VALUEGUIDE JULY 2019 - SHAREKHAN

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VALUEGUIDE JULY 2019 - SHAREKHAN
ValueGuide
                                                                            July 2019

                               Look beyond the Budget

       Intelligent Investing    Regular Features   Products & Services        Trader’s Edge

                Stock Idea          Report Card                  PMS         Technical View
            Stock Updates        Earnings Guide              MF Picks           Currencies
               Viewpoints                                    Advisory          F&O Insights
           Sector Updates

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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
Though Budget 2019                                                                                            FUNDAMENTALS
failed to meet the                                                                                             Stock Idea                                    07 REGULAR FEATURES
street    expectations                                                                                         Stock Update                                  08 Report Card                                       04
on several counts –                                                                                            Sector Update                                 16 Earnings Guide                                    32
lack of any specific
stimuli to supporting
a sluggish economy,                                                                                            TECHNICALS                                        DERIVATIVES
or tax cuts for the                                                                                            Nifty                                          21 View                                             22

consumer – the government’s focus on laying a clear
roadmap for the economy is promising.
                                                                                                06             ADVISORY DESK                                    DERIVATIVES
                                                                                                               MID Trades                                    27 Derivatives Ideas                                 27
PMS DESK
                                   ProPrime - Prime Picks                                         25
                                   ProPrime - Diversified Equity                                  26           CURRENCY
                                                                                                              FUNDAMENTALS
                                                                                                               USD-INR                                       23 GBP-INR                                           23
                                                                                                               EUR-INR                                       23 JPY-INR                                           23

MUTUAL FUND DESK
                                                                                                              TECHNICALS
                                   Top MF Picks (equity)                                          28
                                   Top SIP Fund Picks                                             30           USD-INR                                       24 GBP-INR                                           24
                                                                                                               EUR-INR                                       24 JPY-INR                                           24

                                               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 igc@sharekhan.com. 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.
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                                                   Compliance Officer: Mr. Joby John Meledan; Tel: 022-61150000; email id: compliance@sharekhan.com;
                                                   For any queries or grievances kindly email igc@sharekhan.com or contact: myaccount@sharekhan.com
July 2019
June  2017                                                                                                3                                                                   Sharekhan ValueGuide
REPORT CARD                                                                                              EQUITY                       FUNDAMENTALS

STOCK IDEAS STANDING (AS ON JULY 03, 2019)
                               CURRENT   PRICE AS ON     PRICE       52 WEEK            ABSOLUTE PERFORMANCE                      RELATIVE TO SENSEX
COMPANY
                                RECO      03-JULY-19    TARGET    HIGH    LOW          1M    3M      6M    12M             1M         3M      6M     12M
Automobiles
Apollo Tyres                     Buy             201       230      300         174       1.1   -10.5    -14.6    -20.4      1.3       -13.6    -24.1    -29.8
Ashok Leyland                   Hold             90        100      137         78      -3.3      2.9      -7.1   -28.3      -3.1       -0.7    -17.4    -36.8
Bajaj Auto                      Hold           2898       3250     3214     2420        -3.0      1.2     5.9      -0.9     -2.8        -2.3     -5.9    -12.5
Gabriel India                   Hold              111      145      159         106    -18.5    -26.7    -25.4    -19.5    -18.3       -29.2    -33.7    -29.0
Hero MotoCorp                   Hold           2588      2800      3695     2475        -5.3     -1.2     -11.1   -22.3      -5.1       -4.6    -21.0    -31.5
M&M                              Buy            669        810      993        597      3.3       2.9     -7.4    -24.7      3.5        -0.7     -17.7   -33.6
Maruti Suzuki                   Hold           6534       7150     9929        6318     -7.2     -8.0     -9.5    -28.4     -7.0        -11.2   -19.6    -36.8
Rico Auto Industries            Hold              61        70       87         56     -12.0     -5.0     -12.1   -10.2     -11.8       -8.3    -21.9    -20.8
TVS Motor                       Hold            435        480      605        424     -12.6     -11.4   -19.8    -25.1    -12.4       -14.5    -28.7    -33.9
BSE Auto Index                                18140               25157    17442       -2.9      -5.6     -8.3    -24.4     -2.7        -8.8    -18.5    -33.2
Banks & Finance
Axis Bank                        Buy            806        900      828        509      -1.6      6.3     30.7     57.3      -1.4        2.6     16.2    38.8
Bajaj Finance                    Buy            3715         **    3762        1912      5.7    22.8     44.9     60.4       5.9        18.5    28.8      41.5
Bajaj Finserv                   Hold           8430          **    8578     4955         2.7     16.7    33.2      41.6      2.9        12.6     18.4    24.9
Bank of Baroda                   Buy             126       140      158          91     -2.4     -1.4      6.3     14.4     -2.2        -4.8     -5.5      1.0
Bank of India                   Hold             93          **      110        73      -2.0     -6.5     -13.1    10.0     -1.8        -9.8    -22.7     -2.9
Federal Bank                     Buy             110        118      110        67       1.0     14.5     14.8     31.9      1.2        10.5      2.1     16.4
HDFC                             Buy           2277       2300     2301        1645     2.5       11.7    15.8     19.8      2.7         7.8      2.9      5.7
HDFC Bank                        Buy           2490       2750     2503        1884      1.9      9.4     18.0     18.8         2.1      5.6      4.9      4.8
ICICI Bank                       Buy            436        520      444        257       4.1     12.2     19.4    60.4       4.3         8.3      6.2     41.5
LIC Housing Finance             Hold            569          **     587        388      0.5       6.6     16.5    24.3       0.7         2.9      3.6      9.7
Max Financial                   Hold            420        480      534        344      -7.7     -5.5     -5.9      1.8     -7.5        -8.8    -16.4    -10.2
Punjab National Bank             Buy              81        98      100         58      -0.4    -12.4     0.9       7.8     -0.2       -15.4    -10.3     -4.8
SBI                              Buy            366        390      373        247      4.3      14.2    23.4      42.7      4.5        10.2      9.7    25.9
Union Bank of India            Reduce            84         70      100          61      8.7      -8.1    -8.0      6.4      8.9        -11.3   -18.2      -6.1
Yes Bank                        Hold             100        **      404         90     -37.0    -63.6    -48.6    -70.9    -36.9       -64.9    -54.3    -74.3
BSE Bank Index                                35190               35718    26992       -0.4      5.2     16.2     20.8      -0.2         1.5      3.3     6.6
Consumer goods
Britannia                        Buy           2795       3475     3472     2610        -4.1     -6.6     -9.0     -9.4     -3.9        -9.8     -19.1   -20.1
Emami                           Hold            303        393      600        246     -11.2    -25.1    -26.5    -40.6     -11.0      -27.7    -34.7    -47.5
GSK Consumer                    Hold           7780       7931     7948     6150        2.5      11.3      4.7    22.4       2.7         7.4     -7.0      8.0
Godrej Consumer Products        Hold            673        734      979        627      -3.7      0.2    -15.5    -18.8     -3.5        -3.3    -24.9    -28.4
Hindustan Unilever               Buy            1785      1990      1871       1477     -0.5      8.4      1.4      8.4     -0.3         4.6     -9.9     -4.3
ITC                              Buy            277        347      323        264      -0.6     -4.0      0.7      7.0     -0.4        -7.3    -10.5     -5.5
Jyothy Laboratories             Hold             160       180      245         143     -5.5     -11.7   -21.0    -33.1     -5.3       -14.8    -29.8    -41.0
Marico                           Buy            373        425      397        283      -0.7      5.5     -0.5     10.3     -0.5         1.8     -11.5    -2.7
Zydus Wellness                  Hold            1364      1410     1980     1085         3.1      5.4      2.4     -0.3      3.3          1.7    -9.0    -12.0
BSE FMCG Index                                11442               12850    10498        -1.0     -0.3     -0.9     3.4      -0.8        -3.8    -11.9     -8.8
IT / IT services
HCL Technologies                 Buy            1051      1250      1190       920      -4.2     -5.0     12.0     13.3     -4.0        -8.3     -0.4      0.0
Infosys                          Buy             731       840      774        597       1.2     -0.5     13.2     12.4      1.4        -4.0      0.6     -0.8
Persistent Systems              Hold             616       720      915        532      4.5       0.5     8.8     -24.0      4.7        -3.0     -3.2    -32.9
Tata Consultancy Services        Buy           2238       2400     2293        1784      2.7     12.2    20.7      21.9      2.9         8.3      7.3      7.6
Wipro                           Hold            283        305      302         195     -3.4      9.6     17.0    44.9      -3.2         5.8      4.0     27.9
BSE IT Index                                  15651               16301    13179        0.2       2.7    13.8      13.0     0.4         -0.9      1.2     -0.3
Capital goods / Power
CESC                             Buy             791       905      813         621     0.3       7.3     21.9     17.4      0.5         3.6      8.4      3.6
Finolex Cable                   Hold             415       515      649        356     -10.2    -10.8     -9.2    -28.4    -10.0       -13.9    -19.3    -36.8
Greaves Cotton                  Hold             147       155      165          111    -4.2      -0.1   28.3      13.0     -4.0        -3.6     14.0     -0.2
Kalpataru Power Transmission     Buy            529        620      555        267      2.9      15.0    40.3      37.7         3.1     11.0    24.7      21.5
KEC International                Buy            328        375      355        230      5.3      15.5     14.1      0.1      5.5        11.5      1.5     -11.6
PTC India                       Hold             67         75       94         64      -4.5    -10.8    -26.3     -3.9     -4.3       -13.9    -34.5    -15.2
Thermax                         Hold           1052       1075     1206        873      4.4      10.4     -6.9      3.5      4.6         6.5    -17.2     -8.7
Triveni Turbine                 Hold             104       115      136         94      -2.3     -7.5     -4.7     -11.4     -2.1      -10.7    -15.3    -21.8
V-Guard Industries              Hold            242        255      252         159      1.5     11.3     13.8     31.3         1.7      7.4       1.1    15.9

July 2019                                                                  4                                                    Sharekhan ValueGuide
EQUITY                 FUNDAMENTALS                                                                                             REPORT CARD
 STOCK IDEAS STANDING (AS ON JULY 03, 2019)
                                  CURRENT   PRICE AS ON      PRICE         52 WEEK           ABSOLUTE PERFORMANCE                        RELATIVE TO SENSEX
 COMPANY
                                   RECO      03-JULY-19     TARGET      HIGH    LOW         1M    3M      6M    12M               1M         3M      6M     12M
 Va Tech Wabag                     Hold             339          **       413        243      0.5      8.6     27.9       -8.1       0.7        4.8      13.7    -18.9
 BSE Power Index                                   2144                  2159     1727       6.4        6.1     11.4     16.1       6.6        2.4       -1.0     2.5
 BSE Capital Goods Index                          20046                 20387     16113      -0.2      9.5      9.2      16.3       0.0         5.7      -2.9      2.7
 Infrastructure / Real estate
 Gayatri Projects                  Hold              156       200        212        145    -16.4     -5.0     -14.7      -7.7     -16.2       -8.3     -24.1    -18.5
 IRB Infra                         Hold               95       150        216         84    -20.8    -33.6     -39.3    -53.8     -20.6       -35.9     -46.1    -59.2
 Larsen & Toubro                    Buy             1578      1820       1607        1183     0.1     14.8      13.2     26.4       0.3        10.8       0.7     11.5
 Sadbhav Engineering                Buy             244        285        316        162     -7.2      -2.7      9.7     -13.1      -7.0       -6.0      -2.4    -23.3
 CNX Infra Index                                   3426                  3453     2778       2.0        7.6     10.7     15.0       2.2        3.8       -1.6      1.4
 BSE Real estate Index                             2234                  2277     1535        1.8      6.8     23.5       9.7       2.0         3.1      9.8      -3.2
 Oil & gas
 Oil India Ltd                      Buy              178       230        227        165     -2.4      -0.6      6.8    -10.0      -2.2        -4.0      -5.0    -20.6
 Petronet LNG                       Buy             250        270        255        200      2.4      5.8      14.4     20.0       2.6         2.1        1.7    5.9
 Reliance Ind                       Buy             1283      1630        1418       959     -5.0      -5.1     16.9     29.7       -4.8       -8.4      3.9      14.4
 Selan Exploration Technology      Hold              175       250        278        159      0.5      -6.7     -11.3    -11.2       0.7       -9.9      -21.1   -21.6
 BSE Oil and gas Index                             14741                15930    12040       -5.8      0.9      11.8     12.0      -5.6        -2.6      -0.6     -1.2
 Pharmaceuticals
 Aurobindo Pharma                  Hold             596        710        838        565     -7.4    -22.9     -16.5     -2.9       -7.3      -25.5     -25.8    -14.3
 Cadila Healthcare                 Hold              237       290        433        223     -8.0     -31.3    -31.2    -39.5       -7.8      -33.6     -38.9    -46.6
 Cipla                              Buy             553        720        678        476     -2.0      5.9       7.6     -11.9      -1.8       2.2       -4.4    -22.2
 Divi's Labs                        Buy             1631      1850       1775     1040        2.1      -4.8     10.9     48.1       2.3         -8.1     -1.4     30.7
 Glenmark Pharmaceuticals          Hold              443       595        712        438    -18.6     -32.7    -33.7     -26.1     -18.4      -35.1      -41.1   -34.8
 IPCA Lab      NEW                  Buy             959       1135       1046        590      1.6      -1.4    20.6      32.4        1.9       -4.8       7.2     16.9
 Lupin                            Reduce             753         **       986        697      1.9      -4.4     -9.0    -18.8          2.1     -7.7      -19.1   -28.3
 Sun Pharmaceutical Industries     Hold             396        460        679        345     -4.6     -15.8     -9.6     -32.1      -4.4      -18.7     -19.6    -40.1
 Torrent Pharma                    Hold             1553      1720       1964     1405        1.0     -18.5     -14.1     9.5        1.2      -21.3     -23.7     -3.4
 BSE Health Care Index                            12936                 16497    12448       -3.0    -10.0      -6.7     -9.5      -2.8       -13.1     -17.0    -20.1
 Building materials
 Grasim                             Buy             928       1160       1093        689      6.2     12.8      16.8      -1.9      6.4        8.9        3.8    -13.4
 Shree Cement                      Hold            21487     22130      22400     13100       1.9     14.5     29.3      35.5          2.1     10.5      14.9     19.6
 The Ramco Cements                  Buy              791       870        845        546     -2.5      4.8     25.6      12.7       -2.3         1.1     11.6     -0.6
 UltraTech Cement                   Buy             4561     5000        4905     3260       -1.0     13.9      18.7     22.9       -0.8       9.9       5.5       8.4
 Discretionary consumption
 Arvind*                           Hold               67        95        155         57    -10.0    -25.0     -28.7    -50.6       -9.8      -27.6     -36.6    -56.4
 Arvind Fashions     NEW            Buy             683       1150       1090        591    -12.7     -31.3         -        -     -12.5      -33.7          -       -
 Century Plyboards (India)         Hold              173       190        264        150     -0.2     -16.4      0.4     -30.1      0.0       -19.3     -10.7    -38.3
 Info Edge (India)                 Hold            2274       2350       2444        1154     1.6     23.7      47.2     97.6        1.8       19.4     30.9     74.4
 Inox Leisure                       Buy             323        390        383        188    -12.9      8.0      24.1     25.2      -12.8        4.2      10.3     10.5
 Kewal Kiran Clothing Ltd          Hold             1179      1415       1560     1026       -3.9      -7.2     -1.6     -11.6      -3.7      -10.5     -12.5    -21.9
 Orbit Exports                     Hold              120       177        163         85      4.3      5.9       1.2    -12.6       4.5        2.2      -10.0    -22.9
 Relaxo Footwear#                   Buy             466        485        499        332      9.5      9.9     23.6      32.3       9.8         6.1       9.8     16.8
 Titan Company Limited      NEW     Buy             1328      1375        1341       732      3.4      16.7    39.0      46.2       3.6        12.6     23.5     29.0
 Wonderla Holidays                 Hold              276       338        376        259     -9.6      -11.7     3.9     -13.1      -9.4      -14.7      -7.6    -23.4
 Zee Entertainment                 Hold              361         **       554        288      3.0     -14.6    -23.2    -33.9       3.2       -17.5     -31.7    -41.7
 Diversified / Miscellaneous
 Bajaj Holdings                     Buy            3724       3924       3800     2204        5.9      11.6    25.7       27.1      6.2         7.7      11.8     12.2
 Bharat Electronics                 Buy               113      140        124         73      0.4      16.7    26.0       11.3      0.6        12.6      12.0     -1.8
 Bharti Airtel                      Buy             353        390        371        254      2.9      10.7    22.5        9.1         3.1     6.9       8.9      -3.7
 Gateway Distriparks               Hold              128       140         191        96    -13.9      0.9       7.6    -24.6      -13.7       -2.6      -4.3    -33.4
 PI Industries                      Buy             1194      1280       1230        676      4.6     16.0      41.0     52.1       4.9        12.0     25.3     34.3
 Ratnamani Metals and Tubes         Buy            1006       1150       1035        736      5.7      11.5      9.5      11.2      5.9         7.6      -2.6     -1.9
 Supreme Industries Limited        Hold             1126         **      1275        936      5.7      -0.3      3.4      2.6       5.9        -3.8       -8.1    -9.4
 UPL#                               Buy             652        724        709        358      3.6      13.3    39.6      71.3       3.8         9.4      24.1     51.1
 BSE500 Index                                     15450                 15938    13287       -0.8       1.8     8.4       7.4      -0.6        -1.8      -3.6     -5.2
 CNX500 Index                                      9757                 10050     8371       -0.8       1.9     8.6        7.7     -0.6        -1.6      -3.4     -5.0
 CNXMCAP Index                                    17820                 20088    15803       -1.6      -1.4      1.5      -1.3      -1.4       -4.8      -9.7    -12.9
** Price under review              * Reco price adjusted for demerger      # Reco price adjusted for bonus      ^ Reco price adjusted for stock split

July 2019                                                                        5                                                     Sharekhan ValueGuide
From the Editor’s Desk
From the Editor’s Desk   Look beyond the Budget

                         Though Budget 2019 failed to meet the street expectations on several counts – lack of any
                         specific stimuli to supporting a sluggish economy, or tax cuts for the consumer – the government’s
                         focus on laying a clear roadmap for the economy is promising. Prime among these are the
                         commitment to make huge investments in infrastructure development, recapitalisation of
                         stressed PSU banks, easing liquidity stress for quality NBFCs and a firm commitment to maintain
                         fiscal prudence.

                         But clearly, it appears that Dalal Street may not want to swallow the pill that the government
                         prescribed - with the Sensex slumping nearly 1,200-1,500 points so far. The recent volatility
                         cannot be attributed just to the Union Budget alone. The global environment has also turned
                         uncertain with few of the large global banks raising red flags over the pressures faced by them
                         in particular and the slowing growth momentum of the global economy in general. The inability
                         of world leaders to amicably resolve trade tensions is also adding to the woes of equity markets
                         globally.

                          For now, the focus shifts to the Q1FY20 earnings season. Investors thus need to look beyond
                         the Budget now. Some of the key trends investors would keenly watch in Q1 results are: 1)
                         Continued improvement in health of corporate lending banks and further easing of asset quality
                         issues; 2) Signs of a pick-up in demand in the industrial sector; and lastly, the extent of weakness
                         in consumer demand.

                         The commentary from the management of some of the leading companies in the consumer
                         sector or consumer lending space is not very encouraging and could result in a reset of earnings
                         estimates for consumer sector at large. Given the lofty valuations in the consumer space, a
                         correction could be steep and quick in some of the quality companies.

                         Interestingly, the recent volatility and reset in earnings outlook of some of the evergreen
                         consumer stocks would bring down valuations to more reasonable level and perhaps in line
                         with the situation prior to the election rally during April-May this year. Also, the improving
                         growth outlook for companies operating in the railways, roads and water related space offers
                         an opportunity for the investors. Thus, we see the current phase as an opportunity for long-term
                         investments in quality companies at much more reasonable valuations.

                         After all, India is on a path to almost double its size to $5 trillion economy in the next few
                         years as compared to close to 70 years taken to cross the $2.5 trillion mark. The goal, though
                         ambitious, is achievable and can’t be done with substantial improvement in corporate earnings
                         and an improvement in the economic growth momentum in the country. Thus, the long term
                         investments need to keep the promising big picture in mind rather than get distracted by near-
                         term volatility.

                         Happy Investing!

  July 2019                                                 6                                       Sharekhan ValueGuide
EQUITY                   FUNDAMENTALS                                                                                 STOCK IDEA

                                                                               Recommendation                  Reco Price   Price Target/ Upside (%)
      Date        Company                            Report Type
                                                                            Latest               Chg             (Rs.)            Latest          Chg
Jun 19, 2019      JMC Projects                         Viewpoint          POSITIVE          New Initiation        124              18-20               -

  Summary
  • We initiate Viewpoint Coverage on JMC Projects (JMC) with a Positive view and 18-20% upside potential.
  • JMC’s strong order book and execution capabilities to lead to a 16% CAGR in revenue/PAT over FY2019-FY2021E.
  • JMC provides quality balance sheet due to strong operating cash flow generation, low leverage and healthy return ratios.
  • Divestment of road BOT assets to deleverage the consolidated balance sheet, halting loss funding.

  Read report - https://www.sharekhan.com/MediaGalary/Equity/JMC_Projects-June19_19.pdf

Jun 20, 2019 City Union Bank                           Viewpoint          POSITIVE          New Initiation        212              18-20               -

  Summary
  • We Initiate viewpoint coverage on City Union Bank Limited (CUB) with a Positive view with an upside potential of 18-20%.
  • CUB has been a consistent performer over the years across asset cycles, staying away from riskier areas and sticking to its
    strengths.
  • We believe CUB is well positioned to capitalise from decreased competition in the lending market.
  • CUB currently trades at ~2.5x its FY2021E book value, which considering its stable asset quality, strong execution skills and
    consistent return ratios despite deep and industry wide stress seen in recent times, justify its valuation.

  Read report - https://www.sharekhan.com/MediaGalary/Equity/CityUnion-June20_19.pdf

Jun 27, 2019      ICICI Lombard General Insurance      Viewpoint          POSITIVE          New Initiation        1,121            18-20               -

  Summary
  • We initiate coverage on ICICI Lombard with a Positive view and envisage a 18-20%% upside potential for the stock.
  • ICICI Lombard General Insurance (ILGI) is a strong player with the highest market share (among private general insurers) and
    well placed to benefit from the growing General Insurance market.
  • Recent regulatory changes & developments are favorable for General Insurance players in general, and augur well for ICICI
    Lombard as well.
  • Due to Its strong underwriting skills, effective technology leveraging and diversified channel mix, we expect it to post earnings
    CAGR of 32% FY19-FY21E, making it attractive growth opportunity.

  Read report - https://www.sharekhan.com/MediaGalary/Equity/ICICI_Lombard-June27_19.pdf

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

July 2019                                                                     7                                             Sharekhan ValueGuide
Stock Update                                                                                                EQUITY               FUNDAMENTALS

                                                                                 Recommendation                  Reco Price   Price Target/ Upside (%)
     Date        Company                                   Report Type
                                                                                   Latest           Chg            (Rs.)           Latest        Chg
Jun 03, 2019 Gayatri Projects                             Stock Update             HOLD                             184            200           

 Summary
 • We maintain our Hold rating on the stock with a revised sum-of-the-parts (SOTP)-based PT of Rs. 200 as its EPC business,
   adjusting for its BoT and power investments, is valued at a P/E of 10.5x FY2021E, which provides limited upside potential.
 • In Q4FY19, GPL standalone revenue grew by 23% y-o-led by strong project execution, OPM dipped 246 bps y-o-y. Lower
   interest expenses boosted net earnings by 27% y-o-y.
 • Order book stays strong at 4.7x its FY2019 standalone revenue; company expects order momentum to continue and has
   guided for a more than 25% revenue growth, a 30-40% rise in PAT and stable OPM for FY2020.

 Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Gayatri-June03_19.pdf

Jun 04, 2019 Bharti Airtel                                Stock Update              BUY                            353             390           

 Summary
 • We maintain Buy on Bharti Airtel with a revised PT of Rs. 390, considering its resilient performance in a tough environment and
   some signs of stability in India wireless business.
 • Planned unlocking the value of its holdings in its subsidiaries and divestment of tower business stake would further reduce net
   debt/EBITDA level to around 2.6x and provide cash flow support.
 • India wireless business surprised positively during Q4FY2019, with revenue and EBITDA growth of 4%/32% q-o-q, respectively;
   steep increase in ARPU to Rs. 123 (18.6% q-o-q).
 • DTH business performed well despite uncertainty around new tariff order implementation; ARPU improved while other industry
   players struggled during the quarter.

 Read report - https://www.sharekhan.com/MediaGalary/StockIdea/BhartiAirtel-June04_19.pdf

Jun 10, 2019     Atul Limited                               Viewpoint            POSITIVE                         4,050            10-12         

 Summary
 • We maintain our Positive view on Atul Limited (Atul) with a revised potential upside of 10-12%.
 • We estimate revenue and earnings to report a CAGR of 13.5% and 16.6% over FY2019-FY2021E, respectively.
 • Future growth expected to be driven by improved utilisation levels of enhanced capacities backed by a strong demand outlook
   along with positive pricing tailwinds and operating leverage.
 • Innovators seek a reliable partner for assured sourcing, as the situation in China has not changed much and continues to be
   beneficial for other players in the South Asian region.

 Read report - https://www.sharekhan.com/MediaGalary/Equity/Atul-June10_19.pdf

Jun 10, 2019     Dishman Carbogen Amcis Ltd.                Viewpoint           BOOK PROFIT                        245               -            -

 Summary
 • We advise booking profit in Dishman Carbogen Amcis Limited (Dishman), as our targeted return has been achieved (17% returns
   within a month).
 • Management is confident of reducing debt by Rs. 70 crore-100 crore in the next two years.
 • The company reported strong Q4FY2019 numbers.

 Read report - https://www.sharekhan.com/MediaGalary/Equity/DishmanCarbo-June10_19.pdf

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July 2019                                                                   8                                                 Sharekhan ValueGuide
EQUITY                FUNDAMENTALS                                                                    Stock Update
                                                                          Recommendation       Reco Price   Price Target/ Upside (%)
    Date       Company                               Report Type
                                                                           Latest     Chg        (Rs.)            Latest         Chg
Jun 11, 2019   Info Edge (India)                    Stock Update           HOLD                 2,262             2,350          

 Summary
 • We downgrade our rating on Info Edge (India) Limited (Info Edge) to Hold with a revised PT of Rs. 2,350, given the sharp run-up
   in its stock price over the past 15 days.
 • Naukri’s growth momentum likely to continue, led by IT hiring, while margins will remain under pressure owing to higher spends
   on promotions and technology upgradation.
 • Higher revenue growth in 99acres and lower ad spends in Jeevansathi to reduce losses in the coming 2-3 years.
 • Zomato is rapidly scaling up its operations in cities; currently operates in 310 cities, up from 200+/15 cities in FY2019/FY2018.

 Read report - https://www.sharekhan.com/MediaGalary/StockIdea/InfoEdge-June11_19.pdf

Jun 11, 2019   Inox Leisure                         Stock Update           BUY                   329               390           

 Summary
 • We retain our Buy rating on INOX Leisure Limited (ILL) with a revised PT of Rs 390.
 • Given the higher screen openings and increasing footfalls monetisation efforts, we expect revenue and earnings CAGR to be
   at 18% and 16% respectively over FY19-21E.
 • We expect y-o-y growth momentum to moderate in Q1FY2020E despite Q1 being a seasonally strong quarter, owing to lower
   number of quality content.
 • ATP growth rate is expected to be at high single-digit in FY2020E, while the SPH growth is likely to accelerate due to the on
   introduction of new menu lists and anticipated higher conversion rate.

 Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Inox-June11_19.pdf

Jun 12, 2019   Housing Development Finance Corporation Stock Update        BUY                   2,183            2,500          

 Summary
 • Easing competitive intensity among HFCs to allow strong players like HDFC to cherry pick its way to market share gains.
 • Company has a long history of strong and consistent performance (asset quality, margins, etc).
 • Government to continue to focus on housing, near-term incentives/measures expected.
 • We maintain our Buy rating on stock with a revised price target of Rs. 2,500.

 Read report - https://www.sharekhan.com/MediaGalary/StockIdea/HDFC-June12_19.pdf

Jun 12, 2019   KEC International                    Stock Update           BUY                   323               375           

 Summary
 • We reiterate our Buy rating on KEC; PT unchanged at Rs. 375.
 • Strong order backlog and healthy order pipeline to help net earnings clock a 21% CAGR during FY2019-FY2021E.
 • Company expected to increase its revenue contribution from non-T&D projects in long run. Management expects railway
   tenders to be finalised in Q2FY2020, while eyeing major civil projects arising from government spends.
 • T&D business to grow steadily with focus on financially healthy state electricity boards and externally-funded projects.
   Geographical expansion to boost international order book.

 Read report - https://www.sharekhan.com/MediaGalary/StockIdea/KECInt-June12_19.pdf

July 2019                                                             9                                     Sharekhan ValueGuide
Stock Update                                                                             EQUITY              FUNDAMENTALS

                                                                     Recommendation         Reco Price   Price Target/ Upside (%)
    Date       Company                           Report Type
                                                                      Latest        Chg       (Rs.)            Latest        Chg
Jun 12, 2019   Indian Hotels Company               Viewpoint         POSITIVE                    150          20-22          

 Summary
 • FY2020 to be another strong year for hotel industry as room demand expected to stay ahead of supply, driving up RevPAR
   (revenue per available room) by 10-11%.
 • Occupancy rate to improve by 100-200 bps; ARR to grow by 8-10% in FY2020.
 • IHCL to launch 12 hotels under recent strategic alliance with GIC; move to not stress balance sheet.
 • Company well-placed to reap benefits of industry up-cycle; we stay Positive on stock and expect a 20-22% upside.

 Read report - https://www.sharekhan.com/MediaGalary/Equity/IndianHotel-June12_19.pdf

Jun 13, 2019   Bajaj Holdings & Investment       Stock Update          BUY                   3,696            4,548          

 Summary
 • We retain Buy recommendation on Bajaj Holdings & Investments (BHIL) with an upgraded PT of Rs 4,548 (earlier PT of Rs 3,924).
 • BHIL reports healthy earnings growth for Q4FY2019 on back of double – digit earnings growth by both the associate companies.
 • Stock price of associate company Bajaj Finserv (contributes about 55% of valuation of BHIL) has moved up sharply 20% in past
   three months.
 • BHIL has marginally increased stake in another associate company Bajaj Auto from 31.54% to 33.43% which would further boost
   valuations of BHIL.

 Read report - https://www.sharekhan.com/MediaGalary/StockIdea/BajajHoldings-June13_19.pdf

Jun 13, 2019   SRF Limited                         Viewpoint         NEUTRAL                 2,923               -            -

 Summary
 • Significant run-up in recent months, limit upside downgrade to Neutral. Remain Positive on SRF Limited (SRF) and would wait
   for a better entry price.
 • Q1FY2020 performance likely to have an adverse bearing due to Dahej plant shutdown, however long-term outlook remains
   intact.
 • We expect SRF to report revenue and earnings CAGR of 15.1% and 28.5%, respectively, during FY2019-FY2021E.
 • Commissioning of projects in speciality chemcials and packaging film business to fuel growth momentum and further enhance
   profitability.

 Read report - https://www.sharekhan.com/MediaGalary/Equity/SRF-June13_19.pdf

Jun 14, 2019   Persistent Systems                Stock Update         HOLD                       631           720           

 Summary
 • In the analyst meet, the recently-appointed CEO presented his observations and new initiatives.
 • Simplified team structure and people augmentation to increase re-seller and IP revenue.
 • High cash balance and reasonable valuation limit downside risk.
 • We maintain our Hold rating on Persistent Systems with an unchanged price target of Rs. 720.

 Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Persistent-June14_19.pdf

July 2019                                                       10                                       Sharekhan ValueGuide
EQUITY                  FUNDAMENTALS                                                                 Stock Update
                                                                      Recommendation          Reco Price    Price Target/ Upside (%)
    Date       Company                            Report Type
                                                                       Latest         Chg       (Rs.)             Latest        Chg
Jun 14, 2019   Indraprastha Gas Limited             Viewpoint         POSITIVE                  335              10-12          

 Summary
 • We stay Positive on IGL and expect a 10-12% upside, supported by volume led earnings growth.
 • Pricing power led by priority in allocation of cheap domestic gas would drive volumes and sustain margin.
 • Expansion in new GAs of Rewari, Karnal and Gurugram to diversify company’s volume base.
 • We have marginally increased our FY20 and FY21 standalone earnings estimates to factor higher volume growth.

 Read report - https://www.sharekhan.com/MediaGalary/Equity/IndraprashthaGas-June14_19.pdf

Jun 17, 2019   Larsen & Toubro                    Stock Update          BUY                     1,499            1,820          

 Summary
 • We maintain our Buy rating on Larsen and Toubro (L&T) with a revised PT of Rs. 1,820, rolling forward our valuation multiple for
   the core EPC vertical.
 • Management expects strong order intake aided by government spending and international orders.
 • Strong order backlog, healthy execution and stable margins to lead to a 16% CAGR in net profit over FY2019-FY2021E.
 • Industry order prospects of Rs. 9 lakh crore-10 lakh crore estimated for FY2020, with L&T aiming a 20-25% share.

 Read report - https://www.sharekhan.com/MediaGalary/StockIdea/LnT-June17_19.pdf

Jun 18, 2019   Coal India Ltd                       Viewpoint         POSITIVE                  260              15-17          

 Summary
 • Coal India targets an output of 660 million tonnes in FY20 (8.7% y-o-y growth); plans 1 billion-tonne production by FY25.
 • Management expects employee cost (52% of total cost) and contractual cost (18% of total cost) to remain largely flat in FY20.
 • Capex plans of Rs. 10,000 crore to purchase heavy earth-moving equipments; eyes minority stake in overseas coal mines.
 • We stay Positive on CIL and expect a 15-17% upside given attractive valuation, healthy dividend yield and decent earnings
   growth.

 Read report - https://www.sharekhan.com/MediaGalary/Equity/CoalIndia-June18_19.pdf

Jun 19, 2019   Hindustan Unilever                 Stock Update          BUY                     1,812            1,990          

 Summary
 • HUL delivered one of the strongest performances in the FMCG space for FY2019; domestic volumes grew 10%, while OPM
   inched up to 23%.
 • Return ratios remain strong with RoE and RoCE of 84% and 113%, respectively, for FY2019.
 • Net working capital cycle stayed negative at 119 days and HUL remains one of the cheery dividend payers with a payout of
   ~90%.
 • We maintain a Buy rating with an unchanged PT of Rs. 1,990 as demand outlook is set to improve in H2FY2020.

 Read report - https://www.sharekhan.com/MediaGalary/StockIdea/HUL-June19_19.pdf

July 2019                                                        11                                         Sharekhan ValueGuide
Stock Update                                                                                EQUITY               FUNDAMENTALS

                                                                       Recommendation          Reco Price    Price Target/ Upside (%)
    Date       Company                             Report Type
                                                                        Latest         Chg       (Rs.)             Latest         Chg
Jun 20, 2019 Biocon Limited                         Viewpoint          POSITIVE                   253              18-20          

 Summary
 • We continue to maintain our Positive view on Biocon with a potential upside of 18-20%.
 • Competitive landscape concerns overdone, the stock has corrected by ~30% in the past six months, giving an attractive
   investment opportunity for the medium to long term.
 • Approved sales of Branded Formulations India (BFI) business could be seen as a precursor to value unlocking through IPO.
 • We expect Biocon to report a sales and profit CAGR of 28% and 46%, respectively, over the next two years.

 Read report - https://www.sharekhan.com/MediaGalary/Equity/Biocon-June20_19.pdf

Jun 21, 2019   Insecticides (India) Limited         Viewpoint          POSITIVE                   604             20-25           

 Summary
 • We remain Positive on Insecticides (India) Limited (IIL) with a potential upside of 20-25%.
 • We like IIL as the strategies laid out by management are playing out well.
 • Delay in arrival of monsoon (10-15 days) has postponed sowing (down 10-12%), which is likely to affect Q1 performance; however,
   the likely business loss is expected to be made up during Q2.
 • Management reiterated its revenue growth guidance of 10% and a 150 BPS rise in margins in FY2020. IIL is likely to report
   revenue and earnings CAGR of 10.0% and 14.4%, respectively over FY2019-FY2021E.

 Read report - https://www.sharekhan.com/MediaGalary/Equity/Insecticides-June21_19.pdf

Jun 24, 2019 Jyothy Laboratories                   Stock Update         HOLD                        163             180           

 Summary
 • We maintain our Hold recommendation on Jyothy Laboratories with a revised PT of Rs. 180.
 • HI category will recover but at a gradual space; fabric whitener will grow in mid-single digit; other categories to grow in double
   digits.
 • Management expects 12-14% revenue growth with OPM at 16% due to expected recovery in H2FY2020. We have factored in
   10% revenue growth and ~15% OPM for FY2020 on account of slow recovery in the HI category and higher media spends.
 • Any substantial recovery in business fundamentals (likely to be in H2FY2020) will be a key re-rating trigger for the stock.

 Read report - https://www.sharekhan.com/MediaGalary/StockIdea/JyothyLab-June24_19.pdf

Jun 24, 2019 TVS Motor                             Stock Update         HOLD                      449              480            

 Summary
 • FY 2019 was another good year for TVS as it grew at more than double the industry rate, driven by new launches and expansion
   in geographical reach.
 • Subsidiaries turned profitable in FY2019; strong volume growth coupled with maintaining of profitability led to return ratios
   being in excess of 20%.
 • Management has given cautious commentary on industry demand; higher channel inventory and increase in regulatory costs
   to impact volumes; competitive intensity to remain high.
 • Due to persistent weakness in volumes coupled with rising cost pressures, we have cut our earnings estimates. We maintain
   Hold rating with revised PT of Rs 480.

 Read report - https://www.sharekhan.com/MediaGalary/StockIdea/TVS-June24_19.pdf

July 2019                                                         12                                         Sharekhan ValueGuide
EQUITY                 FUNDAMENTALS                                                                       Stock Update
                                                                       Recommendation            Reco Price    Price Target/ Upside (%)
    Date       Company                              Report Type
                                                                         Latest         Chg        (Rs.)             Latest         Chg
Jun 24, 2019 IndusInd Bank                           Viewpoint         POSITIVE                    1,461             12-15          

  Summary
IndusInd Bank (IIB) and Bharat Financial Services (BHAFIN) have finalised their merger with effective date as July 4, 2019.
  • As per the management, the merger will help improve margins by 30-40 bps of the merged entity.
  • Also a potential capital infusion from the promoter of Rs. ~2,700 crore (due to warrant conversion) which along with merger
    synergies will be positive for NIM/RoE and book value accretive.
  • We maintain our Positive view on the stock and expect an upside potential of 12-15%.

 Read report - https://www.sharekhan.com/MediaGalary/Equity/IndusIndBank-June24_19.pdf

Jun 25, 2019 Tata Consultancy Services             Stock Update           BUY                     2,267             2,400           

 Summary
 • TCS’ annual report provides insights on its differentiated strategy, superior execution and ability to stitch together the
   transformational deals.
 • TCS has aligned its strategy with Business 4.0 framework as most of its large clients are embracing one of the four business
   behaviors.
 • Cash conversion continues to be strong, with FY2019 free cash flow of Rs. 26,461 crore, represents 84% to net profits.
 • Given increasing market share among large peers, we maintain Buy rating on TCS with an unchanged price target of Rs. 2,400.

 Read report - https://www.sharekhan.com/MediaGalary/StockIdea/TCS-June25_19.pdf

Jun 25, 2019 Kalpataru Power Transmission          Stock Update           BUY                       516              620            

 Summary
 • We maintain our Buy rating on Kalpataru Power Transmission Limited (KPTL) with a revised PT of Rs. 620, increasing our
   valuation multiple for the core business due to a positive business outlook.
 • KPTL sees healthy visibility of order intake for FY2020E and retains its revenue and OPM guidance for FY2020E.
 • Divestment of four transmission assets in this fiscal year is likely to de-leverage the balance sheet and free up equity for further
   investments.
 • We expect revenue/net profit to report a CAGR of 16.5%/21.7% over FY2019-FY2021E because of strong order backlog, healthy
   order intake and smooth execution.

 Read report - https://www.sharekhan.com/MediaGalary/StockIdea/KPTL-June25_19.pdf

Jun 26, 2019 Apollo Tyres                          Stock Update           BUY                       201              230            

 Summary
 • The Government of India has levied a counter veiling duty (CVD) of 9.1% to 17.6% on truck and bus radial tyres imports originating
   from China. The duty is levied to offset the subsidies offered by China to its exporters, which enables them to price the tyres
   cheaper by ~20-25% as against Indian tyres.
 • The move is unlikely to substantially benefit Indian tyre makers as CVD will be levied only in a very few instances where the rate
   of subsidization exceeds the rate of dumping. In most of cases, only anti dumping duty (which is already in force) will be levied.
 • Nevertheless, ATL healthy show in domestic replacement segment and ramp up in Europe would make it the fastest growing
   tyre maker. Low Debt: Equity, reasonable P/E of 11xFY21earnings gives us comfort.
 • We have retained our earnings estimates for FY20 and FY21. We maintain Buy recommendation on the stock with an unchanged
   PT of Rs 230.

 Read report - https://www.sharekhan.com/MediaGalary/StockIdea/ApolloTyres-June26_19.pdf

July 2019                                                         13                                           Sharekhan ValueGuide
Stock Update                                                                                  EQUITY               FUNDAMENTALS

                                                                       Recommendation            Reco Price    Price Target/ Upside (%)
    Date       Company                              Report Type
                                                                         Latest         Chg        (Rs.)             Latest         Chg
Jun 26, 2019 Petronet LNG                          Stock Update           BUY                      246               270            

 Summary
 • We maintain our Buy rating on Petronet LNG (PLNG) with unchanged PT of Rs. 270.
 • Strong volume growth outlook led by expansion of Dahej capacity to 17.5 mmt and likely higher utilisation for Kochi terminal.
 • Volume growth likely to be supported by strong demand appetite for low-cost LNG (reflected in 5.6% y-o-y growth in India’s
   LNG imports during April-May 2019).
 • PLNG may surprise with dividend payout similar to FY2019 level of 70% and, thus, could result in dividend yield of 4-5%.

 Read report - https://www.sharekhan.com/MediaGalary/StockIdea/PetronetLNG-June26_19.pdf

Jun 27, 2019   UPL                                 Stock Update           BUY                      943               1,086          

 Summary
 • We maintain Buy on UPL with a PT of Rs. 1,086.
 • The stock has corrected by 16% from its recent high; currently trading at 11.7x its FY2021 EPS (discount to its historical average).
 • Management believes there is no meaningful impact of the concerns, as UPL Corp is expected to fulfill new resident criteria in
   Mauritius; African swine fever not to have much impact as peak soyabean season is over; and ongoing U.S.-China trade war
   likely to benefit as hike in tariff by U.S. makes Chinese products more costly.
 • Arysta’s integration progressing well; Management maintains its revenue and cost synergies guidance.

 Read report - https://www.sharekhan.com/MediaGalary/StockIdea/UPL-June27_19.pdf

Jun 28, 2019 Aurobindo Pharma                      Stock Update          HOLD                      608                710           

 Summary
 • Warning Letter for Unit- XI likely to delay future product approvals which could impact FY2020 and FY2021 numbers..
 • Downgrade to Hold with downward revised Price Target (PT) of Rs 710.
 • Increased regulatory hurdles at various plants will weigh on stock until successful resolution; Increase in remediation cost will
   impact margins and profitability.
 • We expect the company to report sales and profit CAGR of 29% and 22%, respectively, over the next two years.

 Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Aurobindo-June28_19.pdf

Jun 28, 2019 Sadbhav Engineering                   Stock Update           BUY                      249               285            

 Summary
 • Sadbhav Engineering Limited (SEL) receives CARE rating downgrade for its Rohtak-Hisar project due to delay in debt servicing.
 • Diversion of traffic due to presence of alternate routes has led to lower tolling and losses in the project.
 • Management is discussing the issue with NHAI and expects favourable resolution as the issue of alternate route is covered in
   the concession agreement.
 • We maintain our Buy rating on SEL with an unchanged price target of Rs. 285.

 Read report - https://www.sharekhan.com/MediaGalary/StockIdea/SadbhavEngg-June28_19.pdf

July 2019                                                         14                                           Sharekhan ValueGuide
EQUITY                  FUNDAMENTALS                                                                               Stock Update
                                                                              Recommendation             Reco Price     Price Target/ Upside (%)
    Date       Company                                  Report Type
                                                                               Latest           Chg        (Rs.)               Latest          Chg
Jun 28, 2019 Tech Mahindra                                Viewpoint           POSITIVE                      706                13-15               

 Summary
 • We maintain our Positive on Tech Mahindra with revised potential upside of 13-15% upside in next 12 months.
 • Well placed to capture 5G opportunities given its strong IT and network capabilities, investments in platforms and IP.
 • Expect soft Q1FY2020E given weak seasonality in Comviva and softness in manufacturing and BFSI vertical.
 • Expect communication to growth at high-single digit in FY2020E, while enterprise would be at mid-single digit.

 Read report - https://www.sharekhan.com/MediaGalary/Newsletter/TechM-June28_19.pdf

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

July 2019                                                               15                                              Sharekhan ValueGuide
SECTOR UPDATE                                                                                           EQUITY                FUNDAMENTALS

                                                                                                                           Sector View
     Date        Sector                                                                   Report Type
                                                                                                                  Latest                 Chg
Jun 03, 2019 Automobiles                                                                Sector Update            Cautious                

 Summary
 • Automobile sector continued to grapple with multiple headwinds in May 2019 with volumes declining across segments. Slowing
   economic growth, lower industrial output and weak consumer sentiments impacted dispatches.
 • PV segment was the worst hit with volumes declining ~19% marred by liquidity crunch, weak consumer sentiments, increased
   cost of ownership & higher channel inventories.
 • CV segment sales declined 12% for May 2019. Lower freight rates and effect of revised axle load norms leading to under
   utilization of fleet impacted demand for trucks.
 • The 2W volumes declined 6% attributable to cost increase and rural stress.
 • Volume headwinds coupled with margin pressures due to elevated costs will impact earnings in medium term. We retain
   cautious stance on automotive OEM’s.

 Read report - https://www.sharekhan.com/MediaGalary/Equity/Automobile-June03_19.pdf

Jun 03, 2019 Q4FY2019 IT results review                                                 Sector Update             Neutral                

 Summary
 • Mixed quarter for revenue growth: Tier-1 IT CC revenue growth of 0.5-3.3% q-o-q (vs our estimates of 1.2-2.5%) and 6.9-15.3%
   y-o-y.
 • Except TCS (adjusted basis), EBIT margin of Tier-1 IT companies declined on a sequential basis owing to higher attrition,
   increasing investment and transition of large deals.
 • Mixed demand outlook for the BFSI vertical, though management of TCS and Infosys expects strong growth momentum in
   FY2020E.
 • Increasing onsite cost along with investment in business and transition cost of large deals could impact profitability in FY2020E.
 • Retain Neutral stance on the IT sector; Preferred picks: Infosys, HCL Tech, Tech Mahindra, L&T Infotech, Mastek and LTTS.

 Read report - https://www.sharekhan.com/MediaGalary/Equity/Q4FY2019_IT_results_review-June03_19.pdf

Jun 03, 2019 Q4FY2019 Pharma results review                                             Sector Update             Neutral                

 Summary
 • We continue to maintain our Neutral stance on the sector and see opportunity in some select quality companies.
 • Chinese API player’s constraint a multiyear growth opportunity for Indian API players to become an end-to-end solution provider.
 • Valuation of pharma companies has corrected but is still expensive. Moreover, the risk of earnings downgrade still persists
   given near-term challenges.
 • Despite stability and visibility in numbers for the U.S. business, we feel U.S. business margins will remain under pressure going
   forward.

 Read report - https://www.sharekhan.com/MediaGalary/Equity/Q4FY2019_Pharma_results_review-June03_19.pdf

ŠŠ   Upgrade                                       ŠŠ   No change                                     ŠŠ   Downgrade                   
ŠŠ   Note: The arrow indicates change in call and price target, if any, vis-à-vis the previous report

July 2019                                                                  16                                              Sharekhan ValueGuide
EQUITY               FUNDAMENTALS                                                                      SECTOR UPDATE

                                                                                                            Sector View
    Date      Sector                                                        Report Type
                                                                                                   Latest                 Chg
Jun 04, 2019 Q4FY2019 Consumer Discretionary results review                Sector Update           Neutral                

 Summary
 • Overall revenue growth for Q4FY2019 was soft       at 11.6% owing to the overall slowdown in discretionary consumption
   compared to 20.5% y-o-y in Q3FY2019 and 23.7% y-o-y in Q2FY2019.
 • OPM remained mixed in Q4FY2019; OPM expansion was led by operating efficiencies and better revenue mix for few companies
   under our coverage.
 • Advent of normal monsoon and good government policies with a tax-friendly budget will improve consumer sentiments in the
   quarters ahead. However, introduction of Ind AS 116 is likely to be a drag on Reported PAT and return ratios in FY2020 without
   affecting the business fundamentals of the companies (more clarity would emerge in Q1FY2020).
 • Preferred picks: Indian Hotels Company, Jubilant Foodworks and Titan.

 Read report - https://www.sharekhan.com/MediaGalary/Equity/Q4FY2019_ConsumerDisc_results_review-June04_19.pdf

Jun 04, 2019 Q4FY2019 Capital Goods & Engineering results review           Sector Update           Positive                

 Summary
 • The Sharekhan universe of capital goods companies witnessed weakening of execution with 11% y-o-y growth in revenue while
   operating margins remained under pressure leading to subdued 7.5% y-o-y growth in net profit. However, heavy weights L&T
   and BEL showed healthy performance.
 • Order inflow remained weak in H2FY2019 due to the election period affecting government spending, slowing consumption
   demand and a delayed summer. However, healthy order backlog at 2x FY2019 revenue is expected to be further boosted by
   revival in government spending from H2FY2020 onwards.
 • The re-election of the ruling government has envisaged hopes of Rs. 100 lakh crore investments in infrastructure over the next
   five years in sectors such as Roads, Railways and Power. Private industrial capex is expected to follow suit gradually.
 • We upgrade to Positive view on the sector with preference for companies like L&T, Kalpataru Power, KEC, Havells India, Polycab
   and KEI.

 Read report - https://www.sharekhan.com/MediaGalary/Equity/Q4FY2019_CapitalGoods_results_review-June04_19.pdf

Jun 06, 2019 Q4FY2019 Banking and NBFC results review                      Sector Update           Positive                

 Summary
 • Corporate-lending private banks and some PSU banks are showing improving trends in asset quality side. On the other hand,
   the stress is quite visible in the NBFC space though the large NBFCs with a strong parentage continue to do well.
 • Softening of yield curve and expected policy measures to ease liquidity crunch would benefit banks in general, especially
   corporate-focused banks and large PSU banks.
 • We are positive on retail-focused private banks (HDFC Bank, Kotak Bank, RBL) and select corporate-lending banks such as
   ICICI Bank, Axis Bank and SBI. We advise caution on PSU banks at large and NFBCs barring few names like Bajaj Finance.

 Read report - https://www.sharekhan.com/MediaGalary/Equity/Q4FY2019_Banking_results_review-June06_19.pdf

July 2019                                                       17                                          Sharekhan ValueGuide
SECTOR UPDATE                                                                             EQUITY                FUNDAMENTALS

                                                                                                             Sector View
    Date        Sector                                                         Report Type
                                                                                                    Latest                 Chg
Jun 06, 2019 Q4FY2019 Automobiles results review                               Sector Update       Cautious                

 Summary
 • Sharekhan’s Auto universe (ex - TAMO) topline growth moderated substantially to 5% after six consecutive quarters of a double
   digit growth. The revenue growth is in line with estimates. The moderation in growth is on account of volume drop across
   segments attributable to weak consumer sentiments, uncertainties ahead of general elections, financing crunch and high
   channel stocks for (Passenger Vehicles and 2 wheelers).
 • The auto universe’s operating margins contracted sharply by 240 bps impacted by higher raw material costs, elevated
   marketing expenses and operating de-leverage. Auto universe’s PAT declined by 11% y-o-y and is broadly in-line with estimates.
 • Subdued volume outlook coupled with elevated cost pressures would over weigh on the margins; auto universe’s earnings are
   likely to remain under pressure over the near to medium term.
 • Preferred Picks: M&M, Apollo Tyres, Exide Industries.

 Read report - https://www.sharekhan.com/MediaGalary/Equity/Q4FY2019_Auto_results_review-June06_19.pdf

Jun 06, 2019 Q4FY2019 Oil & Gas results review                                 Sector Update       Positive                

 Summary
 • During Q4FY2019, OMCs benefited from inventory gain of Rs. 3,914 crore; Core GRMs were subdued, given weakness in
   middle distillate cracks. Weakness in GRM is a concern for earnings outlook.
 • Earnings of upstream PSUs were impacted by higher operating expenses and a sharp rise in DD&A cost (especially for ONGC).
   Exemption from bearing fuel subsidy improves earnings visibility.
 • CGD companies reported mixed volume growth with double-digit growth for IGL and volume decline for Gujarat Gas. Regulatory
   push would aid higher volume growth and sustain margins.
 • Our preferred stocks are Reliance Industries, Gujarat Gas and Petronet LNG..

 Read report -https://www.sharekhan.com/MediaGalary/Equity/Q4FY2019_Oil_Gas_results_review-June06_19.pdf

Jun 06, 2019 Q4FY2019 Infrastructure/Cement/Building material results review   Sector Update       Positive                

 Summary
 • The cement sector, excluding Grasim and Ultratech saw marginal growth in net earnings on account of strong volume growth,
   better realization and lower input costs during Q4FY2019. Ultratech posted a stellar quarter all around.
 • The construction space showed strong execution with better margins, although it was affected by higher effective tax rate.
   IRB’s performance was dented by weakest operating margins.
 • The building material space felt operating margins pressure on account of a lack of demand and absence of pricing power
   aided by higher input costs. Kajaria posted net profit growth led by lower leverage.
 • We maintain our Positive stance on the cement and construction sector on account of significant investments envisaged in
   infrastructure space over the next five years.
 • Our preferred picks are Grasim, UltraTech, The Ramco Cements, JK Lakshmi Cement, KNR constructions, Ahluwalia Contracts,
   Sadbhav Engineering, Ashoka Buildcon, Kajaria Ceramics.

 Read report - https://www.sharekhan.com/MediaGalary/Equity/Q4FY2019_Infra_Cement_Bldg_results_review-June06_19.pdf

July 2019                                                           18                                       Sharekhan ValueGuide
EQUITY               FUNDAMENTALS                                                                      SECTOR UPDATE

                                                                                                            Sector View
    Date       Sector                                                       Report Type
                                                                                                   Latest                 Chg
Jun 07, 2019   Q4FY2019 Consumer goods and services results review         Sector Update           Neutral                

 Summary
 • Slowing demand in rural markets affected revenue growth of most companies under our coverage in Q4FY2019; Revenue
   growth of Sharekhan consumer goods universe moderated to 9.6% as against 12-13% in some of the earlier quarters.
 • Moderating sales volume growth, higher input prices and elevated ad spends led to OPM decline for most; barring companies
   such as Marico, GSK Consumer and HUL, which benefit from lower input prices and operating efficiencies.
 • Sales volume to remain under pressure in the near term due to subdued demand environment. However, normal monsoon and
   consumer-driven budget might revive the performance (likely in H2FY2020).
 • We prefer companies having a strong product portfolio, strong market positioning and lesser dependence on rural sales such
   as Britannia Industries, HUL, Marico and Varun Beverages.

 Read report -https://www.sharekhan.com/MediaGalary/Equity/Q4FY2019_ConsumerGoods_results_review-June07_19.pdf

Jun 10, 2019   Q4FY2019 results review                                   Sharekhan Special            -                    -

 Summary
 • Moderation in consumption demand dented earnings growth of auto, consumer goods etc. Global cyclical, telecom and pharma
   earnings continued to be weak.
 • Aggregate Sensex earnings growth of 15% YoY driven by banking and financial (BFSI) sector which saw profits jumps due to
   NPA peaking benefits and lower base.
 • Going forward, normalisation in earnings of the BFSI sector (peaking of NPA issues), structural reforms, stable government
   should help drive Sensex earnings for FY2020E by mid-to-high double digit growth.
 • Retain preference for corporate banks, agri-inputs, speciality chemicals and selective ideas in infra/construction, cement and
   industrials space.

 Read report -https://www.sharekhan.com/MediaGalary/Equity/Q4FY19_Results_review-10_June_19.pdf

Jun 27, 2019   Cement                                                      Sector Update           Positive               

 Summary
 • We maintain our Positive view on the cement sector, believing it to be in multi-year upcycle, led by expectations of demand
   pick-up, favourable pricing and easing cost environment.
 • Cement production, prices and movement of key costs hint towards muted volume growth, higher realisation and better OPM
   for Q1FY2020.
 • Expect demand to pick up from H2FY2020, backed by kick start of government spending on infrastructure projects and
   impetus on the affordable housing segment.
 • We have a Buy rating on UltraTech, Grasim and Ramco Cements, while we remain Positive on JK Lakshmi Cement.

 Read report -https://www.sharekhan.com/MediaGalary/Equity/Cement-June27_19.pdf

July 2019                                                       19                                          Sharekhan ValueGuide
SECTOR UPDATE                                                                                       EQUITY                   FUNDAMENTALS

                                                                                                                          Sector View
    Date        Sector                                                                Report Type
                                                                                                                 Latest                 Chg
Jun 27, 2019    Automobiles                                                          Sector Update             Cautious                  

 Summary
 • Auto sector’s pain is expected to worsen in June 2019 with all segments (except PV) reporting deterioration as compared to
   May 2019.
 • 2W volumes are expected to decline steeply by 12% due to high channel inventory and entry of bikes with higher price
   complying with ABS / CBS norms.
 • PV volumes too are likely to drop 14% y-o-y for June 2019 marred by sluggish retails and higher channel stocks.
 • Slowing economic growth and revised axle load norms are likely to result in a 15% dip in CV volumes.
 • Volume headwinds are expected to continue in medium term and we expect further downgrades. We retain Cautious view on
   the sector.

 Read report -https://www.sharekhan.com/MediaGalary/Equity/Automobile-June27_19.pdf

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

July 2019                                                               20                                                Sharekhan ValueGuide
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