VALUEGUIDE JULY 2019 - SHAREKHAN
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ValueGuide
July 2019
Look beyond the Budget
Intelligent Investing Regular Features Products & Services Trader’s Edge
Stock Idea Report Card PMS Technical View
Stock Updates Earnings Guide MF Picks Currencies
Viewpoints Advisory F&O Insights
Sector Updates
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Disclaimer: Client should read the Risk Disclosure Document issued by SEBI & relevant exchanges and the T&C on www.sharekhan.com; Investment in securities market
are subject to market risks, read all the related documents carefully before investing.CONTENTS
From the Editor’s Desk EQUITY
Though Budget 2019 FUNDAMENTALS
failed to meet the Stock Idea 07 REGULAR FEATURES
street expectations Stock Update 08 Report Card 04
on several counts – Sector Update 16 Earnings Guide 32
lack of any specific
stimuli to supporting
a sluggish economy, TECHNICALS DERIVATIVES
or tax cuts for the Nifty 21 View 22
consumer – the government’s focus on laying a clear
roadmap for the economy is promising.
06 ADVISORY DESK DERIVATIVES
MID Trades 27 Derivatives Ideas 27
PMS DESK
ProPrime - Prime Picks 25
ProPrime - Diversified Equity 26 CURRENCY
FUNDAMENTALS
USD-INR 23 GBP-INR 23
EUR-INR 23 JPY-INR 23
MUTUAL FUND DESK
TECHNICALS
Top MF Picks (equity) 28
Top SIP Fund Picks 30 USD-INR 24 GBP-INR 24
EUR-INR 24 JPY-INR 24
Registered Office: Sharekhan Limited, 10th Floor, Beta Building, Lodha iThink Techno Campus, Off. JVLR, Opp. Kanjurmarg Railway Station,
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CD) / MCX - Commodity: INZ000171337; DP: NSDL/CDSL-IN-DP-365-2018; PMS: INP000005786; Mutual Fund: ARN 20669; Research Analyst:
INH000006183; For any complaints email at igc@sharekhan.com. Disclaimer: Client should read the Risk Disclosure Document issued by SEBI
& relevant exchanges and the T&C on www.sharekhan.com; Investment in securities market are subject to market risks, read all the related
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July 2019
June 2017 3 Sharekhan ValueGuideREPORT CARD EQUITY FUNDAMENTALS
STOCK IDEAS STANDING (AS ON JULY 03, 2019)
CURRENT PRICE AS ON PRICE 52 WEEK ABSOLUTE PERFORMANCE RELATIVE TO SENSEX
COMPANY
RECO 03-JULY-19 TARGET HIGH LOW 1M 3M 6M 12M 1M 3M 6M 12M
Automobiles
Apollo Tyres Buy 201 230 300 174 1.1 -10.5 -14.6 -20.4 1.3 -13.6 -24.1 -29.8
Ashok Leyland Hold 90 100 137 78 -3.3 2.9 -7.1 -28.3 -3.1 -0.7 -17.4 -36.8
Bajaj Auto Hold 2898 3250 3214 2420 -3.0 1.2 5.9 -0.9 -2.8 -2.3 -5.9 -12.5
Gabriel India Hold 111 145 159 106 -18.5 -26.7 -25.4 -19.5 -18.3 -29.2 -33.7 -29.0
Hero MotoCorp Hold 2588 2800 3695 2475 -5.3 -1.2 -11.1 -22.3 -5.1 -4.6 -21.0 -31.5
M&M Buy 669 810 993 597 3.3 2.9 -7.4 -24.7 3.5 -0.7 -17.7 -33.6
Maruti Suzuki Hold 6534 7150 9929 6318 -7.2 -8.0 -9.5 -28.4 -7.0 -11.2 -19.6 -36.8
Rico Auto Industries Hold 61 70 87 56 -12.0 -5.0 -12.1 -10.2 -11.8 -8.3 -21.9 -20.8
TVS Motor Hold 435 480 605 424 -12.6 -11.4 -19.8 -25.1 -12.4 -14.5 -28.7 -33.9
BSE Auto Index 18140 25157 17442 -2.9 -5.6 -8.3 -24.4 -2.7 -8.8 -18.5 -33.2
Banks & Finance
Axis Bank Buy 806 900 828 509 -1.6 6.3 30.7 57.3 -1.4 2.6 16.2 38.8
Bajaj Finance Buy 3715 ** 3762 1912 5.7 22.8 44.9 60.4 5.9 18.5 28.8 41.5
Bajaj Finserv Hold 8430 ** 8578 4955 2.7 16.7 33.2 41.6 2.9 12.6 18.4 24.9
Bank of Baroda Buy 126 140 158 91 -2.4 -1.4 6.3 14.4 -2.2 -4.8 -5.5 1.0
Bank of India Hold 93 ** 110 73 -2.0 -6.5 -13.1 10.0 -1.8 -9.8 -22.7 -2.9
Federal Bank Buy 110 118 110 67 1.0 14.5 14.8 31.9 1.2 10.5 2.1 16.4
HDFC Buy 2277 2300 2301 1645 2.5 11.7 15.8 19.8 2.7 7.8 2.9 5.7
HDFC Bank Buy 2490 2750 2503 1884 1.9 9.4 18.0 18.8 2.1 5.6 4.9 4.8
ICICI Bank Buy 436 520 444 257 4.1 12.2 19.4 60.4 4.3 8.3 6.2 41.5
LIC Housing Finance Hold 569 ** 587 388 0.5 6.6 16.5 24.3 0.7 2.9 3.6 9.7
Max Financial Hold 420 480 534 344 -7.7 -5.5 -5.9 1.8 -7.5 -8.8 -16.4 -10.2
Punjab National Bank Buy 81 98 100 58 -0.4 -12.4 0.9 7.8 -0.2 -15.4 -10.3 -4.8
SBI Buy 366 390 373 247 4.3 14.2 23.4 42.7 4.5 10.2 9.7 25.9
Union Bank of India Reduce 84 70 100 61 8.7 -8.1 -8.0 6.4 8.9 -11.3 -18.2 -6.1
Yes Bank Hold 100 ** 404 90 -37.0 -63.6 -48.6 -70.9 -36.9 -64.9 -54.3 -74.3
BSE Bank Index 35190 35718 26992 -0.4 5.2 16.2 20.8 -0.2 1.5 3.3 6.6
Consumer goods
Britannia Buy 2795 3475 3472 2610 -4.1 -6.6 -9.0 -9.4 -3.9 -9.8 -19.1 -20.1
Emami Hold 303 393 600 246 -11.2 -25.1 -26.5 -40.6 -11.0 -27.7 -34.7 -47.5
GSK Consumer Hold 7780 7931 7948 6150 2.5 11.3 4.7 22.4 2.7 7.4 -7.0 8.0
Godrej Consumer Products Hold 673 734 979 627 -3.7 0.2 -15.5 -18.8 -3.5 -3.3 -24.9 -28.4
Hindustan Unilever Buy 1785 1990 1871 1477 -0.5 8.4 1.4 8.4 -0.3 4.6 -9.9 -4.3
ITC Buy 277 347 323 264 -0.6 -4.0 0.7 7.0 -0.4 -7.3 -10.5 -5.5
Jyothy Laboratories Hold 160 180 245 143 -5.5 -11.7 -21.0 -33.1 -5.3 -14.8 -29.8 -41.0
Marico Buy 373 425 397 283 -0.7 5.5 -0.5 10.3 -0.5 1.8 -11.5 -2.7
Zydus Wellness Hold 1364 1410 1980 1085 3.1 5.4 2.4 -0.3 3.3 1.7 -9.0 -12.0
BSE FMCG Index 11442 12850 10498 -1.0 -0.3 -0.9 3.4 -0.8 -3.8 -11.9 -8.8
IT / IT services
HCL Technologies Buy 1051 1250 1190 920 -4.2 -5.0 12.0 13.3 -4.0 -8.3 -0.4 0.0
Infosys Buy 731 840 774 597 1.2 -0.5 13.2 12.4 1.4 -4.0 0.6 -0.8
Persistent Systems Hold 616 720 915 532 4.5 0.5 8.8 -24.0 4.7 -3.0 -3.2 -32.9
Tata Consultancy Services Buy 2238 2400 2293 1784 2.7 12.2 20.7 21.9 2.9 8.3 7.3 7.6
Wipro Hold 283 305 302 195 -3.4 9.6 17.0 44.9 -3.2 5.8 4.0 27.9
BSE IT Index 15651 16301 13179 0.2 2.7 13.8 13.0 0.4 -0.9 1.2 -0.3
Capital goods / Power
CESC Buy 791 905 813 621 0.3 7.3 21.9 17.4 0.5 3.6 8.4 3.6
Finolex Cable Hold 415 515 649 356 -10.2 -10.8 -9.2 -28.4 -10.0 -13.9 -19.3 -36.8
Greaves Cotton Hold 147 155 165 111 -4.2 -0.1 28.3 13.0 -4.0 -3.6 14.0 -0.2
Kalpataru Power Transmission Buy 529 620 555 267 2.9 15.0 40.3 37.7 3.1 11.0 24.7 21.5
KEC International Buy 328 375 355 230 5.3 15.5 14.1 0.1 5.5 11.5 1.5 -11.6
PTC India Hold 67 75 94 64 -4.5 -10.8 -26.3 -3.9 -4.3 -13.9 -34.5 -15.2
Thermax Hold 1052 1075 1206 873 4.4 10.4 -6.9 3.5 4.6 6.5 -17.2 -8.7
Triveni Turbine Hold 104 115 136 94 -2.3 -7.5 -4.7 -11.4 -2.1 -10.7 -15.3 -21.8
V-Guard Industries Hold 242 255 252 159 1.5 11.3 13.8 31.3 1.7 7.4 1.1 15.9
July 2019 4 Sharekhan ValueGuideEQUITY FUNDAMENTALS REPORT CARD
STOCK IDEAS STANDING (AS ON JULY 03, 2019)
CURRENT PRICE AS ON PRICE 52 WEEK ABSOLUTE PERFORMANCE RELATIVE TO SENSEX
COMPANY
RECO 03-JULY-19 TARGET HIGH LOW 1M 3M 6M 12M 1M 3M 6M 12M
Va Tech Wabag Hold 339 ** 413 243 0.5 8.6 27.9 -8.1 0.7 4.8 13.7 -18.9
BSE Power Index 2144 2159 1727 6.4 6.1 11.4 16.1 6.6 2.4 -1.0 2.5
BSE Capital Goods Index 20046 20387 16113 -0.2 9.5 9.2 16.3 0.0 5.7 -2.9 2.7
Infrastructure / Real estate
Gayatri Projects Hold 156 200 212 145 -16.4 -5.0 -14.7 -7.7 -16.2 -8.3 -24.1 -18.5
IRB Infra Hold 95 150 216 84 -20.8 -33.6 -39.3 -53.8 -20.6 -35.9 -46.1 -59.2
Larsen & Toubro Buy 1578 1820 1607 1183 0.1 14.8 13.2 26.4 0.3 10.8 0.7 11.5
Sadbhav Engineering Buy 244 285 316 162 -7.2 -2.7 9.7 -13.1 -7.0 -6.0 -2.4 -23.3
CNX Infra Index 3426 3453 2778 2.0 7.6 10.7 15.0 2.2 3.8 -1.6 1.4
BSE Real estate Index 2234 2277 1535 1.8 6.8 23.5 9.7 2.0 3.1 9.8 -3.2
Oil & gas
Oil India Ltd Buy 178 230 227 165 -2.4 -0.6 6.8 -10.0 -2.2 -4.0 -5.0 -20.6
Petronet LNG Buy 250 270 255 200 2.4 5.8 14.4 20.0 2.6 2.1 1.7 5.9
Reliance Ind Buy 1283 1630 1418 959 -5.0 -5.1 16.9 29.7 -4.8 -8.4 3.9 14.4
Selan Exploration Technology Hold 175 250 278 159 0.5 -6.7 -11.3 -11.2 0.7 -9.9 -21.1 -21.6
BSE Oil and gas Index 14741 15930 12040 -5.8 0.9 11.8 12.0 -5.6 -2.6 -0.6 -1.2
Pharmaceuticals
Aurobindo Pharma Hold 596 710 838 565 -7.4 -22.9 -16.5 -2.9 -7.3 -25.5 -25.8 -14.3
Cadila Healthcare Hold 237 290 433 223 -8.0 -31.3 -31.2 -39.5 -7.8 -33.6 -38.9 -46.6
Cipla Buy 553 720 678 476 -2.0 5.9 7.6 -11.9 -1.8 2.2 -4.4 -22.2
Divi's Labs Buy 1631 1850 1775 1040 2.1 -4.8 10.9 48.1 2.3 -8.1 -1.4 30.7
Glenmark Pharmaceuticals Hold 443 595 712 438 -18.6 -32.7 -33.7 -26.1 -18.4 -35.1 -41.1 -34.8
IPCA Lab NEW Buy 959 1135 1046 590 1.6 -1.4 20.6 32.4 1.9 -4.8 7.2 16.9
Lupin Reduce 753 ** 986 697 1.9 -4.4 -9.0 -18.8 2.1 -7.7 -19.1 -28.3
Sun Pharmaceutical Industries Hold 396 460 679 345 -4.6 -15.8 -9.6 -32.1 -4.4 -18.7 -19.6 -40.1
Torrent Pharma Hold 1553 1720 1964 1405 1.0 -18.5 -14.1 9.5 1.2 -21.3 -23.7 -3.4
BSE Health Care Index 12936 16497 12448 -3.0 -10.0 -6.7 -9.5 -2.8 -13.1 -17.0 -20.1
Building materials
Grasim Buy 928 1160 1093 689 6.2 12.8 16.8 -1.9 6.4 8.9 3.8 -13.4
Shree Cement Hold 21487 22130 22400 13100 1.9 14.5 29.3 35.5 2.1 10.5 14.9 19.6
The Ramco Cements Buy 791 870 845 546 -2.5 4.8 25.6 12.7 -2.3 1.1 11.6 -0.6
UltraTech Cement Buy 4561 5000 4905 3260 -1.0 13.9 18.7 22.9 -0.8 9.9 5.5 8.4
Discretionary consumption
Arvind* Hold 67 95 155 57 -10.0 -25.0 -28.7 -50.6 -9.8 -27.6 -36.6 -56.4
Arvind Fashions NEW Buy 683 1150 1090 591 -12.7 -31.3 - - -12.5 -33.7 - -
Century Plyboards (India) Hold 173 190 264 150 -0.2 -16.4 0.4 -30.1 0.0 -19.3 -10.7 -38.3
Info Edge (India) Hold 2274 2350 2444 1154 1.6 23.7 47.2 97.6 1.8 19.4 30.9 74.4
Inox Leisure Buy 323 390 383 188 -12.9 8.0 24.1 25.2 -12.8 4.2 10.3 10.5
Kewal Kiran Clothing Ltd Hold 1179 1415 1560 1026 -3.9 -7.2 -1.6 -11.6 -3.7 -10.5 -12.5 -21.9
Orbit Exports Hold 120 177 163 85 4.3 5.9 1.2 -12.6 4.5 2.2 -10.0 -22.9
Relaxo Footwear# Buy 466 485 499 332 9.5 9.9 23.6 32.3 9.8 6.1 9.8 16.8
Titan Company Limited NEW Buy 1328 1375 1341 732 3.4 16.7 39.0 46.2 3.6 12.6 23.5 29.0
Wonderla Holidays Hold 276 338 376 259 -9.6 -11.7 3.9 -13.1 -9.4 -14.7 -7.6 -23.4
Zee Entertainment Hold 361 ** 554 288 3.0 -14.6 -23.2 -33.9 3.2 -17.5 -31.7 -41.7
Diversified / Miscellaneous
Bajaj Holdings Buy 3724 3924 3800 2204 5.9 11.6 25.7 27.1 6.2 7.7 11.8 12.2
Bharat Electronics Buy 113 140 124 73 0.4 16.7 26.0 11.3 0.6 12.6 12.0 -1.8
Bharti Airtel Buy 353 390 371 254 2.9 10.7 22.5 9.1 3.1 6.9 8.9 -3.7
Gateway Distriparks Hold 128 140 191 96 -13.9 0.9 7.6 -24.6 -13.7 -2.6 -4.3 -33.4
PI Industries Buy 1194 1280 1230 676 4.6 16.0 41.0 52.1 4.9 12.0 25.3 34.3
Ratnamani Metals and Tubes Buy 1006 1150 1035 736 5.7 11.5 9.5 11.2 5.9 7.6 -2.6 -1.9
Supreme Industries Limited Hold 1126 ** 1275 936 5.7 -0.3 3.4 2.6 5.9 -3.8 -8.1 -9.4
UPL# Buy 652 724 709 358 3.6 13.3 39.6 71.3 3.8 9.4 24.1 51.1
BSE500 Index 15450 15938 13287 -0.8 1.8 8.4 7.4 -0.6 -1.8 -3.6 -5.2
CNX500 Index 9757 10050 8371 -0.8 1.9 8.6 7.7 -0.6 -1.6 -3.4 -5.0
CNXMCAP Index 17820 20088 15803 -1.6 -1.4 1.5 -1.3 -1.4 -4.8 -9.7 -12.9
** Price under review * Reco price adjusted for demerger # Reco price adjusted for bonus ^ Reco price adjusted for stock split
July 2019 5 Sharekhan ValueGuideFrom the Editor’s Desk
From the Editor’s Desk Look beyond the Budget
Though Budget 2019 failed to meet the street expectations on several counts – lack of any
specific stimuli to supporting a sluggish economy, or tax cuts for the consumer – the government’s
focus on laying a clear roadmap for the economy is promising. Prime among these are the
commitment to make huge investments in infrastructure development, recapitalisation of
stressed PSU banks, easing liquidity stress for quality NBFCs and a firm commitment to maintain
fiscal prudence.
But clearly, it appears that Dalal Street may not want to swallow the pill that the government
prescribed - with the Sensex slumping nearly 1,200-1,500 points so far. The recent volatility
cannot be attributed just to the Union Budget alone. The global environment has also turned
uncertain with few of the large global banks raising red flags over the pressures faced by them
in particular and the slowing growth momentum of the global economy in general. The inability
of world leaders to amicably resolve trade tensions is also adding to the woes of equity markets
globally.
For now, the focus shifts to the Q1FY20 earnings season. Investors thus need to look beyond
the Budget now. Some of the key trends investors would keenly watch in Q1 results are: 1)
Continued improvement in health of corporate lending banks and further easing of asset quality
issues; 2) Signs of a pick-up in demand in the industrial sector; and lastly, the extent of weakness
in consumer demand.
The commentary from the management of some of the leading companies in the consumer
sector or consumer lending space is not very encouraging and could result in a reset of earnings
estimates for consumer sector at large. Given the lofty valuations in the consumer space, a
correction could be steep and quick in some of the quality companies.
Interestingly, the recent volatility and reset in earnings outlook of some of the evergreen
consumer stocks would bring down valuations to more reasonable level and perhaps in line
with the situation prior to the election rally during April-May this year. Also, the improving
growth outlook for companies operating in the railways, roads and water related space offers
an opportunity for the investors. Thus, we see the current phase as an opportunity for long-term
investments in quality companies at much more reasonable valuations.
After all, India is on a path to almost double its size to $5 trillion economy in the next few
years as compared to close to 70 years taken to cross the $2.5 trillion mark. The goal, though
ambitious, is achievable and can’t be done with substantial improvement in corporate earnings
and an improvement in the economic growth momentum in the country. Thus, the long term
investments need to keep the promising big picture in mind rather than get distracted by near-
term volatility.
Happy Investing!
July 2019 6 Sharekhan ValueGuideEQUITY FUNDAMENTALS STOCK IDEA
Recommendation Reco Price Price Target/ Upside (%)
Date Company Report Type
Latest Chg (Rs.) Latest Chg
Jun 19, 2019 JMC Projects Viewpoint POSITIVE New Initiation 124 18-20 -
Summary
• We initiate Viewpoint Coverage on JMC Projects (JMC) with a Positive view and 18-20% upside potential.
• JMC’s strong order book and execution capabilities to lead to a 16% CAGR in revenue/PAT over FY2019-FY2021E.
• JMC provides quality balance sheet due to strong operating cash flow generation, low leverage and healthy return ratios.
• Divestment of road BOT assets to deleverage the consolidated balance sheet, halting loss funding.
Read report - https://www.sharekhan.com/MediaGalary/Equity/JMC_Projects-June19_19.pdf
Jun 20, 2019 City Union Bank Viewpoint POSITIVE New Initiation 212 18-20 -
Summary
• We Initiate viewpoint coverage on City Union Bank Limited (CUB) with a Positive view with an upside potential of 18-20%.
• CUB has been a consistent performer over the years across asset cycles, staying away from riskier areas and sticking to its
strengths.
• We believe CUB is well positioned to capitalise from decreased competition in the lending market.
• CUB currently trades at ~2.5x its FY2021E book value, which considering its stable asset quality, strong execution skills and
consistent return ratios despite deep and industry wide stress seen in recent times, justify its valuation.
Read report - https://www.sharekhan.com/MediaGalary/Equity/CityUnion-June20_19.pdf
Jun 27, 2019 ICICI Lombard General Insurance Viewpoint POSITIVE New Initiation 1,121 18-20 -
Summary
• We initiate coverage on ICICI Lombard with a Positive view and envisage a 18-20%% upside potential for the stock.
• ICICI Lombard General Insurance (ILGI) is a strong player with the highest market share (among private general insurers) and
well placed to benefit from the growing General Insurance market.
• Recent regulatory changes & developments are favorable for General Insurance players in general, and augur well for ICICI
Lombard as well.
• Due to Its strong underwriting skills, effective technology leveraging and diversified channel mix, we expect it to post earnings
CAGR of 32% FY19-FY21E, making it attractive growth opportunity.
Read report - https://www.sharekhan.com/MediaGalary/Equity/ICICI_Lombard-June27_19.pdf
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July 2019 7 Sharekhan ValueGuideStock Update EQUITY FUNDAMENTALS
Recommendation Reco Price Price Target/ Upside (%)
Date Company Report Type
Latest Chg (Rs.) Latest Chg
Jun 03, 2019 Gayatri Projects Stock Update HOLD 184 200
Summary
• We maintain our Hold rating on the stock with a revised sum-of-the-parts (SOTP)-based PT of Rs. 200 as its EPC business,
adjusting for its BoT and power investments, is valued at a P/E of 10.5x FY2021E, which provides limited upside potential.
• In Q4FY19, GPL standalone revenue grew by 23% y-o-led by strong project execution, OPM dipped 246 bps y-o-y. Lower
interest expenses boosted net earnings by 27% y-o-y.
• Order book stays strong at 4.7x its FY2019 standalone revenue; company expects order momentum to continue and has
guided for a more than 25% revenue growth, a 30-40% rise in PAT and stable OPM for FY2020.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Gayatri-June03_19.pdf
Jun 04, 2019 Bharti Airtel Stock Update BUY 353 390
Summary
• We maintain Buy on Bharti Airtel with a revised PT of Rs. 390, considering its resilient performance in a tough environment and
some signs of stability in India wireless business.
• Planned unlocking the value of its holdings in its subsidiaries and divestment of tower business stake would further reduce net
debt/EBITDA level to around 2.6x and provide cash flow support.
• India wireless business surprised positively during Q4FY2019, with revenue and EBITDA growth of 4%/32% q-o-q, respectively;
steep increase in ARPU to Rs. 123 (18.6% q-o-q).
• DTH business performed well despite uncertainty around new tariff order implementation; ARPU improved while other industry
players struggled during the quarter.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/BhartiAirtel-June04_19.pdf
Jun 10, 2019 Atul Limited Viewpoint POSITIVE 4,050 10-12
Summary
• We maintain our Positive view on Atul Limited (Atul) with a revised potential upside of 10-12%.
• We estimate revenue and earnings to report a CAGR of 13.5% and 16.6% over FY2019-FY2021E, respectively.
• Future growth expected to be driven by improved utilisation levels of enhanced capacities backed by a strong demand outlook
along with positive pricing tailwinds and operating leverage.
• Innovators seek a reliable partner for assured sourcing, as the situation in China has not changed much and continues to be
beneficial for other players in the South Asian region.
Read report - https://www.sharekhan.com/MediaGalary/Equity/Atul-June10_19.pdf
Jun 10, 2019 Dishman Carbogen Amcis Ltd. Viewpoint BOOK PROFIT 245 - -
Summary
• We advise booking profit in Dishman Carbogen Amcis Limited (Dishman), as our targeted return has been achieved (17% returns
within a month).
• Management is confident of reducing debt by Rs. 70 crore-100 crore in the next two years.
• The company reported strong Q4FY2019 numbers.
Read report - https://www.sharekhan.com/MediaGalary/Equity/DishmanCarbo-June10_19.pdf
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July 2019 8 Sharekhan ValueGuideEQUITY FUNDAMENTALS Stock Update
Recommendation Reco Price Price Target/ Upside (%)
Date Company Report Type
Latest Chg (Rs.) Latest Chg
Jun 11, 2019 Info Edge (India) Stock Update HOLD 2,262 2,350
Summary
• We downgrade our rating on Info Edge (India) Limited (Info Edge) to Hold with a revised PT of Rs. 2,350, given the sharp run-up
in its stock price over the past 15 days.
• Naukri’s growth momentum likely to continue, led by IT hiring, while margins will remain under pressure owing to higher spends
on promotions and technology upgradation.
• Higher revenue growth in 99acres and lower ad spends in Jeevansathi to reduce losses in the coming 2-3 years.
• Zomato is rapidly scaling up its operations in cities; currently operates in 310 cities, up from 200+/15 cities in FY2019/FY2018.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/InfoEdge-June11_19.pdf
Jun 11, 2019 Inox Leisure Stock Update BUY 329 390
Summary
• We retain our Buy rating on INOX Leisure Limited (ILL) with a revised PT of Rs 390.
• Given the higher screen openings and increasing footfalls monetisation efforts, we expect revenue and earnings CAGR to be
at 18% and 16% respectively over FY19-21E.
• We expect y-o-y growth momentum to moderate in Q1FY2020E despite Q1 being a seasonally strong quarter, owing to lower
number of quality content.
• ATP growth rate is expected to be at high single-digit in FY2020E, while the SPH growth is likely to accelerate due to the on
introduction of new menu lists and anticipated higher conversion rate.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Inox-June11_19.pdf
Jun 12, 2019 Housing Development Finance Corporation Stock Update BUY 2,183 2,500
Summary
• Easing competitive intensity among HFCs to allow strong players like HDFC to cherry pick its way to market share gains.
• Company has a long history of strong and consistent performance (asset quality, margins, etc).
• Government to continue to focus on housing, near-term incentives/measures expected.
• We maintain our Buy rating on stock with a revised price target of Rs. 2,500.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/HDFC-June12_19.pdf
Jun 12, 2019 KEC International Stock Update BUY 323 375
Summary
• We reiterate our Buy rating on KEC; PT unchanged at Rs. 375.
• Strong order backlog and healthy order pipeline to help net earnings clock a 21% CAGR during FY2019-FY2021E.
• Company expected to increase its revenue contribution from non-T&D projects in long run. Management expects railway
tenders to be finalised in Q2FY2020, while eyeing major civil projects arising from government spends.
• T&D business to grow steadily with focus on financially healthy state electricity boards and externally-funded projects.
Geographical expansion to boost international order book.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/KECInt-June12_19.pdf
July 2019 9 Sharekhan ValueGuideStock Update EQUITY FUNDAMENTALS
Recommendation Reco Price Price Target/ Upside (%)
Date Company Report Type
Latest Chg (Rs.) Latest Chg
Jun 12, 2019 Indian Hotels Company Viewpoint POSITIVE 150 20-22
Summary
• FY2020 to be another strong year for hotel industry as room demand expected to stay ahead of supply, driving up RevPAR
(revenue per available room) by 10-11%.
• Occupancy rate to improve by 100-200 bps; ARR to grow by 8-10% in FY2020.
• IHCL to launch 12 hotels under recent strategic alliance with GIC; move to not stress balance sheet.
• Company well-placed to reap benefits of industry up-cycle; we stay Positive on stock and expect a 20-22% upside.
Read report - https://www.sharekhan.com/MediaGalary/Equity/IndianHotel-June12_19.pdf
Jun 13, 2019 Bajaj Holdings & Investment Stock Update BUY 3,696 4,548
Summary
• We retain Buy recommendation on Bajaj Holdings & Investments (BHIL) with an upgraded PT of Rs 4,548 (earlier PT of Rs 3,924).
• BHIL reports healthy earnings growth for Q4FY2019 on back of double – digit earnings growth by both the associate companies.
• Stock price of associate company Bajaj Finserv (contributes about 55% of valuation of BHIL) has moved up sharply 20% in past
three months.
• BHIL has marginally increased stake in another associate company Bajaj Auto from 31.54% to 33.43% which would further boost
valuations of BHIL.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/BajajHoldings-June13_19.pdf
Jun 13, 2019 SRF Limited Viewpoint NEUTRAL 2,923 - -
Summary
• Significant run-up in recent months, limit upside downgrade to Neutral. Remain Positive on SRF Limited (SRF) and would wait
for a better entry price.
• Q1FY2020 performance likely to have an adverse bearing due to Dahej plant shutdown, however long-term outlook remains
intact.
• We expect SRF to report revenue and earnings CAGR of 15.1% and 28.5%, respectively, during FY2019-FY2021E.
• Commissioning of projects in speciality chemcials and packaging film business to fuel growth momentum and further enhance
profitability.
Read report - https://www.sharekhan.com/MediaGalary/Equity/SRF-June13_19.pdf
Jun 14, 2019 Persistent Systems Stock Update HOLD 631 720
Summary
• In the analyst meet, the recently-appointed CEO presented his observations and new initiatives.
• Simplified team structure and people augmentation to increase re-seller and IP revenue.
• High cash balance and reasonable valuation limit downside risk.
• We maintain our Hold rating on Persistent Systems with an unchanged price target of Rs. 720.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Persistent-June14_19.pdf
July 2019 10 Sharekhan ValueGuideEQUITY FUNDAMENTALS Stock Update
Recommendation Reco Price Price Target/ Upside (%)
Date Company Report Type
Latest Chg (Rs.) Latest Chg
Jun 14, 2019 Indraprastha Gas Limited Viewpoint POSITIVE 335 10-12
Summary
• We stay Positive on IGL and expect a 10-12% upside, supported by volume led earnings growth.
• Pricing power led by priority in allocation of cheap domestic gas would drive volumes and sustain margin.
• Expansion in new GAs of Rewari, Karnal and Gurugram to diversify company’s volume base.
• We have marginally increased our FY20 and FY21 standalone earnings estimates to factor higher volume growth.
Read report - https://www.sharekhan.com/MediaGalary/Equity/IndraprashthaGas-June14_19.pdf
Jun 17, 2019 Larsen & Toubro Stock Update BUY 1,499 1,820
Summary
• We maintain our Buy rating on Larsen and Toubro (L&T) with a revised PT of Rs. 1,820, rolling forward our valuation multiple for
the core EPC vertical.
• Management expects strong order intake aided by government spending and international orders.
• Strong order backlog, healthy execution and stable margins to lead to a 16% CAGR in net profit over FY2019-FY2021E.
• Industry order prospects of Rs. 9 lakh crore-10 lakh crore estimated for FY2020, with L&T aiming a 20-25% share.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/LnT-June17_19.pdf
Jun 18, 2019 Coal India Ltd Viewpoint POSITIVE 260 15-17
Summary
• Coal India targets an output of 660 million tonnes in FY20 (8.7% y-o-y growth); plans 1 billion-tonne production by FY25.
• Management expects employee cost (52% of total cost) and contractual cost (18% of total cost) to remain largely flat in FY20.
• Capex plans of Rs. 10,000 crore to purchase heavy earth-moving equipments; eyes minority stake in overseas coal mines.
• We stay Positive on CIL and expect a 15-17% upside given attractive valuation, healthy dividend yield and decent earnings
growth.
Read report - https://www.sharekhan.com/MediaGalary/Equity/CoalIndia-June18_19.pdf
Jun 19, 2019 Hindustan Unilever Stock Update BUY 1,812 1,990
Summary
• HUL delivered one of the strongest performances in the FMCG space for FY2019; domestic volumes grew 10%, while OPM
inched up to 23%.
• Return ratios remain strong with RoE and RoCE of 84% and 113%, respectively, for FY2019.
• Net working capital cycle stayed negative at 119 days and HUL remains one of the cheery dividend payers with a payout of
~90%.
• We maintain a Buy rating with an unchanged PT of Rs. 1,990 as demand outlook is set to improve in H2FY2020.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/HUL-June19_19.pdf
July 2019 11 Sharekhan ValueGuideStock Update EQUITY FUNDAMENTALS
Recommendation Reco Price Price Target/ Upside (%)
Date Company Report Type
Latest Chg (Rs.) Latest Chg
Jun 20, 2019 Biocon Limited Viewpoint POSITIVE 253 18-20
Summary
• We continue to maintain our Positive view on Biocon with a potential upside of 18-20%.
• Competitive landscape concerns overdone, the stock has corrected by ~30% in the past six months, giving an attractive
investment opportunity for the medium to long term.
• Approved sales of Branded Formulations India (BFI) business could be seen as a precursor to value unlocking through IPO.
• We expect Biocon to report a sales and profit CAGR of 28% and 46%, respectively, over the next two years.
Read report - https://www.sharekhan.com/MediaGalary/Equity/Biocon-June20_19.pdf
Jun 21, 2019 Insecticides (India) Limited Viewpoint POSITIVE 604 20-25
Summary
• We remain Positive on Insecticides (India) Limited (IIL) with a potential upside of 20-25%.
• We like IIL as the strategies laid out by management are playing out well.
• Delay in arrival of monsoon (10-15 days) has postponed sowing (down 10-12%), which is likely to affect Q1 performance; however,
the likely business loss is expected to be made up during Q2.
• Management reiterated its revenue growth guidance of 10% and a 150 BPS rise in margins in FY2020. IIL is likely to report
revenue and earnings CAGR of 10.0% and 14.4%, respectively over FY2019-FY2021E.
Read report - https://www.sharekhan.com/MediaGalary/Equity/Insecticides-June21_19.pdf
Jun 24, 2019 Jyothy Laboratories Stock Update HOLD 163 180
Summary
• We maintain our Hold recommendation on Jyothy Laboratories with a revised PT of Rs. 180.
• HI category will recover but at a gradual space; fabric whitener will grow in mid-single digit; other categories to grow in double
digits.
• Management expects 12-14% revenue growth with OPM at 16% due to expected recovery in H2FY2020. We have factored in
10% revenue growth and ~15% OPM for FY2020 on account of slow recovery in the HI category and higher media spends.
• Any substantial recovery in business fundamentals (likely to be in H2FY2020) will be a key re-rating trigger for the stock.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/JyothyLab-June24_19.pdf
Jun 24, 2019 TVS Motor Stock Update HOLD 449 480
Summary
• FY 2019 was another good year for TVS as it grew at more than double the industry rate, driven by new launches and expansion
in geographical reach.
• Subsidiaries turned profitable in FY2019; strong volume growth coupled with maintaining of profitability led to return ratios
being in excess of 20%.
• Management has given cautious commentary on industry demand; higher channel inventory and increase in regulatory costs
to impact volumes; competitive intensity to remain high.
• Due to persistent weakness in volumes coupled with rising cost pressures, we have cut our earnings estimates. We maintain
Hold rating with revised PT of Rs 480.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/TVS-June24_19.pdf
July 2019 12 Sharekhan ValueGuideEQUITY FUNDAMENTALS Stock Update
Recommendation Reco Price Price Target/ Upside (%)
Date Company Report Type
Latest Chg (Rs.) Latest Chg
Jun 24, 2019 IndusInd Bank Viewpoint POSITIVE 1,461 12-15
Summary
IndusInd Bank (IIB) and Bharat Financial Services (BHAFIN) have finalised their merger with effective date as July 4, 2019.
• As per the management, the merger will help improve margins by 30-40 bps of the merged entity.
• Also a potential capital infusion from the promoter of Rs. ~2,700 crore (due to warrant conversion) which along with merger
synergies will be positive for NIM/RoE and book value accretive.
• We maintain our Positive view on the stock and expect an upside potential of 12-15%.
Read report - https://www.sharekhan.com/MediaGalary/Equity/IndusIndBank-June24_19.pdf
Jun 25, 2019 Tata Consultancy Services Stock Update BUY 2,267 2,400
Summary
• TCS’ annual report provides insights on its differentiated strategy, superior execution and ability to stitch together the
transformational deals.
• TCS has aligned its strategy with Business 4.0 framework as most of its large clients are embracing one of the four business
behaviors.
• Cash conversion continues to be strong, with FY2019 free cash flow of Rs. 26,461 crore, represents 84% to net profits.
• Given increasing market share among large peers, we maintain Buy rating on TCS with an unchanged price target of Rs. 2,400.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/TCS-June25_19.pdf
Jun 25, 2019 Kalpataru Power Transmission Stock Update BUY 516 620
Summary
• We maintain our Buy rating on Kalpataru Power Transmission Limited (KPTL) with a revised PT of Rs. 620, increasing our
valuation multiple for the core business due to a positive business outlook.
• KPTL sees healthy visibility of order intake for FY2020E and retains its revenue and OPM guidance for FY2020E.
• Divestment of four transmission assets in this fiscal year is likely to de-leverage the balance sheet and free up equity for further
investments.
• We expect revenue/net profit to report a CAGR of 16.5%/21.7% over FY2019-FY2021E because of strong order backlog, healthy
order intake and smooth execution.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/KPTL-June25_19.pdf
Jun 26, 2019 Apollo Tyres Stock Update BUY 201 230
Summary
• The Government of India has levied a counter veiling duty (CVD) of 9.1% to 17.6% on truck and bus radial tyres imports originating
from China. The duty is levied to offset the subsidies offered by China to its exporters, which enables them to price the tyres
cheaper by ~20-25% as against Indian tyres.
• The move is unlikely to substantially benefit Indian tyre makers as CVD will be levied only in a very few instances where the rate
of subsidization exceeds the rate of dumping. In most of cases, only anti dumping duty (which is already in force) will be levied.
• Nevertheless, ATL healthy show in domestic replacement segment and ramp up in Europe would make it the fastest growing
tyre maker. Low Debt: Equity, reasonable P/E of 11xFY21earnings gives us comfort.
• We have retained our earnings estimates for FY20 and FY21. We maintain Buy recommendation on the stock with an unchanged
PT of Rs 230.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/ApolloTyres-June26_19.pdf
July 2019 13 Sharekhan ValueGuideStock Update EQUITY FUNDAMENTALS
Recommendation Reco Price Price Target/ Upside (%)
Date Company Report Type
Latest Chg (Rs.) Latest Chg
Jun 26, 2019 Petronet LNG Stock Update BUY 246 270
Summary
• We maintain our Buy rating on Petronet LNG (PLNG) with unchanged PT of Rs. 270.
• Strong volume growth outlook led by expansion of Dahej capacity to 17.5 mmt and likely higher utilisation for Kochi terminal.
• Volume growth likely to be supported by strong demand appetite for low-cost LNG (reflected in 5.6% y-o-y growth in India’s
LNG imports during April-May 2019).
• PLNG may surprise with dividend payout similar to FY2019 level of 70% and, thus, could result in dividend yield of 4-5%.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/PetronetLNG-June26_19.pdf
Jun 27, 2019 UPL Stock Update BUY 943 1,086
Summary
• We maintain Buy on UPL with a PT of Rs. 1,086.
• The stock has corrected by 16% from its recent high; currently trading at 11.7x its FY2021 EPS (discount to its historical average).
• Management believes there is no meaningful impact of the concerns, as UPL Corp is expected to fulfill new resident criteria in
Mauritius; African swine fever not to have much impact as peak soyabean season is over; and ongoing U.S.-China trade war
likely to benefit as hike in tariff by U.S. makes Chinese products more costly.
• Arysta’s integration progressing well; Management maintains its revenue and cost synergies guidance.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/UPL-June27_19.pdf
Jun 28, 2019 Aurobindo Pharma Stock Update HOLD 608 710
Summary
• Warning Letter for Unit- XI likely to delay future product approvals which could impact FY2020 and FY2021 numbers..
• Downgrade to Hold with downward revised Price Target (PT) of Rs 710.
• Increased regulatory hurdles at various plants will weigh on stock until successful resolution; Increase in remediation cost will
impact margins and profitability.
• We expect the company to report sales and profit CAGR of 29% and 22%, respectively, over the next two years.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Aurobindo-June28_19.pdf
Jun 28, 2019 Sadbhav Engineering Stock Update BUY 249 285
Summary
• Sadbhav Engineering Limited (SEL) receives CARE rating downgrade for its Rohtak-Hisar project due to delay in debt servicing.
• Diversion of traffic due to presence of alternate routes has led to lower tolling and losses in the project.
• Management is discussing the issue with NHAI and expects favourable resolution as the issue of alternate route is covered in
the concession agreement.
• We maintain our Buy rating on SEL with an unchanged price target of Rs. 285.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/SadbhavEngg-June28_19.pdf
July 2019 14 Sharekhan ValueGuideEQUITY FUNDAMENTALS Stock Update
Recommendation Reco Price Price Target/ Upside (%)
Date Company Report Type
Latest Chg (Rs.) Latest Chg
Jun 28, 2019 Tech Mahindra Viewpoint POSITIVE 706 13-15
Summary
• We maintain our Positive on Tech Mahindra with revised potential upside of 13-15% upside in next 12 months.
• Well placed to capture 5G opportunities given its strong IT and network capabilities, investments in platforms and IP.
• Expect soft Q1FY2020E given weak seasonality in Comviva and softness in manufacturing and BFSI vertical.
• Expect communication to growth at high-single digit in FY2020E, while enterprise would be at mid-single digit.
Read report - https://www.sharekhan.com/MediaGalary/Newsletter/TechM-June28_19.pdf
Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a position in the companies mentioned in the article.
July 2019 15 Sharekhan ValueGuideSECTOR UPDATE EQUITY FUNDAMENTALS
Sector View
Date Sector Report Type
Latest Chg
Jun 03, 2019 Automobiles Sector Update Cautious
Summary
• Automobile sector continued to grapple with multiple headwinds in May 2019 with volumes declining across segments. Slowing
economic growth, lower industrial output and weak consumer sentiments impacted dispatches.
• PV segment was the worst hit with volumes declining ~19% marred by liquidity crunch, weak consumer sentiments, increased
cost of ownership & higher channel inventories.
• CV segment sales declined 12% for May 2019. Lower freight rates and effect of revised axle load norms leading to under
utilization of fleet impacted demand for trucks.
• The 2W volumes declined 6% attributable to cost increase and rural stress.
• Volume headwinds coupled with margin pressures due to elevated costs will impact earnings in medium term. We retain
cautious stance on automotive OEM’s.
Read report - https://www.sharekhan.com/MediaGalary/Equity/Automobile-June03_19.pdf
Jun 03, 2019 Q4FY2019 IT results review Sector Update Neutral
Summary
• Mixed quarter for revenue growth: Tier-1 IT CC revenue growth of 0.5-3.3% q-o-q (vs our estimates of 1.2-2.5%) and 6.9-15.3%
y-o-y.
• Except TCS (adjusted basis), EBIT margin of Tier-1 IT companies declined on a sequential basis owing to higher attrition,
increasing investment and transition of large deals.
• Mixed demand outlook for the BFSI vertical, though management of TCS and Infosys expects strong growth momentum in
FY2020E.
• Increasing onsite cost along with investment in business and transition cost of large deals could impact profitability in FY2020E.
• Retain Neutral stance on the IT sector; Preferred picks: Infosys, HCL Tech, Tech Mahindra, L&T Infotech, Mastek and LTTS.
Read report - https://www.sharekhan.com/MediaGalary/Equity/Q4FY2019_IT_results_review-June03_19.pdf
Jun 03, 2019 Q4FY2019 Pharma results review Sector Update Neutral
Summary
• We continue to maintain our Neutral stance on the sector and see opportunity in some select quality companies.
• Chinese API player’s constraint a multiyear growth opportunity for Indian API players to become an end-to-end solution provider.
• Valuation of pharma companies has corrected but is still expensive. Moreover, the risk of earnings downgrade still persists
given near-term challenges.
• Despite stability and visibility in numbers for the U.S. business, we feel U.S. business margins will remain under pressure going
forward.
Read report - https://www.sharekhan.com/MediaGalary/Equity/Q4FY2019_Pharma_results_review-June03_19.pdf
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July 2019 16 Sharekhan ValueGuideEQUITY FUNDAMENTALS SECTOR UPDATE
Sector View
Date Sector Report Type
Latest Chg
Jun 04, 2019 Q4FY2019 Consumer Discretionary results review Sector Update Neutral
Summary
• Overall revenue growth for Q4FY2019 was soft at 11.6% owing to the overall slowdown in discretionary consumption
compared to 20.5% y-o-y in Q3FY2019 and 23.7% y-o-y in Q2FY2019.
• OPM remained mixed in Q4FY2019; OPM expansion was led by operating efficiencies and better revenue mix for few companies
under our coverage.
• Advent of normal monsoon and good government policies with a tax-friendly budget will improve consumer sentiments in the
quarters ahead. However, introduction of Ind AS 116 is likely to be a drag on Reported PAT and return ratios in FY2020 without
affecting the business fundamentals of the companies (more clarity would emerge in Q1FY2020).
• Preferred picks: Indian Hotels Company, Jubilant Foodworks and Titan.
Read report - https://www.sharekhan.com/MediaGalary/Equity/Q4FY2019_ConsumerDisc_results_review-June04_19.pdf
Jun 04, 2019 Q4FY2019 Capital Goods & Engineering results review Sector Update Positive
Summary
• The Sharekhan universe of capital goods companies witnessed weakening of execution with 11% y-o-y growth in revenue while
operating margins remained under pressure leading to subdued 7.5% y-o-y growth in net profit. However, heavy weights L&T
and BEL showed healthy performance.
• Order inflow remained weak in H2FY2019 due to the election period affecting government spending, slowing consumption
demand and a delayed summer. However, healthy order backlog at 2x FY2019 revenue is expected to be further boosted by
revival in government spending from H2FY2020 onwards.
• The re-election of the ruling government has envisaged hopes of Rs. 100 lakh crore investments in infrastructure over the next
five years in sectors such as Roads, Railways and Power. Private industrial capex is expected to follow suit gradually.
• We upgrade to Positive view on the sector with preference for companies like L&T, Kalpataru Power, KEC, Havells India, Polycab
and KEI.
Read report - https://www.sharekhan.com/MediaGalary/Equity/Q4FY2019_CapitalGoods_results_review-June04_19.pdf
Jun 06, 2019 Q4FY2019 Banking and NBFC results review Sector Update Positive
Summary
• Corporate-lending private banks and some PSU banks are showing improving trends in asset quality side. On the other hand,
the stress is quite visible in the NBFC space though the large NBFCs with a strong parentage continue to do well.
• Softening of yield curve and expected policy measures to ease liquidity crunch would benefit banks in general, especially
corporate-focused banks and large PSU banks.
• We are positive on retail-focused private banks (HDFC Bank, Kotak Bank, RBL) and select corporate-lending banks such as
ICICI Bank, Axis Bank and SBI. We advise caution on PSU banks at large and NFBCs barring few names like Bajaj Finance.
Read report - https://www.sharekhan.com/MediaGalary/Equity/Q4FY2019_Banking_results_review-June06_19.pdf
July 2019 17 Sharekhan ValueGuideSECTOR UPDATE EQUITY FUNDAMENTALS
Sector View
Date Sector Report Type
Latest Chg
Jun 06, 2019 Q4FY2019 Automobiles results review Sector Update Cautious
Summary
• Sharekhan’s Auto universe (ex - TAMO) topline growth moderated substantially to 5% after six consecutive quarters of a double
digit growth. The revenue growth is in line with estimates. The moderation in growth is on account of volume drop across
segments attributable to weak consumer sentiments, uncertainties ahead of general elections, financing crunch and high
channel stocks for (Passenger Vehicles and 2 wheelers).
• The auto universe’s operating margins contracted sharply by 240 bps impacted by higher raw material costs, elevated
marketing expenses and operating de-leverage. Auto universe’s PAT declined by 11% y-o-y and is broadly in-line with estimates.
• Subdued volume outlook coupled with elevated cost pressures would over weigh on the margins; auto universe’s earnings are
likely to remain under pressure over the near to medium term.
• Preferred Picks: M&M, Apollo Tyres, Exide Industries.
Read report - https://www.sharekhan.com/MediaGalary/Equity/Q4FY2019_Auto_results_review-June06_19.pdf
Jun 06, 2019 Q4FY2019 Oil & Gas results review Sector Update Positive
Summary
• During Q4FY2019, OMCs benefited from inventory gain of Rs. 3,914 crore; Core GRMs were subdued, given weakness in
middle distillate cracks. Weakness in GRM is a concern for earnings outlook.
• Earnings of upstream PSUs were impacted by higher operating expenses and a sharp rise in DD&A cost (especially for ONGC).
Exemption from bearing fuel subsidy improves earnings visibility.
• CGD companies reported mixed volume growth with double-digit growth for IGL and volume decline for Gujarat Gas. Regulatory
push would aid higher volume growth and sustain margins.
• Our preferred stocks are Reliance Industries, Gujarat Gas and Petronet LNG..
Read report -https://www.sharekhan.com/MediaGalary/Equity/Q4FY2019_Oil_Gas_results_review-June06_19.pdf
Jun 06, 2019 Q4FY2019 Infrastructure/Cement/Building material results review Sector Update Positive
Summary
• The cement sector, excluding Grasim and Ultratech saw marginal growth in net earnings on account of strong volume growth,
better realization and lower input costs during Q4FY2019. Ultratech posted a stellar quarter all around.
• The construction space showed strong execution with better margins, although it was affected by higher effective tax rate.
IRB’s performance was dented by weakest operating margins.
• The building material space felt operating margins pressure on account of a lack of demand and absence of pricing power
aided by higher input costs. Kajaria posted net profit growth led by lower leverage.
• We maintain our Positive stance on the cement and construction sector on account of significant investments envisaged in
infrastructure space over the next five years.
• Our preferred picks are Grasim, UltraTech, The Ramco Cements, JK Lakshmi Cement, KNR constructions, Ahluwalia Contracts,
Sadbhav Engineering, Ashoka Buildcon, Kajaria Ceramics.
Read report - https://www.sharekhan.com/MediaGalary/Equity/Q4FY2019_Infra_Cement_Bldg_results_review-June06_19.pdf
July 2019 18 Sharekhan ValueGuideEQUITY FUNDAMENTALS SECTOR UPDATE
Sector View
Date Sector Report Type
Latest Chg
Jun 07, 2019 Q4FY2019 Consumer goods and services results review Sector Update Neutral
Summary
• Slowing demand in rural markets affected revenue growth of most companies under our coverage in Q4FY2019; Revenue
growth of Sharekhan consumer goods universe moderated to 9.6% as against 12-13% in some of the earlier quarters.
• Moderating sales volume growth, higher input prices and elevated ad spends led to OPM decline for most; barring companies
such as Marico, GSK Consumer and HUL, which benefit from lower input prices and operating efficiencies.
• Sales volume to remain under pressure in the near term due to subdued demand environment. However, normal monsoon and
consumer-driven budget might revive the performance (likely in H2FY2020).
• We prefer companies having a strong product portfolio, strong market positioning and lesser dependence on rural sales such
as Britannia Industries, HUL, Marico and Varun Beverages.
Read report -https://www.sharekhan.com/MediaGalary/Equity/Q4FY2019_ConsumerGoods_results_review-June07_19.pdf
Jun 10, 2019 Q4FY2019 results review Sharekhan Special - -
Summary
• Moderation in consumption demand dented earnings growth of auto, consumer goods etc. Global cyclical, telecom and pharma
earnings continued to be weak.
• Aggregate Sensex earnings growth of 15% YoY driven by banking and financial (BFSI) sector which saw profits jumps due to
NPA peaking benefits and lower base.
• Going forward, normalisation in earnings of the BFSI sector (peaking of NPA issues), structural reforms, stable government
should help drive Sensex earnings for FY2020E by mid-to-high double digit growth.
• Retain preference for corporate banks, agri-inputs, speciality chemicals and selective ideas in infra/construction, cement and
industrials space.
Read report -https://www.sharekhan.com/MediaGalary/Equity/Q4FY19_Results_review-10_June_19.pdf
Jun 27, 2019 Cement Sector Update Positive
Summary
• We maintain our Positive view on the cement sector, believing it to be in multi-year upcycle, led by expectations of demand
pick-up, favourable pricing and easing cost environment.
• Cement production, prices and movement of key costs hint towards muted volume growth, higher realisation and better OPM
for Q1FY2020.
• Expect demand to pick up from H2FY2020, backed by kick start of government spending on infrastructure projects and
impetus on the affordable housing segment.
• We have a Buy rating on UltraTech, Grasim and Ramco Cements, while we remain Positive on JK Lakshmi Cement.
Read report -https://www.sharekhan.com/MediaGalary/Equity/Cement-June27_19.pdf
July 2019 19 Sharekhan ValueGuideSECTOR UPDATE EQUITY FUNDAMENTALS
Sector View
Date Sector Report Type
Latest Chg
Jun 27, 2019 Automobiles Sector Update Cautious
Summary
• Auto sector’s pain is expected to worsen in June 2019 with all segments (except PV) reporting deterioration as compared to
May 2019.
• 2W volumes are expected to decline steeply by 12% due to high channel inventory and entry of bikes with higher price
complying with ABS / CBS norms.
• PV volumes too are likely to drop 14% y-o-y for June 2019 marred by sluggish retails and higher channel stocks.
• Slowing economic growth and revised axle load norms are likely to result in a 15% dip in CV volumes.
• Volume headwinds are expected to continue in medium term and we expect further downgrades. We retain Cautious view on
the sector.
Read report -https://www.sharekhan.com/MediaGalary/Equity/Automobile-June27_19.pdf
Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a position in the companies mentioned in the article.
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