Markets extended their rebound and gained nearly half a percent amid volatility. The bias was on the positive side in the first half, thanks to the recovery in select index majors however the pressure in the banking pack trimmed the gains in the latter half. At the same time, resilience in the FMCG, metal and IT names capped the downside. The broader markets witnessed healthy buying interest as both BSE Midcap and Smallcap outperformed and ended with gains of 0.7-0.8%.
Though the government has allowed resuming certain economic activities in the fourth phase of the lockdown, it would take time to boost the sentiment at the ground. Needless to say, people are aware of the rising COVID-19 cases in India and if it continues to show the same trend, it would be difficult for the government to further ease the lockdown conditions which might again derail the possibility of sustained recovery. Amid all, we believe volatility will continue in the markets and the underperformance from the banking and financial space would remain the major overhang. In the present scenario, participants should limit their naked leveraged positions and focus more on stock selection.
Stock In News
* Bajaj FinServ announced its results wherein revenue was up 2.3% YoY to Rs. 13,295 cr. Its consolidated net profit was down 77% at Rs. 194.4 cr.
* Colgate Palmolive reported its Q4FY20 numbers wherein revenue was down 7.2% to Rs. 1,070 cr. However, its net profit grew by 3.3% to Rs. 204 cr.
* GSK Pharma announced that it would discontinue the manufacture and supply of Zinetac tablets (150 mg and 300 mg products) manufactured in India and will in due course request cancellation of the marketing authorization(s) associated with Zinetac Tablets (150mg / 300mg).
Buy Havells India Ltd 9-12 Months CMP 465.85 Target 577
* Havells India’s (Havells) Q4FY20 results were weak as the March month (particularly last two weeks), which generally contributes ~25% to its Q4 revenues was impacted by COVID-19 led lockdown. Havells’ consolidated Q4FY20 revenue declined by 19.5% YoY, EBITDA declined by 22.3% YoY, while net profit was down by 10.7% YoY.
* We have based our valuation on P/E of 36xFY22E EPS. Given the sharp correction of ~28% in the last five months, we opine that near term growth concerns have been factored into the valuation of the stock. Thus, we recommend a BUY on Havells with a target price of Rs 577 per share.
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