MARKET WRAP: Sensex pares gains to end 45 pts up; financial stocks rally
All that happened in the markets today
 "Markets, Investors, Indices, Stocks")
NSE's Nifty settled flat at 11,472, up around 6 points or 0.05 per cent.
9:06 AM
Markets at Pre-open
9:05 AM
Markets at Pre-open
9:00 AM
Top stocks to watch out for today
Telcos, banks: Shares of telecom companies and select banks may trade actively as the Supreme Court Monday observed that if telecom companies are unwilling to pay their dues, it would direct the Union government to cancel their spectrum allocation and licence.
JK Paper: It has temporary closed production operations at manufacturing facility of The Sirpur Paper Mills Limited, subsidiary of the Company, due to Covid-19.
Axis Bank: The private sector lender on Monday it has reduced the size of the stake that it plans to buy in Max Life Insurance to 17 per cent from 29 per cent. Its move comes months after media reports said the deal, announced in April, ran into a regulatory roadblock over certain clauses in the agreement. READ MORE
8:59 AM
BROKERAGE VIEW :: Emkay Global Financial Services on MOIL
Target price: Rs 163 | Reco: Hold
>> MOIL's expansion plans have been delayed for at least 5 to 6 months, assuming that the lockdown is over by August 31 and work resumes normally. However, in case normalcy is not restored by then, the expansion plan may be delayed further, eluding volume growth.
>> Q1 beat our estimates. EBITDA/t of ₹3,330/t (yoy/qoq:-15%/+15x) was significantly ahead of our estimate of (-) 3,086/t, primarily driven by negative RM costs. Other operating expense was also low but will pick up on higher volumes going forward.
>> We have increased our FY21E EBITDA by 27% due to strong Q1. We have tweaked our EBITDA estimates for FY22/23 marginally to reflect a small uptick in our TP from Rs160 to Rs163 at 4x FY22E EBITDA. Net cash of Rs 74/sh provides support to the stock, but the lack of near term trigger restricts upside.
>> MOIL's expansion plans have been delayed for at least 5 to 6 months, assuming that the lockdown is over by August 31 and work resumes normally. However, in case normalcy is not restored by then, the expansion plan may be delayed further, eluding volume growth.
>> Q1 beat our estimates. EBITDA/t of ₹3,330/t (yoy/qoq:-15%/+15x) was significantly ahead of our estimate of (-) 3,086/t, primarily driven by negative RM costs. Other operating expense was also low but will pick up on higher volumes going forward.
>> We have increased our FY21E EBITDA by 27% due to strong Q1. We have tweaked our EBITDA estimates for FY22/23 marginally to reflect a small uptick in our TP from Rs160 to Rs163 at 4x FY22E EBITDA. Net cash of Rs 74/sh provides support to the stock, but the lack of near term trigger restricts upside.
8:53 AM
BROKERAGE VIEW :: Edelweiss Securities on Titan
Target price: Rs 1,295 | Reco: Buy
>> FY20 proved to be a challenging year owing to high volatility/steep hike in gold prices, pressure on discretionary spends and an unforeseen lockdown. Its major segments – jewellery (4.4%), watches (7.2%) and eyewear (6.4%)–clocked mid-single digit growth despite robust store expansion (double digit). Caratlane (JV), however, bucked the trend, growing at 49% YoY riding rapid store expansion (67%) and traction in casual jewelry. Spurt in net working capital impacted FY20 FCF generation–INR(7.1bn) versus INR4.5bn in FY19.
>> While we envisage near-term challenges to business owing to the lockdown and hit on wedding/gifting sales, we remain confident of Titan’s long-term story underpinned by a robust brand portfolio, popular mid-market brands and store expansion focus.
>> We continue to remain positive on Titan over the longer term owing to: i) strong brand portfolio across segments; ii) steady store expansion with focus on expanding in tier- II/III markets; iii) tailwind to demand of shift towards organised retail.
>> FY20 proved to be a challenging year owing to high volatility/steep hike in gold prices, pressure on discretionary spends and an unforeseen lockdown. Its major segments – jewellery (4.4%), watches (7.2%) and eyewear (6.4%)–clocked mid-single digit growth despite robust store expansion (double digit). Caratlane (JV), however, bucked the trend, growing at 49% YoY riding rapid store expansion (67%) and traction in casual jewelry. Spurt in net working capital impacted FY20 FCF generation–INR(7.1bn) versus INR4.5bn in FY19.
>> While we envisage near-term challenges to business owing to the lockdown and hit on wedding/gifting sales, we remain confident of Titan’s long-term story underpinned by a robust brand portfolio, popular mid-market brands and store expansion focus.
>> We continue to remain positive on Titan over the longer term owing to: i) strong brand portfolio across segments; ii) steady store expansion with focus on expanding in tier- II/III markets; iii) tailwind to demand of shift towards organised retail.
8:50 AM
BROKERAGE VIEW :: Emkay Global Financial Services on BASF India
Target price: Rs 1,484 | Reco: Hold
>> BASF in its annual analyst meet laid out its strategy which includes improving RoCE from ~6% to 10% in the next 2-3 years by cost optimization, improving product portfolio and increasing capacity utilization. The focus is on improving profitability in key segments.
>> Management expects healthy volume growth in Agrochemicals in the coming quarters, which shall partially restrict weakness ensuing from Automotive, Construction and Refining sectors. BAFS aims to launch 15 new products in Agrochemicals unit in the next 5 years.
>> The Dahej plant, which was commercialized in Oct’14 (capex of Rs11bn), operated at the ~70% capacity utilization level for FY20 and reported sales of ~Rs13bn (17% of FY20 sales). The capacity expansion (2x) for polymer dispersions at the plant is underway.
>> Overall balanced exposure for a business that encompasses numerous segments shall continue to deliver moderate growth in coming years. Margin volatility in Materials and Surface Tech remains a risk. We roll forward our valuations to Sept’22E earnings and raise our TP to Rs1,484 (28x Sept’22E EPS vs 24x earlier).
>> BASF in its annual analyst meet laid out its strategy which includes improving RoCE from ~6% to 10% in the next 2-3 years by cost optimization, improving product portfolio and increasing capacity utilization. The focus is on improving profitability in key segments.
>> Management expects healthy volume growth in Agrochemicals in the coming quarters, which shall partially restrict weakness ensuing from Automotive, Construction and Refining sectors. BAFS aims to launch 15 new products in Agrochemicals unit in the next 5 years.
>> The Dahej plant, which was commercialized in Oct’14 (capex of Rs11bn), operated at the ~70% capacity utilization level for FY20 and reported sales of ~Rs13bn (17% of FY20 sales). The capacity expansion (2x) for polymer dispersions at the plant is underway.
>> Overall balanced exposure for a business that encompasses numerous segments shall continue to deliver moderate growth in coming years. Margin volatility in Materials and Surface Tech remains a risk. We roll forward our valuations to Sept’22E earnings and raise our TP to Rs1,484 (28x Sept’22E EPS vs 24x earlier).
8:47 AM
BROKERAGE VIEW :: Axis Securities on Suprajit Engineering
Target price: Rs 210 | Reco: Buy
>> Q1 result was weak with consolidated EBITDA loss at Rs 48 mn though better than our estimate (loss of Rs 150 mn) led by higher-than-expected revenues at the non-auto cable division (down just 24% YoY). This was driven by new contract wins and some one-time orders due to supply disruption at a competitor (not likely to recur).
>> Near-term outlook remains positive (Q2 revenues likely to be almost flat YoY). Triggers for outperformance vs auto industry growth such as content increase in auto cables, strong growth in exports and aftermarket and new order wins driven by vendor consolidation remain intact. Raise our FY21/22 EBITDA estimates by 6-7% on slightly higher revenue assumptions factoring in faster-than-expected recovery.
>> Reiterate BUY with revised TP of Rs 210 (from Rs 175), as we roll forward and value the stock at 17x June-22E EPS (vs 16x FY22E EPS earlier).
>> Q1 result was weak with consolidated EBITDA loss at Rs 48 mn though better than our estimate (loss of Rs 150 mn) led by higher-than-expected revenues at the non-auto cable division (down just 24% YoY). This was driven by new contract wins and some one-time orders due to supply disruption at a competitor (not likely to recur).
>> Near-term outlook remains positive (Q2 revenues likely to be almost flat YoY). Triggers for outperformance vs auto industry growth such as content increase in auto cables, strong growth in exports and aftermarket and new order wins driven by vendor consolidation remain intact. Raise our FY21/22 EBITDA estimates by 6-7% on slightly higher revenue assumptions factoring in faster-than-expected recovery.
>> Reiterate BUY with revised TP of Rs 210 (from Rs 175), as we roll forward and value the stock at 17x June-22E EPS (vs 16x FY22E EPS earlier).
8:44 AM
Market Outlook :: Motilal Oswal Financial Services
Expect market to open on a positive note on account of global cues. US stocks rose to record highs on signs that the Trump administration may fast-track vaccines and treatments for the coronavirus. The S&P 500 rallied 1% to close at above 3400 mark, Dow Jones rose 1.4% and the Nasdaq composite added 0.6%.
Hope was rising as pharmaceutical companies continue to work toward a possible vaccine for Covid-19 and after the US government on Sunday approved an emergency authorization to allow the use of convalescent plasma to treat patients.
European stocks closed higher, rising the most in two weeks, supported by signs of easing tensions between the US and China. FTSE, CAC and DAX Index gained 2% each.
Asian stocks climbed on Tuesday. Both China and the US see progress on their trade pact. Stocks rose in Japan, Australia and South Korea Index gained 1% each (Nikkei Index is up 1.5%). US Future is up 0.5% while SGX Nifty is trading flat.
Hope was rising as pharmaceutical companies continue to work toward a possible vaccine for Covid-19 and after the US government on Sunday approved an emergency authorization to allow the use of convalescent plasma to treat patients.
European stocks closed higher, rising the most in two weeks, supported by signs of easing tensions between the US and China. FTSE, CAC and DAX Index gained 2% each.
Asian stocks climbed on Tuesday. Both China and the US see progress on their trade pact. Stocks rose in Japan, Australia and South Korea Index gained 1% each (Nikkei Index is up 1.5%). US Future is up 0.5% while SGX Nifty is trading flat.
8:39 AM
BROKERAGE VIEW :: CLSA on Max Financial
Upgrades to 'Buy', Revised target price: Rs 720 from Rs 640
>> Despite Axis Bank's revised stake decision, we take this as a step closer towards deal closure
>> From Axis Bank's perspective, the stake is lower but enough to give control
>> Deal revision reduces uncertainty of a long-term distribution tie-up
>> Despite Axis Bank's revised stake decision, we take this as a step closer towards deal closure
>> From Axis Bank's perspective, the stake is lower but enough to give control
>> Deal revision reduces uncertainty of a long-term distribution tie-up
8:35 AM
BROKERAGE VIEW :: CLSA on IRB Infra
Maintains 'Buy', Target price: Rs 166
>> Construction backlog up 23% QoQ and traffic improving fast
>> Traffic returned to 78% of last year's level till June 2020
>> Winning concessions and acceptance of claims by NHAI are catalysts
>> Stock offers value at 8x FY22E
>> Construction backlog up 23% QoQ and traffic improving fast
>> Traffic returned to 78% of last year's level till June 2020
>> Winning concessions and acceptance of claims by NHAI are catalysts
>> Stock offers value at 8x FY22E
8:30 AM
Low volatility giving bulls comfort: Nilesh Jain of Anand Rathi
BUY NIFTY | TARGET: 11,550 | STOP LOSS: 11,360
The Nifty index continued its upmove and also reached our short-term target of 11,400. Now, since we are in the August F&O expiry week, we can expect some rally on the back of the short-covering move. The momentum indicators and oscillators on the weekly scales are still in buy mode which hints at some buying at lower levels. The volatility index is currently near 19 levels which is giving comfort to the bulls. Thus, one can remain on the long side by keeping a stop loss of 11,360. READ MORE
8:20 AM
FII/FPI & DII trading activity on NSE, BSE and MSEI
8:17 AM
Rupee check
Source: Bloomberg
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First Published: Aug 25 2020 | 7:19 AM IST
