MARKET WRAP: Indices end flat on the last day of Samvat 2074; PCJ tanks 12%

For Samvat 2074, the S&P BSE Sensex recorded a gain of over 7 per cent

8:40 AM

Rupee check

 

After two sessions of massive gains, the Indian rupee on Monday again tumbled by 67 paise to close at 73.12 against the US dollar on increased demand for the American currency from importers and unabated foreign fund outflows.

8:38 AM

Centrum on L&T Finance Holdings (LTFH)

Post out last update (Outperformer @ Rs176 on 31 Jul’18), the stock of LTFH has corrected by about 23% on concerns of possible increase in NPAs considering their exposure to risky assets. However, with the management clarifying about the quality of the projects and the excess provisioning created by the company, there seems to be limited stress on the P&L going forward.

Hence, with LTFH staying focused on increasing their non-wholesale book and remaining selective in the profitable wholesale segments builds our confidence in future numbers. Over FY18-20E, we expect ~29% loan book CAGR with return ratios increasing to 2.6% RoA and 20.3% RoE by FY20E. We remain positive on the stock of LTFH with a target price of Rs175/share on SOTP basis (1.8x its FY20E ABV and Rs20/share for investment and wealth businesses).

 

8:37 AM

Edelweiss on SAIL

Steel Authority of India (SAIL) reported lower-than-consensus Q2FY19 EBITDA of INR23.7bn. Key highlights: 1) Lower-than-expected sales/production volume owing to disruptions at the Bhilai and IISCO plants. 2) EBITDA/t at INR6,796, up 163% YoY; 3) Blended realisation shot up 25% YoY to INR 48,040/t; and 4) Debt inched down 3% QoQ to INR 46.3bn. Going ahead, we see the following positives: 1) EBITDA/t to sustain within INR7,700–8,300/t on capacity ramp-up and an improved product mix; 2) wage cost likely to slide to INR 83–84bn; and 3) net debt likely to remain in check. We broadly maintain FY19E/FY20 estimate. Maintain ‘BUY’ with an unchanged target price of Rs 87, implying an exit multiple of 5.7x

8:37 AM

Edelweiss on JSW Energy

JSW Energy’s (JSW) robust 9% generation growth was undone by higher fuel costs, leading to 5% EBITDA miss. Importantly, the company bought another 230MW capacity under long-term PPA via group captives, thus cutting its exposure to the merchant market and improving cash flow predictability.

We like JSW’s strong balance sheet (D/E-0.9x)—the best in the industry—placing it on a strong footing for inorganic growth expansion during the forthcoming bidding under NCLT. However, our cautious stance stems essentially from its entry in the still evolving EV business. Maintain ‘HOLD’ with target price of Rs 72

8:36 AM

Jefferies on PNB Housing

2Q PAT rose 33.2% YoY to Rs2.53bn, 8% miss vs. our estimate due to higher credit cost and tax. Loan disbursal moderated in 2Q. ALM gap exists but CP mix fell in 2Q. We expect ALM mismatch (<1 yr), higher CP mix to affect loan growth and spreads. EPS growth should decelerate and RoA may be capped. Asset quality is stable, but exposure to stressed developer segment is a risk. Stake sale overhang persist, but at 1.7x FY20E BV, we see limited downside. Hold

8:35 AM

COMMODITY WATCH Oil prices dip on worries of economic slowdown, Iran sanctions, trade war

Oil prices dipped on Tuesday as concerns that an economic slowdown may curb fuel demand growth overshadowed the reintroduction of sanctions on Iran. U.S. West Texas Intermediate (WTI) crude futures were at $62.93 a barrel at 0021 GMT, down 17 cents, or 0.3 per cent, from their last settlement READ MORE

8:33 AM

Jefferies on Gateway

We underestimated the weak container volume growth impact between FY16-19E on Gateway Distriparks (Gateway) financials. Given the small scale, Gateway saw some market share loss and 20% profit decline between FY16-18. Stock has underperformed 51% in the last 12 months. DFC delay, higher interest cost on debt for Blackstone deal has led to the sharp cut in our estimates. We still believe the medium-term is strong and maintain Buy with a price target of Rs310 (v/s Rs400).

8:32 AM

Jefferies on Pipavav

We met Pipavav's management to discuss business operations. We find management's cost control and high payout ratio commendable. However, the port has posted negative volume growth vs Mundra's +6% in FY16-18. Our downgrade is a year late as our expectation that the parent’s management change would drive India volumes did not materialise. Our sharp EPS cut reflects lower EBITDA. We see limited upside to our price target of Rs105 (vs Rs175) and downgrade to Hold from Buy

8:32 AM

IDBI Capital on Cipla

Cipla’s Q2FY19 sales at Rs40bn were 3.6% above our expectations while EBITDA/PAT at Rs7bn/Rs3.8bn were 0.3%/12.5% below our expectations. Domestic business was down 0.1% YoY  impacted by 1) higher base due to restocking post GST implementation and 2) Q2FY18 experienced a strong acute season while there is a delay during this season.  

 

We have revised upwards our USD currency estimates from 68 to 70 for FY19/20E, however, given concerns on sales pickup in 1) US, 2) Global API and 3) SAGA, we have revised downwards our sales estimates. We expect Cipla’s sales/EBITDA/net profit to grow at a CAGR of 10.7%/17%/23.5%, respectively, over FY18-20E

8:31 AM

IDBI Capital on Gail India

GAIL’s Q2FY19 results have been a beat at all front on the back of robust performance from gas transmission and gas trading segment. EBITDA and PAT increased by 41.5%/49.9% YoY to reach at all time high levels of Rs29/19bn respectively mainly driven by robust profits from gas trading business and pipeline tariff revision. The company also included Rs2 bn on upward tariff revision for H1FY19 and one-time take or pay settlement of Rs1.3 bn which boosted profits.

Gas trading volume grew 14% YoY to 96mmscmd whereas gas transmission volume remained flattish YoY to 106mmscmd.  We are raising our EPS estimates by 18%/14% in FY19E/FY20E led by new transmission tariff and better show from marketing business. Therefore, we are raising SOTP-based target price to Rs428 from Rs416. Maintain BUY

8:30 AM

SGX Nifty

 

Trends on SGX Nifty indicate a positive opening for the broader index in India, a rise of 35 points or 0.33 per cent. Nifty futures were trading around 10,595-level on the Singaporean Exchange.

8:28 AM

Religare Securities on rupee

On the weekly charts, the RSI is giving signals of a short term correction in the USDINR pair. On the downside, the pair has support at 71.50 followed by 71.00 mark. On the upside 74.50 seems to be a strong resistance area. The likely scenario is that after an intermittent pull back up to 73.80 (spot) levels, the pair will again face selling pressure and witness a decline towards 71.50 (spot), mark from where it is likely to go in to a consolidation phase within a broader range of 74.50 and 71.50(spot). 

8:25 AM

Asian markets inch up

 

Asian shares ticked up in early Tuesday trade, supported by Wall Street gains although sentiment was tempered ahead of the US midterm elections, the first major electoral test of President Donald Trump’s big tax cuts and hostile trade policies. MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.15 per cent while Japan's Nikkei gained 0.5 per cent, a day after both fell more than one per cent.

8:22 AM

Wall Street boosted by financials, energy, defensive sectors

 

The S&P 500 rose on Monday with boosts from financial, energy and defensive sectors as investors showed some caution on the eve of US congressional elections. The Dow Jones Industrial Average rose 190.87 points, or 0.76 per cent, to 25,461.7, the S&P 500 gained 15.25 points, or 0.56 per cent, to 2,738.31 and the Nasdaq Composite dropped 28.14 points, or 0.38 per cent, to 7,328.85.

8:15 AM

Good Morning!

 

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