All You Need To Know Going Into Trade On October 7

Stocks To Watch

• Dixon Technologies: The company's arm Padget Electronics has been chosen as the domestic mobile phone manufacturing partner in the Production Linked Scheme. CFO Saurabh Gupta told BloombergQuint that the company has large contracts with big global brands for servicing domestic as well as international markets. He said that the company intends to begin production sometime in the fourth quarter of FY21.
• Reliance Industries: Abu Dhabi Investment Authority (ADIA) to invest Rs 5,512.5 crore in Reliance Retail Ventures for 1.20% equity stake. Reliance Retail Ventures has raised Rs 37,710 crore from leading global investors including Silver Lake, KKR, General Atlantic, Mubadala, GIC, TPG and ADIA in less than four weeks.
• Bajaj Finance: The company in its September quarter update said that customer franchise at the end of the quarter stood at 44.1 million from 38.7 million last year. The company acquired 1.2 million new customers during the quarter. New loans booked fell 44% to 3.6 million. Assets Under Management were flat at Rs 1.37 lakh crore. Capital Adequacy Ratio at 26.5% as of September 30, 2020. Consolidated liquidity surplus at Rs 22,300 crore. Deposit book grows to Rs 21,600 crore from Rs 17,633 crore during the same period last year. The company said that it will continue to strengthen its balance sheet and accelerate provisioning for Covid-19.
• Tata Motors: Bloomberg News reports that JLR is planning to sell U.S. Dollar-denominated bonds, more than seven months after its first attempt stalled due to the impact of Covid-19 on its business in China. JLR is offering notes worth $500 million with Bank of America as the lead global coordinator and Citigroup, Goldman Sachs & JPMorgan acting as other global coordinators.
• State Bank Of India: Dinesh Kumar Khara to take over as Chairman today.
• Raymond: CARE Ratings revised ratings for long-term bank facilities to CARE AA from CARE AA-. The outlook has been retained at credit watch with developing implications.
• Indo Rama Synthetics: OFS for non-retail investors subscribed 112% on Tuesday. The OFS for retail investors opens today.
• Cox & Kings: Enforcement Directorate has arrested Group CFO Anil Khandewal and company’s internal auditors in a money laundering case.
• Matrimony.com: Management clarified in its conference call that it is expecting double digit growth in billing (sales) in its matchmaking business and not in revenue.
• Linde India: Subhabrata Ghosh resigned as CFO from October 16. Appointment of new CFO will be considered in November.
• Som Distilleries & Breweries: Record date for 1:2 share split set at October 16.
• Indiabulls Ventures: Renamed as Dhani Services from October 6. Allotted 84 lakh shares to NWI Emerging Market Fixed Income Master Fund at Rs 175 per share.
• PSP Projects: Tender for EPC project in GIFT City, Gujarat in which the company emerged as the lowest bidder has been cancelled at the tender inviting authority.
• VA Tech Wabag: Dissolved its Brazilian arm.
• DHFL: Administrator has filed third application on past frauds. The current application is related to undervaluation and fraudulent nature of certain agreements made by the company during its stake sale in Pramerica Life Insurance to DHFL Investments and few inter-corporate deposits given to certain entities. As per transaction auditor Grant Thornton India LLP’s report, the monetary impact of such transactions amounts to Rs 1,865 crore. The report also cites transfer of Rs 230 crore in the form of ICDs which was used to repay a promoter-linked entity. The transactions took place between FY17-19. Application was filed against 10 respondents, including Kapil Wadhawan, Wadhawan Global Capital Limited and few more entities.
• Non-Nifty Earnings Today: Majesco, Zee Learn

Earnings Expectations: TCS Q2FY21

• U.S. Dollar revenue seen 5.5% higher at $5,339 million
• Revenue seen 2.1% higher at Rs 39,133 crore
• Net profit seen 13.4% higher at Rs 7.946 crore
• Ebit seen 5.3% higher at Rs 9,532 crore
• Ebitda margin seen at 24.4% from 23.6%
• All estimates are consolidated and compared on a quarter-on-quarter basis

Factors At Play For TCS:

• Revenue growth to be led by resolution of supply side constraints, ramp-up of large deals signed earlier and conversion of strong order wins
• Robust sequential growth seen in India business from low base
• Expect higher other income as Q1FY21 had a forex loss
• The company will provide Rs 1,218 crore as exceptional item in the EPIC Systems Corporation matter.
• Watch out for buyback details, client budget and spending trends and any furloughs expected in the December quarter along with demand trends.

Brokerage Radar

Macquarie On Solara Active Pharma

• Initiate coverage with outperform rating
• Price target of Rs 1,680
• Among top three pure-play API manufacturers in India
• Long-term focus and growing presence in CRAMS suggest strong outlook even beyond FY23
• Believe growth is more sustainable than some of its Indian API peers
• Expect 25% Ebitda CAGR over FY20-23, building on its nearly 40% Ebitda CAGR over FY18-20
• Likely to report strong cumulative Free Cash Flow of over Rs 220 crore over FY21-23E
• Among the cheapest API stocks globally at 8.8x FY23E EV/Ebitda
• Expect the stock to re-rate further courtesy improving margin profile and strong regulatory track record

Macquarie On Syngene International

• Initiate coverage with outperform rating
• Price target of Rs 708
• Poised to gain share in the growing CRAMS industry
• Strong execution, cost advantage and robust cash conversion some positives
• Expect 16% revenue CAGR and 22% Ebitda CAGR over FY20-23E
• Increased engagement with existing clients, addition of new clients, enhanced commercial manufacturing capabilities and recent capacity expansion to aid growth
• At 27x September-2022 EV/Ebitda multiple, it still trades at a significant discount to most global peers

CLSA On Bharat Forge

• Buy rating maintained
• Price target raised to Rs 580 from Rs 535
• Demand outlook for domestic and export markets continues to improve
• U.S. class 8 trucks should lead export growth recovery
• U.S. oil & gas is showing signs of bottoming
• Defence optionality can be large; order wins awaited
• Domestic truck volumes improving
• Recovery in Passenger Vehicles, tractors is positive

JPMorgan On Bharti Airtel

• Overweight rating maintained
• Price target of Rs 735
• Risk-reward improves sharply post correction
• Expect Bharti to continue to gain share at the premium end of the market
• Jio's postpaid launches are unlikely to dent Bharti's profitability sharply
• Likely to enjoy secular revenue and Ebitda recovery over the next three years
• ARPU growth will be consumption-led

Emkay On Dixon Technologies

• Buy rating maintained
• Price target raised to Rs 10,937 from Rs 8,663
• Multiple customer wins can de-risk revenue concentration in the hyper-competitive phone market
• Timely payouts from the government will be important
• Now bake in revised upper limit of revenues
• Raise FY22/23E EPS estimates by 8% and 14% respectively

Motilal Oswal On Indian Consumer Sector

• Commodity costs remain largely benign
• Agri commodity basket largely seeing moderate deflation in Q2FY21
• Rural market leading the revival while urban recovery remains slow
• Commodity cost impact may be quiet sharp in certain cases
• Hindustan Unilever, Dabur, Marico are our top picks

Pledged Share Details

• GMR Infra: Promoter GMR Enterprises released pledge of 15.78 crore shares between October 1-5.
• MRF: Promoter Dr. Karun Philip created pledge of 400 shares on September 30.
• Apollo Pipes: Promoter Sameer Gupta created pledge of 4.95 lakh shares on September 25.

(As Reported On October 6)

Bulk Deals

• Zee Entertainment Enterprises: Vanguard Group acquired 58.59 lakh shares (0.61%) at Rs 211.46 per share.
• Deepak Fertilizers Rights Issue: Union Bank of India sold 80,620 rights shares at Rs 14.26 per share.

Trading Tweaks

• Fund Raising: ICICI Prudential Life Insurance.
• Record Date Demerger: Anant Raj.
• Buyback Announcement: TCS.
• Price Band Revised From 20% To 10%: Gokaldas Exports, Srikalahasthi Pipes.
• Price Band Revised From 10% To 5%: Banswara Syntex.
• Move Into ASM Framework: Ramkrishna Forgings.
• Move Into Short Term ASM Framework: Federal-Mogul Goetze.
• Move Out Of Short Term ASM Framework: Shyam Century Ferrous.

Money Market Update

• The rupee ended lower for the second straight day on Tuesday, ending at 73.46 against the U.S. Dollar as compared to Monday's close of 73.29.
• The rupee was the worst performing currency in Asia on Tuesday.

F&O Cues

• Nifty October futures closed at 11,672; premium of 10 points from 24 points
• Nifty October futures add 6% and 6 lakh shares in Open Interest
• Nifty Bank October futures closed at 22,910; premium of 56 points from 73 points
• Nifty Bank October futures add 4% and 53,000 shares in Open Interest
• Nifty Put-Call Ratio at 1.44

Nifty Weekly Expiry: October 8

• Maximum Open Interest on call side at 11,800 strike (30.7 lakh shares)
• Maximum Open Interest on put side at 11,500 strike (32.8 lakh shares)
• Active Options: 11,600 Put (24.3 lakh shares) and 11,500 Call (-9.1lakh shares)

Nifty Monthly Expiry: October 29

• Maximum Open Interest on Call side at 12,000 strike (19.7 lakh shares)
• Maximum Open Interest on Put side at 10,500 strike (35.3 lakh shares)