Market Outlook. Market Cues. News Analysis. Investor s Ready Reckoner. Top Picks. Key Upcoming Events. December 27, 2017

Transcription

1 Market Cues Indian markets are likely to open flat tracking global indices and SGX Nifty. The U.S. Indices closed slightly lower on Tuesday. Tech giant Apple slumped by 2.5% which weighed tech heavy NASDAQ and this was more than gain in retail sector stocks. Volumes were low, given that many traders are likely to remain on vacation until after the New Year s holiday. The Dow edged down 0.01% to close at 24,746, the NASDAQ fell 0.3% to finish at 6,936 and the S&P 500 dipped 0.1% to end at 2,681. The major European markets remained closed on the day in celebration of Boxing Day. On Domestic Front, Indices have begun trading upward and the Nifty 50 post fresh record high. However market turned subdued and remained in negative territory most of the session. In last few hours indices turned positive and closed with approx 0.35% higher. There were no big triggers as major European markets remained closed on the day in celebration of Boxing Day. The Sensex jumped 0.21% to close at 34,011, The Nifty 50 ended with a gain of 0.37% to finish at 10,532. News Analysis Canara Bank to raise up to `3,500cr through QIP 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 Dec27 US Consumer Confidence Dec28 US Initial Jobless claims Dec31 Germany PMI Manufacturing Jan02 China PMI Manufacturing Jan02 UK PMI Manufacturing More Events on Pg7 Domestic Indices Chg (Pts) (Close) BSE Sensex ,011 Nifty ,532 Mid Cap ,707 Small Cap ,112 Bankex ,012 Global Indices Chg (Pts) (Close) Dow Jones (0.0) (8) 24,746 Nasdaq (0.3) (24) 6,936 FTSE (0.1) (11) 7,593 Nikkei ,909 Hang Seng ,630 Shanghai Com (0.0) (1) 3,306 Advances / Declines BSE NSE Advances 1,702 1,045 Declines 1, Unchanged Volumes (` Cr) BSE 4,332 NSE 29,809 Net Inflows (` Cr) Net Mtd Ytd FII (1,136) (7,833) 49,799 *MFs 1,012 6,114 1,16,352 Top Gainers Price (`) Chg Rcom Tifhl Jetairways Vakrangee Jpassociat Top Losers Price (`) Chg Religare 72 (4.8) Den 106 (3.5) Adanitrans 228 (3.4) Syndibank 82 (3.1) Kec 368 (2.7) As on December

2 News Analysis Canara Bank to raise up to `3,500cr through QIP CET1/CAR ratio stood at 8.68/12.45% as on Q2FY18, according to nors it should be at 6.75%/10.25%. Total loan book growth grew 3% q-o-q & 10% y-o-y, which will consume capital and recovery in economy, would increase credit demand. Hence this capital raising helps Canara Bank to improve advance growth. "The board of bank at its meeting held on December 26, 2017 has decided to raise additional equity share capital amounting up to `90cr through qualified institutional placement (QIP) route, by issuing up to 9cr equity shares of a face value of `10 each with a premium to be decided as per the applicable guidelines/regulations for an aggregate amount not exceeding `3,500cr inclusive of such premium," it said in a regulatory filing. Economic and Political News Budget worries: GST collections fall to lowest in Nov at `80,808 cr Regulators need to look at the flaws beneath crypto-currencies Take urgent remedial steps to contain NPAs: Parliamentary panel to govt Corporate News Jindal Steel completed 250-tonne basic oxygen furnace at its Odisha plant. IDBI Bank to terminate rating engagement with Moody s for MTN program. NBCC to sell 25.1 lakh shares through an offer for sale to employees. Essar Oilfields commenced drilling contract with Mercator Petroleum.

3 Top Picks HHHHH Company Market Cap (` Cr) CMP (`) Target (`) Upside Alkem Laboratories 26,123 2,185 2, Asian Granito 1, Blue Star 7, Dewan Housing Finance 18, Karur Vysya Bank 8, KEI Industries 2, Music Broadcast 2, Navkar Corporation 2, Siyaram Silk Mills 3, TV Today Network 2, Maruti Suzuki 2,92,137 9,671 10, GIC Housing 2, Century Plyboards India 7, LT Foods 2, 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 Dec 27, :00 PM US Initial Jobless claims Thousands Dec Dec 28, :30 PM US Consumer Confidence S.A./ 1985=100 Dec Dec 31, :30 AM China PMI Manufacturing Value Dec Jan 02, :25 PM Germany Unemployment change (000's) Thousands Dec (18.00) (12.00) 2:25 PM Germany PMI Manufacturing Value Dec F Jan 03, :00 PM UK PMI Manufacturing Value Dec Jan 04, :25 PM Germany PMI Services Value Dec F Jan 05, :00 PM US Change in Nonfarm payrolls Thousands Dec :00 PM US Unnemployment rate % Dec Jan 08, :30 PM Euro Zone Euro-Zone Consumer Confidence Value Dec F 0.50 Jan 10, :00 PM UK Industrial Production (YoY) % Change Nov 3.60 India Imports YoY% % Change Dec India Exports 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 India Monthly Wholesale Prices YoY% % Change Dec 3.93 Jan 15, :00 PM US Consumer price index (mom) % Change Dec 0.40 Jan 16, :00 PM UK CPI (YoY) % Change Dec 3.10 Jan 17, :30 PM Euro Zone Euro-Zone CPI (YoY) % Dec F :45 PM US Industrial Production % Dec 0.20 Jan 18, :00 PM US Housing Starts Thousands Dec 1, :00 PM US Building permits Thousands Dec 1, Jan 24, :30 PM US Existing home sales Million Dec :00 PM UK Jobless claims change % Change Dec 5.90 Source: Bloomberg, Angel Research

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 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 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

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

7 Exhibit 4: Relative performance of indices across globe Returns Country Name of index Closing price 1M 3M 1YR Brazil Bovespa 75, (0.4) 31.5 Russia Micex 2,097 (3.0) 1.3 (3.9) India Nifty 10, China Shanghai Composite 3,306 (0.5) (1.6) 6.0 South Africa Top 40 52,064 (4.5) Mexico Mexbol 48, (4.1) 7.0 Indonesia LQ45 1, Malaysia KLCI 1, (0.6) 7.5 Thailand SET 50 1, USA Dow Jones 24, UK FTSE 7, Japan Nikkei 22, Germany DAX 13, France CAC 5, Source: Bloomberg, Angel Research p68in4

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 ,010 1,873 2, United Phosphorus Accumulate ,367 18,922 21, Auto & Auto Ancillary Ashok Leyland Accumulate ,950 23,339 27, Bajaj Auto Neutral 3,363-97,311 23,936 27, Bharat Forge Buy ,902 7,637 8, Eicher Motors Neutral 30,251-82,394 19,043 22, , Gabriel India Neutral 192-2,752 1,782 2, Hero Motocorp Accumulate 3,805 4,129 75,982 32,239 36, Jamna Auto Industries Neutral 83-3,303 1,441 1, Mahindra and Mahindra Neutral ,158 46,971 53, Maruti Accumulate 9,671 10, ,137 79,470 95, Minda Industries Neutral 1,288-11,129 4,328 5, Motherson Sumi Neutral ,965 55,937 64, Tata Motors Neutral , , , TVS Motor Neutral ,579 13,992 16, Amara Raja Batteries Neutral ,296 6,140 7, Exide Industries Neutral ,760 8,689 9, Apollo Tyres Neutral ,279 15,739 17, Ceat Neutral 2,003-8,104 6,661 7, JK Tyres Neutral 147-3,334 8,318 9, Swaraj Engines Neutral 2,034-2, Subros Neutral 300-1,800 1,855 2, Capital Goods BEML Neutral 1,607-6,690 4,286 5, Bharat Electronics Neutral ,835 10,258 12, Voltas Neutral ,645 6,778 8, BHEL Neutral 93-34,162 33,200 39, Blue Star Accumulate ,716 5,220 6, CG Power and Industrial Neutral 91-5,691 6,555 7, , Solutions Greaves Cotton Neutral 134-3,269 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 368-9,466 9,779 11, KEI Industries Buy ,824 3,001 3, Thermax Neutral 1,228-14,637 4,125 4, VATech Wabag Accumulate ,379 3,867 4, Cement ACC Neutral 1,739-32,650 12,255 13, Ambuja Cements Neutral ,039 10,250 11, India Cements Neutral 185-5,696 6,135 6, JK Cement Neutral 1,082-7,561 4,150 4, J K Lakshmi Cement Neutral 439-5,166 3,422 3, Orient Cement Neutral 169-3,457 2,215 3, Prism Cement Accumulate ,821 5,155 5, UltraTech Cement Neutral 4, ,672 28,250 35, Construction KNR Constructions Neutral 341-4,801 1,846 2, Larsen & Toubro Neutral 1, ,875 95, , Gujarat Pipavav Port Neutral 136-6, PNC Infratech Neutral 217-5,576 2,040 2, Simplex Infra Neutral 579-2,864 6,012 6, Sadbhav Engineering Neutral 427-7,325 3,823 4, NBCC Neutral ,649 9,099 12, MEP Infra Neutral 98-1,594 2,403 2, SIPL Neutral 151-5,312 2,060 2, (5.8) (3.1) (14.2) (2.3) Engineers India Neutral ,653 1,795 2, Financials Axis Bank Neutral ,964 32,558 35, Bank of Baroda Neutral ,387 22,533 26, Canara Bank Neutral ,374 17,925 20, Can Fin Homes Neutral 501-6, Cholamandalam Inv. & Neutral Fin. Co. 1,289-20,146 2,826 3, Dewan Housing Finance Buy ,661 2,676 3, Equitas Holdings Buy ,840 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 Accumulate ,530 4,896 5, GIC Housing Buy , HDFC Bank Neutral 1, ,855 55,236 63, ICICI Bank Neutral ,891 42,361 51, Karur Vysya Bank Buy ,753 3,289 3, LIC Housing Finance Accumulate ,753 4,895 6, Punjab Natl.Bank Neutral ,266 23,708 25, RBL Bank Neutral ,522 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 ,665 14,650 16, Yes Bank Neutral ,513 11,088 13, FMCG Akzo Nobel India Neutral 1,785-8,561 3,164 3, Asian Paints Neutral 1, ,274 17,603 20, , , Britannia Neutral 4,734-56,838 9,690 11, Colgate Neutral 1,082-29,423 4,420 5, Dabur India Neutral ,208 8,346 9, GlaxoSmith Con* Neutral 6,460-27,167 5,072 5, Godrej Consumer Neutral ,648 10,171 11, HUL Neutral 1, ,761 37,077 41, , , ITC Neutral ,769 44,588 49, Marico Neutral ,059 6,788 7, Nestle* Neutral 7,828-75,470 10,083 11, Tata Global Neutral ,309 7,121 7, Procter & Gamble Hygiene Neutral 9,428-30,604 3,034 3, IT HCL Tech^ Accumulate 888 1, ,667 50,009 54, Infosys Accumulate 1,034 1, ,589 70,333 75, TCS Reduce 2,643 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 Accumulate ,185 30,545 32, Wipro Neutral ,582 54,164 56, Media D B Corp Neutral 345-6,343 2,404 2, HT Media Neutral 97-2,259 2,589 2, Jagran Prakashan Buy ,548 2,541 2, Sun TV Network Neutral ,369 3,238 3, Hindustan Media Ventures Neutral 251-1,840 1,002 1, TV Today Network Accumulate , Music Broadcast Limited Buy , Metals & Mining Coal India Neutral ,658 82,301 91, Hind. Zinc Neutral ,485 22,108 24, Hindalco Neutral , , , JSW Steel Neutral ,649 64,500 68, NMDC Neutral ,342 10,209 11, SAIL Neutral 90-37,336 54,100 63, (10.0) Vedanta Neutral ,675 81,206 87, Tata Steel Neutral , , , Oil & Gas GAIL Neutral ,163 53,115 52, ONGC Neutral ,708 83,111 84, Indian Oil Corp Neutral , , , Reliance Industries Neutral , , , Pharmaceuticals Alembic Pharma Accumulate ,006 3,346 3, Alkem Laboratories Ltd Accumulate 2,185 2,341 26,123 6,320 7, Aurobindo Pharma Buy ,071 17,086 19, Aventis* Neutral 4,637-10,679 2,411 2, Cadila Healthcare Neutral ,770 11,365 12, Cipla Sell ,178 16,163 18, Dr Reddy's Reduce 2,360 2,040 39,138 13,734 15, GSK Pharma* Sell 2,422 2,000 20,512 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 ,690 1,114 1, Ipca labs Neutral 596-7,518 3,256 3, Lupin Buy 872 1,091 39,415 16,240 18, Natco Pharma Accumulate 975 1,057 17,986 1,886 2, Sun Pharma Accumulate ,667 28,312 31, Syngene International Accumulate ,952 1,394 1, Power Tata Power Neutral 93-25,236 32,547 33, NTPC Neutral ,563 86, , Power Grid Accumulate ,835 29,183 32, Real Estate Prestige Estate Neutral ,273 4,607 5, MLIFE Accumulate , Telecom Bharti Airtel Neutral ,979 97, , Idea Cellular Neutral ,705 35,012 37, (4.4) (2.7) (6.8) (4.6) Others Abbott India Neutral 5,448-11,576 3,244 3, Asian Granito Accumulate ,636 1,169 1, Bajaj Electricals Neutral 474-4,824 4,646 5, Banco Products (India) Neutral 264-1,889 1,530 1, Coffee Day Enterprises Ltd Neutral 284-5,848 3,494 3, Elecon Engineering Neutral 106-1, Garware Wall Ropes Neutral 958-2, , Goodyear India* Neutral 1,030-2,376 1,717 1, Hitachi Neutral 2,634-7,162 2,355 2, HSIL Neutral 517-3,737 2,240 2, Interglobe Aviation Neutral 1,201-46,152 22,570 27, Jyothy Laboratories Neutral 388-7,059 1,781 2, Linc Pen & Plastics Neutral M M Forgings Neutral 1,162-1, Mirza International Neutral 159-1,908 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 1,840-2,746 2,317 2, Parag Milk Foods Neutral 296-2,487 1,987 2, Radico Khaitan Neutral 290-3,859 1,811 1, Relaxo Footwears Neutral 683-8,215 1,981 2, Siyaram Silk Mills Accumulate ,603 1,769 1, Styrolution ABS India* Neutral 1,073-1,886 1,800 1, Surya Roshni Neutral 387-1,696 4,870 5, TVS Srichakra Neutral 3,682-2,819 2,729 2, Visaka Industries Neutral 642-1,019 1,104 1, VIP Industries Accumulate ,945 1,450 1, Navin Fluorine Neutral 869-4, , Century Plyboards India Buy ,506 2,007 2, LT Foods Accumulate ,246 3,287 3, Ruchira Papers Buy Source: Company, Angel Research; Note: *December year end; #September year end; &October year end; Price as on December 26, 2017

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.