All You Need To Know Going Into Trade On September 2

Earnings Fineprint: ONGC Q1FY21

• Revenue down 39.4% to Rs 13,011.3 crore
• Net profit of Rs 496 crore from net loss of Rs 3,098.3 crore
• Base quarter had an impairment loss of Rs 4,899.1 crore
• Ebitda down 31.2% to Rs 5,907.7 crore
• Ebitda margin at 45.4% from 40%
• Net realisations at $28.72 per barrel from $49 per barrel
• All numbers are standalone and compared on a quarter-on-quarter basis

Stocks To Watch

• Telecom Stocks: Supreme Court AGR judgment said that 10% upfront payment due by March 2021 is on total dues. This indicates that those telcos who have already paid 10% or more of total dues will have to make their next payment in 2022.
• Vodafone Idea: To consider raising funds in one or more tranches at its board meeting on September 4.
• Infosys: Increased U.S. hiring commitment to 25,000 jobs by 2022. It will hire 12,000 American workers over the next two years. Till date, it has created 13,000 jobs in the U.S. and will target experienced technology professionals as well as recent graduates from major universities, liberal arts colleges, and community colleges.
• Coal India: Monthly shipments rise for the first time in six months. Offtake up 9.3% to 44.34 MT. Production up 7.1% at 37.17 MT. Coal Minister Prahlad Joshi said that the company will invest over Rs 1.22 lakh crore by 2023-24 on projects related to coal evacuation, infra, exploration and clean coal technologies.
• NMDC: Iron ore sales in August up 20% to 1.79 MT from 1.49 MT last year. Iron ore production up 15% to 1.62 MT from 1.41 MT.
• Indian Oil Corporation: To invest Rs 1,268 crore for Grassroot Needle Coker Unit at its Paradip Refinery in Odisha. It will be entering the niche product segment for the first time. Calcined Needle Coke is used to produce graphite electrodes for deployment in the high temperature electric arc furnaces of the steel industry.
• Mukand: Board approved sale of upto 51% stake in company’s arm Mukand Sumi Special Tubes to the promoter group over a period of 12 months at a consideration of not less than Rs 571.91 per share aggregating to Rs 1,212.95 crore.
• Embassy Office Parks REIT: Board approved issuance of NCDs worth Rs 1,500 crore in one or more tranches.
• Apollo Hospitals: Demerged its standalone pharmacy business which will now be known as Apollo Medicals. Both entities have filed certified copies of respective NCLT orders sanctioning the scheme with the Registrar of Companies. Effective date of scheme is September 1.
• Cosmo Films: Board approved resuming further investment into the new line for Specialized BOPET film at its Aurangabad plant which was on hold since November 2018. The revised project cost will be Rs 300 crore and will be financed through a mix of internal accruals and loans. The commercial production will commence by the second quarter of FY23.
• JSW Energy: Pritesh Vinay appointed as the CFO of the company from September 16.
• Just Dial: Board approved proposal to amend a clause in the memorandum of association of the company, where the company intends to enable online and offline distribution of assurance products, mutual funds, and other financial products on its platforms.
• V-Mart Retail: To consider raising capital on September 5.
• Nifty Earnings Today: Coal India
• Non-Nifty Earnings Today: Arvind Fashions, Dish TV, Infibeam, Jubilant Foodworks, Sadbhav Engineering, Zuari Agrochem

August Auto Sales

Hero MotoCorp

• Overall sales up 7.5% to 5,84,456 units
• Motorcycle sales up 9.2% to 5,44,658 units
• Scooter sales down 11.2% to 39,798 units
• Overall domestic sales up 8.5% to 5,68,684 units
• Exports down 18.7% to 15,782 units
• Comparisons made on a year-on-year basis

TVS Motor

• Overall sales down 1% at 2,87,398 units
• Two-wheeler sales flat at 2,77,226 units
• Motorcycle sales up 9.6% at 1,19,878
• Scooter sales down 20% at 87,044 units
• Exports flat at 68,347 units
• Two-wheeer exports up 4.5% to 58,888 units
• Three-wheeler sales down 30% to 10,172 units
• Comparisons made on a year-on-year basis

VST Tiller Tractors

• Tractor sales up 10% to 897 units
• Power tiller sales up 84% to 2,638 units
• Comparisons made year-on-year

Brokerage Radar

CLSA On AGR Verdict

• Vodafone Idea's burden is enormous but no spectrum payments are due for 18 months.
• The sector will remain an oligopoly with the Infratel-Indus Tower merger underway
• The industry will likely await the final AGR demands from the Department of Telecom
• To cover AGR, Vodafone Idea will need an ARPU of ~Rs 200 and has announced fund raising
• Factor-in an AGR risk of Rs 12 per share for Vodafone Idea and maintain our underperform rating
• Maintain buy rating on Bharti Airtel with a price target of Rs 715

BofA Securities On Cement

• Sector is on a corrective but slow and winding path towards achieving demand-capacity balance
• Find pockets of opportunities from boost to demand driven by rural housing and improving cost structure from the use of waste-heat recovery systems and lower clinker-cement ratioProject pricing is likely to remain erratic
• Assume 6-8% volume CAGR over the next five years
• Find Ultratech and Ambuja as the best names on these themes and see potential upside of 20% on each
• ACC likely to underperform the sector
• Maintain buy rating on Ultratech with a price target of Rs 4,770
• Maintain buy rating on Ambuja with a price target of Rs 251
• Maintain neutral rating on Shree Cement with a price target of Rs 21,300
• Maintain underperform rating on ACC with a price target of Rs 1,256

Emkay's Alpha Portfolio

• Inclusion in high-conviction large-cap Overweight list: Hero MotoCorp, SBI, BPCL, United Breweries
• Exclusion from high-conviction large-cap Overweight list: Aurobindo Pharma, Bharti Airtel, Britannia, HDFC Bank and Infosys
• Inclusion in high-conviction large-cap Underweight list: Bajaj Finance
• Exclusion from high-conviction large-cap Underweight list: Yes Bank
• Large-cap Overweight list: BPCL, Hero MotoCorp, NTPC, SBI, UPL & United Breweries
• Large-cap Underweight list: ABB India, Bajaj Finance, Pidilite, Punjab National Bank, TCS
• Small & Mid-cap buys: Birla Corporation, Escorts, Granules India, Persistent Systems, Varun Beverages

Motilal Oswal On SBI Life Insurance

• Initiate coverage with buy rating
• Price target of Rs 1,000
• Well placed to sail through challenges
• Market share gains to continue
• Banca channel provides strong distinct competitive advantage
• Uniquely placed to uphold leadership positions with best in-class cost ratios
• Expect 17% VNB CAGR over FY20-23E
• In a sweet spot given strong distribution network, cost leadership and access to its parent SBI's large customer base
• Expect operating RoEV to normalise towards 18% going ahead

Pledged Share Details

• Emami: Promoter Diwakar Viniyog released pledge of 27.4 lakh shares on August 29.
• Ramkrishna Forgings: Promoter created pledge of 10 lakh shares between August 25-28.
• Mangalam Drugs and Organics: Promoter JB Sharma LLP released pledge of 26.5 lakh shares on August 31
• Orient Cement: Promoter Shekhavati Investments created pledge of 18 lakh shares on August 28.
• Solara Active Pharma Sciences: Promoters released pledge of 37 lakh shares between August 27-28.

(As Reported On September 1)

Who’s Meeting Whom

• IGSEC Heavy Engineering: To meet UTI Mutual Fund and Sundaram Mutual Fund between September 2-4.
• Dr Lal PathLabs: To meet Kriis Portfolio on September 2.
• Polycab: To meet T.Rowe Price, Dolat Capital and other investors between September 2-3.

Trading Tweaks

• AGM Date: CG Power and Industrial Solutions, Ashok Leyland, KPIT Tech, Ujjivan Small Finance Bank, Power Grid, Pidilite Industries, Meghmani Organics, Sumitomo Chemical, GE Power.
• Fund Raising: Karda Constructions, CG Power and Industrial Solutions.
• Price Band Revision From 10% To 5%: Patel Integrated Logistics.
• Move Into ASM Framework: Mangalam Drugs And Organics, Kellton Tech Solutions, Talbros Automotive Components, Madhucon Projects, Eastern Silk Industries, Orient Press, Palred Technologies, Techindia Nirman.
• Move Into Short Term ASM Framework: Godawari Power And Ispat, Usha Martin, Garware Synthetics.
• Move Out Of Short Term ASM Framework: Oriental Aromatics, Mahindra Logistics, CMI, MAS Financial Services, BASF India, Bhansali Engineering Polymers, MBL Infrastructures.

Insider Trades

• Jamna Auto: Promoter Map Auto acquired 1 lakh shares on August 28.
• Aarti Industries: Promoters sold 54,696 shares between August 27-28.

(As Reported On September 1)

Money Market Update

• The currency ended at a six-month high of 72.87 against the U.S. Dollar on Tuesday as compared to Monday's close of 73.62.
• The rupee was the best performing currency in Asia on Monday.

F&O Cues

• Nifty September futures closed at 11,528; premium of 58 points from discount of 28 points
• Nifty September futures shed 9.5% and 10.6 lakh shares in Open Interest
• Nifty Bank September futures closed at 23,945; premium of 133 points from discount of 93 points
• Nifty Bank September futures add 1% and 15,000 shares in Open Interest
• Nifty Put-Call Ratio at 1.33
• Enters F&O Ban: Indiabulls Housing Finance
• Stocks In F&O Ban: Indiabulls Housing Finance, Vodafone Idea

Nifty Weekly Expiry: September 3

• Maximum Open Interest on Call side at 12,000 strike (30.5 lakh shares)
• Maximum Open Interest on Put side at 11,400 strike (22.3 lakh shares)
• Active Options: 11,400 Put (4.7 lakh shares) and 11,500 Call (4.8 lakh shares)

Nifty Monthly Expiry: September 24

• Maximum Open Interest on Call side at 12,000 strike (19.4 lakh shares)
• Maximum Open Interest on Put side at 11,000 strike (28.3 lakh shares)