Stocks To Watch: Bajaj Auto, Hindalco Industries, MRPL, Power Grid

Asian shares dipped, with technology stocks leading the region’s losers after some disappointment with U.S. corporate earnings.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 1 percent to 10,933.50 as of 7:00 a.m.

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

• Novelis posts strong third quarter with its full year EBITDA at the higher end of its forecast.
• Lupin launches generic Clobex Lotion in the U.S., which has annual sales of approx $12.6 million.
• Zee Media Board approves acquiring balance 40 percent in Zee Akaash News for Rs 49 crore.
• Gammon Infra-led consortium received EPC order worth Rs 577 crore from NHAI.
• Hinduja Ventures acquires 10.32 lakh shares of Hinduja Leyland Finance on rights basis.
• InfoEdge to sell 32,629 shares (6.66 percent) in Zomato to Ant Small and Micro for $50 million.
• Grasim Industries to raise production capacity of VFS business to 46,300 tonne per annum from 21,300 tonne per annum.

Auto Sales (YoY)

• TVS Motors January sales up 31 percent at 2.71 lakh units.
• SML Isuzu January sales down 6.4 percent at 938 units.
• VST Tillers January sales up 32 percent at 2,822 units.

F&O Setup

• Nifty February futures trade at 11,031 premium of 14 points versus 27.7 points.
• February series: Nifty open interest down 3 percent, Bank Nifty open interest unchanged.
• India VIX ended at 14.4, down 11 percent.
• Max open interest for February series at 11,500 call strike (open interest at 61.2 lakh, up 49 percent).
• Max open interest for February series at 10,500 put (open interest at 59.2 lakh, up 2 percent).

F&O Ban

• In ban: JP Associates, Wockhardt, Fortis Healthcare, Jain Irrigation.
• No new stocks in or out of ban.

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.

Active Stock Futures

Bulk Deals

Jain Irrigation: Societe Generale bought 30.96 lakh shares (0.6 percent) at Rs 135.01 each.

Fortis Healthcare: Societe Generale sold 34.56 lakh shares (0.7 percent) at Rs 130.26 each.

Vmart:

• Bottom Billion Fund bought 1.05 lakh shares (0.6 percent) at Rs 1,515 each.
• Citigroup Global Markets Mauritius Private Limited sold 1.05 lakh shares (0.6 percent) at Rs 1,515 each

Earnings Reactions To Watch

Ashok Leyland Q3 (YoY)

• Revenues up 57.5 percent at Rs 7,113 crore
• Net profit up 178 percent at Rs 450 crore
• EBITDA up 74 percent at Rs 788.5 crore
• Margins at 11.1 percent versus 10 percent

Ceat Q3 (YoY)

• Revenues up 13 percent at Rs 1,574 crore
• Net profit down 2 percent at Rs 82.6 crore
• EBITDA up 22 percent at Rs 186 crore
• Margins at 11.8 percent versus 11 percent

Zee Media Q3 (YoY)

• Revenues up 44.5 percent at Rs 159 crore
• Net profit of Rs 10.3 crore versus net loss of Rs 6.2 crore
• EBITDA up 81 percent at Rs 38 crore
• Margins at 23.9 percent versus 19.1 percent

Bajaj Finserv Q3 (YoY)

• Revenue up 21 percent at Rs 7,666 crore
• Net profit up 22 percent at Rs 748.6 crore
• Net interest income up 38 percent at Rs 2,372.4 crore
• Net NPA at 0.53 percent versus 0.51 percent (QoQ)

Khadim Q3 (YoY)

• Revenues up 47.5 percent at Rs 205 crore
• Net profit up 89 percent at Rs 8.9 crore
• EBITDA up 48 percent at Rs 20 crore
• Margins at 9.8 percent versus 9.7 percent

UCAL Fuel System Q3 (YoY)

• Revenues up 0.5 percent at Rs 149.2 crore
• Net profit up 98 percent at Rs 11.7 crore
• EBITDA up 45 percent at Rs 27.2 crore
• Margins at 18.2 percent versus 12.7 percent

PowerGrid Q3 (YoY)

• Revenues up 13 percent at Rs 7,507 crore
• Net profit up 6 percent at Rs 2,041 crore
• EBITDA up 13 percent at Rs 6,738.5 crore
• Margins at 89.8 percent versus 89.9 percent

Akzo Nobel Q3 (YoY)

• Revenues up 6 percent at Rs 712 crore
• Net profit up 20 percent at Rs 82.6 crore
• EBITDA down 2 percent at Rs 98 crore
• Margins at 13.8 percent versus 14.9 percent

Pricol Q3 (YoY)

• Revenues up 8 percent at Rs 327 crore
• Net profit down 17 percent at Rs 8.7 crore
• EBITDA up 6.5 percent at Rs 33 crore
• Margins at 10.1 percent versus 10.2 percent

Cummins Q3 (YoY)

• Revenues flat at Rs 1,354 crore
• Net profit down 13 percent at Rs 172 crore
• EBITDA down 13 percent at Rs 196 crore
• Margins at 14.5 percent versus 16.7 percent

CCL Products Q3 (YoY)

• Revenues down 5 percent at Rs 274 crore
• Net profit down 11 percent at Rs 40.4 crore
• EBITDA down 17 percent at Rs 64 crore
• Margins at 23.4 percent versus 26.8 percent

PNB Gilts Q3 (YoY)

• Revenue down 59 percent at Rs 68 crore
• Net loss of Rs 14 crore versus net profit of Rs 66 crore

Nifty Earnings To Watch

• Bajaj Auto
• Hindalco Industries

Other Earnings To Watch

• Bajaj Holdings & Investment
• Bayer Cropscience
• BSE
• Glaxosmithkline Pharmaceuticals
• Godrej Properties
• Gujarat Gas
• IEX
• Info Edge
• Inox Wind
• MRPL
• Whirlpool

Brokerage Radar

Nomura on Budget

• Overall budget outcome appears mildly disappointing to expectations.
• Fiscal deficit projection for the next financial year is marginally higher than expected.
• Focus on rural development and common man was largely expected.
• New cost-plus formula for MSP and LTCG tax on equity is negative.
• Corporate tax cut, commitment to medium-term fiscal consolidation and continued infrastructure spending are positives.

Morgan Stanley on Budget

• Budget 2018: Neutral for economy and equities.
• Market had already priced in long-term capital gains tax.
• Policy makers changed the glide path for fiscal consolidation.
• Overall impact on macro stability will be manageable.
• Near term headwinds for bonds will remain.
• Like corporate banks, infrastructure owners, discretionary consumption.

Morgan Stanley on ITC

• Maintained ‘Overweight’ with price target of Rs 320.
• No change cigarette tax, will allay investor concerns.
• Next trigger is volume growth and outcome of GST council meeting.
• Expect very low probability of introduction of additional GST tax slab for cigarettes.

Edelweiss on ITC

• Maintained ‘Hold’ with price target of Rs 313.
• Budget 2018 left tax structure for cigarettes unchanged, much softer than our anticipation.
• All eyes now on GST Council meet.
• Expect stock to re-rate due to improving prospects.

Morgan Stanley on ITC

• Maintained ‘Overweight’ with price target of Rs 320.
• No change cigarette tax, will allay investor concerns.
• Next trigger is volume growth and outcome of GST council meeting.
• Expect very low probability of introduction of additional GST tax slab for cigarettes.

Kotak on Novelis

• Novelis is a subsidiary of Hindalco.
• Strong earnings led by North & South America.
• EBITDA increased higher than our estimate.
• Strong EBITDA aided by increase in rolled shipments.

JPMorgan on Bajaj Finance

• Maintained ‘Overweight’ with price target of Rs 2,100.
• December quarter numbers were in line.
• Robust AUM growth with stable asset quality.
• Opex growth tracking revenue growth.
• Strong competitive position, market opportunity and rich profitability to support valuations.

Deutsche Bank on Bajaj Finance

• Maintained ‘Hold’ with price target of Rs 1,520.
• AUM growth steady at 35 percent.
• Consumer/Rural drive growth; Mortgages pick up.
• Asset quality stable; Some stress in rural visible.
• PPoP above estimates led by better NIMs and benefit on costs.
• Expect AUM and net profit to compound at 37 percent and 39 percent respectively over the financial years through March 2020.
• Like diversity in its loan book and focus on diversifying liabilities.
• In rising rate environment, banks better positioned than NBFC.

JPMorgan on ONGC

• Maintained ‘Overweight’ with price target of Rs 265.
• Flat subsidy does not mean ONGC will bear subsidy burden.
• Under-recoveries are manageable for now.
• Pricing action across the fuels broadly supports next fiscal subsidy assumptions

Macquarie on ONGC

• Maintained ‘Outperform’; raised price target to Rs 290 from Rs 180.
• Incorporating HPCL; Earnings estimate increased by 10 percent.
• Balance sheet gearing rises but still under control.
• Expect mild improvement in return ratios.
• Expect marginal fall in free cash flow.
• Expect material positive dividend.
• ONGC top E&P pick in Asia.

Motilal Oswal on Titan

• Maintained ‘Buy’ with price target of Rs 990.
• Results muted on high October base.
• Recent aggression to capitalise on massive opportunity is heartening.
• Management maintains 25 percent growth guidance.
• Outlook remains buoyant.

Morgan Stanley on Titan

• Maintained ‘Overweight’ with price target of Rs 1,050.
• December quarter was disappointing.
• Weak margin delivery notwithstanding.
• Earnings miss was driven largely by weak EBIT margins in jewellery.
• Strong margin expansion for jewellery business remains intact.
• View any correction as an opportunity for long-term investors to build positions in Titan.

Motilal Oswal on Power Grid

• Maintained ‘Buy’ with price target of Rs 282.
• Underlying earnings growth remains strong.
• Strong growth in transmission partly offset by decline in consultancy.
• Power Grid has Rs 1.1 trillion worth of projects pending execution over next 3-4 years
• Expect earnigns per share to compound at 15 percent over the financial years through March 2020.
• Concerned on growth potential thereafter.
• Bullish on transmission due to demand growth potential.
• Stock trading at attractive valuation.