F&O expiry: Nifty ends Jan series near 21,350; Sensex drops 360 pts
Stock market highlights on January 25, 2024: The frontlines were dragged by Tech M, Axis Bank, Bharti Airtel, HCL Tech, Kotak Bank, HDFC Bank, Wipro, Asian Paints
 "F&O expiry: Nifty ends Jan series near 21,350; Sensex drops 360 pts")
9:08 AM
Pre-Open: Sensex off to subdued start
9:04 AM
Currency Alert: Rupee opens flat at 83.13/$
9:02 AM
Co reported in-line quarter at Ebitda level
Risk-reward looks balanced
Brokerage Report :: CLSA, Morgan Stanley on TVS Motor
MS | Equal-Weight | TP: Rs 1,706
Co reported in-line quarter at Ebitda level
Like co’s focus on premiumization and EVs
Exports recovery, albeit bumpy, seen in near-term, could support margin expansion In FY26
Risk-reward looks balanced
CLSA | Sell | TP: Rs 1,400
Export volume growth could be muted
Margins marginally better than est
Investment in subsidiaries continues to drain cash flow
Valuation appears stretched
8:59 AM
Gross margins surprised positively
Higher capital costs (Depreciation + Interest) resulted in marginal miss at the PAT level
Mgmt noted demand appears to be picking up across segments
Lithium-ion cell plant progressing as per plans
Brokerage Report :: Citi on Exide
Buy | TP: Rs 310
Q3 operational results in-line
Gross margins surprised positively
Higher capital costs (Depreciation + Interest) resulted in marginal miss at the PAT level
Mgmt noted demand appears to be picking up across segments
Mgmt noted input cost pressures have started easing, aiding margins
Lithium-ion cell plant progressing as per plans
8:57 AM
Continue to believe that demand improvement is around the corner
Brokerage Report :: HSBC on Havells
Buy | Target cut to Rs 1,470 per share
Subdued demand from the consumer end market
Higher advertising and promotional expenses impacted Q3 results
Continue to believe that demand improvement is around the corner
Profitable growth should resume from Q4
8:54 AM
Brokerage Report :: Kotak Securities on Pidilite Industries
Add | TP: Rs 2,850
We like the setup: (1) rural is growing at 1.5X urban, aided by distribution expansion, investment in feet-on-street and product range augmentation, (2) growth/pioneer categories (40% salience) are growing faster than the core portfolio, (3) the real estate upcycle can potentially accelerate growth of the core adhesives portfolio starting in FY2025; new construction accounts for 40-45% of sales, and PIDI typically benefits with a lag of 18-24 months in the last stage of project completion and (4) PIDI is comfortably placed on profitability after taking price cuts and doubling A&P spends
PIDI reported a well-rounded 10.4% UVG and a strong EBITDA margin print.
We like the setup: (1) rural is growing at 1.5X urban, aided by distribution expansion, investment in feet-on-street and product range augmentation, (2) growth/pioneer categories (40% salience) are growing faster than the core portfolio, (3) the real estate upcycle can potentially accelerate growth of the core adhesives portfolio starting in FY2025; new construction accounts for 40-45% of sales, and PIDI typically benefits with a lag of 18-24 months in the last stage of project completion and (4) PIDI is comfortably placed on profitability after taking price cuts and doubling A&P spends
8:50 AM
Brokerage Report :: Kotak Securities on Indian Oil
Sell | TP: Rs 120
IOCL reported strong 3Q, with standalone EBITDA of Rs154 bn ((-)27% qoq on a very high base, up 4.3X yoy on a low base), significantly ahead of our estimates led mainly by unexpected large adventitious gains (versus our expectation of large inventory losses).
In our view, with strong 9MFY24 earnings and continued high over-recoveries, there is a strong case for retail price cuts soon, but the timing and quantum of price
In our view, with strong 9MFY24 earnings and continued high over-recoveries, there is a strong case for retail price cuts soon, but the timing and quantum of price
cuts remains uncertain.
The recent run-up in OMCs has been very strong and risk-reward appears unfavorable.
The recent run-up in OMCs has been very strong and risk-reward appears unfavorable.
8:48 AM
Brokerage Report :: Kotak Securities on Bajaj Auto
Sell | TP: Rs 5,000
Bajaj Auto reported Q3FY24 EBITDA of Rs 24.3 bn, which was 2% above our estimates, driven by the richer product mix in the export market and commodity tailwinds.
We expect domestic 2W segment recovery to continue, but downside risks persist (exports), given higher inflation environment and geopolitical tensions.
In our view, current profitability trends are likely to partly reverse, as the mix normalizes.
Maintain SELL, as most positives are priced in at CMP. Valuations remain expensive at 25X FY2025E core EPS.
We expect domestic 2W segment recovery to continue, but downside risks persist (exports), given higher inflation environment and geopolitical tensions.
In our view, current profitability trends are likely to partly reverse, as the mix normalizes.
Maintain SELL, as most positives are priced in at CMP. Valuations remain expensive at 25X FY2025E core EPS.
8:46 AM
Brokerage Report :: Emkay Global on Tech M
Add | TP: Rs 1,450
TechM reported an improved revenue performance in Q3, with 1.1% QoQ in cc, aided by 140bps in a one-off product revenue and Comviva/Retail seasonality.
Reported EBITM expanded by 70bps QoQ to 5.4% (adj. EBITM: 7%), as TechM continued with its portfolio rationalization.
Management highlighted that while the overall demand environment is slightly more positive compared with the last six months, it is too early for any green shoots.
Company is now focused on 3 tracks—revenue, margin improvement, and organization building.
As part of the overall turnaround plan, Management will undertake higher than usual investments to improve the company’s positioning.
After the recent rally in the stock price (up 10%/22% in the last 1M/3M), we see limited near-term upside and opt to wait for the new CEO’s detailed strategy before taking a more constructive view.
TechM reported an improved revenue performance in Q3, with 1.1% QoQ in cc, aided by 140bps in a one-off product revenue and Comviva/Retail seasonality.
Reported EBITM expanded by 70bps QoQ to 5.4% (adj. EBITM: 7%), as TechM continued with its portfolio rationalization.
Management highlighted that while the overall demand environment is slightly more positive compared with the last six months, it is too early for any green shoots.
Company is now focused on 3 tracks—revenue, margin improvement, and organization building.
As part of the overall turnaround plan, Management will undertake higher than usual investments to improve the company’s positioning.
After the recent rally in the stock price (up 10%/22% in the last 1M/3M), we see limited near-term upside and opt to wait for the new CEO’s detailed strategy before taking a more constructive view.
8:43 AM
Brokerage Report :: Emkay Global on Canara Bank
Upgrade to Buy | TP: Rs 550
Canara Bank maintains healthy profitability, at Rs36.6bn, up 27% YoY, and RoA of 1.1%, mainly led by stable margin at 3% and lower LLP, and partly offset by higher staff cost due to wage revision hit (Rs7.5bn, incl. Rs2.5bn for retirement liability).
Adjusted for higher than trending other interest income, NIM is likely to have reduced by 22bps QoQ.
Bank guidance for 2023 NIMs is 2.9-3%, on better cost management and portfolio mix, incl. the high-yielding RAM segment.
Bank has identified 2 subsidiaries for divestment over coming 12M which should supplement its otherwise moderating CET 1 (11.3%).
We revise FY24/25/26 estimates upward by 1%/6%/1.5%, mainly building-in contained provisions and better other income, while we expect healthy RoA/RoE of ~1%/18-20% during FY24-26E (excl. capital raise).
Canara Bank maintains healthy profitability, at Rs36.6bn, up 27% YoY, and RoA of 1.1%, mainly led by stable margin at 3% and lower LLP, and partly offset by higher staff cost due to wage revision hit (Rs7.5bn, incl. Rs2.5bn for retirement liability).
Adjusted for higher than trending other interest income, NIM is likely to have reduced by 22bps QoQ.
Bank guidance for 2023 NIMs is 2.9-3%, on better cost management and portfolio mix, incl. the high-yielding RAM segment.
Bank has identified 2 subsidiaries for divestment over coming 12M which should supplement its otherwise moderating CET 1 (11.3%).
We revise FY24/25/26 estimates upward by 1%/6%/1.5%, mainly building-in contained provisions and better other income, while we expect healthy RoA/RoE of ~1%/18-20% during FY24-26E (excl. capital raise).
8:41 AM
Brokerage Report :: Emkay Global on Indian Oil
Add | TP: Rs 160
IOCL reported a sizable earnings beat in Q3FY24, driven by the inventory gains surprise (refining at USD3.5/bbl vs est. USD2.5 loss). SA adj. EBITDA came in at Rs158.9bn. Core GRM was in line, at USD10/bbl.
Marketing segment could also have logged inventory gains. Blended marketing margin was better, albeit largely offset by higher opex, with core EBITDA being inline.
Domestic sales grew 1% YoY, while diesel was down 6% (below industry). Petchem EBIT turned negative at Rs2bn, due to lower deltas & volumes.
Gross debt grew 7% QoQ to Rs1.06trn.
OMCs remain well-poised in a strong marketing environment, as auto-fuel price-cuts remain elusive, and with nearing general elections and macros being stable.
We raise FY24E EPS 25% and FY25/26E EPS 7-8% each on better refining outlook; retain ADD with revised Dec-24E TP of Rs160/sh.
IOCL reported a sizable earnings beat in Q3FY24, driven by the inventory gains surprise (refining at USD3.5/bbl vs est. USD2.5 loss). SA adj. EBITDA came in at Rs158.9bn. Core GRM was in line, at USD10/bbl.
Marketing segment could also have logged inventory gains. Blended marketing margin was better, albeit largely offset by higher opex, with core EBITDA being inline.
Domestic sales grew 1% YoY, while diesel was down 6% (below industry). Petchem EBIT turned negative at Rs2bn, due to lower deltas & volumes.
Gross debt grew 7% QoQ to Rs1.06trn.
OMCs remain well-poised in a strong marketing environment, as auto-fuel price-cuts remain elusive, and with nearing general elections and macros being stable.
We raise FY24E EPS 25% and FY25/26E EPS 7-8% each on better refining outlook; retain ADD with revised Dec-24E TP of Rs160/sh.
8:39 AM
Stocks to Watch today: Bajaj Auto, Tata Steel, Tech M, TVS Motor, IOC, BoB
Tata Steel: The Tata Group steel major reported a consolidated net profit of Rs 513.37 crore for the quarter ended December 2023 as against a net loss of Rs 2,223.84 crore in the year ago period. Revenue from operations, however, declined 3.1 per cent year-on-year (YoY) to Rs 55,311.88 crore.
Bajaj Auto: Q3FY24 Q3 consolidated net profit jumped 38 per cent to Rs 2,032 crore, beating analyst estimates. Revenue from operations increased by 30 per cent YoY to Rs 12,165 crore. READ MORE
8:36 AM
Nifty Auto, IT indices range-bound on charts; Key levels to watch out for
Similarly, the Nifty Auto Index demonstrates range-bound behavior, fluctuating between 18,866 and 18,175. Traders are encouraged to buy near the lower support levels and sell near resistance until a definitive breakout is witnessed.
This strategy aligns with the market's repetitive movements within the established range. Understanding the dynamics of range-bound markets is crucial for traders seeking to navigate these indices effectively. READ MORE
8:32 AM
ALERT :: Gift Nifty slips 37 points
>> Index trades at 21,441
8:25 AM
Gold falls Rs 50, silver jumps Rs 300; yellow metal trading at Rs 63,000
In Delhi, Bengaluru, and Chennai, the price of ten grams of 24-carat gold stood at Rs 63,150, Rs 63,000, and Rs 63,650, respectively. READ MORE
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First Published: Jan 25 2024 | 7:58 AM IST
