Market Outlook. Market Cues. News Analysis. Investor s Ready Reckoner. Top Picks. Key Upcoming Events. July 14, 2016

Transcription

1 6.( Market Outlook Market Cues Indian markets are expected to open flat tracking SGX Nifty. US market closed mixed on Wednesday with Dowjones closing up by 24 points while the NASDAQ closed down by 17 points. After posting strong gains in the past few trading sessions, lack of any major announcement or economic data left the market s direction less. European shares remained weak as investors stayed away from taking positions ahead of crucial meeting by Bank Of England, where the apex bank will take the decision regarding the future interest rates. Indian markets remained flat on Wednesday and lacked direction. Though ONGC gained after news of staggered hike in Kerosene prices, the gain was negated by weakness in banking stocks and other large stocks like Ultrtaech, Power grid and BPCL etc which saw selling pressure. News Analysis Govt to divest 15% in NBCC TCS results 1QFY17 Preview Detailed analysis on Pg2 Investor s Ready Reckoner Key Domestic & Global Indicators Stock Watch: Latest investment recommendations on 150+ stocks Refer Pg6 onwards Top Picks Company Sector Rating CMP (`) Target (`) Upside (%) Amara Raja Auto/Auto Ancillary Buy 870 1, HCL Tech IT Buy 720 1, LIC Housing Financials Buy Bharat Electronics Capital Goods Accumulate 1,246 1, Navkar Corporation Others Buy More Top Picks on Pg4 Key Upcoming Events Date Region Event Description Previous Reading Consensus Expectations July 14 China Exports YoY% (4.8) (5.0) July 14 UK BOE Announces rates July 14 Euro Zone Euro Zone CPI YoY June 15 India Monthly Wholesale Prices YoY% More Events on Pg5 Domestic Indices Chg (%) (Pts) (Close) BSE Sensex ,815 Nifty (0.0) (2) 8,520 Mid Cap (0.6) (67) 12,050 Small Cap (0.8) (100) 11,981 Bankex (0.3) (61) 21,341 Global Indices Chg (%) (Pts) (Close) Dow Jones ,372 Nasdaq (0.3) (17) 5,006 FTSE (0.2) (10) 6,670 Nikkei ,231 Hang Seng ,322 Shanghai Com ,061 Advances / Declines BSE NSE Advances 1, Declines 1, Unchanged Volumes (` Cr) BSE 3,941 NSE 21,204 Net Inflows (` Cr) Net Mtd Ytd FII 365 1,820 21,365 MFs Top Gainers Price (`) Chg (%) Balkrisind Gmdcltd Gmrinfra Escorts Mrpl Top Losers Price (`) Chg (%) Tv18Brdcst 41 (13.0) Network18 43 (9.6) Dcbbank 100 (5.4) Manappuram 74 (5.0) Rtnpower 11 (4.6) As on July 13, 2016

2 Market Outlook Govt to divest 15% in NBCC, aims to raise `1,706cr; The cabinet on Wednesday approved the 15% stake sale in NBCC in which the Govt holds 90% stake. According to SEBI guidelines the minimum public holding in the listed company has to be minimum 75% and this stake sell will help the company in meeting the guidelines. Early this month the Govt announced to build seven housing colonies to double the existing units from 12,970 to 25,667 at a total cost of `32,835 cr. NBCC is a strong players in the redevelopment work by Govt and hence likely to get a lion share of the order and hence we have seen a sharp rise in the stock price in the last one week. NBCC has been on our top pick in the infra segment and our target has been archived on the stock. At the current price the stock trades at 21x its FY18E EPS of `11. Despite sharp run up in the stock investors with long-term horizon can hold on to the stock as new expected orders brings more earnings visibility going ahead. Result Preview TCS (CMP: `2,491/ TP: `3,004/Upside: 20.6%) TCS is slated to announce its 1QFY2017 results today. We expect the company to post 3.2% sequential growth in USD revenues to US$4,375mn, mostly volume lead. In rupee terms, revenues are expected to come in at `29,362cr, up 3.2% qoq. EBITDA margin is expected to show decline of ~95bp qoq to end at 26.5%. Consequently, PAT is expected to be at `6,151cr, a de-growth of 3.0% qoq. We maintain our buy rating on the stock with a target price of `3,004. Y/E Sales OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales March (` cr) (%) (` cr) (`) (%) (x) (x) (x) (x) FY2017E 1,22, , FY2018E 1,38, , Economic and Political News Navi Mumbai airport gets green signal. Traders call off strike against anomalies in APMC Act SC restores Cong Govt in Arunachal Pradesh Corporate News Tata Motors aims to be among the top 3 in the country HCC becomes to the first corporate to get benefit of S4A by banks. India Ratings reaffirmed AAA ratings on SBI,BoB,Union Bank of India and Canara Bank Mining lease of Pottangi bauxite mines granted to NALCO Greaves Cotton foyas into multi brand spares business Govt to raise `1,706 cr from stake sell in NBCC

3 Market Outlook Quarterly Bloomberg Brokers Consensus Estimate Tata Consultancy Services Ltd Consol - Particulars (` cr) 1QFY17E 1QFY16 y-o-y (%) 4QFY16 q-o-q (%) Net sales 29,281 25, , EBITDA 7,723 7, ,887 (2.1) EBITDA margin (%) Net profit 6,058 5, ,413 (5.5) LIC Housing Finance Ltd - July 15, 2016 Particulars (` cr) 1QFY17E 1QFY16 y-o-y (%) 4QFY16 q-o-q (%) PAT Reliance Industries Ltd - July 15, 2016 Particulars (` cr) 1QFY17E 1QFY16 y-o-y (%) 4QFY16 q-o-q (%) Net sales 57,426 65,817 (12.7) 49, EBITDA 9,817 9, ,727 (8.5) EBITDA margin (%) Net profit 6,549 6, ,320 (10.5) Infosys Ltd Consol - July 15, 2016 Particulars (` cr) 1QFY17E 1QFY16 y-o-y (%) 4QFY16 q-o-q (%) Net sales 17,046 14, , EBITDA 4,457 3, ,639 (3.9) EBITDA margin (%) Net profit 3,430 3, ,597 (4.6) Exide Industries Ltd - July 18, 2016 Particulars (` cr) 1QFY17E 1QFY16 y-o-y (%) 4QFY16 q-o-q (%) Net sales 1,940 1, , EBITDA EBITDA margin (%) Net profit

4 Market Outlook Top Picks Large Cap Company Market Cap (` Cr) CMP (`) Target (`) Upside (%) Rationale Amara Raja Batteries 14, , To outpace battery industry growth due to better technological products leading to market share gains in both the automotive OEM and replacement segments. Bharat Electronics 29,911 1,246 1, Uptick in defense capex by government, coupled with BELs strong market positioning, indicate good times ahead for BEL. HCL Tech 1,01, , Stock is trading at attractive valuations & factors all bad news. HDFC Bank 3,02,353 1,194 1, 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. Infosys 2,74,060 1,193 1, Back on the growth trend, expect a long term growth of 14% to be a US$20bn in FY2020. LIC Housing Fin. 25, Continues to grow its retail loan book at healthy pace with improvement in asset quality. Expect LICHF to post a healthy loan book which is likely to reflect in a strong earnings growth. NBCC 13, Huge bid pipeline of re-development works at Delhi and other State Governments and opportunity from Smart City, positions NBCC to report strong growth, going forward. Voltas 10, Strong market positioning within the domestic AC markets to continue, EMP business set to revive Source: Company, Angel Research Mid Cap Company Market Cap (` Cr) CMP (`) Target (`) Upside (%) Bajaj Electricals 2, Blue Star 4, Dewan Housing 6, Equitas Holdings 5, Goodyear India 1, IL&FS Transport 2, Jagran Prakashan 5, Mahindra Lifespace 1, Navkar Corporation 2, Radico Khaitan 1, Siyaram Silk Mills 995 1,062 1, Source: Company, Angel Research 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 AC industry to augur well for Cooling products business. 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. Commencement of new projects, downtrend in the interest rate cycle, to lead to stock re-rating 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 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 Strong brands and distribution network would boost growth going ahead. Stock currently trades at an inexpensive valuation.

5 Market Outlook h Key Upcoming Events Global economic events release calendar Bloomberg Data Date Time Country Event Description Unit Period Last Reported Estimated Jul 14, :04 PM China Exports YoY% % Change Jun (5.00) 4:30 PM UK BOE Announces rates % Ratio Jul :30 PM Euro Zone Euro-Zone CPI (YoY) % Jun F US Producer Price Index (mom) % Change Jun 0.50 Jul 15, :00 PM India Monthly Wholesale Prices YoY% % Change Jun :00 PM US Consumer price index (mom) % Change Jun :45 PM US Industrial Production % Jun :30 AM China Industrial Production (YoY) % Change Jun :30 AM China Real GDP (YoY) % Change 2Q Jul 19, :00 PM US Housing Starts Thousands Jun , :00 PM US Building permits Thousands Jun , :00 PM UK CPI (YoY) % Change Jun 0.30 Jul 20, :00 PM UK Jobless claims change % Change Jun (0.40) 7:30 PM Euro Zone Euro-Zone Consumer Confidence Value Jul A (7.30) Jul 21, :15 PM Euro Zone ECB announces interest rates % Jul 21-7:30 PM US Existing home sales Million Jun Jul 22, :00 PM Germany PMI Services Value Jul P :00 PM Germany PMI Manufacturing Value Jul P Jul 26, :30 PM US Consumer Confidence S.A./ 1985=100 Jul Source: Bloomberg, Angel Research

6 Agri / Agri Chemical Rallis Neutral 209-4,065 1,612 1, United Phosphorus Buy ,028 13,083 15, Auto & Auto Ancillary Ashok Leyland Buy ,883 17,995 21, Bajaj Auto Neutral 2,656-76,846 22,709 25, Bharat Forge Buy ,378 7,351 8, Eicher Motors Neutral 19,500-52,964 15,556 16, Gabriel India Neutral 99-1,418 1,415 1, Hero Motocorp Neutral 3,236-64,610 28,244 30, Jamna Auto Industries Neutral 170-1,355 1,281 1, L G Balakrishnan & Bros Neutral ,254 1, Mahindra and Mahindra Neutral 1,464-90,953 38,416 42, Maruti Neutral 4, ,502 57,865 68, Minda Industries Neutral 1,160-1,840 2,523 2, Motherson Sumi Accumulate ,041 39,343 45, Rane Brake Lining Buy Setco Automotive Neutral Tata Motors Neutral , , , TVS Motor Accumulate ,616 11,263 13, Amara Raja Batteries Buy 870 1,076 14,866 4,690 5, Exide Industries Neutral ,491 6,950 7, Apollo Tyres Buy ,854 12,056 12, Ceat Buy 863 1,119 3,491 6,041 6, JK Tyres Neutral 89-2,027 7,446 7, Swaraj Engines Neutral 1,139-1, Subros Neutral ,293 1, Indag Rubber Neutral Capital Goods ACE Neutral BEML Buy 882 1,157 3,673 3,277 4, Bharat Electronics Accumulate 1,246 1,414 29,911 7,295 8,

7 Capital Goods Voltas Buy ,712 5,857 6, BGR Energy Neutral ,615 3, BHEL Neutral ,646 33,722 35, Blue Star Accumulate ,025 3,770 4, Crompton Greaves Neutral 71-4,437 13,484 14, Greaves Cotton Neutral 144-3,506 1,655 1, Inox Wind Buy ,132 4,406 5, KEC International Neutral 142-3,657 8,791 9, Thermax Neutral ,799 6,413 7, VATech Wabag Accumulate ,318 2,722 3, Cement ACC Neutral 1,613-30,283 13,151 14, Ambuja Cements Neutral ,435 11,564 12, HeidelbergCement Neutral 118-2,670 1,772 1, India Cements Neutral 113-3,476 4,216 4, JK Cement Neutral 717-5,017 3,661 4, J K Lakshmi Cement Neutral 397-4,666 2,947 3, Mangalam Cements Neutral ,053 1, Orient Cement Neutral 179-3,662 1,854 2, Ramco Cements Neutral ,766 4,036 4, Shree Cement^ Neutral 15,503-54,008 7,150 8, UltraTech Cement Neutral 3,435-94,265 24,669 29, Construction ITNL Accumulate ,753 7,360 8, KNR Constructions Accumulate , , Larsen & Toubro Accumulate 1,549 1, ,382 58,870 65, Gujarat Pipavav Port Neutral 192-9, MBL Infrastructures Buy ,313 2, Nagarjuna Const. Neutral 80-4,420 7,892 8, PNC Infratech Accumulate ,831 1,873 2, Simplex Infra Neutral 310-1,533 5,955 6,

8 Construction Power Mech Projects Neutral ,539 1, Sadbhav Engineering Neutral 296-5,073 3,186 3, NBCC Neutral ,785 5,838 7, MEP Infra Neutral ,956 1, SIPL Neutral 101-3, , Engineers India Neutral 210-7,061 1,667 1, Financials Allahabad Bank Neutral 79-5,723 8,569 9, Axis Bank Neutral ,859 26,204 29, Bank of Baroda Neutral ,820 18,802 21, (7.4) (4.2) Bank of India Neutral ,471 15,972 17, Canara Bank Neutral ,026 15,441 16, Dena Bank Neutral 41-2,734 3,440 3, Dewan Housing Finance Buy ,244 1,828 2, Equitas Holdings Buy , , Federal Bank Neutral 61-10,481 3,279 3, HDFC Neutral 1, ,047 10,358 11, HDFC Bank Accumulate 1,194 1, ,353 38,606 47, ICICI Bank Neutral ,909 34,279 39, IDBI Bank Neutral 74-15,297 9,625 10, Indian Bank Neutral 154-7,418 6,160 6, LIC Housing Finance Accumulate ,808 3,179 3, Oriental Bank Neutral 121-4,185 7,643 8, Punjab Natl.Bank Neutral ,535 23,122 26, South Ind.Bank Neutral 22-2,991 1,965 2, St Bk of India Neutral ,370 79,958 86, Union Bank Neutral 135-9,284 12,646 14, Vijaya Bank Neutral 42-4,200 3,536 3, Yes Bank Neutral 1,147-48,305 7,190 9, FMCG Asian Paints Neutral 1,010-96,831 15,534 17,

9 FMCG Britannia Neutral 2,868-34,406 8,481 9, Colgate Neutral ,140 4,136 4, Dabur India Neutral ,730 9,370 10, GlaxoSmith Con* Neutral 6,213-26,127 4,519 5, Godrej Consumer Neutral 1,602-54,545 9,003 10, HUL Neutral ,258 33,299 35, ITC Neutral ,149 36,837 39, Marico Neutral ,912 6,151 6, Nestle* Neutral 6,582-63,464 9,393 10, Tata Global Neutral 132-8,340 8,635 9, Procter & Gamble Hygiene Buy 6,200 7,369 20,126 2,588 2, IT HCL Tech^ Buy 720 1, ,546 37,061 30, Infosys Buy 1,193 1, ,060 62,441 70, TCS Buy 2,491 3, , , , Tech Mahindra Buy ,191 26,494 30, Wipro Buy ,794 50,808 56, Media D B Corp Neutral 376-6,910 2,025 2, HT Media Neutral 81-1,896 2,495 2, Jagran Prakashan Accumulate ,858 2,107 2, Sun TV Network Neutral ,672 2,510 2, Hindustan Media Ventures Neutral 272-1, , Metals & Mining Coal India Buy ,145 76,167 84, Hind. Zinc Neutral ,760 14,641 14, Hindalco Neutral , , , JSW Steel Neutral 1,558-37,659 42,308 45, (10.3) (1.0) NMDC Neutral 98-38,775 8,237 10, SAIL Neutral 50-20,547 45,915 53, Vedanta Neutral ,488 71,445 81, Tata Steel Neutral , , ,

10 Oil & Gas Cairn India Neutral ,207 11,323 12, GAIL Neutral ,490 64,856 70, ONGC Neutral , , , Petronet LNG Neutral ,578 29,691 31, Indian Oil Corp Neutral , , , Reliance Industries Neutral 1, , , , Pharmaceuticals Alembic Pharma Neutral ,084 3,145 3, Aurobindo Pharma Neutral ,301 13,651 15, Aventis* Neutral 4,589-10,569 2,049 2, Cadila Healthcare Accumulate ,839 9,469 11, Cipla Neutral ,404 13,372 15, Dr Reddy's Neutral 3,608-61,527 15,471 17, Dishman Pharma Neutral 133-2,151 1,733 1, GSK Pharma* Neutral 3,505-29,691 2,741 3, Indoco Remedies Neutral 286-2, , Ipca labs Buy ,823 2,844 3, Lupin Accumulate 1,649 1,809 74,343 13,702 15, Sun Pharma Buy ,313 27,744 31, Power Tata Power Neutral 72-19,487 35,923 37, NTPC Neutral ,742 87,271 99, Power Grid Neutral ,647 20,702 23, Real Estate MLIFE Buy , , Telecom Bharti Airtel Neutral , , , Idea Cellular Neutral ,403 34,282 36, zothers Abbott India Neutral 4,731-10,053 2,715 3, Bajaj Electricals Accumulate ,428 4,612 5, Finolex Cables Neutral 377-5,764 2,520 2, Goodyear India* Buy ,221 1,750 1, Hitachi Neutral 1,372-3,730 1,779 2,

11 zothers Jyothy Laboratories Neutral 293-5,303 1,620 1, MRF Buy 34,517 45,575 14,639 20,316 14, , , Page Industries Neutral 13,171-14,691 1,929 2, Relaxo Footwears Neutral 499-5,985 1,767 2, Siyaram Silk Mills Buy 1,062 1, ,619 1, Styrolution ABS India* Neutral 643-1,131 1,271 1, TVS Srichakra Buy 2,365 2,932 1,811 2,035 2, HSIL Accumulate ,033 2,123 2, Kirloskar Engines India Ltd Neutral 260-3,761 2,403 2, M M Forgings Buy Banco Products (India) Neutral 149-1,067 1,208 1, Competent Automobiles Neutral ,040 1, Nilkamal Neutral 1,212-1,809 1,871 2, Visaka Industries Neutral ,020 1, Transport Corporation of Neutral 334-2,556 2,830 3, India Elecon Engineering Neutral ,359 1, Surya Roshni Buy ,992 3, MT Educare Neutral Radico Khaitan Buy ,218 1,543 1, Garware Wall Ropes Accumulate Wonderla Holidays Neutral 397-2, Linc Pen & Plastics Neutral The Byke Hospitality Neutral Interglobe Aviation Neutral ,994 17,022 21, Coffee Day Enterprises Ltd Neutral 248-5,102 2,692 2, Navneet Education Neutral 98-2, , Navkar Corporation Buy , UFO Moviez Neutral 559-1, VRL Logistics Neutral 314-2,862 1,725 1,

12 zothers Team Lease Serv. Neutral 1,026-1,754 2,565 3, S H Kelkar & Co. Neutral 225-3, , Quick Heal Neutral 278-1, Narayana Hrudaya Neutral 300-6,125 1,603 1, Manpasand Bever. Neutral 629-3, Parag Milk Foods Neutral 339-2,848 1,645 1, Source: Company, Angel Research; Note: *December year end; #September year end; &October year end; Price as on July 13, 2016

13 Market Outlook 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 Metropolitian Stock Exchange of India 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 including its relatives/analyst do not hold any financial interest/beneficial ownership of more than 1% in the company covered by Analyst. 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. Angel/analyst has not served as an officer, director or employee of company covered by Analyst and has not been engaged in market making activity of the company covered by Analyst. 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. 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. Note: Please refer to the important Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Pvt. Limited and its affiliates may have investment positions in the stocks recommended in this report.