Stocks To Watch: BSE, Bajaj Finance, Delta Corp, Federal Bank

Asian equities’ best start to a year since 2006 took a breather Tuesday in the absence of fresh catalysts to spur the rally on. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, was a little changed at 10,749.50 as of 7:05 a.m.

Here Are The Stocks To Watch In Tuesday’s Trade

• Jubilant Life gets environmental clearance for pesticide plant in Gujarat.
• BSE board approved a buyback of up to 15 lakh shares at Rs 1,100 per share; will spend Rs 166 crore on buyback.
• Vascon Engineers sold 85 percent of the units of its new residential project Forest Edge on Day 1.
• Max Ventures approved raising up to Rs 450 crore via rights issue.
• Kotak Mahindra is mulling divesting its stake in MCX (Moneycontrol).
• Bharat Bijlee to receive Rs 46.79 crore from MIDC towards acquisition of land situated at Navi Mumbai.
• RattanIndia Power says joint lenders forum has submitted the S4A Scheme to the overseeing committee.
• BL Kashyap & Sons: Standard Chartered Bank approved one-time settlement scheme.
• Bajaj Finance to hold 12.6 percent stake in Mobikwik on a fully diluted basis post conversion of Compulsorily Convertible Preference Shares for a total investment of Rs 225 crore.
• Seamec bags contract worth $1.26 million from L&T Hydrocarbon for deployment of its vessel.
• IMP Powers receives order for manufacturing turbines from Germany’s Smart Hydro Power GmbH for a period of 20 years.
• Zee Music in pact with Amazon Prime to provide music content.

F&O Setup

• Nifty January futures trading at 10,743, premium of 1.8 points from 5 points
• January series: Nifty open interest up 4 percent; Bank Nifty open interest up 18 percent.
• India VIX ended at 14.3, up 4.2 percent.
• Maximum open interest for January series at 11,000 Call (open interest at 47.9 lakh, up 1 percent).
• Maximum open interest for January series at 10,500 Put (open interest at 82.2 lakh, up 1 percent).

F&O Ban

• In ban: Capital First, Dish TV, Fortis, GMR Infrastructure, HDIL, IFCI, Jet Airways, Jindal Steel & Power, Jain Irrigation, JP Associates, Kaveri Seed, Reliance Communications, Reliance Capital, Reliance Power, Wockhardt
• New in ban: Capital First, IFCI

Only intraday positions can be taken in stocks which are in F&O ban. There is a penalty in case of a rollover of these intraday positions.

Active Stock Futures

Bulk Deals

• Astra Microwave: Dilipkumar Lakhi bought 8.7 lakh shares or 1 percent equity at Rs 123.45 each.
• Apollo Pipes: Canara HSBC OBC Life Insurance bought 1 lakh shares or 2 percent equity at Rs 680 each.
• HDIL: Alliance Capital Management sold 26.85 lakh shares or 0.6 percent equity at Rs 66.62 each

Poddar Housing

• Securities Investment Management Pvt. bought 39,058 shares or 0.6 percent equity at Rs 1,349.25 each.
• Value Quest India Moat Fund sold 86,549 shares or 1.4 percent equity at Rs 1,350.03 each.

Earnings Reactions To Watch

Federal Bank Q3 (YoY)

• Net interest income up 20.1 percent at Rs 950 crore.
• Net profit up 26.2 percent at Rs 260 crore.
• Gross NPA at 2.52 percent versus 2.39 percent (QoQ).
• Net NPA at 1.36 percent versus 1.32 percent (QoQ).

ABC Bearings Q3 (YoY)

• Revenues up 9 percent at Rs 50 crore.
• Net profit up 38.5 percent at Rs 3.6 crore.
• EBITDA up 8 percent at Rs 9.1 crore.
• Margins at 18.2 percent versus 18.3 percent.

India Grid Trust Q3 (QoQ)

• Revenue down 4 percent at Rs 126.7 crore.
• Net profit up 13 percent at Rs 68.8 crore.
• EBITDA down 4 percent at Rs 117.3 crore.

Delta Corp Q3 (YoY)

• Revenue up 56 percent at Rs 162 crore.
• Net profit up 347 percent at Rs 44.7 crore.
• EBITDA up 113 percent at Rs 68.7 crore.
• Margin at 42.4 percent versus 31 percent.

Zee Learn Q3 (YoY)

• Revenue up 73 percent at Rs 52 crore.
• Net profit up 250 percent at Rs 7.7 crore.
• EBITDA up 89 percent at Rs 18 crore.
• Margin at 34.6 percent versus 31.7 percent.

Earning To Watch

• ICICI Lombard General Insurance
• MCX
• Reliance Nippon Life Asset Management
• Agro Tech Foods
• Den Networks
• Hatsun Agro Products
• Jay Bharat Maruti
• Network 18
• SH Kelkar
• TV18

Brokerage Radar

JM Financial on Cochin Shipyard

• Initiated ‘Buy’ with price target of Rs 700.
• Indomitable player in the Indian shipyard industry.
• Large dock size and strategic location place Cochin Shipyard in sweet spot.
• Investing in both capacity and capability to the pave way for the next leg of growth.
• Government policies to enable sustained flow of orders.
• Outpaced peers in a shrinking industry.
• Defence, inland waterways and O&G to offer next leg of growth.
• Robust order book provides revenue visibility over next eight years.
• Expect order inflow momentum to sustain as Navy orders jump three times over the next decade.
• Healthy cash flows and a negative working capital cycle to keep company debt free.
• Expect revenue and operating income to grow at a compounded rate of 18 percent over the financial years through March 2020.
• Expect dividend payout to be 25 percent in coming years.

UBS on Reliance Industries

• Initiated ‘Sell’ with price target of Rs 870.
• Reliance Industries’ capex to expand operating income, but deleveraging to be delayed.
• Refinery-petchem integration to boost returns and reduce cyclicality, but stabilisation to take time.
• GRMs on upward trajectory, boosted by petcoke gasification benefits.
• Expect petchem Ebitda to almost double over the financial years through March 2020, and a compounded growth rate in volume of 8 percent over the financial years through March 2022.
• Expect retail business revenue and operating income to grow at a compounded rate of 22 percent and 24 percent respectively over the financial years through March 2022.
• Jio's market share to expand, but ARPU could be low.
• Expect subscriber and ARPU to grow at a compounded rate of 13 percent and 6.5 percent respectively over the financial years through March 2022 and that will support Jio’s growth in revenue and operating income.
• Expect upstream capex to pick-up and steady telecom capex to continue.
• Expect operating income and earnings per share to grow at a compounded growth rate of 19.3 percent and 14.1 percent respectively over the financial years through March 2022.
• Share price factors in all benefits from the refining and petchem projects.

IIFL on Persistent Systems

• Initiated ‘Add’ with price target of Rs 835.
• Persistent is in middle of an investment phase.
• Continuous investments to keep margin expansion under check.
• Digital to drive growth, Alliance and Accelerite pose upside risks.
• Expect $ Revenue and earnings per share to grow at a compounded rate of 10.5 percent and 11 percent respectively over the financial years through March 2020.
• Remain positive on long-term story
• Believe that investments made are in the right direction.
• Market is already pricing in significant margin expansion.
• Valuations fair but rerating may take time.
• Earnings upgrade cycle may take time to kick in.

JPMorgan on Metals

• Steel, Zinc and Aluminum are preferred commodities.
• Positives: Chinese supply rationalisation, improving India demand and strong global demand.
• Vedanta most attractively positioned in terms of growth.
• TATA and JSW for domestic steel exposure and Hindalco for aluminum.
• Remain Underweight on NMDC and NALCO.
• SAIL offers an interesting option play on India demand recovery.
• Coal India remains a yield play with limited upside..
• Vedanta: Raised price target to Rs 415 from Rs 350; Stressed asset acquisition in steel would be positive given attractive economics.
• Tata Steel: Raised price target to Rs 1,015 from Rs 880.
• JSW Steel: Raised price target to Rs 325 from Rs 285.
• Hindaco: Raised price target to Rs 335 from Rs 300; Little volume growth, re-rating to continue.

Credit Suisse on Sadbhav Engineering

• Maintained ‘Outperform’; raised price target to Rs 480 from Rs 360.
• Positives: Improving execution, ordering pipeline and traffic.
• Execution will continue to keep up the momentum in the next financial year.
• Stronger execution to drive earnings on leverage.
• NHAI bidding pipeline is much stronger now.
• Sadbhav still trades at a relatively attractive.

UBS on Info Edge

• Downgraded to ‘Neutral’ from ‘Buy’; cut price target to Rs 1,370 from Rs 1,500.
• Believe positive market expectations have already driven the stock higher.
• Current valuation appears full.
• Believe market is pricing in an accelerated earnings trajectory for Naukri and undermining risk.
• Expect 15-16 percent/18-20 Revenue CAGR over near to medium term.
• Expect increase in advertisement to limit margin expansion.
• Expect strong delivery and subscription revenue growth at a compounded rate of 50 percent over the financial years through March 2020 for Zomato.
• Expect a $50-100 million fund-raising by Zomato at a valuation of about $1.5 billion.

Macquarie on ITC

• Maintained ‘Neutral’ with price target of Rs 304.
• Cess decision for the next financial year critical for re-rating.
• No cess increase in fixed cess rate for the next financial year will be best.
• Cigarette business continue to be under pressure.
• Expect 1 percent compounded growth rate in cigarette volume for the next two years.
• Profitability focus important for re-rating of FMCG business.

Centrum on Aarti Drugs

• Initiated ‘Buy’ with price target of Rs 940.
• Aarti Drugs is a leading domestic player of APIs.
• Positives: good growth of existing products, new product launches and over 75 percent utilisation.
• Aarti Drugs is profit-making, dividend paying company poised for good growth.
• See strong scope for re-rating.
• Expect to perform well due growth across geographies and economies of scale.
• Expect revenue, operating income and net profit to grow at a compounded rate of 14 percent, 15 percent and 19 percent respectively over the financial years through March 2020.
• To benefit from its presence over the entire pharma value chain.
• Expect company to generate healthy return ratios in future.
• Outperform peers’ due to its efficacious presence in the domestic and emerging markets.

Media Reports

• CCI nod sought: JSW arm, two others to buy pellet maker BRPL (Financial Express).
• Ruias ready forces for a comeback at Essar Steel; may join hands with Russian bank VTB & SSG Capital to mount bid (Economic Times).
• Rakesh Jhunjhunwala, Radhakishan Damani team up as race for Binani Cement intensifies; Ultratech, Heidelberg, JSW Group, Dalmia Bharat and Ramco also make offers. Note: Binani Industries is a subsidiary of Binani Cements. (Economic Times)
• JSW to bid aggressively for stressed assets (Economic Times).
• SBI to put Rs 382 cr soured education loans on sale (Economic Times).
• Blackstone in talks to buy commercial property portfolio from L&T for Rs 2.3k crore. (Economic Times).