VALUEGUIDE AUGUST 2020 - SHAREKHAN
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ValueGuide
August 2020
Intelligent Investing Regular Features Products & Services Trader’s Edge
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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.CONTENTS
From the Editor’s Desk EQUITY
FUNDAMENTALS
Markets have surprised
even the most optimistic REGULAR FEATURES
of investors with the 3R Stock Idea 07 Report Card 04
unrelenting rally for more Stock Update 08 Earnings Guide 49
than four months now. Sector Update 31
Given the economic fallout
of the COVID-19 pandemic, TECHNICALS DERIVATIVES
demand destruction and
Nifty 39 View 40
the pressure on businesses
globally, the surge in the equity market is intriguing to say
the least. ...
06
ADVISORY DESK DERIVATIVES
MID Trades 44 Derivatives Ideas 44
PMS DESK
ProPrime - Prime Picks 43
CURRENCY
FUNDAMENTALS
USD-INR 41 GBP-INR 41
EUR-INR 41 JPY-INR 41
TECHNICALS
MUTUAL FUND DESK 45
USD-INR 42 GBP-INR 42
EUR-INR 42 JPY-INR 42
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June 2017
August 2020 3 Sharekhan ValueGuideREPORT CARD EQUITY FUNDAMENTALS
STOCK IDEAS STANDING (AS ON AUGUST 03, 2020)
CURRENT PRICE AS ON PRICE 52 WEEK ABSOLUTE PERFORMANCE RELATIVE TO SENSEX
COMPANY
RECO 03-AUG-2020 TARGET HIGH LOW 1M 3M 6M 12M 1M 3M 6M 12M
Automobiles
Apollo Tyres Buy 108 135 197 74 -5.4 21.7 -33.0 -26.5 -7.8 4.5 -26.1 -27.0
Ashok Leyland Hold 49 60 88 34 0.3 -0.1 -37.6 -23.0 -2.2 -14.2 -31.1 -23.5
Bajaj Auto Buy 2917 3500 3315 1793 -0.6 19.5 -7.8 11.3 -3.1 2.6 1.8 10.6
Hero MotoCorp Buy 2631 3200 3021 1475 -3.9 31.4 6.8 9.6 -6.3 12.8 18.0 8.9
M&M Buy 597 750 641 246 12.7 67.4 3.6 9.4 9.9 43.7 14.4 8.7
Maruti Suzuki Buy 6166 6925 7755 4002 3.9 26.1 -14.4 8.8 1.3 8.2 -5.4 8.1
TVS Motor Buy 396 470 503 240 0.2 27.4 -12.8 5.4 -2.3 9.4 -3.8 4.7
BSE Auto Index 16399 19057 10141 3.7 31.9 -9.9 6.2 1.1 13.3 -0.5 5.5
Banks & Finance
Axis Bank Buy 417 585 766 285 -2.6 3.6 -41.6 -37.0 -5.0 -11.0 -35.5 -37.5
Bajaj Finance Buy 3173 3800 4923 1783 8.2 52.5 -29.8 0.4 5.5 31.0 -22.4 -0.3
Bajaj Finserv Buy 6073 7500 10297 3986 -1.3 27.4 -36.4 -13.1 -3.7 9.4 -29.8 -13.7
Bank of Baroda Hold 47 56 108 36 -7.7 2.1 -46.2 -54.6 -10.0 -12.4 -40.6 -54.9
Bank of India Hold 48 53 80 30 -5.2 42.4 -26.6 -30.3 -7.6 22.2 -19.0 -30.8
Federal Bank Buy 52 60 99 36 -1.0 19.1 -41.6 -40.0 -3.5 2.2 -35.5 -40.4
HDFC Buy 1740 2113 2500 1473 -7.7 0.9 -25.8 -19.2 -10.0 -13.3 -18.1 -19.7
HDFC Bank Buy 1002 1400 1304 739 -6.7 8.5 -18.5 -54.0 -9.0 -6.8 -10.0 -54.3
ICICI Bank Buy 343 485 552 269 -4.9 1.5 -35.3 -14.7 -7.2 -12.8 -28.5 -15.3
LIC Housing Finance Hold 258 285 509 186 -6.1 -0.6 -34.4 -48.0 -8.4 -14.6 -27.6 -48.4
Max Financial Buy 543 570 611 280 -2.3 17.3 12.4 34.3 -4.7 0.7 24.1 33.5
Punjab National Bank Hold 33 45 70 26 -8.5 8.8 -42.0 -50.6 -10.8 -6.6 -36.0 -50.9
SBI Buy 192 280 351 150 4.0 7.4 -37.3 -36.0 1.4 -7.8 -30.7 -36.4
BSE Bank Index 23927 37193 18430 -3.5 5.5 -31.9 -23.4 -5.9 -9.4 -24.8 -23.9
Consumer goods
New Ide
Asian Paints a Buy 1705 1987 1916 1432 0.5 1.7 -9.8 11.8 -2.0 -12.7 -0.4 11.1
Britannia Buy 3776 4200 4015 2101 6.7 22.1 16.8 46.8 4.0 4.8 29.0 45.8
Emami Buy 241 320 357 141 4.9 27.8 -19.8 -22.6 2.3 9.7 -11.5 -23.1
Godrej Consumer Products Buy 698 810 772 425 -2.7 32.8 6.7 13.9 -5.1 14.0 17.8 13.2
Hindustan Unilever Buy 2205 2550 2614 1756 1.5 5.9 2.3 26.6 -1.0 -9.1 13.0 25.8
ITC Buy 193 250 266 135 -7.1 10.7 -10.7 -25.8 -9.4 -4.9 -1.4 -26.2
Jyothy Laboratories Buy 125 170 185 86 2.4 14.9 -18.3 -19.5 -0.2 -1.4 -9.8 -20.1
Marico Buy 363 420 404 234 1.2 27.6 18.1 -2.9 -1.3 9.5 30.4 -3.5
Tata Consumer Products New Ide
a Buy 434 522 530 214 9.5 29.6 14.3 66.4 6.8 11.3 26.2 65.3
Zydus Wellness Buy 1726 1780 1859 1070 30.0 32.2 14.8 13.5 26.7 13.5 26.8 12.7
BSE FMCG Index 11418 12378 8491 -0.1 10.3 -1.4 4.7 -2.6 -5.3 8.9 4.0
IT / IT services
HCL Technologies Buy 706 750 718 376 21.9 37.3 20.4 -30.2 18.9 17.9 32.9 -30.6
Infosys Buy 957 ** 986 511 25.5 42.1 21.5 23.3 22.4 22.0 34.2 22.5
L&T Technology services New Idea Buy 1534 1600 1780 995 18.5 28.9 -9.6 2.6 15.6 10.7 -0.2 2.0
Persistent Systems Buy 978 1000 1040 420 52.6 111.1 36.6 90.0 48.8 81.3 50.9 88.7
Tata Consultancy Services Hold 2251 ** 2357 1504 2.4 16.7 6.8 0.1 -0.2 0.2 17.9 -0.5
Wipro Hold 281 ** 291 160 25.2 47.9 17.1 7.3 22.1 27.0 29.3 6.6
BSE IT Index 18133 18551 10937 17.1 34.0 12.9 15.9 14.2 15.0 24.7 15.2
Capital goods / Power
CESC Buy 549 825 855 366 -12.8 -12.9 -23.1 -26.1 -15.0 -25.2 -15.1 -26.6
Finolex Cable Hold 269 325 433 165 -8.3 10.6 -28.7 -27.5 -10.6 -5.0 -21.2 -27.9
Greaves Cotton Hold 79 90 154 66 -8.5 4.0 -40.3 -32.6 -10.8 -10.7 -34.1 -33.0
Kalpataru Power Transmission Buy 229 300 515 170 -2.4 4.5 -47.6 -49.5 -4.8 -10.3 -42.2 -49.8
KEC International Buy 268 370 358 155 -3.2 33.6 -19.7 -10.1 -5.6 14.7 -11.4 -10.7
Thermax Hold 742 815 1180 644 -3.1 5.4 -28.1 -28.1 -5.5 -9.5 -20.6 -28.5
Triveni Turbine Hold 64 72 115 46 -12.4 -6.2 -33.4 -37.3 -14.6 -19.5 -26.5 -37.7
V-Guard Industries Buy 162 200 260 149 -4.6 -5.1 -24.9 -26.7 -7.0 -18.5 -17.1 -27.2
August 2020 4 Sharekhan ValueGuideEQUITY FUNDAMENTALS REPORT CARD
STOCK IDEAS STANDING (AS ON AUGUST 03, 2020)
CURRENT PRICE AS ON PRICE 52 WEEK ABSOLUTE PERFORMANCE RELATIVE TO SENSEX
COMPANY
RECO 03-AUG-2020 TARGET HIGH LOW 1M 3M 6M 12M 1M 3M 6M 12M
BSE Power Index 1528 2057 1275 -4.9 5.6 -19.7 -19.1 -7.3 -9.4 -11.3 -19.6
BSE Capital Goods Index 12751 19428 9499 -2.7 10.1 -24.4 -24.9 -5.2 -5.5 -16.5 -25.4
Infrastructure / Real estate
Larsen & Toubro Buy 916 1250 1554 661 -3.0 7.6 -29.1 -31.9 -5.4 -7.6 -21.7 -32.4
Sadbhav Engineering Buy 43 75 148 23 -5.0 -12.1 -62.7 -64.5 -7.4 -24.5 -58.8 -64.7
CNX Infra Index 3113 3392 2073 0.2 16.7 -4.3 3.1 -2.3 0.2 5.7 2.4
BSE Real estate Index 1557 2565 1259 -2.3 15.3 -35.8 -21.7 -4.8 -1.0 -29.1 -22.2
Oil & gas
Mahanagar Gas New Ide
a Buy 972 1380 1247 666 -9.2 3.3 -19.0 20.6 -11.5 -11.3 -10.5 19.8
Oil India Ltd Buy 95 115 175 66 -2.5 0.4 -26.4 -37.3 -4.9 -13.8 -18.8 -37.7
Petronet LNG Buy 250 300 302 171 -8.4 8.2 -7.4 5.6 -10.7 -7.1 2.2 4.9
Reliance Ind Buy 2008 2400 2199 868 12.4 39.9 40.9 75.7 9.6 20.1 55.5 74.6
BSE Oil and gas Index 12980 15772 8724 -0.3 12.0 -7.6 1.3 -2.7 -3.9 2.0 0.7
Pharmaceuticals
Aurobindo Pharma Hold 868 ** 968 281 11.5 32.9 75.3 58.3 8.7 14.1 93.5 57.2
Cadila Healthcare Hold 395 445 412 206 7.9 19.6 49.6 76.7 5.2 2.7 65.2 75.5
Cipla Buy 711 875 814 357 11.2 16.1 58.4 36.9 8.5 -0.3 74.9 36.0
Divi's Labs Buy 2632 3400 3228 1467 20.2 15.1 34.2 66.9 17.2 -1.2 48.2 65.8
IPCA Lab Buy 1888 2365 2175 844 13.5 17.0 60.2 98.9 10.7 0.5 76.9 97.6
Lupin Hold 927 965 978 505 3.1 10.2 28.5 22.5 0.5 -5.4 41.9 21.7
Sun Pharmaceutical Industries Hold 520 575 551 315 9.0 11.8 22.1 24.7 6.3 -4.0 34.9 23.9
Torrent Pharma Hold 2731 2780 3029 1555 14.0 15.0 41.6 63.6 11.2 -1.3 56.4 62.5
BSE Health Care Index 18388 19720 10948 12.5 19.7 32.4 47.8 9.7 2.7 46.2 46.8
Building materials
Grasim Hold 634 704 837 380 0.8 32.0 -20.2 -15.4 -1.7 13.4 -11.9 -16.0
New Ide
JK Lakshmi Cement a Buy 294 372 389 180 6.6 51.6 -17.7 -12.4 3.9 30.2 -9.1 -13.0
New Ide
Pidilite Industries a Buy 1345 1645 1710 1186 -3.2 -5.4 -13.6 5.7 -5.6 -18.8 -4.6 5.0
Shree Cement Hold 21761 23453 25341 15500 -4.9 16.8 -11.2 8.9 -7.3 0.3 -1.9 8.2
The Ramco Cements Buy 676 740 883 457 5.4 31.5 -15.9 -5.0 2.8 12.9 -7.1 -5.6
UltraTech Cement Buy 4044 5000 4753 2913 4.1 20.8 -9.6 -4.7 1.5 3.7 -0.2 -5.4
Discretionary consumption
Arvind@ Buy 28 43 59 19 -14.9 18.8 -35.6 -50.2 -17.0 2.0 -28.9 -50.5
Century Plyboards (India) Buy 129 145 182 95 2.9 10.6 -24.0 12.2 0.3 -5.0 -16.1 11.5
Info Edge (India) Hold 3155 ** 3575 1580 14.0 26.2 6.4 46.7 11.2 8.3 17.5 45.7
Inox Leisure Hold 231 270 511 158 -1.2 11.5 -44.1 -20.0 -3.6 -4.3 -38.2 -20.5
Relaxo Footwear # Buy 594 825 830 410 -9.4 -2.1 -19.6 35.8 -11.6 -16.0 -11.2 34.9
Titan Company Limited Buy 1076 1200 1390 720 7.3 20.8 -15.6 3.8 4.6 3.7 -6.8 3.1
Wonderla Holidays Hold 137 162 300 105 3.8 7.8 -43.6 -45.0 1.2 -7.4 -37.7 -45.3
Diversified / Miscellaneous
Bajaj Holdings Buy 2600 3345 3949 1472 2.0 37.3 -30.6 -25.0 -0.6 17.9 -23.4 -25.5
Bharat Electronics Buy 97 110 122 56 -0.5 43.4 14.1 4.7 -2.9 23.1 26.0 4.0
Bharti Airtel Buy 547 710 612 326 -5.8 2.8 5.4 53.3 -8.2 -11.7 16.4 52.3
New Ide
Coromandel International a Buy 780 1000 830 337 4.1 37.1 26.1 115.3 1.5 17.7 39.2 113.9
Gateway Distriparks Buy 83 110 138 71 -4.6 -4.2 -36.0 -16.5 -6.9 -17.7 -29.4 -17.1
PI Industries Buy 1841 2250 2154 974 16.8 21.7 19.0 70.1 13.9 4.5 31.4 69.0
Ratnamani Metals and Tubes Buy 1132 1250 1384 716 6.6 29.3 -11.5 25.1 3.9 11.0 -2.3 24.3
Supreme Industries Limited Buy 1294 1350 1414 791 14.0 30.9 -4.1 25.7 11.2 12.4 5.9 24.9
UPL Buy 452 550 618 240 1.8 17.2 -13.4 -16.4 -0.7 0.6 -4.4 -17.0
BSE500 Index 14183 16158 9758 2.8 17.7 -9.3 1.4 0.2 1.0 0.2 0.7
CNX500 Index 8932 10175 6152 2.7 17.6 -9.3 1.1 0.2 0.9 0.1 0.5
CNXMCAP Index 15469 18496 10750 2.8 19.8 -13.6 -0.1 0.3 2.9 -4.6 -0.8
** Price under review @ Reco price adjusted for demerger # Reco price adjusted for bonus ^ Reco price adjusted for stock split
* Price targets will be reviewed after we get further clarity on operations from companies post Q4FY2020 result announcements.
New Idea: We have converted the existing Viewpoint under our active coverage into a Stock Idea
August 2020 5 Sharekhan ValueGuideFrom the Editor’s Desk
From the Editor’s Desk Gush of money, wave of hope
Markets have surprised even the most optimistic of investors with the unrelenting rally for
more than four months now. Given the economic fallout of the COVID-19 pandemic, demand
destruction and the pressure on businesses globally, the surge in the equity market is intriguing
to say the least.
But the equity market rally globally can be explained by two simple words: money and hope.
Yes, it is all about money. Policymakers have been quite aggressive and swift this time around.
Globally, the central bankers have cut interest rates sharply and kept liquidity conditions
comfortable. Governments have also played their part with aggressive fiscal stimulus packages
to support accommodative monetary policy. Globally, policymakers have pumped in $10-12
trillion into financial markets in the past few months. Ample low-cost liquidity conditions create
a fertile ground to plant seeds for a new equity rally.
Hope is another key factor behind the equity rally. Hope that the Coronavirus vaccine will be
available sooner than later. Hope that the economic growth will stabilise and latent demand
will drive a smart recovery in the global economy next year and also boost corporate earnings.
The sharp dip in bond yields and falling returns in the fixed income market has also resulted in
money moving into equity in hope of better returns.
The consensus view will get tested over the next few months. Moreover, only time will tell
if reality matches up to hope. This is because the quick recovery in global economy is built
into the current equity rally. The valuations are also not cheap anymore. Thus, it could create
volatility in the near term.
However, there is an important lesson for investors here. It is futile to time the market and catch
the bottom. The idea should be to accumulate gradually during deep corrections. Eventually
markets do recover and handsomely reward investors over the next 12-18 months. So it is
important to keep the larger picture in mind and stay calm as equities eventually bounceback
in the long run.
Happy Investing!
August 2020 6 Sharekhan ValueGuideEQUITY FUNDAMENTALS STOCK IDEA
Tata Consumer Products Ltd.
Date: July 23, 2020 A wholesome basket
Reco Price
Buy PT : Rs. 484 Rs. 405
Summary
• Initiating coverage on Tata Consumer Products Limited (TCPL) — earlier named Tata Global Beverages — with a Buy rating and
PT of Rs. 484.
• TCPL will become strong play with integration of Tata Chemicals’ consumer business; share of consistently-performing India
business in revenue to rise to 61% from 48%, margins too can rise 60-80 bps in the near term.
• Appointment of consumer expert Mr. Sunil D’Souza as MD & CEO improves earnings visibility; consolidated revenue and
earnings (including TCL’s consumer business) to clock CAGR of 10% and 20% over FY2020-23E.
• Balance sheet strengthening despite commodity-linked business; FCF rose to Rs. 711 crore in FY2020 from negative Rs. 103
crore in FY2019; debt/equity ratio at 0.1x.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/TataConsumer-July23_2020_StockIdea.pdf
Pidilite Industries Limited
Date: August 07, 2020 Investment ka mazboot jod
Reco Price
Buy PT : Rs. 1,645 Rs. 1,377
Summary
• We initiate coverage on Pidilite Industries Limited (Pidilite) with Buy recommendation and assigning a price target of Rs. 1,645.
• Pidilite leads domestic market for adhesives, sealants and construction chemicals. Strong brands (including Fevicol, Dr.Fixit and
Fevikwik) give it a competitive edge over peers.
• FY2021 will be affected by impact of Covid-19 spread resulting into a wash-out Q1FY21. With recovery started flowing in
(especially in tier-III and IV towns), FY2022 is expected to witness strong bounceback. Fall in VAM prices would help margins
continue rise.
• Launch of premium products in core categories, foray into new categories (largely consumer-centric), wider distribution reach
and expansion into international markets remain key growth drivers in the medium to long term.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Pidilite-Aug07_2020_3R_StockIdea.pdf
August 2020 7 Sharekhan ValueGuideStock Update EQUITY FUNDAMENTALS
Price Target/ Upside
Recommendation Reco Price
Date Company Report Type (%)
(Rs.)
Latest Chg Latest Chg
July 01, 2020 Finolex Cables Ltd. Stock Update HOLD 291 325
Summary
• We reiterate our Hold rating with a revised PT of Rs. 325, due to muted outlook in user industries.
• Finolex posted lower revenues for Q4FY20 led by weak performance in electrical and communication business, with a decline
in OPM y-o-y. Net profit was higher due to higher other income and lower ETR.
• We expect slowdown in construction and postponement of projects by the Government to limit its revenue growth along with
shortage of skilled labourers in the near term to weigh on performance.
• Company focuses on containing costs and enhances manufacturing efficiencies. Capex plans remains intact attributable
towards backward integration and capacity expansion helping enhancing revenues at full capacity utilization.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Finolex-Jul01_2020.pdf
July 01, 2020 Arvind Limited Stock Update BUY 33 43
Summary
• Q4FY2020 revenue fell by 11.7% y-o-y due to COVID-19 disruptions; revenue grew by 6.7% for January-February and OPM
declined by just 27 bps to 9.6% in Q4FY2020 due to lower operating leverage (despite a significant fall in gross margins).
• Efficient working capital management helped Arvind reduce net debt by Rs. 248 crore in FY2020; we expect balance sheet to
remain stable in FY2021 though operating performance is likely to be sluggish during H1FY2021.
• FY2021 to be impacted by COVID-19, faster recovery in export markets, good growth in garment volumes and sustained growth
in AMD business will help company post good recovery in FY2022; soft cotton prices to help margins sustain.
• We maintain our Buy rating with a revised PT of Rs. 43 due to discounted valuation of 6.6x its FY2022E earnings and 4.1x its
FY2022E EV/EBITDA (trading at a discount of ~28% since its listing last year).
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Arvind-July01_2020.pdf
July 01, 2020 Oil and Natural Gas Corporation Ltd. Viewpoint BOOK OUT - 81 - -
Summary
• We drop our coverage on ONGC and recommend Book Out as valuations are pricing in a crude oil price of $50/bbl (as
compared to current Brent price of $42/bbl) and expect profitability of gas business to be stressed amid weak domestic gas
prices.
• Q4FY20 net loss stood at Rs. 3,098 crore (versus PAT of Rs. 4,240 crore in Q4FY19) due to impairment charge of Rs. 4,899
crore and a forex loss of Rs. 1,113 crore partially offset by a deferred tax benefit of Rs. 1,642 crore. Adjusted standalone PAT of
Rs. 802 crore (down 81.1% y-o-y) was below our estimates.
• For FY2020, ONGC’s consolidated reported PAT declined sharply by 64% to Rs10907 crore due to impairment charge of Rs.
8,025 crore and an inventory loss of Rs. 1,003 crore for its subsidiary HPCL.
• We expect the gas business to report losses in FY2021 given expectation of further downward revision in domestic gas prices
to $1.9-2.1/mmBtu for H2FY2021E as against break-even gas price of $3-3.5/mmBtu.
Read report - https://www.sharekhan.com/MediaGalary/Equity/ONGC-Jul01_2020.pdf
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August 2020 8 Sharekhan ValueGuideEQUITY FUNDAMENTALS Stock Update
Price Target/ Upside
Recommendation Reco Price
Date Company Report Type (%)
(Rs.)
Latest Chg Latest Chg
July 08, 2020 Polyplex Corporation Limited Viewpoint POSITIVE 536 15%
Summary
• Stay positive on Polyplex Corp (PCL) and expect a 15% upside as valuation of 4.6x FY22E EPS is at a 45% discount to historical
average PE, given earnings growth visibility (expect 16% PAT CAGR over FY20-FY22E), robust balance sheet and healthy
dividend yield of 4%.
• Higher exposure to consumer staple packaging (71% of sales) and increased focus on health & hygiene packaging bodes well
for BOPET volumes. Recent BOPET capacity expansion to drive 7% volume CAGR over FY20-FY22E.
• Sharp fall in PTA and MEG prices (key raw material for BOPET films) and lagged impact in correction of BOPET prices bodes
well for margin in Q1FY2021.
• Steady rise in share of specialty films in revenue mix (33% in FY2020 versus 24% in FY2017) to structurally drive margin in
medium to long term.
Read report - https://www.sharekhan.com/MediaGalary/Equity/Polyplex-July08_2020.pdf
July 09, 2020 Tata Consultancy Services Stock Update HOLD 2,204 2,250
Summary
• We downgrade TCS to Hold from Buy with a revised PT of Rs. 2,250.
• Q4 was weak due to supply-side constraints and subdued demand; OPM severely lagged estimates, pulling down PAT by
12.9%.
• Management expects revenue to recover from Q2FY2021E as supply-side constrains evaporate and demand surges for digital
infrastructure solution core transformation; deal wins remained strong.
• Though FY2021 looks to be a weak year, we assume strong revenue growth in FY2022E given pent-up demand and market
share gains.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/TCS-July09_2020.pdf
July 10, 2020 Sadbhav Engineering Stock Update BUY 49 75
Summary
• We maintain our Buy rating on Sadbhav Engineering Limited (SEL) with a revised PT of Rs. 75, factoring lower valuation of its
listed subsidiary Sadbhav Infrastructure Projects Limited (SIPL).
• SEL reported weak execution during Q4FY2020, led by issues plaguing Right of Way in HAM projects and COVID-19 led
lockdown. Adjusted for exceptional gain, SEL posted standalone net loss.
• Management expects to revert to normal quarterly revenue run-rate from Q3FY2021 and strong jump in revenue in FY2022.
Stake sale in assets leads to meaningful de-leveraging.
• Merger of SIPL with SEL isexpected to complete by March 2021. Receives appointed dates for all HAM projects.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Sadbhav-July10_2020.pdf
August 2020 9 Sharekhan ValueGuideStock Update EQUITY FUNDAMENTALS
Price Target/ Upside
Recommendation Reco Price
Date Company Report Type (%)
(Rs.)
Latest Chg Latest Chg
July 14, 2020 Wipro Stock Update HOLD 225 250
Summary
• We maintain our Hold rating on Wipro with a PT of Rs. 250 given low visibility on growth recovery.
• Wipro reported constant currency (CC) revenue decline of 7.5%, in-line with our expectations; margins improved 146bps q-o-q
to 19.1% , resulted in 9% beat in net profit.
• Management expects stability would return in communication, consumer and technology vertical in Q2FY2021E, which together
contribute 34.5% of the total revenue; margin likely to remain in narrow band in Q2FY2021.
• Though new CEO would focus on a potential turnaround strategy, we believe it would be a tough task given existing execution
issues, absence of large-deal engines and challenging demand environment.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Wipro-July14_2020.pdf
July 15, 2020 Infosys Stock Update BUY 831 920
Summary
• We maintain our Buy rating on Infosys with a revised price target of Rs. 920.
• Infosys reported better-than-expected results on all financial fronts despite supply-side constraints, with strong deal wins and
FCF generation; EBIT margin improved by 150 bps q-o-q to 22.7%, way ahead of our estimates.
• Management has resumed guidance with FY2021E revenue growth guidance of 0-2% in CC; margins are likely to be at 21-23%
(EBIT margin was 21.3% in FY2020).
• Even as reduction of IT spending is expected during 2020, Infosys is well poised to gain share in the recessionary environment
and outperform peers in terms of revenue growth in FY2021E.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Infosys-July15_2020.pdf
July 15, 2020 Federal Bank Stock Update BUY 50 60
Summary
• Federal Bank (FB) posted operationally strong performance for Q1FY2020, helped mainly by treasury gains, cost control and
sequentially lower slippages which helped offset elevated provisions and lower fee income.
• The moratorium book (net) now stands at 24%, PCR stands at 58.5% with stressed book at 1.14%, which provides support.
• Management indicated that headwinds would continue and may see a spike in NPAs in Q3, growth outlook is likely to be
cautious.
• We maintain our Buy rating on the stock with an unchanged price target (PT) of Rs. 60.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/FederalBank-July15_2020.pdf
July 16, 2020 L&T Technology Services Stock Update BUY 1,439 1,600
Summary
• We maintain a Buy on L&T Technology Services (LTTS) with an unchanged PT of Rs. 1,600.
• Q1 revenue met our modest expectations, while margins missed mark; revenue affected by scrapping of aerospace project and
softness in plant engineering vertical.
• Management expects USD revenue to fall 9-10%, as anticipated for FY2021 that translates into a 2.3-3% q-o-q growth for
remaining quarters.
• We expect growth to normalise in FY2022E on account of catch-up effects and strong demand for digital engineering.
Read report - https://www.sharekhan.com/MediaGalary/Equity/LTTS-July16_2020.pdf
August 2020 10 Sharekhan ValueGuideEQUITY FUNDAMENTALS Stock Update
Price Target/ Upside
Recommendation Reco Price
Date Company Report Type (%)
(Rs.)
Latest Chg Latest Chg
July 16, 2020 Larsen & Toubro Infotech Viewpoint NEUTRAL 2,291 5-7%
Summary
• We maintain our Neutral stance on L&T Infotech (LTI) given unfavorable risk-reward ratio and expect upside potentialof 5-7%.
• Revenue in-line, margin beat our estimates; however, revenue decline from the top 5 accounts decelerated to 9.8% q-o-q;.
• Despite delay in decision making, LTI won a large deal (TCV of $20 million) with BFS logo in UK. TCV of deal was significantly
smaller compared to usual run-rate in earlier quarters.
• Consistency in deal wins, new logo openings and prudent client mining would position the company in the leader’s quadrant
in term of revenue growth in FY2021.
Read report - https://www.sharekhan.com/MediaGalary/Equity/LTI-July16_2020.pdf
July 17, 2020 HDFC Bank Stock Update BUY 1,099 1,400
Summary
• HDFC Bank reported Q1FY21 results, with Operational performance largely in line with expectations; PAT was boosted by
higher treasury income even though Core fee income declined.
• Though asset quality deteriorated slightly as GNPA rose sequentially, a confident management stated that moratorium pie has
fallen to ~9% of the total book, which is positive. Balance sheet stays robust, with provision buffer (total provisions at 149% of
GNPAs).
• The succession of Mr. Puri, the MD & CEO, will be keenly watched, but the bank has hinted the successor is likely to be an
internal candidate. The bank clarified well on most other uncertainties (recent events, management exits).
• We retain our Buy rating on the stock with unchanged price target (PT) of Rs. 1,400.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/HDFCBank-July17_2020.pdf
July 17, 2020 HCL Technologies Stock Update BUY 623 750
Summary
• We maintain our Buy rating on HCL Technologies (HCL Tech) with a revised PT of Rs. 750.
• Revenue was inline and margins were ahead of our expectations; deal signings and FCF generation remained strong.
• Management provided revenue growth in the range of 1.5% - 2.5% q-o-q for the remaining quarters, translates -3.3% to -0.8%
revenue growth in FY2021E. It expects EBIT margin to be in the range of 19.5-20.5% for FY2021.
• Strong demand for infrastructure business, higher spending on digital infrastructure and emergence of new business models
is expected to create new growth opportunities for the company.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/HCLTech-July17_2020.pdf
August 2020 11 Sharekhan ValueGuideStock Update EQUITY FUNDAMENTALS
Price Target/ Upside
Recommendation Reco Price
Date Company Report Type (%)
(Rs.)
Latest Chg Latest Chg
July 17, 2020 Britannia Industries Stock Update BUY 3,784 4,200
Summary
• Q1FY2020 numbers were strong with revenues growing 26% and OPM stable at 21% (up 634 bps). PAT surged 110% led by
strong operating performance, higher other income and lower tax incidence.
• Hindi-speaking belt performed well with double-digit revenue growth. Adjacent categories (including rusk, bread and cheese)
clocked double-digit revenue growth and higher profitability.
• Sustained demand from in-house consumption and large shift towards branded products and better growth in the rural markets
will help Britannia to maintain growth momentum.
• We have raised earnings estimates by 5% and 4%, respectively, for FY2021 and FY2022 to factor a strong improvement in OPM.
We maintain our Buy rating on stock with a revised price target of Rs. 4,200.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Britannia-July17_2020.pdf
July 17, 2020 ICICI Lombard General Insurance Viewpoint POSITIVE 1,288 15-18%
Summary
• ICICI Lombard General Insurance (ILGI) reported strong Q1FY2021 results with gross direct premium income (GDPI) coming
higher than expectations and encouraging improvement in combined ratio, and solvency ratio, which was positive.
• ROAE jumped to 25.1% in Q1FY2021 from 20.8% in FY2020 due to strong cost control and better profitability; and solvency ratio
also improved to 2.5x in June 2020 (from 2.17x in March).
• We find the general insurance space attractive with strong growth potential; and ILGI with its focus on higher-margin business
andstrong operating metrics make ILGI an attractive franchise for the long term.
• We maintain our Positive view and see 15-18% upside potential for the stock.
Read report - https://www.sharekhan.com/MediaGalary/Equity/ICICILombard-July17_2020.pdf
July 17, 2020 L&T Finance Holding Viewpoint NEUTRAL 62 3-5%
Summary
• L&T Finance Holdings (LTFH) posted weak results for Q1FY2021, where its operational performance was below expectations,
but the company saw a one-time stake sale benefit, which was a one-off.
• Due to the provisions of Rs. 577 crore over and above GS3 provisioning, not only the NS3 declined, but PCR also increased
from 58% to 69%.
• Lower disbursals will impact interest and fee income growth, and higher liquidity on the balance sheet may crimp medium-term
profitability.
• We have fine tuned our estimates for FY2021E and FY2022E and the target multiples. We maintain our view as Neutral on the
stock.
Read report - https://www.sharekhan.com/MediaGalary/Equity/LnTFinance-July17_2020.pdf
August 2020 12 Sharekhan ValueGuideEQUITY FUNDAMENTALS Stock Update
Price Target/ Upside
Recommendation Reco Price
Date Company Report Type (%)
(Rs.)
Latest Chg Latest Chg
July 17, 2020 Granules India Limited Viewpoint POSITIVE 264 18-20%
Summary
• We maintain our Positive view on Granules India and expect an upside potential of 18-20%.
• Granules reported an impressive performance for Q1FY21 with revenues at Rs 735.6 cr, up by 23.6% yoy, on the back of a
double digit growth in lucrative PFI and FD segments. PAT at Rs 111.4 cr was up 34% yoy.
• Granules is witnessing strong demand traction across segments, which is expected to sustain going ahead as well. Tapping
new geographies for growth, strong product pipeline, growth in existing core molecules would drive the revenues. Favorable
mix, benefits of operating efficiencies accruing would lead to OPM expansion.
• Management has revised upwards its earnings growth guidance of FY2021 to 30% while it has retained FY2022 guidance at
25% growth. This compares with earlier guidance of 25% CAGR over FY2020-FY2022.
Read report - https://www.sharekhan.com/MediaGalary/Equity/Granules-July17_2020.pdf
July 17, 2020 Bosch Limited Viewpoint POSITIVE 13,184 18-20%
Summary
• Bosch would gain from an increase in content per vehicle under the BS-VI emission norms and has a strong order book of Rs
24,000 cr, which provides visibility for next 2-3 years.
• Bosch has invested heavily into manufacturing of new age sensors, softwares and services to capture emerging areas of
connected and electric vehicles.
• Bosch is adopting a technology-agnostic approach for growth and stated it will recover faster than the automotive industry .
Bosch has a strong technological parentage, debt-free balance sheet and robust return ratios.
• Valuations at 25.7x FY22 earnings are below long term historical average of 31-32x. Hence, we stay positive on the stock and
expect an 18-20% upside from current levels.
Read report - https://www.sharekhan.com/MediaGalary/Equity/Bosch-July17_2020.pdf
July 20, 2020 Hero MotoCorp Stock Update BUY 2,858 3,200
Summary
• We retain Buy rating on Hero Motocorp (Hero) with revised PT of Rs 3,200. Buoyant rural sentiments would lead to faster
recovery for Hero given its higher rural exposure.
• While near term demand would be impacted by COVID-19; management expects recovery from H2FY21 driven by strong rural
sentiments, pent up demand and preference for personal transport in post COVID era.
• Long term growth levers for 2W industry are intact. Hero is focusing on export markets and premiumisation of product portfolio
to drive growth.
• Valuations at 16.1x FY22 earnings are lower than its long-term historical average. Hero remains our preferred pick in automotive
space.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/HeroMoto-July20_2020.pdf
August 2020 13 Sharekhan ValueGuideStock Update EQUITY FUNDAMENTALS
Price Target/ Upside
Recommendation Reco Price
Date Company Report Type (%)
(Rs.)
Latest Chg Latest Chg
July 21, 2020 Bajaj Finance Stock Update BUY 3,293 3,800
Summary
• Bajaj Finance Ltd (BFL) reported mixed Q1FY20 numbers, with tepid business growth, but asset quality improved sequentially,
and the moratorium share fell to 15.7% of AUM from 27% which is a positive.
• Adopting a conservative and prudent provision policy, creating additional reserves will help the bank meet challenges on asset
quality going forward. Hence, an additional Rs. 1,450 crore COVID-19 provisions (total COVID19 provisions stands at 1.7% of
AUM as of June 2020) provides comfort.
• Asset quality improved sequentially with gross NPA and net NPA at 1.40% and 0.50% respectively, from 1.61% and 0.65% in
Q4FY20. With a strong balance sheet, robust risk management and prudent management, BFL is a strong franchise for the long
term and is well-placed to ride over medium term challenges.
• We maintain a Buy rating on Bajaj Finance with a revised price target of Rs. 3,800.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/BajajFinance-July21_2020.pdf
July 21, 2020 Hindustan Unilever Stock Update BUY 2,319 2,550
Summary
• Q1FY2021 performance was better than our as well as the street’s expectation with revenue and PAT growing by ~4% and ~8%,
respectively. Core business performed well with just a 7% decline compared to ours as well as street’s assumption of 12-13%
decline.
• OPM was affected by unfavourable mix and higher COVID-19-related expenses. However, the same is expected to recover in
coming quarters as business normalises (skin care and personal care regaining momentum).
• Recovery in rural demand, strong demand for hygiene and nutritional products and market share gains in key categories will
be key revenue drivers in the near term. The company paid special dividend of Rs. 9.5 per share.
• We have raised earnings estimates by ~5% and ~4% for FY2021 and FY2022. We retain our Buy recommendation on the stock
with a revised PT of Rs. 2,550.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/HUL-July21_2020.pdf
July 21, 2020 Axis Bank Stock Update BUY 446 585
Summary
• We maintain our Buy rating on the stock with a revised price target (PT) of Rs. 585.
• Axis Bank posted strong results Q1FY2020 with Operating results better than expectations and adopting a conservative
provision policy and slow growth on business impacted the fee income.
• Notably, the moratorium book has declined to 9.7% from ~26% earlier, which is a positive.
• With a decent CRAR (CET1 of 13.5%) the bank is well capitalised and plans for additional capital raise. If these plans fructify, it
will help improve the capital base and augur well for the bank.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/AxisBank-July21_2020.pdf
August 2020 14 Sharekhan ValueGuideEQUITY FUNDAMENTALS Stock Update
Price Target/ Upside
Recommendation Reco Price
Date Company Report Type (%)
(Rs.)
Latest Chg Latest Chg
July 21, 2020 ICICI Prudential Life Insurance Company Ltd Viewpoint POSITIVE 443 18-20%
Summary
• The operational performance of ICICI Prudential Life Insurance (IPRU) was reasonable even as the decline in business was
largely expected, due to the impact of the lockdown during the quarter as well as due to shift in customer preferences.
• Cost management (Cost/TWRP) improved to 14.8% for Q1FY2021 from 17% in Q1FY2020, helped by higher renewal premium
and lower first income premium growth. VNB margin was 24.4% for Q1FY2021 as compared to 21.7% for FY2020, helped by
increased protection mix.
• Going forward, we expect protection and annuity products to continue to see higher growth. We find the insurance space
attractive, given a long runway for growth and believe that players with a strong balance sheet and business metrics would be
able to tide over the crisis.
• We maintain a Positive view on the stock and expect an upside of 18-20%.
Read report - https://www.sharekhan.com/MediaGalary/Equity/ICICIPru-July21_2020.pdf
July 22, 2020 Bajaj Auto Stock Update BUY 2,985 3,500
Summary
• We maintain Buy rating on Bajaj Auto Ltd (Bajaj) with an upgraded PT of Rs 3,500.
• Bajaj’s operating results were ahead of our as well as street estimates as better product mix, favourable currency realisations,
and cost-control measures led to better-than-anticipated margins.
• Bajaj is witnessing fast recovery in both the domestic (due to strong rural sentiments) as well as overseas markets (due to
opening of economies and bounce back in crude prices). Management has stated demand recovery is faster than expected.
• We have fine tuned our earnings estimates. Valuations at 16x FY22 earnings are lower than long term historical average.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/BajajAuto-July22_2020.pdf
July 22, 2020 HDFC Life Insurance Viewpoint POSITIVE 610 12%-15%
Summary
• HDFC Life Insurance (HLIC) Q1 FY21 quarter was impacted by the pandemic as expected, however, better premium recoveries
m-o-m were a silver lining, hinting that business is normalizing fast.
• Total annualized premium equivalent (APE) fell by 30% y-o-y in Q1FY21, impacted by a lockdown and weak buyer sentiment
towards ULIPs; but individual protection and PAR showed strong traction.
• Given strong structural fundamentals such as a robust balance sheet, strong brand image and high long-term growth potential
for the Indian insurance industry we see HDFC Life as attractive option for long-term investors. Its inclusion in Nifty benchmark
index is another positive.
• We maintain our Positive view and expect a potential upside of 12-15%.
Read report - https://www.sharekhan.com/MediaGalary/Equity/HDFCLife-July22_2020.pdf
August 2020 15 Sharekhan ValueGuideStock Update EQUITY FUNDAMENTALS
Price Target/ Upside
Recommendation Reco Price
Date Company Report Type (%)
(Rs.)
Latest Chg Latest Chg
July 22, 2020 Tata Elxsi Limited Viewpoint POSITIVE 915 18-20%
Summary
• We stay Positive on Tata Elxsi Limited (TEL) and expect an upside of 18-20%.
• Revenue in-line, margins beat our expectations; constant currency revenue grew 4.1% y-o-y, led by strong growth in non-
automotive verticals.
• TEL’s diversification strategy in service offering (in media and communications and healthcare verticals) and geography (in the
US) has been progressing well and would help the company to tide out the current challenging situation.
• Management expects recovery in revenues from 2HFY2021 led by new deal wins, addition of new logos, anticipated recovery
in auto segment and continued growth momentum in media and medical devices verticals.
Read report - https://www.sharekhan.com/MediaGalary/Equity/TataElxsi-July22_2020.pdf
July 22, 2020 Indian Oil Corporation Ltd Viewpoint POSITIVE 92 25%
Summary
• We upgrade our view on IOCL to Positive and expect 25% upside given its attractive valuation of 6.1x FY22E EPS (40% discount
to historical average PE and 61% to that of BPCL). Recovery in earnings and high dividend yield of ~8% would narrow valuation
gap with peers.
• We expect strong earnings recovery for OMCs over FY21E-FY22E led by above-average auto fuel marketing margins of ~Rs.
4.5/litre (Rs. 2-2.5/litre historically) and a sharp recovery in petroleum consumption (recovered to ~88% of pre-COVID-19 levels).
• IOCL is biggest beneficiary of a sharp fall in crude oil prices given high fuel & loss of 8.8% (versus 5.4% for BPCL and 7.2% for
HPCL) that would result into highest improvement in IOCL’s refining margins.
• Sharp 27% correction in IOCL’s stock price in CY2020 YTD ignores potential improvement in earnings prospects over FY21E-
FY22E (we expect standalone EBITDA/PAT to clock CAGR of 29%/19% over FY20-FY22E).
Read report - https://www.sharekhan.com/MediaGalary/Equity/IndianOil-July22_2020.pdf
July 22, 2020 Polycab India Limited Viewpoint POSITIVE 824 14-15%
Summary
• We maintain our Positive view on Polycab India Limited (Polycab) with 14-15% upside, given attractive valuation post factoring
COVID-19 impact and expecting strong bounce back in FY2022.
• Q1FY2020 revenue declined sharply, which came in below estimates, affected by COVID-19 led shutdown and adverse
operating leverage resulting in lower OPM. Adjusting for write-back of income tax provision and exceptional gain from Ryker
stake acquisition and interest on income tax refund, adjusted PAT came in at Rs. 7.5 crore.
• We expect H2FY2021 to be better than H1FY2021, while demand is likely to normalise over one to two quarters. We expect
Polycab to bounce back in FY2022, owing to its leadership position in key business verticals.
• Polycab’s strong balance sheet and net cash position provide comfort in the present challenging environment.
Read report - https://www.sharekhan.com/MediaGalary/Equity/Polycab-July22_2020.pdf
August 2020 16 Sharekhan ValueGuideEQUITY FUNDAMENTALS Stock Update
Price Target/ Upside
Recommendation Reco Price
Date Company Report Type (%)
(Rs.)
Latest Chg Latest Chg
July 23, 2020 Bajaj Finserv Stock Update BUY 6,390 7,500
Summary
• Bajaj Finserv (holding company) saw its consolidated net profit rise by 43.7% to Rs 1,215 crore, while revenue increased 15.6%
y-o-y to Rs 14,190 crore in Q1 FY21 mainly helped by strong earnings from its insurance subsidiaries.
• Bajaj Finance (lending subsidiary) saw tepid AUM growth, but asset quality improved q-o-q and moratorium book share declined
to 15.7% (from 27% earlier). Insurance arms saw strong PAT growth helped by lower claims and strong cost management. Even
though Q1 topline was impacted by COVID-19 as expected, pick-up on a month-on-month basis on premiums is encouraging,
reflecting rapid normalisation.
• All subsidiaries are well-capitalised with strong operating metrics, which will enable them withstand and tide over near-term
challenges.
• We maintain our Buy recommendation on Bajaj Finserv with a revised SOTP-based price target of Rs. 7,500.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/BajajFinserv-July24_2020.pdf
July 23, 2020 Larsen and Toubro Stock Update BUY 916 1,250
Summary
• We maintain our Buy rating on Larsen and Toubro (L&T) with an unchanged PT of Rs. 1,250, considering undemanding valuation
and healthy fundamentals to ride the current uncertainties.
• L&T’s Q1FY2021 performance remained resilient in the given conditions with inline revenue, marginally lower operating profit
margin (OPM) with estimates, and slip in earnings due to higher interest cost and depreciation.
• Management has refrained from providing any revenue or order inflow guidance as it is too early to quantify the same and
highlighted that the situation is expected to improve in the latter part of FY2021.
• Order book remains strong and diversified. International order book provides cushion despite lower new order prospects from
the Middle East.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/LnT-July24_2020.pdf
July 24, 2020 Asian Paints Stock Update BUY 1,711 1,987
Summary
• Though Q1 saw the impact of the April lockdown that hit around 30-40 days of business, sales improved post Unlocking 1.0, and
June saw double-digit volume growth for Asian Paints (APL) in decorative paints segment.
• Sharp recovery in June helped APL post better-than-expected performance in Q1FY2021 with revenues declining by 43% y-o-y
(against street expectation of 55-60%) and OPM standing at 16.6% (as against our as well street expectation of 9.5%).
• We maintain that FY2022 would see strong recovery on back of pent-up demand for painting activities, shift to trusted brands
and higher construction activities.
• We have increased our earnings estimates by 6% and 4% for FY2021 and FY2022, respectively. We maintain our Buy
recommendation on the stock with a PT of Rs. 1,987.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/AsianPaint-July24_2020.pdf
August 2020 17 Sharekhan ValueGuideStock Update EQUITY FUNDAMENTALS
Price Target/ Upside
Recommendation Reco Price
Date Company Report Type (%)
(Rs.)
Latest Chg Latest Chg
July 24, 2020 ICICI Bank Stock Update BUY 382 485
Summary
• ICICI Bank posted good numbers for Q1FY2021, where operating performance was better than expectations, even though
higher provisions (partly due to COVID-19) resulted in lower-than-expected PAT. Moratorium book stood at 17.5% (from 30% at
Q4FY2020) which is positive.
• Asset quality improves with GNPA/NNPA ratio decreasing by 5 bps/18 bps, respectively, to 5.99%/1.23% vis-à-vis Q4FY2020.
Even gross slippages declined significantly to Rs. 1,160 crore, which was a 20-quarter low.
• The bank is adequately capitalised (Tier-1 at 14.9%) and a successful equity-raising plan will further add to balance sheet
strength. We like the prudent and cautious approach of the bank in building provision buffers, cautious loan book growth, and
healthy capitalisation levels.
• We maintain our Buy rating on the stock with a revised SOTP-based price target (PT) of Rs. 485.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/ICICIBank-July24_2020.pdf
July 24, 2020 ITC Limited Stock Update BUY 200 250
Summary
• Cigarette sales volumes declined by ~38% in Q1FY2021 affected by lockdown (gross revenues fell by 29%); better than ours as
well as street’s expectation of a 50-55% decline.
• Non-cigarette FMCG business grew by 12.2% on comparable basis (18.8% excluding education and stationery segments);
essentials segment grew by 34%.
• Non-cigarette FMCG business will continue to grow strongly while cigarette sales would improve sequentially; Paperboard,
paper & packaging segment (excluding stationery) would perform stably in the coming quarters.
• We have revised our earnings estimates by 4-5% for FY2021/22. We maintain our Buy recommendation on the stock with
revised PT of Rs. 250.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/ITC-July24_2020.pdf
July 24, 2020 Biocon Viewpoint POSITIVE 415 10-12%
Summary
• Biocon clocked a strong performance for Q1FY21. Revenues at Rs 1672 cr grew 14.6% YoY and were ahead of estimates. Strong
double digit growth in the Biologics as well as generics segment aided the topline growth. PAT at Rs 152 cr was ahead of
estimates.
• Biocon is expected to significantly benefit from the opportunities in the Biologics space. Strong traction in existing products,
healthy new product pipeline, innovative products / therapies, tapping new geographies would be key growth drivers.
• Management expects to have a total of 8 biosimilar products in the US markets by end of FY2022 as against 3 now. It has
retained its guidance of $1bn revenues from the biologics segment by FY2022.
• Possible listing of subsidiary - Biocon Biologics provides a significant value unlocking opportunity. We stay Positive on the stock
and expect an upside of 10-12%.
Read report - https://www.sharekhan.com/MediaGalary/Equity/Biocon-Jul24_2020.pdf
August 2020 18 Sharekhan ValueGuideEQUITY FUNDAMENTALS Stock Update
Price Target/ Upside
Recommendation Reco Price
Date Company Report Type (%)
(Rs.)
Latest Chg Latest Chg
July 24, 2020 JSW Steel Limited Viewpoint POSITIVE 205 20%
Summary
• JSW Steel’s consolidated EBITDA at Rs. 1,341 crore (down 55% q-o-q) was above our estimates, led by higher-than-expected
EBITDA/tonne at Rs. 4,806/tonne (down 41% q-o-q) due to lower cost of production by 4% q-o-q.
• Sales volume declined by 23.6% q-o-q to 2.8 million tonne (mt) with export volume at 1.8mt (57% of volumes) but weak domestic
volumes at 1.2 mt (43% share in sales volume), which was impacted by COVID-19 led lockdown.
• FY2021E sales volume guidance of 15mt implies 9% y-o-y growth in 9MFY2021E. Likely higher domestic steel price, lower
coking coal price, improvement in revenue mix (with ramp-up in domestic sales), and higher plant utilisation to aid earnings
recovery.
• Valuation of 6.1x its FY2022E EV/EBITDA is at 12% discount to its historical average one-year forward multiple EV/EBITDA
multiple of 7x. Hence, we maintain our Positive view on JSW Steel and expect a 20% upside potential.
Read report - https://www.sharekhan.com/MediaGalary/Equity/JSW_Steel-Jul24_2020.pdf
July 27, 2020 Coromandel International Limited Stock Update BUY 790 1,000
Summary
• We maintain our Buy rating on Coromandel International with unchanged PT of Rs. 1,000.
• Company set to report healthy revenue and earnings CAGR of 11% and 17.5%, respectively, over FY2020-22E.
• Coromandel to speed up investments in high-growth crop protection business which is expected to enhance profitability.
• Q1 performance strong with revenue, EBITDA and PAT rising 51%, 111% and 4x y-o-y, respectively.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Coromandel-July27_2020.pdf
July 27, 2020 Marico Stock Update BUY 350 420
Summary
• Marico’s Q1FY2021 performance was better than our as well street expectations, largely led by ~300 bps expansion in
consolidated OPM, resulting in 4% growth in adjusted PAT to Rs. 340.8 crore (better our expectation of Rs. 283.4 crore).
• Domestic sales volume decreased by ~14%, led by 11% volume decrease in parachute rigid packs and 30% volume decline in
value-added hair oil (VAHO) portfolio. Saffola edible oil registered 16% volume growth.
• The month of June saw recovery in sales of Parachute rigid pack and VAHO portfolio, Saffola edible oil is expected to maintain
the good run, while margin expansion is expected to sustain due to benign input prices and lower ad spends.
• We have revised upwards our earnings estimates by ~6% and ~4% for FY2021 and FY2022, respectively. We maintain our Buy
recommendation on the stock with a revised price target of Rs. 420.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Marico-July27_2020.pdf
July 27, 2020 Persistent Systems Stock Update BUY 856 1,000
Summary
• We retain our Buy rating on Persistent Systems Limited (PSL) with a revised PT of Rs. 1,000.
• PSL delivered a strong set of numbers, with beat on all financial fronts; deal signings remained strong.
• We believe growth momentum in Technology Services would continue in FY2022Eled by large deal signings, new logo addition,
prudent client mining strategy and a healthy deal pipeline.
• Cash and cash equivalents account for 23% of its current market capitalisation; strong balance sheet and potential strong
earnings growth potential provide us comfort on the stock.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Persistent-July27_2020.pdf
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