Stocks To Watch: Capital First, HDFC, IDFC Bank, Infosys

Asian stocks built on the strong start to this year and headed for a fresh record high amid optimism in global growth. The dollar held on to losses seen last week, weighed down by strong gains in the euro.

Equity markets from Sydney to Hong Kong to Tokyo rose. U.S. markets are shut Monday for the Martin Luther King Jr. holiday after the S&P 500 Index closed on Friday at an all-time high.

The Singapore traded SGX Nifty, an early indicator of Nifty 50's performance in India, rose 0.4 percent to 10,724 as of 7:15 a.m.

Here Are The Stocks To Watch In Monday's Trade

• HDFC to raise Rs 13,000 crore by selling shares to institutional investors and QIP.
• HDIL board approves allotment of 2 crore warrants to promoter at Rs 70.5 per each.
• IDFC Bank Ltd. and Capital First Ltd. approved a merger between the two entities
• Granules India FPI limit hiked to 49 percent from 24 percent earlier, as per RBI's approval.
• Southern Petrochemicals to shut down its plants for maintenance.
• Religare Enterprises revises value of health insurance operations over delayed sale to Rs 1,350 crore.
• Eclerx to consider details of share buyback on Jan. 23.
• Lasa Supergenerics to consider conversion of unsecured loans into equity at EGM on Feb. 7.
• Filatex India's expansion project at Dahej commences trial production.
• Trigyn Technologies receives multiyear IT services contract worth $1.5 million from IFAD, Rome, Italy.
• REC transfers entire stake in Wholly Owned Subsidiary REC Transmission To Power Grid.
• 3i Infotech's U.S. subsidiaries merge together.
• EXIM Bank declares Venus Remedies and its directors as “wilful defaulters”.

Which set of shareholders will benefit most from IDFC Bank - Capital First merger ratio?
Read the full story here | https://t.co/0YaGwUlcPu pic.twitter.com/R415gKfBoz

F&O Setup

• Nifty January futures trading at 10,686, premium of 5 points versus 3 points.
• January Series: Nifty open interest up 1 percent; Bank Nifty open interest up 12 percent.
• India VIX ended at 13.7, down 2 percent.
• Max open interest for January series at 11,000 Call (open interest up 5 percent at 47.3 lakh).
• Max open interest for January series at 10,500 Put (open interest at 81.5 lakh, down 1 percent).

F&O Ban

• In ban: Dish TV, Jain Irrigation, Kaveri Seed, Fortis Healthcare, GMR Infrastructure, HDIL, Jet Airways, Jindal Steel, JP Associates, Reliance Communication, Reliance Capital, Reliance Power, Wockhardt.
• New in ban: Dish TV, Jain Irrigation, Kaveri Seed.
• Out of ban:NIL

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

Active Stock Futures

Bulk Deals

Butterfly Gandhimathi Appliances

• IDFC MF bought 1 lakh shares or 0.6 percent equity at Rs 580 each.
• Ashish Kacholia bought 1.52 lakh shares or 0.9 percent equity at Rs 580 each.
• Standard Chartered MF bought 3 lakh shares or 1.7 percent equity at Rs 579.99 each.
• Reliance Alternative Invest Fund sold 8.5 lakh shares or 4.8 percent equity at Rs 580.67 each.

APL Apollo Tubes

• Emblem FII sold 2 lakh shares (0.8 percent) at Rs 2,228.23 each.

Hathway Cable

• Small cap World Fund Inc sold 44.6 lakh shares (0.5 percent) at Rs 40.4 each.

Gayatri Projects

• Socite Generale bought 25 lakh shares (1.4 percent) at Rs 217.35 each.
• UBS CH Equity Fund-Emerging Markets bought 70 lakh shares (3.9 percent) at Rs 208 each.
• Afrin Dia sold 70 lakh shares (3.9 percent) at Rs 208 each.

Greenlam Industries

• Sundaram Rural India Fund bought 3.57 lakh shares (1.5) at Rs 1315 each
• Jwalamukhi Investment Holdings sold 3.56 lakh shares (1.5 percent) at Rs 1,315 each

Menon Bearings

• Astute Investments sold 7.75 lakh shares (1.4 percent) at Rs 110.2 each

Emami Papers

• Ganpati Industrial Private Ltd. bought 9.04 lakh shares (1.5 percent) at Rs 226.29 each

Tata Steel was last No. 1 in India nearly 11 years ago. The $13.5-billion Corus buyout of 2007, just before the global economy unravelled, changed everything. https://t.co/U0U2Oo5ysP pic.twitter.com/KaB2GSCe5g

Earnings To Watch

• ABC Bearings
• Delta Corp
• Federal Bank
• India Grid Trust
• Zee Learn

Earnings Reaction To Watch

Infosys Q3 (QoQ)

• Net Sales up 1.3 percent at Rs 17,794 crore.
• Net profit up 37.7 percent at Rs 5,129 crore.
• EBIT up 1.7 percent at Rs 4,319 crore.
• Margins at 24.3 percent versus 24.2 percent.

TGV Sraac Q3 (YoY)

• Revenue up 22 percent at Rs 273 crore.
• Net profit up 221 percent at Rs 10.6 crore.
• Ebitda up 58 percent at Rs 50.5 crore.
• Margin at 18.5 percent versus 14.3 percent.

RIIL Q3 (YoY)

• Revenue down 8 percent at Rs 21.1 crore.
• Net profit down 1 percent at Rs 2.67 crore.
• Ebitda down 30.6 percent at Rs 3.4 crore.
• Margin at 16.1 percent versus 21.3 percent.

Sintex Industries Q3 (YoY)

• Revenue up 44 percent at Rs 840 crore.
• Net profit down 50 percent at Rs 21 crore.
• Ebitda down 32 percent at Rs 57 crore.
• Margin at 6.8 percent versus 14.3 percent.

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Brokerage Radar

Geojit ICICI Pru Life

• Initiated ‘Buy' with price target of Rs 450.
• Outlook on Indian life insurance sector remains bright.
• Indian life insurance industry is at the cusp of enormous growth.
• ICICI Life is well-positioned to capture the strong growth.
• Best play on life insurance sector.
• Expect ICICI Life to deliver 22 percent and 15 percent in return on equity and return on enterprise value in the next financial year.
• Expect new business premium to grow at a compounded rate of 20 percent over the financial years through March 2019.
• Strong brand and parentage; Well placed on distribution.
• Remains outperformer in private life insurance despite challenging business environment.
• Diversified multi-channel distribution network gives a competitive edge.
• Under-penetrated market provides significant growth opportunity.

HSBC on Guajarat Pipavav

• Upgraded to ‘Buy' from ‘Hold'; raised price target to Rs 174 from Rs 144.
• Pipavav is set to receive another two weekly services.
• Rebound in India-China EXIM trade bodes well given exposure to Far East.
• Earnings momentum to resume an upward trend in the near future.
• These service wins along with improved trade outlook raised earnings estimate.

Equirus on Whirlpool

• Initiated ‘Add' with a price target of Rs 1,717.
• With favorable industry dynamics Whirlpool is well-poised for growth.
• Plugging portfolio gaps to drive incremental volumes, improve brand image.
• Distribution network expansion, new product launches to drive growth.
• Revenue growth to be powered by refrigerators, WM and ACs.
• Expect revenue, operating income and net profit to grow at a compounded rate of 19 percent, 21 percent and 20 percent respectively over the financial years through March 2020.
• Stock trades at reasonable valuations.
• Refrigerator segment – penetration levels to increase to 43 percent by March 2022.
• Washing machines – Growth to be driven by fully-automatic machines.
• Air conditioning segment – Split ACs to lead the way.
• Focus on profitable growth to shore up operating income and net profit.

ICICI Direct on Himadri Speciality

• Initiated ‘Buy' with price target of Rs 245.
• Growth visibility is healthy with impressive capex and firm financing plans amid robust product demand.
• Debt at controlled level; debt-to-equity steadily on decline.
• Expect revenue, operating income and net profit to grow at a compounded rate of 22.7 percent, 29.3 percent and 38 percent respectively over the financial years through March 2020.
• Expect Himadri to command premium valuations among its peers.
• Coal tar pitch: Dominance to sustain; cash cow.
• SNF a construction chemical is big opportunity.
• Carbon black: Industry in sweet spot, Himadri a key beneficiary.
• Advance carbon material to fetch high margins and boost earnings from March 2020.
• Himadri is one of the only few listed players with exposure to Electric Vehicle.

Brokerages On Capital First-IDFC Bank Merger

Edelweiss

• Capital First: Maintained ‘Buy', Raised price target to Rs 1,033 from Rs 927.
• IDFC Bank: Maintained ‘Hold', raised price target to Rs 74 from Rs 67.
• Merger is a step in right direction to achieve stated intentions of both entities.
• Merger will be synergistic, value accretive and provide an opportunity to build a robust banking franchise.
• Immediate term benefits flow more to Capital First.
• Value combined entity at Rs 36,400 crore, i.e., 1.75 times next financial year's book
• All regulatory approvals (RBI, CCI, SEBI, etc) to take almost 9-12 months.
• Ramp up of liability franchise will be a key monitorable.

Antique

• Lower borrowing costs is one of the potential benefit of merger.
• Increased provisioning costs to offset benefits from lower borrowing costs.
• Capital First huge SME book to witness higher provisions in banking.
• Combined entity to trade between 2-2.2x during integration phase, translating to Rs 70-75.
• Further upside contingent upon successful integration and re-alignment of bank strategy.
• Expect 10-12 percent price upside to Capital First; No significant upside to IDFC Bank.

Infosys beats profit estimates on one-time tax benefit.https://t.co/Jk2FTWhHn0 pic.twitter.com/LD9URss9YC

Brokerage On Infosys Earnings

Credit Suisse on Infosys

• Maintained ‘Neutral'; raised price target to Rs 1,100 from Rs 1,000.
• Previous quarer results were in line; Guidance maintained.
• U.S. and financial services soft, but management outlook is positive.
• Decent growth recovery in retail; No significant pick-up in large deals.
• Update on the new CEO's strategy only in April.
• Revise estimates to slightly lower tax rate and adjusting for recent buyback.
• Valuations are reasonable as stock underperformed in 2017.
• Do not see any near-term trigger.

CLSA on Infosys

• Maintained ‘Buy'; raised price target to Rs 1,300 from Rs 1,230.
• Previous quarter remained in line in revenue growth and steady margins.
• Tax cuts drive up next two financial year's earnings per share estimates by 2 percent.
• Client mining stayed strong with solid growth in top client.
• Impressive margin performance continues despite hikes and variable pay.
• New CEO is yet to fully sponsor the strategic direction.
• Limited gap with peers, stability and improving execution deserves a rerating.

Edelweiss on Infosys

• Upgraded to ‘Buy' from ‘Hold'; raised price target to Rs 1,265 from Rs 1,010.
• With new CEO in place expect highest margin levers, high dividend yield and undemanding valuations.
• Barring BFSI, all other businesses posted modest numbers in a weak quarter.
• BFSI, retail and digital look strong for 2018.
• BFSI, retail, digital and Europe all look promising.
• Downgraded earlier due to management instability.

Morgan Stanley adds ICICI Bank to its model portfolio, gives it top billing among Indian banks, reports @darshanvmehta1 https://t.co/Pqp9YIl2Vx pic.twitter.com/qyM2Z9iKIO

Media Reports

• JSW to bid for Binani Cement Today. (Economic Times)
• Essar oilfield serives eyes 20 percent jump in revenues (Business Standard).
• RP-Sanjiv Goenka Group to launch 15 food products under the Too Yumm (Business Standard).
• FM launches options trading in guar seeds (Business Standard).

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