India Markets closed

Stocks To Watch: Dr. Reddy’s, ONGC, HPCL, Tata Steel

The Smarter way to get your business news - Subscribe to BloombergQuint on WhatsApp

Asian equities opened mixed on Monday and U.S. Treasuries were steady. The euro advanced on optimism Germany’s Angela Merkel has made a breakthrough toward her fourth term after months of stalement, while the dollar recovered from earlier lows as the federal government shutdown continued.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, was a little changed at 10,911 as of 7:10 a.m.

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

  • ONGC to buy government’s 51.1 percent stake in HPCL for Rs 36,915 crore at Rs 473.97 per share.
  • ONGC chairman tells the press that merging MRPL and HPCL may be an option.
  • Tata Steel to raise Rs 12,800 crore via rights issue.
  • J Kumar Infra gets Rs 57 crore contract from Delhi Metro Rail Corporation.
  • U.S. Department of Justice imposes $5 million fine on Dr. Reddy's over drugs not being in child-resistant packing.
  • Venus Remedies withdraws QIP issue due to unavoidable circumstances.
  • Bharti Airtel to transfer 25 percent stake in Bharti Telemedia to Nettle Infrastructure.
  • Orchid Pharma says NCLT grants extension of 90 days for insolvency process.
  • IFCI says government considering capital infusion of Rs 100 crore in FY18.
  • Reliance Industries to partly start petcoke gasification unit this quarter.
  • HDFC increases size of MTN program to $1.3 billion.
  • DFM Foods launches new product in the domestic market.
  • Pioneer Distilleries says workmen have agreed to call off the strike on Jan. 20.
  • Welspun Enterprises completes acquisition of 49 percent stake in the projects from MBL Group for a total consideration of Rs 2,300 crore.

F&O Setup

  • Nifty January futures trading at 10,810.8 - a discount of 6.2 points from a premium of 3.3 points
  • January Series: Nifty open interest unchanged; Bank Nifty open interest down 1 percent
  • India VIX ended at 13.9, up 0.7 percent
  • Maximum open interest for January series at 11,000 Call (open interest at 62.2 lakh, up 24 percent)
  • Maximum open interest for January series at 10,500 Put (open interest at 70 lakh, down 12 percent)

F&O Ban

  • In ban: Balrampur Chini, Dish TV, DLF, Fortis, GMR Infra, HCC, HDIL, IFCI, India Cement, Jain Irrigation, Kaveri Seed
  • New in ban: DLF
  • Out of ban: Capital First, Jindal Steel, JP Associates, Reliance Power

Only intraday positions can be taken in stocks which are in F&O ban. In case of a rollover of these intraday positions, there is a penalty.

Active Stock Futures

Bulk Deals

Sunteck Realty

  • Fidelity Emerging Markets Funds bought 47.05 lakh shares (3.2 percent) at Rs 404.95 each (average)
  • Sri Gopikrishna Trust sold 39 lakh shares (2.7 percent) at Rs 405.8 each (average)

GSS Infotech

  • Aspire Emerging Fund bought 8 lakh shares (4.7 percent) at Rs 33.28 each

Emco Ltd

  • India Nivesh Capitals bought 4.2 lakh shares (0.6 percent) at Rs 20.18 each

Shah Alloys

  • United India Insurance sold 1.30 lakh shares (0.7 percent) at Rs 18.5 each

IPO

  • Amber Enterprises India subscribed 165 times on final day.
  • Apollo Micro Systems lists today. Issue was subscribed 248 times. Base price 275 per share.

Earnings Reactions To Watch

Reliance Industries Q3 (QoQ)

  • Revenue up 7 percent at Rs 73,256 crore
  • Net profit up 2 percent at Rs 8,454 crore
  • EBITDA up 6 percent at Rs 13,744 crore
  • Margin at 18.8 percent versus 18.9 percent

Reliance Jio Q3 (QoQ)

  • Revenue up 12 percent to Rs 6,879 crore
  • EBITDA up 82 percent to Rs 2,627 crore
  • EBITDA Margin at 38.2 percent versus 23.5 percent
  • Net profit of Rs 504 crore versus net Loss of Rs 271 crore
  • ARPU of Rs 154 versus Rs 156

Wipro Q3 (QoQ)

  • Revenue up 2 percent at Rs 13,669 crore
  • Net profit down 12 percent at Rs 1,931 crore
  • EBIT down 13 percent at Rs 1,959.5 crore
  • Margins at 14.3 percent versus 16.8 percent
  • Q4 IT Services revenue seen in the range of $2.03 billion to $2.07 billion

HDFC Life Q3 (YoY)

  • Net premium income up 19 percent at Rs 5,420 crore
  • Net profit up 14.6 percent at Rs 207 crore versus Rs 180.6 crore

Chennai Petroleum Corp Q3 (QoQ)

  • Revenue up 15 percent at Rs 8,587 crore
  • Net profit up 22.5 percent at Rs 386 crore
  • EBITDA up 31 percent at Rs 834 crore
  • Margin at 9.7 percent versus 8.5 percent

GNA Axles Q3 (YoY)

  • Revenue up 48 percent at Rs 167 crore
  • Net profit up 57 percent at Rs 12.7 crore
  • EBITDA up 37 percent at Rs 26 crore
  • Margins at 15.6 percent versus 16.9 percent

DCM Shriram Q3 (YoY)

  • Revenue up 30 percent at Rs 1,783.7 crore
  • Net profit up 56 percent at Rs 213 crore
  • EBITDA up 75 percent at Rs 329.8 crore
  • Margin at 18.5 percent versus 13.8 percent

Godawari Power Q3 (YoY)

  • Revenue up 57.6 percent at Rs 672 crore
  • Net Profit at Rs 72 crore versus Rs 10 crore loss
  • EBITDA up 87.8 percent at Rs 168.62 crore
  • Margin at 25.1 percent versus 21.1 percent

HOEC Q3 (YoY)

  • Revenue up 141 percent at Rs 13.3 crore
  • Profit at Rs 12.8 crore
  • EBITDA at Rs 12.9 crore from Rs 1.9 crore
  • EBITDA margin at 97 percent from 34.5 percent
  • Exceptional item of Rs 4.4 crore

CDSL Q3 (YoY)

  • Income from operations up 37 percent at Rs 51.5 crore
  • Profit up 25 percent at Rs 25.4 crore
  • EBITDA up 58 percent at Rs 31.6 crore versus Rs 20 crore
  • EBITDA margin at 61.4 percent versus 53.3 percent

Lux Industries Q3 (YoY)

  • Revenues from ops up 28 percent at Rs 296 crore versus Rs 231 crore
  • Profit up 30 percent at Rs 18.4 crore versus Rs 14.1 crore
  • EBITDA up 28 percent at Rs 35.7 crore versus Rs 27.9 crore
  • EBITDA margin at 12.1 percent versus 12.1 percent

JP Associates Q3 (QoQ)

  • Revenue up 50 percent at Rs 1,109 crore
  • Net loss at Rs 148 crore versus Rs 186 crore
  • EBITDA up 269 percent at Rs 140.7 crore
  • Margin at 12.7 percent versus 5.17 percent

Nifty Earnings To Watch

  • Asian Paints
  • Axis Bank

Other Earnings To Watch

  • Dewan Housing Finance
  • GNFC
  • Havells India
  • Just Dial
  • Rallis India
  • Sasken Technologies
  • Vakrangee
  • V-Guard Industries
  • Tinplate

Brokerage Radar

IDFC Securities on ONGC-HPCL

  • Lower premium a key positive for ONGC.
  • Price would set fair value benchmark; Positive for the stock.
  • Transaction to spur further consolidation in oil & gas space.
  • Expect IOCL to merge its subsidiary (CPCL), and/or buy government stake in Oil India.
  • Deal is EPS accretive for ONGC but leverage to increase.
  • Long term prospects for ONGC remain robust.
  • ONGC + HPCL to help price hedging objectives, but only partially.
  • Expect ONGC to see some near-term pressure, unless it decides to monetise stake in IOCL.

BOBCAPS on ONGC-HPCL

  • Expects deal to be entirely funded through debt.
  • Consolidated debt-to-equity ratio to increase to only 0.4 times versus 0.2 times.
  • Acquisition to give access to 26 percent return on capital employed business.
  • Expect no merger or operational synergies as HPCL will be an independent entity.
  • Acquisition to merely contribute as investment value.
  • Deal valuation well within fundamental parameters.
  • Deal creates a convenient template for other potential public-sector stake divestments.

Motilal Oswal on Reliance Industries

  • Maintained ‘Buy’ with price target of Rs 1,069.
  • Petchem drives standalone profitability; RJio turns profitable.
  • Lower throughput impacts refining performance.
  • Robust volume growth and healthy deltas drive profitability.
  • ARPUs to hover at Rs 144 in current quarter, led by recent cut.
  • Expect competitive intensity to remain high over 2-3 quarters.

IDBI Capital on Reliance Industries

  • Maintained ‘Buy’; raised price target to Rs 1,100 from Rs 1,004.
  • Positive surprises continue.
  • December quarter results were better than expectation led by robust performance in petchem, retail and Jio.
  • Petchem profit drove the show; Jio continues to surprise positively.
  • Petcoke gasifiers to start from current quarter; outlook remains positive .

CLSA on Reliance Industries

  • Maintained ‘Buy’; raised price target to Rs 1,125 from Rs 1,080.
  • Big beat on Jio and standalone EBIT with a stellar December quarter from retail.
  • Jio: Neat beat on revenue and operating income.
  • 2018 may turn out to be the year of monetisation.
  • Positives: full utilisation of Off Gas crackers, stabilisation of gasification project, ramp-up of JioPhone and start of broadband.

Credit Suisse on Jubilant Foodworks

  • Maintained ‘Outperform’; raised price target to Rs 2,750 from Rs 2,140.
  • Exceptionally strong on all fronts and expect it to sustain.
  • Jubilant has been seeing a fundamental turnaround.
  • Strong SSSG driven by orders even adjusted for GST.
  • EBITDA margins spike but cost and productivity initiatives have more headroom.
  • Management to refocus on growth in the next financial year.

CLSA on Jubilant Foodworks

  • Maintained ‘Buy’; raised price target to Rs 2,800 from Rs 2,300.
  • Beating the most bullish estimate, SSSG of 17.8 percent is a huge positive.
  • Power of operating leverage played to its best.
  • Management sounded fairly positive in its outlook.
  • Expect earnings to grow at a CAGR of 38 percent over FY18-20.

Macquarie on HDFC Bank

  • Maintained ‘Outperform’; raised price target to Rs 2,676 from Rs 2,589.
  • Reported “boringly” consistent 20 percent YoY net profit growth.
  • Growth momentum strong, led by retail loans.
  • No challenges on divergences visible.
  • Structural shift in credit costs upwards.
  • Bank expects to gain market share from the bond market.
  • HDFC Bank is strong, powerful compounding story with no asset quality issues.
  • Expect strong earnings visibility and consistent high return ratios.

Morgan Stanley on HDFC Bank

  • Maintained ‘Overweight’ with price target of Rs 2,500.
  • Results show strong revenue/PPoP growth.
  • Steady asset quality trends.
  • CASA deposits grew given higher base following the spurt in deposits post demonetisation.

Credit Suisse on HCL Technologies

  • Maintained ‘Outperform’; raised price target to Rs 1,100 from Rs 1,050
  • Strong revenue growth in previous quarter; In-line margins
  • Continuing softness in infra but better outlook in the next financial year.
  • Continuing strength in engineering, and recovery in application services.
  • Good growth in financial services.
  • Expect reasonable growth, steady margins and attractive valuations.
  • Stock is well placed for 2018 as growth should be in line-to-ahead of peers.

Edelweiss on HCL Technologies

  • Maintained ‘Buy’; raised price target to Rs 1,125 from Rs 1,041.
  • Growth led by America, ER&D; RoW and telecom key drags.
  • IMS down for second consecutive quarter.
  • Investments in IP partnership sustain.
  • Long-term prospects bright; ER&D to drive revenue.
  • See bright prospects in IMS though it has been weak.

Jefferies on ITC

  • Maintained ‘Buy’; raised price target to Rs 320 from Rs 302.
  • December quarter results was a mixed bag.
  • Cigarettes, volumes soft with resilient margins.
  • FMCG showed strong all-round show.
  • Other businesses, hotels take the lead.
  • Expect gradual recovery in ITC cigarette volumes.
  • Expect better recovery in other businesses led by other FMCG.

Deutsche Bank on ITC

  • Maintained ‘Buy’; raised price target to Rs 350 from Rs 325.
  • December quarter was another in-line quarter.
  • Cigarette volume declines 4 percent YoY, but flat QoQ.
  • FMCG-others reported healthy sales growth of 16 percent.
  • High probability of rational tax increase in Feb 2018 is a potential re-rating event.

Nomura on Kotak Mahindra Bank

  • Maintained ‘Neutral’; raised price target to Rs 1,150 from Rs 1,070.
  • Q3FY18 stable quarter with in-line net profit.
  • Bank continues to deliver on extracting cost efficiency.
  • Growth momentum steady; PPOP growth hit by weaker margins.
  • Excellent performance by capital market subsidiaries.
  • Prefer HDFC Bank to Kotak given undemanding valuations.

Macquarie on Kotak Mahindra Bank

  • Maintained ‘Neutral’; raised price target to Rs 1,111 from Rs 1,090.
  • Steady performance for the bank.
  • Subsidiaries post robust performances, especially securities and life insurance businesses.
  • Positive on bank’s business and the quality of management.
  • Valuations leave limited potential for upside.

Edelweiss on Wipro

  • Maintained ‘Hold’; raised price target to Rs 320 from Rs 280.
  • December quarter earnings came below estimates.
  • BFSI strengthening; client-specific issues in utility key drag.
  • Digital ticket size expanding.
  • Wipro’s revenue outlook has improved.
  • Sector in turnaround mode, but Wipro expensive.

Macquarie on Wipro

  • Maintained ‘Neutral’; cut price target to Rs 290 from Rs 300.
  • Mixed bag performance in previous quarter in segments.
  • Results continue to highlight volatility in growth.
  • Still some time away from reaching industry level growth.
  • EBIT Margin steady; Growth remains choppy.

Nomura on HDFC Standard Life

  • Maintained ‘Buy’ with price target of Rs 450.
  • Steady performance; Protection mix surprises.
  • Continues to improve on its leadership in protection business.
  • Embedded Value of Rs 14,400 crore and core RoEV of above 20 percent as of 9MFY17.
  • HDFC Life gained share in current fiscal after a loss in share in previous fiscal.
  • Expect steady performance to continue, given balanced product mix.

Deutsche Bank on ICICI Prudential Life

  • Maintained ‘Buy’; raised price target to Rs 500 from Rs 490.
  • Strong uptick in margins in December quarter; APE growth slow.
  • Strong margin improvement but growth muted due to demonetisation base.
  • Higher margin should be sustained; Focus on increasing protection share.
  • Better placed to benefit from sector tailwinds.

Nomura on ICICI Prudential Life

  • Maintained ‘Buy’; raised price target to Rs 540 from Rs 490.
  • Big surprise on VNB margins.
  • More legroom for margin expansion.
  • ULIPs to remain unaffected by expected regulatory change.
  • Expect current fiscal margins at 14.7 percent and increase our long-term margin expectations to 16-16.5 percent.
  • ICICI Pru Life preferred insurance pick.

Media Reports

  • Budgetary support for Railways to be cut by 27% in FY18 (Business Standard).
  • Il&FS Arm Plans To Sell Rs 4,000 crore project To Canada Pension Fund (Financial Express).
  • Future Group puts south Indian chain Foodworld on its grocery list (Economic Times).
  • Vedanta, NCL, Torrent vie for GMR Energy’s plant in Chhatisgarh (Economic Times).

The Smarter way to get your business news - Subscribe to BloombergQuint on WhatsApp

. Read more on Business by BloombergQuint.