Stocks To Watch: Bharti Airtel, Dr. Reddy’s Labs, ICICI Bank, ITC, JSW Steel, Yes Bank
Asian stocks began Friday mixed at the end of a torrid week that dragged the region’s equities deeper into a bear market.
Japan’s Topix index climbed, though it’s still on track for a slide of almost 5 percent this week. South Korean shares slipped and in Australia, stocks were flat. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.3 percent to 10,158.50 as of 7:35 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 Out For In Today’s Trade
- RBI clarified that Ujjivan Financial and Equitas Holdings must list small finance bank separately.
- Ruia family offered to pay all creditors to retain ownership of Essar Steel.
- Shalimar Paints to issue 3.37 crore equity shares via rights issue at a price of Rs 64.50 per share. Rights entitlement ratio fixed at 3:2.
- ArcelorMittal said that the law did not permit Ruia’s offer to withdraw Essar Steel from insolvency.
- Kridhan Infra arm received construction order worth Rs 167 crore.
- Tata Teleservices Board said it was considering an extension of redeemable preference shares on Nov. 15.
- JSW Steel’s board approved raising Rs 5000 crore through a rights issue. Also, it will merge four subsidiaries with itself.
- IDFC Bank said that only NCLT approval pending for Capital First merger.
- Jubilant Industries said it will offer up to 18 lakh equity share and up to 13 lakh convertible warrants to the promoters/ members of promoter group on a preferential basis.
- IL&FS Transportation said it was considering selling some road projects stakes: Bloomberg News.
Nifty Earnings To Watch
- ICICI Bank
- Dr. Reddy’s Lab
Other Earnings To Watch
- Bharat Electronics
- Capital First
- Kokuyo Camlin
- Mahindra Lifespace Developers
- Nestle India
- Nucleus Software Exports
- PI Industries
- Shoppers Stop
- Shriram Asset Management
Earnings Reactions To Watch
Yes Bank (YoY)
- Net interest income up 27 percent at Rs 2,407 crore.
- Net profit down 4 percent at Rs 965 crore.
- Provisions up 50 percent at Rs 940 crore.
- GNPA at 1.60 percent versus 1.31 percent (QoQ).
- NNPA at 0.84 percent versus 0.59 percent (QoQ).
Bharti Airtel (QoQ)
- Revenue up 2 percent at Rs 20,423 crore.
- Net profit up 22 percent at Rs 119 crore.
- Ebitda down 7 percent at Rs 6,244 crore.
- Margin at 30.6 percent versus 33.5 percent.
- India ARPU at Rs 101 versus Rs 105.
- Revenue up 36 percent at Rs 1,321 crore.
- Net profit up 5.1 times at Rs 355 crore.
- Ebitda up 86 percent at Rs 340 crore.
- Margin at 25.7 percent versus 18.9 percent.
- Exceptional gain of Rs 189 crore.
Liberty Shoes (YoY)
- Revenue up 32.6 percent to Rs 166.9 crore.
- Ebitda up 17.8 percent to Rs 10.9 crore.
- Margin at 6.5 percent versus 7.3 percent.
- Profit at Rs 2.02 crore versus Rs 1.2 crore.
L&T Technologies (YoY)
- Revenue up 40.6 percent at Rs 1,226.1 crore.
- Ebitda up 66.5 percent at Rs 228.8 crore.
- Ebitda Margin at 18.1 percent.
- Profit up 55.7 percent at Rs 191 crore.
Tata Coffee (YoY)
- Revenue up 19.3 percent at Rs 455.9 crore.
- Net profit up 11.4 percent at Rs 25.4 crore.
- Ebitda down by 18 percent at Rs 58.8 crore.
- Margin at 12.8 percent versus 18.7 percent.
- Revenue up 15 percent to Rs 1,755 crore.
- Ebitda down 9 percent to Rs 159 crore.
- Ebitda Margin at 9.1 percent versus 11.5 percent.
- Net profit down 18 percent to Rs 63.2 crore.
Gujarat Mineral Development Corporation (YoY)
- Revenue down 12 percent to Rs 332 crore.
- Ebitda down 14 percent to Rs 114 crore.
- Margin at 34.2 percent versus 35 percent.
- Net Loss of Rs 222 crore.
JM Financial (YoY)
- Revenue up 27 percent to Rs 960 crore.
- Net profit up 14 percent to Rs 240 crore.
- GNPA at 0.5 percent versus 0.6 percent (QoQ).
- NNPA at 0.4 percent versus 0.5 percent (QoQ).
Kewal Kiran Clothing (Standalone; YoY)
- Revenue down 9 percent to Rs 152 crore.
- Ebitda down 2 percent to Rs 48 crore.
- Margin at 31.4 percent versus 29.2 percent.
- Net Profit down 4.6 percent to Rs 34 crore.
Crompton Greaves Consumer Electricals (YoY)
- Revenue up 8 percent at Rs 1,038 crore.
- Net profit up 8.5 percent at Rs 77 crore.
- Ebitda up 2.5 percent at Rs 124 crore.
- Margin at 11.9 percent versus 12.6 percent.
Shriram City Union Finance (YoY)
- Net Interest Income up 17 percent at Rs 1,020 crore.
- Net profit up 6 percent at Rs 249 crore.
- Revenue up 16 percent at Rs 1,848 crore.
- Net profit up 5 percent at Rs 63 crore.
- Ebitda up 35 percent at Rs 186 crore.
- Margin at 10.1 percent versus 8.6 percent.
- Electrosteel Castings Ltd promoters acquired 3.14 lakh shares from Oct. 19 – 24.
- Centrum capital ltd promoter BG Advisory Services LLP acquired 1.13 lakh shares from Oct. 19 – 22.
- Mayur Uniquoters Ltd promoter kiran poddar acquired 200 shares on Oct. 24.
- Dhunseri Petrochem Limited promoter Dhunseri Investments Limited acquired 13,967 shares from Oct. 22 – 23.
- NRB Bearings promoter Harshbeena Sahney Zaveri acquired 10,034 shares on Oct. 24.
- Axis Bank promoter Life Insurance Corporation Of India sold 18.65 lakh shares on Oct. 24.
- RPG Life Sciences Ltd promoter Ektara Enterprises LLP acquired 23,671 shares on Oct. 23.
- Cox & Kings promoter Sneh Sadan Traders & Agents Ltd. acquired 49,144 shares on Oct. 23.
- PSP Projects promoter Prahaladbhai Patel acquired 5,010 shares from Oct. 23 – 24.
(As reported on Oct. 25)
- Bharat Financial Inclusion: Route One Fund buys 8 lakh shares (0.6 percent) at Rs 914.17 each.
- Mastek Ltd: KIFS Enterprises sold 2 lakh shares (0.8 percent) at Rs 405.25 each.
Money Market Update
- Rupee closed at 73.28/$ on Thursday from 73.16/$ on Wednesday.
- Nifty November futures closed trading at 10174, premium of 50 points.
- Nifty November open interest up 28 percent; Nifty Bank October open interest up 68 percent.
- Max open interest for October series at 11,000 Call (open interest at 19.9 lakh shares).
- Max open interest for October series at 10,000 Put (open interest at 30.7 lakh shares).
Put Call Ratio
- Nifty PCR at 0.97 from 1.1.
- Nifty Bank PCR at 0.85 from 0.82.
On Yes Bank
- Maintained ‘Buy’; cut price target to Rs 300 from Rs 450, implying a potential upside of 51 percent from the last regular trade.
- Earnings miss on higher provisioning.
- Cut earnings estimates to build-in higher credit costs and slower top-line.
- Succession clarity key; Capital will force consolidation near term.
- Maintained ‘Outperform’; cut price target to Rs 310 from Rs 416, implying a potential upside of 56 percent from the last regular trade.
- GNPA rose led by lumpy slippages.
- Cut estimates largely due to cut in growth and an increase in credit costs.
- Ruling out chances of near term capital raise.
- Maintained ‘Neutral’; cut price target to Rs 225 from Rs 260, implying a potential upside of 13 percent from the last regular trade.
- September quarter review: Earnings miss on bond provisions.
- Loan growth remains solid; Slippages increased sharply almost doubling on a sequential basis.
- Leadership and capital two key constraints on valuations.
On JSW Steel
- Downgraded to ‘Underperform’ from ‘Buy’; cut price target to Rs 375 from Rs 410, implying a potential upside of 6 percent from the last regular trade.
- Ebitda beat estimates, margins soften sequentially.
- Steel spread contracting from recent highs; expect softer margins in the second half of the current financial year.
- High-priced acquisition and potential iron ore constraints post March 2020 pose risk.
- Maintained ‘Neutral’; cut price target to Rs 362 from Rs 411, implying a potential upside of 2 percent from the last regular trade.
- September quarter’s Ebitda was ahead led by better realisation with higher domestic sales mix.
- See margin headwinds ahead with higher raw material and stagnant steel prices.
- Cut price target on lower target multiple, uncertainty around inorganic growth and equity dilution.
On Maruti Suzuki
- Maintained ‘Buy’ with a price target of Rs 9,200, implying a potential upside of 37 percent from the last regular trade.
- September quarter’s Ebitda and net profit were broadly inline.
- Do not see much risk to Maruti’s volume.
- Near-term pressures but valuations more conducive.
- Maintained ‘Outperform’ with a price target of Rs 9,000, implying a potential upside of 34 percent from the last regular trade.
- Solid fundamentals outweigh near-term risks.
- Multiple levers to mitigate cost inflation medium-term.
- Expect Maruti to grow ahead of industry given its strong rural network.
- Maintained ‘Overweight’ with a price target of Rs 8,725, implying a potential upside of 30 percent from the last regular trade.
- Reported inline results; Management maintained 2018-19 outlook.
- Expect Maruti to continue to get engineering payout from Suzuki due to new launches.
- Company expects volumes to recover and maintained double-digit volume growth outlook for the current financial year.
- Maintained ‘Underperform’ with a price target of Rs 70, implying a potential downside of 0.5 percent from the last regular trade.
- September quarter results came in below expectations led by higher raw material expenses.
- Remain negative on BHEL as there is no change in the outlook.
- Announced equity buyback at Rs 86 does not move the needle.
Deutsche Bank Research
- Maintained ‘Buy’; cut price target to Rs 99 from Rs 110, implying a potential upside of 41 percent from the last regular trade.
- Negative operating leverage, amidst rising power demand and tariffs.
- Medium-term thesis intact, though near-term transition pains.
- Find valuation support due to buyback at premium.
More Brokerage Calls
Macquarie on Ujjivan Financial
- Maintained ‘Outperform’ with a price target of Rs 460, implying a potential upside of 109 percent from the last regular trade.
- RBI denied IPO exemption for small finance bank.
- Negative for Ujjivan Financial as an IPO of SFB will result in dual listing and attract a Hold Co. discount.
- Due date for this for Ujjivan is January 2020 and for Equitas is September 2019.
- Stock could fail to attract new buyers if SFB lists separately.
- Stock now suitable only for truly long-horizon investors willing to ride out this hoopla.
Credit Suisse on Bharti Airtel
- Maintained ‘Neutral’ with a price target of Rs 400, implying a potential upside of 35 percent from the last regular trade.
- See further sharp slide in India business metrics.
- Deferred tax benefits helped return to profit.
- See an upside risk to capex, which does not bode well for leverage.
CLSA on PVR
- Maintained ‘Buy’; cut price target to Rs 1,540 from Rs 1,690, implying a potential upside of 20 percent from the last regular trade.
- Strong all-round performance; Cost pressure a bit concerning.
- SPI Cinema acquisition, online platform deal fortifies leadership position.
- Cut EPS estimates by 2-3 percent to account for higher capex and SPI acquisition.