The Weekly Wrap Up June 05, 2020

05 June 2020

DOMESTIC:

HCL Technologies showed its intention to acquire Cisco's self-optimizing network (SON) technology

Biocon’s partner Mylan receives favourable ruling for device in US

Reliance on track to achieve zero net debt: Report

Tata Power completes 51% stake buy in Odisha's TPCODL for Rs179cr

Lupin gets USFDA nod for generic osteoarthritis pain drug

JSW Steel ramps up crude steel production to 83% in May

Hyundai launches end-to-end online car buying platform 'Click to Buy'

RITES arm secures its largest mandate from Railways, to manage 3 GW solar power plants'' installation

Abu Dhabi's Mubadala to invest USD1.2bn in Reliance's Jio Platforms

BPCL sees gasoline, diesel demand returning to pre-Covid levels in July

Sun Pharma initiates Phase II clinical trial on AQCH, a phytopharmaceutical drug, as potential treatment for Covid-19 patients

L&T's construction arm bags contract for heavy civil infrastructure biz

Ashok Leyland unveils new range of BS-VI compliant Modular Trucks

Aurobindo Pharma receives nine observations for US plant

IndusInd Bank launches India's first mobile app based facility for opening current accounts in a paperless manner

ECONOMY:

Moody’s cuts India rating to lowest investment grade

Consumer confidence collapses, economy may contract by 1.5% in FY21: RBI surveys

RBI allows relaxation to payment operators on various compliance deadlines

INDUSTRY:

Auto majors struggle to convert online bookings to sales

India for TRIPs flexibility to ensure drugs’ access

Passenger vehicle sales crash to decades low in May

Highlights of the Week

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COVERAGE NEWS:

ICICI Bank Ltd: ICICI Bank has announced a reduction in its savings bank account interest rate with effect from June 4, 2020. The interest on savings bank balance of below Rs50 lakhs reduced to 3% (from earlier 3.25%) while above Rs50 lakhs reduced to 3.5% (from earlier 3.75%).

The Week That Went By:

Indian markets extended its rally and started the new month on a strong note and reclaimed the level of 9900 but in the last session, Nifty marginally came-off from highs as profit booking was seen at the higher levels. On 2nd trading session, upmove continued in the Index but found resistance at around 9920 and was dragged lower. With a strong leadership of Banks and individual heavyweights, Index recovered from lower levels and moved towards north for the rest of the day. In the mid-week, Index was traded above the psychological level of 10,000 but could not hold its gains as profit booking was seen in financial stocks. On the other hand, IT and Pharma stocks took the leadership and pushed the Index higher from lower levels. Benchmark Index started the last day of the week on a firm note and with the help of Metal and PSU banking stocks, Index compounded its gains. Nifty 50=10142.15 BSE Sensex30=34287.24 Nifty Midcap 100=14158.05 Nifty Smallcap100=4423.10

05 June 2020

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Result Synopsis

Company Result This Week

Srikalahasthi Pipes Ltd CMP: Rs175 Target: Rs250

The net sales for the quarter de-grew by 2.5% to Rs3,985mn as compared to Rs4,087mn in the same quarter last year. The EBITDA margin for the quarter under review stood at 16.8% as compared to 12.4% in Q4FY19. The margins improved mainly on account of lower raw material cost that led to an improved gross margins for the quarter. The net profit came in at Rs507mn as against Rs358mn in the same quarter last year; growth of 41.6%. The EPS stands at Rs10.9. For the full year, the Net sales and PAT grew by 6.7% and 59.7% respectively. The board of directors have recommended a dividend of Rs7 per share for FY20 as against Rs6 per share in FY19. Outlook and Recommendations: The company has yet again reported good set of numbers for the quarter under reference attributed to better margins and operational efficiency. For the full year, the results reported by the company surpassed our expectations, with the operational performance being more or less in line with our estimates. Below the Ebitda levels, the only difference that trickled down to inflate PAT levels was the lower tax rate adopted by the company under the IT Act. Going forward, with the comfortable order book in hand for supply of DI pipes, SPL’s strategy to increase the DI capacity and the continued efforts thereby giving DI pipes the priority as the safest mode of transporting water, the industry can witness growth in times to come. Thus, we continue to remain positive and maintain our target price of Rs250 with a horizon of 12months.

Vesuvius India Ltd CMP: Rs868 Target: Rs1165

The net sales for the quarter came in at Rs2056mn as compared to Rs2227mn in the same quarter last year, drop of 7.7%. The EBITDA margins declined to 12.4% as compared to 14.9% in the same quarter last year mainly on account of the drop in sales. The net profit de-grew by 13.8% to Rs187mn as against Rs216mn in the comparative quarter. For the full year, the net sales reported a drop of 4.1% and Ebitda margins came in at 13.6% (from earlier 15.9% in CY18). The company reported PAT of Rs855mn as against Rs925mn in CY18. The EPS for the quarter stood at Rs9.19. Outlook and Recommendations: The company has reported tepid results for the quarter under reference. Despite the industry slowdown that had an impact on the sales, the company managed to maintain its Gross and PAT margins in the range of 40-43% and 9-10% respectively over the past quarters. For the full year, the numbers were slightly lower than our expectations mainly due to disruption of sales led by the lockdown, and slowdown witnessed in the steel demand. Unlocking of the economy in a phased manner and partial resumptions of the facilities has led to an improvement in the operations for Vesuvius and the management is expecting to cater to the customer demand in a gradual manner going forward. However, considering the slack in demand for the industry as a whole contingent to normalcy levels in a gradual way, to factor in the uncertainty we would like to tone down our target price to the initiating levels of Rs1165 over a 12 months horizon.

Snowman Logistics Ltd CMP: Rs32 Target: Rs55

Net sales for the quarter under review grew by 2% to Rs610mn as compared to Rs598mn in the same quarter last year. The EBITDA margins for the quarter under review stood at 25.2% as compared to 27.2% in the corresponding quarter last year. The company reported a net loss of Rs12mn as compared to a profit of Rs54mn in the comparative quarter of the previous year. For the full year, the company has reported turnover of Rs2,402mn as compared to Rs2,325mn; with EBITDA margins of 25.1% as compared to 25.4%, the company reported a net loss of Rs150mn in FY20 as compared to Rs97mn in FY19. Outlook and Recommendations: Cold storage is a business which has been resilient to disruption in the times of Covid-19 and the company’s’ capacities were more or less at 92%. The Management is focussing on capex plans for Siliguri and Coimbatore. Moreover, the company intends to focus on reducing the debt levels. Debt reduction in the current year signifies the inherent cash generating ability of the company. The company has successfully reduced debt to Rs540mn as on April 30, 2020 from Rs900mn as on March 31, 2019. The upcoming capex, intent to further reduce debt and maintenance of margins in a growing segment like cold chain &logistics makes the vision bullish for investments in Snowman in the long term; thus, we maintain our target price of Rs55 with a horizon of 12 months.

Recommendations adjusted as per Corporate Actions

Company Reco Target Corp Action Adj Price Adj Tgt Price

Upside

IHP Ltd 341 600 Bonus 1 : 1 171 500 224%

Engineers India Ltd 211 200 Bonus 1 : 1 105 200 182%

Gulshan Polyols Ltd 390 500 Stock Split from Rs.FV 5 to Rs.FV 1 110 78 44%

Nesco Ltd 2397 3200 Stock Split from Rs.FV 10 to Rs.FV 2 479 640 37%

Castrol India Ltd 447 550 Bonus 1 : 1 223 200 62%

Hikal Ltd 143 325 Bonus 1 : 2 95 216 41%

*Castrol, Vesuvius– Dec Ending | Siemens—Sept Ending|

05 June 2020

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Coverage Universe Valuations Company Reco Reco at

(Rs) CMP (Rs)

Tgt price (Rs)

Upside 1M Var 3M Var 12M Var

Supreme Petrochem Ltd BUY 77 163 275 69% 3.4% 6.2% -26.7%

Shanthi Gears Ltd BUY 107 87 125 44% 8.5% 1.1% -26.0%

Hind Rectifiers Ltd BUY 69 129 275 113% 3.4% -17.5% -9.6%

KCP Ltd BUY 71 44 105 139% 9.4% -26.1% -51.0%

The Hitech Gears Ltd BUY 298 87 300 246% -3.6% -38.0% -68.3%

Bharat Bijlee Ltd BUY 787 740 1500 103% 7.3% 0.5% -33.4%

Triveni Turbines Ltd BUY 92 68 150 121% -1.2% -25.1% -39.0%

Siemens Ltd BUY 1128 1149 1350 17% 7.9% -14.0% -7.6%

GMM Pfaudler Ltd BUY 332 4260 4500 6% 20.5% 43.1% 229.2%

Alicon Castalloy Ltd BUY 288 244 650 167% 10.4% -13.3% -58.7%

Gufic Biosciences Ltd BUY 50 64 120 88% 4.8% 1.9% -15.8%

Excel Industries Ltd BUY 380 638 1200 88% -4.4% 9.1% -39.3%

Vesuvius India Ltd BUY 1165 868 1165 34% 0.6% -20.3% -25.7%

Munjal Showa Ltd BUY 191 91 191 110% 25.7% -4.2% -43.6%

Bharat Rasayan Ltd BUY 2747 7150 9000 26% 11.1% 0.7% 72.2%

Alkyl Amines Chemicals Ltd BUY 391 2099 2250 7% 17.0% 36.3% 157.0%

Grauer and Weil (India) Ltd BUY 45 41 65 57% 20.1% -13.8% -25.5%

Texmaco Rail & Engineering Ltd BUY 91 27 91 240% 7.2% 11.9% -63.1%

Nagarjuna Agrichem Ltd BUY 29 27 45 65% 12.8% -8.2% -14.0%

ITD Cementation India Ltd BUY 158 41 100 145% 15.9% -17.1% -63.8%

Westlife Development Ltd BUY 266 309 450 45% 9.6% -30.9% -9.5%

Dynamatic Technologies Ltd BUY 2160 517 1700 229% -0.6% -34.6% -63.3%

Hitech Corporation Ltd BUY 175 69 125 81% 23.4% 1.5% -26.6%

NRB Bearings Ltd BUY 138 68 138 104% 2.6% -16.9% -60.2%

Kokuyo Camlin Ltd BUY 132 61 132 117% 27.0% -6.2% -25.7%

Timken India Ltd BUY 883 897 1250 39% 6.3% -4.2% 29.1%

Morganite Crucible (India) Ltd BUY 1047 1650 2500 52% 17.9% -16.2% 25.9%

Vardhman Special Steels Ltd BUY 151 64 110 71% 43.3% 4.1% -33.2%

Zen Technologies Ltd BUY 115 42 125 195% 11.6% -22.1% -39.4%

KSB Ltd BUY 820 519 1100 112% 13.8% -21.5% -27.5%

Thermax Ltd BUY 1019 749 1230 64% 6.9% -15.9% -26.2%

Transpek Industry Ltd BUY 1547 1757 2000 14% 14.2% -8.0% 10.9%

BASF India Ltd BUY 1954 1145 1400 22% 15.0% -5.1% -13.5%

Artson Engineering Ltd BUY 64 24 45 88% 10.4% -10.2% -49.9%

Remsons Industries Ltd BUY 104 57 130 128% 6.4% -15.4% -25.4%

Snowman Logistics Ltd BUY 33 32 55 75% 9.6% -26.3% -9.9%

Alembic Pharmaceuticals Ltd BUY 605 853 1100 29% 13.5% 33.7% 68.9%

SKF India Ltd BUY 1942 1477 1942 32% 3.9% -19.7% -19.9%

HFCL Ltd BUY 25 12 25 105% 15.1% -4.2% -41.9%

Sudarshan Chemical Industries Ltd BUY 372 398 500 26% 4.1% -12.2% 19.4%

Huhtamaki PPL Ltd BUY 254 213 320 50% 6.5% -19.1% -15.8%

Mishra Dhatu Nigam Ltd BUY 123 202 190 -5.8% 0.3% -14.5% 52.1%

Anuh Pharma Ltd BUY 142 200 226 13% 34.8% 39.9% 46.0%

Kirloskar Pneumatic Co. Ltd BUY 134 109 192 76% 7.1% -21.7% -41.0%

Integra Engineering India Ltd BUY 37 24 50 112% 18.3% -23.4% -53.5%

ICICI Bank Ltd BUY 535 357 430 20% 8.0% -29.2% -13.2%

Srikalahasthi Pipes Ltd BUY 205 175 250 43% 29.5% -10.4% -3.2%

Acrysil Ltd BUY 115 73 150 105% 10.5% -31.5% -32.6%

Paushak Ltd BUY 2210 2161 2800 30% 9.7% -13.9% -15.8%

FDC Ltd BUY 240 261 325 24% 8.3% 10.4% 41.0%

Tube Investments of India Ltd BUY 340 401 425 6% 13.1% -24.8% 1.4%

Cipla Ltd BUY 612 653 751 15% 9.3% 48.2% 16.3%

S H Kelkar and Company Ltd BUY 51 71 80 13% 18.0% -26.1% -53.4%

Revathi Equipment Ltd BUY 291 347 391 13% 15.3% -16.5% -25.4%

IHP Ltd BUY 171 155 500 224% 4.0% -8.3% 8.4%

Engineers India Ltd BUY 105 71 200 182% 8.8% -1.5% 20.9%

Gulshan Polyols Ltd BUY 78 31 45 44% 12.0% -18.4% -36.0%

Nesco Ltd BUY 479 466 640 37% 8.7% -28.6% -13.2%

Castrol India Ltd BUY 223 123 200 62% 3.4% -11.0% 69.2%

Hikal Ltd BUY 95 124 175 41% 19.1% 1.9% 12.4%

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24 Jan 2020

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MARKET OUTLOOK

NIFTY (WEEKLY)

BANK NIFTY (WEEKLY)

05 June 2020

In the Nifty50 weekly chart, MACD has given a positive crossover which indicates rally is likely continue and the same was observed in PSU banking, Metal and Media sector too. Auto sector is about to reach at the resistance zone, activity of the upcoming week will decide continuation or reversal of the trend. From the Energy sector, OMC’s stocks will extend their positive momentum. FMCG sector faced its stiff resistance and made a DOJI candle which is indecisive. Majority of the IT stocks has given a breakout from a flag and pole pattern which suggests sector will go with its primary trend. In a Mid & Small cap sectors, MACD is about to give a positive crossover. By summing all the observations, upmove will continue as in majority of the sector MACD has given a positive crossover.

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24 Jan 2020

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NIFTY 50 COMPONENTS (WEEKLY PERFORMANCE)

SECTORAL PERFORMANCE

HDFC Bank 9.71

Hero Motocorp 0.30

Hindalco 8.20

HUL 1.46

ICICI Bank 9.03

Indusind Bank 8.84

Infratel 4.82

INFY 1.84

IOC 7.25

ITC 1.60

Jsw Steel 7.64

Kotak Bank 10.30

LT 2.96

M&M 10.98

Maruti 3.15

Nestle India -2.64

NTPC 1.35

ONGC 5.19

PowerGrid 9.66

Reliance 7.43

SBIN 17.33

Shree Cement 5.77

Sun Pharma 3.67

Tata Motors 29.12

Tata Steel 15.52

TCS 3.64

Tech Mahindra 9.32

TITAN 11.70

Ultratech 0.17

UPL 8.65

VEDL 14.86

Wipro 3.26

Zee Entertainment 14.18

Adani Ports 4.59

Asian Paints -2.04

Axis Bank 6.91

Bajaj Auto 2.62

Bajaj Finserv 19.79

Bajaj Finance 24.00

Bharti Airtel 5.71

BPCL 9.01

Britannia 2.25

Cipla 0.99

Coal India 3.38

DR Reddy’s Labs -0.86

Eicher Motors 6.06

Gail 7.33

Grasim 7.69

HCL Tech 4.17

HDFC 6.48

05 June 2020

* Gain/ Loss in %

Underperformer turned out to be an outperformer i.e. PSU banking Index. Sector has ended the week with gains of over 22%. Almost all the components has ended the week with gains of more than 20%. As shown in the chart, MACD has given a positive crossover which indicates up-move is likely to continue.

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SECTORAL GAINER

05 June 2020

With the Market sentiment being bullish all the sectors have ended the week on a positive note.

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