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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.
HPCL deal will not hit company's overseas acquisition plans, says ONGC Chairman Shashi Shanker.— BloombergQuint (@BloombergQuint) January 21, 2018
Read the full story here https://t.co/BSC3QyWkc1 pic.twitter.com/YPRRk2BUwu
- 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)
- 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
- 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)
- Aspire Emerging Fund bought 8 lakh shares (4.7 percent) at Rs 33.28 each
- India Nivesh Capitals bought 4.2 lakh shares (0.6 percent) at Rs 20.18 each
- United India Insurance sold 1.30 lakh shares (0.7 percent) at Rs 18.5 each
- 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
- Havells India
- Just Dial
- Rallis India
- Sasken Technologies
- V-Guard Industries
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.
- 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).
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