MARKET WRAP: Sensex ends at new closing high of 37,337; ITC up 5% post Q1
The benchmark indices are trading at record high on Friday on strong quarterly results
1:36 PM
Emkay Global on Colgate
At current valuation, Colgate is trading at 33x FY20E EPS (25% discount to peers). We have cut our earnings estimates marginally and expect Colgate to deliver Sales/EPS CAGR of 11%/14% over FY18-21E. We revise our Target Price (TP) to Rs1,200 (Rs1,230 earlier), valuing it at 35x June'20E EPS. Maintain HOLD
At current valuation, Colgate is trading at 33x FY20E EPS (25% discount to peers). We have cut our earnings estimates marginally and expect Colgate to deliver Sales/EPS CAGR of 11%/14% over FY18-21E. We revise our Target Price (TP) to Rs1,200 (Rs1,230 earlier), valuing it at 35x June'20E EPS. Maintain HOLD
1:35 PM
HDFC Securities expects ITC to touch Rs 367
ITC’s cigarette biz has registered ~10/9% revenue CAGR in the last 10/5 years, despite punitive taxes. Our 9% revenue CAGR estimate over FY18-21E looks achievable owing to improving consumption dynamics and favorable base of FY18. Non-cigarette businesses (esp. FMCG), are value accretive, with improving franchise. We expect ~14% revenue CAGR here over FY18-21E
Our long term positive stance on ITC derives from its status of being the cheapest consumer large-cap stock in India. At 26x FY20E EPS, ITC trades at an unfair discount of ~35% to the sector. Reiterate BUY. Our target price is Rs 367, at 32x Jun-20E EPS.
ITC’s cigarette biz has registered ~10/9% revenue CAGR in the last 10/5 years, despite punitive taxes. Our 9% revenue CAGR estimate over FY18-21E looks achievable owing to improving consumption dynamics and favorable base of FY18. Non-cigarette businesses (esp. FMCG), are value accretive, with improving franchise. We expect ~14% revenue CAGR here over FY18-21E
Our long term positive stance on ITC derives from its status of being the cheapest consumer large-cap stock in India. At 26x FY20E EPS, ITC trades at an unfair discount of ~35% to the sector. Reiterate BUY. Our target price is Rs 367, at 32x Jun-20E EPS.
1:31 PM
Edelweiss on Quess Corp
Adjusted for a one-time non-cash charge of INR160mn, Quess Corp (Quess) reported Q1FY19 earnings largely in line with expectations. Sales/EBITDA/PAT grew 52%/36%/20%. Key highlights of Q1FY19 results are: 1) Organic sales growth of 28% YoY. 2) Sequential margin contraction took place due to seasonality in the Global Technology segment, and this is likely to normalize over the next few quarters. 3) Addition of ~5k associates in Q1 shows continued rapid growth in the general staffing business.
We reiterate our thesis that Quess is a play on all the key growth segments in the Indian business services sector. Retain ‘BUY’ with a revised target price of Rs 1,300 (INR1,315 earlier) based on ~4% reduction in our FY19/20 earnings estimates factoring in Q1FY19 numbers and seasonality pertaining to the new acquisitions.\
Adjusted for a one-time non-cash charge of INR160mn, Quess Corp (Quess) reported Q1FY19 earnings largely in line with expectations. Sales/EBITDA/PAT grew 52%/36%/20%. Key highlights of Q1FY19 results are: 1) Organic sales growth of 28% YoY. 2) Sequential margin contraction took place due to seasonality in the Global Technology segment, and this is likely to normalize over the next few quarters. 3) Addition of ~5k associates in Q1 shows continued rapid growth in the general staffing business.
We reiterate our thesis that Quess is a play on all the key growth segments in the Indian business services sector. Retain ‘BUY’ with a revised target price of Rs 1,300 (INR1,315 earlier) based on ~4% reduction in our FY19/20 earnings estimates factoring in Q1FY19 numbers and seasonality pertaining to the new acquisitions.\
1:30 PM
COMMENT Morgan Stanley on banks
One of the drivers of weak performance has been newsflow around management (CEO hunt at Axis and investigation into ICICI's CEO for alleged conflict of interest). This will still move the stocks, depending on the conclusion of investigations for ICICI Bank and clarity around the new CEO at Axis. But the key variable from a longer-term perspective – especially for ICICI and SBI, given low multiples – is asset quality progression
One of the drivers of weak performance has been newsflow around management (CEO hunt at Axis and investigation into ICICI's CEO for alleged conflict of interest). This will still move the stocks, depending on the conclusion of investigations for ICICI Bank and clarity around the new CEO at Axis. But the key variable from a longer-term perspective – especially for ICICI and SBI, given low multiples – is asset quality progression
1:15 PM
As RBI tries to revive rupee, India's forex reserves may go below $400 bn
India’s foreign exchange reserves may soon drop below the $400 billion mark for the first time since November as the central bank steps up action to shore up one of Asia’s worst-performing currencies.
Reserves have steadily declined by $21 billion from a record peak of $426 billion in mid-April, and official data on Friday may show a further slide. With the rupee set to remain under pressure in the face of an emerging-market sell-off, trade war jitters and a stronger dollar, there’s little sign the central bank will ease up on its currency intervention. READ MORE
12:58 PM
AHEAD OF EARNINGS Reliance Industries nears record high
Reliance Industries (RIL) was trading 2% higher at Rs 1,133 on the BSE at 12:32 pm ahead of its June quarter (Q1FY19) results today (July 27, 2018) evening. The stock was quoting close to its record high of Rs 1,138 touched on last Friday, July 20, in intra-day trade.
Oil to telecom major RIL is expected to report a steady performance for Q1FY19. This would be on the back of higher petrochemical volumes, expected to partly offset a softening in the refining segment. In the new-age businesses of retailing and telecom (digital services), analysts expect earnings to slow down as compared to the March quarter (Q4FY18). READ MORE
12:45 PM
Colgate-Palmolive woes deepen with market share decay
Shares of Colgate-Palmolive (Colgate), which were down 10.5 per cent in the past two months until Wednesday, slid another 3.6 per cent to Rs 1,083.90 on Thursday, despite the company posting better-than-expected profit for the June 2018 quarter (Q1). Investors are worried about the persistent decline in Colgate’s toothpaste market share, which may keep the stock under pressure. READ MORE
12:31 PM
Biocon rallies 10% post Q1 results
Shares of Biocon have rallied 10% to Rs 613 per share on the BSE after the company reported 48% growth in consolidated net profit at Rs 1.2 billion in June quarter (Q1FY19). The biopharmaceuticals company had profit of Rs 0.81 billion in the same quarter year ago.
The company’s revenue from operations grew 20% at Rs 11.24 billion against Rs 9.34 billion in the corresponding quarter of previous fiscal. EBITDA (earnings before interest, taxes, depreciation and amortization) margin improved to 26% from 25% during the quarter. READ MORE
12:16 PM
RESULT PREVIEW Petchem to support RIL earnings; analysts expect refining margins to soften
Oil to telecom major Reliance Industries (RIL) is expected to report a steady performance for the quarter ended June 30. This would be on the back of higher petrochemical volumes, expected to partly offset a softening in the refining segment.
In the new-age businesses of retailing and telecom (digital services), analysts expect earnings to slow down as compared to the March quarter. RIL will announce its financial performance for Q1 on Friday. READ MORE
12:02 PM
Markets at Noon
> More on BSE Indices
INDEX | LATEST | PREVIOUS | CHANGE | CHANGE(%) |
---|---|---|---|---|
BSE SENSEX | 37264.22 | 36984.64 | 279.58 | 0.76 |
BSE 500 | 15166.08 | 15059.90 | 106.18 | 0.71 |
BSE MID-CAP | 15897.26 | 15763.22 | 134.04 | 0.85 |
BSE SMALL-CAP | 16429.05 | 16306.02 | 123.03 | 0.75 |
S&P BSE LARGECAP | 4360.19 | 4330.95 | 29.24 | 0.68 |
11:47 AM
Top gainers in BSE 500:
» More on Top Gainers
COMPANY | PRICE() | CHG() | CHG(%) |
BIOCON | 611.25 | 52.15 | 9.33 |
MOTIL.OSWAL.FIN. | 915.00 | 75.90 | 9.05 |
IL&FS TRANSPORT | 39.55 | 2.95 | 8.06 |
NAVIN FLUO.INTL. | 690.25 | 40.95 | 6.31 |
DILIP BUILDCON | 765.70 | 36.45 | 5.00 |
11:35 AM
Facebook's biggest one-day stock wipe-out leaves Zuckerberg $15 bn poorer
Facebook Inc Chief Executive Mark Zuckerberg's fortune took a more than $15 billion hit on Thursday, as the social media company suffered the biggest one-day wipeout in US stock market history a day after executives forecast years of lower profit margins. READ MORE
11:17 AM
Global steel output up 4.6% in H1 as strong margins tempt mills to ramp up
Global crude steel output, a gauge of economic health, rose 4.6 per cent in the first half (H1) of this year versus the same period last year, as strong margins prompted mills in major producing countries to ramp up, industry data showed on Thursday. READ MORE
11:07 AM
IDBI Capital on PVR
PVR’s Q1FY19 result was a beat to our forecast as regards EBITDA and EPS. This was mainly driven by higher growth in footfalls and advertisement revenue vs. our forecast and a YoY decline in repairs & maintenance cost.
Outcome of the PIL as regards allowing outside F&B and news of risks from government interfering with pricing of F&B weighs on the valuation of PVR in the near term. We believe that in case of a court process is followed multiplex players are on a strong footing. However, the timeliness of the outcome remains uncertain.
While we fine tune our EBITDA and EPS forecast for FY19/20E, given the uncertainty over the F&B issue we reduce our target EV/EBITDA multiple to 13x FY20E vs. 15x earlier. We maintain BUY with a new target price of Rs1,406
11:01 AM
Life insurance products with high upfront commission not the best choice
A working committee set up by the Insurance Regulatory and Development Authority of India (Irdai) is currently examining the issue of ushering in level commissions throughout the tenure of life insurance policies, instead of the current practice of offering high upfront commissions to distributors prevalent in some policies. READ MORE
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First Published: Jul 27 2018 | 8:15 AM IST