The Weekly Wrap Up February 07, 2020

07 Feb 2020

DOMESTIC:

Morgan Stanley PE says invests Rs190cr in Centrum Housing Finance

JSW Steel bags two iron ore mines in Odisha

ONGC, IOC, other oil PSUs to invest Rs98,521cr in FY21

HCL Technologies to enter Sri Lanka, to set up global delivery center in Colombo

TCS bags USD1.5bn contract from Walgreens Boots Alliance

Sun Pharma launched Absorica LD capsules in US for acne

USFDA cleared Cadila Healthcare’s subsidiary's Ahmedabad unit with no observation

IFCI completes disinvestment of stake in NSE

JB Chemicals gets nod to acquire entire trademarks portfolio of Unique Pharmaceutical Laboratories Ltd

SAIL registered a 35% rise in sales to 16.59 lakh tonne in January 2020

ITI withdraws Rs1,400cr FPO due to prevailing market condition

Avenue Supermarts launched Rs4,098cr QIP at Rs2,049 per share

Dilip Buildcon bags Rs861cr road project in Chhattisgarh

Strides to acquire 18 ANDAs from Pharmaceutics International, Inc.

ECONOMY:

Manufacturing growth in India picks in January; PMI hits 8-year high

FDI at USD34.90bn till Nov of FY'20: Govt.

Monetary policy review: RBI holds rates, keeps door open for cuts in future

INDUSTRY:

India's coal import rises 8% to 186 million tonnes in April-December

Proposals on medical device manufacturing will help grow domestic industry

Pharma companies set to supply ARVs for ‘treatment’

Highlights of the Week

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The Week That Went By:

Sharp cut was seen in the market post the budget but after digesting all good and bad announcements, markets resumed its uptrend and reversal was observed during this week. D-street kicked off the week on a strong note by taking support of 200DMA and continued to extend towards the north. Status quo decision by MPC acted as a booster for the markets and Index recovered all its losses. Last day was dominated by Bears and Benchmark Index ended the last session on a weak note. Nifty 50=12098.35 BSE Sensex30=41141.85 Nifty Midcap 100=18367.50 Nifty Smallcap100=6247.30

COVERAGE NEWS:

Sudarshan Chemical Industries Limited: The company has informed the exchange that Crisil has assigned its rating as Crisil A1+ for Rs50cr commercial paper. Hind Rectifiers Limited: The company has secured order of Rs54.62cr in January, 2020. It has an all time high pending orders of Rs334.07cr as on 31st January, 2020. Dynamatic Technologies Limited: The company has signed a strategic collaboration agreement with Hindustan Aeronautics Limited (HAL) and Israel Aerospace Industries (IAI) for manufacturing of IAI-designed UAVs. This partnership would be the first in India to manufacture the same.

07 Feb 2020

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Result Synopsis

Company Result This Week

Zen Technologies Ltd CMP: Rs59 Target: Rs125

Q3FY20 results were more or less flattish. The value of export orders on hand as on 01st Feb, 2020 stood at Rs1,775.1mn. The TDB loan of ~Rs116mn that resulted in a promoters pledge position to the tune of 15mn shares (in 2013) has been fully paid. Addition of shares by the promoters from the open market, stability in financial aspects via improved credit ratings, willingness to release the pledged shares are some of the positive triggers which makes us maintain our target price of Rs125 with horizon of 12 months.

Castrol India Ltd CMP: Rs146 Target: Rs200

Despite dip in the turnover, the gross margins expanded above expectations attributed to volumes spurt & improved product mix. Personal mobility segment continues to be the key. Castrol can regain its lost market share in the CV segment, through new product launches & product realignment undertaken in Q3FY20. We feel that despite a tough environmental concern, the management is confident to maintain the steady growth momentum; thus, we recommend buy on dips with target price of Rs200 with a horizon of 12months.

Triveni Turbine Ltd CMP: Rs96 Target: Rs150

Despite reporting a marginal drop in revenues, the company performed well at operational levels attributed to the benefit of lower RM costs. The management has indicated of good growth with a sound order book coupled with the boost to be received from the refurbishment market. Triveni has the edge with enough capacity in hand to capitalize on the opportunities going forward backed by cost efficiency measures & focus on technology. We maintain our target price of Rs150 over a horizon of 12 months.

Thermax Ltd CMP: Rs1044 Target: Rs1230

The company has reported good set of numbers. Slowdown effect was observed in the energy segment with a gradual pick up to be seen in times to come. With due respect to Mr. Unnikrishnan who managed with the best of transparency, the new MD to come on-board, new ideas and experience especially on the international market exposure; would perk up for Thermax. We feel that with sufficient capacities and capability to capitalize on the expected turnaround across the different industries would augur well for Thermax; thus we maintain our stance on the company with target price of Rs1230 over a 12 month horizon.

Hikal Ltd CMP: Rs132 Target: Rs175

The company has reported flat numbers with segmental performance being more or less in a horizontal plane. Hikal continues to maintain margins. With the best efforts to roll out atleast 2-4 molecules every year; Hikal is reported to be working towards some niche molecules with an approximate roll out time of 1.5-2 years. The capex plan in view (inclusive of de-bottlenecking as well as growth capex); new molecules which the company is working on coupled with contract manufacturing augurs well for Hikal; thus we continue to maintain our target price of Rs175 with a horizon of 12 months.

Morganite Crucible (India) Ltd CMP: Rs1550 Target: Rs2000

Despite subdued industrial demand & slowdown in the Auto sector, the company has reported good numbers, which also hints towards a tinge of revival in the domestic auto sector. It has reported more or less above average revenues on y-o-y basis as well as on sequential basis; coupled with decent operational efficiency attributed to benefits of RM. There were provisions made for the Mehsana facility work force and also costs relating to plant and machinery of Mehsana, which is in good spirit, but without these provisions profits would have grown by two fold. We continue to maintain our target price of Rs2000 with a horizon of 12 months.

Engineers India Ltd CMP: Rs92 Target: Rs200

The company reported good set of numbers for the quarter under reference attributed to the robust growth in the Turnkey business. Reiterating on the operational efficiency, the management has indicated a possibility of net provision creation going forward on account of new projects as and when they get executed. With the slow and gradual pick up expected, the company would stand to benefit from the same. We continue with our buy recommendation with target of Rs200 over a 12 months horizon.

Hitech Corporation Ltd CMP: Rs84 Target: Rs125

The company has reported decent numbers on the operational front attributed to lower staff cost & better gross margins. Impact on profits was attributed to one time exceptional charges for discontinuation of Sarigam unit & disruptions that took place at the Baddi plant, which have now resumed normal operations; the claims to be received are being worked on with the Insurance company. A revival can be expected once the external factors are normalised. We maintain a cautious outlook with target price of Rs125 over a 12 months horizon.

Srikalahasthi Pipes Ltd CMP: Rs218 Target: Rs250

The company has reported good set of numbers for the quarter under reference, with better operational efficiency mainly attributed to decent gross margins. The recent sanction and revival of old projects from the AP government to provide drinking water supply to 6 districts would be a major beneficiary for SPL in times to come. Additionally, as per the recent allocation of Rs3.6lkcr made in the Union Budget for Jal Jeevan Mission, for water supply and irrigation projects, the DI pipe industry can witness a good growth. Thus, we continue to remain positive and maintain our target price of Rs250 with a horizon of 12months.

Sudarshan Chemical Industries Ltd CMP: Rs467 Target: Rs500

The company has reported good set of numbers for the quarter under review. The management intends to maintain the gross margins; quite evident with the company’s efforts to build initiatives for the same. It was working for a capex plan in the range of Rs3000mn to Rs3500mn which appears to have been revised to Rs2300mn or so; clearly indicating a spill over to the next FY. With the growth map set ahead (which would enable the company to gain the market share); involves on-going expansions, de-bottlenecking, backward integrations, new product launches, new offices to be set up for addressing the clients based in Euro zone; thus maintaining our positive stance on the company and maintain our target price of Rs500.

Hind Rectifiers Ltd CMP: Rs203 Target: Rs275

The company has successfully implemented the Theory of Constraint for the Nasik plant which has helped get better throughput. One of the key highlights for future growth is the shift from Diesel locomotive engines to electric engines push given by the Indian railways. IR is looking at around 650 locomotives where the requirement for transformers can be fulfilled by major 4 major players, Hirect being one of them. The company has decent pending orders, positive for the revenue as well as PAT growth. We continue to be positive on the gradual transformation happening in the company including JIT, backward integration, theory of constraints (squeeze the timeline); new product launches (indigenous production), new customer additions while exploring newer geographies and technical advancements. We maintain our Buy call on the stock with a target of Rs275 over a 12 months horizon.

Recommendations adjusted as per Corporate Actions

Company Reco Target Corp Action Adj Price Adj Tgt Price

Appreciation

IHP Ltd 341 600 Bonus 1 : 1 171 500 43%

Engineers India Ltd 211 200 Bonus 1 : 1 105 200 -12%

Gulshan Polyols Ltd 390 500 Stock Split from Rs.FV 5 to Rs.FV 1 110 78 -45%

Nesco Ltd 2397 3200 Stock Split from Rs.FV 10 to Rs.FV 2 479 640 61%

Castrol India Ltd 447 550 Bonus 1 : 1 223 200 -35%

Hikal Ltd 143 325 Bonus 1 : 2 95 216 38%

*Castrol, Vesuvius– Dec Ending | Siemens—Sept Ending|

07 Feb 2020

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Coverage Universe Valuations Company Reco Reco at

(Rs) CMP (Rs)

Tgt price (Rs)

Appreciation 1M Var 3M Var 12M Var

Supreme Petrochem Ltd BUY 77 175 275 128% 8.3% 3.8% -14.1%

Shanthi Gears Ltd BUY 107 99 150 -7% 0.0% -2.9% -18.2%

Hind Rectifiers Ltd BUY 69 203 275 194% -8.6% 9.1% 92.9%

KCP Ltd BUY 71 65 105 -9% 1.5% -4.5% -23.1%

The Hitech Gears Ltd BUY 298 186 300 -38% 9.1% -1.6% -37.1%

Bharat Bijlee Ltd BUY 787 857 1500 9% 2.6% -5.4% -20.6%

Triveni Turbines Ltd BUY 92 96 150 4% 0.1% -7.5% -6.3%

Siemens Ltd BUY 1128 1501 1750 33% 1.1% -9.8% 42.2%

GMM Pfaudler Ltd BUY 332 2950 2500 789% 59.9% 101.6% 168.4%

Alicon Castalloy Ltd BUY 288 378 650 31% -5.6% -3.1% -27.5%

Gufic Biosciences Ltd BUY 50 73 120 46% 21.3% 4.4% -5.4%

Excel Industries Ltd BUY 380 885 1200 133% 5.1% -7.2% -22.2%

Vesuvius India Ltd BUY 1165 1116 1300 -4% -2.6% 12.7% -0.4%

Munjal Showa Ltd BUY 191 129 191 -32% 2.9% -2.7% -22.8%

Bharat Rasayan Ltd BUY 2747 7432 7500 171% 23.8% 24.8% 96.7%

Alkyl Amines Chemicals Ltd BUY 391 1461 1300 274% 17.9% 46.7% 135.1%

Grauer and Weil (India) Ltd BUY 45 55 65 22% 7.1% 22.2% 18.9%

Texmaco Rail & Engineering Ltd BUY 91 35 91 -62% -2.1% -20.1% -41.5%

Nagarjuna Agrichem Ltd BUY 29 35 45 20% 28.3% 25.0% 4.4%

ITD Cementation India Ltd BUY 158 67 130 -58% 23.8% 10.9% -38.6%

Westlife Development Ltd BUY 266 465 450 75% 29.1% 21.4% 27.8%

Dynamatic Technologies Ltd BUY 2160 1135 2160 -47% 16.6% -2.2% -17.9%

Hitech Corporation Ltd BUY 175 84 125 -52% -46.6% -13.5% -17.7%

NRB Bearings Ltd BUY 138 97 138 -30% 1.5% -6.5% -48.4%

Kokuyo Camlin Ltd BUY 132 77 132 -41% -7.7% 1.9% -17.3%

Timken India Ltd BUY 883 972 1000 10% 7.8% 10.3% 69.4%

Morganite Crucible (India) Ltd BUY 1047 1550 2000 48% 0.6% -3.7% 10.8%

Vardhman Special Steels Ltd BUY 151 69 110 -54% -8.6% -3.4% -21.1%

Zen Technologies Ltd BUY 115 59 125 -49% 0.3% -10.2% -21.4%

KSB Ltd BUY 820 739 1100 -10% 9.3% 2.3% 8.9%

Thermax Ltd BUY 1019 1044 1230 2% -4.3% -5.3% -3.9%

Transpek Industry Ltd BUY 1547 1575 2000 2% 25.5% 22.3% 8.0%

BASF India Ltd BUY 1954 982 1400 -50% -0.3% 2.3% -27.1%

Artson Engineering Ltd BUY 64 40 55 -38% 9.0% 40.3% 5.3%

Remsons Industries Ltd BUY 104 78 130 -25% 8.9% -8.1% -32.8%

Snowman Logistics Ltd BUY 33 44 55 33% 3.8% 12.4% 43.2%

Alembic Pharmaceuticals Ltd BUY 605 641 751 6% 15.2% 10.9% 11.3%

SKF India Ltd BUY 1942 2056 2620 6% -3.4% -5.4% 6.0%

HFCL Ltd BUY 25 17 25 -32% -2.3% -1.2% -23.4%

Sudarshan Chemical Industries Ltd BUY 372 467 500 25% 10.4% 17.0% 48.9%

Huhtamaki PPL Ltd BUY 254 250 320 -2% 0.0% 1.5% 51.6%

Mishra Dhatu Nigam Ltd BUY 123 164 190 33% 5.2% -4.9% 33.3%

Anuh Pharma Ltd BUY 142 160 175 13% 23.2% 1.4% 12.7%

Kirloskar Pneumatic Co. Ltd BUY 134 150 192 12% 7.2% 7.1% -11.2%

Integra Engineering India Ltd BUY 37 38 50 2% 0.9% -4.3% -27.3%

ICICI Bank Ltd BUY 535 536 657 0% 3.0% 12.1% 49.5%

Srikalahasthi Pipes Ltd BUY 205 218 250 6% 19.2% 25.8% 26.6%

IHP Ltd BUY 171 245 500 43% 0.9% -5.1% 54.6%

Engineers India Ltd BUY 105 92 200 -12% -7.0% -17.1% 59.9%

Gulshan Polyols Ltd BUY 78 43 78 -45% 4.9% 0.5% -25.1%

Nesco Ltd BUY 479 770 800 61% 17.5% 37.2% 73.5%

Castrol India Ltd BUY 223 146 200 -35% 15.0% -4.9% 91.3%

Hikal Ltd BUY 95 132 175 38% 11.2% 13.9% 35.9%

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24 Jan 2020

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Around 38.2% retracement, Nifty50 has formed bullish candlestick pattern (piercing candles). IT sector is consolidating around the record levels, breakout from the Rounding bottom pattern can be anticipated. Energy sector bounced from the neckline of Head & Shoulder pattern; higher levels is likely to play its role. Dual support was seen in FMCG sector i.e. strong support zone & 100WMA, likely to extend its uptrend. Metal sector is forming probable Inverted Head & Shoulder formation, big rally can be seen after the pattern breakout and the same pattern was observed in some of its components. With a bullish engulfing pattern, Midcap sector outperformed Benchmark Index and to add to the bullishness is also creating a Rounding bottom formation. Nifty has immediate resistance of 12,170. On the downside 12,050 holds as an immediate support. Bank Nifty has a stiff resistance of 31,450 whereas support is placed around 30,910.

MARKET OUTLOOK

NIFTY (WEEKLY)

BANK NIFTY (WEEKLY)

07 Feb 2020

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24 Jan 2020

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NIFTY 50 COMPONENTS (WEEKLY PERFORMANCE)

SECTORAL PERFORMANCE

HDFC Bank 3.98

Hero Motocorp 0.83

Hindalco 6.23

HUL 4.19

ICICI Bank 5.91

Indusind Bank 7.01

Infratel 0.04

INFY -0.13

IOC 7.69

ITC -2.71

Jsw Steel 13.76

Kotak Bank 0.00

LT 0.92

M&M 4.38

Maruti 2.88

Nestle India 4.19

NTPC 5.57

ONGC 5.19

PowerGrid 4.67

Reliance 4.37

SBIN 5.61

Sun Pharma 1.79

Tata Motors 4.90

Tata Steel 11.28

TCS -1.36

Tech Mahindra 1.94

TITAN 8.40

Ultratech 5.14

UPL 6.98

VEDL 7.37

Wipro 2.70

Yes Bank 2.11

Zee Entertainment -1.66

Adani Ports 1.99

Asian Paints 5.60

Axis Bank 5.56

Bajaj Auto -0.32

Bajaj Finserv 7.32

Bajaj Finance 8.81

Bharti Airtel 8.92

BPCL 11.33

Britannia 5.25

Cipla -0.72

Coal India 6.11

DR Reddy’s Labs 1.57

Eicher Motors -1.20

Gail 6.16

Grasim 3.32

HCL Tech 2.40

HDFC 6.32

07 Feb 2020

* Gain/ Loss in %

Last week’s underperformer turned out to be an outperformer i.e. Metal sector ended the week with gains of 9%. Welcorp(+34.86%), Jindal Steel(+17.93%) and JSW Steel(+13.76%) were the top performers. As indicated in the previous week, sector is forming a right shoulder of the Inverted Head & Shoulder formation, big rally can be seen after the pattern breakout.

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SECTORAL GAINER

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07 Feb 2020

With the Market sentiment being bullish all the sectors have ended the week on a positive note.

Market Cap (Rs cr ) 3,958

52 week H / L (Rs) 143.55 / 82.60

BSE Code 539844

NSE Code EQUITAS

Investment Rationale: Stock has given a breakout from an inverted head and shoulder pattern as depicted in the chart. Oscillator RSI has also given a breakout which is confirming price breakout. Positive crossover was witnessed in Directional Movement Index. Stock has breached its 50WMA which was constantly acted as a stiff resistance.

Recommendation: We recommend a BUY on the company at current market price of Rs115 with closing stop loss of Rs99 for a target of Rs 130-Rs145 with the perspective of 3–4 months.

Overview: Equitas Holdings Limited is a Non-Deposit Taking Systemically Important - Core Investment Company – registered with The Reserve Bank of India. The activity of the company is to making investment in subsidiary companies and providing loans to them. The company has the following Wholly Owned Subsidiaries: Equitas Small Finance Bank Limited & Equitas Technologies Private Limited

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EQUITAS HOLDINGS LTD Target Price Rs 130 -Rs 145 Horizon 3-4 Months

CMP– Rs 115

07 Feb 2020

SNAPSHOT

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