Stocks Radar: IndiGo, Minda Industries, Manpasand Beverages, TCS

Indian equity benchmarks fluctuated in opening trade today as gains of private banks and Reliance Industries Ltd. were offset by losses of Tata Consultancy Services Ltd., which declared its June quarter results on Tuesday, and IndiGo operator InterGlobe Aviation Ltd., whose promoters are roiled in a dispute.

At 11:36 am, the S&P BSE Sensex was 0.19 percent lower at 38,657.04 points while the NSE Nifty 50 Index shed 0.20 percent to trade at 11,532.59 points.

The market breadth was tilted in favour of buyers. Eight of the 11 sectoral gauges compiled by the National Stock Exchange advanced, led by a 1.36 percent gain in the Nifty Media Index. The Nifty PSU Bank was the top loser, down 0.26 percent.

A look at the stocks moving the markets today morning:

IndiGo Slumps As Promoter Dispute Escalates

Shares of India’s largest airline by market share plunged as much as 20 percent—the most in over a year—to Rs 1,264.80 apiece.

That came after IndiGo co-promoter Rakesh Gangwal accused another co-promoter Rahul Bhatia of questionable related-party transactions, violations of governance regulations and the company’s code of conduct. On Tuesday, Gangwal wrote a letter to the Securities and Exchange Board of India listing several allegations against Bhatia. The market regulator has asked the company to respond by July 19.

Gangwal has also sought an extraordinary general meeting of the airline’s shareholders to address the governance issues he has raised against Bhatia.

Here’s what brokerages had to say on IndiGo:

Citi

• Maintained ‘Sell’ with a price target of Rs 1,300.
• Conflict between promoters is more than just minor differences.
• Do not envisage a settlement anytime soon.
• Uncertainty regarding final resolution could cause weakness in stock price.

Credit Suisse

• Maintained ‘Outperform’ with a price target of Rs 1,900.
• Escalation of promoter dispute likely to be a significant headwind. Control and related party transactions are at the center of the dispute.
• Dispute does not seem to have had any meaningful operational impact so far. An operational impact cannot be ruled out, particularly in case of a public dispute.

Goldman Sachs

• Initiated ‘Buy’ with a price target of Rs 1,830.
• Expanding market share and capacity additions to drive growth.
• IndiGo has one of the strongest balance sheets and leverage ratios.

The Relative Strength Index on the stock was below 30, indicating it may be ‘Oversold’.

Autoline Gains On Subsidy Claim Approval

Shares of Pune-based automaker Autoline Industries Ltd. surged as much as 11.2 percent to Rs 55.90 apiece—the highest in nearly four months.

Autoline Industries said the Government of Maharashtra has approved additional industrial promotion subsidy claim of Rs 44.61 crore. Of this, the company has received Rs 14.50 crore on July 8 and will receive the remaining Rs 35.12 crore in three tranches shortly, it said in an exchange filing.

The stock’s trading volume was more than 100 times the 20-day average for this time of the day, according to Bloomberg data.

Manpasand Beverages Falls After Auditor Quits

Shares of Mango Sip maker Manpasand Beverages Ltd. hit the lower circuit of 5 percent for the third straight day. The stock trades at Rs 38.85 apiece.

Wednesday’s slump came after a statutory auditor to Manpasand Beverages resigned amid a tax probe and top-level exits at the company.

Recent developments at the company, including an investigation by Goods and Services Tax authorities, and resignation of directors and the company secretary led Mehra Goel & Co. to resign, Manpasand Beverages said in an exchange filing.

The stock has tumbled 74 percent in the past 12 months compared with a 7 percent gain in the Sensex, Bloomberg data showed.

Himachal Futuristic Gains After Bagging Rs 187-Crore Order

Shares of telecom equipment maker Himachal Futuristic Communications Ltd. extended gains for the second day in a row after it gained 1.3 percent to Rs 20.10 apiece on Tuesday.

Himachal Futuristic Communications has received a purchase order worth Rs 186.9 crore from state-run telecom firm Bharat Sanchar Nigam Ltd. for setting up of optical transmission backbone network for the armed forces, according to an exchange filing. The project shall be completed within 10 months, the filing said.

The stock fell 36 percent in the past 12 months compared with a 7 percent gain in the Sensex, Bloomberg data showed.

Minda Industries’ Volumes Surge

Shares of auto parts maker Minda Industries Ltd. rose as much as 6.5 percent to Rs 292.60 apiece. The stock’s trading volume was more than five times its 20-day average, according to Bloomberg data. It traded 35 percent below the Bloomberg consensus one-year target price.

TCS Falls After Q1 Results

Shares of IT sector bellwether TCS fell close to 3 percent to Rs 2,071.30 apiece after its operating margin narrowed to lowest in eight quarters.

TCS Q1 Results Review (Quarter-On-Quarter)

• Revenue rose 0.4 percent to Rs 38,172 crore.
• Net profit rose 0.1 percent to Rs 8,131 crore.
• EBIT declined 3 percent to Rs 9,220 crore.
• Margin contracted to 24.2 percent from 25.1 percent.
• Revenue in dollar terms rose 1.6 percent to $5,485 million.

Here’s what brokerages have to say on TCS Q1 Results:

CLSA

• Maintains ‘Buy’ but cuts price target to Rs 2,570 from Rs 2,650.
• Revenue and margin miss estimates; margins miss due to supply pressures.
• Rising relevance—large deal wins, digital share gains and client mining.
• Cut EPS estimates by 3 percent to factor in revenue and margin miss.

UBS

• Maintains ‘Neutral’ with a price target of Rs 2,400.
• Revenue miss likely to raise demand concerns.
• TCS continues to see stress in capital markets and European banking customers.
• Expect some near-term pullback.

BofAML

• Maintains ‘Neutral’, hiked price target to Rs 2,130 from Rs 2,040.
• Q1: U.S. decelerates; steady margin performance.
• Lower FY20/21 EPS estimates by 3-5 percent.
• Stronger margin to peers is likely to help retain premium valuations.

HSBC

• Maintains ‘Hold’ with a price target of Rs 1,900.
• Growth slowed down despite strong deals due to a cyclical slowdown in demand.
• Long-term outlook positive, but near-term slowdown in demand to impact growth.
• Significant macro slowdown and rupee appreciation remain key risks.

The stock traded at 23 times its estimated earnings per share, according to Bloomberg data.