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Market Highlights

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April 15, 2024

1. India Daybook – Stocks in News
Granules: Unit V facility located at Anakapally gets zero Form 483 observations from USFDA. (Positive)
ISMT: Company received 2 contracts from ONGC to supply products worth ₹343.72 cr. (Positive)
RVNL: Company received LoA worth 95.95 cr for new line project of Araria - Galgalia of N.F. railway (Positive)
Mphasis: Company has signed a multi-year global strategic collaboration agreement with Amazon Web Services (AWS). (Positive)
Varun Beverages: Starts commercial production of carbonated soft drinks, energy drinks at Gorakhpur (Positive)
Lemon Tree: Announces the opening of A Lemon Tree Resort, in Chitwan, Nepal. (Positive)
Metal stocks: US imposes sanctions on use of Russian metals on exchanges (Positive)
GAIL/Petronet/NTPC/GIPCL: Government invokes section 11 of the Electricity Act. India will operationalize gas-based power plants to meet summer electricity demand (Positive)
Ambuja/ACC: Adani Cement sees 16% growth, eyes 140 mn tn/year capacity by 2028 (Positive)
Engineers India: Company inks MoU with Detect Technologies for real-time AI-based monitoring for implementing safe practices at construction sites (Positive)
Coal India: Government sets target of producing 170 million tonnes of coal from captive and commercial coal blocks in FY25. (Positive)
Dixon Technologies: Company partners with France's Dassault Systèmes to streamline operations. (Positive)
Zuari Ind: NCLT approves merger of Zuari Sugar and Power with Company. (Positive)
AsterDM: Company's board declares special dividend of Rs 118/share (Positive)
HFCL: Company's subsidiary HTL bags order of around Rs 65 crore to supply optical fibre cables (Positive)
Senco Gold: Company achieved 28% YoY Revenue growth in full year; and 39% YoY in Q4 (Positive)
Kolte-Patil: Company clocked Highest-ever annual sales value of ₹2,822 crore, a growth of 26% from last year. (Positive)
Harsha Eng: Company has been appointed as the exclusive authorized agency of Umbra Group for repair, marketing, promotion, and sale of manufactured components. (Positive)
Zaggle: Entered into an agreement with Eversub India Private Limited. (Positive)
Grindwell: Commencement of the Engineered Ceramics facility at plant located in Halol. (Positive)
PowerGrid: Company to consider raising up to Rs 12,000 crore via NCDs in FY25 on April 17 (Neutral)
Shilpa Medicare: QIP closes, board approves allocation of 1.09 cr shares at ₹455/sh (Neutral)
Patanjali Foods: Q4 Revenue from edible oil segment showed modest single-digit growth QoQ. (Neutral)
Reliance Power: Co concludes slump sale of its 45 MW Wind Power Project to JSW Renewable Energy (Neutral)
Sterlite Tech: QIP closes, board approves allocation of 8.84 cr shares at ₹113.05/sh (Neutral)
Adani Ent: Adani Global, Mauritius will acquire 49% stake in Adani Esyasoft Smart Solutions, Abu Dhabi from UAE-based Esyasoft Holding. (Neutral)
Ami Organics: Company approves raising up to Rs 500 crore via QIP. (Neutral)
IIFL Finance: Board to meet on April 17 to mull fundraising. (Neutral)
TCS: Rupee Revenue at Rs 61,237 crore versus pool of Rs 61459 crore, EBIT seen at Rs 15,918 crore versus poll of Rs 15,504 crore (Neutral)
HDFC Bank; Japan’s Bank of Tokyo-Mitsubishi UFJ (MUFG) set to buy a 20% stake in HDB Financial Services (Neutral)
Coforge: Consider Fund Raising Via Non-Convertible Bonds Worth Rs 340 Crores (Neutral)
HUL/Dabur/Zydus well: Commerce Min issues advisory to all e-commerce websites to remove all drinks/beverages from the category of health drinks on their platforms. (Negative)
Godrej Agrovet: Company gets assessment order worth Rs 115 crore. (Negative)
BhartiHexa: Sanjeev Kumar and Surajit Mandol resign from company's board. (Negative)
2. TCS Review
JPM
Upgrade to OW, TP Raised to Rs 4500
3Q surprised +vely on margins & signings.
CC QQ growth of 1.1% was broadly in-line
With deal signings at highest ever & TTM book to bill at 1.5x, TCS is likely to outpace peers in FY25
GS
Buy, TP Rs 4350
Increasing probability of a double-digit earnings growth in FY25
Continue to forecast a c.8% rev growth in FY25 (was 3.4% in FY24), & exit margins suggest set up for a double-digit EBIT/EPS growth in FY25 is good
Jefferies
Hold, TP Rs 4030
4Q beat estimates, but demand pressures persist.
Despite strong deal bookings, management commentary was cautious.
Continued headcount decline & sharp reduction in subcontractors do not offer comfort on growth.
Nomura
Reduce, TP Rs 3250
4Q : A mixed bag; deal wins robust
Modest miss in growth, strong beat in margins
Order booking was robust; near-term growth visibility remains low
Weak headcount addition persists
Not many levers exist for significant margin expansion
UBS
Buy, TP Rs 4700
Ended FY24 on good note with remarkable deal wins & +ve margin surprise in 4Q (100bp)
Despite all +ves, management appeared to be holding back on calling out growth revival
Conversion of large deal wins into rev is a matter of time
HSBC
Buy, TP Rs 4540
Profit beat for 4Q, led by strong margin expansion, while rev a tad lower
Deal wins strong with BBR at 1.8x; however, management remained non-committal on recovery pace for 1H FY25
MS
OW, TP Rs 4350
Find 4Q results & management commentary mixed.
Margin surprise lifts EPS est 2%, but commentary on limited visibility into near-term revenue growth trends could be a near term multiple drag
Jefferies on ONGC
Initiate Buy, Target Rs 390
Reforms In Crude & Gas Pricing Have Improved Co’s Profitability Above Past Decade Averages
See Strong FCF Generation & Consol Net Debt Reduction On Profitable Prodn Growth Over FY24-26
Valuation Doesn't Capture Adequately As Stock Trading At A Steeper Discount To Nifty
Stock Trading At A Steeper Discount To Nifty Compared To Its Long –term Average
Sharp Rise Or Fall In Crude Price Are Key Risks
MS on Exide
Overweight Call, Target Raised To Rs 485 From Rs 373
Co’s Share Price Could Rise Significantly Over The Next Ten Years
Co Can Become A Leading Player In Battery Cell Localisation
Government Support For Made In India EVs Could Play In Co’s Favour
Strong Auto & Industrial Customer Tie-Ups, Early Mover Advantage Could Play In Co’s Favour
Hyundai/Kia Contract Validates Capabilities; Likely A Multi-year Contract
UBS on Zomato
Buy Call, Target Raised To Rs 250
Believe Co’s Quick Commerce Growth & Margin Potential Are Under Appreciated
Detailed TAM And Unit Economics Framework Suggests FY24-29 GMV CAGR Of 45%
Detailed TAM And Unit Economics Framework Suggests $10.2 Bn By FY29, 20% Above Est
More Importantly, FY29 EBITDA Margin Should Touch 9%, Almost 2x Consensus
HSBC on Sun Pharma
Buy Call, Target Rs 1,790
US FDA Issued ‘Official Action Initiated’ Status For Co’s Dadra Plant
US FDA Observation Adds On Regulatory Overhang For Co
Expect Its US Generic Sales Ex-Grevlimid To Remain Rangebound On FDA Issues
Specialty Sales Remain Key For Earnings Growth, Offsetting Challenges In US Generics
Kotak Inst Eqt on EMS Sector
Believe TAM will reach $221 bn(9% CAGR in FY2023-40E)
Indian EMS service providers are well-positioned to benefit from structural growth drivers, but expensive val limit any meaningful plays
Kotak Inst. on Cyient DLM
Initiate Sell, Target Rs 570
Co Offers Electronics Manufacturing Services For Mission-Critical Applications
Co Offers EMS In Industries Such As Aerospace, Defense, Medical Tech & Industrials
Expect Co To See Strong Revenue Growth Over FY23-26
Strong Revenue Growth Driven By A Robust Order Book
Weakening Margin Profile, Deteriorating Working Capital Cycle Keep Us Cautious
HSBC on Dixon Tech
Buy Call, Target Raised To Rs 8,400
Co To Acquire A Majority Stake In Transsion Holdings’ India Mobile Assembly Unit
Expect Co To More Than Double Its Revenue Over The Next Two Years
Profit Growth To Be Higher Than Revenue Growth
3. Stock to watch
a) DEEPAKNITRITE is hovering in a Rising channel formation on the daily chart. The stock has bounced from its 100- & 200-day EMA. Momentum indicator RSI is positive on the daily chart. Therefore, the stock looks good to 2250 and can test 2525 support at 2140. Positional view.
b) ION EXCHANGE has seen an Inverse Head and Shoulder breakout on the daily charts. The stock has formed an Engulfing Bullish candle on the daily charts. Momentum indicator RSI is positive on the daily charts. Therefore, the stock looks good on dips to 550 and can test 620 support is at 511. Positional view.
c) WEST LIFE FOOD is on the verge of an Inverse Head and Shoulder breakout on the daily charts. The stock has formed a Strong Bullish candle and has closed above its long-term moving averages. The momentum indicator RSI is positive on the daily charts. Therefore, the stock looks good on dips to 815 and can test 930 support is at 757. Positional view
d) JUST DIAL is on the verge of a Multi-year Inverse Head and Shoulder breakout on the daily charts. The stock has formed an Engulfing Bullish pattern. The momentum indicator RSI is positive on the daily chart. Therefore, the stock looks good on dips to 888 and can test 1055 support is at 818. Positional view
e) IEX is hovering in an Expanding Triangle formation on the daily charts. The stock has bounced from its 100- & 200-day EMA on the daily chart. Momentum Indicator RSI is positive on the daily charts. Therefore, the stock looks good on dips to 146 and can test 167 support is at 130. Positional view.
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