Stocks To Watch: Axis Bank, Coffee Day, Dr. Reddy’s, Hero MotoCorp, RBL Bank, Tech Mahindra

Stocks in Asia saw a mixed open in Asia as investors mulled pessimistic signs for U.S.-China trade talks alongside a mixed set of corporate earnings ahead of the Federal Reserve’s long-awaited interest-rate cut.

Japanese shares slid. South Korea’s Kospi was little changed at the open. S&P 500 futures edged up and Australian stocks saw a more modest drop. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.37 percent to 11,056 as of 7:30 a.m.

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

• Coffee Day Enterprises: Body of VG Siddhartha, has been found on the banks of Netravati River in Mangaluru, according to ANI report. Besides, the Income Tax Department said that VG Siddhartha had admitted to holding black money after income tax raids were conducted against him and his companies. They also questioned Siddhartha’s signature on an unverified letter, saying it didn't match with those on documents submitted with it by the Cafe Coffee Day founder.
• RBL Bank said that all Coffee Day Group loan accounts are Standard and Performing. Exposure is there  to certain operating entities of the Coffee Day Group in the logistics, coffee and real estate businesses.
• Dr Reddy’s Laboratories received Form 483 with five observations for its Unit II Lab in Andhra Pradesh from U.S. FDA. The inspection was conducted from July 8-12. (Bloomberg News)
• JSW Steel stated that it has been declared preferred bidder for another three iron ore mines in auctions held by Karnataka. Estimated Resources of these mines stand at around 93 MMT.
• Alkem Laboratories stated that inspection of its manufacturing facility at Baddi has been closed by the U.S. FDA. The company stated that Form 483 contained four observations and it had submitted corrective actions in stipulated time to the FDA.
• Bandhan Bank equity shareholders approved the amalgamation of Gruh Finance with the bank.
• DHFL stated that it completed the sale of its 30.63 percent stake in Avanse Financial Services to Warburg Pincus. The company and all the promoters have completed exited from Avanse from July 30. The company also defaulted on NCDs interest worth Rs 25.06 crore, which was due on July 29.
• Kei Industries has started commercial production of first phase for manufacturing wire at a new plant in Dadra and Nagar Haveli.
• Union Bank reduced MCLR by up to 20 basis points across various tenors with effect from Aug. 1. One-year MCLR at 8.5 percent and one-month MCLR at 8.1 percent.
• Lakshmi Vilas Bank revised MCLR across various tenors with effect from Aug. 1. One-month MCLR at 9.75 percent and one-year MCLR at 9.95 percent.
• Cox & Kings defaulted in payment of CPs worth Rs 10 crore which was due on July 29.
• Vadilal Enterprises India Ratings and Research downgraded long term issuer rating to ‘IND BBB+’ from ‘IND A’.
• Maruti Suzuki stated that Ertiga (Petrol) has now become BS-VI compliant with effect from July 30. The company said that all variants of Ertiga (Petrol) will see a price increase. Revised price of the afore mentioned car to vary from Rs 7.54 lakh to Rs 10.05 lakh.
• Tech Mahindra board approved the proposal to acquire majority stake in Mad Pow Media Solutions which is valued at $25.3 million.
• Sobha acquired 100 percent stake in two companies from Kuthavakkam Group. Both these companies have land parcels.
• Mahindra & Mahindra increased stake in Smartshift Logistics to 34 percent for a consideration of Rs 37.5 crore.
• DLF board approved appointment of KP Singh as Non-Executive Chairman of the company.
• Muthoot Capital Services DSP Mutual Fund increased stake in the company by 1.21 percent to 6.19 percent stake.
• Enkei Wheel Board gave approval to borrow Rs 45 crore from parent company.
• Petronet LNG deferred board meeting for quarterly results to Aug. 7.

Earnings Reaction To Watch

Hero MotoCorp (Q1, YoY)

• Revenue down 8.9 percent to Rs 8,030 crore.
• Net profit up 38.3 percent to Rs 1,257 crore.
• Ebitda down 15.9 percent to Rs 1,158.4 crore.
• Margin at 14.4 percent versus 15.6 percent.
• Exceptional gain of Rs 738 crore in current quarter.

Tech Mahindra (Q1, QoQ)

• Revenue down 2.7 percent to Rs 8,653 crore.
• Net profit down 15 percent to Rs 959 crore.
• EBIT down 27 percent to Rs 993 crore.
• Margin at 11.5 percent versus 15.4 percent.

Axis Bank (Q1, YoY)

• Net Interest Income up 13 percent to Rs 5,844 crore.
• Net profit up 95 percent to Rs 1,370 crore.
• Provisions at Rs 3,814.6 crore versus Rs 3,337.7 crore. (Rs 2,711.4 crore QoQ)
• GNPA at 5.25 percent versus 5.26 percent. (QoQ)
• NNPA at 2.04 percent versus 2.06 percent. (QoQ)

Dish TV (Q1, YoY)

• Revenue down 44.1 percent to Rs 926.3 crore.
• Net loss at Rs 32 crore versus net profit at Rs 27.9 crore.
• Ebitda down 3.7 percent to Rs 536 crore.
• Margin at 57.9 percent versus 33.6 percent.
• Operating expenses down 74 percent to Rs 231.1 crore.

Gujarat Gas (Q1, YoY)

• Revenue up 48.1 percent to Rs 2,614.6 crore.
• Net profit up 91.6 percent to Rs 234 crore.
• Ebitda up 87.7 percent to Rs 466.6 crore.
• Margin at 17.8 percent versus 14.1 percent.

Gulf Oil Lubricants (Q1, YoY)

• Revenue up 12.9 percent to Rs 440.7 crore.
• Net profit up 21.4 percent to Rs 48.7 crore.
• Ebitda up 20.6 percent to Rs 77.9 crore.
• Margin at 17.7 percent versus 16.5 percent.

Vinati Organics (Q1, YoY)

• Revenue up 11.9 percent to Rs 290.7 crore.
• Net profit up 28.1 percent to Rs 82.4 crore.
• Ebitda up 38.5 percent at Rs 120.1 crore.
• Margin at 41.3 percent versus 33.4 percent.
• Raw material as percent of sales at 42.3 percent versus 50.4 percent.

Shoppers Stop (Q1, YoY)

• Revenue flat at Rs 854 crore.
• Net loss at Rs 0.1 crore versus net profit at Rs 4.7 crore.
• Ebitda up 3.7 times to Rs 138.5 crore.
• Margin at 16.2 percent versus 4.4 percent.
• Finance costs up 14 times to Rs 49.2 crore, depreciation up 2.9 times to Rs 90.4 crore.
• Lease expenses down 88 percent to Rs 11.4 crore versus Rs 99.1 crore.
• Change impacted due to IND AS 116 implementation-Rs 85.6 crore of reduction in lease expenses.

Nifty Earnings To Watch

• Eicher Motors
• Indian Oil Corporation
• UPL

Other Earnings To Watch

• Tata Global Beverages
• Trent
• Ashok Leyland
• Ajanta Pharma
• Symphony
• Sequent Scientific
• Indiamart Intermesh
• Jagran Prakashan
• JBF Industries
• Kabra Extrusion Technik
• LG Balakrishnan & Bros
• Mahindra Holidays & Resorts
• Maithan Alloys
• MAS Financial Services
• Motilal Oswal Financial Services
• Munjal Showa, Allahabad Bank
• Apollo Tyres, BF Utilities
• Birla Precision Technologies
• Blue Dart Express
• Carborundum Universal
• CARE Ratings
• Container Corporation of India
• CreditAccess Grameen
• Future Retail
• Future Supply Chain Solutions
• Genus Paper & Boards
• HCL Infosystems
• Heritage Foods
• Hester Biosciences
• Nelcast
• Shyam Century Ferrous
• Sicagen India
• Star Cement
• Tanla Solutions
• Zee Media Corporation
• Zydus Wellness
• Indiabulls Ventures

Bulk Deals

Jubilant Life Sciences

• Rare Enterprises acquired 17.5 lakh shares (1.1 percent) at Rs 432.23 each.
• East Bridge Capital Master Fund acquired 12.5 lakh shares (0.78 percent) at Rs 435 each.

Corporate Actions

• Jubilant Industries, Navkar Builders to move into short term ASM Framework.
• Vimta Labs price band revised to 10 percent.
• MT Educare price band revised to 5 percent.

Who’s Meeting Whom

• CG Consumer Electricals to meet Sumitomo Mitsui Asset Management and Sparx Group from Aug. 2-22.

Brokerage Radar

CLSA on Dish TV

• Maintained ‘Buy’; cut price target to Rs 50 from Rs 60.
• Weak subscription revenues but Ebitda beat.
• Subscriber choice settling post tariff order implementation.
• Reported margins inflate due to accounting change.

CLSA on Cement

• Pricing pressure in south/east and moderation in north/central.
• Cement prices are down 7-10 percent ona monthly basis in south, while east has seen 4 percent month-on-month decline.
• Prices in north, central and Gujarat are down 1-2 percent on a monthly basis.
• Part of price correction is due to seasonality as construction activity tapers off during monsoons.

On Hero Moto

CLSA

• Maintained ‘Sell’; cut price target to Rs 2,100 from Rs 2,350.
• Weak Q1 results; cut EPS estimates by 4-6 percent.
• No signs of spring in Indian two-wheeler market.
• Margins headwinds to persist.

Macquarie

• Downgraded to ‘Neutral’ from ‘Outperform’; cut price target to Rs 2,400 from Rs 3,000.
• Underlying operating performance remained muted due to lower sales and cost hike.
• Headwinds: weak demand, high channel inventory, regulatory changes and intense competition.
• Cut EPS estimates by 12 percent for FY20/21 due to lower volume assumption.

UBS

• Maintained ‘Sell’; cut price target to Rs 2,250 from Rs 2,400.
• Q1 in-line on good cost control; Ebitda Margin rose.
• Now expect domestic volume to decline 10 percent and 4 percent in the current and the next financial year respectively.
• Management says dealer funding issues not acute.

On Axis Bank

CLSA

• Maintained ‘Buy’; cut price target to Rs 900 from Rs 1,000.
• Slippages higher and new stress arises.
• Cost control drives operating profit growth.
• Cut price target on higher credit costs; improvement in asset quality is key.

UBS

• Maintained ‘Buy’; cut price target to Rs 970 from Rs 1,010.
• Mixed quarter; weak asset quality.
• Cut earnings estimates by 8 percent and 3 percent for the current and the next financial ear respectively due to multiple factors.
• Expect lower loan growth, moderation in NIMs and increased credit costs.

Macquarie

• Maintained ‘Outperform’ with a price target of Rs 925.
• Domestic loan growth at 19 percent is positive.
• 60 percent rise in de-facto watchlist and slippages are worrisome.
• Provision normalisation and NIM increase to take longer than expected.

On Tech Mahindra

CLSA

• Maintained ‘Outperform’; cut price target to Rs 740 from Rs 800.
• Revenue miss led by telecom and enterprise, but deal win strong.
• Margins miss and are likely to remain under pressure unless growth picks up.
• Valuation inexpensive with growth acceleration still ahead.

UBS

• Maintained ‘Neutral’ with a price target of Rs 830.
• Revenue and margin miss sets the stage for a soft 2019-20.
• Management attributed decline in revenue and margins to seasonality.

On Gujarat Gas

CLSA

• Maintained ‘Buy’; hiked price target to Rs 210 from Rs 195.
• Record volume and profit in the June quarter.
• Soft LNG prices should be a tailwind in 2019.
• Earnings expected to double in next two years.

UBS

• Maintained ‘Neutral’; hiked price target to Rs 190 from Rs 175.
• June quarter review: higher Morbi volumes drive record earnings.
• Taken conservative view on long term margins given volatility in gas prices.