Indices end at record high for 2nd day, Sensex gains 680 pts, tops 43K
All that happened in the markets today.
 "Brokers trade at their computer terminals at a stock brokerage firm in Mumbai (")
NSE's Nifty added 170 points, or 1.36 per cent to end the session at 12,631 levels.
9:10 AM
Commodity Heatmap
9:06 AM
Top gainers and losers on the S&P BSE Sensex at Pre-open
9:05 AM
Markets at Pre-open
9:04 AM
Markets at Pre-open
9:00 AM
Nifty Outlook :: Sumeet Bagadia, executive director, Choice Broking
The benchmark index has breached its record of 12,430.50 levels and set a new benchmark at 12,474.05 levels on Monday. It also sustained above its 50 days Moving Average, which indicates more upside move in the counter. At the moment, the Nifty has an immediate support at 12,130 levels, while on the higher side it may find resistance around 12,600-12,650 levels.
8:58 AM
Nifty Outlook :: Nagaraj Shetti, technical research analyst, HDFC Securities
The near term trend of Nifty continues to be positive and more upside could be in store in the coming sessions. The overall chart pattern (intraday/daily/weekly) indicate more new highs in the coming sessions. The upside targets to be watched around 12,750-12,800 levels in the next 1-2 weeks
8:55 AM
Aviation, hotels: Investors are likely to pile on the sectors that have underperformed in the current year owing to the Covid restrictions. As such, aviation, hotels and cinema related stocks are set to rally in today's trade.
Top stocks to watch
Pfizer: Pfizer Inc's experimental Covid-19 vaccine was more than 90% effective based on initial trial results, the company said on Monday, a major victory in the fight against a pandemic that has killed over a million people and battered the world's economy. READ MORE
Aviation, hotels: Investors are likely to pile on the sectors that have underperformed in the current year owing to the Covid restrictions. As such, aviation, hotels and cinema related stocks are set to rally in today's trade.
TCS: India's largest IT services firm Tata Consultancy Services (TCS) on Monday said it will acquire 100 per cent shares of Postbank Systems AG (PBS) from Deutsche Bank AG. READ MORE
8:51 AM
BROKERAGE VIEW :: MOFSL on SAIL
CMP: Rs 38 | TP: Rs 39 (+3%) | Reco: Neutral
>> SAIL’s 2QFY21 result highlights the benefits of higher operating leverage (volumes up 34% YoY/88% QoQ) on account of its high-fixed-cost structure. However, results were weaker than expected due to a miss on realization. While SAIL’s peers reported QoQ increase of Rs 1,500–3,500/t, SAIL’s blended realization declined ~INR300/t QoQ, leading to a miss of 31% in EBITDA to Rs 19.0b (up 64% YoY).
>> We expect better volumes and pricing to drive a 29% CAGR in EBITDA over FY20–22E. Net debt, however, is expected to remain elevated at INR458b in FY22, implying 4.8x net debt/EBITDA. The stock also trades at 6.4x EV/EBITDA, implying limited upside. Thus, we maintain Neutral, with TP of Rs 39.
>> SAIL’s 2QFY21 result highlights the benefits of higher operating leverage (volumes up 34% YoY/88% QoQ) on account of its high-fixed-cost structure. However, results were weaker than expected due to a miss on realization. While SAIL’s peers reported QoQ increase of Rs 1,500–3,500/t, SAIL’s blended realization declined ~INR300/t QoQ, leading to a miss of 31% in EBITDA to Rs 19.0b (up 64% YoY).
>> We expect better volumes and pricing to drive a 29% CAGR in EBITDA over FY20–22E. Net debt, however, is expected to remain elevated at INR458b in FY22, implying 4.8x net debt/EBITDA. The stock also trades at 6.4x EV/EBITDA, implying limited upside. Thus, we maintain Neutral, with TP of Rs 39.
8:49 AM
BROKERAGE VIEW :: MOFSL on Ashok Leyland
CMP: Rs 84 | TP: Rs 100 (+19%) | Reco: Buy
>> Ashok Leyland (AL) reported largely in-line results for 2QFY21. While M&HCV has started showing some signs of initial recovery, LCV is back at pre-COVID levels. The normalization of working capital has enabled QoQ reduction in net debt by INR12b. M&HCV is expected to make a strong recovery in 2HFY21. Moreover, continued traction for LCV would enable strong recovery at the company level.
>> We maintain our estimates for FY22/FY23 as the market is recovering in line with expectations. Maintain Buy, with TP of INR100 (~10x Dec’22 EV/EBITDA + INR9/sh HLFL).
>> Ashok Leyland (AL) reported largely in-line results for 2QFY21. While M&HCV has started showing some signs of initial recovery, LCV is back at pre-COVID levels. The normalization of working capital has enabled QoQ reduction in net debt by INR12b. M&HCV is expected to make a strong recovery in 2HFY21. Moreover, continued traction for LCV would enable strong recovery at the company level.
>> We maintain our estimates for FY22/FY23 as the market is recovering in line with expectations. Maintain Buy, with TP of INR100 (~10x Dec’22 EV/EBITDA + INR9/sh HLFL).
8:47 AM
BROKERAGE VIEW :: MOFSL on United Breweries
CMP: Rs 975 | TP: Rs 820 (-16% ) | Reco: Sell
>> United Breweries (UBBL)’s 2Q results were weak – with 48%/42.9% YoY volume/sales decline and 79%/96.5% YoY EBITDA/PAT decline – although better than our expectations. These numbers are also starkly below the ~3%/6% volume/sales decline reported by Alcobev peer United Spirits (UNSP) last week. This once again highlights that the more in-home consumption dominates, spirits consumption would do better. This trend is likely to continue over the next few quarters as well.
>> United Breweries (UBBL)’s 2Q results were weak – with 48%/42.9% YoY volume/sales decline and 79%/96.5% YoY EBITDA/PAT decline – although better than our expectations. These numbers are also starkly below the ~3%/6% volume/sales decline reported by Alcobev peer United Spirits (UNSP) last week. This once again highlights that the more in-home consumption dominates, spirits consumption would do better. This trend is likely to continue over the next few quarters as well.
>> Recovery in FY22 could be sharper for UBBL v/s UNSP. This is particularly attributable to the company losing out on crucial summer season demand in 1QFY21 and a far weaker performance in 2QFY21 as well. However, this heavily relies on the premise that there may be no second wave of the pandemic, which is by no means a certainty. Unprecedented sharp increases in excise are already significantly affecting profitability. Furthermore, another round of increases over the next few months cannot be ruled out given weak state finances, in turn leading to weak cost absorption. Despite underperformance over the last six months, valuations appear rich on both P/E (84.1x FY22 EPS) and EV/EBITDA (32.2x FY22 EBITDA) basis. Maintain Sell.
8:45 AM
BROKERAGE VIEW :: MOFSL on Ipca Labs
CMP: Rs 2,265 | TP: Rs 2,680 (+18%) | Reco: Buy
>> Ipca Laboratories (IPCA) delivered a better-than-expected quarter, led by a superior product mix and lower opex. A growing connect between patient, doctor, and marketing representative (MR) with the easing of the lockdown presents a better outlook in Domestic Formulation (DF) segment. Favorable demand for APIs and healthy traction in the EU/Institutional segment is further strengthening the earnings growth momentum for IPCA.
>> We raise our EPS estimate by 5%/7% for FY21/FY22, factoring in a) an extended cost savings benefit in DF, b) improving demand in the Cough-Cold and Dermatology therapies, c) revival in the UK business, and d) debottlenecking in the API segment. We also introduce FY23 estimates. We value IPCA at 25x 12M forward earnings to arrive at Target Price of INR2,680. We remain positive on IPCA on the back of steady outperformance in the DF segment, cost efficiency in API, and launches under its own label in the UK segment. Reiterate Buy.
>> Ipca Laboratories (IPCA) delivered a better-than-expected quarter, led by a superior product mix and lower opex. A growing connect between patient, doctor, and marketing representative (MR) with the easing of the lockdown presents a better outlook in Domestic Formulation (DF) segment. Favorable demand for APIs and healthy traction in the EU/Institutional segment is further strengthening the earnings growth momentum for IPCA.
>> We raise our EPS estimate by 5%/7% for FY21/FY22, factoring in a) an extended cost savings benefit in DF, b) improving demand in the Cough-Cold and Dermatology therapies, c) revival in the UK business, and d) debottlenecking in the API segment. We also introduce FY23 estimates. We value IPCA at 25x 12M forward earnings to arrive at Target Price of INR2,680. We remain positive on IPCA on the back of steady outperformance in the DF segment, cost efficiency in API, and launches under its own label in the UK segment. Reiterate Buy.
8:44 AM
BROKERAGE VIEW :: MOFSL on Hindalco
CMP: Rs 195 | TP: Rs 267 (+37%) | Reco: Buy
>> Hindalco (HNDL)’s subsidiary Novelis’ 2QFY21 EBITDA surprised with 20% YoY growth to USD455m (est. USD348m). This was led by 11% YoY volume growth (Aleris acquisition) and adj. EBITDA/t of USD493 (est. USD396).
>> Management has raised the sustainable EBITDA margin guidance for Novelis to USD480–500/t (from USD450–475/t).
>> We raise our FY21E EBITDA by 7%, factoring in strong margins for Novelis. Deleveraging is also playing out well, with strong FCF and asset divestitures – while the sale of Duffel has been completed, the sale of Lewisport has been finalized for a cash consideration of USD171m (EV of USD330m). Reiterate Buy.
>> Hindalco (HNDL)’s subsidiary Novelis’ 2QFY21 EBITDA surprised with 20% YoY growth to USD455m (est. USD348m). This was led by 11% YoY volume growth (Aleris acquisition) and adj. EBITDA/t of USD493 (est. USD396).
>> Management has raised the sustainable EBITDA margin guidance for Novelis to USD480–500/t (from USD450–475/t).
>> We raise our FY21E EBITDA by 7%, factoring in strong margins for Novelis. Deleveraging is also playing out well, with strong FCF and asset divestitures – while the sale of Duffel has been completed, the sale of Lewisport has been finalized for a cash consideration of USD171m (EV of USD330m). Reiterate Buy.
8:42 AM
Market Strategy by Motilal Oswal
>> Markets up 3.5% in Oct’20: After consolidating in Sep’20 (down 1.2% MoM), the Nifty headed north in Oct’20 (up 3.5% MoM) and touched the 12k mark to later close at 11,642. After trudging to a low of 7,610 on 23rd Mar’20, the Nifty bounced back more than 53% from its lows. Strong momentum in Oct’20 was despite the global concerns related to the pandemic – many countries in Europe imposed restrictions to curb the spread of the virus. FII inflows were back in Oct’20 and stood at USD2.5b. DIIs remained net sellers with outflows of USD2.4b – highest monthly outflows since Mar’16. The Nifty Mid-cap 100 index underperformed the Nifty by 3% in Oct’20. The Nifty Mid-cap 100 P/E ratio now trades at 4% premium to large-caps at 20.5x (v/s 11.9x in Mar’20.
>> Demand recovery and cost optimization key themes: Increase in economic activity, continued demand improvement coupled with cost rationalization were the key highlights of 2QFY21 earnings season, which has seen decent beat and consequent upward earnings revision. Economic recovery continues, with high-frequency data for Oct’20 coming in quite strong (GST collections, Manufacturing PMI index, rail freight and power demand). Our in-house Economic Activity Index (EAI) for India’s GVA (called EAI-GVA) posted growth of 2.2% YoY for the first time in seven months in Sep’20, following decline of 2.2% YoY in Aug’20.
>> Covid-19: More importantly, Covid-19 cases have seen meaningful decline to 510k active cases currently from the peak of 1.02m active cases in mid-Sep’20. However, valuations at 17.4x FY22E earnings for Nifty, while not very expensive, do not offer as much margin for safety as a few months ago.
>> Outlook: We stay Overweight on IT, BFSI, Healthcare, Telecom and Auto, and maintain Neutral on Consumer in our model portfolio. Another round of fiscal stimulus could help elevate sentiment further, in our view.
>> Top Ideas: Large-caps: ICICI Bank, SBI, Infosys, Divis Labs, Titan, Hero, HUL, Bharti Airtel, Muthoot Finance, UltraTech.
>> Demand recovery and cost optimization key themes: Increase in economic activity, continued demand improvement coupled with cost rationalization were the key highlights of 2QFY21 earnings season, which has seen decent beat and consequent upward earnings revision. Economic recovery continues, with high-frequency data for Oct’20 coming in quite strong (GST collections, Manufacturing PMI index, rail freight and power demand). Our in-house Economic Activity Index (EAI) for India’s GVA (called EAI-GVA) posted growth of 2.2% YoY for the first time in seven months in Sep’20, following decline of 2.2% YoY in Aug’20.
>> Covid-19: More importantly, Covid-19 cases have seen meaningful decline to 510k active cases currently from the peak of 1.02m active cases in mid-Sep’20. However, valuations at 17.4x FY22E earnings for Nifty, while not very expensive, do not offer as much margin for safety as a few months ago.
>> Outlook: We stay Overweight on IT, BFSI, Healthcare, Telecom and Auto, and maintain Neutral on Consumer in our model portfolio. Another round of fiscal stimulus could help elevate sentiment further, in our view.
>> Top Ideas: Large-caps: ICICI Bank, SBI, Infosys, Divis Labs, Titan, Hero, HUL, Bharti Airtel, Muthoot Finance, UltraTech.
Mid-caps: AU Finance, IEX, IPCA, Motherson Sumi, ICICI Securities, Crompton Consumer, ABFRL, Mphasis, Emami, LIC HF.
8:39 AM
Bihar Election Results :: Tally at 8:35 am
8:34 AM
Eli Lilly's Covid-19 antibody drug treatment gets emergency USFDA clearance
The Food and Drug Administration authorised the experimental treatment, called bamlanivimab, for use against mild-to-moderate Covid-19 in adults, including those who are 65 and older, and pediatric patients, the agency said on its website. READ MORE
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First Published: Nov 10 2020 | 7:41 AM IST
