Stocks To Watch: HUL, Indiabulls Housing, ITC, Power Grid, Tech Mahindra, Vedanta  
A bronze bull statue stands at the entrance to the Bombay Stock Exchange (BSE) building in Mumbai, India. (Photographer: Prashanth Vishwanathan /Bloomberg)

Stocks To Watch: HUL, Indiabulls Housing, ITC, Power Grid, Tech Mahindra, Vedanta  

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.56 percent to 11,920 as of 6:58 a.m.

The Bombay Stocks Exchange and the National Stock Exchange will remain open today as Finance Minister Nirmala Sitharaman will present Union Budget 2020-21 in Parliament. The markets, otherwise, are closed on Saturday.

Sitharaman is set to outline fiscal steps that may include higher spending in rural areas and possible tax cuts when she delivers her second budget speech. The government is expected to widen its fiscal deficit target for the year through March to 3.8 percent of gross domestic product from a planned 3.3 percent.

Read to get up to speed:

Here are the five things to watch out for in Union Budget speech today. Catch all other Budget stories here.

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.

  • Automakers are set to announce January sales data.
  • Tech Mahindra will acquire 70 percent stake in Cerium Systems for Rs 245 crore. The company will acquire the remaining 30 percent stake over the next two years subject financial performance of the target company. The transaction will help bolster capabilities in the areas of semiconductor design and testing, embedded software development/testing and product engineering.
  • Vedanta will acquire Ferro Alloys Corporation Ltd. for Rs 280 crore. The target company is in the business of producing Ferroalloys and owns a Ferrochrome plant with capacity of 72,000 TPA, two operational chrome mines and 100 MW of Captive Power Plant through its subsidiary—Facor Power.
  • Dr. Reddy’s Laboratories’ azacytidine received a positive generic recommendation from the European Medicines Agency's CHMP, according to a Bloomberg report. The drug treats leukaemia.
  • SpiceJet: The Securities and Exchange Board of India disposed of an alleged insider trading case against former independent director of the company, KR Sasiprabhu, saying the charges could not be established against him, according to PTI report.
  • NTPC: The petroleum ministry is considering a plan to end the supply of cheap, domestically produced natural gas to power plants and divert supplies to sectors, including transport and cooking fuel, according to Bloomberg report.
  • IndusInd Bank: The Reserve Bank of India approved the appointment of Arun Tiwari as part-time Chairman of the Bank for a period of three years with effect from Jan. 31.
  • Camlin Fine Sciences’ China joint venture’s manufacturing facility’s re-starting of operations has been deferred from Feb. 2 to Feb. 10. The China government has directed all industries operating in Zhejiang province to reopen from Feb. 9 to control pneumonia outbreak.
  • Power Grid’s board approved investment approval for transmission system for renewable energy projects in Rajasthan for Rs 562.86 crore.
  • Divis Labs’ Andhra Pradesh unit received zero Form 483 observations by U.S. FDA.
  • Magma Fincorp: Board approved lending Rs 100 crore in company’s arm Magma Housing Finance to augment its lending business.
  • Eveready Industries said that it has completed the sale of its land at Hyderabad for Rs 100 crore to Nuland Technologies.
  • Shilpa Medicare received approval for cancer drug lenvatinib mesylate capsules in India. Company will commercialize the product under the brand name of Lenshil.
  • NHPC: Board to consider raising capital via debt rose to Rs 1000 crore on Feb. 7.
  • Cholamandalam Investment & Finance: Board approved the closure of QIP issue. The company approved the issue price at Rs 320 per share, which is at a discount of 2.3 percent to closing prices on Jan. 31, aggregating to Rs 900 crore. Key allottees include Government of Singapore, ICICI Pru MF, Aditya Birla Sun Life MF and Monetary Authority of Singapore.
  • Coromandel International: Board approved deferment of the merger of its wholly-owned arm Dare Investments and Liberty Pesticides with self. The company has decided to end its joint venture with SQM and will acquire the entire stake (50 percent) of the outgoing partner SQM. The JV engaged in manufacturing of water-soluble fertilisers.
  • Gati: Bay Capital decreased stake from 9.1 percent to 6.06 percent on the company.
  • Bank of India is looking to raise Rs 1500-2000 crore capital by selling shares to institutions said Chief Executive Officer Atanu Das, according to a Bloomberg report.
  • Weslpun Corp and Laptev Finance extend the long stop date for their business transferred agreement till March 31. Last year to the company had entered into an agreement to sell its Plates and Coil Mill Division to Laptev Finance for Rs 848.5 crore. Laptev Finance has already released 50 percent of the amount , i.e. Rs 424.25 crore of the advance to the company.
  • Black Rose Industries completed the expansion of acrylamide capacity and commenced to the commercial production at the expanded plant. Company has installed the next phase of additional capacity for the manufacture of polyacrylamide liquids and commenced production at the facility.
  • SMS Pharma’s API facility received zero observations after the EDQM inspection program.
  • Sadhana Nitro Chem board approved a share split in 5:1 ratio.

Earnings Reaction To Watch

ITC (Q3, YoY)

  • Revenue rose 5.1 percent to Rs 12,012 crore. (Estimate: Rs 12,079 crore)
  • Net profit rose 29.1 percent to Rs 4,141.9 crore. (Estimate: Rs 3,876 crore)
  • Ebitda rose 6.6 percent to Rs 4,611.6 crore. (Estimate: Rs 4683 crore)
  • Margin stood at 38.4 percent versus 37.8 percent. (Estimate: 38.8 percent)

HUL (Q3, YoY)

  • Revenue rose 2.6 percent to Rs 9,808 crore. (Estimate: Rs 10,034 crore)
  • Net profit rose 11.9 percent to Rs 1,616 crore. (Estimate: Rs 1,596 crore)
  • Ebitda rose 19.5 percent to Rs 2,445 crore. (Estimate: Rs 2,241 crore)
  • Margin stood at 24.9 percent versus 21.4 percent. (Estimate: 22.3 percent)

Tech Mahindra (Q3, QoQ)

  • $ Revenue rose 7.3 percent to $1353 million. (Estimate: $1330 million)
  • Revenue rose 6.4 percent to Rs 9,655 crore. (Estimate: Rs 9477 crore)
  • Net profit rose 2 percent to Rs 1,146 crore. (Estimate: Rs 1005 crore)
  • EBIT rose 8.4 percent to Rs 1,179 crore. (Estimate: Rs 1183 crore)
  • Margin stood at 12.2 percent versus 12 percent. (Estimate: 12.5 percent)

Vedanta (Q3, YoY)

  • Revenue fell 9.8 percent to Rs 21360 crore. (Estimate: Rs 2,0223.2 crore)
  • Net profit rose 49.2 percent to Rs 2348 crore. (Estimate: Rs 720.7 crore)
  • Ebitda rose 15.4 percent to Rs 6514 crore. (Estimate: Rs 4,775.8 crore)
  • Margin stood at 30.5 percent versus 23.8 percent. (Estimate: 23.6 percent)

Power Grid (Q3, YoY)

  • Revenue rose 6 percent to Rs 8,992 crore. (Estimate Rs 9,064.2 crore)
  • Net profit rose 14.6 percent to Rs 2,673.5 crore. (Estimate Rs 2,505.7 crore)
  • Ebitda rose 3.9 percent to Rs 7876.2 crore. (Estimate Rs 8042.8 crore)
  • Margin stood at 87.6 percent versus 89.4 percent. (Estimate 88.7 percent)

Castrol (Q4 CY 2019, YoY)

  • Revenue fell 2.1 percent to Rs 1,011.8 crore.
  • Net profit rose 28 percent to Rs 271.3 crore.
  • Ebitda rose 7.5 percent to Rs 341.2 crore.
  • Margin stood at 33.7 percent versus 30.7 percent.

AIA Engineering (Q3, YoY)

  • Revenue fell 4.4 percent to Rs 694.1 crore.
  • Net profit rose 21 percent to Rs 156.1 crore.
  • Ebitda rose 4.7 percent to Rs 172.9 crore.
  • Margin stood at 24.9 percent versus 22.7 percent.

Aditya Birla Capital (Q3, YoY)

  • Net Interest Income rose 5.8 percent to Rs 633.3 crore.
  • Net profit rose 17.2 percent to Rs 250.5 crore.
  • NBFC loan book rose 30 percent to Rs 47,933 crore.
  • Housing finance loan book rose 13 percent to Rs 12190 crore.
  • Gross premium of life and health insurance rose 18 percent to Rs 2,366 crore.

Shoppers Stop (Q3, YoY)

  • Revenue flat at Rs 1,019 crore.
  • Net loss at Rs 6.5 crore versus Net Profit at Rs 41.7 crore.
  • Ebitda rose 2.1 times to Rs 199.9 crore.
  • Margin stood at 19.6 percent versus 9.3 percent.

Narayana Hrudayalaya (Q3, YoY)

  • Revenue rose 7.3 percent to Rs 785.2 crore.
  • Net profit rose 2.5 times to Rs 31.4 crore.
  • Ebitda rose 31.8 percent to Rs 102.7 crore.
  • Margin stood at 13.1 percent versus 10.6 percent.
  • Tax as percent of PBT at 21.8 percent versus 50.5 percent.

Earnings To Watch

  • Sobha
  • Amara Raja Batteries
  • Thyrocare Technologies
  • Garden Reach Shipbuilders & Engineers
  • Karur Vysya Bank
  • Kopran
  • Mahindra Holidays & Resorts
  • Relaxo Footwears
  • Sarda Energy & Minerals
  • Seshasayee Paper and Boards
  • Suprajit Engineering
  • Andhra Petrochem
  • Apollo Micro Systems
  • Lumax Industries
  • Suprajit Engineering
  • Sobha
  • Amara Raja Batteries
  • Thyrocare Technologies
  • Garden Reach Shipbuilders & Engineers
  • Karur Vysya Bank
  • Kopran
  • Mahindra Holidays & Resorts
  • Relaxo Footwears
  • Sarda Energy & Minerals
  • Seshasayee Paper and Boards
  • Suprajit Engineering
  • Andhra Petrochem
  • Apollo Micro Systems
  • Lumax Industries
  • Suprajit Engineering

Default Disclosures

  • Tilaknagar Industries default on loans from financial institutions and banks stand at Rs 746.51 crore as on Dec. 31. Total financial indebtedness at Rs 1,309.01 crore.
  • DB Realty default on loans from financial institutions and banks stand at Rs 223.45 crore as on Jan. 31. Total financial indebtedness at Rs 1,087.31 crore.

Pledged Share Details

  • Wockhardt promoter Themisto Trustee released pledge of 22.44 lakh shares from Jan. 27-28.
  • Emami promoter Suraj Viniyog revoked pledge of 26.35 lakh shares on Jan. 28.
  • JSW Energy promoter Virtuos Tradecorp revoked pledge of 2 lakh shares on Jan. 29.

Trading Tweaks

  • Mercator to move into ASM Framework.
  • GTN Industries , AXISCADES Engineering Technologies, Goa Carbon, Shyam Century Ferrous, Technofab Engineering, Vipul to move out of ASM Framework.
  • Intrasoft Technologies, Sical Logistics to move into short term ASM Framework.
  • Transglobe Foods price band revised to 20 percent.
  • Kakatiya Cement Sugar & Industries price band revised to 5 percent.

Who’s Meeting Whom

  • Tata Motors to meet Ventura Securities on Feb. 4.

Insider Trading

  • KRBL promoters acquired 1.05 lakh shares on Jan. 31.
  • Navin Fluorine promoter Maftlal Impex sold 2.5 lakh shares on Jan. 31.
  • Ultratech Cement promoter Pilani Investment sold 1.43 lakh shares from Jan. 28-29.

Money Market Update

  • The rupee closed at 71.35/$ versus 71.49/$ on Thursday.

F&O Cues

Index Futures

  • Nifty February futures closed at 11,994.3, premium of 32 points versus 24 points.
  • Nifty February futures open interest up 12.5 percent, adds 12.6 lakh shares in open interest.
  • Nifty Bank February futures closed at 30,937.3, premium of 103.7 points versus 121 points.
  • Nifty Bank February futures open interest down 13 percent, sheds 1.5 lakh shares in open interest.

Options

  • Nifty PCR at 1.04 versus 1.24 (across all series).

Nifty Weekly Expiry: Feb. 6

  • Max open interest on call side at 13,000 (27.7 lakh shares).
  • Max open interest on put side at 12,000 (15.1 lakh shares).
  • open interest addition seen at 13,000C (+14 lakh shares), 12,100C (+9.6 lakh shares), 12,200C (+8.8 lakh shares).

Nifty Monthly Expiry: Feb. 27

  • Max open interest on call side at 12,500 (18 lakh shares).
  • Max open interest on put side at 12,000 (28.3 lakh shares).
Stocks To Watch: HUL, Indiabulls Housing, ITC, Power Grid, Tech Mahindra, Vedanta  

Brokerage Radar

Morgan Stanley on IPCA Labs

  • Downgraded to ‘Equal-weight’ from ‘Overweight’; hiked price target to Rs 1,299 from Rs 1,108.
  • Downgrade due to strong trailing performance and full valuations.
  • Believe the stock is pricing in both earnings recovery and valuation re-rating.
  • Expect 13-14 percent revenue growth, 150-200 basis points margin expansion and 20 percent net profit growth over FY21-22

On SBI

Emkay

  • Maintained ‘Buy’; hiked price target to Rs 380 from Rs 350.
  • Historically highest net profit on better margins resolution of lumpy NPA.
  • Bank expects better profitability in Q4 led by better asset-quality, SBI Cards IPO and lower tax.
  • Key beneficiary of accelerating NPA resolutions.

HSBC

  • Maintained ‘Buy’; cut price target to Rs 405 from Rs 414.
  • December quarter’s profit before was tax in-line; asset quality has normalised.
  • Contained residual stress and high provisioning cover provide comfort.
  • Loan growth has moderated with stable operating trends.

Nomura

  • Maintained ‘Buy’; hiked price target to Rs 410 from Rs 400.
  • December quarter was muted; getting to end of credit cycle; growth improvement key now.
  • Asset quality – in line with our muted expectations.
  • Core pre-provisioning operating profit performance impacted by weak margins.

On Tech Mahindra

UBS

  • Maintained ‘Neutral’ with a price target of Rs 825.
  • Expect a positive reaction to stock on revenue beat and strong contract wins.
  • Strong contract flows and revenue ramps set the stage for a strong FY21.
  • Management remains confident of improving profitability in 2020-21.

HSBC

  • Downgraded to ‘Hold’ from ‘Buy’; hiked price target to Rs 830 from Rs 800.
  • Q3 strong; two mega-deal wins led strong rally in stock which is tough to sustain.
  • Impact of these deals on profitability will remain a challenge for earnings profile in near term.
  • Valuations no longer undemanding; revenue acceleration priced in.

On ITC

Morgan Stanley

  • Maintained ‘Overweight’ with a price target of Rs 370
  • Cigarette volume growth was at over 2 percent versus estimates of 2.5 percent.
  • Earnings beat estimates due to higher other income and lower taxes.
  • Performance in cigarettes business affected by persistent weakness in overall demand environment.

Edelweiss

  • Maintained ‘Buy’ with a price target of Rs 315.
  • Weak demand, high base and illegal cigarettes constrained cigarette volume growth to 2 percent on a yearly basis.
  • FMCG margin expansion on track, but growth a miss.
  • Re-rating demands more; expect price hike in cigarette and margin expansion in FMCG.

On Hindustan Unilever

UBS

  • Maintained ‘Neutral’ with a price target of Rs 2,150.
  • Steady performance; price hikes ahead.
  • Price increases ahead at 5-6 percent given 35 percent basket inflation.
  • Risk reward still not attractive.

PhillipCapital

  • Maintained ‘Buy’ with a price target of Rs 2,360.
  • Volume growth to be quite healthy given.
  • Rural growth was 0.5 times of urban growth, which is far lower than historical run-rate of 1.5-2 times.
  • Expect Ebitda margin tailwinds to accelerate in 2020-21.
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