www.angelbroking.com Market Outlook January 24, 2017 www.angelbroking.com Market Cues Indian markets are likely to open flat with a positive bias tracking SGX Nifty. U.S. markets fell on concerns of President Trump’s protectionist posture. Trump signed an executive order to renegotiate NAFTA and is expected to withdraw from the Trans-Pacific Partnership. Trump also promised massive tax cuts for the middle class and companies. US markets also await key economic data regarding new and existing home sales, durable goods orders, and fourth quarter GDP. All of which will be released by the end of this week. European stocks lost ground in Monday's session in reaction to President Trump’s protectionist tone in his speech. Royal Dutch Shell fell 1.46 percent after agreeing to sell its 50 percent stake in a petrochemical joint venture for $820mln. Banks also lost ground with Royal Bank of Scotland falling by 2.26 percent. Barclays fell by 1.41 percent and HSBC also finished lower by 1.22 percent. Indian markets closed up on Monday as FMCG, PSU bank and metal stocks gained strongly during the session. This was inspite of weak cues from Europe as well as caution ahead of Wednesday’s F&O expiry. Most stock indices closed positive for the session with only the Pharma index closing down 0.91 percent. Result Preview & Review Preview: HCL Tech Review: Hindustan Unilever Ltd Q3 net profit increases to `1,038cr 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 Batteries Auto & Auto Ancillary Buy 872 1,167 33.8 Alkem Laboratories Pharmaceuticals Buy 1,640 1,989 21.3 HCL Tech IT Buy 857 1,000 16.7 Power Grid Corp. Power Accumulate 200 223 11.4 Navkar Corp. Others Buy 172 265 53.8 More Top Picks on Pg4 Key Upcoming Events Date Region Event Description Previous Reading Consensus Expectations Jan 24 Germany PMI Services 54.30 54.50 Jan 24 Germany PMI Manufacturing 55.60 55.40 Jan 24 US Existing home sales 5.61 5.50 Jan 26 US Initial Jobless claims 234.00 247.00 Jan 26 US GDP Qoq (Annualised) 3.50 2.20 More Events on Pg5 Domestic Indices Chg (%) (Pts) (Close) BSE Sensex 0.3 83 27,117 Nifty 0.5 42 8,392 Mid Cap 0.5 61 12,645 Small Cap 0.5 60 12,821 Bankex 0.0 0 21,541 Global Indices Chg (%) (Pts) (Close) Dow Jones (0.1) (27) 19,800 Nasdaq (0.0) (2) 5,553 FTSE (0.7) (47) 7,151 Nikkei (1.3) (247) 18,891 Hang Seng 0.1 13 22,899 Shanghai Com 0.4 14 3,137 Advances / Declines BSE NSE Advances 1,601 991 Declines 1,150 637 Unchanged 182 97 Volumes (` Cr) BSE 3,094 NSE 17,667 Net Inflows (` Cr) Net Mtd Ytd FII 33 (2,543) (2,543) MFs 58 3,284 3,284 Top Gainers Price (`) Chg (%) Beml 1,233 6.4 Unitdspr 2,203 6.0 Hindalco 181 5.8 Sreinfra 88 5.7 Sail 61 5.2 Top Losers Price (`) Chg (%) Pel 1,696 (4.2) Divislab 687 (3.8) Amarajabat 872 (3.3) Jswenergy 59 (3.1) Natcopharm 613 (3.0) As on January 23, 2017
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www.angelbroking.com
Market Outlook January 24, 2017
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Market Cues
Indian markets are likely to open flat with a positive bias tracking SGX Nifty.
U.S. markets fell on concerns of President Trump’s protectionist posture. Trump signed an executive order to renegotiate NAFTA and is expected to withdraw from the Trans-Pacific Partnership. Trump also promised massive tax cuts for the middle class and companies. US markets also await key economic data regarding new and existing home sales, durable goods orders, and fourth quarter GDP. All of which will be released by the end of this week.
European stocks lost ground in Monday's session in reaction to President Trump’s protectionist tone in his speech. Royal Dutch Shell fell 1.46 percent after agreeing to sell its 50 percent stake in a petrochemical joint venture for $820mln. Banks also lost ground with Royal Bank of Scotland falling by 2.26 percent. Barclays fell by 1.41 percent and HSBC also finished lower by 1.22 percent.
Indian markets closed up on Monday as FMCG, PSU bank and metal stocks gained strongly during the session. This was inspite of weak cues from Europe as well as caution ahead of Wednesday’s F&O expiry. Most stock indices closed positive for the session with only the Pharma index closing down 0.91 percent.
Result Preview & Review Preview: HCL Tech
Review: Hindustan Unilever Ltd Q3 net profit increases to `1,038cr 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 Batteries Auto & Auto Ancillary Buy 872 1,167 33.8
Navkar Corp. Others Buy 172 265 53.8More Top Picks on Pg4
Key Upcoming Events Date Region Event Description
Previous Reading
Consensus Expectations
Jan 24 Germany PMI Services 54.30 54.50
Jan 24 Germany PMI Manufacturing 55.60 55.40
Jan 24 US Existing home sales 5.61 5.50
Jan 26 US Initial Jobless claims 234.00 247.00
Jan 26 US GDP Qoq (Annualised) 3.50 2.20More Events on Pg5
Domestic Indices Chg (%) (Pts) (Close)
BSE Sensex 0.3 83 27,117
Nifty 0.5 42 8,392
Mid Cap 0.5 61 12,645
Small Cap 0.5 60 12,821
Bankex 0.0 0 21,541
Global Indices Chg (%) (Pts) (Close)
Dow Jones (0.1) (27) 19,800
Nasdaq (0.0) (2) 5,553
FTSE (0.7) (47) 7,151
Nikkei (1.3) (247) 18,891
Hang Seng 0.1 13 22,899
Shanghai Com 0.4 14 3,137
Advances / Declines BSE NSE
Advances 1,601 991
Declines 1,150 637
Unchanged 182 97
Volumes (` Cr)
BSE 3,094
NSE 17,667
Net Inflows (` Cr) Net Mtd Ytd
FII 33 (2,543) (2,543)
MFs 58 3,284 3,284
Top Gainers Price (`) Chg (%)
Beml 1,233 6.4
Unitdspr 2,203 6.0
Hindalco 181 5.8
Sreinfra 88 5.7
Sail 61 5.2
Top Losers Price (`) Chg (%)
Pel 1,696 (4.2)
Divislab 687 (3.8)
Amarajabat 872 (3.3)
Jswenergy 59 (3.1)
Natcopharm 613 (3.0) As on January 23, 2017
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Market Outlook January 24, 2017
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Result Preview
HCL Tech (CMP: `857 / TP: `1,000/ Upside: 16.7%)
HCL Tech will post a 1.6% sequential growth in USD revenues to US$1,749mn V/s US$1,722mn in 2QFY2017. In rupee terms, revenues, is expected to come in at `11,797cr V/s `11,519cr in 2QFY2017, up 2.4% qoq. On EBIT front, the company posted an EBIT of 20.0% V/s 20.1% in 2QFY2017, down 14bps qoq. Consequently, PAT, came in at `2,070cr V/s `2,014cr in 2QFY2017, a growth of 2.8% qoq. We maintain our buy rating on the stock, with a price target of `1,000.
Y/E Sales OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales
Hindustan Unilever Ltd Q3 net rises 7% to `1,038cr
Hindustan Unilever Ltd on Monday reported a 6.82 percent increase in standalone net profit to `1,037.93cr for Q3FY17 as compared to a net profit of `971.66cr in Q3FY16.
Its revenue declined 0.79 per cent to `8,317.94cr in Q3FY17, compared with `8,384.68cr in Q3FY16.
According to management, the gradual recovery of the market was temporarily impacted by adverse liquidity conditions. However, there are early signs of normalisation and the company’s focus continues to remain on innovation led volume growth and improvement in margins.
Economic and Political News Govt. considering separate regulator for electronic payments
Fitch Ratings says residential property sales to see 20-30 percent drop
India opposes informal proposal from EU and Canada about a global investment pact
Corporate News
Asian Paints Q3 profit up 1.5% YoY to `489cr
Vedanta's power sales up by 8% to 9,453 million units (MU)
Amara Raja Batteries 14,898 872 1,167 33.8To outpace battery industry growth due to bettertechnological products leading to market share gains in both the automotive OEM and replacement segments.
Alkem Laboratories 19,609 1,640 1,989 21.3Strong growth in domestic business due to its leadership inacute therapeutic segment. Alkem expects to launch more products in USA, which bodes for its international business.
HCL Tech 1,20,961 857 1,000 16.7The stock is trading at attractive valuations and is factoringall the bad news.
Infosys 2,18,612 952 1,249 31.2Back on the growth trend, expect a long term growth of 14%to be a US$20bn in FY2020.
Larsen & Toubro 1,29,969 1,394 1,634 17.3Strong order backlog and improvement in execution wouldtrigger the growth for the L&T
Lupin 66,921 1,483 1,809 22.0One of the largest pharma companies with strong international presence. It has a rich pipeline of ANDAs whichis also one of the largest among the generic companies.
Power Grid Corporation 1,04,684 200 223 11.4Going forward, we expect the company to report strong top-line CAGR of ~16% and bottom-line CAGR of ~19% over FY16-18 on back of strong capitalization guidance
Source: Company, Angel Research
Mid Cap Company
Market Cap(` Cr)
CMP (`)
Target(`)
Upside (%)
Rationale
Asian Granito 768 255 351 37.5We expect the company would report strong profitability owing to better product mix, higher B2C sales and amalgamation synergy.
Bajaj Electricals 2,310 228 274 19.9Among 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.
Blue Star 4,890 512 634 23.8
Favourable 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.
Dewan Housing Finance 8,556 273 350 28.1With 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.
Equitas Holdings 5,321 159 235 48.1Strong 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.
Jagran Prakashan 5,855 179 225 25.6
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.
KEI Industries 1,060 136 153 12.3High order book execution in EPC segment, rising B2C sales and higher exports to boost the revenues and profitability
Mahindra Lifespace 1,490 363 522 43.8Speedier execution and speedier sales, strong revenue visibilty in short-to-long run, attractive valuations
Mirza International 1,073 89 107 20.0Higher growth in domestic branded sales and healthy export to boost the profitability.
Navkar Corporation 2,457 172 265 53.8Massive capacity expansion along with rail advantage at ICD as well CFS augurs well for the company
Siyaram Silk Mills 1,310 1,398 1,605 14.8Strong brands and distribution network would boost growth going ahead. Stock currently trades at an inexpensive valuation.
TV Today Network 1,633 274 385 40.7
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 corporates to benefit the stock.
Source: Company, Angel Research
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Market Outlook January 24, 2017
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Key Upcoming Events
Result Calendar Date Company
January 24, 2017 M&M, TVS Motor, HDFC Bank, IOB, Asian Paints, HCL Tech, HT Media, Heritage Foods, Nilkamal
January 25, 2017 United Phosphorus, Maruti, Exide Industries, Ashok Leyland, Blue Star, Kotak Mah. Bank, Indian Bank,Wipro, Kirloskar Engines India Ltd, Alembic Pharma, VRL Logistics
January 27, 2017 India Cements, ITC, Colgate, Indoco Remedies
January 28, 2017 Electrosteel Castings, Siyaram Silk Mills
Source: Bloomberg, Angel Research
Global economic events release calendar
Date Time Country Event Description Unit Period Bloomberg Data
Last Reported Estimated
Jan 24, 2017 2:00 PM Germany PMI Services Value Jan P 54.30 54.50
2:00 PM Germany PMI Manufacturing Value Jan P 55.60 55.40
8:30 PM US Existing home sales Million Dec 5.61 5.50
Jan 26, 2017 7:00 PM US Initial Jobless claims Thousands Jan 21 234.00 247.00
7:00 PM US GDP Qoq (Annualised) % Change 4Q A 3.50 2.20
3:00 PM UK GDP (YoY) % Change 4Q A 2.20 2.10
Jan 27, 2017 8:30 PM US New home sales Thousands Dec 592.00 586.00
Jan 31, 2017 2:25 PM Germany Unemployment change (000's) Thousands Jan (17.00)
8:30 PM US Consumer Confidence S.A./ 1985=100 Jan 113.70 113.00
3:30 PM Euro Zone Euro-Zone GDP s.a. (QoQ) % Change 4Q A 0.40
Feb 01, 2017 3:00 PM UK PMI Manufacturing Value Jan 56.10
6:30 AM China PMI Manufacturing Value Jan 51.40 51.20
Feb 02, 2017 5:30 PM UK BOE Announces rates % Ratio Feb 2 0.25
12:30 AM US FOMC rate decision % Feb 1 0.75 0.75
Feb 03, 2017 7:00 PM US Change in Nonfarm payrolls Thousands Jan 156.00 160.00
7:00 PM US Unnemployment rate % Jan 4.70 4.70
Feb 08, 2017 2:30 PM India RBI Repo rate % Feb 8 6.25
Source: Company, Angel Research; Note: *December year end; #September year end; &October year end; Price as on January 23, 2017
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Stock WatchJanuary 24, 2017
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Market Outlook January 24, 2017
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Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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