All You Need To Know Going Into Trade On May 22

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Asian markets have had a muted open to the final trading day of the weak. Tensions between U.S. and China is the latest addition to the already mounting concerns of economic recovery from Covid-19.

A big Hong Kong ETF fell almost 4 percent after China responded to accusations from U.S. President Donald Trump and threatened countermeasures.

The U.S. Dollar and the treasury yields were steady while oil prices were flat.

The Singapore-traded SGX Nifty, an early indicator of the NIfty 50 index's performance in India, fell 0.33 percent to 9,051 as of 7:15 a.m.

Short on time? Well, then listen to this podcast for a quick summary of All You Need To Know before the opening bell.

BloombergQuint · All You Need To Know On May 22, 2020

Here's a look at all that can influence equities going into today's session:

• Benchmark indices in Japan, South Korea and Australia are little changed while futures in Hong Kong are indicating a negative start.
• Futures on the Dow Jones are trading higher by 100 points after the benchmark ended 0.4 percent lower on Thursday.
• China said it will safeguard its sovereignty, security and interests and threatened countermeasures against the U.S.
• The National People's Congress begins in CHina today where top leaders are likely to reveal a stimulus to support the post-virus economy.
• The Bank of Japan will hold an emergency meeting today to focus on new funding for struggling businesses.
• Yield on the 10-year treasury remained at 0.67 percent.
• West Texas Intermediate Crude was flat at $33.92 per barrel.

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Stocks To Watch

• Reliance Industries: KKR to invest Rs 11,367 crore in Jio Platforms becoming the fifth major investor on board. The transaction values Jio platforms at an equity value of Rs 4.91 lakh crore and an enterprise value of Rs 5.16 lakh crore. The investment translates into a 2.32 percent equity stake in Jio platforms.
• InterGlobe Aviation: Will be resuming domestic flights from May 25, in a phased manner as per government directives. It also said that it will operate 97 Kerala reparation flights to the Middle East.
• Bandhan Bank: In the Bank's area of operations, 49 banking units (micro banking outlets) in five districts were impacted due to cyclone AMPHAN, out of which 45 were operational on May 21. Bank expects these 5 outlets to resume operations shortly. Business of around 65,000 micro banking borrowers, amounting to an exposure of approximately Rs 260 crore, could be impacted due to the cyclone. The major impact has been in the district of South 24 Parganas. AMPHAN affected portfolio expected to regularize by the third quarter of fiscal year 2021, as per the bank.
• GMR Infra: MIHAN India has cancelled the contract for development of Nagpur Airport awarded to the company, as reported by Bloomberg News.
• ONGC and NTPC: Signed MoU to set up joint venture for renewable energy business. As per the MoU, NTPC and ONGC will explore and set up Renewable Power assets including offshore wind, in India and overseas, and explore opportunities in the fields of sustainability, storage, E-mobility and ESG (Environmental, Social and Governance) compliant projects.
• Indian Oil Corporation: Bloomberg News reports that the refiner has cut the run rate of its Haldia refinery in West Bengal to half its capacity after the cyclone disrupted electricity and fresh water supplies. The state-run refiner will review the supply situation on May 22. Indian Oil said operations at its coastal refinery in Odisha is normal and running at about 70% of capacity.
• Bodal Chemicals: To consider amalgamation of wholly-owned subsidiary Trion Chemicals with itself and to re-appoint Suresh Patel as Chairman and Managing Director on May 27.
• PFC: Has incorporated 5 SPVs for development of transmission schemes in Rajasthan and Andhra Pradesh.
• SRF: Stated that its BOPET film line has been commissioned and capitalized on May 21, at a cost of Rs 385 crore.
• Coforge (formerly NIIT Technologies): Buyback opens on May 29 and closes on June 11. The company has offered to buy-back 19.56 lakh shares representing 3.13 percent of total issued and paid-up capital at a price of Rs 1,725 per shares aggregating to Rs 337.46 crore. Buyback price is at a 20 percent premium to its closing price on May 21.
• Music Broadcast: Partners with Spotify to provide the former's content. The radio channel's audio intellectual property rights will be available to millions of users on Spotify.
• Emami: CCI has approved acquisition of 100 percent stake in Emami Cement by Nuvuc Vistas.
• TTK Prestige: In its update due to Covid-19, the company says that sales that could not be effected in the March quarter due to shutdown is estimated at Rs 70 crore. Company expects demand improvement in the kitchen improvement segment in next two quarters and expects to see export customers shifting their sourcing to India from China.
• GTL Infra: Due to cyclon AMPHAN, 2,500 of its radiating towers have been affected. Company's assets are adequately insured. However, the company cannot assess the financial loss of its assets.
• IRB Infra: Allotted NCDs worth Rs 200 crore on a private placement basis.
• Edelweiss Financial Services: Board approved increasing the limit to make loans from Rs 10,000 crore to Rs 20,000 crore and divestment of company's investments or assets.
• Info-Edge: Invests Rs 7.2 crore to acquire stake in a tele health and an e-sports community platforms, respectively.
• Companies That Resumed Operations: Wheels India, JK Paper, Automotive Axles, Arvind, Jain Irrigation, Orient Electric, Sheela Foam.
• Non-Nifty Earnings Today: Alembic Pharma, Bosch, Trent, Essel Propack, Honeywell Automation, IDFC First Bank, Neuland Laboratories, Orient Cement, Supreme Industries, Birla Corp, Bayer Crop, Godrej Industries, WABCO India.

Earnings Reported After Market Hours

VST Industries Q4FY20

• Revenue up 7 percent to Rs 291.5 crore
• Net profit up 33.2 percent to Rs 70.6 crore
• Ebitda up 16.7 percent to Rs 94.8 crore
• Ebitda margin at 32.5 percent from 29.8 percent
• Raw material cost as percent of sales at 48 percent from 53.6 percent
• Declares dividend of Rs 103 per share, implying a dividend yield of 3.3 percent
• Does not foresee any material impact in the recoverability of carrying value of assets due to Covid-19
• All numbers are standalone and compared on a year-on-year basis

BSE Q4FY20

• Revenue up 3 percent to Rs 119.6 crore
• Net loss of Rs 1.3 crore from net profit of Rs 51.9 crore
• Ebitda loss widens to Rs 22.1 crore from Rs 3.1 crore
• Investment income falls 42 percent to Rs 30.5 crore
• Other income falls 59 percent to Rs 5.7 crore
• Provision of Rs 18.6 crore for additional contribution to Investor Services Fund and Investors Protection Fund
• Declares dividend of Rs 17 per share, implying a dividend yield of 4 percent
• All numbers are consolidated and compared on a year-on-year basis

Hawkins Cooker Q4FY20

• Revenue down 21 percent to Rs 146 crore
• Net profit down 30.4 percent to Rs 9.4 crore
• Ebitda down 34.1 percent to Rs 14.5 crore
• Ebitda margin narrows to 9.9 percent from 11.9 percent
• No dividend declared due to Covid-19 impact
• All numbers are standalone and compared on a year-on-year basis

Jubilant Industries Q4FY20

• Revenue down 12.6 percent to Rs 124.4 crore
• Net loss narrows to Rs 1.9 crore from Rs 5.2 crore
• Ebitda down 21.1 percent to Rs 6 crore
• Ebitda margins narrow to 4.8 percent from 5.3 percent
• Agri Product segment revenue down 14 percent to Rs 40.3 crore
• Performance Polymer segment revenue down 12 percent to Rs 84.1 crore
• All numbers are consolidated and compared on a year-on-year basis

Earnings Estimates: UPL Q4FY20

• Revenue seen 17 percent higher at Rs 10,007 crore
• Ebitda seen 58 percent higher at Rs 2,227 crore
• Ebitda margin may widen to 22.3 percent from 16.5 percent
• Net profit may rise 3.9 times to Rs 811 crore
• All estimates are Bloomberg estimates, consolidated and compared on a year-on-year basis

Key Factors At Play For UPL:

• Higher offtake in LatAm and India to drive growth
• Logistics issues due to the lockdown to restrict growth in domestic business despite favourable rabi sowing
• North America & Europe which are high margin markets likely to remain subdued
• Had an exceptional loss of Rs 299 crore in base quarter due to Arysta integration

Brokerage Radar

IIFL On Bajaj Finserv

• Buy rating maintained
• Price target of Rs 8,000
• Profit impacted due to Covid-19 contingency provision & MTM losses on equity portfolio
• VNB margin improvement was likely led by continuous improvement in operating leverage
• Growth in EV relatively muted; impacted due to negative investment varience

Prabhudas Lilladher On Hindustan Zinc

• Upgrade to accumulate from hold
• Price target cut to Rs 195 from Rs 200
• Earnings in-line with estimates
• Improved outlook drives upgrades
• Lower costs help mitigate lower volumes
• Zinc prices made strong recovery due to revival in Chinese demand, disruption in supplies and production cuts

JPMorgan On Hindustan Zinc

• Overweight rating maintained
• Price target of Rs 210
• Q4 in-line with estimates
• Volume guidance deferred to Q1FY21 which should be the trough
• Volume growth in FY22 should be strong as all projects are completed
• Like strong balance sheet, robust volume growth pipeline
• See LME Zinc prices supported at $2,000/tonne levels

Emkay On JK Lakshmi Cement

• Buy rating maintained
• Price target raised to Rs 305 from Rs 262
• Q4 above estimates as lower realisations were offset by higher than expected fall in opex
• Decline in opex/ton led by lower freight, energy and other expenses
• Opex likely to remain subdued with lower petcoke prices and commissioning of WHRS at Sirohi

JPMorgan On Cement

• Pricing discipline and demand normalisation surprisingly positive
• Sustainability of cement demand needs to be monitored as we get into the lean period from July
• Better pricing environment and cost tailwinds to limit incremental downside risk to earnings / cash flows
• Most new expansions have been put on hold, thereby receding competitive intensity in the industry

JPMorgan On Colgate-Palmolive

• Overweight rating maintained
• Price target of Rs 1,400
• Covid-19-led supply disruption impacted sales
• Operational performance below estimate on account of weak top-line delivery
• Revenue decline not worse compared to peers

Motilal Oswal On Aviation

• Reduced capacity would balance out the skewed economics of supply Vs demand
• Regulated fares would at least not impact the current pricing of airlines
• Zero social distancing on board would allow airlines to fly in an economic manner
• Reiterate that demand in the longer run would be major headwind for the industry
• Companies need to completely re-strategize their path ahead

Credit Suisse On IndiGo

• Outperform rating maintained
• Price target of Rs 1,500
• Though price band fares are higher, introducing fare band sets a negative precedent
• Air traffic to be muted on both demand and supply fronts
• Lower supply might help
• Higher operating leverage necessitates 50 percent load factor to break even
• New SoPs for flying to change flying experience

CLSA On IndiGo

• Downgrade to underperform from buy
• Price target cut to Rs 1,375 from Rs 1,670
• Market share pressure imminent over near-term
• Tide turning towards naturals
• Premiumisation will take a step back
• Cost optimisation efforts with benign raw material prices to aid earnings

Pledged Share Details

• GMR Infra: Promoter GMR Enterprises released pledge of 3.72 crore shares on May 20
• Adani Ports & SEZ: Promoter Adani Tradeline revoked pledge of 4.84 lakh shares on May 19
• Max India: Promoter Max Ventures Holdings created pledge of 5 lakh shares on May 19

(As Reported On May 21)

Trading Tweaks

• Move Into Short-Term ASM Framework: Biofil Chemicals & Pharmaceuticals, FCS Software Solutions
• Move Out Of Short-Term ASM Framework: NDTV, Hathway Cable & Datacom, Alembic Pharmaceuticals, Lumax Auto Technologies

Insider Trading

• IFCI: Promoter Government of India acquired 20 crore shares on May 21
• Marico: Promoter Archana Mariwala acquired 3.23 lakh shares on May 18
• TV Today Network: Promoter Aroon Purie acquired 1.84 lakh shares on May 20
• Future Retail: Promoter Future Coupons acquired 1.48 crore shares on May 19

(As Reported On May 21)

Money Market Update

• The rupee ended with gains at 75.62 against the U.S. Dollar as compared to Wednesday's close of 75.80.
• Thursday's gains led to the rupee ending as the best performing currency among its Emerging Market peers.

F&O Cues

• Nifty May futures closed at 9,075; discount of 30 points from premium of 0.1 point
• Nifty May futures shed 3.3 percent in Open Interest and 2.5 lakh shares
• Nifty Bank May futures closed at 17,645; discount widens to 90 points from 4 points
• Nifty Bank May futures add 8.6 percent in Open Interest and 62,900 shares
• Nifty Put-Call Ratio at 1.12 from 1.18 across all series

Nifty Monthly Expiry: May 28

• Maximum Open interest on Call side at 10,000 strike (28.6 lakh shares)
• Maximum Open Interest on Put side at 9,000 strike (32.8 lakh shares)
• Active options: 9,000 Put (+7.2 lakh shares), 9,200 Call (+4.5 lakh shares)

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