Market Outlook. Market Cues. News Analysis. Investor s Ready Reckoner. Top Picks. Key Upcoming Events. November 22, 2017

Transcription

1 Market Cues Indian markets are likely to open flat tracking global indices and SGX Nifty. U.S. stocks rose to record highs on Tuesday as a rally in tech lifted the broader market. Investors also cheered strong quarterly results from top companies in Corporate America. The European markets ended Tuesday's session in the green, adding to the modest gains of the previous session. Traders remain in a cautious mood due to the political uncertainty in Germany. However, the markets received a boost from some positive corporate news. The early gains on Wall Street also provided support in the afternoon Indian markets closed higher of the fourth consecutive session on Tuesday, although overall gains remained muted ahead of derivatives expiry due next week. News Analysis Dr Reddy's (DRL) gets EIR for Vizag Plant 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 Asian Granito Other Buy Navkar Corporation Other Buy KEI Industries Capital Goods Accumulate More Top Picks on Pg4 Key Upcoming Events Date Region Event Description Previous Reading Consensus Expectations Nov22 US Initial Jobless claims Nov22 Germany GDP nsa (YoY) Nov23 Euro Zone Euro-Zone Consumer Confidence (1.00) (0.80) Nov23 Germany PMI Services Nov23 US New home sales More Events on Pg7 Domestic Indices Chg (Pts) (Close) BSE Sensex ,478 Nifty ,327 Mid Cap ,794 Small Cap ,813 Bankex (0.0) (14) 29,207 Global Indices Chg (Pts) (Close) Dow Jones ,430 Nasdaq ,862 FTSE ,411 Nikkei ,416 Hang Seng ,818 Shanghai Com ,410 Advances / Declines BSE NSE Advances 1,460 1,103 Declines 1, Unchanged Volumes (` Cr) BSE 3,572 NSE 33,643 Net Inflows (` Cr) Net Mtd Ytd FII ,403 52,855 MFs 2,326 3,825 99,236 Top Gainers Price (`) Chg Rcom Mcleodruss Trent Sadbhav Gppl Top Losers Price (`) Chg Jetairways 663 (8.0) Renuka 17 (6.4) Gati 133 (5.8) L&Tfh 179 (4.8) Adanient 153 (4.3) As on November,

2 News Analysis Dr Reddy's (DRL) gets EIR for Vizag Plant Dr Reddy's Laboratories (DRL) today received an establishment inspection report (EIR) from the US health regulator for its formulation manufacturing facility at Duvvada in Visakhapatnam. However, it said that the US Food and Drug Administration has not closed the inspection & the manufacturing site's status remains unchanged. In the cover letter the USFDA, has explained that inspection has not closed & the site's status remains unchanged. The USFDA has released the EIR in order to be transparent about its regulatory process. DRL plans to request a re-inspection in 2018 after further discussion on scheduling with the US regulator for its Duvvada facility. As far financials are concerned, the event won t change the status of the company as EIR is just an observation note and doesn t equates to the company getting a clean chit from USFDA. EIR is the name given by the US Food and Drug Administration (US FDA) for an entire narration of what the FDA investigator / inspector did during the time spent at the establishment (facility), from the stage of introductions till the handover of the inspectional observations (termed as Form FDA 483). The EIR is expected to be a compilation of factual information. Thus we maintain reduce recommendation with a Price Target of `2,040. Eris Lifesciences Book profit Ahmadabad based Pharma Company Eris Lifesciences had came with an IPO in June The issue was oversubscribed by 3.3x. Eris Life is a specialty pharma company with 100% focus on the domestic market. It owns and operates a manufacturing facility in Guwahati, Assam. Company also outsources manufacturing of its certain products. The company has reported impressive record of growth and profitability. Considering the track record, we had put a subscribe rating on the issue. The stock at the CMP of `648 yields about 7% returns from the IPO price and we believe that investors should book profit in the scrip. Economic and Political News Railways will now use big data and AI to make your train travel safer ICRA sees GVA growth inching up to 6.3% in Q2 India's food processing sector may attract $33 bn by 2024: Assocham survey Corporate News Future Group aims to open 10,000 Easyday stores by 2022 Muthoot Capital raises `165 cr via QIP, dilutes 12.5% stake Dabur passes on benefits of GST rate cut, reduces some product prices by 9%

3 Top Picks HHHHH Company Market Cap (` Cr) CMP (`) Target (`) Upside Alkem Laboratories 23,368 1,954 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 2,54,457 8,424 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 22, :00 PM US Initial Jobless claims Thousands Nov :30 PM Germany GDP nsa (YoY) % Change 3Q F Nov 23, :30 PM Euro Zone Euro-Zone Consumer Confidence Value Nov A (1.00) (0.80) 2:00 PM Germany PMI Services Value Nov P :30 PM US New home sales Thousands Oct :00 PM Germany PMI Manufacturing Value Nov P Nov 27, :00 PM UK GDP (YoY) % Change 3Q P Nov 28, :30 PM US Consumer Confidence S.A./ 1985=100 Nov Nov 29, :00 PM US GDP Qoq (Annualised) % Change 3Q S Nov 30, :25 PM Germany Unemployment change (000's) Thousands Nov (11.00) 6:30 AM China PMI Manufacturing Value Nov Dec 01, :00 PM UK 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 :00 PM UK Industrial Production (YoY) % Change Oct 2.50 India Exports YoY% % Change Nov (1.10) China Exports YoY% % Change Nov :00 PM US Change in Nonfarm payrolls Thousands Nov :00 PM US Unnemployment rate % Nov 4.10 Dec 09, :00 AM China Consumer Price Index (YoY) % Change Nov 1.90 Dec 12, :30 PM India Industrial Production YoY % Change Oct 3.80 Source: Bloomberg, Angel Research

5 Macro watch Exhibit 1: Quarterly GDP trends Exhibit 2: IIP trends QFY QFY QFY QFY QFY QFY QFY QFY QFY QFY QFY QFY (1.0) 5.1 Nov Dec Jan Feb Mar Apr May-17 (0.3) Jun Jul Aug Sep-17 Source: CSO, Angel Research Source: MOSPI, Angel Research Exhibit 3: Monthly CPI inflation trends Exhibit 4: Manufacturing and services PMI Nov Dec Jan Feb Mar Apr May Jun Jul Aug-17 Sep Oct Sep-16 Oct-16 Nov-16 Dec-16 Mfg. PMI Jan-17 Feb-17 Mar-17 Apr-17 Services PMI May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 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 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 Source: Bloomberg, Angel Research Source: RBI, Angel Research

6 Global watch Exhibit 1: Latest quarterly GDP Growth (%, yoy) across select developing and developed countries Brazil Russia India China South Africa Indonesia Malaysia Thailand UK USA Germany France Japan Source: Bloomberg, Angel Research Exhibit 2: 2017 GDP Growth projection by IMF (%, yoy) across select developing and developed countries Brazil Russia India China South Africa Indonesia Malaysia Thailand UK USA Germany France Japan Source: IMF, Angel Research Exhibit 3: One year forward P-E ratio across select developing and developed countries (x) Brazil 13.1 Russia 5.3 India China South Africa Indonesia Malaysia Thailand UK USA Germany France Japan Source: IMF, Angel Research

7 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 ,501 1,873 2, United Phosphorus Accumulate ,340 18,922 21, Auto & Auto Ancillary Ashok Leyland Accumulate ,589 23,339 27, Bajaj Auto Neutral 3,293-95,287 23,936 27, Bharat Forge Buy ,068 7,637 8, Eicher Motors Neutral 30,397-82,749 19,043 22, , Gabriel India Neutral 191-2,739 1,782 2, Hero Motocorp Accumulate 3,681 4,129 73,502 32,239 36, Jamna Auto Industries Neutral 60-2,393 1,441 1, Mahindra and Mahindra Neutral 1,418-88,142 46,971 53, Maruti Accumulate 8,424 8, ,457 80,985 97, Minda Industries Neutral 1,136-9,815 4,328 5, Motherson Sumi Neutral ,197 55,937 64, Tata Motors Neutral , , , TVS Motor Neutral ,650 13,992 16, Amara Raja Batteries Accumulate ,724 6,140 7, Exide Industries Neutral ,264 8,689 9, Apollo Tyres Neutral ,044 15,739 17, Ceat Neutral 1,840-7,441 6,661 7, JK Tyres Neutral 146-3,322 8,318 9, Swaraj Engines Neutral 1,887-2, Subros Neutral 251-1,507 1,855 2, Capital Goods BEML Neutral 1,635-6,808 4,286 5, Bharat Electronics Neutral ,599 10,258 12, Voltas Neutral ,758 6,778 8, BHEL Neutral 88-32,125 33,200 39, Blue Star Buy ,681 5,220 6, CG Power and Industrial Neutral 86-5,412 6,555 7, , Solutions Greaves Cotton Neutral 121-2,960 1,778 1,

8 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 ,744 9,779 11, KEI Industries Accumulate ,608 3,001 3, Thermax Neutral 1,052-12,536 4,125 4, VATech Wabag Buy ,994 3,867 4, Cement ACC Neutral 1,705-32,013 12,255 13, Ambuja Cements Neutral ,974 10,250 11, India Cements Neutral 170-5,251 6,135 6, JK Cement Neutral 994-6,946 4,150 4, J K Lakshmi Cement Neutral 399-4,692 3,422 3, Orient Cement Neutral 166-3,406 2,215 3, UltraTech Cement Neutral 4, ,256 28,250 35, Construction KNR Constructions Neutral 275-3,865 1,846 2, Larsen & Toubro Neutral 1, ,164 95, , Gujarat Pipavav Port Neutral 140-6, PNC Infratech Neutral 184-4,707 2,040 2, Simplex Infra Neutral 559-2,765 6,012 6, Sadbhav Engineering Neutral 339-5,820 3,823 4, NBCC Neutral ,381 9,099 12, MEP Infra Neutral 101-1,640 2,403 2, SIPL Neutral 138-4,859 2,060 2, (5.8) (3.1) (14.2) (2.3) Engineers India Neutral ,403 1,795 2, Financials Axis Bank Accumulate ,114 32,558 35, Bank of Baroda Neutral ,590 22,533 26, Canara Bank Neutral ,435 17,925 20, Can Fin Homes Neutral 462-6, Cholamandalam Inv. & Neutral Fin. Co. 1,294-20,226 2,826 3, Dewan Housing Finance Accumulate ,486 2,676 3, Equitas Holdings Buy ,934 1,125 1, Federal Bank Accumulate ,986 4,896 5,

9 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, ,398 55,236 63, ICICI Bank Neutral ,444 42,361 51, Karur Vysya Bank Buy ,348 3,289 3, LIC Housing Finance Neutral ,328 4,895 6, Punjab Natl.Bank Neutral ,612 23,708 25, RBL Bank Neutral ,317 2,309 2, Repco Home Finance Buy , South Ind.Bank Neutral 31-5,670 3,195 3, St Bk of India Neutral , , , Union Bank Neutral ,215 14,650 16, Yes Bank Neutral ,576 11,088 13, FMCG Akzo Nobel India Neutral 1,790-8,585 3,164 3, Asian Paints Neutral 1, ,396 17,603 20, , , Britannia Neutral 4,821-57,877 9,690 11, Colgate Neutral 1,044-28,389 4,420 5, Dabur India Neutral ,786 8,346 9, GlaxoSmith Con* Neutral 6,022-25,328 5,072 5, Godrej Consumer Neutral ,900 10,171 11, HUL Neutral 1, ,447 37,077 41, , , ITC Neutral ,315 44,588 49, Marico Neutral ,298 6,788 7, Nestle* Neutral 7,750-74,719 10,083 11, Tata Global Neutral ,239 7,121 7, Procter & Gamble Hygiene Neutral 9,150-29,702 3,034 3, IT HCL Tech^ Buy 837 1, ,496 50,009 54, Infosys Buy 966 1, ,981 70,333 75, TCS Reduce 2,677 2, , , , Tech Mahindra Accumulate ,229 30,545 32,

10 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 ,056 54,164 56, Media D B Corp Neutral 361-6,649 2,404 2, HT Media Neutral 100-2,322 2,589 2, Jagran Prakashan Buy ,085 2,541 2, Sun TV Network Neutral ,430 3,238 3, Hindustan Media Ventures Neutral 243-1,784 1,002 1, TV Today Network Buy , Music Broadcast Limited Buy , Metals & Mining Coal India Neutral ,114 82,301 91, Hind. Zinc Neutral ,562 22,108 24, Hindalco Neutral , , , JSW Steel Neutral ,830 64,500 68, NMDC Neutral ,960 10,209 11, SAIL Neutral 83-34,280 54,100 63, (10.0) Vedanta Neutral ,311 81,206 87, Tata Steel Neutral , , , Oil & Gas GAIL Neutral ,572 53,115 52, ONGC Neutral ,089 83,111 84, Indian Oil Corp Neutral , , , Reliance Industries Neutral , , , Pharmaceuticals Alembic Pharma Buy ,703 3,346 3, Alkem Laboratories Ltd Accumulate 1,954 2,125 23,368 6,320 7, Aurobindo Pharma Buy ,563 17,086 19, Aventis* Neutral 4,477-10,311 2,411 2, Cadila Healthcare Neutral ,869 11,584 13, Cipla Sell ,609 16,163 18, Dr Reddy's Neutral 2,391-39,646 15,844 17, GSK Pharma* Neutral 2,491-21,096 2,968 3, Indoco Remedies Sell ,488 1,154 1,

11 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 542-6,835 3,593 4, Lupin Buy 838 1,091 37,854 16,240 18, Natco Pharma Buy 906 1,057 15,804 1,886 2, Sun Pharma Neutral ,092 32,899 36, Syngene International Accumulate ,326 1,394 1, Power Tata Power Neutral 93-25,127 32,547 33, NTPC Neutral ,933 86, , Power Grid Accumulate ,189 29,183 32, Real Estate Prestige Estate Neutral ,531 4,607 5, MLIFE Buy , Telecom Bharti Airtel Neutral ,129 97, , Idea Cellular Neutral ,361 35,012 37, (4.4) (2.7) (6.8) (4.6) zothers Abbott India Neutral 4,996-10,616 3,244 3, Asian Granito Buy ,486 1,169 1, Bajaj Electricals Neutral 408-4,152 4,646 5, Banco Products (India) Neutral 222-1,588 1,530 1, Coffee Day Enterprises Ltd Neutral 231-4,759 3,494 3, Elecon Engineering Neutral Garware Wall Ropes Neutral 923-2, , Goodyear India* Neutral 822-1,895 1,717 1, Hitachi Neutral 2,500-6,798 2,355 2, HSIL Neutral 485-3,507 2,240 2, Interglobe Aviation Neutral 1,166-44,792 22,570 27, Jyothy Laboratories Neutral 346-6,296 1,781 2, Linc Pen & Plastics Neutral M M Forgings Neutral 873-1, Mirza International Neutral 166-1,992 1,148 1, Navkar Corporation Buy , Nilkamal Neutral 1,620-2,417 2,317 2,

12 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 236-1,988 1,987 2, Radico Khaitan Neutral 281-3,736 1,811 1, Relaxo Footwears Neutral 571-6,873 1,981 2, Siyaram Silk Mills Accumulate ,741 1,769 1, Styrolution ABS India* Neutral 930-1,635 1,800 1, Surya Roshni Neutral 370-1,624 4,870 5, TVS Srichakra Neutral 3,349-2,564 2,729 2, Visaka Industries Neutral 639-1,016 1,104 1, VIP Industries Neutral 310-4,377 1,450 1, Navin Fluorine Neutral 697-3, , Source: Company, Angel Research; Note: *December year end; #September year end; &October year end; Price as on November 21, 2017

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