Sensex, Nifty Log Best Single-Day Gains In Two Months, Snap 3-Day Losing Streak

The broader markets almost mirrored their larger peers. The S&P BSE MidCap rose by 1.48% while the S&P BSE SmallCap gained 1.51%. All the sectoral indices barring S&P BSE FMCG (down 0.2%) advanced with S&P BSE Telecom index and S&P BSE Capital Goods rising 3% each.

The market breadth was skewed in favour of the bulls. About 2,176 stocks advanced, 1,058 declined and 128 remained unchanged on the BSE.

India’s cabinet Thursday approved a production-linked incentive plan worth Rs 6,322 crore ($849 million) over five years for making specialty steel, Information and Broadcasting Minister Aurag Thakur said at a briefing.

• The plan will help in bringing in investment of about Rs 40,000 crore, generate employment of 525,000, the minister said

• It is aimed at boosting production of high-grade specialty steel to minimize the nation’s dependence on import of high-end steel

Madhya Pradesh: Visuals from outside the office of Dainik Bhaskar Group in Bhopal

Income Tax Department is conducting searches on Dainik Bhaskar Group in connection with tax evasion case, at multiple locations, as per Sources pic.twitter.com/boH3xLGUUE

— ANI (@ANI) July 22, 2021

CSB Bank drops as much as 19%, the most since March 2020, after the lender reported gross bad loan ratio for the June-ending quarter rose to 4.88% from 2.68% in the previous quarter.

• Stock pares decline to 4.2% as of 2:35 p.m. in Mumbai

FIRST QUARTER RESULTS

• Net income Rs 61 crore, +14% y/y

• Interest income Rs 495 crore, +17% YoY

• Interest expense Rs 228 crore, -3.8% YoY

• Provisions Rs 98.26 crore, +38% QoQ

• Provision for loan losses Rs 104 crore

• Covid-related provisions Rs 3.8 crore

• Net Profit Rs 1,983 crore vs estimate of Rs 2,200 crore

• Operating revenue Rs 6,378 crore vs estimate of Rs 5,710 crore

• Total expenses Rs 3,723 crore, +24% YoY

• Ebitda Rs 3,560 crore vs estimate of Rs 3,130 crore

COMMENTARY AND CONTEXT

• Maintains FY22 operational, financial guidance

• Q1 includes one-time loss of Rs 134 crore

• Sees FY22 project capex $100 million

• Q1 mined metal output 221,000 tonnes, refined metal output 236,000 tonnes

• Chanderiya fumer plant commissioning seen by Nov. end

Jindal Stainless Ltd. climbed as much as 20.2% to a record high after the company said it has signed a memorandum of understanding with Tata Steel Mining to jointly unearth the chrome ore.

Adhyuday Jindal, managing director of Jindal Stainless said the joint collaboration would help both the companies derive maximum value and enhance the availability of the ore in the region without any adverse environmental impact.

All five of the analysts tracking the company maintained ‘buy’ recommendation. The overall consensus price target of analysts tracked by Bloomberg hints at a further upside of 1.9%.

• Jindal Stainless Hisar Ltd., which merged with the company last year, rose as much as 20% to a record

CCL Products heads for highest close since its June 1995 trading debut as the southern India-based coffee company benefits from ongoing rally in prices of arabica beans on back of shrinking global supplies.

• Shares rise as much as 9.8%, most since July 5

• Trading vol. > 4.5x three-month full-day vol.; set for second day of gains

• Smaller peer Tata Coffee rises 7.8%; set for record close since July 2000

Chennai-based Star Health and Allied Insurance Co. seeks to raise as much as Rs 2,000 crore ($269 million) via new shares, while founders and investors will sell as many as 60.1 million shares in an IPO, according to regulatory documents on managing bank Kotak Mahindra’ website.

• IPO includes founder Safecrop Investments India LLP’s offer-for-sale of up to 30.7 million shares

• Other selling shareholders include APIS Growth 6 Ltd. offloading up to 7.68 million shares, MIO IV Star 4.11 million shares; University of Notre Dame DU LAC 7.44 million shares; MIO Star 4.11 million shares; ROC Capital Pty Ltd. 2.51 million shares, the Draft Red Herring Prospectus for IPO shows

• Rakesh Jhunjhunwala owns 14%, or 76.8 million shares, and Rekha Rakesh Jhunjhunwala holds 3.26%, or 17.9 million shares, as on filing of the DRHP

• Kotak Mahindra Capital, Axis Capital, BofA Securities India, Citigroup Global and ICICI Securities are global coordinators and lead managers to the sale

• CLSA India, Credit Suisse Securities, Jefferies India, Ambit Pvt, DAM Capital, IIFL Securities and SBI Capital Markets are co-book running lead managers

COMMENTARY AND CONTEXT

• Says production costs in quarter rose 11% YoY mainly due to higher fuel prices

• Company is monitoring the impact of Covid's second wave on its operations; the "unexpectedly virulent" second wave marginally impacted cement demand after economy recovered during FY21

• Says expansion program is on track and estimated to be completed by end of FY23; capacity to be augmented to 136.25 mt after expansion completes

• With projections of a likely Covid third wave, company is closely monitoring situation; it remains "cautiously optimistic", given its financial and operational resources

Out of the 41 analysts tracking the company, 32 maintained ‘buy’, 5 maintained ‘hold’ and 4 analysts maintained ‘sell’ recommendations. The overall consensus price target of analysts tracked by Bloomberg implied an upside of 8.6%.

HUL has gained 2.7% year-to-date vs 11.3% advance for the Sensex Index.

Bajaj Auto Q1 Results: Profit Falls But Beats Estimates

Analysts Bet On ICICI Bank's Valuations Catching Up With HDFC Bank

Shares of Allcargo Logistics Ltd rose 6.57% to Rs 167.40 apiece, highest level in 40 months after the company’s promoters announced an initial plan to acquire all the equity shares held by public shareholders and voluntarily delist from the stock exchanges. This process will be executed by a delisting offer under the delisting regulations as stipulated by the markets regulator SEBI.

The floor price determined under the delisting norms is yet to be made public. The Mumbai-based global logistics company is among the best performers on S&P BSE 500, S&P BSE Small cap indexes. Trading volume was 2.9 times the three-month full day average, indicating the interest on the stock.

Shares of Allcargo Logistics have advanced 80% over the past 52 weeks with 23% of the gains being posted in 2021 so far.

Shares of Gland Pharma Ltd. gained 7.7% to Rs 4,089 apiece, the steepest rise in over two months on the back of April-June quarter earnings. Trading volume was 3,17,252 shares, 11 times the 20-day average of 29,123 shares for this time of the day.

The pharma company reported 30% QoQ rise in revenue to Rs 1,153.90 crore while net profit gained 35% to Rs 350.60 crore vs Rs 260.40 crore in the previous quarter.

Margin expanded to 37.8% from 36.9% in Q4FY21 while Ebidta witnessed a growth of 33% in the quarter gone by. The company stated that the strong performance was driven by growth in key products like Micafungin, Enoxaparin, Heparin and Dexemedetomidine.

Out of the 14 analysts tracking the company, 10 maintained ‘buy’, 2 maintained ‘hold’ and 2 analysts maintained ‘sell’ recommendation. The overall consensus price target of analysts tracked by Bloomberg implied an downside of 7.4%.

Gland Pharma traded at 51 times its estimated EPS for the coming year and was priced at 17.1 times book value. Shares of the pharma company have risen 5.1% in the last 5 days, 26% in the last 30 days and nearly 170% in the past 52 weeks, respectively.

Brokerage View

Motilal Oswal

• Recommends ‘buy’ with a target price of Rs 4,460.

• Complex products to drive growth at a rapid pace

• Robust revenue growth across all geographies and scaling up of manufacturing of Covid vaccine boded well for the company.

• Raise our FY22E/FY23E EPS estimate by 8% to factor in increased reach, penetration in global and domestic markets, higher offtake of Remdesivir/Enoxaparin and continued manufacturing efficiency.

• Superior ramp up in existing products and healthy build-up of complex product pipeless to drive growth in the upcoming quarters.

Nirmal Bang

• Maintains ‘accumulate’ with a target price of Rs 3,696.

• Strong growth driven by higher sales in India and other global markets.

• Covid-19 portfolio (Remdesivir and Enoxaparin) aided growth in the April-June quarter.

• Vaccine fill and finish contract from Hetero to offset decline in Covid portfolio in the upcoming quarters.

• Company on track to commercialise the Sputnik vaccine drug substance facility by October or November 2021.

• New approvals in the U.S., monetisation of filings in China and inorganic initiatives to drive growth.

Shares of Havells India Ltd. gained as much as 7.3% to Rs 1,184 apiece on the back of better-than-expected earnings in the April-June quarter.

The consumer electrical goods manufacturer witnessed a 4-fold rise in net profit YoY to Rs 236 crore while the operating revenue rose 75.95% YoY to Rs 2,607.97 crore.

“In-spite of steep inflationary pressures, the company was able to improve gross margin by 90 bps on-year due to better revenue mix, selective price hikes across segments and cost saving initiatives,” analysts led by Aniruddha Joshi at ICICI Securities Ltd. wrote in a note.

Out of the 41 analysts tracking the company, 18 maintained ‘buy’, 15 maintained ‘hold’ and 8 analysts maintained ‘sell’ recommendations. The overall consensus price of analysts tracked by Bloomberg hinted at a downside of 6%. Shares of Havells India have risen nearly 30% in 2021 so far.

Brokerage View

Jefferies

• Recommends ‘buy’ with a target price of Rs 1,190.

• Sharp expansion in operating margin and broad-based growth across segments to aid growth.

• Demand scenario remained positive despite local disruptions due to Covid.

Key Risks: Subdued traction in Lloyd, raw material volatility and pricing pressures are some of the key challenges facing the company.

Motilal Oswal

• Maintains ‘neutral’ with a price target of Rs 1,030.

• Strong performance in the April-June quarter led to revenue beat.

• Gross margin remained resilient despite the second wave.

• Cables and wires segment did better than ECD and Lighting while Lloyd lagged further owing to seasonality.

Key Risk: Higher margin pressure likely to continue due to commodity price inflation.

ICICI Securities

• Recommends ‘buy’ with a target price of Rs 1,320.

• April-June quarter numbers better than consensus estimates despite steep inflationary pressures.

• Better revenue mix, selective price hikes across segments and cost saving initiatives aided gross margin expansion.

• Strong volume growth, price hikes and recovery in Lloyd to drive growth in upcoming quarters.

• Remains structurally positive on the company due to competitive advantages and growth opportunities in consumer durables.

• Price hikes by Havells largely accepted by consumers with negligible impact seen on off-take.

Shares of Jubilant Foodworks Ltd. gained 8.42% to Rs 3,322.5 apiece on the back of April-June quarter earnings.

Revenue fell 14% to Rs 893.18 crore vs Rs 1,037.85 crore QoQ while net profit slipped 35% to Rs 69.51 crore in Q1FY22. The Noida-based food services company also reported 15% QoQ decline in Ebitda to Rs 212.27 crore while margin contracted to 23.77% Vs 24.14% in the last quarter of the previous fiscal.

While the numbers declined on a sequential basis due to the impact of the second wave, the operating revenue grew 131.1% on a YoY basis. The CEO and Wholetime Director of Jubilant Pratik Pota said growth picked up after the easing of the curbs and the momentum in June was markedly higher with almost complete revenue recovery. The company which opened 29 new stores during the June quarter has targeted to open 150-175 stores in this fiscal.

Out of the 32 analysts tracking the company, 22 maintained ‘buy’, 5 maintained ‘hold’ and 5 analysts maintained ‘sell’ recommendation. The consensus price target of the analysts tracked by Bloomberg indicated a downside of 0.4%. Shares of Jubilant Foodworks have gained nearly 19% in 2021 so far.

Brokerages’ View

Jefferies

• Recommends ‘buy’ with a target price of Rs 3062.80.

• Positive surprise on the margin front in the June quarter.

• Growth driven by factors like category formalisation, share gain by trusted brands, digital shift and plans to open new stories in FY22.

• Progress continued on non-Pizza portfolio.

• Tier 3 and 4 cities adapted well to the delivery model.

• Dine-in revenues are expected to add to the gains as the pandemic receded

Motilal Oswal

• Upgrades to ‘buy’ with a target price of Rs 3,630

• Sales broadly in-line with our estimates.

• QSR business in India is at an inflection point.

• Investments to boost the supply chain and addition of new stores are key growth drivers.

• Significant focus on technology to enhance customer experience boded well.

• Company well-positioned to utilize structural opportunities in the QSR space.

Nirmal Bang

• Maintains ‘accumulate’ with a target price of Rs 3,130.

• Delivery channel continued to drive sales recovery despite second wave.

• Higher store additions to aid growth in the upcoming quarters.

• Continuous improvement in revenue trajectory, technology investments, brand equity, strong balance sheet are key positive for the company.

• Diversification in cuisine/brand/format portfolio to serve as a pillar for maintaining dominant position in QSR space.

• Believes that newer brands would gradually scale-up and contribute to overall operations.

To read more brokerage views, click here.

IDFC jumps as much as 19% to its highest level since Jan. 2018 after the company can exit as one of the founder of IDFC First Bank after a lock-in period of 5-years is over.

• Best performer on Nifty Smallcap 100, S&P BSE 500 indexes

• Snaps 2-day decline

• Trading volume >4x three-month full-day average

• IDFC had about 3.44m shares change hands in three bunched trades on NSE, according to data compiled by Bloomberg

In earnings, 8 of the 9 Nifty companies that have announced results so far fell short of analysts’ estimates. Hindustan Unilever Ltd. and Bajaj Auto Ltd. are scheduled to announce results later today.

Indian bond traders will be looking forward to Rs 20,000 crore ($2.7b) of purchases by the central bank as part of its government securities acquisition program. The rupee may fluctuate depending on the pace of inflows as foreign investors seek to buy shares in initial public offers.

• USD/INR falls 0.4% to 74.6163 on Tuesday; Indian FX and bond markets were shut Wednesday for a holiday

• Implied opening from forwards suggest spot may start trading around 74.54

• 10-year yields little changed at 6.19% on Tuesday

All You Need To Know Going Into Trade On July 22