All You Need To Know Going Into Trade On October 5

Newsflow Around Reliance Industries

• Abu Dhabi-based sovereign investor Mubadala Investment to invest Rs 6,247.5 crore in Reliance Retail for a 1.4% equity stake.
• Singapore's global investment firm GIC will invest Rs 5,512.5 crore in Reliance Retail for a 1.22% stake in the company.
• Private Equity firm TPG will invest Rs 1,837.5 crore in Reliance Retail for a 0.4% stake.
• Reliance Retail has so far raised Rs 32,197.5 crore by selling 7.1% stake so far.
• Reliance's subsidiaries will fund the group's fibre infrastructure investment trust, as the conglomerate has so far failed to find investors for these assets. The trust will raise up to Rs 14,706 crore from subsidiaries and promoter companies. It will also raise a loan of Rs 25,000 crore at 12% interest to be provided to the fiber company from the promoter companies.

Stocks To Watch

• TCS: To consider share buyback at its quarterly results meeting on October 7. The company also said that it will be providing Rs 1,218 crore as an exceptional item in the financial results during the quarter after a Chicago court reduced the damage award in the EPIC systems Corporation matter.
• Hero MotoCorp: Raises ex-showroom prices of its motorcycles and scooters by up to 2% from October 1.
• Vedanta: Reverse book-building process for public shareholders begins today. The process continues till October 9. The company's revenue and net profit for the April-June period fell 25.3% and 23.5% respectively year-on-year. Reported Ebitda was down 23.2% while margins were flat at 24.5%.
• Solar Industries: Signs a contract with the government to supply 10 lakh multi-mode hand grenades for Rs 409 crore. The grenades have to be delivered over a period of two years.
• ITI: Signs contract with the Ministry of Defence for supply and establishment of army static switched communication network. The total value of the contract is worth Rs 7,796 crore, whereas the time period for the execution is three years.
• NMDC: Iron Ore sales up 10.5% in September to 2.11 MT while production up 12% to 1.83 MT.
• Dhanlaxmi Bank: RBI approves an interim arrangement to form a new committee of directors to exercise the powers of the bank's MD & CEO till a new one takes charge. The interim arrangement will not continue beyond four months.
• Kilpest India: The company has sold 8.68 lakh Covid-19 tests in the month of September at an average price of Rs 230 per test.
• Godawari Power: Has started exporting mild steel wire rods and the first consignment of export of wire rods worth 2,400 MT has been dispatched to Nepal. The company has received a few more orders for export of wire rods worth 2,000 MT and is also in the process of finalising contracts with some parties for export of wire rods in South-East Asia and Africa.
• Hindalco: Novelis has sold the former Aleris plant in Belgium to ALVANCE - the international aluminium business of the GFG Alliance. As of closing on September 30, Novelis has received 210 million Euros in cash. The parties have agreed to a post-closing arbitration process regarding the payment of the remaining 100 million Euros.
• PNC Infratech: The company's JV with SPML Infra has received a Letter of Award for a water supply project worth Rs 289.8 crore in Uttar Pradesh. The order involves construction of Haraulipur Group of villages Water Supply Scheme and Electric/Solar-based piped ground water supply scheme. This also includes commissioning, operation and maintenance for a period of 10 years. The share of PNC Infratech in the JV is 95%.
• Havells: Has decided to shift its switchgears production capacity from Guwahati to its existing facilities at Baddi, in order to have benefits of synergy.
• HCL Tech: Announces new collaboration with IBM to help clients accelerate their digital transformation by migrating enterprise mission-critical workloads to the IBM public cloud.
• Dr Reddy's Laboratories: Announces the launch of a generic version of Sapropterin Dihydrochloride Tablets for oral use in the U.S. market.
• Polyplex: Thai arm approves proposal to set up a new BOPET thin film line with an installed capacity of 50 KTPA, which will come up adjacent to the existing line in Decatur, Alabama. The estimated cost of the same, including working capital is seen at $102.8 million. This will result in capacity increasing to 86 KTPA from 58 KTPA. The project is proposed to be financed by available surplus cash balances and internal accruals. Tentative time frame for commissioning is about 24 months.
• Marksans Pharma: Expanding its earlier initiated recall of Metformin Hydrochloride Extended release tablets USP 500 mg & 750 mg to include an additional 76 unexpired lots. The recall is due to observation of NDMA content in some lots exceeding the acceptable daily intake limit. As of March 31, 2020, exports to the U.S. for Metformin constituted less than 1% of the company's consolidated revenue.
• South Indian Bank: CARE Ratings downgraded Basel-III tier-II debt worth Rs 1,500 crore to CARE A from CARE A+. The outlook has been retained as negative. The revision is due to the continuous moderation in asset quality and profitability over the past three years, with majority of the slippages coming from the corporate segment.
• Sequent Scientific: Increased its stake in Fendigo BV to 100% from 85%. Fendigo is a veterinary pharmaceutical company operating in the Netherlands. The company is involved in sales and marketing of veterinary and health products for pets, farm animals, horses and poultry.
• L&T Technology Services: Announces completion of the acquisition of Texas-based Orchestra Technology - a specialist technology solutions provider for the telecom industry. The acquisition is in accordance with the terms set out in the agreement announced on July 16.
• Sintex Industries: Filed a writ petition in the Delhi High Court, challenging the RBI circular. The company has been working with its lenders to bring a resolution plan in place for its business activities. On September 30, Punjab National Bank had reported a borrowal fraud of Rs 1,203.2 crore in the company's NPA account.
• Prism Johnson: The company has rationalised workforce by 67% (112 workers) at one of its tile manufacturing facilities at Pen, Maharashtra. The one-time financial impact due to this is approximately Rs 18 crore, which has been met out of the internal accruals of the company. This was done in order to improve the cost structure and viability of the plant and will not have any impact on sales. The Pen plant contributed approximately 1.8% of the total consolidated sales of the company in FY20.
• Max India: Promoter Max Venture Investment Holdings revoked pledge of 5.1 lakh shares on September 30.
• Karur Vysya Bank: Base rate revised to 8.1% from 9.15% while Benchmark Prime Lending Rate (BPLR) revised to 13.1% from 14.15%. The changes are effective from October 4.

Companies With Q2 Update:

• Apollo Pipes: Overall sales up 19% to 12,268 MT. Growth driven by contribution from across product categories including value-added product segment of fittings. The company anticipates further improvement in sales performance over the next few quarters on the back of better demand environment combined with an uptick in utilisation levels.
• CreditAccess Grameen: Collections improve to 88% from 74% in March. Around 77% of the customers are willing to repay 100% of the obligations while only 8% cannot make any payments.
• Federal Bank: Total deposits up 12% to 1.56 lakh crore. Gross advances up 6% to 1.25 lakh crore. CASA ratio at 33.69% from 31.55%. Liquidity coverage ratio at 257.44% from 159.69%.

September Auto Sales

• TVS Motor: Overall sales up 14% in September to 3,27,692 units. Exports up 19% to 85,163 units. Two-wheeler exports up 24% to 71,570 units. The company says challenges in the supply chain continue due to Covid-19.
• Eicher Motors: Overall sales up 1% to 60,041 units. Exports down 11% to 4,131 units.
• Tata Motors: Overall sales up 37% to 44,444 units. Commercial vehicle sales down 11% to 24,910 units. Passenger Vehicle sales up 2.6 times to 21,199 units.
• Hero MotoCorp: Overall sales up 16.9% to 7,15,718 units. Highest monthly sale in CY20. Exports up 57.5% to 18,425 units. Overall Q2 sales up 7.3% to 18,14,683 units.
• VST Tillers Tractors: Total power tiller sales up 73.8% to 2,246 units and tractor sales up 50.1% to 1,004 units.

All Comparisons Made On A Year-on-Year Basis.

IPO Subscription Updates - Day 3

• Mazgaon Dock Shipbuilders: Becomes the most subscribed PSU IPO. Overall subscription at 157.4 times. Institutional subscription at 89.7 times. Non-institutional subscription at 678.9 times. Retail subscription at 35.6 times.
• UTI AMC: Overall subscription at 2.31 times. Institutional subscription at 3.34 times. Non-institutional subscription at 0.93 times while retail subscription at 2.32 times.
• Likhita Infra: IPO extended to October 7, with revised price band of Rs 116-120. The extension was sought mainly to accommodate QIB bidders who could not place their bids due to technical issues. Overall subscription so far at 8.43 times with institutional subscription at 0.45 times, non-institutional subscription at 5.39 times and retail subscription at 21.13 times.

Brokerage Radar

CLSA On Hindustan Unilever

• Upgrade to buy from outperform
• Price target of Rs 2,525
• Supply chain transformation expected to gather pace
• Partnership with SBI likely to address channel working capital needs
• Retailer funding should help accelerate ramp-up of HUL's retailer digital ordering platform - Shikhar
• Near-term hiccups likely, but long-term prospects remain bright
• See valuations as attractive post recent correction

HSBC On CreditAccess Grameen

• Buy rating maintained
• Price target of Rs 950
• Share of non-paying customers down to 8% from 20%, reducing the collection overhang to some extent
• Strong parentage, high rural exposure and adequate liquidity augur well
• Expect further market share gains as smaller players may come under pressure
• Likely to return to healthy growth trajectory from FY22e
• Well positioned to absorb potential losses as asset quality is likely to be impacted
• Risks: Sharper-than-expected deterioration in asset quality and slow demand revival

Nomura On Indian I.T.

• Acceleration in I.T. spending led by shift to digital, coupled with outsourcing push to drive growth
• Room to gain market share for Indian I.T. companies
• Savings from cloud/SaaS will get re-invested in digital transformation initiatives
• Raise U.S. Dollar revenue growth estimates by 1-5% and for Ebit margin estimates by 40-150 basis points over FY21-23F
• Expect 9-10.5% U.S. Dollar revenue CAGR for Infosys, HCL Tech, TCS & Tech Mahindra and 6.4% for Wipro over FY21-23F
• Infosys, followed by HCL Tech & Tech Mahindra are our top picks

Nirmal Bang On Johnson Controls - Hitachi AC India

• Initiate coverage with buy rating
• Price target of Rs 2,500
• Regulatory shift to strengthen competitive edge
• Aims to fortify competitive edge by cutting its imports by half and expanding exports by 3x over next three years
• Nearing an inflection point of reporting stronger volume growth and robust margin expansion
• Expect revenue / earnings CAGR of 13% and 33% respectively over FY20-23
• Expect 33% PAT CAGR and 22% Ebitda CAGR over FY20-23E

Edelweiss On Metals

• Domestic steel prices remained stable despite China's export price coming off $20/t
• Prices in Europe and U.S. continued to move up on lower imports and progressively improving demand
• See optimism creeping back into China
• CRC-HRC premium has risen to its highest ever at Rs 9,300/t in the wake of limited supplies
• Expect Tata Steel to benefit the most owing to its leadership in the domestic automotive market
• Maintain buy rating on Tata Steel with a price target of Rs 500

Bulk Deals

• CAMS: Goldman Sachs acquired 8.18 lakh shares, Fidelity acquired 7.47 lakh shares, Canara Robeco Mutual Fund acquired 3 lakh shares, Nomura acquired 8.44 lakh shares and Smallcap World Fund acquired 5.47 lakh shares.
• Can Fin Homes: Caladium Investment sold 23.1 lakh shares (1.73%) at Rs 423.61 per share and Vanguard acquired 22.8 lakh shares (1.71%) at Rs 423.61 per share.

Who’s Meeting Whom

• Tata Chemicals: To meet First State Stewart on October 6.
• Mahindra & Mahindra: To meet Mirae Asset Global Investments & GIC between October 5-7.
• Tata Motors: To meet Credit Suisse on October 6.

Trading Tweaks

• Fund Raising: PVR
• Record Date For Share Split: Gujarat Ambuja Exports (face value split from Rs 2 to Rs 1 per share).
• Listing Today: Angel Broking
• Move Into ASM Framework: Advanced Enzyme Technologies.
• Move Out Of ASM Framework: Omaxe, Coral India Finance & Housing, BLS International Services.
• Move Into Short Term ASM Framework: Mazda, Gujarat Lease Financing.
• Move Out Of Short Term ASM Framework: SMS Lifesciences, Repco Home Finance.

Insider Trades

• Sequent Scientific: Promoter Chayadeep Ventures sold 4.92 lakh shares between September 29-30.
• Filatex India: Promoter Vrinda Bhageria acquired 69,000 shares on September 29.
• Shakti Pumps: Promoter Dinesh Patidar acquired 83,100 shares on September 30.
• Man Infra: Promoter Parag Shah acquired 1.1 lakh shares on September 30.

Money Market Update

• The rupee ended stronger at 73.15 against the U.S. Dollar as compared to Wednesday's close of 73.76.
• The currency ended as the best performing currency in Asia for the truncated week.

F&O Cues

• Nifty October futures ended at 11,440; premium of 23 points from discount of 4 points
• Nifty October futures add 3% and 2.8 lakh shares in Open Interest
• Nifty Bank October futures ended at 22,292; premium of 46 points from discount of 17 points
• Nifty Bank October futures shed 13% and 2.2 lakh shares in Open Interest
• Nifty Put-Call Ratio at 1.35
• Stock In F&O Ban: Vedanta

Nifty: October 8 Expiry

• Maximum Open Interest on Call side at 11,500 strike (16 lakh shares)
• Maximum Open Interest on Put side at 11,200 strike (17.5 lakh shares)
• Active Options: 11,400 Put (+12.9 lakh shares) and 11,800 Call (+11.8 lakh shares)

Nifty: October 29 Expiry

• Maximum Open Interest on Call side at 12,000 strike (17.4 lakh shares)
• Maximum Open Interest on Put side at 10,500 strike (36.3 lakh shares)