Market Outlook
May 11, 2018
Market Cues
Domestic Indices
Chg (%)
(Pts)
(Close)
Indian markets are likely to open positive tracking global indices and SGX Nifty.
BSE Sensex
(0.2)
(73)
35,246
U.S. Stocks showed an upside during trading on Thursday following the strength
Nifty
(0.2)
(25)
10,717
seen in the previous session. The strength on Wall Street came following the release
Mid Cap
(1.5)
(251)
16,279
of a Labor Department report showing a slightly smaller than expected increase in
Small Cap
(1.4)
(245)
17,840
consumer prices in the month of April. The Dow Jones rose to 24,740 and the
Nasdaq was up by 0.9% to 7,405.
Bankex
(0.3)
(74)
29,358
U.K. shares were little changed on Thursday as investors awaited the latest rate
Global Indices
Chg (%)
(Pts)
(Close)
announcement as well as the quarterly inflation report from the Bank of England for
directional cues. The benchmark FTSE 100 was marginally higher by 0.5% at 7,701.
Dow Jones
0.8
197
24,740
Nasdaq
0.9
65
7,405
On domestic front, Indian shares fell slightly on Thursday as investors stayed on the
FTSE
0.5
38
7,701
sidelines ahead of assembly elections in Karnataka. Surging oil prices on rising
tensions in the Middle East and a weakening rupee amid sustained selling by foreign
Nikkei
0.4
88
22,497
investors also served to keep underlying sentiment cautious. The BSE Sensex closed
Hang Seng
0.9
273
30,809
lower by 0.2% at 35,246.
Shanghai Com
0.5
15
3,174
News Analysis
Advances / Declines
BSE
NSE
Banks are designing a scheme for bailing out stressed power assets
Advances
766
452
Detailed analysis on Pg2
Declines
1,912
1,343
Investor’s Ready Reckoner
Unchanged
131
68
Key Domestic & Global Indicators
Volumes (` Cr)
Stock Watch: Latest investment recommendations on 150+ stocks
2,973
Refer Pg5 onwards
BSE
NSE
28,773
Top Picks
CMP
Target
Upside
Company
Sector
Rating
(`)
(`)
(%)
Net Inflows (` Cr)
Net
Mtd
Ytd
Blue Star
Capital Goods Accumulate
779
867
11.3
FII
(690)
(2,943)
4,454
Dewan Housing Finance
Financials
Buy
624
720
15.4
Century Plyboards
Forest Product
Buy
307
400
30.2
*MFs
727
2,762
48,515
Navkar Corporation
Others
Buy
156
265
70.0
KEI Industries
Capital Goods Accumulate
438
485
10.8
Top Gainers
Price (`)
Chg (%)
More Top Picks on Pg4
WELSPUNIND
61
6.0
Key Upcoming Events
FRETAIL
601
4.7
Previous
Consensus
Date
Region
Event Description
ReadingExpectations
CYIENT
857
3.9
May 11, 2018 US
Consumer price index (mom)
(0.10)
0.30
FCONSUMER
59
3.9
May 11, 2018 US
Initial Jobless claims
211.00
219.00
ADANITRANS
169
3.2
May 11, 2018 UK
Industrial Production (YoY)
2.20
3.10
May 11, 2018 India
Industrial Production YoY
7.10
5.70
Top Losers
Price (`)
Chg (%)
May 11, 2018 China
Consumer Price Index (YoY)
2.10
1.90
More Events on Pg7
FEDERALBNK
89
-11.6
JINDALSAW
103
-9.1
INDIANB
314
-8.2
STAR
527
-7.9
RCOM
14
-7.3
As on May 10, 2018
Market Outlook
May 11, 2018
News Analysis
Banks are designing a scheme for bailing out stressed
power assets
With the Reserve Bank of India (RBI) declining any special dispensation for the
power sector, leading banks are designing a scheme for bailing out stressed
assets. The same might be followed during the proceedings under the National
Company Law Tribunal (NCLT). The selected assets will be the ones that can meet
the RBI’s 180-day deadline for completing resolution proceedings of stressed
asset. The power ministry had asked the RBI to provide a breather to the power
sector in the Insolvency and Bankruptcy Code (IBC) guidelines. The RBI, in
February, mandated banks to classify even a one-day delay in debt servicing as
default.
The plan being worked out by State Bank of India and other banks meets the RBI’s
guidelines. The catch in the guidelines is the timeline. But then, banks will identify
projects where the possibility to achieve success is high. Banks are identifying
assets that can be worked upon within the stipulated time. There are operational
projects with just a fuel issue or indebtedness due to the promoters’ mistake. They
need some tweaking. Such projects stand a higher chance of being resolved.
The stress in the power industry has left SBI with a 30 per cent share in the stressed
assets of private power producers. PFC would see close to 14,000 megawatts (Mw)
of its projects landing in the NCLT as resolution is difficult for power assets due to
regulatory and legal issues. These assets are under consideration by SBI for its new
scheme. SBI’s plan to have an asset management company kind of resolution
might be a second such attempt. Last year, state-owned companies such as
Power Finance Corporation (PFC), Rural Electrification Corporation (REC) and
NTPC were planning to come together to take over the equity and manage
operations of the stressed assets. The plan has not seen the light of day yet.
Economic and Political News
Reserve Bank could turn to NRI bonds to stifle the crude blow
Karnataka next only to Gujarat among states with lowest unemployment rates
PSBs will now report frauds to CBI with new monetary limits set by RBI
Banks are designing a scheme for bailing out stressed power assets
Corporate News
Fortis Healthcare board opts for Munjal-Burman offer
Binani sale: SC won't interfere, pushes Dalmia Bharat's plea back to NCLAT
Jaypee offers 2,000 shares for free to home buyers
Reliance may set up 4 new subsidiaries
Market Outlook
May 11, 2018
Quarterly Bloomberg Brokers Consensus Estimate
Tata Global Ltd - May 11, 2018
Particulars ( ` cr)
4QFY18E
4QFY17
y-o-y (%)
3QFY18
q-o-q (%)
Sales
1,673
1,674
(0.05)
1,730
(3.3)
EBIDTA
223
136
63.9
222
0.01
%
13.3
8.5
20.5
PAT
115
51
125.4
188
(38.1)
Havells Ltd - May 11, 2018
Particulars ( ` cr)
4QFY18E
4QFY17
y-o-y (%)
3QFY18
q-o-q (%)
Sales
2,514
1,710
47.1
1,965
27.9
EBIDTA
332
152
118.1
262
26.7
%
13.2
8.9
13.3
PAT
221
94
135.1
194
13.9
Market Outlook
May 11, 2018
Top Picks
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
Strong growth in domestic business due to its
leadership in acute therapeutic segment. Alkem
Alkem Laboratories
24,116
2,017
2,441
21.0
expects to launch more products in USA, which
bodes for its international business.
Favorable outlook for the AC industry to augur well
for Cooling products business which is out pacing
Blue Star
7,477
779
867
11.3
the market growth. EMPPAC division's profitability
to improve once operating environment turns
around.
With a focus on the low and medium income (LMI)
consumer segment, the company has increased its
Dewan Housing Finance
19,568
624
720
15.4
presence in tier-II & III cities where the growth
opportunity is immense.
Well capitalized with CAR of 18.1% which gives
sufficient room to grow asset base. Faster resolution
ICICI Bank
1,97,363
307
416
35.5
of NPA would reduce provision cost, which would
help to report better ROE.
High order book execution in EPC segment, rising
KEI Industries
3,430
438
485
10.8
B2C sales and higher exports to boost the revenues
and profitability
Expected to benefit from the lower capex
Music Broadcast Limited
2,005
352
475
35.1
requirement and 15 year long radio broadcast
licensing.
Massive capacity expansion along with rail
Navkar Corporation
2,347
156
265
70.0
advantage at ICD as well CFS augur well for the
company
Strong brands and distribution network would boost
Siyaram Silk Mills
3,037
648
851
31.3
growth going ahead. Stock currently trades at an
inexpensive valuation.
Market leadership in Hindi news genre and no. 2
viewership ranking in English news genre, exit from
TV Today Network
2,597
435
603
38.5
the radio business, and anticipated growth in ad
spends by corporate to benefit the stock.
GST regime and the Gujarat plant are expected to
Maruti
2,63,039
8,708
10,619
22.0
improve the company’s sales volume and margins,
respectively.
We expect loan book to grow at 24.3% over next
GIC Housing
2,220
412
655
58.9
two year; change in borrowing mix will help in NIM
improvement
We expect CPIL to report net Revenue/PAT CAGR of
~17%/16% over FY2017-20E mainly due to
Century Plyboards
6,824
307
400
30.2
healthy growth in plywood & lamination business,
forayed into MDF & Particle boards on back of
strong brand & distribution network.
We expect sales/PAT to grow at 13.5%/20% over
LT Foods
2,823
88
128
45.0
next two years on the back of strong distribution
network & addition of new products in portfolio.
Third largest brand play in luggage segment
Increased product offerings and improving
Safari Industries
1,385
623
750
20.5
distribution network is leading to strong growth in
business. Likely to post robust growth for next 3-4
years
We expect HSIL to report PAT CAGR of ~15% over
FY2017-20E owing to better improvement in
HSIL Ltd
2,744
380
510
34.4
operating margin due price hike in container glass
segment, turnaround in consumer business.
Source: Company, Angel Research
Market Outlook
May 11, 2018
Top Picks
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
We expect financialisation of savings and
Aditya Birla Capital
34,051
155
218
40.9
increasing penetration in Insurance & Mutual fund
would ensure steady growth.
One of the leading Indian dairy products
companies in India created strong brands in dairy
products. Rising revenue share of high-margin
Parag Milk Foods
2,559
304
333
9.5
Value Added Products and reduction in interest cost
is likely to boost margins and earnings in next few
years.
We expect MCL to report net revenue CAGR of
~15% to ~`450cr over FY2018-20E mainly due to
strong growth in online matchmaking & marriage
Matrimony.com Ltd
1,783
785
1,016
29.4
related services. On the bottom-line front, we
expect a CAGR of ~28% to `82cr over the same
period on the back margin improvement.
HDFC Bank maintained its steady growth in the
4QFY18. The bank’s net profit grew by 20.3%.
Steady growth in interest income and other income
HDFC Bank
5,16,720
1,990
2,315
16.3
aided PAT growth. The Strong liability franchise
and healthy capitalisation provides strong earning
visibility. At the current market price, the bank is
trading at 3.2x FY20E ABV.
We expect strong PAT growth on back of healthy
growth in automobile segment (on back of new
launches and facelifts in some of the model ) and
M&M
1,06,921
860
990
15.0
strong growth in Tractors segment coupled by its
strong brand recall and improvement in rural
sentiment
Source: Company, Angel Research
Market Outlook
May 11, 2018
Fundamental Call
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
CCL is likely to maintain the strong growth trajectory
CCL Products
4,064
306
360
17.8
over FY18-20 backed by capacity expansion and
new geographical foray
We forecast Nilkamal to report top-line CAGR of
~9% to `2,635cr over FY17-20E on the back of
Nilkamal
2,494
1,671
2,178
30.3
healthy demand growth in plastic division. On the
bottom-line front, we estimate
~10% CAGR to
`162cr owing to improvement in volumes.
Elantas Beck India is the Indian market leader in
liquid insulation segment used in electrical
equipments like motors, transformers etc. It derives
Elantas Beck India Ltd
1,707
2,154
2,500
16.1
demand from several industries which are expected
to register 10%+ CAGR in demand in the coming
years.
Greenply Industries Ltd (GIL) manufactures plywood
& allied products and medium density fibreboards
(MDF). GIL to report net revenue CAGR of ~14% to
Greenply Industries
3,679
300
395
31.7
~`2,478cr over FY2017-20E mainly due to healthy
growth in plywood & lamination business on the
back of strong brand and distribution network
GMM Pfaudler Limited (GMM) is the Indian market
leader in glass-lined (GL) steel equipment. GMM is
expected to cross CAGR 15%+ in revenue over the
GMM Pfaudler Ltd
1,186
811
861
6.1
next few years mainly led by uptick in demand from
user industries and it is also expecting to increase its
share of non-GL business to 50% by 2020.
L&T Fin’s new management is on track to achieve
L&T Finance Holding
35,673
179
210
17.5
ROE of 18% by 2020 and recent capital infusion of
`3000cr would support advance growth.
Market Outlook
May 11, 2018
Key Upcoming Events
Result Calendar
Date
Company
May 11, 2018
Tata Global, Canara Bank, Allahabad Bank, Dena Bank, GlaxoSmith Con, Sun TV Network, Relaxo, Nilkamal
May 14, 2018
Oriental abnk
Source: Bloomberg, Angel Research
Global economic events release calendar
Bloomberg Data
Date
Time
Country
Event Description
Unit
Period
Last Reported
Estimated
May 11, 2018
2:30 PMEuro Zone Euro-Zone GDP s.a. (QoQ)
% Change
1Q P
0.40
May 14, 2018
5:30 PMIndia
Industrial Production YoY
% Change
Mar
7.10
6.10
May 15, 2018
12:00 PMIndia
Monthly Wholesale Prices YoY%
% Change
Apr
2.47
2.90
2:00 PMUK
Jobless claims change
% Change
Apr
11.60
7:30 AMChina
Industrial Production (YoY)
% Change
Apr
6.00
6.40
India
Imports YoY%
% Change
Apr
7.15
India
Exports YoY%
% Change
Apr
(0.66)
11:30 AMGermany GDP nsa (YoY)
% Change
1Q P
2.30
May 16, 2018
2:30 PMEuro Zone Euro-Zone CPI (YoY)
%
Apr F
1.20
6:45 PMUS
Industrial Production
%
Apr
0.51
0.55
6:00 PMUS
Housing Starts
Thousands
Apr
1,319.00
1,319.00
6:00 PMUS
Building permits
Thousands
Apr
1,379.00
1,343.00
May 23, 2018
1:00 PMGermany PMI Manufacturing
Value
May P
58.10
1:00 PMGermany PMI Services
Value
May P
53.00
7:30 PMEuro Zone Euro-Zone Consumer Confidence
Value
May A
0.40
Source: Bloomberg, Angel Research
Market Outlook
May 11, 2018
Macro watch
Exhibit 1: Quarterly GDP trends
Exhibit 2: IIP trends
(%)
(%)
8.5
10.0
9.0
9.1
7.4
9.0
8.0
7.1
7.1
8.0
8.1
7.0
7.6
7.6
8.0
7.3
7.2
7.2
6.0
6.8
4.8
7.0
6.5
5.0
4.1
6.1
5.7
4.0
3.2
6.0
2.9
3.0
1.8
5.0
2.0
1.0
4.0
1.0
-
3.0
(1.0)
(0.3)
Source: CSO, Angel Research
Source: MOSPI, Angel Research
Exhibit 3: Monthly CPI inflation trends
Exhibit 4: Manufacturing and services PMI
56.0
Mfg. PMI
Services PMI
(%)
6.0
54.0
5.2
5.1
4.9
52.0
5.0
4.4
4.3
50.0
4.0
3.6
3.3
3.3
3.0
48.0
3.0
2.4
2.2
46.0
2.0
1.5
44.0
1.0
42.0
40.0
-
Source: Market, Angel Research; Note: Level above 50 indicates expansion
Source: MOSPI, Angel Research
Exhibit 5: Exports and imports growth trends
Exhibit 6: Key policy rates
(%)
Exports yoy growth
Imports yoy growth
(%)
Repo rate
Reverse Repo rate
CRR
60.0
6.50
50.0
6.00
40.0
5.50
30.0
5.00
20.0
4.50
10.0
4.00
0.0
3.50
(10.0)
3.00
Source: Bloomberg, Angel Research
Source: RBI, Angel Research
Market Outlook
May 11, 2018
Global watch
Exhibit 1: Latest quarterly GDP Growth (%, yoy) across select developing and developed countries
(%)
8.0
6.9
7.0
5.8
6.0
5.3
5.0
5.0
1.1
3.7
4.0
2.5
3.0
2.2
1.8
2.0
1.5
1.4
0.8
1.0
0.3
-
Source: Bloomberg, Angel Research
Exhibit 2: 2017 GDP Growth projection by IMF (%, yoy) across select developing and developed countries
(%)
6.7
6.8
7.0
6.0
5.4
5.2
5.0
3.7
4.0
3.0
1.8
2.2
2.0
1.7
1.6
2.0
0.7
1.5
0.7
1.0
-
Source: IMF, Angel Research
Exhibit 3: One year forward P-E ratio across select developing and developed countries
(x)
25.0
20.0
15.0
10.0
5.0
-
Source: IMF, Angel Research
Market Outlook
May 11, 2018
Exhibit 4: Relative performance of indices across globe
Returns (%)
Country
Name of index
Closing price
1M
3M
1YR
Brazil
Bovespa
85,861
3.1
4.9
32.4
Russia
Micex
4,522
1.4
7.1
11.4
India
Nifty
10,717
3.2
(0.4)
15.1
China
Shanghai Composite
3,174
1.0
(9.1)
0.9
South Africa
Top 40
51,493
4.8
(0.8)
8.3
Mexico
Mexbol
46,552
(3.1)
(7.6)
(6.8)
Indonesia
LQ45
954
(4.9)
(10.9)
2.2
Malaysia
KLCI
1,847
0.6
(0.4)
4.4
Thailand
SET 50
1,154
1.5
(2.9)
16.2
USA
Dow Jones
24,740
1.4
(0.6)
18.3
UK
FTSE
7,701
5.1
1.6
2.4
Japan
Nikkei
22,497
5.7
(2.6)
16.7
Germany
DAX
13,023
6.2
5.1
2.5
France
CAC
5,546
5.4
7.4
2.6
Source: Bloomberg, Angel Research 68in4
Market Outlook
May 11, 2018
Exhibit 7: Historical Angel Top Picks/Fundamental Calls
Date Added
Top Picks/Fundamental
Stocks
Reco Price
Target/Revised Price
Current Status
04-05-2018
Top Picks
M&M
860
990
Open
03-05-2018
Fundamental
L&T Finance Holding
171
210
Open
02-05-2018
Top Picks
HDFC Bank
1944
2315
Open
04-05-2018
Top Picks
Matrimony.com Ltd
810
1016
Open
20-04-2018
Top Picks
Matrimony.com Ltd
781
984
16-04-2018
Top Picks
Parag Milk Foods Limited
249
333
Open
06-04-2018
Fundamental
GMM Pfaudler Limited
712
861
Open
07-03-2018
Fundamental
Ashok Leyland Ltd
139
163
Closed (26/04/2018)
03-03-2018
Fundamental
Greenply Industries
340
395
Open
16-04-2018
Top Picks
Safari Industries
651
750
Open
21-02-2018
Top Picks
Safari Industries
532
650
16-02-2018
Top Picks
HSIL Ltd
433
510
Open
07-02-2018
Fundamental
Elantas Beck India Ltd.
2155
2500
Open
01-02-2018
Top Picks
ICICI Bank
352
416
Open
01-02-2018
Top Picks
Aditya Birla Capital
167
218
Open
04-01-2018
Fundamental
CCL Products
278
360
Open
03-01-2018
Fundamental
Nilkamal Ltd
1880
2178
Open
01-01-2018
Fundamental
Capital First Ltd
693
850
Closed (15/01/2018)
30-12-2017
Fundamental
Shreyans Industries Ltd
205
247
Closed
Fundamental
Prism Cement Ltd
160
Closed (09/05/2018)
21-12-2017
Fundamental
Prism Cement Ltd
118
131
18-12-2017
Fundamental
Menon Bearings Limited
92
114
Closed (17/01/2018)
14-12-2017
Top Picks
Ruchira Papers Ltd.
188
244
Closed (09/02/2018)
28-11-2017
Top Picks
Century Plyboards India
317
400
Open
19-12-2017
Top Picks
LT Foods
85
128
Open
06-11-2017
Top Picks
LT Foods
74
96
16-10-2017
Fundamental
Endurance Technologies Ltd
1111
1277
Closed (01/12/2017)
11-09-2017
Top Picks
GIC Housing
533
655
Open
10-10-2017
Top Picks
Music Broadcast Limited
404
475
Open
20-07-2017
Top Picks
Music Broadcast Limited
368
434
07-07-2017
Fundamental
L&T Finance Holdings Ltd
149
179
Closed (28/8/2017)
06-07-2017
Fundamental
Syngene International
478
564
Closed (1/3/2018)
05-07-2017
Top Picks
Maruti
7371
10619
Open
04-01-2017
Top Picks
KEI Industries
125
485
Open
01-12-2016
Top Picks
Alkem Lab
1700
2441
Open
04-08-2016
Top Picks
TV Today Network
297
603
Open
05-04-2016
Top Picks
DHFL
189
720
Open
05-01-2016
Top Picks
Navkar Corporation
207
265
Open
08-12-2015
Top Picks
Blue Star
357
867
Open
30-10-2015
Top Picks
Siyaram Silk Mills
186
851
Open
Source: Company, Angel Research
Market Outlook
May 11, 2018
Research Team Tel: 022 - 39357800
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