F&O expiry: Indices gain for 5th day, Nifty above 11,550; DLF advances 10%
All that happened in the markets today
 "Stock brokers")
(Photo credit: Kamlesh Pednekar)
9:03 AM
Markets at Pre-open
8:59 AM
Stocks to watch today
Hindustan Aeronautics: The government plans to sell as much as 15% stake in state-run defense contractor Hindustan Aeronautics. through a public offering of shares, as Prime Minister Narendra Modi seeks funds to shore up government coffers.
Telecom stocks: Reliance Jio continued adding subscribers to its base, with over 3.65 million user additions during the month, taking its total tally to 392.7 million users. Bharti Airtel lost over 4.74 million subscribers and Vodafone Idea lost 4.72 million taking their respective subscriber base to 317.8 million and over 309.9 million, the TRAI data said. READ MORE
8:53 AM
BROKERAGE VIEW :: Kotak Institutional Equities on Real Estate
Outlook: Attractive
News: The Government of Maharashtra has approved a temporary reduction in stamp duty in the state of Maharashtra from 5% to 2% upto December 31, 2020 and to 3% upto March 31, 2021.
Impact: The reduction further aids in improving affordability, coupled with historically low interest rates, as well as the steep decline in prices that may prompt fence-sitters to act on the purchase of residential real estate.
View: The temporary reduction in stamp duty will likely help support sales of Mumbai-centric players like Oberoi Realty, Godrej Properties and Sunteck Realty among our coverage universe. Oberoi Realty will also benefit from the completion of several of its larger projects that will eliminate the incidence of GST. We remain constructive on the listed real estate players, as we believe that the current pandemic will further aid industry consolidation as weak players struggle to survive the absence of sales in a year of heightened economic uncertainty.
News: The Government of Maharashtra has approved a temporary reduction in stamp duty in the state of Maharashtra from 5% to 2% upto December 31, 2020 and to 3% upto March 31, 2021.
Impact: The reduction further aids in improving affordability, coupled with historically low interest rates, as well as the steep decline in prices that may prompt fence-sitters to act on the purchase of residential real estate.
View: The temporary reduction in stamp duty will likely help support sales of Mumbai-centric players like Oberoi Realty, Godrej Properties and Sunteck Realty among our coverage universe. Oberoi Realty will also benefit from the completion of several of its larger projects that will eliminate the incidence of GST. We remain constructive on the listed real estate players, as we believe that the current pandemic will further aid industry consolidation as weak players struggle to survive the absence of sales in a year of heightened economic uncertainty.
8:51 AM
BROKERAGE VIEW :: Kotak Institutional Equities on IGL
CMP: Rs 413 | Fair value: Rs 380 | Reco: Sell
>> IGL’s 1QFY21 results were well below our estimates reflecting lower-than-expected volumes amid extended lockdowns in Delhi and surrounding regions. We remain wary of medium-term risks to (1) CNG margins from imminent enabling of open access for CGD networks and (2) CNG volumes from plausible shift towards electric mobility for buses and three-wheelers segment as targeted by the recently notified Delhi electric vehicle policy.
>> IGL’s 1QFY21 results were well below our estimates reflecting lower-than-expected volumes amid extended lockdowns in Delhi and surrounding regions. We remain wary of medium-term risks to (1) CNG margins from imminent enabling of open access for CGD networks and (2) CNG volumes from plausible shift towards electric mobility for buses and three-wheelers segment as targeted by the recently notified Delhi electric vehicle policy.
8:46 AM
BROKERAGE VIEW :: Emkay Global Financial Services on IGL
CMP: Rs 413 | Target price: Rs 430 | Reco: Hold
>> IGL’s CNG realization was down 5% qoq, while PNG fell 6%. Employee cost fell 14% yoy/10% qoq and Other Expenditure was down 13% yoy/29% qoq to Rs2.2bn. IGL said it kept compressor-equipment mostly running to quickly scale back and maintained payments and other overheads. Depreciation was up 4% qoq, while other income fell 13% yoy/2% qoq (19% below estimate) to Rs306mn.
>> Volumes fell up to 90% in April, but by June, they were down 35%. July volumes were ~80% of normal, with CNG/industrial/domestic PNG at 75%/105%/130%. Trading is also picking up, but commercial is weak.
>> IGL expects volumes to see growth by mid-Q3FY21 and is trying to achieve FY19 volumes in FY21 as a whole.
>> We value IGL on a DCF-SoTP basis and upgrade to Hold with an EW stance in EAP. Quick volume recovery is the key trigger. Key risks are adverse pricing/margin/currency, high gas prices (incl. reforms), Covid-19 relapse, open access-competition and project delays.
>> IGL’s CNG realization was down 5% qoq, while PNG fell 6%. Employee cost fell 14% yoy/10% qoq and Other Expenditure was down 13% yoy/29% qoq to Rs2.2bn. IGL said it kept compressor-equipment mostly running to quickly scale back and maintained payments and other overheads. Depreciation was up 4% qoq, while other income fell 13% yoy/2% qoq (19% below estimate) to Rs306mn.
>> Volumes fell up to 90% in April, but by June, they were down 35%. July volumes were ~80% of normal, with CNG/industrial/domestic PNG at 75%/105%/130%. Trading is also picking up, but commercial is weak.
>> IGL expects volumes to see growth by mid-Q3FY21 and is trying to achieve FY19 volumes in FY21 as a whole.
>> We value IGL on a DCF-SoTP basis and upgrade to Hold with an EW stance in EAP. Quick volume recovery is the key trigger. Key risks are adverse pricing/margin/currency, high gas prices (incl. reforms), Covid-19 relapse, open access-competition and project delays.
8:42 AM
BROKERAGE VIEW :: Centrum Broking on Godfrey Phillips
CMP: Rs 960 | Target price: Rs 1,320 | Reco: Buy
>> Godfrey Phillips has been the worst affected cigarette player during the lock down period, due to closure of factories and distribution points as per state directives. Revenue slid by 49.4% to Rs4.0bn. Tobacco segment revenue declined 52.3% led by 47% decline in cigarette volume. Moreover, postponement in passing on NCCD has led to a gross margins contraction of 4.87pp (to 49.3%). Despite reduction in ASP (79%) and other expenses(40%) EBITDA declined by 72.1% to Rs536mn. We expect a sharp recovery in sales in Q2FY21 as all factories are operational now to cater market demand. The channel partners suggest pick up for value-for-money cigarettes, could unfold big opportunity for GPIL as its major portfolio is skewed towards RSFT/DSFT segment. We maintain our estimates and reiterate DCF-based TP of Rs.1320, implying 17x FY22E EPS.
8:40 AM
BROKERAGE VIEW :: IDBI Capital on Phillips Carbon
CMP: Rs 124 | Target price: Rs 182 | Reco: Buy (from Hold)
>> Phillips Carbon Black (Phillips) reported mixed results for Q1FY21. Its sales were 9.9% above our estimate but EBITDA was slightly below our forecast. The company’s net sales fell 60.6% YoY to Rs3,595 mn due to sharp fall in volumes (-52.1% YoY) and realization (-21.1% YoY). Also, its EBIDTA fell 65.9% YoY to Rs406 mn. Net profit decreased 96.4% YoY to Rs23 mn.
>> We have raised our FY21 sales volumes estimate by 14% to 348 kt for FY21 due to higher than expected improvement in demand in domestic market and exports. Hence, our EBITDA/ net profit estimates stand higher by 31%/38%, respectively. Also, we raise our volume forecast by 7% to 385 kt for FY22 given rising acceptance for Phillips products in overseas markets.
>> We now value the stock at a PER of 12x FY22E EPS (earlier 8x) as we foresee recovery in volumes and margins from H2FY21 and derive a target price of Rs182 (previous Rs121).
>> Phillips Carbon Black (Phillips) reported mixed results for Q1FY21. Its sales were 9.9% above our estimate but EBITDA was slightly below our forecast. The company’s net sales fell 60.6% YoY to Rs3,595 mn due to sharp fall in volumes (-52.1% YoY) and realization (-21.1% YoY). Also, its EBIDTA fell 65.9% YoY to Rs406 mn. Net profit decreased 96.4% YoY to Rs23 mn.
>> We have raised our FY21 sales volumes estimate by 14% to 348 kt for FY21 due to higher than expected improvement in demand in domestic market and exports. Hence, our EBITDA/ net profit estimates stand higher by 31%/38%, respectively. Also, we raise our volume forecast by 7% to 385 kt for FY22 given rising acceptance for Phillips products in overseas markets.
>> We now value the stock at a PER of 12x FY22E EPS (earlier 8x) as we foresee recovery in volumes and margins from H2FY21 and derive a target price of Rs182 (previous Rs121).
8:37 AM
BROKERAGE VIEW :: Motilal Oswal Financial Services on Telecom
>> Industry gross subscribers shrank by 5.6m MoM to 1.14b in May’20 (v/s 8.2m loss in Apr’20). Bharti/VIL each lost 4.7m, while RJio added 3.7m subscribers. On the other hand, the industry recovered, albeit slowly, by 2.9m active subscribers (after a steep drop of 31.2m was posted in Apr’20). It reached 960.8m (up 0.3% MoM), led by 6.2m adds by RJio and languishing subs for Bharti/VIL declining by 0.2m/2.8m. This reflects the subs are yet to recover from the impact in Apr’20.
>> Bharti – largely flat market share: Bharti added 1.2m MBB subscribers to reach 144m, after losing 3.8m subscribers in Apr’20. Bharti’s SMS contracted by 10bp MoM to 21.6%.
>> RJio – continues to add subscribers: RJio clocked 3.7m MBB subscribers taking its total subscriber base to 393m (v/s 1.6m in Apr’20). Despite adding the highest number of subscribers, after four months of gains, RJio’s market share shrank by 10bps to 59.2%.
>> Vodafone-Idea – increase in subscriber base: After losing a total of 6.9m MBB subscribers in Mar/Apr’20, VIL added 1.7m subs in May’20, taking the total subscriber base to 113m. After continuous loss in SMS for the last seven months, VIL’s market share remained flat at 17%.
>> Bharti – largely flat market share: Bharti added 1.2m MBB subscribers to reach 144m, after losing 3.8m subscribers in Apr’20. Bharti’s SMS contracted by 10bp MoM to 21.6%.
>> RJio – continues to add subscribers: RJio clocked 3.7m MBB subscribers taking its total subscriber base to 393m (v/s 1.6m in Apr’20). Despite adding the highest number of subscribers, after four months of gains, RJio’s market share shrank by 10bps to 59.2%.
>> Vodafone-Idea – increase in subscriber base: After losing a total of 6.9m MBB subscribers in Mar/Apr’20, VIL added 1.7m subs in May’20, taking the total subscriber base to 113m. After continuous loss in SMS for the last seven months, VIL’s market share remained flat at 17%.
8:34 AM
BROKERAGE VIEW :: Motilal Oswal Financial Services on Indraprastha Gas
CMP: Rs 414 | TP: Rs 470 (+14%) | Reco: Neutral
>> Capex in FY20 was INR10.5b (+20% YoY). IGL has a capex plan of INR20b for the next three years (on its new and old GAs).
>> IGL would consider inorganic growth in the coming years. It is also looking at international prospects (such as Myanmar) and has an MoU with Osaka Gas.
>> Factoring the huge miss during the quarter, we have revised down our FY21/FY22 EPS to INR8.9/INR17.2 (from INR10.4/INR17.9). FY21/FY22 EBITDA/scm stands at INR5.8/6.5 (from INR6.3/unchanged) v/s INR6.4 in FY20 as CGDs would benefit from lower APM and spot LNG prices.
>> The stock trades at around 24.1x FY22 EPS of INR17.2 and EV/EBITDA of 14.8x in FY22. We value the company at 24x FY22 adj. EPS of INR17 and add value from the JV to arrive at target price of INR470
>> Capex in FY20 was INR10.5b (+20% YoY). IGL has a capex plan of INR20b for the next three years (on its new and old GAs).
>> IGL would consider inorganic growth in the coming years. It is also looking at international prospects (such as Myanmar) and has an MoU with Osaka Gas.
>> In the short-to-medium term, IGL could increase its sales volume from new areas such as Rewari, Karnal, and Muzaffarnagar; Haryana City Gas; and the newlyawarded (3) GAs in the 10th round — (a) Kaithal (Haryana), (b) Ajmer, Pali, and Rajsamand (Rajasthan), and (c) Kanpur, Fatehpur, and Hamirpur (Uttar Pradesh).
>> Factoring the huge miss during the quarter, we have revised down our FY21/FY22 EPS to INR8.9/INR17.2 (from INR10.4/INR17.9). FY21/FY22 EBITDA/scm stands at INR5.8/6.5 (from INR6.3/unchanged) v/s INR6.4 in FY20 as CGDs would benefit from lower APM and spot LNG prices.
>> The stock trades at around 24.1x FY22 EPS of INR17.2 and EV/EBITDA of 14.8x in FY22. We value the company at 24x FY22 adj. EPS of INR17 and add value from the JV to arrive at target price of INR470
8:28 AM
ALERT :: RBI guv Shaktikanta Das to deliver key note address at BS Unlock 2.0 BFSI event today
8:15 AM
FII/FPI & DII trading activity on NSE, BSE and MSEI
8:12 AM
Rupee check
Source: Bloomberg
8:10 AM
Oil steady as huge Gulf of Mexico storm shuts down production
>> Oil prices were mixed in early trade on Thursday even as oil rigs and refineries shut ahead of a massive storm in the Gulf of Mexico racing towards Texas and Louisiana, with slim worries about the impact on supply as oil stockpiles remain high.
>> US West Texas Intermediate (WTI) crude futures fell 5 cents, or 0.1%, to $43.34 a barrel, reversing a 4 cent gain on Wednesday.
>> US West Texas Intermediate (WTI) crude futures fell 5 cents, or 0.1%, to $43.34 a barrel, reversing a 4 cent gain on Wednesday.
>> Brent crude futures inched up 2 cents to $45.66 a barrel after falling 22 cents, or 0.5%, on Wednesday.
(Source: Reuters)
(Source: Reuters)
Topics : Markets US Fed Tata Sons Hindustan Aeronautics ICICI Bank Reliance Industries Bharti Airtel Vodafone Idea MARKET WRAP
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First Published: Aug 27 2020 | 7:41 AM IST
