Market Outlook
January 22, 2019
Domestic Indices
Chg (%)
(Pts)
(Close)
Market Cues
BSE Sensex
0.5
192
36,579
Indian markets are likely to open flat tracking global indices and SGX Nifty.
Nifty
0.5
55
10,962
US markets were closed in the last trading session. The Dow soared 336.25 points
Mid Cap
(0.6)
(84)
14,939
or 1.4 percent to 24,706 and the Nasdaq jumped 72.76 points or 1 percent to
Small Cap
(0.7)
(102)
14,403
7,157 on Friday.
Bankex
0.1
31
30,770
U.K. stocks ended mostly flaty on Monday, with traders largely treading cautiously
amid concerns about global growth after data showed China's growth to have
Global Indices
Chg (%)
(Pts)
(Close)
slowed to its slowest pace in about three decades.. The FTSE 100 was up by 0.03%
Dow Jones
1.4
336
24,706
to 6,970.
Nasdaq
1.0
73
7,157
On domestic front, Indian shares rose for a fifth consecutive session on Monday,
FTSE
0.03
2
6,970
with sentiment underpinned by positive cues from other Asian markets after reports
Nikkei
0.2
53
20,719
suggested that China had offered to buy more American goods through 2024 to
Hang Seng
0.4
106
27,196
eliminate its trade imbalance with the U.S.. During the trading session
t
he BSE
Shanghai Com
0.6
15
2,610
Sensex was up by 0.5% to 36,579.
Advances / Declines
BSE
NSE
News Analysis
Advances
938
543
States' fiscal deficit to breach target, may go up to 3.2% in FY20: Report
Declines
1657
1183
Detailed analysis on Pg2
Unchanged
178
348
Investor’s Ready Reckoner
Volumes (` Cr)
Key Domestic & Global Indicators
BSE
2,491
Stock Watch: Latest investment recommendations on 150+ stocks
NSE
29,055
Refer Pg5 onwards
Top Picks
Net Inflows (` Cr)
Net
Mtd
Ytd
CMP
Target
Upside
Company
Sector
Rating
FII
(1,058)
(1,022)
(1,022)
(`)
(`)
(%)
Blue Star
Capital Goods
Buy
610
867
42.1
*MFs
439
1,172
1,172
ICICI Bank
Financials
Accumulate
372
416
11.8
Parag Milk Foods
Others
Buy
237
330
39.2
Top Gainers
Price (`)
Chg (%)
Bata India
Others
Accumulate
1,155
1,243
7.6
SPARC
174
17.2
KEI Industries
Capital Goods
Buy
354
486
37.3
LINDEINDIA
666
8.6
More Top Picks on Pg4
HUDCO
45
5.6
Key Upcoming Events
UBL
1483
5.0
Previous
Consensus
Date
Region
Event Description
RELIANCE
1235
4.4
ReadingExpectations
Jan 16, 2019
TU Central Bank Inflation Report
Jan 17, 2019
TH Exports YoY
0.06
--
Top Losers
Price (`)
Chg (%)
Jan 17, 2019
TH Exports
$22380m
--
SOUTHBANK
14
-8.7
Jan 20, 2019
TH Imports YoY
0.24
--
CENTRALBK
32
-8.6
Jan 20, 2019
TH Imports
$21776m
--
More Events on Pg7
IDEA
33
-6.7
UNIONBANK
86
-6.4
FRETAIL
419
-6.3
As on Jan 21, 2018
Market Outlook
January 22, 2019
News Analysis
States' fiscal deficit to breach target, may go up to 3.2% in FY20:
Report
With populist decisions like farm loan waivers and other financial support schemes
likely to gain significance in the run-up to the forthcoming next general elections,
aggregate fiscal deficit of the states is expected to reach 3.2 per cent in FY20,
warns a report.
India Ratings expects the states' revenue account on aggregate to clock a deficit of
0.5 per cent of GDP in FY20 due to a higher growth in revenue spends than
revenue receipt. The competitive populism, in the nature of farm loan waivers and
other financial support schemes, would take the centre stage in the run-up to next
general elections in April-May. A larger impact is expected on fiscal and revenue
deficit to gross state domestic product ratios for MP, Kerala and Rajasthan, among
non-special category states, in FY20," the agency said in a report Monday.
The aggregate fiscal deficit of the states will come in higher at 3.2 per cent in
FY20, which is higher than the FY19 mid-year outlook forecast of 2.8 per cent, it
says, adding "although this is higher than the fiscally prudent level of 3 per cent,
this will not pose any significant upside risks to these states' aggregate debt burden
in FY20”. The agency also expects states' aggregate capex/GDP to come in
marginally lower at 3 per cent in FY20 from the budget estimate of 3.07 per cent
for FY19. According to the agency, MP, Tamil Nadu and Kerala are most
susceptible to see an increase in debt in FY20.
Economic and Political News
IMF hikes India's GDP growth forecast to 7.5%; pegs China's at 6.6%
12 states grew faster than national GDP, but failed in job creation: Crisil
India moves up a notch on global talent competitive index, ranked 80th
India pips Japan to be second largest global steel producer
Corporate News
Margin-led growth likely from FY19 for P&G Hygiene Healthcare
French firm's Indian unit buys Prabhat's dairy business for Rs 1,700 crore
RIL's asset monetisation likely to pare Rs 1 trillion of total debt
NCLT approves merger of debt-ridden Tata Teleservices with Bharti Airtel
ONGC's Rs 4,022 crore share buyback to open on Jan 29, close on Feb 11
Market Outlook
January 22, 2019
Quarterly Bloomberg Brokers Consensus Estimate
TVS Motors - January 22, 2019
Particulars (` cr)
3QFY19E
3QFY18
y-o-y (%)
2QFY19
q-o-q (%)
Sales
4,554
3,685
23.5
4,993
-8.0
EBIDTA
360
287
25.4
428
-15.9
%
8
8
9
PAT
174
154
12.9
211
-17.5
Asian Paints - January 22, 2019
Particulars (` cr)
3QFY19E
3QFY18
y-o-y (%)
2QFY19
q-o-q (%)
Sales
4,931
4,261
15.7
4,639
6.2
EBIDTA
946
891
6.1
784
20.6
%
19
21
17
PAT
652
555
17.5
493
32.2
Market Outlook
January 22, 2019
Top Picks
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
Favorable outlook for the AC industry to augur well
for Cooling products business which is out pacing
Blue Star
5,858
608
867
42.5
the market growth. EMPPAC division's profitability
to improve once operating environment turns
around.
Well capitalized with CAR of 18.1% which gives
sufficient room to grow asset base. Faster
ICICI Bank
2,39,129
371
416
12.0
resolution of NPA would reduce provision cost,
which would help to report better ROE.
High order book execution in EPC segment, rising
KEI Industries
2,791
354
486
37.4
B2C sales and higher exports to boost the revenues
and profitability
Expected to benefit from the lower capex
Music Broadcast Limited
1,643
297
475
59.9
requirement and 15 year long radio broadcast
licensing.
Strong brands and distribution network would
Siyaram Silk Mills
1,595
340
606
78.1
boost growth going ahead. Stock currently trades
at an inexpensive valuation.
GST regime and the Gujarat plant are expected to
Maruti Suzuki
2,17,526
7,201
10,820
50.3
improve the company’s sales volume and margins,
respectively.
We expect loan book to grow at 24.3% over next
GIC Housing
1,380
256
424
65.5
two year; change in borrowing mix will help in NIM
improvement
Third largest brand play in luggage segment
Increased product offerings and improving
Safari Industries
1,702
763
1,000
31.1
distribution network is leading to strong growth in
business. Likely to post robust growth for next 3-4
years
We expect financialisation of savings and
Aditya Birla Capital
20,385
93
151
63.1
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
2,001
238
330
38.7
Value Added Products and reduction in interest cost
is likely to boost margins and earnings in next few
years.
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
5,83,755
2,147
2,350
9.5
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.
Market Outlook
January 22, 2019
Continued...
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
We expect strong PAT growth on back of
healthy growth in automobile segment (on back
of new launches and facelifts in some of the
M&M
90,821
731
1,050
43.7
model ) and strong growth in Tractors segment
coupled by its strong brand recall and
improvement in rural sentiment
Market leader in the room air conditioner (RAC)
outsourced manufacturing space in India with a
market share of
55.4%. It is a one-stop
Amber Enterprises
2,781
884
1,135
28.3
solutions provider for the major brands in the
RAC industry and currently serves eight out of
the 10 top RAC brands in India
BIL is the largest footwear retailer in India,
offering footwear, accessories and bags across
brands. We expect BIL to report net PAT CAGR
of
~16% to
~`3115cr over FY2018-20E
Bata India
14,750
1,148
1,243
8.3
mainly due to new product launches, higher
number of stores addition and focus on
women’s high growth segment and margin
improvement
SHTF is in the sweet spot with benefits from
stronger CV volumes, NIMs unaffected by rising
Shriram Transport Finance
25,283
1,114
1,764
58.3
bond yields on the back of stronger pricing
power and an enhancing ROE by 750bps over
FY18-20E, supported by decline in credit cost.
We expect JSPL’s top line to grow at 27% CAGR
over FY19-FY20 on the back of strong steel
demand and capacity addition. On the bottom
Jindal Steel & Power Limited
13,982
144
327
126.4
line front, we expect JSPL to turn in to profit by
FY19 on back of strong operating margin
improvement.
GMM Pfaudler Limited (GMM) is the Indian
market leader in glass-lined (GL) steel
equipment. GMM is expected to cross CAGR
GMM Pfaudler Ltd
1,661
1,136
1,287
13.3
15%+ in revenue over the 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.
Aurobindo Pharmaceuticals, amongst the
Indian Pharmaceutical companies, is well
placed to face the challenging generic markets,
given its focus on achieving growth through
Aurobindo Pharmaceuticals
45,466
776
870
12.1
productivity. Aurobindo will report net revenue
& net profit CAGR of ~13% & ~8% resp.
during FY2018-20E. Valuations are cheap V/s
its peers and own fair multiples of 17-18x.
We believe advance to grow at a healthy CAGR
of 35% over FY18-20E. Below peers level ROA
RBL Bank
24,692
580
690
18.9
(1.2% FY18) to expand led by margin
expansion and lower credit cost.
TTK Prestige has emerged as one of the leading
brands in kitchen appliances in India after its
successful transformation from a single product
TTK Prestige
9,005
7,729
8,200
6.1
company to offering an entire gamut of home
and kitchen appliances. We are expecting a
CAGR of 18% in revenue and 25% in PAT over
FY2018-20.
Source: Company, Angel Research
Continued...
Market Outlook
January 22, 2019
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
We expect Inox Wind to report exponential
growth in top-line and bottom-line over FY19-
20E. The growth would be led by changing
renewable energy industry dynamics in favor of
Inox Winds
1,616
73
127
74.5
wind energy segment viz. changes in auction
regime from Feed-In-Tariff (FIT) to reverse
auction regime and Government’s guidance for
10GW auction in FY19 and FY20 each.
Considering the strong CV demand due to
change in BS-VI emission norms (will trigger
pre-buying activities), pick up in construction
Ashok Leyland
26,611
91
156
72.1
activities and no significant impact on industry
due to recent axle load norms, we recommend
BUY on Ashok Leyland at current valuations.
Source: Company, Angel Research
Fundamental Call
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
CCL is likely to maintain the strong growth
CCL Products
3,694
278
360
29.7
trajectory 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
2,003
1,342
2,178
62.3
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
1,801
2,272
2,500
10.0
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
1,708
139
256
83.8
~`2,478cr over FY2017-20E mainly due to healthy
growth in plywood & lamination business on the
back of strong brand and distribution network
L&T Fin’s new management is on track to achieve
L&T Finance Holding
27,963
140
210
50.0
ROE of 18% by 2020 and recent capital infusion of
`3000cr would support advance growth.
With a focus on the low and medium income (LMI)
consumer segment, the company has increased its
Dewan Housing Finance
6,633
211
300
41.9
presence in tier-II & III cities where the growth
opportunity is immense.
Well planned strategy to grow small business loans
and cross-selling would propel fees income. We
Yes Bank
44,420
192
290
51.0
expect YES to grow its advance much higher than
industry and improvement in asset quality to
support profitability.
