Weak global cues, sell-off in RIL, IT drag indices; Sensex tanks 1,066 pts
All that happened in the markets today.
 "stocks, shares, market, sensex, nifty, BSE, INVESTORS, BROKERS")
Global shares fell on Thursday as governments across Europe tightened restrictions to battle an accelerating second wave of Covid-19 infections.
9:22 AM
Infosys up 2.6% post stellar Q2 nos
>> The IT services major on Wednesday reported a 20.5 per cent year-on-year (YoY) rise in its consolidated net profit at Rs 4,845 crore for the quarter ended September 30, 2020 (Q2FY21). The company's revenue came in at Rs 24,570 crore, up 8.5 per cent YoY and 3.8 per cent QoQ
9:21 AM
Sectoral trends at Open
9:20 AM
Sensex slips into the red
9:19 AM
Opening Bell
9:17 AM
Opening Bell
9:08 AM
Commodity Heatmap
9:07 AM
Top gainers and losers on the S&P BSE Sensex at Pre-open
9:05 AM
Markets at Pre-open
9:05 AM
Markets at Pre-open
9:04 AM
BROKERAGE VIEW:: Antique Broking on RBL Bank
CMP: Rs 173 | Target price: Rs 240 | Reco: Buy
>> We initiate Buy on RBL Bank (RBK) with Target Price of INR240, 1x FY23 BVe as we expect earnings (on a lower base) to rebound by 4x over FY21-23E and ROAs to improve to 1.2%+ by FY22/23E. We believe investor’s concerns related to corporate exposure (recognized, provided for and de-bulked) and deposits (12% growth in 1HFY21 and LD ratio at several quarters low) are now less of a challenge.
>> High proportion of 30% of unsecured loans (credit card and MFI) to overall loans could impact FY21e earnings as asset quality challenges would rise in this disruptive environment, but fostering of these niche segments (market share of ~5% vs. loan market share of <0.6%) which are linked to consumption and grass root level recovery would provide springboard to earnings in FY22/23e. Superior CET 1 of 17.4% and management continuity would support execution.
>> Current valuations of 0.7x FY23 BV overlooks this potential and as comfort on unsecured businesses improve we see upsides to valuation multiples.
>> We initiate Buy on RBL Bank (RBK) with Target Price of INR240, 1x FY23 BVe as we expect earnings (on a lower base) to rebound by 4x over FY21-23E and ROAs to improve to 1.2%+ by FY22/23E. We believe investor’s concerns related to corporate exposure (recognized, provided for and de-bulked) and deposits (12% growth in 1HFY21 and LD ratio at several quarters low) are now less of a challenge.
>> High proportion of 30% of unsecured loans (credit card and MFI) to overall loans could impact FY21e earnings as asset quality challenges would rise in this disruptive environment, but fostering of these niche segments (market share of ~5% vs. loan market share of <0.6%) which are linked to consumption and grass root level recovery would provide springboard to earnings in FY22/23e. Superior CET 1 of 17.4% and management continuity would support execution.
>> Current valuations of 0.7x FY23 BV overlooks this potential and as comfort on unsecured businesses improve we see upsides to valuation multiples.
9:01 AM
BROKERAGE VIEW :: Emkay Global on Infosys
CMP: Rs 1,137| Target price: Rs 1,360 | Reco: Buy
>> Infosys delivered another stellar quarter, beating consensus estimates on revenue and margins. Revenue grew 6.1% QoQ to $3.3bn. EBITM expanded 270bps to 25.3% (highest quarterly margin since Q4FY16). Strong operating performance led to a net profit beat.
>> For FY21, Infosys raised its revenue guidance to 2-3% YoY cc (from 0-2%) and EBIT margins range to 23-24% (from 21-23%). Its full-year outlook implies a 0.5-1.7% CQGR over the remaining two quarters.
>> Large deal signing remained robust with deal TCV of $3.15bn in Q2 (net new share 86%), highest ever for the company. Net new deal TCV grew ~59% YoY in H1.
>> Infosys continues to outperform TCS in terms of revenue growth (4.8% YoY cc on TTM basis vs. -0.1% for TCS), with the margin differential also narrowing. We expect Infosys valuation gap with TCS to narrow further (trades at ~15% discount vs. >30% in early CY20) with sustained strong operating performance. We assume coverage on the stock with Buy and a TP of Rs1,360 at 25x Sept’22E earnings.
>> Infosys delivered another stellar quarter, beating consensus estimates on revenue and margins. Revenue grew 6.1% QoQ to $3.3bn. EBITM expanded 270bps to 25.3% (highest quarterly margin since Q4FY16). Strong operating performance led to a net profit beat.
>> For FY21, Infosys raised its revenue guidance to 2-3% YoY cc (from 0-2%) and EBIT margins range to 23-24% (from 21-23%). Its full-year outlook implies a 0.5-1.7% CQGR over the remaining two quarters.
>> Large deal signing remained robust with deal TCV of $3.15bn in Q2 (net new share 86%), highest ever for the company. Net new deal TCV grew ~59% YoY in H1.
>> Infosys continues to outperform TCS in terms of revenue growth (4.8% YoY cc on TTM basis vs. -0.1% for TCS), with the margin differential also narrowing. We expect Infosys valuation gap with TCS to narrow further (trades at ~15% discount vs. >30% in early CY20) with sustained strong operating performance. We assume coverage on the stock with Buy and a TP of Rs1,360 at 25x Sept’22E earnings.
8:58 AM
BROKERAGE VIEW :: Kotak Institutional Equities on Construction Material sector
Outlook: Attractive
>> Channel checks with cement dealers suggest pan-India prices increased 2% mom in October after four consecutive months of correction. A price hike in October is also an aberration to historic trends. A strong demand recovery in September 2020 (10-12% yoy) and continued demand tailwinds in early October 2020 underpin the price strength. Cost headwinds should hit from end of 3QFY21 and price hikes, if sustained, would offset the impact on margins and drive earnings upgrades.
>> Channel checks with cement dealers suggest pan-India prices increased 2% mom in October after four consecutive months of correction. A price hike in October is also an aberration to historic trends. A strong demand recovery in September 2020 (10-12% yoy) and continued demand tailwinds in early October 2020 underpin the price strength. Cost headwinds should hit from end of 3QFY21 and price hikes, if sustained, would offset the impact on margins and drive earnings upgrades.
8:56 AM
BROKERAGE VIEW :: Kotak Institutional Equities on Petronet LNG
CMP: Rs 210 | Fair value: Rs 300 | Reco: Buy
>> We believe availability of competitive long-term contracts in global LNG markets may deter PLNG from pursuing investment in Tellurian’s project, with the latter anyway facing several challenges in its progress. The sharp correction in PLNG stock offers an opportunity to BUY as it trades at a discount to NPV of long-term contracts, even as volumes remain robust and well above contractual commitments. We expect the robust earnings/FCF trajectory to translate into higher dividends, as PLNG may find limited investment avenues meeting its threshold IRR.
>> We believe availability of competitive long-term contracts in global LNG markets may deter PLNG from pursuing investment in Tellurian’s project, with the latter anyway facing several challenges in its progress. The sharp correction in PLNG stock offers an opportunity to BUY as it trades at a discount to NPV of long-term contracts, even as volumes remain robust and well above contractual commitments. We expect the robust earnings/FCF trajectory to translate into higher dividends, as PLNG may find limited investment avenues meeting its threshold IRR.
8:55 AM
BROKERAGE VIEW :: Kotak Institutional Equities on Infosys
CMP: Rs 1,137 | Fair value: Rs 1,400 | Reco: Buy
>> Infosys impressed with excellent results and a significant beat on revenues, EBIT and net profit. Large deal TCV hit a new high. The company raised FY2021E revenue and margin guidance. The results capture the success of turnaround efforts initiated by Salil Parekh in 2018. This has resulted in success in all dimensions viz: operations, large deals, capability augmentation and talent retention. Expect the company to lead the industry on growth. We raise FY2021-23E EPS by 8-9% and FV to Rs1,400/share valuing the stock at 25X December 2022E EPS. BUY
>> Infosys impressed with excellent results and a significant beat on revenues, EBIT and net profit. Large deal TCV hit a new high. The company raised FY2021E revenue and margin guidance. The results capture the success of turnaround efforts initiated by Salil Parekh in 2018. This has resulted in success in all dimensions viz: operations, large deals, capability augmentation and talent retention. Expect the company to lead the industry on growth. We raise FY2021-23E EPS by 8-9% and FV to Rs1,400/share valuing the stock at 25X December 2022E EPS. BUY
8:53 AM
Stocks to watch today
Infosys: The IT services major on Wednesday reported a 20.5 per cent year-on-year (YoY) rise in its consolidated net profit at Rs 4,845 crore for the quarter ended September 30, 2020 (Q2FY21). The company's revenue came in at Rs 24,570 crore, up 8.5 per cent YoY and 3.8 per cent QoQ. READ MORE
Earnings today: Today, a total of 15 companies including Mindtree, South Indian Bank, and Cyient are scheduled to announce their quarterly earnings. READ MORE
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First Published: Oct 15 2020 | 7:52 AM IST
