Market Outlook. Market Cues. News Analysis. Investor s Ready Reckoner. Top Picks. Key Upcoming Events. September 06, 2016

Transcription

1 6.( Market Cues Indian markets are expected to open flat with a positive bias. The US markets were closed on Monday on account of Labor day.however markets closed moderaly up on Friday after a lower than expected job data by the Labor department.after reporting 2,75,000 for the month of July, the August data showed non farm payrolls at addition of only 1,51,000. Though the markets gave off some of the initial gains it still manged to close higher. The European markets closed positvely on Friday, after a lower than expected job data, fuelled expectations that, the US Fed might not be able to go ahead with its planned rate hike in the near term. Indian markets closed Friday with a modest gain. The markets have seen broad based buying in the last few trading sessions and seems in the absence of any negative development will continue to trade in positive territory. News Analysis Equitas Holdings starts Small Finance Banking operations 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 Auto/Auto Ancillary Accumulate 997 1, HCL Tech IT Buy 784 1, HDFC Bank Financials Accumulate 1,284 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 06 Euro Eurozone GDP QoQ Sep 07 US Initial Jobless Claims Sep 08 UK Industrial Production YoY China Exports YoY% (4.40) (3.90) India Exports YoY% (6.84) Domestic Indices Chg (Pts) (Close) BSE Sensex ,532 Nifty ,810 Mid Cap ,231 Small Cap ,644 Bankex ,804 Global Indices Chg (Pts) (Close) Dow Jones ,419 Nasdaq FTSE (0.2) (15) 6,879 Nikkei ,037 Hang Seng ,649 Shanghai Com ,072 Advances / Declines BSE NSE Advances 1, Declines 1, Unchanged Volumes (` Cr) BSE 3,735 NSE 19,340 Net Inflows (` Cr) Net Mtd Ytd FII (382) (382) 40,286 MFs ,215 Top Gainers Price (`) Chg Jktyre Hcc Pvr 1, Ceatltd Sci Top Losers Price (`) Chg Cholafin 1,098 (6.0) Eidparry 236 (4.8) Kscl 327 (4.4) Rtnpower 10 (3.4) Jindalstel 82 (3.2) As on September 02, 2016

2 News Analysis Equitas Starts Small Finance Banks Operations Equitas Holdings has commenced operations of its Small Finance Bank on Monday, from its head office in Chennai. Earlier the company had plans to start SFB operations fro 400 branches.while the SFB will have to incur `100 cr capex per year, the management had earlier expressed that the SFB will be profitable from the very first year itself. While a large expenses towards technology and other fixed cost has been incuured initially, man power cost will grdaully go up. The new banking operations will have to hire people experienced in the banking space to scale up. As the much awaited SFB operations has started we belive investors will be more keen to obesves how the cost strcture pans out. We expect the company will be able to report 40% CAGR in its loan book, due its low base over FY16-FY18. However, eargnings growth could be lower than the topline growth as the newly formed bank will have to observe all the needs of RBI like maintaining SLR and CRR. At the CMP the stock is trading at 2.4x its FY18E BV,we maintain our BUY rating on the stock. Economic and Political News Railways draw up holding firm blueprint India s coffee exports up 18.15% in April-August Bombardier to bid for upcoming metro rail projects India becomes Honda s biggest 2 wheller market Services PMI at 42 month high in AUgust Corporate News Praj to tie up with PEs for its green fund; to invest in biomass based ethanol Vedanta to investe `3000 cr to double copper capacity Maruti to launch LCV super carry pan India in phases Carborundum Universal expects to come out of loss in China

3 Top Picks Large Cap Company Market Cap (` Cr) CMP (`) Target (`) Upside Amara Raja Batteries 17, , Bharat Electronics 29,256 1,219 1, 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, coupled with BELs strong market positioning, indicate good times ahead for BEL. HCL Tech 1,10, , Stock is trading at attractive valuations & factors all bad news. HDFC Bank 3,25,189 1,284 1, Infosys 2,36,827 1,031 1, Source: Company, Angel Research Strong visibility for a robust 20% earnings trajectory, coupled with high quality of earnings on account of high quality retail business and strategic focus on highly rated corporates. 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 (`) Upside Blue Star 4, Equitas Holdings 6, Goodyear India 1, IL&FS Transport 2, Mahindra Lifespace 1, Navkar Corporation 2, Radico Khaitan 1, TV Today Network 1, Source: Company, Angel Research Rationale 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. 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. Commencement of new projects, downtrend in the interest rate cycle, to lead to stock re-rating Speedier execution and speedier sales, strong revenue visibility 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 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 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Oct-15 Nov-15 Nov-15 Dec-15 Jan-16 Jan-16 Feb-16 Mar-16 Mar-16 Apr-16 May-16 May-16 Jun-16 Jul-16 Aug-16 Aug-16 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Jun-15 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 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 h Macro watch Exhibit 1: Quarterly GDP trends Exhibit 2: IIP trends (2.0) (4.0) (6.0) (3.4) (0.9) (1.6) (1.3) Source: CSO, Angel Research Source: MOSPI, Angel Research Exhibit 3: Monthly CPI inflation trends Exhibit 4: Manufacturing and services PMI 56.0 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 (5.0) (10.0) (15.0) Exports yoy growth Imports yoy growth Repo rate Reverse Repo rate CRR (20.0) 4.50 (25.0) 4.00 (30.0) 3.50 (35.0) 3.00 Source: Bloomberg, Angel Research Source: RBI, Angel Research

5 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 h Global watch Exhibit 1: Latest quarterly GDP Growth (%, yoy) across select developing and developed countries (2.0) (4.0) (6.0) (3.8) (0.6) (0.2) 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) (6.0) Source: IMF, Angel Research Exhibit 3: One year forward P-E ratio across select developing and developed countries (x) Source: IMF, Angel Research

6 h Exhibit 4: Relative performance of indices across globe Returns Country Name of index Closing price 1M 3M 1YR Brazil Bovespa 58, Russia Micex 1, India Nifty 8, China Shanghai Composite 3, South Africa Top 40 46, (3.8) 4.1 Mexico Mexbol 47, Indonesia LQ (1.1) Malaysia KLCI 1, Thailand SET USA Dow Jones 18, UK FTSE 6, Japan Nikkei 16, (0.2) (12.9) Germany DAX 10, France CAC 4, (3.4) Source: Bloomberg, Angel Research

7 September 6, 2016 h Key Upcoming Events Result Calendar Date Company Sep 07, 2016 BHEL, Areva, ONGC, GAIL, Surya Roshni Sep 08, 2016 Sep 09, 2016 Jindal Steel, SAIL Coal India, Nalco, GSPL Source: Bloomberg, Angel Research Global economic events release calendar Date Time Country Event Description Unit Bloomberg Data Period Last Reported Estimated Sep 06, :30 PM Euro Zone Euro-Zone GDP s.a. (QoQ) % Change 2Q F Sep 07, :00 PM US Initial Jobless claims Thousands Sep Sep 08, :00 PM UK Industrial Production (YoY) % Change Jul China Exports YoY% % Change Aug (4.40) (3.90) India Exports YoY% % Change Aug (6.84) Sep 09, :15 PM Euro Zone ECB announces interest rates % Sep India Imports YoY% % Change Aug (19.03) 7:00 AM China Consumer Price Index (YoY) % Change Aug Sep 12, :30 PM India Industrial Production YoY % Change Jul 2.10 Sep 13, :00 PM UK CPI (YoY) % Change Aug :30 AM China Industrial Production (YoY) % Change Aug Sep 14, :00 PM UK Jobless claims change % Change Aug (8.60) 12:00 PM India Monthly Wholesale Prices YoY% % Change Aug 3.55 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 226-4,398 1,937 2, United Phosphorus Accumulate ,227 15,176 17, Auto & Auto Ancillary Ashok Leyland Buy ,692 22,407 26, Bajaj Auto Neutral 3,000-86,806 25,093 27, Bharat Forge Neutral ,350 7,726 8, Eicher Motors Neutral 22,817-61,974 16,583 20, Gabriel India Neutral 120-1,717 1,544 1, Hero Motocorp Neutral 3,579-71,459 31,253 35, Jamna Auto Industries Neutral 222-1,774 1,486 1, L G Balakrishnan & Bros Neutral ,302 1, Mahindra and Mahindra Neutral 1,469-91,229 46,534 53, Maruti Neutral 5, ,828 69,186 82, Minda Industries Neutral 1,407-2,232 2,728 3, Motherson Sumi Neutral ,420 45,896 53, Rane Brake Lining Neutral Setco Automotive Neutral Tata Motors Neutral , , , TVS Motor Neutral ,766 13,390 15, Amara Raja Batteries Accumulate 997 1,076 17,037 5,717 6, Exide Industries Neutral ,899 7,439 8, Apollo Tyres Neutral 194-9,893 12,877 14, Ceat Buy 954 1,119 3,858 7,524 8, JK Tyres Neutral 145-3,299 7,455 8, Swaraj Engines Neutral 1,162-1, Subros Neutral ,488 1, Indag Rubber Neutral Capital Goods ACE Neutral BEML Accumulate 1,078 1,157 4,489 3,451 4, Bharat Electronics Buy 1,219 1,414 29,256 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 Neutral ,909 6,511 7, BGR Energy Neutral ,567 33, BHEL Neutral ,434 28,797 34, Blue Star Accumulate ,754 4,351 5, Crompton Greaves Neutral 82-5,117 5,777 6, Greaves Cotton Neutral 136-3,313 1,755 1, Inox Wind Buy ,253 5,605 6, KEC International Neutral 135-3,481 9,294 10, Thermax Neutral 821-9,782 5,421 5, VATech Wabag Buy ,079 3,136 3, Cement ACC Neutral 1,668-31,325 11,225 13, Ambuja Cements Neutral ,863 9,350 10, India Cements Neutral 152-4,668 4,364 4, JK Cement Neutral 783-5,473 4,398 5, J K Lakshmi Cement Neutral 460-5,418 2,913 3, Orient Cement Neutral 205-4,190 2,114 2, UltraTech Cement Neutral 4, ,179 25,768 30, Construction ITNL Buy ,395 8,946 10, KNR Constructions Accumulate ,973 1,385 1, Larsen & Toubro Accumulate 1,502 1, ,025 67,665 77, Gujarat Pipavav Port Neutral 186-8, Nagarjuna Const. Neutral 87-4,817 8,842 9, PNC Infratech Accumulate ,112 2,350 2, Simplex Infra Neutral 326-1,612 6,829 7, Power Mech Projects Neutral ,801 2, Sadbhav Engineering Neutral 290-4,968 3,598 4, NBCC Neutral ,676 7,428 9, MEP Infra Neutral ,877 1, SIPL Neutral 107-3,783 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 270-9,086 1,725 1, Financials Axis Bank Neutral ,003 58,081 66, Bank of Baroda Neutral ,341 19,980 23, Canara Bank Neutral ,282 15,225 16, Dewan Housing Finance Neutral 287-8,383 2,225 2, Equitas Holdings Buy , , Federal Bank Neutral 70-12,036 9,353 10, HDFC Neutral 1, ,343 11,475 13, HDFC Bank Accumulate 1,284 1, ,189 46,097 55, ICICI Bank Neutral ,025 39,029 45, LIC Housing Finance Neutral ,008 3,712 4, Punjab Natl.Bank Neutral ,771 23,532 23, South Ind.Bank Neutral 22-3,011 6,435 7, St Bk of India Neutral ,446 88,650 98, Union Bank Neutral 140-9,631 13,450 14, Yes Bank Neutral 1,388-58,413 8,978 11, FMCG Asian Paints Neutral 1, ,847 17,128 18, Britannia Neutral 3,358-40,290 9,795 11, Colgate Neutral ,904 4,605 5, Dabur India Neutral ,194 8,315 9, GlaxoSmith Con* Neutral 6,260-26,325 4,350 4, Godrej Consumer Neutral 1,564-53,271 10,235 11, HUL Neutral ,078 35,252 38, ITC Accumulate ,798 40,059 44, Marico Neutral ,505 6,430 7, Nestle* Neutral 6,449-62,181 10,073 11, Tata Global Neutral 142-8,937 8,675 9, Procter & Gamble Hygiene Accumulate 6,594 7,369 21,405 2,939 3, IT HCL Tech^ Buy 784 1, ,646 49,242 57,

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 Infosys Buy 1,031 1, ,827 69,934 79, TCS Buy 2,514 3, , , , Tech Mahindra Buy ,754 30,347 33, Wipro Buy ,422 51,631 55, Media D B Corp Neutral 406-7,468 2,297 2, HT Media Neutral 85-1,971 2,693 2, Jagran Prakashan Accumulate ,381 2,355 2, Sun TV Network Neutral ,538 2,850 3, Hindustan Media Ventures Neutral 280-2,052 1,016 1, TV Today Network Buy , Metals & Mining Coal India Neutral ,019 84,638 94, Hind. Zinc Neutral ,084 14,252 18, Hindalco Neutral , , , JSW Steel Neutral 1,775-42,895 53,201 58, NMDC Neutral ,660 6,643 7, SAIL Neutral 48-19,886 47,528 53,738 (0.7) 2.1 (1.9) (1.6) Vedanta Neutral ,067 71,744 81, Tata Steel Neutral , , , Oil & Gas Cairn India Neutral ,797 9,127 10, GAIL Neutral ,022 56,220 65, ONGC Neutral , , , Indian Oil Corp Neutral , , , Reliance Industries Neutral 1, , , , Pharmaceuticals Alembic Pharma Neutral ,710 3,483 4, Aurobindo Pharma Accumulate ,585 15,720 18, Sanofi India* Neutral 4,475-10,306 2,357 2, Cadila Healthcare Neutral ,363 11,126 13, Cipla Sell ,430 15,378 18, Dr Reddy's Neutral 3,123-53,254 16,043 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 Dishman Pharma Sell ,814 1,718 1, GSK Pharma* Neutral 2,977-25,219 3,528 3, Indoco Remedies Sell ,975 1,112 1, Ipca labs Accumulate ,829 3,303 3, Lupin Buy 1,516 1,809 68,352 15,912 18, Sun Pharma Buy ,228 31,129 35, Power Tata Power Neutral 79-21,367 36,916 39, NTPC Neutral ,721 86,605 95, Power Grid Neutral ,947 25,763 29, Real Estate MLIFE Buy ,773 1,152 1, Telecom Bharti Airtel Neutral , , , Idea Cellular Neutral 84-30,265 40,133 43, zothers Abbott India Neutral 4,615-9,806 3,153 3, Bajaj Electricals Neutral 268-2,710 5,099 5, Finolex Cables Neutral 424-6,492 2,883 3, Goodyear India* Accumulate ,335 1,598 1, Hitachi Neutral 1,505-4,092 2,081 2, Jyothy Laboratories Neutral 317-5,741 1,440 2, Page Industries Neutral 15,198-16,951 2,450 3, Relaxo Footwears Neutral 448-5,381 2,085 2, Siyaram Silk Mills Neutral 1,329-1,245 1,799 2, Styrolution ABS India* Neutral 569-1,001 1,440 1, TVS Srichakra Accumulate 2,645 2,932 2,025 2,304 2, HSIL Neutral 359-2,593 2,384 2, Kirloskar Engines India Ltd Neutral 286-4,132 2,554 2, M M Forgings Neutral Banco Products (India) Neutral 238-1,704 1,353 1, Competent Automobiles Neutral ,137 1, Nilkamal Neutral 1,260-1,881 1,995 2,

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 Visaka Industries Neutral ,051 1, Transport Corporation of Neutral 191-1,464 2,671 2, India Elecon Engineering Accumulate ,482 1, Surya Roshni Neutral ,342 3, MT Educare Neutral Radico Khaitan Buy ,340 1,659 1, Garware Wall Ropes Accumulate , Wonderla Holidays Neutral 410-2, Linc Pen & Plastics Neutral The Byke Hospitality Neutral Interglobe Aviation Neutral ,369 21,122 26, Coffee Day Enterprises Ltd Neutral 243-5,007 2,964 3, Navneet Education Neutral 104-2,477 1,062 1, Navkar Corporation Buy , UFO Moviez Neutral 476-1, VRL Logistics Neutral 291-2,652 1,902 2, Team Lease Serv. Neutral 1,113-1,903 3,229 4, S H Kelkar & Co. Neutral 341-4,937 1,036 1, Quick Heal Neutral 237-1, Narayana Hrudaya Neutral 312-6,370 1,873 2, Manpasand Bever. Neutral 737-3, , Parag Milk Foods Neutral 339-2,848 1,919 2, Source: Company, Angel Research; Note: *December year end; #September year end; &October year end; Price as on September 02, 2016

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