Employees ride an elevator between electronic ticker boards that indicate the latest stock figures inside the atrium at the National Stock Exchange (NSE) in Mumbai, India (Photographer: Dhiraj Singh/Bloomberg)

Stocks To Watch: Adani Power, PNB Housing Finance, TCS, Yes Bank

  • Government mulls allowing 100 percent FDI in banking, CNBCTV-18 reports.
  • EQ India Fund bought 30 lakh shares of Confidence Petroleum India.
  • Amber Enterprises’ IPO fully subscribed on day 1.

Asian stocks extended this year’s stellar run, following their U.S. counterparts higher amid optimism for global growth. Treasuries held losses on speculation Congress will avert a government shutdown.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.3 percent to 10,839 as of 7:10 a.m.

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

  • Government mulls allowing 100 percent FDI in banking. (CNBC TV-18)
  • Varun Beverages to acquire franchisee rights for Pepsico India in the state of Bihar.
  • PNB Housing Finance gets RBI nod for $500 million masala bonds.
  • Adani Power gets 49 percent stake in 600 MW Korba West Power.
  • TCS expands partnership with Shure Inc to establish global development center.
  • Ashoka Buildcon receives completion certificate for its Mudhol Nipani road project.
  • Pitti Lamination starts commercial operations at its Aurangabad plant.
  • Premier Explosives announces successful test firing of PSOM-XL strap-on motor.

F&O Setup

  • Nifty Jan. futures trading at 10,791.8, premium of 3.3 points versus 9.5 points.
  • Jan. Series: Nifty open interest up 3 percent; Bank Nifty open interest up 5 percent.
  • India VIX ended at 13.8, down 1.6 percent.
  • Max open interest for Jan. series at 11,000 Call (open interest at 50.3 lakh, down 3.6 percent).
  • Max open interest for Jan. series at 10,500 Put (open interest at 79.7 lakh, up 6 percent).

F&O Ban

  • In ban: Balrampur Chini, Capital First, Dish TV, Fortis, GMR Infra, HCC, HDIL, IFCI, India Cement, Jindal Steel, Jain Irrigation, JP Associates, Kaveri Seed and Reliance Power
  • New in ban: GMR Infra, HDIL.
  • Out of ban: Jet Airways, Reliance Communications, Wockhardt.

Only intraday positions can be taken in stocks which are in F&O ban. In case of a rollover of these intraday positions there is a penalty.

IPO

  • Newgen Software Technologies continues on day 3. The issue was subscribed 0.7 times until day 2.
  • Amber Enterprises India IPO continues on day 2. The issue has been fully subscribed.

Bulk Deals

  • Confidence Petroleum India: EQ India Fund bought 30 lakh shares or 1.2 percent stake at Rs 29.56 each.
  • Uttam Galva Steel: Albula Investment Fund sold 42.25 lakh shares or 3 percent stake at Rs 22.48 each.
  • Shah Alloys: United India Insurance Co sold 1 lakh shares or 0.5 percent stake at Rs 18 each.

Emami Paper Mills:

  • L&T MF bought 38.40 lakh shares or 6.3 percent stake at Rs 224.9 each (average).
  • Ganpati Industrial Pvt Ltd sold 22.42 lakh shares or 3.7 percent stake at Rs 225 each.
  • Parwati Devi Jalan sold 5.71 lakh shares or 0.9 percent stake at Rs 225 each.

Irb Invit Fund:

  • BNP Paribas arbitrage sold 1.31 crore units at Rs 88.1 each.
  • Prusik Asia Fund bought 1.66 crore units at Rs 88.1 each.

Nifty Earnings Today

  • Adani Ports SEZ
  • Bharti Airtel
  • UltraTech Cement
  • Yes Bank

Other Earnings Today

  • Adani Enterprises
  • Cyient
  • D B Corp
  • Deepak Nitrite
  • Hindustan Zinc
  • Mastek
  • Zensar Technologies

Earnings Reaction To Watch

Hindustan Unilever Q3 (YoY)

  • Net sales up 11.5 percent at Rs 8,590 crore.
  • EBITDA up 24 percent at Rs 1,680 crore.
  • Margin at 19.6 percent from 17.6 percent.
  • Net profit up 27.7 percent at Rs 1,326 crore.
  • Volumes growth at 11 percent.

Bharti Infratel Q3 (YoY)

  • Revenue up 7 percent at Rs 3,655 crore.
  • EBITDA up 8 percent at Rs 1,613 crore.
  • Margin flat at 44.1 percent.
  • Net profit down 6 percent at Rs 585 crore.

Mindtree Q3 (QoQ)

  • Revenue up 3 percent at Rs 1,377.8 crore.
  • Net profit up 13 percent at Rs 141.5 crore.
  • EBIT up 52 percent at Rs 165.5 crore.
  • Margin at 12 percent from 8.2 percent.

Thirumalai Chemicals Q3 (YoY)

  • Revenue up 39.5 percent at Rs 346 crore.
  • Net profit up 243 percent at Rs 51.5 crore.
  • EBITDA up doubled to Rs 80 crore.
  • Margin at 23.1 percent from 16.1 percent.

Adani Transmission Q3 (YoY)

  • Revenue up 144.5 percent at Rs 1,782.5 crore.
  • Net profit at Rs 842 crore from Rs 99 crore.
  • EBITDA up 205 percent at Rs 1,437 crore.
  • Margins at 80.6 percent from 64.7 percent.

Srei Infra Q3 (YoY)

  • Revenue up 24 percent at Rs 1,405 crore.
  • Net profit up 57 percent at Rs 105 crore.
  • Consolidated AUM up 20 percent at Rs 44,971 crore.
  • Disbursements up 19 percent at Rs 5,731 crore.

DCB Bank Q3 (YoY)

  • Net interest income up 20 percent at Rs 251 crore.
  • Net profit up 12 percent at Rs 57 crore.
  • Provisions up 13 percent at Rs 34.25 crore (QoQ).
  • Gross NPAs at 1.89 percent from 1.80 percent (QoQ).
  • Net NPAs at 0.87 percent from 0.9 percent (QoQ).

Brokerage Radar

UBS on Small Finance Banks

  • Expect small finance banks to report highest loan and revenue growth in next five year.
  • Initiate coverage on AU Small Finance Bank, Equitas Holdings and Ujjivan Financial Services.
  • Loan book for three listed SFBs to grow four-fold over the financial years through March 2022.
  • We believe valuations are now attractive for Equitas and Ujjivan.
  • Though AU Small Finance has best metrics valuations are expensive.
  • AU Bank, Equitas better placed for loan growth on diversified product portfolio.
  • MSMEs present large opportunity due to low penetration.
  • Scale-up in low cost deposit base to drive reduction in cost of funds by March 2022.
  • Equitas: Initiate ‘Buy’ with price target of Rs 250.
  • Ujjivan: Initiate ‘Buy’ with price target of Rs 575.
  • AU Bank: Initiate ‘Neutral’ with price target of Rs 800.

Edelweiss on Magma Fincorp

  • Initiated ‘Buy’ with price target of Rs 238.
  • Magma is a turnaround story.
  • Revamping business to build a scalable and profitable model.
  • Regional diversification, balanced distribution mitigate event risk.
  • AUM CAGR of 15 percent and GNPLs to dip to 5.2 percent by March 2020.
  • Improving operating efficiencies to drive productivity surge.
  • Acceleration in return ratios inevitable.
  • Expect return on assets and return on equity to expand to 2.2 percent and 13 percent respectively by March 2020.
  • Street values the stock at steep discount to peers, owing to weak RoE profile.

Deutsche Bank on Reliance Industries

  • Maintained ‘Buy’; raised price target to Rs 1,150 from Rs 1,040.
  • With end of capex cycle, FCF to improve to 5.3 percent over the financial years through March 2020.
  • Jio’s massive investment signals an optimistic view of Indian telecom sector.
  • Jio: Raising equity value to Rs 206 per share; Fixed broadband is next catalyst.
  • Jio to reach 23 percent wireless revenue market-share by March 2021.
  • New capacities, higher margins to drive strong EBITDA growth.
  • RIL remains one of the most under-owned stocks by MF/FII in the Nifty.
  • Valuations leave scope for upside.

Axis Capital on Sterlite Technologies

  • Initiated ‘Buy’ with price target of Rs 430.
  • Sterlite will benefit from a multi-year global data wave.
  • Positives: exponential increase in data consumption, replacement of copper wires with optic fiber, transition to 5G and government initiatives.
  • Shift towards optic fiber cables is inevitable due to its speedier data transmission.
  • Expect domestic demand to accelerate as India has low fiber penetration.
  • Expect revenue and Ebitda to grow at a compounded rate of 20 percent and 25 percent respectively over the financial years through March 2020.
  • Sterlite should command scarcity premium in market that has potential for exponential growth.
  • Government capex towards Bharat Net and Smart city projects to drive software business.

CLSA on Zee Entertainment

  • Maintained ‘Buy’ with price target of Rs 707.
  • Previous quarter results were ahead of estimates.
  • Performance fuelled by revival in ad spends and improvements in viewership.
  • Strong revival in ad growth.
  • Domestic subscription revenues were hit by delays in content deals.
  • Expect domestic ad revenue, domestic subscription revenue and earnings to grow at a compounded rate of 14 percent, 16 percent and 20 percent respectively over the financial years through March 2020.

CLSA on Bharti Infratel

  • Downgraded to ‘Outperform’ from ‘Buy’; cut price target to Rs 400 from Rs 440.
  • Core performance below estimates.
  • Operator exits led net tenancy loss.
  • Full impact of tenancy loss will be realised in current quarter.
  • Likely merger of Infratel and Indus will be a catalyst for its valuation.

Morgan Stanley on Bharti Infratel

  • Maintained ‘Equal-weight’ with price target of Rs 478.
  • Previous quarter’s revenue and Ebitda were in line with estimate.
  • Net tenancies declined sequentially owing to churn from smaller operators.
  • Estimate tenancy exposure to smaller operators to be more than 5 percent.
  • Ebitda impact from tenancy loss could be reflected next quarter.
  • Energy margins remained strong.

CLSA on HUL

  • Maintained ‘Outperform’; raised price target to Rs 1,575 from Rs 1,515.
  • Low demonetisation base helped its strong results in the previous quarter.
  • Volume growth was ahead of estimate and so was earnings growth.
  • Homecare continued to be star; Personal care growth was modest.
  • Punchy valuation to be maintained.

Macquarie on HUL

  • Maintained ‘Outperform’ with price target of Rs 1,609.
  • Previous quarter results were ahead of estimates.
  • Gradual improvement in demand to sustain.
  • Ebitda margin expanded despite step-up in advertising cost.
  • Segmental performance- All rounded growth.
  • HUL is top pick in the consumer space.

BoFAML on Zee Entertainment

  • Maintained ‘Underperform’ with price target of Rs 530.
  • Results in the previous quarter above estimates.
  • Domestic Ad bounce back; International struggle continues.
  • Expect subscription growth to pick up in current quarter.
  • Expect Ebitda to grow at a compounded rate of 11 percent over the financial years through March 2020.

Axis Capital on Bajaj Auto

  • Upgraded to ‘Buy’ from ‘Hold’; raised price target to Rs 3,905 from Rs 3,503.
  • Three wheelers – Strong growth to continue.
  • Motorcycles – Banking on new launches.
  • Premium bikes – Triumph could be a game changer.
  • Exports – Recovering from low base.
  • Foray into electric vehicles – Starting with three wheelers.
  • Expect volumes and earnings to grow at a compounded rate of 13 percent and 20 percent respectively over the financial years through March 2020 given the better mix.