Market Outlook. Market Cues. News Analysis. Investor s Ready Reckoner. Top Picks. Key Upcoming Events. January 04, 2018

Transcription

1 Market Cues Indian markets are likely to open positive tracking global indices and SGX Nifty. US Stocks moved mostly higher during the trading, adding to the gains posted in the previous session. With the continued upward move on the day, the major averages climbed to new record closing highs. The continued strength on Wall Street came as upbeat data added to recent optimism about the economic outlook. The Dow Jones is up 0.4% to close at 24,923 and the Nasdaq Composite or 0.8%, to 7,066. Domestic Indices Chg (Pts) (Close) BSE Sensex (0.1) (19) 33,793 Nifty ,443 Mid Cap ,819 Small Cap ,345 Bankex ,633 U.K. shares were marginally lower in choppy trade as the pound held firm amid broad dollar weakness, offsetting an upbeat trading update from clothing retailer Next Plc. The FTSE 100 is up by 0.3% to close at 7,671. On domestic front, Indian shares gave up earlier gains to finish on a flat note despite firm cues from global markets. The Sensex ended on a flat note at 33,793, having a slightly downside of 0.1%. The Nifty ended at 10,443. News Analysis VST Tillers Tractors surges 9% on strong December sales Detailed analysis on Pg2 Investor s Ready Reckoner Key Domestic & Global Indicators Stock Watch: Latest investment recommendations on 150+ stocks Refer Pg5 onwards Top Picks Company Sector Rating CMP (`) Target (`) Upside Blue Star Capital Goods Accumulate Dewan Housing Finance Financials Buy Asian Granito Other Accumulate Navkar Corporation Other Buy KEI Industries Capital Goods Buy More Top Picks on Pg4 Key Upcoming Events Date Region Event Description Previous Reading Consensus Expectations Jan04 US Initial Jobless claims Jan04 US Change in Nonfarm payrolls Jan05 Germany PMI Services Jan05 US Unnemployment rate Jan08 India Imports YoY% More Events on Pg7 Global Indices Chg (Pts) (Close) Dow Jones ,923 Nasdaq ,066 FTSE ,671 Nikkei ,300 Hang Seng ,600 Shanghai Com ,376 Advances / Declines BSE NSE Advances 1,894 1,182 Declines 1, Unchanged Volumes (` Cr) BSE 4,784 NSE 33,291 Net Inflows (` Cr) Net Mtd Ytd FII *MFs 1,012 6,114 1,16,352 Top Gainers Price (`) Chg Il&Fstrans Bajajelec Jindalstel Adanient Navkarcorp Top Losers Price (`) Chg Rcom 31 (5.6) Beml 1,524 (3.4) Cox&Kings 268 (3.0) Drreddy 2,336 (3.0) Wipro 310 (2.7) As on January

2 News Analysis VST Tillers Tractors surges 9% on strong December sales The company recorded a strong sales growth of 79% at 3,615 units in the month of December It had sold total 2,018 units in December 2016 and 2,922 units in November 2017.The sales of power tillers more-than-doubled as the company has sold 3,004 units of power tillers for the month, against 1,407 units sold in the same month last year. Tractors sales of the company remained unchanged at 611 units in both the months. VST Tillers Tractors was promoted by VST Motors as a joint venture with Mitsubishi Heavy Industries Ltd, Japan. The company is now the largest manufacturer of power tillers in India. Economic and Political News Railways set Dec 2018 as target to link locomotives via ISRO satellites. Government initiating programmes under Digital India for IT sector growth. Govt approves Rs 53bn Jal Vikas Marg Project on NW 1; completion by 2023 Corporate News SRL becomes first diagnostics firm to record Rs 10 billion in revenue SAP integrates Concur to deliver connected experiences to customers Mahindra tractor sales up 30% in December at 18,288 units NALCO lines up 3 projects, invests Rs 250bn Flipkart's logistics arm Ekart Logistics raises Rs 16 bn from Klick2Shop

3 Top Picks HHHHH Company Market Cap (` Cr) CMP (`) Target (`) Upside Alkem Laboratories 26,460 2,213 2, Asian Granito 1, Blue Star 7, Dewan Housing Finance 18, Karur Vysya Bank 8, KEI Industries 2, Music Broadcast 2, Navkar Corporation 3, Siyaram Silk Mills 3, TV Today Network 2, Maruti Suzuki 2,84,461 9,417 10, GIC Housing 2, Century Plyboards India 7, LT Foods 3, Ruchira Papers Rationale Strong growth in domestic business due to its leade`hip in acute therapeutic segment. Alkem expects to launch more products in USA, which bodes for its international business. We expect the company would report strong profitability owing to better product mix, higher B2C sales and amalgamation synergy. Favorable outlook for the AC industry to augur well for Cooling products business which is out pacing the market growth. EMPPAC division's profitability to improve once operating environment turns around. With a focus on the low and medium income (LMI) consumer segment, the company has increased its presence in tier-ii & III cities where the growth opportunity is immense. Loan growth is likely to pick up after a sluggish FY17. Lower credit cost will help in strong bottom-line growth. Increasing share of CASA will help in NIM improvement. High order book execution in EPC segment, rising B2C sales and higher exports to boost the revenues and profitability Expected to benefit from the lower capex requirement and 15 year long radio broadcast licensing. Massive capacity expansion along with rail advantage at ICD as well CFS augur well for the company Strong brands and distribution network would boost growth going ahead. Stock currently trades at an inexpensive valuation. Market leadership in Hindi news genre and no. 2 viewership ranking in English news genre, exit from the radio business, and anticipated growth in ad spends by corporate to benefit the stock. After GST, the company is expected to see higher volumes along with improving product mix. The Gujarat plant will also enable higher operating leverage which will be margin accretive. We expect loan book to grow at 24.3% over next two year; change in borrowing mix will help in NIM improvement We expect CPIL to report net Revenue/PAT CAGR of ~17%/16% over FY E mainly due to healthy growth in plywood & lamination business, forayed into MDF & Particle boards on back of strong brand & distribution network. We expect sales/pat to grow at 13.5%/20% over next two years on the back of strong distribution network & addition of new products in portfolio. We expect sales/pat to grow at 13%/16% over next two years on the back of strong healthy demand in writing & printing paper and Kraft paper. Further, China had banned making paper from waste pulp which would benefit Indian paper companies. Source: Company, Angel Research

4 Key Upcoming Events Global economic events release calendar Bloomberg Data Date Time Country Event Description Unit Period Last Reported Estimated Jan 04, :25 PM Germany Unemployment change (000's) Thousands Dec (18.00) (13.00) 2:25 PM Germany PMI Services Value Dec F Jan 05, :30 PM Euro Zone Euro-Zone Consumer Confidence Value Dec F :00 PM US Change in N onfarm payrolls Thousands Dec Jan 08, :00 PM US Unnemployment rate % Dec Jan 10, :00 PM UK Industrial Production (YoY) % Change Nov 3.60 India Imports YoY% % Change Dec India Exports YoY% % Change Dec :00 AM China Consumer Price Index (YoY) % Change Dec Jan 11, 2018 US Producer Price Index (mom) % Change Dec 1.40 Jan 12, 2018 China Exports YoY% % Change Dec :00 PM US Consumer price index (mom) % Change Dec Jan 15, : 00 PM India Monthly Wholesale Prices YoY% % Change Dec 3.93 Jan 16, :00 PM UK CPI (YoY) % Change Dec 3.10 Jan 17, :45 PM US Industrial Production % Dec :30 PM Euro Zone Euro-Zone CPI (YoY) % Dec F 1.50 Jan 18, :00 PM US Housing Starts Thousands Dec 1, :00 PM US Building permits Thousands Dec 1, :30 AM China Industrial Production (YoY) % Change Dec :30 AM China Real GDP (YoY) % Change 4Q 6.80 Jan 24, :30 PM US Existing home sales Million Dec :00 PM UK Jobless claims change % Change Dec 5.90 Jan 25, :30 PM US New home sales Thousands Dec :15 PM Euro Zone ECB announces interest rates % Jan 25 - Source: Bloomberg, Angel Research ngelbr oki ng.c o m

5 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Nov-16 Dec-16 Jan-17 Jan-17 Feb-17 Mar-17 Mar-17 Apr-17 May-17 May-17 Jun-17 Jul-17 Aug-17 Aug-17 Sep-17 Oct-17 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Macro watch Exhibit 1: Quarterly GDP trends Exhibit 2: IIP trends (1.0) (0.3) Source: CSO, Angel Research Source: MOSPI, Angel Research Exhibit 3: Monthly CPI inflation trends Exhibit 4: Manufacturing and services PMI Mfg. PMI Services PMI Source: MOSPI, Angel Research Source: Market, Angel Research; Note: Level above 50 indicates expansion Exhibit 5: Exports and imports growth trends Exhibit 6: Key policy rates 60.0 Exports yoy growth Imports yoy growth 6.50 Repo rate Reverse Repo rate CRR (10.0) 3.00 Source: Bloomberg, Angel Research Source: RBI, Angel Research ngelbr oki ng.c o m

6 Brazil Russia India China South Africa Indonesia Malaysia Thailand UK USA Germany France Japan Brazil Russia India China South Africa Indonesia Malaysia Thailand UK USA Germany France Japan Brazil Russia India China South Africa Indonesia Malaysia Thailand UK USA Germany France Japan Global watch Exhibit 1: Latest quarterly GDP Growth (%, yoy) across select developing and developed countries Source: Bloomberg, Angel Research Exhibit 2: 2017 GDP Growth projection by IMF (%, yoy) across select developing and developed countries Source: IMF, Angel Research Exhibit 3: One year forward P-E ratio across select developing and developed countries (x) Source: IMF, Angel Research ngelbr oki ng.c o m

7 Exhibit 4: Relative performance of indices across globe Returns Country Name of index Closing price 1M 3M 1YR Brazil Bovespa 77, Russia Micex 2, (4.9) India Nifty 10, China Shanghai Composite 3, South Africa Top 40 52,832 (2.1) Mexico Mexbol 49, (0.7) 7.9 Indonesia LQ45 1, Malaysia KLCI 1, Thailand SET 50 1, USA Dow Jones 24, UK FTSE 7, Japan Nikkei 22, Germany DAX 12,978 (0.6) France CAC 5,331 (1.2) (0.4) 9.1 Source: Bloomberg, Angel Research p68in4 ngelbr oki ng.c o m

8 Stock Watch Company Name Reco CMP Target Mkt Cap Sales ( cr ) OPM EPS ( ) PER(x) P/BV(x) RoE EV/Sales(x) Agri / Agri Chemical ( ) Price ( ) ( cr ) FY18E FY19E FY18E FY19E FY18E FY19E FY18E FY19E FY18E FY19E FY18E FY19E FY18E FY19E Rallis Sell ,245 1,873 2, United Phosphorus Accumulate ,415 18,922 21, Auto & Auto Ancillary Ashok Leyland Neutral ,442 23,339 27, Bajaj Auto Neutral 3,247-93,970 23,936 27, Bharat Forge Buy ,097 7,637 8, Eicher Motors Neutral 28,814-78,481 19,043 22, , Gabriel India Neutral 198-2,843 1,782 2, Hero Motocorp Accumulate 3,751 4,129 74,919 32,239 36, Jamna Auto Industries Neutral 81-3,222 1,441 1, Mahindra and Mahindra Neutral ,818 46,971 53, Maruti Accumulate 9,417 10, ,461 79,470 95, Minda Industries Neutral 1,253-10,831 4,328 5, Motherson Sumi Neutral ,681 55,937 64, Tata Motors Neutral , , , TVS Motor Neutral ,601 13,992 16, Amara Raja Batteries Neutral ,452 6,140 7, Exide Industries Neutral ,951 8,689 9, Apollo Tyres Neutral ,437 15,739 17, Ceat Neutral 1,947-7,874 6,661 7, JK Tyres Neutral 149-3,369 8,318 9, Swaraj Engines Neutral 2,148-2, Subros Neutral 308-1,847 1,855 2, Capital Goods BEML Neutral 1,524-6,345 4,286 5, Bharat Electronics Neutral ,484 10,258 12, Voltas Neutral ,238 6,778 8, BHEL Neutral 98-36,072 33,200 39, Blue Star Accumulate ,843 5,220 6, CG Power and Industrial Neutral 91-5,716 6,555 7, , Solutions Greaves Cotton Neutral 140-3,419 1,778 1,

9 Stock Watch Company Name Reco CMP Target Mkt Cap Sales ( cr ) OPM EPS ( ) PER(x) P/BV(x) RoE EV/Sales(x) Capital Goods ( ) Price ( ) ( cr ) FY18E FY19E FY18E FY19E FY18E FY19E FY18E FY19E FY18E FY19E FY18E FY19E FY18E FY19E KEC International Neutral 373-9,579 9,779 11, KEI Industries Buy ,955 3,001 3, Thermax Neutral 1,237-14,735 4,125 4, VATech Wabag Accumulate ,454 3,867 4, Cement ACC Neutral 1,770-33,239 12,255 13, Ambuja Cements Neutral ,059 10,250 11, India Cements Neutral 187-5,759 6,135 6, JK Cement Neutral 1,116-7,800 4,150 4, J K Lakshmi Cement Neutral 442-5,206 3,422 3, Orient Cement Neutral 169-3,458 2,215 3, Prism Cement Accumulate ,824 5,155 5, UltraTech Cement Neutral 4, ,906 28,250 35, Construction KNR Constructions Neutral 313-4,401 1,846 2, Larsen & Toubro Neutral 1, ,793 95, , Gujarat Pipavav Port Neutral 138-6, PNC Infratech Neutral 206-5,276 2,040 2, Simplex Infra Neutral 584-2,888 6,012 6, Sadbhav Engineering Neutral 417-7,158 3,823 4, NBCC Neutral ,911 9,099 12, MEP Infra Neutral 100-1,621 2,403 2, SIPL Neutral 144-5,063 2,060 2, (5.8) (3.1) (14.2) (2.3) Engineers India Neutral ,440 1,795 2, Financials Axis Bank Neutral ,667 32,558 35, Bank of Baroda Neutral ,337 22,533 26, Canara Bank Neutral ,093 17,925 20, Can Fin Homes Neutral 476-6, Cholamandalam Inv. & Neutral Fin. Co. 1,307-20,423 2,826 3, Dewan Housing Finance Buy ,429 2,676 3, Equitas Holdings Buy ,919 1,125 1,

10 Stock Watch Company Name Reco CMP Target Mkt Cap Sales ( cr ) OPM EPS ( ) PER(x) P/BV(x) RoE EV/Sales(x) Financials ( ) Price ( ) ( cr ) FY18E FY19E FY18E FY19E FY18E FY19E FY18E FY19E FY18E FY19E FY18E FY19E FY18E FY19E Federal Bank Buy ,186 4,896 5, GIC Housing Buy , HDFC Bank Neutral 1, ,859 55,236 63, ICICI Bank Neutral ,327 42,361 51, Karur Vysya Bank Buy ,739 3,289 3, LIC Housing Finance Accumulate ,612 4,895 6, Punjab Natl.Bank Neutral ,459 23,708 25, RBL Bank Neutral ,482 2,309 2, Repco Home Finance Buy , South Ind.Bank Neutral 31-5,625 3,195 3, St Bk of India Neutral , , , Union Bank Neutral ,250 14,650 16, Yes Bank Neutral ,594 11,088 13, FMCG Akzo Nobel India Neutral 1,855-8,897 3,164 3, Asian Paints Neutral 1, ,454 17,603 20, , , Britannia Neutral 4,665-56,009 9,690 11, Colgate Neutral 1,096-29,816 4,420 5, Dabur India Neutral ,375 8,346 9, GlaxoSmith Con* Neutral 6,390-26,872 5,072 5, Godrej Consumer Neutral ,104 10,171 11, HUL Neutral 1, ,226 37,077 41, , , ITC Neutral ,171 44,588 49, Marico Neutral ,466 6,788 7, Nestle* Neutral 7,855-75,738 10,083 11, Tata Global Neutral ,641 7,121 7, Procter & Gamble Hygiene Neutral 9,400-30,513 3,034 3, IT HCL Tech^ Accumulate 897 1, ,972 50,009 54, Infosys Accumulate 1,019 1, ,087 70,333 75, TCS Reduce 2,635 2, , , ,

11 Stock Watch Company Name Reco CMP Target Mkt Cap Sales ( cr ) OPM EPS ( ) PER(x) P/BV(x) RoE EV/Sales(x) IT ( ) Price ( ) ( cr ) FY18E FY19E FY18E FY19E FY18E FY19E FY18E FY19E FY18E FY19E FY18E FY19E FY18E FY19E Tech Mahindra Neutral ,726 30,545 32, Wipro Neutral ,965 54,164 56, Media D B Corp Neutral 354-6,522 2,404 2, HT Media Neutral 103-2,386 2,589 2, Jagran Prakashan Buy ,588 2,541 2, Sun TV Network Neutral 1,003-39,507 3,238 3, Hindustan Media Ventures Neutral 255-1,870 1,002 1, TV Today Network Buy , Music Broadcast Limited Accumulate , Metals & Mining Coal India Neutral ,028 82,301 91, Hind. Zinc Neutral ,809 22,108 24, Hindalco Neutral , , , JSW Steel Neutral ,830 64,500 68, NMDC Neutral ,205 10,209 11, SAIL Neutral 94-38,740 54,100 63, (10.0) Vedanta Neutral ,597 81,206 87, Tata Steel Neutral , , , Oil & Gas GAIL Neutral ,051 53,115 52, ONGC Neutral ,580 83,111 84, Indian Oil Corp Neutral , , , Reliance Industries Neutral , , , Pharmaceuticals Alembic Pharma Accumulate ,872 3,346 3, Alkem Laboratories Ltd Accumulate 2,213 2,341 26,460 6,320 7, Aurobindo Pharma Buy ,049 17,086 19, Aventis* Neutral 4,651-10,712 2,411 2, Cadila Healthcare Neutral ,796 11,365 12, Cipla Sell ,864 16,163 18, Dr Reddy's Reduce 2,336 2,052 38,739 13,734 15, GSK Pharma* Sell 2,451 2,000 20,760 2,968 3,

12 Stock Watch Company Name Reco CMP Target Mkt Cap Sales ( cr ) OPM EPS ( ) PER(x) P/BV(x) RoE EV/Sales(x) Pharmaceuticals ( ) Price ( ) ( cr ) FY18E FY19E FY18E FY19E FY18E FY19E FY18E FY19E FY18E FY19E FY18E FY19E FY18E FY19E Indoco Remedies Sell ,586 1,114 1, Ipca labs Neutral 583-7,358 3,256 3, Lupin Buy 878 1,091 39,674 16,240 18, Natco Pharma Accumulate 974 1,057 17,972 1,886 2, Sun Pharma Accumulate ,577 28,312 32, Syngene International Neutral ,331 1,394 1, Power Tata Power Neutral ,264 32,547 33, NTPC Neutral ,945 86, , Power Grid Accumulate ,573 29,183 32, Real Estate Prestige Estate Neutral ,088 4,607 5, MLIFE Accumulate , Telecom Bharti Airtel Neutral ,245 97, , Idea Cellular Neutral ,995 35,012 37, (4.4) (2.7) (6.8) (4.6) Others Abbott India Neutral 5,438-11,556 3,244 3, Asian Granito Accumulate ,722 1,169 1, Bajaj Electricals Neutral 535-5,456 4,646 5, Banco Products (India) Neutral 257-1,838 1,530 1, Coffee Day Enterprises Ltd Neutral 273-5,769 3,494 3, Elecon Engineering Neutral 108-1, Garware Wall Ropes Neutral 919-2, , Goodyear India* Neutral 1,110-2,560 1,717 1, Hitachi Neutral 2,630-7,151 2,355 2, HSIL Neutral 499-3,606 2,240 2, Interglobe Aviation Neutral 1,208-46,412 22,570 27, Jyothy Laboratories Neutral 379-6,895 1,781 2, Linc Pen & Plastics Neutral M M Forgings Neutral 1,152-1, Mirza International Neutral 161-1,939 1,148 1, Navkar Corporation Buy ,

13 Stock Watch Company Name Reco CMP Target Mkt Cap Sales ( cr ) OPM EPS ( ) PER(x) P/BV(x) RoE EV/Sales(x) ( ) Price ( ) ( cr ) FY18E FY19E FY18E FY19E FY18E FY19E FY18E FY19E FY18E FY19E FY18E FY19E FY18E FY19E Others Nilkamal Neutral 1,976-2,948 2,317 2, Parag Milk Foods Neutral 304-2,556 1,987 2, Radico Khaitan Neutral 298-3,969 1,811 1, Relaxo Footwears Neutral 684-8,230 1,981 2, Siyaram Silk Mills Accumulate ,349 1,769 1, Styrolution ABS India* Neutral 1,077-1,894 1,800 1, Surya Roshni Neutral 380-1,665 4,870 5, TVS Srichakra Neutral 3,809-2,916 2,729 2, Visaka Industries Neutral 664-1,054 1,104 1, VIP Industries Buy ,870 1,450 1, Navin Fluorine Neutral 814-4, , Century Plyboards India Buy ,613 2,007 2, LT Foods Accumulate ,091 3,287 3, Ruchira Papers Buy Source: Company, Angel Research; Note: *December year end; #September year end; &October year end; Price as on January 03, 2018

14 Research Team Tel: Website: DISCLAIMER Angel Broking Private Limited (hereinafter referred to as Angel ) is a registered Member of National Stock Exchange of India Limited,Bombay Stock Exchange Limited and Metropolitan Stock Exchange Limited. It is also registered as a Depository Participant with CDSL and Portfolio Manager with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Private Limited is a registered entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number INH Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing /dealing in securities Market. Angel or its associates/analyst has not received any compensation / managed or co-managed public offering of securities of the company covered by Analyst during the past twelve months. This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. Investors are advised to refer the Fundamental and Technical Research Reports available on our website to evaluate the contrary view, if any. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Pvt. Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Pvt. Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Pvt. Limited endeavors to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Neither Angel Broking Pvt. Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information.