MARKET: Sensex tumbles 600 pts on surging Covid cases; Nifty ends at 11,730
All that happened in the markets today
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On the NSE, all the sectoral indices ended in the red.
9:06 AM
Markets at Pre-open
9:01 AM
BROKERAGE VIEW :: MOFSL on Amara Raja
CMP: Rs 789 | TP: Rs 800 (+1% ) | Reco: Neutral
>> Amara Raja (AMRJ)’s 2QFY21 performance was driven by sharp demand recovery across segments post the lifting of the lockdown. 3QFY21 would see some RM cost pressure due to lead price inflation; however, sustenance of demand momentum would dilute the impact through a price passthrough and operating leverage.
>> We upgrade our FY21/FY22E EPS estimates by 7.7%/1.3% to factor in a volume upgrade. Maintain Neutral, with TP of INR800 (18x Sep’22 EPS) as valuations fairly capture expected growth.
>> Amara Raja (AMRJ)’s 2QFY21 performance was driven by sharp demand recovery across segments post the lifting of the lockdown. 3QFY21 would see some RM cost pressure due to lead price inflation; however, sustenance of demand momentum would dilute the impact through a price passthrough and operating leverage.
>> We upgrade our FY21/FY22E EPS estimates by 7.7%/1.3% to factor in a volume upgrade. Maintain Neutral, with TP of INR800 (18x Sep’22 EPS) as valuations fairly capture expected growth.
9:00 AM
BROKERAGE VIEW :: MOFSL on M&M Financial Services
CMP: Rs 126 | TP: Rs 165 (+31%) | Reco: Buy
>> Disbursements at 55% of YoY levels improved from the prior quarter, yet came in below expectations, given the strong trends in OEMs. While we expect an uptick in 2H, overall loan growth should be in the mid-single digits. While asset quality numbers are encouraging, we believe the true impact of the lockdown would reflect only in 2HFY21. We increase our FY21 EPS estimate by 8% given lower credit cost. Our FY22 EPS estimate is largely unchanged. While RoE is currently subdued at 7%, it should reach 10% in FY23E. Maintain Buy, with TP of INR165 (1.2x Sep’22E BVPS).
>> Disbursements at 55% of YoY levels improved from the prior quarter, yet came in below expectations, given the strong trends in OEMs. While we expect an uptick in 2H, overall loan growth should be in the mid-single digits. While asset quality numbers are encouraging, we believe the true impact of the lockdown would reflect only in 2HFY21. We increase our FY21 EPS estimate by 8% given lower credit cost. Our FY22 EPS estimate is largely unchanged. While RoE is currently subdued at 7%, it should reach 10% in FY23E. Maintain Buy, with TP of INR165 (1.2x Sep’22E BVPS).
8:59 AM
BROKERAGE VIEW :: MOFSL on ICICI Prudential
CMP: Rs 412 | TP: Rs 525 (+27%) | Reco: Buy
>> The Protection and Annuity segments are likely to see healthy growth and should aid VNB margins (estimate 28% by FY23E). We also expect the ULIP business to revive from FY22E and the addition of the new banca partners to further improve business trends. Also, persistency trends in the Protection segment have improved sharply; expect further recovery in overall persistency trends in 2HFY21. We estimate IPRU Life to deliver a ~17% CAGR in VNB over FY20–23E, largely led by continued expansion in VNB margins to ~28%. We expect operating RoEV to sustain at ~15%. Maintain Buy, with Target Price of INR525 (2.2x Sep’22 EV).
>> The Protection and Annuity segments are likely to see healthy growth and should aid VNB margins (estimate 28% by FY23E). We also expect the ULIP business to revive from FY22E and the addition of the new banca partners to further improve business trends. Also, persistency trends in the Protection segment have improved sharply; expect further recovery in overall persistency trends in 2HFY21. We estimate IPRU Life to deliver a ~17% CAGR in VNB over FY20–23E, largely led by continued expansion in VNB margins to ~28%. We expect operating RoEV to sustain at ~15%. Maintain Buy, with Target Price of INR525 (2.2x Sep’22 EV).
8:57 AM
BROKERAGE VIEW :: MOFSL on Bharti Airtel
CMP: Rs 433 | Reco: Buy
>> Consol. revenue was up 7.7% QoQ to INR257.9b (5% beat) on a big beat in India Wireless.
>> Consol. EBITDA was up 12% QoQ to INR116.4b (11% beat) on strong revenue and operating leverage.
>> The consolidated EBITDA margin improved 170bp to 45.2% (210bp above estimate).
>> Subsequently, reported net loss stood at INR7.6b. Excluding exceptional cost, adjusted net loss after minority interest stood at INR7.4b (est. profit of INR2.6b) v/s net loss of INR4.4b in 1QFY21. India Wireless EBITDA up 13% QoQ (10% above
>> Consol. revenue was up 7.7% QoQ to INR257.9b (5% beat) on a big beat in India Wireless.
>> Consol. EBITDA was up 12% QoQ to INR116.4b (11% beat) on strong revenue and operating leverage.
>> The consolidated EBITDA margin improved 170bp to 45.2% (210bp above estimate).
>> Subsequently, reported net loss stood at INR7.6b. Excluding exceptional cost, adjusted net loss after minority interest stood at INR7.4b (est. profit of INR2.6b) v/s net loss of INR4.4b in 1QFY21. India Wireless EBITDA up 13% QoQ (10% above
8:56 AM
BROKERAGE VIEW :: MOFSL on HDFC Bank
CMP: Rs 1,233 | TP: Rs 1,500 (+22%) | Reco: Buy
>> HDFCB continues to deliver strong growth in a challenging macro environment, and the business momentum has swiftly moved toward pre-COVID levels. Furthermore, the bank’s operating performance remains strong despite margin pressure and lower fee income trends. However, we expect the margin trajectory to now stabilize, and an uptick in unsecured retail would support fee income trends. Also, HDFCB continues to make healthy provisions to further strengthen the balance sheet.
>> Thus, a higher provision buffer would limit the damage on asset quality and enable the bank to quickly recover to a normal growth run-rate. We estimate a 19% PAT CAGR over FY20–23E, with ROA/ROE of 2.0%/17.8% for FY23E. Maintain Buy, with revised TP of INR1,500 (3.3x Sep’22E ABV
>> HDFCB continues to deliver strong growth in a challenging macro environment, and the business momentum has swiftly moved toward pre-COVID levels. Furthermore, the bank’s operating performance remains strong despite margin pressure and lower fee income trends. However, we expect the margin trajectory to now stabilize, and an uptick in unsecured retail would support fee income trends. Also, HDFCB continues to make healthy provisions to further strengthen the balance sheet.
>> Thus, a higher provision buffer would limit the damage on asset quality and enable the bank to quickly recover to a normal growth run-rate. We estimate a 19% PAT CAGR over FY20–23E, with ROA/ROE of 2.0%/17.8% for FY23E. Maintain Buy, with revised TP of INR1,500 (3.3x Sep’22E ABV
8:54 AM
>> However, near-term risk of volume disruption in the EU and UK cannot be ruled out due to the possibility of a second wave of COVID.
>> The stock trades at 2.5x FY22 EV/EBITDA and 0.8x P/BV. Maintain Buy, with TP of ~INR230 (Sep’22-based SOTP).
BROKERAGE VIEW :: MOFSL on Tata Motors
CMP: Rs 136 | TP: Rs 230 (+70%) | Reco: Buy
>> TTMT would see the triple benefit of a) macro recovery, b) company-specific volume/margin drivers, and c) sharp improvement in FCF and leverage in both JLR as well as the India business.
>> TTMT would see the triple benefit of a) macro recovery, b) company-specific volume/margin drivers, and c) sharp improvement in FCF and leverage in both JLR as well as the India business.
>> However, near-term risk of volume disruption in the EU and UK cannot be ruled out due to the possibility of a second wave of COVID.
>> The stock trades at 2.5x FY22 EV/EBITDA and 0.8x P/BV. Maintain Buy, with TP of ~INR230 (Sep’22-based SOTP).
8:52 AM
Stocks in focus today
Tata Motors: Tata Motors’ consolidated loss for the quarter ended September more than doubled over the year-ago period. But a better geographic mix and a higher contribution by the expensive models to the overall sales helped the owner of Jaguar Land Rover (JLR) beat Street estimates.
Bharti Airtel: Telecom operator Bharti Airtel on Tuesday reported substantial narrowing of losses for the second quarter ended September 2020 at Rs 763 crore. The company posted revenues of Rs 25,785 crore for the September 2020 quarter, up 22 per cent over the corresponding period last year.
L&T: Engineering and construction conglomerate Larsen & Toubro (L&T) is scheduled to announce its September quarter result of the current fiscal year (Q2FY21) on Wednesday, October 28. It is expected to post muted numbers for the quarter though the strong contribution of its service business is likely to moderate the impact. READ MORE
8:47 AM
Recommendation: Buy
Weekly stock picks by Religare Broking
Bajaj Finance Limited
Recommendation: Buy
Target: Rs 3,800
Stop loss: Rs 3,250
Stop loss: Rs 3,250
We've witnessed decent traction in the financial counters of late and Bajaj Finance is now catching up with the trend. It has witnessed a breakout on October 27 from the corrective phase, after spending nearly two months. We advise using any dip to create fresh longs in the given range. READ MORE
8:44 AM
Nifty can scale new peak once 12,050 is taken out: HDFC Securities
Nifty is forming a symmetrical triangle with “shortall” in place on the daily chart, which indicates that the chances of bullish breakout is higher than the bearish breakout. Immediate resistance for Nifty is seen in 12,000-12,050 zone and once that is taken out, we can expect Nifty to register new all-time high above 12,430. Support for the Nifty is seen at 11,740. READ MORE
8:38 AM
Bulk deals on NSE as on Tuesday
8:35 AM
FII/FPI & DII trading activity on NSE, BSE and MSEI
8:34 AM
Rupee check
Source: Bloomberg
8:31 AM
Oil falls on oversupply fears after build in US crude stocks
>> Oil prices slid more than 1 percent on Wednesday, paring the previous day’s gains, as a jump in US crude inventories and surging Covid-19 cases raised fears of an oversupply of oil and weak fuel demand.
>> In early Asia, Brent crude LCOc1 was down 61 cents, or 1.5%, at $40.59 a barrel, having climbed nearly 2% the previous day. US oil CLc1 was down 66 cents, or 1.7%, at $38.91 a barrel, after gaining 2.6% on Tuesday.
(Source: Reuters)
(Source: Reuters)
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First Published: Oct 28 2020 | 7:38 AM IST
