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August 07, 2024

BOFA Sec on Industrial
Downgrade ABB/Siemens/Havells/BEL to U-P from BUY
While remain constructive on order inflow/earnings outlook for sector, recent sharp re-rating & near all-time high valuations make us cautious
BOFA Sec on ABB/Siemens
ABB, TP cut to Rs 6625 & Siemens, TP cut to Rs 5378
See risks to global growth cropping up on
a) likely hard US landing,
b) China slowdown,
c) Rate hikes in Japan,
d) RBI cuts likely pushed out to CY25,
e) rising govt subsidies &
f) rising fund raises
BOFA Sec on Havells
Downgrade to U-P, TP cut to Rs 1815
See ltd. room from surprise
BOFA Sec on BEL
Downgrade to U-P, TP cut to Rs 213 from Rs 355
Constructive on earnings, but positives priced in
Citi on Bharti Airtel
Buy Call, Target Rs 1,750
Q1 India Mobile Performance In-line
Cons Rev/EBITDA, Both Up 2% QoQ Were Slightly (1-2%) Below Est On Misses In Africa & Biz Segments
Encouragingly, India Capex Showed Signs Of Moderation, Consistent W/Past Mgmt Commentary
India Capex Drove An Improvement In FCF Generation Along With Deleveraging
Macquarie on Bharti Airtel
Neutral Call, Target Rs 1,280
Headline India/Consolidated EBITDA +12%/1% YoY Which Is A Mild Miss
Q1 Consolidated PAT Beat Led By One-off Exceptional Items
In View Of Strong Stock Outperformance, Believe ARPU Miss Could Weigh On Short-term Sentiment
Over Next 1-2 Years, Remain Constructive On Improvement In Earnings, Cash Flow
Remain Constructive On Improvement In Returns Trajectory In India's Telecom Sector
UBS on Bharti Airtel
Neutral, TP Rs 1530
Q1: Muted although all eyes on impact on tariff hikes in coming qtrs.
Monitor commentary on:
1) capex trajectory
2) 5G rollout progress & uptake,
3) impact of tariff hikes implemented in Jul'24
4) update on enterprise biz
Nomura on Honeywell Auto
Buy Call, Target Rs 60,800
Q1 Results Were In-line
EBITDA Margin At 16.1%, Up 213 bps YoY Due To 135 bps YoY Decline In Employee Cost
EBITDA Margin At 16.1%, Up 213 bps YoY Due To 28 bps YoY Decline In Other Expense
Co’s Focused Portfolio Aligned To India’s Automation Megatrends
MS on Marico
Equal-Weight Call, Target Rs 596
Q1 In-line; Positive Commentary Continues
Growth In Core Businesses Improved Sequentially
Management Expects Double-digit Topline Growth In FY25
Management Maintained EBITDA Margin At FY24 Level (21%)
HSBC On LIC Hsg Fin
Downgrade To Reduce, Target Cut To Rs 590 From 740
Co Continues To Deliver Below-System Loan Growth & Margin Compression
Believe Mgmt Guidance Is Optimistic As Competition Would Keep Loan Growth & NIM Under Pressure
Estimate A 5% EPS CAGR Over FY24-27
Jefferies on ONGC
Buy Call, Target Rs 390
Q1 Standalone EBITDA Was 3% Ahead Of Estimates
Q1 Domestic Production Was Broadly In-line
Realisations Were Slightly Ahead Of Expectations
Q1 PAT Was In-line With Estimates & Consensus, Offset By Higher D&A And Interest Expense
Growth Guidance On Production Especially Krishna Godavari Basin Key To Watch Out For
Premium Price Realisation From New Wells In Nomination Fields Key To Watch Out For
HSBC on Divis Labs
Downgrade to reduce, TP Rs 4375
Lower contribution from custom synthesis on sales mix change led to lower EBITDA margin q-o-q in 1QFY25
Believe current price reflects exuberance on CS projects, mainly peptides, despite ltd clarity on opportunities
Nomura on Motherson Wiring
Buy, TP Rs 85
Rising content to support growth momentum
1Q EBITDA below; key beneficiary of premiumization, rising EV launches
Trading @31.4x FY26F EPS
Ltd capex intensity should sustain robust ROEs of 44- 45% over FY25-26F
Fall from ATH:
Autralia 8375 high, today close 7859 fall 6.3%
Taiwan 24416 high, today close 19830 fall 20%
Korea 2896 high, today close 2441 fall 16%
Singapore 3509 high, today close 3243 fall 8%
Honkong 19700 high today close 16700 fall 15%
India 25070 high today close 24070 fall 4%
Japan 42426 high todays close 31426 fall of 25%
Europe n America today yet to open/close so stay tuned.
FII in FNO today
@CNBCTV18News @CNBCTV18Live
On Index Futures
Unwound 11 k Longs
Added 24k Shorts
FII Long: Short now at 60%:40%
FII net longs now at 1.1 lakh contracts
Why are global markets falling, including India's?
It's mainly due to the 'Yen Carry Trade.'
1. Investors borrowed cheap yen from Japan to invest in higher return assets globally.
2. Bank of Japan hiked rates by 0.25% last week.
3. The Fed signaled future rate cuts.
Result? The yen is rising against the USD and other currencies and sell off in risky assets.
Let's understand it with an example.
Before Interest Rate Hike:
1. An investor borrows 1,000,000 yen at 0.1% interest from Japan.
2. Converts the 1,000,000 yen to USD at an exchange rate of 1 USD = 100 yen, getting $10,000.
3. Invests $10,000 in a global asset with a 5% return, earning $500.
After Interest Rate Hike and Yen Appreciation:
1. Bank of Japan raises interest rates to 0.25%.
2. The yen appreciates to 1 USD = 90 yen.
3. The investor needs to repay 1,000,000 yen + 0.25% interest = 1,002,500 yen.
4. Converts $10,000 + $500 (returns) = $10,500 back to yen at the new rate, getting 945,000 yen.
5. The investor now has a shortfall of 57,500 yen due to the stronger yen and higher interest rate.
This increased cost forces investors to sell off their global investments to repay their yen loans, causing markets to fall.
Took 30 years to make new life time highs and took 3 days to crash.
Nikki ( Japan )
42,000 to 33,000
Our market also downside possible
India Daybook – Stocks in News
Lupin: Revenue at ₹5,600.3 cr vs poll of ₹5,145.9 cr, Net profit at ₹801.3 cr vs poll of ₹564.7 cr (Positive)
PB Fintech: Net profit at ₹60 cr vs loss of ₹11.9 cr, Revenue up 51.8% at ₹1,010.5 cr vs ₹665.6 cr (YoY) (Positive)
Gulf Oil Lubricants: Net profit at Rs 84 cr vs Rs 69 cr, Revenue at Rs 894 cr vs Rs 811 cr (YoY) (Positive)
J Kumar Infra: Net profit at Rs 86.42 cr vs Rs 72.83 cr, Revenue at Rs 1281 cr vs Rs 1131 cr (YoY) (Positive)
Linde India: Net profit at Rs 113.6 cr vs Rs 105.4 cr, Revenue at Rs 653 cr vs Rs 630 cr (QoQ) (Positive)
Asian Granito: Net profit at Rs 1.84 cr vs loss of Rs 2.44 cr, Revenue at Rs 343 cr vs Rs 335 cr (YoY) (Positive)
Bata India: Net profit at Rs 174 cr vs Rs 107 cr, Revenue at Rs 944 cr vs Rs 958 cr (YoY) (Positive)
Sigachi: Net profit at Rs 12.8 cr vs Rs 10.8 cr, Revenue at Rs 96 cr vs Rs 85 cr (YoY) (Positive)
Krsnaa: Net profit at Rs 18 cr vs Rs 14.6 cr, Revenue at Rs 170 cr vs Rs 140 cr (YoY) (Positive)
PI Ind: Net profit at Rs 449 cr vs Rs 369 cr, Revenue at Rs 449 cr vs Rs 369 cr (YoY) (Positive)
Bosch: Net profit at Rs 465.0 cr vs Rs 409.0 cr, Revenue at Rs 4317 cr vs Rs 4158 cr (YoY) (Positive)
DLink: Net profit at Rs 23.6 cr vs Rs 21 cr, Revenue at Rs 350 cr vs Rs 299 cr (YoY) (Positive)
Fortis: Net profit at Rs 165 cr vs Rs 110 cr, Revenue at Rs 1860 cr vs Rs 1660 cr (YoY) (Positive)
Real Estate Stocks: Government moves an amendment to provide relief for real estate under LTCG regime (Positive)
Cupid: Company to set up new unit in UAE to capture market share in the GCC region. (Positive)
PC Jeweller: Indian Bank accepts one time settlement proposal of Company (Positive)
GR Infra projects: Company emerges as lowest bidder for transmission project in Karnataka (Positive)
Aurobindo Pharma: Company receives USFDA approval for estradiol vaginal inserts USP, 10 MCG. (Positive)
Suzlon Energy: Company to buy 76% stake in Renom Energy Services for Rs 660 crore (Positive)
Gujarat State Fertilizers: Company expects 25% volume growth in fiscal 2025. (Positive)
Adani Green: Adani Group is planning a 150% increase in its output of solar panels by 2026 to bolster India’s carbon net zero target (Positive)
Chambal Fertilizers: Net profit at Rs 448.3 cr vs Rs 338.6 cr, Revenue at Rs 4933 cr vs Rs 5589 cr (YoY) (Neutral)
Tata Power: Net profit at Rs 970 cr vs Rs 972 cr, Revenue at Rs 17,294 cr vs Rs 15,213 cr (YoY) (Neutral)
Gland Pharma: Net profit at Rs 144 cr vs Rs 194 cr, Revenue at Rs 1402 cr vs Rs 1209 cr (YoY) (Neutral)
Tamilnadu Petroprocuts: Net profit at Rs 15.05 cr vs Rs 15.40 cr, Revenue at Rs 461 cr vs Rs 449 cr (YoY) (Neutral)
Chaman Lal Setia: Net profit at Rs 22.6 cr vs Rs 27.5 cr, Revenue at Rs 32.2 cr vs Rs 38.7 cr (YoY) (Neutral)
Gujarat Gas: Net profit at Rs 330 cr vs Rs 409 cr, Revenue at Rs 4450 cr vs Rs 4134 cr (QoQ) (Neutral)
Kokuyo Camlin: Net profit at Rs 16.2 cr vs Rs 18.4 cr, Revenue at Rs 230 cr vs Rs 236 cr (YoY) (Neutral)
Cummins India: Net profit at Rs 419.2 cr vs Rs 315 cr, Revenue at Rs 2304 cr vs Rs 2208 cr (YoY) (Neutral)
Credo Brands: Net profit at Rs 9.8 cr vs Rs 8.57 cr, Revenue at Rs 120 cr vs Rs 118 cr (YoY) (Neutral)
Ritco Logistics: Net profit at Rs 8.8 cr vs Rs 7.1 cr, Revenue at Rs 250 cr vs Rs 210 cr (YoY) (Neutral)
Andhra Petrochemical: Net profit at Rs 15.90 cr vs Rs 1.20 cr, Revenue at Rs 130 cr vs Rs 191 cr (YoY) (Neutral)
GIC Housing: Net profit at Rs 39 cr vs Rs 32 cr, Revenue at Rs 84 cr vs Rs 82 cr (YoY) (Neutral)
EIH: Net profit at Rs 92.2 cr vs Rs 100 cr, Revenue at Rs 530 cr vs Rs 498 cr (YoY) (Neutral)
Vadilal: Net profit at Rs 77 cr vs Rs 71 cr, Revenue at Rs 460 cr vs Rs 410 cr (YoY) (Neutral)
Vedanta: Company is targeting a $1.8 billion capital expenditure this financial year. (Neutral)
Karur Vysya Bank: Revises six month & 1 year lending rates by 10 bps (Neutral)
Cummins India: Ashwath Ram resigns as MD; appoints Shveta Arya as Additional Director & MD. (Neutral)
Gland Pharma: U.S. FDA inspection at company's Hyderabad facility concludes with three '483 Observations’. (Neutral)
PTC Industries Ashok Kumar Shukla resigns from the post Whole -Time Director w.e.f. September 1. (Neutral)
Welspun Living: Company's Rs 278 crore buyback to open on August 9, close on August 16 (Neutral)
VIP Industries: Net profit at Rs 4 cr vs Rs 57.8 cr, Revenue at Rs 638 cr vs Rs 336 cr (YoY) (Negative)
Indigo Paints: Net loss at Rs 26.7 cr vs profit Rs 31.7 cr, Revenue at Rs 311 cr vs Rs 288 cr (YoY) (Negative)
Fusion Micro: Net loss at Rs 62 cr vs profit Rs 120 cr, NII at Rs 398 cr vs Rs 296 cr (YoY) (Negative)
RAIN: Net loss at Rs 78 cr vs Rs 166 cr, Revenue at Rs 409 cr vs Rs 467 cr (YoY) (Negative)
Nifty closed @23 ,992.55 (-63.05) and Sensex @78,593.07 (-166.33) on Tuesday GIFT Nifty was trading at 24295 (as of 7:30 a.m)
FIIs net sold equities in cash to the tune of Rs 3 531 cr whereas DIIs bought equities in cash worth Rs. 3 357 cr on August 06 2024
Sops for phone parts production on cards
PB Fintech reported a consolidated net profit of Rs 60 cr for Q 1 FY 25 reversing a loss of Rs 12 crore in the same quarter a year ago
MTNL defaults on Rs 422 crore bank loan payments
Pharma major Lupin Ltd reported a 77.2% YoY jump in net profit at Rs.801 3 cr for Q 1 FY 25
Mizuho plans to say no to Yes Bank deal It's SMBC vs Emirates NDB
Shree Cements' profit for the June quarter declined 45% y/y on weak pricing
Bata India Q 1 FY 25 profit Jumps 63 Revenue fell 23% YoY to Rs 944 63 cr for the three months ended June
IIFL Finance Ltd’s consolidated net profit declined by 28% YoY to Rs 338 cr in the Q 1 FY 25
Fortis Healthcare reported revenue that rose 12.2% YoY to Rs 1859 cr in Q 1 FY 25
Suzlon Energy to buy stake worth Rs 660 cr in Renom Energy Services
Bosch said its consolidated profit after tax rose 14% to Rs 466 cr for Q 1 FY 25
Tata Motors looks to launch sub 600 kg small CV
SEBI eases entry barriers for RIAs, research analysts
NCLT allows KSK Mahanadi lenders to distribute surplus cash of Rs 6400 cr among them
Blue Star's consolidated net profit rose 102.6% y/y to 169 crore in Q 1 FY 25
SC upholds insolvency proceedings against Tulip Hotels
Centre to broaden income criteria for urban housing aid
Indian ADRs: Wipro (+3.4%), Dr Reddy's (1.2%) and Infosys (+0.9%)
Nomura on Lupin
Buy Call, Target Rs 1,952
Q1 Showed Healthy Growth Across Markets; Expansion Of EBITDA Margin
Q1 Sales/EBITDA/PAT 4%/9%/19% Higher Than Estimates
EBITDA Margin Up 527 bps YoY, 120 bps Higher Than Estimates
Adjusted For Glumetza Settlement Charges, EBITDA Margin Was 24.7% (Vs Reported 23.3%)
Co Now Has Net Cash Of Rs 19 Cr Vs `48 Cr Debt In Q4, & Rs 130 Cr Debt As At End Q1FY24
Macquarie on Lupin
O-P, TP Rs 1785
1Q rev/EBITDA/PAT beat est by 6%/18%/35%
Rev beat driven by higher-than-expected rev across all biz segments
EBITDA beat driven by better-than-expected rev, higher-than expected gross margin, & lower-than-expected R&D expenses
Nomura on Gland Pharma
Downgrade To Reduce, Target Rs 1,819
Q1 Was A Weak Quarter
Break In Momentum Post Recovery In Past 4 Quarters
1Q Sales/EBITDA/PAT Missed Estimates By 12%/32%/32%
Ex-Cenexi, Revenues Missed Est By 18%
Lower Revenues & Milestone Income Led To Contraction In EBITDA Margin
CITI On Gland Pharma
Sell, TP Rs 1310
1Q below (26% EBITDA miss) as base biz injectable sales declined by 14% QoQ
A part of decline was due to lower milestone income, but US biz also felt pinch of increased competitive intensity reflecting in softness in vol as well as prices
MS on LIC Hsg Fin
Downgrade To Underweight, Target Rs 550
Expect PpOP To Decline 7% YoY In FY25 & Rise 4% YoY In FY26
There Is Downside Risks From Interest Rate Cuts
Headline P/E Is Less Than 7x
As Structural Pressures & Earnings Volatility Become Increasingly Evident, P/E Could De-rate Further
View NIM & Loan Spread Expansion To Multi-yr High Levels That Co Saw In FY24 Is Unsustainable
MS on Suzlon
Overweight Call, Target Rs 73.4
Renom Energy Services Acquisition: Strategic Entry Into Multibrand OMS
Renom Is A Market Leader With 2.5GW Of Contracted Capacity
Presence In Seven Windy States & Experience Of Maintaining Turbines Of 14 Different Makes
Implied Valuation Of 4x Price To Sales, Cheaper Than Its Listed Peer
MS on PB Fin
Equal-Weight Call, Target Rs 1,125
Q1 Adjusted EBITDA Beat Estimates
Core Business Profitability Was Strong, Despite Weak Disbursement Growth
Adjusted EBITDA Loss At New Business Initiatives Narrowed
Investor Focus Will Be On The Sustainability Of Premium Momentum & A Pickup In Credit Biz
Nomura on Shree Cement
Buy Call, Target Rs 33,400
Q1 Lower-than-expected Blended Realisation Leads To EBITDA Miss
Adjusted For Merchant Power Sales, Cement EBITDA Should Be Around `904/t
Capacity Expansion: On Track To Reach 74 mt By FY26
Stock Is Currently Trading At 17.5x 1-Yr-Fwd EV/EBITDA
Nomura on Cummins
Neutral, TP Rs 3470
1Q rev at Rs 23bn, up 4% y-y (-4%/vs Nomura est.)
Domestic sales grew 12% y-y, while exports declined 22% y-y
Gross margin at 37.8%, rose 523bp y-y
EBITDA at Rs 4.7bn, up 37% y-y (+6% vs est.)
EBITDA margin at 20.3% vs est 18.5%
CITI on Bata India
Sell, TP Rs 1050
EBITDA margin declined by 548bps YoY to 19.6% (-288bps QoQ; -794bps vs 1QFY20).
Margin adversely impacted due to one-time investment in technology (Rs147mn; implying 156bps adverse impact on margin)
CITI on Gujarat Gas
Sell, TP Rs 500
Soft qtr, with 1Q declining 9% qoq in line
While vol recovered 13% qoq (2% ahead), this came at expense of per unit EBITDA margins that declined 20% qoq (in line)
Performance validates that 4Q represented a near-term peak for Co’s earnings
CLSA On PFC
Outperform Call, Target Rs 610
Q1 Net Profit Was Up 24% YoY, & 5% Ahead Of Estimates Primarily Due To Forex Gains
Loan Growth Was Slow At 10% YoY
Mgmt Indicated It Is Undergoing Transformation Projects, Which Should Settle Down Soon
FY25 Growth Guidance Of 12-15% Remains Unchanged
On Asset Quality, Co Has Neither Seen New NPA Formation Nor Any New Resolutions In Q1
One State Utility Has Slipped To Stage 2, Thus Provision Coverage Has Inched Up QoQ
Bernstein on PFC
Outperform Call, Target Rs 620
A Disappointing Quarter With Decline In Loan Book QoQ, But Mgmt Retained Their Guidance
Confident In Loan Book Growth Coming In & See This Quarter As A Temporary Blip
Visibility On Reversal Of Provisions Is Also Improving With A Good Bid Received For KSK Plant
Co’s Strategy To Hedge 100% Of Yen Borrowings As Of End Of Q1 Seems To Have Worked In Its Favor
CLSA on Tata Power
Underperform Call, Target Rs 297
Key Message From Q1 Was That Worst Of Mundra IPP Losses May Be On Weak Coal & Govt Advisory
Renewable Energy Independent Power Producers A Key Catalyst That Investors Look For
Continue To See Declines In PAT Due To Drops In Wind Utilisation Rates
Coal Profit Fell 69% YoY On A Decline In Seaborne Coal Prices
RE IPP Business Saw 12% Decline In Ex-treasury PAT On Lower Wind Utilisation Rates
RE EPC Business Did Well Due To Benign Solar Cell Prices
Stock Remains Expensive At A 35x CL25 PE
Jefferies on Tata Power
Underperform Call, Target Rs 325
Q1 PAT 13% Below Est Due To Lower Coal Mine Profitability
Mgmt Guidance Of `2,000 Cr Capex In FY25 Is At Higher End Of Earlier Plans In Renewables, T&D & Storage
Maintain Estimates As Solar Rooftop And EPC Can See Recovery Ahead
Remain Concerned On Execution Delays & Mundra Plant Issues
BoFA Sec on Tata Power
U-P, TP Rs 336
PAT up 32% YoY (beat BofAe by 7.4%) on operational efficiencies, tariff order in discoms & higher PLF at Mundra
Increased capex guidance to Rs200bn for FY25
RE ramp up on track
Val @3.4x 2yr fwd P/B seen expensive
Jefferies on TVS Motors
Buy Call, Target Raised To Rs 3,000
Q1 EBITDA & Recurring PAT Grew 26-31% YoY To New Highs
Q1 EBITDA & Recurring PAT In-line With Est; EBITDA Margin Rose 10 bps QoQ To 11.5%
Co Should Be A Key Beneficiary Of 2W Demand Revival In Both Domestic And Export Markets
An Improving Franchise Should Also Drive Continued Margin Expansion
Co Has 3 Product Launches In India In H2CY24; Norton Launches Will Start By End-CY25
Expect EPS To More Than Double Over FY24-27
Macquarie on TVS Motors
Outperform Call, Target Rs 2,783
Q1 Gross Margin Surprises Positively
EBITDA Margin Improved To 11.5% — Highest Ever; However, In Line With Estimates
Multiple New Launches For H2FY25
Investment In Subsidiaries Key To Track From A Free-Cash-Flow Standpoint

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