HDFC twins, ICICI Bank help Sensex settle 169 pts higher; Nifty tops 11,950
All that happened in the markets today
 "Markets, Investors, Indices, Stocks")
NSE's Nifty50 index ended at 11,971, up 37 points, or 0.31 per cent.
8:58 AM
BROKERAGE VIEW :: Citi on Wipro
Downgrades to 'Neutral' | Target price: Rs 400
>> Sharp re-rating limits upside
>> Revenue slightly ahead of expectations, margin in line
>> Focus will shift to execution under new CEO
>> Sharp re-rating limits upside
>> Revenue slightly ahead of expectations, margin in line
>> Focus will shift to execution under new CEO
8:56 AM
BROKERAGE VIEW :: Prabhudas Lilladher on Cipla
Rating: REDUCE | CMP: Rs 787 | TP: Rs 657
>> While CIPLA’s US business is struggling with growth issues since last 12 months, it has received an additional setback because of CRL issued (Complete Response Letter) against NDA application for its specialty product IV Tramadol. We believe CRL would delay the approval for at least 3-6 months and final launch may perhaps be in 2HFY22E. Our earnings estimate has not discounted potential benefits from IV Tramadol as we await better clarity of CIPLA’s strategy to market/monetize the products in global markets including US and EU. The product being a specialty medicine, it would take 12-18 months to breakeven, post which it would start contributing in operating profit. However, we prefer to have further clarity post FDA refusal of approval along with issue of CRL and marketing/monetizing strategy of CIPLA in US and ROW. We maintain ‘REDUCE’ with TP of Rs657 based on 22x (PE) of FY22E.
>> While CIPLA’s US business is struggling with growth issues since last 12 months, it has received an additional setback because of CRL issued (Complete Response Letter) against NDA application for its specialty product IV Tramadol. We believe CRL would delay the approval for at least 3-6 months and final launch may perhaps be in 2HFY22E. Our earnings estimate has not discounted potential benefits from IV Tramadol as we await better clarity of CIPLA’s strategy to market/monetize the products in global markets including US and EU. The product being a specialty medicine, it would take 12-18 months to breakeven, post which it would start contributing in operating profit. However, we prefer to have further clarity post FDA refusal of approval along with issue of CRL and marketing/monetizing strategy of CIPLA in US and ROW. We maintain ‘REDUCE’ with TP of Rs657 based on 22x (PE) of FY22E.
8:54 AM
BROKERAGE VIEW :: IDBI Capital on IRCTC
Target price: Rs 1,800 | Reco: Buy
>> We initiate coverage on Indian Railway Catering and Tourism Corporation (IRCTC) with TP of Rs1,800 based on PER of 35x FY23E. We believe that IRCTC is a one-of-its-kind company. In its top-2 segments – internet ticketing and catering services (combined ~89% of FY20 EBIT) – it is the sole service provider. Internet ticketing as digital platform business has seen 302 mn bookings in FY20 with ~73% share in total railway ticket booked in India.
>> In its packaged drinking water business it’s pricing provides a competitive edge. While Covid-19 pandemic will impact FY21 performance, we expect strong pick-up in FY22/23E. We forecast revenue/EBIT/EPS CAGR of 9.2%/14.4%/15.9% over FY20-23E which factors FY23E EBIT/EPS being 4.4x/4x vs. FY21. Further, net-cash B/S and RoE 40%+ over FY22-23 is impressive. Over the long-term, private trains and in- direct benefit from dedicated freight corridor would aid IRCTC’s growth.
>> We initiate coverage on Indian Railway Catering and Tourism Corporation (IRCTC) with TP of Rs1,800 based on PER of 35x FY23E. We believe that IRCTC is a one-of-its-kind company. In its top-2 segments – internet ticketing and catering services (combined ~89% of FY20 EBIT) – it is the sole service provider. Internet ticketing as digital platform business has seen 302 mn bookings in FY20 with ~73% share in total railway ticket booked in India.
>> In its packaged drinking water business it’s pricing provides a competitive edge. While Covid-19 pandemic will impact FY21 performance, we expect strong pick-up in FY22/23E. We forecast revenue/EBIT/EPS CAGR of 9.2%/14.4%/15.9% over FY20-23E which factors FY23E EBIT/EPS being 4.4x/4x vs. FY21. Further, net-cash B/S and RoE 40%+ over FY22-23 is impressive. Over the long-term, private trains and in- direct benefit from dedicated freight corridor would aid IRCTC’s growth.
8:53 AM
Stocks to watch out for today
Karnataka Bank: Net profit of Karnataka Bank rose 12.78 per cent to Rs 119.44 crore in the quarter ended September 2020 as against Rs 105.91 crore during the previous quarter ended September 2019.
IRCTC: As per reports, Indian Railways will run 392 festival special trains from October 20-November 30.
Wipro: The company on Tuesday approved a share buyback worth Rs 9,500 crore, having improved its performance in the second quarter of FY21 on several parameters, apart from giving a stronger outlook. READ MORE
8:52 AM
BROKERAGE VIEW :: MOFSL on Metals
>> Steel trade data released by China suggests demand remains strong, with net steel exports declining to 10-yr lows in Sep’20. Moreover, high passenger car sales in Sep’20 confirm strong end user demand for steel in China. China’s domestic steel prices are also on the rise again post the National Holidays that ended last week. We believe strong steel demand and prices in China, if it sustains, would be beneficial for steel prices in the region as well as India.
>> We prefer longs over flats in India’s Steel sector as we expect rebar prices to be strong, led by the seasonal (post-monsoon) uptick in construction activity.
Stock recommendation
>> Thus, with ~70% share of long products in its portfolio and TP of INR234, JSP is our preferred pick in the sector. Over FY20–22E, we also estimate strong 10%/16% CAGR in standalone volumes/EBITDA. Coupled with the Oman divestment, this should drive a 37% fall in consolidated net debt to INR239b. Thus, net debt/EBITDA should decline to 2.7x, the lowest in India’s Steel sector.
>> We also assign JSTL a Buy rating (TP of INR317), but rate Tata Steel Neutral (TP of INR381) on concerns related to its European business. We rate SAIL with Neutral (TP of INR35) as leverage remains a key concern.
>> We prefer longs over flats in India’s Steel sector as we expect rebar prices to be strong, led by the seasonal (post-monsoon) uptick in construction activity.
Stock recommendation
>> Thus, with ~70% share of long products in its portfolio and TP of INR234, JSP is our preferred pick in the sector. Over FY20–22E, we also estimate strong 10%/16% CAGR in standalone volumes/EBITDA. Coupled with the Oman divestment, this should drive a 37% fall in consolidated net debt to INR239b. Thus, net debt/EBITDA should decline to 2.7x, the lowest in India’s Steel sector.
>> We also assign JSTL a Buy rating (TP of INR317), but rate Tata Steel Neutral (TP of INR381) on concerns related to its European business. We rate SAIL with Neutral (TP of INR35) as leverage remains a key concern.
8:49 AM
BROKERAGE VIEW :: MOFSL on Wipro
CMP: Rs 376 | TP: Rs 385 (+2%) | Reco: Neutral
>> Wipro reported better-than-expected revenue growth for the quarter (2% QoQ CC v/s est. 0.5%). Broad-based recovery across verticals, continued margin resiliency, and strong cash generation were the key positives for the company. A robust deal pipeline and improved demand present an encouraging outlook.
>> Management guidance for revenue growth (1.5–3.5% QoQ CC) in 3QFY21 stands above our estimate of 0–2%, which is another key positive.
>> The key contours of the new CEO’s refreshed strategy – growth from focused sectors/markets, continued investment in talent, and a simplified operational model to help improve focus on customers – seem to be steps in the right direction.
>> We upgrade our FY21/FY22E EPS by 3%/2%, largely led by a revised revenue outlook based on guidance. Maintain Neutral as we await further evidence of execution of Wipro’s refreshed strategy and a successful turnaround from its growth struggles over the past decade before turning more constructive on the stock. Our TP implies 20x FY22E EPS.
>> Wipro reported better-than-expected revenue growth for the quarter (2% QoQ CC v/s est. 0.5%). Broad-based recovery across verticals, continued margin resiliency, and strong cash generation were the key positives for the company. A robust deal pipeline and improved demand present an encouraging outlook.
>> Management guidance for revenue growth (1.5–3.5% QoQ CC) in 3QFY21 stands above our estimate of 0–2%, which is another key positive.
>> The key contours of the new CEO’s refreshed strategy – growth from focused sectors/markets, continued investment in talent, and a simplified operational model to help improve focus on customers – seem to be steps in the right direction.
>> We upgrade our FY21/FY22E EPS by 3%/2%, largely led by a revised revenue outlook based on guidance. Maintain Neutral as we await further evidence of execution of Wipro’s refreshed strategy and a successful turnaround from its growth struggles over the past decade before turning more constructive on the stock. Our TP implies 20x FY22E EPS.
8:44 AM
'Nifty could consolidate between 11,900 and 12,050 in short term'
Nifty outlook
From the bottom of 10,790, registered on September 24, 2020, Nifty saw a sharp recovery towards 12,022. Nifty has registered a rise of 1,232 points from the recent bottom in the span of just 11 trading sessions. After such steep rise, Nifty could consolidate for a few sessions. The probable range would be 11,900-12,050. Previous top on the daily charts is placed at 11,794, which is likely to provide support to the index. Any level above 1,2050 could take Nifty towards 12,250 levels. READ MORE
8:41 AM
Recommendation: Buy
Stock calls by Ajit Mishra of Religare Broking
Tata Chemicals Limited
Recommendation: Buy
Target: 324
Stop loss:296
Tata Chem made an equally sharp reversal after the vertical decline in March 2020 and has made a new record high at 345.90 in August month. After the month-long corrective phase, it's currently holding above the support zone of multiple moving averages on the daily chart around 300 and is likely to resume the uptrend in near future.Traders can create fresh longs in the mentioned zone. READ MORE
8:33 AM
Bulk deals on NSE as on Tuesday
8:31 AM
FII/FPI & DII trading activity on NSE, BSE and MSEI
8:31 AM
FII/FPI & DII trading activity on NSE, BSE and MSEI
8:29 AM
Rupee check
Source: Bloomberg
8:24 AM
Oil steady as rising coronavirus cases stokes demand concerns
>> Oil prices were steady on Wednesday on concerns that fuel demand will continue to falter as rising coronavirus cases across Europe and in the United States, the world’s biggest oil consumer, could impede economic growth.
>> The Organization of the Petroleum Exporting Countries (OPEC) said in its monthly report on Tuesday that oil demand in 2021 will rise by 6.54 million barrels per day (bpd) to 96.84 million bpd, 80,000 bpd less than its forecast a month ago, as a result of the economic dislocations caused by the coronavirus pandemic.
>> The Organization of the Petroleum Exporting Countries (OPEC) said in its monthly report on Tuesday that oil demand in 2021 will rise by 6.54 million barrels per day (bpd) to 96.84 million bpd, 80,000 bpd less than its forecast a month ago, as a result of the economic dislocations caused by the coronavirus pandemic.
>> Brent crude futures for December fell by 8 cents, or 0.2%, to $42.37 a barrel while US West Texas Intermediate futures were down 9 cents, or 0.2%, to $40.11.
(Source: Reuters)
(Source: Reuters)
8:20 AM
SGX Nifty update
>> At 8:19 am, the index was at 11,888 level, down 53 points or 0.44 per cent.
Topics : Moratorium Markets Sensex Infosys Wipro IRCTC MARKET WRAP
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First Published: Oct 14 2020 | 7:48 AM IST
