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ICICIdirect Research Posted on 09:02am 25-Jun-2020

IOC said capacity utilisation of refineries is currently at 90% and will reach up to 100% by July end...

* Market Outlook

Indian markets are likely to open negative on the back of weak global cues amid a resurgence of new Covid-19 infections globally and downward revision of GDP growth by IMF. Global news flows and earning outcome of domestic companies will be key monitorables.


* Markets Yesterday

• Domestic markets ended lower dragged by selling pressure across the board except FMCG sector

• US markets ended sharply lower due to a spike in Covid-19 cases across several states


* Key Developments  

• Ashok Leyland is likely to report a dismal quarter courtesy sharp 57% YoY decline in volumes. Total CV volumes for Q4FY20 came in at 25.5k units (down 57% YoY). Consequent net sales in Q4FY20E is expected at | 3,429 crore (down 61% YoY). EBITDA in Q4FY20E is expected at | 93.2 crore with corresponding EBITDA margins at 2.7% vs. 5.6% in Q3FY20 and 11.1% in Q4FY19. We expect ALL to report loss of | 68 crore.

• We expect revenue for TTK Prestige to decline 11% YoY to | 397.6 crore. On account of negative operating leverage, we expect EBITDA margins to decline 210 bps YoY to 12.3%, with absolute EBITDA declining 23.8% YoY to | 48.9 crore. Lower tax rate is expected to aid PAT to a certain rate. Hence, we anticipate PAT will decline 23.4% YoY to | 33.6 crore.

• As per preliminary data, India's oil imports in May fell 26% YoY to 3.2 mbpd at its lowest since October 2011

• Canara Bank posted weak set of Q4FY20 numbers wherein higher provisioning dented PAT growth. Standstill asset quality improved with GNNPA/NNPA down 15/83 bps QoQ to 8.2%/4.2% respectively. NCLT exposure stands at | 34176 crore and the bank has provided 83% for the same. Provisioning stood at | 5375 crore with Covid provisions at | 94.1 crore. PCR at 75.86%. Credit growth was muted at 1.6% YoY to | 451223 crore with major traction towards corporate loans. NII declined 9.3% to | 3319 croe due to muted business growth. NIMs declined 48bps YoY to 2.28%. Strong treasury gains was offset by higher opex due to employee cost leading PPP to come in at | 2040.9 crore. Higher provisions led to a loss of | 3334.5 crore

• India Cements reported weak set of numbers for Q4FY20. Company's revenues declined 26% YoY to | 1152 crore driven by a 20% drop in volumes to 2.65 MT. Realisations also declined 6% YoY during the quarter. EBITDA for the quarter dropped sharply from | 192 crore to | 67 crore YoY and EBITDA margins shrinked from 12.3% to 5.8%. Company during the quarter also made a provision of | 100 crore towards its flight chartering business and infra subsidiary. Thus the company reported a loss of | 111 crore in Q4FY20 against a profit of | 43.85 crore in Q4FY19.

• Sanghi Industries' Q4FY20 revenues dropped 20% YoY to | 222 crore, which we believe would have been dragged majorly by volumes as pricing in the West and North improved YoY in the quarter. EBITDA increased by 11% YoY to | 51 crore and EBITDA margins expanded from 17% in Q4FY19 to 23% in Q4FY20. Higher depreciation and finance costs however dragged the PAT lower to | 16 crore vs | 26 crore in LY.

• USFDA has revoked exception to the import alert for chloroquine phosphate API from Ipca's API facility in Ratlam, MP as the shortage situation for the same has been resolved. However, the company can continue to export the API for Hydroxychloroquine sulphate till further communication

• Bharti Infratel on Wednesday extended the deadline for merger with Indus Towers by over two months till August 31. We believe that the decision was taken on account of lack of clarity over the AGR case in supreme court, which will be heard in the last week of July,2020.

•  Tata Consultancy Services has successfully implemented a unified partner commerce platform for Zebra Technologies (Zebra). Zebra selected TCS to help modernize its online product selection and configuration experience for its partners.

• Diageo India will offer hygiene kits and personal protection equipment to bars, pubs and restaurants serving alcohol once they resume business in India and has earmarked ₹75 crore for it. Under its 'Raising the Bar' programme, the local arm (USL) will help the outlets establish tie-ups with online reservation and digital payment partners over a period of two years as it hopes for a recovery in these trade channels that contribute significantly to sale of alcoholic beverages

• Cadila Healthcare has received USFDA approval for the antihistamine, Meclizine Hydrochloride (US RLD: AntivertTM) tablets, 12.5/25 mg. The drug, used to treat and prevent symptoms of motion sickness and vertigo, will be manufactured at the company's Ahmedabad SEZ facility

• As per media sources, NTPC has been awarded a project management consultancy award for development of 500 MW solar park in Republic of Mali. NTPC plans to anchor 10,000 MW of solar parks in ISA member countries in the next two years

• As per media reports, operations of Fertilizers and Chemicals Travancoreand BPCL's Kochi refinery are back to normal with production now inrange of 2,500 tonnes of Factamfos and 700 tonnes of ammonium sulphate daily

• DB Corp's pledged shareholding reduced 1.1% to 34.2%

• In a bid to prevent further scams and to provide depositor comfort , the government passed an ordinance on 24th June 2020 wherein all cooperative banks would come under RBI's supervision. This ordinance would come in force in immediate effect post approval from the President.

• IOC said capacity utilisation of refineries is currently at 90% and will reach up to 100% by July end

• GAIL is analysing prospects of buying stake in Indian gas exchange

• CCEA has approved ONGC Videsh's investment of | 909 crore in development of Shwe oil & gas project in Myanmar

• BPCL is planning to raise | 3000 crore through private placement of NCDs in FY21


* Today's Highlights

Results: Ashok Leyland, Somany Ceramics, TTK Prestige, Concor, Taj GVK, Star Cement, Engineers India, Endurance Technologies, Deccan Cement