www.angelbroking.com Market Outlook October 27, 2016 Market Cues Indian markets are likely to negative tracking global cues and SGX Nifty. U.S. indices had a mixed session on Wednesday as a number of earning results came in. Apple Inc. (AAPL) fell by 2.2% after it released a mixed earnings report. Home-improvement retailer Lowe's Cos. Inc. fell 1.6% after it was hit with two downgrades. New home sales rose in September, though the increase was helped by revisions to the previous month’s data. UK’s FTSE index lost its previous day’s gains as commodity prices slumped with crude prices falling below $49. Antofagasta dropped 3.15% after the company guided toward a lower copper output range in 2017. Royal Bank of Scotland Group finished higher by 0.73 percent after Clydesdale made a preliminary non-binding proposal to buy its Williams & Glyn operations. Indian indices lost ground for another session as weakness in Tata group stocks pulled down the broader indices lower. Tata Group stocks remained under pressure, with Tata Motors and Tata Steel losing about 5 percent each. Axis bank fell by 8.3% after it reported an 83% decline QoQ in profits for Q2FY17. Result Review, Preview & News Analysis Result Review: Cadilla Healthcare, Indoco Remedies Result Preview: Tech Mahindra Hero Motocorp Q2FY17 Results Update to Cyrus Mistry’s resignation from Tata Sons 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 Ancill. Buy 1,017 1,218 19.7 HCL Tech IT Buy 791 1,000 26.5 Bharat Electronics Capital Goods Accumulate 1,259 1,414 12.3 Equitas Holdings Financials Buy 177 235 33.1 Navkar Corporation Others Buy 196 265 35.2 More Top Picks on Pg6 Key Upcoming Events Date Region Event Description Previous Reading Consensus Expectations Oct 27 UK GDP (YoY) 2.1 2.1 Oct 27 US Initial Jobless claims 260.0 -- Oct 28 Euro Zone Euro Zone Consumer Confidence (8.0) (8.0) Oct 28 UK PMI Manufacturing 55.4 -- Oct 31 US GDP QoQ (Annualised) 1.4 2.5 6.( More Events on Pg7 Domestic Indices Chg (%) (Pts) (Close) BSE Sensex (0.9) (255) 27,837 Nifty (0.9) (76) 8,615 Mid Cap (0.9) (122) 13,421 Small Cap (0.7) (90) 13,429 Bankex (1.9) (432) 22,347 Global Indices Chg (%) (Pts) (Close) Dow Jones 0.2 30 18,199 Nasdaq (0.6) (33) 5,250 FTSE (0.8) (60) 6,958 Nikkei 0.2 27 17,392 Hang Seng (1.0) (240) 23,325 Shanghai Com (0.5) (16) 3,116 Advances / Declines BSE NSE Advances 1,148 542 Declines 1,647 1,099 Unchanged 237 67 Volumes (` Cr) BSE 3,598 NSE 22,790 Net Inflows (` Cr) Net Mtd Ytd FII (505) (1,501) 48,504 MFs 729 6,016 19,963 Top Gainers Price (`) Chg (%) Ttkprestig 6,094 5.2 Gmrinfra 14 5.2 Piind 867 4.6 Gati 145 4.6 Idea 79 4.4 Top Losers Price (`) Chg (%) Axisbank 487 (8.0) Jublfood 1,059 (7.5) Carerating 1,430 (5.9) Cadilahc 388 (4.8) Jswenergy 67 (4.4) As on October 26, 2016
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www.angelbroking.com
Market Outlook
October 27, 2016
Market Cues
Indian markets are likely to negative tracking global cues and SGX Nifty.
U.S. indices had a mixed session on Wednesday as a number of earning results
came in. Apple Inc. (AAPL) fell by 2.2% after it released a mixed earnings report.
Home-improvement retailer Lowe's Cos. Inc. fell 1.6% after it was hit with two
downgrades. New home sales rose in September, though the increase was helped
by revisions to the previous month’s data.
UK’s FTSE index lost its previous day’s gains as commodity prices slumped with
crude prices falling below $49. Antofagasta dropped 3.15% after the company
guided toward a lower copper output range in 2017. Royal Bank of Scotland Group
finished higher by 0.73 percent after Clydesdale made a preliminary non-binding
proposal to buy its Williams & Glyn operations.
Indian indices lost ground for another session as weakness in Tata group stocks
pulled down the broader indices lower. Tata Group stocks remained under pressure,
with Tata Motors and Tata Steel losing about 5 percent each. Axis bank fell by 8.3%
after it reported an 83% decline QoQ in profits for Q2FY17.
Result Review, Preview & News Analysis
Result Review: Cadilla Healthcare, Indoco Remedies
Result Preview: Tech Mahindra
Hero Motocorp Q2FY17 Results
Update to Cyrus Mistry’s resignation from Tata Sons
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 Ancill. Buy 1,017 1,218 19.7
HCL Tech IT Buy 791 1,000 26.5
Bharat Electronics Capital Goods Accumulate 1,259 1,414 12.3
Equitas Holdings Financials Buy 177 235 33.1
Navkar Corporation Others Buy 196 265 35.2
More Top Picks on Pg6
Key Upcoming Events
Date Region Event Description
Previous
Reading
Consensus
Expectations
Oct 27 UK GDP (YoY) 2.1 2.1
Oct 27 US Initial Jobless claims 260.0 --
Oct 28 Euro Zone Euro Zone Consumer Confidence (8.0) (8.0)
Oct 28 UK PMI Manufacturing 55.4 --
Oct 31 US GDP QoQ (Annualised) 1.4 2.5 6.(
More Events on Pg7
Domestic Indices Chg (%) (Pts) (Close)
BSE Sensex (0.9) (255) 27,837
Nifty (0.9) (76) 8,615
Mid Cap (0.9) (122) 13,421
Small Cap (0.7) (90) 13,429
Bankex (1.9) (432) 22,347
Global Indices Chg (%) (Pts) (Close)
Dow Jones 0.2 30 18,199
Nasdaq (0.6) (33) 5,250
FTSE (0.8) (60) 6,958
Nikkei 0.2 27 17,392
Hang Seng (1.0) (240) 23,325
Shanghai Com (0.5) (16) 3,116
Advances / Declines BSE NSE
Advances 1,148 542
Declines 1,647 1,099
Unchanged 237 67
Volumes (` Cr)
BSE 3,598
NSE 22,790
Net Inflows (` Cr) Net Mtd Ytd
FII (505) (1,501) 48,504
MFs 729 6,016 19,963
Top Gainers Price (`) Chg (%)
Ttkprestig 6,094 5.2
Gmrinfra 14 5.2
Piind 867 4.6
Gati 145 4.6
Idea 79 4.4
Top Losers Price (`) Chg (%)
Axisbank 487 (8.0)
Jublfood 1,059 (7.5)
Carerating 1,430 (5.9)
Cadilahc 388 (4.8)
Jswenergy 67 (4.4)
As on October 26, 2016
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Market Outlook
October 27, 2016
Result Review
Cadila Healthcare (CMP: `408 / TP: /Upside:)
Cadila Healthcare, posted results lower than expected on net profit and sales
front. In rupee terms, the consolidated revenues; came in at `2,336cr V/s
`2,373cr expected, down 1.6% yoy, mainly driven by pressure on the US generic
market.
The Formulation business sales (`1,988cr, up 3.2% yoy), mainly lead by the
US(`988.8cr, 1.5% dip yoy), Indian Formulation ( `820.9cr, a yoy growth 8.8%),
Emerging market Formulations (`113cr, a yoy dip of 3.2%) and Latin America
formulations ( `65.6cr, a yoy growth of 24.6%) . The other Business & Alliances (
`398.5cr), a yoy growth of 4.0%. Europe Formulations (`55.7cr, a yoy dip of
14.1%), Consumer Wellness (`111.9cr, a 7.6% yoy growth), Animal Healthcare
(`122.5cr, a yoy growth of 51.9%), API (`83.2cr, a yoy dip of 7.4%) and Alliances
(`25.2cr, a yoy dip of 42.5%).
On operating front, the EBITDA margins came in at 21.4% V/s 21.7% expected V/s
22.6% in 2QFY2016. Consequently, Adj. PAT came in at `336.2cr V/s `460.7cr
expected V/s `390.9cr in 2QFY2016, yoy de-growth of 14.0%. Other reason in
the dip in the net profit was the `40.4cr V/s `109.4cr, a yoy dip of 63.1%. We
maintain our neutral rating on the stock.
Y/E Sales OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales
Centre to announce 2% dearness allowance for govt. employees and
pensioners
Government to plan Market Intervention Scheme (MIS) for arecanut
Cabinet to consider advancing Budget to Feb 1
Corporate News
Sun Pharma buys eye care specialist Ocular Tech for $40m
Dr Reddy's Laboratories enters into collaboration with Gland Pharma to
market and distribute 8 Abbreviated New Drug Applications (ANDAs)
Suzlon forms Joint Venture with Ostro Energy for 50-mw solar project
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Market Outlook October 27, 2016
Top Picks Large Cap Company Market Cap
(` Cr) CMP
(`) Target
(`) Upside
(%) Rationale
Amara Raja Batteries 17,379 1,017 1,218 19.7 To outpace battery industry growth due to better technological products leading to market share gains in both the automotive OEM and replacement segments.
Axis Bank 1,16,116 487 630 29.5 Healthy pace of branch expansion, backed by distribution network, will be the driving force for the bank’s retail business
and overall earnings.
Bharat Electronics 30,227 1,259 1,414 12.3 Uptick in defense capex by government when coupled with BELs strong market positioning, indicate that good times are ahead for BEL.
HCL Tech 1,11,527 791 1,000 26.5 The stock is trading at attractive valuations and is factoring all the bad news.
Infosys 2,33,105 1,015 1,249 23.0 Back on the growth trend, expect a long term growth of 14% to be a US$20bn in FY2020.
Source: Company, Angel Research
Mid Cap Company Market Cap
(` Cr) CMP
(`) Target
(`) Upside
(%) Rationale
Asian Granito 825 274 351 28.1 We expect the company would report strong profitability owing to better product mix, higher B2C sales and amalgamation synergy.
Bajaj Electricals 2,615 259 306 18.3 Among 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 5,265 552 634 14.8
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 9,297 319 350 9.9 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.
Equitas Holdings 5,919 177 235 33.1 Strong 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 6,370 195 225 15.5
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.
Mahindra Lifespace 1,807 440 522 18.5 Speedier execution and speedier sales, strong revenue visibilty in short-to-long run, attractive valuations
Mirza International 1,130 94 113 20.3
We expect the company to report strong growth on back of healthy growth in domestic branded sales (owing to aggressive ad spend and addition in the number of EBOs & multi-brand outlets [MBOs]) and healthy export revenues.
Navkar Corporation 2,795 196 265 35.2 Massive capacity expansion along with rail advantage at ICD as well CFS augurs well for the company.
Siyaram Silk Mills 1,423 1,518 1,714 12.9 Strong brands and distribution network would boost growth going ahead. Stock currently trades at an inexpensive valuation.
TV Today Network 1,980 332 363 9.3
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; Note: *December year end; #September year end; &October year end; Price as on October 26, 2016
www.angelbroking.com
October 27, 2016
Stock Watch
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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