PremiumIndian indices are likely to witness a negative start on Friday. The bourses gained around 1.5% on Thursday, aided heavily by heavyweights Reliance, M&M, Maruti, and HDFC amid positive global trends. Globally, investor sentiments took a hit following hawkish comments from US Fed boss Jerome Powell on Thursday. He signalled that the US central bank will have to move more aggressively to counter US inflation, and explicitly said a half-point interest rate increase is "on the table" for next month's policy meeting. The comments erased all the gains made till mid-session as the Wall Street indices ended lower despite a lift from a resurgent aviation industry. Tracking losses in the US markets, major Asian indices slipped. Shares in Japan, South Korea, Australia, Hong Kong, and Shanghai all fell in early morning trade on Friday.
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Uncertainties over the Life Insurance Corp. of India’s (LIC’s) initial public offering (IPO) are likely to delay the Centre’s plans to list three other state-run companies, Export Credit Guarantee Corp. of India (ECGC), WAPCOS and National Seeds Corp. Ltd, according to a senior government official.
A clutch of lenders accounting for most of the loans to debt-laden Future Group on Thursday rejected a proposal to sell its retail, wholesale and logistics assets to Reliance Retail Ventures Ltd after the Reliance Industries Ltd unit cut the deal value in a surprise move, two people aware of the development said.
8 stocks to buy or sell today — 22nd April
We cut LTTS’s rating to Accumulate from Buy as we cut DCF based target
price to Rs. 4549 (earlier: Rs.5428) given expensive valuations on backdrop
of possible moderation in ER&D spends (more discretionary in nature) given
high inflationary environment, supply chain issues and global macro
uncertainties and little scope for further margin expansion over FY23-24 due
to higher manpower costs, return of travel costs and investments for future
growth. Our EPS estimates cut by 3.3%/4.2% in FY23/24 led by cut in revenue
estimates. We assume ~18% margins in FY23 & FY24.
FY23 USD revenue growth guidance of 13.5-15.5% YoY USD appears to be
conservative given pickup in large deal wins especially in EACV segment in
FY22 and all-time large deal pipeline. However, given possibility of
moderation in ER&D spends due to macro uncertainties, guidance may not
be upgraded by same level as it was done in FY22 (upgraded from 13-15% to
19-20%). Management targets to maintain 18%+ EBIT margin factoring in
headwinds from intermittent wage hikes, travel costs, high admin expenses
partially offset by tailwinds of growth leverage, better quality of revenues,
pyramid optimization and operational efficiencies.
We arrive at DCF based TP of Rs. 4549 with implied target multiple of 36x P/E
on FY24 EPS (earlier 41x). LTTS is currently trading at 38x/33x on FY23/24
earnings of INR 111/126 respectively with Revenue/EPS CAGR of 16%/17%
over FY22-24E.
We downgrade HCLT to ‘Accumulate’ (earlier Buy) as we cut DCF based target price to Rs. 1169 (earlier Rs. 1295) led by 1) decline in margin profile, 2) volatility in P&P revenue dragging down overall revenue growth, 3) increase in risk free rate and 4) moderation in terminal growth rate. We cut EPS estimates by 4%/5% for FY23/24, led by cut in EBIT margin estimates by ~50-70 bps.
Q4 reported weak revenue (0.5% QoQ USD) due to decline in P&P business (-24.4% QoQ USD) and moderation in ER&D growth (3.5% QoQ USD). IT services revenue grew 4.6% QoQ USD. We believe growth in new deal TCV (14% YoY) and ACV (21% YoY) for FY23 is strong, but revenue guidance of 12-14% YoY for FY23 is lower due to volatility and declining trajectory of P&P (12% of total revenue). We anticipate recovery in P&P business to be slow because – 1) it is run as a software start-up and 2) 25% of P&P portfolio is declining in high double digit. Growth in ER&D business (16% of revenue) is also lower than ER&D peers for FY22.
We assign DCF based TP of ₹1169 with implied target multiple of 19x (earlier 21x) on FY24 EPS. HCLT is currently trading at 20x/18x on FY23/24E EPS of INR 54.5/62.5 respectively with Revenue/EPS CAGR of 12.4%/12% over FY22-24E.
Gold prices slipped on Friday, pressured by strength in U.S. Treasury yields, and were headed for their first weekly fall in three.
Oil prices fell on Friday, heading for a drop of nearly 4% for the week, burdened by the prospect of rate hikes, weaker global growth and COVID-19 lockdowns in China hurting demand, even as the European Union weighed a ban on Russian oil.
Brent crude futures slid 81 cents, or 0.8%, to $107.52 a barrel at 0130 GMT, while U.S. West Texas Intermediate (WTI) crude futures declined 72 cents, or 0.7%, to $103.07 a barrel.
Both benchmark contracts were headed for weekly declines of around 3.7%.
This has been the least volatile week of trade since Russia launched its invasion of Ukraine on Feb. 24, sparking sanctions that cut Russian oil supply and led consuming nations to release a record volume of oil from emergency stockpiles. Moscow calls its actions in Ukraine a "special operation".
Australian shares fell on Friday, as investors took cues from a tepid Wall Street overnight finish after the U.S. Federal Reserve reiterated aggressive rate-hike views, while miners also dragged the benchmark index lower on weak iron ore prices.
The S&P/ASX 200 index was down 1.5% at 7,479.20 points, as of 0038 GMT. The benchmark, which closed 0.3% higher on Thursday, was on track for its worst week in two months, if losses hold.
Miners slumped 3.9% and were set for their biggest weekly drop since last August after iron ore prices fell amid COVID-19 concerns and steel production controls in top steel producer China.
Global miners BHP and Rio Tinto, which flagged continuing production weakness earlier this week, fell 5% and 4.1%, respectively, to be the top losers in the mining sub-index.
Tokyo stocks opened lower on Friday, extending losses on Wall Street following hawkish comments from the Federal Reserve about its monetary tightening plans.
The benchmark Nikkei 225 index was down 1.49 percent, or 410.48 points, at 27,142.58 in early trade, while the broader Topix index was down 1.16 percent, or 22.36 points, at 1,905.64.
Stocks, U.S. equity futures and sovereign bonds fell Friday as the prospect of one of the Federal Reserve’s most aggressive monetary tightening cycles in recent history sowed more market discontent.
An Asian share gauge sank to the lowest level in over a month, sapped by Japan and Hong Kong. S&P 500, Nasdaq 100 and European contracts were also in the red. Energy and technology equities led Wall Street lower Thursday.
China’s economy-sapping Covid lockdowns and concerns over regulations weighed on the nation’s equity bourses. Beijing’s vow of market stability has failed to mollify investors: the latest step was a statement from the securities watchdog urging institutional investors to buy more domestic shares.
The dollar advanced, the yen weakened and oil dipped below $103 a barrel. Energy costs are still elevated supply challenges posted by the conflict, but slowing U.S. and Chinese growth could curb demand too.
US stocks tumbled while the dollar rallied Thursday following hawkish comments from the head of the Federal Reserve that exacerbated worries over higher interest rates, offsetting a lift from a resurgent airline industry.
With bourses in Paris and Frankfurt winning solid gains, Wall Street equities had opened higher following good results from Tesla and upbeat comments from leading airlines.
But US stock markets reversed course at mid-session, and ended decisively lower as the yield on the 10-year US Treasury note rose above 2.9 percent.
Fed Chair Jerome Powell, who has signaled the US central bank will have to move more aggressively to counter record US inflation, explicitly said a half-point interest rate increase is "on the table" for next month's policy meeting.
New York - Dow: Down 1.1% at 34,792.76
New York - S&P 500: Down 1.5% at 4,393.66
New York - Nasdaq: Down 2.1% at 13,174.65
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