MARKET WRAP: Sensex gains 95 pts, Nifty ends at 11,227; FMCG stocks advance
All that happened in the markets today
 "BSE, Markets")
In the broader market, the S&P BSE MidCap and SmallCap indexes ended 0.05 per cent and 0.04 per cent higher, respectively. (Photo: Kamlesh Pednekar)
9:09 AM
Markets at Pre-open
9:08 AM
Markets at Pre-open
9:06 AM
BROKERAGE VIEW :: Kotak Institutional Equities on Tech Mahindra
CMP: Rs 768 | Fair Value: Rs 845 | Reco: Buy
>> We hosted investor calls with CP Gurnani, CEO of TechM and Manoj Bhat, CFO. The company expects to match the industry on growth and achieve 15% EBIT margin in the medium term. TechM has set up transformation offices to improve growth and profitability. Some of the measures taken up are (1) expanding the portfolio of offerings, (2) improving revenue per client via cross-sell and client rationalization, (3) increasing exposure to developed markets and (4) cost optimization and operational efficiencies being adopted on a war footing. BUY.
>> We hosted investor calls with CP Gurnani, CEO of TechM and Manoj Bhat, CFO. The company expects to match the industry on growth and achieve 15% EBIT margin in the medium term. TechM has set up transformation offices to improve growth and profitability. Some of the measures taken up are (1) expanding the portfolio of offerings, (2) improving revenue per client via cross-sell and client rationalization, (3) increasing exposure to developed markets and (4) cost optimization and operational efficiencies being adopted on a war footing. BUY.
9:05 AM
BROKERAGE VIEW :: Kotak Institutional Equities on Asian Paints
CMP: Rs 1,960 | Fair Value: Rs 1,800 | Reco: Reduce
APNT has launched its own range of furniture, furnishing and decorative lighting and unveiled ‘Beautiful Homes’ as its omni-channel identity in home décor (HD); this development is in line with its long-standing vision to offer complete HD solutions. We believe APNT has the potential to build a large HD business in the long-term; capital commitment will determine the pace of progress. We like LT volume-led growth potential with stable margin profile offered by decorative paints; HD and waterproofing segments offer optionality; await a better entry price.
9:01 AM
BROKERAGE VIEW :: MOFSL on KNR Constructions
CMP: Rs 253 | TP: Rs 310 (+23%) | Reco: Buy
>> KNR has completed the sale of the Walayar road project to Cube Highways at an enterprise value of INR5.1b. Debt on the project stands at INR1.3b. Thus, the deal’s equity value is estimated to be ~INR3.8b or P/Inv of ~1x. While this is almost in line with the announced deal value in Jan’20, part of the proceeds is subject to the fulfillment of certain conditions. In lieu of an equity value of INR3.8b, KNR is likely to immediately realize a payment of INR3.1b, while the remaining INR0.7b would flow in over the next two years. Further NHAI claims and other governmental instrumentalities amount to INR1.7b – a pass-through to KNR as and when realized. We are yet to factor in any arbitration proceeds in our model. Any such realization could further boost the balance sheet.
>> We increase our FY21/FY22E EPS by 6%/4% on account of the early realization of asset monetization, leading to lower interest costs. We forecast a revenue/EBITDA/PAT CAGR of 18%/12%/25% over FY20–22E. Despite the recent increase in receivables, we believe KNR’s strong balance sheet gives it a key competitive advantage v/s peers: (a) in bidding for newer projects and (b) in terms of strong execution despite financing challenges in the sector – as the dependency on bank financing is minimal. We maintain our Buy rating, with higher TP of INR310 (prior: INR295), based on: (a) unchanged 12x Mar’22E EPS to the EPC business and (b) the book value of road assets
>> KNR has completed the sale of the Walayar road project to Cube Highways at an enterprise value of INR5.1b. Debt on the project stands at INR1.3b. Thus, the deal’s equity value is estimated to be ~INR3.8b or P/Inv of ~1x. While this is almost in line with the announced deal value in Jan’20, part of the proceeds is subject to the fulfillment of certain conditions. In lieu of an equity value of INR3.8b, KNR is likely to immediately realize a payment of INR3.1b, while the remaining INR0.7b would flow in over the next two years. Further NHAI claims and other governmental instrumentalities amount to INR1.7b – a pass-through to KNR as and when realized. We are yet to factor in any arbitration proceeds in our model. Any such realization could further boost the balance sheet.
>> We increase our FY21/FY22E EPS by 6%/4% on account of the early realization of asset monetization, leading to lower interest costs. We forecast a revenue/EBITDA/PAT CAGR of 18%/12%/25% over FY20–22E. Despite the recent increase in receivables, we believe KNR’s strong balance sheet gives it a key competitive advantage v/s peers: (a) in bidding for newer projects and (b) in terms of strong execution despite financing challenges in the sector – as the dependency on bank financing is minimal. We maintain our Buy rating, with higher TP of INR310 (prior: INR295), based on: (a) unchanged 12x Mar’22E EPS to the EPC business and (b) the book value of road assets
8:58 AM
BROKERAGE VIEW :: MOFSL on Vedanta
CMP: Rs 140 | TP: Rs 148 (+6%) | Reco: Neutral
>> Vedanta Resources Ltd (VRL) and other promoter group companies have received stock exchange approval for delisting the shares of Vedanta Ltd. The reverse book-building process for public shareholders to tender their shares would take place over Oct 5–9, which would result in the discovery of the final offer price.
>> Excluding ADRs, the promoter group holds 52.33% of the total issued paidup capital and public shareholders hold 47.67% of the same. In order to delist, promoters would have to raise their shareholding to 90%, implying that public shareholders would have to tender ~79% of their holding.
>> We have factored in the post-COVID recovery in commodity prices in our estimates. VEDL’s cost reduction in Aluminum, completion of capacity expansion in Zinc, and expected ramp-up in Oil & Gas should also support earnings growth in FY22. Over FY20–22E, we estimate an 11% CAGR in EBITDA and 32% CAGR in
>> We value Vedanta on an SOTP basis to arrive at TP of INR148
>> Vedanta Resources Ltd (VRL) and other promoter group companies have received stock exchange approval for delisting the shares of Vedanta Ltd. The reverse book-building process for public shareholders to tender their shares would take place over Oct 5–9, which would result in the discovery of the final offer price.
>> Excluding ADRs, the promoter group holds 52.33% of the total issued paidup capital and public shareholders hold 47.67% of the same. In order to delist, promoters would have to raise their shareholding to 90%, implying that public shareholders would have to tender ~79% of their holding.
>> We have factored in the post-COVID recovery in commodity prices in our estimates. VEDL’s cost reduction in Aluminum, completion of capacity expansion in Zinc, and expected ramp-up in Oil & Gas should also support earnings growth in FY22. Over FY20–22E, we estimate an 11% CAGR in EBITDA and 32% CAGR in
EPS.
>> We value Vedanta on an SOTP basis to arrive at TP of INR148
8:56 AM
>> PNGRB has asked stakeholders for their views on determining the tariff for zone one – which shall be a percentage of the second tariff zone. The Open House to be conducted on 23rd Oct, post which the final notification would be released.
>> In various instances, PNGRB has reiterated that it is working toward streamlining the tariff regulation for trunk pipelines in the country.
>> As a general guidance, PNGRB has shown the order of magnitude for unified tariff based on FY20 data as per the excel sheet uploaded on its website. Following the same workings, our preliminary calculations suggest that the unified tariff of INR56.8/mmbtu is higher by 15%/48% to implied tariff of GAIL/GSPL respectively.
>> We maintain Buy on GSPL and GAIL.
BROKERAGE VIEW :: MOFSL on Oil and Gas sector
>> The Petroleum and Natural Gas Board (PNGRB) has published yet another draft notification, this time for determining the natural gas pipeline unified tariff.
>> PNGRB has asked stakeholders for their views on determining the tariff for zone one – which shall be a percentage of the second tariff zone. The Open House to be conducted on 23rd Oct, post which the final notification would be released.
>> In various instances, PNGRB has reiterated that it is working toward streamlining the tariff regulation for trunk pipelines in the country.
>> As a general guidance, PNGRB has shown the order of magnitude for unified tariff based on FY20 data as per the excel sheet uploaded on its website. Following the same workings, our preliminary calculations suggest that the unified tariff of INR56.8/mmbtu is higher by 15%/48% to implied tariff of GAIL/GSPL respectively.
>> We maintain Buy on GSPL and GAIL.
8:54 AM
Sept Auto Sales :: MOFSL expects M&M to post 46% MoM growth
8:52 AM
Stocks to watch out for today
RIL: Reliance Industries and Reliance Retail Ventures Limited announced that General Atlantic, a leading global growth equity firm, will invest Rs 3,675 crore into RRVL, a subsidiary of Reliance Industries. That apart, Abu Dhabi state fund Mubadala Investment Co is in advanced talks to invest up to $1 billion in the retail division of the compny, two sources told Reuters.
Lakshmi Vilas Bank, PNB: The Reserve Bank of India (RBI) is learned to have told state-owned Punjab National Bank to get ready to take over Lakshmi Vilas Bank (LVB) in case the beleaguered lender’s proposed transaction with Clix Capital does not materialise. Apart from PNB, another public sector bank has been asked to look into the books of LVB. READ MORE
8:49 AM
Recommendation: Buy
Weekly stock recommendations by Religare Broking
Sun Pharmaceutical Industries Limited
Recommendation: Buy
Target: 540
Stop loss:485
Sun Pharma has been witnessing profit taking for the last two months, after a strong rally from roughly 310 to 560+ levels. It has reached the support zone of major moving averages on multiple time frames and they all coincide closer to 485 levels. Indications are in the favor of gradual recovery from hereon thus we advise creating fresh longs in the given range. READ MORE
8:41 AM
FII/FPI & DII trading activity on NSE, BSE and MSEI
8:40 AM
Rupee check
Source: Bloomberg
8:39 AM
Oil drops second day as surging coronavirus cases prompt demand worries
>> Oil prices fell for a second day on Wednesday, extending big losses from the previous session amid rising concerns about fuel demand as the coronavirus pandemic worsens.
>> Brent crude dropped 23 cents, or 0.6%, to $41.03 per barrel. West Texas Intermediate fell 26 cents, or 0.7%, to $39.29.
(Source: Reuters)
>> Brent crude dropped 23 cents, or 0.6%, to $41.03 per barrel. West Texas Intermediate fell 26 cents, or 0.7%, to $39.29.
(Source: Reuters)
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First Published: Sep 30 2020 | 8:02 AM IST
