Market Outlook. Market Cues. News Analysis. Investor s Ready Reckoner. Top Picks. Key Upcoming Events. September 16, 2016

Transcription

1 6.( Market Cues Indian markets are likely to open positive taking global cues. US markets gained on Thursday after weak U.S. retail sales data undermined the argument that the Federal Reserve will raise interest rates next week. European markets closed broadly up on Thursday after the Bank of England kept rates at 0.25% and announced there would be no change to its 70 billion ($92 billion) quantitative easing program. Indian markets rose for a second consecutive session on Thursday, even as the underlying sentiment remained cautious amid the oil price downturn and concerns over the global central banks' ability to stimulate growth through ultra-easy monetary policies. News Analysis Transformers and Rectifiers bags `103cr order from PGCIL 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 Amara Raja Batteries Auto & Auto Ancillary Accumulate 1,039 1, HCL Tech IT Buy 778 1, Bharat Electronics Capital Goods Buy 1,219 1, Equitas Holdings Financials Buy Navkar Corporation Others Buy More Top Picks on Pg3 Key Upcoming Events Date Region Event Description Previous Reading Consensus Expectations Sep 16 UK BOE Announces rates Sep 20 US Housing rates 1, ,193.0 Sep 20 US Building permits 1, ,170.0 Sep 21 UK FOMC rate decision Sep 22 US Euro Zone Consumer Confidence (8.5) -- Sep 22 US Existing home sales More Events on Pg4 Domestic Indices Chg (Pts) (Close) BSE Sensex ,413 Nifty ,743 Mid Cap (0.3) (33) 13,092 Small Cap ,746 Bankex (0.6) (134) 22,736 Global Indices Chg (Pts) (Close) Dow Jones ,212 Nasdaq ,250 FTSE ,730 Nikkei (1.3) (209) 16,405 Hang Seng ,336 Shanghai Com (0.7) (21) 3,003 Advances / Declines BSE NSE Advances 1, Declines 1, Unchanged Volumes (` Cr) BSE 3,801 NSE 19,232 Net Inflows (` Cr) Net Mtd Ytd FII (473) ,522 MFs (185) (840) 9,269 Top Gainers Price (`) Chg Tv18Brdcst Jubilant Suntv Unitech Dishtv Top Losers Price (`) Chg Beml 900 (12.3) Prestige 184 (4.8) Pcjeweller 494 (4.5) Ashokley 82 (3.6) Trent 232 (3.2) As on September 15, 2016

2 News Analysis Transformers and Rectifiers bags `103cr order from PGCIL Power equipment maker Transformers and Rectifiers announced it has bagged order worth `103cr from Power Grid Corporation of India Ltd to supply power transformers. Transformers and Rectifiers (India) Ltd has been awarded the order for power transformers up to 220 kv class amounting to `103cr from Power Grid Corporation of India Ltd (PGCIL). With this order, the company's order book as on date stands at `960cr. As per management the company continuously thrives to deliver quality products and services and over a period of time has become a leading manufacturer of transformers in the country. Economic and Political News Petrol, diesel consumption hits 5-year high in August Mines ministry to seek bids for exploration of 20 blocks Textile package reforms yet to significantly boost jobs, productivity Corporate News NMDC, MOIL's `8,400cr buyback offers to open Sept 19 PVR to raise `250cr via NCDs ONGC inks deal to buy extra 11% stake in Russian Vankor fields Future Group to add 6 more stores to Central brand Maruti to launch seven new models in 2017

3 Top Picks Large Cap Company Market Cap (` Cr) CMP (`) Target (`) Upside Amara Raja Batteries 17,753 1,039 1, Bharat Electronics 29,262 1,219 1, HCL Tech 1,09, , Infosys 2,39,192 1,041 1, Source: Company, Angel Research Rationale To outpace battery industry growth due to better technological products leading to market share gains in both the automotive OEM and replacement segments. Uptick in defense capex by government when coupled with BELs strong market positioning, indicate that good times are ahead for BEL. The stock is trading at attractive valuations and is factoring all the bad news. Back on the growth trend, expect a long term growth of 14% to be a US$20bn in FY2020. Mid Cap Company Market Cap (` Cr) CMP (`) Target (`) Bajaj Electricals 2, Blue Star 4, Dewan Housing Finance 8, Equitas Holdings 5, Goodyear India 1, Jagran Prakashan 6, Mahindra Lifespace 1, Navkar Corporation 2, Radico Khaitan 1, Siyaram Silk Mills 1,197 1,277 1, TV Today Network 1, Source: Company, Angel Research Upside Rationale Among the top 4 players in the consumer durables segment. Improved profitability backed by turn around in E&P segment. Strong order book lends earnings visibility. Favourable 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. Strong loan growth backed by diversified loan portfolio and adequate CAR. ROE & ROA likely to remain decent as risk of dilution remains low. Attractive valuations considering growth. Expectations of above average monsoon augurs well for Goodyear India as it derives ~50% of its turnover from farm tyre segment. Economic recovery to have favourable impact on advertising & circulation revenue growth. Further, the acquisition of a radio business (Radio City) would also boost the company's revenue growth. Speedier execution and speedier sales, strong revenue visibilty in short-to-long run, attractive valuations Massive capacity expansion along with rail advantage at ICD as well CFS augurs well for the company Earnings boost on back of stable material prices and favourable pricing environment. Valuation discount to peers provides additional comfort 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 corporates to benefit the stock.

4 Key Upcoming Events Global economic events release calendar Date Time Country Event Description Unit Period Bloomberg Data Last Reported Estimated Sep 16, :30PM UK BOE Announces rates % Ratio Sep Sep 20, :00PM US Housing Starts Thousands Aug 1, , :00PM US Building permits Thousands Aug 1, , Sep 21, :30PM US FOMC rate decision % Sep Sep 22, :30PM Euro Zone Euro-Zone Consumer Confidence Value Sep A (8.50) -- 7:30PM US Existing home sales Million Aug Sep 23, :00PM Germany PMI Services Value Sep P :00PM Germany PMI Manufacturing Value Sep P Sep 26, :30PM US New home sales Thousands Aug Sep 27, :30PM US Consumer Confidence S.A./ 1985=100 Sep Sep 29, :00PM US GDP Qoq (Annualised) % Change 2Q T :25PM Germany Unemployment change (000's) Thousands Sep (7.00) -- Sep 30, :00PM UK GDP (YoY) % Change 2Q F Oct 1, :30AM China PMI Manufacturing Value Sep Oct 3, :00PM UK PMI Manufacturing Value Sep Oct 4, :00AM India RBI Reverse Repo rate % Oct :00AM India RBI Repo rate % Oct :00AM India RBI Cash Reserve ratio % Oct Source: Bloomberg, Angel Research

5 h Macro watch Exhibit 1: Quarterly GDP trends Exhibit 2: IIP trends QFY QFY QFY QFY QFY QFY15 4QFY QFY16 2QFY QFY QFY QFY (2.0) (4.0) (6.0) 3.7 Sep Oct-15 (3.4) Nov-15 (0.9) Dec-15 (1.6) Jan Feb Mar-16 (1.3) Apr May Jun-16 (2.4) Jul-16 Source: CSO, Angel Research Source: MOSPI, Angel Research Exhibit 3: Monthly CPI inflation trends Exhibit 4: Manufacturing and services PMI Mfg. PMI Services PMI Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 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 (5.0) (10.0) (15.0) Exports yoy growth Imports yoy growth Repo rate Reverse Repo rate CRR (20.0) (25.0) (30.0) (35.0) Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul Oct-15 Nov-15 Nov-15 Dec-15 Dec-15 Jan-16 Jan-16 Jan-16 Feb-16 Feb-16 Mar-16 Mar-16 Apr-16 Apr-16 May-16 May-16 Jun-16 Jun-16 Jul-16 Jul-16 Jul-16 Aug-16 Aug-16 Sep-16 Source: Bloomberg, Angel Research Source: RBI, Angel Research

6 h Global watch Exhibit 1: Latest quarterly GDP Growth (%, yoy) across select developing and developed countries (2.0) (4.0) Brazil (3.8) Russia (0.6) India China South Africa Indonesia Malaysia Thailand UK USA Germany France Japan (6.0) Source: Bloomberg, Angel Research Exhibit 2: 2016 GDP Growth projection by IMF (%, yoy) across select developing and developed countries (3.8) (1.8) (2.0) (4.0) Brazil Russia India China South Africa Indonesia Malaysia Thailand UK USA Germany France Japan (6.0) Source: IMF, Angel Research Exhibit 3: One year forward P-E ratio across select developing and developed countries (x) Brazil 7.5 Russia 18.3 India 13.1 China 18.1 South Africa 18.1 Indonesia 16.5 Malaysia 13.8 Thailand 16.8 UK 15.8 USA 12.7 Germany 14.0 France 12.1 Japan Source: IMF, Angel Research

7 h Exhibit 4: Relative performance of indices across globe Returns Country Name of index Closing price 1M 3M 1YR Brazil Bovespa 57,909 (2.1) Russia Micex 1, India Nifty 8, China Shanghai Composite 3,003 (3.9) 4.5 (5.3) South Africa Top 40 45, (1.0) 5.8 Mexico Mexbol 45,923 (6.0) Indonesia LQ (3.8) Malaysia KLCI 1,653 (1.9) Thailand SET (5.9) USA Dow Jones 18,212 (2.9) UK FTSE 6,730 (3.0) Japan Nikkei 16,405 (1.2) 3.0 (7.8) Germany DAX 10,431 (3.4) France CAC 4,373 (2.8) 5.2 (1.4) Source: Bloomberg, Angel Research

8 Stock Watch Company Name Reco CMP Target Mkt Cap Sales ( cr ) OPM EPS ( ) PER(x) P/BV(x) RoE EV/Sales(x) ( ) Price ( ) ( cr ) FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E Agri / Agri Chemical Rallis Neutral 222-4,307 1,937 2, United Phosphorus Neutral ,683 15,176 17, Auto & Auto Ancillary Ashok Leyland Buy ,208 22,407 26, Bajaj Auto Neutral 2,932-84,841 25,093 27, Bharat Forge Neutral ,240 7,726 8, Eicher Motors Neutral 22,440-60,950 16,583 20, Gabriel India Neutral 116-1,661 1,544 1, Hero Motocorp Neutral 3,523-70,342 31,253 35, Jamna Auto Industries Neutral 214-1,707 1,486 1, L G Balakrishnan & Bros Neutral ,302 1, Mahindra and Mahindra Neutral 1,406-87,301 46,534 53, Maruti Neutral 5, ,433 69,186 82, Minda Industries Neutral 310-2,463 2,728 3, Motherson Sumi Neutral ,323 45,896 53, Rane Brake Lining Neutral 1,296-1, Setco Automotive Neutral Tata Motors Neutral , , , TVS Motor Neutral ,255 13,390 15, Amara Raja Batteries Accumulate 1,039 1,174 17,753 5,429 6, Exide Industries Neutral ,545 7,439 8, Apollo Tyres Neutral ,962 12,877 14, Ceat Accumulate 1,063 1,119 4,301 7,524 8, JK Tyres Neutral 145-3,288 7,455 8, Swaraj Engines Neutral 1,206-1, Subros Neutral ,488 1, Indag Rubber Neutral Capital Goods ACE Neutral BEML Buy 900 1,157 3,749 3,451 4, Bharat Electronics Buy 1,219 1,414 29,262 8,137 9,

9 Stock Watch Company Name Reco CMP Target Mkt Cap Sales ( cr ) OPM EPS ( ) PER(x) P/BV(x) RoE EV/Sales(x) ( ) Price ( ) ( cr ) FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E Capital Goods Voltas Accumulate ,699 6,511 7, BGR Energy Neutral ,567 33, BHEL Neutral ,787 28,797 34, Blue Star Accumulate ,901 4,351 5, Crompton Greaves Neutral 80-5,017 5,777 6, Greaves Cotton Neutral 135-3,303 1,755 1, Inox Wind Buy ,306 5,605 6, KEC International Neutral 125-3,221 9,294 10, Thermax Neutral 823-9,805 5,421 5, VATech Wabag Buy ,036 3,136 3, Cement ACC Neutral 1,606-30,158 11,225 13, Ambuja Cements Neutral ,845 9,350 10, India Cements Neutral 148-4,534 4,364 4, JK Cement Neutral 799-5,585 4,398 5, J K Lakshmi Cement Neutral 472-5,555 2,913 3, Orient Cement Neutral 208-4,252 2,114 2, UltraTech Cement Neutral 3, ,838 25,768 30, Construction ITNL Neutral 92-3,026 8,946 10, KNR Constructions Accumulate ,989 1,385 1, Larsen & Toubro Buy 1,471 1, ,061 67,665 77, Gujarat Pipavav Port Neutral 182-8, Nagarjuna Const. Neutral 86-4,789 8,842 9, PNC Infratech Buy ,131 2,350 2, Simplex Infra Neutral 336-1,662 6,829 7, Power Mech Projects Neutral ,801 2, Sadbhav Engineering Neutral 291-4,994 3,598 4, NBCC Neutral ,219 7,428 9, MEP Infra Neutral ,877 1, SIPL Neutral 101-3,549 1,036 1, (8.4) (5.6) (22.8) (15.9)

10 Stock Watch Company Name Reco CMP Target Mkt Cap Sales ( cr ) OPM EPS ( ) PER(x) P/BV(x) RoE EV/Sales(x) Construction ( ) Price ( ) ( cr ) FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E Engineers India Neutral 257-8,674 1,725 1, Financials Axis Bank Neutral ,520 58,081 66, Bank of Baroda Neutral ,387 19,980 23, Canara Bank Neutral ,545 15,225 16, Dewan Housing Finance Accumulate ,312 2,225 2, Equitas Holdings Buy , , Federal Bank Neutral 72-12,285 9,353 10, HDFC Neutral 1, ,774 11,475 13, HDFC Bank Accumulate 1,280 1, ,949 46,097 55, ICICI Bank Neutral ,435 39,029 45, LIC Housing Finance Neutral ,501 3,712 4, Punjab Natl.Bank Neutral ,235 23,532 23, RBL Bank Accumulate ,070 1,783 2, South Ind.Bank Neutral 23-3,153 6,435 7, St Bk of India Neutral ,572 88,650 98, Union Bank Neutral 144-9,865 13,450 14, Yes Bank Neutral 1,222-51,438 8,978 11, FMCG Asian Paints Neutral 1, ,255 17,128 18, Britannia Neutral 3,528-42,322 9,795 11, Colgate Neutral ,181 4,605 5, Dabur India Neutral ,516 8,315 9, GlaxoSmith Con* Neutral 6,117-25,726 4,350 4, Godrej Consumer Neutral 1,667-56,764 10,235 11, HUL Neutral ,855 35,252 38, ITC Accumulate ,926 40,059 44, Marico Neutral ,621 6,430 7, Nestle* Neutral 6,296-60,705 10,073 11, Tata Global Neutral 137-8,646 8,675 9, Procter & Gamble Hygiene Accumulate 6,705 7,369 21,765 2,939 3,

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 ) FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E HCL Tech^ Buy 778 1, ,736 49,242 57, Infosys Buy 1,041 1, ,192 69,934 79, TCS Buy 2,328 3, , , , Tech Mahindra Buy ,977 30,347 33, Wipro Buy ,274 51,631 55, Media D B Corp Neutral 400-7,349 2,297 2, HT Media Neutral 84-1,957 2,693 2, Jagran Prakashan Buy ,259 2,355 2, Sun TV Network Neutral ,998 2,850 3, Hindustan Media Ventures Neutral 280-2,055 1,016 1, TV Today Network Buy , Metals & Mining Coal India Neutral ,366 84,638 94, Hind. Zinc Neutral ,344 14,252 18, Hindalco Neutral , , , JSW Steel Neutral 1,754-42,402 53,201 58, NMDC Neutral ,737 6,643 7, SAIL Neutral 48-19,721 47,528 53,738 (0.7) 2.1 (1.9) (1.6) Vedanta Neutral ,095 71,744 81, Tata Steel Neutral , , , Oil & Gas Cairn India Neutral ,054 9,127 10, GAIL Neutral ,855 56,220 65, ONGC Neutral , , , Indian Oil Corp Neutral , , , Reliance Industries Neutral 1, , , , Pharmaceuticals Alembic Pharma Neutral ,854 3,483 4, Aurobindo Pharma Accumulate ,754 15,720 18, Sanofi India* Neutral 4,317-9,942 2,357 2, Cadila Healthcare Neutral ,399 11,126 13, Cipla Sell ,965 15,378 18,

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 ) FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E Dr Reddy's Neutral 3,142-52,055 16,043 18, Dishman Pharma Sell ,902 1,718 1, GSK Pharma* Neutral 2,977-25,217 3,528 3, Indoco Remedies Sell ,926 1,112 1, Ipca labs Accumulate ,271 3,303 3, Lupin Buy 1,545 1,809 69,666 15,912 18, Sun Pharma Buy ,226 31,129 35, Power Tata Power Neutral 75-20,231 36,916 39, NTPC Neutral ,485 86,605 95, Power Grid Neutral ,527 25,763 29, Real Estate MLIFE Buy ,764 1,152 1, Telecom Bharti Airtel Neutral , , , Idea Cellular Neutral 84-30,355 40,133 43, zothers Abbott India Neutral 4,560-9,690 3,153 3, Bajaj Electricals Accumulate ,717 5,099 5, Finolex Cables Neutral 430-6,577 2,883 3, Goodyear India* Accumulate ,420 1,598 1, Hitachi Neutral 1,503-4,087 2,081 2, Jyothy Laboratories Neutral 321-5,818 1,440 2, Page Industries Neutral 14,588-16,272 2,450 3, Relaxo Footwears Neutral 430-5,156 2,085 2, Siyaram Silk Mills Buy 1,277 1,469 1,197 1,799 2, Styrolution ABS India* Neutral 584-1,027 1,440 1, TVS Srichakra Accumulate 2,782 2,932 2,130 2,304 2, HSIL Neutral 344-2,484 2,384 2, Kirloskar Engines India Ltd Neutral 301-4,349 2,554 2, M M Forgings Neutral Banco Products (India) Neutral 233-1,668 1,353 1, Competent Automobiles Neutral ,137 1,

13 Stock Watch Company Name Reco CMP Target Mkt Cap Sales ( cr ) OPM EPS ( ) PER(x) P/BV(x) RoE EV/Sales(x) zothers ( ) Price ( ) ( cr ) FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E Nilkamal Neutral 1,338-1,997 1,995 2, Visaka Industries Neutral ,051 1, Transport Corporation of Neutral 182-1,393 2,671 2, India Elecon Engineering Accumulate ,482 1, Surya Roshni Neutral ,342 3, MT Educare Neutral Radico Khaitan Buy ,408 1,659 1, Garware Wall Ropes Neutral 510-1, Wonderla Holidays Neutral 399-2, Linc Pen & Plastics Neutral The Byke Hospitality Neutral Interglobe Aviation Neutral ,333 21,122 26, Coffee Day Enterprises Ltd Neutral 238-4,912 2,964 3, Navneet Education Neutral 104-2,476 1,062 1, Navkar Corporation Buy , UFO Moviez Neutral 462-1, VRL Logistics Neutral 290-2,649 1,902 2, Team Lease Serv. Neutral 1,088-1,860 3,229 4, S H Kelkar & Co. Neutral 308-4,457 1,036 1, Quick Heal Neutral 225-1, Narayana Hrudaya Neutral 320-6,540 1,873 2, Manpasand Bever. Neutral 707-3, , Parag Milk Foods Neutral 330-2,773 1,919 2, Mirza International Buy ,109 1,024 1, Source: Company, Angel Research; Note: *December year end; #September year end; &October year end; Price as on September 15, 2016

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