Sensex recovers 600 pts from day's low, ends 223 pts up; FMCG, pharma rally

All that happened in the markets today

12:43 PM

F&O :: May series analysis

>>  Due to smart recovery in last two sessions, index trimmedoff most of its Month-on-Month losses and concluded the May series near to 9,500 zones, with loss of 3.75% from its April expiry close.

>> Some long positions got formed in recent bounce and part of it got rolled to June series as Rollover for Nifty stood at 75.67%, which is higher than its quarterly average of 70.36%

>> FIIs also participated in the fall towards 8800 zone (in Nifty) as they continued to sell index futures (their index Long Short Ratio reached to 28% on 18th May). However, we witnessed good amount of buying interest from FIIs desk in last few days and as a result, their Long Short Ratio has moved to 63.21%.

>> On option front, open interest activity is scattered at 10,000 and 9,500 Call options; while highest Put OI is at 9,000, followed by 9,600 and 8,500 strikes. Option data suggests a wider trading range in between 9,000 and10,000 zones.

>> Bank Nifty: Due to a sharp rally of more than 1700 points in last two sessions, it managed to conclude May series above 19100 levels. We witnessed good amount of short buildup in the down move; but decent short covering was seen towards the fag end of May series. At current juncture, some short positions are still intact in the system as open interest increased by 42.74% on M-o-M basis. Rollover in BankNifty stood at 81.13%, which is higher than quarterly average of 70.60%.

>> Overall derivatives data of BankNifty indicates that short positions are there in the system and if it sustains above 19,500, then we may see further short covering move towards 20,600 and then 22,000 mark. While immediate support for BankNifty is now placed at 18,200 level and below that major support at 17,000 zone.

>> Stock-wise: Good amount of long rollovers in counters like Balkrisha Inds, ZEEL., Jindal Steel, Ramco Cement, Godrej CP, etc. While stocks which added shorts and the same got rolled to next series are Ashok Leyland, Colpal, Bajaj Finserv, Chola Fin., PNB, Indusind Bank, etc.

(Source: Motilal Oswal Financial Services)

12:37 PM

NEWS ALERT | Axis Bank's 35L shares change hands in 3 block deals, CNBC-TV18 reports

>> Shares worth Rs 133 cr changed hands on BSE and NSE at Rs 378.6 - Rs 381.45 / share

12:32 PM

MARKET UPDATE | Manappuram Finance trades 4.5% higher

12:23 PM

NEWS ALERT | PM Modi's meeting with Amit Shah to discuss lockdown extension concludes: CNBC TV18

12:14 PM

Auto index outperforms benchmark Sensex for second straight month

Thus far in the month of May, the S&P BSE Auto index has gained 5 per cent, as compared to 5 per cent decline in the S&P BSE Sensex. In the previous month of April, the auto index soared 24 per cent against 14.4 per cent rise recorded by the benchmark index. In the first three months (January-March), the auto index had tanked 42 per cent, as compared to 29 per cent decline in the Sensex. READ MORE

12:09 PM

BROKERAGE VIEW:: Edelweiss Securities on Quess Corp

Operationally, Quess Corp (Quess) sustained growth momentum in Q4FY20 with 25-30% organic growth in revenue and EBITDA. Headcount addition of 60k plus in FY20 in general staffing indicates massive market share gains. Notably, in Q4FY20, Quess has taken a sizeable impairment charge (non-cash) of Rs 6.6bn, impairing ~38% of its goodwill, given the potential front-ended cash flow hit due to COVID-19. Management indicated headcount decline of 10-15% during Q1FY21; but our base case assumes 20-25% dip for FY21, based on our channel checks. A few businesses such as training and parts of facility management faced some headwinds. On the positive side, balance sheet seems healthier YoY (net debt/EBITDA <1x) and with M&A on the backburner, it should get heft. In our view, the 65% stock price fall since February largely captures the damage to FY21/22E earnings and at 11x FY22E earnings, valuations are enticing. Retain ‘BUY’ and TP of Rs 338.

12:01 PM

BROKERAGE VIEW:: Prabhudas Lilladher on Federal Bank

Rating: BUY | CMP: Rs 43 | TP: Rs 67

Bank also had to provide acturial employee benefits of Rs1.2bn owing to drop in yields. Adjusting to COVID, core performance would have been undeterred but seems slippgaes run rate still would have been at Rs5.0-6.0bn/qtr and still leading to higher provisions. Key negative was NIMs still remaining dismal at 3.0%, while positive was better deposit growth in NRE/Retail TD & SA. We retain BUY with revised TP of Rs 67 (from Rs73) based on 0.9x Mar-22 ABV as valuations are undemanding amongst mid-cap banks.

11:58 AM

BROKERAGE VIEW:: ICICI Securities on Coal India

With coal inventories at power plants reaching 30 days, CIL’s production continues to be subdued and focus remains on OB removal to prepare it for higher demand in the subsequent months. However, offtake has improved substantially, particularly in the past week and now clocks 1.35mnte/day from 1.1mnte/day during Apr’20.

We maintain our BUY rating on CIL, but cut our target price to Rs 264 (earlier: Rs 284), valuing on DCF basis with a peak production of 850mnte from FY29E onwards.

11:53 AM

BROKERAGE VIEW:: Anand Rathi Shares on KPIT Technologies

TP: Rs 85 | Rating: BUY

At $76.9m, KPIT reported flat quarter (up 0.1%q/q, 8%y/y). It lost 1.5% in revenue on account of Covid-19 this quarter. The EBIT margin came at 8.5%, up 28bps q/q, down 82bps y/y. The company continued to strengthen its balance sheet, ending FY20 with high, Rs 3,278m, net cash. Despite Q4 being better than expected, auto/engineering is seeing headwinds ahead, with management talking of up to a 15% drop in Q1 revenues. We cut our FY21e/FY22e revenues 15%, resulting in a lower target of Rs 85 (Rs 100 earlier) at 13x FY22e EPS.

11:50 AM

BROKERAGE VIEW:: Emkay Global Financial Services on Britannia

TP: Rs 3,900 (12 months) | Rating: BUY

• We increase Britannia’s (BRIT) estimates by 12% and raise our TP to Rs3,900 (from Rs 3,250), factoring in stronger-than-expected growth trends in its portfolio, acceleration in market share gains and multiple tailwinds for higher growth and margin expansion.
• BRIT is emerging as the biggest beneficiary from the disruption, as packaged foods consumption is growing strongly, led by higher in home consumption and lesser avenues for out-of-home consumption. The shift from unorganized/street food to packaged foods may sustain even post lockdown given higher preference for hygiene and trusted brands.
   
• In addition, BRIT’s better distribution capabilities with strong direct reach, wide portfolio and faster innovation makes it well-placed to accelerate share gains. Margin outlook has also improved on benign input prices, steady cost-saving culture, reduced competitive activity (reduction in trade schemes) and better portfolio mix
• Valuations at 41xFY22 are still attractive given the improved growth outlook and likely upsides to earnings. Re-iterate BUY and maintain BRIT as an EAP high conviction idea.

11:48 AM

BROKERAGE VIEW:: Emkay Global Financial Services on TVS Motor

TP: Rs 296 (12 months) | Rating: SELL 

• Q4FY20 revenue declined 21% yoy to Rs34.8bn (est.:Rs33.2bn), while adj. PAT fell 26% to Rs993mn (est.:Rs459mn), above estimates due to higher OPM, increase in other income and lower tax. OPM was flat at 7% (est.: 6.2%), above estimates due to the change in inventory and cost-reduction efforts.
• Demand prospects remain subdued for both Overseas and Domestic markets. Apart from Covid-19 lockdowns, demand in overseas markets is likely to be adversely impacted due to a fall in global commodity prices and adverse currency movement. In comparison, domestic demand is be affected by steep price increases.
• Led by the lockdown and expectation of gradual pick-up in demand, we reduce our FY21E volume estimate by 18% to 2.4mn units, but we broadly retain our FY22E volume forecast at 3.3mn units. Expect recovery from H2FY21, led by a low base, pent-up demand and better rural sentiment.
• The stock trades at FY22E P/E of 24x, which is expensive in comparison to 14-18x for larger peers. Retain Sell rating with revised TP of Rs296, based on 19x FY22E EPS and value of TVS Credit Services at Rs34/share. In sector EAP, we have an UW stance on the company.

11:41 AM

Specialty products segment key to Sun Pharma's growth prospects

The Sun Pharma stock gained 1.38 per cent on Thursday, even as the firm posted a weaker-than-expected performance for the March quarter. This was on account of the specialty products segment, which put up a better-than-expected show. This segment is vital to Sun Pharma’s growth prospects. READ MORE

11:34 AM

Covid-19 impact: Auto biggies face low-liquidity risk, says study

Domestic brokerage firm Equirus has analysed companies based on the debt-to-equity ratio and debt-to-Ebitda ratio to assess companies that are at high-risk or ones that are relatively comfortable.

 

According to the brokerage, companies with debt/Ebitda of less than 0.7 are at low risk, those between 0.7 and 1.7 are at moderate risk, while those above 1.7 are at high risk. All large auto manufacturers fall in the low-risk bracket. READ MORE

11:26 AM

Rain Industries surges 17% on healthy operational performance in March qtr

Shares of Rain Industries soared 17 per cent to Rs 81.20 on the BSE on Friday after the company’s profit before depreciation, interest, taxes and exceptional item (Ebitda) jumped 52 per cent year on year (YoY) to Rs 558 crore in the March quarter (Q1CY20). Ebitda margin expanded 780 basis points to 19.3 per cent from 11.5 per cent in the year-ago quarter. READ MORE

11:19 AM

CEAT up 6% on 14% YoY growth in Q4 EBITDA, partial resumption of operations

It's standalone EBITDA logged a 14.4 per cent YoY rise at Rs 190 crore for Q4FY20, while margin improved to 12.5 per cent, up 280 bps YoY. For the whole FY20, EBITDA came in at Rs 705 crore, up 10.6 per cent YoY.

 

On consolidated basis, the company's EBITDA for FY20 was Rs 740 crore, up 12 per cent compared to previous fiscal, while margin expaned by 340 bps YoY to 12.9 per cent. READ MORE