Stocks To Watch: Bank of Baroda, Dr. Reddy’s, HDFC, ICICI Bank, JSW Steel, Vodafone Idea

Stocks and crude oil tumbled, and havens including the yen and Treasuries jumped, as fears deepened about the rising impact of the deadly coronavirus.

With no sign of the disease’s containment, traders rushed out of risk assets. Contracts on the S&P 500 Index fell more than 1 percent and Japan’s Topix opened down in excess of 1.6 percent. The moves come on a day with limited trading options in Asia, as markets are shut in locations including China, Hong Kong, South Korea and Australia, due to holidays.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.66 percent to 12,191 as of 7:06 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 to watch in today’s trade.

• Cipla received 4 observations by U.S. FDA, which conducted inspection at company’s Bangalore’s API manufacturing facilities from Jan. 20-24.
• Prestige Estate Projects: Board approved allotment of 1.34 crore shares on a preferential allotment basis at Rs 325 per share, aggregating to Rs 437 crore to GIC’s unit Gamnat.
• Vodafone Idea: India Ratings & Research downgraded the rating on NCDs worth Rs 3500 crore from IND BBB to IND BBB-. The downgrade is on account of crystallisation of adjusted gross revenue-related liabilities, post the dismissal of the review petition by the Supreme Court.
• Siemens entered into definitive agreement to acquire 99.22 percent stake in C&S Electric for Rs 2120 crore. The acquisition is expected to be completed by December 2020.
• Power Grid Corporation said that it has filed an application for clarification from the SupremeCourt on its order on the AGR issue.
• Boeing looking at setting up a flight simulator for its grounded 737 Max jet in India to help hasten its return, says SpiceJet.
• CG Power & Industrial Solutions: Board to seek approval Central Government to seek for removal of joint auditors KK Mankeshwar due to independence issues.
• Bharat Road Network said it has received provisional completion certificate for completion of a high project in Maharashtra.
• VST Tillers Tractors entered into an understanding with Czech Republic’s Zetor Tractors for exploring joint product development of tractors.
• NHPC declared successful applicant by creditors of Jalpower Corporation.
• Sunteck Realty entered into an agreement for joint development of properties with 4 entities.
• Varun Beverages to consider raising capital via QIP on Feb. 7.
• Axis Bank to consider raising funds up to Rs 5,000 crore via NCDs.
• Cholamandalam Investment & Finance: Invesco reduced stake from 6.96 percent to 4.64 percent in the company.

Nifty Earnings Reaction To Watch

ICICI Bank (Q3, YoY)

• Net interest income rose 24 percent to Rs 8,546 crore.
• Profit after tax up 1.5 times to Rs4,146 crore.
• Provisions at Rs 2,083 crore versus 2,506 crore.
• Gross NPA at 5.95 percent versus 6.37 percent. (QoQ)
• Net NPA at 1.49 percent versus 1.60 percent. (QoQ)
• Slippages at Rs 4,363 crore versus Rs 2,482 crore. (QoQ)

JSW Steel (Q3, YoY)

• Revenue down 12 percent to Rs 17,805 crore.
• Net profit fell 88 percent to Rs 187 crore.
• Ebitda fell 51 percent at Rs 2,201 crore.
• Gross margin at 12.4 percent versus 22.2 percent.

Other Earnings To Watch

APL Apollo Tubes (Q3, YoY)

• Revenue rose 25 percent to Rs 2,115.8 crore.
• Ebitda rose 170 percent to Rs161 crore.
• Ebitda margin at 7.6 percent versus 3.5 percent.
• Profit after tax up 5.5 times to 83.2 crore.

Bhageria Ind (Q3, YoY)

• Revenue down 6 percent to Rs 104.8 crore.
• Ebitda declined 9 percent to Rs 23.2crore.
• Ebitda margin at 22.1 percent versus 22.9 percent.
• Profit after tax rose 17 percent to Rs 17.7 crore.

Bank of Baroda (Q3,QoQ)

• Net Interest Income up 1.4 percent at Rs 7,129 crore.
• Net loss at Rs 1,407 crore versus net profit at Rs 736.7 crore.
• Provisions at Rs 6,620.6 crore versus Rs 3425.3 crore.
• Gross NPA at 10.43 percent versus 10.25 percent.
• Net NPA at 4.05 percent versus 3.91 percent.

Prestige Estates Projects (Q3, YoY)

• Revenue rose 2.5 times to Rs 2,680.9 crore.
• Net profit up 2.8 times to Rs 161.8 crore.
• Ebitda rose 2.1 times to Rs 718.8 crore.
• Ebitda margin at 26.8 percent versus 32.6 percent.

Emkay Global Financial Services (Q3, YoY)

• Revenue declined 1.8 percent to Rs 33.4 crore.
• Net loss at Rs 1.5 crore versus net loss at Rs 0.1 crore.

Wendt (Q3, YoY)

• Revenue declined 22 percent to Rs 34 crore.
• Net profit down 59.3 percent to Rs 2.2 crore.
• Ebitda down 53.8 percent to Rs 4.2 crore.
• Margins at 12.4 percent versus 20.9 percent.

Nifty Earnings To Watch

• Dr. Reddy's Laboratories
• Housing Development Finance Corporation

Other Earnings To Watch

• IIFL Finance
• InterGlobe Aviation
• JK Paper
• Torrent Pharmaceuticals
• Mahindra Lifespace Developers
• Mold-Tek Packaging
• Mold-Tek Technologies
• Music Broadcast
• Navin Fluorine International
• TTK Prestige
• United Spirits
• V2 Retail
• Wockhardt
• Orient Paper & Industries
• PTC India Financial Services
• Shanthi Gears
• Tata Steel Long Products
• TCI Express
• Confidence Petroleum India
• Bhansali Engineering Polymers
• CCL Products
• DCM Shriram
• Gandhi Special Tubes
• Gulshan Polyols
• H.G. Infra Engineering
• HCL Infosystems
• Kriti Nutrients
• Kriti Industries
• Lakshmi Machine Works

Pledge Share Details

• Uflex promoters created pledge of 24 lakh shares on Jan. 23.

Bulk Deals

GHCL

• DSP Mutual Fund acquired 15.13 lakh shares (1.54 percent) at Rs 192 each.
• RBC Emerging Markets Dividend Fund sold 13.76 lakh shares (1.4 percent) at Rs 192 each.

Indiabulls Housing Finance

Credit Suisse acquired 22.36 lakh shares (0.53 percent) at Rs 323.25 each.

Trading Tweaks

• Axiscades Engineering Technologies, Chromatic, Emkay Global Financial Services to move into ASM Framework.
• Reliance Power, Prime Focus to move out of ASM Framework.
• Century Extrusions, Inox Wind, Compuage Infocom to move out of short term ASM Framework.
• Mahindra EPC Irrigation, FCS Software Solutions to move into short term ASM Framework.
• Sadhana Nitro Chem price band revised to 10 percent.
• Gujarat Intrux price band revised to 5 percent.

Money Market Update

• Rupee ended at 71.33/$ on Friday versus 71.27/$ on Thursday.

F&O Cues

Index Futures

• Nifty January futures closed at 12,271.6, premium of 23.4 points versus 20.7 points.
• Nifty Jan futures OI down 2 percent, sheds 2 lakh shares in OI.
• Nifty Bank Jan futures closed at 31,330.3, premium of 88.6 points versus 86 points.
• Nifty Bank Jan futures OI 4 percent, sheds 54,000 shares in OI

Options

• Nifty PCR at 1.42 versus 1.26 (across all series)

Nifty Monthly Expiry: Jan 30

• Max OI on call side at 12,500 (37.1 lakh shares)
• Max OI on put side at 12,000 (42.8 lakh shares)
• OI addition seen at 12,200P (+10.6 lakh shares), 12,250P (+8.9 lakh shares)
• OI shedding seen at 12,200C (-6.4 lakh shares), 12,300C (-2 lakh shares)

Securities In Ban

• Yes Bank

Brokerage Radar

On UltraTech Cement

Morgan Stanley

• Maintained ‘Overweight’ with a price target of Rs 5,350.
• December quarter earnings inline but commentary encouraging.
• Sees sign of demand revival, cost discipline and strong focus on de-leveraging.
• Expect net debt to Ebitda to improve significantly over coming years

PhillipCapital

• Maintained ‘Buy’ with a price target of Rs 6,000.
• No major surprises or disappointments on realisations/costs.
• Century operations remain a drag and may continue for few more quarters.
• On-ground vigilance to drive the structural and sustainable delta to earnings.

On JSW Steel

PhillipCapital

• Maintained ‘Sell’; hiked price target to Rs 233 from Rs 198.
• Expect domestic spreads to improve in Q4 aided by steel price hike.
• Benefits would be partially nullified by steep increase in domestic iron ore prices well.
• Expect delays in turnaround of subsidiaries and potential debt increment.
• Outlook improving but valuations remain expensive.

JPMorgan

• Maintained ‘Overweight’; cut price target to Rs 271 from Rs 295.
• Benefit of steel prices to come in March quarter.
• Overseas subsidiaries remain a drag; China market and prices there remain a cause of concern.
• Would wait for better entry point.

On Bank of Baroda

Prabhudas Lilladher

• Maintained ‘Buy’; cut price target to Rs 107 from Rs 115.
• Slippages continue to be elevated on back of divergence and lumpy accounts in NBFC sector.
• Income performance was decent but higher opex led to mediocre operating profit.
• Remain cautious on asset quality but PCR remains at decent levels.

Motilal Oswal

• Maintained ‘Buy’; cut price target to Rs 115 from Rs 120.
• Pre-provisioning operating profit in line adjusted for one-offs; slippages remain elevated.
• Business growth remains muted; asset quality deteriorates further.
• Slippages elevated due to RBI divergence/HFC account; provisioning coverage stable.

On ICICI Bank

UBS

• Maintained ‘Buy’ with a price target of Rs 620.
• Strong pre-provisioning operating profit performance; but slippages higher.
• Credit cost to remain higher in the fourth quarter.
• Continue to prefer ICICI Bank for its strong retail franchise and improving earnings profile.

Edelweiss

• Maintained ‘Buy’; hiked price target to Rs 631 from Rs 606.
• Slippages higher, but essentially from known accounts.
• Focus on track to help sustain 20% plus pre-provisioning operating profit growth.
• ICICI will be progressively valued up as market gains more confidence in its RoE focus.

More Calls

Jefferies on Supreme Industries

• Maintained ‘Buy’; hiked price target to Rs 1,530 from Rs 1,520.
• December quarter review: Strong margin expansion; outlook revised upwards.
• Robust margin mainly led by higher value-added mix.
• Management cited that demand growth was back from H2 November 2019.

Motilal Oswal on DCB Bank

• Maintained ‘Neutral’ with a price target of Rs 200.
• Business growth moderates; provision coverage declines further.
• Pre-provisioning operating profit in line; higher provisions drive earnings miss.
• Asset quality deteriorates further; cut EPS estimates for the current and the next financial year by 8 percent and 6 percent respectively.

Motilal Oswal on Siemens

• Downgraded to ‘Neutral’ from ‘Buy’; maintained price target at Rs 1,705.
• C&S Electric acquisition not the best use of cash.
• Scope of acquisition comprises low voltage switchgears and panels, low/medium voltage power busbars as well as protection and metering devices.
• Await a better entry point in the stock.

Citi on Aavas Financiers

• Downgraded to ‘Neutral’ from ‘Buy’; hiked price target to Rs 2,100 from Rs 1,900.
• Healthy December quarter; downgrade on expensive valuations.
• Lead indicators of asset quality better.
• Expansion continues; competition manageable.