ITC fourth-quarter profit rises 10%; beats estimates India's biggest cigarette maker ITC posted a better-than-expected quarterly profit on Wednesday, helped by a fall in excise duty. Profit for the quarter ended March 31 came in at Rs 29.33 billion ($432.44 million) from Rs 26.69 billion reported last year, the company, which also makes biscuits and noodles under the Sunfeast brand, said. Earnings Impact Edelweiss on Tata Steel The NCLT has approved Tata Steel’s (TSL) Resolution Plan (RP) for Bhushan Steel (BSL). While certain uncertainties remain, particularly w.r.t. lenders’ share in the equity, we believe the deal is better than what Street had estimated earlier: 1) EV/t pegged at USD1,060/t compared to our ~USD1,225/t initial estimate; 2) no additional equity infusion of INR90bn as previously estimated; and 3) financial creditors to release pledge on promoters’ shares (36.2% of BSL’s equity). On the valuation front, assuming BSL’s steady-state EBITDA/t of INR11,500 and 95% capacity utilisation, TSL is likely to trade at 5.6x FY20E EBITDA, similar to the current level. Maintain ‘BUY’ with target price of Rs 903 Sector watch: Air conditioners The air-conditioner industry has witnessed several headwinds during FY18, led by GST transition and the change in energy efficiency ratings. Additionally, the summer of 2018 started on a weak note, despite IMD predicting a harsh summer. Consumer offtake has thus been weak, as evident in Lloyd (Havells) and Blue Star’s Room Air Conditioner (RAC) volume growth in 4QFY18. However, value growth (19% for Blue Star) was boosted by a richer mix (inverter share rising and rating change in Jan-18) and a commodity-led price hike of 3-4%. Nevertheless, we stick to our longer term constructive view on RAC volume growth, which will drive up value growth even higher in future. Meanwhile, Voltas is down ~10% over the last month as the street is expecting a weak 4QFY18 show. However, given Blue Star’s show, Voltas can post double digit value growth (despite possibly muted volumes). The mix improvement is possibly being ignored by Voltas’ sellers. This throws open an opportunity to buy Voltas on dips. At 25x Mar-20E EPS, our target price of Rs 710 offers an entry point Volume Toppers COMPANY PRICE() CHG() CHG(%) VOLUME SH.RENUKA SUGAR 15.50 0.10 0.65 25136271 REL. COMM. 10.30 -2.15 -17.27 19593299 PUNJAB NATL.BANK 76.00 -10.00 -11.63 8166188 SUZLON ENERGY 9.08 0.30 3.42 4516688 JP ASSOCIATES 17.05 0.00 0.00 2990465 Market check Index Current Pt. Change % Change S&P BSE SENSEX 35,445.45 -98.49 -0.28 S&P BSE SENSEX 50 11,270.85 -35.96 -0.32 S&P BSE SENSEX Next 50 32,719.45 -156.79 -0.48 S&P BSE 100 11,066.39 -37.95 -0.34 S&P BSE Bharat 22 Index 3,575.96 -6.72 -0.19 Europe Update Shares in Europe opened mixed as investors monitor surging interest rates in the bond markets. The pan-European Stoxx 600 was 0.1% up with the various sectors moving in different directions
The markets have trimmed their morning losses and are trading in a range on Wednesday afternoon, following a recovery in the value of rupee and a dip in global crude oil prices despite uncertainty over Karnataka assembly election outcome.
RUPEE AND CRUDE OIL
A day after the Karnataka Assembly election results threw up a fractured mandate, the Janata Dal (Secular) has alleged that Bharatiya Janata Party (BJP) is offering its MLAs Rs 1-billion each to abstain from voting during the floor test so that the BJP could prove a majority in the House and form the next government.
On Tuesday, the BJP had emerged as the single largest party in Karnataka with 104 seats, even as it fell short of the majority mark of 112. The Congress stood second with 78 seats and former prime minister H D Deve Gowda’s Janata Dal (Secular) third with 37 seats.
Asian markets fell in early trade on Wednesday after Pyongyang called off talks with Seoul, throwing a major US-North Korean summit into question, and a spike in the US 10-year Treasury yield to a seven-year high knocked sentiment on Wall Street.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.1 per cent. South Korea's KOSPI was 0.4 per cent lower and Japan's Nikkei was down 0.3 per cent.
(with Reuters inputs)