Market Outlook
May 22, 2018
Market Cues
Domestic Indices
Chg (%)
(Pts)
(Close)
Indian markets are likely to open negative tracking global indices and SGX Nifty.
BSE Sensex
(0.7)
(232)
34,616
U.S. Stocks surged on Monday morning following news that the U.S. and China will
Nifty
(0.8)
(80)
10,517
refrain from new tariffs that may have sparked a trade war. To meet the growing
Mid Cap
(1.6)
(260)
15,636
consumption needs of the Chinese people and the need for high-quality economic
Small Cap
(2.2)
(380)
16,946
development, China will significantly increase purchases of United States goods and
services. The Dow Jones increased by 1.3% to 25,013 and the Nasdaq was up by
Bankex
(0.3)
(94)
28,851
0.5% to 7,394.
Global Indices
Chg (%)
(Pts)
(Close)
U.K. stocks rose sharply yesterday to approach a record high as investors cheered
the outcome of trade negotiations between the United States and China. The two
Dow Jones
1.3
314
25,013
sides have agreed to put the trade war on hold and set up a framework for
Nasdaq
0.5
40
7,394
addressing trade imbalances in the future. The benchmark FTSE 100 was up by 1%
FTSE
1
80
7,859
at 7,859.
Nikkei
0.3
72
23,002
On domestic front, Indian shares fell sharply on Monday as concerns over rising oil
Hang Seng
0.6
186
31,234
prices, a fractured mandate in Karnataka and renewed selling by foreign funds
Shanghai Com
0.6
21
3,214
amid higher U.S. bond yields weighed on investors' risk appetite. The BSE Sensex
closed down by 0.7% at 34,616.
Advances / Declines
BSE
NSE
News Analysis
Advances
664
467
Budget deficit fear looms as BJP plans to woo rural vote after K'taka loss
Declines
2,029
1,335
Unchanged
130
69
Detailed analysis on Pg2
Investor’s Ready Reckoner
Volumes (` Cr)
Key Domestic & Global Indicators
BSE
3,328
Stock Watch: Latest investment recommendations on 150+ stocks
NSE
29,838
Refer Pg5 onwards
Net Inflows (` Cr)
Net
Mtd
Ytd
Top Picks
CMP
Target
Upside
FII
(412)
(3,914)
3,483
Company
Sector
Rating
(`)
(`)
(%)
*MFs
693
5,830
51,583
Blue Star
Capital Goods
Buy
703
867
23.3
Dewan Housing Finance
Financials
Buy
615
720
17.1
Top Gainers
Price (`)
Chg (%)
Parag Milk Foods
Others
Buy
265
400
50.8
Navkar Corporation
Others
Buy
150
265
76.3
DBCORP
265
6.1
KEI Industries
Capital Goods Accumulate
450
485
7.9
BALRAMCHIN
66
5.8
More Top Picks on Pg4
BANKINDIA
98
5.3
Key Upcoming Events
PNB
78
4.6
Previous
Consensus
Date
Region
Event Description
CANBK
246
4.4
ReadingExpectations
May 23, 2018 Germany PMI Services
53.00
53.30
May 23, 2018 Euro Zone Euro-Zone Consumer Confidence
0.40
0.50
Top Losers
Price (`)
Chg (%)
May 23, 2018 Germany PMI Manufacturing
58.10
57.90
JPASSOCIAT
14
-18.9
May 23, 2018 US
New home sales
694.00
679.00
RCOM
13
-12.7
May 23, 2018 Germany
GDP nsa (YoY)
1.60
1.60
More Events on Pg7
STAR
341
-11.9
IBREALEST
185
-10.0
IBVENTUREPP
228
-10.0
As on May 21, 2018
Market Outlook
May 22, 2018
News Analysis
Budget deficit fear looms as BJP plans to woo rural vote after
K'taka loss
Prime Minister Narendra Modi’s loss of control of a key Indian state will put
pressure on his party to ramp up spending to woo more rural voters, pushing back
plans to rein in one of Asia’s largest budget deficits.
The budget was already under strain even before this weekend’s events in
Karnataka -- the southern state where Modi’s Bharatiya Janata Party failed to form
a government. The fiscal target was breached in the 2018 financial year, while the
goal for this year was widened to 3.3 percent of gross domestic product.
India will post bigger budget deficits than previously forecast. Add to that a surge
in oil prices, the currency’s more than 6 percent slump against the dollar this year,
and a pick-up in inflation, and India’s outlook is starting to look gloomy. Bonds
have taken a knock this year, fueled by wider budget targets, faster inflation and a
global selloff of emerging market assets. Yields on the 10-year bond have climbed
almost 50 basis points to 7.83 percent since the beginning of the year.
Economic and Political News
Budget deficit fear looms as BJP plans to woo rural vote after K'taka loss
Considering steps to keep fuel prices in check, says Oil Minister Pradhan
Goods exporters body seeks parity between domestic, export steel price
NSE to delist Kingfisher Airlines, 17 others from 30 May
Corporate News
Online sellers' body moves CCI against Flipkart for abusing position
NCLAT refuses to stay Tata Steel's acquisition of debt-laden Bhushan Steel
Ex-MD & CEO was aware of fraud in the PNB scam, but kept misleading RBI,
says CBI
Cognizant enters coveted Fortune 200 list on improved earnings
Market Outlook
May 22, 2018
Quarterly Bloomberg Brokers Consensus Estimate
Dr Reddy Ltd - May 22, 2018
Particulars ( ` cr)
4QFY18E
4QFY17
y-o-y (%)
3QFY18
q-o-q (%)
Sales
3709
3612
2.7
3834
(3.3)
EBIDTA
716
591
21.2
793
(9.7)
%
19.3
16.4
20.7
PAT
374
338
10.7
303
23.4
Hindustan Petroleum Corporation Ltd - May 22, 2018
Particulars ( ` cr)
4QFY18E
4QFY17
y-o-y (%)
3QFY18
q-o-q (%)
Sales
50050
51525
(2.9)
57474
(10.4)
EBIDTA
3203
2886
11.0
3159
(8.6)
%
6.4
5.6
5.5
PAT
1944
1819
6.9
1950
(6.7)
SBI Ltd - May 22, 2018
Particulars ( ` cr)
4QFY18E
4QFY17
y-o-y (%)
3QFY18
q-o-q (%)
PAT
(1728)
(2978)
42.0
(1887)
8.4
Cipla Ltd - May 22, 2018
Particulars ( ` cr)
4QFY18E
4QFY17
y-o-y (%)
3QFY18
q-o-q (%)
Sales
4003
3582
11.8
3914
2.3
EBIDTA
830
506
64.0
819
1.3
%
20.7
14.1
20.9
PAT
438
(62)
403
8.7
Bharat Forge Ltd - May 22, 2018
Particulars ( ` cr)
4QFY18E
4QFY17
y-o-y (%)
3QFY18
q-o-q (%)
Sales
1445
1126
28.3
1390
4.0
EBIDTA
437
304
43.8
416
5.0
%
30
27
30
PAT
244
207
17.9
228
7.0
Market Outlook
May 22, 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
23,052
1,928
2,441
26.6
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
6,753
703
867
23.3
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
19,277
615
720
17.1
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
186,219
290
416
43.6
of NPA would reduce provision cost, which would
help to report better ROE.
High order book execution in EPC segment, rising
KEI Industries
3,523
450
485
7.9
B2C sales and higher exports to boost the revenues
and profitability
Expected to benefit from the lower capex
Music Broadcast Limited
1,911
335
475
41.8
requirement and 15 year long radio broadcast
licensing.
Massive capacity expansion along with rail
Navkar Corporation
2,263
150
265
76.3
advantage at ICD as well CFS augur well for the
company
Strong brands and distribution network would boost
Siyaram Silk Mills
2,955
631
851
35.0
growth going ahead. Stock currently trades at an
inexpensive valuation.
GST regime and the Gujarat plant are expected to
Maruti
2,681
450
603
34.1
improve the company’s sales volume and margins,
respectively.
We expect loan book to grow at 24.3% over next
GIC Housing
254,598
8,428
10,619
26.0
two year; change in borrowing mix will help in NIM
improvement
We expect sales/PAT to grow at 13.5%/20% over
LT Foods
2,026
376
655
74.1
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
5,894
265
400
50.8
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
2,669
83
128
53.4
operating margin due price hike in container glass
segment, turnaround in consumer business.
Source: Company, Angel Research
Market Outlook
May 22, 2018
Top Picks
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
We expect financialisation of savings and
Aditya Birla Capital
31,662
144
218
51.5
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
2,773
330
410
24.4
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
1,772
780
1,016
30.3
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
517,292
1,992
2,315
16.2
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
102638
826
990
19.9
strong growth in Tractors segment coupled by its
strong brand recall and improvement in rural
sentiment
Source: Company, Angel Research
Market Outlook
May 22, 2018
Fundamental Call
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
CCL is likely to maintain the strong growth trajectory
CCL Products
3,974
299
360
20.5
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
2,468
1,654
2,178
31.7
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
1,631
2,058
2,500
21.5
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
3,433
280
395
41.1
~`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
1,213
830
920
10.9
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
33,319
167
210
25.8
ROE of 18% by 2020 and recent capital infusion of
`3000cr would support advance growth.
Market Outlook
May 22, 2018
Key Upcoming Events
Result Calendar
Date
Company
May 22, 2018
Bosch India, Bharat Forge, St Bk of India, Andhra Bank, IOC, HPCL, TVS Srichakra, Dr Reddy's, Cipla
May 23, 2018
Tata Motors, Motherson Sumi, Areva, Ramco Cements, KPIT Cummins, Indraprasth Gas, Bajaj Electrical
Source: Bloomberg, Angel Research
Global economic events release calendar
Bloomberg Data
Date
Time
Country
Event Description
Unit
Period
Last Reported
Estimated
May 23, 2018
1:00 PMGermany PMI Services
Value
May P
53.00
53.00
7:30 PMEuro Zone Euro-Zone Consumer Confidence
Value
May A
0.40
0.40
1:00 PMGermany PMI Manufacturing
Value
May P
58.10
57.90
7:30 PMUS
New home sales
Thousands
Apr
694.00
679.00
11:30 AMGermany GDP nsa (YoY)
% Change
1Q F
1.60
1.60
May 24, 2018
2:00 PMUK
CPI (YoY)
% Change
Apr
2.50
2.50
6:00 PMUS
Initial Jobless claims
Thousands
May 19
222.00
220.00
7:30 PMUS
Existing home sales
Million
Apr
5.60
5.55
May 25, 2018
2:00 PMUK
GDP (YoY)
% Change
1Q P
1.20
1.20
May 29, 2018
7:30 PMUS
Consumer Confidence
S.A./ 1985=100 May
128.70
128.00
May 30, 2018
6:00 PMUS
GDP Qoq (Annualised)
% Change
1Q S
2.30
2.30
1:25 PMGermany Unemployment change (000's)
Thousands
May
(7.00)
May 31, 2018
6:30 AMChina
PMI Manufacturing
Value
May
51.40
Jun 01, 2018
6:00 PMUS
Change in Nonfarm payrolls
Thousands
May
164.00
195.00
6:00 PMUS
Unnemployment rate
%
May
3.90
3.90
Source: Bloomberg, Angel Research
Market Outlook
May 22, 2018
Macro watch
Exhibit 1: Quarterly GDP trends
Exhibit 2: IIP trends
(%)
(%)
8.5
10.0
9.0
9.1
7.3
7.4
9.0
8.0
7.0
8.0
8.1
7.0
7.6
7.6
8.0
7.3
7.2
7.2
6.0
6.8
4.8
6.5
4.4
7.0
5.0
4.1
6.1
5.7
4.0
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
4.6
4.3
50.0
4.0
3.6
3.3
3.3
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
35.0
6.50
30.0
6.00
25.0
5.50
20.0
5.00
15.0
4.50
10.0
4.00
5.0
0.0
3.50
(5.0)
3.00
Source: Bloomberg, Angel Research
Source: RBI, Angel Research
Market Outlook
May 22, 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 As on 21 May, 2018
Market Outlook
May 22, 2018
Exhibit 4: Relative performance of indices across globe
Returns (%)
Country
Name of index
Closing price
1M
3M
1YR
Brazil
Bovespa
83,082
(1.2)
(1.4)
21.8
Russia
Micex
4,517
1.4
7.1
11.4
India
Nifty
10,596
(0.1)
0.2
10.4
China
Shanghai Composite
3,193
4.8
(2.9)
5.3
South Africa
Top 40
51,292
2.6
2.1
7.7
Mexico
Mexbol
45,667
(6.7)
(4.7)
(5.5)
Indonesia
LQ45
919
(11.7)
(18.4)
(4.1)
Malaysia
KLCI
1,855
(1.0)
1.3
5.2
Thailand
SET 50
1,161
0.1
0.5
19.1
USA
Dow Jones
24,715
(0.1)
(1.9)
18.8
UK
FTSE
7,779
7.6
7.8
3.8
Japan
Nikkei
22,930
5.3
7.9
14.9
Germany
DAX
13,078
3.9
6.0
3.5
France
CAC
5,615
5.1
8.3
6.0
Source: Bloomberg, Angel Research As on 21 May, 2018 68in4
Market Outlook
May 22, 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
15-05-2018
Top Picks
Parag Milk Foods Limited
310
410
Open
16-04-2018
Top Picks
Parag Milk Foods Limited
249
333
14-05-2018
Fundamental
GMM Pfaudler Limited
818
900
Open
06-04-2018
Fundamental
GMM Pfaudler Limited
712
861
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)
17-05-2018
Top Picks
Century Plyboards India
280
Closed(17/05/2018)
28-11-2017
Top Picks
Century Plyboards India
317
400
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
05-06-2017
Top Picks
Karur Vysya Bank
127
100
Closed (12/03/2018)
04-01-2017
Top Picks
KEI Industries
125
485
Open
01-12-2016
Top Picks
Alkem Lab
1700
2441
Open
17-10-2016
Top Picks
Asian Granito
267
534
Closed (18/02/2018)
17-05-2018
Top Picks
TV Today Network
460
Closed (17/05/2018)
04-08-2016
Top Picks
TV Today Network
297
603
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 22, 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
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