Stocks To Watch: Bharti Airtel, HDFC Bank, ITC, Kotak Mahindra Bank

Asian equities headed for a sixth week of gains even as investors face the test of rising yields, with benchmark 10-year Treasuries reaching levels last seen in 2016. The dollar edged lower as the possibility of a government shutdown grew.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.2 percent to 10,831 as of 7:10 a.m.

Here Are The Stocks To Watch Out For In Friday’s Trade

• RBI hikes foreign investment limit in Healthcare Global to 100 percent from 24 percent earlier.
• Alembic board to consider buyback of shares on Jan. 23.
• Biocon enters into a global partnership with Sandoz to develop, manufacture and commercialise multiple biosimilars in immunology and oncology.
• Savita Oil Technologies to consider share buyback on Jan. 23.
• Torrent Pharma acquires U.S.-based generic pharmaceuticals Bio-Pharma Inc.
• Tech Mahindra to acquire 17.5 percent shares of Altiostar on a fully diluted basis.

F&O Setup

• Nifty Jan. futures trading at 10,810.8, discount of 6.2 points from a premium of 3.3 points
• Jan. Series: Nifty open interest unchanged; Bank Nifty open interest down 1 percent
• India VIX ended at 13.9, up 0.7 percent
• Max open interest for Jan. series at 11,000 Call (open interest at 62.2 lakh, up 24 percent)
• Max open interest for Jan. series at 10,500 Put (open interest at 70 lakh, down 12 percent)

F&O Ban

• In ban: Balrampur Chini, Dish TV, DLF, Fortis, GMR Infra, HCC, HDIL, IFCI, India Cement, Jain Irrigation, Kaveri Seed
• New in ban: DLF
• Out of ban: Capital First, Jindal Steel, JP Associates, Reliance Power

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

Active Stock To Futures

Bulk Deals

Websol Energy System

• Garnet International bought 1.40 lakh shares or 0.5 percent equity at Rs 130.62 each.

Star Cement

• SBI MF bought 1.53 crore shares or 3.7 percent equity at Rs 129.97 each.
• Promoters sold 1.4 crore shares or 3.3 percent equity at an average of Rs 130.05 each.

Arman Financial Services

• Param Capital bought 3.25 lakh shares or 5.7 percent equity at Rs 255.5 each.
• Reliance MF sold 3.94 lakh shares or 6.9 percent equity at Rs 255.5 each.

Shah Alloys

• General Insurance Corp of India sold 1.12 lakh shares or 0.6 percent equity at Rs 18.3 each.
• United India Insurance sold 1 lakh shares or 0.5 percent equity at Rs 18.25 each.

IPO

• Newgen Software Technologies IPO closes. The issue was subscribed 8.1 times.
• Amber Enterprises India IPO continues on day 3. The issue is subscribed 3.6 times.

Earnings Reactions To Watch

HCL Technologies (Q3, Consolidated, QoQ)

• Maintained revenue guidance of 10.5-12.5 percent for FY18 in constant currency terms.
• Retains FY18 operating margin guidance at 19.5-20.5 percent.
• Keeps FY18 dollar sales growth guidance at 12.1-14.1 percent.
• Net profit down 6 percent at Rs 2,075 crore.
• Revenue up 3 percent at Rs 12,809 crore.
• Sales in dollar terms up 3.1 percent at $1,988 million
• EBIT up 2.4 percent at Rs 2,510 crore.
• Margin at 19.6 percent versus 19.7 percent.
• Constant currency financial services operations grew 2.8 percent.

Bharti Airtel Q3 (QoQ)

• Revenue down 7 percent at Rs 20,319 crore.
• Ebitda down 6 percent at Rs 7,469 crore.
• Margin at 36.76 percent from 36.38 percent.
• Net Profit down 11 percent at Rs 306 crore.
• ARPU down 15 percent to Rs 123.

Cyient Q3 (QoQ)

• Revenue up 2 percent at Rs 983 crore.
• Net profit down 21 percent at Rs 87.8 crore.
• EBIT down 1 percent at Rs 112 crore.
• Margin at 11.4 percent from 11.7 percent.

Zensar Technologies Q3 (QoQ)

• Revenue up 4 percent at Rs 794 crore.
• Net profit down 6 percent at Rs 59 crore.
• EBIT up 26.8 percent at Rs 90 crore.
• Margin at 11.3 percent from 9.3 percent.

Deepak Nitrite Q3 (YoY)

• Revenue up 22 percent at Rs 371 crore.
• Net profit up 170 percent at Rs 20 crore.
• Ebitda up 68 percent at Rs 52 crore.
• Margin at 14.0 percent from 10.2 percent.

Jubilant Industries Q3 (YoY)

• Revenue up 4.9 percent at Rs 119 crore.
• Net loss of Rs 2.2 crore from a net loss of Rs 5.6 crore.
• Ebitda up 6 percent at Rs 5.3 crore.
• Margin at 4.5 percent from 4.4 percent.

Kewal Kiran Clothing Q3 (YoY)

• Revenue flat at Rs 94.4 crore.
• Net profit up 25 percent at Rs 10.4 crore.
• Ebitda up 48 percent at Rs 15.8 crore.
• Margin at 16.7 percent from 11.4 percent.

Nifty Earnings To Watch

• HDFC Bank
• ITC
• Kotak Mahindra Bank
• Reliance Industries
• Wipro

Other Earnings To Watch

• Atul
• CDSL
• GNA Axles
• HDFC Standard Life Insurance
• ICICI Prudential Life Insurance
• IDFC Bank
• Jubilant Foodworks
• Kansai Nerolac Paints
• NIIT Technologies
• PC Jeweller
• Tata Elxsi

Brokerage Radar

Equirus on Ajanta Pharma

• Initiated ‘Add’ with price target of Rs 1,648.
• Company’s relentless growth trajectory likely to pause in the financial years through March 2019.
• Growth recovery would only be back-ended.
• Domestic business – on a strong footing.
• Africa business - IPCA's re-entry should hurt.
• Asia business - Middle East Asia and Central Asia to remain a drag.
• US business - Bleak visibility over future launches.
• Expect revenue to grow at a compounded rate of 10 percent over the financial years through March 2020.
• Operating margins to contract by 250 basis points over the financial years through March 2020 on higher costs/overheads.
• With a moderate growth profile, we expect return on equity and return on capital employed to decline by 10 percentage points.

IDFC on Hindustan Zinc

• Maintained ‘Underperform’; raised price target to Rs 278 from Rs 267.
• Results could have been better with increase in zinc and lead prices .
• Higher cost of production offset pricing gain.
• Volume guidance maintained for the current financial year; positive commentary on zinc market.
• Cost of production to be 10 percent lower on a quarterly basis in the current quarter.
• Stock price factors in average zinc price of US$3,300/t in the financial year-ending March 2020.
• Comfort is dividend yield of 5 percent.

Citi on Yes Bank

• Maintained ‘Buy’ with price target of Rs 400.
• Strong growth, but margin and asset quality miss.
• CASA and fee momentum continue with gains in retail lending franchise.
• Slippages and credit costs remained relatively elevated.

Morgan Stanley on Yes Bank

• Maintained ‘Overweight’ with price target of Rs 450.
• Earnings in the previous quarter missed, driven by lower-than-expected net interest income and higher provisions, partially offset by higher non-interest income.

Emkay on UltraTech Cement

• Maintained ‘Accumulate’; raised price target to Rs 4,686 from Rs 4,585.
• Impressive volume growth, pricing pressure drags margins.
• Volume beats estimates, realisation lags.
• Management upbeat on volume growth on government initiatives.
• Company well positioned to generate superior profits.
• Positives: demand recovery, capacity expansion plans and under-utilized capacities.

Credit Suisse on UltraTech Cement

• Maintained ‘Underperform’; raised price target to Rs 3,500 from Rs 2,900.
• Weak results due to lower average selling price and higher costs.
• Weak ASP trend continues; No meaningful pick-up in January.
• JPA assets: Brand transition done; Focus on utilisation.
• Expect high supply pressure in the next financial year.
• Weak demand impacting pass through of cost increase.
• Stock already factoring in upside from demand pick-up over the next three years.

HSBC on Hospitals

• Regulatory overhang continues India.
• Private players focus on volume growth.
• Government continues scrutiny on healthcare services costs.
• Maintain Buy on Apollo and Fortis on long-term growth outlook.

HSBC on Fortis

• Maintained ‘Buy’; raised price target to Rs 225 from Rs 172.
• Outlook remains positive for hospital business with scope of margin improvement.
• Wait on update on SRL demerger progress.
• Rationalisation & higher focus on retail customers continue to grow margins.
• Fortis on track to focus on clinical excellence programs and hence improving case mix.

HSBC on Apollo

• Maintained ‘Buy’ with price target of Rs 1,300.
• Near-term challenges continue
• Expect operating leverage-driven gradual recovery to begin in the next financial year.
• Breakeven at Navi Mumbai expected by first half of the next fiscal year.
• Tariff hike and rationalisation at Chennai should offset low volume growth.
• Consolidation to benefit hospital business post capex expansion cycle.

Citi on Adani Ports

• Maintained ‘Buy’ with price target of Rs 575.
• Previous quarter was well-rounded and strong.
• Volume growth was strong and broad based across commodities and ports.
• Strong volumes led to strong headline numbers.
• Management guided for increase in free cash flow and increase in dividend payout.
• Prominent and strong position in Indian port services space.
• Adani Ports one of the top picks in India infrastructure/logistics.

Goldman Sachs on Infra

• L&T: Maintained ‘Buy’ and added to conviction List with a price target of Rs 1,600, implying a potential upside of 21 percent from last regular trade.
• Container Corp: Upgraded to ‘Buy’ with price target of Rs 1,660, implying a potential upside of 17 percent form last regular trade. Improving execution and cash flow to drive re-rating.
• Adani Ports: Maintained ‘Buy’ with price target of Rs 488, implying a potential upside of 15 percent form last regular trade. Successfully moving to cash generating mode from CAPEX mode.

Macquarie on Hindustan Zinc

• Maintained ‘Outperform’ with price target of Rs 329.
• Strong commodity prices drive previous quarter earnings.
• No risk to current fiscal earnings despite hedge losses and higher costs.
• Impressive growth pipeline with expansion on track.
• Hindustan Zinc remains in a sweet spot with a strong volume growth pipeline.

Media Reports

• Tata Steel arm prices dollar bonds to raise $1.3 billion (Financial Express).
• NCLT upholds termination of coal mine tender to Monnet Ispat (Financial Express).
• Galaxy surfactants IPO to open on Jan. 29 ( Price band Fixed At Rs 1470 To Rs 1480 per equity share) (Financial Express).
• ED to sell Rs 4,000 crore Mallya shares in United Breweries (Economic Times).
• Bhushan Power & Steel liquidation value doubled (Economic Times).