Top Stock Market News Today: Sensex, Nifty, Share Prices Domestic markets were in firm control of bulls on Wednesday. S&P BSE Sensex was up 1,000 points or 1.73% sitting near an intraday high of 58,637 while NSE Nifty 50 was above 17,450.
Bank Nifty rallied 2% to regain 37,300 levels. Broader markets were mirroring the up-move. Bajaj Finance was the top index gainer, up 3.3%, followed by ICICI Bank, Bajaj Finserv, and SBI. Power Grid was the only Sensex constituent to trade in the red.
Motilal Oswal Initiates Coverage With ‘Buy’ Rating
Shares of Devyani International Ltd. rose over 16%, the biggest intraday gain in nearly a month after Motilal Oswal initiated coverage on the stock on Wednesday with a ‘buy’ rating driven by (i) KFC’s strong brand equity and operating metrics, (ii) rising focus on delivery by Pizza Hut driving its turnaround and (iii) robust growth in both these brands led by network expansion.
Motilal Oswal has kept the target price at Rs 190, an implied return of 4.60%. The brokerage firm noted that the unique offerings of KFC lends it a strong brand equity, driving robust Average Daily Sales (ADS) and profitability. In fact, the KFC business is pegged to deliver 41% CAGR over FY20-24E, with the store expansion estimated to rise to 574 from 264 over the same period.
The rapid addition of delivery-focused small format stores are expected to aid Pizza Hut business as well, as the company shifts attention to the underperforming delivery channel. The small format stores are added with the intent to reduce the distance to the consumer and lower delivery time.
JBM Auto Shares Rise As Company Approves Sub-Division Of Shares
Shares of JBM Auto Ltd. rose over 6% in intraday trade to Rs 1,174 apiece after the company approved the proposal of sub-division of equity share having face value of Rs 5 each into equity shares of face value of Rs 2 each. The record date for the share split will be determined, subsequent to the approval of shareholders.
Shares of JBM Auto rose nearly 26% since the company announced on November 19 that the company’s board will consider a stock split on December 8 in a meeting of board of directors.
The relative strength index on the stock was 74, suggesting it may be overbought.
Analyst Actions: Gujarat Petronet, Petronet LNG
- Gujarat State Petronet cut to ‘accumulate’ from ‘buy’ at Elara Securities India; price target at Rs 358
- Petronet LNG cut to ‘accumulate’ from ‘buy’ at Elara Securities India; price target at Rs 266
Analyst Actions: Berger Paints, Ramco Cements
- Berger Paints raised to ‘buy’ from ‘hold’ at IDBI Capital Market; price target at Rs 870.
- Ramco Cements raised to ‘buy’ from ‘add’ at Axis Capital; price target at Rs 1,125.
Reliance Industries Ups Price Target
Goldman Sachs has also highlighted risks to its estimates and target price. A few of them are:
- A slower-than-expected commercial ramp-up due to technology would drive downside risk to volume/earnings forecasts, including the export segment.
- The biggest challenge for the pick-up in India’s renewable demand lies in the policy framework and transmission infrastructures. Any material delay or lack of follow-through in execution would likely lead to lower market size and drive downside to earnings forecast.
- Higher-than-expected leverage/interest cost may lead to lower profitability.
- Lower-than-anticipated capacity additions could significantly impact the company’s growth.
- Higher-than-expected competitive intensity can drive lower-than-expected ARPU, impacting the profitability of the telecom business.
- Higher-than-expected competitive intensity and unfavourable regulations in the retail business could drive lower market share and margins versus our assumptions for offline and online retail business.
- Delay in new launches and lower-than-expected pick-up of new products could drive downside risks versus our forecasts.
What Q2 GDP Data Tells Us About The Economy
The Indian economy recouped much of what it lost in the April-June quarter over the next three months as Covid cases fell and states eased restrictions. With that, output moved back to the pre-pandemic levels but remained below what it would have been had the pandemic not hit at all.
The scars of the pandemic are visible in the relatively weak rebound in consumption so far, even as government spending and strong exports are helping the economy rebound. A strong agricultural sector has helped as well.
These are some of the key takeaways from economists following release of data for the second quarter, which showed GDP growth at 8.4% and gross value added growth at 8.5%.
Economy Rebounded Following Second-Wave Hit
The economy grew 29% on a quarter-on-quarter, seasonally-adjusted and annualised basis, said JP Morgan chief economist Sajjid Chinoy in a note. This is on the back of the 28% contraction in the previous quarter characterised by a vicious second wave.
The dynamic that underpinned this is a faster reopening of the economy, Chinoy said. While the economy is close to pre-pandemic levels, the gap is wider in the case of core GVA, which adjusts for agriculture and government spending, he added.
According to Sonal Varma, chief India economist at Nomura, the 6.6% seasonally adjusted quarterly growth reflects a swift rebound from the second wave lows.
Devyani International Shares Gain As Motilal Oswal Initiates Coverage With ‘Buy’
Shares of Devyani International Ltd. gained the most in nearly a month after Motilal Oswal initiated coverage on the operator of KFC, Pizza Hut stores in India with a ‘buy’.
That, according to the brokerage’s Dec. 8 report, was because of:
- KFC’s strong brand equity and operating metrics.
- Rising focus on delivery by Pizza Hut driving its turnaround.
- Robust growth in both these brands led by network expansion.
Motilal Oswal kept the target price on the largest franchisee of Yum! Brands in India at Rs 190 apiece, an implied return of 4.60%.
According to the brokerage, the unique offerings of KFC lend it a strong brand equity, driving robust average daily sales and profitability. The KFC business, it said, is pegged to deliver a 41% annualised growth rate over FY20-24E, with stores estimated to rise to 574 from 264 during the period.
The rapid addition of delivery-focused small format stores is expected to aid Pizza Hut’s business as well, Motilal Oswal said. The small-format stores are aimed at reducing the distance to consumers and cutting delivery time.
Devyani’s pan-India rights for small-format stores of Pizza Hut (except in Tamil Nadu) provides it with an advantage over Sapphire Foods India Ltd. (the other Indian partner of Yum! Brands). That’s because it gives access to Devyani in Sapphire’s territories and helps in faster addition of such stores due to lower capex required, the note said.
Morgan Stanley Initiates Coverage On ICICI Lombard With A ‘Buy’; Stock Gains
Shares of ICICI Lombard General Insurance Co. gained after three days as Morgan Stanley turned ‘overweight’ on the company, betting on its long-term potential.
“The next three months is an opportune time to build positions in the large-cap quality stock,” the research house said in a note, initiating coverage on the general insurer. “ICICI Lombard is the largest multi-line private sector player in India with a strong track record of profitability, diversification and risk management.”
While there are investor concerns about the company’s loss of premium market share and a slowdown in gross direct premium growth to single digit, ICICI Lombard stands to benefit from the multi-decade growth potential of the non-life insurance industry, Morgan Stanley said. It expects private companies’ market share to rise from 57% in FY21 to 85% by FY36.
ICICI Lombard, according to the note, will see its gross direct premium growth bottom out by December 2022 and bounce back to double digits in the quarter ending March 2023.
Morgan Stanley has set a price target of Rs 1,920 apiece, an upside of 35% from the closing on Dec. 6.
Shares of the general insurer rose as much as 2.38%—the highest in two weeks. The stock was trading 1.72% higher at 1:56 p.m. on Wednesday compared with a 1.6% rise in the benchmark Nifty 50.
Of the 26 analysts tracking ICICI Lombard, 17 recommend a ‘buy’, four suggest a ‘hold’ and five have a ‘sell’ rating, according to Bloomberg data. The average of 12-month price targets implies an upside potential of 14.5%.
Morgan Stanley views on ICICI Lombard:
- Domination on the profit market share metric.
- Consistent return on equity.
- The return on equity has been consistently over 20%. It fell to 15% in the FY22 due to Bharti AXA General Insurance Co.’s integration and high loss ratio in health (due to the pandemic).
- The RoE will revert to the 20%-plus levels from the financial year 2023.
- A severe Covid-19 third wave is a potential risk.
