Stocks Radar: DCB Bank, HDFC Bank, L&T, Sun Pharma

Indian equity benchmarks remained subdued in the open even as Asian peers gained on trade hopes, China data. The S&P BSE Sensex rose as much as 0.76 percent to 36,664.24 and the NSE Nifty 50 Index gained as much as 0.67 percent to 10,981.65, as of 10:15 a.m. The 31-stock index is also set for its longest winning streak in more than a month.

The market breadth was tilted in favour of buyers. About 829 stocks advanced and 704 shares declined on the National Stock Exchange. Ten out of the 11 sectoral gauges advanced, led by the NSE Nifty Pharma Index’s 1.6 percent gain. The NSE Nifty Realty Index was the only loser, down 0.1 percent.

Here Are The Stocks Moving The Market This Morning

L&T Falls After SEBI Rejects Buyback Proposal

Shares of the country’s largest construction company fell as much as 3.4 percent, the most in over three months, to Rs 1,273.45 apiece.

The Securities and Exchange Board of India advised L&T against the Rs 9,000-crore buyback offer since the debt ratio after the buyback would be more than twice the capital and reserves. The company had proposed to buyback 610 lakh shares at a price of Rs 1,475 apiece. (More details here)

Here’s what analysts had to say after SEBI rejected L&T’s buyback plans:

CLSA

• No set-back to return-on-equity expansion.
• Believes the regulator is mistaken in looking at consolidated financials.
• Thinks L&T’s board could approve a one-time large dividend of Rs 53 a share this week.
• Recommends buying L&T as it is a good proxy for domestic capex.

JPMorgan

• Denial by SEBI on the technicality of leverage comes as a negative surprise.
• Hardly any leeway to scale down the buyback size.
• Better-than-expected core profit and loss performance in third quarter may assuage worries around execution.

HDFC Bank Swings After Q3 Results

Shares of the Mumbai-based lender fluctuated between gains and losses to trade flat at Rs 2,129.55 apiece.

The bank’s profit rose 20.3 percent on a yearly basis to Rs 5,585.9 crore in the quarter ended December, according to its exchange filing. (Read the full story here)

Key earnings highlights (Q3, YoY)

• Net interest income up 21.9 percent to Rs 1,2576 crore.
• Net interest margin seen at 4.3 percent.
• Gross NPA at 1.38 percent versus 1.33 percent in the preceding quarter.
• Net NPA at 0.42 percent versus 0.40 percent in the September quarter.

Here’s what analysts had to say after the company announced its quarterly results:

JPMorgan

• Maintains ‘Overweight’ with a price target of Rs 2,400.
• December quarter review: in-line earnings; loan growth at 24 percent remains solid.
• Term deposit strategy paying off well.
• Overall asset quality steady; agriculture segment showing some stress.

Edelweiss

• Maintains ‘Buy’; hikes price target to Rs 2,530 from Rs 2,454.
• Core operating performance strong, but asset quality slips a tad.
• Gross bad loans rose to 1.38 percent, with slippages higher at 2.1 percent, largely impacted by the agriculture segment.
• Due to challenges in the operating environment, expects a flight to safety in favour of private banks.

Emkay

• Maintains ‘Buy’; hikes price target to Rs 2,600 from Rs 2,500.
• Healthy margin/fees; falling cost-to-income ratios.
• Marginally higher NPAs due to farm-loan waivers.
• Bank expects farm loan NPAs to remain high in the run-up to general election.

Wipro Falls After Q3 Results

Shares of the Bengaluru-based software developer declined as much as 3.2 percent to Rs 335 apiece

Its profit for the three months ended December beat estimates. (more details here). The company also issued bonus shares in the proportion of 1:3.

Key earnings highlights (Q3, Sequentially)

• Dollar revenue up 1.8 percent at $2,046.5 million.
• Revenue up 3.4 percent at Rs 15,059 crore.
• Net profit up 34.9 percent at Rs 2,544 crore.
• EBIT up 43 percent at Rs 2,775.7 crore.
• Margin at 18.4 percent versus 13.3 percent.

Here’s what analysts have to say about Wipro:

Macquarie

• Maintains ‘Outperform’; hikes price target to Rs 360 from Rs 350.
• Expects margin normalisation to continue.
• Revenue growth to remain below industry due to uncertainty in the healthcare business.
• Hikes EPS estimates for FY19-21 by 1-2 percent.

CLSA

• Maintains ‘Sell’; hikes price target to Rs 295 from Rs 285.
• Hikes EPS estimates for FY19-21 by 4-6 percent.
• Retains ‘Sell’ given lack of convincing growth acceleration.

Motilal Oswal

• Maintains ‘Neutral’; hikes price target to Rs 385 from Rs 350.
• Improving gradually on revenues, steadily on margin.
• Fourth quarter guidance factors in macro uncertainty.
• Hikes EPS estimates for the next two financial years by 5 percent.

DCB Bank Falls The Most In Four Months

Shares of DCB Bank slumped as much as 7 percent, the most since Sept. 21, to Rs 172.50 apiece.

The lender clarified that it neither had direct dealings with scam-hit NSEL nor has it provided loan or financing for NSEL transactions done by its customers, according to its exchange filing. The bank said it had entered into a referral agreement with India Infoline Commodity to provide its customers access to commodity trading across exchanges.

This comes after a Hindu Businessline report suggested DCB Bank and brokerage India Infoline Commodity acted in concert with NSEL in misselling their fraudulent financial products.

Sun Pharma Second Best On Sensex, Nifty

Shares of the country’s largest drugmaker rose as much as 3.8 percent to Rs 399.20 apiece.

Foreign institutional investors trim stake in Sun Pharma during the December quarter, while domestic mutual funds and financials institutions were buyers, according to BSE data. Life Insurance Corporation of India also lowered stake marginally.

The stock tumbled 13 percent intra-day on Friday—the most in nearly 20 months—after a report revealed excerpts about a whistleblower’s complaint against controlling shareholder Dilip Shanghvi.

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