Market Insight - Dow, Dow Futures, Hangseng, SGX Nifty & Nikkei 24 Jan 17

Markets always tend to be interesting with something or the other happening all the time. Our Morning Mantra is released before the opening bell and it includes the market commentary along with Corporate & Global news for the day.

US stocks were mixed after the close on Tuesday, as gains in the Utilities, Technology and Consumer Services sectors led shares higher while losses in the Telecoms, Healthcare and Oil & Gas sectors led shares lower.

Dow  26210.8  -3.8  -0.01%

Dow Futures 26200.0  -1.0  0.00%

Hangseng  32746.1  -184.6  -0.56%

Nikkei  23989.1  -135.1  -0.56%

SGX Nifty  11080.0  -8.0  -0.07%

Asian indices are trading with a negative bias. Trade concerns simmered in the background after President Donald Trump approved tariffs on imported solar cells and washing machines earlier this week.

Market is expected to open on flattish note and likely to witness range bound session during the day.  

The calendar fourth-quarter earnings season is off to a good start. As of Tuesday, 76 percent of the S&P 500 US companies that had reported surpassed earnings expectations, while 84 percent of those companies had beaten sales estimates, according to Thomson Reuters I/B/E/S.

Wipro bags multi-year business process services contract from Nilfisk.

Novelis, subisidiary of Hindalco announced that it will invest around $300 million in an automotive aluminium sheet manufacturing facility in Guthrie, Kentucky, as part of its plans to expand manufacturing for automotive purposes to meet the rising demand. 

After the conclusion of the promoter's stake sale in its rental arm to Singapore sovereign wealth fund GIC, DLF is looking to make its development arm a zero net-debt company by March 2019, repaying the entire liability of Rs 13,000 cr. 

Manappuram Finance board authorises managing director to scout for investment opportunity.

Majesco QIP opens with a floor price of Rs 532 per share.

eClerx Services to buyback shares Worth Rs 258 cr at Rs 2000/ share.The total number of shares to be bought back in the buyback shall be 12,90,000 equity shares representing about 3.24% of the total issued and paid up equity share capital as on 31 March 2017.

Genus Paper & Boards Ltd, has taken on lease a Kraft paper manufacturing facility for 5 Years. The facility is located at Kashipur, Uttarakhand and has manufacturing capacity of 75,000 metric tonnes per annum (MTPA).

Lenders to Amtek Auto, which is facing Rs 12,722-crore claims from creditors, have decided to reject the only two offers they received — from Liberty House and Deccan Value Investors — unless the bidders raised the price. The offers are below the liquidation value of the company. 

Arcelor Mittal has withdrawn from bidding for bankrupt Bhushan Power & Steel after it conducted due diligence on the Indian company. Tata Steel, JSW, Vedanta, AION Capital and a Dubai-based billionaire remain in the fray for the bankrupt company ahead of the January 29 deadline. 

Alembic to buy back 1.02 crore shares (3.84% equity) at Rs 80 per share.

Quickheal Technologies receives order from tax authorities demanding Rs 37.7 crore. Company will appeal against the order with CESTAT.

Retail Research desk: DHFL Concall Update –AUM crossed Rs. 1 Lac cr (Rs 1,01,286 cr) increased 29% YoY (8% QoQ).AUM Mix was stable QoQ: Home Loans 63%, LAP 18%, Project 15%, SME 4%.Disbursements increased by 54% YoY to Rs. 10,846 cr, (+9% QoQ).Disbursement mix: Home Loans 55%, LAP 21%, Project 18%, SME 8%.Sanctions increased by 75% YoY to Rs. 16,552 cr.NII came at Rs. 739.8 Cr vs YoY (+31%) Rs. 566.4 Cr, QoQ (+4%) Rs. 710.8 Cr.PAT came at Rs. 306 Cr vs YoY (+25%) Rs. 244.8 Cr, QoQ (+4%) Rs. 293.3 Cr. Incremental yields for Home Loans at 9.3%, for LAP at 11.3%.Incremental Cost of Funds at 7.95%.Cost/Income of 23.04% has been consistently declining. Scope for further reduction of 100-150bp. It will always be higher than peers (~17%) as company’s distribution reach is focused on tier2/3 towns which involves a higher cost structure. Asset quality stable QoQ/YoY: GNPA at 0.96%, NNPA at 0.54%.ROE is stable at 17.8% (adjusting for stake sale of DPLI by DHFL).Affordable housing to drive growth in housing loan market. Company held 23 events in tier2/3 segments during the quarter. Company’s strength lies in its reach in tier 2/3 towns. Won’t need to raise capital for next 2 years (CAR of 16.3%). Growth Guidance for next couple of years: AUM / Disbursements / PAT is 20-24% / 27-30% / 20-24%.Share is trading at P/E of 17x FY18E EPS & 2.2x trailing P/BV

Institution desk: V-Guard Industries- ACCUMULATE- 3QFY18 Result Update- Sustains Strong Revenue Growth; Retain Accumulate: V-Guard Industries (VIL) posted strong 3QFY18 revenues of Rs5.2bn, up 19% YoY, in line with consensus estimate but marginally below our estimate of Rs5.4bn. Adjusted for GST-related price change impact, the revenue growth was even stronger at 23% YoY. The growth was broad-based across all product categories led by cables & wires, inverters and fans. Gross margin improved 160bps YoY to 32.4% while EBITDA margin rose 120bps YoY to 9.4%, leading to 37% YoY increase in EBITDA to Rs494mn. PAT jumped 41% YoY to Rs358mn, partly led by a lower tax rate of 23.4% (versus 27.2% YoY). The bottom-line was below our estimate of Rs396mn, but above consensus estimate by 4%. EBITDA margin in 9MFY18 stood at 9.1%, but the management aims to achieve EBITDA margin of 10% in FY18 driven by a seasonally strong fourth quarter. We have marginally tweaked our earnings estimates and rolled forward our valuation to FY20E financials. We have retained Accumulate rating on VIL with a revised target price of Rs240 (Rs210 earlier) based on 36x FY20E earnings.