Indices end at yet another peak, Sensex up 315 pts; BSE Midcap outperforms
All that happened in the markets today
 "MARKET LIVE: Sensex hits record high, tops 44,000-mark; Nifty near 12,900")
Nifty settled at 12,874, up 94 points, or 0.74 per cent.
9:07 AM
MARKET AT PRE-OPEN
9:02 AM
Market Outlook :: Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel Broking
Looking at the daily chart, we can observe a couple of encouraging developments on charts. The ‘RSI-Smoothened’ is moving northwards after entering the bullish territory above 70 and adding to this, the ‘ADX (14)’ is becoming stronger as we can see its value rising well above the 25 mark. Generally, when we see these conditions together, it provides impetus to the rally. Hence, any dip towards 12,600 – 12,450 should be used as a buying opportunity. On the upside, the next milestone of 13,000 is likely to be achieved very soon; in fact, we do not rule out the possibility of reaching 13,100 – 13,200 this week itself.
Traders are advised not to expect any meaningful correction in the near future and hence, do not venture into taking contradictory bets in such strong Bull Run. We are sounding extremely optimistic because almost all major sectors are contributing to this surge and hence, can be considered a robust one. The broader market has also started to give some mesmerizing moves and mind you, this is just a beginning of the mega Bull Run. So fasten your seat belts and gear up to take off post Diwali as well.
9:01 AM
Stocks in focus today
RIL: Reliance Industries’ (RIL’s) retail arm has acquired 96 per cent stake in Bengaluru-based online furniture retailer Urban Ladder for over Rs 182 crore. The deal is expected to help Mukesh Ambani-headed RIL take on players such as Jeff Bezos-led Amazon, Walmart-owned Flipkart, Swedish home furnishing major Ikea, and smaller rival Pepperfry in the battle for India’s $32 billion worth furniture market.
BPCL: The long-awaited privatisation process for Bharat Petroleum Corporation (BPCL) is finally moving to its second stage with at least three to four companies submitting expressions of interest (EoIs). The government had to extend the deadlines for submission of EoIs four times before setting the final deadline on Monday. Reliance Industries, however, did not put in a bid, nor did its partner Saudi Aramco. READ MORE
8:59 AM
BROKERAGE VIEW :: JM Financial on Prestige Estates Projects
>> Prestige Estates reported a decent set of results with Revenue / EBITDA / PAT declining 2% / 12% / 46% YoY. Residential and commercial segment held up well while retail and hospitality business showed losses. Moreover, it has recently signed a term sheet with Blackstone for the part sale of commercial, retail and hospitality assets at an Enterprise Value of INR 91.6bn (8.5% cap rate for completed assets). Post the deal, it plans repay INR 50.0bn and reduce debt to INR 35bn (INR 86.7bn currently) and enter into a new phase of development across residential and annuity assets as management continues to see opportunities across cities and looks to opportunistically scale up. On the residential front, it continues to see good traction for completed as well under construction inventory and hopes to reduce debt through cash generation.
8:55 AM
BROKERAGE VIEW :: Edelweiss Securities on Rossari Biotech
CMP: Rs 777 | TP: Rs 912 | Reco: Buy
>> Rossari Biotech (Rossari) is a key specialty chemicals manufacturer operating in home and personal care, textiles, and animal health and nutrition segments in India. Its R&D driven product development business model addresses customer-specific application requirements. This is a source of competitive advantage for the company and has helped it create a sticky base of marquee customers.
>> Continued momentum in the higher margin home and personal care business would aid in margin expansion going forward. We expect a revenue/EBITDA/PAT CAGR of 22%/27%/29% over FY20-23E. We initiate coverage with a BUY rating and a target price of INR 912 per share.
>> Rossari ticks the right boxes with a strong growth outlook, debt free balance sheet, industry leading asset turnover, short working capital cycle and a technocratic
>> Rossari Biotech (Rossari) is a key specialty chemicals manufacturer operating in home and personal care, textiles, and animal health and nutrition segments in India. Its R&D driven product development business model addresses customer-specific application requirements. This is a source of competitive advantage for the company and has helped it create a sticky base of marquee customers.
>> Continued momentum in the higher margin home and personal care business would aid in margin expansion going forward. We expect a revenue/EBITDA/PAT CAGR of 22%/27%/29% over FY20-23E. We initiate coverage with a BUY rating and a target price of INR 912 per share.
>> Rossari ticks the right boxes with a strong growth outlook, debt free balance sheet, industry leading asset turnover, short working capital cycle and a technocratic
management team with a great execution track record. We initiate coverage with a BUY rating and a target price of INR 912 per share (upside of 17%), valuing the company at 33x FY23E EPS.
8:50 AM
>> We thus broadly maintain our estimates for the Retail, Office, and Residential segments, while we lower our FY21 estimates for Hospitality. We value PHNX’s retail assets on the DCF-based NAV approach, assuming a cap rate of 9.5% and discount rate of 13.5%. Maintain Buy, with SOTPbased TP of INR750
BROKERAGE VIEW :: MOFSL on Phoenix Mills
CMP: Rs 622 | TP: Rs 750 (+21%) | Reco: Buy
>> The Retail segment has continued to gain traction since the resumption of malls and subsequent opening up of F&B outlets as we traverse the path to normalcy. The Office segment remains largely stable. However, Hospitality remains a drag as travel restrictions continue to impact the business.
>> The Retail segment has continued to gain traction since the resumption of malls and subsequent opening up of F&B outlets as we traverse the path to normalcy. The Office segment remains largely stable. However, Hospitality remains a drag as travel restrictions continue to impact the business.
>> We thus broadly maintain our estimates for the Retail, Office, and Residential segments, while we lower our FY21 estimates for Hospitality. We value PHNX’s retail assets on the DCF-based NAV approach, assuming a cap rate of 9.5% and discount rate of 13.5%. Maintain Buy, with SOTPbased TP of INR750
8:48 AM
BROKERAGE VIEW :: MOFSL on Tata Steel
CMP: Rs 487 | TP: Rs 456 (-6%) | Reco: Neutral
>> Tata Steel (TATA) has seen strong recovery in profitability, led by higher steel prices. Consolidated EBITDA rose 60% YoY to INR61.1b in 2QFY21 (the highest in the last six quarters), and we estimate 3QFY21 to be even stronger at Rs 71.6b (+98% YoY). Furthermore, net debt fell Rs 83b QoQ to INR988b (the lowest in the last six quarters), led by working capital release of Rs 103b.
>> The potential divestment of the company’s profitable Netherlands operations to SSAB could lead to further deleveraging. However, its continually loss-making UK operations would remain an overhang on the stock.
>> We raise our FY21/FY22E EBITDA estimates by 38%/9%, factoring in higher steel prices and spreads. Maintain Neutral.
>> Tata Steel (TATA) has seen strong recovery in profitability, led by higher steel prices. Consolidated EBITDA rose 60% YoY to INR61.1b in 2QFY21 (the highest in the last six quarters), and we estimate 3QFY21 to be even stronger at Rs 71.6b (+98% YoY). Furthermore, net debt fell Rs 83b QoQ to INR988b (the lowest in the last six quarters), led by working capital release of Rs 103b.
>> The potential divestment of the company’s profitable Netherlands operations to SSAB could lead to further deleveraging. However, its continually loss-making UK operations would remain an overhang on the stock.
>> We raise our FY21/FY22E EBITDA estimates by 38%/9%, factoring in higher steel prices and spreads. Maintain Neutral.
8:42 AM
BROKERAGE VIEW :: MOFSL on Grasim
CMP: Rs 841 | TP: Rs 805 (-4%) | Reco: Neutral
>> GRASIM’s 2QFY21 result exhibits a strong recovery from the COVID pandemic. Both the Viscose and Chemicals businesses have seen near normalization of volumes and bottoming out of prices/margins. While EBITDA declined 40% YoY to INR4b in 2Q, it is now expected to grow YoY in 3QFY21.
>> Sale of low RoCE Fertilizer business for ~USD350m has been carried out at a good valuation (12x FY20 EV/EBITDA) and would help GRASIM substantially deleverage.
>> We raise our EBITDA estimate by ~4% to factor in better volumes and SoTPbased TP by ~10% to INR805 due to higher market price of subsidiaries. While the holding company discount at 53% is above the 10-year average of 47%, we maintain our Neutral rating as we do not expect the same to shrink significantly
>> GRASIM’s 2QFY21 result exhibits a strong recovery from the COVID pandemic. Both the Viscose and Chemicals businesses have seen near normalization of volumes and bottoming out of prices/margins. While EBITDA declined 40% YoY to INR4b in 2Q, it is now expected to grow YoY in 3QFY21.
>> Sale of low RoCE Fertilizer business for ~USD350m has been carried out at a good valuation (12x FY20 EV/EBITDA) and would help GRASIM substantially deleverage.
>> We raise our EBITDA estimate by ~4% to factor in better volumes and SoTPbased TP by ~10% to INR805 due to higher market price of subsidiaries. While the holding company discount at 53% is above the 10-year average of 47%, we maintain our Neutral rating as we do not expect the same to shrink significantly
8:41 AM
BROKERAGE VIEW :: MOFSL on ONGC
CMP: Rs 72 | TP: Rs 90 (+25%) | Reco: Buy
>> Oil and Gas sales and net realization (USD41.4/bbl; -31% YoY) stood in line with estimates. Net sales came in line with est. at INR169b (-31% YoY). We have built in oil/gas production at 23.3mmt/24.8bcm for FY21, as per the management’s earlier guidance.
>> We forecast a crude oil price of ~USD45/bbl for 2HFY21 and expect prices to remain stable around current levels in the medium term. However, we highlight that a change of USD5/bbl in oil price realization would raise ONGC’s EBITDA (consolidated/SA) by 7%/12% for FY22.
>> Despite the delay, ONGC is expected to grow its gas production in FY22, with efforts to arrest the decline in oil production from age-old fields (accounting for 60–70% of total oil production). Maintain Buy.
>> Oil and Gas sales and net realization (USD41.4/bbl; -31% YoY) stood in line with estimates. Net sales came in line with est. at INR169b (-31% YoY). We have built in oil/gas production at 23.3mmt/24.8bcm for FY21, as per the management’s earlier guidance.
>> We forecast a crude oil price of ~USD45/bbl for 2HFY21 and expect prices to remain stable around current levels in the medium term. However, we highlight that a change of USD5/bbl in oil price realization would raise ONGC’s EBITDA (consolidated/SA) by 7%/12% for FY22.
>> Despite the delay, ONGC is expected to grow its gas production in FY22, with efforts to arrest the decline in oil production from age-old fields (accounting for 60–70% of total oil production). Maintain Buy.
8:36 AM
Nifty outlook and stock recommendations by Sameet Chavan of Angel Broking
Last week, we had witnessed a ‘Bullish Flag’ breakout around 12,050 and since then markets never looked back. With its marathon rally in merely eight days, markets are very much in a commanding position. All’s well that ends well and hence, from hereon we can see a brighter picture till the next Samvat. Looking at the daily chart, we can observe a couple of encouraging developments on charts. READ MORE
8:30 AM
Two stocks that Vaishali Parekh is bullish on
BUY INOX LEISURE | CMP: Rs 267 | Target Price: Rs 300-310 | Stop Loss: Rs 245
Overall, the stock has been in a gradual rising trend and is currently moving above the 100-day moving average (DMA). It has shown a positive bias and we anticipate an upward movement in the coming days. The relative strength indicator (RSI) has also consolidated to maintain a positive bias. With the chart looking good, we suggest to buy and accumulate this stock for an upside target of Rs 300 - Rs 310, keeping the stop loss at Rs 245. READ MORE
8:26 AM
Bulk deals on BSE as on Saturday
8:23 AM
Muhurat Trading :: FII/FPI & DII trading activity on NSE, BSE and MSEI
8:20 AM
Rupee check
Source: Bloomberg
Topics : Markets Coronavirus Vaccine Wall Street Global Markets Asian markets Reliance Industries BPCL MARKET WRAP
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First Published: Nov 17 2020 | 7:35 AM IST
