Earnings miss on bond provisions.
  • Loan growth remains solid; Slippages increased sharply almost doubling on a sequential basis.
  • Leadership and capital two key constraints on valuations.

On JSW Steel

CLSA

  • Downgraded to ‘Underperform’ from ‘Buy’; cut price target to Rs 375 from Rs 410, implying a potential upside of 6 percent from the last regular trade.
  • Ebitda beat estimates, margins soften sequentially.
  • Steel spread contracting from recent highs; expect softer margins in the second half of the current financial year.
  • High-priced acquisition and potential iron ore constraints post March 2020 pose risk.

Macquarie

  • Maintained ‘Neutral’; cut price target to Rs 362 from Rs 411, implying a potential upside of 2 percent from the last regular trade.
  • September quarter’s Ebitda was ahead led by better realisation with higher domestic sales mix.
  • See margin headwinds ahead with higher raw material and stagnant steel prices.
  • Cut price target on lower target multiple, uncertainty around inorganic growth and equity dilution.

On Maruti Suzuki

CLSA

  • Maintained ‘Buy’ with a price target of Rs 9,200, implying a potential upside of 37 percent from the last regular trade.
  • September quarter’s Ebitda and net profit were broadly inline.
  • Do not see much risk to Maruti’s volume.
  • Near-term pressures but valuations more conducive.

Macquarie

  • Maintained ‘Outperform’ with a price target of Rs 9,000, implying a potential upside of 34 percent from the last regular trade.
  • Solid fundamentals outweigh near-term risks.
  • Multiple levers to mitigate cost inflation medium-term.
  • Expect Maruti to grow ahead of industry given its strong rural network.

Morgan Stanley

  • Maintained ‘Overweight’ with a price target of Rs 8,725, implying a potential upside of 30 percent from the last regular trade.
  • Reported inline results; Management maintained 2018-19 outlook.
  • Expect Maruti to continue to get engineering payout from Suzuki due to new launches.
  • Company expects volumes to recover and maintained double-digit volume growth outlook for the current financial year.

On BHEL

Jefferies

  • Maintained ‘Underperform’ with a price target of Rs 70, implying a potential downside of 0.5 percent from the last regular trade.
  • September quarter results came in below expectations led by higher raw material expenses.
  • Remain negative on BHEL as there is no change in the outlook.
  • Announced equity buyback at Rs 86 does not move the needle.

Deutsche Bank Research

  • Maintained ‘Buy’; cut price target to Rs 99 from Rs 110, implying a potential upside of 41 percent from the last regular trade.
  • Negative operating leverage, amidst rising power demand and tariffs.
  • Medium-term thesis intact, though near-term transition pains.
  • Find valuation support due to buyback at premium.

More Calls

Macquarie on Ujjivan Financial

  • Maintained ‘Outperform’ with a price target of Rs 460, implying a potential upside of 109 percent from the last regular trade.
  • RBI denied IPO exemption for small finance bank.
  • Negative for Ujjivan Financial as an IPO of SFB will result in dual listing and attract a Hold Co. discount.
  • Due date for this for Ujjivan is January 2020 and for Equitas is September 2019.
  • Stock could fail to attract new buyers if SFB lists separately.
  • Stock now suitable only for truly long-horizon investors willing to ride out this hoopla.

Credit Suisse on Bharti Airtel

  • Maintained ‘Neutral’ with a price target of Rs 400, implying a potential upside of 35 percent from the last regular trade.
  • See further sharp slide in India business metrics.
  • Deferred tax benefits helped return to profit.
  • See an upside risk to capex, which does not bode well for leverage.

CLSA on PVR

  • Maintained ‘Buy’; cut price target to Rs 1,540 from Rs 1,690, implying a potential upside of 20 percent from the last regular trade.
  • Strong all-round performance; Cost pressure a bit concerning.
  • SPI Cinema acquisition, online platform deal fortifies leadership position.
  • Cut EPS estimates by 2-3 percent to account for higher capex and SPI acquisition.