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January 17, 2024

*Fund Houses Recommendations*
UBS on *GAIL:* Upgrade to Buy on Company, raise target price at Rs 190/sh (Positive)
MS on *Ambuja Cement:* Upgrade to overweight on Company, raise target price at Rs 600/sh (Positive)
MS on *ACC:* Upgrade to Equal weight on Company, raise target price at Rs 2400/sh (Positive)
MS on *Ultratech:* Maintain overweight on Company, raise target price at Rs 12000/sh (Positive)
MS on *Dalmia Bharat:* Maintain overweight on Company, raise target price at Rs 2750/sh (Positive)
MS on *Grasim:* Maintain overweight on Company, raise target price at Rs 2430/sh (Positive)
MS on *Shree Cement:* Maintain Equal weight on Company, raise target price at Rs 28500/sh (Positive)
MOSL on *Cipla:* Maintain Buy on Company, target price at Rs 1540/sh (Positive)
Citi on *Bharti Airtel:* Maintain Buy on Company, target price at Rs 1270/sh (Positive)
Citi on *Indus Tower:* Maintain Buy on Company, target price at Rs 265/sh (Positive)
CLSA on *Hero Motocorp:* Maintain Buy on Company, raise target price at Rs 4964/sh (Positive)
CLSA on *HDFC Bank:* Maintain Outperform on Bank, raise target price at Rs 2025/sh (Positive)
Bernstein on *HDFC Bank:* Maintain Outperform on Bank, target price at Rs 2200/sh (Neutral)
MS on *HDFC Bank:* Maintain Overweight on Bank, target price at Rs 2110/sh (Neutral)
Citi on *HDFC Bank:* Maintain Buy on Bank, cut target price at Rs 2050/sh (Neutral)
Jefferies on *HDFC Bank:* Maintain Buy on Bank, target price at Rs 2000/sh (Neutral)
HSBC on *HDFC Bank:* Maintain Buy on Bank, target price at Rs 1950/sh (Neutral)
DAM on *HDFC Bank:* Maintain Buy on Bank, target price at Rs 2000/sh (Neutral)
Incred on *HDFC Bank:* Maintain Add on Bank, target price at Rs 2000/sh (Neutral)
MOSL on *HDFC Bank:* Maintain Buy on Bank, target price at Rs 1950/sh (Neutral)
MOSL on *LTTS:* Maintain Buy on Company, target price at Rs 6220/sh (Neutral)
UBS on *Bajaj Finance:* Maintain Sell on Company, target price at Rs 6800/sh (Neutral)
MS on *ICICI Lombard:* Maintain Overweight on Company, target price at Rs 1750/sh (Neutral)
MS on *Federal Bank:* Maintain Equal weight on Bank, target price at Rs 165/sh (Neutral)
CLSA on *TVS Motors:* Maintain Sell on Company, raise target price at Rs 1438/sh (Positive)
Nuvama on *HDFC Bank:* Downgrade to Hold on Bank, cut target price at Rs 1730/sh (Negative)
Nomura on *HDFC Bank:* Maintain Neutral on Bank, cut target price at Rs 1625/sh (Negative)
MS on *LTTS:* Maintain Underweight on Company, target price at Rs 4600/sh (Negative)
Citi on *LTTS:* Maintain Buy on Company, cut target price at Rs 4065/sh (Negative)
CLSA on *Bajaj Auto:* Downgrade to Sell on Company, cut target price at Rs 6315/sh (Negative)
CLSA on *Eicher Motors:* Downgrade to Sell on Company, cut target price at Rs 3716/sh (Negative)
*Sbi Securities Daily Market Pulse 17th January 2024*
* From Price Action Perspective:*
Profit booking was visible from higher levels yesterday, and as a result, Nifty lost 0.29% yesterday primarily due to profit taking in IT sector, Reliance and Pharma. Banknifty, for a change, outpeformed the broader markets by closing flat largely in anticipation of decent numbers from HDFCBANK.
* Decoding Asset Relationships:*
The Dollar index broke above its 13-day range, marking a potential change in sentiment in the currency basket as it approached 103.35 levels. US 10-year Bond yields too experienced uptick as it comfortably sustained above 4.05% in tandem with the dollar index.
Meanwhile, Brent Crude remains steady between $80-75 a barrel.
* Quick Check on Global Markets:*
The S&P 500 opened with a downwards gap, experiencing price rejection near its life high zone closer to 4800. This is the second price rejection in a fortnight. Overall, Momentum is bullish, but for fresh momentum to emerge, it is essential for the index to surpass this level of 4800.
On the downside, the previous swing low of 4700-4690 zone could act as an important support.
* Key Nifty levels:*
A single day of red in the market does not necessarily indicate a downtrend. The global cues from coming from the recovering dollar index and selling pressure in S&P 500 may gather like clouds on the horizon, but it may not indicate a signal to go aggressively short just yet. Rather, it could be a warning to decrease leveraged positions and hedge existing long positions. It also could signal an elongated period of consolidation going ahead into the quarterly numbers.
Going forward, from a short-term perspective, post the gap down, support is likely to be seen at 21700-21730 level & resistance on the upside will be closer to 22000-22030.
In case 21700 is breached,
Index could slide towards 21550-21510 zone on the downside.
Above 22030, the Index could resume its uptrend towards 22220-22280 zone.
However, since HDFCBANK Bank numbers are not on expected lines and ADR is trading with a deeper cut, expect the initial trading sentiment to get hit. Also, with IT too coming under pressure, we could witness some additional profit booking in the coming few sessions.
OI data Interpretation for weekly series,
The open interest for January futures declined by 1.41% while the price fell 0.49%. This indicates partial, long unwinding of positions.
Nifty PCR_OI has cooled off to 1.11 levels.
Put writing seen in 22000 and 21900 strikes while 22100 as well as 22300/22500 calls have seen aggressive writing.
Overall, the range for the coming few sessions could be 21700 on the downside & 22150 on the upside.
*Key Bank Nifty Levels:*
HDFC bank's quarterly earnings were released yesterday, and what was notable was a prominent lack of expansion in Net Interest Margins. This is likely to put a damper in the banking sector as a whole as the markets digest this development.
Going forward, the zone of
48300-48250 is likely to act as a resistance & till this holds, index can experience profit booking upto 47600-47700 zone.
In case 47600 breaks, Index can retest its next support placed at 47100-47000.
Above 48300, Bank Nifty could witness a sharp extension of the rally towards 48600-48800.
For the next weekly Expiry,
In banknifty's case, too, the near expiry experienced a decline of 0.48% while, on a cummulative basis, the futures OI surged by 0.34%, indicating opening up of minor short positions ahead of HDFCBANK's numbers.
FIIs sold 2557 contracts when it came to banknifty.
Banknifty's PCR is weaker at 0.92.
Significant Open Interest buildup is witnessed in 48300-48500 calls and 48100-48000 puts, implying a range of 47700 and 48600 for the coming few sessions.
However, in case BN slips below 47600-47650, Short-covering in Puts could be witnessed, which could put further pressure on the Index.
Next few sessions are going to be crucial for Bank Nifty as numbers of ICICIBANK and Kotak Bank are also scheduled to be released in next 3 days.
* Sectors & stocks in Momentum:*
The most influential stocks whose quarterly earnings are due today are Asianpaints, ICICI Pru, LTIM and OFSS.
Oil and Gas constituents such as Ongc, Petronet, Gugasltd, Bpcl and Aegischem have formed favourable chart structures on daily as well as weekly timeframes.
From the broader market, bullish setups were observed in Titan, Itc, Tatamotors, Irfc, Sail, Bankindia, Biocon, Policybzr, Escorts, Nmdc, Lichsgdin, Cochinship, Amber, Intellect, Nationalum, Idbi, Idfc and RVNL.
* FII - DII data Synopsis*
In the Cash Segment,
FIIs bought to the tune of 656.57 cr, while DIIs sold to the tune of 369.29 cr.
FIIs' Long Short Ratio for Index Futures slightly weakened to 65.56 as on a net basis, they sold 2096 index futures.
On the stock futures front, FIIs have sold to the tune of 9797 contracts, while on the Options Front, FIIs bought 10850 call contracts and bought 271500 Put Option contracts. Buying of these put options could be a potential hedge against the overall existing Index Futures and Stock Futures Long positions.
*Regards*,
*Sbi Securities Ltd*
*India Daybook – Stocks in News*
*Karnataka Bank:* Company enters into co-lending partnership with ClixCapital to provide loans to Indian MSMEs (Positive)
*RVNL:* Company forms 49:51 joint venture with #JaksonGreen for solar projects in India and oversees: (Positive)
*ICICI SEC Q3:* Total Income at Rs 1322.0 crore versus Rs 879.0 crore YoY, Rs 1249.0 crore QoQ. Net Profit at Rs 466.0 crore versus Rs 281.0 crore YoY, Rs 424.0 crore QoQ (Positive)
*IREDA:* The Company has signed MoU with Indian Overseas Bank for Co-lending in Green Energy Financing (Positive)
*PNC Infratech:* Company gets Letter of Acceptance for road construction project worth Rs 1,174 crore. (Positive)
*UltraTech Cement:* Incorporates Meghalaya unit Letein Valley Cement for limestone mining (Positive)
*Adani Energy Solutions:* Company's smart-metering contracts include 8 projects with a contract value of Rs 25,100 crore. (Positive)
*GR Infraprojects:* Company executes concession agreement with NHAI for Rs 1085.5 crore four-laning project in Uttar Pradesh. (Positive)
*GMR Airports:* Total passenger traffic at airports at 1.1 crore, up 15.3% year-on-year. (Positive)
*Newgen Software:* Management says robust profitability and significant cash flow generation. (Positive)
*ICICI Lombard: Company has registered a 22.4 percent on-year growth in net profit at Rs 431 crore. (Positive)
*Godrej Prop:* Company has acquired an additional 1 acre of land parcel in Yeshwanthpur, Bengaluru. (Positive)
*Piramal Pharma:* Company announced the launch of a new concentration of zinc sulfate injection in the US market (Positive)
*HDFC BANK:* NII at Rs 28471.0 crore versus Poll of Rs 29079.0 crore, Net Profit at Rs 16373.0 crore versus Poll of Rs 15693.0 crore (Neutral)
*LTTS:* Net Profit at Rs 336.2 versus poll of Rs 332 cr, Revenues at Rs 2422 versus poll of Rs 2454 cr (Neutral)
*TCS:* Company to train entire staff of over 5 lakh software engineers on upcoming Generative AI opportunity. (Neutral)
*TV18 Broadcast:* Company posted a five percent on-year decline in consolidated revenue at Rs 1,676 crore for the quarter ended December FY24. (Neutral)
*DCB Bank:* The private sector said the RBI approved the appointment of Praveen Achuthan Kutty as its Managing Director and CEO. T (Neutral)
*Network18:* The company reported a loss of ₹107.87 crore for the third quarter that ended December 31, 2023 (Negative)
*HDFC BK Review*
*CLSA*
Buy, TP Rs 2025
Mixed qtr
NIM stable, but deposit traction & branch opening weak
Loan growth & asset quality good; 1-off credit costs
Cut est. 3%-5% on a/c of lower deposit & loan growth
2 key things to monitor- ability to raise deposits & NIM trajectory
*MS*
OW, TP Rs 2110
F3Q24 PAT of Rs164bn grew by 2% QoQ, beating MSe by 4%, owing to lower taxes
NII up 4% QoQ, in-line
Margins stable QoQ as expected
Core PPoP up 3% QoQ (in-line)
Credit costs higher largely owing to 1-time contingency provisions
*Bernstein*
O-P, TP Rs 2200
1st YoY EPS decline in a decade, sums up a disappointing qtr
Reported very Qtr— NIMs flat QoQ, borrowings grew faster than deposits & bank had to once again use lower tax expense route to maintain its 2% RoA
*HSBC*
Buy, TP cut to Rs 1950
Moderate NIM expansion est. to c15bp over FY2024-26e (c30bp earlier); few NIM levers remain
With a NIM recovery being potentially back-ended, HDFCB’s near-term earnings est.
Cut EPS by 0.8/7.8/5.8% for FY24/25/26e
*Jefferies*
Buy, TP Rs 2000
Core PBT at Rs207bn, up 4% QoQ, in line
But net profit at Rs164bn ahead with lower tax rate & higher treasury
Key miss was in QoQ flat NIMs even as impact of ICRR & surplus liquidity receded
*L&T Tech Review*
*MS*
UW, TP Rs 4600
Q3 a miss vs. MSe, but management commentary constructive on demand
Believe STK would need material acceleration in growth in F25, absent which it could underperform.
Reported revenue growth of 0.9% qoq in constant currency terms (vs. 2.1% est.)
*CITI*
Sell, TP Rs 4065
Soft rev growth at 0.9% in cc(Citi: 2% in cc)
EBIT margins slightly better
Forward looking indicators –
a) FY24 overall cc rev guidance maintained at 17.5% to 18.5%
b) headcount declined 2.4% qoq
*Nomura*
Reduce, TP cut to Rs 3880
3Q misses both at rev & margin levels
4Q ask rate a steep one; for achieving FY24E revenue growth guidance of 17.5-18.5%
Stock is currently trading at 38x FY25F & 33x FY26F EPS
*UBS resumes coverage on Bajaj Finance*
SELL, TP Rs6800
High share in consumer finance; mounting competition underappreciated
Consensus is overestimating ROA profile of Bajaj Finance
Yield to be under pressure in urban consumer financing (37% of standalone AUM; 45% interest earned & over 60% of core fee income in FY23)
High mkt share in consumer finance – 50%
Bajaj’s high-yield consumer segment AUM to grow 4-6% below consensus in FY23-26E
1/3rd of fee, forming 28% of PBT in FY23; could be under pressured by competition
We est 21% CAGR in EPS over FY23-26E vs 28% in FY20-24E
FY25/FY26E is 9%/15% lower than consensus
JFS’s expansion could put pressure on consumer loans in medium term
Quality of customer base is peaking; cross-selling is key to incremental growth
*MS on Cement*
Believe industry is in middle of a multiyear demand upcycle
Although capacity addition remains strong, utilization levels are expected to remain high
This consequently should drive margin expansion over next couple of yrs , & hence further re-rating
Upgrade Ambuja to OW, TP raised to Rs 600 from Rs 390
Upgrade ACC to EW, TP raised to Rs 2400 from Rs 1650
Ultratrech – OW, TP Raised to Rs 12000 from Rs 9300
Dalmia– OW, TP Raised to Rs 2750
Grasim– OW, TP Raised to Rs 2430
Shree Cement – EW, TP Raised to Rs 28500
*Citi On Banks*
Business Updates Reflect Further LDR Expansion & LCR Contraction
Incremental Levers Point To Further NIM Downside
Lower FY25/26 NIM Ests For Kotak Bk. HDFC, Axis, Federal & ICICI
Prefer Prvt Bks, Followed By NBFCs Over PSU Bks
Downgrade SBI To Sell, TP cut to Rs 600 From Rs 700
Downgrade Federal To Neutral, TP Cut To Rs 135 From Rs 170
Upgrade M&M Fin To Buy, TP Cut To Rs 310
Upgrade Chola Invst To Buy, TP Raised To Rs 1510 From Rs 1200
*CLSA on 2Ws*
Downgrade Bajaj Auto & Eicher Motors to Sell from U-P
Believe stocks (ex Hero) are overvalued following recent rally
Turn cautious as valuations are pricing in double-digit volume growth over next few years, which think is unlikely
Bajaj Auto - Downgrade to SELL, TP Rs 6315 (13% downside potential)
Cut FY24/25CL vol assumptions by 4.7%/6.3%
Eicher Motors - Downgrade to SELL, TP cut to Rs 3716 from Rs 4129
Expect new competitors (Harley/Triumph) to gain market share
Hero Motocorp - O-P, TP Raised to Rs 4964 from Rs 4127
Increase vol est. in premium motorcycle & electric scooter segments
TVS Motors - Sell, TP Rs 1438 (30% downside potential)
Decrease FY24/25CL volume est by 2.0/4.1%

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