Stocks To Watch: HDFC, Indiabulls Housing Finance, Reliance Capital, Vodafone Idea, Yes Bank

Stocks edged higher in Asia and American equity futures advanced amid optimism China and the U.S. are moving closer to an interim trade deal.

Shares rose in Sydney and Seoul, though a capital raising at one of Australia’s largest banks capped the positive sentiment. Markets are shut in Tokyo, so Japanese equities won’t trade and cash Treasuries will begin at the London open. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.21 percent to 11,962.50 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.

• Reliance Capital has defaulted in payment of NCD obligations which were due on Oct. 31.
• Alkem Laboratories said that U.S. FDA has closed its inspection at its manufacturing facility in Daman and Baddi. The regulator has issued an EIR for both plants in the month of August when the inspection took place.
• Vodafone Idea: India Ratings cut the company’s long-term rating and bonds to BBB from A+, citing increased liquidity risk, deteriorating operations and weakening support from promoters, the rater said in a statement.
• Coal India: Coal production in October down 20.9 percent at 39.35 million tons versus 49.78 million tons. Coal offtake down 18.9 percent at 40.5 million tons versus 49.96 million tons.
• Indiabulls Housing Finance to consider raising funds via NCDs on Nov. 6.
• Berger Paints to increase its stake from 91.94 percent to 95.53 percent in STP Ltd. The target company has become the subsidiary of Berger Paints with effect from Nov. 1.
• InterGlobe Aviation said that they are confident to meet DGCA directive where the company is required to have at least one LPT 3 modified engine on aircraft which has one unmodified engine. The new directive requires that all operating A320 NEO should have both engines with LPT3 modification installed for operation post Jan 2020. The company is working with both P&W and Airbus on mitigation so that enough modified spare engines are there by January 2020, the schedule has remained intact.
• Ashok Leyland to observe non-working days ranging from 0-12 days during the month of November.
• 3i Infotech: Board approved sale of 74 percent stake in company’s arm Locuz Enterprise Solutionz for Rs 23 crore.
• MOIL has reduced prices of all grades of manganese ore (37 percent and above) by 20 percent on existing prices for manganese ore (less than 37 percent) by 25 percent on the current prices prevailing since Oct. 1.
• IL&FS Transportation Networks defaulted in payment of debenture interest aggregating to Rs 2.29 crore which was due on Nov. 1.
• Lakshmi Vilas Bank said that divergence in provisioning for FY19 stood at Rs 111.9 crore and the Bank has already considered Rs 62.72 crore in Q1FY20.
• Union Bank said that divergence in provisioning for FY19 stood at Rs 1,587.6 crore and adjusted loss after divergence stood at Rs 3,978 crore.
• Indian Bank said that divergence in provisioning for FY19 stood at Rs 1,004 crore and adjusted loss after divergence stood at Rs 333.2 crore.
• Allcargo Logistics to consider an issue of NCDs aggregating to Rs 195 crore on Nov. 8.
• Eveready Industries: India Ratings and Research has downgraded the company's long-term credit rating to 'IND BB' from 'IND BBB-' and maintained it on Rating Watch Negative.
• Dhanlaxmi Bank: RBI approved the interim arrangement of formation of a Committee of Directors to exercise the powers vested with the Managing Director and CEO till such time a new MD and CEO is appointed and assumes charge. As advised by RBI, the interim arrangement will not continue beyond four months within which the bank will complete the process of identification and appointment of a new MD and CEO.
• Godrej Agrovet: Amalgamation of company’s two arms Creamline Dairy Products and Nagavalli Milkline has become effective on Oct. 31.
• Seamec said that subject contract for second season has commenced from Oct. 31 with mobilization of Barge Glorious.
• Aster DM to hold analyst conference call on Nov. 13, 2019 at noon.
• Just Dial: Matthew Pacific Tiger Fund sells 4.41 lakh shares or 0.68 percent equity reducing its holding in the company to 3.22 percent from 3.90 percent.
• Indiabulls Real Estate: Update on divestmet of London Property - Company’s wholly owned subsidiary has divested it entire stake in Century Limited to Clivedale Overseas Limited, an entity owned by the Promoters of the Company. With this Century Limited ceases to be a subsidiary of the Company. A consideration of 200 million pounds would be received in tranches.
• Cochin Shipyard acquired 57,20,000 shares or 26 percent equity of Hooghly Cochin Shipyard Ltd., an unlisted subsidiary of CSL, on Nov. 1, 2019 at total consideration of Rs.5.06 crore. Prior to this acquisition of shares, CSL was holding 74 percent of the equity shares of HCSL.
• Steel Strips And Wheels’ rim sales fell 27 percent on a yearly basis to 10.55 lakhs last month. The number is lower due to the fact that October was the second highest sale figure for SSWL ever. The base effect of last year's festive sales was the reason for large dip in sales volumes.
• Manapuram Finance: Meeting of the financial resources and management committee of the board of directors of the company will be held on Nov. 7. Inter- alia to consider and approve the issuance of the private placement of rated, secured, redeemable non-convertible debentures for Rs.200 crore.
• DCB Bank revised marginal cost of funds-based lending rate with effect from Nov. 5. Overnight MCLR at 8.71 percent, one-month MCLR at 8.71 percent, three-month MCLR at 9.34 percent, six-month MCLR at 9.91 percent and one-year MCLR 10.31 percent.
• SpiceJet: Ajay Singh, promoter and chairman of the company, has pledged around 2.78 percent stake for securing a credit facility for the budget airline.
• Minda Industries issued commercial paper of Rs 30 crore due for maturity on Jan. 30, 2020. This is in line with the management efforts to bring down finance costs.
• IRB Infra: NHAI terminates the Concession Agreements of IRB PP Project Private Limited and IRB PS Highway Pvt. Ltd. with effect from May 15, 2019 as per clause 4.5 of respective concession agreements.

Nifty Earnings To Watch

Housing Development Finance Corporation

Other Earnings To Watch

• Automotive Axles
• Mahindra Logistics
• Sun Pharma Advanced Research
• Sundram Fasteners
• Bharat Electronics
• Can Fin Homes
• CARE Ratings
• Varun Beverages
• GE Power India
• Godrej Agrovet
• HSIL
• HT Media
• Indian Overseas Bank
• Intellect Design Arena
• Kirloskar Brothers
• KRBL
• Mahindra Holidays & Resorts India
• Mangalore Refinery and Petrochemicals
• NACL Industries
• NOCIL
• Persistent Systems
• Piramal Phytocare
• Repro India
• SRF
• Sudarshan Chemical Industries
• TCI Developers
• TCI Express
• The Hi-Tech Gears
• WABCO
• Wheels India

Earnings Reaction To Watch

Yes Bank (Q2, YoY)

• Net Interest Income down 9.6 percent at Rs 2,185.91 crore
• Net loss at Rs 600.08 crore versus net profit at Rs 964.70 crore
• Provisions at Rs 1,336.25 crore vs Rs 1,784.11 crore QoQ
• Gross NPAs at 7.39 percent versus 5.01 percent QoQ
• Net NPAs at 4.35 percent versus 2.91 percent QoQ
• Measurement of accumulated DTA has resulted in a one-time additional charge of Rs 708.61 crore.

JK Lakshmi Cement (Q2, YoY)

• Revenue up 9.8 percent at Rs 935.5 crore
• Net profit up 5 times at Rs 45.9 crore
• Ebitda up 62.3 percent at Rs 148.6 crore
• Margin at 15.8 percent versus 10.7 percent

V-Mart Retail (Q2, YoY)

• Revenue up 19.8 percent at Rs 314.2 crore
• Net loss at Rs 18 crore vs net loss at Rs 4 crore
• Ebitda at Rs 11.4 crore versus Ebitda loss of Rs 1.4 crore
• IND AS 116 Impact Seen
• Inventory Gain of Rs 230.2 crore in current quarter
• SSSG growth at 1 percent, impacted be economic slowdown
• Opened 27 new stores in H1FY20 taking total store count to 239

Central Bank of India (Q2, YoY)

• Net Interest Income up 12.9 percent at Rs 1,891 crore
• Net profit at Rs 134.1 crore versus net loss at Rs 923.6 crore
• Provisions at Rs 550.6 crore versus Rs 1,649.3 crore
• Gross NPA at 19.89 percent from 19.93 percent QoQ
• Net NPA at 7.9 percent from 7.98 percent QoQ

GIC Housing Finance (Q1, YoY)

• Net interest income down 20.9 percent at Rs 70.7 crore.
• Net loss at Rs 10 crore versus net profit at Rs 46.2 crore.
• IND AS 116 impact seen.

Escorts (Q2, YoY)

• Revenue down 6 percent to Rs 1,333.77 crore.
• Net Profit flat at 101.54 crore.
• Ebitda down 18 percent to Rs 124.69 crore.
• Margin at 9.34 percent versus 10.80 percent
• Tax expense down 92 percent to Rs 4.08 crore.
• Exceptional loss of 9.22 crore represents full and final settlement of product liability matter

Trident (Q2, YoY)

• Revenue down 5 percent to Rs 134.65 crore.
• Net Profit up 27 percent to Rs 13.98 crore.
• Ebitda at Rs 26.5 crore versus Rs 27.47 crore.
• Forex gain of Rs 2.57 crore versus loss of Rs 5.58 crore.

Relaxo Footwear (Q2, YoY)

• Revenue up 14 percent to Rs 621.77 crore.
• Net Profit up 79 percent to Rs 70.54 crore.
• Ebitda up 42 percent to Rs 104.71 crore.
• Margin at 16.84 percent versus 13.54 percent.
• Tax expense at Rs 3.76 crore Rs 23.55 crore.

BEML (Q2, YoY)

• Revenue down 6 percent to Rs 687.11 crore.
• Net loss at Rs 27.2 crore versus net profit of Rs 16.63 crore.
• Ebitda loss at Rs 7.26 crore versus Ebitda profit of Rs 42.07 crore.

Bulk Deals

• Yes Bank: BNP Paribas Arbitrage sold 1.3 crore shares (0.51 percent) at Rs 69.15 each
• Eveready Industries: Aditya Birla Finance sold 25 lakh shares (3.44 percent) at Rs 59.6 each. Naravi Infra and Utilities acquired 6 lakh shares (0.83 percent) at Rs 59.6 each
• CL Educate: Principal MF sold 73,000 shares (0.52 percent) at Rs 75 each
• Jyothy Labs: UTI MF acquired 19.6 lakh shares (0.53 percent) at Rs 173.4 each. Reliance MF acquired 69.2 lakh shares (1.88 percent) at Rs 173.4 each. Promoter Sahyadri Agencies sold 1.55 crore shares (4.22 percent) at Rs 173.4 each.
• Just Dial: Matthew Pacific Tiger Fund sells 4.41 lakh shares or 0.68 percent of equity. Holding in Just Dial now at 3.22 percent from 3.90 percent.

Pledge Share Details

• MEP Infra Developers promoters created pledge of 1.5 crore shares on Oct. 26.

Who’s Meeting Whom

Mahindra & Mahindra Financial Services to meet Black Rock (Hong Kong), Ruane Cuniff & Goldfarb and other investors from Nov. 5-13

Insider Trading

• BPCL promoter Government of India sold 69.12 lakh shares on Oct. 10
• Hatsun Agro Product promoter and director RG Chandramogan acquired 63k shares on Oct. 31

(As Reported On Oct. 31)

Money Market Update

• The Indian rupee ended higher for the second consecutive week. The home currency appreciated 0.1 percent last week to end at 70.81 against the U.S. dollar.

F&O Cues

Futures

• Nifty November futures closed at 11928.2, premium of 37.6points
• Nifty November Futures OI up 2 percent, adds 2.4 lakh shares in OI
• Nifty Bank November futures closed at 30,374, premium of 43.6 points
• Nifty Bank November futures series OI up 21 percent, adds 1.6 lakh shares in OI

Options

• Nifty PCR at 1.41 (across all series)

Nifty Weekly Expiry: Nov 7

• Max OI on call side at 12,000 (21 lakh shares)
• Max OI on put side at 11,800 (20.8 lakh shares)
• OI addition seen at 11,800P (+7.4 lakh shares), 12,000C (+7 lakh shares)

Nifty Monthly Expiry: Nov 28

• Max OI on call side at 12,000 (17.2 lakh shares)
• Max OI on put side at 11,600 (18.8 lakh shares)

Brokerage Radar

UBS on Reliance Industries

• Maintained ‘Buy’; hiked price target to Rs 1,750 from Rs 1,500.
• Reorganisation of Jio to unlock shareholder value.
• Digital platform strategy: a compelling investment proposition.
• On track toward deleveraging and right-sizing of balance sheet.

On Yes Bank

Macquarie

• Maintained ‘Underperform’ with a price target of Rs 50.
• It’s all about capital and asset quality.
• Credit cost estimate could very negatively surprise.
• Seriously doubt management’s ability to assess the risk.
• No contingent provisions against BB and below book and BBB book.
• If 50 percent of BB and below book gets wiped off, almost 50 percent of the book value will have to be written down

Edelweiss

• Maintained ‘Hold’; cut price target to Rs 70 from Rs 110.
• Build in Gross NPAs of greater than 11 percent (7 percent currently) by 2020-21.
• Binding offer will boost capital, but is still contingent on regulatory approval.
• Building capital translates into BV cut of 14 percent and 13 percent for the current and the next financial year respectively.

JPMorgan

• Maintained ‘Underweight’; cut price target to Rs 55 from Rs 60.
• Capital raise key for stabilising the business and improving confidence.
• Cut EPS estimates by 14-18 percent for FY21-22

On Dr. Reddy’s Laboratories

Credit Suisse

• Maintained ‘Outperform’ with a price target of Rs 3,055.
• Quarter had multiple one-offs, but normalised was in line.
• High erosion in the U.S. but Suboxone could present good opportunity.
• Suboxone should more than compensate for Ranitidine impact.
• U.S. sales are low, even after accounting for temporary supply disruption and Ranitidine recall.

CLSA

• Maintained ‘Buy’; hiked price target to Rs 3,300 from Rs 3,200.
• Q2 results were impacted due to one offs.
• Sequential decline in US sales despite new launches was negative.
• Improving traction seen in India and emerging markets.

Goldman Sachs

• Maintained ‘Neutral’; cut price target to Rs 2,600 from Rs 2,620.
• Operational challenges in US business to subside.
• Gross margins shy of internal aspirations due to unfavorable business mix.