Weak global cues, sell-off in RIL, IT drag indices; Sensex tanks 1,066 pts
All that happened in the markets today.
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Global shares fell on Thursday as governments across Europe tightened restrictions to battle an accelerating second wave of Covid-19 infections.
8:52 AM
BROKERAGE VIEW :: MOFSL on Tata Steel
Target price: Rs 381 | Reco: Neutral
>> Tata Steel BSL (TSBSL), subsidiary of Tata Steel Ltd, reported EBITDA of INR11.1b v/s INR1.5b in 1QFY21 – above our est. of INR8.4b. The beat on EBITDA was driven by higher-than-expected volumes and realization.
>> Sales volumes increased +84% QoQ / 23% YoY to 1.28mt (est. 1.1mt). Domestic volumes stood at 0.86mt, +150% QoQ / 11% YoY. The share of exports declined to ~31% v/s ~50% in 1QFY21. Crude steel production also increased by 73% QoQ/ 7% YoY to 1.14mt.
>> Realization improved by 11% QoQ (4,260/t) to INR43,120/t on higher steel prices and a better product mix, and was ~INR950/t above our estimate. This drove the beat on EBITDA/t.
>> We value TATA on SoTP based on FY22 EV/EBITDA of 6.5x for India operations and 5.0x for Europe operations. We arrive at target price of INR381/sh. Maintain Neutral on concerns on European operations.
>> Tata Steel BSL (TSBSL), subsidiary of Tata Steel Ltd, reported EBITDA of INR11.1b v/s INR1.5b in 1QFY21 – above our est. of INR8.4b. The beat on EBITDA was driven by higher-than-expected volumes and realization.
>> Sales volumes increased +84% QoQ / 23% YoY to 1.28mt (est. 1.1mt). Domestic volumes stood at 0.86mt, +150% QoQ / 11% YoY. The share of exports declined to ~31% v/s ~50% in 1QFY21. Crude steel production also increased by 73% QoQ/ 7% YoY to 1.14mt.
>> Realization improved by 11% QoQ (4,260/t) to INR43,120/t on higher steel prices and a better product mix, and was ~INR950/t above our estimate. This drove the beat on EBITDA/t.
>> We value TATA on SoTP based on FY22 EV/EBITDA of 6.5x for India operations and 5.0x for Europe operations. We arrive at target price of INR381/sh. Maintain Neutral on concerns on European operations.
8:50 AM
BROKERAGE VIEW :: MOFSL on Infosys
CMP: Rs 1,136 | TP: Rs 1,355 (+19%) | Reco: Buy
>> Infosys (INFO)’s 2QFY21 revenue and margin performance were above expectations. The company impressed with a second consecutive quarter of strong margin expansion (270bp QoQ in 2Q; ~420bp over 1HFY21).
>> We expect some margin benefits to be sustainable. On the other hand, tailwinds (such as increased offshoring, lower attrition, deferred wage hikes, and lower travel/SGA costs) as a result of the pandemic are likely to partly wane out later on as the situation normalizes further over the next few quarters.
>> The highest ever deal wins were reported (~USD3.15b), and the deal pipeline remains healthy. Upward revision to FY21 guidance – with revenue growth of 2–3% YoY CC (v/s 0–2% earlier) and margin guidance of 23–24% (v/s 21–23% earlier) – is positive, but still conservative. We expect Infosys to deliver above guidance in FY21 a) notwithstanding margin headwinds (wage hikes in 4Q, large deal ramp-up, seasonality, above margin factors, etc.) and b) based on strong deal wins.
>> We upgrade our FY21/FY22E EPS estimates by 9%/12% as we adjust our revenue and EBIT margin trajectory. Infosys should be a key beneficiary in terms of recovery in IT spends in FY22. Additionally, leading operational performance in 1HFY21, coupled with strong deal wins, should translate to strong outperformance on EPS growth (v/s the sector).
>> Infosys (INFO)’s 2QFY21 revenue and margin performance were above expectations. The company impressed with a second consecutive quarter of strong margin expansion (270bp QoQ in 2Q; ~420bp over 1HFY21).
>> We expect some margin benefits to be sustainable. On the other hand, tailwinds (such as increased offshoring, lower attrition, deferred wage hikes, and lower travel/SGA costs) as a result of the pandemic are likely to partly wane out later on as the situation normalizes further over the next few quarters.
>> The highest ever deal wins were reported (~USD3.15b), and the deal pipeline remains healthy. Upward revision to FY21 guidance – with revenue growth of 2–3% YoY CC (v/s 0–2% earlier) and margin guidance of 23–24% (v/s 21–23% earlier) – is positive, but still conservative. We expect Infosys to deliver above guidance in FY21 a) notwithstanding margin headwinds (wage hikes in 4Q, large deal ramp-up, seasonality, above margin factors, etc.) and b) based on strong deal wins.
>> We upgrade our FY21/FY22E EPS estimates by 9%/12% as we adjust our revenue and EBIT margin trajectory. Infosys should be a key beneficiary in terms of recovery in IT spends in FY22. Additionally, leading operational performance in 1HFY21, coupled with strong deal wins, should translate to strong outperformance on EPS growth (v/s the sector).
8:46 AM
Trading strategies for zinc and nickel
Nickel has witnessed breakout from the range of 1,078-1,042 with volume. The recent breakout confirms bullish trend as we have also seen cross over of 20 and 50 EMA on daily scale. Momentum oscillator ADX is quoting above 58 and RSI_14 is trading at 58, both confirming trending market and bullish bias. Nickel has also made rounding bottom chart pattern whose next resistance comes around 1135. So we recommend long positions with target of 1,135 and stoploss of 1,080. READ MORE
8:42 AM
Nifty outlook and stock pick by Gaurav Garg of CapitalVia Global Research
As per weekly option data, handful of put writing on lower strikes ranging from 11,700 to 11,900 is witnessed which shows Nifty would face firm support in sub-11,800 zone.11,800 will act as support as maximum put OI is placed here. We can witness short-covering move along with addition of fresh position only if nifty breaches 12,000. Therefore, traders should try to create long position keeping close eye on 11,800. READ MORE
8:36 AM
FII/FPI & DII trading activity on NSE, BSE and MSEI
8:32 AM
Rupee check
Source: Bloomberg
8:31 AM
Oil holds gains on shrinking US stockpiles
>> Oil prices rose slightly in early trade on Thursday after data showed US crude stockpiles fell last week, adding to 2% gains overnight, as OPEC and its allies were seen fully complying in September with their pact to curb output.
>> US West Texas Intermediate (WTI) crude futures picked up 4 cents, or 0.1%, to $41.08 a barrel, while Brent crude futures rose 5 cents, or 0.1% to $43.37 a barrel.
(Source: Reuters)
(Source: Reuters)
8:26 AM
SGX Nifty update
>> At 8:25 am, the index was at 11,977 level, up 15 points.
8:21 AM
Asia market check
Source: Reuters
8:20 AM
Wall Street on Wednesday
Source: Reuters
8:09 AM
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First Published: Oct 15 2020 | 7:52 AM IST
