Stocks To Watch: DHFL, IndiGo, ITC, Maruti Suzuki, Nestle
A chart showing the ‘flash crash’ change in the value of the U.K. pound versus the U.S. dollar overnight sits on a trader’s computer screen. (Photographer: Chris Ratcliffe/Bloomberg)

Stocks To Watch: DHFL, IndiGo, ITC, Maruti Suzuki, Nestle

Asian stocks fell Monday as investors fretted over President Donald Trump’s escalation of the trade war with China.

Shares opened lower in Japan, Australia and South Korea, and S&P 500 Index futures dipped. Futures signalled shares will also fall in Hong Kong, The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.58 percent to 10,952 as of 7:40 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

  • Nestle: Board announced that the company will commence construction of its ninth factory in Gujarat for Maggi Noodles, which will involve an initial investment of Rs 700 crore over the next two years.
  • Maruti Suzuki sent nearly 10 percent of its contract workforce at its Gurugram, Haryana plant on a leave without pay, according to a person aware of the decision, as the nation’s largest carmaker’s sales tumbled the most in seven years last month.
  • NIIT will consider a share buyback on Aug. 10.
  • Astral Poly Technik: Board approved bonus issue of one equity share for four shares held. The company’s Hosur plant has commenced production from expanded facility from July.
  • Shriram Transport Finance, Shriram City Union Finance: Blackstone and Carlyle Group are among five investors that are in talks to acquire a stake in privately-held Indian-financier Shriram Capital, Bloomberg reported quoting people with knowledge of the matter. The sellers are seeking a valuation of $1.2 billion for the stake, they said.
  • Punjab & Sind Bank stated that account of Fairdeal Supplies with outstanding dues of Rs 40.49 crore has been declared as fraud and reported to RBl.
  • Adani Power completed the acquisition of GMR Chhattisgarh Energy with itself.
  • Adani Green Energy part commissioned 100MWAC capacity in Rajasthan having PPA with Maharashtra State Electricity Distribution Company Limited at Rs. 2.71/kWh for a period of 25 years.
  • Coal India’s Talcher mines remain shut, Bloomberg reported quoting unit spokesman.
  • Cox & Kings defaulted in payment of CPs worth Rs 100 crore which was due on Aug. 1.
  • DHFL: DSP Mutual Fund said 50 percent of dues from the company remain unpaid, according to a Bloomberg report.
  • Europe to block Hindalco’s arm Novelis, Aleris deal unless concessions offered., Reuters reported.
  • V-Mart Retail opened three new stores in Rajasthan, Uttar Pradesh and Punjab.
  • RPP Infra Projects won orders worth Rs 107.9 crore for white topping of selected roads in Bengaluru.
  • Coffee Day Enterprises to delay its quarterly board meeting from Aug. 8 to a later date.
  • Manpasand Beverages appointed Batliboi & Purohit as Statutory Auditors for a period of five years.
  • InterGlobe Aviation: Related party transactions for 2018-19 have been approved by audit panel. Besides, the company will seek approval for IGE group to nominate five directors, according to Bloomberg report.
  • Tata Power to install 300 electric vehicle charging stations, according to Bloomberg report.
  • IL&FS Transportation Networks defaulted on NCD interest payment worth Rs 2.29 crore which was due on Aug. 2
  • VST Tillers Tractors July Update: Power Tillers sales up 11 percent at 2880 units versus 2598 units. Tractors sales down 7 percent at 719 units versus 769 units.
  • RBI imposed a penalty for non-compliance of rules on the following banks: Allahabad Bank (Rs 2 crore), Bank of Baroda (Rs 1.5 crore), Bank of India (Rs 1.5 crore), Bank of Maharashtra (Rs 2 crore), Indian Overseas Bank (Rs 1.5 crore), Oriental Bank of Commerce (Rs 1 crore), Union Bank of India (Rs 1.5 crore) Punjab National Bank (Rs 50 lakh), Oriental Bank (Rs 1.5 crore).
  • DHFL defaulted on NCDs interest worth Rs 42.77 crore and Rs 49.25 crore, which were due on August 2 and August 3, respectively.
  • JM Financial: Public issue by way of the Tranche II issue of secured, rated, listed, redeemable, NCDs of face value €1,000 each with a base issue size of €100 crore with an option to retain oversubscription up to Rs 400 crore, aggregating up to Rs 500 crore.
  • Tata Power and Tata Motors announced their partnership to install 300 fast charging stations by the end of the March 2020, across key five cities namely Mumbai, Delhi, Pune, Bangalore and Hyderabad.
  • PNC Infratech received Rs 145.3 crore towards an arbitration award from NHAI.
  • BEML bagged an order worth Rs 834 crore for making 21 train sets for MMRDA Mumbai line 2 and 7.

Also read: CCI Dismisses Abuse Of Dominance Charge Against ONGC

Earnings To Watch

  • Entertainment Network
  • Berger Paints
  • Bombay Dyeing
  • Action Construction Equipment
  • Arvind SmartSpaces
  • Torrent Power
  • Venky's
  • Butterfly Gandhimathi Appliances
  • CL Educate
  • Cosmo Films
  • Dilip Buildcon
  • Hinduja Global Solutions
  • Hindustan Oil Exploration
  • Indian Bank
  • Jindal Stainless
  • KEI Industries
  • Majesco
  • Monte Carlo Fashions
  • Mangalam Cement
  • Nath Bio-Genes
  • Nesco
  • PNB Gilts
  • SRF
  • Sundaram Finance Holdings
  • Indian Hotels

Earnings Reaction To Watch

ITC (Q1, YoY)

  • Revenue up 5.8 percent to Rs 11502.8 crore (estimate Rs 11,759 crore)
  • Net profit up 12.6 percent to Rs 3173.9 crore (estimate Rs 3,154 crore)
  • Ebitda up 8.7 percent to Rs 4565.6 crore (estimate Rs 4,622 crore)
  • Margin at 39.7 percent versus 38.6 percent (estimate 39.3 percent)

Nestle India (Q2CY19, YoY)

  • Revenue up 11.2 percent to Rs 3,000.9 crore (estimate Rs 2,923 crore)
  • Net profit up 10.8 percent to Rs 437.8 crore (estimate Rs 437 crore)
  • Ebitda up 8.1 percent to Rs 697.3 crore (estimate Rs 705 crore)
  • Margin at 23.2 percent versus 23.9 percent (estimate 24.1 percent)
  • Board declared interim dividend of Rs 180 per share and annual dividend of Rs 23 per share

Tata Communications (Q1, QoQ)

  • Revenue down 1.8 percent to Rs 4,168.6 crore
  • Net profit at Rs 76.6 crore versus net loss of Rs 198.8 crore
  • Ebitda up 20.5 percent to Rs 825.6 crore
  • Margin at 19.8 percent versus 16.1 percent
  • Other expenses down 22 percent to Rs 865.9 crore

Deepak Nitrite (Q1, YoY)

  • Revenue up 2.3 times to Rs 1,051 crore
  • Net profit up 7 times to Rs 131.6 crore
  • Ebitda up 4.8 times to Rs 253.9 crore
  • Margin at 24.2 percent versus 11.4 percent

Astral Poly (Q1, YoY)

  • Revenue up 27 percent to Rs 607 crore
  • Net profit up 27 percent to Rs 47 crore
  • Ebitda up 19 percent to Rs 93 crore
  • Margin at 15.3 percent versus 16.4 percent

Gujarat State Petronet (Q1, QoQ)

  • Revenue up 31.5 percent to Rs 3,021.5 crore
  • Net profit up 56 percent to Rs 331.8 crore
  • Ebitda up 48.6 percent to Rs 872.1 crore
  • Margin at 28.9 percent versus 25.5 percent

Bata (Q1, YoY)

  • Revenue up 10.6 percent to Rs 882.1 crore
  • Net profit up 21.9 percent to Rs 100.7 crore
  • Ebitda up 84.4 percent to Rs 243.1 crore
  • Margin at 27.6 percent versus 16.5 percent

Equitas Holding (Q1, YoY)

  • Net interest income up 38 percent to Rs 362.8 crore
  • Net profit up 2.4 times to Rs 70.3 crore
  • Deposits up 52 percent to Rs 8670 crore
  • GNPA at 2.75 percent versus 2.52 percent (QoQ)
  • NNPA at 1.54 percent versus 1.43 percent (QoQ)

Union Bank (Q1, YoY)

  • Net interest income down 4.1 percent to Rs 2,518.2 crore
  • Net profit up 73.3 percent to Rs 224.4 crore
  • Provisions at Rs 1,431.1 crore versus Rs 1,803.2 crore
  • GNPA at 15.18 percent versus 14.98 percent (QoQ)
  • NNPA at 7.23 percent versus 6.85 percent (QoQ)

Laurus Labs (Q1, YoY)

  • Revenue up 2.2 percent to Rs 550.6 crore
  • Net profit down 9 percent to Rs 15.1 crore
  • Ebitda up 3.4 percent to Rs 83.2 crore
  • Margin at 15.1 percent versus 14.9 percent

Aditya Birla Capital (Q1, YoY)

  • Net interest income up 30.9 percent to Rs 661.1 crore
  • Net profit up 26.8 percent to Rs 270 crore
  • Lending book up 16 percent to Rs 61,998 crore

V-Mart Retail (Q1, YoY)

  • Revenue up 25.5 percent to Rs 453 crore
  • Net profit down 29.3 percent to Rs 17.6 crore
  • Ebitda up 30.3 percent to Rs 58 crore
  • Margin at 12.8 percent versus 12.3 percent

Gujarat Mineral Development Corporation (Q1, YoY)

  • Revenue down 21.7 percent to Rs 505 crore.
  • Net profit down 48.6 percent to Rs 96 crore.
  • Ebitda down 55.6 percent to Rs 113.3 crore.
  • Margin at 22.4 percent versus 39.5 percent.

Trident (Q1, YoY)

  • Revenue up 15.4 percent to Rs 1,312 crore.
  • Net profit up 2.1 times to Rs 122.4 crore.
  • Ebitda up 25.7 percent to Rs 297.7 crore.
  • Margin at 22.7 percent versus 20.8 percent.
  • Forex loss of Rs 41.6 crore in the base quarter.

JK Cement (Q1, YoY)

  • Revenue up 15.9 percent to Rs 1,394 crore.
  • Net profit up 193.3 percent to Rs 132 crore.
  • Ebitda up 83.3 percent to Rs 308 crore.
  • Margin at 22.09 percent versus 13.9 percent.

Relaxo Footwears (Q1, YoY)

  • Revenue up 15.4 percent to Rs 648.3 crore.
  • Net profit up 8.3 percent to Rs 49.8 crore.
  • Ebitda up 28.5 percent to Rs 106.5 crore.
  • Margin at 16.4 percent versus 14.8 percent.

Bhansali Engineering Polymers (Q1, YoY)

  • Revenue up 55.3 percent to Rs 313.3 crore.
  • Net profit up 30.4 percent to Rs 21.9 crore.
  • Ebitda up 5.8 percent to Rs 29.1 crore.
  • Margin at 9.3 percent versus 13.6 percent.
  • Raw material as percent of sales to 80 percent versus 72 percent

J&K Bank (Q1, YoY)

  • Net interest income up 15.8 percent to Rs 902.2 crore.
  • Net profit down 58.4 percent to Rs 21.9 crore.
  • Provisions to Rs 293.2 crore versus Rs 255 crore (Rs 378 crore QoQ)
  • GNPA to 8.48 percent versus 8.97 percent (QoQ)
  • NNPA to 4.36 percent versus 4.89 percent (QoQ)

LIC Housing Finance (Q1, YoY)

  • Net interest income up 17.2 percent to Rs 1,181.9 crore.
  • Net profit up 7.5 percent to Rs 610.7 crore.

Offerings

  • Spandana Sphoorty Financial IPO opens today. The company raised Rs 360.28 crore from 18 anchor investors at Rs 856 per share

Also read: Spandana Sphoorty IPO: All You Need To Know

Datawatch

  • 10:30 a.m.: Markit India PMI Services for July, prior 49.6.
  • 10:30 a.m.: Markit India PMI Composite for July, prior 50.8.

Bulk Deals

  • Care Ratings: Virtus Emerging Markets Small Cap Fund sold 2.7 lakh shares (0.92 percent) at Rs 496.79 each.
  • NRB Bearings: Bajaj Finance sold 19.45 lakh shares (2.01 percent) at Rs 76.56 each.

Trading Tweaks

  • Hubtown, CARE Ratings, Alphageo, NRB Bearings price band revised to 10 percent
  • Williamson Magor & Company to move out of ASM Framework

F&O Cues

August Futures

  • Nifty futures closed at 11,024, premium of 26.7 points
  • Nifty futures OI up 1 percent, adds 1.4 lakh shares in OI
  • Bank Nifty futures closed at 28,327.3, premium of 122 points
  • Bank Nifty futures OI up 3 percent, adds 46,800 shares in OI

Options

  • Nifty PCR at 1.18 (across all series)

Nifty Weekly Expiry (Aug. 8)

  • Max OI on call side at 11,100 (21.4 lakh shares)
  • Max OI on put side at 11,000 (17 lakh shares)
  • Max OI addition seen in 10,900P (+6.7 lakh shares), 10,500P (+6.2 lakh shares)

Nifty Monthly Expiry (Aug. 29)

  • Max OI on call side at 11,500 (22.2 lakh shares)
  • Max OI on put side at 11,000 (34.7 lakh shares)

Brokerage Radar

On ITC

Morgan Stanley

  • Maintained ‘Overweight’ with a price target of Rs 360.
  • ITC results were weaker than expected.
  • Except for FMCG, EBIT growth across all business segments missed estimates.
  • Higher other income drove net profit beat.

CLSA

  • Maintained ‘Buy’ with a price target of Rs 365.
  • Q1 results exactly inline.
  • Cigarette volume around 3 percent missed estimates but EBIT was inline.
  • Strong FMCG profitability despite modest growth.

HSBC

  • Maintained ‘Buy’; cut price target to Rs 320 from Rs 330.
  • June quarter review: Cigarette volume growth of 3-4 percent was slightly below consensus.
  • Ebitda margin widened on faster ‘FMCG-Others’ Ebitda growth and respectable cigarette EBIT growth.
  • While valuation is undemanding, taxation path remains a key risk.

Kotak Securities

  • Maintained ‘Add’; cut price target to Rs 315 from Rs 335.
  • June quarter review: headline earnings in line, internals weak.
  • Segmental: cigarettes volumes disappoint, FMCG growth moderates to 8 percent from 11-12 percent.
  • ITC offers value; stay positive notwithstanding soft narrative, lack of near-term triggers.

On HDFC

Morgan Stanley

  • Maintained ‘Overweight’ with a price target of Rs 2,600.
  • Core pre-provisioning operating profit was in line, driven by securitisation income.
  • Spreads and AUM growth moderated as the corporate book had lumpy repayments.
  • Individual AUM growth was strong; Corporate NPLs increased, largely as expected.

CLSA

  • Maintained ‘Buy’; hiked price target to Rs 2,770 from Rs 2,730.
  • Healthy rise in retail; cautious on corporate.
  • NPLs rise, but were well provided.
  • Top pick among NBFCs.

Nomura

  • Maintained ‘Neutral’ with a price target of Rs 2,300.
  • Steady performance in a tough environment.
  • Growth moderation driven by builder book.
  • Asset quality: Marginal increase in corporate NPAs but still manageable.

Kotak Securities

  • Maintained ‘Add’; hiked price target to Rs 2,325 from Rs 2,175.
  • Moderate core earnings in June quarter in challenging environment.
  • Competition from banks remains intense, but debt market’s preference for HDFC will augur well.
  • Concerns in real estate lending segments will have overhang on HFCs even as HDFC is better-placed.

On SBI

IDFC Securities

  • Maintained ‘Outperform’; cut price target to Rs 365 from Rs 385.
  • June quarter review – Sharp deterioration in asset quality.
  • See downside risks to earnings from weak macro, high pension costs and larger watch list.
  • Maintain Outperform due to inexpensive valuations; but asset quality remains key monitorable.

CLSA

  • Maintained ‘Buy’; cut price target to Rs 380 from Rs 420.
  • High slippage and provisions drag down profit.
  • Steady operating performance; Subsidiaries growing well.
  • Cut earnings to factor-in higher credit costs; but still prefer SBI over other PSUs.

On Nestle India

IDFC Securities

  • Maintained ‘Outperform’ with a price target of Rs 12,405.
  • Key positives: Healthy domestic sales despite high base.
  • Key negatives: Higher input cost led contraction in gross margins.
  • Cut 2020 net profit estimates by 1.4 percent on lower gross margins.

CLSA

  • Maintained ‘Outperform’; hiked price target to Rs 12,415 from Rs 11,750.
  • June quarter results slightly ahead; Margins were expectedly weak.
  • Good domestic growth, weak exports.
  • Cut estimates by 2-5 percent over CY19-21 mainly due to cut in other income post announcing special dividend.

On Dalmia Bharat

Kotak Securities

  • Maintained ‘Add’ with a price target of Rs 1,225.
  • June quarter review: Strong start to the year; record margins led by sharp price hikes.
  • Murli Industries acquisition gets NCLT nod; East expansion on track.
  • See strong growth pipeline and attractive valuations.

HSBC

  • Maintained ‘Buy’ with a price target of Rs 1,230.
  • June quarter results were a beat on operating profit.
  • Volume growth in a challenging environment was commendable.
  • Management exuded confidence on recovery of lost funds.

More Calls

HSBC on Godrej Consumer

  • Maintained ‘Hold’; cut price target to Rs 680 from Rs 710.
  • Domestic sales growth was weak led by key categories.
  • Indonesia slowed down due to modern trade, Africa continues to face macro headwinds, while South Africa improved.
  • Company hopes for gradual improvements in the coming quarters.

Kotak Securities on Exide Industries

  • Maintained ‘Sell’; cut price target to Rs 180 from Rs 210.
  • June quarter review: Ebitda was 3 percent below estimates on marginal revenue decline.
  • Decline in lead prices over the past few months led to improvement in profitability.
  • Believe price cuts in two-wheeler replacement segment and profitability pressures in industrial segment pose concern.

Jefferies on Marico

  • Maintained ‘Hold’; hiked price target target to Rs 390 from Rs 380.
  • June quarter review: Strong June quarter on expected lines.
  • To benefit from margin expansion through 2019-20 given benign input costs.
  • Volumes are expected to remain steady in 2019-20.

IDFC Securities on Astral Poly

  • Maintained ‘Outperform’ with a price target of Rs 1,329.
  • Key positives: Better than expected pipes realisations/adhesives margins .
  • Key negatives: Weak adhesives revenue growth.
  • Expect premium valuations to sustain given strong execution and ability to stay ahead in innovation.

CLSA on Inox Leisure

  • Maintained ‘Buy’; hiked pirce target to Rs 412 from Rs 394.
  • Aggressive screen additions continue; footfall monetisation improving.
  • Shift to IND-AS 116 drives sharp cut to estimates.

IDFC Securities on Indian Energy Exchange

  • Maintained ‘Outperform’; cut price target to Rs 183 from Rs 193.
  • Key negatives: 13 percent decline in volumes.
  • Key positives: Cross border trading likely to start from September quarter, ESCERT to trade in 2019-20 and lower tax rate to continue for next three years.

Morgan Stanley on LIC Housing Finance

  • Maintained ‘Equal-weight’ with a price target of Rs 500.
  • Reported net profit below estimate, driven mainly by higher provisions.
  • Asset quality deterioration is increasingly becoming a concern now.
  • Share of LAP declined QoQ for the first time in at least five years.

Kotak Securities on Ceat

  • Maintained ‘Add’; cut price target to Rs 900 from Rs 1,080.
  • Decent June quarter results; consolidated Ebitda above estimates.
  • Expect the company to gain market share in Passenger vehicle segment.
  • Lower FY20-22 EPS estimates by 5-13 percent on lower margin and higher depreciation and interest companies.

Morgan Stanley on Prestige Estates

  • Maintained ‘Overweight’ with a price target of Rs 347.
  • Residential business should continue to grow and diversify with planned new launches.
  • Well balanced with a growing rental portfolio.

Credit Suisse on Reliance Industries

  • Downgraded to ‘Underperform’ from ‘Neutral’, cut price target to Rs 995 from Rs 1,350.
  • Cautious on refining and petrochemical cycle due to high supply pressure.
  • RIL is likely to be FCF negative for FY20-21; incorporate higher liabilities from crude payables, JioPhone financing and East West pipeline.
  • Slow enterprise rollout and weak Jio ARPU in June quarter.

CLSA on Union Bank

  • Maintained ‘Buy’; cut price target to Rs 80 from Rs 96.
  • Top-line growth remains weak; capital infusion key.
  • Earnings a tad weaker; risk of slippages drives cuts.
  • Upsides can arise from resolutions in cases such as Essar Steel.
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