Market Outlook. Market Cues. News Analysis. Investor s Ready Reckoner. Top Picks. Key Upcoming Events. March 23, 2018

Transcription

1 Market Cues Indian markets are likely to open negative tracking global indices and SGX Nifty. U.S. stocks showed a substantial move to the downside during trading, with the major averages adding to the modest losses posted in the previous session. The Dow Jones closes down to 2.9% to close at 23,958. The NASDAQ dropped down by 2.4% to close at 7,167. U.K. stocks were modestly lower as investors scrutinized the Fed's projections for future inflation and economic outlook and waited for the Bank of England rate decision. The FTSE 100 was down by 1.2% to end at 6,953. On domestic front, Indian shares opened slightly higher as investors took a 25bps Fed rate in their strike and awaited U.S. President Donald Trump's decision on tariffs. The BSE Sensex ended down by 0.4% at 33,006. News Analysis Infosys invests $1.5mn in Waterline Data Science through Innovation Fund Domestic Indices Chg (Pts) (Close) BSE Sensex (0.4) (130) 33,006 Nifty (0.4) (41) 10,115 Mid Cap (0.8) (121) 15,911 Small Cap (1.0) (180) 17,064 Bankex (0.7) (180) 27,076 Global Indices Chg (Pts) (Close) Dow Jones (2.9) (724) 23,958 Nasdaq (2.4) (179) 7,167 FTSE (1.2) (86) 6,953 Nikkei (3.5) (764) 20,828 Hang Seng (3.1) (956) 30,115 Shanghai Com (2.7) (88) 3,175 Detailed analysis on Pg2 Investor s Ready Reckoner Key Domestic & Global Indicators Stock Watch: Latest investment recommendations on 150+ stocks Refer Pg5 onwards Top Picks Company Sector Rating CMP Target Upside Blue Star Capital Goods Accumulate Dewan Housing Finance Financials Buy Century Plyboards Forest Product Buy Navkar Corporation Others Buy KEI Industries Capital Goods Buy More Top Picks on Pg4 Key Upcoming Events Date Region Event Description Previous Reading Consensus Expectations Mar 23 UK BOE Announces rates Mar 27 Euro Zone EuroZone Consumer Confidence 0.10 Mar 27 US Consumer Confidence Mar 28 US GDP Qoq (Annualised) Mar 29 Germany Unemployment change (000's) (20) More Events on Pg7 Advances / Declines BSE NSE Advances Declines 2,063 1,391 Unchanged Volumes (` Cr) BSE 3,509 NSE 27,454 Net Inflows (` Cr) Net Mtd Ytd FII (71) 10,086 10,578 *MFs 887 3,111 28,315 Top Gainers Price Chg IBVENTUREPP NATIONALUM HATHWAY OIL JUBLFOOD 2,272 Top Losers Price Chg HCC JPASSOCIAT BALRAMCHIN WELCORP MMTC As on March 22, 2018

2 News Analysis Infosys invests $1.5mn in Waterline Data Science through Innovation Fund India's second largest software services firm Infosys has made a followon investment of $1.5 million (about Rs 97.7 million) in Waterline Data Science, a provider of data discovery and data governance software. Infosys had made an initial investment of $4 million in the company in January The investment has been made through the Infosys Innovation Fund, it said in a regulatory filing. The investment is expected to be completed by April 6, 2018, subject to necessary approvals. Waterline Data Science provides a data inventory and cataloguing solution that helps business analysts and data scientists with data discovery and data governance. Economic and Political News Domestic natural gas prices all set to rise to the highest level in 2 years AAP government presents Rs 530bn 'green' budget for FY19 in Delhi Assembly India's steel exports to remain robust as China pares production capacity Corporate News Vedanta to invest Rs 12.4bn on Jharsuguda unit to raise aluminium capacity Infosys invests $1.5mn in Waterline Data Science through Innovation Fund Hero MotoCorp hikes stake in Colombian JV to 68% Indian Oil considers investing $3.5bn from April to expand capacity

3 Top Picks Company Market Cap (` Cr) CMP Target Upside Alkem Laboratories 25,289 2,115 2, Blue Star 7, Dewan Housing Finance 16, ICICI Bank 1,82, KEI Industries 2, Music Broadcast Limited 2, Navkar Corporation 2, Siyaram Silk Mills 2, TV Today Network 3, Maruti 2,62,779 8,699 10, GIC Housing 1, Century Plyboards 7, LT Foods 2, Safari Industries 1, HSIL Ltd 2, Aditya Birla Capital Rationale Strong growth in domestic business due to its leadership in acute therapeutic segment. Alkem expects to launch more products in USA, which bodes for its international business. Favorable outlook for the AC industry to augur well for Cooling products business which is out pacing the market growth. EMPPAC division's profitability to improve once operating environment turns around. With a focus on the low and medium income (LMI) consumer segment, the company has increased its presence in tierii & III cities where the growth opportunity is immense. Well capitalized with CAR of 18.1% which gives sufficient room to grow asset base. Faster resolution of NPA would reduce provision cost, which would help to report better ROE. High order book execution in EPC segment, rising B2C sales and higher exports to boost the revenues and profitability Expected to benefit from the lower capex requirement and 15 year long radio broadcast licensing. Massive capacity expansion along with rail advantage at ICD as well CFS augur well for the company Strong brands and distribution network would boost growth going ahead. Stock currently trades at an inexpensive valuation. Market leadership in Hindi news genre and no. 2 viewership ranking in English news genre, exit from the radio business, and anticipated growth in ad spends by corporate to benefit the stock. After GST, the company is expected to see higher volumes along with improving product mix. The Gujarat plant will also enable higher operating leverage which will be margin accretive. We expect loan book to grow at 24.3% over next two year; change in borrowing mix will help in NIM improvement We expect CPIL to report net Revenue/PAT CAGR of ~17%/16% over FY201720E mainly due to healthy growth in plywood & lamination business, forayed into MDF & Particle boards on back of strong brand & distribution network. We expect sales/pat to grow at 13.5%/20% over next two years on the back of strong distribution network & addition of new products in portfolio. Third largest brand play in luggage segment Increased product offerings and improving distribution network is leading to strong growth in business. Likely to post robust growth for next 34 years We expect HSIL to report PAT CAGR of ~15% over FY201720E owing to better improvement in operating margin due price hike in container glass segment, turnaround in consumer business. We expect financialisation of savings and increasing penetration in Insurance & Mutual fund would ensure steady growth. Source: Company, Angel Research

4 Fundamental Call Company Market Cap (` Cr) CMP Target Upside CCL Products 3, Nilkamal 2,379 1,594 2, Prism Cement 5, Elantas Beck India Ltd 1,620 2,044 2, Greenply Industries 4, Rationale CCL is likely to maintain the strong growth trajectory over FY1820 backed by capacity expansion and new geographical foray We forecast Nilkamal to report topline CAGR of ~9% to `2,635cr over FY1720E on the back of healthy demand growth in plastic division. On the bottomline front, we estimate ~10% CAGR to `162cr owing to improvement in volumes. The prism has diversified exposure in the different segment such as Cement, Tile & ready mix concrete. Thus we believe, PCL is in the right place to capture ongoing government spending on affordable housing and infrastructure projects. Elantas Beck India is the Indian market leader in liquid insulation segment used in electrical equipments like motors, transformers etc. It derives demand from several industries which are expected to register 10%+ CAGR in demand in the coming years. Greenply Industries Ltd (GIL) manufactures plywood & allied products and medium density fibreboards (MDF). GIL to report net revenue CAGR of ~14% to ~`2,478cr over FY201720E mainly due to healthy growth in plywood & lamination business on the back of strong brand and distribution network Source: Company, Angel Research

5 Key Upcoming Events Global economic events release calendar Bloomberg Data Date Time Country Event Description Unit Period Last Reported Estimated Mar 23, :30 PM UK BOE Announces rates % Ratio Mar Mar 27, :30 PM Euro Zone EuroZone Consumer Confidence Value Mar F :30 PM US Consumer Confidence S.A./ 1985=100 Mar Mar 28, :00 PM US GDP Qoq (Annualised) % Change 4Q T Mar 29, :25 PM Germany Unemployment change (000's) Thousands Mar (20) 2:00 PM UK GDP (YoY) % Change 4Q F 1.40 Mar 31, :30 AM China PMI Manufacturing Value Mar Apr 03, :00 PM UK PMI Manufacturing Value Mar Apr 05, :30 PM India RBI Reverse Repo rate % Apr :30 PM India RBI Repo rate % Apr 5 0 6:00 PM US Change in Nonfarm payrolls Thousands Mar 310 Apr 06, :30 PM India RBI Cash Reserve ratio % Apr 5 0 6:00 PM US Unnemployment rate % Mar 4.10 Apr 10, 2018 US Producer Price Index (mom) % Change Mar (0.30) Apr 11, :00 PM US Consumer price index (mom) % Change Mar :00 PM UK Industrial Production (YoY) % Change Feb :00 AM China Consumer Price Index (YoY) % Change Mar 2.90 Apr 12, 2018 India Imports YoY% % Change Mar India Exports YoY% % Change Mar :30 PM India Industrial Production YoY % Change Feb 7.50 Apr 13, :00 PM India Monthly Wholesale Prices YoY% % Change Mar 2.48 Apr 16, :45 PM US Industrial Production % Mar 1.06 Apr 17, Jan00 US Housing Starts Thousands Mar 1,230 China Exports YoY% % Change Mar Source: Bloomberg, Angel Research

6 Feb17 Mar17 Apr17 Jun17 Aug17 Oct17 Dec17 Apr17 Jun17 Aug17 Oct17 Dec17 Mar17 Apr17 Jun17 Aug17 Oct17 Dec17 Feb18 Jan17 Feb17 Mar17 Apr17 Jun17 Aug17 Oct17 Dec17 Feb18 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18 2QFY18 3QFY18 Mar17 Apr17 Jun17 Aug17 Oct17 Dec17 Market Outlook Macro watch Exhibit 1: Quarterly GDP trends Exhibit 2: IIP trends () (0.3) Source: CSO, Angel Research Source: MOSPI, Angel Research Exhibit 3: Monthly CPI inflation trends Exhibit 4: Manufacturing and services PMI Mfg. PMI Services PMI Source: MOSPI, Angel Research Source: Market, Angel Research; Note: Level above 50 indicates expansion Exhibit 5: Exports and imports growth trends Exhibit 6: Key policy rates 60.0 Exports yoy growth Imports yoy growth 6.50 Repo rate Reverse Repo rate CRR (10.0) 0 Source: Bloomberg, Angel Research Source: RBI, Angel Research

7 Brazil Russia India China South Africa Indonesia Malaysia Thailand UK USA Germany France Japan Brazil Russia India China South Africa Indonesia Malaysia Thailand UK USA Germany France Japan Brazil Russia India China South Africa Indonesia Malaysia Thailand UK USA Germany France Japan Market Outlook Global watch Exhibit 1: Latest quarterly GDP Growth (%, yoy) across select developing and developed countries Source: Bloomberg, Angel Research Exhibit 2: 2017 GDP Growth projection by IMF (%, yoy) across select developing and developed countries Source: IMF, Angel Research Exhibit 3: One year forward PE ratio across select developing and developed countries (x) Source: IMF, Angel Research

8 Exhibit 4: Relative performance of indices across globe Returns Country Name of index Closing price 1M 3M 1YR Brazil Bovespa 84,768 (1.2) Russia Micex 2, India Nifty 10,115 (2.5) (2.6) 10.8 China Shanghai Composite 3,263 (0.7) (2.8) () South Africa Top 40 50,517 (2.3) (1.0) 11.0 Mexico Mexbol 47,361 (3.2) (2.6) (2.3) Indonesia LQ45 1,027 (10.2) (3.7) 11.9 Malaysia KLCI 1, Thailand SET 50 1, USA Dow Jones 23,958 () (3.4) 1 UK FTSE 6,953 (4.1) (7.8) (5.2) Japan Nikkei 21,592 (2.5) (4.9) 10.1 Germany DAX 12,100 (3.1) (8.4) 0.5 France CAC 5,167 (2.3) () 2.4 Source: Bloomberg, Angel Research p68in4