Market Outlook. Market Cues. News Analysis. Investor s Ready Reckoner. Top Picks. Key Upcoming Events. December 13, 2017

Transcription

1 Market Cues Indian markets are likely to open flat tracking global indices and SGX Nifty. US markets may show a lack of direction in early trading on Tuesday following the modest strength seen in the previous session. The major index futures are currently pointing to a mixed open for the markets, with the Dow futures up by 52 points and the Nasdaq futures down by 4 points. The European markets got off to a rough start Tuesday, but ended the session with modest gains. Traders are in a cautious mood ahead of the upcoming flurry of central bank activity this week. Indian markets fell modestly on Tuesday after three days of strong gains and amid macro data on inflation and industrial output due later in the day. While a rise in crude prices rekindled inflation worries, global cues also remained muted ahead of key central bank meetings due this week as well as a major annual economic planning conference in Beijing that will set policy priorities for the next 12 months. News Analysis CPI inflation surprises on the upside as IIP remains tepid 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 Accumulate More Top Picks on Pg4 Key Upcoming Events Date Region Event Description Previous Reading Dec13 UK Jobless claims change 1.10 Consensus Expectations Dec13 US Consumer price index (mom) Dec14 China Industrial Production (YoY) 6.20 Dec14 India Monthly Wholesale Prices YoY% 3.59 Dec14 UK BOE Announces rates More Events on Pg7 Domestic Indices Chg (Pts) (Close) BSE Sensex (0.7) (228) 33,228 Nifty (0.8) (82) 10,240 Mid Cap (1.0) (173) 16,933 Small Cap (0.7) (124) 18,128 Bankex (1.0) (294) 28,458 Global Indices Chg (Pts) (Close) Dow Jones ,505 Nasdaq (0.2) (13) 6,862 FTSE ,500 Nikkei (0.3) (73) 22,866 Hang Seng (0.6) (171) 28,794 Shanghai Com (1.2) (41) 3,281 Advances / Declines BSE NSE Advances Declines 1, Unchanged Volumes (` Cr) BSE 4,888 NSE 26,986 Net Inflows (` Cr) Net Mtd Ytd FII 44 (3,442) 54,190 MFs 864 4,436 1,11,927 Top Gainers Price (`) Chg Aban Ipcalab Mindtree Bluedart 4, Gruh Top Losers Price (`) Chg Fortis 128 (7.8) Den 105 (5.2) Videoind 18 (4.9) Unitech 8 (4.6) Deltacorp 246 (4.3) As on December

2 News Analysis CPI inflation surprises on the upside as IIP remains tepid The CPI inflation for the month of November came in sharply higher touching a 15-month high at 4.88% even as the IIP for October came in tepid at just about 2.2%. The CPI inflation was just about 3.58% in the previous month. This inflation level is also sharply higher than the RBI prescribed comfort level of 4% as a longterm average. The RBI had already warned about the sharp increase in inflation in its monetary policy in the aftermath of the higher HRA payable to government employees. The real surge in inflation came in rural inflation which sharply moved up from 3.36% to 4.79%. This is likely to force the MPC to put off rate cuts for the time being. There was some solace on the IIP front. The mining sector showed a growth of 0.2% and manufacturing showed a growth of 2.5% while electricity was up by 3.2%. A total of 10 out of the 23 industries in the manufacturing space saw positive growth while the others registered negative growth. The combination of higher inflation and flat growth almost rules out any rate cut by the RBI in the next couple of monetary policies. Economic and Political News NHAI to speed up highway projects, to bid out 3,500 km of work by monthend Indian telecom subscriber base declines to 1.2 bn in October: Trai data India's cotton output set to rise 9% in FY18 but fall short of record high Corporate News IndiGo promoters offloading `1,245cr shares through OFS BHEL commissions 54-Mw coal-fired power plant in Indonesia Apollo Munich sees FY18 premium collection growing 30% to `1,700cr

3 Top Picks HHHHH Company Market Cap (` Cr) CMP (`) Target (`) Upside Alkem Laboratories 25,002 2,091 2, Asian Granito 1, Blue Star 7, Dewan Housing Finance 18, Karur Vysya Bank 8, KEI Industries 3, Music Broadcast 2, Navkar Corporation 2, Siyaram Silk Mills 3, TV Today Network 2, Maruti Suzuki 2,76,184 9,143 9, GIC Housing 2, Century Plyboards India 7, LT Foods 2, 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. 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 Dec 13, :00 PM UK Jobless claims change % Change Nov :00 PM US Consumer price index (mom) % Change Nov Dec 14, :30 AM China Industrial Production (YoY) % Change Nov : 00 PM India Monthly Wholesale Prices YoY% % Change Nov :30 PM UK BOE Announces rates % Ratio Dec :15 PM Euro Zone ECB announces interest rates % Dec 14-7:45 PM US Industrial Production % Nov 0.94 Dec 15, :30 PM Euro Zone Euro-Zone CPI (YoY) % Nov F 1.40 Dec 18, : 30 AM US FOMC rate decision % Dec Dec 19, :00 PM US Housing Starts Thousands Nov 1, :00 PM US Building permits Thousands Nov 1, Dec 20, :30 PM US Existing home sales Million Nov 5.48 Dec 22, :30 PM US New home sales Thousands Nov :00 PM UK GDP (YoY) % Change 3Q F 1.50 Dec 27, :30 PM US Consumer Confidence S.A./ 1985=100 Dec Feb 14, : 30 PM Germany GDP nsa (YoY) % Change 4Q P 2.30 Source: Bloomberg, Angel Research ngelbr oki ng.c o m

5 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-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 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Oct-16 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 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-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 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 Reduce ,570 1,873 2, United Phosphorus Accumulate ,100 18,922 21, Auto & Auto Ancillary Ashok Leyland Accumulate ,325 23,339 27, Bajaj Auto Neutral 3,169-91,690 23,936 27, Bharat Forge Buy ,470 7,637 8, Eicher Motors Neutral 28,599-77,893 19,043 22, , Gabriel India Neutral 189-2,711 1,782 2, Hero Motocorp Buy 3,445 4,129 68,798 32,239 36, Jamna Auto Industries Neutral 64-2,558 1,441 1, Mahindra and Mahindra Neutral 1,419-88,220 46,971 53, Maruti Accumulate 9,143 9, ,184 79,470 95, Minda Industries Neutral 1,127-9,741 4,328 5, Motherson Sumi Neutral ,302 55,937 64, Tata Motors Neutral , , , TVS Motor Neutral ,107 13,992 16, Amara Raja Batteries Accumulate ,166 6,140 7, Exide Industries Neutral ,383 8,689 9, Apollo Tyres Neutral ,972 15,739 17, Ceat Neutral 1,733-7,012 6,661 7, JK Tyres Neutral 136-3,093 8,318 9, Swaraj Engines Neutral 1,951-2, Subros Neutral 258-1,547 1,855 2, Capital Goods BEML Neutral 1,562-6,504 4,286 5, Bharat Electronics Neutral ,558 10,258 12, Voltas Neutral ,768 6,778 8, BHEL Neutral 92-33,630 33,200 39, Blue Star Accumulate ,695 5,220 6, CG Power and Industrial Neutral 87-5,434 6,555 7, , Solutions Greaves Cotton Neutral 119-2,909 1,778 1,

8 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 334-8,598 9,779 11, KEI Industries Accumulate ,084 3,001 3, Thermax Neutral 1,183-14,094 4,125 4, VATech Wabag Accumulate ,355 3,867 4, Cement ACC Neutral 1,709-32,098 12,255 13, Ambuja Cements Neutral ,689 10,250 11, India Cements Neutral 169-5,206 6,135 6, JK Cement Neutral 990-6,919 4,150 4, J K Lakshmi Cement Neutral 412-4,845 3,422 3, Orient Cement Neutral 166-3,391 2,215 3, UltraTech Cement Neutral 4, ,015 28,250 35, Construction KNR Constructions Neutral 275-3,865 1,846 2, Larsen & Toubro Neutral 1, ,523 95, , Gujarat Pipavav Port Neutral 141-6, PNC Infratech Neutral 186-4,761 2,040 2, Simplex Infra Neutral 565-2,793 6,012 6, Sadbhav Engineering Neutral 367-6,297 3,823 4, NBCC Neutral ,622 9,099 12, MEP Infra Neutral 93-1,513 2,403 2, SIPL Neutral 142-5,010 2,060 2, (5.8) (3.1) (14.2) (2.3) Engineers India Neutral ,834 1,795 2, Financials Axis Bank Accumulate ,107 32,558 35, Bank of Baroda Neutral ,134 22,533 26, Canara Bank Neutral ,915 17,925 20, Can Fin Homes Neutral 467-6, Cholamandalam Inv. & Neutral Fin. Co. 1,276-19,939 2,826 3, Dewan Housing Finance Buy ,253 2,676 3, Equitas Holdings Buy ,720 1,125 1, Federal Bank Buy ,955 4,896 5,

9 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 GIC Housing Buy , HDFC Bank Neutral 1, ,076 55,236 63, ICICI Bank Neutral ,389 42,361 51, Karur Vysya Bank Buy ,403 3,289 3, LIC Housing Finance Accumulate ,830 4,895 6, Punjab Natl.Bank Neutral ,931 23,708 25, RBL Bank Neutral ,278 2,309 2, Repco Home Finance Buy , South Ind.Bank Neutral 32-5,706 3,195 3, St Bk of India Neutral , , , Union Bank Neutral ,973 14,650 16, Yes Bank Neutral ,422 11,088 13, FMCG Akzo Nobel India Neutral 1,818-8,720 3,164 3, Asian Paints Neutral 1, ,286 17,603 20, , , Britannia Neutral 4,859-58,341 9,690 11, Colgate Neutral 1,069-29,075 4,420 5, Dabur India Neutral ,283 8,346 9, GlaxoSmith Con* Neutral 6,261-26,330 5,072 5, Godrej Consumer Neutral 1,010-68,804 10,171 11, HUL Neutral 1, ,618 37,077 41, , , ITC Neutral ,783 44,588 49, Marico Neutral ,762 6,788 7, Nestle* Neutral 7,911-76,274 10,083 11, Tata Global Neutral ,164 7,121 7, Procter & Gamble Hygiene Neutral 9,515-30,886 3,034 3, IT HCL Tech^ Buy 873 1, ,576 50,009 54, Infosys Accumulate 1,011 1, ,249 70,333 75, TCS Reduce 2,614 2, , , , Tech Mahindra Accumulate ,894 30,545 32,

10 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 Wipro Neutral ,771 54,164 56, Media D B Corp Neutral 351-6,455 2,404 2, HT Media Neutral 97-2,266 2,589 2, Jagran Prakashan Buy ,174 2,541 2, Sun TV Network Neutral ,085 3,238 3, Hindustan Media Ventures Neutral 237-1,736 1,002 1, TV Today Network Accumulate , Music Broadcast Limited Accumulate , Metals & Mining Coal India Neutral ,410 82,301 91, Hind. Zinc Neutral ,809 22,108 24, Hindalco Neutral , , , JSW Steel Neutral ,503 64,500 68, NMDC Neutral ,146 10,209 11, SAIL Neutral 80-33,103 54,100 63, (10.0) Vedanta Neutral ,970 81,206 87, Tata Steel Neutral , , , Oil & Gas GAIL Neutral ,204 53,115 52, ONGC Neutral ,784 83,111 84, Indian Oil Corp Neutral , , , Reliance Industries Neutral , , , Pharmaceuticals Alembic Pharma Accumulate ,864 3,346 3, Alkem Laboratories Ltd Accumulate 2,091 2,341 25,002 6,320 7, Aurobindo Pharma Buy ,679 17,086 19, Aventis* Neutral 4,639-10,683 2,411 2, Cadila Healthcare Neutral ,475 11,365 12, Cipla Sell ,545 16,163 18, Dr Reddy's Reduce 2,256 2,040 37,403 13,734 15, GSK Pharma* Sell 2,443 2,000 20,693 2,968 3, Indoco Remedies Sell ,496 1,114 1,

11 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 Ipca labs Neutral 552-6,962 3,256 3, Lupin Buy 845 1,091 38,191 16,240 18, Natco Pharma Accumulate 961 1,057 16,764 1,886 2, Sun Pharma Buy ,953 28,312 31, Syngene International Accumulate ,740 1,394 1, Power Tata Power Neutral 91-24,492 32,547 33, NTPC Neutral ,955 86, , Power Grid Accumulate ,201 29,183 32, Real Estate Prestige Estate Neutral ,113 4,607 5, MLIFE Buy , Telecom Bharti Airtel Neutral ,444 97, , Idea Cellular Neutral 93-33,693 35,012 37, (4.4) (2.7) (6.8) (4.6) zothers Abbott India Neutral 5,457-11,596 3,244 3, Asian Granito Accumulate ,542 1,169 1, Bajaj Electricals Neutral 481-4,887 4,646 5, Banco Products (India) Neutral 249-1,781 1,530 1, Coffee Day Enterprises Ltd Neutral 275-5,658 3,494 3, Elecon Engineering Neutral 95-1, Garware Wall Ropes Neutral 913-1, , Goodyear India* Neutral 869-2,005 1,717 1, Hitachi Neutral 2,525-6,866 2,355 2, HSIL Neutral 488-3,527 2,240 2, Interglobe Aviation Neutral 1,180-45,359 22,570 27, Jyothy Laboratories Neutral 370-6,725 1,781 2, Linc Pen & Plastics Neutral M M Forgings Neutral 1,007-1, Mirza International Neutral 157-1,885 1,148 1, Navkar Corporation Buy , Nilkamal Neutral 1,802-2,689 2,317 2,

12 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 zothers Parag Milk Foods Neutral 260-2,186 1,987 2, Radico Khaitan Neutral 271-3,607 1,811 1, Relaxo Footwears Neutral 640-7,702 1,981 2, Siyaram Silk Mills Accumulate ,518 1,769 1, Styrolution ABS India* Neutral 1,051-1,848 1,800 1, Surya Roshni Neutral 380-1,665 4,870 5, TVS Srichakra Neutral 3,397-2,601 2,729 2, Visaka Industries Neutral ,104 1, VIP Industries Buy ,841 1,450 1, Navin Fluorine Accumulate , , Source: Company, Angel Research; Note: *December year end; #September year end; &October year end; Price as on December 12, 2017

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