MARKET WRAP: Sensex falls 216 pts, Nifty fails to hold 10650; banks drag

Benchmark indices ended lower on global correction and weaker rupee

12:55 PM

MARKET COMMENT

Volatility returned to stock markets in Q1 2018. Based on our valuation implied returns for India, we favor large-cap equity over mid and small-cap equity due to valuation concerns on the latter. Indian fixed income markets also witnessed increased volatility during the quarter. With global interest rates and bond yields near all-time lows, it should be no surprise that bonds also continue to look broadly expensive in absolute terms. We believe that emerging market debt offers better prospective return expectations than developed market peers.

(Source: Morningstar market obverver)

12:48 PM

RCom: Reliance Infratel, minority investors reach amicable settlement

Anil Ambani-run Reliance Communications' (RCom's) tower and fibre arm Reliance Infratel Limited (RITL) on Tuesday reached an amicable settlement with its minority investors.

 

Minority investors hold 4.26 per cent equity in RITL. The settlement paves the way for the vacation of the stay granted by the National Company Law Tribunal (NCLT) on the sale of RITL's tower and fibre assets. READ MORE

12:39 PM

Edelweiss on Wonderla Holidays

Wonderla Holidays’ (Wonderla) 7.5% YoY revenue dip and 79.2% YoY EBITDA growth in Q4FY18 came in line with estimates. Like-to-like, revenue grew 2% YoY, factoring provision made for disputed taxes. Share of non-ticket revenue rose 10.6% YoY following introduction of F&B offerings and costume sales. EBITDA margin expanded (1,347bps YoY) for third consecutive quarter primarily led by cost rationalisation.

The company had cut ticket prices 10% post reduction in the GST rate from 28% to 18%. Management expects recovery in footfalls in FY19 led by new rides and rational ticket prices hike (2% price hikes thus far in FY19). We like Wonderla’s strategy of adding new rides and increasing non-ticketing revenue avenues to spur footfalls. However, the impact of sharp price hikes on footfalls remains a key monitorable. Maintain ‘BUY’.

12:38 PM

Edelweiss on Zuari Agrochemicals

Zuari Agrochemicals (ZAC) reported below expectation Q4FY18 performance impacted by higher raw material (RM) costs. Standalone EBITDA fell 21% YoY to INR610mn, similarly, EBITDA of Paradeep Phosphate (PPL – 40% joint venture) contracted ~50% to INR960mn. However, EBITDA of Mangalore Chemicals & Fertilizers (MCFL) nearly doubled.

With management guiding for sustainable but lower EBITDA/MT of Rs 2,000 for ZAC (Rs 2,500 earlier estimate), we trim FY20E EBITDA by 7%. Factoring in further delays in subsidy receipts, we expect debt to remain high thereby exerting pressure on interest. Given high financial leverage, despite the marginal cut in EBITDA, we cut FY20E PAT by 32%. Subsidy receipts and company’s ability to fund its ongoing capex remain key monitorables. We value the stock at 15x FY20E EPS and arrive at a revised target price of Rs 579 (Rs 847 earlier). Maintain ‘BUY’.

12:37 PM

Reliance Securities on Cadila

Expecting significant ramp-up in US sales owing to niche launches (injectables/trans-dermal) and strong growth in domestic business, we maintain our BUY recommendation on the stock with a revised target price of Rs490 (from Rs540 earlier).

12:36 PM

PNC Infratech – All set for strong growth; retaining a Buy

 

With right-of-way (RoW) issues now largely behind, PNC closed FY18 on astrong note. As its pace of execution is set to gain further traction and witha comfortable debt position and huge order backlog, its industry-leading growthseems certain. Also, the under-levered balance sheet implies that it iswell-placed to meet the equity required for its range of hybrid annuityprojects. Besides, reasonable valuations and proven execution capabilitiessupport our Buy call

(Source: Anand Rathi Research)

12:35 PM

Nomura on Sun Pharma

We reset target price at Rs 513/share (up from Rs 479/share), based on 22.5x FY20F EPS of INR22.8, implying an upside of 10%. Maintain Neutral. We have reduced our EPS estimates for FY19F and FY20F by 18% and 17%, respectively, as we factor in higher spend on specialty and lower US generic revenues to factor in competitive pressure.

We estimate the increase in upfront promotional investment for specialty launches adversely impacted the FY20F EPS by ~13%. Given this additional source of revenue cost mismatch, we think it is justified to raise the valuation multiple from 20x to 22.5x. Post the recent correction, we think downside risk may be limited. However, value accretion on a large market cap through specialty and generic launches remain a challenge, in our view.

12:29 PM

Q4 results: High NPA recognition, growth visibility boost PFC sentiment

Despite deterioration in asset quality in the March 2018 quarter (Q4), shares of Power Finance Corporation (PFC), which were down over 40 per cent in the past one year, surged 6.5 per cent on Monday. The recognition of stressed loan assets has turned investors' sentiment after Q4 results. READ MORE

 

12:18 PM

Aviation stock: Cost pressures continue to take a toll on profitability

Aviation stocks were among key gainers on Monday on expectations that falling crude oil prices and strengthening rupee will improve profitability. While SpiceJet gained nearly 20 per cent, Jet Airways and InterGlobe Aviation were up 7.7 per cent and 2.4 per cent, respectively. READ MORE
 

12:03 PM

Market Check

 

S&P BSE Sensex	35,191.52		0.07%
Nifty 50	10,703.65		0.14%
S&P BSE 200	4,654.08		0.10%
Nifty 500	9,324.45		0.18%
S&P BSE Mid-Cap	16,131.39		0.08%
S&P BSE Small-Cap	17,477.51		0.30%

11:47 AM

Manpasand Beverages tanks 20% second straight after auditor resigns

Manpasand Beverages is locked in lower circuit for the second straight day, down 20% at Rs 276 on the BSE. The sharp falls comes after the Deloitte Haskins and Sells resigned as auditor of the company with effect from May 26, 2018.
 

The stock hit a fresh 52-week low today, plunging 36% in past two trading sessions from Rs 431 on Friday. READ MORE

11:32 AM

Volume Toppers

COMPANY	PRICE()	CHG()	CHG(%)	VALUE( CR)
VARDHMAN TEXTILE	1247.00	-2.70	-0.22	85.32
SPICEJET	123.25	0.80	0.65	53.93
JUST DIAL	595.20	-13.85	-2.27	48.33
SHRIRAM TRANS.	1526.85	-16.20	-1.05	38.46
LARSEN & TOUBRO	1396.85	19.25	1.40	29.58

11:15 AM

COMPANY NEWS Insolvency: Binani Cement lenders vote for UltraTech's Rs 79.60 bn offer

 

The Committee of Creditors (CoC) of Binani Cement on Monday voted in favour of UltraTech’s Rs 79.60 billion offer.

 

All 100 per cent votes were cast in UltraTech’s favour since the Aditya Birla Group firm, in its proposal, agreed to take care of all the legitimate claims of all stakeholders, said sources who attended the meeting. READ MORE

11:00 AM

ReNew focusing on potential acquisitions after launching IPO in April

 

While ReNew Power is seeking to raise equity through an initial public offering, the company has seen its borrowing cost shooting up to Rs 8.3 billion during FY17, compared with Rs 5.3 billion during FY16. As on December 31, 2017, the total borrowings of ReNew stood at Rs 151 billion, which consisted of long-term borrowings, short-term borrowings and current maturities of long-term borrowings.

 

ReNew, which filed for IPO last month, aims to raise Rs 260 billion from the market. Of the total net proceeds, it will utilise Rs 19.5 billion for redemption or early redemption of certain debentures issued by the company or its subsidiaries. READ MORE

10:47 AM

No major change in number of MF schemes post Sebi rationalisation

The Securities and Exchange Board of India's (Sebi's) move to categorise and rationalise mutual fund schemes has resulted in a reduction of less than three per cent in the number of schemes in the MF universe.

Between September 2017 and May this year, 38 schemes have been merged, the majority of which are in the debt domain, data collated from Value Research shows. READ MORE