Market Outlook
April 27, 2018
Market Cues
Domestic Indices
Chg (%)
(Pts)
(Cl ose)
Indian markets are likely to open positive tracking global indices and SGX Nifty.
BSE Sensex
0.6
212
34,714
U.S. Stocks moved sharply higher over the course of the trading session, as traders
Nifty
0.4
47
10,618
reacted positively to latest batch of earnings news. The major averages climbed
Mid Cap
(0.0)
(3)
16,785
firmly into positive territory after ending the previous session mixed. The Dow Jones
Small Cap
0.3
46
18,164
ended up by 1.0 percent to 24,332 and the Nasdaq jumped by 1.6 percent to
Bankex
0.9
238
27,970
7,119.
U.K. stocks rose modestly during the last trading session as the pound pulled back
Global Indices
Chg (%)
(Pts)
(Cl ose)
against the dollar and investors looked ahead to the ECB rate decision later in the
day for directional cues. The FTSE 100 was up by 0.6% to end at 7,421.
Dow Jones
1.0
239
24,322
Nasdaq
1.6
115
7,119
On domestic front, Indian shares closed higher on Thursday as Yes Bank delivered
FTSE
0.6
42
7,421
good quarterly numbers and traders covered their short positions on eve of
Nikkei
0.4
97
22,416
derivative expiry. The BSE Sensex ended up by 0.6% at 34,714.
Hang Seng
0.6
176
30,183
News Analysis
Shanghai Com
0.2
5
3,080
Ashok Leyland generates 17% returns (Profit booked)
Result Update - HDFC Bank
A dvances / Declines
BSE
NSE
Detailed analysis on Pg2
Advances
1,095
796
Declines
1,548
982
Investor’s Ready Reckoner
Unchanged
146
76
Key Domestic & Global Indicators
Stock Watch: Latest investment recommendations on 150+ stocks
Volumes (` Cr)
Refer Pg5 onwards
BSE
2,897
Top Picks
NSE
41,542
C MP
Target
U psi de
C ompany
Sector
R ating
(`)
(`)
(%)
Net Inflows (` Cr)
Ne t
Mtd
Ytd
Blue Star
Capital Goods Accumulate
793
867
9.4
Dewan Housi ng Finance
Financials
Buy
621
720
15.9
FII
(100)
(4,952)
8,655
Century Plyboards
Forest Product
Buy
336
400
19.0
*MFs
409
8,173
42,632
Navkar Corporation
Others
Buy
177
265
49.7
KEI Industrie s
Capital Goods Accumulate
426
485
13.9
Top Gainers
Price (`)
Chg (%)
More Top Picks on Pg4
YESBANK
352
8.3
Key Upcoming Events
BFUTILITIE
431
8.0
Previous
C onsensus
D ate
Region
Event Description
ReadingExpectations
JMFINANCIL
135
8.0
Apr 27, 2018 US
GDP Qoq (Annualise d)
2.90
2.00
IBVENTUREPP
274
8.0
Apr 27, 2018 Euro Zone Euro-Zone Consumer Confidence
0.40
(0.10)
HATHWAY
35
7.9
Apr 27, 2018 Germany Unempl oyment change (000's)
(19.00)
(15.00)
Apr 27, 2018 UK
PMI Manufacturing
55.10
Top Losers
Price (`)
Chg (%)
Apr 30, 2018 UK
GDP (YoY)
1.40
1.40
More Events on Pg7
RNAVAL
19
-14.7
HDIL
37
-5.5
RCOM
17
-5.1
SYNGENE
642
-5.0
VAKRANGEE
111
-5.0
As on April 26, 2018
Market Outlook
April 27, 2018
News Analysis
Ashok Leyland - 17% returns (Profit booked)
Company background: Ashok Leyland Ltd (ALL) is the flagship company of the
Hinduja Group, and one of the largest commercial vehicle manufacturers in India.
ALL is engaged in the manufacturing of commercial vehicles and related
components. ALL’s products include buses, trucks, engines, defense and special
vehicles. Ashok Leyland offers a range of products from 18 to 82 seater double-
decker buses, from 7.5 to 49 tonne in haulage vehicles, from numerous special
application vehicles to diesel engines for industrial, marine and genset
applications. The company is headquartered in Chennai, India. The company’s
manufacturing facilities are spread across India with two facilities in Prague (Czech
Republic) and Ras Al Khaimah (UAE). It has operations in India, Sri Lanka,
Bangladesh, Mauritius, the Middle East and Africa.
Outlook valuation: In the recent past, stock has achieved our target price of
Rs.163 (reco price was Rs.139). Currently, stock is trading at a higher range of the
valuation. We recommend booking the profit.
Economic and Political News
Corporate News
Market Outlook
April 27, 2018
Quarterly Bloomberg Brokers Consensus Estimate
Reliance Industries Ltd - April 27, 2018
Particulars ( ` cr)
4QFY18E
4QFY17
y-o-y (%)
3QFY18
q-o-q (%)
Sales
1,59,000
84,823
87
99,810
59.3
EBIDTA
17,824
12,228
46
17,588
1.3
%
11
14
18
PAT
9,347
8,053
16
9,445
(1)
Maruti Suzuki India Ltd - April 27, 2018
Particulars ( ` cr)
4QFY18E
4QFY17
y-o-y (%)
3QFY18
q-o-q (%)
Sales
20,975
18,333
14.4
19,283
8.8
EBIDTA
3282
2,560
28.3
3,038
8.1
%
16
14
16
PAT
2,085
1,711
21.9
1,799
15.9
Shriram Transport Finance Co. Ltd - April 27, 2018
Particulars ( ` cr)
4QFY18E
4QFY17
y-o-y (%)
3QFY18
q-o-q (%)
Sales
1,956
2,712
(28)
3,088
(36.7)
EBIDTA
1,383
1,506
(8.2)
2,117
(34.7)
%
71
56
69
PAT
393
150
163
496
(20.6)
UPL Ltd. - April 27, 2018
Particulars ( ` cr)
4QFY18E
4QFY17
y-o-y (%)
3QFY18
q-o-q (%)
Sales
5,905
5,341
10.6
4,194
40.8
EBIDTA
1,221
1,036
17.8
709
72.2
%
21
19
17
PAT
772
740
4.4
579
33.4
Hindustan Petroleum Corporation Ltd. - April 27, 2018
Particulars ( ` cr)
4QFY18E
4QFY17
y-o-y (%)
3QFY18
q-o-q (%)
Sales
50,050
51,525
(2.9)
57,474
(12.9)
EBIDTA
3,202
2,886
11
3,159
1.4
%
6
6
5
PAT
1,944
1,819
6.9
1,950
(0.3)
Market Outlook
April 27, 2018
Top Picks
Market Cap
C MP
Target
Upside
C ompany
R ationale
(` Cr)
(`)
(`)
(%)
Strong growth in domestic business due to its
leadership in acute therapeutic segment. Alkem
Alkem Laboratories
22,956
1,920
2,441
27.1
expects to launch more products in USA, which
bode s for its internati onal business.
Favorable outlook for the AC industry to augur well
for Cooling products business which is out pacing
Blue Star
7,610
793
867
9.4
the market growth. EMPPAC division's profitability
to improve once oper ating environme nt turns
around.
With a focus on the low and me dium income (LMI)
consumer se gment, the company has increase d its
Dewan Housi ng Finance
19,492
621
720
15.9
presence in tier-II & III cities where the growth
opportunity i s immense.
Well capitalized with CAR of 18.1% which give s
sufficient room to grow asset base. F aster re solution
ICICI Bank
1,79,185
279
416
49.2
of NPA would reduce provi sion cost, which would
help to re port better ROE.
High order book execution in EPC segment, rising
KEI Industrie s
3,338
426
485
13.9
B2C sales and hi gher exports to boost the revenue s
and profitability
Expected to benefit from the lower capex
Music Broadcast Limited
2,214
388
475
22.4
requirement and 15 year long radio broadcast
licensing.
Massive capacity expansion along with rail
Navkar Corporation
2,665
177
265
49.7
advantage at ICD as well CFS augur well for the
company
Strong brands and distribution network would boost
Siyaram Silk Mills
3,031
647
851
31.6
growth goi ng ahe ad. 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
2,841
476
603
26.6
the radio busine ss, and anticipated growth in ad
spends by corporate to benefit the stock.
After GST, the company is expected to see higher
volume s along with improving product mix. The
Maruti
2,70,295
8,948
10,619
18.7
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
2,296
426
655
53.6
two year; change in borrowing mix will help in NIM
improve ment
We expect CPIL to report net Revenue/PAT CAGR of
~17%/ 16% over FY2017-20E mainly due to
Century Plyboards
7,468
336
400
19.0
healthy growth in plywood & lamination busine ss,
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
2,952
92
128
38.7
next two years on the back of strong di stribution
network & addition of new products in portfolio.
Third large st brand play in luggage segment
Increase d product offerings and improvi ng
Safari Industries
1,464
658
750
14.0
distribution network is leading to strong growth in
busine ss. 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 improve ment in
HSIL Ltd
2,761
382
510
33.5
operating margi n due price hi ke in container glass
segment, turnaround in consumer busine ss.
Source: Company, Angel Research
Market Outlook
April 27, 2018
Top Picks
Market Cap
C MP
Target
Upside
C ompany
R ationale
(` Cr)
(`)
(`)
(%)
We expect financi alisation of savings and
Aditya Birla Capital
34,391
156
230
31.33
increasing penetration in Insurance & Mutual fund
would ensure steady growth.
One of the leading Indi an dairy products
companie s in India create d strong brands in dairy
products. Rising revenue share of hi gh-margin
Parag Milk F oods
2,611
311
333
7.1
Value Added Products and reduction in interest cost
is likely to boost margins and e arnings 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
1,946
857
984
14.8
related services. On the bottom-line front, we
expect a CAGR of ~28% to `82cr over the same
period on the back margin improve ment.
Source: Company, Angel Research
Fundamental Call
Market Cap
C MP
Target
Upside
C ompany
R ationale
(` Cr)
(`)
(`)
(%)
CCL is likely to maintain the strong growth trajectory
CCL Products
4,005
301
360
19.6
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
Nilkamal
2,533
1,698
2,178
28.3
healthy demand growth in plastic divi sion. On the
bottom-line front, we esti mate
~10% CAGR to
`162cr owing to improve ment in volumes.
The prism has diversified exposure in the different
segment such as Ceme nt, Tile & ready mix concrete.
Prism Cement
5,892
117
160
36.7
Thus we believe, PCL is in the right place to capture
ongoing government spendi ng on affordable
housing and infrastructure projects.
Elantas Beck India is the Indian market leader in
liquid insulation segment used in electrical
equipme nts like motors, transformers etc. It derives
Elantas Beck India Ltd
1,773
2,236
2,500
11.8
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 me dium density fibreboards
(MDF). GIL to report net revenue CAGR of ~14% to
Greenply Industries
3,768
307
395
28.5
~`2,478cr over FY2017-20E mainly due to healthy
growth in plyw ood & lamination busine ss on the
back of strong brand and di stribution 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
1,102
754
861
14.2
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.
4QFY2018 Result Update | Banking
April 26, 2018
HDFC Bank
BUY
CMP
`1,930
Performance Highlights
Target Price
`2,315
Particulars (` cr)
4QFY18
3QFY18
% chg (qoq)
4QFY17
% chg (yoy)
Investment Period
12 Months
NII
10,656
10,314
3.3
9,055
17.7
Pre-prov. profit
8,835
8,451
4.5
7,279
21.4
Stock Info
PAT
4,799
4,642
3.4
3,990
20.3
Sector
Banking
Source: Company, Angel Research
Market Cap (` cr)
5,00,787
Beta
1.1
HDFC Bank maintained its steady growth in the 4QFY18. The bank’s net profit
52 Week High / Low
2,014/1,524
grew by 20.3%. Steady growth in interest income and other income aided PAT
Avg. Daily Volume
14,97,970
growth. Other income grew by 23%, which was driven by a 32% rise in income
Face Value (`)
2
from fees & commission. Apart from the top-line growth, the bank managed to
BSE Sensex
34,568
reduce its expenses and brought down the cost/income ratio from 42% in 4QFY17
Nifty
10,575
Reuters Code
HDBK.NS
to 41% in 4QFY18
Bloomberg Code
HDFCB:IN
Healthy operating profit growth; Asset quality stable
During 3QFY18, the bank’s advances grew by 19% yoy, of which retail loan book
Shareholding Pattern (%)
increased by 27.4% yoy to constitute 57% of the total advances. The wholesale
Promoters
20.9
loans inched up by just 9.4%. The net interest income during this period grew by
MF / Banks / Indian Fls
12.3
18%, in line with loans & advances. Moreover, a slower rise in opex helped lower
cost/income by 180bps yoy to 41% in Q4FY18.
FII / NRIs / OCBs
51.7
Indian Public / Others
9.7
The growth momentum in deposits was stronger than that of advances. Total
deposits surged by 22.5% yoy and 10.1% qoq compared to 17.8% yoy growth in
4QFY17. CASA deposits accounted for 43.5% of the total deposits.
Abs. (%)
3m 1yr
3yr
On asset quality front, continues to maintain strong asset quality with a
Sensex
(3.7)
15.2
26.5
GNPA/NPA ratio of 1.3%/0.4% of loans. The bank has grown unsecured retail
HDFC Bank
(2.7)
24.8
90.5
loans by 40% yoy which is riskier but generate higher yield.
Outlook & Valuation: Credit growth beat the industry growth rate, driven by strong
3-year price chart
retail business. The Strong liability franchise and healthy capitalisation provides
2500
strong earning visibility. At the current market price, the bank is trading at 3.2x
2000
FY20E ABV. We recommend a Buy rating on the stock, with a target price of
1500
1000
`2,315/-.
500
Key financials (Standalone)
0
Y/E March (` cr)
FY16
FY17
FY18
FY19E
FY20E
NII
27,592
33,139
40,092
48,833
56,694
% chg
23.6
20.1
21.0
21.8
16.1
Source: Company, Angel Research
Net profit
12,296
14,549
17,486
21,765
25,734
% chg
21.2
18.3
20.2
24.5
18.2
NIM (%)
4.5
4.5
4.4
4.4
4.4
EPS ( Rs)
48.6
56.8
67.5
80.0
94.6
P/E (x)
39.7
34.0
28.6
24.1
20.4
P/ABV (x)
6.8
5.9
4.8
3.6
3.2
RoA (%)
1.9
1.9
1.8
1.9
1.8
Jaikishan Parmar
022 - 39357600 Ext: 6810
RoE (%)
18.3
18.3
18.2
17.1
16.3
Note: CMP as of April 26, 2018
Please refer to important disclosures at the end of this report
1
Market Outlook
April 27, 2018
Key Upcoming Events
Result Calendar
D ate
C ompany
April 27, 2018
Axis Bank, Shriram Trans, Reliance Industries, Maruti, United Phosphorus
April 28, 2018
L G Balakri shnan & Bros
Source: Bloomberg, Angel Research
Global economic events release calendar
Bl oomberg Data
D ate
Time
C ountry
Event Description
Unit
Period
L ast Reporte d
E stimate d
Apr 27, 2018
6:00 PMUS
GDP Qoq (Annualise d)
% Change
1Q A
2.90
2.00
2:30 PMEuro Zone Euro-Zone Consumer Confidence
Value
Apr F
0.40
(0.10)
1:25 PMGermany Unempl oyment change (000's)
Thousands
Apr
(19.00)
(15.00)
2:00 PMUK
PMI Manufacturing
Value
Apr
55.10
Apr 30, 2018
2:00 PMUK
GDP (YoY)
% Change
1Q A
1.40
1.40
May 01, 2018
6:30 AMChina
PMI Manufacturing
Value
Apr
51.50
51.30
May 02, 2018
1:25 PMGermany PMI Manufacturing
Value
Apr F
58.10
11: 30 PMUS
FOMC rate decision
%
May 2
1.75
1.75
2:30 PMEuro Zone Euro-Zone GDP s.a. (QoQ)
% Change
1Q A
0.70
May 04, 2018
1:25 PMGermany PMI Services
Value
Apr F
54.10
6:00 PMUS
Change in N onfarm payrolls
Thousands
Apr
103.00
190.00
6:00 PMUS
Unnemployment rate
%
Apr
4.10
4.00
May 08, 2018
China
Exports YoY%
% Change
Apr
(2.70)
May 09, 2018
US
Producer Price Index (mom)
% Change
Apr
0.20
May 10, 2018
6:00 PMUS
Consumer price index (mom)
% Change
Apr
(0.10)
Source: Bloomberg, Angel Research
Market Outlook
April 27, 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
April 27, 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 26 April, 2018
Market Outlook
April 27, 2018
Exhibit 4: Relative performance of indices across globe
Returns (%)
C ountry
Name of index
Closing price
1M
3M
1YR
Brazil
Bovespa
85,824
2.3
7.6
33.4
Russia
Micex
4,442
1.4
7.1
11.4
India
Nifty
10,565
4.7
(1.7)
16.0
China
Shanghai Composite
3,117
(6.3)
(10.3)
(6.2)
South Africa
Top 40
50,729
(1.3)
(6.2)
10.8
Mexico
Mexbol
48,745
1.9
(1.3)
(0.3)
Indonesia
LQ45
1,040
0.7
(5.9)
10.0
Malaysia
KLCI
1,895
2.1
3.8
9.2
Thailand
SET 50
1,189
0.2
0.7
19.2
USA
Dow Jones
24,665
0.2
(5.6)
19.9
UK
FTSE
7,329
2.3
(5.1)
3.0
Japan
Nikkei
22,191
3.3
(7.0)
19.6
Germany
DAX
12,567
2.9
(5.3)
4.4
France
CAC
5,392
3.7
(1.4)
2.4
Source: Bloomberg, Angel Research as on 26 April, 2018 68in4
