Sensex ends lacklustre trade 272 pts up; Nifty tops 14,700; metal, IT rally

The benchmark S&P BSE Sensex swung within a band of 400 points, hitting a high and low of 49,011 and 48,614 levels, respectively

8:55 AM

BROKERAGE VIEW :: MOFSL on L&T Infotech

Reco: NEUTRAL | TP: Rs 3,680

LTI has deep domain capabilities, strong partnerships, and low exposure to segments that faced headwinds (legacy IMS and BPO). This is helping the company secure industry-leading growth rates.

On the margin front, we expect some normalization from current levels on account of the easing of utilization levels and investments needed by the management in S&M to drive growth.

Despite being confident of the company’s execution capabilities, we remain on the sidelines, led by significant multiple expansions. We value the stock at 26x FY23E EPS (in line with our TCS valuation, given LTI’s industry-leading growth). Our TP of INR3,680 per share implies a 6% downside. Maintain Neutral.

8:52 AM

BROKERAGE VIEW :: ICICI Securities on Banks

Taking into consideration the current surge in covid cases and the related business disruption, the Reserve Bank of India has announced measures to: 1) provide immediate liquidity to ramp-up healthcare facilities, 2) support the smallest and the most vulnerable segments; and 3) ease the financial stress in the system.

This is the need of the hour to ensure financing support to healthcare infrastructure. Incentivising through PSL classification, higher rate on equivalent surplus liquidity and indirect delivery are steps in the right direction. Banks will also tend to be more proactive in lending for this purpose.

The resort to restructuring under the earlier scheme has been much lower than earlier envisaged. Leading banks have restructured less than 1% and even for financiers’ exposures to vulnerable segment, restructuring was not more than 3%. However, at that time, there was moratorium too co-existing that had deferred the payment obligations and the stress. Undoubtedly, it is a timely measure to provide an option of restructuring, but response to the same is yet to be seen

 

8:49 AM

BROKERAGE VIEW :: Nirmal Bang on Tata Chemicals

Reco: SELL | TP: 546

We maintain Sell on Tata Chemicals Ltd (TTCH) based on marginal changes in estimates and 2.9% haircut in SOTP-based target price (TP) of Rs546 post the massive miss in 4QFY21 results due to one-off items hitting US and UK earnings. Long term outlook is positive based on management comments during the concall about demand returning to pre-Covid volume in all regions (including the troubled US business), The pressure on pricing outside India is likely to ease by 4QFY22 as quarterly contract prices are likely to be raised to align with market prices.

We have modelled positives like improving long term outlook for demand growth in Soda Ash. However we have tempered pricing/margin estimates as annual US contract prices are down US$5/te and increase in energy/freight cost remains a headwind in FY22. Our Sell is based on (i) 22.8% downside from CMP (ii) rich valuation at 18.1x on FY23E ~ 79.2% premium to 5-year median PE of 10.1x and (iii) lack of fresh catalysts over the next 1-2 years and (iv) single digit ROCE/RoE.

8:45 AM

BROKERAGE VIEW :: ICICI Direct on Alembic Pharma

Reco: HOLD | TP: Rs 1,055

Q4 revenues grew 6.1% YoY to Rs 1,280 crore with strong growth in RoW formulations and API segment being partly offset by 17.7% YoY decline in US sales to Rs 475 crore. Domestic formulations grew 4.7% YoY to Rs 358 crore. RoW sales grew a robust 76.5% YoY to Rs 233 crore whereas API segment grew 38.1% YoY to Rs 214 crore.

EBITDA margins declined 45 bps YoY to 26.7% with lower gross margins being mostly offset by lower employee cost. EBITDA grew 4.3% YoY to Rs 342 crore. Adjusted PAT grew 6.5% YoY to Rs 251 crore.

Q4 topline performance was in line with expectation (albeit skewed), impacted by decline in US sales. Profitability was better-than-expected due to lower-than-expected staff costs, other expenditure (ex-R&D) and a lower tax rate. Owing to pricing pressure across the Sartan portfolio, the management expects US quarterly sales to remain subdued in the near term. On the domestic front, the management expects a steady run rate, going forward. Additionally, in the API segment with Chinese players returning to the market, the management expects some sales moderation but expects steady growth.

Apart from this, the management is aggressively spending on R&D and manufacturing for US oncology, injectables, derma segments which provides growth optimism for medium to long-term but may impact near term margins. 

8:42 AM

BROKERAGE VIEW :: IDBI Capital on L&T Infotech

Reco: ACCUMULATE | TP: Rs 4,309

Larsen & Toubro Infotech’s (LTI) Q4FY21 revenue growth of 4.4% QoQ in CC was in-line with our forecast. EBIT margin of 19.4%, -125bps, was higher than our forecast. EPS of Rs31.2, +5.1%/+27.3% QoQ/YoY, was even bigger beat to our forecast.

In Q4FY21, LTI has secured 2 large deals with net-new TCV of US$66 mn taking the FY21 TCV to a new-high of US$404 mn. It has added 2 more Fortune 500 client taking the total to 71. LTI confirmed that the deal-pipeline remains strong. It expects to remain in leaders quadrant as regards revenue growth in FY22.

We factor Q4FY21 beat and increase our FY22/FY23 revenue (US$) forecast by 1.3%/1.1% and EPS by 3.9%/4%. We now forecast revenue (US$)/EPS CAGR of 14.9%/13.9% over FY21-23. We increase our TP to Rs4,309 (Rs4,144 earlier) based on PER of 30x FY23E.

We now recommend ACCUMULATE vs. HOLD earlier.

8:39 AM

BROKERAGE VIEW :: Kotak Institutional Equities on Banks

Outlook: ATTRACTIVE

The RBI has announced a few measures that aim to increase credit flow to specific sectors or arrest a possible increase in impairment ratios by extending or modifying the restructuring scheme for MSME borrowers. It is quite likely that the RBI is taking a more calibrated approach looking at the incoming data before new measures are introduced.

The overall usage of these schemes has been low suggesting lenders’ or buyers’ reluctance to take advantage of these schemes. We are not changing our view currently and keep our positive view on large banks; HDFC, STFC and Chola in diversified financials.

8:37 AM

BROKERAGE VIEW :: Kotak Institutional Equities on L&T Infotech

Reco: REDUCE | TP: Rs 3,850

LTI reported a solid 4.4% sequential growth in c/c. Gross profit margin declined sharply, while SG&A pullback contained EBIT margin decline to 120 bps. LTI is set for consistent mid-teens growth led by strength in core modernization programs and rapidly growing cloud infrastructure practice backed by excellent sales and leadership teams.

However, these positives are more than captured in the current market price. We retain REDUCE rating on expensive valuations. We tweak estimates, incorporate revised INR/USD and roll over, leading to FV increase to Rs3,850 (Rs3,810 earlier) at unchanged 25X June 2023E earnings

8:34 AM

Bulk deals on the NSE as on Wednesday

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8:32 AM

Bulk deals on the BSE as on Wednesday

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8:30 AM

FII/FPI & DII trading activity on NSE, BSE and MSEI

8:27 AM

Top stocks to watch today

Results today: A total of 25 firms are slated to post their March quarter numbers today, including Hero MotoCorp, Tata Consumer, Adani Power, Blue Star, Hikal, Icra and Raymond.

 

HeroMoto Corp, slated to report its March quarter results (Q4FY21) on May 6, is expected to post nearly 60 per cent year-on-year growth in earnings before interest, tax, depreciation, and amortization (Ebitda) aided by healthy sales volume and low base effect. However, price hikes taken due to BS-VI transition and to off-set increase in input costs may not be enough to cushion Ebitda margin hit, say analysts. READ MORE

8:24 AM

Rupee check

Source: Bloomberg

8:21 AM

Oil check :: Brent hovers around $69/barrel-mark

8:17 AM

SGX Nifty alert

>> At 8:15 AM, the index was at 14,731 levels, up 38 points

8:14 AM

Asian markets check

In Asia, stocks rose in early trade while US futures were steady. Japan’s Topix Index rose 1.5%, South Korea’s Kospi edged up 0.75% and Australia’s S&P/ASX 200 Index climbed less than 0.1%.