MARKET WRAP: Sensex slides 464 points; NBFCs plunge, India VIX surges 11%
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SMEs at large do not understand forex and the concept of hedging, which banks often exploit. (Photo: iStock)
Benchmark indices Sensex and Nifty ended over 1 per cent lower on Friday, dragged by fall in blue-chip companies such as Reliance Industries (RIL), Infosys and YES Bank amid muted global cues. The S&P BSE Sensex ended 464 points or 1.33 per cent down at 34,316 while NSE’s Nifty50 index settled at 10,303.55, down 150 points or 1.43 per cent.
Stock markets all round were a bit lackluster: data showing China’s economy growing at its slowest pace since 2009 weighed on shares in Asia, although Chinese shares staged a recovery after the securities regulator announced a series of measures to aid the market.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up less than 0.l per cent after earlier falling as much as 0.9 percent ahead of the China GDP reading. Australian shares fell 0.05 per cent and Japan’s Nikkei average ended 0.6 per cent lower for its third straight week of declines. Stocks in Europe managed a modest rise at the start of trading but fell back into the red.
Back home, among individual stocks, RIL dipped as much 7 per cent to Rs 1,073 on the BSE in the intra-day trade after a mixed bag results for the quarter ended September 2018 (Q2FY19) with its retail and digital services (telecom; Jio) businesses continuing to post strong growth, while its core refining business performance was a bit disappointing amid high expectations. The stock ended at Rs 1,102 apiece on BSE, down 4 per cent.
YES Bank also dropped as much as 8 per cent in the intra-day trade after the Reserve Bank of India (RBI) on Wednesday once again rejected the lender’s request for extending the term of MD & CEO Rana Kapoor, and reaffirmed the February deadline for finding his successor. Shares of the bank ended at Rs 218, down 6 per cent.
NBFCs tank
Shares of non-banking financial companies (NBFCs), including housing finance companies (HFCs) and select private banks tumbled for the second straight day. Among individual stocks, Dewan Housing Finance Corporation (DHFL), Indiabulls Housing Finance and PNB Housing Finance slipped over 17 per cent on Friday on concerns of overall credit growth due to the liquidity crisis. READ MORE HERE
(with Reuters input)
3:51 PM
Sectoral gainers & losers on NSE
3:50 PM
S&P BSE Sensex: Top gainers & losers on BSE
3:39 PM
Market at close
The S&P BSE Sensex ended 464 points or 1.33 per cent down at 34,316 while NSE’s Nifty50 index ended at 10,304, down 150 pts, or 1.43 per cent.
3:15 PM
Buzzing Stock
Lakshmi Vilas Bank jumps 16%
Lakshmi Vilas Bank jumps 16%
2:45 PM
HDFC Securities on DCB Bank
DCBB’s 2Q results were impressive, particularly, the stable asset quality (esp. in the mortgage business) on account of lower slippages, sustained business momentum (+27%), controlled costs (core C-I improved ~360bps) and further decline in provisions (even as PCR inched up). RWA remained constant even as the loan book grew 4% QoQ. While the CASA ratio dipped QoQ, 30% SA growth was promising.
While we have marginally tweaked our estimates, our assumptions on opex growth (18% CAGR) and NIMs (3.7% over FY18-21E) provide enough cushion to our earnings. Maintain BUY with a TP of 209 (2x Sept-20E ABV of Rs 104).
2:19 PM
Buzzing stocks
IT shares trade weak; TCS hits 3-mth low, Infosys, HCL Tech down 4% each
The Trump administration has said it is coming out with new proposals to not only revise the definition of speciality occupations under H-1B visas, but also the definition of employment under this foreign work visa category which is popular among Indian companies, the PTI report suggested. READ MORE
2:17 PM
Top losers today
» More on Top Losers
| COMPANY | PRICE() | CHG() | CHG(%) | VOLUME |
| PNB HOUSING | 722.90 | -144.65 | -16.67 | 158193 |
| MINDTREE | 830.00 | -148.95 | -15.22 | 390784 |
| INDIABULLS HOUS. | 673.25 | -115.60 | -14.65 | 2443856 |
| PIRAMAL ENTERP. | 1885.35 | -213.60 | -10.18 | 168920 |
| REPCO HOME FIN | 307.00 | -34.40 | -10.08 | 173737 |
2:09 PM
Centrum Broking on ACC
During Q3CY18, ACC delivered 10% YoY volume growth aided by strong demand – mainly in east and south markets. However, realisation fell 1.7% QoQ amid aggressive competition and seasonal weakness. ACC’s productivity improvement muted inflationary impact of slag, energy and diesel price inflation. Consolidated EBITDA/PAT growth of 8%/17% YoY came is lower than estimated, owing to higher than estimated other expenses.
We believe ACC’s focus on cost controls to keep cost inflation in check, going forward. While ACC’s volume growth would moderate during CY19-20E due to lack of new expansions, its profitability should benefit from price recovery going forward and increased cost controls. We upgrade to BUY from HOLD, with a revised target price of Rs1820
During Q3CY18, ACC delivered 10% YoY volume growth aided by strong demand – mainly in east and south markets. However, realisation fell 1.7% QoQ amid aggressive competition and seasonal weakness. ACC’s productivity improvement muted inflationary impact of slag, energy and diesel price inflation. Consolidated EBITDA/PAT growth of 8%/17% YoY came is lower than estimated, owing to higher than estimated other expenses.
We believe ACC’s focus on cost controls to keep cost inflation in check, going forward. While ACC’s volume growth would moderate during CY19-20E due to lack of new expansions, its profitability should benefit from price recovery going forward and increased cost controls. We upgrade to BUY from HOLD, with a revised target price of Rs1820
2:08 PM
YES Bank, RIL among top Sensex losers
2:02 PM
Markets plunge
> More on BSE Indices
| INDEX | LATEST | PREVIOUS | CHANGE | CHANGE(%) |
|---|---|---|---|---|
| BSE SENSEX | 34218.47 | 34779.58 | -561.11 | -1.61 |
| BSE 500 | 13670.73 | 13887.26 | -216.53 | -1.56 |
| BSE MID-CAP | 14048.42 | 14214.23 | -165.81 | -1.17 |
| BSE SMALL-CAP | 14040.55 | 14271.16 | -230.61 | -1.62 |
| S&P BSE LARGECAP | 3974.77 | 4040.67 | -65.90 | -1.63 |
2:00 PM
Kotak Securities on cable providers
RIL’s acquisition of Hathway and Den paves the way for the accelerated rollout of Jio’s FTTH broadband + IPTV. Jio can potentially add 15 mn FTTH subs in the next three years. Key implications: (1) acceleration in TV-to-OTT shift led by proliferation of ultra-high-speed fixed-line internet, (2) deceleration in broadcasters’ subscription revenue growth due to consolidation of distributors, ARPU-dilutive churn of subs to Jio from DTH, (3) risk to subscriber and ARPU growth of DTH in urban markets. We cut Dish TV’s FY2020-21E EBITDA by 5-10% and target price to Rs70 (from Rs90); ADD.
RIL’s acquisition of Hathway and Den paves the way for the accelerated rollout of Jio’s FTTH broadband + IPTV. Jio can potentially add 15 mn FTTH subs in the next three years. Key implications: (1) acceleration in TV-to-OTT shift led by proliferation of ultra-high-speed fixed-line internet, (2) deceleration in broadcasters’ subscription revenue growth due to consolidation of distributors, ARPU-dilutive churn of subs to Jio from DTH, (3) risk to subscriber and ARPU growth of DTH in urban markets. We cut Dish TV’s FY2020-21E EBITDA by 5-10% and target price to Rs70 (from Rs90); ADD.
1:59 PM
SMC Global on Bajaj Corp
With good cash on hand and zero debt, the company is gaining in its light hair oil category which is premium hair oil. It has increased number of distributors in rural areas. Actions done in the past such as increase in distribution and direct dealer network have resulted in increase in volumes better than the industry.
The management of the company aims to continue to launch new products. Immediate launches will be in hair oil and skin care. Currently it has new launches in related category products and aims to use cash for acquisition to leverage the strong distribution. Thus we expect the stock to see a price target of Rs 450 in 8 to 10 months time frame 2 year average P/Ex of 27.84 and FY19 (E) earnings of Rs16.17.
The management of the company aims to continue to launch new products. Immediate launches will be in hair oil and skin care. Currently it has new launches in related category products and aims to use cash for acquisition to leverage the strong distribution. Thus we expect the stock to see a price target of Rs 450 in 8 to 10 months time frame 2 year average P/Ex of 27.84 and FY19 (E) earnings of Rs16.17.
1:58 PM
SMC Global on NIIT Technologies
On the back of strong order pipeline, experienced senior management team and energised sales force, it is expected that the momentum of robust performance will continue. Over the past few years, the company has been shifting gears and in recent quarters, it has transformed completely to engage with the emerging.
The business from digital has been accelerating and has grown 38% YoY and represents 28% of overall revenue. Thus, it is expected that the stock will see a price target of Rs.1458 in 8 to 10 months time frame on a target P/E of 24x and FY19 (E) earnings of Rs.60.76.
The business from digital has been accelerating and has grown 38% YoY and represents 28% of overall revenue. Thus, it is expected that the stock will see a price target of Rs.1458 in 8 to 10 months time frame on a target P/E of 24x and FY19 (E) earnings of Rs.60.76.
1:57 PM
Anand Rathi on Cyient
Cyient's Q2 revenue was $169m (up 4.9% q/q, 12.5% y/y). Services grew 3.5% q/q in CC (2.6% org.) and 2.1% in dollar terms, with growth driven by the non-top10 accounts. Some ramp-ups were delayed to Q3; FY19?s 10%+ growth target retained. DLM held to high, 45%y/y, growth.
The EBITDA margin was up 152bps q/q to 13.7%, though down 90bps y/y, incl. the NBA impact. No change in revenue guidance but margin guidance raised 50bps for currency (`72/$) and on the expected higher contribution from services in H2. No meaningful change in estimates (excl. GoI incentives in other income). Target revised to Rs 820 (16x FY21e, from 18x FY20e).
Cyient's Q2 revenue was $169m (up 4.9% q/q, 12.5% y/y). Services grew 3.5% q/q in CC (2.6% org.) and 2.1% in dollar terms, with growth driven by the non-top10 accounts. Some ramp-ups were delayed to Q3; FY19?s 10%+ growth target retained. DLM held to high, 45%y/y, growth.
The EBITDA margin was up 152bps q/q to 13.7%, though down 90bps y/y, incl. the NBA impact. No change in revenue guidance but margin guidance raised 50bps for currency (`72/$) and on the expected higher contribution from services in H2. No meaningful change in estimates (excl. GoI incentives in other income). Target revised to Rs 820 (16x FY21e, from 18x FY20e).
1:56 PM
Centrum on DCB Bank
We retain BUY on DCB Bank (DCBB) with target price at Rs205. Q2’19 results were strong on many counts – robust loan growth, healthy core operating profit, limited slippages and higher than expected NII / PAT. NIM (reported) declined 7bps QoQ; we expect trend in NIM to reverse in H2FY19. Cost / asset ratio declined further to 2.6% (vs. 2.9% for FY18) and re-affirms our thesis of improved branch productivity.
Continued traction will aid in increased profitability. Capital position remains strong; management has guided for prudent capital consumption with greater focus at risk-adjusted RoEs. Valuations at 1.6x FY20E ABV for an exit RoE of ~14% by end-FY20E remain attractive. Retain BUY
We retain BUY on DCB Bank (DCBB) with target price at Rs205. Q2’19 results were strong on many counts – robust loan growth, healthy core operating profit, limited slippages and higher than expected NII / PAT. NIM (reported) declined 7bps QoQ; we expect trend in NIM to reverse in H2FY19. Cost / asset ratio declined further to 2.6% (vs. 2.9% for FY18) and re-affirms our thesis of improved branch productivity.
Continued traction will aid in increased profitability. Capital position remains strong; management has guided for prudent capital consumption with greater focus at risk-adjusted RoEs. Valuations at 1.6x FY20E ABV for an exit RoE of ~14% by end-FY20E remain attractive. Retain BUY
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First Published: Oct 19 2018 | 8:06 AM IST
