Stocks To Watch: Electrosteel Steels, Infosys, NMDC, Power Grid, Spice Mobility

Indian equity benchmarks advanced to a record for the third straight day, led by the gains in Coal India, Yes Bank and Wipro.

The S&P BSE Sensex rose 0.3 percent to 34,443.19 after 14 out of 31 stocks in the Index gained. The NSE Nifty 50 Index rose 0.1 percent to 10,637.

The Singapore traded SGX Nifty, an early indicator of Nifty 50’s performance in India, was a little changed at 10,641 as of 7:05 a.m.

Here Are The Stocks To Watch Out For In Wednesday’s Session

• Infosys signs an advance pricing agreement with the U.S. Internal Revenue Services. The pact would result in a reversal of $225 million of tax provisions.
• Electrosteel Steels receives resolution plans from Tata Steel, Vedanta, Edelweiss ARC and Renaissance Steel.
• Power Grid Corp board approves a Rs 92 crore investment in Tumkur Ultra Mega Solar Power Park.
• NMDC offer for sale for the non-retail category subscribed 1.68 times at an indicative price of Rs 154.
• Spice Mobility divests its entire stake in Sunstone Eduversity.
• HIL ties up with Chennai Super Kings as official partner for the next two seasons of IPL.
• Syndicate Bank keeps MCLR unchanged.
• Nath Bio Genes institutional share sale opens on Jan. 22 at a floor price of Rs 468.69 per share.

F&O Setup

• Nifty January futures trading at 10,647, premium of 9.9 points from 8.5 points.
• January Series: Nifty open interest up 5 percent; Bank Nifty open interest up 4 percent.
• India VIX ended at 13.8, up 0.8 percent.
• Max open interest for January series at 11,000 Call (open interest at 45.4 lakh, up 1 percent).

• Max open interest for January series at 10,500 Put (open interest at 69.2 lakh, up 11 percent).

F&O Ban

• In ban: Fortis, GMR Infrastructure, HDIL, IFCI, Jindal Steel and Power, Jain Irrigation, JP Associates, Reliance Communications, Reliance Capital, Reliance Power, Wockhardt.
• No new stocks in or out of ban list

Only intraday positions can be taken in stocks which are in F&O ban. There is a penalty in case of a rollover of these intraday positions.

Active Stock Futures

Bulk Deals

• KSK Energy Ventures: Societe Generale bought 54.17 lakh shares or 1.3 percent equity at an average of Rs 17.86.
• Philips Carbon Black: FIL Investments (Mauritius) sold 2.32 lakh shares or 0.7 percent equity at Rs 1465.08 each.

Greenlam Industries

• IDFC MF bought 4.38 lakh shares or 1.8 percent equity at Rs 1315 each.
• Jwalamukhi Investment Holdings sold 5.30 lakh shares or 2.2 percent equity at Rs 1315 each.

Emami Infra

• Ganpati Industrial Pvt Ltd sold 3.99 lakh shares or 1.6 percent equity at Rs 351.05 each.
• Shubham Enterprises bought 3.99 lakh shares or 1.6 percent equity at Rs 351.05 each.

Chembond Chemicals

• Promoter Perviz Dastur sold 96,800 shares or 0.7 percent equity at Rs 242.84 each.
• Shree Damodar Krishna Trust bought 83,000 shares or 0.6 percent equity at Rs 242.65 each.

Camlin Fine Sciences

• Promoter Abha Dandekar sold 48.98 lakh shares or 4.7 percent equity at Rs 132.4 each.
• Promoter Leena Leena Dandekar sold 29.90 lakh shares or 2.9 percent equity at Rs 130.04 each.
• Promoter Vivek Dandekar sold 48.98 lakh shares or 4.7 percent equity at Rs 129.17 each.

Brokerage Radar

Credit Suisse on Interglobe Aviation

• Initiated ‘Buy’ with price target of Rs 1,650; implying a potential upside of 34 percent from yesterday’s close.
• Strong run so far which is likely to get even better.
• Indigo has strong balance sheet and cost structure with lead in market share.
• Air traffic growth to have added cyclical upside with stronger economy.
• Strong yields and seat factors to continue.
• Best in class; Competition modest but reviving.
• Usage of unrestricted cash for buying airplanes can optimise cost structure and returns.
• Positives: strong sectoral growth, superior positioning and relatively attractive valuations.
• Expect revenue, EBITDAR and net profit to grow at a compounded rate of 22 percent, 28 percent and 39 percent over the financial years through March 2020.
• Profitability has high sensitivity to fuel; Expect brent at $65/bbl.

IIFL on Magma Fincorp

• Initiated ‘Buy’ with price target of Rs 220; implying a potential upside of 31 percent from yesterday’s close.
• Business performance at an inflexion.
• Larger part of business restructuring is complete; Disbursements growth is gradually improving.
• Improving financial performance should lead to a credit rating upgrade.
• Financial performance will improve with AUM growth.
• Higher loan growth, margins would aid revenue growth.
• Expect disbursements, AUM and net profit to grow at a compounded rate of 26 percent, 17 percent and 28 percent respectively over the financial years through March 2021.
• Expect return on assets and return on equity to expand to 2.4 percent and 15 percent respectively.
• Valuation is highly attractive and presents a good opportunity for entry at this point.
• Sanguine earnings outlook, attractive valuations strengthen investment case.

BoFAML on Jubilant FoodWorks

• Maintained ‘Buy’; raised price target to Rs 2,300 from Rs 2,000.
• Strong same-store sales growth (SSSG) profitability could to drive consensus upgrade.
• Previous quarter to be marked by double-digit SSSG and by further clarity on cost-control initiatives.
• Cost control to back non-stop increase in profitability.
• Expect 10 percent SSSG in the previous quarter, led by favorable base, industry changes.
• Strong earnings per share’s compounded growth rate to back premium valuation; Expect earnings per share to grow at a compounded rate of 59 percent over the financial years through March 2020.

Citi on JSPL

• Maintained ‘Buy’; raised price target to Rs 375 from Rs 219.
• Operational capacity has potential to generate higher Operating income.
• Positives: execution speed, control on capex and ability to fund capex without debt.
• Volume ramp-up to start now.
• Still Undervalued; Best is yet to Come.
• Expect breaking even at net profit level from the next financial year onwards.

Motilal Oswal on Emami

• Maintained ‘Buy’; raised price target to Rs 1,655 from Rs 1,564.
• Prime play on rural demand growth and wholesale recovery.
• Pace of innovation among the best of breed.
• R&D and advertising spend highest among peers.
• International business poised to turn around.
• Recovery in Kesh King business key.
• Expect earnings to grow at a compounded rate of 20 percent over the financial years through March 2021.
• Remains a credible long-term play; Valuations attractive.

Credit Suisse on Sun Pharma

• Maintained ‘Outperform’; raised price target to Rs 640 from Rs 595.
• Shift towards specialty and high India contribution to drive outperformance.
• Stay negative on US outlook and expect price erosion to accelerate; But positive on Sun Pharma.
• Halol reinspection in the current quarter could unlock several key filings.
• Sun Pharma has started monetisation on speciality side.
• Specialty success to help Sun to revert to 20 percent growth trajectory.
• Expect consolidated earnins per share to grow at a compounded rate of 20 percent over the financial years through March 2022, even beyond Halol recovery.

Credit Suisse on Pharma Sector

• U.S. generic market is still very profitable and vulnerable.
• Price erosion to accelerate further in this year.
• Expect U.S. generic market and profit pool to decline by 5 percent and around 9 percent respectively through December 2020.
• Fight for market share to further intensify and will pull down industry RoCE further.
• Prefer Cipla: low price erosion risk and good pipeline.
• Prefer Sun: shifting away from generics.
• Concerned on Dr. Reddy’s: high product concentration.

HSBC on Cement

• ACC: Downgrade to Hold from Buy; Cut price target to Rs 1,875 from Rs 1,900.
• Ambuja: Maintains Hold; raised price target to Rs 260 from Rs 252.
• Likely to report strong sales volumes coupled with benign base in the previous quarter.
• Industry cost pressures negatively impacting profitability.

Axis Capital on Infosys

• APA agreement positive for Infosys.
• Positive impact on earnings by 5 percent between current quarter to December 2022.
• APA to result in reversal of tax provisions of $225 million in the previous financial year.
• Company expects tax rate to be lower by 100 basis points.
• Agreement to improve predictability of tax outflow.
• New agreement to clear the ambiguity around the Base Erosion Anti-Abuse Tax.

Credit Suisse on Infosys

• Maintained ‘Neutral’ with price target of Rs 1,000.
• Tax agreement to reduce tax rates by 100 basis points till March 2021.
• Reduction in tax rate does not materially help earnings.
• Agreement removes uncertainty around U.S. tax implications for next three years.
• Reduction in tax rate to add over 1 percent to earnings.

Morgan Stanley on Infosys

• Maintains Equal-weight with price target of Rs 1,028.
• Agreement means tax rate guidance of 28-29 percent will decline to 27-28 percent.
• Agreement could positively impact on the earnings per share during the next two financial years by up to 1 percent.

Media Reports

• Azure Power bags a solar project in Rajasthan (Business Line).
• Essar to sell off office space in Mumbai for Rs 24 billion (Business Standard).
• RInfra moves MERC for sale approval of Mumbai biz to Adani transmission (Business Standard).
• IDFC Bank, Capital First explore merger; talks at initial stage (Economic Times).
• Axis looks to foray into life insurance business; bank eyes IDBI Federal Life, also in talks with Tata AIA (Economic Times).
• RCom’s spectrum band in 4G-ready 850 MHz band up for grabs (Economic Times).
• BoB, Union Bank put over Rs 17k-cr bad loans on sale (Economic Times).