Stocks To Watch: Bharti Airtel, Biocon, ICICI Bank, Reliance Industries, Hindalco

Asian stocks edged higher on Friday and headed for the strongest week since early June following a series of steps by China shifting to stimulus mode.

Japanese equities climbed for a fourth day, despite a drop of more than 5 percent in Nomura Holdings Inc. following a profit slide. Intensifying speculation about tweaks to the Bank of Japan’s stimulus programme saw 10-year yields triple this week, and they traded at 0.1 percent for a second day.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded 0.2 percent higher at 11,245 as of 7:23 a.m.

Short on time? Well, then listen to this podcast for all you need to know before the opening bell.

Here Are The Stocks To Watch Out For In Today’s Trade

• Hindalco’s Novelis to buy Aleris in $2.6 billion deal with assumption of debt.
• Adani Ports signs a long-term regasification pact with GAIL for Dhamra LNG terminal.
• IFB Industries to acquire industrial laundry equipment biz of Ramsons Garment for Rs 35 crore.
• HPCL unlikely to buy Iran oil until India gets waiver from U.S. (Bloomberg)
• Petronet LNG CEO expects BPCL Kochi plant to boost gas purchase. (Bloomberg)

Offerings

• HDFC Asset Management IPO gets demand for 5.52 times shares offered on second day sale; offer closes today.

Nifty Earnings To Watch

• HCL Technologies
• ICICI Bank
• Reliance Industries

Other Earnings To Watch

• Alembic Pharmaceuticals
• Bank of Baroda
• Coromandel International
• Equitas Holdings
• Heritage Foods
• IL&FS Transportation
• Indian Overseas Bank
• Johnson Controls-Hitachi
• JSW Energy
• Jubilant Life
• Mahindra & Mahindra Financial Services
• Phillips Carbon
• Prestige Estates Projects
• Prism Johnson
• Shoppers Stop
• Welspun India

Earnings Reaction To Watch

Petronet LNG (Q1, QoQ)

• Revenue up 6.2 percent to Rs 9169 crore
• Net profit up 12.2 percent to Rs 587 crore
• Ebitda up 13.6 percent to Rs 934 crore
• Margin at 10.2 percent versus 9.5 percent

Essel Propack (Q1, YoY)

• Revenue up 13.3 percent at Rs 635.4 crore versus Rs 560.8 crore
• Net profit up 20.4 percent at Rs 41.3 crore versus Rs 34.3 crore
• Ebitda up 9.5 percent at Rs 111.6 crore versus Rs 101.9 crore
• Margin at 17.6 percent versus 18.2 percent

Tata Metaliks (Q1, YoY)

• Revenue up 21.8 percent at Rs 467.5 crore.
• Net profit down 1 percent at Rs 30.6 crore.
• Ebitda up 32.8 percent at Rs 66 crore.
• Margin at 14.1 percent versus 12.9 percent.

Quess Corp (Q1, YoY)

• Revenue up 51.7 percent at Rs 1,968.4 crore.
• Net profit up 19 percent at Rs 54.4 crore.
• Ebitda up 36.1 percent at Rs 102.5 crore.
• Margin at 5.2 percent versus 5.8 percent.

WABCO India (Q1, YoY)

• Revenue up 42.2 percent at Rs 747.3 crore.
• Net profit up 38 percent at Rs 74.8 crore.
• Ebitda up 26.2 percent at Rs 99.7 crore.
• Margin at 13.3 percent versus 15 percent.

ITC (Q1, YoY)

• Revenue up 8 percent at Rs 10,707 crore.
• Net profit up 10 percent at Rs 2,819 crore.
• Ebitda up 12 percent at Rs 4,202.5 crore.
• Margin at 39.3 percent versus 37.6 percent.

Container Corporation of India (Q1, YoY)

• Revenue up 7 percent at Rs 1,568 crore.
• Net profit up 2 percent at Rs 252 crore.
• Ebitda up 16 percent at Rs 390 crore.
• Margin at 24.9 percent versus 23 percent.

Jubilant Industries (Q1, YoY)

• Revenue up 17 percent at Rs 133 crore.
• Net loss of Rs 1 crore versus net loss of Rs 2 crore.
• Ebitda unchanged at Rs 7 crore.
• Margin at 5.3 percent versus 6.1 percent.

Biocon (Q1, YoY)

• Revenue up 21.2 percent at Rs 1,123.8 crore.
• Net profit up 47.2 percent at Rs 119.7 crore.
• Ebitda up 23.8 percent at Rs 237.8 crore.
• Margin at 21.2 percent versus 20.7 percent.

Bharti Airtel (Q1, QoQ)

• Revenue up 2.3 percent at Rs 20,080 crore.
• Net profit up 17 percent at Rs 97 crore.
• Ebitda down 3 percent at Rs 6,726 crore.
• Margin at 33.5 percent versus 35.3 percent.
• ARPU at Rs 105 versus Rs 116.

Cholamandalam Investment (Q1, YoY)

• Net interest income up 20 percent at Rs 795 crore.
• Net profit up 36 percent at Rs 285 crore.
• AUM up 30 percent at Rs 46,663 crore.

Lakshmi Vilas Bank (Q1, YoY)

• Net interest income down 40 percent at Rs 130 crore.
• Net loss of Rs 124 crore versus net Profit of Rs 66 crore.
• Provision down 82 percent at Rs 161.5 crore (QoQ)
• GNPA at 10.73 percent versus 9.98 percent.
• NPA at 5.96 percent versus 5.66 percent.

Tata Coffee (Q1, YoY)

• Revenue up 14.9 percent at Rs 422.2 crore.
• Net profit down 37.4 percent at Rs 21.6 crore.
• Ebitda down 16.81 percent at Rs 66.3 crore.
• Margin at 15.7 percent versus 21.7 percent.

Tinplate Company of India (Q1, YoY)

• Revenue at Rs 568.6 crore versus Rs 236.5 crore.
• Net profit at Rs 9.5 crore versus Rs 14.1 crore.
• Ebitda at Rs 25.5 crore versus Rs 32 crore.
• Margin at 4.4 percent versus 13.5 percent.

Bulk Deals

Welspun Corp: Insight Solutions sold 2.15 crore shares (8.1 percent) at Rs 112 each (average)

Safari Industries

• White Oak India Equity Fund bought 1.54 lakh shares (0.7 percent) at Rs 700 each.
• India Acorn Fund Ltd bought 1.31 lakh shares (0.6 percent) at Rs 700 each.
• Tano India Private Equity Fund II sold 4.10 lakh shares (1.8 percent) at Rs 700.03 each.

GMR Infra: Albula Investment Fund sold 3.02crore shares (0.5 percent) at Rs 18.01 each.

Shriram Transport Finance Co.: Association De Bienfaisance bought 12.14 lakh shares (0.5 percent) at Rs 1,379.36 each.

Just Dial: Acadian Emerging Markets Small Cap Equity Fund Llc bought 3.47 lakh shares (0.5 percent) at Rs 565.52 each.

Who’s Meeting Whom

• Inox Leisure to meet Infina Finance on July 27.
• Tata Metaliks to meet Centrum Broking on July 27.
• Crompton Greaves Consumer Electrics to meet Amansa Holdings Pvt on July 27.

Rupee

• Rupee closed at 68.67/$ on Thursday from 68.79/$ on Wednesday

F&O Cues

• Nifty August futures closed trading at 11,201.3 premium of 34 points versus 31points.
• Across series: Nifty open interest up 2 percent; Bank Nifty open interest up 31 percent.
• Rollover: Nifty at 74 percent, Bank Nifty at 78 percent.
• India VIX ended at 12.02, down 1.5 percent.
• Max open interest for Aug series at 11,500 Call (open interest at 23.9 lakh, up 20 percent)
• Max open interest for Aug series at 11,000 Put (open interest at 32.4 lakh, up 29 percent)

Active Stock Futures

Brokerage Radar

Credit Suisse On Maruti Suzuki

• Maintained ‘Neutral’; target price raised to Rs 10,300 from Rs 9,800.
• Q1 revenue and Ebitda in line; net profit below estimates due to lower other income.
• Maruti has chosen not to take any price hikes.
• Gross margins contracted on adverse commodity prices.
• Maruti continues to focus on increasing market share further.
• Given premium valuations, expect stock to time-correct for now.

Credit Suisse On Yes Bank

• Maintained ‘Neutral’ with target price of Rs 395.
• Loan growth remains strong driven by retail segment.
• Asset quality stable with net slippage at 0.6 percent.
• Capital is needed to maintain current pace of growth.

Brokerages On Bharti Airtel

BoFAML

• Maintained ‘Buy’ with target price of Rs 480.
• Q1FY19: Inline Ebitda; Small profit due to tax credits.
• Steady improvement in Africa continues.
• Company continue to focus on cost-control and gain market share.

UBS

• Maintained ‘Buy’ with target price of Rs 520.
• Q1FY19: Respectable performance amidst a tough environment.
• Africa momentum remains strong with revenue growth and margin improvement.
• Bharti Airtel has managed to hold its market share better than peers.

Brokerages On ITC

JPMorgan

• Maintained ‘Overweight’ with target price of Rs 335.
• 1QFY19 earnings were ahead of our estimates; Good start to FY19.
• Cigarette: Good performance; volume growth surprises positively.
• Other FMCG: Impressive revenue growth and profitability gains.
• Paper division: Good margin delivery.
• Agri division: Adverse mix weighs on Ebit.
• Hotel division: Good Q1.

UBS

• Maintained ‘Buy’ with target price of Rs 350.
• Overall performance creditable as it comes on a normalised base.
• Delivered positive cigarette volume of 2 percent (YoY).
• Positive volume growth is sustainable and could improve from here on.
• Other FMCG business grew despite a high base.

Credit Suisse

• Maintained ‘Outperform’; target price raised to Rs 360 from Rs 350.
• Cigarette business seeing a revival, potential re-rating could start playing out.
• Cigarette volumes likely to have grown 1-2 percent which is a significant improvement.
• Q1 net profit ahead of estimates; Ebitda growth highest in nine quarters.

Brokerages On Colgate-Palmolive

Credit Suisse

• Maintained ‘Neutral’; target price cut to Rs 1,150 from Rs 1,225.
• Volume and market share trends weaken further.
• Delivered very strong Ebitda margin driven by gross margins.
• Since GST rate cuts, there has been steep jump in margins.
• Colgate is still struggling in naturals.

JPMorgan

• Maintained ‘Overweight’ with target price of Rs 1,400.
• Q1 a mixed bag: Revenue growth remains unexciting, earnings beat led by margins.
• Market share trends were soft.
• Expect gradual volume growth revival in coming quarters.
• Healthy FCF generation, return ratios and an improved dividend payout to support stock.

UBS on Petronet LNG

• Maintained ‘Buy’ with target price of Rs 245.
• Q1 net profit ahead of estimates driven by higher than expected re-gas margins.
• Higher re-gas tariffs and operational efficiencies from higher volumes drove margins.
• Positive sentiments should be driven by delay in commissioning of Mundra re-gas terminal.
• Expect stock to react positively.

UBS on Quess Corp

• Maintained ‘Buy’; target price cut to Rs 1,345 from Rs 1,360.
• Revenue growth remained strong.
• Margins impacted by mix of factors.
• Positive on strategic investments.
• Near term profitability to be adversely impacted due to investments.

JPMorgan on Shriram Transport

• Maintained ‘Overweight’ with target price of Rs 1,700.
• Net profit driven by loan growth and sharply reduced credit cost.
• IND-AS accounting shift beneficial to both EPS & BPS.
• Loan growth at 22 percent running above forecast.
• Increase in axle load norms to improve earnings of core customers.

JPMorgan On Container Corporation

• Maintained ‘Overweight’ with target price of Rs 875.
• Operating performance continues to improve in Q1.
• Margin improvement continues as rail freight expense remained flat.
• Lead distance continues to weigh on top-line performance.
• Expect 14 percent earnings CAGR over FY18-20 driven by margin improvement.

JPMorgan On Crompton Consumer

• Maintained ‘Overweight’ with target price of Rs 300.
• Q1 numbers ahead of estimates, good start to the year.
• Good delivery by ECD segment; Lighting hits a blip on negligible government business.
• Go-To-Market roll-out, fast LED replacement and scale-up of new categories to drive healthy revenue growth over the next 2-3 years.
• Success of new product launches and market share gains key positives.

Brokerages On Dr. Reddy’s Labs

Citi

• Maintained ‘Neutral’ with target price of Rs 2,270.
• Strong headline number but likely to normalise.
• Slight delay in expected launch timelines of gNuvaring & gCopaxone.
• Near term prospects dependent on gSuboxone, gNuvaring, gCopaxone.

Credit Suisse

• Maintained ‘Underperform’ with target price of Rs 1,865.
• Suboxone, lower R&D, low tax lead to beat in results.
• Nuvaring further delayed; more competition expected in key products in FY19.
• Suboxone sales was $17-18 million while base business U.S. sales declined 2 percent (QoQ).

Goldman Sachs

• Maintained ‘Neutral’ target price cut to Rs 2,200 from Rs 2,270.
• Pushback the expected launch time of Suboxone by another quarter to 4QFY19.

UBS

• Maintained ‘Neutral’ with target price of Rs 2,480.
• Delays to key launches likely to drive consensus downgrades.
• First quarter aided by gSuboxone and a lower tax expense.
• See reduced opportunities for niche products in pipeline.
• Base business continued to saw pricing erosion led by gDacogen and gToprol XL.