ValueGuide - Sharekhan · 2020-03-12 · There’s something for everyone at Sharekhan Classroom I...

ValueGuideMarch 2020

Intelligent Investing

Stock IdeaStock Updates

ViewpointsSector Updates

Regular Features

Report CardEarnings Guide

Products & Services

PMSMF PicksAdvisory

Trader’s Edge

Technical ViewCurrencies

F&O Insights

For Private Circulation only www.sharekhan.com

Contagion CrisisContagion Crisis

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Registered O�ce: Sharekhan Limited, 10th Floor, Beta Building, Lodha iThink Techno Campus, O�. JVLR, Opp. Kanjurmarg Railway Station, Kanjurmarg (East), Mumbai – 400042, Maharashtra. Tel: 022 - 61150000. Sharekhan Ltd.: SEBI Regn. Nos.: BSE / NSE / MSEI (CASH / F&O / CD) / MCX - Commodity: INZ000171337; DP: NSDL/CD-SL-IN-DP-365-2018; PMS: INP000005786; Mutual Fund: ARN 20669; Research Analyst: INH000006183; Compliance O¤cer: Mr. Joby John Meledan; Tel: 022-61150000; email id: [email protected]; For any queries or grievances kindly email [email protected] or contact: [email protected]: Client should read the Risk Disclosure Document issued by SEBI & relevant exchanges and the T&C on www.sharekhan.com; Investment in securities market are subject to market risks, read all the related documents carefully before investing.

CONTENTS

3March 2020 Sharekhan ValueGuide3June 2017 Sharekhan ValueGuide

disclaimer

Disclaimer: This document has been prepared by Sharekhan Ltd. (SHAREKHAN) and is intended for use only by the person or entity to which it is addressed to. This Document may contain confidential and/or privileged material and is not for any type of circulation and any review, retransmission, or any other use is strictly prohibited. This Document is subject to changes without prior notice. This document does not constitute an offer to sell or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. Though disseminated to all customers who are due to receive the same, not all customers may receive this report at the same time. SHAREKHAN will not treat recipients as customers by virtue of their receiving this report.

The information contained herein is obtained from publicly available data or other sources believed to be reliable and SHAREKHAN has not independently verified the accuracy and completeness of the said data and hence it should not be relied upon as such. While we would endeavour to update the information herein on reasonable basis, SHAREKHAN, its subsidiaries and associated compa-nies, their directors and employees (“SHAREKHAN and affiliates”) are under no obligation to update or keep the information current. Also, there may be regulatory, compliance, or other reasons that may prevent SHAREKHAN and affiliates from doing so. This document is prepared for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Recipients of this report should also be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The user assumes the entire risk of any use made of this information. Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. We do not undertake to advise you as to any change of our views. Affiliates of Sharekhan may have issued other reports that are inconsistent with and reach different conclusions from the information presented in this report.

This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject SHAREKHAN and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.

The analyst certifies that the analyst has not dealt or traded directly or indirectly in securities of the company and that all of the views expressed in this document accurately reflect his or her personal views about the subject company or companies and its or their securities and do not necessarily reflect those of SHAREKHAN. The analyst further certifies that neither he or its associates or his relatives has any direct or indirect financial interest nor have actual or beneficial ownership of 1% or more in the securities of the company at the end of the month immediately preceding the date of publication of the research report nor have any material conflict of interest nor has served as officer, director or employee or engaged in market making activity of the company. Further, the analyst has also not been a part of the team which has managed or co-managed the public offerings of the company and no part of the analyst’s compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this document. Sharekhan Limited or its associates or analysts have not received any compensation for investment banking, merchant banking, brokerage services or any compensation or other benefits from the subject company or from third party in the past twelve months in connection with the research report.

Either SHAREKHAN or its affiliates or its directors or employees / representatives / clients or their relatives may have position(s), make market, act as principal or engage in transactions of purchase or sell of securities, from time to time or may be materially interested in any of the securities or related securities referred to in this report and they may have used the information set forth herein before publication. SHAREKHAN may from time to time solicit from, or perform investment banking, or other services for, any company mentioned herein. Without limiting any of the foregoing, in no event shall SHAREKHAN, any of its affiliates or any third party involved in, or related to, computing or compiling the information have any liability for any damages of any kind.

Compliance Officer: Mr. Joby John Meledan; Tel: 022-61150000; email id: [email protected];

For any queries or grievances kindly email [email protected] or contact: [email protected]

Registered Office: Sharekhan Limited, 10th Floor, Beta Building, Lodha iThink Techno Campus, Off. JVLR, Opp. Kanjurmarg Railway Station, Kanjurmarg (East), Mumbai – 400042, Maharashtra. Tel: 022 - 61150000. Sharekhan Ltd.: SEBI Regn. Nos.: BSE / NSE / MSEI (CASH / F&O / CD) / MCX - Commodity: INZ000171337; DP: NSDL/CDSL-IN-DP-365-2018; PMS: INP000005786; Mutual Fund: ARN 20669; Research Analyst: INH000006183; For any complaints email at [email protected]. Disclaimer: Client should read the Risk Disclosure Document issued by SEBI & relevant exchanges and the T&C on www.sharekhan.com; Investment in securities market are subject to market risks, read all the related documents carefully before investing.

Stock markets in India and

the world over are in a tizzy

as the Coronavirus outbreak

tightens its grip day by day.

Unfortunately, the outbreak

has come at a time when major

global economies have already

From the Editor’s Desk

PMS DESK

ProPrime - Prime Picks 44

ProPrime - Diversified Equity 45

MUTUAL FUND DESK 47

ValueGuideMarch 2020

Intelligent Investing

Stock IdeaStock Updates

ViewpointsSector Updates

Regular Features

Report CardEarnings Guide

Products & Services

PMSMF PicksAdvisory

Trader’s Edge

Technical ViewCurrencies

F&O Insights

For Private Circulation only www.sharekhan.com

Contagion CrisisContagion Crisis

06

EQUITY

FUNDAMENTALS

TECHNICALS DERIVATIVES

Nifty 40 View 41

ADVISORY DESK DERIVATIVES

MID Trades 46 Derivatives Ideas 46

CURRENCY

FUNDAMENTALS

USD-INR 42 GBP-INR 42

EUR-INR 42 JPY-INR 42

TECHNICALS

USD-INR 43 GBP-INR 43

EUR-INR 43 JPY-INR 43

Stock Idea 07 REGULAR FEATURES

Stock Update 09 Report Card 04

Sector Update 36 Earnings Guide 51

been slowing down due to US-China trade tariff war and

other geopolitical issues hurting business sentiments....

EQUITY FUNDAMENTALSREPORT CARD

4March 2020 Sharekhan ValueGuide

STOCK IDEAS STANDING (AS ON MARCH 04, 2020)

COMPANYCURRENT

RECOPRICE AS ON04-MAR-2020

PRICETARGET

52 WEEK ABSOLUTE PERFORMANCE RELATIVE TO SENSEX

HIGH LOW 1M 3M 6M 12M 1M 3M 6M 12M

Automobiles

Apollo Tyres Buy 140 200 236 125 -16.3 -20.5 -21.1 -35.8 -8.1 -14.6 -22.6 -38.1

Ashok Leyland Hold 72 90 98 57 -12.0 -6.9 11.4 -18.2 -3.4 0.1 9.4 -21.1

Bajaj Auto Buy 2712 3670 3315 2400 -9.3 -10.9 0.6 -0.3 -0.4 -4.2 -1.2 -3.8

Hero MotoCorp Hold 2046 2750 3023 1916 -13.1 -11.3 -21.2 -23.3 -4.5 -4.6 -22.6 -26.0

M&M Buy 475 665 704 441 -18.8 -7.7 -11.0 -27.5 -10.8 -0.7 -12.7 -30.1

Maruti Suzuki Hold 6384 7500 7759 5446 -8.2 -6.4 4.2 -7.4 0.8 0.6 2.3 -10.7

TVS Motor Hold 410 485 525 338 -12.2 -6.3 9.1 -15.0 -3.6 0.7 7.1 -18.0

BSE Auto Index 15644 20412 14662 -14.3 -10.5 -1.8 -18.5 -5.9 -3.7 -3.6 -21.4

Banks & Finance

Axis Bank Buy 682 882 828 615 -10.8 -8.4 -2.0 -8.6 -2.0 -1.5 -3.8 -11.9

Bajaj Finance Buy 4286 5000 4923 2745 -9.2 7.2 25.6 53.3 -0.3 15.2 23.3 47.8

Bajaj Finserv Buy 8800 11000 10297 6581 -10.5 -2.8 20.0 30.3 -1.7 4.5 17.8 25.6

Bank of Baroda Hold 73 105 144 69 -21.7 -26.1 -24.0 -36.0 -14.0 -20.5 -25.4 -38.3

Bank of India Hold 48 70 108 40 -30.0 -33.5 -28.6 -49.3 -23.1 -28.5 -29.9 -51.2

Federal Bank Buy 83 110 110 70 -13.5 -4.9 -3.7 -7.0 -5.0 2.3 -5.5 -10.3

HDFC Buy 2206 2800 2500 1884 -13.4 -6.9 3.3 12.9 -4.9 0.1 1.5 8.9

HDFC Bank Buy 1149 1510 1306 1059 -8.5 -8.9 1.1 8.8 0.5 -2.1 -0.8 4.9

ICICI Bank Buy 508 630 552 370 -10.2 -7.3 24.3 31.1 -1.4 -0.4 22.0 26.4

LIC Housing Finance Hold 321 460 587 282 -30.9 -29.1 -24.2 -37.3 -24.1 -23.7 -25.6 -39.6

Max Financial Buy 591 ** 612 370 8.4 0.7 28.3 27.6 19.0 8.3 26.0 23.0

Punjab National Bank Hold 44 65 100 39 -27.8 -29.7 -30.9 -48.6 -20.7 -24.4 -32.2 -50.5

SBI Buy 285 415 374 244 -16.0 -15.5 -1.3 -2.7 -7.7 -9.1 -3.0 -6.2

Union Bank of India Reduce 36 ** 100 34 -25.1 -33.2 -33.4 -53.7 -17.7 -28.2 -34.6 -55.4

BSE Bank Index 32939 37193 29858 -10.7 -10.5 4.4 3.6 -1.9 -3.8 2.5 -0.1

Consumer goods

Britannia Buy 3063 3670 3584 2300 -5.3 0.4 15.5 2.4 4.1 7.9 13.4 -1.3

Emami Hold 250 352 416 226 -20.7 -24.4 -17.9 -38.6 -12.9 -18.8 -19.4 -40.8

GSK Consumer Hold 9502 9950 9935 6856 3.4 8.7 21.3 36.5 13.5 16.8 19.1 31.6

Godrej Consumer Products Buy 632 865 772 556 -2.0 -3.6 7.2 -8.4 7.6 3.6 5.3 -11.7

Hindustan Unilever Buy 2176 2575 2308 1650 1.5 8.0 20.9 30.4 11.5 16.2 18.8 25.7

ITC Hold 188 242 310 175 -14.9 -25.3 -25.5 -35.2 -6.5 -19.7 -26.8 -37.5

Jyothy Laboratories Hold 123 175 200 119 -12.6 -23.5 -13.1 -32.6 -4.0 -17.8 -14.7 -35.0

Marico Buy 295 395 404 262 -7.6 -16.3 -24.8 -14.6 1.4 -10.0 -26.1 -17.7

Zydus Wellness Hold 1452 1575 1860 1212 -2.2 0.5 -14.3 14.3 7.4 8.1 -15.9 10.2

BSE FMCG Index 10920 12378 10388 -6.6 -6.5 -0.5 -4.9 2.5 0.5 -2.3 -8.3

IT / IT services

HCL Technologies# Buy 563 670 624 497 -5.6 1.4 3.4 9.5 3.7 9.0 1.6 5.6

Infosys Buy 759 820 847 615 -4.2 3.3 -11.0 3.6 5.2 11.1 -12.6 -0.2

Persistent Systems Buy 705 805 740 469 -1.0 2.5 24.2 6.2 8.7 10.2 21.9 2.4

Tata Consultancy Services Hold 2083 2300 2286 1887 -0.6 -0.1 -1.3 9.6 9.2 7.4 -3.1 5.7

Wipro Hold 229 285 302 213 -8.2 -6.9 -10.9 -19.1 0.8 0.1 -12.5 -22.0

BSE IT Index 15537 16587 14183 -3.8 1.6 -4.6 2.7 5.6 9.3 -6.3 -1.0

Capital goods / Power

CESC Buy 610 860 855 578 -15.5 -15.9 -22.3 -14.3 -7.2 -9.5 -23.7 -17.4

Finolex Cable Hold 324 410 508 300 -20.0 -10.6 -14.5 -25.6 -12.1 -3.9 -16.0 -28.3

Greaves Cotton Hold 130 155 157 112 -10.9 -3.6 -2.6 -4.3 -2.2 3.6 -4.4 -7.7

Kalpataru Power Transmission Buy 329 545 555 286 -27.1 -25.1 -26.7 -17.4 -20.0 -19.5 -28.0 -20.4

KEC International Buy 315 415 359 230 -6.0 20.3 33.3 18.8 3.2 29.4 30.9 14.5

Thermax Hold 900 1195 1181 833 -17.4 -11.5 -13.4 -11.9 -9.3 -4.9 -15.0 -15.1

EQUITY FUNDAMENTALS REPORT CARD


STOCK IDEAS STANDING (AS ON MARCH 04, 2020)

COMPANYCURRENT

RECOPRICE AS ON04-MAR-2020

PRICETARGET

52 WEEK ABSOLUTE PERFORMANCE RELATIVE TO SENSEX

HIGH LOW 1M 3M 6M 12M 1M 3M 6M 12M

Triveni Turbine Hold 94 112 123 81 -5.5 -6.3 -8.1 -19.9 3.8 0.7 -9.8 -22.8

V-Guard Industries Buy 203 270 260 192 -7.0 -11.9 -10.1 -8.5 2.1 -5.3 -11.7 -11.8

BSE Power Index 1768 2159 1618 -9.6 -7.3 -10.0 -7.2 -0.7 -0.3 -11.6 -10.6

BSE Capital Goods Index 15392 20387 14249 -11.8 -10.0 -10.3 -12.6 -3.1 -3.2 -11.9 -15.8

Infrastructure / Real estate

Larsen & Toubro Buy 1177 1614 1607 1068 -12.0 -10.2 -12.8 -10.9 -3.4 -3.5 -14.3 -14.1

Sadbhav Engineering Buy 65 120 274 52 -50.1 -51.7 -59.6 -74.4 -45.2 -48.1 -60.3 -75.3

CNX Infra Index 3025 3453 2755 -11.0 -8.8 -2.2 -0.3 -2.2 -1.9 -4.0 -3.9

BSE Real estate Index 2133 2565 1824 -17.5 -5.6 5.2 11.9 -9.3 1.5 3.3 7.8

Oil & gas

Oil India Ltd Buy 110 165 190 89 -19.1 -30.0 -28.1 -39.5 -11.1 -24.7 -29.4 -41.7

Petronet LNG Buy 245 345 296 215 -13.8 -12.3 -9.3 7.4 -5.3 -5.7 -10.9 3.6

Reliance Ind Buy 1340 1850 1618 1095 -12.8 -18.3 4.0 1.0 -4.3 -12.1 2.1 -2.6

BSE Oil and gas Index 12653 15930 11517 -14.4 -16.0 -7.9 -13.5 -6.0 -9.7 -9.6 -16.6

Pharmaceuticals

Aurobindo Pharma Hold 521 600 838 389 0.3 14.9 -17.1 -30.0 10.2 23.5 -18.6 -32.5

Cadila Healthcare Hold 256 300 353 206 -2.6 4.2 11.4 -18.2 7.0 12.1 9.4 -21.2

Cipla Buy 448 540 586 390 -1.2 -4.6 -8.5 -20.2 8.5 2.5 -10.2 -23.1

Divi's Labs Buy 2175 2430 2258 1466 11.6 26.5 37.8 33.7 22.5 36.0 35.3 28.9

IPCA Lab Buy 1429 1590 1541 844 16.9 32.9 55.0 66.6 28.3 42.8 52.2 60.6

Lupin Reduce 664 650 884 621 -8.1 -12.9 -14.2 -15.4 0.9 -6.4 -15.7 -18.4

Sun Pharmaceutical Industries Hold 405 470 484 345 -6.2 -5.8 -5.0 -11.7 3.0 1.3 -6.7 -14.9

Torrent Pharma Hold 2183 ** 2287 1452 9.7 18.6 26.3 22.3 20.5 27.5 24.0 17.9

BSE Health Care Index 14080 14664 11874 -0.4 4.9 8.2 -0.2 9.4 12.8 6.2 -3.8

Building materials

Grasim Hold 690 830 960 625 -17.0 -13.4 -5.5 -18.1 -8.8 -6.9 -7.2 -21.1

Shree Cement Buy 23256 26000 25313 17194 -7.2 14.3 29.9 33.1 1.9 22.9 27.6 28.3

The Ramco Cements Buy 750 875 884 684 -8.5 -7.1 3.2 0.9 0.5 -0.1 1.3 -2.7

UltraTech Cement Buy 4173 5200 4905 3791 -6.7 0.2 6.7 5.0 2.5 7.8 4.7 1.2

Discretionary consumption

Arvind* Buy 37 66 97 33 -14.2 -7.7 -30.2 -57.2 -5.8 -0.8 -31.5 -58.7

Century Plyboards (India) Hold 155 185 222 112 -10.2 -7.3 15.0 -17.1 -1.4 -0.3 12.9 -20.1

Info Edge (India) Hold 2654 2700 3130 1774 -13.7 8.5 29.2 53.3 -5.2 16.6 26.8 47.7

Inox Leisure Buy 381 575 512 249 -10.8 1.0 30.7 26.7 -2.0 8.6 28.3 22.2

Relaxo Footwear # Buy 692 845 830 367 -4.9 16.7 45.7 87.6 4.4 25.5 43.0 80.9

Titan Company Limited Buy 1251 1500 1390 998 -1.3 6.0 16.3 18.2 8.4 14.0 14.2 14.0

Wonderla Holidays Hold 202 270 323 195 -15.7 -16.6 -15.4 -26.7 -7.4 -10.3 -17.0 -29.3

Diversified / Miscellaneous

Bajaj Holdings Buy 3324 4654 3950 2850 -15.6 -6.4 -3.4 0.1 -7.3 0.7 -5.1 -3.5

Bharat Electronics Buy 75 130 122 68 -16.5 -29.2 -33.4 -18.5 -8.3 -23.9 -34.6 -21.4

Bharti Airtel Buy 517 610 569 283 -5.1 16.7 48.6 82.7 4.3 25.5 46.0 76.2

Gateway Distriparks Buy 125 150 154 81 -3.0 27.7 17.6 2.5 6.5 37.3 15.5 -1.2

PI Industries Buy 1576 1750 1629 982 2.0 5.6 30.7 63.9 12.1 13.5 28.3 58.0

Ratnamani Metals and Tubes Buy 1327 1450 1390 830 -0.4 29.0 41.4 47.1 9.4 38.7 38.9 41.8

Supreme Industries Limited Buy 1236 1500 1414 946 -9.0 11.1 13.4 15.3 -0.1 19.5 11.4 11.2

UPL Buy 512 647 709 491 -4.3 -8.6 -9.6 -11.5 5.1 -1.7 -11.2 -14.7

BSE500 Index 14676 16158 13502 -9.4 -6.2 1.9 -0.6 -0.5 0.8 0.1 -4.2

CNX500 Index 9258 10175 8521 -9.3 -6.1 2.0 -0.6 -0.4 1.0 0.1 -4.1

CNXMCAP Index 16746 18496 14976 -9.9 -1.7 5.5 -4.8 -1.0 5.7 3.6 -8.2

* Reco price adjusted for demerger ** Price under review # Reco price adjusted for bonus


Contagion crisis

Stock markets in India and the world over are in a tizzy as the Coronavirus outbreak tightens its

grip day by day. Unfortunately, the outbreak has come at a time when major global economies

have already been slowing down due to US-China trade tariff war and other geopolitical issues

hurting business sentiments. To top it all, the friction between oil producing giants Saudi Arabia

and Russia threaten to bring in additional disruptions in the global economy.

After a seeming recovery seen post the Union Budget 2020, the benchmark indices had a

free-fall, with the Sensex alone losing nearly 1,500 points on the last day of February alone. The

selling pressure has spilled over to March as well.

Indian markets aren’t falling alone. The global environment has turned quite volatile given the

rising risk of a global economic slowdown. The cumulative impact of the Coronavirus and the

subsequent disruption has wiping off almost $8-10 trillion in investor wealth within a period of

few weeks.

In India, the situation is additionally worrisome. The contagion of financial duress threatens to

spread across the Indian financial system. Post the IL&FS meltdown and PMC Bank fiasco, the

banking regulator has stepped in to save one of the large private sector banks from going bust.

However, there is always an opportunity in adversity. In the past, it has been seen that such global

outbreaks have been controlled in a few months and the correction was a great opportunity to

invest.

Particularly in the case of Coronavirus, the general sense from experts is that the spread will

get controlled with the onset of summer as the virus is quite sensitive to heat (does not survive

beyond temperature of 26-28%). Moreover, the death rate is very low in case of Coronavirus at

0.4-0.5% for people below age of 60 years. This is marginally higher than deaths from common

flu in Europe every year.

From an economic perspective, the outbreak of Coronavirus has brought down crude oil prices

by 30% in the last couple of months, which is a huge positive for Indian economy in terms of

fiscal deficit and inflationary pressures. Moreover, central banks across the major regions have

cut interest rates and looking at infusing more cash to support their economy.

From an investor’s perspective, it is important to note that it is not practically possible to catch the

bottom or time the market. Past experience shows that buying after an over 12-15% correction

does give handsome returns over the next 6 to 12 months. Thus, the idea should be to focus on

quality stocks that have corrected by over 15% in a short timeframe and offer a good entry price

point to investors.

Fro

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Ed

ito

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De

skFrom the Editor’s Desk

EQUITY FUNDAMENTALS STOCK IDEA


Date Company Report TypeRecommendation Reco Price

(Rs.)

Price Target/ Upside (%)

Latest Chg Latest Chg

Feb 06, 2020 Aditya Birla Fashion and Retail Limited New Idea POSITIVE - 254 22-25% -

Summary

• Aditya Birla Fashion and Retail Limited (ABFRL) is one of India’s largest fashion and retail companies with a footprint of 8.1 million

square feet.

• Change in positioning of Pantaloon as fast fashion brand helped company clock strong recovery in the performance, with

revenues growing by 14% over FY2016-19 and OPM improving to 7.2% in FY2019 from 4.8% in FY2016.

• Despite the ongoing slowdown in discretionary spends, ABFRL has posted consistent performance with revenues growing by

~12% and OPM improving by 65 bps in 9MFY2020.

• The stock is trading at a discounted valuation of ~42.8x, lower than its close peers. We re-initiate a viewpoint on the stock and

expect a 20-25% upside from current levels in the next 12 months.

Read report - https://www.sharekhan.com/MediaGalary/Equity/ABRL-Feb06_2020.pdf

Feb 14, 2020 Mayur Uniquoters New Idea POSITIVE - 227 28-30% -

Summary

• We initiate viewpoint coverage on Mayur Uniquoters Ltd (MUL) with a positive view and expect 28-30% upside from current

levels.

• India’s largest manufacturer of synthetic leather, Mayur Uniquoters Limited (MUL) is poised to enter into the high-growth

trajectory.

• Addition of new clients in auto segment and foray into PU (polyurethane) segment to be the key growth drivers. We expect a

robust 13% topline CAGR over FY2020-FY2022.

• MUL has strong return ratios (> 20%) with cash at 20% of marketcap. MUL would generate strong free cash flows of Rs 200 cr

over next three years and is available at attractive P/E of 11.4x FY2021 and 9.5x its FY2022 earnings.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Mayur_Uniquoters_NewIdea-Feb14_2020.pdf

Feb 18, 2020 Triveni Engineering Industries New Idea POSITIVE - 79 25-28% -

Summary

• The expected decline in domestic sugar production by ~20% in SY2019-SY2020 and lower production in key international

markets would keep domestic sugar prices in surge in FY2020-FY2021.

• Triveni Engineering Limited (TEL) is the largest integrated sugar manufacturing company in India. With a capacity of 61,000 TCD,

the company will be one of the key beneficiaries of lower sugar inventory and high sugar prices.

• Debt is expected to come down by Rs. 800 crore-850 crore over FY2019-FY2021 mainly on account of improving cash flows,

driven by lowering of sugar inventory and better profitability.

• We initiate viewpoint on TEL with a Positive view and potential upside of 25-28% from the current level.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Triveni_Engg_NewIdea-Feb19_2020.pdf

� Upgrade � No change � Downgrade

� Note: The arrow indicates change in call and price target, if any, vis-à-vis the previous report

EQUITY FUNDAMENTALSSTOCK IDEA


Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a position in the companies mentioned in the article.


(Rs.)



Feb 20, 2020 Asian Oilfield Services Limited New Idea POSITIVE - 137 28-30% -

Summary

• We initiate viewpoint coverage on Asian Oilfield Services Limited (AOSL) with a Positive view and expect 28-30% upside

potential.

• AOSL’s strong order book of ~Rs. 997 crore (domestic seismic survey at Rs. 580 crore, O&M at Rs. 210 crore and overseas

oil and gas facilities order at Rs. 207 crore) provides strong earnings growth visibility (expect 33% PAT CAGR over FY2020E-

FY2022E).

• The change of management control to new promoter (Oilmax Energy) in FY2017 has transformed AOSL with net cash of Rs52

crore as on December 2019 vs. net debt of Rs46 crore as on March 2017 and increase in net worth to Rs. 163 crore as on

December 2019 vs. only Rs. 10 crore as on March 2016.

• Open acreage licensing policy provides seismic opportunities worth Rs. 1,500 crore from the oil and gas space. Moreover,

privatisation of the coal sector would bring new opportunities worth Rs. 1,500 crore for seismic surveys.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Asian_Oilfield_NewIdea-Feb20_2020.pdf

Stock Update


EQUITY FUNDAMENTALS


(Rs.)



Feb 01, 2020 ITC Stock Update HOLD 219 242

Summary

• Tax rate on cigarette increased by 6-12% depending on the size of the cigarettes; Weight average tax rate increase for ITC

stands at 9%.

• Cigarette sales volume growth continued to remain muted at 2% in Q3FY2020; price increase of ~10% would put further stress

on cigarettes sales volume in the near term.

• We have reduced our earnings estimates to factor in lower-than-earlier expected cigarette sales volume for FY2021 and

FY2022.

• We have downgraded our rating on the stock to Hold with a revised price target of Rs. 242.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/ITC-Feb01_2020.pdf

Feb 03, 2020 Relaxo Footwears Stock Update BUY 721 845

Summary

• Revenue grew by ~9% y-o-y, led by premiumisation, a favourable product mix and good growth across the brand portfolio.

• Benign input costs and a better product mix drove up gross margins by 504 bps, while comparable OPM rose by ~180 bps to

15%, owing to operating efficiencies; effect of Ind AS 116 on PBT stood at Rs. 2.2 crore.

• Sustained volume growth, premiumisation, cost efficiencies and wider presence in untapped markets and a higher duty on

imported footwear will drive operating performance in the coming quarters.

• We broadly maintain our estimates for FY2020, FY2021 and FY2022 and maintain a Buy rating on the stock with a revised PT

of Rs. 845.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Relaxo-Feb03_2020.pdf

Feb 03, 2020 V-Guard Industries Stock Update BUY 218 270

Summary

• We retain Buy on V-Guard Industries Limited (V-Guard) with a revised PT of Rs. 270 lowering our valuation multiple due to near

term headwinds and rolling forward it to FY22E earnings.

• V-Guard reported lower than estimated net profit at Rs. 42.9 crore (up 27% y-o-y) on account of muted topline growth (up 5.4%

y-o-y) and lower than expected OPM (due to lower absorption of fixed costs led by muted revenue growth).

• The focus areas of the company will be increasing its non-South presence, expansion into adjacencies and improving efficiencies

which should revive its revenue growth to double digit over the medium term.

• Uncertainties with respect to Coronavirus in Kerala and China (being key supplier for electrical components) can affect near

term earnings.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/V-Guard-Feb03_2020.pdf



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Feb 03, 2020 Triveni Turbine Stock Update HOLD 99 112

Summary

• We retain our Hold rating on Triveni Turbine Limited (TTL) with a revised PT of Rs. 112 due to near-term uncertainties in terms of

execution, order inflow and rolling forward our valuation multiple to FY2022E earnings.

• In Q3FY2020, revenue was lower than estimates on sluggish performance in domestic markets, although the company reported

better performance in exports. Net earnings were boosted by better operational performance.

• We expect the company to report a revenue and earnings CAGR of 11% and 16%, during FY2019-FY2022E, respectively.

• Order booking grew by 11% y-o-y for Q3FY2020, although order backlog stands lower by ~8% y-o-y.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Tiveni_Turbine-Feb03_2020.pdf

Feb 03, 2020 HDFC Life Insurance Company Viewpoint POSITIVE 566 12-15%

Summary

• HDFC Life is expected to only be impacted marginally by the new norms introduced in the Union Budget.

• The company has relatively lower dependence on investment linked products (~28% of APE), and hence we don’t expect it to

be impacted significantly.

• We have introduced FY22E EV estimates and have adjusted the valuation multiples for the stock under the changed scenario.

• We maintain our Positive view and expect a 12-15% upside from current levels.

Read report - https://www.sharekhan.com/MediaGalary/Equity/HDFC_Life-Feb03_2020.pdf

Feb 03, 2020 Power Grid Corporation of India Viewpoint POSITIVE 188 20-22%

Summary

• We maintain our Positive view on Power Grid Corporation of India Ltd. and expect 20-22% upside as strong order pipeline

provides visibility for sustained earnings growth over the next couple of years. Valuation attractive at 1.3x its FY22E P/BV.

• Strong PAT growth of 15% y-o-y to Rs. 2,654 crore, slightly above our estimates. Asset capitalisation increased to Rs. 5,230 crore

versus Rs. 4,221 crore in Q2FY2020.

• Management reiterated asset capitalisation guidance of Rs. 20,000 crore – Rs. 25,000 crore for FY2020E and target for

FY2021E is at Rs. 15,000 crore. Capex guidance of Rs. 10,500 crore for FY2021E vs. Rs15,000 crore in FY2020E.

• Removal of DDT and decline in capex could result into higher dividend payout.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Power_Grid-Feb03_2020.pdf

Feb 03, 2020 ICICI Prudential Life Insurance Company Ltd Viewpoint POSITIVE 446 12-15%

Summary

• ICICI Prudential Life (IPRU), which has ~70% exposure to investment-linked products such as ULIP, is expected to be impacted

by the new norms.

• IPRU is available at 2.4x its FY2022E EV, which we believe is reasonable given the quality of the franchise and business metrics.

• We believe while the structural story for the insurance sector is intact, near-term stock performance may remain volatile until

clarity emerges.

• We maintain our Positive view on the stock with a revised upside potential of 12-15%.

Read report - https://www.sharekhan.com/MediaGalary/Equity/ICICI_Prud_Life-Feb03_2020.pdf

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Feb 03, 2020 Indian Hotels Company Viewpoint POSITIVE 141 22-25%

Summary

• Consolidated revenue grew by 3.7% y-o-y to Rs. 1,372.7 crore, while standalone revenue rose by 6.5% (driven by 5.6% growth

in the RevPAR).

• Consolidated OPM on a comparable basis improved by 339 bps to 29.6%, led by better performance of the India business and

operating efficiencies.

• Domestic demand-supply gap widened, with room demand growing by 4.7%, while supply increased by just 2.7%; domestic

RevPAR improved to 5.5%.

• Management expects RevPAR to cross 7% in FY2021, which augurs well for hotel industry; we stay Positive on the stock and

expect a 22-25% upside from current levels.

Read report - https://www.sharekhan.com/MediaGalary/Equity/IHCL-Feb03_2020.pdf

Feb 03, 2020 Vinati Organics Ltd Viewpoint NEUTRAL 1,953 6-8%

Summary

• We downgrade Vinati Organics (Vinati) to Neutral and revise the potential upside to 6-8% as demand environment looks

challenging for its key products ATBS and IBB in the near term.

• However, we like the company’s business model from a long-term perspective as it operates in niche segments and has an

exceptional product basket that have a significant market share globally.

• Owing to soft performance and weak demand environment, we cut our earnings estimates for FY2020E/FY2021E/FY2022E by

11%/14%/19%; hence expect revenue and earnings CAGRs of 12.2% and 15.4%, respectively, over FY2019-FY2022E.

• The company delivered soft performance during Q3FY2020 with Revenue, EBITDA and PAT registering a decline of 21%, 22%

and 6% respectively.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Vinati-Feb03_2020.pdf

Feb 04, 2020 Titan Company Stock Update BUY 1,276 1,500

Summary

• Consolidated revenue grew by 11.2% y-o-y driven by a 10.6% growth in the standalone jewellery business and strong growth of

34% and 69% clocked by subsidiaries TEAL and Caratlane, respectively.

• Despite higher gold prices, the company maintained its margins of jewellery business at 13%; overall reported OPM improved

by 74 bps to 12% (comparable OPM stood flat 11.2%).

• The management has guided for an 11-13% growth in the jewellery business in Q4FY2020.

• We have fine-tuned our earnings estimates for FY2021 and FY2022 and maintain our Buy recommendation with a revised PT

of Rs. 1,500.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Titan-Feb04_2020.pdf

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Feb 04, 2020 TVS Motor Stock Update HOLD 455 485

Summary

• We upgrade our recommendation on TVS Motors Ltd (TVSM) to “Hold” from “Reduce” earlier. Our PT stands at Rs 485.

• Q3FY20 results were ahead of our as well as street expectations as the company managed to improve margins despite double

digit fall in topline.

• 2W industry is expected to recover from H2FY21; margin improvement is expected to sustain due to increased localization and

cost control measures.

• We expect TVSM earnings to grow in double digits from FY21 as against flattish earnings expected over FY2018-2020 period.

• We have broadly retained estimates for FY21 and introduced FY22 earnings. Stock currently trades at 20.7x FY22 earnings

which is close to its long term historical average.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/TVS_Motor-Feb04_2020.pdf

Feb 04, 2020 Century Plyboards (India) Stock Update HOLD 169 185

Summary

• We downgrade Century Plyboards (Century) to Hold with a revised PT of Rs. 185, lowering the valuation multiple, led by a lower-

than-expected earnings growth trajectory in the next two years and rolling forward it to FY2022E earnings.

• In Q3FY2020, Century reported muted revenue growth while adjusted OPM surprised positively. Adjusting for a Rs. 45.6 crore

impairment loss, the net profit rose by 68.5% y-o-y.

• The management expects muted revenue growth of 5-6% for FY2020, while OPM are expected to tread higher. GST-related

benefits are expected to accrue at much slower pace.

• MDF/Particle board greenfield capacity expansion to be undertaken post lifting of stay by the UP state government on issued

licenses. The hearing of the case on 13th February, 2020.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/CenturyPly-Feb04_2020.pdf

Feb 04, 2020 Tata Global Beverages Viewpoint POSITIVE 380 22-24%

Summary

• Tata Global Beverages (TGBL) registered mixed numbers in Q3FY2020. Revenues rose by ~3%, driven by a 7% growth in the

India business.

• Benign input prices (Tea and Coffee) led to an almost 200 bps improvement in operating margins to 12.2%.

• The company received NCLT approval for merger of Tata Chemicals’ consumer business with TGBL, which would result in

portfolio expansion and margin accretion over the next two years.

• We have broadly maintained our earnings estimates for FY2021 and FY2022; and retain our Positive view on the stock with a

22-24% upside.

Read report - https://www.sharekhan.com/MediaGalary/Equity/TGBL-Feb04_2020.pdf

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Feb 04, 2020 SRF Limited Viewpoint POSITIVE 3,745 13-15%

Summary

• We maintain our Positive stance of SRF with potential upside of 13-15%.

• Considering 9MFY2020 performance, we have fine tuned our numbers for FY2020E, FY2021E and FY2022E to factor in strong

growth momentum in the chemicals business, improved profitability in the packaging film business and weak performance in

the technical textiles business.

• Considering strong buoyancy in the chemical business, the company has further announced capex of Rs. 304 crore to produce

intermediates for agro chemcials and to debottleneck the HFC capacity.

• Strong Q3 performance led by the chemical segment, wherein revenue grew by 39% and EBIT margin improved by 455 BPS

y-o-y to 17.6%. Overall revenue grew by 2.3% y-o-y, EBITDA margin improved by 384 BPS y-o-y to 21.1%, while tax credit of Rs.

123 crore doubled RPAT to Rs. 343 crore.

Read report - https://www.sharekhan.com/MediaGalary/Equity/SRF-Feb04_2020.pdf

Feb 04, 2020 Affle India Limited Viewpoint POSITIVE 1,798 10-12%

Summary

• We stay Positive on Affle India (Affle) and expect a 10-12% upside in the next 10-12 months.

• Revenue beat in a tough macro environment; margins contract due to higher inventory and data costs and employee expenses.

• Revenue growth momentum in Q4FY2020 on y-o-y basis is expected accelerate on the back of advertisers’ spending spill-over

and lower base effect.

• Management remains confident that the company would deliver at least 25% CAGR of revenue growth till 2025, led by its CPCU

model and expanding scope of products for both consumer and advertisers.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Affle-Feb04_2020.pdf

Feb 05, 2020 Bharti Airtel Stock Update BUY 534 610

Summary

• We maintain our Buy rating on Bharti Airtel with a revised price target (PT) of Rs. 610.

• Steady EBITDA performance, scope for growth in 4G subscribers and improving free cash flows make us optimistic on the stock.

• Revenue beat estimates, led by tariff hikes in Q3; EBITDA margin remained in line with our estimates.

• Given higher consumption of data and recent developments in Indian wireless industry, we believe that the company would

hike tariffs again in 12-18 months.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Bharti_Airtel-Feb05_2020.pdf

Feb 05, 2020 Cipla Stock Update BUY 447 540

Summary

• We maintain our Buy recommendation on the stock with an unchanged PT of Rs. 540.

• Cipla reported muted results for Q3FY2020. PAT missed estimates.

• India business is on strong footing with the management looking to merge all the three segments in the India business under

one, leading to generation of significant synergies.

• Strong new launch line up is expected to drive the US business.

• We expect Cipla’s topline and PAT to clock a CAGR of 13% and 23%, respectively, over the next two years.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Cipla-Feb05_2020.pdf

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Feb 05, 2020 Cadila Healthcare Stock Update HOLD 272 300

Summary

• We retain our Hold Recommendation on Cadila Healthcare Limited (Cadila) with a revised PT of Rs 300.

• Cadila reported weak results for Q3FY2020.

• We expect regulatory issues at the Moraiya plant to overweigh on the stock until completely resolved. The management has

stopped production at Moraiya Plant and is in midst of a site transfer to Liva.

• We expect the Sales and PAT to grow at a CAGR of 9.5% and 10% respectively over the next two years.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Cadila-Feb05_2020.pdf

Feb 05, 2020 Thermax Stock Update HOLD 1,074 1,195

Summary

• We retain our Hold rating on Thermax with an unchanged PT of Rs. 1,195 on account of a cautious outlook in order tendering.

• In Q3FY20, Thermax achieved steady execution and operating margins improved. A lower effective tax rate pulls up net profit.

• Weak order inflow barring one large FGD order for Q3FY2020 and modest execution during the same period depleted the exit

order backlog to 0.8x TTM consolidated revenues.

• Management expects better ordering both in its energy and environment segments as the enquiries pipeline remains positive

in domestic as well as international markets.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Thermax-Feb05_2020.pdf

Feb 05, 2020 Apollo Tyres Stock Update BUY 168 200

Summary

• We upgrade our recommendation on Apollo Tyres Ltd (ATL) to “Buy” from “Hold. Our PT stands at Rs 200.

• Domestic market is expected to recover from FY21 driven by improved economy and increased infrastructure investment by

Government.

• Margins are expected to improve driven by soft commodity prices and ramp up at Hungary plant.

• We expect ATL to report strong 28% earnings CAGR over the next two years as against earnings drop expected in FY20.

• We introduce FY22 estimates and rollover our target multiple of 12x on FY22 earnings.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Apollo_Tyres-Feb05_2020.pdf

Feb 05, 2020 Max Financial Services Stock Update BUY 484 590

Summary

• Max Financial Services (MFS) posted modest numbers for Q3FY2020, with steady business growth but moderating margin. The

life insurance business, MLIC saw GWP increasing by 10.1% y-o-y.

• Valuation for MFS appears attractive and is at a significant discount compared to some of the listed bank-owned insurance

players.

• We find that there are significant long-term positives in the strong operational numbers for the company.

• We maintain our Buy rating with an unchanged PT of Rs. 590.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Max-Feb05_2020.pdf

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Feb 05, 2020 Jyothy Laboratories Stock Update HOLD 145 175

Summary

• Jyothy Laboratories (JLL) registered yet another quarter of subdued numbers in Q3FY2020 with revenues declining by ~6%

(while volumes fell by 5.6%) and OPM declining by 30 bps y-o-y.

• Revenues fell by around 4% mainly because of a one-off moderation in institutional sales.

• The management expects revenue growth to get back to 4-5% in Q4FY2020 with OPM remaining stable on y-o-y basis.

• We have reduced our earnings estimates for FY2020 and FY2021 to factor in lower than expected performance; we maintain

Hold with a revised PT of Rs. 175.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Jyothi_Lab-Feb05_2020.pdf

Feb 05, 2020 Zydus Wellness Stock Update HOLD 1,435 1,575

Summary

• After consolidation of Heinz portfolio, revenue growth was muted at 4-5% on like-to-like basis, affected by sustained demand

slowdown and seasonality in the portfolio.

• Profitability was affected due to change in revenue mix (lesser contribution from high-margin products) and higher input prices

(including milk and palm oil prices).

• Sales and distribution integration with Heinz has been over and the benefits of integration will start flowing from FY2021.

• We have reduced our earnings estimates for FY2020 and FY2021 to factor in lower-than-earlier expected margins and maintain

our Hold rating with a revised PT of Rs. 1,575.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Zydus-Feb05_2020.pdf

Feb 05, 2020 Exide Industries Viewpoint POSITIVE 186 20-22%

Summary

• Exide Industries Ltd (Exide) Q3 results were in line on the operating front. Higher other income led to Profit beat.

• We expect Exide to report healthy 7% topline growth over the next two years driven by recovery in Auto OEM and improved

traction in industrial segment.

• New focus areas such as e-rickshaws and solar power would aid in topline growth.

• We retain positive view and expect 20-22% upside. Valuations at 12.5x FY22 earnings are attractive and lower than long term

historical average of 17x.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Exide-Feb05_2020.pdf

Feb 05, 2020 Gujarat Gas Limited Viewpoint POSITIVE 296 13-15%

Summary

• Q3FY20 operating profit/PAT at Rs. 371 crore/Rs197 crore, rose by 15%/31% y-o-y and were above our estimates due to a better-

than-expected EBITDA margin, higher other income and lower interest cost.

• Q3FY20 exit gas sales volume run-rate at 10 mmscmd; Management guided for 8% annual volume growth outlook for next

couple of years.

• Development of six new geographical areas and environmental push to curb pollution would lead to next leg of volume growth.

• We stay Positive on Gujarat Gas and expect a 13-15% upside given strong volume led earning growth visibility.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Gujarat_Gas-Feb05_2020.pdf

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Feb 05, 2020 Mahindra Logistics Limited Viewpoint NEUTRAL 400 3-5%

Summary

• We retain a Neutral view on Mahindra Logistics Limited (MLL) on account of a material cut in net earnings for FY2020-FY2021

and a challenging business outlook for the medium term.

• Q3 net earnings continued to be affected by a slowdown in the auto sector, dragging down revenue, while increased overheads

eroded adjusted OPM, dragging net profit by 19% y-o-y.

• MLL added 1.2msf of warehousing capacity during 9MFY2020 taking the total warehouse space to 16.5 msf.

• Focus areas to be higher non-auto revenue, speeding up freight forwarding business, enhancing value added services, being

asset-light, increasing leased warehousing space and investment in technology.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Mahindra_Logistic-Feb05_2020.pdf

Feb 06, 2020 Hero MotoCorp Stock Update HOLD 2,412 2,750

Summary

• Q3FY2020 results were better than our as well as street estimates as operating margins surprised positively. Cost control

measures, soft commodity prices and better mix helpled in margin expansion.

• Hero expects industry demand to remain weak in the next 2-3 quarters due to steep cost increases (12-15%) on account of

transition to BS6 emission norms.

• Hero expects sustained recovery to take time and expects recovery from H2FY21 driven by improved economic growth and

higher rabi sowing.

• We retain Hold rating on the stock with a revised PT of Rs. 2,750. PE of 13.4x FY22 earnings is close to historical average of

15-16x.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/HeroMoto_Corp-Feb06_2020.pdf

Feb 06, 2020 Divi’s Laboratories Stock Update BUY 2,023 2,200

Summary

• We maintain our Buy rating on Divis Laboratories (Divis) with a revised PT of Rs. 2,200.

• Divis Q3FY2020 numbers were soft, but management maintained revenue growth guidance of 10% for FY2020, pointing to a

sturdy topline growth in Q4FY2020.

• Long-term growth to remain healthy, led by backward integration, aggressive capacity expansion, outsourcing potentials and

opportunities in China.

• We expect the company to report a sales and profit CAGR of 20% and 22%, respectively in the next two years.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/DiviLab-Feb06_2020.pdf

Feb 06, 2020 Federal Bank Stock Update BUY 93 110

Summary

• We maintain Buy rating on Federal Bank with a revised target price of Rs 110..

• The stock trades at inexpensive valuations and offers scope of re-rating as the earnings cycle recovers.

• The bank posted strong results for Q3 FY20 with a sharp decline in net stressed loans to ~2.3% of loans (down by 14 BPS q-o-q)

in Q3 FY20, helped by the resolution of a large restructured account in the airline sector.

• We believe incremental loans to better-rated borrowers, no addition to the stressed pool, and high provision coverage are

positives, but asset-quality performance and margins will continue to be key monitorables.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/FederalBank-Feb06_2020.pdf

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Feb 06, 2020 Ratnamani Metals & Tubes Stock Update BUY 1,276 1,450

Summary

• We maintain our Buy rating on Ratnamani Metals & Tubes Limited (RMTL) with a revised PT of Rs. 1,450.

• We remain Positive on RMTL due to its strong balance sheet and its ability to generate superior return ratios despite capacity

expansion programmes.

• The management provides an encouraging outlook which will help in healthy order intake in coming quarters. Margin guidance

to remain in the range of 16-17%.

• RMTL reported a mixed quarter with beat on revenue, while margin was below expectation owing to a higher share of low

margin line pipes.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Ratnamani-Feb06_2020.pdf

Feb 06, 2020 Greaves Cotton Stock Update HOLD 140 155

Summary

• Greaves results were ahead of estimates as margins surprised positively. Margins improved on yoy basis despite fall in the

topline.

• Going ahead, we expect volume pressure to sustain as diesel 3W engines are expected to fall in FY21 due to steep cost

increases post BS6 emission norm.

• Drop in diesel 3W volumes would offset the strong growth in electric scooters and aftermarkets and we expect GCL volumes

to be flattish for FY2021.

• We retain Hold rating on the stock with revised PT of Rs 155 as we rollover to FY22 estimates. At CMP, stock is trading at P/E of

16.6x FY22 earnings which is close to long term historical average.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Greaves_Cotton-Feb06_2020.pdf

Feb 06, 2020 Hindustan Petroleum Corporation Limited Viewpoint POSITIVE 243 12-15%

Summary

• Q3FY20 PAT, at Rs. 747 crore (up 2.4x y-o-y, down 28.8% q-o-q) lagged our estimates due to a miss in refining margins and

lower refining throughput. Core GRM was weak at $1.5/bbl (down 43% q-o-q).

• Recent decline in crude oil prices are expected to lower fuel under-recoveries and thus reduce working capital burden for

OMCs.

• HPCL’s FY21E EV/EBITDA of 6.1x is at a steep discount of 34% versus that of BPCL. Tactical opportunity arising out of the

government’s divestment plan could deliver healthy returns in the next 8-12 months given a potential re-rating.

• Hence, we maintain our Positive view on HPCL and expect a 12-15% upside from current levels.

Read report - https://www.sharekhan.com/MediaGalary/Equity/HPCL-Feb06_2020.pdf

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Feb 06, 2020 Indraprastha Gas Limited Viewpoint POSITIVE 522 10-12%

Summary

• We maintain our Positive view on Indraprastha Gas Limited (IGL) and expect 10-12% upside as lower domestic gas prices and

regulatory push are expected to drive margin expansion and volume growth.

• Q3FY2020 PAT at Rs. 284 crore (up 43.4% y-o-y) was ahead of our estimate due to beat in gas sales volume at 6.7 mmscmd (up

13.4% y-o-y), EBITDA margin at Rs. 6.4/scm (up 8.1% y-o-y) and higher-than-expected other income.

• CNG and PNG volume was up by 11.6% and 18.4% y-o-y respectively in Q3FY2020.

• IGL’s premium valuation of 26.8x its FY2022E EPS as compared to its peers to sustain supported by superior volume growth

visibility.

Read report - https://www.sharekhan.com/MediaGalary/Equity/IGL-Feb06_2020.pdf

Feb 06, 2020 PNC Infratech Limited Viewpoint POSITIVE 195 18-20%

Summary

• We retain our Positive view on PNC Infratech (PNC) with 18-20% upside potential on account of strong net earnings growth

visibility of a 35% CAGR over FY2019-FY2021E, led by a 38% CAGR in execution.

• In Q3FY2020, PNC maintained strong execution with 67.5% y-o-y standalone net revenue growth, stable OPM and net earnings

growth of 63% y-o-y.

• PNC maintained 60% y-o-y revenue growth guidance for FY2020 and expects 18-20% revenue growth for FY2021. Order inflow

guidance stays at Rs. 6,000 crore-7,000 crore despite Rs. 1,000 crore plus order inflows for fiscal year till date.

• We expect PNC to be one of the beneficiaries from the government’s Rs. 103 lakh crore infrastructure investment planned till

2025.

Read report - https://www.sharekhan.com/MediaGalary/Equity/PNC_Infra-Feb06_2020.pdf

Feb 06, 2020 Sudarshan Chemicals Industries Viewpoint POSITIVE 480 10-12%

Summary

• We reiterate our Positive view on Sudarshan Chemical Industries Limited (SCIL) with a potential upside of 12-15%.

• The company is likely to deliver healthy revenue and earnings CAGR of 14.1% and 28.8%, respectively, over FY2019-FY2022E.

• Growth momentum to continue as capex plans are on track and likely to contribute significantly in FY2021E.

• The company delivered healthy performance in Q3FY2020, ahead of expectation. Revenue/adjusted EBITDA and adjusted PAT

increased by 8%/67% and 86% y-o-y, respectively.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Sudarshan-Feb06_2020.pdf

Feb 07, 2020 UPL Stock Update BUY 543 647

Summary

• We have upgraded our rating on UPL Limited (UPL) to BUY with a revised price target of Rs 647/share as the risk-reward matrix

turns favourable.

• We have fine tuned our numbers for FY2020E and FY2021E and introduced FY2022E estimates and believe that the company

will be able to deliver revenue and earnings CAGR of 10.0% and 29.5% over FY2020-22E.

• The management maintains its guidance of revenue growth of 8-10% & EBITDA growth of 16-20% for FY2020E and expects to

pare down debt by US$ 500 million by the end of Q4FY2020E.

• As the new season kicks off, the management expects the inventory levels to normalise by the end of Q4FY2020E resulting in

improved operating cash flow position leading to debt reduction.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/UPL-Feb07_2020.pdf

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Feb 07, 2020 GlaxoSmithKline Consumer Healthcare Stock Update HOLD 9,238 9,950

Summary

• Revenue grew by 4% y-o-y, driven by a 6% growth in the Health food drinks category; domestic sales volumes grew by 3%..

• Higher milk prices led to 126 bps decline in gross margins; lower employee cost and efficiencies drove up OPM by 212 bps.

• The Chandigarh Bench of the NCLT at its hearing held on February 03, 2020 has reserved its order on the scheme of GSK

Consumer’s merger with Hindustan Unilever (HUL) and the Company is now awaiting the formal order.

• We have broadly maintained earnings estimates for FY2020/21; retain Hold with a revised PT of Rs. 9,950.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/GSK_Consumer-Feb07_2020.pdf

Feb 07, 2020 Aurobindo Pharma Stock Update HOLD 547 600

Summary

• We maintain our Hold recommendation on Aurobindo Pharma Limited (Aurobindo) with a revised PT of Rs. 600.

• Q3FY2020 results were broadly in line with estimates..

• Aurobindo is witnessing elevated scrutiny from the USFDA. More than half of the filling done are from impacted plants and

approvals are likely to be delayed. Regulatory hurdles would overweigh on the stock performance, until successfully resolved.

• We expect the company to report sales and profit CAGRs of 19% and 10%, respectively, in the next two years.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Aurobindo-Feb07_2020.pdf

Feb 07, 2020 Punjab National Bank Stock Update HOLD 59 65

Summary

• Punjab National Bank (PNB) posted weak Q3FY2020 performance, with muted business growth and weak asset quality.

• PNB currently trades at <0.5x its FY2022E book value, which reflects concerns on its asset-quality outlook and sluggish loan

growth prospects.

• We have introduced FY2022E estimates in this report.

• We maintain our rating to Hold with a revised PT of Rs. 65.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/PNB-Feb07_2020.pdf

Feb 07, 2020 KEC International Stock Update BUY 347 415

Summary

• We maintain a Buy rating on KEC International Limited (KEC) with a revised price target of Rs. 415 revising our valuation multiple

given a healthy order backlog along with order inflow visibility in international T&D non T&D business and KEC’s ability to ramp-

up execution.

• KEC clocked healthy revenue growth driven by strong execution in T&D (SAE) with stable OPM. Stable operational performance

along with lower tax outgo resulted in strong net earnings growth.

• The management reiterated its guidance for 15% revenue growth with stable OPM for FY20 as it is expected to deliver strong

growth on increased scalability in non-T&D business and stable execution in the T&D business.

• Order book remains healthy providing 1.8x TTM revenues and order inflows for FY20 expected to remain at similar levels as

of FY2019.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/KEC-Feb07_2020.pdf

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Feb 07, 2020 PTC India Stock Update BOOK OUT - 56 - -

Summary

• We drop our coverage on PTC India and recommend Book out as the continued weak performance of financial services arm is

a cause of concern for stock and it also lack positive triggers in the near to medium term.

• Plans to divest stakes in non-core subsidiaries (PTC India Financial Services and PTC Energy) is progressing at slow place and

would take time to materialise given the stress in the NBFC sector (high NPAs and provisions).

• Q3FY20 operating profit (excluding surcharge income) declined 15.6% y-o-y to Rs48 crore due to 11% y-o-y decline in gross

margin (excluding surcharge income) at 3.7 paisa per unit; growth in power trading volume was weak at 1.8% y-o-y.

• Short-term contracted volume fell by 24% y-o-y to 5,228 million units while medium and long-term contracts were up by 31%

y-o-y to 7,924 million units (accounting for 60% of total volumes in Q3FY2020).

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/PTC_India-Feb07_2020.pdf

Feb 07, 2020 NTPC Limited Viewpoint POSITIVE 116 18-20%

Summary

• We maintain our Positive view on NTPC and expect an 18-20% upside given strong earnings growth outlook, attractive valuation

of 0.9x FY21E P/BV and healthy dividend yield of 5-6%.

• The strong commercialization schedule (6GW in FY20E and 5.3GW in FY21E at group level) would drive growth in regulated

equity. This coupled with lower fixed cost under-recoveries to drive earnings 13% PAT CAGR over FY2019-FY2022E.

• NTPC’s Q3FY2020 PAT was by up 25.6% y-o-y (down 8.2% q-o-q) to Rs. 2995, crore, which was marginally ahead of our

estimates. The growth in PAT was driven by lower fixed cost under-recoveries.

• PAF for coal-based power plants improved to 88% in Q3FY2020 versus 85% in Q3FY2019 and 84% in Q2FY2020.

Read report - https://www.sharekhan.com/MediaGalary/Equity/NTPC-Feb07_2020.pdf

Feb 07, 2020 Bata India Viewpoint POSITIVE 1,833 18-20%

Summary

• Bata India’s (Bata) Q3FY2020 revenue grew by 6.5% y-o-y, driven by 4.5% growth in the retail channel and over 20% growth in

the wholesale channel (SSSG stood at ~2%), driven by premiumisation and innovation.

• Operating performance was steady with GPM and comparable OPM expansion of 208 BPS and 30 BPS, respectively; one-time

deferred tax adjustment impacted profitability.

• Store additions, focus on women’s footwear segment and improving contribution from premium end-products will drive

operating performance in the near to medium.

• We have broadly maintained our estimates for FY2021 and FY2022; We retain our Positive view with 18-20% upside from

current levels.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Bata-Feb07_2020.pdf

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Feb 07, 2020 Varun Beverages Viewpoint POSITIVE 843 13-15%

Summary

• Varun Beverages Limited (VBL) ended CY2019 on strong footing with revenues growing by 42%, while PAT rose by 61%; largely

driven by strong volume growth of 45% (organic volume growth of 13%).

• Despite integration of some of the acquired territories in south and west, the OPM improved by 30 bps to 20% in CY2019 and

expected to gradually improve in the coming years.

• We expect organic volume growth of 13-15% to sustain along with strong double-digit growth in the international business.

• We maintain our Positive view on the stock with 13-15% upside from current levels.

Read report - https://www.sharekhan.com/MediaGalary/Equity/VBL-Feb07_2020.pdf

Feb 07, 2020 Trent Limited Viewpoint POSITIVE 663 16-18%

Summary

• Trent delivered strong performance in Q3FY2020 with revenue growth of ~33% driven by consistent SSSG of ~10%.

• Gross margins declined by 240 BPS due to higher discounts and change in revenue mix; reported OPM improved significantly

to 20% due to Ind AS 116.

• We expect the SSSG momentum to sustain in low double digits aided by improving store fundamentals, higher contribution

from private brands and higher investment on brands.

• We have increased our earnings estimates for FY2020, FY2021 and FY2022; we maintain our positive view on the stock with

16-18% upside from current levels.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Trent-Feb07_2020.pdf

Feb 10, 2020 Sun Pharmaceutical Industries Stock Update HOLD 420 470

Summary

• We retain hold recommendation on Sun Pharmaceuticals limited (Sun Pharma) with a revised PT of Rs 470.

• Q3FY2020 results are in line with estimates operationally; however lower other Incomes, high depreciation & tax led to a PAT

miss.

• Going ahead lack of new product launches in the specialty segment, continued higher specialty promotional spends and price

erosion in US base business are likely to weigh on the performance.

• We expect headwinds and overhang to stay and hence despite reasonable valuations we don’t have a constructive view on

Sun Pharma.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Sun_Pharma-Feb10_2020.pdf

Feb 10, 2020 Britannia Industries Stock Update BUY 3,155 3,670

Summary

• Britannia Industries’ (Britannia’s) net revenue grew by ~4% driven by a 2% volume growth and a 2% rise in realisations.

• Despite 3-4% inflation in raw material costs, the company saw gross margins dip by just 44 bps. OPM improved by 94 bps, led

by operating efficiencies and cost-saving initiatives.

• New products/ categories continue to perform well and contributed close to a 2% revenue growth.

• The stock is currently trading at 45.6x and 38.7x its FY2021E and FY2022E earnings; we maintain Buy with a revised PT of Rs.

3,670.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Britannia-Feb10_2020.pdf

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Feb 10, 2020 Grasim Industries Stock Update HOLD 759 830

Summary

• We retain Hold on Grasim Industries Limited (Grasim) with revised PT of Rs. 830 lowering our standalone estimates led by weak

outlook in its key verticals over near to medium term.

• In Q3FY2020, Grasim’s standalone adjusted net profit was affected by weak realizations in both its VSF and chemical divisions

affected by capacity overhang and muted demand environment.

• Grasim’s capacity expansion plan stay on track to benefit over a longer term as the demand environment revives in its standalone

businesses.

• The near-term outlook for viscose and chemical remains challenging due to capacity overhang, soft demand and continuing

U.S.-China trade war.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Grasim-Feb10_2020.pdf

Feb 10, 2020 Emami Stock Update HOLD 293 352

Summary

• Consolidated revenue stood flat at Rs. 813 crore, winter products portfolio affected by delayed season; non-winter product

sales volumes grew by 10%.

• Gross margins improved by 124 bps due to benign raw material costs; OPM stood flat at 32.5% due to higher advertising spends.

• Promoter’s pledged share will reduce to 20% of promoter’s holding from current ~72% post the cement business sale.

• Normal summer to help growth recover in Q4; maintain Hold with unchanged PT of Rs. 352.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Emami-Feb10_2020.pdf

Feb 10, 2020 Union Bank of India Stock Update REDUCE 51 45

Summary

• Q3FY20 numbers were modest as slippages remained elevated, proving to be a dampener on the asset quality side.

• NII grew by 25.7% y-o-y mainly as the bank was expected to emerge from low base last year.

• Despite the large capital infusion by the governmentlast quarter, we believe that the asset quality is still volatile and the

impending merger will be an additional overhang on the stock’s performance.

• We maintain our Reduce rating on the stock with a revised price target (PT) of Rs. 45.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/UBI-Feb10_2020.pdf

Feb 10, 2020 GAIL (India) Limited Viewpoint POSITIVE 122 25-27%

Summary

• GAIL’s Q3FY2020 adjusted operating profit at Rs2,072 crore (down 22.5% y-o-y; up 18.5% q-o-q) was above our estimates due

to higher profitability in natural gas transmission and gas trading business; Adjusted PAT at Rs1,251 crore was marginally above

our estimates.

• Outlook for the core business has improved given expectation of pick-up in gas transmission and trading volume.

• GAIL is trading at trading at an attractive valuation of 4.9x FY2022E EV/EBITDA, which is near its trough valuation and 45%

discount to historical one-year forward EV/EBITDA of 9x).

• Hence, we maintain our Positive view on GAIL and expect 25-27% upside.

Read report - https://www.sharekhan.com/MediaGalary/Equity/GAIL-Feb10_2020.pdf

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Feb 10, 2020 Mahanagar Gas Limited Viewpoint POSITIVE 1,196 15%

Summary

• Q3FY20 Adjusted PAT at Rs. 187 crore was in line with our estimate as marginal beat in EBITDA margin was offset by higher

other income and a lower effective income tax rate.

• Margin outlook is robust as domestic gas prices are expected to further decline in H1FY2021E, after a sharp cut of 12.5% to

$3.23/mmBtu for H2FY2020.

• Gas sales volume grew by 3% y-o-y to 3.1 mmscmd; management reiterated its long-term volume growth guidance of 5-6%

annually.

• We maintain our Positive on MGL and expect a 15% upside, given attractive valuation of 13.8x its FY22E EPS (48% discount to

that of IGL FY22E PE) despite industry-leading margins of Rs. 9-10/scm and superior RoE of ~25-27%.

Read report - https://www.sharekhan.com/MediaGalary/Equity/MGL-Feb10_2020.pdf

Feb 10, 2020 Kajaria Ceramics Limited Viewpoint POSITIVE 545 10-12%

Summary

• We stay Positive on Kajaria Ceramics and expect a 10-12% upside, factoring in a cut in earnings estimates for FY2020-FY2022;

we roll forward our valuation multiple to FY2022E.

• Kajaria continues to be affected by weak demand and muted volume offtake. Lower absorption of fixed costs owing to a decline

in revenues affects OPM. Net profit decline was restricted by a lower corporate tax rate.

• The management expects volume offtake to improve in FY2021 led by government’s efforts on completing stuck housing

projects, easing liquidity in banking sector and tightening GST compliances.

• Kajaria’s consolidated net surplus rises so does working capital days. The management withdrew a 5.6 MSM p.a. brownfield

capacity expansion plan of polished vitrified tiles at Rajasthan.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Kajaria-Feb10_2020.pdf

Feb 10, 2020 Insecticides (India) Limited Viewpoint POSITIVE 488 18-20%

Summary

• We remain Positive on Insecticides (India) Limited (IIL) and expect an upside of 18-20%.

• We have fine-tuned our numbers for FY2020E and FY2021E and introduced FY2022E estimates and expect the company to

report revenue and earnings CAGRs of 10.0% and 14.5%, respectively, over FY2019-FY2022E.

• Management provides revenues and EBITDA growth guidance of 10% and 15% over the next few years, led improved pricing

environment in Q4FY2020 and further launch of innovative products in FY2021E.

• Delivers strong revenue growth of 22% in Q4FY2020, however inventory write-down impacts profitability (lower by 28% and

48% y-o-y at operating and PAT level respectively).

Read report - https://www.sharekhan.com/MediaGalary/Equity/Insecticides-Feb10_2020.pdf

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Feb 10, 2020 Mastek Limited Viewpoint POSITIVE 417 23-25%

Summary

• We maintain our Positive stance on Mastek Limited and expect a 23-25% upside from current levels.

• Mastek announced the acquisition of Evosys’ Middle East business for $65 million and the merger of Evosys India, US, UK and

RoW businesses for a consideration of 15% of Mastek shares to Evosys’ promoters.

• This deal would allow Mastek to access fast-growing segments, and verticals; also allow Mastek to cross-sale its services as

Evosys has strong 1000+ customers base (100+ customers with revenue of $1 billion+).

• Despite dilution of share, the deal is EPS accretive and will increase our EPS estimates by 14/17% for FY2021/FY2022E

respectively.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Mastek-Feb10_2020.pdf

Feb 11, 2020 Petronet LNG Stock Update BUY 264 345

Summary

• Petronet LNG’s (PLNG’s) Q3FY2020 adjusted operating profit of Rs. 988 crore (up 16.4% y-o-y; down 5.6% q-o-q) was below our

estimate due to a miss in Dahej volume at 222 tBtu (up 12.7% y-o-y). Adjusted PAT at Rs. 730 crore (up 29.1% y-o-y; down 10.8%

q-o-q), exceeded our estimates of Rs. 649 crore.

• Work on the Kochi-Mangalore pipeline is on track and the pipeline is likely to get commissioned by March 2020. Ramp-up

of Kochi terminal’s utilisation rate and further capacity expansion at Dahej to 19.5 mmt would drive volume growth over next

couple of years.

• PLNG’s valuation of 11x FY2022E EPS seems attractive, given a strong volume-led earnings growth visibility (we expect an

EBITDA/PAT CAGR of 13%/8% over FY2020E-FY2022E) and robust RoE of 29-30%.

• We maintain a Buy rating on PLNG with unchanged price target of Rs. 345.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Petronet_LNG-Feb11_2020.pdf

Feb 11, 2020 Mahindra & Mahindra Stock Update BUY 524 665

Summary

• In Q3FY2020, M&M’s margins improved y-o-y despite 6% fall in topline owing to cost-control initiatives, better mix and softening

commodity prices.

• New launches in the utility vehicle segment and conversion of the entire portfolio to petrol would drive auto volumes. Also,

tractor volumes would return to growth trajectory in FY21 due to higher rabi sowing and water reservoir.

• M&M’s volumes would improve substantially and we expect mid-single digit growth in the next two years as against a 9% drop

expected in FY2020.

• We retain our Buy rating on the stock with revised SOTP-based price target PT of Rs. 665 as we rollover to FY22 earnings. P/E

of ~10x FY22 earnings is attractive and below long term average of 15x.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/MnM-Feb11_2020.pdf

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Feb 11, 2020 Oil India Stock Update BUY 134 165

Summary

• We maintain our Buy rating on Oil India with a revised SoTP-based PT of Rs. 165 given an attractive valuation of 6.1x its FY22E

EPS (29% discount to historical average one-year forward PE multiple) and a high dividend yield of 7-8%.

• Q3FY20 adjusted PAT of Rs. 401 crore (down 67.5% y-o-y) was substantially below our estimates due to a sharp miss in oil & gas

sales volume, lower-than-expected other income and a higher-than-expected effective income tax rate.

• A sharp decline of 11% y-o-y in oil sales volume to 0.7 mmt and a fall of 7.4% y-o-y in gas sales volume to 0.6 bcm as production

was affected by protests in Assam; net oil realisation stood at $63/bbl (marginally ahead of our estimate).

• We have cut our FY2020-FY2021 earnings estimates by 13%-23% to factor lower oil & gas realisation and sales volume.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Oil_India-Feb11_2020.pdf

Feb 11, 2020 Kalpataru Power Transmission Stock Update BUY 417 545

Summary

• We maintain our Buy rating on KPTL with a revised PT of Rs. 545 fine tuning the estimates for FY20-21 and have also rolled

forward our valuation multiple to FY2022E standalone earnings and revised valuation on JMC Projects.

• Healthy execution, stable operating margins and lower tax rate leads to adjusted net profit growth of 23% y-o-y.

• Management trimmed its revenue growth guidance to 18-20% for FY2020 versus earlier 20%+ y-o-y along with stable OPM of

10.5-11% for FY2020.

• Order book remains healthy providing 1.8x TTM revenues and order inflow expected to remain at the lower end of the guidance

of Rs 9000 crore for FY2020.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Kalpatru-Feb11_2020.pdf

Feb 11, 2020 Selan Exploration Technology Stock Update BOOK OUT - 141 - -

Summary

• We drop our coverage on Selan Exploration and recommend a Book Out as the extension of the PSC for Lohar and Bakrol

fields, entails an increase in government share of profit petroleum and higher royalty & cess, which would affect profitability.

• Poor track record of production ramp-up and the recent sharp correction to ~$54-55/bbl (from ~71/bbl in FY2019) is also a

concern with regards to earnings visibility..

• We expect Selan’s PAT to decline by 36% y-o-y in FY20E and by 8.1% y-o-y in FY21E due to lower crude oil price (assumption

of $62/bbl over FY2020E-2021E as compared to $71/bbl in FY2019) and a lower profitability for the Lohar and Bakrol fields.

• The company’s decision of not pursuing with the extension of the Indrora field (expiring on March 12, 2020) due to technological

and economical reasons would mean relinquishment of ~52 million barrels of discovered in-place reserves.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Selan-Feb11_2020.pdf

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Feb 11, 2020 Ashoka Buildcon Limited Viewpoint POSITIVE 104 16-18%

Summary

• We retain our Positive view on Ashoka Buildcon Limited (Ashoka) with 16-18% upside potential, factoring lower standalone

estimates for FY2020-FY2021 and rolling forward our EPC valuation multiple to FY2022E.

• In Q3FY2020, Ashoka’s consolidated net revenues declined led by lower execution on account of prolonged monsoons in key

projects. Higher OPM, lower interest expense and lower ETR led to healthy growth in net profit.

• Management trimmed standalone revenue growth guidance for FY2020 factoring weak Q2 and Q3. It will be eyeing Rs. 3000

crore to Rs. 4000 crore order inflows over the next couple of months.

• Management expects clarity emerging out of Macquarie’s exit from BOT/HAM assets by March 2020 which we believe should

remove a key hangover on the stock.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Ashoka_Buildcon-Feb11_2020.pdf

Feb 11, 2020 JMC Projects (India) Limited Viewpoint POSITIVE 89 12-15%

Summary

• We stay Positive on JMC Projects and expect 12-15% upside, revising downwards our estimates for FY2020-FY2021 and rolling

forward our valuation multiple to FY2022E estimate.

• JMC Projects’ net earnings were affected by deliberate slowdown in execution to better manage cashflows along with higher

interest expense led by increasing leverage.

• Management has trimmed down FY2020 revenue growth guidance as priority in the near term remains on better cash flow

management than execution.

• Order inflows for Q3FY2020 were up 51% y-o-y with order backlog at the end of Q3FY2020 at Rs. 10,492 crore (2.8x its TTM

standalone revenue).

Read report - https://www.sharekhan.com/MediaGalary/Equity/JMC_Project-Feb11_2020.pdf

Feb 11, 2020 Parag Milk Foods Viewpoint BOOK OUT - 100 - -

Summary

• Shortage in milk supply and higher milk prices owing to a prolonged monsoon marred Parag Milk Foods’ (Parag’s) Q3FY2020

performance, dragging gross margins by over 700 bps and OPM by 104 bps.

• Performance over 9MFY2020 was also subdued, with both gross and operating margins declining substantially.

• Working capital cycle has deteriorated in H1FY2020 and the company is unable to deliver results even after the implementation

of a new sales model.

• We expect milk prices to remain high which will continue to affect Parag’s profitability; with no visibility of improvement in near-

term performance, we advise investors to exit the stock.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Parag_Milk-Feb11_2020.pdf

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Feb 12, 2020 Info Edge (India) Stock Update HOLD 2,954 3,200

Summary

• We retain our Hold rating on Info Edge (India) Limited (Info Edge) with a revised PT of Rs. 3,200.

• Revenue growth moderated to 14% y-o-y, in-line with the expected lines, owing to macro concerns; EBITDA margin improved by

170 BPS to 31% (on a comparable basis) owing to a decline in ad spends.

• Growth rate could moderate in the medium term, given slowdown in hiring and macro concerns in the real estate sector;

however, EBITDA margin is expected to improve going ahead.

• Post the acquisition of UberEats, Zomato has become India’s largest online food delivery player in terms of number of orders;

early signs show that the acquisition is spanning out well.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Info_Edge-Feb12_2020.pdf

Feb 12, 2020 Lupin Stock Update REDUCE 704 650

Summary

• We maintain Reduce rating on Lupin with a revised PT of Rs 650.

• Lupin reported a disappointing performance for Q3FY2020 with results way below estimates.

• Lupin continues to grapple with regulatory headwinds as five of its facilities are under the USFDA scanner. This is likely to

impact new approvals as well as also slow down the growth momentum.

• Lack of clarity and uncertainty of timeline as well as the outcome of the USFDA regulatory issues would be an overhang on the

stock.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Lupin-Feb12_2020.pdf

Feb 12, 2020 Bank of India Stock Update HOLD 63 70

Summary

• Bank of India (BOI) posted modest results for Q3FY2020 with mixed 0perating performance (PAT growth helped by other

income jump) but persisting concerns on asset quality..

• Elevated slippages pace continued (Q3FY2020 at Rs. 6,716 crore) and weak asset-quality outlook is a concern..

• We have fine-tuned our estimates for FY2020E/FY2021E and have introduced FY2022E estimates..

• We maintain Hold with a revised PT of Rs. 70.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/BOI-Feb12_2020.pdf

Feb 12, 2020 Coal India Ltd Viewpoint POSITIVE 180 20-22%

Summary

• We maintain our Positive view on Coal India and expect 20-22% upside given attractive valuation of 5.8x FY22E EPS (56%

discount to historical average one-year forward PE of 13.1x) and high dividend yield of 9-10%.

• Likely higher volume offtake (led by better evacuation infrastructure) and improvement in realisations is expected to revive

earnings growth over FY2021E-FY2022E.

• Q3FY20 PAT at Rs. 3,924 crore (down 14.1% y-o-y; up 11.4% q-o-q), beats our estimate on account of better-than-expected FSA

realisation at Rs. 1411/tonne (up 5.7% y-o-y) and marginally lower-than-expected income tax rate.

• Sharp decline in coal production and offtake by 5.4% y-o-y and 8% y-o-y respectively was on expected lines.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Coal_India-Feb12_2020.pdf

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Feb 12, 2020 Astral Poly Technik Limited Viewpoint POSITIVE 1,210 12-15%

Summary

• We reiterate our Positive view on Astral Poly Technik (Astral) and expect an upside of 12-15%.

• We have fine-tuned our numbers for FY2020E, FY2021E and FY2022E and expect revenue and earnings CAGR of 19.2% and

34.8%, respectively, over FY2019-FY2022E.

• Management guides for a healthy performance in Q4FY2020 and maintains guidance of 10-15% volume growth for FY2021 in

plastic segment and expects EBITDA growth to be in excess of revenue growth at company level.

• Delivers healthy volume growth of 15% y-o-y in plastic segment while performance in adhesive segment not encouraging as

revenue growth remained muted along with margin contraction.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Astral_Poly-Feb12_2020.pdf

Feb 12, 2020 City Union Bank Viewpoint POSITIVE 228 10-12%

Summary

• We maintain a positive view on City Union Bank and expect potential upsides of 10-12%.

• City Union Bank (CUBK) posted modest results for Q3FY20, where its operating performance was slower, and asset quality wise

the impact of slowdown was visible due to high slippages (but recoveries there as well).

• CUB has a quality franchise and a conservative lending approach, which differentiates it from several similar-sized peers.

• CUB’s diversified credit portfolio, backed by strong collaterals, provides comfort on book quality.

Read report - https://www.sharekhan.com/MediaGalary/Equity/City_Union-Feb12_2020.pdf

Feb 13, 2020 PI Industries Stock Update BUY 1,547 1,750

Summary

• We upgrade our rating on PI Industries Limited to Buy with a revised PT of Rs. 1,750 per share owing to aggressive expansion

strategy to tap the robust and encouraging demand environment.

• We expect revenue and earnings CAGR of 27.6% and 29.8%, respectively, during FY2019-FY2022E (Isagro numbers factored

in from Q4FY2020).

• Management retains its FY2020E guidance of ~20% y-o-y improvement in performance, led by healthy order book,

commissioning of additional capacity and contribution from newly launched brands.

• The company delivered in-line results during Q3FY2020 with revenue up by 20% y-o-y to Rs. 850 crore; operating margin

improved by 94 BPS y-o-y to 21.9% and PAT increased by 13.0% y-o-y to Rs. 121 crore.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/PI_Industries-Feb13_2020.pdf

Feb 13, 2020 Ipca Laboratories Stock Update BUY 1,420 1,590

Summary

• We maintain Buy recommendation on IPCA Labs with a revised PT of Rs 1590.

• Ipca reported impressive performance for Q3FY2020 with the results ahead of estimates.

• Strong growth outlook across both the API and formulations space would be the key growth driver. Resolution of the USFDA

hurdles would be a positive and will lead to earnings upgrades.

• We expect the company to report a Sales and PAT CAGR of 16% and 20% respectively between FY2020 to FY2022.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/IPCA-Feb13_2020.pdf

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Feb 13, 2020 CESC Stock Update BUY 726 860

Summary

• We maintain our Buy rating on CESC with a revised SoTP-based PT of Rs. 860. Potential turnaround of loss-making subsidiaries

and steady standalone earnings keeps us constructive on the stock. Valuation is attractive at 8.8x its FY22E EPS and 0.8x its

FY2022E P/BV.

• Consolidated Q3FY2020 PAT grew by 10% y-o-y to Rs. 263 crore aided by reduction in loss at Dhariwal Infrastructure and

higher profits at the Rajasthan distribution franchisee.

• Standalone performance lagged estimates with only 1.7% y-o-y rise in PAT to Rs. 176 crore and flat y-o-y power sales volume.

• Singing of long-term PPA for unit-1 of Dhariwal Infrastructure could act as key trigger for turnaround of the subsidiary.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/CESC-Feb13_2020.pdf

Feb 13, 2020 Kewal Kiran Clothing Stock Update BOOK OUT - 989 - -

Summary

• We recommend a Book Out on Kewal Kiran Clothing (KKCL), as earnings visibility remains bleak in the near term due to a

slowdown in the denim industry.

• Revenue and operating profit grew at a CAGR of just 3.2% and 2.6% over FY2016-19.

• Revenue growth stood at ~9% for 9MYF2020, OPM dropped by 471 bps and adjusted PAT declined by 5% y-o-y.

• The management has lowered its OPM guidance to ~18% from ~20% earlier due to higher discounts/trade margins.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/KKCL-Feb13_2020.pdf

Feb 13, 2020 Aarti Industries Viewpoint POSITIVE 972 16-18%

Summary

• We reiterate our Positive stance on Aarti Industries Limited (Aarti) with a revised potential upside of 16-18%.

• The company remains among our top investment bets, as growth levers in respect of multi-year high margin contracts would

start to play out in 6-12 months.

• Management reiterates it PAT growth guidance of 10-15% and capex of Rs 1200 crores for FY2020E. We expect revenue and

earnings CAGR of 19.3% and 25.4% over FY2019-FY2022E, respectively.

• Delivers mixed results as beat on revenue, while margin disappoints. On comparable basis, revenue was lower by 1% and EBIT

margin improved by 28 bps to 20.5%.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Aarti_Industries-Feb13_2020.pdf

Feb 14, 2020 IRB Infrastructure Developers Stock Update BOOK OUT - 101 - -

Summary

• We Book Out IRB Infrastructure from our active coverage owing to its weak EPC order backlog, unresolved BOT toll issues and

increased leverage.

• During Q3, IRB’s consolidated net profit was affected by a decline in BOT revenue, contraction in OPM and increased interest

expense.

• Strong EPC execution during the quarter and removal of two projects leads to weak order backlog translating to 1.3x TTM EPC

revenues.

• IRB expects to win Mumbai Pune tolling rights with payout of Rs. 8262 crore in four installment in three years. GIC deal closure

expected in few days time.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/IRB-Feb14_2020.pdf

Stock Update


EQUITY FUNDAMENTALS


(Rs.)



Feb 14, 2020 Orbit Exports Stock Update BOOK OUT - 81 - -

Summary

• We recommend Book Out on Orbit Exports Limited (Orbit), as earnings visibility remains bleak due to slowdown in the exports

market and revival is expected to take another few quarters.

• Revenue and earnings have been consistently falling since FY2015 and have declined at a CAGR of 3.3% and 3.4% over

FY2015-19, respectively.

• Performance was also subdued for 9MFY2020, with revenue growth moderating to 5.8% and adjusted PAT staying flat.

• Uncertainty in the export market is expected to sustain, thus impacting the performance of Orbit.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Orbit-Feb14_2020.pdf

Feb 14, 2020 Bharat Petroleum Corporation Viewpoint POSITIVE 476 18-20%

Summary

• Q3FY2020 adjusted operating profit of Rs. 2,546 crore (up 3.5x y-o-y; up 13.9% q-o-q) lagged our estimates, due to a miss in

GRM at $3.2/bbl (up 16.2% y-o-y). This was, however, partially offset by higher refinery throughput of 8.4 mmt (up 12.3% y-o-y).

• Core GRM was weak at $2.2/bbl (up 15.4% y-o-y) but better-than-expected when compared to $1.5/bbl for HPCL and $2/bbl for

IOCL. Marketing sales volume grew by 7.7% y-o-y to 12.3 mmt.

• We believe the sale of government’s 53% stake in BPCL to private/foreign players could lead to re-rating of the stock. Thus, the

tactical opportunity arising out of the government’s divestment could deliver healthy returns in the next 8-12 months.

• Hence, we stay Positive on BPCL and expect 18-20% upside from current levels.

Read report - https://www.sharekhan.com/MediaGalary/Equity/BPCL-Feb14_2020.pdf

Feb 14, 2020 Future Lifestyle Fashions Viewpoint POSITIVE 386 18-20%

Summary

• Q3FY2020 consolidated revenue grew by just ~3% y-o-y affected by brand rationalisation and reduction of inventory with trade

channels; revenue of Central grew by ~9.3%, whereas revenue of Brand Factory chain stood flat.

• Higher revenue share from the premium brand Central and operating efficiencies led gross margins and OPM to expand by 102

bps and 60 bps, respectively.

• Mid-to-high single-digit SSSG, incremental retail space and focus on emerging brands would aid double-digit revenue growth

in the near to medium term; we expect OPM at 17% for FY2020.

• We maintain our Positive view and expect a further upside of 18-20% from current levels.

Read report - https://www.sharekhan.com/MediaGalary/Equity/FLFL-Feb14_2020.pdf

Feb 14, 2020 KNR Constructions Limited Viewpoint POSITIVE 277 18-20%

Summary

• We retain a Positive view on KNR Construction and expect 18-20% upside, considering its strong order backlog, healthy order

inflows and rolling forward our EPC valuation to FY2022E.

• KNR reported stellar Q3FY2020 standalone results, backed by higher execution and improvement in OPM.

• Management conservatively target Rs. 2,750 crore standalone revenue and Rs. 2,500 crore order inflows for FY2021.

• Divestment of Walayar project is likely to aid in paying off promoter loan and provide funding for working capital and investment

in HAM projects.

Read report - https://www.sharekhan.com/MediaGalary/Equity/KNR_Cons-Feb14_2020.pdf

Stock Update


EQUITY FUNDAMENTALS


(Rs.)



Feb 14, 2020 Polyplex Corporation Ltd Viewpoint POSITIVE 520 28-30%

Summary

• We stay Positive on Polyplex Corp (PCL) and expect a 28-30% upside, as valuation of 4x FY2022E EPS seems attractive, given

earnings growth visibility and a robust balance sheet.

• Recent capacity expansion by 16% to 312,645 tonnes and margin improvement to drive a 9% CAGR in PAT over FY2019-

FY2022E.

• Q3FY2020 consolidated operating profit increased sharply by 19% y-o-y (up 7.8% q-o-q) to Rs. 213 crore led by a 9% y-o-y rise

in sales volume and 420bps y-o-y increase in operating profit margin to 19.5%.

• Withdrawal of anti-dumping duty on purified terephthalic acid (PTA) by the government could reduce raw material cost for

production of PET film.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Polyplex_Corp-Feb14_2020.pdf

Feb 17, 2020 Shree Cement Stock Update BUY 24,031 26,000

Summary

• We retain our Buy rating on Shree Cement Limited (Shree Cement) with a revised PT of Rs. 26,000, rolling forward our valuation

multiple to FY2022E earnings.

• During Q3FY2020, Shree Cement’s adjusted standalone net profit grew by 10% y-o-y, led by healthy performance from the

cement division, while power reported operating loss due to weak realisation.

• Shree Cement’s capacity expansion plan to reach 60MTPA in four years from the current 46MTPA remains on track. The

company recently raised Rs. 2,400 crore through QIP to aid in future growth plans.

• Shree Cement’s continuous capacity expansion plan with nil rise in leverage is likely to aid in healthy net earnings growth over

the next two years.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Shree_Cement-Feb17_2020.pdf

Feb 17, 2020 Ashok Leyland Stock Update HOLD 82 90

Summary

• Ashok Leyland Ltd (ALL) Q3FY20 results were lower than expectations due to steep fall in the MHCV demand and resultant

drop in margins.

• MHCV industry is expected to remain under pressure over next three to four quarters given the subdued economic growth and

steep cost increases due to BS6 emission norms.

• Sustained recovery would take time and management expects demand to revive from H2FY21.

• We rollover our multiple on FY22 earnings and arrive at PT of Rs 90. We retain Hold rating on the stock. Current EV/EBIDTA of

10.6x FY22 is close to historical average of 11-12x.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Ashok_Leyland-Feb17_2020.pdf

Stock Update


EQUITY FUNDAMENTALS


(Rs.)



Feb 17, 2020 Finolex Cables Stock Update HOLD 372 410

Summary

• We reiterate our Hold rating with a revised PT of Rs. 410, rolling forward our valuation multiple to FY2022E.

• Finolex posted lower-than-estimated financials, led by weak performance in electrical and communication, with a decline in

OPM. Net profit was higher due to lower ETR.

• We expect slowdown in construction and funding crunch in OFC to limit its revenue growth along with higher ad spends in

FMEG to weigh on overall OPM over FY2020-FY2022.

• The issue regarding re-appointment of key managerial personnel also remains unresolved, with the matter now sub-judice.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Finolex_Cables-Feb17_2020.pdf

Feb 17, 2020 Sadbhav Engineering Stock Update BUY 97 120

Summary

• We maintain our Buy rating on Sadbhav Engineering Limited (SEL) with a revised PT of Rs. 120, factoring a steep cut in standalone

net earnings estimates and rolling forward our EPC valuation multiple to FY2022E.

• SEL reported dismal Q3 standalone earnings, affected by extended monsoons and inability to receive lenders’ funds in HAM

projects.

• Management has trimmed down its FY2020 and FY2021 revenue guidance on account of weak Q2 and Q3. However, advance

stages of HAM projects are likely to put execution on track from Q1FY2021.

• Sale of nine projects to IndInfravit is expected to reduce net debt to Rs. 400 crore from Rs. 2,372 crore.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Sadbhav_Engg-Feb17_2020.pdf

Feb 17, 2020 Oil and Natural Gas Corporation Viewpoint POSITIVE 100 28-30%

Summary

• ONGC’s Q3FY2020 adjusted PAT lagged our estimates owing to miss in oil & gas sales volumes, lower oil realisation, lower

other income (given lower dividend income) and higher DD&A (due to sharp 44% y-o-y jump in depletion).

• Oil and gas sales volume declined by 3% y-o-y and 9.4% y-o-y to 5.2mmt and 4.8bcm respectively; Net oil realisation stood at

$59.7/bbl (down 10% y-o-y).

• Commencement of gas production from KG 98/2 field in February 2020 could reverse the declining gas production trend going

forward.

• Stock trades at a 44% discount to historical average one-year forward PE of 11.2x; offers high dividend yield of ~6-7%. Hence,

we maintain our Positive view on ONGC and expect a 28-30% upside.

Read report - https://www.sharekhan.com/MediaGalary/Equity/ONGC-Feb17_2020.pdf

Stock Update


EQUITY FUNDAMENTALS


(Rs.)



Feb 17, 2020 Balkrishna Industries Viewpoint POSITIVE 1,277 12-15%

Summary

• Balkrishna Industries Ltd (BKT) posted strong Q3 results with operating margins improving sharply 640 bps yoy; beating our as

well as consensus estimates.

• BKT volumes are expected to grow in double digits over the next two years driven by easing of USA-China trade tensions,

deeper penetration into key markets and re-stocking by dealers.

• Operating margins are expected to sustain at 31% levels due to favourable commodity prices, captive carbon sourcing and

operating leverage due to strong volume growth.

• We expect BKT to deliver strong 21% earnings CAGR over FY20-22 period. The stock is trading at 17.5x FY22 earnings but the

premium valuations are justified given the strong earnings growth and return ratios of 18-22%.

• To factor sustained margin improvement and sales of carbon black to outside parties, we have raised our estimates by ~20%.

We retain positive view on the stock and expect 12-15% upside from the current levels.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Balkrishna-Feb17_2020.pdf

Feb 20, 2020 Divis Laboratories Limited Stock Update BUY 2,169 2,430

Summary

• We maintain Buy recommendation on Divis Laboratories (Divis) with a revised PT of Rs 2,430.

• Divis is well placed to capitalize on the opportunities in the API space. A strong run up in the API prices attributable to likely

supply disruption from China due to outbreak of the Corona Virus is would substantially benefit API focused companies like

Divis.

• Backward integration, aggressive capex plan incurred in the past and outsourcing opportunities would add to the topline and

PAT growth for Divis. Further The company does not have pending regulatory hurdles which is a key positive and offers visibility

for growth going ahead.

• We expect the sales and PAT to grow CAGR 20% and 24% respectively over FY2020 –FY2022.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Divis_Lab-Feb20_2020.pdf

Feb 24, 2020 Inox Leisure Stock Update BUY 495 575

Summary

• We maintain our Buy rating on INOX Leisure Limited (ILL) with revised PT of Rs. 575 as we expects the company to post a

revenue and earnings CAGR of 18.5% and 16.5% over FY2019-2022E.

• We rework our estimates for FY2020E to factor in the expectation of soft Q4 performance coupled with adoption of lower tax

regime from Q4FY2020E; hence numbers for FY2021E and FY2022E are adjusted for taxation accordingly.

• Though seasonal factor is no more applicable, however Q4FY2020E performance is expected to remain muted owing to weak

content in most part of the quarter coupled with one-time non cash hit on the taxation front.

• Screen additions set to accelerate in 2021E (80 screens as compared to expectation of 70 screen addition during FY2020E).

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Inox-Feb24_2020.pdf

Stock Update


EQUITY FUNDAMENTALS


(Rs.)



Feb 24, 2020 Nippon Life India Asset Management Viewpoint POSITIVE 426 10-12%

Summary

• Nippon Life Asset Management (NAM) has witnessed re-rating as it sees the benefits of ownership change and strengthening

of its balance sheet.

• We believe that the stock has potential for further upsides, as the second leg of AUM growth and benefits from having a global

owner kicks in.

• The new ownership, due to its strong international presence can help the AMC to benefit from increased International funds

participation as well.

• We maintain our Positive view and expect potential upside of 10-12%.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Nippon_Life-Feb24_2020.pdf

Feb 25, 2020 Hindustan Unilever Stock Update BUY 2,232 2,575

Summary

• Hindustan Unilever Limited (HUL) is planning to form a new subsidiary with an authorised share capital of Rs. 2,000 crore to set

up a manufacturing facility to avail the benefits of the new tax regime.

• The company is planning for initial investment of Rs. 600 crore-800 crore for setting up the new facility.

• HUL will continue to post 4-5% volume growth in the near term as recovery will take 2-3 quarters; margin expansion is expected

to sustain.

• We maintain our Buy recommendation on the stock with a revised price target of Rs. 2,575.

Read report - https://www.sharekhan.com/MediaGalary/StockIdea/HUL-Feb25_2020.pdf

Feb 27, 2020 Gujarat Gas Limited Viewpoint POSITIVE 287 17-19%

Summary

• We maintain our Positive view on Gujarat Gas Limited (GGAS) and expect 17-19% upside, given strong earnings growth visibility

(expect 15% PAT CAGR over FY2020E-FY2022E) along with robust RoE of 28-32%.

• Better gas sourcing mix with likely increase in share of cheap spot LNG to ~63% in the coming quarters from 55% currently

would help expand EBITDA margin to Rs. 4.6-4.9/scm over FY2020E-FY2022E from Rs. 4.3/scm in FY2019.

• Expect volume CAGR of 9% over FY2020E-FY2022E, led by regulatory push to curb pollution and low LNG prices. Development

of six new geographical areas would lead to the next leg of volume for GGAS.

• Management hinted that network tariff for common carrier capacity would not make business lucrative for new entrants given

low margin of ~Rs. 3/scm for industrial PNG (76% of GGAS’s volumes) and, thus, do not expect risk to volumes.

Read report - https://www.sharekhan.com/MediaGalary/Equity/GujGas-Feb27_2020.pdf

Stock Update


EQUITY FUNDAMENTALS



(Rs.)



Feb 28, 2020 Atul Limited Viewpoint POSITIVE 5,118 12-15%

Summary

• We like Atul Limited’s (Atul) business model from a long-term perspective and consider it as an attractive play, hence we

upgrade our stance on Atul to a Positive View as risk-reward turns favourable with potential upside of 12-15%.

• The company has been delivering healthy performance on a sustainable basis and we believe the same to continue. We expect

revenue and earnings CAGR of 8.9% and 23.1%, respectively, over FY2019-FY2022E.

• Atul is adequately placed with raw materials till April 2020; hence we do not see any meaningful impact on Q4FY2020

performance owing to spread of Corona Virus beyond China, which is causing a concern for the global economic environment.

• Future growth is likely to be driven by improved utilisation of enhanced capacities as there seems to be limited scope for further

margin expansion (from margin of sub-16% in FY2018 expanded to 22.5%+ for 9MFY2020).

Read report - https://www.sharekhan.com/MediaGalary/Equity/Atul-Feb28_2020.pdf

Feb 28, 2020 Granules India Limited Viewpoint POSITIVE 157 20-22%

Summary

• We maintain a Positive view on Granules and expect an upside of 20-22%.

• Traction in existing products, strong new product launch pipeline and plans to enter the EU would boost topline. Favorable

product mix coupled with operational efficiencies would lead to OPM expansion.

• The management expects the strong growth momentum to sustain. Sales and PAT are expected to grow by 19% and 21% CAGR

respectively over FY2020-FY2022.

• The outbreak of the Coronavirus, is unlikely to have any material impact for Granules, as the company has alternate sources

for raw material procurement in place.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Granules-Feb28_2020.pdf

EQUITY FUNDAMENTALSSECTOR UPDATE


Date Sector Report TypeSector View

Latest Chg

Feb 03, 2020 Automobiles Sector Update NEUTRAL

Summary

• Automotive sales continued to remain in the negative trajectory due to weak economic growth coupled with OEMs intensified

efforts to correct BS4 stocks to ensure smooth transition to BS6 norms.

• While sales dropped across segments, performance in January 2020 continues to improve compared to earlier months.

• 2W players volumes declined 10% yoy while PV players reported drop of 5% drop yoy. CV players reported a 16% yoy drop in

volumes due to inventory correction and impact of axle load norms.

• Transition to BS6 norms would impact the automotive volumes in the near term. We expect gradual recovery driven by improved

financing and rural demand. We retain Neutral view on the sector.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Auto_Monthly_Review-Feb03_2020.pdf

Feb 04, 2020 Cement Sector Update POSITIVE

Summary

• We maintain our Positive view on the cement sector, believing it to be in multi-year upcycle, with sustained government’s focus

on infrastructure investment and affordable housing as highlighted in the Budget.

• Cement production, prices and movement of key costs hint towards marginal volume growth, healthy pricing discipline and

contained key opex costs for Q4FY2020TD.

• We expect kick start of government spending on infrastructure projects and impetus on the affordable housing segment to

improve upon profitability of the sector in the medium to long term.

• We have a Buy rating on UltraTech and Ramco Cements, while we remain Positive on JK Lakshmi Cement.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Cement-Feb04_2020.pdf

Feb 18, 2020 Q3FY2020 IT Results Review Sector Update NEUTRAL

Summary

• Revenue growth of tier-I IT companies moderated y-o-y along expected lines; CC growth remained at 0.4-4.3% q-o-q.

• EBIT margin expanded by 20-100 BPS q-o-q for tier-1 companies (except Tech Mahindra), led by higher utilisation and currency

tailwind.

• We expect similar or slight moderation in revenue growth in FY2021E (versus FY2020E) despite headwinds in BFSI and retail;

pace of decline in EBIT margin to moderate in FY2021E.

• We stay Neutral on the sector; Preferred picks: Infosys, HCL Tech, Tech Mahindra, L&T Infotech and Tata Elxsi.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Q3FY2020_IT_Results_Review_18_Feb_2020.pdf



EQUITY FUNDAMENTALS SECTOR UPDATE



Latest Chg

Feb 18, 2020 Q3FY2020 Consumer Discretionary Results Review Sector Update NEUTRAL

Summary

• Overall revenue performance for Q3FY2020 was mixed with growth standing at 10.7%; most companies registered low double-

digit revenue growth barring companies such as Wonderla Holidays and Future Lifestyle Fashions that registered muted

revenue performance.

• Comparable OPM (excluding Trent) expanded by 82 bps in Q3FY2020 to 13.5% driven by a favourable revenue mix and

operating efficiencies for most companies; comparable operating profit (excluding Trent) and PAT grew by 17% and 19%,

respectively.

• We expect the same-store-sales growth (SSSG) to be better in Q4FY2020 on the back of the on-going wedding season and

end of season sale (EOSS). Soft input prices to drive margins of footwear companies while higher discounts to dent margins of

certain apparel companies.

• We remain selective and our preferred picks include Bata India, Relaxo Footwears, Aditya Birla Fashion and Retail (ABFRL) and

Trent.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Q3FY2020_ConsumerDiscretionary_Results_Review_18_Feb_2020.pdf

Feb 19, 2020 Q3FY2020 Oil & Gas Results Review Sector Update POSITIVE

Summary

• During Q3FY2020, CGD companies showcased continued strong performance with double digit volume growth and resilient

margins resulting in robust earnings growth on a y-o-y basis.

• Upstream PSUs earnings were impacted by lower sales volumes and weak oil & gas realizations along with higher cost.

Earnings of OMCs recovered led by inventory gain but core GRM remained weak.

• We maintain our positive stance on gas companies and OMCs. Strong volume growth outlook for CGD and gas utilities led

robust gas demand; privatisation of BPCL could act as key re-rating trigger for OMCs.

• Preferred picks - Reliance Industries, Mahanagar Gas, Gujarat Gas, GAIL (India) and Petronet LNG.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Q3FY2020_OilnGas_Results_review-Feb19_2020.pdf

Feb 20, 2020 Q3FY2020 Automobiles Results Review Sector Update NEUTRAL

Summary

• Q3FY2020 was a weak quarter for automobile companies with the universe’s (ex-TAMO) revenue and profit falling by 6% and

10% y-o-y, respectively.

• However the performance was much better as compared to Q2FY20 where the automotive universe had registered topline

and Net Profit fall of 15% and 17% respectively.

• BS 6 transition is expected to impact volumes over the next three to four quarters. We expect recovery from H2FY21 driven by

pick-up in economic growth and improved rural sentiments.

• We retain Neutral view on the sector. Preferred picks: M&M, Bajaj Auto, Balkrishna Industries, Exide Industries and Apollo Tyres.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Q3FY2020_Auto_Results_review-Feb20_2020.pdf

EQUITY FUNDAMENTALSSECTOR UPDATE



Latest Chg

Feb 20, 2020 Q3FY2020 Capital Goods & Engineering Results Review Sector Update POSITIVE

Summary

• Project-based companies reported weak execution during the quarter. Order inflow remained flat barring couple of companies.

• Selected consumer-facing companies posted strong net earnings growth despite weak macro environment and low consumer

sentiments.

• Government infra pipeline to improve upon execution run rate. Corona virus outbreak in China remains a concern for couple of

players in the consumer durable space.

• We stay Positive on the sector. Our preferred picks are L&T, KEC International, Kalpataru Power Transmission, KEI Industries

and Dixon Technologies.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Q3FY2020_CapitalGoods_Results_review-Feb20_2020.pdf

Feb 24, 2020 Q3FY2020 Banking and Financial Services Results Review Sector Update POSITIVE

Summary

• In Q3FY20, better operating performance of corporate-focused banks, and healthy growth trends in insurance companies

were key positives.

• Most banks, notably corporate private banks’ earnings were aided by recoveries (from a few large NCLT accounts), while retail

banks reported stable profitability. Most PSU Banks (PSBs) & NBFCs saw muted credit growth.

• We continue to like Private banks, due to high earnings visibility, remain selective in the NBFC space and prefer strong

players therein. Strong insurance players, having healthy business metrics and backed by strong (and stable) bancassurance

partnerships, are also attractive.

• Preferred Picks - ICICI Bank, SBI, Axis Bank, HDFC Life, Spandana Sphoorty, Kotak Mahindra Bank, ICICI Lombard, ICICI

Prudential and Bajaj Finance.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Q3FY2020_BFSI_Results_review-Feb24_2020.pdf

Feb 24, 2020 Q3FY2020 Consumer Goods Results Review Sector Update NEUTRAL

Summary

• Q3FY2020 too was modest for consumer goods companies as a demand slowdown continued to affect sales volume of most

companies under coverage; volume growth for companies under our coverage stood at 0-5%.

• Inventory of low price commodities and operating efficiencies through cost-saving measures helped most companies post a

higher OPM y-o-y; universe’s PAT grew by 24% was boosted by the corporate tax rate cut.

• We expect a recovery will take another 2-3 quarters as trade channels are yet to get back on track (especially in rural markets);

better rabi crop and government’s steps to revive rural economy provides hope of some recovery by H1FY2021.

• Preferred picks - Dabur India, Varun Beverages and Tata Global Beverages.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Q3FY2020_Consumer_Goods_Results_review-Feb24_2020.pdf

EQUITY FUNDAMENTALS SECTOR UPDATE




Latest Chg

Feb 24, 2020 Q3FY2020 Infrastructure/Cement/Building material Results Review Sector Update POSITIVE

Summary

• The cement sector continued to benefit from higher realisation and margin expansion, while demand remained weak. January-

February cement prices were up on a y-o-y basis.

• Infrastructure companies barring PNC Infratech were weak on execution & increased interest expense. Order inflows are to

gather pace from March 2020.

• Building materials companies face weak demand and are expected to see gradual recovery from stricter GST compliance and

improvement in demand from real estate.

• Preferred picks - UltraTech, Shree Cement, The Ramco Cements, JK Lakshmi Cement, KNR Construction, PNC Infratech,

Ashoke Buildcon, Supreme Industries.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Q3FY2020_Infra_Cement_Results_review-Feb24_2020.pdf

Feb 24, 2020 Q3FY2020 Pharmaceuticals Results Review Sector Update NEUTRAL

Summary

• Q3FY2020 results of Pharma companies under Sharekhan’s coverage was a mixed bag. Topline grew 7% y-o-y, primarily driven

by strong growth in domestic operations, which supported growth during the quarter. Elevated cost pressures resulted in PAT

decline.

• Earnings performance of the Pharma companies is expected to remain volatile as US business of the companies is expected

to be stressed due to multiple headwinds, including regulatory hurdles from the US FDA. Moreover, the cropping up of Corona

Virus is expected to be an overhang as it could result in supply disruptions from China, if prolonged.

• Although valuations of Pharma companies seem reasonable, apparent growth challenges are likely to stay; We retain our

Neutral Stance on the sector.

• Preferred Picks - IPCA, Divis Laboratories, Granules, Biocon, Laurus Labs.

Read report - https://www.sharekhan.com/MediaGalary/Equity/Q3FY2020_Pharmaceuticals_Results_review-Feb24_2020.pdf

Feb 26, 2020 Automobiles Sector Update NEUTRAL

Summary

• We expect automotive sales volumes to be much better in February 2020, as the average decline is likely to be 8% as compared

to an 17% drop seen in YTDFY2020.

• Inventories across segments have come down to 3-4 weeks as compared to 6-7 weeks in past three months.

• PV sales are expected to drop marginally 3% while 2W segment is expected to drop 11% yoy in Feb. CV volumes are expected

to decline by 10% yoy.

• Transition to BS6 norms would impact the volumes in the near term. We expect sustained recovery from H2FY21.

• Preferred Picks - M&M and Bajaj Auto (among OEMs); Balkrishna Industries and Exide Industries(among ancillary companies).

Read report - https://www.sharekhan.com/MediaGalary/Equity/Auto_Monthly_Preview-Feb26_20.pdf

TREND & VIEW


EQUITY TECHNICALS

Near vertical fall

Daily view

�� The Nifty had registered a new all-time high of 12430

in January

�� Over there, it had formed multiple bearish patterns and

had entered a short term correction phase

�� The index witnessed a near vertical fall from the second

half of February

�� On the way down, the Nifty achieved our initial short

term target of 11170 and even breached the support

zone of 11100-11000 where there were multiple supports

�� The daily momentum indicator is bearish

�� Crucial support will be at 9630, whereas crucial

resistance will be at 10100

�� Breach of the key psychological level of 11000 on

closing basis indicated that the medium-term trend is

bearish as well

�� In terms of the wave structure, the index has broken

down from a multi-month Ending Diagonal pattern

�� The bearish price breakout has been accompanied by

the bearish weekly momentum indicator

�� The weekly Bollinger Bands have started expanding

that suggests that that the fall can continue

�� Crucial support will be at 9400 whereas crucial

resistance will be at 10545

�� The Nifty had formed an Engulfing Bear candle on the monthly chart for January

�� As a follow through of the bearish candle, the index tumbled down in February

�� In terms of the wave structure, the index has completed a wave 3 on the upside with an Ending Diagonal formation & is forming a wave 4 down

�� For this, the Nifty can come down to the previous wave IV low, which is near 10000

�� The monthly momentum indicator has triggered bearish crossover

�� Crucial support will be at 9200 whereas crucial resistance will be at 10752

Weekly view

Monthly view

Trend Target Support Resistance Trend reversal

Down 9200 9200 10752 10752

MONTHLY VIEW


EQUITY DERIVATIVES

Shorts getting added in the index; It is Sell on rise

The February series was much of an volatile expiry and it was very much expected it to be volatile, as there were a lot of important events such as the Union Budget, the RBI Policy, etc, which were lined up in February. After the Union Budget, the market witnessed a sharp sell-off which dragged the Nifty till 11600 and soon after that it witnessed sharp short covering and again tested 12200-12250 levels. However, after the panic of Coronavirus outbreak all over the world, the Nifty witnessed a sharp sell-off and breached the budget low of 11600 and ended February with a loss of around 3.57%. This fall was backed by a significant amount of addition in open interest, indicating that a lot of shorts got developed in this journey and with a high rollover of 77% in the Nifty versus the three-month average of 72%. A majority of the shorts have got carried forward to the March series also.

On the FII front, the data has been negative throughout February. Currently, in Derivatives, they are net short in index futures with over 1,50,000 contracts and they have rolled over more shorts then longs in the next series. In the cash market too, they continued to be net sellers in February and have so far being net sellers of Rs. 11,180 crore of equity on a net basis.

View for March series:

On the options front, in the March monthly expiry, the

10000 PE has the highest open interest of around 35.50

lakh shares, followed by the 11000 PE, which has 31.07 lakh

shares. On the Call side, the 12000 CE has the highest in

open interest with 27.05 lakh shares followed by 11000 CE

which has 18.94 lakh shares in open interest.

The put-call Ratio (PCR) has started on the higher side at

1.37, which is a negative sign for the market. The volatility

index due to panic of Coronavirus across the world has

been continuously inching higher currently at around 32

levels. While the Nifty is also starting the new series with

high open interest of 1.52 crore shares versus 1.08 crore

shares in the last series and simultaneously the FII data

shows very negative outlook for the Indian market. Hence

keeping in mind the above data, we feel that the trend of

the market continues to remain negative and its sell on

every rise with the target of 10000 for the March expiry.�

Rollover highlights-

• Nifty Future began the MAR series with lifetime low open interest at 1.52 crore versus 1.08 crore shares in open interest.

• The March series started with Rs.1,12,006 crore versus Rs. 1,17,502 crore in stock futures, Rs.17,687 crore versus Rs. 12,971 crore in Nifty futures and Rs. 114,291 crore versus Rs. 99,729 crore in index options and Rs. 17,721 crore versus Rs. 17,571 crore in stock options.

• Nifty March month rollover was at 77.65% versus 66.30%.

• Market-wide rollover was at 85.67% versus 89.00%

MARKET WIDE VS NIFTY ROLLOVER ACTIVITY:

OPTIONSOPEN INTEREST

(Rs. Cr)

SBIN 2,746.79

RELIANCE 2,195.02

HDFCBANK 861.20

ICICIBANK 817.46

BAJFINANCE 817.35

Top five stock options with the highest open interest in the current series are:

Source: Sharekhan

FUTURESOPEN INTEREST

(Rs. Cr)

HDFC 7,805.70

ICICIBANK 5,140.63

RELIANCE 4,822.33

SBIN 4,054.18

HDFCBANK 4,002.36

Top five stock futures with the highest open interest in the current series are:

Source: Sharekhan

77.6

5%

66.3

0%

70.4

4%

79.6

4%

84.0

9%

73.0

8%85.2

4%

89.0

0%

91.2

4%

92.7

4%

88.6

7%

93.7

5%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

100.00%

Mar

Feb

Jan

Dec

Nov Oct

Nifty Market Wide

CURRENCY FUNDAMENTALSMONTHLY VIEW


Indian Rupee slips on ongoing concern over corona virus

Key points

India consumer price index (CPI) data showed that inflation accelerated by 7.59% in January 2020 as compared to 7.35% in December 2019

India’s industrial production declined by 0.3% in December 2019 as compared to a 1.8% rise in November 2019

Exports declined by 1.7% in January and trade deficit widened to $15 billion

India’s GDP data showed economy expanded by 4.7% in Q3FY20 in line with expectations.

CURRENCY LEVELS IN FEBRUARY (IN RS.)

Currency High Low Close % Monthly Change

USDINR 72.27 71.08 72.18 1.15

EURINR 79.79 77.15 79.49 0.95

GBPINR 94.30 91.86 92.96 -0.66

JPYINR 67.12 63.85 66.75 1.37

Spot INR Movement in February Spot INR Movement in February

USD-INR: CMP Rs. 73.28The Indian Rupee depreciated by 1.15% in the previous month on a strong US Dollar and risk aversion in domestic markets. Market sentiments remained weak amid the Coronavirus outbreak and disappointing macros. India CPI inflation jumped to a 5.5-year high and industrial production contracted. Further, the RBI raised its inflation forecast for Q4FY20 to 6.5% from 4.7% and projection for H1FY21 to 5.0-5.4% from 3.8-4.0%.

Outlook: The Indian Rupee is expected to trade with negative bias on amid ongoing concern over the Coronavirus outbreak and fears over deteriorating global economic growth. The global death toll from the corona virus outbreak increased more than 3200. In India number of Coronavirus cases increased to 30. Additionally, continued FII outflows from local shares and disappointing macro economic data will hurt the Rupee. India’s GDP grew by 4.7% in Q3 FY20 compared to 5.1% in Q2 FY20. Traders will remain cautious ahead of Inflation data. India CPI data has shown that inflation remained above Reserve Bank of India comfort zone. Expected trading range in near term is 72.30-74.

EUR-INR: CMP Rs. 81.50The Euro depreciated by 0.60% in the previous month amid strong Dollar and disappointing economic data from the Eurozone. GDP data from the Eurozone showed that economy grew at slower pace. Further, Uncertainty about German Chancellor Angela Merkel’s succession plans also added to the downside pressure.

Outlook: Euro currency expected to trade with positive bias amid weak Dollar. Furthermore, Euro as a funding currency because of their nation’s low interest rates may gain strength as money flows back to where it was funded from during risk times. However, sharp gains may be capped as traders may speculate rate cut from European Central Bank to cushion corona virus impact on economic growth. Expected trading range in near term is 79.60– 82.90..

GBP-INR: CMP Rs. 94.20The British Pound depreciated by 2.90% in the month of February as the US Dollar stayed strong and on worries over UK-EU trade relations in future. The UK said it will start preparing for a no-deal scenario if talks with the EU fail to make any progress by June. Further, Pound slipped on concern over the Coronavirus outbreak. Traders speculate rate cut from Bank of England to cushion the Coronavirus impact on economic growth.

Outlook: The Pound is expected to trade with negative bias on concern over UK future trade relationship with the EU. Furthermore, Investors fear that outbreak of deadly Coronavirus may hurt global economic growth. Traders expect Bank of England to cut rates to cushion the impact of the epidemic on economic growth. Traders will remain cautious ahead of monetary policy meeting. The Pound is expected to trade at 92.0-95.0 in the near term.

JPY-INR: CMP Rs. (68.18)The Yen appreciated by 0.42% in the previous month as safe-haven demand increased on fear that outbreak of deadly virus in China may hurt global economic growth. However, sharp gains were prevented by a strong US Dollar and as Japanese GDP data showed that the economy contracted by 1.6% in Q4CY19 compared to 0.4% expansion in Q3 CY19.

Outlook: The Japanese Yen is expected to trade with positive bias on concern over Corona virus outbreak in China. Number of cases and death toll worldwide increased. Investors fear that the outbreak may hurt global economic growth. Further, demand for safe haven will increase on worries over geopolitical tension in Middle East and concern over global economic slowdown. Traders will remain cautious ahead of OPEC meeting. However, sharp gains may be prevented as the Bank of Japan pledged to take necessary actions if needed to cushion economic damage from the Coronavirus outbreak. Traders will remain cautious ahead of Bank of Japan Monetary policy meeting. The Yen is expected to trade at 66.50-69 in the near term.

CMP as on March 05, 2019

63.5

64

64.5

65

65.5

66

66.5

67

71

71.2

71.4

71.6

71.8

72

72.2

03-F

eb-2

0

05-F

eb-2

0

07-F

eb-2

0

09-F

eb-2

0

11-F

eb-2

0

13-F

eb-2

0

15-F

eb-2

0

17-F

eb-2

0

19-F

eb-2

0

21-F

eb-2

0

23-F

eb-2

0

25-F

eb-2

0

27-F

eb-2

0

USDINR JPYINR

92

92.2

92.4

92.6

92.8

93

93.2

93.4

77

77.5

78

78.5

79

79.5

03-F

eb-2

0

05-F

eb-2

0

07-F

eb-2

0

09-F

eb-2

0

11-F

eb-2

0

13-F

eb-2

0

15-F

eb-2

0

17-F

eb-2

0

19-F

eb-2

0

21-F

eb-2

0

23-F

eb-2

0

25-F

eb-2

0

27-F

eb-2

0

EURINR GBPINR

CURRENCY TECHNICALS TREND & VIEW


USD-INR - Eyeing uncharted territory

The USDINR was consolidating since September 2019 at 72.40-70.34. For February, the pair broke out of the consolidation on the upside and closed decisively above the range.

Bollinger bands are expanding and prices are trading along the upper band, indicating expansion of volatility after six months of sideways price action.

The weekly and monthly momentum indicators have a positive crossover, which is a Buy signal. Thus both price and momentum indicators are pointing towards a rise in the pair.

We maintain a positive stance on the pair and expect it to reach levels of 77.85 in March.

EUR-INR - Range breached

EURINR was trading in a broad range of 80.56-76.87 since August 2019. For February, the pair found support near the weekly lower Bollinger band (77.60) and witnessed a sharp rebound.

The pair has broken out of the consolidation and indicating resumption of uptrend. The pair is inching towards the previous swing high of 86.17.

The weekly and monthly momentum indicator have a positive crossover which is a Buy signal. Thus both price and momentum indicators are pointing towards a further rise in the pair.

The pair has potential to retest the high (92.00) it touched in August 2013.

GBP-INR - Bullish Flag breakout

The GBPINR consolidated on expected lines for February and closed in the red.

During consolidation phase it formed a Bullish flag pattern. The pair has broken out of the pattern indicating a continuation of the uptrend.

Bollinger bands are now expanding on account of the sharp breakout and prices are trading along the upper band, indicating that the positive price action is likely to continue.

We maintain positive stance on the pair and expect the pair to reach levels of 101.60 in March.

JPY-INR - Wedge breakout

JPYINR was in retracement mode since August 2019. It was falling steadily from levels of 68.65. The fall was overlapping in nature indicating that it is a correction of the previous rise.

For February, the pair closed in the red, however, and formed a long lower shadow indicating buying interest near 20-month moving average of 64.25.

The pair has broken out of the wedge pattern with a gap and has been inching higher. Bollinger Bands are showing signs of expansion on account of the sharp rise in the pair. weekly and monthly momentum indicator have a positive crossover which is a Buy signal.

We maintain a positive stance on the pair and expect the pair to continue to rise till 75.00 during March.

Currency View Reversal Supports Resistances Target

USD-INR UP 71.50 72.40 / 72.00 74.48 / 75.00 77.85

GBP-INR UP 92.00 93.00 / 94.50 98.52 / 100 101.60

EUR-INR UP 79.50 82.27 / 80.66 86.17 / 90.31 92.00

JYP-INR UP 66.40 68.65 / 67.11 72.22 / 74.00 75.00

A S O N D 2015 A M J J A S O N D 2016 A M J J A S O N D 2017 A M J J A S O N D 2018 A M J J A S O N D 2019 A M J J A S O N D 2020 A M J J A S O N D 2021

53

54

55

56

57

58

59

60

61

62

63

64

65

66

67

68

69

70

71

72

73

74

75

76

77

78

79USDINR - INDIAN RUPEE

0

5

10

29 5April

19 26 10May

17 31 14June

21 5 12July

19 26 9 16August

23 6 20 27September

4 18October

25 1 15November

22 6 13 27December

32020

17 31 7 21February

28 13March

20 3April

17 24 8May

15

82.583.083.584.084.585.085.586.086.587.087.588.088.589.089.590.090.591.091.592.092.593.093.594.094.595.095.596.096.597.097.598.098.599.099.5

100.0100.5101.0101.5102.0

GBPINR

-4-3-2-1012345

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

61

62

63

64

65

66

67

68

69

70

71727374757677787980818283848586878889909192939495

EURINR

-10

-5

0

5

10

15

A M J J A S O N D 2016 M A M J J A S O N D 2017 M A M J J A S O N D 2018 M A M J J A S O N D 2019 M A M J J A S O N D 2020 M A M48

49

50

51

52

53

54

55

56

57

58

59

60

61

62

63

64

65

66

67

68

69

70

71

72

7374

75JPYINR

-5

0

5

PMS DESKPMS FUNDS


PRIME PICKS STRATEGY

OVERVIEW

Prime Picks is a multi-cap discretionary PMS scheme.

It aims to outperform the BSE 200 & CNX Mid Cap 100 indices across market cycles.

Scheme comprises two folios, Quality and Alpha, with a distinct investing style to offer.

Based on the client risk profile allocation between conservative /moderate / aggressive.

It’s a long only fund.

INVESTMENT STRATEGY

Right mix of two different strategies with a high standard of management and corporate governance through in-depth research by experienced in-house fundamental research team.

Aims to leverage on investment opportunities in structural growth sectors through Quality folio whereas the allocation to more aggressive Alpha folio would add to superior outperformance across market cycles.

Maintain judicious mix between Quality and Alpha through dynamic investment strategy and providing flexibility to investors to make changes to allocations between the two folios once every year.

PRICING & PRODUCT FEATURES

Minimum investment of Rs.50 lakh

Charges

¾ 2% per annum (plus taxes); AMC fee charged every quarter.

¾ 0.5% brokerage on every trade executed.

¾ 20% profit sharing after the 18% hurdle is crossed at the end of

every fiscal (with higher watermark basis).

Prime Picks Portfolio Performance (as of February 2020)

Duration Prime picks*

BSE 200 NIFTY

1 Month -4.0% -6.4% -6.4%

3 Months -3.9% -6.5% -7.1%

6 Months 2.2% 2.4% 1.6%

1 Year 3.7% 3.4% 3.8%

Since inception (25 June,2018)

3.9% 1.7% 4.1%

*Note : Net of Quarterly AMC Fees*Note: Returns mentioned are system-generated

Disclaimer: Returns are based on a client’s returns since inception and may be different from those depicted in the risk disclosure document.

Top 5 Stocks – Prime Picks QUALITY

1 BAJAJ FINANCE

2 HCL TECHNOLOGIES

3 HDFC BANK

4 LARSEN & TOUBRO

5 RELIANCE INDUSTRIES

Top 5 Stocks – Prime Picks ALPHA

1 DIVI'S LABORATORIES

2 MAHANAGAR GAS

3 SPANDANA SPHOORTY

4 SUDARSHAN CHEMICAL

5 TATA CONSUMER

-4.0% -3.9%

2.2%

3.7% 3.9%

-6.4% -6.5%

2.4%

3.4%

1.7%

-6.4%-7.1%

1.6%

3.8%4.1%

1 Month 3 Month 6 Months 1 Year Since Inception

Prime Picks PMS BSE 200 Nifty

PMS DESK PMS FUNDS


DIVERSIFIED EQUITY STRATEGY

OVERVIEW

Diversified Equity is a large-cap oriented, multi-cap discretionary PMS

scheme.

The investment product aims to outperform the BSE 500 Index, with

relatively lower volatility in the portfolio.

The product is suitable for investors having a moderate risk profile and

seek to generate superior risk-adjusted returns.

It’s a long-only fund.

INVESTMENT STRATEGY

DE is a multi-cap strategy with endeavour to have two-thirds exposure

to Top 100 companies at any given point of time. While the rest is either

invested in good quality midcaps or partly in cash to take advantage of

volatility in the markets.

The portfolio endeavors to deliver superior risk-adjusted returns

across market cycles through a well-defined stock selection process

and has a low churn. The composition of large-cap and mid-cap

companies is fine-tuned depending upon market conditions.

PRICING & PRODUCT FEATURES

Minimum investment of Rs.50 lakh

Charges

¾ 2.5% per annum (plus taxes); AMC fee charged every quarter.

¾ 0.5% brokerage on every trade executed.

¾ 20% profit sharing after the 15% hurdle is crossed at the end of

every fiscal (with higher watermark basis).

Diversified Equity Portfolio Performance (As of February 2020)

Duration Diversified Equity* BSE 500

1 Month -4.2% -6.5%

3 Months -5.1% -6.0%

6 Months 6.4% 2.8%

1 Year 6.4% 3.0%

2 Years 2.2% -0.1%

3 Years 6.4% 6.3%

5 Years 7.2% 5.0%

*Note : Net of Quarterly AMC FeesAnnualised returns of 2 years, 3 years & 5 years

Disclaimer: Returns are based on a client’s returns since inception and may be different from those depicted in the risk disclosure document.

Top 10 Stocks – Diversified Equity

1 BAJAJ FINSERV

2 HDFC BANK

3 HINDUSTAN UNILEVER

4 JUBILANT FOODWORKS

5 KOTAK BANK

6 LARSEN & TOUBRO

7 MAHANAGAR GAS

8 RELIANCE INDUSTRIES

9 SUDARSHAN CHEMICALS

10 TITAN

-4.2%-5.1%

6.4% 6.4%

2.2%

6.4%7.2%

-6.5%-6.0%

2.8% 3.0%

-0.1%

6.3%

5.0%

1 Month 3 Months 6 Months 1 Year 2 Years 3 Years 5 Years

Diversified Equity PMS BSE 500

ADVISORY DESKMONTHLY PERFORMANCE


Advisory Products and ServicesThe Advisory Desk is a central desk consisting of a Mumbai-based expert team that runs various sample model portfolios for illustrative purposes only for clients of all profiles, be they traders or investors.

These products are different from Sharekhan research-based technical and fundamental offerings as these essentially try to capture the trading opportunities in stocks where momentum is expected before or after some event including the announcement of results or where some news/event is probable.

Advisory products are ideal for those who do not have time to either monitor the market tick by tick or shift through pages of research for data or pour over complex charts to catch a trend. However, all these products require perfect discipline and money management.

Report Card

INTRADAY CALLS

These are technical analysis calls. Calls will be generated in the cash segment and closed before the end of the trading day. These calls have pre-defined stop loss, targets. For details of the product, please write to us at [email protected].

DERIVATIVE CALLS

These calls are based on the analysis of open interest, implied volatility and put-call ratio in the derivatives market. It is a leveraged product and ideal for aggressive traders. These calls have a pre-defined stop loss, target, timeframe and quantity to be executed. For more details on this product, please write to us at [email protected].

DERIVATIVE IDEA FUTURES

Calls are in (stocks & index) futures segment, based on an analysis of open interest, implied volatility and the put-call ratio in the derivatives market. It is a leveraged product and ideal for aggressive traders. These calls have pre-defined stop loss, targets, timeframe and quantity to be executed. For more details on this product, please write to us at [email protected].

SHAREKHAN PRE-MARKET ACTION

This report gives us stocks in news, with likely the price effect which is valid for a day. The report has different sections - Stocks in News, Events, Technical View and Derivative View alongwith positive and negative bias stocks. The report is valid for a day, for more details please write to us on [email protected].

Product Intraday Calls (Cash) Derivative Calls Derivative Idea Future and Strategy

Month Feb 20 CY 20 Feb 20 CY 20 Feb 20 CY 20

No. of calls 35 74 89 202 7 15

Profit booked 18 41 46 116 3 09

Stop loss hit 17 33 43 86 4 07

Strike rate (%) 51 55 52 57 43 60

For Investor

Advisory Products & ServicesAdvisory Products & Services

T dInvestor

A i bl Id

Trader

Actionable IdeasMID Derivative Sharekhan

Pre Market ActionIntraday Calls

(Cash)

Stocks In Technical Derivative

Derivative Calls (Opt)

Derivative Idea (Fut+Opt)

Stocks In News

Technical view

Derivative view

For traders

ACTIONABLE IDEAS

These calls focus on generating absolute returns over a timeframe of 6-12 months and have a favourable risk-reward ratio. Stocks are closely tracked based on regular interaction with companies’ management to stay abreast of the business outlook. For details about the product, please write to us at [email protected].

http://[email protected].







MUTUAL FUNDS DESK MF PICKS


Data as on February 03, 2020

Scheme Name *Riskometer NAV (Rs.)

Absolute % (Point to Point)

Compounded Annualised % (Point to Point)

6 Months 1 yr 3 yrs 5 yrs Since Inception

Large Cap Funds

Axis Bluechip Fund - Growth Moderately High 32 11.6 18.7 17.4 10.0 12.3

Mirae Asset Large Cap Fund - Reg - Growth Moderately High 52 7.0 8.8 11.5 9.8 15.0

UTI Mastershare Unit Scheme - Growth Moderately High 127 9.3 9.6 9.9 6.3 15.3

Nippon India Large Cap Fund - Growth Moderately High 34 5.1 3.7 9.6 6.7 10.3

Kotak Bluechip Fund - Reg - Growth Moderately High 247 11.4 12.9 9.5 7.1 19.5

ICICI Prudential Bluechip Fund - Growth Moderately High 43 6.7 8.0 9.2 7.4 13.3

HDFC Top 100 Fund - Growth Moderately High 470 0.2 1.2 6.9 5.7 19.0

Large & Mid Cap Fund

Invesco India Growth Opportunities Fund - Growth Moderately High 36 12.3 12.3 12.7 9.2 10.9

Sundaram Large and Mid Cap Fund - Reg - Growth Moderately High 37 14.0 13.3 12.2 10.2 10.6

Kotak Equity Opportunities Fund - Reg - Growth Moderately High 131 15.6 17.3 10.6 9.4 18.2

SBI Large & Midcap Fund - Growth Moderately High 235 13.0 11.5 10.4 8.8 14.1

Principal Emerging Bluechip Fund - Growth Moderately High 111 17.0 13.8 9.6 10.4 23.9

DSP Equity Opportunities Fund - Reg - Growth Moderately High 236 13.9 15.0 8.8 10.0 17.4

IDFC Core Equity Fund - Reg - Growth Moderately High 46 10.4 7.6 7.5 7.7 11.1

ICICI Prudential Large & Mid Cap Fund - Growth Moderately High 326 7.4 7.2 5.1 5.7 17.5

Mid Cap Fund

Axis Midcap Fund - Growth Moderately High 41 18.4 20.0 16.3 10.2 17.1

Kotak Emerging Equity Fund - Reg - Growth Moderately High 43 19.5 18.9 9.3 10.8 11.9

Edelweiss Mid Cap Fund - Growth High 28 16.6 14.0 9.0 8.5 9.0

DSP Midcap Fund - Reg - Growth Moderately High 60 19.0 18.9 8.8 10.9 14.5

BNP Paribas Mid Cap Fund - Growth High 34 15.7 14.6 6.8 7.6 9.4

Franklin India Prima Fund - Growth Moderately High 980 10.3 7.4 6.6 8.2 19.1

ICICI Prudential MidCap Fund - Growth Moderately High 96 9.3 6.1 5.9 6.1 16.0

Small Cap Fund

Axis Small Cap Fund - Reg - Growth Moderately High 34 24.9 30.9 14.4 12.2 22.0

HDFC Small Cap Fund - Growth Moderately High 39 5.0 -5.6 8.0 8.8 12.3

Kotak Small Cap Fund - Reg - Growth Moderately High 79 23.7 18.2 6.8 9.0 14.8

ICICI Prudential Smallcap Fund - Ret - Growth Moderately High 27 15.5 20.1 5.8 5.6 8.4

L&T Emerging Businesses Fund - Reg - Growth High 23 8.3 -2.2 5.6 9.8 15.7

Franklin India Smaller Companies Fund - Growth Moderately High 51 7.9 -0.7 1.5 6.1 12.3

Focused Fund

Axis Focused 25 Fund - Growth Moderately High 31 14.3 21.9 16.3 11.8 16.1

SBI Focused Equity Fund - Growth Moderately High 157 14.3 22.5 15.5 11.0 19.6

Sundaram Select Focus - Reg - Growth Moderately High 190 8.0 13.1 13.0 7.5 18.3

Motilal Oswal Focused 25 Fund - Reg - Growth Moderately High 24 14.5 18.1 10.2 8.1 13.8

Aditya Birla Sun Life Focused Equity Fund - Growth Moderately High 62 9.2 12.2 8.3 7.0 13.6

Franklin India Focused Equity Fund - Growth Moderately High 41 6.5 8.9 7.1 6.7 12.0

Multi Cap Funds

Canara Robeco Equity Diversified Fund - Growth Moderately High 143 12.3 12.8 13.1 8.0 17.6

Kotak Standard Multicap Fund - Reg - Growth Moderately High 37 10.1 12.8 10.8 9.5 13.5

SBI Magnum Multi Cap Fund - Growth Moderately High 51 7.9 11.5 9.5 9.6 12.0

Nippon India Multi Cap Fund - Growth Moderately High 96 6.8 2.8 8.6 4.5 16.4

Principal Multi Cap Growth Fund - Growth Moderately High 142 8.1 4.8 8.2 7.7 14.8

Aditya Birla Sun Life Equity Fund - Growth Moderately High 763 12.5 11.3 8.2 9.2 22.4

ICICI Prudential Multicap Fund - Growth Moderately High 291 5.2 5.7 7.4 7.7 14.2

HDFC Equity Fund - Growth Moderately High 637 0.9 1.9 6.9 5.7 18.0

Sharekhan mutual fund Finder March 2020Top Equity Fund Picks

MUTUAL FUNDS DESKMF PICKS


Every individual has a different investment requirement, which depends on his financial goals and risk-taking capacities. We at Sharekhan first understand the individual’s investment objectives and risk-taking capacity, and then recommend a suitable portfolio. So, we suggest that you get in touch with our Mutual Fund Advisor before investing in the best funds.n

Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the mutual funds mentioned in the article.

Data as on February 03, 2020

Scheme Name *Riskometer NAV (Rs.)

Absolute % (Point to Point)


6 Months 1 yr 3 yrs 5 yrs Since Inception

Value & Contra Funds

Kotak India EQ Contra Fund - Reg - Growth Moderately High 55 9.8 9.8 12.3 8.4 12.4

Invesco India Contra Fund - Growth Moderately High 49 10.8 9.3 11.3 9.4 13.2

Tata Equity P/E Fund - Reg - Growth Moderately High 134 6.2 6.0 6.8 8.2 18.1

HDFC Capital Builder Value Fund - Growth Moderately High 277 3.8 -0.7 6.4 6.2 13.6

IDFC Sterling Value Fund - Reg - Growth Moderately High 48 8.3 1.3 6.2 5.7 14.2

ELSS

Axis Long Term Equity Fund - Growth Moderately High 50 14.3 21.7 15.5 10.5 17.3

Mirae Asset Tax Saver Fund - Reg - Growth Moderately High 19 9.5 12.1 13.7 -- 16.3

Canara Robeco Equity Tax Saver Fund - Growth Moderately High 69 12.0 11.5 12.3 7.6 19.2

Invesco India Tax Plan - Growth Moderately High 54 12.1 11.0 11.4 8.9 13.7

BNP Paribas Long Term Equity Fund - Growth Moderately High 42 11.4 15.8 10.6 6.9 10.6

Aditya Birla Sun Life Tax Relief 96 - Growth Moderately High 32 12.1 6.2 10.5 8.4 10.3

Kotak Tax Saver Fund - Reg - Growth Moderately High 48 13.2 16.2 10.5 8.4 11.6

DSP Tax Saver Fund - Growth Moderately High 51 10.7 15.4 9.0 9.7 13.3

Thematic/Sector Funds

Aditya Birla Sun Life India GenNext Fund - Growth High 92 15.6 16.3 12.7 11.3 16.5

ICICI Prudential Banking and Financial Services Fund - Retail - Growth High 67 7.2 12.7 11.2 11.4 18.0

Aditya Birla Sun Life Banking and Financial Services Fund - Reg - Growth

High 30 9.8 15.2 10.6 11.5 19.6

L&T Infrastructure Fund - Reg - Growth High 16 8.9 6.1 5.5 7.6 3.7

DSP Natural Resources & New Energy Fund - Reg - Gth High 29 2.4 -2.2 0.2 9.7 9.5

BNP Paribas Equity schemes

Scheme name *RiskometerScheme

Category

Absolute % (Point to

Point)


6 Months 1 yr 3 yrs 5 yrsSince

Inception

BNP Paribas Large Cap Fund - Growth Moderately High Large Cap 9.3 15.7 11.4 7.2 15.9

BNP Paribas Long Term Equity Fund - Growth Moderately High ELSS 11.4 15.8 10.6 6.9 10.6

BNP Paribas Multi Cap Fund - Growth Moderately High Multi Cap 12.7 15.8 9.2 7.8 11.9

BNP Paribas Mid Cap Fund - Growth High Mid Cap 15.7 14.6 6.8 7.6 9.4

BNP Paribas Focused 25 Equity Fund - Reg - Growth Moderately High Focused 10.3 14.2 -- -- 0.9

BNP Paribas India Consumption Fund - Reg - Growth High Thematic 16.6 23.1 -- -- 21.6

BNP Paribas Substantial Equity Hybrid Fund - Reg - Growth Moderately HighAggressive

Hybrid11.7 17.3 -- -- 10.0

*The Riskometer will indicate five levels of risk – low (principal at low risk), moderately low (principal at moderately low risk), moderate (principal at moderate risk), moderately high (principal at moderately high risk) and high (principal at high risk).

MUTUAL FUNDS DESK MF PICKS


Sharekhan mutual fund Finder March 2020

(*invested on 1st day of every month) Data as on February 03, 2020

SIP INVST (Monthly Rs. 1,000)* 1 year 3 years 5 Year

Total amount invested 12,000 36,000 60000

Scheme Name *Riskometer NAV (Rs.)Present Value (Rs.)

Compounded annualised return (%)

Present value (Rs.)


Present value (Rs.)


Large Cap Fund

Axis Bluechip Fund - Growth Moderately High 32 12,885 16.3 43,979 14.1 84,050 13.8

Kotak Bluechip Fund - Reg - Growth Moderately High 247 12,560 10.2 40,024 7.4 74,075 8.6

Mirae Asset Large Cap Fund - Reg - Growth Moderately High 52 12,231 4.2 39,741 6.9 77,504 10.5

UTI Mastershare Unit Scheme - Growth Moderately High 127 12,474 8.6 39,682 6.8 73,507 8.3

ICICI Prudential Bluechip Fund - Growth Moderately High 43 12,186 3.4 38,789 5.2 73,672 8.4

Nippon India Large Cap Fund - Growth Moderately High 34 11,920 -1.4 38,014 3.8 72,399 7.7

HDFC Top 100 Fund - Growth Moderately High 470 11,553 -7.9 37,002 1.9 70,434 6.5

Large & Mid Cap Fund

Kotak Equity Opportunities Fund - Reg - Growth Moderately High 131 13,038 19.2 41,144 9.3 78,439 11.0

Mirae Asset Emerging Bluechip Fund - Growth Moderately High 57 12,714 13.1 41,110 9.3 83,580 13.6

Sundaram Large and Mid Cap Fund - Reg - Growth

Moderately High 37 12,724 13.2 40,850 8.8 79,194 11.4

Invesco India Growth Opportunities Fund - Growth

Moderately High 36 12,631 11.5 40,635 8.4 77,891 10.7

SBI Large & Midcap Fund - Growth Moderately High 235 12,824 15.1 40,229 7.7 75,575 9.4

DSP Equity Opportunities Fund - Reg - Growth Moderately High 236 12,768 14.1 39,764 6.9 76,485 9.9

Principal Emerging Bluechip Fund - Growth Moderately High 111 12,996 18.4 39,149 5.8 76,727 10.1

ICICI Prudential Large & Mid Cap Fund - Growth

Moderately High 326 12,212 3.8 37,340 2.5 69,888 6.2

Mid Cap Fund

Axis Midcap Fund - Growth Moderately High 41 13,227 22.8 43,597 13.5 82,643 13.1

DSP Midcap Fund - Reg - Growth Moderately High 60 13,262 23.5 40,427 8.1 78,134 10.8

Kotak Emerging Equity Fund - Reg - Growth Moderately High 43 13,298 24.2 40,416 8.1 77,776 10.6

Edelweiss Mid Cap Fund - Growth High 28 12,970 17.9 38,577 4.8 72,987 8.0

BNP Paribas Mid Cap Fund - Growth High 34 13,106 20.5 38,431 4.5 70,987 6.9

Franklin India Prima Fund - Growth Moderately High 980 12,488 8.9 37,720 3.2 71,549 7.2

ICICI Prudential MidCap Fund - Growth Moderately High 96 12,373 6.8 36,656 1.2 69,028 5.7

Small Cap Fund

Axis Small Cap Fund - Reg - Growth Moderately High 34 13,900 35.9 44,913 15.7 85,320 14.5

SBI Small Cap Fund - Growth Moderately High 56 13,074 19.9 39,930 7.2 81,000 12.3

Kotak Small Cap Fund - Reg - Growth Moderately High 79 13,450 27.1 39,095 5.7 73,528 8.3

ICICI Prudential Smallcap Fund - Ret - Growth Moderately High 27 13,104 20.4 38,204 4.1 69,887 6.2

Nippon India Small Cap Fund - Growth Moderately High 40 12,622 11.4 36,486 0.9 73,064 8.0

HDFC Small Cap Fund - Growth Moderately High 39 11,716 -5.0 34,745 -2.4 69,585 6.0

L&T Emerging Businesses Fund - Reg - Growth High 23 11,978 -0.4 34,001 -3.9 69,561 6.0

Top SIP Fund Picks

MUTUAL FUNDS DESKMF PICKS


(*invested on 1st day of every month) Data as on February 03, 2020

SIP INVST (Monthly Rs. 1,000)* 1 year 3 years 5 Year

Total amount invested 12,000 36,000 60000

Scheme Name *Riskometer NAV (Rs.)Present Value (Rs.)


Present value (Rs.)


Present value (Rs.)


Focused Fund

SBI Focused Equity Fund - Growth Moderately High 157 13,054 19.5 43,200 12.8 83,154 13.4

Axis Focused 25 Fund - Growth Moderately High 31 13,052 19.4 42,661 11.9 83,989 13.8

Sundaram Select Focus - Reg - Growth Moderately High 190 12,508 9.2 40,896 8.9 77,662 10.6

Motilal Oswal Focused 25 Fund - Reg - Growth Moderately High 24 12,873 16.0 40,691 8.5 76,270 9.8

Aditya Birla Sun Life Focused Equity Fund - Growth

Moderately High 62 12,442 8.0 39,105 5.7 73,131 8.1

Franklin India Focused Equity Fund - Growth Moderately High 41 12,141 2.5 38,343 4.4 71,758 7.3

Multi Cap Funds

Canara Robeco Equity Diversified Fund - Growth

Moderately High 143 12,737 13.5 41,425 9.8 78,215 10.9

Kotak Standard Multicap Fund - Reg - Growth Moderately High 37 12,520 9.5 40,254 7.8 77,848 10.7

SBI Magnum Multi Cap Fund - Growth Moderately High 51 12,394 7.1 39,291 6.1 75,110 9.2

Aditya Birla Sun Life Equity Fund - Growth Moderately High 763 12,659 12.0 39,201 5.9 75,610 9.5

ICICI Prudential Multicap Fund - Growth Moderately High 291 12,055 1.0 37,849 3.5 71,353 7.1

Nippon India Multi Cap Fund - Growth Moderately High 96 12,007 0.1 37,667 3.1 69,401 5.9

Principal Multi Cap Growth Fund - Growth Moderately High 142 12,259 4.7 37,131 2.1 72,243 7.6

HDFC Equity Fund - Growth Moderately High 637 11,632 -6.5 36,884 1.7 70,161 6.4

Value & Contra Funds

Kotak India EQ Contra Fund - Reg - Growth Moderately High 55 12,467 8.5 40,426 8.1 77,615 10.5

Invesco India Contra Fund - Growth Moderately High 49 12,479 8.7 39,416 6.3 76,808 10.1

Tata Equity P/E Fund - Reg - Growth Moderately High 134 12,073 1.3 36,500 0.9 71,937 7.4

HDFC Capital Builder Value Fund - Growth Moderately High 277 11,717 -5.0 35,560 -0.8 67,949 5.1

IDFC Sterling Value Fund - Reg - Growth Moderately High 48 12,088 1.6 34,631 -2.6 66,950 4.5

Tax-saving funds (ELSS)

Axis Long Term Equity Fund - Growth Moderately High 50 13,037 19.2 42,932 12.4 81,563 12.6

Canara Robeco Equity Tax Saver Fund - Growth

Moderately High 69 12,681 12.5 41,290 9.6 77,376 10.4

Kotak Tax Saver Fund - Reg - Growth Moderately High 48 12,878 16.1 41,090 9.2 77,675 10.6

BNP Paribas Long Term Equity Fund - Growth Moderately High 42 12,815 15.0 40,399 8.0 73,977 8.6

Motilal Oswal Long Term Equity Fund - Reg - Growth

Moderately High 19 13,106 20.5 40,258 7.8 80,023 11.8

Invesco India Tax Plan - Growth Moderately High 54 12,642 11.7 40,129 7.5 76,040 9.7

DSP Tax Saver Fund - Growth Moderately High 51 12,554 10.1 39,930 7.2 76,527 10.0

Aditya Birla Sun Life Tax Relief 96 - Growth Moderately High 32 12,463 8.4 38,514 4.7 73,582 8.3

Every individual has a different investment requirement, which depends on his financial goals and risk-taking capacities. We at Sharekhan first understand the individual’s investment objectives and risk-taking capacity, and then recommend a suitable portfolio. So, we suggest that you get in touch with our Mutual Fund Advisor before investing in the best funds.n

Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a postition in the mutual funds mentioned in the article.

*The Riskometer will indicate five levels of risk – low (principal at low risk), moderately low (principal at moderately low risk), moderate (principal at moderate risk), moderately high (principal at moderately high risk) and high (principal at high risk).


EQUITY FUNDAMENTALS EARNINGS GUIDE

Sharekhan Earnings Guide Prices as on March 04, 2020

CompanyCMP (Rs)

Sales Net profit EPS (%) EPSgrowth

PE (x) RoCE (%) RoNW (%) DPSRs.

DivYld(%) FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E FY20E FY21E FY20E FY21E

Automobiles

Apollo Tyres 140 17,548.8 16,981.2 17,776.6 879.7 585.9 821.0 15.4 10.2 14.4 -3% 9.1 13.7 9.7 5.4 6.8 5.6 7.5 3.3 2.3

Ashok Leyland 72 29,055.0 18,998.4 20,201.5 2,040.7 593.3 542.0 7.0 2.0 1.9 -48% 10.4 36.2 38.1 6.6 5.9 7.2 6.7 3.1 4.3

Bajaj Auto 2,712 30,250.0 30,929.3 34,291.7 4,333.2 5,058.0 5,389.1 149.8 174.9 186.3 12% 18.1 15.5 14.6 26.0 25.4 20.5 19.5 60.0 2.2

HERO MOTOCORP 2,046 33,650.5 31,294.2 33,031.4 3,384.9 3,460.8 3,340.6 169.5 173.3 167.3 -1% 12.1 11.8 12.2 29.8 28.1 27.7 21.9 87.0 4.3

M&M 475 52,848.2 48,767.8 50,622.2 5,423.9 4,245.5 3,942.2 43.6 34.1 31.7 -15% 10.9 13.9 15.0 14.4 12.4 11.2 9.8 8.5 1.8

Maruti Suzuki 6,384 86,020.3 79,800.9 81,232.0 7,500.6 6,196.9 7,320.2 248.3 205.1 242.3 -1% 25.7 31.1 26.3 14.7 15.7 12.2 13.0 80.0 1.3

TVS Motor 410 18,209.9 17,179.3 19,608.3 670.1 689.3 748.8 14.1 14.5 15.8 6% 29.1 28.3 25.9 18.9 19.6 18.2 17.5 2.5 0.6

Banks & Financials

Axis Bank 682 21,708.0 24,979.0 28,151.0 4,675.9 7,363.0 9,250.0 18.2 28.6 36.0 41% 37.5 23.9 19.0 - - 10.6 12.1 0.0 0.0

Bajaj Finance 4,286 11,762.0 12,852.0 14,764.0 3,995.0 5,367.9 6,107.0 68.9 89.2 101.5 21% 62.2 48.1 42.2 - - 22.4 23.7 4.0 0.1

Bajaj Finserv 8,800 - - - - - - - - - - - - - - - - - 1.8 0.0

Bank of Baroda 73 18,683.8 25,942.9 28,378.8 433.5 865.7 4,894.8 1.6 3.2 18.3 236% 45.1 22.9 4.0 - - 4.8 5.4 0.0 0.0

Bank of India 48 13,658.0 14,555.0 16,766.0 (5,546.9) 1,151.0 2,525.0 -16.2 3.4 7.4 - - 14.2 6.5 - - 4.5 7.6 0.0 0.0

Federal Bank 83 4,176.4 4,574.9 5,655.6 1,243.9 1,556.2 2,130.8 6.3 8.0 11.0 33% 13.3 10.4 7.6 - - 11.3 14.0 1.0 1.2

HDFC 2,206 11,403.0 12,689.0 14,452.0 9,632.5 12,394.0 12,794.0 55.9 71.7 74.1 15% 39.4 30.8 29.8 - - 12.0 13.0 20.0 0.9

HDFC Bank 1,149 48,243.0 57,079.0 69,780.0 21,069.5 26,123.6 32,767.1 38.7 47.7 59.9 24% 29.7 24.1 19.2 - - 16.5 18.2 13.0 1.1

ICICI Bank 508 27,014.8 30,824.7 36,795.3 2,970.8 9,563.2 16,798.4 4.6 14.9 26.1 138% 110.0 34.1 19.5 - - 8.7 13.9 1.5 0.3

LIC Housing Finance 321 4,349.9 5,334.5 6,580.5 2,431.0 2,675.8 3,325.2 48.1 53.0 65.8 17% 6.7 6.1 4.9 - - 16.2 18.3 6.8 2.1

Max Financial 591 14,575.0 16,476.0 21,470.0 - - - - - - - - - - - - - - 0.0 0.0

Punjab National Bank 44 17,156.0 16,270.0 18,124.0 (9,975.5) 1,214.0 1,891.0 -46.9 5.7 8.9 - - 7.8 5.0 - - 3.4 7.1 0.0 0.0

SBI 285 88,349.0 1,02,605.0 1,17,155.0 862.2 16,200.0 27,787.0 1.0 18.2 31.1 467% 295.3 15.7 9.2 - - 5.1 7.3 0.0 0.0

Union Bank of India 36 10,215.0 11,325.0 13,243.0 (2,887.3) (254.7) 1,190.4 -16.4 -0.7 3.5 - - - 10.4 - - - 3.0 0.0 0.0

Consumer Goods

Britannia 3,063 11,054.7 11,716.0 13,100.5 1,156.4 1,422.8 1,663.2 48.2 59.3 69.3 20% 63.5 51.7 44.2 38.3 37.9 30.4 29.4 15.0 0.5

Emami 250 2,692.9 2,846.3 3,321.1 513.3 598.8 719.4 11.3 13.2 15.9 18% 22.1 18.9 15.8 33.7 40.8 28.0 31.5 4.0 1.6

GSK Consumer 9,502 4,782.0 5,096.4 5,616.8 868.8 1,151.6 1,234.5 206.6 273.8 293.5 19% 46.0 34.7 32.4 33.3 32.8 26.2 24.5 105 1.1

Godrej Consumer Products 632 10,314.3 10,399.6 11,815.4 1,478.5 1,608.3 1,938.1 14.5 15.7 19.0 14% 43.6 40.2 33.3 17.9 20.2 21.2 23.2 3.0 0.5

Hindustan Unilever 2,176 38,224.0 40,651.2 45,561.1 6,199.4 7,431.0 8,732.7 28.7 34.4 40.4 19% 75.8 63.2 53.8 115.3 106.2 91.5 84.3 22.0 1.0

ITC 188 45,784.4 49,460.5 54,841.7 12,386.6 14,998.7 16,382.5 10.1 12.3 13.4 15% 18.6 15.3 14.0 27.5 27.7 24.7 24.5 5.8 3.1

Jyothy Laboratories 123 1,813.6 1,894.5 2,144.7 197.6 206.9 246.8 5.4 5.6 6.7 12% 22.8 21.8 18.3 13.8 14.7 14.9 16.1 3.0 2.4

Marico 295 7,333.8 7,434.1 8,039.5 938.8 1,056.4 1,185.1 7.3 8.2 9.2 12% 40.6 36.0 32.1 40.5 40.0 32.6 31.4 3.8 1.3

Zydus Wellness 1,452 842.8 1,765.4 2,039.1 171.2 125.5 181.7 29.7 21.8 31.5 3% 48.9 66.7 46.1 5.1 6.3 3.7 5.1 5.0 0.3

IT / IT services

HCL Technologies# 563 60,427.0 70,952.0 78,819.8 10,123.0 10,919.0 11,953.4 36.8 40.2 44.1 9% 15.3 14.0 12.8 27.2 27.2 24.8 24.1 8.0 1.4

Infosys 759 82,675.0 91,735.6 1,01,015.6 15,862.0 16,698.4 18,340.2 35.4 39.1 43.1 10% 21.4 19.4 17.6 34.5 38.1 25.9 28.4 21.5 2.8

Persistent Systems 705 3,365.9 3,583.4 3,950.2 351.7 352.8 402.8 44.0 46.0 52.7 9% 16.0 15.3 13.4 19.0 20.0 14.5 15.4 11.0 1.6

Tata Consultancy Services 2,083 1,46,463.0 1,57,647.3 1,73,375.7 31,472.0 32,697.3 35,653.9 83.1 87.1 95.0 7% 25.1 23.9 21.9 39.8 39.8 34.6 34.4 26.0 1.2

Wipro 229 58,906.0 61,053.2 65,795.3 8,984.5 9,815.3 10,399.2 14.9 16.8 18.3 11% 15.4 13.6 12.5 16.4 16.9 17.8 17.2 1.0 0.4

Cap goods / Power

CESC 610 7,754.0 8,015.4 8,790.8 937.0 854.0 1,067.1 70.3 64.1 80.1 7% 8.7 9.5 7.6 7.7 8.7 8.5 9.9 17.5 2.9

Finolex cable 324 3,077.8 3,064.4 3,253.9 344.1 380.1 397.3 22.5 24.9 26.0 7% 14.4 13.0 12.5 19.1 18.4 30.1 28.4 4.5 1.4


EQUITY FUNDAMENTALSEARNINGS GUIDE

CompanyCMP (Rs)

Sales Net profit EPS (%) EPSgrowth

PE (x) RoCE (%) RoNW (%) DPSRs.

DivYld(%) FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E FY19 FY20E FY21E FY20E FY21E FY20E FY21E

Greaves Cotton 130 2,015.3 2,075.8 2,387.1 180.5 163.1 179.0 7.5 7.2 7.7 1% 17.3 18.0 16.8 26.4 27.6 22.2 22.9 5.5 4.2

Kalpataru Power Transmission 329 7,115.1 8,452.9 9,733.9 401.3 510.4 603.4 26.2 34.8 39.3 23% 12.6 9.5 8.4 21.0 21.1 15.2 15.8 3.0 0.9

KEC International 315 11,000.5 12,655.5 14,632.6 486.4 614.7 723.1 18.9 23.9 28.1 22% 16.6 13.2 11.2 24.0 23.3 23.3 23.0 3.4 1.1

Thermax 900 5,973.2 6,110.1 6,747.0 325.4 288.8 388.9 28.9 25.6 34.5 9% 31.1 35.1 26.1 16.0 18.8 10.8 14.9 7.0 0.8

Triveni Turbine 94 840.0 916.9 1,027.2 100.2 119.6 136.7 3.1 3.7 4.2 17% 30.2 25.3 22.1 33.9 30.9 23.2 21.9 0.0 0.0

V-Guard Industries 203 2,566.4 2,761.9 3,129.2 165.5 223.4 264.1 3.9 5.2 6.2 26% 52.2 38.7 32.7 29.5 28.9 22.6 22.3 0.8 0.4

Infra / Real Estate

Larsen & Toubro 1,177 1,41,007.1 1,60,976.6 1,84,099.3 8,610.4 10,456.0 12,074.3 63.4 74.6 86.1 17% 18.6 15.8 13.7 8.6 9.6 15.8 16.6 18.0 1.5

Sadbhav Engineering 65 3,549.2 2,410.2 3,121.8 186.1 96.6 147.6 10.8 5.6 8.6 -11% 6.0 11.5 7.5 5.7 7.1 4.7 6.8 1.0 1.5

Oil & gas

Oil India Ltd 110 13,735.0 12,003.9 11,534.2 3,616.9 2,485.9 2,222.5 33.4 22.9 20.5 -22% 3.3 4.8 5.4 11.1 9.8 8.8 7.6 10.7 9.6

Petronet LNG 245 38,395.4 36,035.6 39,684.7 2,291.4 3,058.2 3,210.2 15.3 20.4 21.4 18% 16.1 12.0 11.5 29.7 32.7 29.7 29.6 10.0 4.1

Reliance Ind 1,340 5,67,135.0 5,89,272.9 6,33,650.7 39,837.0 46,540.5 53,995.1 67.3 78.6 91.2 16% 19.9 17.0 14.7 10.7 11.1 12.1 12.5 6.5 0.5

Pharmaceuticals

Aurobindo Pharma 521 19,563.6 23,731.7 27,471.1 2,513.3 2,762.0 3,309.7 42.9 47.1 56.5 15% 12.1 11.0 9.2 17.0 18.6 18.1 18.2 2.5 0.5

Cadila Healthcare 256 13,165.6 14,210.9 15,491.5 1,801.9 1,550.5 1,636.3 17.6 15.1 16.0 -5% 14.5 16.9 16.0 11.1 11.2 13.5 13.0 3.5 1.4

Cipla 448 16,362.4 17,732.8 19,864.0 1,492.4 1,747.0 2,161.5 18.7 21.7 26.8 20% 23.9 20.6 16.7 12.5 14.5 11.1 12.3 3.0 0.7

Divi's Labs 2,175 4,946.3 5,538.4 6,578.6 1,352.7 1,404.6 1,742.6 51.0 52.9 65.6 13% 42.7 41.1 33.2 22.7 23.6 17.6 18.6 16.0 0.7

IPCA Lab 1,429 3,773.2 4,600.3 5,307.3 442.2 658.2 799.9 35.1 52.2 63.4 34% 40.8 27.4 22.5 20.3 20.8 19.1 19.2 3.0 0.2

Lupin 664 16,718.2 16,321.4 17,078.9 946.5 858.6 1,182.4 20.9 19.0 26.1 12% 31.8 35.0 25.5 6.4 6.5 6.2 7.9 5.0 0.8

Sun Pharmaceutical Industries 405 29,065.9 32,638.5 35,853.4 3,879.8 4,352.4 5,148.9 16.2 18.1 21.5 15% 25.0 22.4 18.9 10.6 11.7 9.6 10.3 2.8 0.7

Torrent Pharma 2,183 7,462.0 8,144.5 8,987.6 793.0 1,022.5 1,308.3 46.6 60.1 77.0 28% 46.8 36.3 28.4 15.6 18.0 19.7 20.9 4.0 0.2

Building Materials

Grasim 690 20,550.4 19,149.5 20,846.3 2,883.3 1,327.9 1,603.0 43.8 20.2 24.4 -25% 15.7 34.2 28.3 2.7 3.2 3.1 3.6 7.0 1.0

Shree Cement 23,256 11,722.0 12,618.1 14,587.3 1,138.7 1,410.8 1,667.6 326.8 391.0 462.2 19% 71.2 59.5 50.3 11.5 12.2 12.4 13.1 60.0 0.3

The Ramco Cements 750 5,146.3 5,536.9 6,275.1 501.0 573.0 680.6 21.3 24.3 28.9 17% 35.3 30.8 26.0 8.3 8.5 12.2 13.0 3.0 0.4

UltraTech Cement 4,173 40,000.8 42,141.2 46,074.2 2,526.3 3,832.6 4,323.1 87.5 132.8 149.8 31% 47.7 31.4 27.9 10.0 10.2 12.9 12.9 11.5 0.3

Discretionary

Arvind* 37 7,142.2 7,694.6 8,350.4 264.8 207.2 254.5 10.3 8.0 9.8 -2% 3.6 4.6 3.7 6.6 7.2 7.3 8.5 2.0 5.5

Century Plyboards (India) 155 2,280.4 2,402.5 2,680.8 166.2 227.6 241.0 7.5 10.2 10.8 20% 20.8 15.2 14.3 17.4 16.8 21.2 18.8 1.0 0.6

Info Edge (India) 2,654 1,098.3 1,311.5 1,549.7 315.1 340.3 437.8 25.8 27.8 35.8 18% 102.7 95.5 74.1 18.6 20.2 13.4 15.0 6.0 0.2

Inox Leisure 381 1,692.0 2,030.0 2,391.0 139.0 135.0 181.0 14.1 13.6 18.4 14% 27.1 28.0 20.7 22.7 15.1 17.8 19.3 1.0 0.3

Relaxo Footwear # 692 2,292.1 2,612.0 3,065.2 175.4 239.4 298.9 7.1 9.7 12.1 30% 97.5 71.7 57.4 28.5 29.3 19.9 21.1 1.8 0.3

Titan Company Limited 1,251 19,778.5 21,793.1 25,456.7 1,519.0 1,626.6 1,976.5 17.1 18.3 22.3 14% 73.3 68.3 56.2 32.6 32.7 24.8 25.4 5.0 0.4

Wonderla Holidays 202 282.0 289.7 320.1 55.4 59.9 68.4 9.8 10.6 12.1 11% 20.6 19.1 16.7 8.9 9.9 7.2 7.9 1.8 0.9

Diversified / Miscellaneous

Bajaj Holdings 3,324 426.7 - - 3,048.8 - - 273.9 - - - 12.1 - - - - - - 32.5 1.0

Bharat Electronics 75 12,164.0 13,214.0 14,536.0 1,886.0 1,920.0 2,040.0 7.7 7.9 8.4 4% 9.7 9.5 8.9 19.5 18.9 19.8 19.1 3.4 4.5

Bharti Airtel 517 80,780.2 86,614.1 99,465.0 (3,977.8) (4,975.6) 1,712.0 -10.0 -9.5 3.3 - - - 154.9 4.2 7.5 - 3.7 2.5 0.5

Gateway Distriparks 125 430.6 1,267.7 1,416.2 84.6 50.3 60.5 7.8 4.6 5.6 -15% 16.1 27.0 22.5 7.1 8.7 3.8 4.6 7.0 5.6

PI Industries 1,576 2,841.0 3,528.0 4,844.0 410.0 529.0 737.0 29.8 38.5 53.6 34% 52.9 40.9 29.4 27.1 30.7 21.0 23.8 4.0 0.3

Ratnamani Metals and Tubes 1,327 2,755.0 2,679.0 3,108.0 253.0 304.0 327.0 54.1 65.0 70.1 14% 24.5 20.4 18.9 21.2 21.7 18.3 16.9 9.0 0.7

Supreme Industries limited 1,236 5,612.0 5,833.0 6,587.0 381.0 510.0 539.0 30.0 40.2 42.4 19% 41.1 30.7 29.1 22.5 22.2 20.5 19.0 13.0 1.1

UPL 512 21,837.0 34,120.0 37,959.0 1,898.0 2,390.0 3,297.0 24.8 31.2 43.1 32% 20.6 16.4 11.9 10.2 13.1 15.7 19.6 5.3 1.0

Note: Grasim- Changed reporting to standalone financial numbers HCL Technologies post 1:1 bonus



Remarks

Automobiles

Apollo Tyres (ATL) Q3FY2020 operating results were in line with estimates. ATL expects domestic demand (65% of

revenue) to recover in FY2021 due to a pick-up in economic growth and huge infrastructure investments

by the government. Original equipment manufacturer (OEM) sales are also expected to recover

after transition to BS-VI norms and the receding impact of axle load norms. Margins are expected to

improve, driven by soft commodity prices and ramp-up at the Hungary plant (management is targeting

breakeven by FY2022). We upgrade our recommendation to Buy as we rollover our multiple on

FY2022E earnings.

Ashok Leyland Ashok Leyland Limited (ALL), the second-largest CV manufacturer in India, is a pure play on commercial

vehicles. MHCV industry is expected to be in declining trend over next 3-4 quarters given weak

economic growth and cost increases due to the shift to BS-VI norms. Post transition to BS-VI norms

(in April 2020) and with the industry absorbing excess capacity created due to axle load norms, the

medium & heavy commercial vehicle (MHCV) segment is expected to revive from H2FY2021. Moreover,

with the government announcing various measures to boost the economy (including corporate tax

cut and sector-specific measures), economic growth is expected to gain momentum in the next 3-4

quarters, in turn propelling MHCV demand. We retain Hold rating on the stock.

Bajaj Auto Bajaj Auto Limited’s (BAL) Q3FY2020 results are ahead of ours as well as the street’s estimates as

the company posted the highest margins in the past seven quarters. BAL is expected to continue

outpacing the industry and plans to launch new products with enhanced features in the domestic

market. BAL has launched the electronic injection system in its entry motorcycles to meet BS-VI

emission norms as against fuel injection launched by competition. As per management, electronic

injection system costs slightly lower than fuel injection and the company can utilise the differential

to provide additional features, leading to market share gains. Moreover, export outlook continues to

remain robust with the company expecting double-digit growth to continue for the next two to three

quarters. We retain our Buy recommendation on the stock.

Hero MotoCorp Hero MotoCorp Limited’s (Hero) Q3YF2020 results were better than our as well as street estimates

as operating margins surprised positively. The two-wheeler industry’s demand pressures are likely to

sustain in the near term due to steep cost increases on account of transition to BS-VI emission norms

(the industry is likely to see cost increases of 12-15%). Hero expects demand to remain weak in the

next 2-3 quarters and expects sustained recovery to take time. Hero expects the industry to recover

from H2FY2021, driven by improved economic growth and better rabi sowing. We retain our Hold

recommendation on the stock.

M&M M&M’s Q3FY2020 operating results were in line with estimates. Margins improved on yoy basis

despite a 6% fall in the topline due to cost-control initiatives, a better mix and softening commodity

prices. M&M’s volume trajectory is expected to significantly improve in FY2021. New launches in

the utility vehicle segment and conversion of the entire portfolio to petrol (industry expected to shift

towards petrol post the implementation of BS-VI emission norms) would shore up volumes. Moreover,

with higher rabi sowing, M&M tractor segment is expected to grow by 5% in FY2021. M&M’s volumes

would improve substantially and we expect mid-single digit growth in the next two years as against a

9% drop expected in FY2020. We retain Buy rating on the stock.

Maruti Suzuki Maruti Suzuki India Limited (MSIL) is India’s largest passenger vehicle (PV) manufacturer. The company

held a strong 51% market share as of FY2019. Q3FY2020 results were lower than ours as well as

consensus estimates. We expect MSIL’s volumes to remain muted for 2-3 quarters, as the company



transitions from BS-IV to BS-VI emission norms. Moreover, the company’s exit from the diesel segment

with the introduction of BS-VI norms would keep volumes subdued. We expect sustained recovery

only from H2FY2021 post transition to BS-VI norms and gradual improvement in the economy and

financing situation. Hence, we retain our Hold rating on the stock.

TVS Motor TVS Motor (TVSM) is India’s fourth largest two-wheeler manufacturer present in the scooter segment.

The company manufactures mopeds and motorcycles as well. TVSM expects the two-wheeler industry

to recover from H2FY2021, driven by robust rural sentiments due to higher rabi sowing, improving

economic growth and liquidity situation. Moreover, margin improvement is expected to sustain given

the company’s focus to improve localisation further and control costs. We expect margin improvement

to sustain and expect TVSM earnings to grow in double digits from FY2021 as against a flat profit

expected in FY2018-FY2020. We rollover our price target on FY2022 earnings and upgrade our

recommendation to Hold from Reduce earlier.

Banks & Financials

Axis Bank Axis Bank is the third-largest private sector bank, which is growing faster than the industry and

has a well- diversified loan book with strengths in both retail and corporate segments. The bank’s

liability profile has improved significantly, which would help sustain margins at healthy levels. Of late,

asset quality is improving, which we believe is positive for its profitability and growth, going forward.

Business restructuring along with drivers such as normalisation of corporate fee income and growth

from retail and midmarket groups are steps in the right direction, which will augment sustainability

and profitability. The bank may explore opportunities in the insurance business, as the new leadership

settles down. The bank has a strong market position across most digital payment products.

Bajaj Finance Bajaj Finance, owned by Bajaj Finserv, is a fast-growing, well-diversified leading NBFC. The company

has its assets spread across products, viz. loans for consumer durables, two-wheelers and three-

wheelers, loans to small and medium enterprises (SME), mortgage loans and commercial loans. The

company’s strong loan growth, asset quality and provisioning, sets Bajaj Finance’s performance

among the best in the system. Given the strong growth rate, high margins and attractive return ratios,

its premium valuations within the NBFC space are expected to be maintained.

Bajaj Finserv Bajaj Finserv is a financial conglomerate with subsidiaries in the financing business, life insurance and

general insurance segments. We expect its subsidiary, BFL, to maintain its loan book trajectory as well

as profitability and margins, which will be the key support for present valuations of Bajaj Finserv. Bajaj

Allianz General Insurance Company (BAGIC) is expected to continue its healthy operating metrics

and profitability going ahead. BALIC is focusing well on strengthening its distribution channel and

protection business, but profitability will depend on the pace and segment of new business growth.

Bank of Baroda Bank of Baroda has over 9,400 branches across India and abroad, along with a diversified products

and services portfolio and strong client relationships. Business growth as well as profitability and

asset-quality improvement is gradual but in the desired direction. Two other PSU banks have been

merged with Bank of Baroda. Notwithstanding the synergies that will accrue over the long run, we

believe near-term challenges in terms of asset quality and integration issues of the merged entity may

mute medium-term performance.

Bank of India Bank of India (BOI), established in 1906, is one of the largest PSU banks in the country. The bank,

headquartered in Mumbai, has a strong presence in Western and Eastern regions of India. The bank

has over 5,100 branches and 5,800 ATMs across India. The government holds a stake of ~89% in the

bank. Operating performance and earnings have been affected by a sharp rise in NPAs. However,

going forward, credit traction is expected to start gradually as the bank has exited the prompt corrective



action (PCA) framework. As several segments are undergoing stress and weak credit demand, we

expect credit growth and margins for BOI are likely to be muted for the medium term.

Federal Bank Federal Bank is among the better-performing old private-sector banks in India with a strong presence

in South India, especially Kerala. We believe the bank’s growth is in the desirable direction and the

accompanying vectors indicate sustainability and quality of the bank. We believe incremental loans

to better-rated borrowers, lesser addition to the stressed asset pool, and high provision coverage are

positives, but asset-quality performance will continue to be a key monitorable for the medium term.

HDFC HDFC Limited is among the top-performing housing finance companies in the country having deep

roots in the retail segment. Despite the general slowdown in credit growth, HDFC continues to report

strong growth in advances with stable margins. Aided by a strong business franchise, best-in-class

credit ratings and impeccable asset quality, HDFC is a safe bet with a scope for steady business

growth-led value creation.

HDFC Bank HDFC Bank is among the top performing banks with deep roots in the retail segment. Despite the

general slowdown in credit growth, the bank continues to report strong growth in advances from retail

products. Relatively high margins (as compared to peers), a strong branch network and better asset

quality make HDFC Bank a safe bet with a scope for expansion in its valuations.

ICICI Bank ICICI Bank is India’s largest private sector bank with over 5,200 branches. The bank has made inroads

in to retail loans and has significantly improved its liability franchise. We believe that its NPA cycle is

peaking and uncertainty regarding top leadership behind, along with strong capital adequacy and a

wide branch network and business will gather pace in the long run. The bank has shown improvement

in key operating parameters and has a better asset-quality outlook. The bank appears to be well-

positioned to benefit from a reduction in competitive intensity from NBFCs, and political stability is

expected to gather pace in reforms such as IBC, which will be positive for recoveries/resolutions and

credit demand revival.

LIC Housing LIC Housing Finance is one of the largest mortgage financiers in India and is promoted by Life

Insurance Corporation of India. With over 282 marketing offices, the company has one of the

strongest distribution networks to support business expansion. Though factors such as rising interest

rates and a strong parent bode well for the NBFC, we believe increasing competitive pressures may

keep NIM range-bound in the near to medium term. A soft scenario in the builder loan segment and

deterioration in the asset quality warrants caution. Recoveries in retail and developer book and loan

growth momentum in the next few quarters would be key monitorables.

Max Financial Services Max Life Insurance is owned by Max Financial Services (MFS) and is among the leading private sector

insurers that has gained critical mass and enjoys the best operating parameters in the industry. MFS

is effectively building an attractive insurance franchise characterised by a multi-channel distribution

network built upon a conservatively underwritten insurance business. Management has reiterated

its strategic guidance of more than a 25% growth in VNB, ~25% VNB margin and ~25% ROEVs by

FY2022. The strategy to achieve a balanced product mix and focus on non-par savings with the

protection segment will be margin-accretive.

PNB Punjab National Bank (PNB) has strong liability mixes in the banking space, with low-cost deposits

constituting over 40% of its total deposits. PNB has done a significant amount of business and process

enhancement/upgradation to mitigate operational and credit risks after the fraud, yet asset-quality

performance has been subdued. Further development in resolution/recovery of NCLT exposures as

well stress in the SME segment warrant a cautious approach. Risks of chunky slippages/haircuts are

present in the near term.



SBI State Bank of India (SBI) is India’s largest bank. The successful merger of associate banks and value

unlocking from the insurance business could provide further upside for the bank. While the bank is

favourably placed in terms of liability base and the operating profit is better than peers, asset quality

is also improving aided by strong resolution/recoveries. SBI is well capitalised (Tier-1 at 11.6% and

CET-1 at 10.18%) and, coupled with an enviable reach and business strength, we believe SBI is a strong

business franchise, which is well placed to gain market share as well as quality clients in the medium

to long term. SBI’s status as the market maker in terms of domestic interest rates places it at an

advantage to other PSU bank peers, providing a cushion to margins.

Union Bank of India Union Bank of India has a strong branch network and an all-India presence. The bank’s asset-quality

challenges have come to the fore (mainly from the corporate portfolio), whereas weak capital position

remains an area of concern. An increase in credit cost guidance indicates a wobbly asset-quality

outlook for Union Bank of India largely as stressed exposures of the bank continue to be a dampener.

Other concerns pertaining to growth, provisions, impact of taxation going ahead, etc. also add up to

dim the overall outlook.

Yes Bank Yes Bank started its operations in November 2004. In the backdrop of rating downgrades as well as

concerns on book quality, we believe raising equity capital for the bank becomes difficult once again.

We believe operating performance has deteriorated and there is a risk of further negative surprises

in asset quality. While the capital raise may be perceived as a succor, we believe that a large stressed

pool, threshold capital position etc. continue to pose risk. Moreover, the pricing and the resultant

dilution are not clear. Upward revision in stressed exposure and credit costs raises concerns.

Consumer Goods

Britannia Britannia is one of the largest domestic biscuit and snacking companies (it gained top position

in domestic biscuit market, beating Parle) with a turnover of over Rs. 10,000 crore. Under a new

leadership, the company has been able to leverage and monetise its strong brand and premium

positioning in the biscuits and snacks segments (achieved volume growth of 2% in Q3FY2020). A

recovery in the volume growth to 5-7% is expected in H1FY2021 on the back of overall improvement in

rural demand, which is expected to recover on account of a better rabi season. Sustained innovation

in the product portfolio, expanding distribution reach, entry into newer categories and focus on cost

efficiency will help the company maintain steady earnings growth in the medium term.

Emami Emami is one of the largest players in the domestic FMCG market with a strong presence in

underpenetrated categories such as cooling oil, antiseptic creams, balm and men’s fairness creams.

The initiatives behind key brands (such as Kesh King and Boroplus) have started giving positive results

for the company with brands such as Kesh King hair oil, Navratna and 7-oils-in-1 delivering double-

digit revenue growth in Q3FY2020. The management expects volume growth to recover to 8-10%

if the summers begin on time. Most brands from the power portfolio (including Kesh King hair oil &

Zandu Pancharishta) have started showing recovery in performance post the succession of strategic

initiatives undertaken in the past. We should expect the business to normalise by Q1FY2021. Further,

benign input prices would help maintain operating margins at about 28%. We expect a revival to take

some time and maintain our Hold recommendation on the stock.

GSK Consumer GSK Consumer Healthcare is a leading player in the malted food drinks (MFD) segment with a ~70%

share in the domestic market. We expect volume growth to sustain at 3-5% in the coming quarters

as allied products and new launches are gaining good traction in the domestic market. In December,

2018, GSK Plc exited the Indian nutrition business and sold 100% stake in GSK Consumer to HUL in an

all-equity deal valued at Rs. 31,700 crore (share exchange ratio is 4.39 shares of HUL for every share

of GSK Consumer). Approval has been received from both the Mumbai and the Chandigarh bench of

the National Company Law Tribunal (NCLT) and the integration will be completed by end of FY2020.



The company’s business fundamentals have improved, which will result in better performance in the

coming quarters. We maintain our Hold recommendation on the stock.

GCPL Godrej Consumer Products Limited (GCPL) is a major player in the personal wash, hair colour and

household insecticide market segments in India. GCPL registered soft operating performance in

Q3FY2020 affected by price-offs in the domestic market and volatile currency in the international

markets. Volume growth was sustained at 7% whereas the household insecticides (HI) segment posted

recovery in performance with mid-single-digit volume growth. The company continues to witness

market share in the domestic soap and HI categories due to relevant price and consumer offers. On

the international front, Indonesia continued to perform well. However, volatile currency will continue

to affect margins. The receding of concerns hovering around domestic HI business (receding threat

of illegal incense sticks) and international geographies performing well gives us improved earnings

visibility in the near term. Hence, we maintain our Buy rating on the stock.

HUL Hindustan Unilever Limited (HUL) is India’s largest fast-moving consumer goods (FMCG) company.

HUL reported decent operating performance with 5% volume growth in Q3FY2020 in the backdrop

of tough demand. Rural demand remains sluggish and we expect volume growth to be at 5-6% in the

near term and expect it to improve gradually with better demand. This would result in decent revenue

growth in the coming quarters. With input prices (including that of palm oil) going up, operating profit

margin (OPM) expansion would be limited and will largely be driven by efficiencies. However, volatility

in crude oil prices will play a key role in determining profitability in the coming quarters. Further,

the recent acquisition of GSK Consumers’ domestic health food business will scale up HUL’s food

business and will help it grow in double digits in the near to medium term. HUL remains one of our top

picks in the FMCG space

ITC Sales volume growth for the cigarette business stood at just 2% in Q3FY2020. The government has

increased tax rate of cigarettes in the Union Budget which will put stress on cigarette sales and

volumes in the near term. Revenue of the non-cigarette FMCG business is expected to grow in high-

single digits to low double digits in the near term as the slowdown in demand is likely to persist in

the near term. However, a higher scale will support the business’ overall margins in the medium term.

We expect the company’s hotels business to also deliver strong performance FY2020, with demand

for rooms likely to exceed room supply supported by reduction in GST rate on hotels. The paper,

paperboard and packaging (PPP) business will continue to post higher profitability on account of a

better revenue mix and benign input cost. However, the stress on the core cigarette business would

result in moderate earnings growth in the near to medium term. Thus, in view of near-term headwinds,

we have downgraded our rating on the stock to Hold.

Jyothy Labs Jyothy Laboratories Limited (JLL) is the market leader in the fabric whitener segment in India. With a

strong brand portfolio in the fabric care and dishwashing space, JLL is well poised to achieve revenue

growth in mid-teens in the near to medium term. The key highlight of the Q3FY2020 was that the

household insecticide (HI) segment recovered by registering a 5% volume growth. If the HI segment

maintains the positive growth momentum, the management is confident of achieving 4-5% revenue

growth in Q4FY2020. The company expects OPM to sustain at 16% in FY2020. We have a Hold


Marico Marico is among India’s leading FMCG companies. Core brands such as Parachute and Saffola have

a strong foothold in the market. The company’s Q3FY2020 performance was affected by a sustained

slowdown in domestic demand. This was because of a sharp fall in sales of categories such as

value-added hair oils (VAHO) as consumers shifted to lower-end of the product portfolio, while some

consumers shifted to unbranded products. The company is going to invest in low-cost products in the

value-added hair oil (VAHO) segment to drive growth going ahead. The management expects volume



growth to recover in another 2-3 quarters. Copra prices (35-40% of Marico’s raw-material cost) are

down and the softening price trend would aid margins to remain high on a y-o-y basis in the near to

medium term. We maintain our Buy recommendation on the stock.

Zydus Wellness Zydus Wellness now has a product portfolio of brands such as EverYuth, Nutralite and Sugar Free

along with Glucon D and Complan post the acquisition of Heinz India. Zydus Wellness has a strong

portfolio of leading brands, which are largely placed in low-penetrated categories. The company

posted subdued performance in Q3FY2020; however, it maintained its leadership positions in most

key categories. The company is working on cost synergies through the merger and expects a saving

of Rs. 40 crore in 2-3 years. However, due to lack of clarity on the seasonality of the Heinz portfolio

over the next two quarters, we would not like to change our stance on the stock. We have a Hold

rating on the stock.

IT/IT services

HCL Tech HCL Technologies has a leadership position in infrastructure management services (IMS) and

engineering and research & development (ERD) space. Management has tightened its revenue growth

guidance to 16.5-17% for FY2020E, implying 0.3-2% revenue growth in Q4FY2020. The company

has increased EBIT margin guidance for FY2020E to 19-19.5% from 18.5-19.5% earlier. Qualified deal

pipeline is at an all-time high for HCL Tech, which provides hope of higher conversion into deals in

Q4FY2020. Strong performance during the first nine months of FY2020 along with large addressable

opportunity in information management systems (IMS) provides visibility of industry-leading organic

revenue among large peers in FY2020E.

Infosys Infosys is India’s premier IT and ITeS company that provides business consulting, technology,

engineering and outsourcing services. The company expects its Pentagon agile digital service

architecture to help to address the client’s digital requirements. The management has raised revenue

growth guidance to 10-10.5% in CC from 9-10% earlier, implies flat revenues to 1.5% growth for Q4FY20.

With robust TCV signings, a healthy deal pipeline and integrated offerings, we believe Infosys would

comfortably achieve its revenue growth guidance. Infosys has retained EBIT margin guidance band to

21-23% for FY2020E. The clean chit to both CEO and CFO in whistleblower issue allays the concerns

and removes overhang on the stock.

Persistent Persistent Systems has proven expertise and a strong presence in newer technologies, strength to

improve its IP base and a decent margin profile, all of which set it apart from other mid-cap IT companies.

PSL is focusing on the development of Internet of Things (IoT) products and platforms, as it sees a

significant traction from industrial machinery, SmartCity, healthcare and smart agriculture verticals.

With the strong growth in the BFSI vertical (6.2% CQGR in the last four quarters), we expect that the

revenue growth would accelerate in FY2021E on the back of higher deal wins with increasing TCVs,

healthy deal pipelines, top accounts mining, new service offerings across the verticals and addition of

new logos. Reasonable valuation and high cash & cash equivalents (25% of market capitalisation) offer

us comfort on the stock.

TCS Tata Consultancy Services (TCS) is among the pioneers in the IT services outsourcing businesses

in India and is the largest IT services firm in the country. TCS has managed the cost structure well

during Q3FY2020, resulting in 100 bps q-o-q increase in EBIT margins. The management hopes EBIT

margins would improve gradually/ remain in a narrow band with an upward bias in the coming quarters

on account of pyramid rationalisation (adjusting variable pay), improving utilisation and control on

subcontracting expenses. With integrated offering, leadership across markets, digital competencies

and new market expansion opportunities, TCS is expected to continue to gain market share.



Wipro Wipro is among the top five IT companies in India. The management has guided revenue growth

guidance of 0%- 2% for Q4FY2020E, in line with our expectation. We expect revenue growth in

FY2020E could be lower than underlying revenue growth of FY2019 owing to its high exposure to the

impacted segments of financial services, viz. capital markets and European banks. With inconsistent

execution along with macro uncertainties, underperformance on revenue growth among large peers

will likely continue.

Capital Goods/Power

CESC CESC, an RP-Sanjiv Goenka Group company, is a fully integrated power utility company. The company

has stable earnings contribution from standalone operations with regulated power generation and

distribution businesses getting assured RoE of 15.5% on generation assets and 16.5% for distribution

assets. Reducing loss at Dhariwal Infrastructure and Rajasthan distribution franchisee makes CESC an

attractive investment proposition.

Finolex Cables Finolex Cables, a leading manufacturer of power and communications cables, is set to benefit from

improving demand for cables, its core business. The company is leveraging its brand strength to build

a high-margin consumer product business, although scaling up the business would be gradual. The

company faces near-term headwinds due to slowdown in construction activity affecting its electrical

division, while funding crunch in the telecom industry is expected to affect optical fibre cable revenue,

affecting its communication cable segment. Further, increased advertising spends in consumer

durables are expected to limit its profitability in the FMEG space. We have a Hold rating on the stock

due to near-term challenges in its key business verticals.

Greaves Cotton Greaves Cotton Limited (GCL) is a mid-size and well-diversified engineering company. Core

competencies of the company are in diesel/petrol engines, power gensets, agro engines and pump

sets (engine segment). GCL’s Q3FY2020 results were better than estimates as operating margins

surprised positively. Going ahead, we expect volume pressure to sustain as diesel three-wheelers

engines are expected to fall in FY21 due to steep cost increases (about 40-45% cost increase expected)

on account of implementation of BS-VI emission norms. We expect share of diesel three-wheelers to

fall further in post BS-VI era. Drop in diesel three-wheelers volumes would offset a strong growth in

electric scooters and in the aftermarket segment. We expect overall volumes to be flattish in FY21. We

retain our Hold rating on the stock.

Kalpataru Power Kalpataru Power Transmission (KPTL) is a leading EPC player in the power transmission and distribution

space in India. Opportunities in this space are likely to grow significantly, thereby providing healthy

growth visibility. Management trimmed its revenue growth guidance to 18-20% for FY2020 versus a

guidance of more than 20% y-o-y earlier along with stable OPM of 10.5-11% for FY2020. We maintain

our Buy rating on KPTL fine tuning the estimates for FY20-21 and have also rolled forward our valuation

multiple to FY2022E standalone earnings and revised valuation on JMC Projects.

KEC KEC International is a Global Power Transmission Infrastructure EPC major. The company is present

in the T&D, cables, railways, water, renewable (solar energy) and civil works verticals. Globally, the

company has powered infrastructure development in more than 61 countries. KEC is a leader in power

transmission EPC projects and has more than seven decades of experience. Over the years, it has

grown through the organic as well as inorganic route. Order book remains strong, providing two-year

revenue visibility; and order inflow visibility remains healthy in international T&D and railways. We

retain our Positive outlook on the stock.



Thermax The energy and environment businesses of Thermax are direct beneficiaries of the continuous rise

in India Inc’s capex. The company’s declining order book remains a concern, which is currently at

Rs. 5,439 crore order backlog (0.8x TTM revenue; down 17% y-o-y). Weak international order inflows

and limited visibility for big ticket- size domestic orders led to management’s reiteration for similar

order inflows in FY2020 as seen in FY2019. Lower carry-forward order book along with lower

capacity utilisation in most core user industries is likely to impact order inflows at least for FY2020.

Management expects better ordering both in its energy and environment segments as the enquiries

pipeline remains positive in domestic as well as international markets in FY2021. We maintain our Hold

rating on the stock.

Triveni Turbines Triveni Turbines Limited (TTL) is a market leader in 0-30 MW steam turbine segment. TTL order

book came lower at Rs. 694 crore amounting to ~0.8x of its TTM consolidated revenue. Although

management is confident of better performance ahead and stable margins, we have conservatively

built these in our estimates. Exports order booking declined in 9MFY2020; although domestically,

the company was able to book higher orders. Enquiry pipeline remained healthy, although fructifying

of the same remains to be seen in a weak macro environment. Conversion of exports opportunity

remains a key monitorable going ahead. Factoring near-term uncertainties in terms of execution and

order inflow we have lowered our valuation multiple and have rolled forward it to FY2022E earnings.

We maintain our Hold rating on the stock.

V-Guard V-Guard Industries is an established brand in the electrical and household goods space, particularly

in South India. Over the years, the company has successfully ramped up its operations and network

to become a multi- product company. The company is currently facing near term headwinds like

weak demand, increased competitive intensity and possible scarcity of key components from China.

However, the increasing contribution from non-South region, launch of new products and increasing

penetration in tier II & III cities is expected to revive the company’s double digit revenue growth

trajectory in the medium term. A strong cash position may lead to inorganic expansion at favourable

valuations, considering weak environment. We have fine tuned our estimates for FY2020-FY2021

and have introduced FY2022E estimate. Factoring in near-term weak demand, we have lowered our

valuation multiple and have also rolled forward it to FY2022E earnings. We continue to maintain Buy

as we expect strong net earnings growth driven by OPM expansion owing to muted demand in the

near term.

Infrastructure/Real Estate

L&T Larsen & Toubro (L&T), being the largest engineering and construction company in India, is a direct

beneficiary of the domestic infrastructure capex cycle. The government’s thrust on infrastructure

investment to remain and expect revival in project tendering. The company is expected to perform

well, backed by its sound execution track record and healthy order book. Measures planned by the

company to improve its return ratios augur well. Hence, we remain Positive on the stock.

Sadbhav Engineering (SEL) SEL is engaged in 1) EPC business for transport, mining and irrigation sectors and 2) development

of roads and highways on BOT basis through SIPL. SEL has a healthy order book of Rs. 8,726 crore

(3x its TTM standalone revenue). The company has robust in-house integrated execution capabilities

with qualified human resource and owned equipment. We expect SEL to benefit from better order

execution, enhanced order inflows (particularly from the transport segment) and resolution of working

capital issues, resulting in a sturdier balance sheet. Further, the improving outlook for the Indian road

sector and limited competitive intensity augur well for SEL since it is present in both the asset creation

and EPC verticals.



Oil & Gas

Oil India Oil India has several hydrocarbon discoveries across reserves in Rajasthan and the northeastern

regions of India. The company holds domestic 2P (proved and probable) reserves of 76 mmt for oil

and 130 bcm for gas. Reserve- replacement ratio of the company is also healthy. The stock offers a

high dividend yield.

Petronet LNG Petronet LNG is the largest LNG re-gasifier in India with 17.5 mmt LNG terminal at Dahej and 5 mmt LNG

terminal at Kochi. The company’s Dahej terminal enjoys a competitive edge compared to other LNG

import terminals given its low tariff and long-term contracted volume with use or pay clause. We expect

the Dahej terminal to operate at 100% utilisation, given its competitive edge, while Kochi terminal

utilisation is expected to improve with resolution of pipeline connectivity issues in southern India.

Petronet LNG would be the key beneficiary of rising share of LNG in India’s overall gas consumption.

Reliance Industries Reliance Industries has one of the largest and complex refining businesses in India and enjoys a

substantially higher refining margin over the benchmark Singapore Complex gross refining margins

(GRM). We expect GRM to recover with ramp-up of petcoke gasification project and implementation

of revised IMO regulations. Large investment in Reliance Jio could add value in the long term.

Deleveraging of consolidated balance sheet and likely value unlocking from retail and digital platform

businesses are key triggers in the near to medium term.

Pharmaceuticals

Aurobindo Pharma Aurobindo’s Q3FY2020 results were in line with our estimates. Aurobindo is witnessing higher USFDA

scrutiny over the past six to nine months, pointing at elevated regulatory risks. More than 50% of the

company’s fillings are from impacted plants; hence, resolution of USFDA issues is a key parameter to

watch for, as revenue from the US hold a 50% share in the total pie. The management is confident of

submitting the responses in a timely manner and re-inspection of the plants is likely to happen in the

near term. We believe the uncertainty related to regulatory hurdles at various units will weigh on the

stock performance (until they are resolved successfully). We maintain our Hold rating on the stock.

Cadila Cadila’s Q3FY2020 results were weak. Cadila’s India and US businesses are well placed to capitalise

on growth opportunities. Management has guided for healthy growth in the both the Indian as well as

US business. Further, following a warning letter to Moraiya plant, the company has stopped production

and has initiated a site transfer, which is expected to be completed by FY2020. We expect the

regulatory issues at Moraiya plant to overweigh on the stock until completely resolved. We retain our

Hold recommendation on the stock.

Cipla Cipla reported a muted results for Q3FY2020. Cipla’s domestic business is on a strong footing and

is a key growth driver. The management’s effort to merge the three businesses (prescription, trade

generics and consumer health) is expected to yield synergies, which augur well for the company. New

launches lined up by the company in the US in the near to medium term would boost revenues. Also,

the management is working closely with the USFDA to resolve issues at its Goa plant (OAI indicated

by the US FDA) and seems confident of a resolution. We retain our Buy recommendation on the stock.

Divis Labs Q3FY2020 was a soft quarter for Divis Laboratories. The management has maintained its revenue

growth guidance of 10% for FY2020, despite a slow topline growth in the previous two quarters. This

points at a likely sturdy revenue growth for Q4FY2020. Further, the recent outbreak of Corona virus

in China has resulted in a hunt for an alternative sourcing base and global players are looking at India

for the same. This augurs well for API focused companies like Divis. With partial commencement of

the backward integration project, gross margins have improved sequentially and are expected to rise



further. We believe Divis could benefit from its focus on completing backward integration and a large

capex project, as well as from a supply disruption in China. We retain our Buy recommendation on the

stock.

IPCA Lab IPCA reported impressive results for Q3FY2020. Numbers were ahead of estimates, aided by strong

double- digit growth across the formulations and API businesses. Traction across the formulation and

API business, improved product mix and a substantial drop in the remedial cost are expected to be the

key earnings drivers. We expect IPCA’s sales and profit to report CAGR of 16% and 20%, respectively,

over FY2020-FY2022. Further, a successful inspection outcome from the USFDA would be a key

trigger for earnings upgrades. We retain our Buy recommendation on the stock.

Lupin Lupin’s Q3FY2020 results were weak and missed estimates. Going ahead, regulatory hurdles –

observations, Warning letters, OAI status are likely to be the key dampeners. This would lead to delay

in new approvals and further intensify pressure on the US business, which is already facing tough

competition in Metformin and base business. Lack of significant launches would further elevate issues.

Owing to lack of clarity and uncertainty of timeline as well as the outcome of the USFDA regulatory

issues, we maintain our Reduce rating on the stock.

Sun Pharma Sun Pharma’s Q3FY2020 results were in line with expectations. Sun Pharma is confronting issues

in the US pertaining to price erosion. This coupled with higher specialty promotional spends and

increased R&D spends, are likely to moderate the earnings growth and we expect FY2020 to reflect

full impact of increased costs (on account of specialty pipeline build-up). Further the US business is

languishing due to the lack of new product launches. Going ahead we expect the headwinds and

overhang to stay and hence despite reasonable valuations we don’t have a constructive view on Sun

Pharma. We maintain our Hold recommendation on the stock.

Torrent Pharma Torrent Pharma reported muted results for Q3FY2020. Torrent’s three plants – Indrad, Dahej and US

(Levittown - Pennsylvania) have been under USFDA regulatory issues with a warning letter issued

to all the three plants. As a result of this, new product approvals from all the three plants have been

withheld. Off the three plants, the Dahej plant is a critical one for Torrent as it has several new product

fillings coming from this unit. The management expects the re-inspection at Dahej plant to happen

in mid of CY2020, while the other two plants would have a re-inspection by end of CY2020. We feel

this event is likely to remain as an overhang until successfully closed/resolved. We maintain our Hold


Building Materials

Grasim Grasim has been underperforming due to its exposure in Vodafone Idea with 11.55% stake. Vodafone

Idea’s highly leveraged balance sheet, weak telecom outlook and delay in monetisation of assets may

lead to further capital infusion by FY2021 from its stakeholders, including Grasim, to retain its stake.

This is expected to lead to erosion in liquid investments or higher leverage at Grasim standalone.

Further, weak macro environment is expected to lead to underperformance of ABCL (56% Grasim

stake) in the near term. Hence, UltraTech remains a safe bet, which comprises major value of Grasim’s

sum-of-the-parts (SOTP) valuation. We believe investors can directly have exposure in UltraTech, which

has no overhangs and a better earnings growth outlook over the next two years. Hence, we have a

Hold rating on Grasim.

Shree Cement The expansion plan of Shree Cement to reach 60 mtpa over four years (currently 40 mtpa) and

increasing geographical footprint in the eastern and southern regions are likely to aid better volume

growth going ahead. The company’s focus to increase share of trade sales should help improve

realisation. Shree Cement is expected to benefit from favourable demand and pricing outlook,



especially in its North Indian operations. Further, the company’s continuous capacity expansion plans

and muted opex would bring incremental volume growth with better profitability going ahead.

The Ramco Cements The Ramco Cements, one of the most cost-efficient cement producers in India, will benefit from capacity

addition carried out ahead of its peers in the southern region. Ramco Cements has embarked upon

capital expenditure plan of Rs. 3,430 crore to reach cement capacity of 20 million tonnes per annum

(MTPA) by 2020 end. The expansion aims to strengthen reach in Andhra Pradesh, West Bengal and

North Eastern states. The company has reaped the benefits through cost-saving measures, besides

constantly reducing debt, which has led to improved profitability. In a nutshell, better volumes, cost

efficiencies and reducing leverage have yielded benefits.

UltraTech Cement UltraTech Cement is India’s largest cement company. We expect UltraTech to report industry-leading

volume growth on account of timely capacity expansion (acquisition of Jaypee Group’s cement assets,

Century’s assets and Binani Cement’s assets) and likely revival in demand (with the start of affordable

housing projects and enhanced spending on infrastructure development).

Discretionary Consumption

Arvind Arvind demerged into three separate entities of Arvind (textile business), Arvind Fashion (branded

and retail business) and Anup Engineering (engineering business) with an aim to unlock value for

shareholders. Post the demerger, Arvind becomes a textile hub present in segments such as denim,

fabric, garments and advanced material (AMD). Arvind posted good operating performance in

Q3FY2020 clocking a healthy growth in the textiles and advanced materials business (AMD) and

strong growth of 40% in garment volumes. Though gross margin was significantly down, operating

efficiencies led to OPM expansion. The scaling-up of garmenting operations through excessive

capacity and reduction in cotton prices would help textiles business margins improve in the coming

quarters. AMD would maintain its strong double-digit growth trajectory due to better demand. The

management has guided for 8-9% revenue growth in FY2020 and OPM to sustain at 10% (in line with

last fiscal). We maintain our Buy rating on the stock.

Century Plyboards Century Plyboards is a leading player in the organised plywood industry with a market share of 25%.

The company also has laminate, particle board and medium-density fibreboard (MDF) division having

a capacity of 600 cubic metres per day. As MDF and particle-board segments are running at optimum

capacities, the management is de-bottlenecking the units for growth. The benefits of GST are expected

to accrue at a slower pace as unorganised sector continues to benefit from loopholes leading to a

price differential of 35% that is still existent. We believe that the slow pace of plywood growth, capacity

limitation in MDF and particle-board and industry oversupply in laminates is expected to slow down

the pace of revenue growth for the company over the next two years. Hence, we have a Hold rating

on the stock due to lack of near-term triggers and fair valuation.

Info Edge (India) Info Edge is India’s premier online classified company in the recruitment, matrimony, real estate,

education and related service sectors. Naukri.com is a quality play and is directly related to GDP

growth and internet/mobile penetration. Management highlighted that accelerated investments in its

core businesses will continue to gain market share along with acquiring more customers. Further,

its investee companies, particularly Zomato and PolicyBazaar, have been progressing well in their

respective businesses. We continue to derive comfort on Info Edge’s business strength, with leading

market share in key businesses.

Inox Leisure Inox Leisure Limited (ILL), incorporated in 1999, is one of the largest multiplex operators in India. ILL

currently operates 146 properties (614 screens and over 1.42 lakh seats) located in 68 cities across the

country. ILL is the only multiplex operator having such a diverse presence across India. The company



accounts for 20% share of multiplex screens in India and ~11% share of domestic box office collections.

The ILL mega show is supported by improving content quality in the Indian mainstream and regional

cinema, with its movies regularly hitting the Rs. 100 crore or Rs. 200 crore box-office collection mark.

Though the seasonal factor is no more applicable, however Q4FY2020E performance is expected to

remain muted owing to weak content in most part of the quarter coupled with one-time non cash hit

on the taxation front. We have reworked our estimates for FY2020E to factor in the expectation of

soft Q4 performance coupled with adoption of lower tax regime from Q4FY2020E; hence numbers

for FY2021E and FY2022E are adjusted for taxation accordingly. Screen additions set to accelerate in

2021E (80 screens as compared to expectation of 70 screen addition during FY2020E). We maintain

our Buy rating on INOX Leisure Limited (ILL) as we expect the company to post a revenue and earnings

CAGR of 18.5% and 16.5% over FY2019-2022E.

Relaxo Footwear Relaxo Footwear (Relaxo) is present in the fast-growing footwear category, where it caters to customers

with its four top-of-the-mind recall brands, such as Hawaii, Sparx, Flite and Schoolmate. Relaxo’s focus

is on driving sales through distribution expansion (COCO and franchisee stores) and improving the

brand presence. GST implementation has been a silver lining for the company, as it is witnessing a

gradual shift of demand from the unorganised to organised market. The company is expected to

enhance its current capacity, which will add to revenue growth. Input cost pressure is likely to soften

going ahead, with OPM expected to sustain at 16.5% in FY2020. Recent hike in customs duty on

footwear in the Union Budget FY2020 will augur well for Relaxo in near to medium term. Further, focus

on strong distribution enhancement (especially in South India) and expected high growth in premium

categories (due to reduction in GST rate) make Relaxo one of our preferred picks in the discretionary

consumption space.

Titan Company Titan is India’s largest specialty retail player, operating more than 1,600 stores spread across over 2

million sq. ft. in 279 towns having businesses in jewellery, watches and eyewear. Revenue of Titan’s

jewellery business reported a CAGR of 23% over FY2016-FY2019. Sustained launch of new collection,

expansion in domestic footprint, shift of consumers to trusted brands and strong growth in diamond

jewellery remain the key pillars of growth. The target is to achieve 2.5x sales and grab market share

of 10% by FY2023. In the eyewear business, Titan’s focus is to build a strong customer base through a

calibrated expansion plan and offer products at affordable prices. An increase in scale of the watches

and eyewear businesses along with expansion into tier II and tier III markets and continuous shift

from non-branded to branded jewellery players is expected to drive up margin going ahead. With

a lean balance sheet and strong financial background, Titan is one of the best retail plays amongst

peers. Titan is well placed to achieve double-digit revenue and earnings CAGR of 15.6% and 17.2%,

respectively, during FY2019-FY2022.

Wonderla Holidays Wonderla Holidays Limited (WHL) is the largest amusement park company in India with over a decade

of successful and profitable operations. Q3FY2020 performance was affected by a slowdown in the

discretionary environment, which dragged down footfalls by ~5%.WHL added two new rides each in the

Kochi and Hyderabad parks and one at its Bengaluru park, which will help boost footfalls in Q1FY2021.

Improvement in footfalls and higher ticketing revenue would result in better profitability; and OPM is

expected to improve in the coming years. The management is confident of achieving higher footfalls

in a stable economic environment (expects Bengaluru park footfalls to reach 1.25 million p.a. in the

next 2-3 years). The company has acquired 61.87 acres of land for the new amusement park project in

Kelambakkam in Chennai. The project will commence soon. The company has approved the proposal

of the Odisha government to set up a park. The sustenance of growth in footfalls has to be keenly

monitored in the coming quarters. Hence, we maintain our Hold recommendation on the stock.



Diversified/Miscellaneous

Bajaj Holdings Bajaj Holdings & Investment Limited (BHIL, erstwhile Bajaj Auto) was demerged in December 2007,

whereby its manufacturing business was transferred to the new Bajaj Auto Limited (BAL) and its strategic

business consisting of the wind farm and financial services businesses was vested with Bajaj FinServ

(BFS). All the businesses and properties, assets, investments and liabilities of erstwhile Bajaj Auto,

other than the manufacturing and strategic ones, now remain with BHIL. BHIL is a primary investment

company focusing on new business opportunities. Given the strategic nature of its investments

[namely BAL (Bajaj Auto Limited) and BFL (Bajaj Finserv Limited)], we have given a holding company

discount to its equity investments. Liquid investments have been valued at cost. Associate company

Bajaj Finserv PT has been revised upwards due to healthy results. We retain our Buy recommendation

on BHIL.

Bharat Electronics Bharat Electronics Limited (BEL), a defence PSU, remains our preferred pick in the domestic defence

sector on account of its strong manufacturing and R&D capabilities, good cost-control measures,

growing indigenisation and a strong balance sheet with improving return ratios. Further, the company

is well positioned to capture incremental spends by the government on defence through the Make-

in-India initiative. Management provides revenue guidance of 10-12% for FY2020E and expects to

bag Coastal Surveillance Systems order during the remains part of FY2020.We expect revenue and

earnings to clock CAGR of 10.4% and 6.5% during FY2019-2022E as we fine tune our numbers for

FY2020E and FY2021E and introduce FY2022E numbers. Though order intake remained low during

Q3FY2020, order book remains healthy at Rs 54,959 crores (4.5x FY19 revenues) which provides

revenue visibility; hence reiterate our Buy rating on Bharat Electronics Limited (BEL).

Bharti Airtel Bharti Airtel (Bharti) is one of the leaders in the Indian mobile telephony space. The management

continues to focus sharply on increasing retail ARPUs, non-mobile services (enterprise services) and

value-added services (Airtel TV and music) to boost revenue and reduce the churn rate. ARPU in

Q4FY2020E would be better compared to Q3FY2020 as the exit ARPU was at Rs. 140. The recent

fund-raising of $3 billion has alleviated the concerns over viability at certain extent as the company is

now better positioned to pay AGR dues. From a long-term perspective, explosive growth in the data

segment, rapid network expansion and reach will help Bharti emerge stronger. We have a Buy rating

on the stock

GDL With its dominant presence in container freight station (CFS) and rail freight businesses, Gateway

Distriparks Limited (GDL) has evolved as an integrated logistics player. The company’s CFS and

rail verticals are facing a tough business environment owing to intensive competition. However, the

rail division has started showing resilience with improvement in volume and profitability. Capacity

expansion in rail will prove to be beneficial for the company as the trade environment revives. Further,

key positive triggers such as the dedicated freight corridor (DFC) remains intact. Due to comfort on

valuation, we have a Buy rating on the stock.

PI Industries Incorporated in 1947, PI Industries focuses on developing complex chemistry solutions in the agri-

science space. The company delivered in-line results during Q3FY2020 with revenue up by 20%

y-o-y to Rs. 850 crore; operating margin improved by 94 BPS y-o-y to 21.9% and PAT increased by

13.0% y-o-y to Rs. 121 crore. Management retains its FY2020E guidance of ~20% y-o-y improvement in

performance, led by healthy order book, commissioning of additional capacity and contribution from

newly launched brands. We expect revenue and earnings CAGR of 27.6% and 29.8%, respectively,

during FY2019-FY2022E (Isagro numbers factored in from Q4FY2020). We upgrade our rating on PI

Industries Limited to Buy owing to aggressive expansion strategy to tap the robust and encouraging

demand environment.



Ratnamani Metals Ratnamani Metals and Tubes Limited (RMTL) is the largest stainless steel tube and pipe manufacturer in

India. We remain positive on RMTL, led by its strong balance sheet, ability to generate superior return

ratios and capacity expansion programmes. Further, overall capex revival in its key industries such as

oil and gas coupled with improving orders from international markets will keep order momentum strong

over the next 3-4 years. The company order book as on Feb 1st stood at Rs 1,569 crores (up by 18.7%

y-o-y, however was lower by 18.5% q-o-q) which provides healthy revenue visibility. The management

provides for encouraging outlook which will help in healthy order intake in coming quarters and

guided for margins to remain in the range of 16-17% for FY2021E. Further, RMTL is adding capacities

in both the CS and SS divisions which are expected to be commissioned in coming quarters and aid

in grabbing significant opportunities which will come under way in FY2021E.We remain Positive on

RMTL due to its strong balance sheet and its ability to generate superior return ratios despite capacity

expansion programmes. We maintain our Buy rating on Ratnamani Metals & Tubes Limited (RMTL).

Supreme Industries Supreme Industries Limited (SIL) is a leading manufacturer of plastic products with a significant

presence across the piping, packaging, industrial and consumer segments. Management maintained

FY2020E volume growth guidance at 10-12%, translates 13.8% to 20.7% y-o-y growth in Q4FY2020E;

this seems challenging considering 9MFY2020 volume growth. However raised margin guidance to

14.0-14.5% for FY2020E from 13-14% earlier driven by better product mix and increased pricing power

in CPVC. Demand outlooks looks promising in plastic piping system; enhanced capex commitment to

Rs. 500 crore to capture the upcoming opportunities especially in plastic piping segment. We remain

Positive on SIL for the long term, given recovery in the rural economy, affordable housing sector and

the new scheme for piped water connection – ‘Nal se Jal’. Given positive demand outlook coupled

with healthy cashflow generation and a strong balance sheet, we retain our Buy rating on the stock.

UPL UPL Limited (UPL) reported revenue and EBITDA growth of 7% y-o-y and 22% y-o-y respectively on

a like-to-like basis (i.e. including Arysta numbers in the base quarter) during Q3FY2020. Operating

margin improved by 280 bps y-o-y to 23.3% despite gross margin being similar at 42% owing to

revenue and cost synergy at play. Revenue was backed by overall volume growth of 10% y-o-y on

a comparable basis partly offset by softness in realisation (lower by 1% y-o-y) and adverse currency

impact of 2%. As the new season kicks off, the management expects the inventory levels to normalise

by the end of Q4FY2020E resulting in improved operating cash flow position leading to debt

reduction. The management maintains its guidance of revenue growth of 8-10% & EBITDA growth of

16-20% for FY2020E and expects to pare down debt by US$ 500 million by the end of Q4FY2020E.

We have fine tuned our numbers for FY2020E and FY2021E and introduced FY2022E estimates and

believe that the company will be able to deliver revenue and earnings CAGR of 10.0% and 29.5% over

FY2020-22E. We have upgraded our rating on UPL Limited (UPL) to BUY as the risk-reward matrix

turns favourable.

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