Sensex Logs Worst Two-Month Fall Since Feb. 2016 Despite Last Day Rebound

Tata Motors Ltd. reported higher than anticipated net loss during the July-September period.

Key earnings highlights (Q1, YoY):

• Net loss of Rs 1,049 crore versus net profit of Rs 2,482.8 crore. (Est. Rs 874 crore.)
• Revenue up 2.5 percent at Rs 72,112.1 crore.
• Ebitda down 16.4 percent at Rs 6,757.6 crore.
• Margin at 9.4 percent versus 11.5 percent.

Shares of the Mumbai-based airline operator slumped as much as 11 percent to Rs 209 after it received notices for payment delays/defaults from few aircraft lessors, Jet Airways said in an exchange notification.

• Lessors mindful of current challenges faced by Indian aviation industry
• Company is current on its payment to Airports Authority of India

Shares of the Mumbai-based drugmaker rose as much as 2.2 percent to Rs 896 after its profit met Bloomberg consensus estimates in September quarter.

Key earnings highlights:

• Revenues flat at Rs 3,951 crore versus Rs 3,952 crore
• Net profit down 41 percent at Rs 266 crore versus Rs 455 crore; Estimate of Rs 273 crore
• Ebitda up down 36 percent at Rs 549 crore versus Rs 853 crore.
• Margin at 13.9 percent versus 21.5 percent

Share of Tata Steel pared losses after it said it will continue to hold discussions with the European Commission on concerns related to the Thyssenkrupp merger.

• Have noted concerns raised by the European Commission regarding Thyssenkrupp merger
• The proposed JV is subject to merger control clearance in several jurisdictions, including the European Union
• Will provide further information and analysis to secure the required approval for the proposed JV.

Source: Exchange Filing

Shares of the Ahmedabad-based company recovered from low levels and rose as much as 2.8 percent to Rs 174 after it reported September quarter earnings.

Key earnings highlights:

• Net profit nearly triples to Rs 172 crore versus Rs 59 crore (YoY)
• Revenue at Rs 9,155 crore versus Rs 8,546 crore (YoY)

Shares of the Faridabad-based tractor maker rose as much as 2.5 percent to Rs 619 after its net profit met Bloomberg consensus estimates in September quarter.

Key earnings highlights:

• Net profit at Rs 103 crore versus Rs 77.5 crore (YoY); estimate of Rs 100 crore
• Revenue at Rs 1,398.3 crore versus Rs 1,212 crore (YoY)

Shares of the Ghaziabad-based FMCG products maker erased gains and fell as much as 2.62 percent to Rs 385.95 after its profit missed Bloomberg consensus estimates in September quarter.

Key earnings highlights:

• Net profit at Rs 376.63 crore versus estimate of Rs 399 crore
• Revenue at Rs 2,125 crore versus Rs 1,959 crore (YoY)

Shares of the Mumbai-based drugmaker rose as much as 7.6 percent to Rs 217 after it received Establishment Inspection Report (EIR) for Waluj plant.

FDC received EIR for Waluj plant for inspection conducted between Aug. 10-16 by the U.S. FDA and it is acceptable with regards to current Good Manufacturing Practices (GMPs) and the inspection stands closed, the company said in an exchange notification.

Garden Reach Shipbuilders & Engineers surged as much as 11.53 percent to Rs 93.85 after it entered into contract with Ministry of Defence for construction and delivery of four survey vessels for Rs 2,435.2 crore. The project is expected to be completed by April 2023.

Shares of the Pune-based software developer rose as much as 8 percent, the most since May 2016, to Rs 740 after its profit met Bloomberg consensus estimates in July-September quarter on higher margins.

Net profit rose 18.5 percent quarter-on-quarter to Rs 1,064.3 crore for the quarter ended September, the company said in an exchange filing yesterday after market hours. That compares with the Bloomberg consensus estimate of Rs 1,013 crore.

Key earnings highlights

• Revenue up 4 percent at Rs 8,630 crore.
• Net profit up 18 percent at Rs 1,064 crore.
• EBIT up 23 percent to Rs 1,325 crore.
• Margin at 15.3 percent versus 13.0 percent.
• Dollar revenue down 0.5 percent at $1218 million.

Shares of the Bengaluru-based pharmaceutical company erased gains and fell as much as 3.71 percent to Rs 398 after it reported loss in September quarter against Bloomberg estimate of profit of Rs 21 crore.

Key earnings highlights:

• Consolidated net loss at Rs 12.30 crore versus loss of Rs 5.30 crore (YoY); estimate of profit of Rs 20.9 crore
• Revenue at Rs 732.63 crore versus Rs 768.66 crore (YoY)

Shares of the Pune-based combustion engine maker rose as much as 14.27 percent to Rs 769.40 after it reported September quarter earnings.

Key earnings highlights:

• Revenue up 28.9 percent at Rs 1,486.9 crore.
• Net profit up 38.4 percent at Rs 211.6 crore.
• Ebitda up 49.8 percent at Rs 250.9 crore.
• Margin at 16.9 percent versus 14.5 percent.
• Other Income at Rs 78.5 crore versus Rs 53.6 crore.

Shares of the Mumbai-based carmaker pared opening gains and fell nearly 1.7 percent to Rs 174.20 ahead of September quarter earnings.

Q2 Earnings Preview: (YoY)

• Revenues seen rising 3.2 percent to Rs 72,980 crore.
• Ebitda expected to fall Rs 6,560 crore.
• Net Loss expected at Rs 874 crore versus profit of Rs 1992 crore.
• Margins seen to decline 9 percent versus 12.7 percent.
• The stock is 48 percent below the Bloomberg consensus one-year target price.

Indian equity benchmarks erased early gains as banking, metal and auto shares came under selling pressure after sentiment soured amid worsening relationship between the Reserve Bank of India and government.

The Sensex fell 0.7 percent or 238 points to 33,653 and the Nifty 50 Index dropped 0.8 percent or 80 points to 10,118.

All sector gauges barring the Nifty IT Index were trading lower led by the Nifty metal Index's 2.4 percent drop.

Shares of the state-run coal miner fell as much as 4.4 percent to Rs 263.80 after the government started selling its 3 percent stake in the company.

Coal India announced yesterday that the government will sell three percent stake in the company with an over subscription option of selling additional six percent stake as offer for sale to public.

• Floor price is set at Rs 266 per share
• Amount raised would be around Rs 14,861 crore, including green shoe option
• Offer opened today and will last till tomorrow

Government Invokes Rarely-Used Powers To Direct RBI Governor

Goldman Sachs on Page Industries

• Initiated ‘Neutral’ with a price target of Rs 28,695, implying a potential downside of 1 percent from the last regular trade.
• Positive on medium-term revenue and margin prospects.
• Risk-reward balanced as robust revenue/profit prospects are balanced by high valuation.
• Company has a track record for steady margins and consistently high cash returns.
• Expect Revenue and net profit to grow at a compounded annual growth rate of 20 percent ad 21 percent respectively over FY18-21.

HSBC on Grasim Industries

• Upgraded to ‘Buy’ from ‘Hold’; cut price target to Rs 910 from Rs 1,140, implying a potential upside of 13 percent from the last regular trade.
• Holding company discount hits a record high.
• Weak subsidiary performance has led to expansion in discount.
• Find steep discount unjustified; Valuation attractive.

JPMorgan on Bank of Baroda

• Maintained ‘Neutral’ with a price target of Rs 100, implying a potential downside of 9 percent from the last regular trade.
• Good set of operational numbers; Bank’s transformation efforts clearly visible.
• Net profit misses estimate due to higher MTM losses.
• Saw asset quality improvement; Fresh slippages more than halved on a sequential basis.

CLSA on Ramco Cement

• Maintained ‘Buy’; cut price target to Rs 850 from Rs 960, implying a potential upside of 41 percent from the last regular trade.
• Flat unit EBITDA (QoQ) despite multiple external pressures.
• Cut EPS estimates by 12-18 percent to factor lower realisation and higher costs.
• Like Ramco’s growth focus and cost-saving agenda.

On Coal India

JPMorgan

• Maintained ‘Neutral’ with a price target of Rs 330, implying a potential upside of 20 percent from the last regular trade.
• Much expected stake sale to remove one key overhang.
• Operating environment strong given price hikes and strong E auction prices.
• Struggle to see stock breaking out Rs 260-330 range on growth concerns beyond April 2019.

Macquarie

• Maintained ‘Outperform’ with a price target of Rs 335, implying a potential upside of 21 percent from the last regular trade.
• Divestment has been a key overhang; Recommend subscriber to offer for sale.
• Coal India well placed given current tightness in domestic coal market.
• Estimated dividend yield of 7 percent for 2018-19 has upside risk, given government’s fiscal stress.

On Tech Mahindra

Macquarie

• Upgraded to ‘Outperform’ from ‘Neutral’; raied price target to Rs 830 from Rs 820, implying a potential upside of 30 percent from the last regular trade.
• September quarter results lower than estimates at revenue level but better at EBIT margin level.
• New deal wins running high; 5G capex still sometime away.
• Raise EPS by 1-2 percent; Upgrade on cheap valuations.

CLSA

• Upgraded to ‘Outperform’ from ‘Underperform’; maintain price target at Rs 790, implying a potential upside of 16 percent from the last regular trade.
• Revenue miss led by enterprise as telecom recovers.
• Margin continues to recover.
• Upgrade on improved demand environment and FX support.

On Cummins India

Deutsche Bank Research

• Maintained ‘Buy’ with a price target of Rs 880, implying a potential upside of 31 percent from the last regular trade.
• September quarter’s net profit reported big beat on strong revenue growth and operating leverage.
• Solid growth seen in industrial and exports segment.
• Expect guidance for exports to be raised given favourable performance and tailwinds.

Macquarie

• Maintained ‘Outperform’ with a price target of Rs 975, implying a potential upside of 45 percent from the last regular trade.
• September quarter earnings surpassed expectations on all parameters.
• Margin ahead of estimates due to strong operating leverage and rupee depreciation.
• Strong revenue growth is likely to lead to upward revision.

On IRB Infra

Deutsche Bank Research

• Maintained ‘Buy’; cut price target to Rs 250 from Rs 290, implying a potential upside of 98 percent from the last regular trade.
• September quarter was below estimates due to lower margins and higher finance cost.
• Order book execution to pick up pace in the second half.
• Cut price target to factor in lower EPC margins from HAM projects.

CLSA

• Maintained ‘Buy’; cut price target to Rs 250 from Rs 330, implying a potential upside of 98 percent from the last regular trade.
• Toll collection mixed; Rajasthan roads remain strong.
• EPC execution picks up but margins down.
• EPS estimates cut by 4-6 percent for FY19-20; Stock offers deep-value.

On ABB India

Deutsche Bank Research

• Maintained ‘Hold’; raised price target to Rs 1,340 from Rs 1,320, implying a potential upside of 11 percent from the last regular trade.
• September quarter was ahead due to improving margins and revenue growth.
• Initial sings of industrial recovery translating to orders.
• Valuations fair given low growth in T&D segments.

Macquarie

• Maintained ‘Underperform’; raised price target to Rs 967 from Rs 893, implying a potential downside of 20 percent from the last regular trade.
• Revenue growth was strong helped by strong growth across all segments.
• Biggest concern has been on margins, which continue to disappoint.
• Prefer Cummins on play the recovery in the capex cycle.

On Emami

Macquarie

• Maintained ‘Neutral’; cut price target to Rs 430 from Rs 590, implying a potential upside of 6 percent from the last regular trade.
• September quarter results were below estimates on lower-than-expected volume.
• Believe recovery in key brands is critical for a re-rating.
• Cut price target to factor in lower earnings and lower valuation multiple.

CLSA

• Maintained ‘Buy’; cut price target to Rs 490 from Rs 675, implying a potential upside of 21 percent from the last regular trade.
• Weak growth and weak margins in September quarter; Mgmt. commentary positive in the second half.
• Cut EPS on lower revenue and margin estimates; Retain Buy on relatively cheaper valuations.
• One of the worst-performing stocks due to multiple concerns.

• Nifty October futures closed trading at 10,229, premium of 31 points.
• Nifty November open interest down 1.1 percent; Nifty Bank November open interest down 5.3 percent.
• Maximum open interest for November series at 10,700 strike value call option (open interest at 20.9 lakh shares)
• Maximum open interest for November series at 10,000 strike value put option (open interest at 42.3 lakh shares)

Insider Trades

• Electrosteel Castings promoter acquired 1.3 lakh shares between Oct. 25-26.
• Confidence Petroleum promoter acquired 1.2 lakh on Oct. 29.

Trading Tweaks

• GPT Infraprojects to move into ASM framework.
• Cochin Shipyard record date to determine buyback eligibility.
• Motherson Sumi Systems record date for 1:2 bonus issue
• Jindal Worldwide ex-date for share split from Rs 5 to Re 1.
• CESC record date for spinoff.

• All you need to know about Dr. Reddy’s Duvvada plant’s troubles
• Tata, Thyssenkrupp Steel venture faces in-depth EU probe
• NBFC crisis tops agenda in meeting between government, regulators
• SBI slashes ATM withdrawal limit to Rs 20,000 for certain card holders
• RBI independence: Just how much power do we give technocrats?
• Private vehicles might stop plying in Delhi if pollution worsens
• Facebook profit beats Wall Street forecasts, calming concern
• Government looks to raise up to Rs 15,000 crore through Coal India share sale
• Equity to be India’s best-returning asset class in a decade
• Why airplane black boxes are so hard to find after crashes
• Nomura indicators point to a slowdown in rural and urban India
• Apple revamps iPad with iPhone features in tablet revival

Here are some key events coming up this week:

• This week’s earnings season highlights include: Macquarie, Apple, Alibaba, Airbus, Credit Suisse, Exxon Mobil, and Shell.
• Monetary policy decisions are due in Japan and the U.K.
• On Friday, the final U.S. jobs report before the November midterm elections may show hiring improved as payrolls rose about 190,000, and the unemployment rate held at a 48-year low of 3.7 percent, analysts forecast.