MARKET WRAP: Nifty at new high, Sensex up 284 pts; banks, FMCG stocks rally
Among key stocks, the fast moving consumer goods (FMCG) major ITC rose over 2 per cent to end at Rs 313 levels on the BSE. The stock hit a fresh 52-week high of Rs 315 earlier today.
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10:53 AM
Top Nifty50 gainers
| COMPANY | LATEST | PREV CLOSE | GAIN() | GAIN(%) | VOLUME |
| GRASIM INDS | 1030.80 | 999.45 | 31.35 | 3.14 | 859071 |
| TATA STEEL | 581.25 | 567.55 | 13.70 | 2.41 | 2765211 |
| LUPIN | 870.20 | 849.75 | 20.45 | 2.41 | 1382771 |
| DR REDDY'S LABS | 2400.80 | 2353.45 | 47.35 | 2.01 | 430630 |
| ADANI PORTS | 377.70 | 370.30 | 7.40 | 2.00 | 874069 |
10:45 AM
PNB Housing: Margins will continue to be under pressure even in medium term
The stock of PNB Housing Finance (PNB Housing) has declined by over three per cent after the company announced its June quarter results last week. Given the Street’s concerns on profit margins, the stock is likely to remain under pressure.
While the company clocked strong growth in loan book (47 per cent year-on-year) and asset quality was also satisfactory (gross bad loans flat at the year-ago level of 0.43 per cent), a net interest margin (NIM) compression, amid lower spread, disappointed investors. READ MORE
10:30 AM
ITC hits fresh 52-week high; stock surges 17% in one month
Shares of ITC hit a fresh 52-week high of Rs 315, up 2.5% on the BSE in early morning trade, extending gains of the past 4 weeks after the company’s June quarter net profit beat the Street estimates.
The stock of fast moving consumer goods (FMCG) company was the largest gainer among the S&P BSE Sensex. It outperformed the market by surging 17% in past one month, as compared to a 4% rise in the benchmark index. READ MORE
10:26 AM
Jefferies on Repco
1Q PAT grew 8.9%YoY to Rs609 mn (Ind AS) vs. our Rs 564mn est. (GAAP). Loan growth was muted and spreads fell YoY, but this was partly offset by much lower credit cost under Ind AS. GNPA is back to recent peak. We tweak our estimates. Slow resolution of TN issues, high loan attrition should weigh on loan growth. Spreads may moderate. Asset quality could take longer to stabilize. However, at 2x FY20E BV, downside appears limited. We maintain our Hold
1Q PAT grew 8.9%YoY to Rs609 mn (Ind AS) vs. our Rs 564mn est. (GAAP). Loan growth was muted and spreads fell YoY, but this was partly offset by much lower credit cost under Ind AS. GNPA is back to recent peak. We tweak our estimates. Slow resolution of TN issues, high loan attrition should weigh on loan growth. Spreads may moderate. Asset quality could take longer to stabilize. However, at 2x FY20E BV, downside appears limited. We maintain our Hold
10:21 AM
Jefferies on Yatra
We initiate on Yatra with Buy and price target of $6.75. We expect it to benefit from strong air traffic growth in India and low online penetration in hotel booking. Though Yatra is distant No. 2 to Makemytrip, it differentiates by targeting 1) B2E and B2B2C segments and 2) budget hotels in Tier 2/3 cities. We expect revenue growth of 15-23% over FY19-21E and losses to narrow helped by lower marketing expenses. Valuation discount makes risk-reward favorable
We initiate on Yatra with Buy and price target of $6.75. We expect it to benefit from strong air traffic growth in India and low online penetration in hotel booking. Though Yatra is distant No. 2 to Makemytrip, it differentiates by targeting 1) B2E and B2B2C segments and 2) budget hotels in Tier 2/3 cities. We expect revenue growth of 15-23% over FY19-21E and losses to narrow helped by lower marketing expenses. Valuation discount makes risk-reward favorable
10:19 AM
Elara Capital on Simplex Infra
Improvement in payment cycle and recovery of receivables is the key thing awaited for the turnaround story to play out. After several years of muted performance, the management has given a bold guidance of strong double digit revenue growth which is planned to be achieved with Rs 17bn of execution in 2Q and thereafter Rs 8bn of execution per month.
We remain cautious and maintain our execution estimates and rating on the stock at Reduce with a revised target price of Rs 392 valuing FY20 earnings at P/E of 16x (unchanged)
Improvement in payment cycle and recovery of receivables is the key thing awaited for the turnaround story to play out. After several years of muted performance, the management has given a bold guidance of strong double digit revenue growth which is planned to be achieved with Rs 17bn of execution in 2Q and thereafter Rs 8bn of execution per month.
We remain cautious and maintain our execution estimates and rating on the stock at Reduce with a revised target price of Rs 392 valuing FY20 earnings at P/E of 16x (unchanged)
10:15 AM
PSUs get 3rd lifeline to meet free-float norms, deadline extended by 2 yrs
The Securities and Exchange Board of India (Sebi) has thrown another lifeline to public sector undertakings (PSUs) to achieve 25 per cent public shareholding, a key corporate governance requirement, which private sector listed entities had to achieve by June 2013. According to sources, the capital markets regulator has extended the August 21 deadline by another two years.
The move comes as a relief to over three dozen PSUs in which the government shareholding is in excess of 75 per cent. READ MORE
10:00 AM
Market Check
| Index | Current | Pt. Change | % Change |
| S&P BSE SENSEX | 37,927.16 | +263.60 | +0.70 |
| S&P BSE SENSEX 50 | 11,998.15 | +84.20 | +0.71 |
| S&P BSE SENSEX Next 50 | 33,912.94 | +284.30 | +0.85 |
| S&P BSE 100 | 11,733.47 | +84.76 | +0.73 |
| S&P BSE Bharat 22 Index | 3,601.05 | +30.17 | +0.84 |
9:45 AM
INTERVIEW OF THE DAY No 2017-like IPO pipeline in second half this year: UBS India's Anuj Kapoor
It is unlikely that this year’s equity fundraising tally will surpass that of last year. Anuj Kapoor, head of investment banking, UBS India says that rising global and domestic uncertainties could weigh on equity capital raising in the near-term. Click here to read full interview
9:34 AM
Edelweiss on Jain Irrigation
Jain Irrigation (JISL) reported in-line Q1FY19 with revenue jumping 24% YoY to Rs 20.9bn and EBITDA surging 15% to Rs 2.7bn. While interest cost also increased, one-off rise in other income propelled PAT 84% YoY. Key highlights: 1) broad-based growth across all segments, with growth also returning to the agro processing division; 2) project business spurred MIS growth, but retail segment’s growth was muted; and 3) net debt spiked by ~Rs 5bn YoY due to currency and acquisition impact.
Factoring the higher interest cost, we revise down FY19/20E PAT 5%/8%. Though we retain our confidence in JISL’s EBITDA growth, the spike in debt remains a monitorable. Hence, we revise down FY20E EPS multiple to 12x (from 15x) and target price to Rs 126 (Rs 150 earlier). Maintain ‘BUY’
Jain Irrigation (JISL) reported in-line Q1FY19 with revenue jumping 24% YoY to Rs 20.9bn and EBITDA surging 15% to Rs 2.7bn. While interest cost also increased, one-off rise in other income propelled PAT 84% YoY. Key highlights: 1) broad-based growth across all segments, with growth also returning to the agro processing division; 2) project business spurred MIS growth, but retail segment’s growth was muted; and 3) net debt spiked by ~Rs 5bn YoY due to currency and acquisition impact.
Factoring the higher interest cost, we revise down FY19/20E PAT 5%/8%. Though we retain our confidence in JISL’s EBITDA growth, the spike in debt remains a monitorable. Hence, we revise down FY20E EPS multiple to 12x (from 15x) and target price to Rs 126 (Rs 150 earlier). Maintain ‘BUY’
9:33 AM
WEB EXCLUSIVE Investors richer in Modi's 'acche din' than under Vajpayee's 'India shining'
The markets have performed better under the National Democratic Alliance’s (NDA’s) Narendra Modi, as compared to Atal Bihari Vajpayee’s tenure as India’s Prime Minister (PM).
The Nifty 50 index (Nifty as it was known then), notched up a gain of 5.7 per cent, while the Sensex lost one per cent on an absolute basis between October 13, 1999 when Vajpaee assumed charge as the PM, till May 19, 2004 when he left office, data shows READ MORE HERE
Narendra Modi, Atal Bihari Vajpayee
9:32 AM
MARKET COMMENT Chris Wood of CLSA
The choice facing Erdogan is now clear. He can play the orthodox game and raise interest rates aggressively and appoint a new finance minister who is not his son-in-law. Or he can follow the precedent set by Mahathir in Malaysia in 1998 and close the capital account with a view, in Turkey’s case, of obtaining emergency funding from the likes of Russia and China and friends in the Middle East.
The possibility of such a development, in terms of the closure of the capital account or some other form of constraint on convertibility, has grown significantly over the past week given the scale of the Turkish currency’s collapse and the unhelpful reaction from Washington in terms of the threat of Turkey targeted sanctions. Any mooted IMF bailout of Turkey is also likely to have its conditions dictated by America.
Turkey will also be viewed as idiosyncratic. It has certainly been the case that Turkey has long been viewed as a prime candidate for triggering a crisis. The reasons are high dollar borrowing and a habit of running large current account deficits.
The key driver of Turkey’s problems of late are political not economic. Turkey, under the recently re-elected President Recep Tayyip Erdogan, is no longer in the Western camp, as was made extraordinarily clear by the Donald’s gratuitously provocative tweet last Friday when he stated that he has authorised a doubling of tariffs on steel and aluminium imports from Turkey.
The choice facing Erdogan is now clear. He can play the orthodox game and raise interest rates aggressively and appoint a new finance minister who is not his son-in-law. Or he can follow the precedent set by Mahathir in Malaysia in 1998 and close the capital account with a view, in Turkey’s case, of obtaining emergency funding from the likes of Russia and China and friends in the Middle East.
The possibility of such a development, in terms of the closure of the capital account or some other form of constraint on convertibility, has grown significantly over the past week given the scale of the Turkish currency’s collapse and the unhelpful reaction from Washington in terms of the threat of Turkey targeted sanctions. Any mooted IMF bailout of Turkey is also likely to have its conditions dictated by America.
Christopher Wood, Managing Director & Equity Strategist, CLSAChristopher Wood, Managing Director & Equity Strategist, CLSA
9:30 AM
IDBI Capital on Lemon Tree Hotels
Lemon Tree Hotels reported a net profit of Rs22mn for 1QFY19, down 80.9% QoQ and up from a loss of Rs31mn in 1QFY18. The decline in earnings on QoQ basis was because of: 1) Decline in other income from Rs78mn in 4QFY18 to Rs19mn in 1QFY19.
However, on YoY basis the company reported positive earnings on account of: 1) Rise in ARR (average revenue per room) from Rs3,373 in 1QFY18 to Rs3,899 in 1QFY19, up 15% YoY. 2) Rise in occupancy rate by 336bps to 76.8% in 1QFY19. Rise in ARR and occupancy rate led RevPar (Revenue Per Available Room) to increase by 19% to Rs2,994. 3) Addition of 678 rooms since 1QFY18. 572 rooms have been added under management contract and 106 rooms have been added under the owned and leased portfolio. We have retained our Buy rating on the stock with a target price of Rs92
Lemon Tree Hotels reported a net profit of Rs22mn for 1QFY19, down 80.9% QoQ and up from a loss of Rs31mn in 1QFY18. The decline in earnings on QoQ basis was because of: 1) Decline in other income from Rs78mn in 4QFY18 to Rs19mn in 1QFY19.
However, on YoY basis the company reported positive earnings on account of: 1) Rise in ARR (average revenue per room) from Rs3,373 in 1QFY18 to Rs3,899 in 1QFY19, up 15% YoY. 2) Rise in occupancy rate by 336bps to 76.8% in 1QFY19. Rise in ARR and occupancy rate led RevPar (Revenue Per Available Room) to increase by 19% to Rs2,994. 3) Addition of 678 rooms since 1QFY18. 572 rooms have been added under management contract and 106 rooms have been added under the owned and leased portfolio. We have retained our Buy rating on the stock with a target price of Rs92
9:25 AM
Nifty sectoral trend
9:20 AM
Top Sensex gainers and losers
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First Published: Aug 17 2018 | 8:15 AM IST
