Stocks To Watch: Cipla, DHFL, InterGlobe Aviation, Jet Airways, L&T Infotech, RIL, SpiceJet, Zee Entertainment

Asian stocks headed for their highest close since July on Friday after U.S. shares edged closer to a record.

Stocks in Tokyo and Seoul rose Friday, while Australia’s benchmark dipped. Treasuries were little changed. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.3 percent to 11,573.50 as of 7 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.

• Nocil has started trials runs towards manufacture of rubber chemicals at company’s plant in Dahej, Gujarat. In January 2018, the board had approved capex of Rs 255 crore for expansion of capacities in Navi Mumbai and Dahej.
• Alicon Castalloy awarded multi-year contract aggregating to Rs 810 crore from Jaguar Land Rover, Daimler, Samsung SDI and Mahle.
• Cipla: Venus Remedies sold its patented product Elores to the company for the Indian markets. This drug is used for treatment of life-threatening infections caused by bacteria.
• Gruh Finance and Bandhan Bank has filed orders passed by the National Company Law Tribunal regarding their amalgamation to the Registrar of Companies.
• FDC has entered into definitive agreement (including a trademark assignment deed) with GlaxoSmithKline Pharmaceuticals Limited for acquiring the registered Trademark "ENTEROPLUS" from GSK.
• AksharChem has planned shutdown of Vinyl Sulphone plant at Mehsana from Oct. 18-31, to carry out major repairs and maintenance.
• Reliance Capital has said that it has delayed the payment of NCS’s interest/ principle obligation which due on Oct. 16-17. The company expects that the debt servicing of the company in relation to accelerated amounts and otherwise will be delayed.
• L&T Infotech to acquire 100 percent stake in PowerupCloud Technologies for value estimated at $15 million. The target company deals with consultancy for cloud consulting and product platforms.
• Future Enterprises to seek shareholder’s nod for release and disposal/sale of specific assets of the company on Nov. 7.
• Avenue Supermarts has allotted non-convertible debentures worth Rs 100 crore on a private placement basis.
• KPR Mill to proceed with its buyback offer, with record date set as June 19.
• ICRA: NCLT has sanctioned merger of the company’s two arms with self.
• Indiabulls Housing Finance to consider fund raising via issue of bonds on Nov. 6.
• Shemaroo Entertainment approved raising up to Rs 250 crore.
• Arvind Fashions to consider raising funds on Oct. 23.
• Zuari Global to consider raising funds via NCDs on Oct. 24.
• IST: Board approved share split of one equity share to two equity shares. Record date set as Nov. 4.

Earnings Reaction To Watch

Zee Entertainment Enterprises (Q2, YoY)

• Revenue rose 7.4 percent to Rs 2,122 crore.
• Net profit rose 6.9 percent to Rs 413.2 crore.
• Ebitda rose 4.7 percent to Rs 684.2 crore.
• Margin stood at 32.2 percent versus 33.1 percent.
• Exceptional loss of Rs 171 crore in the current quarter.

LT & Infotech (Q2, QoQ)

• Revenue rose 3.5 percent to Rs 2,570.7 crore.
• Net profit rose 1.2 percent to Rs 360.1 crore.
• EBIT rose 0.7 percent to Rs 379.7 crore.
• Margin stood at 14.8 percent versus 15.2 percent.

Cyient (Q2, QoQ)

• Revenue rose 6.4 percent to Rs 1,159 crore.
• Net profit rose 9.4 percent to Rs 98.5 crore.
• EBIT rose 12.9 percent to Rs 111.5 crore.
• Margin stood at 9.6 percent versus 9.1 percent.
• Declared dividend of Rs 6 per share.

DHFL (Q1, YoY)

• Net Interest Income fell 75 percent to Rs 165.9 crore.
• Net loss stood at Rs 215.5 crore versus net profit of Rs 429 crore.
• Net loss on fair value changes to Rs 236.4 crore in Q1.

Jay Bharat Maruti (Q2, YoY)

• Revenue fell 25.3 percent to Rs 411 crore.
• Net profit fell 76.8 percent to Rs 3.8 crore.
• Ebitda fell 37.9 percent to Rs 30.1 crore.
• Margin stood at 7.3 percent versus 8.8 percent.

South Indian Bank (Q2, YoY)

• Net Interest Income rose 15.2 percent to Rs 584.3 crore.
• Net profit rose 20.5 percent to Rs 84.5 crore.
• Provisions stood at Rs 306.3 crore versus Rs 205 crore.
• GNPA to 4.92 percent versus 4.96 percent QoQ.
• NNPA to 3.48 percent versus 3.41 percent QoQ.

Nifty Earnings To Watch

• Reliance Industries

Other Earnings To Watch

• ICICI Lombard General Insurance
• L&T Finance Holdings
• L&T Technology Services
• Ambuja Cements
• Sundaram Clayton
• Central Depository Services (India)
• Kirloskar Ferrous Industries
• Pioneer Distilleries
• Sasken Technologies

Aviation Data

• Aviation industry passenger growth stood at 1 percent
• IndiGo’s air passenger growth stood at 13 percent – slowest in last 22 months.
• SpiceJet’s air passenger growth stood at 25 percent – slowest in last four months.
• India sees 2019 air traffic growth 4-6 percent : Bloomberg News
• India expects double digit air traffic growth early next year: Bloomberg News

Pledge Share Details

• Nagarjuna Fertilizers & Chemicals promoter Amlika Mercantile created a pledge of 14.52 crore on Sept. 16.
• Hotel Leelaventure SBICAP Trustee released pledge of 15.94 crore shares on Oct. 17.
• RNAM promoter Reliance Capital released pledge of 35.3 lakh shares on Oct. 16 for Invesco AMC, L&T MF, UTI MF, Powerica and DHFL Pramerica MF.

Trading Tweaks

• NIIT record date for share buyback.
• Mirc Electronics, ITD Cementation, Zee Media Corp, Pil Italica Lifestyle to move into ASM Framework.
• Eveready Industries, Alembic, Ramky Infrastructure to move out of short term ASM Framework.
• GTL Infrastructure, GVK Power & Infrastructure, Venus Remedies, GTL, Prime Focus to move into short term ASM Framework.
• BF Utilities, Adani Green Energy, ITDC price band revised to 10 percent.

Who’s Meeting Whom

• MCX to meet JP Morgan AMC, UBS Securities and other investors from Oct. 18-25.

Money Market Update

• The rupee closed at 71.17/$ versus 71.44/$ on Wednesday.

F&O Cues

Futures

• Nifty Oct futures closed at 11600.6, premium of 14.3 points versus 11.5 points
• Nifty Oct futures down 1.4 percent, sheds 1.9 lakh shares in OI
• Nifty Bank futures closed at 29,079.6, premium of 90.2 points versus 65.9 points
• Nifty Bank Oct futures OI up 3 percent, adds 38,000 shares in OI

Options

• Nifty PCR at 1.40 versus 1.31 (across all series)

Nifty Weekly Expiry: Oct 24

• Max OI on call side at 11,500 (8.7 lakh shares)
• Max OI on put side at 11,500 (11.5 lakh shares)
• OI addition seen at 11500P (+10.3 lakh shares), 11,400P (7.2 lakh shares)

Nifty Monthly Expiry: Oct 31

• Max OI on call side at 12,000 (21.8 lakh shares)
• Max OI on put side at 11,000 (30.5 lakh shares)

Brokerage Radar

On Zee Entertainment

JPMorgan

• Maintained ‘Neutral’; cut price target to Rs 260 from Rs 375.
• In-line Q2 Ebitda but negative operating cash flow disappoints.
• Muted advertising revenue growth; domestic subscription healthy.
• Lower valuation multiple on account of risks related to potential stake sale and weak free cash flow.

BofAML

• Maintained ‘Neutral’; cut price target to Rs 360 from Rs 445.
• September quarter revenue was in line; Ebitda beat; guidance unchanged.
• Ad growth better than industry; expect positive operating cash flow in 2020-21
• Performance of balance sheet items will drive near term stock performance

CLSA

• Maintained ‘Buy’; hiked price target to Rs 320 from Rs 290.
• September quarter’s revenue and net profit was head of estimates.
• Ad revenue to pick up in H2FY20; working capital expansion drags cashflow.
• Awaiting resolution to Zee’s share pledging crisis.

Emkay

• Maintained ‘Sell’; cut price target to Rs 240 from Rs 341.
• In-line operating performance.
• Weakening balance sheet adds to the overhang.
• Cut EPS estimates by 10 percent each for the current and the next financial year to factor in higher programming cost

Edelweiss

• Maintained ‘Buy’ with a price target of Rs 399.
• Ad growth slackens; subscription revenue jumps.
• Ebitda margin contracted owing to weak revenue growth.
• Expect Zee to be key beneficiary of NTO given its strong viewership countrywide.

Morgan Stanley

• Maintained ‘Underweight’ with a price target of Rs 248.
• Revenue growth and margin were slightly weaker than expected.
• Cash balance decreased further; receivables and inventory continued to increase.
• Stock to remain volatile until debt issue is resolved.

On TVS Motor

Nomura

• Maintained ‘Reduce’; hiked price target to Rs 375 from Rs 358
• September quarter beat estimates on cost reduction; mgmt. expects some more benefit in the third quarter.
• Volumes to remain under pressure over FY20-21;
• Valuation seems expensive and outlook is weak.

CLSA

• Maintained ‘Sell’; hiked price target to Rs 380 from Rs 360.
• Weak quarter but decent margins.
• Two wheeler industry outlook remains weak; mopeds pose a drag.
• Margins unlikely to improve amid weak demand, high competition and cost push.

On L&T Infotech

Macquarie

• Maintained ‘Outperform’; hiked price target to Rs 2,130 from Rs 2,100.
• Q2 results ahead of estimates at the revenue level.
• Large deal win momentum remains strong.
• Margins on expected lines; utilisation improvement key to uptick in future.

Credit Suisse

• Maintained ‘Outperform’ with a price target of Rs 1,900.
• Margin better than expected despite a wage hike quarter.
• BFS weakness persists as expected but the weakness in top account seems to have bottomed out.
• Client hunting and mining continues to remain strong.
• Headcount addition also remains steady, suggesting preparedness for a stronger second half.

On PVR

Edelweiss

• Maintained ‘Buy’ with a price target of Rs 2,100.
• Escapism holds sway despite economic slowdown.
• Strong content fuelled revenue, Ebitda and net profit.
• Ad revenue jumped 16 percent YoY despite a tough ad environment.

UBS

• Maintained ‘Buy’ with a price target of Rs 1,950.
• Robust revenue growth led by hit movies in both Bollywood and Hollywood.
• Meaningful growth in film distribution business is a healthy sign.
• Explore other revenue streams; Robust screen addition visibility.

More Calls

Edelweiss on Cyient

• Maintained ‘Buy’; hiked price target to Rs 647 from Rs 632.
• Margin expansion playing out on expected lines.
• Growth led by DLM business; uptick in services awaited.
• Expect Cyient to benefit once client-specific issues are resolved.

ICICI Securities on Metropolis Healthcare

• Initiated with ‘Add’ rating and a price target of Rs 1,365.
• Specialty focus to sustain premium realisations.
• Expect steady growth with consistent free cashflow generation.
• Positives: focus on high-value specialised tests, increasing footprint and rising share of organised players.
• Expect revenue and net profit to grow at a CAGR of 15 percent and 21.7 percent respectively over FY19-22.