12th August 2016 Friday ShareKhan Pre - Market Action Trading Ideas: Long/Short Ideas identified on basis of Fundamental Trigger/News/Events. Watch List: List of stocks identified for trading with positive and negative bias for the day. News/ Updates: Important News & Events (Both Domestic & Global) to keep you updated on all the happenings in markets. Index Ideas: Nifty and Bank Nifty view for the day.
Trading Ideas
Ashok Leyland (CMP- 87) Logistics start-up Rivigo orders 1,200 Ashok Leyland trucks Action to be taken: Long Ashok Leyland Stop loss: 85 Target: 89-91
J.K.Lakshmi Cement (CMP- 440 ) JK CEMENT Q1: Net Profit At RS 28.6 Cr Vs Loss Of RS 23.4 Cr YoY. Total Income At RS 777 Cr Vs RS 591 Cr YoY Action to be taken: Long J.K.Lakshmi Cement Stop loss: 431 Target: 453-462
ABNL and Grasim Restructuring ABN will merge with Grasim (existing shareholders of ABN will get 3 shares of Grasim for every 10 shares held) Each shareholder of combined Grasim entity would get 7 shares of hived off financial services entity, Aditya Birla Financial Services for every 1 share held of Grasim. Unfavourable for ABN shareholders, the target price is put Under Review though stock may react negative today Neutral for Grasim (retain Buy with target price of Rs5195):
News Updates Mahindra s mini-truck Jeeto garners 20%market share in small LCV category; enables M&M to increase overall LCV market share Grasim: Board Approves Stock Split In Ratio Of 1:5 Zensar Forms Partnership With South African Co, The Foschini Group Rane Engine Valve has sold portion of land owned by the Company in Alandur, Chennai for a consideration of Rs 94.82 crore.
News Updates Airtel completes 4G spectrum trading with Aircel in 7 out of 8 circles Vedanta merger: Cairn calls shareholders' meeting on September 12 UTI AMC gets majority nod for listing Moody's changes Novelis' outlook to Negative. Indian PE Multiples & Chryscap lead FinCorp Stake Stable from race for Hero
News Updates Alkem Labs No 483S issued by USFDA post inspection at Taloja. SAIL: NITI Aayog identifies SAIL units for strategic sale Petronet LNG plans import terminals in Bangladesh, Sri Lanka Dena Bank to consider raising up to Rs.446 cr via pref share sale to Govt
Result Updates IDBI BANK Q1: PAT at Rs.240cr vs Rs.135cr YoY Gross NPA at 11.92% vs 10.98% QoQ Dhanuka Agri Q1: Net Profit Up 4.3% at Rs.19.3 cr; Total income up 10.2% at Rs.199 cr. We have a positive view on the stock and expect a 10-12% upside from the current level. IRB Q1: IRB reported a consolidated net profit growth of 10.4% YoY. Maintain Buy with a price target of Rs300 Jyothy Laboratories Better operating performance to sustain; Retain Buy with revised PT of Rs350
Imp Results Today Stocks Estimated PAT (Crs.) Cipla 372 Divis 265.7 Glenmark 248.1 Sun Pharma 1973 Shree Cement 228 State Bank of India 10494.7 Bank of India 2012.6 Allahabad Bank 1174.5 PTC India Financial 118.6
Watch List Stocks With +ve Bias CMP (Rs) Stocks With -ve Bias CMP (Rs) DABUR 295 ADANIENT 76 DHFL 259 AMBUJACEM 261 UPL 629 BANKBARODA 146
Stock for Investment
Stocks for Investment Stocks CMP (Rs) BRITANNIA 3237 HDFC 1348 HERO MOTOCORP 3305 GRASIM 4540 SUNPHARMA 808
Actionable Ideas & ViewPoints
Sharekhan Actionable Ideas = Grasim CMP = 4539 Target = 5195 Grasim Industries (Grasim) has approved a composite Scheme of Restructuring, whereby Aditya Birla Nuvo (ABN) will be merged into Grasim following which the carved financial services business (Aditya Birla Financial Services) will be listed. Grasim shareholders will continue to hold stake in the merged Grasim (FY2016 Revenue Rs59,766 crore, EBITDA Rs11,961 crore, PAT Rs4,245 crore) and will get 7 shares of Aditya Birla Financial Services (ABFS). The transaction is likely to be completed by Q4FY2017/Q1FY2018. We have outlined and valued major businesses getting aligned in the merged Grasim and have also allocated value to ABFS (view table). Even with a 40% holding company discount to all the businesses in the combined entity (Grasim + ABN), plus additional value from ABFS shares, we do not see much change in our price target (PT) of Grasim. Hence, we have maintained our Buy rating on the stock with an unchanged PT of Rs5,195.
Sharekhan Actionable ViewPoints = Manpasand Beverages CMP = 678 Target = 813 Manpasand Beverages (MBL) is one of the emerging players in the Indian packaged/canned fruit juice market with focus on mango-flavoured drinks (which has found huge acceptance in the Indian fruit juice market). The company has carved a niche for itself with a strong presence in tier-2, semiurban and rural markets (currently present in 24 states). MBL is on a strong growth trajectory, with gradually widening distribution reach in tier II and tier III cities, enhanced capacity and introduction of valueadded products to capitalise on the un-tapped markets. Though the focus is on achieving strong revenue growth, the company has managed to improve its working capital (operating cash cycle reduced to 40 days in FY2016 from 74 days in FY2014). This gives us visibility of strong double-digit earnings growth, along with stable cash flows in the coming years. Though the stock has run-up in the recent past, it is trading at 26.0x, which is at a discount to some mid-cap and large-cap.
Sharekhan Actionable ViewPoints = Dhanuka Agritech CMP = 638 Target = 714 During Q1FY2017, Dhanuka Agritech (DAL) reported a revenue growth of 10% YoY, largely driven by higher volume. However, delay in the south-west monsoon restricted topline growth in Q1FY2017. Management has guided for strong Q2 and Q3 on account of improvement in monsoon s progress across the country. Gross Profit Margin (GPM) was up by 300BPS YoY, primarily due to excise duty refunds, which is not sustainable going ahead (company to maintain GPM of ~35%). As a result, Operating Profit Margin (OPM) expanded by 144BPS YoY to 15.5% while the EBITDA at Rs31.29 crore was up by 23% YoY. A higher depreciation charge (on account of Keshwana plant commissioning) and increased tax rate led to only a 4% YoY growth in Profit After Tax (PAT) at Rs19.35 crore. We have marginally tweaked our estimates for FY2017 / FY2018 to factor in the positives. At the current market price, the stock is trading at 25x its FY2017E and 19.8x its FY18E earnings estimates. We have a positive view on the stock and expect a 10-12% upside from the current level.
Sharekhan Actionable ViewPoints = Suven LifeSciences CMP = 205 Target = 246 Suven Life Sciences (Suven) has posted a revenue CAGR of 27% during the past five years, which included the supply of three key intermediates for the prelaunch phase during FY2015. Suven had generated over Rs2.2bn revenue during FY2015 from the supply of key intermediates to a US-based client and two European clients for their innovative products (passing through the pre-launch phase). Since these products are likely to be launched in FY2017-FY2018, Suven expects to get repeat orders for these intermediates for a longer period (management has indicated Rs30 crore in FY2017). We expect revenue CAGR to be 20% and net profit CAGR to be 40%+ over FY2017E-FY2018E. Number of active CRAMS projects at the end of Q1FY2017 117; Phase 1 68 projects, Phase 2 45 projects, Phase 3 1 project; Commercial phase 3 projects. We have a positive view on the stock due to the company s clear focus, visibility in sales growth over the next 2-3 years and improving profitability (on account of better product mix). We see a potential upside of 18-20% over the next six months.
Global Update
Global Indices and news Stocks in the United States and Europe raced higher on Thursday helped by encouraging corporate reports and a 4 percent surge in oil prices on comments from the Saudi oil minister and a forecast for a tighter crude market. Asian stocks rose slightly in early Friday trade, taking a cue from Wall Street's records overnight, before switching focus to a run of economic indicators from China. Key data to watch in US today is Retail Sales, Business Inventories, and Consumer Sentiment Index Close Prev Close Change Change Dow Jones 18613 18495 118 0.64% S&P 500 2186 2175 11 0.47% FTSE 6914 6866 48 0.70%
MID Ideas Technical Update
Technical view Nifty 8592 Short Term Target for Nifty is 8850 Crucial Support area for Nifty is 8518 Intraday levels: Support 8560 8518 Resistance 8630 8690 All levels are spot levels
Technical view Bank Nifty- 18640 Crucial for Support Bank Nifty is at 18410 Intraday levels: Support 18537-18410 Resistance 18772-18886 All levels are Spot levels
Derivatives View
Future s Activity Current Previous % change Nifty 8612.45 8598.05 0.17% Nifty CoC 6.16% 6.46% -4.58% OI 28560375 28556475 0.01% PCR(OI) 0.96 0.94 2.13% INDIA VIX 14.21 14.92-4.76% Nifty added 0.04 lakh shares in OI.
Option s Activity Most active index call option Strike Curr. IV Curr. OI % Chg. OI % Chg. IV 8700 C 12.25% 5058600-1.34% -4.76% 8600 C 12.44% 3021525 3.71% -5.08% 8800 C 12.18% 6236400 0.49% -4.12% Most active index Put option Strike Curr. IV Curr. OI % Chg. OI % Chg. IV 8500 P 13.32% 5590875 4.44% -4.72% 8600 P 12.71% 3618075-10.50% -3.88% 8400 P 14.20% 5523000 17.77% -4.26%
On the options front in the August series 8500 PE stands with the highest number of shares in the open interest (OI). Whereas on call side 9000 CE stands with the highest number of shares in the open interest (OI). Securities in Ban For Trade Date 12-Aug-2016 1. DISHTV 2. IBREALEST 3. INDIACEM 4. JETAIRWAYS 5. JINDALSTEL 6. JISLJALEQS 7. RCOM 8. WOCKPHARMA FII : INDEX FUTURES INDEX OPTIONS STOCK FUTURES STOCK OPTIONS +6.39 cr. +517.04 cr. -956.69 cr. -30.61 cr.
Market Level 5-DAY VWAP Lower Range Higher Range 8670 8500 8670 SGX Nifty +5.00 points at 8622.00 (Aug Fut.)
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