Stocks To Watch: Axis Bank, BEL, Coal India, DLF, Dr. Reddy’s, Hero MotoCorp, Jain Irrigation, Tech Mahindra

Asian stocks edged higher Tuesday as investors awaited news from the resumption of U.S.-China trade talks.

Shares saw modest gains in Japan, South Korea and Australia, which could see a record close if the advance holds. Hong Kong futures were flat amid escalating protests in the city. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.23 percent to 11,236.50 as of 7:10 a.m.

Short on time? Well, then listen to this podcast for a quick summary of All You Need To Know before the opening bell.

Here are the stocks moving the markets this morning

• Strides Pharma arm has entered in a JV with China’s Sihuan Pharma. The company will own 49 percent stake in the JV and will license 4 products immediately to this JV with an option to expand the portfolio subsequently, while Sihuan Pharma will use its distribution channel to market the products across China.
• Dr. Reddy’s Laboratories board approved amalgamation promoter group held company Dr. Reddy’s Holdings with the company. The holdings company holds 24.88 percent stake in the pharmaceuticals company.
• Insecticides India received patent for concentrate formulation for 20 years. The combination will be sold by the company under the brand name ‘Aikido’.
• BEML stated that it has commenced manufacturing metro cars for Mumbai Metro project. Coal India sold 1.7 percent stake in the company via CPSE ETF. After this deal the government has 69.26 percent stake in the company.
• Muthoot Finance stated that in order to moderate gold loan growth due to spike in gold prices in last two months, fresh gold loan advance was temporarily stopped in some branches from July 25-27. Fresh advances have resumed from July 29.
• Indian Oil Corporation has made alternate arrangements for sourcing of oil to maintain supplies after imposition of U.S. sanctions on trade with Iran, the state refiner says in its annual report for the year ended March. Alternate arrangements include term contracts for U.S.-origin crude. (Bloomberg News)
• Kansai Nerolac board approved merger of three arms with self.

Earnings Reaction To Watch

Dr Reddy’s Lab (Q1, YoY)

• Revenue up 3 percent to Rs 3,844 crore.
• Net profit up 45 percent to Rs 663 crore.
• Ebitda at Rs 758 crore versus Rs 777 crore.
• Margin at 19.7 percent versus 20.8 percent.

Strides Pharma (Q1, YoY)

• Revenue up 45.1 percent to Rs 685.8 crore.
• Net profit at Rs 2.9 crore versus net loss at Rs 2.6 crore.
• Ebitda up 2.9 times to Rs 123.6 crore.
• Margin at 18 percent versus 9 percent.
• Raw material as percent of sales at 46 percent versus 54.3 percent.
• Finance cost up 2.1 times.

DLF (Q1, YoY)

• Revenue down 11.7 percent to Rs 1,331.2 crore.
• Net profit up 2.4 times to Rs 414.7 crore.
• Ebitda down 22.3 percent to Rs 239.7 crore.
• Margin at 18 percent versus 20.5 percent.
• Exceptional gain of Rs 296.5 crore in the current quarter.
• Other income up 40 percent to Rs 209.7 crore.

Bharat Electronic (Q1, YoY)

• Revenue flat at Rs 2,124.5 crore.
• Net profit up 11.8 percent to Rs 210.6 crore.
• Ebitda up 11.4 percent to Rs 355.1 crore.
• Margin at 16.7 percent versus 14.9 percent.
• Other income of Rs 25.8 crore in current quarter.

RNAM (Q1, YoY)

• Revenue down 17.6 percent to Rs 325.1 crore.
• Net profit up 12.9 percent to Rs 125.4 crore.
• Other expenses down 47 percent to Rs 62.9 crore.
• AUM up 6 percent to Rs 4.3 lakh crore.

Sanofi India (Q2CY19, YoY)

• Revenue up 9.4 percent to Rs 747.9 crore.
• Net profit down 2.2 percent to Rs 97.4 crore.
• Ebitda down 4.1 percent at Rs 157.8 crore.
• Margin at 21.1 percent versus 24.1 percent.
• Raw material as percent of sales at 56 percent versus 40 percent.

Muthoot Capital Services (Q1, YoY)

• Revenue up 26.2 percent to Rs 143.9 crore.
• Net profit down 22.3 percent to Rs 13.6 crore.
• Other expenses up 49 percent to Rs 22.6 crore.

Shriram City Union Finance (Q1, YoY)

• Net interest income down 1.5 percent to Rs 954.7 crore.
• Net profit up 10 percent to Rs 260 crore.

IFB Agro Industries (Q1, YoY)

• Revenue down 19.5 percent to Rs 224.1 crore.
• Net profit down 73.9 percent to Rs 3 crore.
• Ebitda down 73.1 percent to Rs 5 crore.
• Margin at 2.2 percent versus 6.7 percent.
• Spirit segment revenue up 22 percent
• Marine segment revenue down 42 percent.
• Other expenses up 11 percent.

Shalby (Q1, YoY)

• Revenue up 13.3 percent to Rs 131.4 crore.
• Net profit up 2 times to Rs 23.6 crore.
• Ebitda up 18.1 percent at Rs 29.3 crore.
• Margin at 22.3 percent versus 21.4 percent.

Cochin Shipyard (Q1, YoY)

• Revenue up 11.6 percent at Rs 735.4 crore.
• Net profit up 12.1 percent to Rs 119.1 crore.
• Ebitda up 22.5 percent at Rs 140.9 crore.
• Margin at 19.2 percent versus 17.5 percent.

Nifty Earnings To Watch

• Axis Bank
• Hero MotoCorp
• Tech Mahindra

Other Earnings To Watch

• Piramal Enterprises
• PNB Housing Finance
• Prism Johnson
• NMDC
• NOCIL
• Orient Electric
• Dish TV
• Aegis Logistics
• Andhra Cements
• Balkrishna Paper Mills
• Bank of India
• Vinati Organics
• Welspun India
• Chemfab Alkalis
• Cholamandalam Investment and Finance
• Enkei Wheels
• Fertilizers and Chemicals Travancore
• Granules India
• Gujarat Gas
• Gulf Oil Lubricants
• Heidelberg Cement
• Mangalore Refinery and Petrochemicals
• New Delhi Television
• Repro India
• RPG Life Sciences
• Shoppers Stop
• Solar Industries India
• Sumeet Industries
• Swaraj Engines
• TCI Developers
• TCI Express
• United Bank of India
• Vaibhav Global
• V.I.P.Industries

Bulk Deals

Future Lifestyle Fashions

• BTO FBI acquired 1.17 crore shares (6 percent) at Rs 466.25 each.
• Promoter Ryka Commercial Ventures sold 1.17 crore shares (6 percent) at Rs 466.25 each.

Trading Tweaks

• SORIL Infra Resources to move into ASM Framework.
• Tejas Networks to move into short term ASM Framework.
• Mangalam Drugs & Organics, Filatex, Sanwaria Consumer to move out of short term ASM Framework.
• Jubilant Industries price band revised to 10 percent.
• Reliance Naval and Engineering, Navkar Builders price band revised to 5 percent.

Insider Trading

JM Financial promoter JM Financial and Investment Consultancy acquired 40,000 shares from July 24-25.

Who’s Meeting Whom

• Eris Lifesciences to meet UTI MF, Edelweiss MF and other investors from July 30-31.
• CG Consumer Electricals to meet Anand Rathi, Cooper Investors and Ambit Capital from July 30-Aug. 1.
• Crisil to meet Capital Group (Hong Kong) on Aug. 20.

Money Market Update

The rupee strengthened to 68.72/$ versus 68.90/$ on Friday.

Brokerage Radar

On Dr. Reddy’s Laboratories

CLSA

• Maintained ‘Buy’ with a price target of Rs 3,330.
• On track to deliver on its realigned strategy.
• Improving traction in India and emerging markets.
• Fourth consecutive quarter of the U.S. sales improvement.

UBS

• Maintained ‘Neutral’ with a price target of Rs 2,950.
• June quarter’s revenue and margin impacted by unusually weak PSAI segment.
• New products success and cost control key for earnings growth.

BofA Securities

• Maintained ‘Buy’; hiked price target to Rs 3,052 from Rs 3,009.
• Sharp QoQ recovery despite significant miss in PSAI business.
• Margin beat on lower cost despite impact of certain inventory provisioning.
• U.S. base launches are underestimated; strong balance sheet gives flexibility for inorganic growth.

More Calls

BofA Securities on Bharti Airtel

• Upgraded to ‘Buy’ from ‘Neutral’; hiked price target to Rs 400 from Rs 360.
• Find Airtel well positioned to capitalize on weakness of Vodafone Idea.
• Expect Airtel’s market share to remain stable at 30-31 percent over FY20-24.
• Favourable risk reward with tariff hike adding upside optionality.

Citi on Eris Lifesciences

• Maintained ‘Buy’; cut price target to Rs 670 from Rs 800.
• Revenues pick up but growth stays sluggish.
• Post several consecutive earnings misses, valuation recovery will be a gradual process.
• Cut FY20-22 EPS estimates by 5-8 percent on slower top-line growth and softer gross margin.

Citi on Vodafone Idea

• Maintained ‘Neutral’; cut price target to Rs 10.5 from Rs 16.
• Q1 – Material disappointment.
• Operating metrics deteriorate.
• Capex declines, 4G sub adds remain muted.

Investec on KPIT Technologies

• Maintained ‘Buy’; cut price target to Rs 140 from Rs 145.
• A solid performance on multiple fronts.
• KPIT’s portfolio is aligned to areas of fast growing spends.
• Stock is attractive with 16-18 percent YoY revenue growth and 50 percent EPS CAGR.

Investec on Havells India

• Maintained ‘Hold’; cut price target to Rs 630 from Rs 725.
• June quarter review: weak results; not immune to sluggish macro.
• Adverse macro to impact Electrical business.
• Several challenges for Lloyd; Cut EPS estimates by 8-10 percent

CLSA on Kansai Nerolac

• Maintained ‘Sell’; hiked price target to Rs 390 from Rs 385.
• Decent decorative; sustained pressures in industrial.
• Benign inputs and cost saving further boosted margins.
• Remain concerned on exposure to auto OEMs, which continue to face severe pressure.