There are key events happening in this week, investors and traders must pay attention to it.
We have seen roller coaster moves in the market since the starting of this year. If we exclude the market caps of top 10 stocks, the remaining over 4,000 stocks listed on BSE have lost a whopping almost Rs 16.5 lakh crores since January 2018!
Most of these stocks have fallen anywhere from 35% to as high as 90% from their one-year high prices. Reasons are many. Be it consolidation of MF schemes, ASM on midcaps and smallcaps or rising crude oil prices. All went against the rising stock market.
But we believe as results have started coming and we are seeing some value emerging in quality names. There are key events happening in this week, investors and traders must pay attention to it.
On 23rd July, it’s midcap heavy results’ day as ACC, Delta Corp, Granules India, HOEC, Hindustan Zinc, Indiabulls Ventures, L&T Infotech, L&T Tech, Saregama, Tejas Networks, United Spirits, Vijaya Bank, V-Mart Retail and Welspun Corp will come out with numbers.
On 24th July, Asian Paints will declare it’s quarterly results along with Hexaware, Century Plywood, Chambal Fertilizers, ICICI Prudential Life Insurance, INOX Leisure, Kajaria Ceramics, Kalyani Steels, Info Edge, Radico Khaitan, Music Broadcast, Symphony, Teamlease, TV18 Broadcast and KRBL.
25th is quite a heavy day as Hero MotoCorp, Bharti Infratel and L&T will declare their respective numbers. HDFC Asset Management Company’s IPO will also start on the same day which will get closed on 27th.
On 26th July, Bharti Airtel, Dr Reddy, ITC, Maruti and Yes Bank will declare their numbers while the market will also see the expiry on July series’ F&O contracts. On 27th July HCL Tech and ICICI Bank will declare their quarterly numbers.
ITC
ITC has been a steady compounder for the last thirty years! We expect the company’s performance to improve with a steady rise in revenues and improvement in margins due to GST.
Higher taxation will put a stress on cigarette volumes but that being a business with inelastic demand, is expected to bounce back in the long term. With per capita consumption 1/18th China’s, cigarette opportunity in India remains attractive over the long term. However, with cigarettes still contributing ~85% to ITC’s EBIT, dependency on regulated business continues to remain high. Currently, the stock trades at 25X FY19 PE. We recommend a BUY on the stock.
Mahindra Finance
The Indian rural economy has emerged as an important growth engine of our nation. In 2018-19, ministries to spend Rs 14.34 lakh crore on the creation of livelihood in rural areas; national livelihood scheme to get Rs 5,750 crore.
Housing for all by 2022 scheme, one crore houses to be built under the Pradhan Mantri Awas Yojana in rural areas. Mahindra Finance has 1284 offices covering 27 states and 4 union territories in India, with over 5.34 million vehicles. Government objective of doubling farmers’ income shall boost sentiments and improve earnings of the company.
Normal monsoon will also help the company to grow above industry growth. During FY18, Company has raised almost Rs.2111crore via preferential allotment and QIP. The company has AUM of Rs 5000 crore in SME financing business and Rs 3352 crore AUM in Mutual fund business. Its total Assets under management raised 18% to Rs 55101 crore from Rs 46776 crore in FY18 and overall disbursement registered a growth of 19% at Rs 37772.9 crore as compared to Rs 31659.1 crore in FY18. The stock trades at PE ratio of 27x earnings. Based on the above financial and performance parameters we are recommending BUY.
YES BANK
Yes Bank had posted a very strong set of numbers for Q4FY18 with Net Interest Income (NII) growing by 31.4% YoY while the non-interest income increased by 13.0% YoY. Provisions declined by 5.1% sequentially. Advances growth was robust at 54% YoY while deposits surged by 40.5% YoY.
The asset quality performance was also healthy as GNPA ratio declined by 44 bps to 1.28% while net NPAs were down by 29bps to 0.64% on a sequential basis. Of the earlier reported NPA divergence of Rs 6355 crore, Rs 2434 crore has already been paid, fully or partially, Rs 2632 crore have been upgraded to standard account due to satisfactory performance. The net profit for the quarter increased by 29% YoY.
As Bank will post its Q1FY19 numbers in this week, we are quite confident that this numbers can be replicated in the coming results. We have a BUY rating on YES BANK with on the back of stable metrics of asset quality and franchise.
