Market Outlook. Market Cues. News Analysis. Investor s Ready Reckoner. Top Picks. Key Upcoming Events. November 16, 2017

Transcription

1 Market Cues Indian markets are likely to open flat tracking global indices and SGX Nifty. U.S. stocks closed lower Wednesday, as falling oil prices and worries over the progress of a U.S. tax overhaul left investors increasingly averse to putting more money into assets seen as risky. Traders were also digesting the latest batch of U.S. economic news, including a report from the Commerce Department showing a modest increase in retail sales in the month of October. The Dow ended the day down by 0.6% at 23,271.The NASDAQ dropped 0.47% to close at 6,706 and the S&P 500 fell 0.55% to finish at 2,564. Stocks in the U.K. closed lower on Wednesday, as a slide in oil prices pulled energy producer shares into the red and a drop in metals prices knocked down prices for miners. The FTSE 100 dropped 0.6% to end at 7,372. On domestic front, Indices continue it s down ward trend owing to Weak global cues after a sharp fall in commodity prices, Disappointing earnings updates from the likes of Sun Pharma and Grasim as well as weak trade data. India's trade deficit widened to an almost three-year high in October as exports declined for the first time in 14 months amid a liquidity crunch because of delayed GST refunds. The benchmark BSE Sensex ended down 0.55% at 32,760, while the Nifty fell 0.7% to closed at 10,118. News Analysis New India Assurance Q2 profit almost triples to `748cr YoY 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 Buy Dewan Housing Finance Financials Accumulate (15.5) Asian Granito Other Buy (0.2) Navkar Corporation Other Buy KEI Industries Capital Goods Accumulate (19.8) More Top Picks on Pg4 Key Upcoming Events Date Region Event Description Previous Reading Consensus Expectations Nov16 Euro Zone Euro-Zone CPI (YoY) Nov16 US Initial Jobless claims Nov16 US Industrial Production Nov17 US Existing home sales Nov17 US Housing Starts 1, , More Events on Pg7 Domestic Indices Chg (Pts) (Close) BSE Sensex (0.6) (181) 32,760 Nifty (0.7) (69) 10,118 Mid Cap (1.0) (166) 16,329 Small Cap (1.5) (266) 17,273 Bankex (0.3) (81) 28,624 Global Indices Chg (Pts) (Close) Dow Jones (0.5) (30) 23,271 Nasdaq (0.4) (20) 6,706 FTSE (0.6) (45) 7,372 Nikkei (1.6) (352) 22,028 Hang Seng (1.0) (300) 28,852 Shanghai Com (0.8) (27) 3,403 Advances / Declines BSE NSE Advances Declines 1,999 1,389 Unchanged Volumes (` Cr) BSE 3,944 NSE 30,562 Net Inflows (` Cr) Net Mtd Ytd FII 2,681 12,283 50,735 MFs 2,326 3,825 99,236 Top Gainers Price (`) Chg Religare Fortis Icil Biocon Videoind Top Losers Price (`) Chg Rcom 10 (12.1) Relcapital 423 (10.2) Relinfra 417 (9.2) Hindcopper 89 (8.6) Rpower 35 (8.6) As on November,

2 News Analysis New India Assurance Q2 profit almost triples to `748cr YoY New India Assurance today reported % jump in net profit for Q2FY18 due to lower incurred claims loss and improvement combined ratio. The company reported net profit of `748.27cr as against `260.24cr in the corresponding quarter last year. It has investment portfolio of `61,000cr and had earned 8% on the portfolio. The company has declared an interim dividend of 75%. The dividend payout will cost `300cr for the company. The combined ratio came down to % compared to % a year ago, the adjusted combined ratio for the quarter dropped to 91.45% as compared to % of the earlier year largely driven by improvement in claims ratio and expenses of management ratio. Economic and Political News PSBs told to submit roadmap for fund-raising in a month. India M&A to reach $46.5 billon in 2017 GST Council to take up moderation of rates for handicrafts, handloom Corporate News RBL Bank acquires an additional 2.08% stake in Swadhaar Finserve, increasing its holding to 60.48%. ONGC says Venezuela s state-run PDVSA is committed to the arrangement with ONGC Videsh. Fortis proposes to buy RHT Health assets for 4,650cr

3 Top Picks HHHHH Company Market Cap (` Cr) CMP (`) Target (`) Upside Alkem Laboratories 23,889 1,998 2, Asian Granito 1, Blue Star 6, Dewan Housing Finance 19, Karur Vysya Bank 7, KEI Industries 2, Music Broadcast 2, Navkar Corporation 2, Siyaram Silk Mills 2, TV Today Network 2, Maruti Suzuki 2,45,377 8,123 8, GIC Housing 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.. 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 Nov 16, :30 PM Euro Zone Euro-Zone CPI (YoY) % Oct F :00 PM US Initial Jobless claims Thousands Nov :45 PM US Industrial Production % Oct Nov 17, :30 PM US Existing home sales Million Oct :00 PM US Housing Starts Thousands Oct 1, , Nov 21, :00 PM US Building permits Thousands Oct 1, , Nov 22, :30 PM Euro Zone Euro-Zone Consumer Confidence Value Nov A (1.00) Nov 23, : 30 PM Germany GDP nsa (YoY) % Change 3Q F :00 PM Germany PMI Services Value Nov P :00 PM Germany PMI Manufacturing Value Nov P Nov 27, :30 PM US New home sales Thousands Oct Nov 28, :30 PM US Consumer Confidence S.A./ 1985=100 Nov :00 PM UK GDP (YoY) % Change 3Q P 1.50 Nov 29, :00 PM US GDP Qoq (Annualised) % Change 3Q S Nov 30, :25 PM Germany Unemployment change (000's) Thousands Nov (11.00) 3:00 PM UK PMI Manufacturing Value Nov Dec 01, :30 AM China PMI Manufacturing Value Nov Dec 05, :30 PM Euro Zone Euro-Zone GDP s.a. (QoQ) % Change 3Q F 0.60 Dec 06, :30 PM India RBI Reverse Repo rate % Dec :30 PM India RBI Repo rate % Dec :30 PM India RBI Cash Reserve ratio % Dec Dec 08, 2017 India Imports YoY% % Change Nov 7.60 India Exports YoY% % Change Nov (1.10) 3:00 PM UK Industrial Production (YoY) % Change Oct 2.50 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 Sep-16 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 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 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 Exhibit 4: Relative performance of indices across globe Returns Country Name of index Closing price 1M 3M 1YR Brazil Bovespa 70,827 (7.6) Russia Micex 2, India Nifty 10,187 (0.5) China Shanghai Composite 3, South Africa Top 40 53, Mexico Mexbol 47,874 (4.2) (6.8) 6.6 Indonesia LQ (0.0) Malaysia KLCI 1,734 (1.2) (2.5) 5.2 Thailand SET 50 1,084 (2.0) USA Dow Jones 23, UK FTSE 7,414 (1.6) Japan Nikkei 22, Germany DAX 13,033 (1.0) France CAC 5,316 (1.5) Source: Bloomberg, Angel Research as on November 14, 2017 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 Reduce ,412 1,873 2, United Phosphorus Accumulate ,673 18,922 21, Auto & Auto Ancillary Ashok Leyland Accumulate ,193 23,339 27, Bajaj Auto Neutral 3,212-92,955 23,936 27, Bharat Forge Buy ,191 7,637 8, Eicher Motors Neutral 30,483-82,983 19,043 22, , Gabriel India Neutral 193-2,775 1,782 2, Hero Motocorp Accumulate 3,676 4,129 73,399 32,239 36, Jamna Auto Industries Neutral 60-2,377 1,441 1, Mahindra and Mahindra Neutral 1,415-87,940 46,971 53, Maruti Accumulate 8,123 8, ,377 80,985 97, Minda Industries Neutral 1,038-8,966 4,328 5, Motherson Sumi Neutral ,523 55,937 64, Tata Motors Neutral , , , TVS Motor Neutral ,071 13,992 16, Amara Raja Batteries Neutral ,010 6,140 7, Exide Industries Neutral ,664 8,689 9, Apollo Tyres Neutral ,263 15,739 17, Ceat Neutral 1,746-7,064 6,661 7, JK Tyres Neutral 143-3,253 8,318 9, Swaraj Engines Neutral 1,880-2, Subros Neutral 244-1,462 1,855 2, Capital Goods BEML Neutral 1,654-6,888 4,286 5, Bharat Electronics Neutral ,329 10,258 12, Voltas Neutral ,314 6,778 8, BHEL Neutral 88-32,400 33,200 39, Blue Star Buy ,690 5,220 6, CG Power and Industrial Neutral 80-4,995 6,555 7, , Solutions Greaves Cotton Neutral 121-2,959 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 Buy ,557 9,779 11, KEI Industries Buy ,520 3,001 3, Thermax Neutral ,872 4,125 4, VATech Wabag Buy ,915 3,867 4, Cement ACC Neutral 1,768-33,199 12,255 13, Ambuja Cements Neutral ,804 10,250 11, India Cements Neutral 167-5,143 6,135 6, JK Cement Neutral 1,054-7,370 4,150 4, J K Lakshmi Cement Neutral 435-5,123 3,422 3, Orient Cement Neutral 155-3,169 2,215 3, UltraTech Cement Neutral 4, ,479 28,250 35, Construction KNR Constructions Neutral 256-3,598 1,846 2, Larsen & Toubro Neutral 1, ,158 95, , Gujarat Pipavav Port Neutral 134-6, PNC Infratech Neutral 171-4,398 2,040 2, Simplex Infra Neutral 498-2,466 6,012 6, Sadbhav Engineering Neutral 313-5,369 3,823 4, NBCC Neutral ,850 9,099 12, MEP Infra Neutral 102-1,666 2,403 2, SIPL Neutral 121-4,253 2,060 2, (5.8) (3.1) (14.2) (2.3) Engineers India Neutral ,238 1,795 2, Financials Axis Bank Accumulate ,999 32,558 35, Bank of Baroda Neutral ,208 22,533 26, Canara Bank Neutral ,100 17,925 20, Can Fin Homes Accumulate , Cholamandalam Inv. & Neutral Fin. Co. 1,249-19,527 2,826 3, Dewan Housing Finance Buy ,301 2,676 3, Equitas Holdings Buy ,690 1,125 1, Federal Bank Accumulate ,634 4,896 5,

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 GIC Housing Buy , HDFC Bank Neutral 1, ,166 55,236 63, ICICI Bank Neutral ,531 42,361 51, Karur Vysya Bank Buy ,264 3,289 3, LIC Housing Finance Accumulate ,187 4,895 6, Punjab Natl.Bank Neutral ,442 23,708 25, RBL Bank Neutral ,112 2,309 2, Repco Home Finance Buy , South Ind.Bank Neutral 30-5,422 3,195 3, St Bk of India Neutral , , , Union Bank Neutral ,939 14,650 16, Yes Bank Neutral ,041 11,088 13, FMCG Akzo Nobel India Neutral 1,755-8,417 3,164 3, Asian Paints Neutral 1, ,883 17,603 20, , , Britannia Neutral 4,741-56,918 9,690 11, Colgate Neutral 1,043-28,355 4,420 5, Dabur India Neutral ,949 8,346 9, GlaxoSmith Con* Neutral 5,993-25,205 5,072 5, Godrej Consumer Neutral ,546 10,171 11, HUL Neutral 1, ,763 37,077 41, , , ITC Neutral ,050 44,588 49, Marico Neutral ,536 6,788 7, Nestle* Neutral 7,705-74,285 10,083 11, Tata Global Neutral ,835 7,121 7, Procter & Gamble Hygiene Neutral 8,919-28,952 3,034 3, IT HCL Tech^ Buy 848 1, ,059 50,009 54, Infosys Buy 952 1, ,662 70,333 75, TCS Neutral 2, , , , Tech Mahindra Accumulate ,355 31,015 33,

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 Wipro Neutral ,151 54,164 56, Media D B Corp Neutral 361-6,643 2,404 2, HT Media Neutral 96-2,229 2,589 2, Jagran Prakashan Buy ,317 2,541 2, Sun TV Network Neutral ,849 3,238 3, Hindustan Media Ventures Neutral 245-1,797 1,002 1, TV Today Network Buy , Music Broadcast Limited Buy , Metals & Mining Coal India Neutral ,090 82,301 91, Hind. Zinc Neutral ,260 22,108 24, Hindalco Neutral , , , JSW Steel Neutral ,796 64,500 68, NMDC Neutral ,694 10,209 11, SAIL Neutral 76-31,347 54,100 63, (10.0) Vedanta Neutral ,843 81,206 87, Tata Steel Neutral , , , Oil & Gas GAIL Neutral ,880 53,115 52, ONGC Neutral ,598 83,111 84, Indian Oil Corp Neutral , , , Reliance Industries Neutral , , , Pharmaceuticals Alembic Pharma Buy ,674 3,903 4, Alkem Laboratories Ltd Accumulate 1,998 2,125 23,889 6,320 7, Aurobindo Pharma Buy ,757 17,086 19, Aventis* Neutral 4,352-10,022 2,508 2, Cadila Healthcare Neutral ,978 11,584 13, Cipla Sell ,767 16,619 19, Dr Reddy's Neutral 2,307-38,257 15,844 17, GSK Pharma* Neutral 2,551-21,609 3,260 3, Indoco Remedies Sell ,513 1,154 1,

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 Ipca labs Neutral 526-6,641 3,593 4, Lupin Buy 823 1,467 37,174 18,657 21, Natco Pharma Buy 905 1,057 15,783 1,886 2, Sun Pharma Accumulate ,174 32,899 36, Syngene International Accumulate ,168 1,394 1, Power Tata Power Neutral 82-22,193 32,547 33, NTPC Neutral ,430 86, , Power Grid Accumulate ,346 29,183 32, Real Estate Prestige Estate Neutral ,620 4,607 5, MLIFE Buy , Telecom Bharti Airtel Neutral ,813 97, , Idea Cellular Neutral 94-33,728 35,012 37, (4.4) (2.7) (6.8) (4.6) zothers Abbott India Neutral 4,956-10,531 3,244 3, Asian Granito Buy ,446 1,169 1, Bajaj Electricals Neutral 404-4,106 4,646 5, Banco Products (India) Neutral 221-1,580 1,530 1, Coffee Day Enterprises Ltd Neutral 219-4,503 3,494 3, Elecon Engineering Neutral Garware Wall Ropes Neutral 915-2, , Goodyear India* Neutral 813-1,874 1,717 1, Hitachi Neutral 2,400-6,525 2,355 2, HSIL Neutral 457-3,307 2,240 2, Interglobe Aviation Neutral 1,166-44,769 22,570 27, Jyothy Laboratories Neutral 331-6,010 1,781 2, Linc Pen & Plastics Neutral M M Forgings Neutral 860-1, Mirza International Neutral 152-1,823 1,148 1, Navkar Corporation Buy , Nilkamal Neutral 1,561-2,329 2,317 2,

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 zothers Parag Milk Foods Neutral 233-1,959 1,987 2, Radico Khaitan Neutral 219-2,911 1,811 1, Relaxo Footwears Neutral 558-6,697 1,981 2, Siyaram Silk Mills Buy ,640 1,769 1, Styrolution ABS India* Neutral 932-1,638 1,800 1, Surya Roshni Neutral 342-1,499 4,870 5, TVS Srichakra Neutral 3,263-2,498 2,729 2, Visaka Industries Neutral ,104 1, VIP Industries Neutral 305-4,307 1,450 1, Navin Fluorine Accumulate , , Source: Company, Angel Research; Note: *December year end; #September year end; &October year end; Price as on November 15, 2017

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