MARKET WRAP: Indices rally for 5th straight day, Sensex ends 187 pts higher
All that happened in the markets today
 "Mumbai Police's Economic Offences Wing fresh notices to 300 NSEL brokers")
NSE's Nifty closed at 10,799.65 points, up 36 points or 0.33 per cent.
8:44 AM
Stocks to watch: PVR, HUL, Bajaj Finance, Godrej Consumer Products, NBCC
HUL, Emami: In an interim relief to Hindustan Unilever (HUL), which recently dropped the word 'Fair' from its skin cream for men and renamed it 'Glow & Handsome', the Bombay High Court on Monday said FMCG firm Emami, that has its own 'Glow and Handsome' cream, shall give HUL seven days prior notice before initiating legal proceedings ontrademarks.
PVR Ltd: The company's board has approved the issue of equity shares of face value of Rs 10 each by way of a rights issue to the eligible shareholders for an amount aggregating up to Rs 30,000 lakhs. The price of rights issue is set at Rs 784 apiece. The issue will open on July 17 and close on July 31.
Bajaj Finance: In its quarterly update, Bajaj Finance has said, its asset under management (AUM) under moratorium has reduced to 15.5 per cent at the end of June quarter of FY21 from 27 per cent at the end of April 30. New loans booked by the financier plummeted 76.3 per cent to 1.7 million in Q1FY20 compared to 7.3 million in Q1FY20. READ MORE
8:40 AM
BROKERAGE VIEW :: Motilal Oswal Financial Services on Bandhan Bank
CMP: Rs 357 | TP: Rs 350 (-2%) | Reco: Buy
>> As economic activity picks up in India, we are seeing steady improvement in collection trends. Bandhan’s collection efficiency has improved to ~70% in the MFI portfolio and ~84% in the Non-MFI portfolio. Thus, the incidence of moratorium availed has been declining. Furthermore, the bank has created COVID-19-related provisions of INR6.9b to deal with higher delinquencies in the near term. LGD should remain lower (v/s that of peers) due to Bandhan’s strong market share and higher unique customer base. We maintain a Buy rating, with unchanged TP of INR350 (2.6x FY22E); however, we would review our target price in our preview estimates.
>> As economic activity picks up in India, we are seeing steady improvement in collection trends. Bandhan’s collection efficiency has improved to ~70% in the MFI portfolio and ~84% in the Non-MFI portfolio. Thus, the incidence of moratorium availed has been declining. Furthermore, the bank has created COVID-19-related provisions of INR6.9b to deal with higher delinquencies in the near term. LGD should remain lower (v/s that of peers) due to Bandhan’s strong market share and higher unique customer base. We maintain a Buy rating, with unchanged TP of INR350 (2.6x FY22E); however, we would review our target price in our preview estimates.
8:37 AM
BROKERAGE VIEW :: Motilal Oswal Financial Services on Godrej Consumer Products
CMP: Rs 708 | TP: Rs 675 (-5%) | Reco: Neutral
>> Over FY10-20E, GCPL posted healthy growth on all fronts. However, domestic sales slowdown in recent years and continued inability to scale up margins and improve weak RoCEs in the international business have adversely affected GCPL’s pace of earnings growth. Apart from the COVID-19 led lockdown challenges, which is more of a short-term phenomenon, the loss of dominance in Hair Color, the advent of unorganized incense stick players in HI and weak execution in the Africa business remain points of worry.
>> Also, based on the management commentary above, there is no indication that pace of earnings will improve vis-à-vis the past five years. Given the weak earnings outlook and inferior RoCE v/s peers, valuations of 44x FY22E EPS appear fair.
>> Over FY10-20E, GCPL posted healthy growth on all fronts. However, domestic sales slowdown in recent years and continued inability to scale up margins and improve weak RoCEs in the international business have adversely affected GCPL’s pace of earnings growth. Apart from the COVID-19 led lockdown challenges, which is more of a short-term phenomenon, the loss of dominance in Hair Color, the advent of unorganized incense stick players in HI and weak execution in the Africa business remain points of worry.
>> Also, based on the management commentary above, there is no indication that pace of earnings will improve vis-à-vis the past five years. Given the weak earnings outlook and inferior RoCE v/s peers, valuations of 44x FY22E EPS appear fair.
8:35 AM
BROKERAGE VIEW :: Motilal Oswal Financial Services on Bajaj Finance
CMP: Rs 3,110 | TP: Rs 3,000 (-4%) | Reco: Neutral
>> The sharp reduction in morat. is a big positive in disclosures. Better performance in asset quality would result in big delta to earnings via lower credit cost / margin compression. While QoQ decline in AUM is in line with our expectation, a pickup in economic activities should lead to better AUM growth going forward. On the other hand, BAF is likely to benefit from lower cost of funds from bank loans as well as market borrowings.
>> While we have baked in NIM compression of 90bp, there is room for a surprise. BAF is also aggressively looking to cut the flab in the system and improve opex to assets (we bake in a 100bp YoY drop) to counter pressure on the topline. Overall, we have upgraded our earnings estimates by ~15% for FY21/FY22 to factor better AUM growth, a reduction in credit cost, and slightly better margins. Maintain Neutral, with TP of INR3,000 (4.2x FY22E BVPS; implied 25x PE FY22).
>> While we have baked in NIM compression of 90bp, there is room for a surprise. BAF is also aggressively looking to cut the flab in the system and improve opex to assets (we bake in a 100bp YoY drop) to counter pressure on the topline. Overall, we have upgraded our earnings estimates by ~15% for FY21/FY22 to factor better AUM growth, a reduction in credit cost, and slightly better margins. Maintain Neutral, with TP of INR3,000 (4.2x FY22E BVPS; implied 25x PE FY22).
8:31 AM
BROKERAGE VIEW :: Morgan Stanley on Shriram Transport
Maintains 'Overweight', Target price: Rs 940
>> Lower leverage may put pressure on RoE
>> RoE pressure to be mitigated by better access to funding
>> Valuation support expected
>> Lower leverage may put pressure on RoE
>> RoE pressure to be mitigated by better access to funding
>> Valuation support expected
8:28 AM
BROKERAGE VIEW :: Macquarie on Bandhan Bank
Maintains 'Outperform', Target price: Rs 300
>> MFI collections resume, non-MFI collections drag
>> MFI-AUM under moratorium down to 30% as on July 3
>> Cumulative Repayment Rate will be key monitorable when the company will report its earnings
>> Deposits continue to remain healthy
>> MFI collections resume, non-MFI collections drag
>> MFI-AUM under moratorium down to 30% as on July 3
>> Cumulative Repayment Rate will be key monitorable when the company will report its earnings
>> Deposits continue to remain healthy
8:19 AM
Defensive traders should refrain from aggressive bets on Nifty: Nilesh Jain
BUY NIFTY | TARGET: 10,850 | STOP LOSS: 10,680
The Nifty index continued its up move and also filled a gap that was placed at 10,800. Nifty has also reclaimed its 61.8 per cent retracement levels of 10,550 on the closing basis. The momentum indicators and oscillators are very well in the buy mode on a weekly scale which hints that bulls are tightening the grip and current pullback is likely to extend further. The volatility index, IndiaVIX, fell by 2.6 per cent and ended at a 4-month low of 25.1 levels. READ MORE
8:09 AM
FII/FPI & DII trading activity on NSE, BSE and MSEI
8:06 AM
Rupee check
Source: Bloomberg
8:03 AM
Oil prices inch higher on output cut support, but US coronavirus spike caps gains
>> Oil prices cautiously rose in early trade on Tuesday with major producers sticking to supply cuts, but gains were capped as US coronavirus cases surged, potentially hampering a recovery in fuel demand.
>> US West Texas Intermediate (WTI) crude futures climbed 13 cents, or 0.3%, to $40.76 a barrel, recouping a 2 cent loss from Monday.
>> Brent crude futures rose 7 cents, or 0.2%, to $43.17, adding to a 0.7% gain on Monday.
(Source: Reuters)
(Source: Reuters)
8:01 AM
SGX Nifty hints at lower opening
>> At 8:00 am, the index was down 43 points, or 0.40 per cent, at 10,723 level.
7:58 AM
Asian stocks trade mixed
Source: Reuters
7:56 AM
Wall Street jumps on strong services sector, hopes of China recovery
Source: Reuters
Topics : Coronavirus Markets Shriram Transport Punjab National Bank Tata Consultancy Services MARKET WRAP
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First Published: Jul 07 2020 | 7:24 AM IST
