Stocks To Watch: Axis Bank, Dr. Reddy’s, Essel Propack, ICICI Bank, L&T, Wipro
Asian stocks stabilised in early trading Tuesday after a technology rout sank Nasdaq shares overnight.
Equities fluctuated at the open in Japan, Australia and South Korea. Futures on the S&P 500 Index were flat. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.3 percent to 12,077.50 as of 6:45 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 podcast.
Stocks To Watch
- CESC Ventures: acquired 64.6 percent stake in Herbolab India Private Limited for Rs 32.2 crore. The company is involved in manufacturing of Ayurveda medicines and products.
- L&T Technology Services’ promoter Larsen & Toubro plans to sell 3.88 percent stake in the company. The promoter will sell up to 40.34 lakh shares at a floor price of Rs 1,650 a piece—a discount of about 4 percent to current market price—through an offer-for-sale, according to an exchange filing.
- Wipro set June 21 as record date for share buyback.
- Dr. Reddys Laboratories to re-launch Zenatane capsules in the U.S. market.
- GE Power India awarded contract worth Rs 738.3 crore by NTPC JV for engineering work on a full turnkey basis.
- Mahindra’s arm entered into a partnership with Japan based Mitsui to jointly develop and operate distributed solar power generation projects in India. The unit will continue to hold 51 percent stake in the joint venture.
- Competition Commission of India approved acquisition of up to 75 percent of shareholding in Essel Propack by Epilson Bidco. (Twitter)
- Welspun Enterprises’s HAM project in Maharashtra received appointed date for the project as May 26 from Public Works Department. The project has achieved financial closure.
- Lemon Tree Hotels said that it has taken a Chandigarh property of 102 rooms from its arm on a lease basis.
- Saregama India lauched Carvaan Mini in Bengali.
- ICICI Bank’s long-term issuer default rating downgraded by Fitch to ‘BB+’ (Junk) from ‘BBB-’. Senior unsecured debt rating rated by Fitch to ‘BB+’. Outlook remains stable.
- Axis Bank’s long-term issuer default rating downgraded by Fitch to BB+ from BBB-. Senior Unsecured Debt Rating was downgraded by Fitch to BB+ from BBB-. Outlook to stable from negative.
Mahindra & Mahindra
- Caisse De Depot Et Placement Du Quebec acquired 2.2 crore shares or 1.86 percent equity at Rs 648 each.
- Promoter MM Benefit Trust sold 1.92 crore shares or 1.63 percent equity at Rs 648 each.
Bharat Financial Inclusion
- Goldman Sachs Singapore acquired 8.32 lakh shares or 0.59 percent equity at Rs 1,004 each.
- Europacific Growth Fund sold 8.32 lakh shares or 0.59 percent equity at Rs 1,004 each.
- Mahindra & Mahindra acquired 1.77 lakh shares or 1.46 percent equity at Rs 1,387 each.
- Jupiter India Fund sold 1.77 lakh shares or 1.46 percent equity at Rs 1,387 each.
- Conneqt Business Solutions acquired 53.9 lakh shares or 35 percent equity at Rs 319 each.
- Promoter Adiseshan Saravanan sold 27.31 lakh shares or 17.9 percent equity at Rs 319 each.
- Promoter Ramamoorthy Jagadish sold 26.56 lakh shares or 17.4 percent equity at Rs 319 each.
Pledge Share Details
- Adani Enterprises promoter group Gautam Adani revoked pledge of 41.62 lakh shares on May 31.
- Sun Pharma promoter group Shanghvi Finance revoked pledge of 41 lakh shares on May 30.
- Adani Ports & SEZ promoter group Gautam Adani revoked pledge of 40.21 lakh shares on May 30.
- Max Financial Services promoter group Max Ventures Investment Holdings created pledge of 5 lakh shares on May 30.
- Sical Logistics promoters created pledge of 17.2 lakh shares and revoked pledge of 6 lakh shares from May 8-30.
- Atul promoter Aagam Holdings revoked pledge of 1.5 lakh shares on May 30.
- Future Lifestyle Fashions promoter Ryka Commercial Ventures revoked pledge on 25 lakh shares on May 31.
- Chambal Fertilisers & Chemicals promoter groups created pledge of 8.4 lakh shares on May 30.
- AU Small Finance Bank promoter Chiranjilal Agarwal created pledge of 25.5 lakh shares from May 10-13.
- Kridhan Infra, Symphony to move into short term ASM Framework.
Who’s Meeting Whom
- TCI Express to meet HSBC, Allard Partners and other investors from June 5-6.
- Gujarat Pipavav Ports to meet Utilico Emerging Markets and Motilal Oswal Financial Services on June 4.
- Torrent Power to meet Abu Dhabi Investment Authority and Utilico Emerging Markets from June 5-12.
- Shriram City Union Finance to meet Ward Ferry Management on June 5.
- All Cargo Logistics to meet ICICI Securities on June 4.
Money Market Update
- Indian rupee on Monday strengthened for the second straight session to close at 69.26/$ versus Friday’s 69.69/$.
- Nifty futures closed at 12,104, premium of 16 points
- Nifty Futures open interest up 9 percent, adds 15.9 lakh shares
- Bank Nifty futures closed at 31,679.9, premium of 26 points
- Bank Nifty futures open interest up 9 percent, adds 1,6 lakh shares in open interest
- Nifty PCR at 1.75 Vs 1.3 (across all series)
Nifty Weekly Expiry June 6
- Max open interest call side at 12,100 (14.8 lakh shares)
- Max open interest on put side at 12,000 (25.9 lakh shares), 11,900 (25 lakh shares)
- open interest addition seen at 12,000P (+21 lakh shares), 11,900 P (+13.4 lakh shares)
- open interest shedding seen at 12,000C (-12.9 lakh shares)
Nifty Monthly Expiry June 27
- Max open interest on call side at 12,500 (18 lakh shares)
- Max open interest on put side at 11,500 (26 lakh shares)
On Indian Autos
- May-19 volumes: PVs surprise positively, while other segments disappoint.
- Measures to address liquidity and recent fall in oil prices can lead to demand recovery in the second half of the current financial year.
- Recovery likely to be slower than expectation.
- Most companies are likely to see further consensus estimate cuts.
- Demand softness continues; Two wheelers demand sluggish.
- Passenger vehicles and Tractors volumes slump.
- Trucks remain weak but Ashok Leyland volumes relatively better.
HSBC on Maruti Suzuki
- Maintained ‘Hold’ with a price target of Rs 7,200.
- Some green shoots but a long, tough ride ahead.
- Maruti retail traction remains weak as well.
- On a positive note, enquiries picked up post-election; quality and sustenance of these is critical.
UBS on Indian Consumer Sector
- Key Highlights From Q4FY19:
- Volume growth was 6.4 percent, a sharp slowdown from 9.9 percent growth in 9MFY19
- Growth differential between rural and urban significantly narrowed in the fourth quarter.
- Gross margin trends and commentary were different across sub-segments.
- Discretionary companies grew at an average rate 2.2 times that of staples in 2018-19.
- This indicates robust urban demand despite the uncertain rural outlook.
- Our top picks in the sector: ITC, Asian Paints, Godrej, Titan and Britannia.
JMFinancial on AMC
- Price hikes across liquid schemes should mitigate TER-cut pain.
- Four of top five AMCs take price hikes in liquid MF schemes.
- Banning of upfront commissions will continue to aid profitability in the transition period.
- Larger AMCs will be able to maintain their profitability in the current financial year.
Citi on IndusInd Bank
- Maintained ‘Buy’ with a price target of Rs 1,980.
- Expects growth in CV financing segment to remain healthy.
- Reiterated that entire 1.9 percent exposure to stressed groups is part of below investment grade.
- Expects the merger to get formal NCLT approval in few weeks and will deliver synergies from day one.
Citi on HDFC Bank
- Maintained ‘Buy’ with a price target of Rs 2,800.
- HDBK is looking to step-up its branch presence from the current network of 5,103 branches.
- Management depth remains strong.
Citi on Ambuja Cements
- Maintained ‘Buy’ with a price target of Rs 285.
- Pace of capacity additions has slowed down since 2005-11 and should decline further.
- Mgmt. expects industry demand should grow 7-8 percent in 2019-20.
- Pricing to be resilient in the North, Centre and West.
- Management is evaluating solar power and participation in captive power projects to save cost.
Citi on Havells India
- Maintained ‘Buy’ with a price target of Rs 850.
- For room ACs, summers have been good and Havells has put through a price hike.
- Next focus area is launching refrigerators; expect definite announcements over next 6-9 months.
- Started working on expanding its distribution network to tier-3/ tier-4 towns.
Citi on Balkrishna Industries
- Balkrishna growth to outperform industry growth.
- FY20 volume growth guidance for Balkrishna is 3-5 percent versus negative 15-20 percent for the tyre industry.
- Margins to remain in 25-28 percent range; currently, margins are at lower end of this range.
- Balkrishna could be carbon black surplus with both phases of the carbon black plants operational.
Citi on Varroc Engineering
- Despite slowdown in auto industry, mgmt. noted that there are no pricing pressures.
- Volume growth in 2019-20 expected to be in range of 7-10 percent, Ebitda Margin to be in double-digits.
- Varroc should benefit from BS-VI transition with increase in demand.
- FY20 revenues from BS-VI related components expected to be Rs 550 crore versus Rs 100 crore.
CLSA on FY19 GST Collection
- Weak end to FY19 fiscal builds FY20 worries.
- GST collections weaken, cess issues may emerge.
- FY20 has seen a sluggish start adding to concerns of limited fiscal space.
- This puts a floor to the bond yield correction despite our expectation of a 100 basis point policy rate cut
- GST compliance measures are badly needed.
- Government’s ability to give a fiscal boost rests largely on RBI’s return of capital.
CLSA on India Financials
- Fitch cuts ratings on ICICI and Axis.
- Credit ratings lowered to below investment grade; see limited impact.
- Incremental issuances may become a tad difficult, and risks can arise from other downgrades.
- With slippages moderating see turnaround in earnings from FY20 as credit costs normalise.
CLSA on United Spirits
- Maintained ‘Sell’ with a price target of Rs 450.
- Management sounded positive on India and reiterated its double-digit medium-term growth and margin guidance of mid-to-high teens.
- Focus to remain on execution, cost optimisation, working capital savings and agility.
- Cost saving is in the DNA, but easy gains are already made; further upsides looks difficult.