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Stocks To Watch: ACC, HDFC Bank, Hindustan Zinc, UPL, Wipro, Just Dial

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Asian stocks were mixed as the yen pared some of its gains after the Bank of Japan offered to buy bonds at the first fixed-rate operation since February, in a sign the central bank was trying to rein yields.

Equity benchmarks declined in Australia and South Korea. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded a little changed at 11,020.50 as of 7:30 a.m.

Short on time? Well, then listen to this podcast for all you need to know before the opening bell!

Here Are The Stocks To Watch Out For In Today’s Trade

  • UPL Ltd. to acquire Arysta Lifescience in an all cash deal worth $4.2 billion.
  • Wipro guided for IT services revenues to be in range of $2,009 million to $2,049 million in the second quarter. The company will acquire U.S.-based Alight Solutions' India operations for $117 million.
  • Just Dial approved buyback of 27.5 lakh shares, or 24.26 percent equity, at Rs 800 each. The buyback amount to not exceed Rs 220 crore.
  • Havells to merge all India-based subsidiaries with self.
  • Hathway Cable to raise Rs 100 crore via preferential allotment of equity shares to promoter.
  • Muthoot Finance received primary SEBI nod for AMC business.
  • IMP Powers started production of Kinetic Energy Turbine in Silvassa.
  • Sintex Plastics clarified that change in auditors has been effected only post audit and not abruptly.
  • Lyka Labs board accepted in-principle approval received from Dena Bank for compromise settlement of their account.
  • Alok Industries said that their liquidation application has been withdrawn.
  • Cadila Healthcare’s Zydus received final approval from the U.S. FDA for Acetylcysteine injection.
  • BPCL’s board approved transfer of gas business division to subsidiary Bharat Gas Resources Limited. The transaction to be completed in three-four months.

From Bloomberg

  • Alok Industries: Says liquidation application withdrawn.
  • Corporation Bank: Approved raising Rs 2,555 crore via shares allotment preferentially to government.
  • Jubilant Foodworks: Says received a report from anti-profiteering body saying Jubilant didn’t pass GST benefit.
  • SpiceJet: Says Tribunal rejects Maran’s damage claim on warrants
  • Tata Motors: Said to restart talks to sell engineering unit stake

Earnings To Watch

  • ACC
  • Delta Corp
  • Granules India
  • Hindustan Zinc
  • ICICI Securities
  • Indiabulls Ventures
  • L&T Infotech
  • L&T Technology Services
  • Lakshmi Machine
  • Linde India
  • Tejas Networks
  • United Spirits
  • V-Mart Retail
  • Vijaya Bank
  • Welspun Corp

Earnings Reaction To Watch

Wipro (Q1, QoQ)

  • Revenues up 3.4 percent to Rs 14,231 crore.
  • Net Profit up 16.3 percent to Rs 2,094 crore.
  • EBIT up 19.7 percent to Rs 2,254 crore.
  • Margins at 15.8 percent versus 13.7 percent.

HDFC Bank (Q1, YoY)

  • Net profit up 18.2 percent to Rs 4,601 crore.
  • Net interest income up 15.4 percent to Rs 10,813 crore.
  • Net interest margins at 4.2 percent versus 4.3 percent.
  • GNPA at 1.33 percent versus 1.30 percent (QoQ).
  • NNPA at 0.41 percent versus 0.40 percent (QoQ).

L&T Finance Holdings (Q1, YoY)

  • Income from operations up 32 percent to Rs 3,041 crore.
  • Net Profit grew 59 percent to Rs 540 crore.

MCX (Q1, YoY)

  • Revenues up 24 percent to Rs 73 crore.
  • Net profit down 77 percent to Rs 6 crore.
  • Exceptional loss of Rs 24 crore in current quarter.
  • EBITDA doubled to Rs 26 crore.
  • Margins at 35.6 percent versus 22 percent.

Bata India (Q1, YoY)

  • Revenue grew 7.3 percent to Rs 797.3 crore.
  • EBITDA grew 38 percent to Rs 131.8 crore.
  • Margin at 16.5 percent versus 13 percent.
  • Net Profit grew 36.7 percent to Rs 82.5 crore.

Just Dial (Q1, YoY)

  • Revenue up 11.3 percent to Rs 211.4 crore.
  • EBITDA up 76.9 percent to Rs 57.4 crore.
  • Margin at 27.2 percent versus 17.1 percent.
  • Net Profit up 1 percent to Rs 38.5 crore.

VST Industries (Q1, YoY)

  • Revenue down 53.2 percent to Rs 263 crore.
  • EBITDA up 48 percent to Rs 96.7 crore.
  • Margin at 39.8 percent versus 31.1 percent.
  • Net Profit up 54 percent to Rs 61.2 crore.

South Indian Bank (Q1, YoY)

  • NII grew 7.3 percent to Rs 494.3 crore.
  • Net Profit down 77 percent to Rs 23 crore.
  • Other Income at Rs 146 crore versus Rs 219 crore.
  • GNPA at 4.54 percent versus 3.59 percent.
  • NNPA at 3.27 percent versus 2.60 percent.

IPO Update

  • TCNS Clothing IPO gets demand for 5.3 times shares offered.

Insider Trades

  • Bharat Forge promoter Sundaram Trading & Investment Pvt Ltd acquired 16,000 shares from July 18–19.
  • Sequent Scientific promoter Rajitha Gopalakrishnan acquired 50,000 shares on July 18.
  • GTPL Hathway promoter Gujarat Digi Com Private Limited acquired 53,000 shares on July 19.

Rupee

  • Rupee ended at 68.85/$ on Friday versus 69.05/$ on Thursday.

F&O Cues

  • Nifty July Futures closed trading at 11,024.8, premium of 14.6 points versus 16.4 points.
  • July series-Nifty Open Interest up 1 percent and Bank Nifty Open Interest down 1.4 percent.
  • India VIX ended at 13.5, down 0.4 percent.
  • Maximum Open Interest for July series at 11,100 call, Open Interest at 37.8 lakh, Open Interest unchanged
  • Maximum Open Interest for July series at 10,800 Put, Open Interest at 47.7 lakh, Open Interest up 3 percent.

F&O Ban

In Ban: Adani Enterprises, Adani Power

(Alert: Only intraday positions can be taken in stocks which are in F&O ban, incase of rollover of these intraday positions there is a penalty.)

Active Stock Futures

Brokerage Radar

ICICI Direct on ABB India

  • Initiated ‘Buy’ with a price target of Rs 1,400
  • Capex in power T&D, smart grid solutions, railways gives strong visibility
  • Industry solutions, renewables, E-cars to bring new growth opportunities
  • Positives: strong competencies and technology leadership, proven expertise in execution, healthy balance sheet and large anticipated capex spends
  • Expect revenue, Ebitda and net profit to compound at 14 percent, 20.5 percent and 21 percent over 2017-2019.
  • ABB trades at premium multiples due to its strong technical capabilities.

Angel Broking on Yes Bank

  • Initiated ‘Buy’ with a price target of Rs 435.
  • CASA growth and rating improvement to support NIM.
  • Expect asset quality to improve and minimal impact of stress resolution.
  • Expect YES Bank’s advances to grow at a CAGR of 32 percent over FY18-20.
  • YES trades attractive valuations considering growth prospects.

UBS on Petronet LNG

  • Upgraded to ‘Buy’ from ‘Sell’; raised price target to Rs 245 from Rs 235.
  • Strong LNG imports driving the short-term outlook.
  • Lower utilisation due to higher regas capacity additions is priced in.
  • Strong utilisation rates and a 5 percent increase in regas tariffs to drive 2018-19 earnings.
  • Triggers: Mundra terminal delay and Kochi-Mangalore pipeline commissioning.

Credit Suisse on Havells

  • Maintained ‘Outperform’; raised price target to Rs 725 from Rs 670.
  • June quarter was very strong on the back of good revenue growth and margin expansion.
  • Main positive was the strong pick-up in switchgears.
  • Lloyd growth positive, especially weak air conditioner season.

JPMorgan on L&T Finance Holding

  • Maintained ‘Neutral’ with a price target of Rs 170.
  • June quarter’s net profit sharply ahead expectations.
  • Rural and housing continue to report strong growth and ROEs.
  • Believe with transition to INDAS, infrastructure book drag is now behind.

CLSA on Kansai Nerolac

  • Maintained ‘Buy’ with a price target of Rs 550.
  • June quarter’s Ebitda was slightly ahead of estimates; Revenue growth momentum continued .
  • Expect higher input prices to keep margins under pressure.
  • Company continues to negotiate product price hikes in auto and industrial segments.

Nomura on Justdial

  • Maintained ‘Buy’ with a price target of Rs 730.
  • June quarter’s revenue and margin came in ahead.
  • Momentum in paid listings alongside improving realisations is positive.
  • Traffic trends continue to be positive despite lower Ad spend in last two quarters.
  • Expect a positive reaction in the stock.

Kotak Securities on Asian Paints

  • Maintained ‘Reduce’; raised price target to Rs 1,275 from Rs 1,100.
  • GST rate cut - definitive kicker to earnings growth for paints companies.
  • Expect higher volume growth as pricing gap versus unorganized segment reduces.
  • Expect likely acceleration in pace of premiumisation.
  • Raise volume, realization and margin assumptions.

Kotak Securities on CDSL

  • Initiated ‘Buy’ with a price target of Rs 320.
  • Repeat business in multiple offerings provides stability to operating income.
  • Strong operating activities and limited capex to keep FCF strong.
  • Positives: stable growth in annual issuer charges, increased market traction, higher number of IPO and inflow in MFs.
  • Expect revenue, Ebitda and earnings per share to compound at 11 percent. 11 percent and 10 percent over FY18-20.

Brokerages On GST Changes

IDFC Securities

  • Expect boost to consumption demand propelled by a fall in prices.
  • Companies will pass on lower GST rate and thereby not see benefit in form of margins.
  • Sectors which saw tax rate cut have big share of unorganised players.
  • Move should help them come under tax net.
  • Expect paint companies, P&G hygiene, footwear manufacturers, Whirlpool, Dixon, Havells, Voltas and select hotels to be key beneficiaries.

Kotak Securities

  • GST rate cuts should be meaningful earnings kicker for paints companies.
  • Indirect benefits market share gains and premiumisation to boost earnings.
  • ITC: No revision would normally be seen as a positive.
  • United Spirits: Could bounce back on non-inclusion of ENA.

Brokerages On UPL

IDFC Securities

  • Maintained ‘Outperformer’ with a price target of Rs 982.
  • Positive on Arysta transaction on the back of potential meaningful upsides.
  • Deal valued at 9.9 times EV/EBITDA, excluding synergies.
  • Expect significant cost/revenue synergies.
  • Significant performa cash flows to take care of leverage ratio.

CLSA

  • Maintained ‘Buy’ with a price target of Rs 940.
  • Arysta acquisition offers scale benefits and discovery capabilities.
  • Complementary portfolio; UPL to get scale benefits.
  • Acquisition valued at 10 times EV/EBITDA and is EPS accretive.

Brokerages On HDFC Bank

IDFC Securities

  • Maintained ‘Outperform’ with a price target of Rs 2,515.
  • Margins and asset quality were soft in June quarter.
  • Pressure on NIMs driven by lower yields and higher cost of funds.
  • Key Reasons For Miss: higher than expected agri-slippage and decline in NIMs.
  • Expect these to improve through the year.

Goldman Sachs

  • Maintained ‘Buy’; raised price target to Rs 2,613 from Rs 2,487.
  • In-line core operating profit growth.
  • Positives: Efficiency gains, strong fee income and robust retail lending growth.
  • Negatives: marginal blip in asset quality and slower growth in NII.
  • Expect NIMs to improve significantly in second half of the current financial year.

Brokerages On Bajaj Auto

Macquarie

  • Maintained ‘Neutral’ with a price target of Rs 2,800.
  • Reported lower-than-expected margins and net profit in June quarter.
  • Cut in prices hurting profitability.
  • Struggling to balance growth and profitability.
  • Exports growth to continue in the near-term.

Deutsche Bank

  • Maintained ‘Hold’ with a price target of Rs 3,000.
  • June quarter’s operating results below estimates despite strong volume performance.
  • Bajaj paying the price for market-share gains.
  • Company is willing to use pricing as a lever to gain market-share.
  • Expect margin pressures due to competitive intensity and elevated commodity prices.

Brokerages On Wipro

Macquarie

  • Maintained ‘Neutral’ with a price target of Rs 300.
  • June quarter missed estimates at margin level; revenue at higher end range.
  • Struggle in verticals extended from healthcare to manufacturing; BFSI remains strong.
  • Expect Wipro to post weakest growth amongst large cap Indian IT names in 2018-19.
  • Wipro is cheap; triggers for re-rating remain amiss.

Nomura

  • Maintained ‘Neutral’ with a price target of Rs 260.
  • June quarter’s margins and guidance miss expectations.
  • Guidance for September quarter suggests flattish growth at midpoint of the range.
  • Except for BFSI, none of the other segments provide comfort.
  • Expect stock to react negative on results.

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