Market Outlook
April 16, 2018
Market Cues
Domestic Indices
Chg (%)
(Pts)
(Close)
Indian markets are likely to open negative tracking global indices and SGX Nifty.
BSE Sensex
0.3
92
34,193
U.S. stocks mostly lower over the course of the trading session on Friday. With the
Nifty
0.2
22
10,481
downturn on the day, the major averages partly offset the gains posted in the
Mid Cap
0.5
77
16,678
previous session. The Dow Jones ended down by 0.5% to close at 24,360. The
Small Cap
0.3
47
17,982
NASDAQ ended down by 0.5% to close at 7,107.
Bankex
0.1
30
28,303
U.K. shares were marginally lower as the oil price rally stalled, the pound continued
to strengthen and accountancy software firm cut its full-year forecast for revenue
Global Indices
Chg (%)
(Pts)
(Close)
growth after a disappointing first-half. The FTSE 100 was closed up by 0.1% to end
at 7,265.
Dow Jones
(0.5)
(123)
24,360
Nasdaq
(0.5)
(34)
7,107
On domestic front, Indian shares extended their winning streak to a seventh straight
FTSE
0.1
6
7,265
session as investors digested positive macro data and looked ahead to Infosys'
earnings for directional cues. The BSE Sensex ended up by 0.3% at 34,193.
Nikkei
0.3
57
21,836
Hang Seng
(1.3)
(415)
30,394
News Analysis
Shanghai Com
(0.7)
(23)
3,136
Addition to top picks - Parag Milk Foods
Target price upgraded for Safari Industries
Advances / Declines
BSE
NSE
Detailed analysis on Pg2
Advances
1,298
881
Declines
1,443
926
Investor’s Ready Reckoner
Unchanged
127
81
Key Domestic & Global Indicators
Stock Watch: Latest investment recommendations on 150+ stocks
Volumes (` Cr)
Refer Pg5 onwards
BSE
3,064
Top Picks
NSE
29,219
CMP
Target
Upside
Company
Sector
Rating
(`)
(`)
(%)
Net Inflows (` Cr)
Net
Mtd
Ytd
Blue Star
Capital Goods Accumulate
782
867
10.9
Dewan Housing Finance
Financials
Buy
548
720
31.5
FII
470
(826)
12,781
Century Plyboards
Forest Product
Buy
346
400
15.6
*MFs
(6)
3,764
38,224
Navkar Corporation
Others
Buy
175
265
51.4
KEI Industries
Capital Goods Accumulate
457
485
6.2
Top Gainers
Price (`)
Chg (%)
More Top Picks on Pg4
IBVENTUREPP
143
20.0
Key Upcoming Events
IBVENTURES
317
14.1
Previous
Consensus
Date
Region
Event Description
ReadingExpectations
CHAMBLFERT
187
12.5
Apr 16, 2018 China
Exports YoY%
(2.70)
11.80
RCF
82
5.2
Apr 17, 2018 UK
Jobless claims change
9.20
GLENMARK
582
4.6
Apr 17, 2018 US
Building permits
1,321.00
1,330.00
Apr 17, 2018 US
Industrial Production
0.95
0.30
Top Losers
Price (`)
Chg (%)
Apr 17, 2018 US
Housing Starts
1,236.00
1,269.00
More Events on Pg7
VAKRANGEE
133
-5.0
JPASSOCIAT
19
-4.9
PRAJIND
93
-3.7
MFSL
435
-3.4
DELTACORP
268
-3.3
As on April 13, 2018
Market Outlook
April 16, 2018
News Analysis
Addition to top picks - Parag Milk Foods
CMP - ` 249/ Target Price- ` 333
Parag Milk Foods (PARAG) is one of the leading Indian dairy products companies
in India. The company is the first mover in many dairy products like Cow Ghee,
Whey protein and has been successful in creating strong brands like GO,
Gowardhan. It commands 33% market share of processed cheese and has
become the 2nd player after Amul in a short span of 10 years.
We expect PARAG to report net revenue/PAT CAGR of 13%/28% respectively over
FY2018-20E driven by rising VAP’s share and reduction in interest cost. The stock
currently trades at a P/E of 14.9x FY2020E EPS. This valuations are looking
attractive as such valuations are given to a commodity business while we feel that
it is evolving as dairy FMCG brand story. We initiate coverage on the stock with a
BUY recommendation and Target Price of `333 (20x FY2020E EPS), an upside of
34% from the current levels.
Target price upgraded for Safari Industries
We are upgrading target price to `720 from `650 as we are upgrading target
multiple from 36x to 40x in view of buoyancy in demand for its products.
Economic and Political News
Government to launch this fiscal's first tranche of gold bond on Apr 16
Exports fall for first time in five months in March as trade deficit widens
March trade deficit widens to $13.69 bn; exports dip marginally to $29bn
Corporate News
Dilip Buildcon forms 5 SPVs for Rs 63.07-billion worth NHAI projects
Ashok Leyland shares gain 3% on defence ministry's Rs 1-bn contract win
Tata Steel posts lower sales, production in Q4 due to Kalinganagar incident
Reliance Industries to buy 73% stake in AI-based edutech firm Embibe
Market Outlook
April 16, 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
21,332
1,784
2,441
36.8
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
7,506
782
867
10.9
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
17,174
548
720
31.5
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
185,254
288
416
44.3
of NPA would reduce provision cost, which would
help to report better ROE.
High order book execution in EPC segment, rising
KEI Industries
3,579
457
485
6.2
B2C sales and higher exports to boost the revenues
and profitability
Expected to benefit from the lower capex
Music Broadcast Limited
2,198
385
475
23.3
requirement and 15 year long radio broadcast
licensing.
Massive capacity expansion along with rail
Navkar Corporation
2,634
175
265
51.4
advantage at ICD as well CFS augur well for the
company
Strong brands and distribution network would boost
Siyaram Silk Mills
3,285
701
851
21.4
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
2,825
474
603
27.3
the radio business, and anticipated growth in ad
spends by corporate to benefit the stock.
After GST, the company is expected to see higher
volumes along with improving product mix. The
Maruti
276,054
9,138
10,619
16.2
Gujarat plant will also enable higher operating
leverage which will be margin accretive.
We expect loan book to grow at 24.3% over next
GIC Housing
2,181
405
655
61.7
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
7,688
346
400
15.6
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
2,986
93
128
37.1
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
1,382
621
720
16.0
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
2,876
398
510
28.2
operating margin due price hike in container glass
segment, turnaround in consumer business.
Source: Company, Angel Research
Market Outlook
April 16, 2018
Top Picks
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
We expect financialisation of savings and
Aditya Birla Capital
34974
159
230
44.7
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
2092
249
333
34.0
Value Added Products and reduction in interest cost
is likely to boost margins and earnings in next few
years.
Source: Company, Angel Research
Fundamental Call
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
CCL is likely to maintain the strong growth trajectory
CCL Products
3,837
288
360
24.8
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 healthy
Nilkamal
2,568
1,721
2,178
26.5
demand growth in plastic division. On the bottom-line
front, we estimate ~10% CAGR to `162cr owing to
improvement in volumes.
The prism has diversified exposure in the different
segment such as Cement, Tile & ready mix concrete.
Prism Cement
5,786
115
160
39.2
Thus we believe, PCL is in the right place to capture
ongoing government spending on affordable housing
and infrastructure projects.
Elantas Beck India is the Indian market leader in liquid
insulation segment used in electrical equipments like
Elantas Beck India Ltd
1,732
2,185
2,500
14.4
motors, transformers etc. It derives 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
3,920
320
395
23.6
~`2,478cr over FY2017-20E mainly due to healthy
growth in plywood & lamination business on the back
of strong brand and distribution network
Ashok Leyland Ltd (ALL) is the flagship company of the
Hinduja Group, and one of the largest commercial
vehicle manufacturers in India. Ashok Leyland
Ashok Leyland
42,414
145
163
12.5
expected to report net Profit (reported) CAGR of ~19%
to
~`2,075cr over FY2017-20E mainly due to
improvement in replacement demand.
Market Outlook
April 16, 2018
