F&O expiry: Sensex tanks 1,115 pts on global sell-off; Nifty ends at 10,806
All that happened in the markets today
 "F&O expiry: Sensex tanks 1,115 pts on global sell-off; Nifty ends at 10,806")
In the broader market, the S&P BSE MidCap index dropped 2.14 per cent to 13,933 levels.
9:20 AM
Sectoral trends at Open
9:19 AM
Sensex Heatmap at Open
9:18 AM
First Trade :: Nifty breaks below 11,000-mark
9:16 AM
First Trade :: Sensex tanks 500 pts at Open
9:07 AM
Commodity Heatmap :: Silver extends decline
9:05 AM
Top gainers and losers on S&P BSE Sensex at Pre-Open
9:05 AM
Markets at Pre-Open
9:04 AM
Markets at Pre-Open
8:55 AM
Stocks to watch today
Tata Chemicals, Tata Motors DVR: According to bulk deal data on NSE, Tata Sons purchased shares of Tata Chemicals for Rs 63.56 crore and Tata Motors DVR shares for Rs 22.51 crore.
Ircon International on Wednesday said it has won contracts worth over Rs 400 crore from Ministry of Railways. The contracts pertain to works of nine road over bridges. READ MORE
8:55 AM
BROKERAGE VIEW :: Kotak Institutional Equities on Hindalco
CMP: Rs 165 | Fair value: Rs 285 | Reco: Buy
>> Scrap spreads hit a three-year low in 1QFY21 as lockdowns impacted availability, handling and scrap-processing plants in North America. Scrap spreads play a significant role in Novelis’ margins as scrap forms 60% of its raw material. With opening up of economies, scrap spreads have rebounded to Jan 2020 levels and pent-up supply implies further upside. Recovery in auto volumes and scrap spreads should elevate Novelis’ margins back to pre-Covid levels in 2HFY21.
>> HNDL, post the recent correction, is trading at 4.6X EV/EBITDA FY2022E, 23% discount to long-term average of 6X. Current price implies Novelis business available at 4.2X EV/EBITDA FY2022E (refer to Exhibit 10) assuming India business at spot spreads and 5X EV/EBITDA. We maintain BUY rating with Fair Value of Rs285/share. HNDL offers the most attractive risk-reward within our metals coverage.
>> HNDL, post the recent correction, is trading at 4.6X EV/EBITDA FY2022E, 23% discount to long-term average of 6X. Current price implies Novelis business available at 4.2X EV/EBITDA FY2022E (refer to Exhibit 10) assuming India business at spot spreads and 5X EV/EBITDA. We maintain BUY rating with Fair Value of Rs285/share. HNDL offers the most attractive risk-reward within our metals coverage.
8:46 AM
>> 2W and PV reported growth in August 2020 and outlook for festive seasonis positive given channel filling by automotive companies on account of lower inventory.
>> We expect a strong recovery in automotive demand from FY22 driven by normalization of economic activities and pent up demand. Also, Alicon would commence execution of recent incremental order wins (both domestic and exports) from FY22. With robust topline growth and margin improvement on account of operating leverage and better product mix, we expect strong 43% earnings CAGR over FY20-23 period.
>> At CMP, stock is trading at 8.7x FY23 earnings which is lower than its long-term historical average. We rollover to FY23 earnings and expect 28-30% upside from current levels. We retain positive view on the stock.
BROKERAGE VIEW :: Sharekhan on Alicon Castalloy
Target price: 28-30% upside | Stance: positive
>> Domestic Automotive OEM volumes contributing 75% of revenues of Alicon Castalloy (Alicon) is witnessing an improvement on month on month basis. Opening up of the economy under Government unlock measures, increased preference for personal transportation is driving improvement in volumes.
>> Domestic Automotive OEM volumes contributing 75% of revenues of Alicon Castalloy (Alicon) is witnessing an improvement on month on month basis. Opening up of the economy under Government unlock measures, increased preference for personal transportation is driving improvement in volumes.
>> 2W and PV reported growth in August 2020 and outlook for festive seasonis positive given channel filling by automotive companies on account of lower inventory.
>> We expect a strong recovery in automotive demand from FY22 driven by normalization of economic activities and pent up demand. Also, Alicon would commence execution of recent incremental order wins (both domestic and exports) from FY22. With robust topline growth and margin improvement on account of operating leverage and better product mix, we expect strong 43% earnings CAGR over FY20-23 period.
>> At CMP, stock is trading at 8.7x FY23 earnings which is lower than its long-term historical average. We rollover to FY23 earnings and expect 28-30% upside from current levels. We retain positive view on the stock.
8:44 AM
>> We expect margin improvement going ahead, led by higher offshoring, reduction in subcontractor expenses, improvement in margin profile of two large deals, and better profitability of acquired entities.
>> Tech M is well placed to benefit from the expansion of 5G value chain across networks and IT services, when there is pick up in investments by CSPs and higher 5G adoption by enterprise would happen.
BROKERAGE VIEW :: Sharekhan on Tech Mahindra
Target price: Rs 910 | Reco: Buy
>> We maintain our Buy rating on Tech Mahindra (TechM) with a revised PT of Rs 910, given it is trading at a sharp discount to its large peers. Revenue growth in Q2 would be driven by strong recovery in BPO business, stability around network services revenue and growth in BFSI, healthcare, and technology verticals.
>> We maintain our Buy rating on Tech Mahindra (TechM) with a revised PT of Rs 910, given it is trading at a sharp discount to its large peers. Revenue growth in Q2 would be driven by strong recovery in BPO business, stability around network services revenue and growth in BFSI, healthcare, and technology verticals.
>> We expect margin improvement going ahead, led by higher offshoring, reduction in subcontractor expenses, improvement in margin profile of two large deals, and better profitability of acquired entities.
>> Tech M is well placed to benefit from the expansion of 5G value chain across networks and IT services, when there is pick up in investments by CSPs and higher 5G adoption by enterprise would happen.
8:41 AM
Bank Nifty Future
Nifty Outlook :: ICICI Securities
Nifty Future
>> The Nifty is expected to trade between 11,000 and 11,300 amid high volatility. Sell Nifty 11300 Call (October 1 expiry) in the range of Rs 50-52 Target: Rs 36-26 Stop loss : Rs 66
Bank Nifty Future
>> The Bank Nifty managed to hold the Put base of 21,000 and reversed during the day. Axis Bank, Kotak Mahindra Bank and HDFC Bank witnessed short covering, which helped the Bank Nifty to end near 21,300 with a gain of 0.5%. In the options space, additions were seen in 21,500 Call and 21,000 Put, suggesting a trading range for the coming days. Sell Bank Nifty in the range of 21,150-21,250; Target: 21,000-20,800, Stop loss: 21,325
Stock Analysis
Long build-up/short covering: Tata Chemical, Tata Power, Muthoot Finance, Axis Bank, Ramco Cement and Escorts
Short build-up/profit booking: Bharti Airtel, Sun TV, Tata Steel, IndusInd Bank, Lupin, TVS Motor, JSW Steel and Cipla
8:36 AM
BROKERAGE VIEW :: Prabhudas Lilladher on Coromandel International
Target Price: Rs 676 | Rating: REDUCE
>> We initiate coverage on Coromandel International (CRIN) with REDUCE rating with a target price of Rs676 based on 15x Sept’22E EPS of Rs45. CRIN has reaped benefits from 1) benign input costs (~17%/21% decline in price of Phosphoric Acid/Rock Phosphate) 2) supportive NBS regime (mere 3% cumulative decline in subsidy rates for FY20 & FY21) and 3) 8% volume CAGR in NPK between FY19-21E. However, we believe CRIN’s margins to peak out in FY21E and APAT to decline by 9% in FY22E driven by 1) increasing raw material prices of Phosphoric Acid, Rock Phosphate, Ammonia, Sulphur, etc (2) Expected lower NBS subsidy in FY22E and 3) limited volume growth due to capacity constraints (operating at +86%). While CRIN’s fundamentals remain rock solid and Crop Protection division (13% of revenue/ EBIT) is on a steady growth trajectory but headwinds emerging from the fertilizer segment (87% of revenue & EBIT) leave little room for a negative surprise given that the stock trades at near-to-peak multiples (18x Sep’22E EPS) as well as margins. Reduce
>> We initiate coverage on Coromandel International (CRIN) with REDUCE rating with a target price of Rs676 based on 15x Sept’22E EPS of Rs45. CRIN has reaped benefits from 1) benign input costs (~17%/21% decline in price of Phosphoric Acid/Rock Phosphate) 2) supportive NBS regime (mere 3% cumulative decline in subsidy rates for FY20 & FY21) and 3) 8% volume CAGR in NPK between FY19-21E. However, we believe CRIN’s margins to peak out in FY21E and APAT to decline by 9% in FY22E driven by 1) increasing raw material prices of Phosphoric Acid, Rock Phosphate, Ammonia, Sulphur, etc (2) Expected lower NBS subsidy in FY22E and 3) limited volume growth due to capacity constraints (operating at +86%). While CRIN’s fundamentals remain rock solid and Crop Protection division (13% of revenue/ EBIT) is on a steady growth trajectory but headwinds emerging from the fertilizer segment (87% of revenue & EBIT) leave little room for a negative surprise given that the stock trades at near-to-peak multiples (18x Sep’22E EPS) as well as margins. Reduce
8:33 AM
BROKERAGE VIEW :: Edelweiss Securities on Avenue Supermarts
Target Price: Rs 2,157 | Reco: Hold
>> Avenue SuperMarts (DMart) has aced the offline retail segment via its execution prowess, a rarity in food & grocery (F&G) retailing. Organized F&G has clocked stupendous growth and remains the biggest migration play in retail. In fact, Reliance Retail’s takeover of Future Retail has further consolidated the industry, entrenching these two strong players deeper. Our bottom-up analysis reveals DMart has potential to open ~400 stores more (FY20: 214; FY20–22E target: 60).
>> In online retail, DMart has been conservative hitherto and has a lot of catch-up to do with peers. In light of the hastened online migration and JioMart’s aggression, a compelling/aggressive strategy is imperative for DMart’s future growth. Maintain ‘HOLD’.
>> Avenue SuperMarts (DMart) has aced the offline retail segment via its execution prowess, a rarity in food & grocery (F&G) retailing. Organized F&G has clocked stupendous growth and remains the biggest migration play in retail. In fact, Reliance Retail’s takeover of Future Retail has further consolidated the industry, entrenching these two strong players deeper. Our bottom-up analysis reveals DMart has potential to open ~400 stores more (FY20: 214; FY20–22E target: 60).
>> In online retail, DMart has been conservative hitherto and has a lot of catch-up to do with peers. In light of the hastened online migration and JioMart’s aggression, a compelling/aggressive strategy is imperative for DMart’s future growth. Maintain ‘HOLD’.
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First Published: Sep 24 2020 | 7:34 AM IST
