Market Outlook
January 19, 2018
Market Cues
Domestic Indices
Chg (%)
(Pts)
(Close)
Indian markets are likely to open flat tracking global indices and SGX Nifty.
BSE Sensex
0.5
178
35,260
US stocks saw the strong upward move in the last trading session while the major
Nifty
0.3
28
10,817
averages moved to the downside after ending Wednesday trading at record closing
Mid Cap
(1.7)
(303)
17,629
highs. The Dow Jones ended on a downside front of 0.4% at 26,018 and the
Small Cap
(2.0)
(402)
19,286
Nasdaq Composite edged up to 7,296.
Bankex
0.7
206
30,017
U.K. shares fall for a fourth straight session with pressure on a London Blue chips
benchmark and decline in shares of Primark chain operator Associated British
Global Indices
Chg (%)
(Pts)
(Close)
Foods. The FTSE 100 was down by 0.3% to close at 7,701.
Dow Jones
(0.4)
(98)
26,018
Nasdaq
(0.0)
(2)
7,296
On domestic front, Indian shares hit fresh record highs with sentiment helped by
firm global cues and media reports that the government is considering a proposal to
FTSE
(0.3)
(24)
7,701
permit 100 percent FDI in private banks. The Sensex edged up to 0.5% at 35,260
Nikkei
0.3
71
23,835
while the Nifty ended at 10,817 with an upside of 0.3%.
Hang Seng
0.2
56
32,178
Shanghai Com
0.4
15
3,490
News Analysis
Result preview: HCL Tech (CMP: `955 / TP: `1,014/ Upside: 6.2%)
Advances / Declines
BSE
NSE
Result preview: Wipro (CMP: `327 /`289 TP: / Upside: -11.8%)
Advances
670
331
Detailed analysis on Pg2
Declines
2,315
1,502
Unchanged
120
42
Investor’s Ready Reckoner
Key Domestic & Global Indicators
Volumes (` Cr)
Stock Watch: Latest investment recommendations on 150+ stocks
BSE
6,015
Refer Pg5 onwards
NSE
42,553
Top Picks
CMP
Target
Upside
Company
Sector
Rating
(`)
(`)
(%)
Net Inflows (` Cr)
Net
Mtd
Ytd
Blue Star
Capital Goods Accumulate
763
867
13.6
FII
809
3,318
3,318
Dewan Housing Finance
Financials
Buy
590
712
20.6
*MFs
544
4,588
4,588
Asian Granito
Other
Accumulate
589
651
10.5
Navkar Corporation
Other
Buy
196
265
35.5
Top Gainers
Price (`)
Chg (%)
KEI Industries
Capital Goods Accumulate
387
436
12.7
More Top Picks on Pg4
Mindtree
686
10.0
Gruh
595
8.7
Key Upcoming Events
Wabcoindia
7,647
4.2
Previous
Consensus
Date
Region
Event Description
Reading
Expectations
Mphasis
789
3.9
Jan23
Germany PMI Manufacturing
63.30
Bluestarco
772
3.7
Jan24
Euro Zone Euro-Zone Consumer Confidence
0.50
Jan24
Germany PMI Services
55.80
Top Losers
Price (`)
Chg (%)
Jan24
US
Existing home sales
5.81
5.68
Jan24
UK
Jobless claims change
5.90
Justdial
558
(12.1)
More Events on Pg7
Adanipower
37
(9.2)
Rcom
29
(9.1)
Jpassociat
21
(8.4)
Den
123
(7.9)
As on January 18, 2018
Market Outlook
January 19, 2018
News Analysis
Result preview: HCL Tech (CMP: `955 / TP: `1,014/ Upside: 6.2%)
HCL Tech will post a 2.5% sequential growth in USD revenues to US$1,977mn V/s
US$1,929mn in 2QFY2017. In rupee terms, revenues, expected to come in at
`12,795cr V/s `12,434cr in 2QFY2018, up 2.9% qoq. On EBIT front, the
company posted an EBIT of 19.7% V/s 19.7% in 2QFY2017. Consequently, the
PAT came in at `2,168cr V/s `2,188cr in 2QFY2017, de-growth of 0.9% qoq. We
maintain our accumulate rating on the stock, with a price target of `1,014.
Y/E
Sales OPM
PAT
EPS ROE P/E P/BV EV/EBITDA EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
FY2018E
50,099
22.1
8,857
62.8
22.4
15.2
3.4
10.4
2.3
FY2019E
54,608
22.1
9,537
67.6
20.6
14.1
2.9
9.1
2.0
Result preview: Wipro (CMP: `327 /`289 TP: / Upside: -11.8%)
Wipro IT services will post a 1.1% sequential growth in USD revenues to
US$2,035mn V/s US$2,013mn in 2QFY2017. In rupee terms, consolidated
revenues, expected to come in at `13,450cr V/s `13,423cr in 2QFY2018, up
0.2% qoq. On EBIT front, the company posted an EBIT of 16.8% V/s 16.8% in
2QFY2017. Consequently, the PAT came in at
`2,147cr V/s
`2,191cr in
2QFY2017, de-growth of 2.0% qoq. We maintain our reduce rating on the stock,
with a price target of `289.
Y/E
Sales OPM
PAT
EPS ROE P/E P/BV EV/EBITDA EV/Sales
March
(` cr)
(%)
(` cr)
(`)
(%)
(x)
(x)
(x)
(x)
FY2018E
54,164
22.3
9,156
18.8
15.8
17.4
2.9
9.1
2.0
FY2019E
56,544
22.3
9,488
19.5
14.8
16.8
2.6
8.3
1.8
Economic and Political News
Modi to visit West Asia in Feb with eye on $75bn investment
Tamil Nadu government to come out with Aerospace & Defence policy
India sets up $350 million fund for International Solar Alliance
Government to set up $350mn fund in bid to add 175Gw in renewable
energy by 2022
Corporate News
Idea offers Rs 3,300 cashback on recharge of Rs 398 and above
Retail firm Siam Makro enters cash & carry biz in India, to invest Rs 10bn
All-new wider version of Maruti Suzuki Swift to be launched at Auto Expo
Volkswagen monitoring developments on electric vehicles in India
Market Outlook
January 19, 2018
Quarterly Bloomberg Brokers Consensus Estimate
ITC Ltd - Jan 19, 2018
Particulars ( ` cr)
3QFY18E
3QFY17
y-o-y (%)
2QFY18
q-o-q (%)
Sales
12,235
9,248
32.3
10,314
18.6
EBIDTA
3,874
3,546
9.3
3,761
3.1
%
31.6
38.3
36.4
PAT
2,850
2,646
7.8
2,639
7.9
HCL Tech - Jan 19, 2018
Particulars ( ` cr)
3QFY18E
3QFY17
y-o-y (%)
2QFY18
q-o-q (%)
Sales
12,764
11,814
8.1
12,433
2.7
EBIDTA
2,821
2,610
8.0
2,741
2.9
%
22.1
22.1
22.1
PAT
2,147
2,062
4.1
2,207
(2.7)
Wipro - Jan 19, 2018
Particulars ( ` cr)
3QFY18E
3QFY17
y-o-y (%)
2QFY18
q-o-q (%)
Sales
13,684
13,764
(0.5)
13,423
1.9
EBIDTA
2,817
2,864
(1.6)
2,778
1.4
%
20.5
20.8
20.7
PAT
2,142
2,114
1.3
2,189
(2.1)
Kotak Bank - Jan 19, 2018
Particulars ( ` cr)
3QFY18E
3QFY17
y-o-y (%)
2QFY18
q-o-q (%)
PAT
1,547
1,266
22.2
1,440
7.4
HDFC Bank - Jan 19, 2018
Particulars ( ` cr)
3QFY18E
3QFY17
y-o-y (%)
2QFY18
q-o-q (%)
PAT
4,717
3,865
22.1
4,151
13.6
IDFC Bank - Jan 19, 2018
Particulars ( ` cr)
3QFY18E
3QFY17
y-o-y (%)
2QFY18
q-o-q (%)
PAT
178
191
(6.8)
233
(23.6)
Reliance Industries - Jan 19, 2018
Particulars ( ` cr)
3QFY18E
3QFY17
y-o-y (%)
2QFY18
q-o-q (%)
Sales
1,02,000
79,408
28.5
91,481
11.5
EBIDTA
16,462
11,501
43.1
15,565
5.7
%
16.2
14.5
17.1
PAT
8,496
7,524
12.9
8,097
4.9
Market Outlook
January 19, 2018
Top Picks
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
Strong growth in domestic business due to its
leade`hip in acute therapeutic segment. Alkem expects
Alkem Laboratories
26,891
2,249
2,441
8.5
to launch more products in USA, which bodes for its
international business.
We expect the company would report strong
Asian Granito
1,773
589
651
10.5
profitability owing to better product mix, higher B2C
sales and amalgamation synergy.
Favorable outlook for the AC industry to augur well for
Cooling products business which is out pacing the
Blue Star
7,319
763
867
13.6
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
18,511
590
712
20.6
presence in tier-II & III cities where the growth
opportunity is immense.
Loan growth is likely to pick up after a sluggish FY17.
Lower credit cost will help in strong bottom-line
Karur Vysya Bank
8,376
115
160
38.8
growth. Increasing share of CASA will help in NIM
improvement.
High order book execution in EPC segment, rising B2C
KEI Industries
3,030
387
436
12.7
sales and higher exports to boost the revenues and
profitability
Expected to benefit from the lower capex requirement
Music Broadcast
2,339
410
475
15.9
and 15 year long radio broadcast licensing.
Massive capacity expansion along with rail advantage
Navkar Corporation
2,943
196
265
35.5
at ICD as well CFS augur well for the company
Strong brands and distribution network would boost
Siyaram Silk Mills
3,509
749
851
13.7
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 the
TV Today Network
2,687
451
500
11.0
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 Suzuki
2,82,717
9,359
10,619
13.5
Gujarat plant will also enable higher operating
leverage which will be margin accretive.
We expect loan book to grow at 24.3% over next two
GIC Housing
2,341
435
655
50.7
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 healthy
7,582
341
400
17.2
growth in plywood & lamination business, forayed into
Century Plyboards India
MDF & Particle boards on back of strong brand &
distribution network.
We expect sales/PAT to grow at 13.5%/20% over next
LT Foods
2,909
91
128
40.7
two years on the back of strong distribution network &
addition of new products in portfolio.
We expect sales/PAT to grow at 13%/16% over next
two years on the back of strong healthy demand in
Ruchira Papers
441
197
244
24.1
writing & printing paper and Kraft paper. Further,
China had banned making paper from waste pulp
which would benefit Indian paper companies.
We expect financialisation of savings and increasing
Aditya Birla Capital
39781
176
230
30.6
penetration in Insurance & Mutual fund would ensure
steady growth.
Source: Company, Angel Research
Market Outlook
January 19, 2018
Fundamental Call
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
CCL is likely to maintain the strong growth trajectory
CCL Products
3,814
287
360
25.6
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
2,838
1,902
2,178
14.5
demand growth in plastic division. On the bottom-line
front, we estimate ~10% CAGR to `162cr owing to
improvement in volumes.
We expect sales/PAT to grow at 9%/14% over next two
years on the back of healthy demand growth in
Shreyans Industries
278
201
247
22.8
printing. Further, China had banned making paper
from waste pulp which would benefit Indian paper
companies.
The prism has diversified exposure in the different
segment such as Cement, Tile & ready mix concrete.
Prism Cement
7,009
139
160
14.9
Thus we believe, PCL is in the right place to capture
ongoing government spending on affordable housing
and infrastructure projects.
Source: Company, Angel Research
Market Outlook
January 19, 2018
Key Upcoming Events
Result Calendar
Date
Company
January 19, 2018
HDFC Bank, Kotak Mah. Bank, ITC, Wipro, HCL Tech, Reliance Industries, Kirloskar Engines India Ltd
January 22, 2018
Rallis, Axis Bank, Asian Paints
Source: Bloomberg, Angel Research
Global economic events release calendar
Bloomberg Data
Date
Time
Country
Event Description
Unit
Period
Last Reported
Estimated
Jan 23, 2018
2:00 PMGermany PMI Manufacturing
Value
Jan P
63.30
Jan 24, 2018
8:30 PMEuro Zone Euro-Zone Consumer Confidence
Value
Jan A
0.50
2:00 PMGermany PMI Services
Value
Jan P
55.80
8:30 PMUS
Existing home sales
Million
Dec
5.81
5.68
3:00 PMUK
Jobless claims change
% Change
Dec
5.90
Jan 25, 2018
8:30 PMUS
New home sales
Thousands
Dec
733.00
675.00
6:15 PMEuro Zone ECB announces interest rates
%
Jan 25
-
Jan 26, 2018
3:00 PMUK
GDP (YoY)
% Change
4Q A
1.70
1.30
7:00 PMUS
GDP Qoq (Annualised)
% Change
4Q A
3.20
3.00
Jan 30, 2018
8:30 PMUS
Consumer Confidence
S.A./ 1985=100
Jan
122.10
123.50
3:30 PMEuro Zone Euro-Zone GDP s.a. (QoQ)
% Change
4Q A
0.70
Jan 31, 2018
2:25 PMGermany Unemployment change (000's)
Thousands
Jan
(29.00)
3:00 PMUK
PMI Manufacturing
Value
Jan
56.30
Feb 01, 2018
6:30 AMChina
PMI Manufacturing
Value
Jan
51.60
12:30 AMUS
FOMC rate decision
%
Jan 31
1.50
1.50
Source: Bloomberg, Angel Research
Market Outlook
January 19, 2018
Macro watch
Exhibit 1: Quarterly GDP trends
Exhibit 2: IIP trends
(%)
(%)
10.0
9.0
8.4
9.1
9.0
8.0
8.0
7.9
7.0
7.6
7.5
8.0
7.3
7.2
7.0
6.0
4.8
7.0
6.3
5.0
4.4
4.1
6.1
6.1
5.7
3.5
3.2
6.0
4.0
2.9
3.0
2.0
5.0
2.0
1.2
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
4.9
52.0
5.0
3.9
50.0
3.7
3.6
4.0
3.3
3.3
3.2
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
January 19, 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)
20.0
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
-
Source: IMF, Angel Research
Market Outlook
January 19, 2018
Exhibit 4: Relative performance of indices across globe
Returns (%)
Country
Name of index
Closing price
1M
3M
1YR
Brazil
Bovespa
80,963
11.8
5.6
29.7
Russia
Micex
2,297
6.7
9.1
5.9
India
Nifty
10,817
4.1
5.9
28.6
China
Shanghai Composite
3,475
5.9
3.3
11.3
South Africa
Top 40
54,010
4.9
4.9
17.3
Mexico
Mexbol
49,912
3.8
(0.1)
7.7
Indonesia
LQ45
1,099
6.6
10.7
24.3
Malaysia
KLCI
1,822
3.9
3.8
8.9
Thailand
SET 50
1,183
6.2
7.8
20.2
USA
Dow Jones
26,018
6.2
13.3
31.9
UK
FTSE
7,701
3.4
2.5
7.0
Japan
Nikkei
23,763
4.4
13.4
24.2
Germany
DAX
13,281
1.6
2.1
14.5
France
CAC
5,495
2.6
2.5
13.8
Source: Bloomberg, Angel Research p68in4
Market Outlook
January 19, 2018
Research Team Tel: 022 - 39357800
DISCLAIMER
Angel Broking Private Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India
Limited,Bombay Stock Exchange Limited and Metropolitan Stock Exchange Limited. It is also registered as a Depository Participant with
CDSL and Portfolio Manager with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Private Limited is a
registered entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number
INH000000164. Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing
/dealing in securities Market. Angel or its associates/analyst has not received any compensation / managed or
co-managed public offering of securities of the company covered by Analyst during the past twelve months.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make
such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies
referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and
risks of such an investment.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals. Investors are advised to refer the Fundamental and Technical Research Reports available on our website to evaluate the
contrary view, if any.
The information in this document has been printed on the basis of publicly available information, internal data and other reliable
sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
document is for general guidance only. Angel Broking Pvt. Limited or any of its affiliates/ group companies shall not be in any way
responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.
Angel Broking Pvt. Limited has not independently verified all the information contained within this document. Accordingly, we cannot
testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document.
While Angel Broking Pvt. Limited endeavors to update on a reasonable basis the information discussed in this material, there may be
regulatory, compliance, or other reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
redistributed or passed on, directly or indirectly.
Neither Angel Broking Pvt. Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from
or in connection with the use of this information.
